LU THAI TEXTILE CO., LTD.INTERIM REPORT 2021
August 2021
Part I Important Notes, Table of Contents and DefinitionsThe 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 ofthis Report and its summary, and shall be jointly and severally liable for anymisrepresentations, misleading statements or material omissions therein.Liu Zibin, the Company’s legal representative, Zhang Hongmei, the Company’s ChiefAccountant, and Zhang Keming, the Company’s Financial Manager hereby guarantee thatthe 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 Reportand its summary.The Company has described in detail in this Report the possible risks. Please refer to thecontents under the heading “Risks Facing the Company and Countermeasures” in “Part IIIManagement Discussion and Analysis” of this Report. Securities Times, Shanghai SecuritiesNews, China Securities Journal, Ta Kung Pao (HK) and www.cninfo.com.cn have beendesignated by the Company for its information disclosure in 2021. And all information aboutthe Company shall be subject to what’s disclosed by the Company on the aforesaid media.Investors are kindly reminded to pay attention to investment risks.The Company is subject to the Guideline No. 17 of the Shenzhen Stock Exchange onInformation Disclosure by Industry—for Listed Companies Engaging in Textile and Apparel.In the first half of 2021, COVID-19 has slowed down with the popularization of vaccination.But there are repeated outbreaks in several regions and there is a common problem of lackingvaccines in low-income countries. The global economy is recovering, but is ill-balanced inregions and industries. The Chinese government has relatively mature experience incontrolling the spread of COVID-19 in the shortest time. The domestic consumer marketwitnessed a rapid recovery. However, the recovery of companies mainly focusing on exportingthe fabrics of suits and shirts and manufacturing shirts is slow due to the exchange rateappreciation of RMB on year and the increase in the prices of the raw materials like cottonand textile auxiliaries. For further information, see “Part III Management Discussion andAnalysis”.The Company has no interim dividend plan, either in the form of cash or stock.This Report and its summary have been prepared in both Chinese and English. Should therebe any discrepancies or misunderstandings between the two versions, the Chinese versionsshall prevail.
Table of Contents
Part I Important Notes, Table of Contents and Definitions ...... 2
Part II Corporate Information and Key Financial Information ...... 6
Part III Management Discussion and Analysis ...... 9
Part IV Corporate Governance ...... 29
Part V Environmental and Social Responsibility ...... 32
Part VI Significant Events ...... 37
Part VII Share Changes and Shareholder Information ...... 55
Part VIII Preferred Shares ...... 67
Part IX Bonds ...... 68
Part X Financial Statements ...... 72
Documents Available for Reference
1. The financial statements signed and stamped by the Company’s legal representative, Chief Accountant andFinancial Manager;
2. The originals of all the Company’s announcements and documents disclosed to the public during the ReportingPeriod on Securities Times, Shanghai Securities News, China Securities Journal and Ta Kung Pao.
Definitions
| Term | Definition |
| The “Company”, “LTTC”, “Issuer” or “we” | Lu Thai Textile Co., Ltd. and its consolidated subsidiaries, except where the 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 |
| RMB, RMB’0,000 | Expressed in the Chinese currency of Renminbi, expressed in tens of thousands of Renminbi |
| The “Company Law” | The “Company Law of the People‘s Republic of China” |
| The “Securities Law” | The “Securities Law of the People‘s Republic of China” |
| The “Reporting Period” or “Current Period” | The period from 1 January 2021 to 30 June 2021 |
Part II Corporate Information and Key Financial InformationI Corporate Information
| Stock name | LTTC, LTTC-B | Stock code | 000726, 200726 |
| Changed stock name (if any) | N/A | ||
| Stock exchange for stock listing | Shenzhen Stock Exchange | ||
| Company name in Chinese | 鲁泰纺织股份有限公司 | ||
| Abbr. (if any) | 鲁泰纺织 | ||
| Company name in English (if any) | LU THAI TEXTILE CO.，LTD | ||
| Abbr. (if any) | LTTC | ||
| Legal representative | Liu Zibin | ||
II Contact Information
| Board Secretary | Securities Representative | |
| Name | Zhang Keming | Zheng Weiyin and Li Kun |
| Address | No. 81, Songling East Road, Zichuan District, Zibo, Shandong, P.R.China | No. 81, Songling East Road, Zichuan District, Zibo, Shandong, P.R.China |
| Tel. | 0533-5277008 | 0533-5285166 |
| Fax | 0533-5418805 | 0533-5418805 |
| Email address | zhangkeming@lttc.com.cn | wyzheng@lttc.com.cn，likun@lttc.com.cn |
III Other Information
1. Contact Information of the Company
Indicate by tick mark whether any change occurred to the registered address, office address and their zip codes, website address andemail address of the Company in the Reporting Period.
□ Applicable √ Not applicable
No change occurred to the said information in the Reporting Period, which can be found in the 2020 Annual Report.
2. Media for Information Disclosure and Place where this Report is Lodged
Indicate by tick mark whether any change occurred to the information disclosure media and the place for lodging the Company’speriodic reports in the Reporting Period.
□ Applicable √ Not applicable
The newspapers designated by the Company for information disclosure, the website designated by the CSRC for disclosing theCompany’s periodic reports and the place for lodging such reports did not change in the Reporting Period. The said information canbe found in the 2020 Annual Report.IV Key Financial InformationIndicate by tick mark whether there is any retrospectively restated datum in the table below.
□ Yes √ No
| H1 2021 | H1 2020 | Change (%) | |
| Operating revenue (RMB) | 2,220,313,650.94 | 2,286,744,080.79 | -2.91% |
| Net profit attributable to the listed company’s shareholders (RMB) | 153,497,344.66 | 144,119,579.22 | 6.51% |
| Net profit attributable to the listed company’s shareholders before exceptional gains and losses (RMB) | 54,281,532.08 | 108,105,593.17 | -49.79% |
| Net cash generated from/used in operating activities (RMB) | 182,761,025.14 | 209,392,265.69 | -12.72% |
| Basic earnings per share (RMB/share) | 0.17 | 0.17 | 0.00% |
| Diluted earnings per share (RMB/share) | 0.19 | 0.16 | 18.75% |
| Weighted average return on equity (%) | 1.97% | 1.85% | 0.12% |
| 30 June 2021 | 31 December 2020 | Change (%) | |
| Total assets (RMB) | 12,400,765,912.80 | 12,129,903,960.65 | 2.23% |
| Equity attributable to the listed company’s shareholders (RMB) | 7,868,221,583.13 | 7,687,577,590.72 | 2.35% |
V Accounting Data Differences under China’s Accounting Standards for Business Enterprises(CAS) and International Financial Reporting Standards (IFRS) and Foreign AccountingStandards
1. Net Profit and Equity under CAS and IFRS
□ Applicable √ Not applicable
No such differences for the Reporting Period.
2. Net Profit and Equity Differences under CAS and Foreign Accounting Standards
□ Applicable √ Not applicable
No such differences for the Reporting Period.
VI Exceptional Gains and Losses
√ Applicable □ Not applicable
Unit: RMB
| Item | Amount | Note |
| Gain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs) | 58,531,388.42 | |
| Government subsidies charged to current profit or loss (exclusive of government subsidies given in the Company’s ordinary course of business at fixed quotas or amounts as per the government’s uniform standards) | 19,089,311.11 | |
| Gain or loss on fair-value changes in trading and derivative financial assets and liabilities & income from disposal of trading and derivative financial assets and liabilities and investments in other debt obligations (exclusive of the effective portion of hedges that arise in the Company’s ordinary course of business) | 39,004,803.56 | |
| Reversed portions of impairment allowances for receivables and contract assets which are tested individually for impairment | 5,386,518.99 | |
| Non-operating income and expense other than the above | -1,405,920.92 | |
| Less: Income tax effects | 18,018,514.02 | |
| Non-controlling interests effects (net of tax) | 3,371,774.56 | |
| Total | 99,215,812.58 | -- |
Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item defined or listed in the ExplanatoryAnnouncement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gain/LossItems:
□ Applicable √ Not applicable
No such cases for the Reporting Period.
Part III Management Discussion and AnalysisI Principal Activity of the Company in the Reporting Period
The economic environment has been complicated since 2021. The uncertainties in the recovery of the post-pandemic era are a lot,especially when it comes to the situations like the surging in the prices of mass merchandise and the high cost of human resources.The Company is centered on the clients and continues to implement the strategies of “Improve Quality and Efficiency” and “OverallInternationalization”. The Company focuses on expanding the market, adjusting the structure and building capabilities to make sureall programs running smoothly. For the Reporting Period, the Company recorded revenue of RMB2,220 million, an operating profitof RMB167 million, a net profit attributable to the listed company’s shareholders of RMB153 million and a net profit attributable tothe listed company’s shareholders before exceptional gains and losses of RMB54 million, down 2.91%, down 4.71%, up 6.51%, anddown 49.79% respectively from the same period of last year. No changes occurred to the Company’s principal operations, products orbusiness models, or the primary factors driving the Company’s growth in the Reporting Period.During the Reporting Period, the Company has been rated as the leader in the cotton textile industry during the 13th Five Year Planby China Cotton Textile Association and as the top 30 enterprises in 2021 in the dyeing and printing industry by China Dyeing andPrinting Association. Besides, it has been conferred the Special Contribution Award (2016-2020) in the textile and apparel industryof Shandong Province and appraised as the advanced enterprise in corporate culture development in 2020 by Shandong Textile andApparel Association. The Company has prioritized the following aspects:
(I) The Company has put the customer on the first place, optimized the product structure and expanded the market.
1. It has built an all-around relationship with its customers so as to stabilize order and production.The Company has established a high-level docking mechanism and a multi-tiered communication mechanism with its strategiccustomers. What's more, it has advanced the development of front-end design services, especially the service that aims at strategiccustomers. It has also stepped up the efforts to complete 16 tailored projects including the development of viscose and knitted fabrics.The Company has set up a specialized service group targeted at the strategic and valuable customers. In doing so, it can improve themarketing capability and enhance the capability of defusing and controlling marketing risks. With the above measures, the Companyhas witnessed an increase in its order and its revenue has also increased.
2. The Company has driven the development of business wear and expanded the domestic market of business wear.The Company has constantly adjusted the product structure in domestic market based on its competitive businesses and the situationof domestic market. Moreover, it has kept enhancing the cooperation with strategic customers of domestic market and planned itsbusiness development and the focus of cooperation in the future. During the Reporting Period, the profit of the Company's careerapparel in domestic market has seen a significant rise and the career apparel's share in the Company's domestic businesses has alsowitnessed an increase.
3. The Company has stepped up its efforts to enrich the variety of its products and expanded its market.During the Reporting Period, the Company has made endeavors to develop new fabrics like knitted and pants fabrics. Moreover, ithas diversified its garment products including yoga pants and T-shirt. Therefore, its volume of business and new customers haveincreased. What's more, it has actively explored new models of business cooperation, which includes the cooperation withe-commerce platforms.(II) The Company now has put an emphasis on its product lines and fully leveraged the strength of its international industrialdistribution.The Company has possessed six product lines including yan, yarn-dyed, printing and dyeing, functional and knitted fabrics andgarment. Although the severe international market situation and the significant price rise of raw materials have had an impact on theCompany, it has adjusted the structure of its product lines and explored new operation models. The technology of high-quality and
ironing-free knitted fabrics of shirts developed by the Company has passed the science evaluation and reached the advancedinternational level.Faced with the pressure brought by COVID-19 pandemic, Lu Thai (Burma) Textile Co., Ltd and Lu Thai (Tan Chau) Textile Co., Ltdhave fully leveraged geographical advantages to cushion the impacts of tariff barrier and Sino-US trade friction. During theReporting Period, the yarn-dyed factory of Lu Thai (Burma) Textile Co., Ltd has completed the task of taking orders of strategiccustomers. Lu Thai (Cambodia) Textile Co., Ltd has seen a reduction in its order due to the impact of the pandemic. Despite that, theCompany has made constant endeavors to control and prevent COVID-19 and stressed the building of company staff with a lowestrate of employee turnover.(III) The Company has taken various measures to stabilize the number of its employees.A stable number of employees is the cornerstone for the Company's development. During the Reporting Period, the Company waspressured by a shortage of employees. Therefore, it has implemented the2021 restricted stock incentive plan, adjusted its salarystructure and improved staff benefits. In doing so, it has stabilized the number of ordinary employees and core technical staff.The Company has always upheld its mission of creating wealth and making contributions to the society. It has practiced the value ofputting people on the first place, customers coming first, and being honest and seeking win-win outcome. Besides, it has keptimproving and extending its industrial chains. So, it has gradually become a textile and apparel enterprise that integrates spinning,bleaching, weaving and clothing manufacture. It has laid its emphasis on the production of yarn-dyed, printing and dyeing, andknitted fabrics for medium-and-high end shirts and the sale of ready-made clothes. The Company has prioritized its comprehensivemanagement capability, R&D capability, technology, stable product quality and international industrial distribution. What's more, itkeeps improving its service, stepping up innovation, expanding its market and increasing the added-value of its products. At themoment, the Company has formed the fashionable, functional and comfortable product lines that focus on natural fiber fabric,multi-component functional fiber fabric and ironing-free fabric. It products lines now have satisfied the diversified and personalizedmarket demand.The Company now has become a large-scale manufacturer of high-quality yarn-dyed fabric and a first-line shirt manufacturer at theinternational level. It has embarked on a green, low-carbon, scientific and humanistic path of development based on the traditionaltextile industry.The Company is subject to the Guideline No. 17 of the Shenzhen Stock Exchange on Information Disclosure by Industry—for ListedCompanies Engaging in Textile and Apparel.2021 is the first year of the new development cycle of the 14th Five-Year Plan. The textile industry still faces a complicateddevelopment situation. The foundation for a sustainable recovery still needs to be consolidated and there are still lots of challenges forthe post-pandemic new development cycle of high quality. Foreign trade enterprises is also faced with problems like the floating of theexchange rate of RMB, the surging prices of the raw materials, the increasing difficulty of recruiting and the rising of the cost of humanresources. There is great development pressure for the enterprises. Besides, the recovery of performance of the companies focusing onexporting the fabrics and shirts is slow. According to the statistics from the website for the information of China cotton, the exportedtextile and apparels of our country reached USD140.09 billion from January to June in 2021, a year-on-year increase of 12%. Amongthem, the exported textile reached USD68.66 billion, a year-on-year decrease of 7.4%; while the exported apparels reached USD71.53billion, a year-on-year increase of 40.3%. Besides, according to the analysis of the exports from the China Chamber of Commerce forImport and Export Textiles from January to June in 2021, the increase in knitted apparels is much higher than that of the wovengarments and export of epidemic-prevention supplies gradually slows down. The European Union market is weak in recovery.Although there is a huge increase in the exports to USA, the exports of shirts and suits is still increasing slowly due to the enduringinfluence from COVID-19 on the commute of the American consumers.The Company is a textile and garment enterprise group with comprehensive and vertical production capacities integrating spinning,bleaching and dyeing, weaving, afterfinish and clothing manufacture. Over 50% of the yearn dyed fabric and printed and dyed fabricused for shirts as well as ready-to-wear garment were sold to more than 60 countries and regions such as the US, European Unionand Japan. The Company has established strategic partnership with renowned brand owners at home and abroad.
In terms of technology, relying on the national enterprise technical center, national demonstration base for introducing talents,national post-doctoral scientific research station and Shandong Provincial Engineering Technology Research Center, Lu ThaiEngineering Technology Institute has been devoted to research on frontier technology, and has strong R&D capabilities in terms oftechnological innovation, quality improvement, and low carbon and energy-saving. The Company has established long-termcooperation with colleges and universities as well as renowned transnational enterprises such as Donghua University, The HongKong Polytechnic University (PolyU), Jiangnan University, Qingdao University, Huntsman and DowDuPont. It jointed hands withits partners in R&D of new technologies, new materials and new products to achieve alliance between giants and improvecomprehensive capabilities of the Company.As for procurement, the Supply Chain Department of the Company carried out direct procurement in domestic and overseas marketsbased on market-oriented principles. At present, the Company's bulk raw materials are cotton, which is purchased from all over theworld based on the market situation. Besides, the Company purchased dye auxiliaries from the global market in line with productfeatures and customer requirements.Regarding production, the Company adopted the make-to-order (MTO) strategy. As required by customers in their orders, theCompany organized and completed production. The Company was equipped with an entire production system ranging from spinningto garment processing, in which production lines operated in an synergetic and effective way with their respective resourceadvantages. Meanwhile, upon years of accumulation, the Company has developed unique quality control capabilities for the wholeproduction process. With great independence and flexibility, it is able to produce and deliver fast even for small orders.With respect to sales, the Company applied the order-based sales model. Each year, over 50% of its products were sold to countriesand regions such as Europe, the US, Japan, South Korea, Southeast Asia and Hong Kong. With the self-owned trademark "Luthai"for its fabric sales, the Company was able to provide its customers with development and design plans for fashionable andtechnological products with environmentally friendly functions. Shirts were mainly made according to the orders of customers athome and abroad, and sold by brand owners. The Company's self-owned brand was operated through self-owned exclusive shopssuch as Lu Thai Exhibition and Sales Pavilion, counters of affiliated stores in malls and e-networking marketing. Meanwhile, theCompany could provide customers with high-end customized shirts and customized business wear to meet the market demand of thehigh-end service industry.
II Core Competitiveness Analysis
1. The Company has a comprehensive vertical industrial chain and internationalized layout. It possesses the whole industrial chainintegrating spinning, bleaching and dyeing, neatening, testing, and garment making, as well as excellent quality control capabilitiesthrough various links of the production of high-end yarn-dyed fabrics. In order to leverage international resources, give play to theadvantage of internationalized industrial distribution and reinforce the leading international status in manufacturing the yarn-dyedfabrics for shirts, the Company has built various production bases in Cambodia, Burma and Vietnam etc., and established the designagency 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, theCompany has successively passed the certification of ISO9000 quality management system, ISO14000 environmental managementsystem, OHSAS18000 Occupation Health Safety Management System, SA8000 Social Responsibility Management System, TheWorldwide Responsible Apparel Production Standard (WRAP), Sustainable Textile Production (STeP), Global Organic TextileStandard (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 outstandingachievement in its operating management, better improve the Company’s business performance and capabilities, the Company hasintroduced the GB/T19580 Criteria for Performance Excellence step by step, set up the “big quality” system, promoted themanagement 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 anduniversities, strategic clients and important suppliers by relying on various technical platforms including the national enterprisetechnical center, the national industrial design center, the national demonstration base for introducing talents, the nationalpost-doctoral scientific research station and Shandong Provincial Engineering Technology Research Center, dedicates itself to thecutting-edge technical research, and gradually transforms from technology research to integrated product development. Besides, theCompany will also transform from the overcoming of key technical difficulties to the mastery of technical principles and theformulation of industrial standards, and from the focus on technical innovation to the dynamic integration of new techniqueexploration with model innovation, materialize the low-carbon, green and sustainable development.
III Core Business Analysis
See contents under the heading “I Principal Activity of the Company in the Reporting Period”.Year-on-year changes in key financial data:
Unit: RMB
| H1 2021 | H1 2020 | Change (%) | Main reason for change | |
| Operating revenue | 2,220,313,650.94 | 2,286,744,080.79 | -2.91% | |
| Cost of sales | 1,811,241,743.20 | 1,683,752,331.27 | 7.57% | |
| Selling expense | 48,546,795.06 | 81,739,905.59 | -40.61% | Reclassification of transport expense and port charges from selling expense to cost of sales of principal operations |
| Administrative expense | 130,118,046.40 | 177,893,599.47 | -26.86% | |
| Finance costs | 24,222,929.28 | 25,207,309.68 | -3.91% | |
| Income tax expense | 22,209,233.14 | 27,067,833.69 | -17.95% | |
| R&D investments | 131,384,483.80 | 123,441,723.06 | 6.43% | |
| Net cash generated from/used in operating activities | 182,761,025.14 | 209,392,265.69 | -12.72% | |
| Net cash generated from/used in investing activities | 299,774,945.83 | -129,138,967.68 | 332.13% | Disinvestment in wealth management instruments upon maturity |
| Net cash generated from/used in financing activities | 155,808,685.68 | 1,059,376,072.72 | -85.29% | Decrease in borrowings obtained |
| Net increase in cash and cash equivalents | 635,115,592.71 | 1,140,089,624.57 | -44.29% | Decrease in net cash generated from financing activities |
Significant changes to the profit structure or sources of the Company in the Reporting Period:
□ Applicable √ Not applicable
No such changes in the Reporting Period.Breakdown of operating revenue:
Unit: RMB
| H1 2021 | H1 2020 | Change (%) | |||
| Operating revenue | As % of total operating revenue (%) | Operating revenue | As % of total operating revenue (%) | ||
| Total | 2,220,313,650.94 | 100% | 2,286,744,080.79 | 100% | -2.91% |
| By operating division | |||||
| Textile and apparel | 2,044,428,570.21 | 92.08% | 2,030,174,545.12 | 88.78% | 0.70% |
| Personal protective equipment (PPE) | 0.00% | 75,350,026.50 | 3.30% | -100.00% | |
| Cotton | 0.00% | 1,943,648.71 | 0.08% | -100.00% | |
| Electricity and steam | 112,014,559.74 | 5.04% | 107,378,501.63 | 4.70% | 4.32% |
| Others | 63,870,520.99 | 2.88% | 71,897,358.83 | 3.14% | -11.16% |
| By product category | |||||
| Fabric products | 1,644,786,813.50 | 74.08% | 1,612,566,391.94 | 70.52% | 2.00% |
| Shirts | 399,641,756.71 | 18.00% | 417,608,153.18 | 18.26% | -4.30% |
| Personal protective equipment (PPE) | 0.00% | 75,350,026.50 | 3.30% | -100.00% | |
| Cotton | 0.00% | 1,943,648.71 | 0.08% | -100.00% | |
| Electricity and steam | 112,014,559.74 | 5.04% | 107,378,501.63 | 4.70% | 4.32% |
| Others | 63,870,520.99 | 2.88% | 71,897,358.83 | 3.14% | -11.16% |
| By operating segment | |||||
| Hong Kong | 84,111,107.56 | 3.79% | 116,864,760.52 | 5.11% | -28.03% |
| Japan And South Korea | 125,781,396.82 | 5.67% | 200,810,815.94 | 8.78% | -37.36% |
| Southeast Asia | 494,884,594.42 | 22.29% | 598,894,637.52 | 26.19% | -17.37% |
| Europe and America | 227,821,017.11 | 10.26% | 299,568,719.70 | 13.10% | -23.95% |
| Others | 206,958,205.91 | 9.32% | 216,712,978.98 | 9.48% | -4.50% |
| Mainland China | 1,080,757,329.12 | 48.68% | 853,892,168.13 | 37.34% | 26.57% |
Operating division, product category or operating segment contributing over 10% of operating revenue or operating profit:
□ Applicable √ Not applicable
Any over 30% YoY movements in the data above and why:
√ Applicable □ Not applicable
Operating revenue from Japan And South Korea declined 37.36% year-on-year, primarily driven by a decrease in the sales of PPE inthe period.The Company is subject to the Guideline No. 17 of the Shenzhen Stock Exchange on Information Disclosure by Industry—for ListedCompanies Engaging in Textile and Apparel.
Unit: RMB
| Operating revenue | Cost of sales | Gross profit margin | YoY change in operating revenue (%) | YoY change in cost of sales (%) | YoY change in gross profit margin (%) | |
| By operating division | ||||||
| Textile and apparel | 2,044,428,570.21 | 1,654,539,637.21 | 19.07% | 0.70% | 11.91% | -8.10% |
| By product category | ||||||
| Fabric products | 1,644,786,813.50 | 1,340,924,104.11 | 18.47% | 2.00% | 14.16% | -8.69% |
| Shirts | 399,641,756.71 | 313,615,533.10 | 21.53% | -4.30% | 3.20% | -5.70% |
| By operating segment | ||||||
| Southeast Asia | 494,884,594.41 | 403,126,563.66 | 18.54% | -17.37% | -7.57% | -8.63% |
| Europe and America | 227,821,017.11 | 180,224,160.17 | 20.89% | -23.95% | -16.62% | -6.95% |
| Mainland China | 1,080,757,329.12 | 882,807,479.01 | 18.32% | 26.57% | 37.06% | -6.25% |
Core business data of the prior year restated according to the changed statistical caliber for the Reporting Period:
□ Applicable √ Not applicable
Physical stores of the Company:
□ Yes √ No
New physical stores:
□ Yes √ No
Indicate by tick mark whether the Company discloses its top five franchised stores.
□ Yes √ No
IV Other Information Required by Information Disclosure Guide for Companies Engaged inTextile and Garment Services
1. Capacity
The Company's own capacity
| Industry Classification | Item | H1 2021 | H1 2020 |
| Fabrics | Total capacity (fabrics) (10,000 meters) | 14,680.00 | 14,680.00 |
| Rate of capacity utilization | 66% | 73% | |
| Plants under construction | The Company's convertible bond fundraising projects: The | The Company's convertible bond fundraising projects: The |
| "Functional Fabric Intelligent Eco-park Project (Phase I)" with an annual capacity of 35 million meters of high-grade functional fabrics and the "Production Line Project of High-grade Printed and Dyed Fabrics" with an annual capacity of 25 million meters of high-grade printed and dyed fabrics were in progress. | "Functional Fabric Intelligent Eco-park Project (Phase I)" with an annual capacity of 35 million meters of high-grade functional fabrics and the "Production Line Project of High-grade Printed and Dyed Fabrics" with an annual capacity of 25 million meters of high-grade printed and dyed fabrics were in progress. | ||
| Garment | Total capacity (garment) (10,000 pieces) | 1,015.00 | 1,015.00 |
| Rate of capacity utilization | 60% | 87% | |
| Plants under construction |
Year-on-year change in the rate of capacity utilization above 10%
√ Yes □ No
Due to the year-on-year decrease in the output of masks and protective clothing in the apparel product line during the Reporting Period,the utilization rate of apparel production capacity decreased.Overseas capacity
√ Yes □ No
| Industry Classification | Item | Domestic | Overseas |
| Fabrics | Percentage of capacity | 85% | 15% |
| Capacity layout | Mainly in Shandong Province | Mainly in T?y Ninh Province, Vietnam | |
| Rate of capacity utilization | 64% | 82% | |
| Garment | Percentage of capacity | 47% | 53% |
| Capacity layout | Mainly in Shandong Province | Mainly in T?nh An Giang, Vietnam; Svay Rieng Province, Cambodia; and Thilawa Special Economic Zone, Yangon, Myanmar |
| Rate of capacity utilization | 71% | 51% |
2. Sales model and channels
Product sales channels and operation methodsa. Sales modelThe Company adopted the order-based sales model. With the self-owned trademark "Luthai" for its fabric sales, it provided customerswith development and design plans based on customer needs, fabrics and patterns leading the market, fashion and technology, functionsand environmental protection. In addition, it engaged in brand operation of spot fabric on the new retail e-commerce platform. Shirtswere 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-endcustomized shirts and customized business wear to meet the market demand of the high-end service industry.b. Sales channelsDirect sales: The headquarters of the Company carried out direct investments and operation, and operated and managed a brand at theheadquarters 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 transactionswith customers on the Internet and delivered goods to customers by express delivery services.
Unit: RMB
| Sales channels | Operating revenue | Cost of sales | Gross profit margin | YoY change in operating revenue | YoY change in cost of sales | YoY change in gross profit margin |
| Online sales | 2,975,252.11 | 1,014,489.67 | 65.90% | 1,025,500.20 | 393,449.22 | -2.25% |
| Direct sales | 1,648,572,884.53 | 1,342,517,967.29 | 18.56% | 32,706,583.68 | 166,446,819.59 | -8.65% |
| OEM/ODM | 392,880,433.57 | 311,007,180.25 | 20.84% | -19,478,058.79 | 9,238,211.31 | -6.32% |
| Total | 2,044,428,570.21 | 1,654,539,637.21 | 19.07% | 14,254,025.09 | 176,078,480.12 | -8.10% |
Reason for change
3. Selling expense and breakdown thereof
Unit: RMB
| Item | H1 2021 | H1 2020 | YoY change | Note |
| Salary | 24,817,866.24 | 24,858,302.63 | -0.16% | |
| Sales service fee | 5,389,984.38 | 4,662,986.11 | 15.59% |
| Publicity expense | 7,483,834.48 | 8,117,611.43 | -7.81% | |
| Transportation fee | 0.00 | 18,556,351.95 | -100.00% | According to the new accounting standards, the transportation fee is adjusted from the selling expense to the main business cost |
| Port surcharge | 0.00 | 5,552,752.80 | -100.00% | According to the new accounting standards, the port surcharge is adjusted from the selling expense to the main business cost |
| Rental fee | 536,277.43 | 2,003,837.09 | -73.24% | Mainly due to the decrease in rental fees for overseas offices. |
| Others | 5,745,728.96 | 9,185,513.60 | -37.45% | |
| Total | 43,973,691.49 | 72,937,355.61 | -39.71% |
4. Franchise and distribution
Franchisees and distributors recorded more than 30% of sales revenue
□ Yes √ No
5. Online sales
Online sales recorded more than 30% of sales revenue
□ Yes √ No
Self-developed sales platforms
√ Yes □ No
| Start of operation | 30 March 2009 |
| Number of registered users | 200,000 |
| Average number of active monthly users (AMU) | 20,000 |
| Return rate of main brands | 5.00% |
| Return rate of main types | 5.00% |
Cooperation with third-party sales platforms
√ Yes □ No
Online sales channels opened or closed by the Company
√ Applicable □Not applicable
| Channel | Main brand | Main product type | Channel status | Reason for closure | Opening time | Operation during the opening of the store |
| biyao.com | NARCISU | Shirts | Normal | 22 January 2020 |
6. Agency operation model
Agency operation model involved
□ Yes √ No
7. Inventory
Inventory
| Main products | Days of turnover of inventories | Quantity of inventory | Inventory age | Year-over-year change in inventory balance | Reason |
| Fabrics (10,000 meters) | 113 | 3,643.61 | Within 1 year | -21.93% | |
| Fabrics (10,000 meters) | 1,437.25 | Over 1 year | 81.95% | Delivery of some fabrics delayed due to COVID-19 | |
| Shirts (10,000 pieces) | 36 | 82.46 | Within 1 year | -28.00% | |
| Shirts (10,000 pieces) | 15.68 | Over 1 year | 227.50% | Delivery of some shirts delayed |
Reserves for falling prices of inventory
| Item | 30 June 2021 | ||
| Carrying amount | Falling price reserves or provision for impairment on contract performance cost | Carrying value | |
| Raw materials | 764,584,360.28 | 2,547,151.31 | 762,037,208.97 |
| Goods in process | 455,835,628.95 | 3,599,739.14 | 452,235,889.81 |
| Products on hand | 960,560,597.77 | 107,230,734.35 | 853,329,863.42 |
| Commissioned products | 11,882,281.00 | 11,882,281.00 | |
| Total | 2,192,862,868.00 | 113,377,624.80 | 2,079,485,243.20 |
8. Brand building
Production and sales of brand clothing, apparel and home textile products
√ Yes □ No
Self-owned brands
| Brand name | Trademark name | Main product types | Characteristics | Target consumer group | Price zone of main products | Main sales areas | City levels |
| LTGRFF | LTGRFF | Shirts and suits | Classic business attire | Business people | RMB500-3000 | East China, South China and Southwest China | Provincial capital cities and other prefecture-level cities |
Trademark ownership disputes
□ Applicable √ Not applicable
9. Others
Engaged in business related to apparel design
□ Yes √ No
Whether the Company held meetings for the placement of orders
□ Yes √ No
V Analysis of Non-Core Businesses
√ Applicable □ Not applicable
Unit: RMB
| Amount | As % of total profit | Source/Reason | Recurrent or not | |
| Return on investment | 29,181,508.22 | 17.62% | Investment income from the disposal of held-for-trading financial assets | Not |
| Gain/loss on changes in fair value | 8,034,224.66 | 4.85% | Gain/loss on changes in fair value of held-for-trading financial assets | Not |
| Asset impairments | -7,035,233.41 | -4.25% | Inventory valuation allowances | Not |
| Non-operating income | 1,184,008.01 | 0.71% | Income of non-operating compensation, etc | Not |
| Non-operating expense | 2,589,928.93 | 1.56% | Non-operating donations and compensations, etc. | Not |
VI Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB
| 30 June 2021 | 31 December 2020 | Change in percentage (%) | Reason for any significant change | |||
| Amount | As % of total assets | Amount | As % of total assets | |||
| Monetary assets | 2,039,571,421.60 | 16.45% | 1,400,478,034.81 | 11.55% | 4.90% | |
| Accounts receivable | 467,077,027.00 | 3.77% | 522,425,219.87 | 4.31% | -0.54% | |
| Inventories | 2,079,485,243.20 | 16.77% | 1,988,968,681.64 | 16.40% | 0.37% | |
| Investment property | 21,812,985.44 | 0.18% | 22,263,668.85 | 0.18% | 0.00% | |
| Long-term equity investments | 128,409,211.89 | 1.04% | 138,079,577.25 | 1.14% | -0.10% | |
| Fixed assets | 5,643,953,088.23 | 45.51% | 5,661,592,991.66 | 46.67% | -1.16% | |
| Construction in progress | 293,251,051.85 | 2.36% | 356,273,197.49 | 2.94% | -0.58% | |
| Right-of-use assets | 161,742,107.43 | 1.30% | 1.30% | |||
| Short-term borrowings | 991,568,008.40 | 8.00% | 930,871,008.19 | 7.67% | 0.33% | |
| Contract liabilities | 146,761,705.56 | 1.18% | 141,339,705.62 | 1.17% | 0.01% | |
| Long-term borrowings | 659,734,579.14 | 5.32% | 495,520,342.78 | 4.09% | 1.23% | |
| Lease liabilities | 32,226,761.06 | 0.26% | 0.26% | |||
2. Major Assets Overseas
√ Applicable □ Not applicable
| Assets | Cause of forma | Asset scale | Location | Operation model | Control measures to ensure asset safety | Earning position | As % of net assets | Risk of material impairment |
| tion | or not | |||||||
| Lu Thai (Hong Kong) Textile Co., Ltd. | Set-up | 214,035,015.72 | Hong Kong | Sales-oriented | Key management personnel assigned by the Company as the parent | 2,326,681.18 | 2.59% | Not |
| Lu Thai (America) Textile Co., Ltd. | Set-up | 5,982,889.89 | New York | Sales-oriented | Key management personnel assigned by the Company as the parent | -722,086.47 | 0.07% | Not |
| Lu Thai (Cambodia) Textile Co., Ltd. | Set-up | 143,785,165.56 | Svay Rieng | Production-oriented | Key management personnel assigned by the Company as the parent | -3,002,820.18 | 1.74% | Not |
| Vanguard Apparel Co., Ltd. | Set-up | 73,740,844.10 | Yangon | Production-oriented | Key management personnel assigned by the Company as the parent | 367,211.32 | 0.89% | Not |
| Continental Textile Co., Ltd. | Set-up | 2,510,580,347.92 | T?y Ninh | Production-oriented | Key management personnel assigned by the Company as the parent | 51,489,617.89 | 30.39% | Not |
| Lu An Garments Co., Ltd. | Set-up | 198,150,056.51 | T?nh An Giang, Vietnam | Production-oriented | Key management personnel assigned by the Company as the parent | 1,680,703.60 | 2.40% | Not |
| Tianping International Investment Co., Ltd. | Set-up | 230,074,897.57 | Singapore | Investment-oriented | Key management personnel assigned by the Company as the parent | 743,206.65 | 2.78% | Not |
3. Assets and Liabilities at Fair Value
√ Applicable □ Not applicable
Unit: RMB
| Item | Beginning amount | Gain/loss on fair-value changes in the Reporting Period | Cumulative fair-value changes charged to equity | Impairment allowance for the Reportin | Purchased in the Reporting Period | Sold in the Reporting Period | Other change | Ending amount |
| g Period | ||||||||
| Financial assets | ||||||||
| 1. Held-for-trading financial assets (excluding derivative financial assets) | 408,730,337.23 | -1,806,575.34 | 299,214,978.03 | 451,652,752.65 | 254,485,987.27 | |||
| 2. Derivative financial assets | 16,641,500.00 | 9,840,800.00 | 26,482,300.00 | |||||
| Subtotal of financial assets | 425,371,837.23 | 8,034,224.66 | 299,214,978.03 | 451,652,752.65 | 280,968,287.27 | |||
| Others | 55,150,926.34 | -332,259.77 | -25,235,757.69 | 29,582,908.88 | ||||
| Total of the above | 480,522,763.57 | 8,034,224.66 | -332,259.77 | 299,214,978.03 | 451,652,752.65 | -25,235,757.69 | 310,551,196.15 | |
| Financial liabilities | 0.00 | 0.00 | ||||||
Content of other change:
Changes in receivables financing.Significant changes to the measurement attributes of the major assets in the Reporting Period:
□ Yes √ No
4. Restricted Asset Rights as at the Period-End
For details, see Part X. VII. 61. Assets with restricted ownership and using right in this Report.VII Investments Made
1. Total Investment Amount
□ Applicable √ Not applicable
2. Major Equity Investments Made in the Reporting Period
□ Applicable √ Not applicable
3. Major Non-Equity Investments Ongoing in the Reporting Period
□ Applicable √ Not applicable
4. Financial Investments
(1) Securities Investments
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Investments in Derivative Financial Instruments
√ Applicable □ Not applicable
Unit: RMB'0,000
| Operator | Relationship with the Company | Related-party transaction | Type of derivative | Initial investment amount | Starting date | Ending date | Beginning investment amount | Purchased in the Reporting Period | Sold in the Reporting Period | Impairment provision (if any) | Ending investment amount | Proportion of closing investment amount in the Company’s ending net assets | Actual gain/loss in the Reporting Period |
| Commercial bank | Non-related | No | Forward exchange settlement | 166,697.7 | 26 November 2020 | 30 December 2021 | 129,805.79 | 36,891.91 | 60,267 | 106,430.7 | 12.88% | 2,095.02 | |
| Commercial bank | Non-related | No | Foreign exchange option | 118,238.46 | 22 October 2020 | 27 January 2022 | 62,150 | 56,088.46 | 18,356.71 | 99,881.75 | 12.09% | 195.16 | |
| Commercial | Non-r | No | Forward exchang | 13,081.6 | 14 January | 1 April | 13,081.6 | 13,081.6 | 17.82 |
| bank | elated | e transactions | 2021 | 2021 | |||||||||
| Total | 298,017.76 | -- | -- | 191,955.79 | 106,061.97 | 91,705.31 | 206,312.45 | 24.97% | 2,308 | ||||
| Capital source for derivative investment | The Company’s own money | ||||||||||||
| Lawsuit (if applicable) | N/A | ||||||||||||
| Disclosure date of board of directors announcement on approval of derivative investment (if any) | 30 April 2020 | ||||||||||||
| Disclosure date of general meeting of shareholders announcement on approval of derivative investment (if any) | |||||||||||||
| Analysis on risks and control measures of derivative products held in the Reporting Period (including but not limited to market risk, liquidity risk, credit risk, operation risk, law risk, etc.) | The Company conducted derivatives products transaction in order for hedging. And the forward settlement hedging was operated by installments, with the relevant amount not more than the planned derivatives products transactions. And all derivatives products transaction was zero-deposit. Meanwhile, the Company had a complete risk control system for sufficient analysis and prevention of possible risks such as market risk, liquidity risk and credit risk, operation risk and risk of laws and regulation. 1. Market risk: when the international and domestic economic situations change, the corresponding changes in exchange rates and interest rates may have an adverse impact on the financial derivatives transactions of the Company. Precautionary measures to be taken include: the Company chooses risk-controlled financial derivative tools with simple structure and good liquidity to carry out the hedging business, strictly controls the scale of financial derivatives trading by staged operations, and adjusts the strategy according to market changes in a timely manner. 2. Liquidity risk and credit risk: a credit risk arising from failure of the contractually due Company or counterparty in performing the contract due to liquidity or factors other than liquidity. Precautionary measures to be taken include: the Company determines the upper limit of derivatives transaction amounts according to production and operation scale as well as foreign exchange income, and conducts operations by stage according to the budget of future collections and disbursement. The derivative trades are free of guarantee deposit and can still be guaranteed in performance after the contract expires by means of extension and balance settlement etc. to prevent the Company from credit damages due to lack of liquidity. The Company selects financial institutions with strong capability and good reputation as a counterparty and signs standard derivative trading contracts to strictly control credit risk of the counterparty. | ||||||||||||
| 3. Operation risk: The derivatives had high specialty and complexity, so internal operation procedures, staffs and external events would make the Company to undertake risks during the transaction. Risk control measures: The Company promulgated strict authorization and approval system and perfect regulatory mechanism, fixed the operation procedures and approval procedures system to conduct derivative products transaction, implemented strict authorization and post checks and balances system, meanwhile, it improved the overall quality of relevant personnel through strengthening the professional ethics education and business training for them. Besides, it established the System of Reporting the Abnormal Situation Timely so as to ensure to lower the operation risks to the maximum. 4. Risk of laws and regulation: The Company conducted derivatives products transaction in strict accordance with relevant laws and rules. If there were no standard operation procedures and strict approval procedures, it was easy to cause compliant and regulatory risks existing in the validity and feasibility of contract, commitments and other legal documents signed. Risk control measures: The Company carefully studied and mastered laws, regulations and policies relevant to derivative products transaction, formulated internal control rules for the forward settlement hedging business, standardized the operation procedures. And strengthened the compliant examination on derivative products transaction business. The Company conducted derivative transaction business according to the relevant approval procedure, which was in line with relevant laws, regulations, the Company’s Articles of Association, the Management Rules for Securities Investments and Derivative Transaction of Lu Thai Textile Co., Ltd., the Proposal on Plan for Derivative Transaction of Lu Thai Textile Co., Ltd. approved at the 13th Meeting of the 9th Board of Directors, and performed relevant information disclosure responsibilities. | |
| Changes of market prices or fair values in the Reporting Period of the invested derivatives. And the analysis on the fair value of the derivatives should include the specific use methods and the relevant assumptions and parameters. | 1. As of 30 June 2021, the Company held 51 undue financial derivatives contracts, totaling USD323.5 million, among which 27 were forward forex settlement contracts, totaling USD160 million, and 24 were forex option portfolio contracts, totaling USD163.5 million. 2. During H1 2021, the total amount of all due financial derivatives of the Company was equivalent to USD138 million, which were all delivered, generating gains of RMB23.08 million, among which, gains of RMB20.9502 million were from the delivery of forward forex settlement contracts of USD90 million; gains of RMB1.9516 million were from the delivery of forex option contracts of USD28 million; gains of RMB0.1782 million were from the delivery of forward forex transactions of USD20 million. |
| Whether significant changes occurred to the Company’s accounting policy and specific accounting principles of derivatives in the | No significant changes |
| Reporting Period compared to the previous Reporting Period | |
| Specific opinion from independent directors on the Company’s derivatives investment and risk control | The Company’s independent directors Zhou Zhiji, Pan Ailing, Wang Xinyu and Qu Dongmei expressed the following professional opinions on the Company’s engagement in the transaction of derivatives: In our opinions, the Company engaged in the transaction of derivatives strictly in accordance with related laws and regulations, the Articles of Incorporation and the Management Policy of Lu Thai for the Transaction of Derivatives during the Reporting Period, which complied with the derivative transaction plan considered and approved by the Board of Directors, with the operation process complying with laws and regulations. While ensuring its normal production and operations, the Company may use the transaction of derivatives dominated by forward settlement and sale of foreign exchange as an effective instrument to avert exchange rate risks. By strengthening internal control and implementing measures to prevent losses and risks, the risks of derivative transactions are relatively controllable and thus, such transactions will help to improve the Company’s ability to defense against exchange rate fluctuations, and will not harm the rights and interests of the Company and its shareholders. |
VIII Sale of Major Assets and Equity Interests
1. Sale of Major Assets
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Sale of Major Equity Interests
□ Applicable √ Not applicable
IX Major Subsidiaries
√ Applicable □ Not applicable
Major fully/majority-owned subsidiaries and those minority-owned subsidiaries with an over 10% effect on the Company’s net profit:
Unit: RMB
| Name | Relationship with the Company | Principal activity | Registered capital | Total assets | Net assets | Operating revenue | Operating profit | Net profit |
| Lufeng Weaving & Dyeing Co., Ltd. | Subsidiary | Fabric | 706,160,000 | 1,768,740,074.66 | 1,231,995,346.25 | 528,023,041.71 | -28,228,901.78 | -24,919,021.98 |
| Shandong Lulian New Materials Co., Ltd. | Subsidiary | Fabric | 400,000,000 | 1,015,219,351.90 | 344,752,715.98 | 14,060,457.18 | -30,800,968.43 | -23,633,974.03 |
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 printingand dyeing products and the products of clothing and garments, and it were authenticated to be high-tech enterprise in October 2014.During the Reporting Period, due to the impact of the COVID-19 epidemic, Lufeng Weaving & Dyeing’s export business and highvalue-added orders were reduced, which had a greater impact on performance. Lufeng Weaving & Dyeing achieved operating revenueof RMB 528 million, down 12.98% year on-year and net profit of RMB -24.919 million, down 181.08% year-on-year.Shandong Lulian New Materials Co., Ltd. (hereinafter referred to as "Lulian New Materials") is the holding subsidiary of the Company.Registration place: Zibo, Shandong; registered capital: RMB 400 million. It was established in April 2019 and mainly manufacturingand selling functional fabrics. During the Reporting Period, it is still under construction, and some trial products are offline. Lulian NewMaterials achieved operating revenue of RMB 14,060,500, up 1320.35% year on-year due to the small revenue base of the sameperiod and net profit of RMB-23.634 million, down 200.76% year-on-year.X Structured Bodies Controlled by the Company
□ Applicable √ Not applicable
XI Risks Facing the Company and Countermeasures
1. Impact of macro-environment: under the increasing uncertainty risk of the international trade, political risk in countries ofinvestments and the impact of the COVID-19 epidemic, the Company will face more challenges. In addition, the economicdevelopment of China should be transformed and upgrade, therefore, the Company will continue to strictly execute coronaviruscontrol measures, guarantee production and safety and further utilize various resources to develop domestic and overseas markets, soas 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 bymarket supply and demand, climate, policy, exchange rate, quota and other factors, therefore, based on the production orders andimport quota, the Company seriously considers the information of global raw cotton market, properly works out procurement strategyand actively reduces cost fluctuation arising from price change of raw cotton.
3. Change of exchange rate: the Company has a large ratio in import and export business and exchange rate fluctuation will place aremarkable impact on its performance. In order to reduce adverse influence of exchange rate fluctuation, the Company adopted thefollowing measures: firstly, the Company appropriately conducted foreign exchange hedging, using forward FX sales and purchase,forward foreign exchange trading and option portfolios to avoid some risks Secondly, the Company made reasonable arrangement on
settlement day and currency structure and conclusion of agreements on fixed foreign exchange rate to avoid exchange rate-relatedrisks. Thirdly, the Company adjusted the Renminbi and foreign-currency liabilities structure to control financial costs. Fourthly,according to the fluctuation trend of exchange rates, the Company properly adjusted imports of raw and auxiliary materials topartially offset the influence of exchange rate fluctuations on the Company.
Part IV Corporate GovernanceI Annual and Extraordinary General Meeting Convened during the Reporting Period
1. General Meetings Convened during the Reporting Period
| Meeting | Type | Investor participation ratio | Convened date | Disclosure date | Index to disclosed information |
| The 2020 Annual General Meeting | Annual General Meeting | 34.24% | 20 April 2021 | 21 April 2021 | Announcement of Resolution (No. 2021-029) published on Securities Times, China Securities Journal, Shanghai Securities News, and Hong Kong Ta Kung Pao and http://www.cninfo.co on 21 April 2021 |
| The 1st Extraordinary General Meeting of 2021 | Extraordinary General Meeting | 34.50% | 13 May 2021 | 14 May 2021 | Announcement of Resolution (No. 2021-035) published on Securities Times, China Securities Journal, Shanghai Securities News, and Hong Kong Ta Kung Pao and http://www.cninfo.co on 14 May 2021 |
2. Extraordinary General Meeting Convened at Request of Preference Shareholders with Resumed VotingRights
□ Applicable √ Not applicable
II Change of Directors, Supervisors and Senior Management
√ Applicable □ Not applicable
| Name | Office title | Type of change | Date of change | Reason for change |
| Bi Xiuli | Independent director | Left | 25 February 2021 | Left for job arrangement |
| Wang Fangshui | Director | Left | 26 February 2021 | Retired |
| Wang Changzhao | Non-director senior executive | Left | 28 June 2021 | Left for personal reason |
III Interim Dividend Plan
□ Applicable √ Not applicable
The Company has no interim dividend plan, either in the form of cash or stock.
IV Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures forEmployees
√Applicable □ Not applicable
| No. | Deliberation time | Relevant meeting | Overview of execution | Disclosure index |
| 1 | 12 April 2021 | The 22nd Meeting of the 9th Board of Directors | 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. The Company's independent directors expressed their independent opinions on this share incentive scheme. | Announcement of Resolution (No. 2021-024) published on http://www.cninfo.co on 13 April 2021 and relevant documents |
| 2 | 12 April 2021 | The 13th Meeting of the 9th Supervisory Committee | 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 the Verification of the Company's Staff List of 2021 Restricted Share Incentive Scheme. | Announcement of Resolution (No. 2021-025) published on http://www.cninfo.co on 13 April 2021 |
| 3 | 16 April 2021 to 26 April 2021 | - | The Company internally announced the names and 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. | - |
| 4 | 8 May 2021 | - | The Ninth Board of Supervisors issued the Explanation of the Board of Supervisors on the Review and Publicity of the Staff List of 2021 Restricted Share Incentive Scheme on the basis of the list review and publicity. | Relevant documents published on http://www.cninfo.co on 8 May 2021 |
| 5 | 13 May 2021 | The First Extraordinary General Meeting of 2021 | 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 | Relevant announcements (No. 2021-035, 2021-036) published on |
| 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. | http://www.cninfo.co on 14 May 2021 | |||
| 6 | 17 May 2021 | The 24th Meeting of the 9th Board of Directors, 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. Except for 5 incentive staff who had been no longer qualified for the incentive due to resignation, and 47 incentive targets who 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. | Relevant announcements (No. 2021-037, 2021-038, 2021-039, 2021-040) published on http://www.cninfo.co on 18 May 2021 |
| 7 | 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 first-granted restricted stocks was completed. | Relevant announcements published on http://www.cninfo.co on 4 June 2021 |
Part V Environmental and Social Responsibility
I Major Environmental IssuesIndicate by tick mark whether the Company or any of its subsidiaries is a heavily polluting business identified by the environmentalprotection authorities of China.
√ Yes □ No
| Name of polluter | Name of major pollutants | Way of discharge | Number of discharge outlets | Distribution of discharge outlets | Discharge concentration | Discharge standards implemented | Total discharge | Approved total discharge | Excessive discharge |
| Lu Thai Textile Co., Ltd | COD and ammonia nitrogen | Continuous discharge | 2 | Huangjiapu Industrial Park; East Zone Industrial Park | COD≤120mg/L; ammonia nitrogen≤8mg/L | Emission standard of water pollutants in textile dyeing and finishing industry GB 4287-2012 COD: 200mg/L, ammonia nitrogen: 20mg/L | COD is 154.885t；ammonia nitrogen is 3.885t | COD is1495.08t; ammonia nitrogen is 149.51t | No |
| LuFeng Company Limited | COD and ammonia nitrogen | Continuous discharge | 1 | Lufeng chief discharge outlet | COD≤120mg/L; ammonia nitrogen≤5mg/L | Emission standard of water pollutants in textile dyeing and finishing industry GB 4287-2012 COD: 200mg/L, ammonia nitrogen: 20mg/L | COD is 100.983t；ammonia nitrogen is 2.576t | COD is 575.985t; ammonia nitrogen is 57.6t | No |
| Zibo Xinsheng Thermal Power Co., Ltd. | SO2, NQx, and smoke | Continuous discharge | 4 | Production plant of Xinsheng Thermal Power | SO2：≤35mg/m3, NQx：≤50mg/m3, PM: ≤5mg/m3 | Emission standard of air pollutants of Thermal Power Plant in Shandong Province DB37/664-2019 | SO2 is 17.304t、NQx is 76.847t、PM is 2.674t. | SO2 is 236.13t/a、NQx is 674.63t/a、PM is 67.47t/a. | No |
| Continental Textile Co., | Sewage | Discharge into the | 1 | Beside sewage | COD≤50mg/L; ammonia | QCVN40:2011/BTNMT | Sewage discharge | / | No |
| Ltd. | ecological pond in the park district after treatment | plant | nitrogen≤1.0mg/L | is 693,900t | |||||
| Continental Textile Co., Ltd. | Exhaust gas | Direct discharge after treatment | 4 | Beside boiler room | / | QCVN19:2009/BTNMT | Gas emission is 147 million m3 | / | No |
Construction of pollution prevention equipment and operation conditionLu 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 forenvironmental protection in project constructions. The companies are equipped with complete facilities for waste gas and waste watertreatment. Lu Thai Textile Co., Ltd. and its majority-owned subsidiary Lufeng Weaving & Dyeing Co., Ltd. carried out the waste watertreatment system transformation project to improve the treated water quality by systematic and comprehensive reform, furtherimproving the river water quality and local ecological environment. Support teams were set up to be responsible for daily operationmaintenance and inspection to guarantee the normal operation of facilities. Both the exhaust emission and waste water discharge meetthe emission standards.The Company and Lufeng Weaving & Dyeing collected and treated VOCs waste gas, and built online monitoring facilities. Aftertreatment, the content of VOCs decreased to 40 mg/m
, which meets the requirement in Volatile Organic Emission Standard ofShandong Province: Part 7 - Other Industries DB37/2801.7-2019. The Company and its majority-owned subsidiary Lufeng Weaving& Dyeing uploaded the emission data of VOCs to the government environmental monitoring system so as to monitor the emission dataof VOCs comprehensively. In terms of energy saving, the Company won the Ministry of Industry and Information Technology's 2020Water Efficiency Leader in Key Water-using Enterprises and China National Textile and Apparel Council's 2020 Textile IndustryWater-saving Enterprise Award, making outstanding contributions to the company's energy-saving development.The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. (hereinafter referred to as “Xinsheng Thermal Power”) enforcesthe “Three Simultaneous” management system for environmental protection in extension project construction in accordance with thegovernment 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 workswell.The waste water treatment project of the wholly-owned subsidiary Continental Textile Co., Ltd. (hereinafter referred to as“Continental Textile”) is designed to treat 6,500 tons of sewage water daily, among which, sewage plan I is designed to treat 3,000tons of sewage water daily, and the sewage plant II is designed to treat 3,500 tons of sewage water daily. Continental Textile adopts acomprehensive treatment process of “pre-materialization + A2O biochemistry + post-materialization + ozone oxidation+ active sandfiltration” for waste water treatment, and the treated water quality is better than the QCVN 40: 2011/BTNMT A-level emissionstandards stipulated by the Vietnam government. The treated waste water is all discharged to the ecological pond in the park. Treatedwater quality analysis for H1 2021: The COD (mean value) was 45.9 mg/L, the chrominance (mean value) was 29, the ammonia
nitrogen (mean value) was 0.17 mg/L, and the total phosphorus (mean value) was 0.2 mg/L. All the parameters met the A-levelemission standards set in the “Regulations on Parameters of Industrial Drainage in Vietnam” (QCVN40: 2011/BTNMT). Wastewater discharge in the whole year met the standards without violation. The total amount of waste water discharged in H1 2021 was693,900 tons, among which, the chemical oxygen demand (COD) was 31.84 tons, ammonia nitrogen (NH3-N) was 0.11 tons andtotal phosphorus (TP) was 0.12 ton. Continental Textile is equipped with multi-pipe and water film dust-separation devices toprocess the exhaust gas discharged from boilers. In H1 2021, all the equipment was in normal operation, and the exhaust gasinspection parameters were lower than the QCVN19: 2009/BTNMT emission standards set by Vietnam government. In H1 2021, thetotal amount of sulfur dioxide emissions was 26.32 tons, and the total amount of nitrogen oxides emissions was 24.97 tons.Project Environmental Impact Assessment and Other Administrative Permission for Environmental ProtectionIn July 2021, the “Lu Thai Textile Co., Ltd. Intelligent Technology Upgrading Project of 25 million-meter High-grade FabricProduction Line”, the “Engineering Technology Research Institute Project”, the “Technology Upgrading Project of High-endPrinting and Dyeing Fabric Finishing Production Process” and the “Technology Upgrading Project of Regenerated Fibre ProductionLine and Colored Spun Yarn Production Line” has completed the acceptance check. The “Lufeng Weaving and Dyeing’s High-endPrinting and Dyeing Fabric Production Line Project” of the holding subsidiary Lufeng Weaving and Dyeing Co., Ltd. has beenapproved and is under construction. Zibo Xinsheng Thermal Power Co., Ltd. obtained the “Response of the Environmental ImpactReport of the Shandong Provincial Department of Environmental Protection on the Extension Project of Zibo Xinsheng ThermalPower” (Luhuanjian [2015] No. 241), the phase II of the expansion project has been completed. Continental Textile’s Spinning PhaseI and Dyeing Park Phase I environmental protection projects have been completed and accepted for confirmation. The spinning phaseII and yarn dyeing park Phase II environmental assessment reports have been approved.Emergency plan for environmental incidentsLu Thai Textile Co., Ltd. and its majority-owned subsidiary Lufeng Weaving & Dyeing Co., Ltd. prepared the Emergency Plan forEnvironmental Incidents, which was filed with Zibo Environmental Protection Bureau Xichuan Branch. The wholly-ownedsubsidiary Zibo Xinsheng Thermal Power Co., Ltd. has formulated the “Emergency Plan for Environmental Incidents” and filed itwith the environmental protection management department. The identification and risk assessment of environmental risk sources,prevention and early warning mechanisms, emergency protection and supervision and management were included in the plan. Thewholly-owned subsidiary Continental Textile Co., Ltd. has prepared emergency plans for different environmental incidents to reducetheir impacts.Environmental self-monitoring programLu Thai Textile Co., Ltd. and its majority-owned subsidiary Lufeng Weaving & Dyeing Co., Ltd. observed the requirements of thecompetent environment authorities to establish the following year’s environmental self-test plans in every February. In addition, theyinvited a qualified testing institution quarterly to conduct tests on sewage and waste gas according to the self-monitoring plan, dulydisclosed the monitoring data to the Shandong Pollution Source Self-monitoring Sharing System, and submitted the test reports to thecompetent environment authorities. The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. has implemented onlinereal-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 samplingand water quality automatic online monitoring devices, real-time automatic sampling and online monitoring of sewage effluent waterquality; the company invites external qualified testing institutions to conduct sewage, sludge and exhaust gas quarterly Test andsubmit the test report to the environmental supervision department.
Administrative penalties imposed for environmental issues during the Reporting Period
| Name | Reason | Case | Result | Influence on production and operation | Rectification measures |
| N/A | N/A | N/A | N/A | N/A | N/A |
Other environment information that should be disclosedNoOther related environment protection informationNoThe Company shall be subject to the disclosure requirements of Industry Information Disclosure Directive No. 17 of Shenzhen StockExchange – Listed Companies Engaged in Business Related to Textiles and ApparelsEnvironmental protection conformity situation of the Company in the report periodThe 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 forwaste gas and waste water treatment, wastewater is treated with hydrolysis and acidification technique + AO treatment process andfinally discharged according to GB4287-2012 the Discharge Standard of Water Pollutants for Dyeing and Finishing of TextileIndustry; the boiler exhaust is treated with low nitrogen combustion technology and meets DB37/2374-2018 the Emission Standardsof Air Pollutants for Boilers in Shandong Province. The spray + electrostatic technology is adopted in the VOCs waste gas treatment,which meets the requirement in Volatile Organic Emission Standard of Shandong Province: Part 7 - Other IndustriesDB37/2801.7-2019. Temporary storage room of common solid waste and hazardous waste is constructed in accordance withenvironmental protection requirements, and the Company signs hazardous waste disposal contracts with third party qualifiedcompanies every year to dispose the hazardous waste of the Company on basis of conformity. The Company strictly observesenvironmental protection laws and regulations, and its projects have complete formalities and its environmental protection facilitiesare in normal operation; in 2021, the environmental protection departments of governments at various levels checked the Companymore than 20 times but nonconformity was found.Zibo Xinsheng Thermal Power utilizes neutralization basin to teat acidic and alkali wastewater, and reduces pH value to 6-9 afterprecipitation and neutralization. The treated wastewater and reverse osmosis water are used as desulfurizing water, coal feedingsystem rinsing water, road sprinkling water and coal yard water. Desulfurizing wastewater is treated with flocculation sedimentationpurification process and the design output of wastewater treatment system is 10m3/h, and the water quality after treatment will meetthe requirements of Discharge Standard of Wastewater from Limestone-gypsum Flue Gas Desulfurization System In Fossil FuelPower Plant DL/T997-2006, and also meet the wastewater recycling requirement of the plant. The treated wastewater is used fordamping dry dust. The stove ash generating from coal burning and gypsum generating from ultralow emission in Zibo XinshengThermal Power. are general solid waste, the Company signs boiler ash and desulfurized gypsum supply and distribution agreementswith 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 beenproperly 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 istreated with heat exchange and temperature reduction, dust separation, spraying, water film dust collection, absorption, chemicalreaction and etc. Now the equipment has been installed and properly operated for six years. Exhaust discharge meets the dischargestandard of Vietnam, “State Technical Specifications on Discharge of Industrial Inorganic Substances and Dust” (Circular36/2015/TT-BTNMT). Hazardous waste and industrial waste warehouses are built up for separated storage of hazardous waste andindustrial waste in accordance with the Vietnamese regulations, Regulations on Administration of Hazardous Waste (Circular36/2015/TT-BTNMT) and Decision on Administration of Waste (Decree 38/2015/N?-CP), and waste transportation and disposalcontracts are signed with local qualified treatment organizations, and relevant treatment records of waste are reported theenvironmental protection authority of Vietnam quarterly.II Social Responsibility
During the Reporting Period, the company hired 7 people with poverty registration, and provided assistance to the impoverished anddisabled people with an expenditure of RMB95,000.
Part VI Significant EventsI Commitments of the Company’s De Facto Controller, Shareholders, Related Parties andAcquirers, as well as the Company Itself and Other Entities Fulfilled in the Reporting Periodor Ongoing at the Period-End
√ Applicable □ Not applicable
| Commitment | Promisor | Type of commitment | Details of commitment | Date of commitment making | Term of commitment | Fulfillment |
| Commitments made in share reform | ||||||
| Commitments made in acquisition documents or shareholding alteration documents | ||||||
| Commitments made in time of asset restructuring | ||||||
| Commitments made in time of IPO or refinancing | Controlling shareholder, actual controller | Dilution of at sight returns on public offering A-share convertible corporate bonds | 1. Not intervene the Company’s operation and management beyond the authority and not occupy the Company’s interests. 2. From the issuance date of this commitment to the completion of the implementation of the Company's public offering of A-share convertible corporate bonds, if the CSRC makes other new regulatory provisions on remedial measures for returns and the commitment, and the above commitment fails to meet the requirements of the CSRC, the company / I promise to issue supplementary commitment then in accordance with the latest regulations of CSRC. 3. Commitment is made to fulfill | 23 May 2019 | From 23 May 2019 to 8 April 2026 | On-going |
| the Company's relevant remedial measures for returns and any commitment made herein by the company / me. If the company / I violate(s) such commitment and cause(s) losses to the Company or investors, the company / I will bear the compensation responsibility to the Company or investors in accordance with the law. | |||||
| Directors and senior management of the Company | Dilution of at sight returns on public offering A-share convertible corporate bonds | 1. Commitment is made not to transfer benefits to other units or individuals free of charge or under unfair conditions, and no other ways damaging the interests of the Company will be taken. 2. I will strictly abide by the budget management of the Company, and accept the strict supervision and management of the Company to avoid waste or excessive consumption. Any position-related consumption behaviors of me will occur within the scope necessary for the performance of my duties. 3. Commitment is made not to use the Company's assets to engage in investment and consumption activities unrelated to the performance of duties. 4. Commitment is made that the remuneration system developed by the Board of Directors or the Remuneration Committee is linked to the implementation of the Company's remedial measures for returns. 5. Commitment is made that the conditions for exercising the Equity Incentive Plan to be issued in the future will be linked to the implementation of the Company's remedial measures for returns. 6. From the issuance date of this commitment to | 23 May 2019 | From 23 May 2019 to 8 April 2026 | On-going |
| the completion of the implementation of the Company's public offering of A-share convertible corporate bonds, if the CSRC makes other new regulatory provisions on remedial measures for returns and the commitment, and the above commitment fails to meet the requirements of the CSRC, I promise to issue supplementary commitment then in accordance with the latest regulations of CSRC. 7. Commitment is made to fulfill the Company's relevant remedial measures for returns and any commitment made herein by me. If I violate such commitment and causes losses to the Company or investors, I will bear the compensation responsibility to the Company or investors in accordance with the law. | ||||||
| Equity incentive commitments | ||||||
| Other commitments made to minority interests | ||||||
| Executed on time or not | Not | |||||
II Occupation of the Company’s Capital by the Controlling Shareholder or any of Its RelatedParties for Non-Operating Purposes
□ Applicable √ Not applicable
No such cases in the Reporting Period.III Irregularities in the Provision of Guarantees
□ Applicable √ Not applicable
No such cases in the Reporting Period.
IV Engagement and Disengagement of Independent AuditorAre the interim financial statements audited?
□ Yes √ No
The interim financial statements have not been audited.V Explanations Given by the Board of Directors and the Supervisory Committee Regardingthe Independent Auditor's “Modified Opinion” on the Financial Statements of the ReportingPeriod
□ Applicable √ Not applicable
VI Explanations Given by the Board of Directors Regarding the Independent Auditor's“Modified Opinion” on the Financial Statements of Last Year
□ Applicable √ Not applicable
VII Insolvency and Reorganization
□ Applicable √ Not applicable
No such cases in the Reporting Period.
VIII Legal Matters
Significant lawsuits and arbitrations:
□ Applicable √ Not applicable
No such cases in the Reporting Period.Other legal matters:
□ Applicable √ Not applicable
IX Punishments and Rectifications
□ Applicable √ Not applicable
No such cases in the Reporting Period.X Credit Quality of the Company as well as its Controlling Shareholder and De FactoController
□ Applicable √ Not applicable
XI Major Related-Party Transactions
1. Continuing Related-Party Transactions
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Related-Party Transactions Regarding Purchase or Disposal of Assets or Equity Investments
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Related-Party Transactions Regarding Joint Investments in Third Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Amounts Due to and from Related Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
5. Transactions with Related Finance Companies, or Finance Companies Controlled by the Company
□ Applicable √ Not applicable
The Company did not make deposits in, receive loans or credit from and was not involved in any other finance business with any relatedfinance company, finance company controlled by the Company or any other related parties.
6. Other Major Related-Party Transactions
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XII Major Contracts and Execution thereof
1. Entrustment, Contracting and Leases
(1) Entrustment
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Contracting
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(3) Leases
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Major Guarantees
√ Applicable □ Not applicable
Unit: RMB’0,000
| Guarantees provided by the Company as the parent and its subsidiaries for external parties (exclusive of those for subsidiaries) | ||||||||||
| Obligor | Disclosure date of the guarantee line announcement | Line of guarantee | Actual occurrence date | Actual guarantee amount | Type of guarantee | Collateral (if any) | Counter-guarantee (if any) | Term of guarantee | Having expired or not | Guarantee for a related party or not |
| Guarantees provided by the Company for its subsidiaries | ||||||||||
| Obligor | Disclosure date of the guarantee line announcement | Line of guarantee | Actual occurrence date | Actual guarantee amount | Type of guarantee | Collateral (if any) | Counter-guarantee (if any) | Term of guarantee | Having expired or not | Guarantee for a related party or not |
| Continental Textile Co., Ltd. | 25 January 2017 | 10,336.16 | 20 January 2017 | 1,217.26 | Joint-liability | Five years since the approval of the board of the Company | No | Yes | ||
| Continental Textile Co., Ltd. | 25 January 2017 | 17,765.28 | 20 January 2017 | 0 | Joint-liability | Five years since the approval of the shareholders meeting of the Company | No | Yes | ||
| Continental Textile Co., Ltd. | 27 October 2017 | 27,132.42 | 25 October 2017 | 8,172.38 | Joint-liability | Five years since the approval of the shareholders meeting of the Company | No | Yes | ||
| Continental Textile Co., Ltd. | 22 August 2018 | 7,106.11 | 20 August 2018 | 6,771.15 | Joint-liability | Three years since the approval of the board of the Company | No | Yes | ||
| Continental Textile Co., Ltd. | 29 March 2019 | 3,876.06 | 27 March 2019 | 3,876.06 | Joint-liability | Three years since the approval of the board of the Company | No | Yes | ||
| Lu Thai (Tan Chau) Textile Co., Ltd. | 28 September 2019 | 6,460.1 | 27 September 2019 | 1,292.02 | Joint-liability | Three years since the approval of the board of the Company | No | Yes | ||
| Continental Textile Co., Ltd. | 28 September 2019 | 10,982.17 | 27 September 2019 | 0 | Joint-liability | Three years since the approval of the board of the Company | No | Yes | ||
| Continental Textile Co., Ltd. | 28 September 2019 | 2,907.05 | 27 September 2019 | 0 | Joint-liability | Three years since the approval of the board of the Company | No | Yes | ||
| Continental Textile Co., Ltd. | 28 August 2020 | 12,920.2 | 26 August 2020 | 3,673.61 | Joint-liability | Three years since the approval of the board of the Company | No | Yes | ||
| Lu Thai (Tan Chau) Textile Co., Ltd. | 15 December 2020 | 9,044.14 | 14 December 2020 | 1,934 | Joint-liability | Four years since the approval of the board of the Company | No | Yes | ||
| Lu Thai (Tan Chau) Textile Co., Ltd. | 15 December 2020 | 3,876.06 | 14 December 2020 | 3,587.73 | Joint-liability | Three years since the approval of the board of the | No | Yes |
| Company | |||||||||||
| Lu An Garments Co., Ltd. | 15 January 2021 | 3,230.05 | 13 January 2021 | 2,948.4 | Joint-liability | Two years since the approval of the board of the Company | No | Yes | |||
| Continental Textile Co., Ltd./ Lu Thai (Tan Chau) Textile Co., Ltd. | 18 May 2021 | 12,144.99 | 17 May 2021 | 4,394.42 | Joint-liability | Three years since the approval of the board of the Company | No | Yes | |||
| Total approved line for such guarantees in the Reporting Period (B1) | 15,375.04 | Total actual amount of such guarantees in the Reporting Period (B2) | 36,589.3 | ||||||||
| Total approved line for such guarantees at the end of the Reporting Period (B3) | 127,780.79 | Total actual balance of such guarantees at the end of the Reporting Period (B4) | 37,867.04 | ||||||||
| Guarantees provided between subsidiaries | |||||||||||
| Obligor | Disclosure date of the guarantee line announcement | Line of guarantee | Actual occurrence date | Actual guarantee amount | Type of guarantee | Collateral (if any) | Counter-guarantee (if any) | Term of guarantee | Having expired or not | Guarantee for a related party or not | |
| Total guarantee amount (total of the three kinds of guarantees above) | |||||||||||
| Total guarantee line approved in the Reporting Period (A1+B1+C1) | 15,375.04 | Total actual guarantee amount in the Reporting Period (A2+B2+C2) | 36,589.3 | ||||||||
| Total approved guarantee line at the end of the Reporting Period (A3+B3+C3) | 127,780.79 | Total actual guarantee balance at the end of the Reporting Period (A4+B4+C4) | 37,867.04 | ||||||||
| Total actual guarantee amount (A4+B4+C4) as % of the Company’s net assets | 4.81% | ||||||||||
| Of which: | |||||||||||
| Balance of guarantees provided for shareholders, actual controller and their related parties (D) | 0 |
| Balance of debt guarantees provided directly or indirectly for obligors with an over 70% debt/asset ratio (E) | 0 |
| Amount by which the total guarantee amount exceeds 50% of the Company’s net assets (F) | 0 |
| Total of the three amounts above (D+E+F) | 0 |
| Explanation about external guarantee violating established procedure (if any) | N/A |
Compound guarantees:
Whether the Company needs to observe the disclosure requirements stipulated in Shenzhen Stock Exchange Industrial InformationDisclosure Guidelines No.17-Listed Companies Engaging in Businesses in Relation to the Textile IndustryWhether the Company provides guarantees or financial assistance for dealers
□ Yes √ No
3. Cash Entrusted for Wealth Management
√ Applicable □ Not applicable
RMB’0,000
| Specific type | Capital resources | Amount incurred | Undue Balance | Overdue amount | Overdue amount with provision for impairment |
| Bank financial products | Raised funds | 69,954 | 9,700 | 0 | 0 |
| Bank financial products | Self-owned funds | 52,143 | 0 | 0 | 0 |
| Total | 122,097 | 9,700 | 0 | 0 | |
Particulars of entrusted cash management with single significant amount or low security, bad liquidity, and no capital preservation
√ Applicable □ Not applicable
RMB’0,000
| Name of the trustee | Type of the trustee | Type of the product | Amount | Resource of funds | Initial date | Ended Date | Use of fund | Method of payment determination | Annual yield for reference | Estimate profit (if any) | Amount of actual profits or losses in Reporting Period | Actual recovery of profits or losses in Reporting Period | Amount withdrawn impairment provision (if any) | Whether go through stator procedures | Whether there is wealth management entrustment plan in future or not | Overview of the item and the related index for inquiring (if any) |
| Agricultural Bank of China | Bank | Principal-protected | 10,000 | Raised funds | 2020/07/02 | 2021/01/08 | Bank financial products | One-off repayment of principal and interests at maturity | 3.50% | 171.88 | 171.88 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-051) disclosed on Cninfo on 23 May 2020 |
| Qishang Bank | Bank | Principal-protected | 5,000 | Raised funds | 2020/10/16 | 2021/01/14 | Bank financial products | One-off repayment of principal and interests at maturity | 3.50% | 40.71 | 40.71 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-051) disclosed on Cninfo on 23 May 2020 |
| Qishang Bank | Bank | Principal-protected | 2,754 | Raised funds | 2020/12/10 | 2021/03/11 | Bank financial products | One-off repayment of principal and interests at maturity | 3.50% | 22.67 | 22.67 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-051) disclosed on Cninfo on 23 May 2020 |
| Qishang Bank | Bank | Principal-protected | 5,000 | Raised funds | 2020/12/10 | 2021/03/11 | Bank financial products | One-off repayment of principal and interests at maturity | 3.50% | 41.16 | 41.16 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-051) disclosed on Cninfo on 23 May 2020 |
| Agricultural Bank of China | Bank | Principal-protected | 10,000 | Raised funds | 2020/12/31 | 2021/03/25 | Bank financial products | One-off repayment of principal and interests at maturity | 3.15% | 68.39 | 68.39 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-051) disclosed on Cninfo on 23 May 2020 |
| Qishang Bank | Bank | Principal-protected | 2,500 | Raised funds | 2021/03/19 | 2021/06/22 | Bank financial produc | One-off repayment of principal | 3.70% | 22.71 | 22.71 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-051) disclosed on Cninfo on 23 May |
| ts | and interests at maturity | 2020 | ||||||||||||||
| Agricultural Bank of China | Bank | Principal-protected | 10,000 | Raised funds | 2021/01/22 | 2021/04/16 | Bank financial products | One-off repayment of principal and interests at maturity | 3.30% | 71.65 | 71.65 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-051) disclosed on Cninfo on 23 May 2020 |
| Agricultural Bank of China | Bank | Principal-protected | 10,000 | Raised funds | 2021/03/30 | 2021/06/25 | Bank financial products | One-off repayment of principal and interests at maturity | 3.70% | 83.2 | 83.2 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-051) disclosed on Cninfo on 23 May 2020 |
| Agricultural Bank of China | Bank | Principal-protected | 5,000 | Raised funds | 2021/03/30 | 2021/06/25 | Bank financial products | One-off repayment of principal and interests at maturity | 3.70% | 41.6 | 41.6 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-051) disclosed on Cninfo on 23 May 2020 |
| Agricultura | Bank | Princip | 9,700 | Raised | 2021/04/27 | 2021/07/23 | Bank | One-off | 3.50% | 76.34 | 0 | - | 0 | Yes | Not yet | Refer to the related |
| l Bank of China | al-protected | funds | financial products | repayment of principal and interests at maturity | announcement (No.: 2020-051) disclosed on Cninfo on 23 May 2020 | |||||||||||
| Qishang Bank | Bank | Principal-protected | 3,000 | Self-owned funds | 2020/10/16 | 2021/01/14 | Bank financial products | One-off repayment of principal and interests at maturity | 3.50% | 24.42 | 24.42 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-059) disclosed on Cninfo on 14 August 2020 |
| Qishang Bank | Bank | Principal-protected | 5,000 | Self-owned funds | 2020/11/04 | 2021/02/02 | Bank financial products | One-off repayment of principal and interests at maturity | 3.50% | 40.71 | 40.71 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-059) disclosed on Cninfo on 14 August 2020 |
| Qishang Bank | Bank | Principal-protected | 5,000 | Self-owned funds | 2020/11/11 | 2021/02/09 | Bank financial products | One-off repayment of principal and | 3.50% | 40.71 | 40.71 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-059) disclosed on Cninfo on 14 August 2020 |
| interests at maturity | ||||||||||||||||
| Qishang Bank | Bank | Principal-protected | 6,246 | Self-owned funds | 2020/12/10 | 2021/03/11 | Bank financial products | One-off repayment of principal and interests at maturity | 3.50% | 51.42 | 51.42 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-059) disclosed on Cninfo on 14 August 2020 |
| Qishang Bank | Bank | Principal-protected | 3,000 | Self-owned funds | 2020/12/11 | 2021/01/20 | Bank financial products | One-off repayment of principal and interests at maturity | 3.40% | 10.55 | 10.55 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-059) disclosed on Cninfo on 14 August 2020 |
| Qishang Bank | Bank | Principal-protected | 5,000 | Self-owned funds | 2020/12/18 | 2021/01/18 | Bank financial products | One-off repayment of principal and interests at maturity | 2.70% | 10.61 | 10.61 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-059) disclosed on Cninfo on 14 August 2020 |
| Qishang Bank | Bank | Principal-prot | 2,600 | Self-owned funds | 2021/01/07 | 2021/02/19 | Bank financi | One-off repayment | 3.40% | 9.82 | 9.82 | Recovery on | 0 | Yes | Not yet | Refer to the related announcement (No.: |
| ected | al products | of principal and interests at maturity | schedule | 2020-059) disclosed on Cninfo on 14 August 2020 | ||||||||||||
| Qishang Bank | Bank | Principal-protected | 2,000 | Self-owned funds | 2021/01/27 | 2021/03/03 | Bank financial products | One-off repayment of principal and interests at maturity | 3.40% | 6.15 | 6.15 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-059) disclosed on Cninfo on 14 August 2020 |
| Qishang Bank | Bank | Principal-protected | 3,697 | Self-owned funds | 2021/02/09 | 2021/05/18 | Bank financial products | One-off repayment of principal and interests at maturity | 3.50% | 32.78 | 32.78 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-059) disclosed on Cninfo on 14 August 2020 |
| Qishang Bank | Bank | Principal-protected | 7,000 | Self-owned funds | 2021/02/24 | 2021/06/29 | Bank financial products | One-off repayment of principal and interests at | 3.60% | 81.42 | 81.42 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-059) disclosed on Cninfo on 14 August 2020 |
| maturity | ||||||||||||||||
| Qishang Bank | Bank | Principal-protected | 2,600 | Self-owned funds | 2021/02/24 | 2021/03/31 | Bank financial products | One-off repayment of principal and interests at maturity | 3.50% | 8.23 | 8.23 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-059) disclosed on Cninfo on 14 August 2020 |
| Qishang Bank | Bank | Principal-protected | 2,000 | Self-owned funds | 2021/03/11 | 2021/06/15 | Bank financial products | One-off repayment of principal and interests at maturity | 3.60% | 17.87 | 17.87 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-059) disclosed on Cninfo on 14 August 2020 |
| Qishang Bank | Bank | Principal-protected | 5,000 | Self-owned funds | 2021/03/19 | 2021/06/22 | Bank financial products | One-off repayment of principal and interests at maturity | 3.70% | 45.43 | 45.43 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-059) disclosed on Cninfo on 14 August 2020 |
| Total | 122,097 | -- | -- | -- | -- | -- | -- | 1,020.43 | 944.09 | -- | 0 | -- | -- | -- |
Whether there is the case where the principal cannot be recovered at maturity or other case which may cause impairment for entrusted asset management
□ Applicable √ Not applicable
4. Continuing Major Contracts
□ Applicable √ Not applicable
5. Other Major Contracts
□ Applicable √ Not applicable
No such cases in the Reporting Period.XIII Other Significant Events
√ Applicable □ Not applicable
As examined and approved by Shenzhen Stock Exchange, the Company's restricted B shares held by Tailun (Thailand) Textile Co.,Ltd., with a volume of 118,232,400 shares, were lifted from restricted sales on 12 July 2021. For more information, please refer tothe announcement disclosed on 9 July 2021 on the cninfo website (http://www.cninfo.com.cn).XIV Significant Events of Subsidiaries
□ Applicable √ Not applicable
Part VII Share Changes and Shareholder Information
I Share Changes
1. Share Changes
Unit: share
| Before | Increase/decrease in the Reporting Period (+/-) | After | |||||||
| Shares | Percentage (%) | New issues | Shares as dividend converted from profit | Shares as dividend converted from capital reserves | Other | Subtotal | Shares | Percentage (%) | |
| I. Restricted shares | 119,038,937 | 13.87% | 24,321,013 | 24,321,013 | 143,359,950 | 16.25% | |||
| 1. Shares held by State | |||||||||
| 2. Shares held by state-owned legal person | |||||||||
| 3. Shares held by other domestic investors | 806,537 | 0.09% | 24,321,013 | 24,321,013 | 25,127,550 | 2.85% | |||
| Among which: Shares held by domestic legal person | |||||||||
| Shares held by domestic natural person | 806,537 | 0.09% | 24,321,013 | 24,321,013 | 25,127,550 | 2.85% | |||
| 4. Shares held by other foreign investors | 118,232,400 | 13.78% | 118,232,400 | 13.40% | |||||
| Among which: Shares held by foreign corporations | 118,232,400 | 13.78% | 118,232,400 | 13.40% | |||||
| Shares held by foreign natural person | |||||||||
| II. Unrestricted shares | 739,093,385 | 86.13% | -33,413 | -33,413 | 739,059,972 | 83.75% | |||
| 1. RMB ordinary shares | 561,275,069 | 65.41% | -20,638 | -20,638 | 561,254,431 | 63.60% | |||
| 2. Domestically listed foreign shares | 177,818,316 | 20.72% | -12,775 | -12,775 | 177,805,541 | 20.15% | |||
| 3. Overseas listed foreign shares | 0 | ||||||||
| 4. Other | 0 | ||||||||
| III. Total shares | 858,132,322 | 100.00% | 24,287,600 | 24,287,600 | 882,419,922 | 100.00% |
Reasons for share changes:
√ Applicable □ Not applicable
a) According to its 2021 restricted share incentive scheme, the Company have firstly granted 24,285,000 restricted ordinary A sharesthat were directly issued to the incentive staff on 7 June 2021.b) Due to the fact that the Company had issued convertible A-share bonds on 9 April 2020, convertible bonds were converted to2,600 shares in the period from the beginning of 2021 to 30 June 2021.c) Due to the retirement of directors and the resignation of executives, the shares held by former directors or executives will belocked and adjusted in accordance with relevant regulations on the executive share management.Approval of share changes:
√ Applicable □ Not applicable
1. On 13 May 2021, the first Extraordinary General Meeting of this year was held in the Company. Deliberated and approved wereProposal 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 Authorizationfor 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 theCompany's Shares was disclosed.
2. On 17 May 2021, the Company convened the 24th Meeting of the 9th Board of Directors and the 15th Meeting of the 9th SupervisoryCommittee. Deliberated and approved were Proposal on Adjusting the List of the Name and Number of Incentive Staff of 2021Restricted Share Incentive Scheme and Proposal on Granting Restrictive Stocks to Incentive Staff. The Board of Directors believed thatthe granting conditions specified in the incentive scheme had been fulfilled, and agreed to designate 17 May 2021 as the granting date.
24.285 million restricted shares were effectively granted to 750 incentive staff.
Transfer of share ownership:
√ Applicable □ Not applicable
On 7 June 2021, the first-granted restricted shares in the Company's 2021 Restricted Share Incentive Scheme were registered, asaudited and confirmed by Shenzhen Stock Exchange and the Shenzhen branch of China Securities Depository and ClearingCorporation Limited.Progress on any share repurchases:
□ Applicable √ Not applicable
Progress on reducing the repurchased shares by means of centralized bidding:
□ Applicable √ Not applicable
Effects of share changes on the basic and diluted earnings per share, equity per share attributable to the Company’s ordinaryshareholders and other financial indicators of the prior year and the prior accounting period, respectively:
□ Applicable √ Not applicable
Other information that the Company considers necessary or is required by the securities regulator to be disclosed:
□ Applicable √ Not applicable
2. Changes in Restricted Shares
√ Applicable □ Not applicable
Unit: share
| Name of the shareholders | Restricted shares amount at the period-begin | Restricted shares relieved of the period | Restricted shares increased of the period | Restricted shares amount at the period-end | Restricted reasons | Restricted shares relieved date |
| Tailun (Thailand) Textile Co., Ltd. | Foreign legal person | 118,232,400 | Pre-IPO restricted shares | 12 July 2021 | ||
| Liu Zibin | 111,217 | 111,217 | Locked public shares held by senior management | The Company shall implement the provisions on restricted sale by directors, supervisors and senior management within tenure | ||
| Wang Fangshui | 110,065 | 36,688 | 146,753 | Locked public shares held by senior management | The Company shall implement the provisions on restricted sale by directors, supervisors and senior management | |
| Qin Guiling | 94,906 | 94,906 | Locked public shares held by senior management | The Company shall implement the provisions on restricted sale by directors, supervisors and senior management within tenure | ||
| Zhang Hongmei | 69,375 | 300,000 | 369,375 | Locked public shares held by senior management: 69375 shares; restricted shares from equity incentive: 300000 shares | The Company shall implement the provisions on restricted sale by directors, supervisors and senior management within tenure, and lift the lock-up in batches according to the share incentive scheme | |
| Wang Jiabin | 62,775 | 300,000 | 362,775 | Locked public shares held by | The Company shall implement the provisions on restricted sale by |
| senior management: 62775 shares; restricted shares from equity incentive: 300000 shares | directors, supervisors and senior management within tenure, and lift the lock-up in batches according to the share incentive scheme | |||||
| Yu Shouzheng | 62,325 | 200,000 | 262,325 | Locked public shares held by senior management: 62325 shares; restricted shares from equity incentive: 200000 shares | The Company shall implement the provisions on restricted sale by directors, supervisors and senior management within tenure, and lift the lock-up in batches according to the share incentive scheme | |
| Zhang Zhanqi | 60,225 | 300,000 | 360,225 | Locked public shares held by senior management: 60225 shares; restricted shares from equity incentive: 300000 shares | The Company shall implement the provisions on restricted sale by directors, supervisors and senior management within tenure, and lift the lock-up in batches according to the share incentive scheme | |
| Zhang Keming | 58,275 | 200,000 | 258,275 | Locked public shares held by senior management: 58275 shares; restricted shares from equity incentive: 200000 shares | The Company shall implement the provisions on restricted sale by directors, supervisors and senior management within tenure, and lift the lock-up in batches according to the share incentive scheme | |
| Zhang Shougang | 54,825 | 54,825 | Locked public shares held by senior management | The Company shall implement the provisions on restricted sale by directors, supervisors and senior management within tenure | ||
| Zhang Jianxiang | 39,112 | 39,112 | Locked public shares held by senior management | The Company shall implement the provisions on restricted sale by directors, supervisors and senior |
| management within tenure | ||||||
| Lyu Yongchen | 25,312 | 6,300 | 19,012 | Locked public shares held by senior management | The Company shall implement the provisions on restricted sale by directors, supervisors and senior management | |
| Shang Chenggang | 22,500 | 200,000 | 222,500 | Locked public shares held by senior management: 22500 shares; restricted shares from equity incentive: 200000 shares | The Company shall implement the provisions on restricted sale by directors, supervisors and senior management within tenure, and lift the lock-up in batches according to the share incentive scheme | |
| Wang Changzhao | 16,875 | 5,625 | 22,500 | Locked public shares held by senior management | The Company shall implement the provisions on restricted sale by directors, supervisors and senior management | |
| Li Wenji | 7,500 | 200,000 | 207,500 | Locked public shares held by senior management: 7500 shares; restricted shares from equity incentive: 200000 shares | The Company shall implement the provisions on restricted sale by directors, supervisors and senior management within tenure, and lift the lock-up in batches according to the share incentive scheme | |
| Liu Zilong | 7,500 | 7,500 | Locked public shares held by senior management | The Company shall implement the provisions on restricted sale by directors, supervisors and senior management within tenure | ||
| Dong Shibing | 3,750 | 3,750 | Locked public shares held by senior management | The Company shall implement the provisions on restricted sale by directors, supervisors and senior management within tenure | ||
| Du Lixin | 200,000 | 200,000 | Restricted shares from equity incentive | Lift the lock-up in batches according to the share incentive scheme |
| Zhang Wei | 200,000 | 200,000 | Restricted shares from equity incentive | Lift the lock-up in batches according to the share incentive scheme | ||
| Fu Guannan | 200,000 | 200,000 | Restricted shares from equity incentive | Lift the lock-up in batches according to the share incentive scheme | ||
| Guo Heng | 200,000 | 200,000 | Restricted shares from equity incentive | Lift the lock-up in batches according to the share incentive scheme | ||
| Other subjects of first-granted incentive of restricted share incentive scheme in 2021 | 21,785,000 | 21,785,000 | Restricted shares from equity incentive | Lift the lock-up in batches according to the share incentive scheme | ||
| Total | 119,038,937 | 6,300 | 24,327,313 | 143,359,950 | -- | -- |
II. Issuance and Listing of Securities
□ Applicable √ Not applicable
III Total Number of Shareholders and Their Shareholdings
Unit: share
| Total number of ordinary shareholders at the period-end | 58,740 | Total number of preference shareholders with resumed voting rights at the period-end (if any) (see Note 8) | 0 | |||||||
| 5% or greater ordinary shareholders or the top 10 ordinary shareholders | ||||||||||
| Name of shareholder | Nature of shareholder | Shareholding percentage (%) | Total shares held at the period-end | Increase/decrease during the Reporting Period | Number of restricted shares held | Number of non-restricted shares held | Pledged, marked or frozen shares | |||
| Status | Number | |||||||||
| Zibo Lucheng Textile Investment Co., Ltd. | Domestic non-state-owned legal person | 15.91% | 140,353,583 | 0 | 0 | 140,353,583 | ||||
| Tailun (Thailand) Textile Co., Ltd. | Foreign legal person | 13.40% | 118,232,400 | 0 | 118,232,400 | |||||
| Central Huijin Assets Management Co., Ltd. | State-owned legal person | 2.30% | 20,315,300 | 0 | 20,315,300 | |||
| Bank of Communications- ICBC Credit Suisse Double Interest Bond Securities Investment Fund | Other | 1.36% | 11,999,859 | 11,999,859 | 11,999,859 | |||
| National Social Security Fund Portfolio 413 | Domestic non-state-owned legal person | 1.09% | 9,600,051 | 150,000 | 9,600,051 | |||
| Zhong Ou Asset Management-Agricultural Bank of China-Zhong Ou China Securities Asset Management Plan | Other | 0.59% | 5,235,900 | 0 | 5,235,900 | |||
| Dacheng Fund-Agricultural Bank of China- Dacheng China Securities Asset Management Plan | Other | 0.59% | 5,235,900 | 0 | 5,235,900 | |||
| Harvest Fund-Agricultural Bank of China-Harvest China Securities Asset Management Plan | Other | 0.59% | 5,235,900 | 0 | 5,235,900 | |||
| GF Fund Management-Agricultural Bank of China-GF China Securities Asset Management Plan | Other | 0.59% | 5,235,900 | 0 | 5,235,900 | |||
| China Asset Management-Agricultural Bank of China-China China Securities Asset Management Plan | Other | 0.59% | 5,235,900 | 0 | 5,235,900 | |||
| Strategic investors or general corporations becoming top-ten shareholders due to placing of new shares (if any) (see Note 3) | Naught | |||||||
| Related or acting-in-concert parties among the | Zibo Lucheng Textile Investment Co., Ltd. is the largest shareholder of the Company | |||||||
| shareholders above | and the actual controller. Tailun (Thailand) Textile Co., Ltd. is the second largest shareholder as well as sponsor of foreign capital of the Company. All of other shareholders are people holding public A share or public B share and the Company is not able to confirm whether there is associated relationship or concerted action among other shareholders. | |||
| Explain if any of the shareholders above was involved in entrusting/being entrusted with voting rights or waiving voting rights | Naught | |||
| Special account for share repurchases (if any) among the top 10 shareholders (see note 11) | Naught | |||
| Shareholdings of the top ten non-restricted ordinary shareholders | ||||
| Name of shareholder | Number of non-restricted shares held at the period-end | Type of shares | ||
| Type | Shares | |||
| Zibo Lucheng Textile Investment Co., Ltd. | 140,353,583 | RMB ordinary share | 140,353,583 | |
| Central Huijin Assets Management Co., Ltd. | 20,315,300 | RMB ordinary share | 20,315,300 | |
| Bank of Communications- ICBC Credit Suisse Double Interest Bond Securities Investment Fund | 11,999,859 | RMB ordinary share | 11,999,859 | |
| National Social Security Fund Portfolio 413 | 9,600,051 | RMB ordinary share | 9,600,051 | |
| Zhong Ou Asset Management-Agricultural Bank of China-Zhong Ou China Securities Asset Management Plan | 5,235,900 | RMB ordinary share | 5,235,900 | |
| Dacheng Fund-Agricultural Bank of China- Dacheng China Securities Asset Management Plan | 5,235,900 | RMB ordinary share | 5,235,900 | |
| Harvest Fund-Agricultural Bank of China-Harvest China Securities Asset Management Plan | 5,235,900 | RMB ordinary share | 5,235,900 | |
| GF Fund Management-Agricultural Bank of China-GF China Securities Asset Management Plan | 5,235,900 | RMB ordinary share | 5,235,900 | |
| China Asset Management-Agricultural Bank of China-China China Securities Asset Management Plan | 5,235,900 | RMB ordinary share | 5,235,900 | |
| Yinhua Fund-Agricultural Bank of China-Yinhua China Securities Asset Management Plan | 5,235,900 | RMB ordinary share | 5,235,900 | |
| Explanation on connected relationship among the top ten shareholders of tradable share not subject to trading moratorium, as well as among the top ten shareholders of tradable share not subject to trading moratorium and top ten shareholders, or explanation on acting-in-concert | Zibo Lucheng Textile Investment Co., Ltd. is the largest shareholder and the actual controller of the Company. Tailun (Thailand) Textile Co., Ltd. is the second largest shareholder and the foreign sponsor of the Company. All the other shareholders are holding tradable A-shares or B-shares. And it is unknown whether there is any related party or acting-in-concert party among them. |
| Particular about shareholder participate in the securities lending and borrowing business (if any) (note 4) | Naught |
Indicate by tick mark whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary shareholders of theCompany conducted any promissory repo during the Reporting Period.
□ Yes √ No
No such cases in the Reporting Period.IV Change in Shareholdings of Directors, Supervisors and Senior Management
√ Applicable □ Not applicable
| Name | Office title | Incumbent/former | Beginning shareholding (share) | Increase in the Current Period (share) | Decrease in the Current Period (share) | Ending shareholding (share) | Number of granted restricted shares at the period-begin (share) | Number of restricted shares granted in the Current Period (share) | Number of granted restricted shares at the period-end (share) |
| Liu Zibin | Chairman and President | Incumbent | 148,290 | 148,290 | |||||
| Xu Zhinan | Vice Chairman | Incumbent | |||||||
| Fujiwara Hidetoshi | Director | Incumbent | |||||||
| Chen Ruimou | Director | Incumbent |
| Zeng Facheng | Director | Incumbent | |||||||
| Liu Deming | Director, Vice Controller of Global Marketing Department | Incumbent | |||||||
| Qin Guiling | Director | Incumbent | 126,542 | 126,542 | |||||
| Zhang Hongmei | Director and Chief Accountant | Incumbent | 92,500 | 300,000 | 392,500 | 300,000 | 300,000 | ||
| Zhou Zhiji | Independent Director | Incumbent | |||||||
| Pan Ailing | Independent Director | Incumbent | |||||||
| Wang Xinyu | Independent Director | Incumbent | |||||||
| Qu Dongmei | Independent Director | Incumbent | |||||||
| Zhang Shougang | Chairman of the Supervisory Committee | Incumbent | 73,100 | 73,100 | |||||
| Liu Zilong | Supervisor | Incumbent | 10,000 | 10,000 | |||||
| Dong Shibing | Supervisor, Manager of Logistics Management Department | Incumbent | 5,000 | 5,000 | |||||
| Zhang Jianxiang | Vice president, Controller of Functional Fabric | Incumbe | 52,150 | 52,150 |
| Product Line | nt | ||||||||
| Wang Jiabin | Vice president, Security Controller, | Incumbent | 83,700 | 300,000 | 383,700 | 300,000 | 300,000 | ||
| Zhang Zhanqi | Vice president, Controller of Global Marketing Department | Incumbent | 80,300 | 300,000 | 380,300 | 300,000 | 300,000 | ||
| Zhang Keming | Board Secretary, Controller of Financial Management Department | Incumbent | 77,700 | 200,000 | 277,700 | 200,000 | 200,000 | ||
| Li Wenji | Controller of Business Management Department | Incumbent | 10,000 | 200,000 | 210,000 | 200,000 | 200,000 | ||
| Zhang Wei | Controller of Strategy and Market Department | Incumbent | 200,000 | 200,000 | 200,000 | 200,000 | |||
| Fujiwara Matsuzaka | GM of Japan Office | Incumbent | |||||||
| Yu Shouzheng | Controller of Energy and Environment Protection Department | Incumbent | 83,100 | 200,000 | 283,100 | 200,000 | 200,000 | ||
| Shang Chenggang | Controller of Garment Product Line | Incumbent | 30,000 | 200,000 | 230,000 | 200,000 | 200,000 | ||
| Du Lixin | Chief Engineer, Executive Dean of Lu Thai Engineering Technology Research Institute | Incumbent | 200,000 | 200,000 | 200,000 | 200,000 | |||
| Guo Heng | Vice GM of Shandong Lulian New Materials Co., Ltd. | Incumbent | 200,000 | 200,000 | 200,000 | 200,000 | |||
| Fu Guannan | President Assistant | Incumbent | 200,000 | 200,000 | 200,000 | 200,000 |
| Wang Fangshui | Director | Former | 146,753 | 146,753 | |||||
| Bi Xiuli | Independent Director | Former | |||||||
| Wang Changzhao | Executive Dean of Lu Thai Engineering Technology Research Institute | Former | 22,500 | 22,500 | |||||
| Total | -- | -- | 1,041,635 | 2,500,000 | 0 | 3,541,635 | 0 | 2,500,000 | 2,500,000 |
V Change of the Controlling Shareholder or the De Facto ControllerChange of the controlling shareholder in the Reporting Period
□ Applicable √ Not applicable
No such cases in the Reporting Period.Change of the de facto controller in the Reporting Period
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Part VIII Preference Shares
□ Applicable √ Not applicable
No preference shares in the Reporting Period.
Part IX Bonds
√ Applicable □ Not applicable
I Enterprise Bonds
□ Applicable √ Not applicable
No enterprise bonds in the Reporting Period.
II Corporate Bonds
□ Applicable √ Not applicable
No corporate bonds in the Reporting Period.III Debt Financing Instruments of Non-financial Enterprises
□ Applicable √ Not applicable
No such cases in the Reporting Period.
IV Convertible Corporate Bonds
√ Applicable □ Not applicable
1. Previous Adjustments of Conversion Price
On 9 April 2020, the Company publicly issued 14 million A-share convertible corporate bonds (short name: Lu ThaiConvertible Bonds, bond code: 127016) on Shenzhen Stock Exchange with an issue price of RMB100 per share anda share conversion price of RMB9.01 per share. The bonds were listed on Shenzhen Stock Exchange on 13 May2020. In accordance with related terms of the “Prospectus for the Public Offering of A-Share Convertible CorporateBonds of Lu Thai Textile Co., Ltd.”, as well as the regulations of China Securities Regulatory Commission on thepublic offering of convertible corporate bonds, if the Company has any distribution of share dividends, conversioninto 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 theissue of “Lu Thai Convertible Bonds”, adjustment shall be made to the share conversion price.On 21 May 2020, the Company held the Annual General Meeting of 2019, where the “Proposal on the Company’sProfit Distribution Plan for 2019” was considered and approved. According to the Proposal, a cash amount of RMB
1.00 (inclusive of tax) would be distributed to every 10 shares, with the 858,121,541 shares of share capital on 31December 2019 as the base. The share registration date for the Company’s equity distribution of 2019 was 8 July
2020 and the ex-rights and ex-dividend date was 9 July 2020. Therefore, the share conversion price of “Lu ThaiConvertible Bonds” was adjusted from RMB9.01 per share to RMB8.91 per share, and the new price after theadjustment 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 shareincentive scheme at the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited (ChinaClear). 7 June 2021 is designated as the listing date of first-granted restricted stocks of the Company in 2021. TheCompany grants 750 subjects of incentive 24,285,000 restricted shares at a price of RMB3.31 per share, accountingfor 2.83% of total share capital of the Company. The source of the stock is RMB A-share ordinary shares issued bythe Company to subjects of incentive. Therefore, the conversion price of Lu Thai Convertible Bond will be adjustedfrom RMB8.91 per share to RMB8.76 per share, with the adjusted conversion price coming into force from 7 June2021.The 2020 annual general meeting convened on 20 April 2021 deliberated on and adopted the Company's Proposalon Profit Appropriation Plan in 2020, which distributes cash of RMB0.50 per 10 shares (including tax) with totalshare capital at the record date of this distribution scheme as base. The record date of the Company's interestdistribution in 2020 is set on 17 June 2021. The ex-date is set on 18 June 2021. Therefore, the conversion price of LuThai Convertible Bond will be adjusted from RMB8.76 per share to RMB8.71 per share, with the adjustedconversion price coming into force from 18 June 2021 (the ex-date).
2. Accumulative Conversion
√ Applicable □ Not applicable
| Abbreviation | Start date | Total circulation (piece) | Total amount | Accumulative amount converted (RMB) | Accumulative shares converted (share) | Converted shares as % of total shares issued by the Company before the start date of conversion | Unconverted amount (RMB) | Unconverted amount as % of total amount |
| Lu Thai Convertible Bonds | 15 October 2020 | 14,000,000 | 1,400,000,000.00 | 119,400.00 | 13,381 | 0.00% | 1,399,880,600.00 | 99.99% |
3. Top 10 Convertible Bond Holders
Unit: share
| No. | Name of holders | Nature of holders | Number of convertible bonds | Amount of convertible bonds | As % of convertible |
| held at the period-end (share) | held at the period-end (RMB) | bonds held at the period-end | |||
| 1 | Guosen Securities Co., Ltd. | State-owned legal person | 1,450,930 | 145,093,000.00 | 10.36% |
| 2 | ICBC Credit Suisse Tianxiang Hybrid Pension Products-Industrial and Commercial Bank of China | Other | 675,551 | 67,555,100.00 | 4.83% |
| 3 |
| Other | 630,004 | 63,000,400.00 | 4.50% | ||
| 4 | Industrial and Commercial Bank of China－China Universal Convertible Bond Securities Investment Fund | Other | 581,095 | 58,109,500.00 | 4.15% |
| 5 | Shanghai Pudong Development Bank－E Fund Yuxiang Return Bond Securities Investment Fund | Other | 542,427 | 54,242,700.00 | 3.87% |
| 6 | China Merchants Bank Co., Ltd.- Essence Sustaining Profit Increase Mixed Type Securities Investment Fund | Other | 505,005 | 50,500,500.00 | 3.61% |
| 7 | National Social Security Fund Portfolio 1002 | Other | 493,247 | 49,324,700.00 | 3.52% |
| 8 | Genertec Investment Management Co., Ltd. | State-owned legal person | 434,645 | 43,464,500.00 | 3.10% |
| 9 | Fullgoal Fuyi Progressive Fixed Benefit Pension Product- Industrial and Commercial Bank of China | Other | 424,112 | 42,411,200.00 | 3.03% |
| 10 | National Social Security Fund Portfolio 1005 | Other | 415,369 | 41,536,900.00 | 2.97% |
4. Significant Changes in Profitability, Assets Condition and Credit Status of Guarantors
□ Applicable √ Not applicable
5. The Company’s Liabilities, Credit Changes at the Period-end and Cash Arrangements to Repay Debts inFuture Years
For the relevant indicators, please refer to the Part IX Bonds- VI The Major Accounting Data and the Financial Indicators of theRecent 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 ofthe same period of last year.
V Losses of Scope of Consolidated Financial Statements during the Reporting PeriodExceeding 10% of Net Assets up the Period-end of Last Year
□ Applicable √ Not applicable
VI The Major Accounting Data and the Financial Indicators of the Recent 2 Years of theCompany up the Period-end
Unit: RMB’0,000
| Item | Period-end | The end of last year | Increase/decrease |
| Current ratio | 294.37% | 268.48% | 25.89% |
| Asset-liability ratio | 32.33% | 33.29% | -0.96% |
| Quick ratio | 176.78% | 162.17% | 14.61% |
| Reporting Period | Same period of last year | YoY increase/decrease | |
| Net profit after deducting non-recurring profit or loss | 5,428.15 | 10,810.56 | -49.79% |
| Debt/EBITDA ratio | 0.14% | 0.14% | 0.00% |
| Interest cover (times) | 4.96 | 4.88 | 1.64% |
| Cash-to-interest cover (times) | 5.15 | 5.62 | -8.36% |
| EBITDA interest coverage ratio | 10.95 | 10.66 | 2.72% |
| Rate of redemption | 100.00% | 100.00% | |
| Interest coverage | 100.00% | 100.00% |
Part X Financial Statements
I Independent Auditor’s ReportAre these interim financial statements audited by an independent auditor?
□Yes √ No
They are unaudited by such an auditor.II Financial StatementsCurrency unit for the financial statements and the notes thereto: RMB
1. Consolidated Balance Sheet
Prepared by Lu Thai Textile Co., Ltd.
30 June 2021
Unit: RMB
| Item | 30 June 2021 | 31 December 2020 |
| Current assets: | ||
| Monetary assets | 2,039,571,421.60 | 1,400,478,034.81 |
| Held-for-trading financial assets | 124,052,667.02 | 268,456,216.98 |
| Derivative financial assets | ||
| Notes receivable | 222,064,350.43 | 182,994,110.86 |
| Accounts receivable | 467,077,027.00 | 522,425,219.87 |
| Accounts receivable financing | 29,582,908.88 | 55,150,926.34 |
| Prepayments | 58,244,197.83 | 19,611,775.28 |
| Other receivables | 79,655,594.80 | 105,710,818.69 |
| Including: Interest receivable | ||
| Dividends receivable | 47,025,975.44 | 75,488,652.49 |
| Financial assets purchased under resale agreements | ||
| Inventories | 2,079,485,243.20 | 1,988,968,681.64 |
| Current portion of non-current assets | 46,625,009.15 | 45,750,018.30 |
| Other current assets | 59,213,123.64 | 433,432,258.63 |
| Total current assets | 5,205,571,543.55 | 5,022,978,061.40 |
| Non-current assets: | ||
| Long-term receivables | 41,847,020.06 | 41,053,183.15 |
| Long-term equity investment | 128,409,211.89 | 138,079,577.25 |
| Other equity instrument investment | ||
| Other non-current financial assets | 156,915,620.25 | 156,915,620.25 |
| Investment property | 21,812,985.44 | 22,263,668.85 |
| Fixed assets | 5,643,953,088.23 | 5,661,592,991.66 |
| Construction in progress | 293,251,051.85 | 356,273,197.49 |
| Right-of-use assets | 161,742,107.43 | |
| Intangible assets | 368,399,517.46 | 373,543,480.84 |
| Development costs | ||
| Goodwill | 20,563,803.29 | 20,563,803.29 |
| Long-term deferred expenses | 1,039,474.40 | 118,340,494.60 |
| Deferred income tax assets | 130,640,687.96 | 122,865,841.69 |
| Other non-current assets | 226,619,800.99 | 95,434,040.18 |
| Total non-current assets | 7,195,194,369.25 | 7,106,925,899.25 |
| Total assets | 12,400,765,912.80 | 12,129,903,960.65 |
| Current liabilities: | ||
| Short-term borrowings | 991,568,008.40 | 930,871,008.19 |
| Held-for-trading financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | ||
| Accounts payable | 236,877,923.06 | 243,262,473.69 |
| Advances from customers | ||
| Contract liabilities | 146,761,705.56 | 141,339,705.62 |
| Payroll payable | 220,896,759.48 | 265,648,198.38 |
| Taxes payable | 33,875,062.59 | 36,468,978.77 |
| Other payables | 21,013,345.96 | 17,587,470.79 |
| Including: Interest payable |
| Dividends payable | 441,113.64 | 441,113.64 |
| Held-for-sale liabilities | ||
| Current portion of non-current liabilities | 35,776,283.56 | 43,149,400.13 |
| Other current liabilities | 81,612,744.54 | 192,574,674.68 |
| Total current liabilities | 1,768,381,833.15 | 1,870,901,910.25 |
| Non-current liabilities: | ||
| Long-term borrowings | 659,734,579.14 | 495,520,342.78 |
| Bonds payable | 1,370,297,472.37 | 1,350,171,526.97 |
| Lease liabilities | 32,226,761.06 | |
| Long-term payables | ||
| Long-term payroll payable | 45,772,995.06 | 62,137,656.00 |
| Provisions | ||
| Deferred income | 176,361,848.15 | 173,862,983.31 |
| Deferred income tax liabilities | 85,704,360.07 | 85,633,161.44 |
| Other non-current liabilities | ||
| Total non-current liabilities | 2,370,098,015.85 | 2,167,325,670.50 |
| Total liabilities | 4,138,479,849.00 | 4,038,227,580.75 |
| Owners’ equity: | ||
| Share capital | 882,419,922.00 | 858,132,322.00 |
| Other equity instruments | 71,385,268.76 | 71,386,451.81 |
| Capital reserves | 317,616,396.30 | 255,912,488.01 |
| Less: Treasury stock | ||
| Other comprehensive income | -13,413,764.20 | 1,308,922.89 |
| Specific reserve | ||
| Surplus reserves | 1,154,017,457.79 | 1,154,017,457.79 |
| General reserve | ||
| Retained earnings | 5,456,196,302.48 | 5,346,819,948.22 |
| Total equity attributable to owners of the Company as the parent | 7,868,221,583.13 | 7,687,577,590.72 |
| Non-controlling interests | 394,064,480.67 | 404,098,789.18 |
| Total owners’ equity | 8,262,286,063.80 | 8,091,676,379.90 |
| Total liabilities and owners’ equity | 12,400,765,912.80 | 12,129,903,960.65 |
Legal representative: Liu Zibin Chief Accountant: Zhang HongmeiFinancial Manager: Zhang Keming
2. Balance Sheet of the Company as the Parent
Unit: RMB
| Item | 30 June 2021 | 31 December 2020 |
| Current assets: | ||
| Monetary assets | 1,116,523,734.67 | 729,437,231.33 |
| Held-for-trading financial assets | 19,242,000.00 | 163,636,075.34 |
| Derivative financial assets | ||
| Notes receivable | 96,970,966.74 | 108,863,689.79 |
| Accounts receivable | 277,335,192.64 | 326,166,935.10 |
| Accounts receivable financing | 16,349,613.80 | 48,764,088.05 |
| Prepayments | 49,110,806.94 | 13,059,806.74 |
| Other receivables | 1,947,833,748.48 | 1,500,882,682.19 |
| Including: Interest receivable | ||
| Dividends receivable | 47,025,975.44 | 75,488,652.49 |
| Inventories | 1,104,446,945.96 | 1,097,438,610.46 |
| Contract assets | ||
| Available-for-sale assets | ||
| Current portion of non-current assets | 46,625,009.15 | 45,750,018.30 |
| Other current assets | 5,310,118.06 | 247,860,882.02 |
| Total current assets | 4,679,748,136.44 | 4,281,860,019.32 |
| Non-current assets: | ||
| Investments in debt obligations | ||
| Investments in other debt obligations | ||
| Long-term receivables | 41,847,020.06 | 41,053,183.15 |
| Long-term equity investments | 2,781,480,493.77 | 2,555,150,859.13 |
| Investments in other equity instruments |
| Other non-current financial assets | 144,915,620.25 | 144,915,620.25 |
| Investment property | 59,059,918.70 | 29,734,239.22 |
| Fixed assets | 2,352,046,544.08 | 2,471,686,117.72 |
| Construction in progress | 47,162,095.82 | 48,694,822.74 |
| Right-of-use assets | 46,136,458.69 | |
| Intangible assets | 221,756,813.90 | 225,128,308.75 |
| Development costs | ||
| Goodwill | ||
| Long-term deferred expenses | 1,039,474.40 | 1,406,347.76 |
| Deferred income tax assets | 59,998,125.17 | 65,729,304.26 |
| Other non-current assets | 10,226,737.66 | 7,936,745.28 |
| Total non-current assets | 5,765,669,302.50 | 5,591,435,548.26 |
| Total assets | 10,445,417,438.94 | 9,873,295,567.58 |
| Current liabilities: | ||
| Short-term borrowings | 549,208,356.03 | 332,466,931.13 |
| Held-for-trading financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | ||
| Accounts payable | 180,260,865.99 | 132,231,596.74 |
| Advances from customers | ||
| Contract liabilities | 66,521,266.93 | 56,841,289.66 |
| Payroll payable | 160,055,528.93 | 202,694,515.93 |
| Taxes payable | 23,093,701.53 | 21,896,035.49 |
| Other payables | 17,206,697.02 | 79,668,657.80 |
| Including: Interest payable | ||
| Dividends payable | 441,113.64 | 441,113.64 |
| Liabilities held for sale | ||
| Current portion of non-current liabilities | 23,244,146.50 | 4,000,000.00 |
| Other current liabilities | 57,302,889.18 | 166,257,466.30 |
| Total current liabilities | 1,076,893,452.11 | 996,056,493.05 |
| Non-current liabilities: | ||
| Long-term borrowings | 659,734,579.14 | 495,520,342.78 |
| Bonds payable | 1,370,297,472.37 | 1,350,171,526.97 |
| Lease liabilities | 30,785,894.31 | |
| Long-term payables | ||
| Long-term payroll payable | 45,772,995.06 | 62,137,656.00 |
| Provisions | ||
| Deferred income | 134,130,153.39 | 131,546,549.87 |
| Deferred income tax liabilities | 59,591,817.72 | 58,927,115.71 |
| Other non-current liabilities | ||
| Total non-current liabilities | 2,300,312,911.99 | 2,098,303,191.33 |
| Total liabilities | 3,377,206,364.10 | 3,094,359,684.38 |
| Owners’ equity: | ||
| Share capital | 882,419,922.00 | 858,132,322.00 |
| Other equity instruments | 71,385,268.76 | 71,386,451.81 |
| Capital reserves | 378,996,430.54 | 317,292,522.25 |
| Less: Treasury stock | ||
| Other comprehensive income | -163,748.92 | -424,313.33 |
| Specific reserve | ||
| Surplus reserves | 1,150,908,718.15 | 1,150,908,718.15 |
| Retained earnings | 4,584,664,484.31 | 4,381,640,182.32 |
| Total owners’ equity | 7,068,211,074.84 | 6,778,935,883.20 |
| Total liabilities and owners’ equity | 10,445,417,438.94 | 9,873,295,567.58 |
3. Consolidated Income Statement
Unit: RMB
| Item | H1 2021 | H1 2020 |
| 1. Revenue | 2,220,313,650.94 | 2,286,744,080.79 |
| Including: Operating revenue | 2,220,313,650.94 | 2,286,744,080.79 |
| 2. Costs and expenses | 2,173,672,124.61 | 2,127,801,124.48 |
| Including: Cost of sales | 1,811,241,743.20 | 1,683,752,331.27 |
| Taxes and surcharges | 28,158,126.87 | 35,766,255.41 |
| Selling expense | 48,546,795.06 | 81,739,905.59 |
| Administrative expense | 130,118,046.40 | 177,893,599.47 |
| Development cost | 131,384,483.80 | 123,441,723.06 |
| Finance costs | 24,222,929.28 | 25,207,309.68 |
| Including: Interest expense | 28,972,821.31 | 38,659,705.45 |
| Interest income | 14,562,127.13 | 13,506,359.51 |
| Add: Other income | 19,089,311.11 | 36,850,705.82 |
| Return on investment (“-” for loss) | 29,181,508.22 | 150,730,013.89 |
| Including: Share of profit or loss of joint ventures and associates | -1,789,070.68 | -3,579,523.35 |
| Income from the derecognition of financial assets at amortized cost (“-” for loss) | ||
| Exchange gain (“-” for loss) | ||
| Net gain on exposure hedges (“-” for loss) | ||
| Gain on changes in fair value (“-” for loss) | 8,034,224.66 | -144,695,954.16 |
| Credit impairment loss (“-” for loss) | 12,613,175.75 | -1,553,716.48 |
| Asset impairment loss (“-” for loss) | -7,035,233.41 | -24,613,079.38 |
| Asset disposal income (“-” for loss) | 58,531,388.42 | -353,863.18 |
| 3. Operating profit (“-” for loss) | 167,055,901.08 | 175,307,062.82 |
| Add: Non-operating income | 1,184,008.01 | 2,125,819.41 |
| Less: Non-operating expense | 2,589,928.93 | 2,383,926.90 |
| 4. Profit before tax (“-” for loss) | 165,649,980.16 | 175,048,955.33 |
| Less: Income tax expense | 22,209,233.14 | 27,067,833.69 |
| 5. Net profit (“-” for net loss) | 143,440,747.02 | 147,981,121.64 |
| 5.1 By operating continuity | ||
| 5.1.1 Net profit from continuing operations (“-” for net loss) | 143,440,747.02 | 147,981,121.64 |
| 5.1.2 Net profit from discontinued operations (“-” for net loss) | ||
| 5.2 By ownership | ||
| 5.2.1 Net profit attributable to owners of the Company as the parent | 153,497,344.66 | 144,119,579.22 |
| 5.2.1 Net profit attributable to non-controlling interests | -10,056,597.64 | 3,861,542.42 |
| 6. Other comprehensive income, net of tax | -14,700,397.96 | 21,295,310.76 |
| Attributable to owners of the Company as the parent | -14,722,687.09 | 21,295,310.76 |
| 6.1 Items that will not be reclassified to profit or loss | ||
| 6.1.1 Changes caused by re-measurements on defined benefit schemes | ||
| 6.1.2 Other comprehensive income that will not be reclassified to profit or loss under the equity method | ||
| 6.1.3 Changes in the fair value of investments in other equity instruments | ||
| 6.1.4 Changes in the fair value arising from changes in own credit risk | ||
| 6.1.5 Other | ||
| 6.2 Items that will be reclassified to profit or loss | -14,722,687.09 | 21,295,310.76 |
| 6.2.1 Other comprehensive income that will be reclassified to profit or loss under the equity method | ||
| 6.2.2 Changes in the fair value of investments in other debt obligations | -365.50 | |
| 6.2.3 Other comprehensive income arising from the reclassification of financial assets | ||
| 6.2.4 Credit impairment allowance for investments in other debt obligations | ||
| 6.2.5 Reserve for cash flow hedges | ||
| 6.2.6 Differences arising from the translation of foreign currency-denominated financial statements | -14,722,321.59 | 21,295,310.76 |
| 6.2.7 Other | ||
| Attributable to non-controlling interests | 22,289.13 | |
| 7. Total comprehensive income | 128,740,349.06 | 169,276,432.40 |
| Attributable to owners of the Company as the parent | 138,774,657.57 | 165,414,889.98 |
| Attributable to non-controlling interests | -10,034,308.51 | 3,861,542.42 |
| 8. Earnings per share | ||
| 8.1 Basic earnings per share | 0.17 | 0.17 |
| 8.2 Diluted earnings per share | 0.19 | 0.16 |
Where business combinations under common control occurred in the current period, the net profit achieved by the acquirees before thecombinations was RMB0.00, with the amount for the same period of last year being RMB0.00.Legal representative: Liu Zibin Chief Accountant: Zhang Hongmei
Financial Manager: Zhang Keming
4. Income Statement of the Company as the Parent
Unit: RMB
| Item | H1 2021 | H1 2020 |
| 1. Operating revenue | 1,546,770,256.74 | 1,524,486,328.98 |
| Less: Cost of sales | 1,233,607,256.57 | 1,181,364,557.21 |
| Taxes and surcharges | 18,073,275.27 | 23,730,341.94 |
| Selling expense | 35,265,127.32 | 46,988,183.91 |
| Administrative expense | 75,940,716.94 | 111,338,619.84 |
| R&D expense | 92,384,664.97 | 82,599,289.44 |
| Finance costs | 7,127,260.14 | 5,664,248.42 |
| Including: Interest expense | 13,954,488.83 | 10,420,836.93 |
| Interest income | 11,629,881.84 | 3,879,751.58 |
| Add: Other income | 13,305,144.20 | 26,850,419.74 |
| Return on investment (“-” for loss) | 111,926,435.70 | 297,360,063.89 |
| Including: Share of profit or loss of joint ventures and associates | -1,789,070.68 | -3,579,523.35 |
| Income from the derecognition of financial assets at amortized cost (“-” for loss) | ||
| Net gain on exposure hedges (“-” for loss) | ||
| Gain on changes in fair value (“-” for loss) | 5,605,924.66 | -143,854,551.38 |
| Credit impairment loss (“-” for loss) | 11,175,804.15 | 1,110,012.04 |
| Asset impairment loss (“-” for loss) | -3,411,935.03 | -20,100,921.17 |
| Asset disposal income (“-” for loss) | 58,532,217.69 | -414,285.87 |
| 2. Operating profit (“-” for loss) | 281,505,546.90 | 233,751,825.47 |
| Add: Non-operating income | 972,603.08 | 1,982,724.35 |
| Less: Non-operating expense | 2,054,627.77 | 1,505,277.66 |
| 3. Profit before tax (“-” for loss) | 280,423,522.21 | 234,229,272.16 |
| Less: Income tax expense | 33,278,229.82 | 12,153,281.55 |
| 4. Net profit (“-” for net loss) | 247,145,292.39 | 222,075,990.61 |
| 4.1 Net profit from continuing operations (“-” for net loss) | 247,145,292.39 | 222,075,990.61 |
| 4.2 Net profit from discontinued operations (“-” for net loss) |
| 5. Other comprehensive income, net of tax | 260,564.41 | |
| 5.1 Items that will not be reclassified to profit or loss | ||
| 5.1.1 Changes caused by re-measurements on defined benefit schemes | ||
| 5.1.2 Other comprehensive income that will not be reclassified to profit or loss under the equity method | ||
| 5.1.3 Changes in the fair value of investments in other equity instruments | ||
| 5.1.4 Changes in the fair value arising from changes in own credit risk | ||
| 5.1.5 Other | ||
| 5.2 Items that will be reclassified to profit or loss | 260,564.41 | |
| 5.2.1 Other comprehensive income that will be reclassified to profit or loss under the equity method | ||
| 5.2.2 Changes in the fair value of investments in other debt obligations | 260,564.41 | |
| 5.2.3 Other comprehensive income arising from the reclassification of financial assets | ||
| 5.2.4 Credit impairment allowance for investments in other debt obligations | ||
| 5.2.5 Reserve for cash flow hedges | ||
| 5.2.6 Differences arising from the translation of foreign currency-denominated financial statements | ||
| 5.2.7 Other | ||
| 6. Total comprehensive income | 247,405,856.80 | 222,075,990.61 |
| 7. Earnings per share | ||
| 7.1 Basic earnings per share | 0.28 | 0.26 |
| 7.2 Diluted earnings per share | 0.29 | 0.26 |
5. Consolidated Cash Flow Statement
Unit: RMB
| Item | H1 2021 | H1 2020 |
| 1. Cash flows from operating activities: | ||
| Proceeds from sale of commodities and rendering of services | 2,188,519,072.50 | 2,349,623,633.05 |
| Tax rebates | 49,776,817.94 | 88,289,716.37 |
| Cash generated from other operating activities | 40,450,105.81 | 55,602,212.50 |
| Subtotal of cash generated from operating activities | 2,278,745,996.25 | 2,493,515,561.92 |
| Payments for commodities and services | 1,226,604,647.77 | 1,263,252,180.21 |
| Cash paid to and for employees | 720,934,623.02 | 818,429,524.90 |
| Taxes paid | 80,233,114.94 | 98,517,829.70 |
| Cash used in other operating activities | 68,212,585.38 | 103,923,761.42 |
| Subtotal of cash used in operating activities | 2,095,984,971.11 | 2,284,123,296.23 |
| Net cash generated from/used in operating activities | 182,761,025.14 | 209,392,265.69 |
| 2. Cash flows from investing activities: | ||
| Proceeds from disinvestment | 1,123,970,000.00 | 50,131,167.06 |
| Return on investment | 47,849,203.51 | 146,015,342.75 |
| Net proceeds from the disposal of fixed assets, intangible assets and other long-lived assets | 710,556.50 | 2,828,220.00 |
| Net proceeds from the disposal of subsidiaries and other business units | ||
| Cash generated from other investing activities | 37,938,763.04 | 46,094,785.79 |
| Subtotal of cash generated from investing activities | 1,210,468,523.05 | 245,069,515.60 |
| Payments for the acquisition of fixed assets, intangible assets and other long-lived assets | 287,358,483.38 | 318,762,103.03 |
| Payments for investments | 620,970,000.00 | 52,215,000.00 |
| Net increase in pledged loans granted | ||
| Net payments for the acquisition of subsidiaries and other business units | ||
| Cash used in other investing activities | 2,365,093.84 | 3,231,380.25 |
| Subtotal of cash used in investing activities | 910,693,577.22 | 374,208,483.28 |
| Net cash generated from/used in investing activities | 299,774,945.83 | -129,138,967.68 |
| 3. Cash flows from financing activities: | ||
| Capital contributions received | 80,383,350.00 | 50,000,000.00 |
| Including: Capital contributions by non-controlling interests to subsidiaries | 50,000,000.00 | |
| Borrowings raised | 843,468,990.63 | 2,152,485,725.20 |
| Cash generated from other financing activities | 174,000,000.00 | |
| Subtotal of cash generated from financing activities | 923,852,340.63 | 2,376,485,725.20 |
| Repayment of borrowings | 692,224,712.96 | 1,075,621,432.55 |
| Interest and dividends paid | 66,479,635.99 | 81,488,219.93 |
| Including: Dividends paid by subsidiaries to non-controlling interests | 50,000,000.00 |
| Cash used in other financing activities | 9,339,306.00 | 160,000,000.00 |
| Subtotal of cash used in financing activities | 768,043,654.95 | 1,317,109,652.48 |
| Net cash generated from/used in financing activities | 155,808,685.68 | 1,059,376,072.72 |
| 4. Effect of foreign exchange rates changes on cash and cash equivalents | -3,229,063.94 | 460,253.84 |
| 5. Net increase in cash and cash equivalents | 635,115,592.71 | 1,140,089,624.57 |
| Add: Cash and cash equivalents, beginning of the period | 1,396,530,407.47 | 878,559,018.92 |
| 6. Cash and cash equivalents, end of the period | 2,031,646,000.18 | 2,018,648,643.49 |
6. Cash Flow Statement of the Company as the Parent
Unit: RMB
| Item | H1 2021 | H1 2020 |
| 1. Cash flows from operating activities: | ||
| Proceeds from sale of commodities and rendering of services | 1,577,179,188.45 | 1,618,771,452.43 |
| Tax rebates | 3,977,675.63 | 36,161,757.59 |
| Cash generated from other operating activities | 30,694,841.32 | 32,417,593.75 |
| Subtotal of cash generated from operating activities | 1,611,851,705.40 | 1,687,350,803.77 |
| Payments for commodities and services | 803,497,278.61 | 1,120,352,074.73 |
| Cash paid to and for employees | 440,588,791.54 | 497,295,354.33 |
| Taxes paid | 45,320,520.61 | 43,095,322.48 |
| Cash used in other operating activities | 52,552,741.22 | 70,463,669.09 |
| Subtotal of cash used in operating activities | 1,341,959,331.98 | 1,731,206,420.63 |
| Net cash generated from/used in operating activities | 269,892,373.42 | -43,855,616.86 |
| 2. Cash flows from investing activities: | ||
| Proceeds from disinvestment | 549,430,000.00 | 50,131,167.06 |
| Return on investment | 132,956,299.26 | 296,015,342.75 |
| Net proceeds from the disposal of fixed assets, intangible assets and other long-lived assets | 804,625.93 | 9,912,775.89 |
| Net proceeds from the disposal of subsidiaries and other business units | ||
| Cash generated from other investing activities | 495,197,496.03 | 411,047,820.90 |
| Subtotal of cash generated from investing activities | 1,178,388,421.22 | 767,107,106.60 |
| Payments for the acquisition of fixed assets, intangible assets and other long-lived | 41,200,695.39 | 28,778,618.38 |
| assets | ||
| Payments for investments | 392,970,000.00 | 208,165,000.00 |
| Net payments for the acquisition of subsidiaries and other business units | ||
| Cash used in other investing activities | 928,911,558.44 | 535,327,516.63 |
| Subtotal of cash used in investing activities | 1,363,082,253.83 | 772,271,135.01 |
| Net cash generated from/used in investing activities | -184,693,832.61 | -5,164,028.41 |
| 3. Cash flows from financing activities: | ||
| Capital contributions received | 80,383,350.00 | |
| Borrowings raised | 442,042,271.59 | 1,538,788,675.65 |
| Cash generated from other financing activities | 58,215,720.00 | 58,280,000.00 |
| Subtotal of cash generated from financing activities | 580,641,341.59 | 1,597,068,675.65 |
| Repayment of borrowings | 86,522,398.76 | 298,208,024.53 |
| Interest and dividends paid | 60,176,992.11 | 16,129,305.81 |
| Cash used in other financing activities | 133,919,601.16 | 135,072,100.00 |
| Subtotal of cash used in financing activities | 280,618,992.03 | 449,409,430.34 |
| Net cash generated from/used in financing activities | 300,022,349.56 | 1,147,659,245.31 |
| 4. Effect of foreign exchange rates changes on cash and cash equivalents | -1,488,714.12 | -58,014.74 |
| 5. Net increase in cash and cash equivalents | 383,732,176.25 | 1,098,581,585.30 |
| Add: Cash and cash equivalents, beginning of the period | 728,346,695.28 | 259,320,863.08 |
| 6. Cash and cash equivalents, end of the period | 1,112,078,871.53 | 1,357,902,448.38 |
7. Consolidated Statements of Changes in Owners’ Equity
H1 2021
Unit: RMB
| Item | H1 2021 | ||||||||||||||
| Equity attributable to owners of the Company as the parent | Non-controlling interests | Total owners’ equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Specific reserve | Surplus reserves | General reserve | Retained earnings | Other | Subtotal | |||||
| Preferred shares | Perpetual bonds | Other | |||||||||||||
| 1. Balances as at the end of the prior year | 858,132,322.00 | 71,386,451.81 | 255,912,488.01 | 1,308,922.89 | 1,154,017,457.79 | 5,346,819,948.22 | 7,687,577,590.72 | 404,098,789.18 | 8,091,676,379.90 | ||||||
| Add: Adjustments for changed accounting policies | |||||||||||||||
| Adjustments for corrections of previous errors | |||||||||||||||
| Adjustments for business combinations under common control | |||||||||||||||
| Other adjustments | |||||||||||||||
| 2. Balances as at the beginning of the year | 858,132,322.00 | 71,386,451.81 | 255,912,488.01 | 1,308,922.89 | 1,154,017,457.79 | 5,346,819,948.22 | 7,687,577,590.72 | 404,098,789.18 | 8,091,676,379.90 | ||||||
| 3. Increase/ decrease in the period (“-” for decrease) | 24,287,600.00 | -1,183.05 | 61,703,908.29 | -14,722,687.09 | 109,376,354.26 | 180,643,992.41 | -10,034,308.51 | 170,609,683.90 | |||||||
| 3.1 Total comprehensive income | -14,722,687.09 | 153,497,344.66 | 138,774,657.57 | -10,034,308.51 | 128,740,349.06 | ||||||||||
| 3.2 Capital increased and reduced by owners | 24,287,600.00 | -1,183.05 | 61,703,908.29 | 85,990,325.24 | 85,990,325.24 | ||||||||||
| 3.2.1 Ordinary shares increased by shareholders | 24,287,600.00 | 61,703,908.29 | 85,991,508.29 | 85,991,508.29 | |||||||||||
| 3.2.2 Capital increased by holders of other equity instruments | -1,183.05 | -1,183.05 | -1,183.05 | ||||||||||||
| 3.2.3 Share-based payments included in owners’ equity | |||||||||||||||
| 3.2.4 Other | |||||||||||||||
| 3.3 Profit distribution | -44,120,990.40 | -44,120,990.40 | -44,120,990.40 | ||||||||||||
| 3.3.1 Appropriation to surplus reserves | |||||||||||||||
| 3.3.2 Appropriation to general reserve | |||||||||||||||
| 3.3.3 Appropriation to owners (or shareholders) | -44,120,990.40 | -44,120,990.40 | -44,120,990.40 | ||||||||||||
| 3.3.4 Other | |||||||||||||||
| 3.4 Transfers within owners’ equity | |||||||||||||||
| 3.4.1 Increase in capital (or share capital) from capital reserves | |||||||||||||||
| 3.4.2 Increase in capital (or share capital) from surplus reserves | |||||||||||||||
| 3.4.3 Loss offset by surplus |
| reserves | |||||||||||||||
| 3.4.4 Changes in defined benefit pension schemes transferred to retained earnings | |||||||||||||||
| 3.4.5 Other comprehensive income transferred to retained earnings | |||||||||||||||
| 3.4.6 Other | |||||||||||||||
| 3.5 Specific reserve | |||||||||||||||
| 3.5.1 Increase in the period | |||||||||||||||
| 3.5.2 Used in the period | |||||||||||||||
| 3.6 Other | |||||||||||||||
| 4. Balances as at the end of the period | 882,419,922.00 | 71,385,268.76 | 317,616,396.30 | -13,413,764.20 | 1,154,017,457.79 | 5,456,196,302.48 | 7,868,221,583.13 | 394,064,480.67 | 8,262,286,063.80 |
H1 2020
Unit: RMB
| Item | H1 2020 | ||||||||||||||
| Equity attributable to owners of the Company as the parent | Non-controlling interests | Total owners’ equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Specific reserve | Surplus reserves | General reserve | Retained earnings | Other | Subtotal | |||||
| Preferred | Perpetual | Other | |||||||||||||
| shares | bonds | ||||||||||||||
| 1. Balances as at the end of the prior year | 858,121,541.00 | 258,046,245.42 | 91,626,571.75 | 1,117,267,351.63 | 5,372,073,615.12 | 7,697,135,324.92 | 602,169,223.52 | 8,299,304,548.44 | |||||||
| Add: Adjustments for changed accounting policies | |||||||||||||||
| Adjustments for corrections of previous errors | |||||||||||||||
| Adjustments for business combinations under common control | |||||||||||||||
| Other adjustments | |||||||||||||||
| 2. Balances as at the beginning of the year | 858,121,541.00 | 258,046,245.42 | 91,626,571.75 | 1,117,267,351.63 | 5,372,073,615.12 | 7,697,135,324.92 | 602,169,223.52 | 8,299,304,548.44 | |||||||
| 3. Increase/ decrease in the period (“-” for decrease) | 71,391,357.42 | 21,295,310.76 | 58,307,425.12 | 150,994,093.30 | 3,861,542.42 | 154,855,635.72 | |||||||||
| 3.1 Total comprehensive income | 21,295,310.76 | 144,119,579.22 | 165,414,889.98 | 3,861,542.42 | 169,276,432.40 | ||||||||||
| 3.2 Capital increased and reduced by owners | 71,391,357.42 | 71,391,357.42 | 50,000,000.00 | 121,391,357.42 | |||||||||||
| 3.2.1 Ordinary shares increased by shareholders | 50,000,000.00 | 50,000,000.00 | |||||||||||||
| 3.2.2 Capital increased by holders of other equity instruments | 71,391,357.42 | 71,391,357.42 | 71,391,357.42 | ||||||||||||
| 3.2.3 Share-based payments included in owners’ equity |
| 3.2.4 Other | |||||||||||||||
| 3.3 Profit distribution | -85,812,154.10 | -85,812,154.10 | -50,000,000.00 | -135,812,154.10 | |||||||||||
| 3.3.1 Appropriation to surplus reserves | |||||||||||||||
| 3.3.2 Appropriation to general reserve | |||||||||||||||
| 3.3.3 Appropriation to owners (or shareholders) | -85,812,154.10 | -85,812,154.10 | -50,000,000.00 | -135,812,154.10 | |||||||||||
| 3.3.4 Other | |||||||||||||||
| 3.4 Transfers within owners’ equity | |||||||||||||||
| 3.4.1 Increase in capital (or share capital) from capital reserves | |||||||||||||||
| 3.4.2 Increase in capital (or share capital) from surplus reserves | |||||||||||||||
| 3.4.3 Loss offset by surplus reserves | |||||||||||||||
| 3.4.4 Changes in defined benefit pension schemes transferred to retained earnings | |||||||||||||||
| 3.4.5 Other comprehensive income transferred to retained earnings | |||||||||||||||
| 3.4.6 Other | |||||||||||||||
| 3.5 Specific reserve |
| 3.5.1 Increase in the period | |||||||||||||||
| 3.5.2 Used in the period | |||||||||||||||
| 3.6 Other | |||||||||||||||
| 4. Balances as at the end of the period | 858,121,541.00 | 71,391,357.42 | 258,046,245.42 | 112,921,882.51 | 1,117,267,351.63 | 5,430,381,040.24 | 7,848,129,418.22 | 606,030,765.94 | 8,454,160,184.16 |
8. Statements of Changes in Owners’ Equity of the Company as the Parent
H1 2021
Unit: RMB
| Item | H1 2021 | |||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Specific reserve | Surplus reserves | Retained earnings | Other | Total owners’ equity | |||
| Preferred shares | Perpetual bonds | Other | ||||||||||
| 1. Balances as at the end of the prior year | 858,132,322.00 | 71,386,451.81 | 317,292,522.25 | -424,313.33 | 1,150,908,718.15 | 4,381,640,182.32 | 6,778,935,883.20 | |||||
| Add: Adjustments for changed accounting policies | ||||||||||||
| Adjustments for corrections of previous errors | ||||||||||||
| Other adjustments | ||||||||||||
| 2. Balances as at the beginning of the year | 858,132,322.00 | 71,386,451.81 | 317,292,522.25 | -424,313.33 | 1,150,908,718.15 | 4,381,640,182.32 | 6,778,935,883.20 | |||||
| 3. Increase/ decrease in the period (“-” for decrease) | 24,287,600.00 | -1,183.05 | 61,703,908.29 | 260,564.41 | 203,024,301.99 | 289,275,191.64 | ||||||
| 3.1 Total comprehensive income | 260,564.41 | 247,145,292.39 | 247,405,856.80 | |||||||||
| 3.2 Capital increased and reduced by owners | 24,287,600.00 | -1,183.05 | 61,703,908.29 | 85,990,325.24 | ||||||||
| 3.2.1 Ordinary shares increased by shareholders | 24,287,600.00 | 61,703,908.29 | 85,991,508.29 | |||||||||
| 3.2.2 Capital increased by holders of other equity instruments | -1,183.05 | -1,183.05 | ||||||||||
| 3.2.3 Share-based payments included in owners’ equity | ||||||||||||
| 3.2.4 Other | ||||||||||||
| 3.3 Profit distribution | -44,120,990.40 | -44,120,990.40 | ||||||||||
| 3.3.1 Appropriation to surplus reserves | ||||||||||||
| 3.3.2 Appropriation to owners (or shareholders) | -44,120,990.40 | -44,120,990.40 | ||||||||||
| 3.3.3 Other | ||||||||||||
| 3.4 Transfers within owners’ equity | ||||||||||||
| 3.4.1 Increase in capital (or share capital) from capital reserves | ||||||||||||
| 3.4.2 Increase in capital (or share capital) from surplus reserves |
| 3.4.3 Loss offset by surplus reserves | ||||||||||||
| 3.4.4 Changes in defined benefit pension schemes transferred to retained earnings | ||||||||||||
| 3.4.5 Other comprehensive income transferred to retained earnings | ||||||||||||
| 3.4.6 Other | ||||||||||||
| 3.5 Specific reserve | ||||||||||||
| 3.5.1 Increase in the period | ||||||||||||
| 3.5.2 Used in the period | ||||||||||||
| 3.6 Other | ||||||||||||
| 4. Balances as at the end of the period | 882,419,922.00 | 71,385,268.76 | 378,996,430.54 | -163,748.92 | 1,150,908,718.15 | 4,584,664,484.31 | 7,068,211,074.84 |
H1 2020
Unit: RMB
| Item | H1 2020 | |||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Specific reserve | Surplus reserves | Retained earnings | Other | Total owners’ equity | |||
| Preferred shares | Perpetual bonds | Other | ||||||||||
| 1. Balances as at the end of the prior year | 858,121,541.00 | 317,206,232.47 | 1,114,158,611.99 | 4,136,701,381.01 | 6,426,187,766.47 | |||||||
| Add: Adjustments for changed accounting policies | ||||||||||||
| Adjustments for corrections of previous errors | ||||||||||||
| Other adjustments | ||||||||||||
| 2. Balances as at the beginning of the year | 858,121,541.00 | 317,206,232.47 | 1,114,158,611.99 | 4,136,701,381.01 | 6,426,187,766.47 | |||||||
| 3. Increase/ decrease in the period (“-” for decrease) | 71,391,357.42 | 136,263,836.51 | 207,655,193.93 | |||||||||
| 3.1 Total comprehensive income | 222,075,990.61 | 222,075,990.61 | ||||||||||
| 3.2 Capital increased and reduced by owners | 71,391,357.42 | 71,391,357.42 | ||||||||||
| 3.2.1 Ordinary shares increased by shareholders | ||||||||||||
| 3.2.2 Capital increased by holders of other equity instruments | 71,391,357.42 | 71,391,357.42 | ||||||||||
| 3.2.3 Share-based payments included in owners’ equity | ||||||||||||
| 3.2.4 Other | ||||||||||||
| 3.3 Profit distribution | -85,812,154.10 | -85,812,154.10 | ||||||||||
| 3.3.1 Appropriation to surplus reserves | ||||||||||||
| 3.3.2 Appropriation to owners | -85,812,154.10 | -85,812,154.10 |
| (or shareholders) | ||||||||||||
| 3.3.3 Other | ||||||||||||
| 3.4 Transfers within owners’ equity | ||||||||||||
| 3.4.1 Increase in capital (or share capital) from capital reserves | ||||||||||||
| 3.4.2 Increase in capital (or share capital) from surplus reserves | ||||||||||||
| 3.4.3 Loss offset by surplus reserves | ||||||||||||
| 3.4.4 Changes in defined benefit pension schemes transferred to retained earnings | ||||||||||||
| 3.4.5 Other comprehensive income transferred to retained earnings | ||||||||||||
| 3.4.6 Other | ||||||||||||
| 3.5 Specific reserve | ||||||||||||
| 3.5.1 Increase in the period | ||||||||||||
| 3.5.2 Used in the period | ||||||||||||
| 3.6 Other | ||||||||||||
| 4. Balances as at the end of the | 858,121,541.00 | 71,391,357.42 | 317,206,232.47 | 1,114,158,611.99 | 4,272,965,217.52 | 6,633,842,960.40 |
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) inWJMZEHZ No. 59 to convert into a joint-stock enterprise. Zibo Administration for Industry and Commerce issued the Companycorporate 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 issue80 million shares of domestically listed foreign share( B-shares) at the price of RMB 1.00 per share. Upon approved by Shenzhen StockExchange with No. (1997) 296 Listing Notice, the Company is listed on the Shenzhen Stock Exchange on 19 August 1997 withB-shares stock code of 200726. On 24 November 2000, approved by ZJGSZ [2000] No.199 by CSRC, the Company increasedpublication of 50 million shares of general share (A-shares) at the book value of RMB 1.00, which are listed on the Shenzhen StockExchange 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 capitalpublic 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 10shares 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 capitalpublic reserve are 2 more shares for each 10 shares, and inner employees’ shared increased to 40.56 million shares. As examined andapproved by ZJGSZ No. [2000] 199 of CSRC, the inner employees’ shares will start circulation 3 years later since listing on theA-share market. On 25 December 2003, the inner employees’ shares reach 3 years since listing on the A-share stock market, and theyset 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 allits 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 2
nd
Special Extraordinary General Meeting of 2011, the relevant resolution of the 15
th
Meeting of the 6
thBoard of Directors, the Opinion of China Securities Regulatory Commission on the Restricted Share Incentive Planof 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 OriginalIncentive Targets not Reaching the Incentive Conditions made at the 23
rd Session of the 6
thBoard of Directors on 13 August 2012, the
Company canceling a total of 60,000.00 shares already granted for the original incentive targets not reaching the incentive conditions.According to the second temporary resolution of Proposal on counter purchase of part of the domestic listed foreign share (B share) on25 June 2012, the Company counter purchase domestic listed foreign share (B share) 48,837,300 shares.According to the Proposal on Repurchase and Cancel Part of Unlocked Restricted Share of the Original Incentive Personnel notConforming to the Incentive Condition, Proposal on Repurchase and Cancel unlocked Restricted Share in Second Unlocked Period ofall the Incentive Personnel reviewed and approved by the 26
th Meeting of the 6
thBoard of Directors on 27 March 2013, the Companyrepurchase and cancel 4,257,000 shares owned by original people whom to motivate.According to the Proposal on Repurchase and Write-off of Partly of the Original Incentive Targets Not Met with the IncentiveConditions but Granted Restricted Shares approved on the 11
th
Meeting of the 7
thBoard of Directors on 11 June 2014, to executerepurchase and write-off of the whole granted shares of 42,000 shares of the original incentive targets not met with the incentive targetsof the Company.As per the Proposal on Buy-back of Some A- and B-shares considered and approved as a resolution at the 1
stspecial meeting ofshareholders on 5 August 2015, the Company repurchased 33,156,200 domestically listed foreign shares (B-shares).As per the Proposal on Buy-back of Some B-shares considered and approved as a resolution at the 2
ndExtraordinary General Meetingon 23 March 2018, the Company repurchased 64,480,800 domestically listed foreign shares (B-shares).According to the resolution of the Company's first extraordinary general meeting in 2021 and the resolution of the 24th meeting ofthe 9th board of directors, the Company issues 24,285,000 restricted shares to 750 subjects of incentive, with contribution made bysubjects of restricted share incentive by means of monetary capital.As of 30 June 2021, 13,400 shares are added to conversion of shares due to the issue of A-share convertible bond by the Company.As of 30 June 2021, the registered capital of the Company was RMB882.4199 million.The Company’s registered address: No. 61, Luthai Avenue, Hi-tech Development Zone, Zibo, ShandongThe Company’s unified social credit code: 91370300613281175KThe Company’s legal representative: Liu ZibinThe Company establishes the corporate governance structure consisting of the shareholders meeting, the Board of Directors and theSupervisory Committee. At present, the Company has set up various departments including the Yarn-dyed Fabric ManufacturingCenter, Garment Manufacturing Center, the Clothing Marketing Department, the Global Marketing Department, the Supply ChainDepartment, Lu Thai Engineering Technology Institute, the Enterprise Management Department, the Financial ManagementDepartment and the Strategy and Market Department etc..The scope of business of the Company and its subsidiaries (hereinafter referred to as “the Group”) shall include: the design, R&D,production and sales of various textiles and garments including yarns, fabrics, blouses/shirts, suits and coats etc.; the textiles and
clothing testing; the production and sales of Class I medical devices; the production and sales of non-medical masks and protectiveclothing; the technical development, service and consultation based on the e-commerce platform; the processing and sales ofmechanical and electrical products; the procurement of agricultural products; hotel, restaurant, catering, conference and trainingservices; the lease of self-owned premises and lands; the non-quota license management; the procurement and sales of non-exclusivegoods.The Company’s financial statements and Notes thereof have been approved by the 26
th Meeting of the 9
thBoard of Directors held on26 August 2021.There were 19 subsidiaries included into the consolidation scope of the Company in H1 2021, and for the details, please refer to NoteVIII. “Changes of Consolidation Scope” and Notes IX. “Equities among Other Entities”.IV Basis for Preparation of Financial Statements
1. Preparation Basis
This financial statement is prepared in accordance with the accounting standards for business enterprises, and the application guide,interpretation and other relevant regulations (hereinafter collectively referred to as “Accounting Standards for Business Enterprises”)issued by the Ministry of Finance. In addition, the Group also disclosed relevant financial information in accordance with theRegulations on Information Disclosure and Compilation for Companies Public Offering Securities No. 15-General Provisions onFinancial Report (revised in 2014) issued by China Securities Regulatory Commission.The Group's accounting is based on the accrual basis. Except for certain financial instruments, this financial statement is measured onthe basis of historical cost. If the asset is impaired, the corresponding impairment provision shall be made in accordance with relevantregulations.
2. Going-concern
The financial statements are presented on the basis of continuing operations.V Significant Accounting Policies and EstimatesSpecific accounting policies and accounting estimates indicators:
Specific accounting policies and accounting estimates indicators:
The Group determines income recognition policy according to its production and operation characteristics, and the specific accountingpolicies are shown in Note V (26).
1. Statement of Compliance with the Accounting Standards for Business EnterprisesThe financial statements prepared by the Company are in compliance with in compliance with the Accounting Standards for BusinessEnterprises, which factually and completely present the consolidated, and the Company’s financial positions as at 30 June 2021,business results and cash flows for the January to December of H1 2021, and other relevant information.
2. Fiscal Year
The Company’s fiscal year starts on 1 January and ends on 31 December of every year according to the Gregorian calendar.
3. Operating Cycle
The Group regards 12 months as an operating cycle.
4. Recording Currency
The Company and its domestic subsidiaries adopt RMB as the recording currency. The Company’s overseas subsidiaries confirm toadopt HK Dollar and US Dollar as the recording currency according their major economic environment of the operating. Whenpreparing the financial statements for the Reporting Period, the Group adopted RMB as the recording currency.
5. Accounting Treatment for Business Combinations under the Common Control and Not under theCommon 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 themerger, except for adjustments due to different accounting policies, shall be measured at the carrying value of the merged party in theconsolidated financial statement of the final controller on the combination date. As for the difference between the carrying value ofthe merger consideration and carrying value of the net assets obtained in the merger, the capital reserve (capital stock premium) shallbe 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 timesIn specific financial statements, the share of book value of the net assets of the combined party that shall be enjoyed in the combinedfinancial statements of the final control party on the combination date as calculated according to the shareholding ratio of thecombination date is regarded as the initial investment cost of the investment; the difference between the initial investment cost andthe sum of book value of investment held before combination plus the book value of the consideration newly paid on the combinationdate is used for adjusting the capital reserve (capital stock premium), and if the capital reserve is insufficient to offset, the retainedearnings shall be adjusted.In the combined financial statements, the assets and liabilities of the combined party acquired by the combining party in thecombination, except for adjustments due to different accounting policies, shall be measured at the book value of the combined partyin the consolidated financial statement of the final controller on the combination date; the difference between the sum of the bookvalue of investment held before combination plus the book value newly paid on the combination date, and the book value of the netassets acquired in combination, is used for adjusting the capital reserve (capital stock premium), and if the capital reserve (capitalstock premium) is insufficient to offset, the retained earnings shall be adjusted. The long-term equity investment held by thecombining party before acquiring the control right of the combined party, if relevant gains and losses, other comprehensive revenuesand changes in other owner’s equity have been confirmed from the date of acquiring equity and the date when the combining partyand the combined party under the final control of the same party, whichever is later, to the combination date, shall offset the retainedearnings 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 purchasedate, the acquired assets, liabilities and contingent liabilities of the purchased party are recognized at fair value.The difference between the merger cost and the fair value of the identifiable net assets of the acquired party acquired in the merger
(the former is greater than the latter) is recognized as goodwill, and subsequent measurement is made based on the cost deducting theaccumulated impairment provision; the difference between the merger cost and the fair value of the identifiable net assets of theacquired party acquired in the merger (the former is less than the latter) shall be recorded into the current profit or loss after therecheck.
(3) Treatment of transaction costs in business combinations
Intermediary expenses such as auditing, legal services, evaluation and consulting and other related management expenses incurredfor the business combination shall be included in the current profit and loss when incurred. The transaction costs of equity securitiesor debt securities issued as the merger consideration shall be included in the initial recognition amount of equity securities or debtsecurities.
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 theCompany 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 entitiescontrolled 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 itssubsidiaries and other relevant materials. When preparing the consolidated financial statements, the accounting policies andaccounting fiscal of the Company and those of subsidiaries shall be consistent and the large transactions and intercourse balanceamong companies shall be offset. Subsidiaries and businesses increased due to business combinations under the same control duringthe Reporting Period shall be included into the Company’s combination scope since the date when they are jointly controlled by thefinal controller, and the operating result and cash flow since then shall be respectively included into the consolidated incomestatement and consolidated cash flow statement. As for subsidiaries and businesses increase due to business combinations not underthe same control during the Reporting Period, the revenue, expenses and profit or those subsidiaries and businesses from the purchasedate to the end of the Reporting Period shall be included into the consolidated income statement and the cash flow thereof shall beincluded into the consolidated cash flow statement. The share of shareholders’ equity in subsidiaries not belonging to the Companyshall be regarded as the minority interests and separately listed under the item of shareholders’ equity in the consolidated balancesheet. The share of current portion of net profit or loss in subsidiaries belonging to minority interests shall presented as the item ofminority interests under the item of net profit in the consolidated income statement. The difference between the losses of subsidiariesborn by not-controlling shareholders and the share of the company’s owners’ equity at the period-beginning the not-controllingshareholders 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 sharesand the share of net assets of the subsidiary continuously accounted from the purchase date or combination date the Company shallenjoy based on the new shareholding ratio and the difference between the disposal price of partial equity investments in thesubsidiary under the premise of remaining the control power and the share of net assets of the subsidiary continuously accountedfrom the purchase date or combination date the Company shall enjoy and corresponding to the disposal of long-term equityinvestments, the capital reserve (capital stock premium) in the consolidated balance sheet shall be adjusted and when the capitalreserve 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 equityshall 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 theoriginal subsidiary continuously accounted from the purchase date the Company shall enjoy based on the original shareholding ratioand the goodwill shall be recorded into the investment income of the period when the control power is lost. The other comprehensiveincome related to the equity investments in the original subsidiary shall be transferred to the current profit or loss when the controlpower is lost except for the other comprehensive income arising from changes in net liabilities or net assets due to the remeasurementof defined benefit plan by the investee.
7. Confirmation Standard for Cash and Cash Equivalent
The term “cash” refers to cash on hand and deposits that are available for payment at any time. Cash equivalents refer to investmentsheld by the Group that are short-term, highly liquid, easily convertible into known amounts of cash, and have little risk of change invalue.
8. Foreign Currency Businesses and Translation of Foreign Currency Financial Statements
(1) Foreign currency business
The Group's foreign currency business is translated into the amount of the recording currency at the spot exchange rate on thetransaction date.On the balance sheet date, foreign currency monetary items are translated at the spot exchange rate on the balance sheet date. Theexchange difference arising from the difference between the spot exchange rate on the balance sheet date and the spot exchange rateat the time of initial recognition or the previous balance sheet date is included in the current profit and loss; for foreign currencynon-monetary items measured at historical cost, the translation adopts the spot exchange rate on the day the transaction occurs; forforeign currency non-monetary items measured at fair value, the translation adopts the spot exchange rate on the day when the fairvalue is confirmed, and the difference between the amount of recording currency and the amount of original recording currency shallbe included into the current profit or loss.
(2) Conversion of foreign currency financial statements
When converting the foreign currency financial statements of overseas subsidiaries on the balance sheet date, the assets and liabilitiesitems in the balance sheet shall be converted at the spot exchange rate on the balance sheet date. Other items of shareholders' equityexcept for "undistributed profits" shall be converted at the spot exchange rate on the occurrence date.Income and expense items in the income statement shall be converted using the current average exchange rate on the transaction date.All items in the cash flow statement are converted according to the current average exchange rate on the occurrence date of cash flow.The impact of exchange rate changes on cash is taken as a reconciling item, and the item "impact of exchange rate changes on cashand 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 theshareholders' equity in the balance sheet.When disposing of the overseas operation and losing control rights, the foreign currency statement conversion difference related tothe overseas operation shown under the shareholders' equity in the balance sheet shall be transferred to current profit and loss ofdisposal in whole or in proportion to the disposal of overseas operation.
9. Financial Instruments
Financial instruments refer to contracts that form one party’s financial assets and form other parties’ financial liabilities or equityinstruments.
(1) Recognition and derecognition of financial instruments
The Company recognizes a financial asset or liability when it becomes a party of the relevant financial instrument contract.
Where a financial asset satisfies any of the following requirements, the recognition of it is terminated:
① The contractual rights for collecting the cash flow of the said financial asset are terminated;
② The said financial asset has been transferred and meet the following derecognition conditions for transfer of financial assets.Only when the prevailing obligations of a financial liability are relieved in all or in part may the recognition of the financial liabilitybe terminated in all or partly. Where the Company (debtor) enters into an agreement with a creditor so as to substitute the existingfinancial liabilities by way of any new financial liability, and if the contractual stipulations regarding the new financial liability issubstantially different from that regarding the existing financial liability, it terminates the recognition of the existing financialliability, 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 theprice of transaction date.
(2) Classification and measurement of financial assets
The Group classifies financial assets into the following three categories according to the business mode of managing financial assetsand 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 measuredat fair value and whose changes are included in current profit and loss.Financial assets measured at amortized costThe Group classifies financial assets that meet the following conditions and are not designated to be measured at fair value andwhose changes are included in current profit and loss as financial assets measured at amortized cost:
The Group's business model for managing this financial asset is aimed at collecting contractual cash flow;The contractual terms of this financial asset stipulate that the cash flow generated on the specific date is only the payment of principaland 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 arisingfrom financial assets measured in amortized cost that are not part of any hedging relationship are included in current profit and losswhen 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 incomeThe Group classifies financial assets that meet the following conditions and are not designated to be measured at fair value andwhose changes are included in current profit and loss as financial assets measured at fair value and whose changes are included inother comprehensive income:
The Group's business model for managing this financial asset is aimed at both collecting the contractual cash flow and selling thisfinancial asset;The contractual terms of this financial asset stipulate that the cash flow generated on the specific date is only the payment of principaland interest based on the principal amount outstanding.Such financial assets are subsequently measured at fair value after initial recognition. Interest, impairment losses or gains andexchange gains and losses calculated by the effective interest method are included in current profit and loss, while other gains orlosses are included in other comprehensive income. When the financial asset is derecognized, the accumulated gains or lossespreviously 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 lossExcept for the above financial assets measured at amortized cost and at fair value with changes included in other comprehensiveincome, the Group classifies all other financial assets as financial assets measured at fair value with changes included in currentprofit and loss. Upon initial recognition, in order to eliminate or significantly reduce accounting mismatches, the Group irrevocablydesignates some financial assets that should have been measured at amortized cost or at fair value and whose changes are included inother 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 (includinginterest and dividend income) are included in current profit and loss unless the financial assets are part of the hedging relationship.
The business model of managing financial assets refers to how the Group manages financial assets to generate cash flow. Thebusiness model determines whether the cash flow of the financial assets managed by the Group comes from the collection ofcontractual cash flow, the sale of financial assets or both. The Group determines the business model for managing financial assets onthe basis of objective facts and specific business objectives decided by key management personnel to manage financial assets.The Group evaluates the contractual cash flow characteristics of financial assets to determine whether the contractual cash flowgenerated by the relevant financial assets on the specific date is only the payment of principal and interest based on the principalamount outstanding. Among them, the principal refers to the fair value of financial assets upon initial recognition; interest includesconsideration for the time value of money, credit risks related to the principal amount outstanding in the specific period, and otherbasic lending risks, costs and profits. In addition, the Group evaluates the contract terms that may lead to changes in the timedistribution or amount of contractual cash flow of financial assets to determine whether they meet the requirements of theabove-mentioned contractual cash flow characteristics.Only when the Group changes the business mode of managing financial assets will all affected related financial assets be reclassifiedon the first day of the first reporting period after business model changes, otherwise financial assets cannot be reclassified after initialrecognition.Financial assets are measured at fair value upon initial recognition. For financial assets measured at fair value and whose changes areincluded in current profit and loss, relevant transaction expenses are directly included in current profit and loss; for other types offinancial assets, relevant transaction expenses are included in the initial recognition amount. For accounts receivable arising from thesale of products or the provision of labor services, which do not include or do not consider significant financing components, theamount of consideration the Group is expected to be entitled to receive is taken as the initial recognition amount.
(3) Classification and measurement of financial liabilities
The Group's financial liabilities are classified upon initial recognition as: financial liabilities measured at fair value and whosechanges are included in current profit and loss, and financial liabilities measured at amortized cost. For financial liabilities that arenot classified as measured at fair value and whose changes are included in current profit and loss, relevant transaction costs areincluded in the initial recognition amount.Financial liabilities measured at fair value and whose changes are included in current profit and lossFinancial liabilities measured at fair value and whose changes are included in current profit and loss include transactional financialliabilities and financial liabilities designated as measured at fair value upon initial recognition and whose changes are included incurrent profit and loss. Subsequent measurement shall be carried out according to fair value for such financial liabilities. Gains orlosses resulting from changes in fair value and dividends and interest expenses related to such financial liabilities shall be included incurrent profit and loss.Financial liabilities measured at amortized costOther financial liabilities are subsequently measured at amortized cost by using the effective interest method. Gains or lossesresulting from derecognition or amortization are included in current profit and loss.Distinction between financial liabilities and equity instrumentsFinancial liabilities refer to liabilities that meet one of the following conditions:
① The contractual obligation to deliver cash or other financial assets to other parties.
② The contractual obligation to exchange financial assets or financial liabilities with other parties under potentially unfavorableconditions.
③ Non-derivative contracts that must be or can be settled with the enterprise's own equity instruments in the future, and theenterprise will deliver a variable number of its own equity instruments according to the contract.
④ Derivative contracts that must be or can be settled with the enterprise's own equity instruments in the future, except derivativescontracts that exchange a fixed amount of cash or other financial assets with a fixed amount of its own equity instruments.Equity instruments refer to contracts that can prove that an enterprise has the residual equity in its assets after deducting all liabilities.If the Group cannot unconditionally avoid performing a contractual obligation by delivering cash or other financial assets, the
contractual obligation meets the definition of financial liability.If a financial instrument must be or can be settled with the Group's own equity instruments, it is necessary to consider whether theGroup's own equity instruments used to settle the instrument are used as substitutes for cash or other financial assets or to enable theholder of this instrument to enjoy the residual equity in the assets after deducting all liabilities from the issuer. If it is the former, thisinstrument is the Group's financial liability; if the latter is the case, this instrument is the Group's equity instrument.
(4) Derivative financial instruments and embedded derivatives
The Group's derivative financial instruments include forward foreign exchange contracts. Initially, the fair value on the date when thederivative 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 indeedrecognized as a liability. Any gains or losses arising from changes in fair value that do not conform to the provisions of hedgeaccounting 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 onclassification of financial assets shall apply to the hybrid instruments as a whole. If the main contract is not a financial asset, and thehybrid instrument is not measured at fair value and its changes are included in current profit and loss for accounting treatment, theembedded derivative instrument has no close relationship with the main contract in terms of economic characteristics and risks, andhas the same conditions as the embedded derivative instrument, and the separate existing instrument meets the definition ofderivative instrument, the embedded derivative instrument shall be separated from the hybrid instrument and treated as a separatederivative financial instrument. If it is not possible to separately measure embedded derivative instruments at the time of acquisitionor the subsequent balance sheet date, the hybrid instruments as a whole are designated as financial assets or financial liabilitiesmeasured at fair value and their changes are included in current profit and loss.
(5) Fair value of financial instruments
See Note V(10) for the method of determining the fair value of financial assets and liabilities.
(6) Impairment of financial assets
The Group conducts impairment accounting treatment for the following items and confirms the loss provision based on the expectedcredit 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 financialassets).Measurement of expected credit lossExpected credit loss refers to the weighted average of the credit losses of financial instruments weighted by the risk of default. Creditloss refers to the difference between all contractual cash flows discounted at the original effective interest rate and receivableaccording to the contract and all cash flows expected to be collected of the Group, i.e. the present value of all cash shortfalls.Considering the reasonable and reliable information about past events, current situation and the forecast of future economic situation,the company takes the risk of default as the weight, calculates the probability weighted amount of the present value of the differencebetween the cash flow receivable from the contract and the cash flow expected to be received, and confirms the expected credit loss.The Group separately measures the expected credit losses of financial instruments at different stages. If the credit risk of financialinstruments has not increased significantly since the initial recognition, it is in the first stage. The Group measures the loss reserveaccording to the expected credit loss in the next 12 months; if the credit risk of financial instruments has increased significantly sinceits initial recognition but no credit impairment has occurred, it is in the second stage. The Group measures the loss reserve accordingto the expected credit loss during the whole duration of this instrument; if the financial instrument has suffered credit impairment
since its initial recognition, it is in the third stage. The Group measures the loss reserve according to the expected credit loss duringthe whole duration of this instrument.For financial instruments with low credit risk on the balance sheet date, the Group assumes that their credit risk has not increasedsignificantly 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 thewhole expected duration of financial instruments. The expected credit loss in the next 12 months refers to the expected credit losscaused by the possible default events of financial instruments within 12 months (or the expected duration if the expected duration offinancial instruments is less than 12 months) after the balance sheet date, which is part of the expected credit loss in the wholeduration.When measuring the expected credit loss, the longest term that the Group needs to consider is the longest contract term that theenterprise faces credit risk (including the option to renew the contract).The Group calculates interest income based on the book balance before deducting impairment provisions and the effective interestrate for financial instruments in the first and second stages and with low credit risk. The interest income shall be calculated accordingto their book balance minus the amortized cost after impairment provision and the effective interest rate for financial instruments inthe third stage.The Group always measures its loss reserves at an amount equivalent to the expected credit loss during the entire duration for notesreceivable, contract assets and accounts receivable, regardless of whether there is any significant financing component.If a single financial asset cannot be used to evaluate the expected credit loss information at a reasonable cost, the Group will dividethe notes receivable and accounts receivable into portfolio on the basis of the credit risk features, and calculate the expected creditloss based on the portfolio. The basis for determining the portfolio is as follows:
A. Notes receivableNotes receivable portfolio 1: bank acceptance bills and L/CNotes receivable portfolio 2: commercial acceptance billsB. Accounts receivableAccounts 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 assetsContract assets portfolio 1: product salesContract assets portfolio 2: engineering constructionFor notes receivable and contract assets divided into portfolios, with reference to historical credit loss experience, combined withcurrent conditions and predictions of future economic conditions, the Group has calculated expected credit losses through default riskexposure 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 conditionsand predictions of future economic conditions, the Group has prepared a comparison table between the number of overdue days ofaccounts receivable and the expected credit loss rate over the entire duration, and has calculated the expected credit loss.Other receivablesThe Group divides other receivables into several portfolios based on the features of credit risk, and calculates the expected credit losseson 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 consolidationOther receivables portfolio 2: Tax refund receivableOther receivables portfolio 3: Deposit receivable and security depositOther receivables portfolio 4: other receivables
For other receivables that are divided into portfolios, the Group calculates the expected credit loss with the default risk exposure and theexpected credit loss rate within the next 12 months or the entire duration.Long-term receivablesThe long-term receivables of the Group include finance lease receivables, installment accounts receivable from equity transfer andlong-term advance receivables.Based on credit risk characteristics, the Group divides long-term receivables into several portfolios, calculates expected credit lossesbased on the portfolio. The basis for determining the portfolio is as follows:
A. Finance lease receivable portfolio: finance lease receivableB. Installment accounts receivable from equity transfer: accounts receivable from equity transferC. Other long-term receivables: prepaid receivablesFor the financial lease receivables, the with reference to the historical credit loss experience, in combination with the current situationand the prediction of the future economic situation, the Group calculates the expected credit loss with the default risk exposure and theexpected credit loss rate for the entire duration.Others, except finance lease receivables, are divided into portfolio long-term receivables; the Group calculates expected credit losseswith default risk exposure and expected credit loss rate within the next 12 months or the entire duration.Creditors' investment and other creditors' investmentFor creditors' investment and other creditors' investment, the Group calculates the expected credit based on the nature of the investment,as well as kinds of types of counterparties and risk exposures, the default risk exposure and the expected credit loss rate within the next12 months or the entire duration loss.Assessment on significant increase of credit riskIn order to determine the relative changes in the default risk of financial instruments during their expected life and to assess whether thecredit risk of financial instruments has increased significantly since initial recognition, the Group compares the default risk of financialinstruments on the balance sheet date with the default risk on the initial recognition date.When determining whether the credit risk has risen greatly since the initial recognition, the Group considers reasonable and reliableinformation (forward-looking information inclusive) that can be obtained without unnecessary extra costs or efforts. The informationthe Group considers shall include:
The debtor fails to pay the principal and interest according to the contract expiration date;The external or internal credit ratings (if any) of financial instruments, which have occurred or are expected, deteriorate significantly;The debtor’s operating results, which have occurred or are expected, deteriorate significantly;Existing or expected changes in technology, market, economy or legal environment will lead to a great adverse effect on the debtor'sability to repay the Group.Based on the nature of financial instruments, the Group assesses whether there is great risk in credit risk on the basis of individualfinancial instruments or financial instrument portfolios. During assessment based on financial instrument portfolios, the Group candivide financial instruments on the basis of common credit risk characteristics, such as overdue information and credit risk ratings.In case that the period overdue exceeds 30 days, the Group determines that there is a significant increase in the credit risk of financialinstruments.Financial assets with depreciation of creditThe Group assesses, on the balance sheet date, whether there is any credit impairment to financial assets measured at amortized cost andcreditors' investment measured at fair value and whose changes are included in other comprehensive income. In case of one or moreevents that adversely affect the expected future cash flow of a financial asset occur, the financial asset will become financial assets withdepreciation of credit. The observable information below can be treated as evidence for credit impairment to financial assets:
The issuer or debtor is caught in a serious financial difficulty;The debtor breaches the agreement of contract, such as default or overdue payment of interest or principal, or other default;Due to economic or contractual considerations related to the debtor's financial difficulties, the Group gives concessions to the debtor;
and the concessions will not be made under any other circumstances;There lies a great probability of bankruptcy or other financial restructuring for the debtor;The issuer or debtor is caught in financial difficulties, which leads to the disappearance of the active market of the financial asset;Presentation of expected credit loss provisionThe Group remeasures expected credit losses on each balance sheet date to reflect the changes in the credit risk of financial instrumentssince initial recognition; the increase or reversal amount of the loss reserve formed there from shall be included in the current profit andloss as impairment losses or gains. For financial assets measured at amortized cost, the loss allowance offsets the carrying amount of thefinancial asset listed in the balance sheet; for creditors’ investment that are measured at fair value and its changes are included in othercomprehensive income, the Group recognizes its loss reserve in other comprehensive income and will not offset the carrying amount ofthe financial asset.Write-offsIn case that the Group fails to reasonably expect the contract cash flow of the financial asset to be recovered in a full or partial scale, thebook balance of the financial asset will be written off directly. Such write-downs may constitute the derecognition for related financialassets. This situation occurs frequently when the Group determines that the debtor does not have any assets or any source of income togenerate sufficient cash flow to repay the amount that will be written off. However, in accordance with the procedures for recoveringdue payments of the Group, the written-off financial assets may still be affected by the execution activities.In case that the financial asset written off is recovered later, it shall be included in the current profit and loss as the reversal of theimpairment loss.
(7) Transfer of financial assets
The transfer of financial assets refers to the transfer or delivery of financial assets to another party (transferee) other than the issuer ofthe financial asset.If the Group has transferred almost all the risks and rewards of the ownership of financial assets to the transferee, derecognize thefinancial asset; if it retains almost all the risks and rewards of the ownership of financial assets, the financial asset will not bederecognized.If the Group has neither transferred nor retained almost all the risks and rewards of the ownership of financial assets, it shall be dealtwith in the following situations: if the control of the financial asset is abandoned, the confirmation of the financial asset shall beterminated and the generated assets and liabilities shall be confirmed; If the financial assets are controlled, the relevant financial assetsshall be recognized according to the extent of their continued involvement in the transferred financial assets, and the relevant liabilitiesshall 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, andintends either to settle on a net basis, or to realize the financial asset and settle the financial liability simultaneously, a financial asset anda financial liability shall be offset and the net amount is presented in the balance sheet. Except for the above circumstances, financialassets and financial liabilities shall be presented separately in the balance sheet and shall not be offset.
10. Measurement of Fair Value
Fair value refers to the price that market participants can receive from sales of a asset or shall pay for transfer of a liability in the orderlytransaction that occurs on the measurement date.The Group measures related assets or liabilities at fair value, assuming that the orderly transaction of selling assets or transferringliabilities is conducted in the main market of related assets or liabilities; if there is no main market, the Group assumes that thetransaction is conducted in the most beneficial market. The main market (or the most favorable market) is the trading market that theGroup can enter on the measurement date. The Group uses the assumptions used by market participants to maximize their economicbenefits when pricing the asset or liability.
For financial assets or financial liabilities with active markets, the Group uses the quotation in active markets to determine its fair value.If there is no active market for financial instruments, the Group uses valuation techniques to determine its fair value.When measuring non-financial assets at fair value, the ability of market participants to best use the asset for generating economicbenefits, or the ability to sell the asset to other market participants that can best use the asset to generate economic benefits shall beconsidered.The Group adopts valuation techniques that are applicable in the current situation and have sufficient available data and otherinformation to support it. Priority is given to using relevant observable input values. Only when observable input values are unavailableor are not feasible to obtain, the unobservable input values can be used. For assets and liabilities measured or disclosed at fair value inthe financial statements, the fair value hierarchy to which they belong is determined based on the lowest level input value that isimportant to the fair value measurement as a whole: the first level input value is the unadjusted quotation of the same assets or liabilitiesable to be obtained in an active market on the measurement date; the second level input value is the directly or indirectly observableinput value of the relevant asset or liability except the first level input value; the third level input value is unobservable input value ofrelated assets or liabilities.On each balance sheet date, the Group reassessed the assets and liabilities continuously measured at fair value confirmed in thefinancial statements to determine whether there is a transition among levels of fair value measurement.
11. Inventory
(1) Classification
Inventories mainly include raw materials, work-in-progress, stock products, product processed on entrustment and etc.
(2) Valuation method of inventories acquiring and issuing
Inventories shall be measured at actual cost when acquired, and the cost of the inventories including the procurement cost, processingcost and other costs. Grey yarn, dyed yarn, and plus material shall be measured at first-in first-out method when acquired anddelivered; 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 inventoriesNet realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion, theestimated costs necessary to make the sale and relevant taxes. Net realizable value is determined on the basis of clear evidenceobtained, 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 isbelow the cost of inventories, a provision for decline in value of inventories is made. The provision for inventories decline in value isdetermined by the difference of the cost of individual item less its realizable value. After the provision for decline in value ofinventories is made, if the circumstances that previously caused inventories to be written down below cost no longer exist so that thenet realizable value of inventories is higher than their cost, the original provision for decline in value is reversed and the reversal isincluded 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 whenconsuming.
12. Contract Costs
Contract cost includes the incremental cost incurred for acquiring contract and contract performance cost.The incremental cost incurred for acquiring contract refers to the cost that will not occur if the Group has not acquired contract (forexample, sales commission). If the cost is expected to be recovered, the Group regards it as contract acquiring cost and confirms it as anasset. The expenses incurred by the Group for acquiring contract, other than the incremental cost expected to be recovered, are included
in the current profits and losses at the time of occurrence.If the cost incurred for performance of contract does not belong to inventory and other scope of other corporate accounting standardsand meets the following conditions, the Group will regard it as contract performance cost and confirm it as an asset:
①The cost is directly related to a copy of contract currently acquired or expected to be acquired, including direct labor, direct materials,manufacture expenses (or similar expenses), cost determined to be undertaken by the customer and other cost incurred due to thecontract;
②The cost increases the resources of the Group that will be used for performance of contract obligations in the future;
③The cost is expected to be recovered.
The assets confirmed by the contract acquiring cost and the assets confirmed by the contract performance cost (“assets related tocontract cost”) are amortized according to the same basis as confirmation of goods or service income related to the asset and areincluded in the current profits and losses. If the amortization term does not exceed one year, it will be included in the current profits andlosses 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 Groupaccrues provision for impairment to the excessive part and confirms it as impairment loss:
①The remaining consideration that the Group expects to acquire from transfer of goods or services related to the asset;
②The cost that will occur for transfer of such related goods or services as estimated.
The contract performance cost confirmed as asset, if amortization term does not exceed one year or a normal business cycle at the timeof initial confirmation, is listed in the item of “inventory”; if amortization term exceeds one year or a normal business cycle at the timeof 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 thetime of initial confirmation, is listed in the item of “other current assets”; if amortization term exceeds one year or a normal businesscycle at the time of initial confirmation, is listed in the item of “other non-current assets”.
13. Long-term Equity Investments
Long-term equity investments include equity investments in subsidiaries, joint ventures and associated enterprises. The investee thatthe Group is able to exert significant influence is an associated enterprise of the Group.
(1) Determination of initial investment cost
Long-term equity investment that forms a business combination: Long-term equity investment obtained by business combinationunder the same control, on the merger date, based on the book value share of the merged party’s owners’ equity in the finalcontroller’s consolidated financial statements as investment cost; The long-term equity investment acquired by a businesscombination 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 theinitial investment cost according to the actual purchase price; the long-term equity investment obtained by issuing equity securitiesshall 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 havebeen declared but not yet included in the actual payment or consideration included in the investment, the cash dividends or profitsdeclared 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 fairvalue share of the investee’s identifiable net assets at the time of investment, the investment cost of the long-term equity investmentis 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 lossof the investment.When using the equity method of accounting, the investment income and other comprehensive income are recognized separatelyaccording to the share of net profit and loss and other comprehensive income realized by the invested unit that should be enjoyed orshared, and the book value of the long-term equity investment is adjusted at the same time; The distribution of profits or cashdividends should be calculated to reduce the book value of long-term equity investment; the investee's other changes in owner'sequity other than net profit and loss, other comprehensive income and profit distribution, adjust the book value of long-term equityinvestment and Included in capital reserves (other capital reserves). When confirming the share of the investee’s net profit or loss,based on the fair value of the investee’s identifiable assets at the time of investment, and in accordance with the Group’s accountingpolicies 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 notconstitute control, on the conversion date, the sum of the fair value of the original equity plus the additional investment cost will beused as the initial accounting for the equity method cost of investment. The difference between the fair value of the original equity onthe conversion date and the book value, as well as the cumulative changes in fair value originally included in other comprehensiveincome, are transferred to the current profit and loss accounted for using the equity method.If the joint control or significant influence on the invested unit is lost due to the disposal of part of the equity investment, etc., theremaining equity after the disposal shall be changed to the Accounting Standards for Business Enterprises No. 22-Recognition andMeasurement of Financial Instruments is performed, and the difference between fair value and book value is included in the currentprofit and loss. Other comprehensive income recognized by the original equity investment due to the equity method of accountingshall be accounted for on the same basis as the investee’s direct disposal of related assets or liabilities when the equity method ofaccounting 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 disposalcan exercise joint control or exert significant influence on the invested unit, the equity method is used for accounting and theremaining equity is treated as When acquiring, the equity method is adopted for adjustment; if the remaining equity after disposalcannot exercise joint control or exert significant influence on the investee, the accounting shall be changed according to the relevantprovisions of "Accounting Standards for Business Enterprises No. 22-Recognition and Measurement of Financial Instruments Thedifference 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 ableto exercise joint control or exert significant influence on the investee, the new shareholding ratio shall be used to confirm that thecompany should enjoy the capital increase of the investee. The difference between the increase in share and the increase in the shareof net assets and the original book value of the long-term equity investment corresponding to the decrease in the proportion of theshareholding that should be carried forward are included in the current profit and loss; That is, adjustments are made using the equitymethod of accounting.The unrealized internal transaction gains and losses that occur between the Group and associates and joint ventures are calculatedaccording to the shareholding ratio and are attributed to the Group, and the investment gains and losses are recognized on the basis ofoffset. However, the unrealized internal transaction losses incurred by the Group and the investee are the impairment losses of thetransferred 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 thearrangement must be agreed upon by the parties sharing control rights before they can make decisions. When judging whether thereis joint control, first determine whether all participants or a combination of participants collectively control the arrangement, andsecondly determine whether the decision-making related activities of the arrangement must be unanimously agreed by theparticipants who collectively control the arrangement. If all participants or a group of participants must act in concert to determinethe relevant activities of an arrangement, it is considered that all participants or a group of participants collectively control the
arrangement; if there is a combination of two or more participants can collectively Controlling an arrangement does not constitutejoint 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 policiesof the invested unit, but cannot control or jointly control the formulation of these policies with other parties. When determiningwhether it can exert significant influence on the invested unit, consider that the investor directly or indirectly holds the voting sharesof the invested unit and the current executable potential voting rights held by the investor and other parties are assumed to beconverted into the invested unit After the equity of the company, the impact includes the current convertible warrants, stock optionsand 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 investedunit, it is generally considered to have a significant impact on the invested unit, unless there is clear evidence that such circumstancescannot participate in the production and operation decisions of the invested unit, and does not have a significant impact; when theGroup owns less than 20% (excluding) voting rights of the invested unit, it generally does not consider it to have a significant impacton the invested unit unless there is clear evidence that Under these circumstances, it can participate in the production and operationdecisions 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 NoteV-21.
14. Investment Property
Measurement model of investment real estateCosting method measurementDepreciation or amortization methodThe 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 offixed assets or intangible assets.The Company adopts the cost mode to conduct the subsequent measurement on the investment real estate, see the Note V-21 for themethod of withdrawing asset impairment provision.The difference between the disposal income of investment real estate sales, transfer, scrap or damage after deducting its book valueand related taxes is included in the current profit and loss.
15. Fixed Assets
(1) Conditions for Recognition
The term “fixed assets” refers to the tangible assets that simultaneously possess the features as follows: (a) they are held for the sakeof producing commodities, rendering labor service, renting or business management; and (b) their useful life is in excess of one fiscalyear. The fixed assets are only recognized when the relevant economic benefits probably flow in the Company and its cost could bereliable measured. The fixed assets of the Group are initially measured at the actual cost at the time of acquisition. Please refer toNote V-21 for the test method of impairment of fixed assets and the method of impairment provision.
(2) Depreciation Methods
| Category of fixed assets | Method | Useful life | Salvage value | Annual deprecation |
| Housing and building | Average method of useful life | 5-30 | 0-10 | 20.00-3.00 |
| Machinery equipments | Average method of useful life | 10-18 | 0-10 | 10.00-5.00 |
| Transportation vehicle | Average method of useful life | 5 | 0-10 | 20.00-18.00 |
| Electronic equipments and others | Average method of useful life | 5 | 0-10 | 20.00-18.00 |
(3) Recognition Basis, Pricing and Depreciation Method of Fixed Assets by Finance Lease
When the fixed assets leased by the Group meet one or more of the following criteria, it is recognized as fixed assets leased byfinancing: ① When the lease term expires, the ownership of the leased assets is transferred to the Group. ② The Group has theoption to purchase leased assets, and the purchase price concluded is expected to be much lower than the fair value of the leasedassets when the option is exercised, so it can be reasonably determined that the Group will exercise this option on the lease start date.
③Even if the ownership of the asset is not transferred, the lease period accounts for most of the service life of the leased asset. ④The present value of the Group's minimum lease payment on the lease start date is almost equivalent to the fair value of the leasedasset on the lease start date. ⑤ The leased assets are of a special nature and only the Group can use them without major renovation.The fixed assets leased under financial leases shall be the booked value at the lower of the fair value of the leased assets on the leasestart date and the present value of the minimum lease payment. The minimum lease payment is taken as the book value of long-termpayables, and the difference is taken as unrecognized financing expenses. The initial direct costs such as handling fees, attorney’sfees, travel expenses, and stamp taxes that occurred during the lease negotiation and signing of the lease contract are included in thevalue of the leased asset. Unrecognized financing expenses are allocated using the effective interest rate method in each period of thelease period.Financing leased fixed assets adopts the same policy as its own fixed assets to withdraw depreciation of leased assets. If it can bereasonably determined that the ownership of the leased asset will be acquired at the end of the lease period, depreciation will beaccrued within the useful life of the leased asset; if it cannot be reasonably determined that the ownership of the leased asset can beacquired at the end of the lease period, the depreciation shall be accrued in the shorter period between the lease period and theresidual life of the leased asset.
(4) Other Notes
At the end of each year, review is carried out by the Group for the service life, estimated net residual value and depreciation method offixed assets. If there is any difference between the expected service life and the original estimated service life, the service life of fixedassets will be adjusted; if there is any difference between the expected net residual value and the original estimated net residual value,the expected net residual value will be adjusted.Major repair expenses incurred by the Group in the regular inspection of fixed assets are included in the cost of fixed assets if evidencesshow that they meet the recognition conditions of fixed assets, and those fail to meet the recognition conditions of fixed assets areincluded in the current profit and loss. Fixed assets at intervals of regular major repairs shall be depreciated as accrued.
16. Construction in Progress
Construction in process is measured at actual cost. Actual cost comprises construction costs, borrowing costs that are eligible forcapitalization before the fixed assets being ready for their intended us and other relevant costs.Construction in process is transferred to fixed assets when the assets are ready for their intended use.See the details of the impairment provision withdrawal method of the construction in progress to Notes V-21.
17. Engineering Materials
Engineering materials of the Group refer to various materials prepared for projects under construction, including engineeringmaterials, 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 transferredto the project under construction, and the remaining engineering materials after the completion of the project will be stored asinventory.Please refer to Note V (21) for the method of provision for impairment of assets for engineering materials.In the balance sheet, the ending balance of engineering materials is listed in the "project under construction" item.
18. Borrowing Costs
(1) Confirmation principle of Capitalized Borrowing Expense
The borrowing expenses incurred by the Group, if can directly belong to acquisition, construction or production of assets meetingcapitalization conditions, are capitalized and included in relevant asset cost; other borrowing expenses are confirmed as expenseaccording to its amount at the time of occurrence and included in the current profits and losses. If the borrowing expenses meet thefollowing conditions, capitalization starts:
①Assets expenditure has occurred, and asset expenditure includes the expenditure occurring in the form of payment in cash,transferring noncash asset or assuming interest bearing debt for acquiring, constructing or producing the assets meeting capitalizationconditions;
② Borrowing expenses have occurred;
③The acquisition, construction or production activities required for making assets usable or saleable as intended have started.
(2) Capitalization period of borrowing expenses
When the Group acquires, constructs or produces assets, which meet capitalization conditions and reach the intended usable or saleablestatus, the borrowing expenses stop capitalization. The borrowing expenses that occur after the assets meeting capitalization conditionsreach the intended usable or saleable status are confirmed as expenses according to its amount at the time of occurrence and areincluded in the current profits and losses.If the assets meeting capital conditions generate improper interruption in the course of acquisition, construction or production, and theinterruption time continuously exceeds three months, capitalization of borrowing expenses suspends; the borrowing expenses in thenormal interruption period are continually capitalized.
(3) Capitalization rate of borrowing expenses and calculation method of capitalized amountThe interest expenses of special borrowing actually occurring in the current period, minus the interest income of the unused borrowedcapital obtained from depositing in bank or the gain on temporary investment, are capitalized; for common borrowing, the weightedaverage of asset expenditure of the part that the cumulative asset expenditure exceeds special borrowing is multiplied by thecapitalization rate of the occupied common borrowing to determine capitalization amount. Capitalization rate is calculated anddetermined 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 exchangedifference of special borrowing in foreign currency is included in the current profits and losses.
19. Right-of-use Assets
The term "right-of-use assets" refers to the right of the lessee to use the leased assets during the lease term. At the start date of thelease term. The Company initially measures the right-of-use assets at cost. The cost includes: a) the initial measurement amount oflease obligations; b) the lease payment amount paid on or prior to the inception of the lease (less the related amount of leaseincentives already enjoyed if any); c) the initial direct cost incurred by the lessee; and d) the anticipated cost of dismantling andremoving the leasehold property, restoring the site where the leasehold property is located, or bringing the leasehold property back tothe state agreed upon in the lease terms.The Company makes provision for depreciation of right-of-use assets with the composite life method. Where it can be reasonablycertain that the Company will obtain ownership of the leased assets at the expiry of the lease term, the leased assets are depreciatedover the expected residual service life; where it cannot be reasonably certain that the Company can obtain ownership of the leasedassets 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 theleased assets.The Company will determine the impairment of right-of-use assets and conduct accounting treatment in accordance with relevantprovisions of the Accounting Standards for Business Enterprises No.8 - Asset Impairment.
20. Intangible Assets
(1) Pricing Method, Useful Life and Impairment Test
The intangible assets of the Group include land use right, patent right, etc.Intangible assets are initially measured at cost, and their service life is analyzed and determined when intangible assets are acquired.If the service life of intangible assets is limited, the intangible assets shall be amortized by the method that can reflect the expectedrealization method of the economic benefits related to the assets within the expected service life since they are available for use. Thestraight-line method shall be used for amortization if no expected realization method can be determined reliably. Intangible assetswith uncertain service life shall not be amortized.The amortization method of intangible assets with limited service life is as follows:
| Category | Service life | Amortization method | Note |
| Land use right | Stipulated in the land certificate | Method of line | |
| Patent use right | 10 years | Method of line | |
| Software use right | 1-3 years | Method of line |
| Brand use right | 10 years | Method of line |
At the end of each year, the Group reviews the service life and amortization method of intangible assets with limited service life. Ifthe estimate is different from the previous one, the original estimate shall be adjusted and treated as per accounting estimate change.If it is estimated that an intangible asset can no longer bring future economic benefits to the enterprise on the date of balance sheet,this carrying amount of the intangible asset shall be transferred into the current profit and loss.The method of withdrawing impairment on intangible assets was stated in the Note V-21.
(2) Accounting Policy for Internal Research and Development ExpendituresThe expenditures for internal research and development projects of an enterprise shall be classified into research expenditures and
development expenditures.The research expenditures shall be recorded into the profit or loss for the current period.The development expenditures can be capitalized only when they satisfy the following conditions simultaneously: ① It is feasibletechnically to finish intangible assets for use or sale; ② It is intended to finish and use or sell the intangible assets; ③ Theusefulness of methods for intangible assets to generate economic benefits shall be proved, including being able to prove that there is apotential market for the products manufactured by applying the intangible assets or there is a potential market for the intangibleassets itself or the intangible assets will be used internally; ④ It is able to finish the development of the intangible assets, and ableto use or sell the intangible assets, with the support of sufficient technologies, financial resources and other resources; ⑤ Thedevelopment expenditures of the intangible assets can be reliably measured. The development expenditures shall be recorded intoprofit or loss for the current period when they don’t satisfy the following conditions.The research and development project of the Group will enter the development stage after meeting the above conditions and theproject is approved and initiated through technical feasibility and economic feasibility study.The capitalized expenditure in the development stage is listed as expenditure for development on the balance sheet, and it will betransferred to intangible assets from the date when the project reaches the intended purpose.
21. Impairment of Long-term Assets
For long term equity investment in subsidiaries, associated enterprises and joint ventures, investment real estate which follow-upmeasurement is carried out by cost pattern, fixed assets, project under construction, intangible assets, business reputation, etc.(excluding inventory, deferred income tax assets, financial assets), the impairment of assets shall be determined according to thefollowing methods:
On the date of the balance sheet, determination shall be made to see whether there is any sign of possible impairment of assets. If thereis, the Group will estimate its recoverable amount and conduct impairment test. For goodwill, intangible assets with uncertain servicelife and intangible assets that have not reached the serviceable state due to business merger, impairment test shall be carried out everyyear regardless of whether there is any sign of impairment.The recoverable amount is determined according to the net amount of the fair value of the asset minus the disposal expenses and thepresent value of the expected future cash flow of the asset, the higher amount shall be prevail. The Group estimates the recoverableamount on the basis of a single asset. If it is difficult to estimate the recoverable amount of a single asset, the recoverable amount of theasset group shall be determined based on the asset group to which the asset belongs. The asset group is determined on the basis ofwhether the main cash inflow generated by the asset group is independent of the cash inflow of other assets or asset groups.When the recoverable amount of an asset or asset group is lower than its carrying amount, the group will write down its carryingamount to the recoverable amount, and the written down amount will be included in the current profit and loss, and the correspondingasset impairment reserve will be accrued.Regarding the impairment test of business reputation, the carrying amount of business reputation formed by business merger shall beapportioned to the relevant asset group in a reasonable way from the date of purchase. If it is difficult to apportion to the relevant assetgroup, it shall be apportioned to the relevant combination of asset group. The relevant asset group or combination of asset groups is theone that can benefit from the synergy effect of business merger, and is the one smaller than the reportable segment determined by theGroup.In the impairment test, if there is any sign of impairment in the asset group or combination of asset groups related to business reputation,first, impairment test shall be carried out on the asset group or combination of asset groups not containing business reputation, tocalculate the recoverable amount and recognize the corresponding impairment loss. Then impairment test shall be carried out on theasset group or combination of asset group containing business reputation to compare the carrying amount with the recoverable amount.If the recoverable amount is lower than the carrying amount, the impairment loss of business reputation shall be recognized.Once the impairment loss of assets is recognized, it will not be reversed in the future accounting period.
22. Long-term Deferred Expenses
The long-term expenses to be amortized incurred by the Group are valued at the actual cost and amortized averagely according to theexpected benefit period. For long-term expenses to be amortized, the amortized value that cannot benefit the future accounting periodshall be included in the current profit and loss.
23. Contract liabilities
Refer to Note V. Significant Accounting Policies and Estimates 26. Revenue (1) for details.
24. Payroll
(1) Accounting Treatment of Short-term Compensation
During the accounting period in which employees provide services, the Group recognizes the actual employee wages, bonuses, socialinsurance premiums such as medical insurance premiums, industrial injury insurance premiums, and maternity insurance premiumsand housing provident funds paid to employees according to the prescribed standards and proportions as liabilities and included themin the current profit and loss or related asset costs. If the liability is not expected to be fully paid within twelve months after the endof the annual reporting period for employees to provide related services, and the financial impact is significant, the liability will bemeasured at the discounted amount.
(2) Accounting Treatment of the Welfare after Departure
The post-employment benefit plan includes a defined contribution plan and a defined benefit plan. Among them, the definedcontribution plan refers to the post-employment benefit plan that the enterprise no longer assumes further payment obligations afterthe fixed fund has paid a fixed fee; the defined benefit plan refers to the post-employment benefit plan other than the establishedcontribution plan.Set withdrawal planThe set contribution plan includes basic pension insurance and unemployment insurance.During the accounting period in which employees provide services, the amount of deposit payable calculated according to the setwithdrawal plan is recognized as a liability and included in the current profit and loss or related asset costs.Define a benefit planFor the defined benefit plan, an independent actuary performs an actuarial valuation on the annual balance sheet date, and the cost ofproviding benefits is determined by the expected cumulative benefit unit method. The employee compensation cost caused by theGroup's defined benefit plan includes the following components:
①Service cost, including current service cost, past service cost and settlement gains or losses. Among them, the current service costrefers to the increase in the present value of the defined benefit plan obligations caused by the employees providing services in thecurrent period; the past service cost refers to the defined benefit related to the employee services in the previous period caused by themodification of the defined benefit plan An increase or decrease in the present value of plan obligations.
② The net interest of the net liabilities or net assets of the defined benefit plan, including the interest income of the plan assets, theinterest expense of the defined benefit plan obligations and the interest affected by the asset ceiling.
③ Re-measure the changes caused by the net liabilities or net assets of the defined benefit plan.Unless other accounting standards require or allow employee benefit costs to be included in the cost of assets, the Group will include
the above items ① and ② into the current profit and loss; item ③ is included in other comprehensive income and will not betransferred back to profit or loss in the subsequent accounting period When the defined benefit plan is terminated, all the partsoriginally included in other comprehensive income are carried forward to undistributed profits within the scope of equity.
(3) Accounting Treatment of the Demission Welfare
The Company relieves the labor relation with the employees before the due date of the labor contacts or puts forward the advice ofproviding the compensation for urging the employees volunteered to receive the downsizing and when the Company could notunilaterally withdraw the demission welfare owning to the relieving plan of the labor relation or the downsizing advice, shouldconfirm the liabilities of the employees’ salary from the demission welfare on the earlier day between the cost confirmed by theCompany and the cost related to the reorganization of the payment of the demission welfare and includes which in the current gainsand losses.Regarding the implementation of internal retirement plan of the employees, the economic compensation before the official retirementdate belongs to the dismissal welfare. From the date when the employees stop providing services to the normal retirement date, thewages and social insurance premiums to be paid to the early retired employees shall be included in the current profit and loss at onetime. Financial compensation (such as normal pension) after the official retirement date shall be handled as welfare after separation.
(4) Accounting Treatment of the Welfare of Other Long-term Staffs
Other long-term employee benefits provided by the Group to employees that meet the conditions of defined contribution plans shallbe handled in accordance with the above-mentioned relevant provisions on defined contribution plans. Those in line with the definedbenefit plan shall be handled in accordance with the above-mentioned relevant provisions on the defined benefit plan. However, thepart of "changes caused by remeasuring the net liabilities or net assets of the defined benefit plan" in the salary cost of relevantemployees shall be included in the current profit and loss or the relevant asset cost.
25. Lease Liabilities
The Company initially measures the lease obligation at the present value of the lease payments outstanding at the commencementdate of the lease term. Lease payments include: a) fixed payment (including substantial fixed payment), and the relevant amount afterdeducting the lease incentive if any; b) variable lease payments depending on index or ratio; c) estimated payments due to theguaranteed residual value provided by the lessee; d) exercise price of the purchased option, provided that the lessee reasonablydetermines that the option will be exercised; and e) the amount to be paid for the exercise of the lease termination options, providedthat the lease term reflects that the lessee will exercise the options to terminate the lease.The Company uses the interest rate implicit in lease as the rate of discount. If the interest rate implicit in lease cannot be reasonablydetermined, the Company's incremental borrowing rate is used as the rate of discount. The Company calculates the interest expensesof the lease obligations during each period of the lease term at a fixed periodic interest rate, and includes them in financial expenses.The periodic interest rate refers to the rate of discount employed by the Company or the rate of discount after revision.Variable lease payments that are not covered in the measurement of the lease obligations are included in current profit or loss whenactually incurred.When there is a change in the Company's evaluation results of lease renewal options, lease termination options or purchase options,the Company will re-measure the lease payment and remeasure the lease obligation using the present value of the changed leasepayment and the revised rate of discount, and adjust the book value of right-of-use assets accordingly. Where there is a change in
substantial lease payment, estimated payments due to the guaranteed residual value, or variable lease payments depending on indexor ratio, the Company will re-measure the lease obligation using the present value of the changed lease payment and the original rateof discount, and adjust the book value of right-of-use assets accordingly.
26. Revenue
Accounting policies adopted for the recognition and measurement of revenueAccounting policies adopted for the recognition and measurement of revenue
(1) General principle
The Company recognizes revenue when it has fulfilled its contract performance obligation in a contract, namely, when the customerobtains the control over the related commodity or service.If a contract contains two or more performance obligations, the Group allocates transaction price to single performance obligationson the contract commencement date according to the relative ratio of separate price of goods or services committed by singleperformance obligation, and income is measured according to the transaction price allocated to single performance obligation.When meeting one of the following conditions, the Group belongs to performance of contract performing obligations in a period, orotherwise, the Group belongs to performance of contract performing obligations at a point of time:
①While the Group is performing the contract, the customer acquires and consumes the economic benefit arising from performanceby the Group.
②The customer can control the goods in construction in the course of performance by the Group.
③The goods outputted in the course of performance by the Group have irreplaceable purpose, and the Group has the right tocollection of money for the completed performance part cumulative up to now in the whole term of contract.For the performance obligation performed in a period, the Group confirms income according to the performance progress in suchperiod. When the performance progress cannot be reasonably determined, if the cost that the Group has incurred is expected to becompensated, income is confirmed according to the cost amount that has occurred, until the performance progress can be reasonablydetermined.For the performance obligation performed at a point of time, income is confirmed at the point of time when the customer acquires thecontrol right to relevant goods or services. When it judges whether the customer has acquired the control right to the goods orservices, the Group will consider the following indications:
①The Group enjoys the current collection right to the goods or services, i.e. the customer undertakes current payment obligation tothe goods.
②The Group has transferred the legal ownership of the goods to the customer, that is, the customer has owned the legal ownership ofthe goods.
③The Group has transferred the kind of the goods to the customer, namely, the customer has possessed the good in kind.
④The Group has transferred the major risks and remuneration on the ownership of the goods, i.e. the customer has acquired themajor risks and remuneration on the ownership of the goods.
④The customer has accepted the goods or services.
⑤Other indications showing that the customer has acquired the control right to the goods.The Group has transferred goods or services and has the right to collect consideration (and the right depends on factors other thantime elapse) as contract assets, and contract asset is accrued impairment on the basis of expected credit loss (refer to Note V 9(6)).The right of the Group, unconditionally (only depending on time elapse) charging consideration from the customer, is listed asreceivable. The obligation of the Group that shall transfer goods or services to the customer for the consideration that has been orshall be collected is liability to the contract.The contract assets and contract liabilities under the same contract are listed in net amount. If net amount is debit balance, it is listedin the items “contract asset” or “other non-current asset” according to its fluidity; if net amount is credit balance, it is listed in the
items “contract liability” or “other non-current liability” according to its fluidity.
(2) Specific methods
The specific income confirming methods of the Group are following:
For income of domestic products, after the Group delivers products to the purchaser according to the provisions of the contract andthe purchaser confirms receipt, the purchaser acquires the control right of products, and the Group confirms income.For income of exportable products, after the Group completes customs declaration of products, departure and obtains bill of ladingaccording to the provisions of the contract, the purchaser acquires the control right of products, and the Group confirms income.Differences in accounting policies for revenue recognition due to different business models of the same type of businessDifferences in accounting policies for revenue recognition due to different business models of the same type of business
27. Government Grants
Government grants are recognized when they meet the conditions attached to government grants and when they can be received.Government grants for monetary assets shall be measured according to the amount received or receivable. Government grants fornon-monetary assets shall be measured by fair value, and they shall be measured by the nominal amount of RMB1 if the fair valuecannot be obtained reliably. Asset related government grants refer to the government grants obtained by the Group for acquisition andconstruction or other forms of long-term assets. In addition, they are government grants related to income.Regarding the government grants that the government document does not specify the object of subsidy and can form long-term assets,the part of government subsidy corresponding to the asset value shall be regarded as the asset-related government subsidy and the restshall be regarded as income-related government subsidy. If it is difficult to distinguish, the government subsidy shall be regarded as theincome-related government subsidy.The government grants related to assets shall be recognized as the deferred income, which shall be included in the profit and loss ininstallment in a reasonable and systematic way within the service life of the relevant assets. Income-related government grants whichare used to compensate the relevant costs or losses incurred shall be included in the current profit and loss. Those used to compensatethe relevant costs or losses in the later period shall be included in the deferred income, and shall be included in the current profit andloss during the recognition period of the relevant costs or losses. The government grants measured according to the nominal amountshall be directly included in the current profit and loss. The same method is adopted for the same or similar government subsidybusinesses of the Group.Government grants related to daily activities shall be included in other incomes according to the essence of business transactions.Government grants irrelevant to daily activities are included in non-business income.When the recognized government grants need to be returned, and are used to offset the carrying value of related assets when initiallyrecognized, the carrying value of the assets shall be adjusted; the book balance of relevant deferred income shall be offset if there is abalance of relevant deferred income, and the excess part shall be included in the current profit and loss. Otherwise, it shall be directlyincluded in the current profit and loss.Regarding the interest subsidy of the policy preferential loan obtained, if the Ministry of Finance allocates the interest subsidy to theloan bank, the actual received loan amount shall be taken as the entry value of the loan, and the loan cost shall be calculated accordingto the loan principal and the policy preferential interest rate. If the Ministry of Finance allocates the interest subsidy directly to theGroup, the interest subsidy will offset the borrowing costs.
28. Deferred Income Tax Assets/Deferred Income Tax Liabilities
Income tax includes current income tax and deferred income tax. All shall be included in the current profit and loss as income taxexpense except the adjustment business reputation arising from business merger, or the deferred income tax related to the transactionsor events directly included in the owner's equity is included in the owner's equity.
Pursuant to the temporary difference between the carrying amount of assets and liabilities on the date of balance sheet and the tax basis,the Group recognizes the deferred income tax by balance sheet liability method.For all taxable temporary differences, related deferred income tax liabilities are recognized, unless the taxable temporary differencesare generated in the following transactions:
(1) The initial recognition of business reputation or the initial recognition of assets or liabilities arising from transactions with thefollowing characteristics: The transaction is not a business merger, and does not affect the accounting profit or taxable income when itoccurs;
(2) Regarding the taxable temporary difference related to the investment of subsidiaries, joint ventures and associated enterprises, thetime of reversal of the temporary difference can be controlled and the temporary difference is unlikely to be reversed in the foreseeablefuture.For deductible temporary differences, deductible losses and tax credits that can be carried forward in subsequent years, the Group islikely to obtain the future taxable income as the limit to offset the deductible temporary differences, deductible losses and tax credits, inwhich way to recognize the deferred income tax assets arising from the deductible temporary differences, deductible losses and taxcredits, unless the deductible temporary differences are generated in the following transactions:
(1) The transaction is not a business merger, and does not affect the accounting profit nor taxable income when it occurs;
(2) The corresponding deferred income tax assets shall be recognized if the deductible temporary differences related to the investmentof subsidiaries, joint ventures and associated enterprises meet the following conditions simultaneously: The temporary differences arelikely to be reversed in the foreseeable future, and the taxable income used to deduct the deductible temporary differences is likely to beobtained in the future.On the date of the balance sheet, the income tax assets and deferred income tax liabilities shall be measured by the Group on the basisof the applicable tax rate during the period when the assets are expected to be recovered or the liabilities are expected to be paid off, andthe income tax impact on the expected recovery of assets on the date of the balance sheet or on the method to pay off the liabilities shallbe reflected.The book value of deferred income tax assets shall be reviewed at each balance sheet date. If it is unlikely to obtain sufficient taxableincome to offset against the benefit of the deferred income tax asset, the book value of the deferred income tax assets shall be writtendown. Any such write-down should be subsequently reversed where it becomes probable that sufficient taxable income will beavailable.
29. Lease
From the effectiveness date of a contract, the Company assesses whether the contract is a lease or includes any lease. If a party to thecontract transfers the right allowing the control over the use of one or more assets that have been identified within a certain period, inexchange for a consideration, such contract is a lease or includes a lease.
1. Accounting treatment with the Company as a lessee
On the commencement date of the lease term, the Company recognizes the right-of-use assets and lease liabilities for the lease, unlessit is a simplified short-term lease or a low-value asset lease.
(1) Short-term leases and low-value asset leases
A short-term lease refers to a lease that does not include a purchase option and whose lease term does not exceed 12 months. Alow-value asset lease refers to a lease where the value is low and a single leased asset is a new asset.The Company does not recognize the right-of-use assets and lease liabilities for the short-term leases and low-value asset leases. Ineach period within the lease term, the relevant lease payments are included in cost of the related assets or profit or loss for the current
period on a straight-line basis or according to other systematic and reasonable methods.
(2) The accounting policies of right-of-use assets and lease liabilities refer to the accounting treatment methods detailed in V.19Right-of-use assets and V.25 Lease liabilities in Section X.
2. Accounting treatment with the Company as a lessor
(1) Lease classification
The Company classifies leases into finance leases and operating leases at the inception of leases. A finance lease refers to a leasewhere almost all the risks and rewards, related to the ownership of the leased asset, are substantially transferred, regardless ofwhether the ownership is eventually transferred or not. All leases other than finance leases are classified as operating leases.
(2) Accounting treatment of finance leases
On the commencement date of the lease term, the Company recognizes the finance lease receivables for the finance lease andderecognizes the leased asset of the finance lease. In the initial measurement of finance lease receivables, the sum of the unsecuredresidual value and the present value of the lease payments receivable not yet received on the commencement date of the lease termdiscounted at the interest rate implicit in lease is the entry value of the finance lease receivables. The Company calculates andrecognizes the interest income in each period within the lease term at a fixed interest rate implicit in the lease. The received variablelease payments that are not included in the measurement of the net investment in the lease are included in profit or loss for the currentperiod when they are actually incurred.
(3) Accounting treatment of operating leases
The Company recognizes the lease payments receivable of the operating lease as rental earning in each period within the lease termon a straight-line basis or according to other systematic and reasonable methods. The initial direct costs related to the operating leaseare capitalized, amortized within the lease term on the same basis as the recognition of rental earning, and included in profit or lossfor the current period. The received variable lease payments related to the operating lease that are not included in the lease paymentsreceivable are included in profit or loss for the current period when they are actually incurred.
30. Repurchase of Shares
Before the shares repurchased by the Company are cancelled or transferred, they are managed as treasury shares, and all expendituresfor the repurchase of shares are transferred to the cost of treasury shares. Consideration and transaction costs paid in share repurchasereduce shareholders' equity. When buying back, transferring or cancelling shares in the Company, no profits or losses are recognized.The transfer of inventory shares shall be credited to the capital reserve on the basis of the difference between the amount actuallyreceived and the carrying amount of the treasury stock. Write off surplus reserves and undistributed profits if capital reserves areinsufficient to offset. Write-off of treasury stocks can reduce shares in par with par value and number of write-out stocks. The capitalreserve is offset based on the difference between book balance and face value of cancelled treasury stocks. Write off surplus reservesand undistributed profits if capital reserves are insufficient to offset.
31. Other Significant Accounting Policies and Estimations
Pursuant to historical experience and other factors and reasonable expectations for future events, the Group continuously evaluatesthe important accounting estimates and key assumptions adopted. The important accounting estimates and key assumptions that arelikely to cause major adjustment risk to the carrying amount of assets and liabilities in the next fiscal year are listed as follows:
Classification of financial assetsDuring the recognition of the classification of financial assets by the Group, the major judgments involved include the analysis of
business model and contract cash flow characteristics, etc.The Group determines the business model for managing financial assets at the level of financial asset portfolio, and factorsconsidered include methods of evaluation and reporting financial asset performance to key management personnel, risks affectingfinancial asset performance and their management methods, and the way in which relevant business management personnel are paid.When assessing whether the contractual cash flow of financial assets is consistent with the basic lending arrangements, the Group hasthe following main judgments: Whether the principal may change in the time distribution or amount during the duration due toprepayment and other reasons; whether the interest include only the time value of money, credit risk, other basic lending risks, andconsiderations of costs and profits. For example, whether the amount of prepayment only reflect the unpaid principal and interestbased on the unpaid principal, as well as reasonable compensation due to early termination of the contract.Measurement of expected credit loss of accounts receivableThe Group calculates the expected credit loss of accounts receivable through the default risk exposure and the expected credit lossrate of accounts receivable, and determines the expected credit loss rate based on the default probability and loss given default. Whendetermining the expected credit loss rate, the Group adjusts the historical data by using internal historical credit loss experience andother data, and combining the current situation and forward-looking information. The indicators used by the Group include risks ofeconomic downturn, changes in external market environment, technological environment and customer conditions, etc. whenconsidering forward-looking information. The Group regularly monitors and reviews assumptions related to the calculation ofexpected credit losses.Impairment of goodwillThe Group assesses whether goodwill is impaired at least annually. This requires estimating the value in use of the asset group towhich goodwill has been allocated. When estimating the value in use, the Group needs to estimate the future cash flows from theasset group and select the appropriate discount rate to calculate the present value of future cash flows.Deferred income tax assetsIn a limit providing large possibility of offset losses from sufficient taxable profits, the Group shall recognize deferred income taxassets in line with all unused tax losses, which requires management staffs of the Group to estimate the time when future taxableprofits occurs and the amount thereof by applying plenty of judgments and combining tax planning strategies, so as to determine theamount of the recognizable deferred income tax assets.Recognition of fair value of unlisted equity investmentFair value of unlisted equity investment is the expected future cash flow as discounted according to the current discount rate of theproject with similar articles and risk characteristics. This appraisement requires the Group to estimate the expected future cash flowand discount rate, so it has uncertainty. Under limited circumstances, if the information used to determine the fair value is insufficient,or the possible estimated amount of fair value is widely distributed, and the cost represents the best estimate of fair value within therange, the cost may represent the appropriate estimate of fair value within the distribution range.
32. Changes in Main Accounting Policies and Estimates
(1) Significant Changes in Accounting Policies
√ Applicable □ Not applicable
| Contents of changes in accounting policies and reasons thereof | Approval procedures | Note |
| On 7 December 2018, the Ministry of Finance revised and issued No.21 the Accounting Standards for Business Enterprises - Leasing (hereinafter referred to as the New Leasing Standards). Main changes | The Company held the 21st Meeting of the 9th Board of Directors on 29 March 2021 and | Refer to Note V. 25 for details about new accounting policies. |
| are: 1. Under the New Lease Standards, except for short-term leases and low-value asset leases, the lessees will no longer distinguish finance leases from operating leases. All leases are subject to the same accounting treatment, and the right-of-use assets and lease liabilities must be both recognized; 2. For the right-of-use assets, if the lessee reasonably recognizes that it can obtain the ownership of the leased assets at the expiration of the lease term, the depreciation shall be accrued within the remaining service life of the leased assets. If it is impossible to reasonably recognize that the right-of-use of the leased asset can be obtained at the expiration of the lease term, the depreciation shall be accrued within the lease term or the remaining service life, whichever is shorter. At the same time, the lessee shall recognize whether the right-of-use assets are impaired and account for the identified impairment losses; 3. For lease liabilities, the lessee shall calculate the interest expense of the lease liabilities in each period of the lease term and count it into the current profit and loss; 4. In accordance with the requirements of the New Leasing Standards and Listing Rules, the relevant contents of the leasing business should be adjusted in the disclosed financial statements. According to the New Leasing Standards and from 1 January 2021, except for short-term leases and low-value asset leases whose treatment is chosen to be simplified, the Company will recognize the right-of-use assets and lease liabilities for all leased assets with the present value of the minimum lease payment based on the future rent payable, and recognize the depreciation and unrecognized financing expenses respectively. The information of comparable periods will not be adjusted. | decided to implement the said standards since 1 January 2021 and adjusted related contents of accounting policies. | ||||
| Affected items of the balance sheet Unit: RMB | |||||
| Item | 31 December 2020 | 1 January 2021 | Adjusted | ||
| Right-of-use assets | 123,826,579.05 | 123,826,579.05 | |||
| Long-term prepaid expense | 118,340,494.60 | 1,406,347.76 | -116,934,146.84 | ||
| Current portion of non-current liabilities | 43,149,400.13 | 43,599,400.13 | 450,000.00 | ||
| Lease liabilities | 6,442,432.21 | 6,442,432.21 | |||
(2) Significant Changes in Accounting Estimates
□ Applicable √ Not applicable
(3) Adjustments to the Financial Statements at the Beginning of the First Execution Year of any NewStandards Governing Leases since 2021ApplicableWhether need to adjust items of balance sheet at the beginning of the year
√ Yes □ No
Consolidated balance sheet
Unit: RMB
| Item | 31 December 2020 | 1 January 2021 | Adjusted |
| Current assets: | |||
| Monetary assets | 1,400,478,034.81 | 1,400,478,034.81 | |
| Held-for-trading financial assets | 268,456,216.98 | 268,456,216.98 | |
| Derivative financial assets | |||
| Notes receivable | 182,994,110.86 | 182,994,110.86 | |
| Accounts receivable | 522,425,219.87 | 522,425,219.87 | |
| Accounts receivable financing | 55,150,926.34 | 55,150,926.34 | |
| Prepayments | 19,611,775.28 | 19,611,775.28 | |
| Other receivables | 105,710,818.69 | 105,710,818.69 | |
| Including: Interest receivable | |||
| Dividends receivable | 75,488,652.49 | 75,488,652.49 | |
| Financial assets purchased under resale agreements | |||
| Inventories | 1,988,968,681.64 | 1,988,968,681.64 | |
| Contract assets | |||
| Assets held for sale | |||
| Current portion of non-current assets | 45,750,018.30 | 45,750,018.30 | |
| Other current assets | 433,432,258.63 | 433,432,258.63 | |
| Total current assets | 5,022,978,061.40 | 5,022,978,061.40 | |
| Non-current assets: | |||
| Investments in other debt obligations | |||
| Long-term receivables | 41,053,183.15 | 41,053,183.15 | |
| Long-term equity investments | 138,079,577.25 | 138,079,577.25 |
| Investments in other equity instruments | |||
| Other non-current financial assets | 156,915,620.25 | 156,915,620.25 | |
| Investment property | 22,263,668.85 | 22,263,668.85 | |
| Fixed assets | 5,661,592,991.66 | 5,661,592,991.66 | |
| Construction in progress | 356,273,197.49 | 356,273,197.49 | |
| Right-of-use assets | 123,826,579.05 | 123,826,579.05 | |
| Intangible assets | 373,543,480.84 | 373,543,480.84 | |
| Development costs | |||
| Goodwill | 20,563,803.29 | 20,563,803.29 | |
| Long-term prepaid expense | 118,340,494.60 | 1,406,347.76 | -116,934,146.84 |
| Deferred income tax assets | 122,865,841.69 | 122,865,841.69 | |
| Other non-current assets | 95,434,040.18 | 95,434,040.18 | |
| Total non-current assets | 7,106,925,899.25 | 7,113,818,331.46 | 6,892,432.21 |
| Total assets | 12,129,903,960.65 | 12,136,796,392.86 | 6,892,432.21 |
| Current liabilities: | |||
| Short-term borrowings | 930,871,008.19 | 930,871,008.19 | |
| Derivative financial liabilities | |||
| Notes payable | |||
| Accounts payable | 243,262,473.69 | 243,262,473.69 | |
| Advances from customers | |||
| Contract liabilities | 141,339,705.62 | 141,339,705.62 | |
| Employee benefits payable | 265,648,198.38 | 265,648,198.38 | |
| Taxes payable | 36,468,978.77 | 36,468,978.77 | |
| Other payables | 17,587,470.79 | 17,587,470.79 | |
| Including: Interest payable | |||
| Dividends payable | 441,113.64 | 441,113.64 | |
| Liabilities directly associated with assets held for sale | |||
| Current portion of non-current liabilities | 43,149,400.13 | 43,599,400.13 | 450,000.00 |
| Other current liabilities | 192,574,674.68 | 192,574,674.68 | |
| Total current liabilities | 1,870,901,910.25 | 1,871,351,910.25 | 450,000.00 |
| Non-current liabilities: | |||
| Insurance contract reserve | |||
| Long-term borrowings | 495,520,342.78 | 495,520,342.78 | |
| Bonds payable | 1,350,171,526.97 | 1,350,171,526.97 | |
| Lease liabilities | 6,442,432.21 | 6,442,432.21 | |
| Long-term payables | |||
| Long-term employee benefits payable | 62,137,656.00 | 62,137,656.00 | |
| Provisions | |||
| Deferred income | 173,862,983.31 | 173,862,983.31 | |
| Deferred income tax liabilities | 85,633,161.44 | 85,633,161.44 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 2,167,325,670.50 | 2,173,768,102.71 | 6,442,432.21 |
| Total liabilities | 4,038,227,580.75 | 4,045,120,012.96 | 6,892,432.21 |
| Owners’ equity: | |||
| Share capital | 858,132,322.00 | 858,132,322.00 | |
| Other equity instruments | 71,386,451.81 | 71,386,451.81 | |
| Capital reserves | 255,912,488.01 | 255,912,488.01 | |
| Less: Treasury stock | |||
| Other comprehensive income | 1,308,922.89 | 1,308,922.89 | |
| Specific reserve | |||
| Surplus reserves | 1,154,017,457.79 | 1,154,017,457.79 | |
| General reserve | |||
| Retained earnings | 5,346,819,948.22 | 5,346,819,948.22 | |
| Total equity attributable to owners of the Company as the parent | 7,687,577,590.72 | 7,687,577,590.72 | |
| Non-controlling interests | 404,098,789.18 | 404,098,789.18 | |
| Total owners’ equity | 8,091,676,379.90 | 8,091,676,379.90 | |
| Total liabilities and owners’ equity | 12,129,903,960.65 | 12,136,796,392.86 | 6,892,432.21 |
Note for adjustment
Balance Sheet of the Company as the Parent
Unit: RMB
| Item | 31 December 2020 | 1 January 2021 | Adjusted |
| Current assets: | |||
| Monetary assets | 729,437,231.33 | 729,437,231.33 | |
| Held-for-trading financial assets | 163,636,075.34 | 163,636,075.34 | |
| Derivative financial assets | |||
| Notes receivable | 108,863,689.79 | 108,863,689.79 | |
| Accounts receivable | 326,166,935.10 | 326,166,935.10 | |
| Accounts receivable financing | 48,764,088.05 | 48,764,088.05 | |
| Prepayments | 13,059,806.74 | 13,059,806.74 | |
| Other receivables | 1,500,882,682.19 | 1,500,882,682.19 | |
| Including: Interest receivable | |||
| Dividends receivable | 75,488,652.49 | 75,488,652.49 | |
| Inventories | 1,097,438,610.46 | 1,097,438,610.46 | |
| Contract assets | |||
| Assets held for sale | |||
| Current portion of non-current assets | 45,750,018.30 | 45,750,018.30 | |
| Other current assets | 247,860,882.02 | 247,860,882.02 | |
| Total current assets | 4,281,860,019.32 | 4,281,860,019.32 | |
| Non-current assets: | |||
| Investments in debt obligations | |||
| Investments in other debt obligations | |||
| Long-term receivables | 41,053,183.15 | 41,053,183.15 | |
| Long-term equity investments | 2,555,150,859.13 | 2,555,150,859.13 | |
| Investments in other equity instruments | |||
| Other non-current financial assets | 144,915,620.25 | 144,915,620.25 | |
| Investment property | 29,734,239.22 | 29,734,239.22 | |
| Fixed assets | 2,471,686,117.72 | 2,471,686,117.72 | |
| Construction in progress | 48,694,822.74 | 48,694,822.74 |
| Right-of-use assets | 7,709,598.61 | 7,709,598.61 | |
| Intangible assets | 225,128,308.75 | 225,128,308.75 | |
| Development costs | |||
| Goodwill | |||
| Long-term prepaid expense | 1,406,347.76 | 1,406,347.76 | |
| Deferred income tax assets | 65,729,304.26 | 65,729,304.26 | |
| Other non-current assets | 7,936,745.28 | 7,936,745.28 | |
| Total non-current assets | 5,591,435,548.26 | 5,599,145,146.87 | 7,709,598.61 |
| Total assets | 9,873,295,567.58 | 9,881,005,166.19 | 7,709,598.61 |
| Current liabilities: | |||
| Short-term borrowings | 332,466,931.13 | 332,466,931.13 | |
| Held-for-trading financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | |||
| Accounts payable | 132,231,596.74 | 132,231,596.74 | |
| Advances from customers | |||
| Contract liabilities | 56,841,289.66 | 56,841,289.66 | |
| Employee benefits payable | 202,694,515.93 | 202,694,515.93 | |
| Taxes payable | 21,896,035.49 | 21,896,035.49 | |
| Other payables | 79,668,657.80 | 79,668,657.80 | |
| Including: Interest payable | |||
| Dividends payable | 441,113.64 | 441,113.64 | |
| Liabilities directly associated with assets held for sale | |||
| Current portion of non-current liabilities | 4,000,000.00 | 5,139,062.02 | 1,139,062.02 |
| Other current liabilities | 166,257,466.30 | 166,257,466.30 | |
| Total current liabilities | 996,056,493.05 | 997,195,555.07 | 1,139,062.02 |
| Non-current liabilities: | |||
| Long-term borrowings | 495,520,342.78 | 495,520,342.78 | |
| Bonds payable | 1,350,171,526.97 | 1,350,171,526.97 |
| Lease liabilities | 6,570,536.59 | 6,570,536.59 | |
| Long-term payables | |||
| Long-term employee benefits payable | 62,137,656.00 | 62,137,656.00 | |
| Provisions | |||
| Deferred income | 131,546,549.87 | 131,546,549.87 | |
| Deferred income tax liabilities | 58,927,115.71 | 58,927,115.71 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 2,098,303,191.33 | 2,104,873,727.92 | 6,570,536.59 |
| Total liabilities | 3,094,359,684.38 | 3,102,069,282.99 | 7,709,598.61 |
| Owners’ equity: | |||
| Share capital | 858,132,322.00 | 858,132,322.00 | |
| Other equity instruments | 71,386,451.81 | 71,386,451.81 | |
| Capital reserves | 317,292,522.25 | 317,292,522.25 | |
| Less: Treasury stock | |||
| Other comprehensive income | -424,313.33 | -424,313.33 | |
| Specific reserve | |||
| Surplus reserves | 1,150,908,718.15 | 1,150,908,718.15 | |
| Retained earnings | 4,381,640,182.32 | 4,381,640,182.32 | |
| Total owners’ equity | 6,778,935,883.20 | 6,778,935,883.20 | |
| Total liabilities and owners’ equity | 9,873,295,567.58 | 9,881,005,166.19 | 7,709,598.61 |
Note for adjustment
(4) Retroactive Adjustments to Comparative Data of Prior Years when First Execution of any NewStandards Governing Leases since 2021
□Applicable √ Not applicable
VI Taxation
1. Main Taxes and Tax Rate
| Category of taxes | Tax basis | Tax rate |
| VAT | Taxable income | 13%、9%、6%、5%、3%、0 |
| Urban maintenance and | Turnover tax payable | 7%、5% |
| construction tax | ||
| Enterprise income tax | Income tax payable | 0、6.5%、8.5%、15%、16.5%、17%、20%、25% |
Notes of the disclosure situation of the taxpaying bodies with different enterprises income tax rate
| Taxpayer | Income tax rate |
| The Company | 15% |
| Lufeng Weaving & Dyeing | 15% |
| Lu Thai Hong Kong | 16.50% |
| Luqun Textile | 25% |
| Xinsheng Power | 25% |
| Shanghai Lu Thai | 20% |
| Shanghai Zhinuo | 20% |
| Lulian New Materials | 25% |
| Lujia Import & Export | 20% |
| Zhishu Trading | 20% |
| Lu Thai Cambodia | 20% |
| Vanguard Apparel | 0% |
| Continental Textile | 0% |
| Lu Thai Tan Chau | 0% |
| Lu An Garments | 8.5% |
| Lu Thai America | 6.5% |
| Lu Thai Vocational Training School | 0% |
| Huilin International | 15% |
| Tianping International | 17% |
| Banyang Hills | 20% |
2. Tax Preference
In accordance with the Reply on Filing of the Second Batch of Hi-tech Enterprises of Shandong Province in 2020 with Reference No.Guo Ke Huo Zi [2021]25, the Company was identified as a hi-tech enterprise and the certificate issuing date was December 8, 2020; inaccordance with the Notice for Announcing the First Batch of Hi-tech Enterprise Identification List of Shandong Province in 2020 withreference No. Lu Ke Zi [2020]136, the majority-owned subsidiary Lufeng Weaving & Dyeing was identified as a hi-tech enterprise,and the certificate issuing date was August 17, 2020. Pursuant to Article 28 of the Law of the PRC on Enterprise Income Tax and the No.23 Announcement revised and published by the State Administration of Taxation in 2018, namely Management of Preferential Policy
on Corporate Income Tax, the Measures for the Administration of the Recognition of High and New Technological Enterprises (GKFH[2016] No. 195) revised and published by the Ministry of Science and Technology, Ministry of Finance and State Administration ofTaxation, the Company and the holding subsidiary Lufeng Weaving & Dyeing enjoy a corporate income tax rate of 15%.Lu Thai (Hong Kong) Textile Co., Ltd. (hereinafter refers as Lu Thai (Hong Kong) Textile), the wholly-owned subsidiary company ofthe Company, was incorporated in Hong Kong SAR, whose profit tax shall be paid at tax rate of 16.5%.The wholly-owned subsidiaries including Shanghai Luthai, Shanghai Zhinuo Textile New Materials Co., Ltd., Lu Jia Import &Export Co., Ltd., Beijing Zhishu Trading Co., Ltd. and Banyang Mountain Villa pay corporate income tax at a tax rate of 20%according to Announcement of the State Taxation Administration on Issues Concerning the Implementation of the Inclusive IncomeTax Reduction and Exemption Policy for Small and Low-profit Enterprises (Announcement No. 2 [2019] of the State TaxationAdministration) and Announcement of the State Taxation Administration on Issues Concerning the Implementation of PreferentialIncome Tax Policies to Support the Development of Small and Low-profit Enterprises and Individual Businesses (Announcement No.8 [2021] of the State Taxation Administration).Based on the provisions of the Tax Law of Kingdom of Cambodia on income tax, the business income tax rate of the wholly-ownedsubsidiary Lu Thai (Cambodia) Textile Co., Ltd. is 20%.The wholly own subsidiary Vanguard Apparel, according to the Burma’s Special Economic Zone Law issued by Pyidaungsu Hluttaw,Vanguard Apparel enjoys tax preference on corporate income tax of 7 (7 years tax holiday) + 5 (5 years tax revenues drop by half) +5 (re-invest the profits within 1 year and continues to enjoy the half tax revenues 5 years afterwards). After grace period, enterpriseincome tax rate was of 25%. Year 2021 is the sixth year of tax holiday.The wholly-owned subsidiary Continental Textile shall enjoy the preference of enterprise income tax at 3 years’ starting term + 4years’ duty-free term + 9 years’ half-tax term according to the investment license issued by Vietnamese Tay Ninh Industrial ZoneManagement Committee, and it will enter into 2 years’ duty-free term if it is profitable within 3 years’ starting term. ContinentalTextile shall enjoy 10% of the preference tax rate within 15 years since the tax year to get the first production and operation income,and the enterprise income tax rate shall be 20% after the preference term ends. Year 2021 is the fourth year of the duty-free term.The wholly-owned subsidiary of Continental Textile, Lu Thai Tan Chau, shall enjoy the preference of enterprise income tax at 3years’ starting term + 4 years’ duty-free term + 9 years’ half-tax term according to the investment license issued by Vietnamese TayNinh Investment Planning Office, and it will enter into 2 years’ duty-free term if it is profitable within 3 years’ starting term. TheCompany shall enjoy 10% of the preference tax rate within 15 years since the tax year to get the first production and operationincome, and the enterprise income tax rate shall be 20% after the preference term ends.The wholly-owned subsidiary Lu An Garments Co., Ltd. shall enjoy the preference of enterprise income tax at 3 years’ starting term+ 2 years’ duty-free term + 4 years’ half-tax term according to the investment license issued by Vietnamese Anjiang ProvinceEconomic Zone Management Committee, and it will enter into duty-free term if the profitability is realized at any year within 3 years’starting term. The Company shall enjoy 17% of the preference tax rate within 10 years since the tax year to get the first productionand operation income, and the enterprise income tax rate shall be 20% after the preference term ends. Year 2021 is the first year ofthe halving collection period.Lu Thai America, the wholly-owned subsidiary of the Company registered in New York, America, was imposed the federalenterprise income tax at fixed tax rate of 21%, and imposed the New York Enterprise income tax at the fixed tax rate of 6.5%.The wholly-owned subsidiary Lu Thai Vocational Training School Co., Ltd. enjoys the preferential policy for non-profit organizationincome exemption from corporate income tax according to Article 26, Item 4 of the Enterprise Income Tax Law of the People's
Republic of China and Article 84 and Article 85 of Regulations for the Implementation of the Enterprise Income Tax Law of thePeople's Republic of China and CS (2018) No. 13.The Wholly-owned subsidiary Huilin International, which is registered in Hainan Pilot Free Zone and operates the encouragedindustry, pays corporate income tax at a reduced tax rate of 15% according to Announcement of the Ministry of Finance and theState Taxation Administration on the Corporate Income Tax Preferential Policies of Hainan Pilot Free Zone (Announcement No.31[2020] of the Ministry of Finance and the State Taxation Administration)The Wholly-owned subsidiary Tianping International of Huilin International is registered in Singapore and pays the corporate incometax at a rate of 17%.
VII. Notes to Main Items of Consolidated Financial Statements
1. Monetary Assets
Unit: RMB
| Item | Ending balance | Beginning balance |
| Cash on hand | 6,722,270.36 | 7,009,891.16 |
| Bank deposits | 2,029,384,057.40 | 1,390,809,492.44 |
| Other monetary funds | 3,465,093.84 | 2,658,651.21 |
| Total | 2,039,571,421.60 | 1,400,478,034.81 |
| Of which: total amount deposited overseas | 128,893,283.41 | 131,075,580.22 |
Other notes:
(1) On 30 June 2021, the monetary assets with restricted ownership of the Company were of RMB3,465,093.84, which was the cashdeposit for L/G of USD195,831.93 (equivalent to RMB1,265,093.84) for the Company's subsidiary Continental Textile, and theforward settlement of exchange guarantee deposit of RMB2.2 million for the subsidiary Lulian New Materials.
(2) The interest receivable in bank deposits was RMB4,460,327.58.
2. Trading Financial Assets
Unit: RMB
| Item | Ending balance | Beginning balance |
| Financial assets at fair value through profit or loss | 124,052,667.02 | 268,456,216.98 |
| Of which: | ||
| Debt instrument investment | 97,570,367.02 | 251,814,716.98 |
| Derivative financial assets | 26,482,300.00 | 16,641,500.00 |
| Of which: | ||
| Total | 124,052,667.02 | 268,456,216.98 |
3. Notes Receivable
(1) Notes Receivable Listed by Category
Unit: RMB
| Item | Ending balance | Beginning balance |
| Bank acceptance bill | 148,033,617.59 | 141,168,447.70 |
| L/C | 74,030,732.84 | 41,825,663.16 |
| Total | 222,064,350.43 | 182,994,110.86 |
Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable if adopting the general modeof expected credit loss to withdraw bad debt provision of notes receivable.
□ Applicable √ Not applicable
(2) Notes Receivable Pledged by the Company at the Period-end
Unit: RMB
| Item | Ending pledged amount |
| Bank acceptance bill | 26,300,299.48 |
| Total | 26,300,299.48 |
(3) Notes Receivable which Had Endorsed by the Company or Had Discounted and Had not Due on theBalance Sheet Date at the Period-end
Unit: RMB
| Item | Amount of recognition termination at the period-end | Amount of not terminated recognition at the period-end |
| Bank acceptance bill | 99,033,886.64 | |
| Total | 99,033,886.64 |
4. Accounts Receivable
(1) Listed by Category
Unit: RMB
| Category | Ending balance | Beginning balance | ||||||||
| Carrying amount | Bad debt provision | Carrying value | Carrying amount | Bad debt provision | Carrying value | |||||
| Amount | Proportion | Amount | Withdrawal proportion | Amount | Proportion | Amount | Withdrawal proportion | |||
| Accounts receivable | 2,992,197.22 | 0.60% | 2,992,197.22 | 100.00% | 8,378,716.21 | 1.48% | 8,378,716.21 | 100.00% | ||
| withdrawal of Bad debt provision separately accrued | ||||||||||
| Of which: | ||||||||||
| Accounts receivable withdrawal of bad debt provision of by group | 495,662,642.77 | 99.40% | 28,585,615.77 | 5.77% | 467,077,027.00 | 558,478,267.74 | 98.52% | 36,053,047.87 | 6.46% | 522,425,219.87 |
| Of which: | ||||||||||
| Undue accounts (credit insurance insured) | 184,474,315.78 | 36.99% | 1,936,980.30 | 1.05% | 182,537,335.48 | 166,997,706.03 | 29.46% | 1,753,475.92 | 1.05% | 165,244,230.11 |
| Undue accounts (no credit insurance) | 219,274,795.15 | 43.97% | 10,963,739.77 | 5.00% | 208,311,055.38 | 269,999,707.80 | 47.63% | 13,499,985.39 | 5.00% | 256,499,722.41 |
| Overdue accounts (credit insurance insured) | 45,619,371.98 | 9.15% | 4,881,272.80 | 10.70% | 40,738,099.18 | 46,514,806.33 | 8.21% | 4,977,084.28 | 10.70% | 41,537,722.05 |
| Overdue accounts (no credit insurance) | 46,294,159.86 | 9.28% | 10,803,622.91 | 23.34% | 35,490,536.95 | 74,966,047.58 | 13.22% | 15,822,502.28 | 21.11% | 59,143,545.30 |
| Total | 498,654,839.99 | 100.00% | 31,577,812.99 | 6.33% | 467,077,027.00 | 566,856,983.95 | 100.00% | 44,431,764.08 | 7.84% | 522,425,219.87 |
Bad debt provision separately accrued:
Unit: RMB
| Name | Ending balance | |||
| Carrying amount | Bad debt provision | Withdrawal proportion | Reason for withdraw | |
| Customer 1 | 1,853,150.81 | 1,853,150.81 | 100.00% | Customer's application for bankruptcy protection |
| Customer 2 | 141,974.46 | 141,974.46 | 100.00% | Customer's application for bankruptcy protection |
| Other customers | 997,071.95 | 997,071.95 | 100.00% | Customer in financial difficulty or application for bankruptcy |
| Total | 2,992,197.22 | 2,992,197.22 | -- | -- |
Withdrawal of bad debt provision by group:
Unit: RMB
| Name | Ending balance | ||
| Carrying amount | Bad debt provision | Withdrawal proportion | |
| Group 1: Undue accounts (credit insurance insured) | 184,474,315.78 | 1,936,980.30 | 1.05% |
| Group 2: Undue accounts (no credit insurance) | 219,274,795.15 | 10,963,739.77 | 5.00% |
| Group 3: Overdue accounts (credit insurance insured) | 45,619,371.98 | 4,881,272.80 | 10.70% |
| Group 4: Overdue accounts (no credit insurance) | 46,294,159.86 | 10,803,622.91 | 23.34% |
| Total | 495,662,642.77 | 28,585,615.77 | -- |
Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable if adopting the general modeof expected credit loss to withdraw bad debt provision of accounts receivable.
√ Applicable □ Not applicable
Disclosure by aging
Unit: RMB
| Aging | Ending balance |
| Within 1 year (including 1 year) | 480,702,865.14 |
| 1 to 2 years | 15,122,802.42 |
| 2 to 3 years | 2,028,588.53 |
| Over 3 years | 800,583.90 |
| 3 to 4 years | 508,337.83 |
| 4 to 5 years | 292,246.07 |
| Total | 498,654,839.99 |
(2) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting PeriodWithdrawal of bad debt provision:
Unit: RMB
| Category | Beginning | Changes in the Reporting Period | Ending balance |
| balance | Withdrawal | Reversal or recovery | Verification | Others | ||
| Bad debt provision separately accrued | 8,378,716.21 | -5,386,518.99 | 2,992,197.22 | |||
| Withdrawal of bad debt provision by group | 36,053,047.87 | -6,027,858.17 | 1,439,573.93 | 28,585,615.77 | ||
| Total | 44,431,764.08 | -11,414,377.16 | 0.00 | 1,439,573.93 | 0.00 | 31,577,812.99 |
(3) Accounts Receivable Written-off in Current Period
Unit: RMB
| Item | Written-off amount |
| Written-off accounts receivable | 1,439,573.93 |
(4) Top 5 of the Ending Balance of the Accounts Receivable Collected according to Arrears Party
Unit: RMB
| Name of the entity | Ending balance | Proportion to total ending balance of accounts receivable | Ending balance of bad debt provision |
| Customer A | 49,754,813.30 | 9.98% | 2,625,045.16 |
| Customer B | 21,404,979.77 | 4.29% | 629,981.92 |
| Customer C | 20,910,062.08 | 4.19% | 489,997.30 |
| Customer D | 20,133,981.14 | 4.04% | 750,699.18 |
| Customer E | 18,434,346.13 | 3.70% | 921,717.31 |
| Total | 130,638,182.42 | 26.20% |
5. Accounts Receivable Financing
Unit: RMB
| Item | Ending balance | Beginning balance |
| Notes receivable | 29,915,168.65 | 55,508,978.63 |
| Less: Other comprehensive income-fair value change | -332,259.77 | -358,052.29 |
| Total | 29,582,908.88 | 55,150,926.34 |
The changes of accounts receivable financing in the Reporting Period and the changes in fair value
□ Applicable √ Not applicable
Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable if adopting the general modeof expected credit loss to withdraw bad debt provision of accounts receivable financing.
□ Applicable √ Not applicable
6. Prepayment
(1) Prepayment Listed by Aging Analysis
Unit: RMB
| Aging | Ending balance | Beginning balance | ||
| Amount | Proportion | Amount | Proportion | |
| Within 1 year | 57,925,483.91 | 99.45% | 19,462,310.59 | 99.24% |
| 1 to 2 years | 258,245.74 | 0.44% | 113,434.12 | 0.58% |
| 2 to 3 years | 60,468.18 | 0.10% | 36,030.57 | 0.18% |
| Over 3 years | 0.00% | |||
| Total | 58,244,197.83 | -- | 19,611,775.28 | -- |
(2) Top 5 Prepayment in Ending Balance Collected according to the Prepayment Target
The total top 5 prepayment in ending balance collected according to the prepayment target for the Company was RMB36,618,076.25,accounting for 62.87% of total ending balance of prepayment.
7. Other Accounts Receivable
Unit: RMB
| Item | Ending balance | Beginning balance |
| Dividend receivable | 47,025,975.44 | 75,488,652.49 |
| Other receivables | 32,629,619.36 | 30,222,166.20 |
| Total | 79,655,594.80 | 105,710,818.69 |
(1) Dividend receivable
1) Dividend receivable classification
Unit: RMB
| Project (or investee) | Ending balance | Beginning balance |
| Fengshou Cotton Industry | 47,025,975.44 | 75,488,652.49 |
| Total | 47,025,975.44 | 75,488,652.49 |
2) Withdrawal of Bad Debt Provision
√ Applicable □ Not applicable
Unit: RMB
| Bad debt provision | First stage | Second stage | Third stage | Total |
| Expected credit loss of the next 12 months | Expected loss in the duration (credit impairment not occurred) | Expected loss in the duration (credit impairment occurred) | ||
| Balance of 1 January 2021 | 3,973,086.97 | 3,973,086.97 | ||
| Balance of 1 January 2021 in the Current Period | —— | —— | —— | —— |
| Withdrawal of the Current Period | -1,498,035.63 | -1,498,035.63 | ||
| Balance of 30 June 2021 | 2,475,051.34 | 2,475,051.34 |
Changes of carrying amount with significant amount changed of loss provision in the Current Period
□ Applicable √ Not applicable
(2) Other Accounts Receivable
1) Other Receivables Classified by Account Nature
Unit: RMB
| Nature | Ending carrying amount | Beginning carrying amount |
| Export rebates | 5,953,237.24 | |
| VAT to be returned | 9,103,166.26 | 9,341,623.77 |
| Payment on behalf | 10,713,131.84 | 13,868,814.75 |
| Guarantee deposit and cash deposit | 7,964,983.22 | 5,163,865.78 |
| Borrowings and petty cash | 1,237,930.25 | 4,483,805.85 |
| Others | 723,261.84 | 218,743.34 |
| Total | 35,695,710.65 | 33,076,853.49 |
2) Withdrawal of Bad Debt Provision
Unit: RMB
| Bad debt provision | First stage | Second stage | Third stage | Total |
| Expected credit loss of the next 12 months | Expected loss in the duration (credit impairment not occurred) | Expected loss in the duration (credit impairment occurred) | ||
| Balance of 1 January 2021 | 1,516,853.79 | 1,337,833.50 | 2,854,687.29 | |
| Balance of 1 January 2021 in the Current Period | —— | —— | —— | —— |
| Withdrawal of the Current Period | 121,764.14 | 89,639.86 | 211,404.00 | |
| Balance of 30 June 2021 | 1,638,617.93 | 1,427,473.36 | 3,066,091.29 |
Changes of carrying amount with significant amount changed of loss provision in the Current Period
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMB
| Aging | Ending balance |
| Within 1 year (including 1 year) | 28,209,647.65 |
| 1 to 2 years | 2,433,419.56 |
| 2 to 3 years | 308,266.30 |
| Over 3 years | 4,744,377.14 |
| 3 to 4 years | 225,759.46 |
| Over 5 years | 4,518,617.68 |
| Total | 35,695,710.65 |
3) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
Withdrawal of bad debt provision:
Unit: RMB
| Category | Beginning balance | Changes in the Reporting Period | Ending balance | |||
| Withdrawal | Reversal or recovery | Verification | Others | |||
| Expected credit loss of the next 12 months at the first stage | 1,516,853.79 | 121,764.14 | 1,638,617.93 | |||
| Expected loss in the duration (credit impairment not occurred) at the second stage | 1,337,833.50 | 89,639.86 | 1,427,473.36 | |||
| Expected loss in the duration (credit impairment occurred) at the third stage | 0.00 | |||||
| Total | 2,854,687.29 | 211,404.00 | 0.00 | 0.00 | 0.00 | 3,066,091.29 |
4) Top 5 Other Accounts Receivable in Ending Balance Collected according to the Arrears Party
Unit: RMB
| Name of the entity | Nature | Ending balance | Aging | Proportion to total ending balance of other receivables | Ending balance of bad debt |
| provision | |||||
| VAT receivable to be returned of Lu Thai (Cambodia) | Input VAT | 4,670,292.99 | Within 1 year | 13.08% | 233,514.65 |
| Withholding and remitting of personal endowment insurance | Advance money | 4,571,053.09 | Within 1 year | 12.81% | 228,552.65 |
| VAT receivable to be returned of Lu Thai Tan Chau | Input VAT | 4,432,873.27 | Within 1 year | 12.42% | 221,643.66 |
| Migrant workers’ wage margin in Zichuan District of Zibo | Migrant workers’ wage margin of infrastructural project | 1,955,703.00 | 1 to 2 years, over 3 years | 5.48% | 954,969.77 |
| Withholding and remitting of personal housing provident fund | Advance money | 1,177,266.67 | Within 1 year | 3.30% | 58,863.33 |
| Total | -- | 16,807,189.02 | -- | 47.08% | 1,697,544.06 |
8. Inventory
Whether the Company needs to comply with the disclosure requirements for real estate industryNo
(1) Category of Inventory
Unit: RMB
| Item | Ending balance | Beginning balance | ||||
| Carrying amount | Depreciation reserves of inventories or impairment provision for contract performance costs | Carrying value | Carrying amount | Depreciation reserves of inventories or impairment provision for contract performance costs | Carrying value | |
| Raw material | 764,584,360.28 | 2,547,151.31 | 762,037,208.97 | 849,455,158.83 | 2,547,151.31 | 846,908,007.52 |
| Goods in process | 455,835,628.95 | 3,599,739.14 | 452,235,889.81 | 393,404,083.58 | 5,437,464.35 | 387,966,619.23 |
| Inventory goods | 960,560,597.77 | 107,230,734.35 | 853,329,863.42 | 877,507,714.63 | 136,403,191.01 | 741,104,523.62 |
| Assigned processing products | 11,882,281.00 | 11,882,281.00 | 12,989,531.27 | 12,989,531.27 | ||
| Goods in transit | ||||||
| Total | 2,192,862,868.00 | 113,377,624.80 | 2,079,485,243.20 | 2,133,356,488.31 | 144,387,806.67 | 1,988,968,681.64 |
(2) Falling Price Reserves of Inventory and Impairment Provision for Contract Performance Costs
Unit: RMB
| Item | Beginning balance | Increased amount | Decrease | Ending balance | ||
| Withdrawal | Others | Reversal or write-off | Others | |||
| Raw material | 2,547,151.31 | 2,547,151.31 | ||||
| Goods in process | 5,437,464.35 | 1,837,725.21 | 3,599,739.14 | |||
| Inventory goods | 136,403,191.01 | 7,035,233.41 | 36,207,690.07 | 107,230,734.35 | ||
| Total | 144,387,806.67 | 7,035,233.41 | 0.00 | 38,045,415.28 | 113,377,624.80 | |
9. Non-current Assets due within 1 Year
Unit: RMB
| Item | Ending balance | Beginning balance |
| Long-term accounts receivable matured within 1 Year | 46,625,009.15 | 45,750,018.30 |
| Total | 46,625,009.15 | 45,750,018.30 |
10. Other Current Assets
Unit: RMB
| Item | Ending balance | Beginning balance |
| Other tax | 53,044,329.41 | 69,924,309.37 |
| Prepaid income tax | 5,844,322.05 | 8,268,591.39 |
| Prepaid other taxes | 3,161,080.82 | |
| Short-term investment in debt obligations | 351,379,736.36 | |
| Convertible broken lot fund | 199,801.66 | 199,858.61 |
| Short-term unamortized expenses | 124,670.52 | 498,682.08 |
| Total | 59,213,123.64 | 433,432,258.63 |
11. Long-term Receivables
(1) List of Long-term Receivables
Unit: RMB
| Item | Ending balance | Beginning balance | Interval of discount | ||||
| Carrying | Bad debt | Carrying value | Carrying | Bad debt | Carrying value | ||
| amount | provision | amount | provision | rate | |||
| Equity transfer account receivable | 93,128,451.80 | 4,656,422.59 | 88,472,029.21 | 91,371,791.00 | 4,568,589.55 | 86,803,201.45 | 3.85% |
| Less: Long-term accounts receivable matured within 1 Year | -49,078,957.00 | -2,453,947.85 | -46,625,009.15 | -48,157,914.00 | -2,407,895.70 | -45,750,018.30 | |
| Total | 44,049,494.80 | 2,202,474.74 | 41,847,020.06 | 43,213,877.00 | 2,160,693.85 | 41,053,183.15 | -- |
Impairment of bad debt provision
Unit: RMB
| Bad debt provision | First stage | Second stage | Third stage | Total |
| Expected credit loss of the next 12 months | Expected loss in the duration (credit impairment not occurred) | Expected loss in the duration (credit impairment occurred) | ||
| Balance of 1 January 2021 | 4,568,589.55 | 4,568,589.55 | ||
| Balance of 1 January 2021 in the Current Period | —— | —— | —— | —— |
| Withdrawal of the Current Period | 87,833.04 | 87,833.04 | ||
| Balance of 30 June 2021 | 4,656,422.59 | 4,656,422.59 |
Changes of carrying amount with significant amount changed of loss provision in the Current Period
□ Applicable √ Not applicable
12. Long-term Equity Investment
Unit: RMB
| Investee | Beginning balance (carrying value) | Increase/decrease | Ending balance (carrying value) | Ending balance of depreciation reserve | |||||||
| Additional investment | Reduced investment | Gains and losses recognized under the equity method | Adjustment of other comprehensive income | Changes of other equity | Cash bonus or profits announced to issue | Withdrawal of impairment provision | Others | ||||
| I. Joint ventures | |||||||||||
| II. Associated enterprises | |||||||||||
| Ningbo Mei shan Bonded Port Area Haohong Equity | 88,329,922.16 | -3,493,810.90 | -7,881,294.68 | 76,954,816.58 | |||||||
| Investment Partnership (L.P) (hereinafter referred to as “Haohong Investment”) | |||||||||||
| Ningbo Haoying Equity Investment Partnership (L.P) (hereinafter referred to as “Haoying Investment”) | 49,749,655.09 | 1,704,740.22 | 51,454,395.31 | ||||||||
| Subtotal | 138,079,577.25 | -1,789,070.68 | -7,881,294.68 | 128,409,211.89 | |||||||
| Total | 138,079,577.25 | -1,789,070.68 | -7,881,294.68 | 128,409,211.89 |
13. Other Non-current Financial Assets
Unit: RMB
| Item | Ending balance | Beginning balance |
| Debt instrument investment | ||
| Equity instrument investment | 144,915,620.25 | 144,915,620.25 |
| Financial assets assigned measured by fair value and the changes be included in the current gains and losses | 12,000,000.00 | 12,000,000.00 |
| Others | ||
| Total | 156,915,620.25 | 156,915,620.25 |
14. Investment Property
(1) Investment Property Adopted the Cost Measurement Mode
√ Applicable □ Not applicable
Unit: RMB
| Item | Houses and buildings | Land use right | Construction in progress | Total |
| I. Original carrying value | ||||
| 1. Beginning balance | 33,577,852.12 | 33,577,852.12 | ||
| 2. Increased amount of the period | ||||
| (1) Outsourcing | ||||
| (2)Transfer from inventory/fixed assets/construction in progress | ||||
| (3) Business combination increase | ||||
| 3. Decreased amount of the period | ||||
| (1) Disposal | ||||
| (2) Other transfer | ||||
| 4. Ending balance | 33,577,852.12 | 33,577,852.12 | ||
| II. Accumulative depreciation and accumulative amortization | ||||
| 1. Beginning balance | 11,314,183.27 | 11,314,183.27 | ||
| 2. Increased amount of the period | 450,683.41 | 450,683.41 | ||
| (1) Withdrawal or amortization | 450,683.41 | 450,683.41 | ||
| (2) Fixed asset carried down | ||||
| 3. Decreased amount of the period | ||||
| (1) Disposal | ||||
| (2) Other transfer | ||||
| 4. Ending balance | 11,764,866.68 | 11,764,866.68 | ||
| III. Depreciation reserves | ||||
| 1. Beginning balance | ||||
| 2. Increased amount of the period | ||||
| (1) Withdrawal | ||||
| 3. Decreased amount of the period | ||||
| (1) Disposal | ||||
| (2) Other transfer | ||||
| 4. Ending balance | ||||
| IV. Carrying value | ||||
| 1. Ending carrying value | 21,812,985.44 | 21,812,985.44 | ||
| 2. Beginning carrying value | 22,263,668.85 | 22,263,668.85 |
(2) Investment Property Adopted the Fair Value Measurement Mode
□ Applicable √ Not applicable
15. Fixed Assets
Unit: RMB
| Item | Ending balance | Beginning balance |
| Fixed assets | 5,643,953,088.23 | 5,623,635,171.21 |
| Liquidation of PP&E | 37,957,820.45 | |
| Total | 5,643,953,088.23 | 5,661,592,991.66 |
(1) List of Fixed Assets
Unit: RMB
| Item | Houses and buildings | Machinery equipment | Transportation equipment | Electronic equipment and others | Total |
| I. Original carrying value | |||||
| 1. Beginning balance | 3,323,791,573.68 | 6,830,302,709.90 | 53,794,437.30 | 129,442,986.01 | 10,337,331,706.89 |
| 2. Increased amount of the period | 66,081,159.49 | 187,303,985.59 | 1,189,933.60 | 1,950,216.91 | 256,525,295.59 |
| (1) Purchase | 0.00 | 160,310,856.01 | 1,189,933.60 | 1,950,216.91 | 163,451,006.52 |
| (2) Transfer from construction in progress | 66,081,159.49 | 26,993,129.58 | 93,074,289.07 | ||
| (3) Business combination increase | 0.00 | ||||
| 3. Decreased amount of the period | 19,706,138.23 | 45,301,134.11 | 3,617,936.53 | 300,556.19 | 68,925,765.05 |
| (1) Disposal or scrap | 0.00 | 28,099,110.57 | 3,524,589.05 | 209,363.99 | 31,833,063.61 |
| (2) Transfer from construction in progress | 11,406,001.81 | 11,406,001.81 | |||
| (3) Transfer from investment properties | |||||
| (4) Other decrease | 8,300,136.42 | 17,202,023.54 | 93,347.48 | 91,192.20 | 25,686,699.63 |
| 4. Ending balance | 3,370,166,594.94 | 6,972,305,561.38 | 51,366,434.37 | 131,092,646.73 | 10,524,931,237.43 |
| II. Accumulative depreciation | |||||
| 1. Beginning balance | 995,997,040.59 | 3,533,778,199.66 | 36,975,373.50 | 97,668,147.56 | 4,664,418,761.31 |
| 2. Increased amount of the period | 54,655,598.94 | 154,272,433.72 | 2,321,511.20 | 6,572,927.13 | 217,822,470.98 |
| (1) Withdrawal | 54,655,598.94 | 154,272,433.72 | 2,321,511.20 | 6,572,927.13 | 217,822,470.98 |
| 3. Decreased amount of the period | 10,175,582.39 | 33,114,440.52 | 2,922,681.83 | 274,179.76 | 46,486,884.50 |
| (1) Disposal or scrap | 0.00 | 22,472,010.07 | 2,693,461.74 | 236,411.45 | 25,401,883.26 |
| (2) Transfer from construction in progress | 9,101,573.57 | 9,101,573.57 | |||
| (3) Transfer from investment properties | |||||
| (4) Other decrease | 1,074,008.82 | 10,642,430.45 | 229,220.09 | 37,768.32 | 11,983,427.67 |
| 4. Ending balance | 1,040,477,057.14 | 3,654,936,192.85 | 36,374,202.87 | 103,966,894.93 | 4,835,754,347.79 |
| III. Depreciation reserves | |||||
| 1. Beginning balance | 1,574,730.45 | 47,619,177.12 | 5,671.30 | 78,195.50 | 49,277,774.37 |
| 2. Increased amount of the period | |||||
| (1) Withdrawal | |||||
| 3. Decreased amount of the period | 4,045,259.29 | 8,713.67 | 4,053,972.96 | ||
| (1) Disposal or scrap | 4,045,259.29 | 8,713.67 | 4,053,972.96 | ||
| 4. Ending balance | 1,574,730.45 | 43,573,917.83 | 5,671.30 | 69,481.83 | 45,223,801.41 |
| IV. Carrying value | |||||
| 1. Ending carrying value | 2,328,114,807.35 | 3,273,795,450.70 | 14,986,560.20 | 27,056,269.98 | 5,643,953,088.23 |
| 2. Beginning carrying value | 2,326,219,802.64 | 3,248,905,333.12 | 16,813,392.50 | 31,696,642.95 | 5,623,635,171.21 |
(2) Fixed Assets Leased out by Operation Lease
Unit: RMB
| Item | Ending carrying value |
| Houses and buildings | 3,846,450.11 |
(3) Fixed Assets Failed to Accomplish Certification of Property
Unit: RMB
| Item | Carrying value | Reason |
| Lufeng weaving dye gray yarn warehouse | 11,081,816.28 | Under the relevant certificate procedures of acceptance, measurement, examination by the real estate trading center and other departments |
| Lulian New Materials Winding and Dyeing Plant | 47,492,809.01 | The project is under relevant the procedures of acceptance |
| Lulian New Materials Sizing Plant | 12,099,824.78 | The project is under relevant the procedures of acceptance |
| Lulian New Materials Dyeing Plant | 45,866,874.19 | The project is under relevant the procedures of acceptance |
| Lulian New Materials Powerhouse | 22,557,227.04 | The project is under relevant the procedures of acceptance |
(4) Liquidation of PP&E
Unit: RMB
| Item | Ending balance | Beginning balance |
| Houses and buildings of Zhangdian Industrial Park | 0.00 | 37,957,820.45 |
| Total | 37,957,820.45 |
16. Construction in Progress
Unit: RMB
| Item | Ending balance | Beginning balance |
| Construction in progress | 202,862,768.01 | 201,339,271.24 |
| Engineering materials | 90,388,283.84 | 154,933,926.25 |
| Total | 293,251,051.85 | 356,273,197.49 |
(1) Construction in Progress
Unit: RMB
| Item | Ending balance | Beginning balance | ||||
| Carrying amount | Depreciation reserve | Carrying value | Carrying amount | Depreciation reserve | Carrying value | |
| Reform project of Xinsheng Thermal Power | 26,446,596.90 | 26,446,596.90 | 15,024,257.20 | 15,024,257.20 | ||
| Expansion project of Xinsheng Thermal Power (Phase II) | 525,648.44 | 525,648.44 | 24,901,015.93 | 24,901,015.93 | ||
| Dormitory project of Lu Thai (Vietnam) | 22,880,424.95 | 22,880,424.95 | 19,083,725.35 | 19,083,725.35 | ||
| Spinning project of Lu Thai Tan Chau | 7,502,855.24 | 7,502,855.24 | 5,296,923.55 | 5,296,923.55 | ||
| Functional Fabric Intelligent Ecological Park Project Phase I | 85,584,978.56 | 85,584,978.56 | 95,803,812.78 | 95,803,812.78 | ||
| Other retails projects | 59,922,263.92 | 59,922,263.92 | 41,229,536.43 | 41,229,536.43 | ||
| Total | 202,862,768.01 | 0.00 | 202,862,768.01 | 201,339,271.24 | 0.00 | 201,339,271.24 |
(2) Changes in Significant Construction in Progress during the Reporting Period
Unit: RMB
| Item | Budget | Beginning balance | Increased amount | Transferred in fixed assets | Other decreased amount | Ending balance | Proportion of accumulated investment in constructions to budget | Job schedule | Accumulated amount of interest capitalization | Of which: amount of capitalized interests for the Reporting Period | Capitalization rate of interests for the Reporting Period | Capital resources |
| Reform project of Xinsheng Thermal Power | 42,170,000.00 | 15,024,257.20 | 11,423,363.20 | 1,023.50 | 26,446,596.90 | 63.00% | 63.00% | Others | ||||
| Expansion project of Xinsheng Thermal Power (Phase II) | 110,690,000.00 | 24,901,015.93 | 1,656,055.03 | 26,031,422.52 | 525,648.44 | 115.00% | 99.00% | Others | ||||
| Dormitory project of Lu Thai (Vietnam) | 21,626,200.00 | 19,083,725.35 | 4,021,012.53 | 224,312.93 | 22,880,424.95 | 105.80% | 95.00% | Others | ||||
| Spinning project of Lu Thai Tan Chau | 153,470,000.00 | 5,296,923.55 | 2,264,200.16 | 58,268.47 | 7,502,855.24 | 93.98% | 93.98% | Others | ||||
| Functional Fabric Intelligent Ecological Park Project Phase I | 217,211,000.00 | 95,803,812.78 | 56,205,173.88 | 66,424,008.10 | 85,584,978.56 | 112.84% | 90.00% | 25,327,491.90 | 10,299,292.35 | 3.68% | Raised through equity offering |
| Other retails projects | 41,229,536.43 | 19,324,550.09 | 617,834.95 | 13,987.65 | 59,922,263.92 | Others | ||||||
| Total | 545,167,200.00 | 201,339,271.24 | 94,894,354.89 | 93,074,289.07 | 296,569.05 | 202,862,768.01 | -- | -- | 25,327,491.90 | 10,299,292.35 | -- |
(3) Engineering Materials
Unit: RMB
| Item | Ending balance | Beginning balance | ||||
| Carrying amount | Depreciation reserve | Carrying value | Carrying amount | Depreciation reserve | Carrying value | |
| Special materials | ||||||
| Special equipment | 90,388,283.84 | 90,388,283.84 | 154,933,926.25 | 154,933,926.25 | ||
| Total | 90,388,283.84 | 90,388,283.84 | 154,933,926.25 | 154,933,926.25 | ||
17. Right-of-use Assets
Unit: RMB
| Item | Houses and buildings | Land use right | Total |
| 1. Beginning balance | 6,892,432.21 | 135,556,075.48 | 142,448,507.69 |
| 2. Increased amount of the period | 49,016,057.44 | 49,016,057.44 | |
| 4. Ending balance | 55,908,489.65 | 135,556,075.48 | 191,464,565.13 |
| 1. Beginning balance | 18,621,928.64 | 18,621,928.64 | |
| 2. Increased amount of the period | 8,543,697.88 | 2,556,831.18 | 11,100,529.06 |
| (1) Withdrawal | 8,543,697.88 | 2,556,831.18 | 11,100,529.06 |
| 4. Ending balance | 8,543,697.88 | 21,178,759.82 | 29,722,457.70 |
| 1. Ending carrying value | 47,364,791.77 | 114,377,315.66 | 161,742,107.43 |
| 2. Beginning carrying value | 6,892,432.21 | 116,934,146.84 | 123,826,579.05 |
18. Intangible Assets
(1) List of Intangible Assets
Unit: RMB
| Item | Land use right | Patent right | Non-patent technologies | Software use rights | Brand use rights | Total |
| I. Original carrying value | ||||||
| 1. Beginning balance | 470,338,494.00 | 3,627,343.66 | 473,965,837.66 | |||
| 2. Increased amount of the period | 409,550.00 | 70,796.46 | 480,346.46 | |||
| (1) Purchase | 409,550.00 | 70,796.46 | 480,346.46 | |||
| (2) Internal R&D | ||||||
| (3) Business combination increase | ||||||
| 3. Decreased amount of the period | 1,268,358.23 | 1,268,358.23 | ||||
| (1) Disposal | ||||||
| (2) Invalid and recognition terminated portion | 1,268,358.23 | 1,268,358.23 | ||||
| 4. Ending balance | 470,338,494.00 | 409,550.00 | 2,429,781.89 | 473,177,825.89 | ||
| II. Accumulated amortization | ||||||
| 1. Beginning balance | 98,250,066.12 | 2,172,290.70 | 100,422,356.82 | |||
| 2. Increased amount of the period | 5,049,404.16 | 10,238.76 | 564,666.92 | 5,624,309.84 | ||
| (1) Withdrawal | 5,049,404.16 | 10,238.76 | 564,666.92 | 5,624,309.84 | ||
| 3. Decreased amount of the period | 1,268,358.23 | 1,268,358.23 | ||||
| (1) Disposal | ||||||
| (2) Invalid and recognition terminated portion | 1,268,358.23 | |||||
| 4. Ending balance | 103,299,470.28 | 10,238.76 | 1,468,599.39 | 104,778,308.43 | ||
| III. Depreciation reserves | ||||||
| 1. Beginning balance | ||||||
| 2. Increased amount of the period | ||||||
| (1) Withdrawal | ||||||
| 3. Decreased amount of the period | ||||||
| (1) Disposal | ||||||
| 4. Ending balance | ||||||
| IV. Carrying value | ||||||
| 1. Ending carrying value | 367,039,023.72 | 399,311.24 | 961,182.50 | 368,399,517.46 | ||
| 2. Beginning carrying value | 372,088,427.88 | 1,455,052.96 | 373,543,480.84 |
The proportion of intangible assets formed from the internal R&D of the Company at the Period-end to the ending balance ofintangible assets was 0.00%.
19. Development Costs
Unit: RMB
| Item | Beginning balance | Increased amount | Decrease | Ending balance | ||
| Internal development costs | Others | Recognized as intangible assets | Transferred into the current profit or loss | |||
| R&D of products | 131,384,483.80 | 131,384,483.80 | ||||
| Total | 131,384,483.80 | 131,384,483.80 | ||||
20. Goodwill
(1) Original Carrying Value of Goodwill
Unit: RMB
| Name of the invested units or events generating goodwill | Beginning balance | Increase | Decrease | Ending balance | ||
| Formed by business combination | Disposal | |||||
| Xinsheng Power | 20,563,803.29 | 20,563,803.29 | ||||
| Total | 20,563,803.29 | 20,563,803.29 | ||||
21. Long-term Prepaid Expense
Unit: RMB
| Item | Beginning balance | Increased amount | Amortization amount of the period | Other decreased amount | Ending balance |
| Decoration fee | 1,406,347.76 | 366,873.36 | 1,039,474.40 | ||
| Total | 1,406,347.76 | 366,873.36 | 1,039,474.40 |
22. Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) Deferred Income Tax Assets Had Not Been Off-set
Unit: RMB
| Item | Ending balance | Beginning balance | ||
| Deductible temporary difference | Deferred income tax assets | Deductible temporary difference | Deferred income tax assets | |
| Provision for impairment of assets | 185,234,407.19 | 30,515,460.15 | 232,609,684.18 | 37,624,855.86 |
| Internal unrealized profit | 123,127,144.30 | 18,792,107.51 | 109,437,547.23 | 17,073,399.27 |
| Deductible losses | 140,626,688.41 | 28,643,183.03 | 80,123,710.98 | 16,776,355.64 |
| One-time listed decoration expenses | 93,446.60 | 23,361.65 | 93,446.60 | 23,361.65 |
| Payroll payable | 118,015,305.73 | 17,802,836.17 | 118,015,305.73 | 17,802,836.18 |
| Deferred income | 176,361,848.15 | 27,601,608.50 | 173,862,983.31 | 27,188,106.81 |
| Contract liabilities | 20,153,015.55 | 5,038,253.88 | 16,596,721.35 | 4,149,180.34 |
| Changes in fair value of other non-current financial assets | 14,493,587.33 | 2,174,038.10 | 14,493,587.33 | 2,174,038.10 |
| The changes of accounts receivable financing in fair value | 332,259.77 | 49,838.97 | 358,052.29 | 53,707.84 |
| Total | 778,437,703.03 | 130,640,687.96 | 745,591,039.00 | 122,865,841.69 |
(2) Deferred Income Tax Liabilities Had Not Been Off-set
Unit: RMB
| Item | Ending balance | Beginning balance | ||
| Taxable temporary difference | Deferred income tax liabilities | Taxable temporary difference | Deferred income tax liabilities | |
| Depreciation of fixed assets | 413,309,189.57 | 66,575,988.87 | 417,366,245.56 | 67,382,126.00 |
| Internal unrealized profit | 0.00 | 0.00 | ||
| Changes in fair value of trading financial assets | 25,479,700.00 | 3,821,955.00 | 18,456,216.98 | 2,768,432.55 |
| Changes in fair value of other non-current financial assets | 102,042,774.64 | 15,306,416.20 | 102,042,774.64 | 15,306,416.20 |
| Interest payable of investment in debt obligations | 0.00 | 0.00 | 1,174,577.93 | 176,186.69 |
| Total | 540,831,664.21 | 85,704,360.07 | 539,039,815.11 | 85,633,161.44 |
(3) Deferred Income Tax Assets or Liabilities Had Been Off-set Listed in Net Amount
Unit: RMB
| Item | Ending off-set amount of deferred income tax assets and liabilities | Ending balance of deferred income tax assets and liabilities | Beginning off-set amount of deferred income tax assets and liabilities | Beginning balance of deferred income tax assets and liabilities |
| Deferred income tax assets | 130,640,687.96 | 122,865,841.69 | ||
| Deferred income tax liabilities | 85,704,360.07 | 85,633,161.44 |
(4) List of Unrecognized Deferred Income Tax Assets
Unit: RMB
| Item | Ending balance | Beginning balance |
| Deductible temporary difference | 15,142,397.23 | 16,884,024.75 |
| Deductible losses | 1,141,584.49 | 586,187.49 |
| Total | 16,283,981.72 | 17,470,212.24 |
(5) Deductible Losses of Unrecognized Deferred Income Tax Assets will Due in the Following Years
Unit: RMB
| Years | Ending amount | Beginning amount | Remarks |
| 2024 | 1,344.62 | 1,344.62 | |
| 2025 | 584,842.87 | 584,842.87 | |
| 2026 | 555,397.00 | ||
| Total | 1,141,584.49 | 586,187.49 | -- |
23. Other Non-current Assets
Unit: RMB
| Item | Ending balance | Beginning balance | ||||
| Carrying amount | Depreciation reserve | Carrying value | Carrying amount | Depreciation reserve | Carrying value | |
| Prepayment for land transfer fee | 214,636,813.33 | 214,636,813.33 | 86,515,839.05 | 86,515,839.05 | ||
| Prepayment for equipment | 11,982,987.66 | 11,982,987.66 | 6,195,947.23 | 6,195,947.23 | ||
| Land occupancy right to be recaptured by government | 2,722,253.90 | 2,722,253.90 | ||||
| Total | 226,619,800.99 | 226,619,800.99 | 95,434,040.18 | 95,434,040.18 | ||
24. Short-term Borrowings
(1) Category of Short-term Borrowings
Unit: RMB
| Item | Ending balance | Beginning balance |
| Pledged loan | 26,300,299.48 | 11,763,977.73 |
| Guarantee loan | 365,786,529.41 | 550,258,596.41 |
| Credit loan | 599,481,179.51 | 368,848,434.05 |
| Total | 991,568,008.40 | 930,871,008.19 |
Notes of the category for short-term loans:
(1) The ending pledged loan was the short-term debt formed by the discounted and undue bill receivable under derecognition at theperiod-end. Ending guarantee loan was the guarantee provided for the bank loan of the subsidiary Lu An Garments, ContinentalTextile and Lu Thai Tan Chau by the Company. Refer to Note XIII-2 for details.
(2) The short-term borrowings include interest payable of RMB684,557.35.
25. Accounts Payable
(1) List of Accounts Payable
Unit: RMB
| Item | Ending balance | Beginning balance |
| Payment for goods | 130,187,266.79 | 137,003,680.16 |
| Engineering equipment | 86,974,225.85 | 80,349,348.21 |
| Others | 19,716,430.42 | 25,909,445.32 |
| Total | 236,877,923.06 | 243,262,473.69 |
26. Contract Liabilities
Unit: RMB
| Item | Ending balance | Beginning balance |
| Advance from sales | 155,640,862.94 | 152,333,217.97 |
| Less: contract liability recorded in other current liabilities | -8,879,157.38 | -10,993,512.35 |
| Total | 146,761,705.56 | 141,339,705.62 |
27. Payroll Payable
(1) List of Payroll Payable
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance |
| I. Short-term salary | 265,648,198.38 | 629,293,111.93 | 674,156,079.00 | 220,785,231.31 |
| II. Post-employment benefit-defined contribution plans | 70,180,846.15 | 70,069,317.98 | 111,528.17 | |
| III. Termination Benefits | 1,605,779.70 | 1,605,779.70 | 0.00 |
| Total | 265,648,198.38 | 701,079,737.78 | 745,831,176.68 | 220,896,759.48 |
(2) List of Short-term Salary
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance |
| 1. Salary, bonus, allowance, subsidy | 202,510,898.31 | 552,467,184.66 | 601,220,509.36 | 153,757,573.61 |
| 2. Employee welfare | 0.00 | 24,585,541.59 | 24,585,541.59 | 0.00 |
| 3. Social insurance | 24,203.32 | 34,238,381.89 | 34,242,079.95 | 20,505.26 |
| Of which: Medical insurance premiums | 17,079.14 | 30,884,737.04 | 30,883,997.75 | 17,818.43 |
| Work-related injury insurance | 6,854.60 | 3,349,949.14 | 3,354,429.37 | 2,374.37 |
| Maternity insurance | 269.58 | 3,695.71 | 3,652.83 | 312.46 |
| 4. Housing fund | 0.00 | 7,354,686.30 | 7,354,686.30 | 0.00 |
| 5. Labor union budget and employee education budget | 63,113,096.75 | 10,647,317.49 | 6,753,261.80 | 67,007,152.44 |
| Total | 265,648,198.38 | 629,293,111.93 | 674,156,079.00 | 220,785,231.31 |
(3) List of Defined Contribution Plans
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance |
| 1. Basic pension benefits | 66,914,679.12 | 66,808,587.72 | 106,091.40 | |
| 2. Unemployment insurance | 3,266,167.03 | 3,260,730.26 | 5,436.77 | |
| Total | 70,180,846.15 | 70,069,317.98 | 111,528.17 |
Other notes:
The Company, in line with the requirement, participates in the endowment insurance, unemployment insurance plans and so on.Under these plans, the Company makes monthly contributions to these plans at 16% and 0.7% of the social security contributionbase, respectively. No further payment obligations will be incurred by the Company beyond the above monthly contribution fees.Except the monthly payment, the Company no longer shoulder the further payment obligation, the relevant expense occurred wasrecorded into current profits and losses or related assets costs.
28. Taxes Payable
Unit: RMB
| Item | Ending balance | Beginning balance |
| VAT | 1,362,271.48 | 12,077,311.75 |
| Corporate income tax | 21,928,042.67 | 11,531,626.63 |
| Personal income tax | 439,454.95 | 422,663.35 |
| Urban maintenance and construction tax | 1,147,267.34 | 3,390,064.57 |
| Stamp duty | 245,290.70 | 441,946.14 |
| Property tax | 4,986,586.13 | 4,868,121.51 |
| Land use tax | 2,558,614.55 | 900,240.84 |
| Education Surcharge | 334,750.91 | 1,338,871.23 |
| Local education surcharge | 502,126.36 | 876,371.30 |
| Local water conservancy facility construction fund | 218,962.12 | |
| Resources tax | 153,036.00 | 70,554.00 |
| Environmental protection tax | 217,621.50 | 332,245.33 |
| Total | 33,875,062.59 | 36,468,978.77 |
29. Other Payables
Unit: RMB
| Item | Ending balance | Beginning balance |
| Dividends payable | 441,113.64 | 441,113.64 |
| Other payables | 20,572,232.32 | 17,146,357.15 |
| Total | 21,013,345.96 | 17,587,470.79 |
(1) Dividends Payable
Unit: RMB
| Item | Ending balance | Beginning balance |
| Dividends payable to individual shareholders | 441,113.64 | 441,113.64 |
| Total | 441,113.64 | 441,113.64 |
Other notes: including significant dividends payable unpaid for over one year, the unpaid reason shall be disclosed:
Cash dividend of previous year not received by individual shareholders
(2) Other Payables
1) Other Payables Listed by Nature of Account
Unit: RMB
| Item | Ending balance | Beginning balance |
| Deposits and cash deposits etc. | 4,620,531.70 | 5,571,490.73 |
| Collecting payment on behalf of others | 419,786.08 | 1,266,624.26 |
| Intercourse funds | 73,371.05 | |
| Others | 15,531,914.54 | 10,234,871.11 |
| Total | 20,572,232.32 | 17,146,357.15 |
30. Current Portion of Non-current Liabilities
Unit: RMB
| Item | Ending balance | Beginning balance |
| Current portion of long-term borrowings | 20,420,200.26 | 43,149,400.13 |
| Lease obligation matured within 1 Year | 15,356,083.30 | 450,000.00 |
| Total | 35,776,283.56 | 43,599,400.13 |
31. Other Current Liabilities
Unit: RMB
| Item | Ending balance | Beginning balance |
| Tax to be charged off | 8,879,157.38 | 10,993,512.35 |
| Demolition compensation received | 95,751,465.00 | |
| Endorsed undue bill under non-derecognition | 72,733,587.16 | 85,829,697.33 |
| Total | 81,612,744.54 | 192,574,674.68 |
32. Long-term Borrowings
(1) Category of Long-term Borrowings
Unit: RMB
| Item | Ending balance | Beginning balance |
| Guarantee loan | 12,920,200.26 | 39,149,400.13 |
| Credit loan | 667,234,579.14 | 499,520,342.78 |
| Less: current portion of long-term borrowings | -20,420,200.26 | -43,149,400.13 |
| Total | 659,734,579.14 | 495,520,342.78 |
Note to the category of long-term borrowings:
(1) The guarantee loan was the guarantee provided for the bank loan of the subsidiary Lu Thai Tan Chau by the Company. Refer to
Note XIII-2 for details.
(2) The long-term borrowings term borrowings include interest payable of RMB604,579.14.Other notes, including interest rate range
| Item | Ending balance | Interest rate range (%) | Beginning balance | Interest rate range (%) |
| Guarantee loan | 12,920,200.26 | 2.10-2.20 | 39,149,400.13 | 2.89-3.10 |
| Credit loan | 667,234,579.14 | 3.06-3.65 | 499,520,342.78 | 3.06-3.50 |
33. Bonds Payable
(1) Bonds Payable
Unit: RMB
| Item | Ending balance | Beginning balance |
| Convertible corporate bonds | 1,370,297,472.37 | 1,350,171,526.97 |
| Total | 1,370,297,472.37 | 1,350,171,526.97 |
(2) Changes of Bonds Payable (Excluding Other Financial Instruments Divided as Financial Liabilities suchas Preferred Shares and Perpetual Bonds)
Unit: RMB
| Name | Par value | Issue date | Bond duration | Issue amount | Beginning balance | Issued in the Reporting Period | Interest accrued at par value | Amortization of premium and depreciation | Repaid in the Reporting Period | Current shares converted | Ending balance |
| LuThai Convertible Bond 127016 | 1,400,000,000.00 | 9 April 2020 | 6 | 1,400,000,000.00 | 1,350,171,526.97 | 3,037,640.29 | 21,311,166.41 | 4,199,661.30 | 23,200.00 | 1,370,297,472.37 | |
| Total | -- | -- | -- |
(3) Convertible Conditions and Time for Convertible Corporate Bonds
According to the Approval of the Public Issue of Convertible Corporate Bonds of Lu Thai Textile Co., Ltd. (ZJXK [2020] No.
299) of the China Securities Regulatory Commission, the Company issued 14 million convertible bonds with a face value ofRMB100 each for a total issue amount of RMB1.4 billion with a maturity of 6 years, i.e., from 9 April 2020 to 8 April 2026.The coupon rates of the convertible bonds issued by the Company are 0.3%, 0.6%, 1%, 1.5%, 1.8% and 2% in the followingorder from the first stage to the sixth stage, with interest payable annually. The conversion period shall commence from (and include)the first trading day on 15 October 2020, six months after the date of issue, and shall end on (and include) the trading day prior to thematurity date of the convertible bonds (8 April 2026). Holders may apply for conversion during the conversion period.
The initial conversion price of the convertible corporate bonds was RMB9.01 per share at the time of issuance and the initialconversion price was adjusted accordingly to RMB8.91 per share from 9 July 2020 after the implementation of the Company'sproposal to distribute a cash dividend of RMB85,812,154.10 per share (RMB1 per 10 shares in cash) for 2019 on 8 July 2020.On 3 June 2021, the Company completed the registration of first-granted restricted stocks of restricted share incentive scheme atthe Shenzhen Branch of China Securities Depository and Clearing Corporation Limited (China Clear). 7 June 2021 is designated as thelisting date of first-granted restricted stocks of the Company in 2021. The Company grants 750 subjects of incentive 24,285,000restricted shares at a price of RMB3.31 per share, accounting for 2.83% of total share capital of the Company. The source of the stockis RMB A-share ordinary shares issued by the Company to subjects of incentive. Therefore, the conversion price of Lu Thai convertiblebond will be adjusted from RMB8.91 per share to RMB8.76 per share, with the adjusted conversion price coming into force from 7 June2021.The 2020 annual general meeting convened on 20 April 2021 deliberated on and adopted the Company's Proposal on ProfitAppropriation Plan in 2020, which distributes cash of RMB0.50 per 10 shares (including tax) with total share capital at the recorddate of this distribution scheme as base. The record date of the Company's interest distribution in 2020 is set on 17 June 2021. Theex-date is set on 18 June 2021. Therefore, the conversion price of Lu Thai convertible bond will be adjusted from RMB8.76 per shareto RMB8.71 per share, with the adjusted conversion price coming into force from 18 June 2021 (the ex-date).
34. Lease Obligation
Unit: RMB
| Item | Ending balance | Beginning balance |
| Lease liabilities | 32,226,761.06 | 6,442,432.21 |
| Total | 32,226,761.06 | 6,442,432.21 |
35. Long-term Payroll Payable
(1) List of Long-term Payroll Payable
Unit: RMB
| Item | Ending balance | Beginning balance |
| III. Other long-term welfare | 45,772,995.06 | 62,137,656.00 |
| Total | 45,772,995.06 | 62,137,656.00 |
36. Deferred Income
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance | Reason for formation |
| Government subsidies | 173,862,983.31 | 6,736,300.00 | 4,237,435.16 | 176,361,848.15 | Government subsidies |
| Unrealized financing incomes |
| Total | 173,862,983.31 | 6,736,300.00 | 4,237,435.16 | 176,361,848.15 | -- |
Item involving government grants:
Refer to Note VII-63 Government Grants for the government grants included in the deferred income
37. Share Capital
Unit: RMB
| Beginning balance | Increase/decrease (+/-) | Ending balance | |||||
| New shares issued | Bonus shares | Bonus issue from profit | Others | Subtotal | |||
| The sum of shares | 858,132,322.00 | 24,285,000.00 | 2,600.00 | 24,287,600.00 | 882,419,922.00 | ||
Other notes:
During the period, the Company issued 24,285,000.00 restricted shares from equity incentive and 2,600.00 shares converted fromconvertible bonds.
38. Other Equity Instruments
(1) Basic Information about Other Outstanding Financial Instruments such as Preferred Shares andPerpetual Bonds at the Period-endOn 9 April 2020, the Company publicly issued 14 million A-share convertible corporate bonds (short name: Luthai ConvertibleBonds, bond code: 127016) on Shenzhen Stock Exchange with an issue price of RMB100 per share. The bonds were listed on ShenzhenStock Exchange on 13 May 2020.
(2) Changes of Outstanding Financial Instruments such as Preferred Shares and Perpetual Bonds at thePeriod-end
Unit: RMB
| Outstanding financial instruments | Period-beginning | Increase | Decrease | Period-end | ||||
| Number | Carrying value | Number | Carrying value | Number | Carrying value | Number | Carrying value | |
| Convertible bonds to equity | 71,386,451.81 | 1,183.05 | 71,385,268.76 | |||||
| Total | 71,386,451.81 | 1,183.05 | 71,385,268.76 | |||||
Changes of other equity instruments in the Reporting Period, reasons thereof and basis of related accounting treatment:
The decrease in other equity instruments for the period is due to the convertible debt-for-equity swap.
39. Capital Reserves
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance |
| Capital premium (premium on stock) | 197,695,880.68 | 56,119,250.83 | 253,815,131.51 | |
| Other capital reserves | 58,216,607.33 | 5,584,657.46 | 63,801,264.79 | |
| Total | 255,912,488.01 | 61,703,908.29 | 317,616,396.30 |
Other notes, including a description of the increase or decrease in the current period and the reasons for the change:
(1) Capital premium increased by RMB56,119,250.83 during the year, mainly due to the capital premium arising from the capitalincrease under the Restricted Share Incentive Scheme.
(2) Other capital reserve increased by RMB5,584,657.46 in the year, mainly due to the expense recognized for equity-settled sharepayments under the Restricted Share Incentive Scheme.
40. Other Comprehensive Income
Unit: RMB
| Item | Beginning balance | Amount of the current period | Ending balance | |||||
| Income before taxation in the Current Period | Less: recorded in other comprehensive income in prior period and transferred in profit or loss in the Current Period | Less: recorded in other comprehensive income in prior period and transferred in retained earnings in the Current Period | Less: Income tax expense | Attributable to owners of the Company as the parent after tax | Attributable to non-controlling interests after tax | |||
| II. Other comprehensive income that may subsequently be reclassified to profit or loss | 1,308,922.89 | -14,696,529.07 | 0.00 | 0.00 | 3,868.89 | -14,722,687.09 | 22,289.13 | -13,413,764.20 |
| Differences arising from translation of foreign currency-denominated financial statements | 1,561,310.24 | -14,722,321.59 | -14,722,321.59 | -13,161,011.35 | ||||
| The changes of accounts receivable financing in fair value | -252,387.35 | 25,792.52 | 3,868.89 | -365.50 | 22,289.13 | -252,752.85 | ||
| Total of other comprehensive income | 1,308,922.89 | -14,696,529.07 | 3,868.89 | -14,722,687.09 | 22,289.13 | -13,413,764.20 | ||
41. Surplus Reserves
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance |
| Statutory surplus reserves | 1,150,675,885.21 | 1,150,675,885.21 | ||
| Discretional surplus reserves | 3,341,572.58 | 3,341,572.58 | ||
| Total | 1,154,017,457.79 | 1,154,017,457.79 |
42. Retained Profits
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Beginning balance of retained profits before adjustments | 5,346,819,948.22 | 5,372,073,615.12 |
| Beginning balance of retained profits after adjustments | 5,346,819,948.22 | 5,372,073,615.12 |
| Add: Net profit attributable to owners of the Company as the parent | 153,497,344.66 | 144,119,579.22 |
| Dividend of ordinary shares payable | 44,120,990.40 | 85,812,154.10 |
| Ending retained profits | 5,456,196,302.48 | 5,430,381,040.24 |
List of adjustment of beginning retained profits:
1) RMB0.00 beginning retained profits was affected by retrospective adjustment conducted according to the Accounting Standardsfor Business Enterprises and relevant new regulations.
2) RMB0.00 beginning retained profits was affected by changes in accounting policies.
3) RMB0.00 beginning retained profits was affected by correction of significant accounting errors.
4) RMB0.00 beginning retained profits was affected by changes in combination scope arising from same control.
5) RMB0.00 beginning retained profits was affected totally by other adjustments.
43. Operating Revenue and Cost of Sales
Unit: RMB
| Item | Amount of the current period | Amount of the previous period | ||
| Revenue | Cost | Revenue | Cost | |
| Main operations | 2,156,443,129.95 | 1,763,955,459.16 | 2,222,332,890.30 | 1,634,158,882.29 |
| Other operations | 63,870,520.99 | 47,286,284.04 | 64,411,190.49 | 49,593,448.98 |
| Total | 2,220,313,650.94 | 1,811,241,743.20 | 2,286,744,080.79 | 1,683,752,331.27 |
Information about performance obligations:
NoneInformation in relation to the transaction price apportioned to the residual contract performance obligation:
As at the end of the Reporting Period, the revenue amount corresponding to the contract performance obligation yet to be fulfilled oryet to be completed under a signed contract is RMB0.00, including RMB0.00 expected to be recognized as revenue in the year,RMB0.00 expected to be recognized as revenue in the year, and RMB0.00 expected to be recognized as revenue in the year.
44. Taxes and Surtaxes
Unit: RMB
| Item | Amount of the current period | Amount of the previous period |
| Urban maintenance and construction tax | 6,283,128.18 | 7,630,680.55 |
| Education Surcharge | 2,695,603.21 | 3,402,460.99 |
| Resources tax | 236,902.00 | 262,578.00 |
| Property tax | 10,055,281.39 | 10,624,279.89 |
| Land use tax | 5,120,956.62 | 8,760,353.77 |
| Vehicle and vessel usage tax | 49,025.98 | 75,368.72 |
| Stamp duty | 1,427,573.40 | 1,668,370.50 |
| Local education surcharge | 1,797,068.80 | 2,268,305.20 |
| Local water conservancy facility construction fund | -102,200.92 | 541,123.15 |
| Environmental protection tax | 594,788.21 | 532,734.64 |
| Total | 28,158,126.87 | 35,766,255.41 |
45. Selling Expense
Unit: RMB
| Item | Amount of the current period | Amount of the previous period |
| Salary | 24,817,866.24 | 24,858,302.63 |
| Carriage charges | 18,556,351.95 | |
| Advertising expense | 185,949.36 | 218,938.82 |
| Port surcharge | 5,552,752.80 | |
| Depreciation charge | 2,919,396.85 | 3,364,600.96 |
| Travel expense | 695,266.26 | 963,154.55 |
| Rental charges | 536,277.43 | 2,003,837.09 |
| Sales service fee | 5,389,984.38 | 4,662,986.11 |
| Publicity expenses | 7,483,834.48 | 8,117,611.43 |
| Expense for repairmen and loss | 2,666,451.20 | 7,115,057.20 |
| Others | 3,851,768.86 | 6,326,312.05 |
| Total | 48,546,795.06 | 81,739,905.59 |
46. Administrative Expense
Unit: RMB
| Item | Amount of the current period | Amount of the previous period |
| Salary | 34,322,960.21 | 67,681,094.74 |
| Depreciation charge | 13,936,331.40 | 17,659,534.12 |
| Warehouse funding | 17,942,419.24 | 20,442,304.85 |
| Travel expense | 12,190,687.06 | 12,025,932.80 |
| Rental charges | 6,505,177.01 | 6,948,195.24 |
| Labor-union expenditure | 5,802,625.03 | 5,915,433.42 |
| Employee education budget | 4,210,543.12 | 4,188,129.15 |
| Amortization of intangible assets | 6,143,216.69 | 6,766,430.80 |
| Carriage charges | 3,094,038.89 | 3,500,431.81 |
| Others | 25,970,047.75 | 32,766,112.54 |
| Total | 130,118,046.40 | 177,893,599.47 |
47. R&D Expense
Unit: RMB
| Item | Amount of the current period | Amount of the previous period |
| Labor cost | 77,616,982.58 | 63,175,350.86 |
| Material expense | 36,220,227.08 | 43,001,450.30 |
| Depreciation charge | 6,279,523.70 | 6,678,502.09 |
| Others | 11,267,750.44 | 10,586,419.81 |
| Total | 131,384,483.80 | 123,441,723.06 |
48. Finance Costs
Unit: RMB
| Item | Amount of the current period | Amount of the previous period |
| Interest expense | 39,272,113.66 | 43,752,260.50 |
| Less: Interest income | 14,562,127.13 | 13,506,359.51 |
| Less: Capitalized interest | 10,299,292.35 | 5,092,555.05 |
| Foreign exchange gains or losses | 5,910,962.13 | -3,962,751.87 |
| Less: Capitalized foreign exchange gains or losses | ||
| Others | 3,901,272.97 | 4,016,715.61 |
| Total | 24,222,929.28 | 25,207,309.68 |
49. Other Income
Unit: RMB
| Sources | Amount of the current period | Amount of the previous period |
| Government subsidies | 19,089,311.11 | 36,850,705.82 |
| Total | 19,089,311.11 | 36,850,705.82 |
50. Investment Income
Unit: RMB
| Item | Amount of the current period | Amount of the previous period |
| Long-term equity investment income accounted by equity method | -1,789,070.68 | -3,579,523.35 |
| Investment income from disposal of trading financial assets | 24,904,879.52 | 154,309,537.24 |
| Interest income earned on investment in debt obligations during the holding period | 6,065,699.38 | |
| Total | 29,181,508.22 | 150,730,013.89 |
Other notes:
The investment income generated from wealth management during the Reporting Period was RMB7,890,621.85.
51. Gain on Changes in Fair Value
Unit: RMB
| Sources | Amount of the current period | Amount of the previous period |
| Trading financial assets | 8,034,224.66 | -143,854,551.38 |
| Trading financial liabilities | -841,402.78 | |
| Total | 8,034,224.66 | -144,695,954.16 |
Other notes:
The fair value change gain or loss arising from wealth management during the reporting period was: -RMB1,806,575.34
52. Credit Impairment Loss
Unit: RMB
| Item | Amount of the current period | Amount of the previous period |
| Bad debt loss of other receivables | -211,404.00 | 567,920.22 |
| Bad debt loss of long-term receivables | -87,833.04 | 396,960.83 |
| Bad debt loss of accounts receivable("-" indicates loss) | 11,414,377.16 | -2,518,597.53 |
| Bad debt loss of dividend receivable ("-" indicates loss) | 1,498,035.63 | |
| Total | 12,613,175.75 | -1,553,716.48 |
53. Asset Impairment Loss
Unit: RMB
| Item | Amount of the current period | Amount of the previous period |
| II. Inventory falling price loss and impairment provision for contract performance costs | -7,035,233.41 | -24,613,079.38 |
| Total | -7,035,233.41 | -24,613,079.38 |
54. Asset Disposal Income
Unit: RMB
| Sources | Amount of the current period | Amount of the previous period |
| Fixed asset disposal income (“-” for loss) | 39,092,642.32 | -405,636.42 |
| Intangible asset disposal income (“-” for loss) | 19,438,746.10 | 51,773.24 |
| Total | 58,531,388.42 | -353,863.18 |
55. Non-operating Income
Unit: RMB
| Item | Amount of the current period | Amount of the previous period | Amount recorded in the current non-recurring profit or loss |
| Others | 1,184,008.01 | 2,125,819.41 | |
| Total | 1,184,008.01 | 2,125,819.41 |
56. Non-operating Expense
Unit: RMB
| Item | Amount of the current period | Amount of the previous period | Amount recorded in the current non-recurring profit or loss |
| Donation | 2,012,051.62 | 1,000,000.00 |
| Losses from damage and scrap of non-current assets | 0.00 | 149,918.89 | |
| Others | 577,877.31 | 1,234,008.01 | |
| Total | 2,589,928.93 | 2,383,926.90 |
57. Income Tax Expense
(1) List of Income Tax Expense
Unit: RMB
| Item | Amount of the current period | Amount of the previous period |
| Current income tax expense | 29,081,920.36 | 26,171,457.60 |
| Deferred income tax expense | -6,872,687.22 | 896,376.09 |
| Total | 22,209,233.14 | 27,067,833.69 |
(2) Adjustment Process of Accounting Profit and Income Tax Expense
Unit: RMB
| Item | Amount of the current period |
| Profit before taxation | 165,649,980.16 |
| Current income tax expense accounted at statutory/applicable tax rate | 24,847,497.02 |
| Influence of applying different tax rates by subsidiaries | -600,686.48 |
| Influence of income tax before adjustment | -2,324,613.80 |
| Effect of deductible temporary differences or deductible losses on deferred income tax assets not recognized in the period | 555,397.00 |
| Profit/loss of associated enterprises and joint ventures accounted by equity method | -268,360.60 |
| Income tax expense | 22,209,233.14 |
58. Other Comprehensive Income
Refer to Note VII-40 for details.
59. Cash Flow Statement
(1) Cash Generated from Other Operating Activities
Unit: RMB
| Item | Amount of the current period | Amount of the previous period |
| Government subsidies | 21,588,175.95 | 42,760,333.79 |
| Claim income | 356,171.92 | 657,147.73 |
| Recovery of employee borrowings, petty cash and deposit | 12,429,591.08 | 7,829,609.00 |
| Collection for employees | 2,413,849.33 | 1,507,827.48 |
| Others | 3,662,317.53 | 2,847,294.50 |
| Total | 40,450,105.81 | 55,602,212.50 |
(2) Cash Used in Other Operating Activities
Unit: RMB
| Item | Amount of the current period | Amount of the previous period |
| Freight and miscellaneous charges | 25,102,769.53 | |
| Rental charges | 2,387,330.09 | 11,393,199.71 |
| Advertising expense | 605,033.82 | 1,074,493.45 |
| Business travel charges | 15,478,544.40 | 14,492,835.30 |
| Insurance | 2,585,281.80 | 2,130,902.85 |
| Audit advisory announcement fee | 6,023,522.11 | 9,146,615.17 |
| Decoration & repair expenses | 394,368.44 | 1,368,170.04 |
| Donation | 2,433,466.47 | 1,000,000.00 |
| Pre-payment | 858,305.97 | 1,750,359.55 |
| Payment of employee borrowings, petty cash and deposit | 15,018,936.57 | 6,298,914.86 |
| Others | 22,427,795.71 | 30,165,500.96 |
| Total | 68,212,585.38 | 103,923,761.42 |
(3) Cash Generated from Other Investing Activities
Unit: RMB
| Item | Amount of the current period | Amount of the previous period |
| Interest income | 14,858,805.99 | 8,467,672.27 |
| Income from forward foreign exchange | 23,079,957.05 | 8,657,194.49 |
| Cash deposit of L/C for purchasing equipment | 28,969,919.03 | |
| Total | 37,938,763.04 | 46,094,785.79 |
(4) Cash Used in Other Investing Activities
Unit: RMB
| Item | Amount of the current period | Amount of the previous period |
| Forward settlement exchange loss | 363,000.00 | |
| Pay margin | 2,365,093.84 | 2,868,380.25 |
| Total | 2,365,093.84 | 3,231,380.25 |
(5) Cash Generated from Other Financing Activities
Unit: RMB
| Item | Amount of the current period | Amount of the previous period |
| Return of loan guarantees | 14,000,000.00 | |
| Recovery of intercourse accounts | 160,000,000.00 | |
| Total | 174,000,000.00 |
(6) Cash Used in Other Financing Activities
Unit: RMB
| Item | Amount of the current period | Amount of the previous period |
| Pay right-of-use assets accounts | 9,339,306.00 | |
| Payment for intercourse accounts | 160,000,000.00 | |
| Total | 9,339,306.00 | 160,000,000.00 |
60. Supplemental Information for Cash Flow Statement
(1) Supplemental Information for Cash Flow Statement
Unit: RMB
| Supplemental information | Reporting Period | Same period of last year |
| 1. Reconciliation of net profit to net cash flows generated from operating activities | -- | -- |
| Net profit | 143,440,747.02 | 147,981,121.64 |
| Add: Provision for impairment of assets | -5,577,942.34 | 26,166,795.86 |
| Depreciation of fixed assets, oil-gas assets, and productive living assets | 218,273,154.39 | 242,090,445.82 |
| Depreciation of right-of-use assets | 11,100,529.06 | |
| Amortization of intangible assets | 5,624,309.84 | 8,510,785.39 |
| Amortization of long-term prepaid expenses | 366,873.36 | 2,182,757.76 |
| Losses from disposal of fixed assets, intangible assets and other long-lived assets (gains: negative) | -58,531,388.42 | 353,863.18 |
| Losses from scrap of fixed assets (gains: negative) | 0.00 | 149,918.89 |
| Losses from changes in fair value (gains: negative) | -8,034,224.66 | 143,854,551.38 |
| Finance costs (gains: negative) | 20,321,656.31 | 21,190,594.07 |
| Investment loss (gains: negative) | -29,181,508.22 | -150,730,013.89 |
| Decrease in deferred income tax assets (gains: negative) | -7,774,846.27 | 1,633,759.08 |
| Increase in deferred income tax liabilities (“-” means decrease) | 71,198.63 | 21,903,691.90 |
| Decrease in inventory (gains: negative) | -59,506,379.69 | -169,000,792.88 |
| Decrease in accounts receivable generated from operating activities (gains: negative) | 13,448,642.14 | 188,207,459.72 |
| Increase in accounts payable used in operating activities (decrease: negative) | -61,279,796.01 | -275,102,672.23 |
| Others | ||
| Net cash generated from/used in operating activities | 182,761,025.14 | 209,392,265.69 |
| 2. Significant investing and financing activities without involvement of cash receipts and payments | -- | -- |
| Conversion of debt to capital | ||
| Convertible corporate bonds matured within 1 Year | ||
| Fixed asset under finance lease | ||
| 3. Net increase/decrease of cash and cash equivalent: | -- | -- |
| Ending balance of cash | 2,031,646,000.18 | 2,018,648,643.49 |
| Less: beginning balance of cash | 1,396,530,407.47 | 878,559,018.92 |
| Add：Ending balance of cash equivalents | ||
| Less: Opening balance of cash equivalents | ||
| Net increase in cash and cash equivalents | 635,115,592.71 | 1,140,089,624.57 |
(2) Cash and Cash Equivalents
Unit: RMB
| Item | Ending balance | Beginning balance |
| I. Cash | 2,031,646,000.18 | 1,396,530,407.47 |
| Including: Cash on hand | 6,722,270.36 | 7,009,891.16 |
| Bank deposit on demand | 2,024,923,729.82 | 1,389,520,516.31 |
| III. Ending balance of cash and cash equivalents | 2,031,646,000.18 | 1,396,530,407.47 |
61. Assets with Restricted Ownership or Right to Use
Unit: RMB
| Item | Ending carrying value | Reason for restriction |
| Monetary assets | 3,465,093.84 | Cash deposit for L/G and L/C |
| Notes receivable | 99,033,886.64 | Endorsement or discounting of not terminated recognition |
| Total | 102,498,980.48 | -- |
62. Foreign Currency Monetary Items
(1) Foreign Currency Monetary Items
Unit: RMB
| Item | Ending foreign currency balance | Exchange rate | Ending balance converted to RMB |
| Monetary assets | -- | -- | |
| Of which: USD | 32,313,460.50 | 6.4601 | 208,748,186.16 |
| EUR | 847,803.58 | 7.6862 | 6,516,387.88 |
| HKD | 3,500,100.13 | 0.8321 | 2,912,433.32 |
| JPY | 22,594,809.00 | 0.0584 | 1,319,536.85 |
| GBP | 1,957.18 | 8.9410 | 17,499.15 |
| CHF | 1,137.82 | 7.0134 | 7,979.99 |
| SEK | |||
| VND | 51,095,214,217.71 | 0.00028 | 14,306,659.98 |
| MMK | 190,441,987.96 | 0.0040 | 761,767.95 |
| KHR | 105,399,264.00 | 0.0016 | 168,638.82 |
| Notes receivable | |||
| Of which: USD | 11,412,766.57 | 6.4601 | 73,727,613.32 |
| Accounts receivable | -- | -- | |
| Of which: USD | 49,859,930.84 | 6.4601 | 322,100,139.23 |
| EUR | 384,979.93 | 7.6862 | 2,959,032.74 |
| HKD | |||
| VND | 36,565,303,815.00 | 0.00028 | 10,238,285.07 |
| Other receivables | |||
| Of which: USD | 838,067.45 | 6.4601 | 5,413,999.53 |
| JPY | 1,395,040.00 | 0.0584 | 81,470.34 |
| HKD | 1,775,449.00 | 0.8321 | 1,477,351.11 |
| VND | 18,374,290,779.94 | 0.00028 | 5,144,801.42 |
| GBP | 7,250.00 | 8.9410 | 64,822.25 |
| Accounts payable | |||
| Of which: USD | 5,887,933.57 | 6.4601 | 38,036,639.66 |
| EUR | 718,514.67 | 7.6862 | 5,522,647.46 |
| JPY | 15,482,648.00 | 0.0584 | 904,186.64 |
| VND | 25,644,036,076.00 | 0.00028 | 7,180,330.10 |
| MMK | 39,811,940.00 | 0.00400 | 159,247.76 |
| Other payables | |||
| Of which: USD | 98,823.05 | 6.4601 | 638,406.79 |
| VND | 1,108,493,475.00 | 0.000280 | 310,378.17 |
| MMK | 1,000,000.00 | 0.0040 | 4,000.00 |
| Short-term borrowings | |||
| Of which: USD | 148,082,726.55 | 6.4601 | 956,629,221.79 |
| VND | 28,356,504,353.00 | 0.00028 | 7,939,821.22 |
| Current portion of long-term borrowings | |||
| Of which: USD | 2,000,000.04 | 6.4601 | 12,920,200.26 |
| Long-term borrowings | -- | -- | |
| Of which: USD | |||
| EUR | |||
| HKD | |||
(2) Notes to Overseas Entities Including: for Significant Oversea Entities, Main Operating Place, RecordingCurrency and Selection Basis Shall Be Disclosed; if there Are Changes in Recording Currency, RelevantReasons Shall Be Disclosed.
√ Applicable □ Not applicable
The operating places of Company’s subsidiaries Lu Thai (Hong Kong), Lu Thai (Cambodia), Vanguard Apparel, Lu Thai(America), Continental Textile, Lu An Garments, and the sub-subsidiary Lu Thai Tan Chau and Libra International were Hong Kong,Cambodia, Burma, America, Vietnam, Vietnam, Vietnam, Singapore, and the recording currency was HKD for Lu Thai (HongKong), USD for other overseas companies.
63. Government Grants
(1) Basic Information on Government Grants
Unit: RMB
| Category | Amount | Listed items | Amount recorded in the current profit or loss |
| Subsidy funds for high-grade fabric production line intelligent technology transformation project | 5,000,000.00 | Deferred income | |
| Subsidy funds for the construction of infrastructure facilities | 400,000.00 | Deferred income | |
| Subsidy accounts for investment in technological renovation equipment | 1,069,000.00 | Deferred income | |
| Subsidy funds for technological renovation project | 267,300.00 | Deferred income | |
| Rebate of surcharges for withholding taxes | 239,800.14 | Other income | 239,800.14 |
| Fund for providing generous support to local enterprises and fund for providing generous support of current period | 4,300,000.00 | Other income | 4,300,000.00 |
| Subsidy accounts for van phase-out | 25,600.00 | Other income | 25,600.00 |
| Additional deduction amount | 21,100.26 | Other income | 21,100.26 |
| VAT deduction of GTS equipment | 720.00 | Other income | 720.00 |
| VAT deduction of GTS equipment technical service charge | 1,820.00 | Other income | 1,820.00 |
| Subsidies for work-based training for enterprises in difficulty | 300,000.00 | Other income | 300,000.00 |
| VAT deduction of enterprises recruiting employee with poverty registration | 2,600.00 | Other income | 2,600.00 |
| Urban construction tax deduction of enterprises recruiting key group personnel | 25,150.00 | Other income | 25,150.00 |
| VAT deduction of enterprises recruiting key group personnel | 31,350.00 | Other income | 31,350.00 |
| Talent supporting expenditure | 50,000.00 | Other income | 50,000.00 |
| Provincial incentive fund for innovation platform | 200,000.00 | Other income | 200,000.00 |
| Tax return | 54,742.26 | Other income | 54,742.26 |
| Foreign trade premium stand subsidy | 2,400.00 | Other income | 2,400.00 |
| Subsidies for work-based training | 3,482,358.04 | Other income | 3,482,358.04 |
| VAT reduction and exemption | 7,445.25 | Other income | 7,445.25 |
| Subsidy for exhibition halls | 3,600,000.00 | Other income | 3,600,000.00 |
| Subsidy for occupational training | 2,506,790.00 | Other income | 2,506,790.00 |
| Total | 21,588,175.95 | 14,851,875.95 |
(2) Return of Government Grants
□ Applicable √ Not applicable
Other notes:
VIII. Change of Consolidation Scope
1. Disposal of Subsidiaries
Whether there was a single disposal of an investment in a subsidiary that resulted in a loss of control
□ Y √ N
Whether there was a step-by-step disposal of investment in a subsidiary through multiple transactions and loss of control during theperiod
□ Y √ N
2. Change in Consolidation Scope for Other Reasons
Describe other changes in the consolidation scope (e.g., new subsidiaries, liquidation of subsidiaries, etc.) and relevant situations:
During the year, the Company established new subsidiaries, Hainan Huilin International Holdings Co., Ltd. and Zibo BanyangMountainVilla Hotel Co., Ltd, and a new sub-subsidiary, Libra International Investment Pet. Ltd.
IX. Equity in Other Entities
1. Equity in Subsidiary
(1) Subsidiaries
| Name | Main operating place | Registration place | Nature of business | Holding percentage (%) | Way of gaining | |
| Directly | Indirectly | |||||
| Luthai (Hong Kong) | Hong Kong | Hong Kong | Wholesale and retail industry | 100.00% | Set-up | |
| Shanghai Luthai | Shanghai | Shanghai | Wholesale and retail industry | 100.00% | Set-up | |
| Lufeng Weaving & Dyeing | Zibo | Zibo | Manufacturing industry | 75.00% | Set-up | |
| Luqun Textile | Zibo | Zibo | Manufacturing industry | 100.00% | Set-up | |
| Xinsheng Power | Zibo | Zibo | Manufacturing industry | 100.00% | Business combination not under the same control | |
| Shanghai Zhinuo | Shanghai | Shanghai | Technology development, technical consultancy and transfer of technologies | 100.00% | Set-up | |
| Lulian New Materials | Zibo | Zibo | Manufacturing industry | 75.00% | Set-up | |
| Lujia Import & Export | Zibo | Zibo | Import and export trade | 100.00% | Set-up | |
| Lu Thai Occupational Training School | Zibo | Zibo | Skill training | 100.00% | Set-up | |
| Beijing Zhishu Trading | Beijing | Beijing | Wholesale and retail industry | 100.00% | Set-up | |
| Lu Thai (Cambodia) | Cambodia | Cambodia | Manufacturing industry | 100.00% | Set-up | |
| Vanguard Apparel | Burma | Burma | Manufacturing industry | 100.00% | Set-up | |
| Lu Thai (America) | America | America | Wholesale and retail industry | 100.00% | Set-up | |
| Continental Textile | Vietnam | Vietnam | Manufacturing industry | 100.00% | Set-up | |
| Lu Thai Tan Chau (sub-subsidiary) | Vietnam | Vietnam | Manufacturing industry | 100.00% | Set-up | |
| Lu An Garments | Vietnam | Vietnam | Manufacturing industry | 100.00% | Set-up | |
| Huilin International | Wenchang | Wenchang | Modern service industry | 100.00% | Set-up | |
| Libra International (sub-subsidiary) | Singapore | Singapore | Wholesale textiles and leather, holding company | 100.00% | Set-up | |
| Banyang Mountain Villa | Zibo | Zibo | Catering | 100.00% | Set-up |
(2) Significant Non-wholly-owned Subsidiary
Unit: RMB
| Name | Shareholding proportion of non-controlling interests | The profit or loss attributable to the non-controlling interests | Declaring dividends distributed to non-controlling interests | Balance of non-controlling interests at the period-end |
| Lufeng Weaving & Dyeing | 25.00% | -4,472,568.73 | 307,529,547.95 | |
| Lulian New Materials | 25.00% | -5,561,739.78 | 86,534,932.72 |
(3) The Main Financial Information of Significant Not Wholly-owned Subsidiary
Unit: RMB
| Name | Ending balance | Beginning balance | ||||||||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liability | Total liabilities | Current assets | Non-current assets | Total assets | Current liabilities | Non-current liability | Total liabilities | |
| Lufeng Weaving & Dyeing | 1,001,709,569.68 | 767,030,504.98 | 1,768,740,074.66 | 491,440,992.94 | 45,303,735.47 | 536,744,728.41 | 900,603,950.86 | 765,771,111.19 | 1,666,375,062.05 | 365,567,492.89 | 43,982,357.41 | 409,549,850.30 |
| Lulian New | 522,725,766.65 | 492,493,585.25 | 1,015,219,351.90 | 667,310,220.56 | 3,156,415.36 | 670,466,635.92 | 508,510,155.05 | 414,671,978.33 | 923,182,133.38 | 551,639,028.01 | 3,156,415.36 | 554,795,443.37 |
Unit: RMB
MaterialsName
| Name | Amount of the current period | Amount of the previous period | ||||||
| Operating revenue | Net profit | Total comprehensive income | Cash flows from operating activities | Operating revenue | Net profit | Total comprehensive income | Cash flows from operating activities | |
| Lufeng Weaving & Dyeing | 528,023,041.71 | -24,919,021.98 | -24,829,865.50 | -25,430,786.43 | 606,784,342.44 | 30,732,000.50 | 30,732,000.50 | -27,139,185.20 |
| Lulian New Materials | 14,060,457.18 | -23,633,974.03 | -23,633,974.03 | -20,179,784.39 | 989,929.41 | -7,858,066.26 | -7,858,066.26 | -31,971,995.02 |
2. Equity in Joint Ventures or Associated Enterprises
(1) Significant Joint Ventures or Associated Enterprises
| Name | Main operating place | Registration place | Nature of business | Holding percentage (%) | Accounting treatment of the investment to joint venture or associated enterprise | |
| Directly | Indirectly | |||||
| Haohong Investment | Ningbo | Ningbo | Equity investment | 33.33% | Equity method | |
| Haoying Investment | Ningbo | Ningbo | Equity investment | 47.62% | Equity method | |
(2) Main Financial Information of Significant Associated Enterprises
Unit: RMB
| Closing balance/amount of the current period | Opening balance/amount of the previous period | |
| Haohong Investment | Haohong Investment | |
| Current assets | 234,293,702.92 | 265,506,727.38 |
| Total assets | 234,293,702.92 | 265,506,727.38 |
| Current liabilities | 3,433,167.13 | 517,461.99 |
| Total liabilities | 3,433,167.13 | 517,461.99 |
| Equity attributable to shareholders of the Company as the parent | 230,860,535.79 | 264,989,265.39 |
| Net assets shares calculated at the shareholding proportion | 76,954,816.58 | 88,329,922.16 |
| Carrying value of investment to associated enterprises | 76,954,816.58 | 88,329,922.16 |
| Net profit | -10,484,845.56 | -13,549,861.17 |
| Total comprehensive income | -10,484,845.56 | -13,549,861.17 |
X. Risks Associated with Financial Instruments
The Group’s major financial instruments include the monetary assets, notes receivable, accounts receivables, accountsreceivable financing, other receivables, other current assets, trading financial assets, debt investment, other non-current financialassets, long-term receivables, notes payable, accounts payable, other payables, the short-term borrowings, trading financial liabilities,Current Portion of Non-current Liabilities and long-term borrowings. Details of various financial instruments are disclosed inrelevant Notes. Possible risks related to these financial instruments and various risk management policies implemented to reducethese risks are described as follows. The Group’s management has controlled and monitored these risk exposures in order to controlthe above-mentioned risks within the limited scope.
1. Risk management objectives and policies
The Group has conducted the risk management to achieve an appropriate balance between the risk and the income and tominimize the adverse influence of financial risks on the Group’s financial performance. According to such risk managementobjective, the Company has formulated corresponding risk management policy to recognize and analyze possible risks encounteredby the Group, set the appropriate acceptable risk level and designed corresponding internal control procedures to monitor the Group’srisk level. Meanwhile, the Group will regularly review these risk management policies and relevant internal control system so as tocater for the market or respond to any change in the Group’s business operations. Accordingly, the Group’s internal audit departmentwill also regularly or randomly check whether the internal control system is implemented in conformity with relevant riskmanagement policies.
The major risks caused by financial instruments of the Group are credit risk, liquidity risk and market risk (including foreignexchange risk and interest rate risk).
The Board of Directors shall be responsible for planning and establishing the risk management framework for the Group,determining the Group’s risk management policies and relevant guidelines and monitoring the implementation of various riskmanagement measures. However, the Company has established corresponding risk management policies to recognize and analyzepossible risks encountered by the Group. Besides, various risks are specified in these risk management policies, including the creditrisk, the liquidity risk and the market risk management etc.. On a regular basis, the Group will evaluate the specific marketingenvironment and various changes in the Group’s business operations so as to determine whether any risk management policy andsystem need be updated.
(1) Credit risk
Credit Risk means that the Group will suffer any financial losses due to the counter party’s failure in fulfilling the contractobligations.
The Group shall manage the credit risk based on the specific Group Classification, and the credit risk mainly arises from bank
deposit, notes receivable, accounts receivable, other receivables and long-term accounts receivable etc.The Group’s bank deposits are mainly saved in state-owned banks and other large and medium-sized listed banks. The Group’sbank deposits are expected not to suffer any major credit risks.For notes receivable, accounts receivable, other accounts receivable and long-term accounts receivable, the Group hasestablished relevant policies to control the credit risk exposure. According to the client’s financial status, credit record and otherfactors (including the current market condition), the Group will evaluate the client’s credit qualification and set corresponding creditperiod. In addition, the Group will regularly monitor the client’s credit record. For clients with poor credit records, the Group willissue the written Reminder Notice, shorten the credit period or cancel the credit period to guarantee the Group’s overall credit riskunder control.The hugest credit risk exposure borne by the Group is the book value of each financial asset reflected in the balance sheet. TheGroup is also exposed to credit risk due to the provision of financial guarantees, as disclosed in Note XI-2.
In terms of accounts receivable, the top 5 customers in accounts receivable were accounted for 26.20% of the total amount ofaccounts receivable of the Group (29.49% in 2020). In terms of other receivables, the top 5 of the ending balance according to thearrears party was accounted for 47.08% of the total amount of other receivables of the Group (59.79% in 2020).
Investment in debt obligations
The Group supervised the changes of credit risk through tracking the published external credit ratings. In order to make surewhether the credit rating was the latest, and whether the credit risk has increased obviously of evaluation report date but not beenreflected in the published external ratings, the Group has supplemented through examining the changes of bond yield and theavailable news and supervision information.
On the balance sheet date, the carrying value of investment in debt obligations of the Group are listed as follows according toreport items (Unit: RMB’0,000).
| Item | 30 June 2021 | 31 December 2020 | 31 December 2019 |
| Trading financial assets | 9,757.04 | 25,181.47 | 5,235.61 |
| Other current assets | - | 35,137.97 | |
| Total | 9,757.04 | 60,319.44 | 5,235.61 |
(2) Liquidity risk
Liquidity Risk refers to the risk of capital shortage encountered by the Group during the cash payment or the settlement of otherfinancial assets.
During the management of liquidity risk, the Group shall reserve and monitor corresponding cash and cash equivalent deemedsufficient by the management so as to meet the Group’s operational requirements and mitigate the impact caused by the cash flowfluctuation. The Group’s management will monitor the use of bank loans and guarantee the fulfillment of loan agreement.Meanwhile, major financial institutions shall promise to provide the Group with sufficient reserve funds in order to satisfy theshort-term and long-term fund demand. The Group shall raise its working capital based on the capital generated from businessoperations and bank loans.
(3) Market risk
The financial instrument’s market risk refers to the fluctuation risk of fair value of financial instrument or future cash flowcaused by the changes of market price, including the interest rate risk and the exchange rate risk.
Interest rate risk
Interest rate risk refers to the risk of fluctuations in the fair value or future cash flows of financial instruments arising fromchanges in market interest rates. The interest rate can derive from the recognized interest-bearing financial instruments andunrecognized financial instruments (including certain loan commitment).
The Group's interest rate risk mainly arises from the bank loan and bonds payable. Financial liabilities based on the floatinginterest rate will cause the cash flow interest rate risk to the Group, and financial liabilities based on the fixed interest rate the fairvalue interest rate risk.
However, the Group has paid close attention the impact of interest rate fluctuations on the Group’s interest rate risk. At present,the Group has not taken any interest rate hedging measures. The rise of interest rate will increase the cost of newly-addedinterest-bearing debts and the interest cost of the Group’s unsettled interest-bearing debts based on the floating interest rate, andcause major adverse influence on the Group’s financial performance. The management will timely make corresponding adjustmentaccording to the latest market situation, and corresponding interest rate swap will be arranged to reduce the interest rate risk.
The Group holds interest-bearing financial liabilities as follows (Unit: RMB’0,000):
| Item | 30 June 2021 | 31 December 2020 |
| Fixed-interest financial liability | ||
| Including: short-term borrowings | 90,396.77 | 34,385.82 |
| Current portion of long-term borrowings | 150.00 | 400.00 |
| Long-term borrowings | 29,800.00 | 20,000.00 |
| Bonds payables | 137,029.75 | 135,017.15 |
| Total | 257,376.52 | 189,802.97 |
| Floating rate financial liability |
| Including: short-term borrowings | 8,691.57 | 58,452.36 | |
| Current portion of long-term borrowings | 1,892.02 | 3,914.94 | |
| Long-term borrowings | 36,113.00 | 29,500.00 | |
| Total | 46,696.59 | 91,869.30 | |
On 30 June 2020, if the lending rate calculated at floating interest rate up or down 100 basis points with other variablesunchanged, the net profit and shareholders’ equity will be decreased or increased about RMB4,669,700.
Foreign exchange riskForeign exchange risk is referred to the fluctuation risk of fair value of financial instruments or future cash flows resulted fromthe change of foreign exchange rate. The foreign exchange rate was originated from the financial instruments denominated in foreigncurrencies other than the recording currency.
On 30 June 2020, the amount of foreign currency financial assets and foreign currency financial liabilities converted to renminbi
is as follows (Unit: RMB’0,000):
| Item | Foreign currency liabilities | Foreign currency assets | ||
| Ending balance | Beginning balance | Ending balance | Beginning balance | |
| USD | 100,822.45 | 100,434.65 | 60,998.99 | 54,643.66 |
| EUR | 552.26 | 136.74 | 947.54 | 894.96 |
| JPY | 90.42 | 195.50 | 140.10 | 64.20 |
| HKD | 29.49 | 438.98 | 328.79 | |
| GBP | 0.00 | 8.23 | 8.19 | |
| CHF | 24.32 | 0.80 | 5.18 |
| SEK | 0.00 | 0.00 | 0.06 | |
| VND | 1,543.05 | 1,583.90 | 2,968.97 | 3,110.91 |
| MMK | 16.32 | 28.21 | 76.18 | 30.99 |
| KHR | 0.00 | 16.86 | 46.39 | |
| Total | 103,024.50 | 102,432.81 | 65,596.65 | 59,133.34 |
However, the Group has paid close attention the impact of exchange rate fluctuations on the Group’s exchange rate risk. As atthe end of each reporting period, for the Group's monetary capital, bills receivable, accounts receivable, accounts payable, short-termborrowings and long-term borrowings denominated in foreign currencies, the impact on the Group's shareholders' equity and netprofit assuming a 10% appreciation or depreciation of RMB against foreign currencies, while other factors remain unchanged, wouldbe as follows (Unit: RMB’0,000):
| Exchange rate fluctuations | Reporting Period | Same Period Last Year | ||
| Impact on profit | Impact on shareholders' equity | Impact on profit | Impact on shareholders' equity | |
| 10% appreciation against RMB | 3,742.78 | 3,742.78 | 4,711.60 | 4,711.60 |
| 10% depreciation against RMB | -3,742.78 | -3,742.78 | -4,711.60 | -4,711.60 |
2. Capital management
The objectives of capital management policies of the Group are to ensure the continuous operation of the Group so as to providereturn to shareholders and benefit other stakeholders, as well as to reduce capital cost by maintaining the optimal capital structure.
In order to maintain or adjust capital structure, the Group might adjust financing method and the dividends paid to shareholders,return capital to shareholders, issue new shares and other equity instrument or sell assets to reduce debts.
The Group supervised the capital structure based on the asset-liability ratio (namely total liabilities divide total assets). On 31December 2020, the asset-liability ratio was 33.29% of the Group (30.17% on 31 December 2019).
XI. Disclosure of Fair Value
1. Ending Fair Value of Assets and Liabilities at Fair Value
Unit: RMB
| Item | Ending fair value | |||
| Fair value measurement items at level 1 | Fair value measurement items at level 2 | Fair value measurement items at level 3 | Total | |
| I. Consistent fair value measurement | -- | -- | -- | -- |
| (I) Trading Financial Assets | 124,052,667.02 | 124,052,667.02 | ||
| 1. Financial assets measured at fair value through profit and loss for the current period | 97,570,367.02 | 97,570,367.02 | ||
| (3) Derivative financial assets | 26,482,300.00 | 26,482,300.00 | ||
| (II) Accounts receivable financing | 29,582,908.88 | 29,582,908.88 | ||
| (III) Other non-current financial assets | 156,915,620.25 | 156,915,620.25 | ||
| The total amount of assets consistently measured at fair value | 124,052,667.02 | 186,498,529.13 | 310,551,196.15 | |
| II. Inconsistent fair value measurement | -- | -- | -- | -- |
2. Continuous and Non-continuous Level 2 Fair Value Measurement Items, Valuation Techniques Used,and the Qualitative and Quantitative Information of Important Parameters
For bank WM products, the Company determines their fair value based on the expected rate of return as agreed in the contract.For forward settlements of exchanges, the Company determines their fair value based on bank forward foreign exchangequotations at the end of the period.
3. Valuation Technique Adopted and Nature and Amount Determination of Important Parameters forConsistent and Inconsistent Fair Value Measurement Items at Level 3
For the unlisted equity investment, the Company adopts the comparable listed company comparison method, and thenon-observable input value of the comparable listed company comparison method includes the liquidity discount.
The Company values its holdings of unlisted and outstanding domestic shares of companies listed on the Hong Kong StockExchange on the basis of quoted prices for Hong Kong shares and taking into account factors such as unlisted and outstanding cases.
The investment into Shandong Hongqiao Thermoelectric Co., Ltd. made by Luqun Textile (the Company’s subsidiary) isexpected to be held in the long run for obtaining the discount on power purchase. As no revenue distribution right is vested in theinvestment, the invested unit’s operating profit and loss are not shared or borne, and the equity transfer is not proposed, the Companyregards it as the financial asset which shall be measured based on the fair value and whose variations are included in the currentprofit and loss, and the investment cost is deemed as the fair value of the financial asset.
For accounts receivables financing at fair value and the changes included in other comprehensive income, its fair value shall bedetermined by the discount cash flow method.
4. Fair Value of Financial Assets and Liabilities Not Measured at Fair Value
The financial assets and financial liabilities measured at amortized cost mainly include: monetary assets, notes receivable,accounts receivable, other receivables, long-term receivables, short-term borrowings, notes payable, accounts payables, otherpayables, current portion of long-term borrowings and long-term borrowings, etc.
XII. Related Party and Related-party Transactions
1. Information Related to the Company as the Parent of the Company
| Name | Registration place | Nature of business | Registered capital | Proportion of share held by the Company as the parent against the Company (%) | Proportion of voting rights owned by the Company as the parent against the Company (%) |
| Lucheng Textile | Zibo | Textile, chemistry and investment | RMB63.26 million | 15.91% | 15.91% |
Notes: information on the Company as the parentThe final controllers of the Company are Mr. Liu Zibin and Mr. Liu Deming.
2. Subsidiaries of the Company
Refer to Note IX-1.
3. Information on the Joint Ventures and Associated Enterprises of the CompanyRefer to Note IX-2.
4. Information on Other Related Parties
| Name | Relationship with the Company |
| Zibo Limin Purified Water Co., Ltd. (hereinafter called Limin Purified Water) | Wholly-owned subsidiary of the Company as the parent |
| Zibo Luqun Land Co., Ltd (hereinafter called Luqun Land) | Wholly-owned subsidiary of the Company as the parent |
| Zibo Lurui Fine Chemical Co., Ltd. (hereinafter referred to as Lurui Chemical) | Majority-owned subsidiary of the Company as the parent |
| Zibo Lujia Property Management Co. , Ltd. (hereinafter referred to as Lujia Property) | Wholly-owned subsidiary of the Company as the parent |
| Hong Kong Tung Hoi International Company Limited (hereinafter called Tung Hoi International) | Wholly-owned subsidiary of the Company as the parent |
| Zibo Chengshun Hosiery Co., Ltd. (hereinafter referred to as Chengshun Hosiery) | Wholly-owned subsidiary of the Company as the parent |
| Zibo Chengshun Economic and Trade Co., Ltd. (hereinafter referred to as Chengshun Economic and Trade) | Wholly-owned subsidiary of the Company as the parent |
| Chengshun Petrochemical (Zhejiang Zhoushan) Co., Ltd. (hereinafter referred to as Chengshun Petrochemical) | Wholly-owned subsidiary of the Company as the parent |
| Zibo Lucheng Petrochemical Sales Co., Ltd. (hereinafter referred to as Lucheng Petrochemical) | Wholly-owned subsidiary of the Company as the parent |
| Shanghai Hengjiu Textile New Materials Co., Ltd. (hereinafter referred to as Hengjiu Textile) | Wholly-owned subsidiary of the Company as the parent |
| Unikorn Nonwovens Co., Ltd. (hereinafter referred to as the Unikorn Nonwovens) | Wholly-owned subsidiary of wholly-owned subsidiary of the Company as the parent |
| Zibo Lumei Economic and Trade Co., Ltd. (hereinafter referred to as Lumei Economic and Trade) | Wholly-owned subsidiary of the Company as the parent |
5. List of Related-party Transactions
(1) Information on Acquisition of Goods and Reception of Labor Service
Information on acquisition of goods and reception of labor service
Unit: RMB
| Related party | Content | Amount of the current period | The approval trade credit | Whether exceed trade credit or not | Amount of the previous period |
| Limin Purified Water | Recycled water, sewage treatment, materials | 12,211,050.25 | 14,653,260.00 | No | 9,822,323.88 |
| Lurui Fine Chemical | Auxiliaries | 40,620,712.88 | 48,744,856.00 | No | 36,593,447.10 |
| Chengshun Hosiery | Welfares such as socks, paper cores and hose processing fee | 4,379,850.31 | 5,255,820.00 | No | 3,909,785.92 |
| Chengshun Economic and Trade | Supermarket retail | 577,791.56 | 693,350.00 | No | 1,796,605.97 |
| Lucheng Petrochemical | Oils | 1,524,662.66 | 1,829,595.00 | No | 844,180.74 |
| Chengshun Petrochemical | Gas | 18,133,501.78 | 21,760,202.00 | No | 16,749,727.55 |
| Unikorn Nonwovens | Mask | 700,367.23 | 0.00 | No | 6,187.61 |
Information of sales of goods and provision of labor service
Unit: RMB
| Related party | Content | Amount of the current period | Amount of the previous period |
| Lucheng Textile | Sales of materials, electricity, running water, draught water, gas etc. | 5,797.88 | |
| Chengshun Hosiery | Materials, electricity, running water, heating, steam | 133,071.57 | 64,659.60 |
| Chengshun Hosiery | Sales of grey yarn etc. | 353,219.89 | 186,772.14 |
| Chengshun Economic and Trade | Materials, electricity, running water | 47,784.20 | 98,220.46 |
| Lucheng Petrochemical | Electricity, materials | 7,857.02 | 11,892.89 |
| Limin Purified Water | Sales of materials, garment, electricity etc. | 1,572,783.76 | 750,467.47 |
| Lurui Fine Chemical | Sales of garment, fabrics, yarns, water & electricity, lunch components and materials | 6,731.29 | 27,177.52 |
| Lujia Property | Sales of materials and recycled water | 71,945.34 | 95,382.35 |
| Unikorn Nonwovens | Fabrics, materials, isolation gowns, etc. | 1,012,527.84 | 2,563.14 |
| Luqun Property | Materials | 463.68 | |
| Luqun Property | Heating utilities | 1,720,174.32 |
(2) Information on Related-party Lease
The Company was lessor:
Unit: RMB
| Name of lessee | Category of leased assets | The lease income confirmed in the Reporting Period | The lease income confirmed in the same period of last year |
| Chengshun Economic and Trade | Houses and buildings | 36,108.00 | 36,108.00 |
| Lurui Fine Chemical | Houses and buildings | 4,091.82 |
The Company was lessee:
Unit: RMB
| Name of lessor | Category of leased assets | The lease fee confirmed in the Reporting Period | The lease fee confirmed in the same period of last year |
| Lucheng Textile | Rent of land | 1,807,428.60 | 1,807,428.60 |
| Lucheng Textile | Rent of gas station | 116,571.42 | 116,571.42 |
| Lucheng Textile | Rent of buildings | 5,511,114.30 | 5,511,114.30 |
| Luqun Property | Rent of land and buildings | 985,714.26 | 985,714.26 |
6. Accounts Receivable and Payable of Related Party
(1) Accounts Payable
Unit: RMB
| Item | Related party | Ending carrying amount | Beginning carrying amount |
| Accounts payable | Chengshun Economic and Trade | 7,720.00 | |
| Accounts payable | Lurui Fine Chemical | 5,282,060.12 | 988,293.00 |
| Contract liabilities | Luqun Property | 649,676.55 |
XIII. Commitments and Contingency
1. Significant Commitments
Significant commitments on balance sheet date
| Commitments signed but has not been recognized in financial statements | 30 June 2021 | 31 December 2020 |
| Commitment on constructing and purchasing long-lived assets (RMB’0,000) | 8,808.60 | 9,864.22 |
2. Contingency
(1) Significant Contingency on Balance Sheet Date
(1) Contingent liabilities formed by the debt guarantee provided to other entities and the financial impactAs of 30 June 2020, the Group provided guarantee to loans of the following entities:
| Name | Item | Currency | Foreign currency amount | Amount converted to RMB | Start date | Maturity date | Remarks |
| I. Subsidiary | |||||||
| Lu An Garments | Short-term borrowings | USD | 714,302.04 | 4,614,462.61 | 2021/3/17 | 2021/7/15 | |
| Lu An Garments | Short-term borrowings | USD | 4,939.95 | 31,912.57 | 2021/4/6 | 2021/8/4 | |
| Lu An Garments | Short-term borrowings | USD | 60,414.16 | 390,281.52 | 2021/4/19 | 2021/8/2 | |
| Lu An Garments | Short-term borrowings | USD | 953,901.25 | 6,162,297.46 | 2021/4/19 | 2021/8/17 | |
| Lu An Garments | Short-term borrowings | USD | 3,905.04 | 25,226.95 | 2021/5/5 | 2021/9/2 | |
| Lu An Garments | Short-term borrowings | USD | 20,160.02 | 130,235.75 | 2021/5/13 | 2021/9/5 |
| Lu An Garments | Short-term borrowings | USD | 42,761.73 | 276,245.05 | 2021/5/13 | 2021/8/23 | |
| Lu An Garments | Short-term borrowings | USD | 58,865.00 | 380,273.79 | 2021/6/7 | 2021/10/5 | |
| Lu An Garments | Short-term borrowings | USD | 84,611.55 | 546,599.07 | 2021/6/15 | 2021/10/13 | |
| Lu An Garments | Short-term borrowings | USD | 2,620,155.68 | 16,926,467.70 | 2021/6/23 | 2021/10/21 | |
| Continental Textile | Short-term borrowings | Dong | 12,909,486,897.00 | 3,621,079.34 | 2021/6/18 | 2021/12/15 | |
| Continental Textile | Short-term borrowings | Dong | 4,785,104,304.00 | 1,342,210.00 | 2021/6/25 | 2021/12/22 | |
| Continental Textile | Short-term borrowings | Dong | 10,661,913,152.00 | 2,990,640.44 | 2021/6/28 | 2021/12/25 | |
| Continental Textile | Short-term borrowings | USD | 653,020.30 | 4,218,576.44 | 2021/6/17 | 2021/12/14 | |
| Continental Textile | Short-term borrowings | USD | 1,393,849.60 | 9,004,407.80 | 2021/2/2 | 2021/8/2 | |
| Continental Textile | Short-term borrowings | USD | 1,410,884.88 | 9,114,457.41 | 2021/2/22 | 2021/8/21 | |
| Continental Textile | Short-term borrowings | USD | 201,971.81 | 1,304,758.09 | 2021/2/22 | 2021/8/21 | |
| Continental Textile | Short-term borrowings | USD | 727,576.73 | 4,700,218.43 | 2021/3/12 | 2021/9/8 | |
| Continental Textile | Short-term borrowings | USD | 318,134.58 | 2,055,181.20 | 2021/3/18 | 2021/9/14 | |
| Continental Textile | Short-term borrowings | USD | 1,288,280.40 | 8,322,420.21 | 2021/3/24 | 2021/9/20 | |
| Continental Textile | Short-term borrowings | USD | 1,454,676.96 | 9,397,358.63 | 2021/3/24 | 2021/9/20 | |
| Continental Textile | Short-term borrowings | USD | 177,046.16 | 1,143,735.90 | 2021/3/30 | 2021/9/26 | |
| Continental Textile | Short-term borrowings | USD | 169,061.05 | 1,092,151.29 | 2021/4/9 | 2021/10/6 | |
| Continental Textile | Short-term borrowings | USD | 589,075.05 | 3,805,483.73 | 2021/4/12 | 2021/10/9 | |
| Continental Textile | Short-term borrowings | USD | 1,121,899.02 | 7,247,579.86 | 2021/4/27 | 2021/10/24 | |
| Continental Textile | Short-term borrowings | USD | 1,571,097.84 | 10,149,449.17 | 2021/5/5 | 2021/11/1 | |
| Continental Textile | Short-term borrowings | USD | 256,132.35 | 1,654,640.59 | 2021/5/14 | 2021/11/10 |
| Continental Textile | Short-term borrowings | USD | 984,465.10 | 6,359,742.99 | 2021/5/21 | 2021/11/17 | |
| Continental Textile | Short-term borrowings | USD | 986,391.14 | 6,372,185.40 | 2021/5/24 | 2021/11/20 | |
| Continental Textile | Short-term borrowings | USD | 851,049.33 | 5,497,863.78 | 2021/1/4 | 2021/7/6 | |
| Continental Textile | Short-term borrowings | USD | 421,140.16 | 2,720,607.55 | 2021/1/7 | 2021/7/7 | |
| Continental Textile | Short-term borrowings | USD | 1,022,627.20 | 6,606,273.97 | 2021/1/13 | 2021/7/12 | |
| Continental Textile | Short-term borrowings | USD | 546,556.29 | 3,530,808.29 | 2021/1/20 | 2021/7/20 | |
| Continental Textile | Short-term borrowings | USD | 175,452.15 | 1,133,438.43 | 2021/1/25 | 2021/7/26 | |
| Continental Textile | Short-term borrowings | USD | 1,161,176.91 | 7,501,318.96 | 2021/1/29 | 2021/7/28 | |
| Continental Textile | Short-term borrowings | USD | 437,435.84 | 2,825,879.27 | 2021/2/2 | 2021/8/2 | |
| Continental Textile | Short-term borrowings | USD | 913,778.76 | 5,903,102.17 | 2021/2/4 | 2021/8/4 | |
| Continental Textile | Short-term borrowings | USD | 640,883.11 | 4,140,168.98 | 2021/2/5 | 2021/8/5 | |
| Continental Textile | Short-term borrowings | USD | 176,163.31 | 1,138,032.60 | 2021/2/22 | 2021/8/21 | |
| Continental Textile | Short-term borrowings | USD | 344,794.48 | 2,227,406.82 | 2021/2/26 | 2021/8/25 | |
| Continental Textile | Short-term borrowings | USD | 1,024,035.70 | 6,615,373.03 | 2021/3/2 | 2021/8/29 | |
| Continental Textile | Short-term borrowings | USD | 868,939.55 | 5,613,436.39 | 2021/3/5 | 2021/9/7 | |
| Continental Textile | Short-term borrowings | USD | 660,424.22 | 4,266,406.50 | 2021/3/12 | 2021/9/9 | |
| Continental Textile | Short-term borrowings | USD | 454,648.83 | 2,937,076.91 | 2021/3/24 | 2021/9/21 | |
| Continental Textile | Short-term borrowings | USD | 975,921.65 | 6,304,551.45 | 2021/4/5 | 2021/10/4 | |
| Continental Textile | Short-term borrowings | USD | 503,438.57 | 3,252,263.51 | 2021/4/14 | 2021/10/12 | |
| Continental Textile | Short-term borrowings | USD | 398,717.39 | 2,575,754.21 | 2021/4/26 | 2021/10/23 | |
| Continental Textile | Short-term borrowings | USD | 1,596,146.23 | 10,311,264.26 | 2021/5/14 | 2021/11/10 |
| Continental Textile | Short-term borrowings | USD | 475,640.00 | 3,072,681.96 | 2021/5/26 | 2021/11/22 | |
| Continental Textile | Short-term borrowings | USD | 1,147,024.51 | 7,409,893.04 | 2021/6/3 | 2021/12/1 | |
| Continental Textile | Short-term borrowings | USD | 1,685,518.72 | 10,888,619.47 | 2021/6/10 | 2021/12/7 | |
| Continental Textile | Short-term borrowings | USD | 1,563,272.91 | 10,098,899.33 | 2021/3/26 | 2021/9/26 | |
| Continental Textile | Short-term borrowings | USD | 635,530.49 | 4,105,590.52 | 2021/4/6 | 2021/10/6 | |
| Continental Textile | Short-term borrowings | USD | 401,823.00 | 2,595,816.76 | 2021/4/22 | 2021/10/22 | |
| Continental Textile | Short-term borrowings | USD | 182,549.00 | 1,179,284.79 | 2021/4/26 | 2021/10/26 | |
| Continental Textile | Short-term borrowings | USD | 317,392.00 | 2,050,384.06 | 2021/4/27 | 2021/10/27 | |
| Continental Textile | Short-term borrowings | USD | 1,196,240.00 | 7,727,830.03 | 2021/5/6 | 2021/11/6 | |
| Continental Textile | Short-term borrowings | USD | 566,674.00 | 3,660,770.71 | 2021/5/14 | 2021/11/14 | |
| Continental Textile | Short-term borrowings | USD | 291,763.00 | 1,884,818.16 | 2021/5/19 | 2021/11/19 | |
| Continental Textile | Short-term borrowings | USD | 193,134.00 | 1,247,664.95 | 2021/5/24 | 2021/11/24 | |
| Continental Textile | Short-term borrowings | USD | 338,249.00 | 2,185,122.36 | 2021/6/1 | 2021/12/1 | |
| Lu Thai Tan Chau | Long-term borrowings | USD | 48,960.00 | 316,286.50 | 2019/9/30 | 2021/8/30 | |
| Lu Thai Tan Chau | Long-term borrowings | USD | 487,200.00 | 3,147,360.72 | 2019/9/30 | 2021/8/30 | |
| Lu Thai Tan Chau | Long-term borrowings | USD | 57,059.28 | 368,608.65 | 2019/10/3 | 2021/8/30 | |
| Lu Thai Tan Chau | Long-term borrowings | USD | 32,130.00 | 207,563.01 | 2019/10/3 | 2021/8/30 | |
| Lu Thai Tan Chau | Long-term borrowings | USD | 38,851.20 | 250,982.64 | 2019/10/7 | 2021/8/30 | |
| Lu Thai Tan Chau | Long-term borrowings | USD | 10,368.00 | 66,978.32 | 2019/10/11 | 2021/8/30 | |
| Lu Thai Tan Chau | Long-term borrowings | USD | 34,344.00 | 221,865.67 | 2019/10/17 | 2021/8/30 | |
| Lu Thai Tan Chau | Long-term borrowings | USD | 37,960.59 | 245,229.21 | 2019/10/21 | 2021/8/30 |
| Lu Thai Tan Chau | Long-term borrowings | USD | 9,606.00 | 62,055.72 | 2019/10/21 | 2021/8/30 | |
| Lu Thai Tan Chau | Long-term borrowings | USD | 1,512.00 | 9,767.67 | 2019/10/21 | 2021/8/30 | |
| Lu Thai Tan Chau | Long-term borrowings | USD | 20,804.81 | 134,401.15 | 2019/11/7 | 2021/8/30 | |
| Lu Thai Tan Chau | Long-term borrowings | USD | 21,931.35 | 141,678.71 | 2019/11/7 | 2021/8/30 | |
| Lu Thai Tan Chau | Long-term borrowings | USD | 501,509.79 | 3,239,803.40 | 2019/11/20 | 2021/8/30 | |
| Lu Thai Tan Chau | Long-term borrowings | USD | 92,243.52 | 595,902.36 | 2019/11/20 | 2021/8/30 | |
| Lu Thai Tan Chau | Long-term borrowings | USD | 25,704.00 | 166,050.41 | 2019/12/4 | 2021/8/30 | |
| Lu Thai Tan Chau | Long-term borrowings | USD | 517,790.65 | 3,344,979.39 | 2019/12/5 | 2021/8/30 | |
| Lu Thai Tan Chau | Long-term borrowings | USD | 62,024.85 | 400,686.73 | 2019/12/17 | 2021/8/30 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 936,460.30 | 6,049,627.18 | 2021/1/22 | 2021/7/21 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 897,364.54 | 5,797,064.66 | 2021/2/24 | 2021/8/23 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 1,045,799.47 | 6,755,969.16 | 2021/3/8 | 2021/9/4 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 114,145.22 | 737,389.54 | 2021/4/16 | 2021/10/13 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 895,937.36 | 5,787,844.94 | 2021/5/4 | 2021/10/31 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 583,654.12 | 3,770,463.98 | 2021/5/7 | 2021/11/3 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 893,376.10 | 5,771,298.94 | 2021/5/17 | 2021/11/13 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 984,576.97 | 6,360,465.68 | 2021/5/21 | 2021/11/17 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 985,252.70 | 6,364,830.97 | 2021/5/24 | 2021/11/20 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 1,210,880.67 | 7,822,410.22 | 2021/5/26 | 2021/11/22 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 836,466.56 | 5,403,657.62 | 2020/7/24 | 2021/7/19 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 805,709.04 | 5,204,960.97 | 2020/8/4 | 2021/7/30 |
| Lu Thai Tan Chau | Short-term borrowings | USD | 286,614.00 | 1,851,555.10 | 2021/3/23 | 2021/9/19 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 48,977.00 | 316,396.32 | 2021/3/24 | 2021/9/20 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 165,231.00 | 1,067,408.78 | 2021/3/30 | 2021/9/26 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 301,075.00 | 1,944,974.61 | 2021/4/2 | 2021/9/29 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 375,775.00 | 2,427,544.08 | 2021/4/23 | 2021/10/20 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 55,982.00 | 361,649.32 | 2021/4/26 | 2021/10/23 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 180,333.00 | 1,164,969.21 | 2021/4/28 | 2021/10/25 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 381,887.00 | 2,467,028.21 | 2021/5/6 | 2021/11/2 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 145,587.00 | 940,506.58 | 2021/5/18 | 2021/10/29 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 62,268.00 | 402,257.51 | 2021/5/24 | 2021/10/29 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 189,015.00 | 1,221,055.80 | 2021/5/26 | 2021/10/29 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 187,250.00 | 1,209,653.73 | 2021/5/31 | 2021/10/29 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 370,326.00 | 2,392,342.99 | 2021/6/3 | 2021/11/30 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 1,764,984.00 | 11,401,973.14 | 2021/6/8 | 2021/11/30 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 393,507.00 | 2,542,094.57 | 2021/6/21 | 2021/12/18 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 63,928.00 | 412,981.27 | 2021/6/23 | 2021/12/20 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 187,484.00 | 1,211,165.39 | 2021/6/30 | 2021/12/27 |
| Total | 378,670,423.34 |
(2) As at 30 June 2021, the Group provided guarantee to guarantees of the following entities:
| Name | Item | Currency | Amount | Start date | Maturity date | Remarks |
| I. Subsidiary | ||||||
| Lulian New Materials | Guarantee | RMB | 5,200,000.00 | 2020/12/3 | 2022/7/20 |
| Lulian New | Guarantee | RMB | 770,000.00 | 2020/6/18 | 2021/7/30 |
| Materials | ||||||
| Lulian New Materials | Guarantee | RMB | 4,000,000.00 | 2020/10/9 | 2021/11/30 | |
| Lulian New Materials | Guarantee | RMB | 7,500,000.00 | 2020/3/19 | 2021/7/10 | |
| Lulian New Materials | Guarantee | RMB | 3,500,000.00 | 11 December 2020 | 2022/7/20 | |
| Lulian New Materials | Guarantee | RMB | 18,000,000.00 | 2020/2/28 | 2021/9/19 | |
| Lulian New Materials | Guarantee | RMB | 400,000.00 | 2021/6/16 | 2022/7/10 | |
| Lulian New Materials | Guarantee | RMB | 22,500,000.00 | 2021/4/15 | 2022/6/20 | |
| Lulian New Materials | Guarantee | RMB | 3,800,000.00 | 2021/4/15 | 2022/6/20 | |
| Lulian New Materials | Guarantee | RMB | 2,800,000.00 | 2021/4/6 | 2022/4/24 | |
| Total | 68,470,000.00 |
As at 30 June 2021, the Group has no other disclosable contingencies.
(2) Explanation shall be given even if there is no significant contingency for the Company to discloseThere was no significant contingency in the Company to disclose.XIV. Notes of Main Items in the Financial Statements of the Company as the Parent
1. Accounts Receivable
(1) Listed by Category
Unit: RMB
| Category | Ending balance | Beginning balance | ||||||||
| Carrying amount | Bad debt provision | Carrying value | Carrying amount | Bad debt provision | Carrying value | |||||
| Amount | Proportion | Amount | Withdrawal proportion | Amount | Proportion | Amount | Withdrawal proportion | |||
| Accounts receivable withdrawal of Bad debt provision separately accrued | 1,698,109.45 | 0.57% | 1,698,109.45 | 100.00% | 5,730,132.44 | 1.60% | 5,730,132.44 | 100.00% | ||
| Of which: | ||||||||||
| Accounts receivable withdrawal of bad debt provision of by group | 296,441,182.12 | 99.43% | 19,105,989.48 | 6.45% | 277,335,192.64 | 352,666,401.84 | 98.40% | 26,499,466.74 | 7.51% | 326,166,935.10 |
| Of which: | ||||||||||
| Undue accounts (credit insurance insured) | 31,121,897.77 | 10.44% | 326,779.93 | 1.05% | 30,795,117.84 | 29,328,670.49 | 8.18% | 307,951.04 | 1.05% | 29,020,719.45 |
| Undue accounts (no credit insurance) | 221,463,235.63 | 74.28% | 11,073,161.78 | 5.00% | 210,390,073.85 | 242,017,947.74 | 67.53% | 12,100,897.39 | 5.00% | 229,917,050.35 |
| Overdue accounts (credit insurance insured) | 18,191,464.49 | 6.10% | 1,946,486.70 | 10.70% | 16,244,977.79 | 23,520,765.79 | 6.56% | 2,516,721.94 | 10.70% | 21,004,043.85 |
| Overdue accounts (no credit insurance) | 25,664,584.23 | 8.61% | 5,759,561.07 | 22.44% | 19,905,023.16 | 57,799,017.82 | 16.13% | 11,573,896.37 | 20.02% | 46,225,121.45 |
| Total | 298,139,291.57 | 100.00% | 20,804,098.93 | 6.98% | 277,335,192.64 | 358,396,534.28 | 100.00% | 32,229,599.18 | 8.99% | 326,166,935.10 |
Bad debt provision separately accrued:
Unit: RMB
| Name | Ending balance | |||
| Carrying amount | Bad debt provision | Withdrawal proportion | Reason for withdraw | |
| Customer 1 | 1,461,552.02 | 1,461,552.02 | 100.00% | Customer's application for bankruptcy protection |
| Other customers | 236,557.43 | 236,557.43 | 100.00% | Customer in financial difficulty or application for bankruptcy |
| Total | 1,698,109.45 | 1,698,109.45 | -- | -- |
Withdrawal of bad debt provision by group:
Unit: RMB
| Name | Ending balance | ||
| Carrying amount | Bad debt provision | Withdrawal proportion | |
| Group 1: Undue accounts (credit insurance insured) | 31,121,897.77 | 326,779.93 | 1.05% |
| Group 2: Undue accounts (no credit insurance) | 221,463,235.63 | 11,073,161.78 | 5.00% |
| Group 3: Overdue accounts (credit insurance insured) | 18,191,464.49 | 1,946,486.70 | 10.70% |
| Group 4: Overdue accounts (no credit insurance) | 25,664,584.23 | 5,759,561.07 | 22.44% |
| Total | 296,441,182.12 | 19,105,989.48 | -- |
Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable if adopting the general modeof expected credit loss to withdraw bad debt provision of accounts receivable.
√ Applicable □ Not applicable
Disclosure by aging
Unit: RMB
| Aging | Ending balance |
| Within 1 year (including 1 year) | 288,775,529.55 |
| 1 to 2 years | 7,724,521.88 |
| 2 to 3 years | 1,013,779.67 |
| Over 3 years | 625,460.47 |
| 3 to 4 years | 333,214.40 |
| 4 to 5 years | 292,246.07 |
| Over 5 years | 0.00 |
| Total | 298,139,291.57 |
(2) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting PeriodWithdrawal of bad debt provision:
Unit: RMB
| Category | Beginning balance | Changes in the Reporting Period | Ending balance | |||
| Withdrawal | Reversal or recovery | Verification | Others | |||
| Bad debt provision | 32,229,599.18 | -11,425,305.79 | 194.46 | 20,804,098.93 | ||
| Total | 32,229,599.18 | -11,425,305.79 | 194.46 | 20,804,098.93 | ||
(3) Accounts Receivable Written-off in Current Period
Unit: RMB
| Item | Written-off amount |
| Written-off accounts receivable | 194.46 |
(3) Top 5 of the Ending Balance of the Accounts Receivable Collected according to Arrears Party
Unit: RMB
| Name of the entity | Ending balance | Proportion to total ending balance of accounts receivable | Ending balance of bad debt provision |
| Customer A | 37,241,795.80 | 12.49% | 2,312,284.80 |
| Customer B | 29,821,557.16 | 10.00% | 1,491,077.86 |
| Customer C | 18,008,824.61 | 6.04% | 900,441.23 |
| Customer D | 13,349,879.08 | 4.48% | 675,829.07 |
| Customer E | 12,440,845.08 | 4.17% | 325,039.49 |
| Total | 110,862,901.73 | 37.18% |
2. Notes Receivable
| Types of notes | 30 June 2021 | 31 December 2020 | ||||
| Carrying amount | Bad debt provision | Carrying value | Carrying amount | Bad debt provision | Carrying value | |
| Bank’s acceptance bill | 66,008,730.01 | 66,008,730.01 | 75,987,373.12 | 75,987,373.12 | ||
| L/C | 30,962,236.73 | 30,962,236.73 | 32,876,316.67 | 32,876,316.67 | ||
| Total | 96,970,966.74 | 96,970,966.74 | 108,863,689.79 | 108,863,689.79 |
Notes: The Company believed that there was no significant credit risk in the bank acceptance bill and letter of credit held by theCompany, and no significant loss caused by bank defaults.
(1) The Company had no pledged notes receivable at the end of the period.
(2) The Company had notes receivable endorsed or discounted but not yet due at the end of the period.
| Category | Amount of recognition termination at the period-end | Amount of not terminated recognition at the period-end |
| Bank acceptance bill | 51,200,093.47 | |
| Commercial acceptance bill |
| Total | 51,200,093.47 |
Bank acceptances used for endorsement and discounting that are accepted by a higher-rated bank have minimal credit risk anddeferred payment risk, and the interest rate risk associated with the note has been transferred to the bank so that the primary risks andrewards of ownership can be judged to have been transferred and therefore derecognized. For those accepted by a bank with a lowcredit rating, endorsement and discounting do not affect recourse and the credit risk and deferred payment risk associated with thenotes remain untransferred and are therefore not derecognized.
(3) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
3. Other Accounts Receivable
Unit: RMB
| Item | Ending balance | Beginning balance |
| Dividend receivable | 47,025,975.44 | 75,488,652.49 |
| Other receivables | 1,900,807,773.04 | 1,425,394,029.70 |
| Total | 1,947,833,748.48 | 1,500,882,682.19 |
(1) Dividend Receivable
1) Dividend Receivable Classification
Unit: RMB
| Project (or investee) | Ending balance | Beginning balance |
| Fengshou Cotton Industry | 49,501,026.78 | 79,461,739.46 |
| Less: bad debt provision | -2,475,051.34 | -3,973,086.97 |
| Total | 47,025,975.44 | 75,488,652.49 |
2) Withdrawal of Bad Debt Provision
√ Applicable □ Not applicable
Unit: RMB
| Bad debt provision | First stage | Second stage | Third stage | Total |
| Expected credit loss of the next 12 months | Expected loss in the duration (credit impairment not occurred) | Expected loss in the duration (credit impairment occurred) | ||
| Balance of 1 January 2021 | 3,973,086.97 | 3,973,086.97 | ||
| Balance of 1 January 2021 in the Current Period | —— | —— | —— | —— |
| Withdrawal of the Current Period | -1,498,035.63 | -1,498,035.63 | ||
| Balance of 30 June 2021 | 2,475,051.34 | 2,475,051.34 |
Changes of carrying amount with significant amount changed of loss provision in the Current Period
□ Applicable √ Not applicable
(2) Other Accounts Receivable
1) Other Receivables Classified by Account Nature
Unit: RMB
| Nature | Ending carrying amount | Beginning carrying amount |
| Intercourse funds | 1,891,140,077.72 | 1,415,868,182.84 |
| Export rebates | 2,322,437.75 | |
| Payment on behalf | 9,058,714.25 | 11,567,504.63 |
| Guarantee deposit and cash deposit | 4,423,315.99 | 3,119,958.81 |
| Borrowings and petty cash | 1,034,990.72 | 859,406.80 |
| Others | 607,027.84 | 98,063.62 |
| Total | 1,908,586,564.27 | 1,431,513,116.70 |
2) Withdrawal of Bad Debt Provision
Unit: RMB
| Bad debt provision | First stage | Second stage | Third stage | Total |
| Expected credit loss of the next 12 months | Expected loss in the duration (credit impairment not occurred) | Expected loss in the duration (credit impairment occurred) | ||
| Balance of 1 January 2021 | 4,905,594.37 | 1,213,492.63 | 6,119,087.00 | |
| Balance of 1 January 2021 in the Current Period | —— | —— | —— | —— |
| Withdrawal of the Current Period | 1,499,487.78 | 160,216.44 | 1,659,704.23 | |
| Balance of 30 June 2021 | 6,405,082.15 | 1,373,709.07 | 7,778,791.23 |
Changes of carrying amount with significant amount changed of loss provision in the Current Period
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMB
| Aging | Ending balance |
| Within 1 year (including 1 year) | 1,903,711,498.55 |
| 1 to 2 years | 1,462,197.25 |
| 2 to 3 years | 178,000.00 |
| Over 3 years | 3,234,868.47 |
| 3 to 4 years | 225,759.46 |
| Over 5 years | 3,009,109.01 |
| Total | 1,908,586,564.27 |
3) Top 5 of the Ending Balance of Other Receivables Collected according to the Arrears Party
Unit: RMB
| Name of the entity | Nature | Ending balance | Aging | Proportion to ending balance of total other receivables% | Ending balance of bad debt provision |
| Continental Textile . | Intercourse funds | 746,141,550.00 | Within 1 year | 39.09% | 2,238,424.65 |
| Lulian New Materials | Intercourse funds | 628,006,001.54 | Within 1 year | 32.90% | 1,884,018.00 |
| Lufeng Weaving & Dyeing | Intercourse funds | 254,179,136.19 | Within 1 year | 13.32% | 762,537.41 |
| Lu Thai Tan Chau | Intercourse funds | 172,484,670.00 | Within 1 year | 9.04% | 517,454.01 |
| Lu An Garments | Intercourse funds | 88,826,375.00 | Within 1 year | 4.65% | 266,479.13 |
| Total | -- | 1,889,637,732.73 | -- | 99.01% | 5,668,913.20 |
4. Long-term Equity Investment
Unit: RMB
| Item | Ending balance | Beginning balance | ||||
| Carrying amount | Depreciation reserve | Carrying value | Carrying amount | Depreciation reserve | Carrying value | |
| Investment to subsidiaries | 2,653,071,281.88 | 0.00 | 2,653,071,281.88 | 2,417,071,281.88 | 2,417,071,281.88 | |
| Investment to joint ventures and associated enterprises | 128,409,211.89 | 128,409,211.89 | 138,079,577.25 | 138,079,577.25 | ||
| Total | 2,781,480,493.77 | 2,781,480,493.77 | 2,555,150,859.13 | 2,555,150,859.13 | ||
(1) Investment to Subsidiaries
Unit: RMB
| Investee | Beginning balance (carrying value) | Increase/decrease | Ending balance (carrying value) | Ending balance of depreciation reserve | |||
| Additional investment | Reduced investment | Withdrawal of impairment provision | Others | ||||
| Xinsheng Power | 176,340,737.93 | 176,340,737.93 | |||||
| Lufeng Weaving & Dyeing | 529,620,000.00 | 529,620,000.00 | |||||
| Luqun Textile | 171,784,550.00 | 171,784,550.00 | |||||
| Luthai (Hong Kong) | 128,771,800.00 | 128,771,800.00 | |||||
| Shanghai Luthai | 20,000,000.00 | 20,000,000.00 | |||||
| Lu Thai (Cambodia) | 108,242,335.38 | 108,242,335.38 | |||||
| Lu Thai (America) | 10,209,050.00 | 10,209,050.00 | |||||
| Vanguard Apparel | 62,337,238.57 | 62,337,238.57 | |||||
| Continental Textile | 834,936,510.00 | 834,936,510.00 | |||||
| Lu An Garments | 64,229,060.00 | 64,229,060.00 | |||||
| Lulian New Materials | 300,000,000.00 | 300,000,000.00 | |||||
| Lujia Import & Export | 10,000,000.00 | 10,000,000.00 | |||||
| Lu Thai Occupational Training School | 100,000.00 | 100,000.00 | |||||
| Beijing Zhishu Trading | 500,000.00 | 500,000.00 | 1,000,000.00 | ||||
| Hainan Huilin | 232,000,000.00 | 232,000,000.00 | |||||
| Banyang Villa Hotel | 3,500,000.00 | 3,500,000.00 | |||||
| Total | 2,417,071,281.88 | 236,000,000.00 | 2,653,071,281.88 | 0.00 |
(2) Investment to Joint Ventures and Associated Enterprises
Unit: RMB
| Investee | Beginning balance (carrying value) | Increase/decrease | Ending balance (carrying value) | Ending balance of depreciation reserve | |||||||
| Additional investment | Reduced investment | Gains and losses recognized under the equity method | Adjustment of other comprehensive income | Changes of other equity | Cash bonus or profits announced to issue | Withdrawal of impairment provision | Others | ||||
| I. Joint ventures | |||||||||||
| II. Associated enterprises | |||||||||||
| Haohong Investment | 88,329,922.16 | 0.00 | 0.00 | -3,493,810.90 | -7,881,294.68 | 76,954,816.58 | |||||
| Haoying Investment | 49,749,655.09 | 0.00 | 0.00 | 1,704,740.22 | 51,454,395.31 | ||||||
| Subtotal | 138,079,577.25 | -1,789,070.68 | -7,881,294.68 | 128,409,211.89 | |||||||
| Total | 138,079,577.25 | -1,789,070.68 | -7,881,294.68 | 128,409,211.89 | |||||||
5. Operating Revenue and Cost of Sales
Unit: RMB
| Item | Amount of the current period | Amount of the previous period | ||
| Revenue | Cost | Revenue | Cost | |
| Main operations | 1,454,435,324.82 | 1,148,081,216.40 | 1,433,647,769.93 | 1,095,226,641.53 |
| Other operations | 92,334,931.92 | 85,526,040.17 | 90,838,559.05 | 86,137,915.68 |
| Total | 1,546,770,256.74 | 1,233,607,256.57 | 1,524,486,328.98 | 1,181,364,557.21 |
Information about performance obligations:
NoneInformation in relation to the transaction price apportioned to the residual contract performance obligation:
As at the end of the Reporting Period, the revenue amount corresponding to the contract performance obligation yet to befulfilled or yet to be completed under a signed contract is RMB0.00, including RMB0.00 expected to be recognized as revenue in theyear, RMB0.00 expected to be recognized as revenue in the year, and RMB0.00 expected to be recognized as revenue in the year.
6、Investment Income
Unit: RMB
| Item | Amount of the current period | Amount of the previous period |
| Long-term equity investment income accounted by cost method | 94,015,922.61 | 150,000,000.00 |
| Long-term equity investment income accounted by equity method | -1,789,070.68 | -3,579,523.35 |
| Investment income from disposal of trading financial assets | 17,298,322.47 | 150,939,587.24 |
| Interest income earned on investment in debt obligations during the holding period | 2,401,261.30 | |
| Total | 111,926,435.70 | 297,360,063.89 |
XV. Supplementary Materials
1. Items and Amounts of Non-recurring Profit or Loss
√ Applicable □ Not applicable
Unit: RMB
| Item | Amount | Note |
| Gains/losses from the disposal of non-current assets | 58,531,388.42 | |
| Government grants recognized in the current period, except for those acquired in the ordinary course of business or granted at certain quotas or amounts according to the government’s unified standards | 19,089,311.11 | |
| Gain/loss from change of fair value of trading financial assets and liabilities, and derivative financial assets and liabilities, and investment gains from disposal of trading financial assets and | 39,004,803.56 |
| liabilities, and derivative financial assets and liabilities, and investment in other debt obligations, other than valid hedging related to the Company’s common businesses | ||
| Reversal of provision for impairment test of receivables and contract assets impairment | 5,386,518.99 | |
| Other non-operating income and expense other than the above | -1,405,920.92 | |
| Less: Income tax effects | 18,018,514.02 | |
| Non-controlling interests effects | 3,371,774.56 | |
| Total | 99,215,812.58 | -- |
Reasons for the case that the Company defined non-recurring profit and loss items in accordance with Explanatory Notice ofInformation Disclosure by Companies Offering Securities to the Public No. 1- Non-recurring Profit and Loss Items and the case thatthe Company defined the non-recurring profit and loss items listed in Explanatory Notice of Information Disclosure by CompaniesOffering Securities to the Public No. 1- Non-recurring Profit and Loss Items as recurring profit and loss items shall be specified.
□ Applicable √ Not applicable
2. Return on Equity and Earnings Per Share
| Profit as of Reporting Period | Weighted average ROE (%) | EPS (Yuan/share) | |
| EPS-basic | EPS-diluted | ||
| Net profit attributable to ordinary shareholders of the Company | 1.97% | 0.17 | 0.19 |
| Net profit attributable to ordinary shareholders of the Company after deduction of non-recurring profit or loss | 0.70% | 0.06 | 0.08 |
3. Accounting Data Differences under PRC GAAP and Those under IFRSs
(1) Differences between disclosed net profits and net assets in financial report in accordance withInternational Accounting Standards and Chinese Accounting Standards.
□ Applicable √ Not applicable
(2) Differences between disclosed net profits and net assets in financial report in accordance with DomesticAccounting Standards and Chinese Accounting Standards.
□ Applicable √ Not applicable
4. Other
Chairman of the Board: Liu Zibin
Lu Thai Textile Co., Ltd.
28 August 2021