LU THAI TEXTILE CO., LTD.
ANNUAL REPORT 2020
March 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 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 2020, the coronavirus pandemic exerted material adverse impact on the world economyand trade. Faced with the impact of the pandemic, The Chinese government made quickresponse, and contained the spread of the coronavirus within the shortest time. Governmentauthorities concerned issued positive and favorable policies regarding social security andtaxes, vigorously promoting resumption of work and production and improvement ofeconomic benefits quarter by quarter. In this way, China became the only economy achievinggrowth across the globe last year. However, due to unfavorable factors including theinadequate pandemic control of Americas and Europe and other developed economies,continuously weak market demand, as well as the China-U.S. trade frictions, theexport-oriented textile and apparel enterprises in China suffered a heavy hit and saw slowrecovery, especially the Company that mainly produces shirt fabric and processes shirts. Formore details, please refer to the business summary in Part III of this Report.The Company has described in detail in this Report the possible risks. Please refer to thecontents about the major risks and countermeasures in “Outlook of the Company’s futuredevelopment” in “Part IV Operating Performance Discussion and Analysis” of this Report.Securities Times, Shanghai Securities News, China Securities Journal, Ta Kung Pao (HK) andwww.cninfo.com.cn have been designated by the Company for its information disclosure in2021. And all information about the Company shall be subject to what’s disclosed by theCompany on the aforesaid media. Investors are kindly reminded to pay attention toinvestment risks.The Board has approved a final dividend plan as follows: based on 858,132,322 shares, a cashdividend of RMB0.50 (tax inclusive) per 10 shares is to be distributed to the shareholders,with no bonus issue from either profit or capital reserves.This Report and its summary have been prepared in both Chinese and English. Should 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 ...... 5
Part III Business Summary ...... 9
Part IV Operating Performance Discussion and Analysis ...... 13
Part V Significant Events ...... 38
Part VI Share Changes and Shareholder Information ...... 62
Part VII Preferred Shares ...... 69
Part VIII Convertible Corporate Bonds ...... 70
Part IX Directors, Supervisors, Senior Management and Staff ...... 73
Part X Corporate Governance ...... 84
Part XI Corporate Bonds ...... 93
Part XII Financial Statements ...... 94
Part XIII Documents Available for Reference ...... 233
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 ten thousand 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 2020 to 31 December 2020 |
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. | 鲁泰纺织 | ||
| Company name in English (if any) | LU THAI TEXTILE CO.，LTD | ||
| Abbr. (if any) | LTTC | ||
| Legal representative | Liu Zibin | ||
| Registered address | 61 Luthai Boulevard, High-tech Development Zone, Zibo City, Shandong Province, P.R.China | ||
| Zip code | 255086 | ||
| Office address | 81 Songling East Road, Zichuan District, Zibo City, Shandong Province, P.R.China | ||
| Zip code | 255100 | ||
| Company website | www.lttc.com.cn | ||
| Email address | lttc@lttc.com.cn | ||
II Contact Information
| Board Secretary | Securities Representative | |
| Name | Zhang Keming | Zheng Weiyin and Li Kun |
| Address | 81 Songling East Road, Zichuan District, Zibo City, Shandong Province, P.R.China | 81 Songling East Road, Zichuan District, Zibo City, Shandong Province, P.R.China |
| Tel. | 0533-5277008 | 0533-5285166 |
| Fax | 0533-5418805 | 0533-5418805 |
| Email address | zhangkeming@lttc.com.cn | wyzheng@lttc.com.cn，likun@lttc.com.cn |
III Media for Information Disclosure and Place where this Report Is Lodged
| Newspapers designated by the Company for information disclosure | Securities Times, Shanghai Securities News, China Securities Journal and Ta Kung Pao (HK) |
| Website designated by CSRC for publication of this | www.cninfo.com.cn |
| Report | |
| Place where this Report is lodged | The Securities Department of the Company |
IV Change to Company Registered Information
| Unified social credit code | 91370300613281175K |
| Change to principal activity of the Company since going public (if any) | No change |
| Every change of controlling shareholder since incorporation (if any) | No change |
V Other Information
The independent audit firm hired by the Company:
| Name | Grant Thornton China |
| Office address | 5th Floor, Scitech Palace 22 Jianguomen Wai Avenue, Chaoyang District, Beijing |
| Accountants writing signatures | He Feng and Guo Dongmei |
The independent sponsor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
√ Applicable □ Not applicable
| Name of sponsor | Office address of sponsor | Name of sponsor representative | Period of constant supervision |
| Guotai Junan Securities Co., Ltd. | 618 Shangcheng Road, China (Shanghai) Pilot Free Trade Zone | Ding Xiaowen and Wang Wenting | From 9 April 2020 to 31 December 2020 |
The independent financial advisor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
□ Applicable √ Not applicable
VI Key Financial Information
Indicate by tick mark whether there is any retrospectively restated datum in the table below.
□ Yes √ No
| 2020 | 2019 | 2020-over-2019 change (%) | 2018 | |
| Operating revenue (RMB) | 4,751,222,464.14 | 6,801,381,448.94 | -30.14% | 6,879,058,813.93 |
| Net profit attributable to the listed company’s shareholders (RMB) | 97,308,593.36 | 952,386,011.49 | -89.78% | 811,526,477.83 |
| Net profit attributable to the listed company’s shareholders before exceptional gains and | 20,039,094.03 | 662,416,013.00 | -96.97% | 805,197,824.28 |
| losses (RMB) | ||||
| Net cash generated from/used in operating activities (RMB) | 593,535,922.89 | 1,086,110,575.51 | -45.35% | 1,430,341,663.16 |
| Basic earnings per share (RMB/share) | 0.11 | 1.11 | -90.09% | 0.90 |
| Diluted earnings per share (RMB/share) | 0.11 | 1.11 | -90.09% | 0.90 |
| Weighted average return on equity (%) | 1.26% | 12.96% | -11.70% | 11.24% |
| 31 December 2020 | 31 December 2019 | Change of 31 December 2020 over 31 December 2019 (%) | 31 December 2018 | |
| Total assets (RMB) | 12,129,903,960.65 | 11,885,431,553.08 | 2.06% | 10,537,759,811.84 |
| Equity attributable to the listed company’s shareholders (RMB) | 7,687,577,590.72 | 7,697,135,324.92 | -0.12% | 7,146,548,467.86 |
Indicate by tick mark whether the lower of the net profit attributable to the listed company’s shareholders before and after exceptionalgains and losses was negative for the last three accounting years, and the latest independent auditor’s report indicated that there wasuncertainty about the Company’s ability to continue as a going concern.
□ Yes √ No
Indicate by tick mark whether the lower of the net profit attributable to the listed company’s shareholders before and after exceptionalgains and losses was negative.
□ Yes √ No
VII Accounting Data Differences under China’s Accounting Standards for BusinessEnterprises (CAS) and International Financial Reporting Standards (IFRS) and ForeignAccounting Standards
1. Net Profit and Equity under CAS and IFRS
□ Applicable √ Not applicable
No difference for the Reporting Period.
2. Net Profit and Equity under CAS and Foreign Accounting Standards
□ Applicable √ Not applicable
No difference for the Reporting Period.VIII Key Financial Information by Quarter
Unit: RMB
| Q1 | Q2 | Q3 | Q4 | |
| Operating revenue | 1,252,428,965.20 | 1,034,315,115.59 | 1,083,514,157.78 | 1,380,964,225.57 |
| Net profit attributable to the listed company’s shareholders | 103,518,808.50 | 40,600,770.72 | -48,455,060.39 | 1,644,074.53 |
| Net profit attributable to the listed company’s shareholders before exceptional gains and losses | 103,615,262.08 | 4,490,331.09 | -59,285,564.88 | -28,780,934.26 |
| Net cash generated from/used in operating activities | 145,916,523.77 | 63,475,741.92 | 219,056,724.96 | 165,086,932.24 |
Indicate by tick mark whether any of the quarterly financial data in the table above or their summations differs materially from whathave been disclosed in the Company’s quarterly or interim reports.
□ Yes √ No
IX Exceptional Gains and Losses
√ Applicable □ Not applicable
Unit: RMB
| Item | 2020 | 2019 | 2018 | Note |
| Gain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs) | -3,265,763.83 | -1,196,233.94 | 20,670,427.42 | |
| 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) | 61,358,132.11 | 62,198,864.45 | 63,680,098.12 | |
| Gain or loss on fair-value changes in held-for-trading and derivative financial assets and liabilities & income from disposal of held-for-trading and derivative financial assets and liabilities and other investments in debt obligations (exclusive of the effective portion of hedges that arise in the Company’s ordinary course of business) | 46,684,051.43 | 241,537,682.90 | -63,632,606.67 | |
| Non-operating income and expense other than the above | 2,373,569.56 | -2,857,141.21 | 2,784,021.34 | |
| Income from disposal of held-for-trading financial assets, financial liabilities and investments in debt obligations | 14,162,405.95 | |||
| Less: Income tax effects | 24,345,018.31 | 14,593,639.87 | 6,656,476.16 | |
| Non-controlling interests effects (net of tax) | 5,535,471.63 | 9,281,939.79 | 10,516,810.50 | |
| Total | 77,269,499.33 | 289,969,998.49 | 6,328,653.55 | -- |
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 Business SummaryI Principal Activity of the Company in the Reporting PeriodThe 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.In 2020, the coronavirus pandemic exerted huge impact on the economy and trade of various countries in the world. The Chinesegovernment made quick response, and contained the spread of the coronavirus within the shortest time. In this way, China became theonly economy achieving growth across the globe last year. However, the export-oriented textile and garment enterprises still sufferedfrom severe impact, especially the Company that mainly produces shirt fabric and processes shirts. According to the statistics of ChinaChamber of Commerce for Import and Export of Textiles (CCCT), production and export of textile and garment were severelyimpacted by COVID-19 in the first quarter, a year-on-year decrease of 17.7%. In the second quarter, COVID-19 was suppressed athome. Yet there was a surge in the confirmed cases overseas, resulting in a decline in the orders of fabric and garment export.Specifically, exports of fabric and knits & wovens decreased by 38.7% and 20.8% respectively compared with those in the same quarterof the previous year. During the third and fourth quarters, with the recovery of the needs for consumer goods such as home textiles andknits, textile export stopped declining and began to increase.During the Reporting Period, faced with the impact of the pandemic, the Ministry of Human Resources and Social Security(MOHRSS), Ministry of Finance (MOF) and State Taxation Administration issued the Notice on Phased Reduction and Exemption ofSocial Insurance Charges of Enterprises and the Guidelines on Favorable Taxation Policies in Response to COVID-19, vigorouslypromoting resumption of work and production and improvement of economic benefits quarter by quarter. However, internationaltrade friction still had huge impact on textile and garment trade between China and the US. Though the Company proactivelyadjusted its product structure and increased the production and sales of protective products, it was still difficult to ease the majorimpact on the Company of the dramatic decline in European and American needs, causing a severe decrease in the operating resultsof the Company.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. Approximately 60% of the yearn dyed fabric and printed anddyed fabric used for shirts as well as ready-to-wear garment were sold to more than 60 countries and regions such as the US,European Union and Japan. At present, the Company's capacity of yarn dyed fabric has made up 18% of the market of global yearndyed fabric for medium and high-end shirts. Moreover, the Company has established strategic partnership with renowned brandowners 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 established four research departments, namely the General Technology Office, TechnicalResearch Department, Product Development Department and Fabric Design Department. In collaboration with operating departmentssuch as those of yarn, yearn dyed fabric, printed and dyed fabric, functional fabric, knitted fabric and the garment production line, LuThai Engineering Technology Institute has been devoted to research on frontier technology, and has strong R&D capabilities in termsof technological 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 markets
based 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, about 60% 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. In addition, it engaged in brand operation of spot fabric on the newretail e-commerce platform. Shirts were mainly made according to the orders of customers at home and abroad, and sold by brandowners. The Company's self-owned brand was operated through self-owned exclusive shops such as Lu Thai Exhibition and SalesPavilion, counters of affiliated stores in malls and e-networking marketing. Meanwhile, the Company could provide customers withhigh-end customized shirts and customized business wear to meet the market demand of the high-end service industry.II Significant Changes in Major Assets
1. Significant Changes in Major Assets
Not applicable.
2. Major Assets Overseas
√ Applicable □ Not applicable
| Asset | Source | Asset value (RMB) | Location | Management model | Control measures to protect asset safety | Return generated (RMB) | As % of the Company’s equity | Material impairment risk (yes/no) |
| Lu Thai (Hong Kong) Textile Co., Ltd. | Incorporated | 186,781,101.59 | Hong Kong | Marketing | Main management personnel sent by the Company as the parent | 5,956,474.81 | 2.31% | No |
| Lu Thai (America) Textile Co., Ltd. | Incorporated | 8,221,390.48 | New York | Marketing | Main management personnel sent by the Company as the parent | -2,455,000.10 | 0.10% | No |
| Lu Thai (Cambodia) Textile Co., Ltd. | Incorporated | 183,242,504.55 | Svay Rieng | Manufacturing | Main management personnel sent | 10,227,606.09 | 2.26% | No |
| by the Company as the parent | ||||||||
| Vanguard Apparel Co., Ltd. | Incorporated | 84,468,490.59 | Rangoon | Manufacturing | Main management personnel sent by the Company as the parent | 7,934,401.45 | 1.04% | No |
| Continental Textile Co., Ltd. | Incorporated | 2,311,537,278.61 | Tay Ninh | Manufacturing | Main management personnel sent by the Company as the parent | -33,191,542.73 | 28.57% | No |
| Lu An Garments Co., Ltd. | Incorporated | 172,006,967.22 | Anjiang, Vietnam | Manufacturing | Main management personnel sent by the Company as the parent | 10,874,508.68 | 2.13% | No |
| Other information | During the Reporting Period, Luthai (Burma) Co., Ltd. and Luthai (Vietnam) Co., Ltd. were renamed as “Vanguard Apparel Co., Ltd.” and “Continental Textile Co., Ltd.” respectively. | |||||||
III 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 Companyalways 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, the
Company 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.
Part IV Operating Performance Discussion and AnalysisI OverviewIn 2020, the coronavirus pandemic brought enormous impact to the world economy and China's export industry. Coupled with theinternational trade friction, China's export-oriented textile and apparel companies suffered from one disaster to another. Though theCompany proactively adjusted its product structure and increased the production and sales of protective products, it was still difficult toease the major impact on the Company of the dramatic decline in European and American needs, causing a considerable decrease in theoperating results of the Company. For the Reporting Period, the Company achieved operating revenue of RMB4,751 million,operating profit of RMB83 million, a net profit attributable to the Company as the parent of RMB97 million, and a net profitattributable to the Company as the parent before exceptional gains and losses of RMB20 million, respectively down 30.14%, 92.68%,
89.78% and 96.97% when compared to last year.
No changes occurred to the Company’s core businesses, primary products, business models and major growth drivers in theReporting Period. As an advantaged enterprise in the textile manufacturing industry, the Company was granted with “Top 30 ChinesePrinting and Dyeing Enterprise” by China Dyeing and Printing Association (CDPA), “Top 100 Private Enterprises with the HighestBrand Value of Shandong Province of 2020” by Shandong Council for Brand Development, “High-End Brand Builders in theManufacturing Sector of Shandong Province” by Shandong Administration for Market Regulation, "Excellent Institution FosteringChina's Corporate Culture during the 13th Fiver-year Plan Period" by China Corporate Culture Institute, and "Advanced Enterprise ofParty Building in the National Textile Industry" by China National Textile and Apparel Council (CNTAC) and Chinese Associationfor Textile Enterprise Culture Construction. During the Reporting Period, the Company mainly completed the following tasks:
(I) Coordinated Response to COVID-19 and Rapid Resumption of Work and ProductionIn 2020, under extreme circumstances of epidemic prevention and control, the Company made quick response, formulated detailedplans for fighting against the pandemic and resuming work and production, and took multiple measures to ensure employees couldresume their work and production soon, who displayed strong execution and cohesion.(II) Customer-centric ArrangementsIn 2020, the coronavirus pandemic had massive impact on China's industries, especially export-oriented textile and apparel enterprises.To deal with the crisis and market changes, the Company proactively adjusted its product structure and market structure, intensifiedpromotion to boost sales in the domestic market, and vigorously expanded markets for protective products. Through onlinepromotional meetings, customized promotional meetings and designer promotional meetings, it provided customers with one-stopsolutions and value-added service, and deepened cooperation with strategic customers. Besides, the Company strengtheneddevelopment of business wear orders, proactively boosted service of group purchase and customer-tailored production, and expandedcooperation with Tmall and Biyao Mall, maintaining stable production and operation.In terms of marketing, the Company expanded potential markets and customers at home and abroad, and launched customizationservice of NARCISU shirts on Biyao Mall, achieving good results.(III) Improvement of Business Layout and Structural Adjustment to ProductsDuring the Reporting Period, the Company took measures to ensure normal businesses with traditional customers, strengthened thedevelopment of products and customers, closely followed the actual demands of customers, relied on the new development paradigmwith domestic circulation as the mainstay and domestic and international circulations reinforcing each other, and positively addressedthe challenge of business decline oriented by “new products and new markets”.During the Reporting Period, the Company issued convertible corporate bonds of RMB 1.4 billion for new projects andreplenishment of working capital. On top of yarn, yarn dyed fabric, printed and dyed fabric, and shirts, it extended its business tofunctional fabric and knitted fabric. By doing so, it enriched its product structure, formed a multi-layered product matrix including
mature products, growth products and exploration products, and developed different styles such as formal wear, casual wear, andcomfortable and fashionable clothing, meeting customer needs. In addition, based on the situation of the pandemic in regions wheremajor foreign customers were located, the Company developed and launched protective products successively, meeting theirrequirements for basic protection, environmental protection and reusability, and winning market recognition.It responded to the trade friction with a positive attitude, made full use of the edges in the industrial layout at home and abroad, andplanned and adjusted the order production bases of some strategic customers in a coordinated manner, achieving good effect.(IV) Deepen Management Reform and Focus More on R&D InnovationFirst, the Company further adjusted and improved the organizational management structure, established six product lines, namelyyarn, yearn dyed fabric, printed and dyed fabric, functional fabric, knitted fabric and garment, and carried out whole-process overalloperation management with the product lines as the mainstay to improve the organizational capabilities and cost control capabilitiesand help achieve the operating goals.Besides, the Company vigorously promoted integrated product development, enhanced the cultivation of the business engineeringcapacity and management process capability, and bolstered the coordinated R&D system covering marketing, R&D, manufacturing,supply chain, finance and economy, and quality operation. Moreover, with products as platforms, it established teams of formal wear,casual wear, wrinkle-resistant fabric, functional fabric and materials, and customized development to rapidly meet the diversified andpersonalized needs of customers for developing products within a short delivery time in a targeted manner.During the Reporting Period, the Company implemented 31 corporate-level product development projects and promoted processupgrading, energy conservation and reduction of energy consumption. Meanwhile, it launched the customized development of fabricstargeting strategic and key accounts. By building two innovative cooperation platforms and four technical cooperation platforms, itmainly invested in project R&D of wrinkle-free eco-fabrics, four-sided stretch fabrics, renewable and biodegradable fabrics, andanti-virus protective fabrics and apparel. During the Reporting Period, the Company was granted with 16 patents, with the “TextileFabric Color Digitization Key Technology and Industrialization” project winning the title of “Shandong Textile and ApparelIndustrial New Technology (Achievement)” by the Department of Industry and Information Technology of Shandong Province. Itwas once again certified as a national high-tech enterprise and a national demonstration enterprise of green industrial product design,and passed the review of the national manufacturer in single item. Two projects under the national key R&D plan during the 13thFiver-year Plan period and one development and construction project of Shandong Peninsula Self-dependent InnovationDemonstration Area (Zibo), undertaken by the Company, passed the assessment and review for the year 2020. In the future, it will, inline with its corporate strategy, boost product development, establish a sound operating procedure and management standards forR&D projects, and build an efficient R&D system.(V) Active Response of Overseas Subsidiaries to the COVID-19As the pandemic developed in foreign countries, the Company experienced increasing impact on its overseas business. Its overseasproduction bases assumed the major task of operation development while responding to COVID-19. During the Reporting Period, itsoverseas production bases actively responded to COVID-19 as required by countries where they were located, and succeeded inpreventing infection in factories. In terms of production operation, the Company promoted local management, adjusted the productstructure and expanded product types, recording profit in all the three garment production bases.During the Reporting Period, the Company faced up to the “crisis” and organized all its employees to hold the “100-Day Competition”activity, aiming to improve the business and technological capabilities of all its employees in their respective areas. It rose to thecrisis, took the initiative to implement reform and boosted capability cultivation and strength accumulation, laying a solid foundationfor long-term development after the pandemic.
II Core Business Analysis
1. Overview
For the Reporting Period, the Company recorded operating revenue of RMB4,751 million (a 30.14% year-on-year decrease); cost ofsales of RMB3,738 million (a 21.97% year-on-year decrease), selling expense of RMB126 million (a 25.27% year-on-year decline)and administrative expense of RMB361 million (a 17.31% year-on-year decrease); research and development expense of RMB231million (a 26.95% year-on-year decrease); and net cash generated from operating activities of RMB594 million (a 45.35%year-on-year drop).
2. Revenue and Cost Analysis
(1) Breakdown of Operating Revenue
Unit: RMB
| 2020 | 2019 | Change (%) | |||
| Operating revenue | As % of total operating revenue (%) | Operating revenue | As % of total operating revenue (%) | ||
| Total | 4,751,222,464.14 | 100% | 6,801,381,448.94 | 100% | -30.14% |
| By operating division | |||||
| Textile and apparel | 4,238,645,661.96 | 89.20% | 6,200,013,276.17 | 91.15% | -31.63% |
| Personal protective equipment (PPE) | 184,669,256.67 | 3.89% | 100.00% | ||
| Cotton | 1,943,648.71 | 0.04% | 14,064,809.50 | 0.21% | -86.18% |
| Electricity and steam | 182,709,470.17 | 3.85% | 157,581,305.05 | 2.32% | 15.95% |
| Others | 143,254,426.63 | 3.02% | 429,722,058.22 | 6.32% | -66.66% |
| By product category | |||||
| Fabric products | 3,371,261,899.44 | 70.95% | 4,909,745,821.91 | 72.18% | -31.34% |
| Shirts | 867,383,762.52 | 18.25% | 1,290,267,454.26 | 18.97% | -32.77% |
| PPE | 184,669,256.67 | 3.89% | 100.00% | ||
| Cotton | 1,943,648.71 | 0.04% | 14,064,809.50 | 0.21% | -86.18% |
| Electricity and steam | 182,709,470.17 | 3.85% | 157,581,305.05 | 2.32% | 15.95% |
| Others | 143,254,426.63 | 3.02% | 429,722,058.22 | 6.32% | -66.66% |
| By operating segment | |||||
| Hong Kong | 189,971,723.94 | 4.00% | 267,880,620.85 | 3.94% | -29.08% |
| Japan And South Korea | 364,740,573.67 | 7.68% | 437,324,606.90 | 6.43% | -16.60% |
| Southeast Asia | 1,062,716,851.02 | 22.37% | 2,077,793,566.16 | 30.55% | -48.85% |
| Europe and America | 575,125,583.72 | 12.10% | 1,127,470,815.82 | 16.58% | -48.99% |
| Others | 336,434,709.67 | 7.08% | 443,227,080.72 | 6.52% | -24.09% |
| Mainland China | 2,222,233,022.12 | 46.77% | 2,447,684,758.49 | 35.98% | -9.21% |
(2) Operating Division, Product Category or Operating Segment Contributing over 10% of OperatingRevenue or Operating Profit
□ Applicable √ Not applicable
(3) Whether Revenue from Physical Sales Is Higher than Service Revenue
√ Yes □ No
| Operating division | Item | Unit | 2020 | 2019 | Change (%) |
| Fabric | Unit sales | 0,000 meters | 16,769.7 | 24,872.14 | -32.58% |
| Output | 0,000 meters | 18,808.22 | 27,594.29 | -31.84% | |
| Inventory | 0,000 meters | 4,375.76 | 3,897.93 | 12.26% | |
| Apparel | Unit sales | 0,000 pieces | 1,809.67 | 1,836.81 | -1.48% |
| Output | 0,000 pieces | 1,889.1 | 1,826.4 | 3.43% | |
| Inventory | 0,000 pieces | 156.09 | 61.28 | 154.71% | |
| Electricity | Unit sales | 000 KWH | 149,646.34 | 118,444.03 | 26.34% |
| Output | 000 KWH | 409,893.45 | 438,795.21 | -6.59% | |
| Inventory | 000 KWH | ||||
| Steam | Unit sales | ton | 339,064.67 | 389,968.19 | -13.05% |
| Output | ton | 1,082,057.31 | 1,303,340.54 | -16.98% | |
| Inventory | ton |
Any over 30% YoY movements in the data above and why:
√ Applicable □ Not applicable
1. The unit sales of fabric decreased 32.58% while the output declined 31.84% during 2020 compared to last year, primarily drivenby the COVID-19 pandemic across the world.
2. The inventory of apparel increased 154.71% during 2020 compared to last year, primarily driven by the postponed shipment ofsome shirts due to the pandemic.
(4) Execution Progress of Major Signed Sales Contracts in the Reporting Period
□ Applicable √ Not applicable
(5) Breakdown of Cost of Sales
By operating division and product category
Unit: RMB
| Operating division | Item | 2020 | 2019 | Change (%) | ||
| Cost of sales | As % of total cost of sales (%) | Cost of sales | As % of total cost of sales (%) | |||
| Textile and apparel | Cost of sales | 3,329,872,586.97 | 89.08% | 4,317,537,053.82 | 90.13% | -22.88% |
| PPE | Cost of sales | 127,124,669.03 | 3.40% | |||
| Cotton | Cost of sales | 1,560,876.66 | 0.04% | 12,191,266.36 | 0.25% | -87.20% |
| Electricity and steam | Cost of sales | 161,892,710.06 | 4.33% | 156,970,101.07 | 3.28% | 3.14% |
| Other | Cost of sales | 117,533,240.73 | 3.15% | 303,906,684.11 | 6.34% | -61.33% |
Unit: RMB
| Product category | Item | 2020 | 2019 | Change (%) | ||
| Cost of sales | As % of total cost of sales (%) | Cost of sales | As % of total cost of sales (%) | |||
| Fabric products | Cost of sales | 2,670,531,996.56 | 71.44% | 3,411,135,055.55 | 71.21% | -21.71% |
| Shirts | Cost of sales | 659,340,590.41 | 17.64% | 906,401,998.27 | 18.92% | -27.26% |
| PPE | Cost of sales | 127,124,669.03 | 3.40% | |||
| Cotton | Cost of sales | 1,560,876.66 | 0.04% | 12,191,266.36 | 0.25% | -87.20% |
| Electricity and steam | Cost of sales | 161,892,710.06 | 4.33% | 156,970,101.07 | 3.28% | 3.14% |
| Other | Cost of sales | 117,533,240.73 | 3.15% | 303,906,684.11 | 6.34% | -61.33% |
Note:
| Product | Period | Raw material | Labor cost | Depreciation | Energy | Manufacture expenses | Total |
| Fabric | 2020 | 55.85% | 16.08% | 6.57% | 12.68% | 8.82% | 100.00% |
| 2019 | 53.36% | 18.15% | 5.70% | 12.99% | 9.80% | 100.00% | |
| Shirts | 2020 | 54.84% | 35.16% | 2.84% | 1.34% | 5.82% | 100.00% |
| 2019 | 58.53% | 34.15% | 2.29% | 1.05% | 3.98% | 100.00% |
(6) Changes in the Scope of Consolidated Financial Statements for the Reporting Period
√ Yes □ No
During 2020, new subsidiary Beijing Zhishu Trading Co., Ltd. was incorporated; subsidiary Fengshou Cotton Industry Co., Ltd. wastransferred; and subsidiary Beijing Luthai Prime Fabric E-commerce Corp. was de-registered.
(7) Major Changes to the Business Scope or Product or Service Range in the Reporting Period
□ Applicable √ Not applicable
(8) Major Customers and Suppliers
Major customers:
| Total sales to top five customers (RMB) | 954,606,840.50 |
| Total sales to top five customers as % of total sales of the Reporting Period (%) | 20.09% |
| Total sales to related parties among top five customers as % of total sales of the Reporting Period (%) | 0.00% |
Information about top five customers:
| No. | Customer | Sales revenue contributed for the Reporting Period (RMB) | As % of total sales revenue (%) |
| Total | -- | 954,606,840.50 | 20.09% |
Other information about major customers:
□ Applicable √ Not applicable
Major suppliers:
| Total purchases from top five suppliers (RMB) | 440,228,522.82 |
| Total purchases from top five suppliers as % of total purchases of the Reporting Period (%) | 14.18% |
| Total purchases from related parties among top five suppliers as % of total purchases of the Reporting Period (%) | 2.68% |
Information about top five suppliers:
| No. | Supplier | Purchase in the Reporting Period (RMB) | As % of total purchases (%) |
| Total | -- | 440,228,522.82 | 14.18% |
Other information about major suppliers:
□ Applicable √ Not applicable
3. Expense
Unit: RMB
| 2020 | 2019 | Change (%) | Reason for any significant change | |
| Selling expense | 125,717,288.31 | 168,227,064.83 | -25.27% | |
| Administrative expense | 360,656,722.39 | 436,171,656.30 | -17.31% | |
| Finance costs | 109,546,654.83 | 96,179,716.62 | 13.90% | |
| R&D expense | 231,265,031.12 | 316,575,474.85 | -26.95% |
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.Selling expense was RMB125.7173 million during 2020, down 25.27% year on year. For the breakdown of selling expense, see
VII.46 in Part XII of this Report.
4. Other Information Required by Information Disclosure Guide for Companies Engaged in Textile andGarment Services
(1) Capacity
| Industry Classification | Item | 2020 | 2019 |
| Fabrics | Total capacity (fabrics) (10,000 meters) | 29,360.00 | 29,300.00 |
| Rate of capacity utilization | 64% | 94% | |
| Plants under construction | 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. | - | |
| Garment | Total capacity (garment) (10,000 pieces) | 2,030.00 | 2,030.00 |
| Rate of capacity utilization | 80% | 90% | |
| Plants under construction | Lu An Garments Co., Ltd. in Vietnam invested in a Phase III project of a production line of 3 million pieces, expecting to complete plant construction in March 2021. | - |
Year-on-year change in the rate of capacity utilization above 10% √YesDue to the impact of the pandemic, the Company saw a decrease in the orders and sales volume of yarn-dyed fabrics, resulting in agreat change in the rate of capacity utilization.Overseas capacity √Yes
| 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 | 66% | 53% |
| 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 | 91% | 69% |
Plan for overseas capacity expansionLu An Garments Co., Ltd., a wholly-owned subsidiary of the Company in Vietnam, invested in a Phase III project of a productionline of three million pieces, expecting to complete plant construction in March 2021.
(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 providedcustomers with development and design plans based on customer needs, fabrics and patterns leading the market, fashion andtechnology, functions and environmental protection. In addition, it engaged in brand operation of spot fabric on the new retaile-commerce platform. Shirts were mainly made according to the orders of customers at home and abroad, and sold by brand owners.The Company's self-owned brand was operated through self-owned exclusive shops such as Lu Thai Exhibition and Sales Pavilion,counters of affiliated stores in malls and e-networking marketing. Meanwhile, the Company could provide customers with high-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 concludedtransactions with 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 | 4,684,633.54 | 1,683,409.32 | 64.07% | 2,737,186.84 | 999,292.39 | -0.81% |
| Direct sales | 7,761,729.69 | 3,872,976.88 | 50.10% | -3,029,197.52 | -828,068.18 | -6.33% |
(3) Franchise and distribution
Franchisees and distributors recorded more than 30% of sales revenue
□ Yes √ No
(4) Online sales
Online sales recorded more than 30% of sales revenue
□ Yes √ No
Self-developed sales platforms
√ Yes □ No
| Start of operation | 30 March 2009 |
| Number of registered users | 140,073 |
| Average number of active monthly users (AMU) | 5,000 |
| Return rate of main brands | 3.00% |
| Return rate of main types | 3.00% |
Cooperation with third-party sales platforms
√ Yes □ No
Online sales channels opened or closed by the Company
√ Applicable □Not applicable
| Channel | Main brand | Main product type | Channel status | Reason for closure | Opening time | Operation during the opening of the store |
| JD.com | BESSSHIRT | Shirts | Closed | Brand adjustment | 10 September 2011 | Ordinary |
Specify the impact on the Company in the current period and futureThe Company closed its store on JD.com due to brand adjustment, which had no major impact on it.
(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) | 91 | 3,452.61 | Within 1 year | 4.97% | |
| Fabrics (10,000 meters) | 923.15 | Over 1 year | 51.67% | Delivery of some fabrics delayed due to COVID-19 in 2020 | |
| Shirts (10,000 pieces) | 25 | 103.59 | Within 1 year | 99.62% | Delivery of some shirts delayed due to COVID-19 in 2020 |
| Shirts (10,000 pieces) | 4.58 | Over 1 year | -51.19% | Decrease in inventory due to sales of |
Reserves for falling prices of inventoryThe Group set aside reserves for falling prices of inventory on an individual inventory item basis through provisions when the cost ofinventory was higher than its net realizable value on the balance sheet date.Unit: RMB
some shirts
Item
| Item | 31 December 2020 |
| Book balance | Falling price reserves | Book value | |
| Raw materials | 849,455,158.83 | 2,547,151.31 | 846,908,007.52 |
| Goods in process | 393,404,083.58 | 5,437,464.35 | 387,966,619.23 |
| Products on hand | 877,507,714.63 | 136,403,191.01 | 741,104,523.62 |
| Commissioned products | 12,989,531.27 | 12,989,531.27 | |
| Expendable biological assets | |||
| Total | 2,133,356,488.31 | 144,387,806.67 | 1,988,968,681.64 |
(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 | RMB 1,000-3,000 | 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
5. R&D Investments
√ Applicable □ Not applicable
With leading the technology development in the industry as the goal, the research staff of the Company work hard in new product
development, new technology promotion and transformation of new technological results to productivity to explore ways fortransforming the business mode, adjusting the structure and extending the industrial chain. These efforts will promote the Company’sdevelopment towards an energy-saving and environment-friendly enterprise and truly achieve the sustainable development.
Details about R&D investments:
| 2020 | 2019 | Change (%) | |
| Number of R&D personnel | 1,604 | 1,714 | -6.42% |
| R&D personnel as % of total employees | 12.68% | 11.89% | 0.79% |
| R&D investments (RMB) | 231,265,031.12 | 316,575,474.85 | -26.95% |
| R&D investments as % of operating revenue | 4.87% | 4.65% | 0.22% |
| Capitalized R&D investments (RMB) | 0.00 | 0.00 | 0.00% |
| Capitalized R&D investments as % of total R&D investments | 0.00% | 0.00% | 0.00% |
Reasons for any significant YoY change in the percentage of R&D expense in operating revenue:
□ Applicable √ Not applicable
Reason for any sharp variation in the percentage of capitalized R&D expense and rationale:
□ Applicable √ Not applicable
6. Cash Flows
Unit: RMB
| Item | 2020 | 2019 | Change (%) |
| Subtotal of cash generated from operating activities | 4,775,015,226.05 | 6,870,532,638.88 | -30.50% |
| Subtotal of cash used in operating activities | 4,181,479,303.16 | 5,784,422,063.37 | -27.71% |
| Net cash generated from/used in operating activities | 593,535,922.89 | 1,086,110,575.51 | -45.35% |
| Subtotal of cash generated from investing activities | 850,680,343.34 | 90,780,303.67 | 837.08% |
| Subtotal of cash used in investing activities | 1,638,855,294.04 | 878,837,255.97 | 86.48% |
| Net cash generated from/used in investing activities | -788,174,950.70 | -788,056,952.30 | 0.01% |
| Subtotal of cash generated from financing activities | 3,622,339,439.58 | 4,170,463,313.14 | -13.14% |
| Subtotal of cash used in financing activities | 2,888,674,850.63 | 4,121,225,344.37 | -29.91% |
| Net cash generated from/used in financing activities | 733,664,588.95 | 49,237,968.77 | 1,390.04% |
| Net increase in cash and cash equivalents | 517,971,388.55 | 343,424,246.02 | 50.83% |
Explanation of why any of the data above varies significantly:
√ Applicable □ Not applicable
Subtotal of cash generated from operating activities amounted to RMB4,775,015,226.05 during the Reporting Period, down 30.5%year on year, primarily driven by a decrease in sales revenue; net cash generated from operating activities amounted toRMB593,535,922.89 during the Reporting Period, down 45.35% year on year, primarily driven by a decrease in sales revenue andthe settlement of due notes; subtotal of cash generated from investing activities amounted to RMB850,680,343.34 during theReporting Period, up 837.08% year on year, primarily driven by the disinvestment in wealth management products upon maturity;subtotal of cash used in investing activities amounted to RMB1,638,855,294.04 during the Reporting Period, up 86.48% year on year,primarily driven by an increase in investments in wealth management products; net cash generated from financing activitiesamounted to RMB733,664,588.95 during the Reporting Period, up 1390.04% year on year, primarily driven by an increase in cashborrowings due to the issue of convertible corporate bonds in the current period; and net increase in cash and cash equivalentsamounted to RMB517,971,388.55 during the Reporting Period, up 50.83% year on year, primarily driven by a decrease in cashpayments in financing activities.Reason for any big difference between the net operating cash flow and the net profit for this Reporting Period
√ Applicable □ Not applicable
The difference of RMB504,445,864.50 between the net cash generated from/used in operating activities of RMB593,535,922.89 andthe net profit of RMB89,090,058.39 was attributable to a decrease in operating payments, increases in losses on fair value changes,finance costs and return on investments, as well as the depreciation of fixed assets.III Analysis of Non-Core Businesses
√ Applicable □ Not applicable
Unit: RMB
| Amount | As % of total profit | Source/Reason | Recurrent or not | |
| Return on investment | 145,968,403.88 | 172.10% | Income from the disposal of held-for-trading financial assets | Not |
| Gain/loss on changes in fair value | -107,002,594.56 | -126.16% | Reclassification of gains on changes in fair value recognized last year due to the disposal of held-for-trading financial assets | Not |
| Asset impairments | -113,460,308.96 | -133.77% | Inventory valuation allowances | Not |
| Non-operating income | 6,466,024.36 | 7.62% | Income of non-operating compensation, etc | Not |
| Non-operating expense | 4,468,911.08 | 5.27% | Non-operating donations and compensations, etc. | Not |
IV Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Indicate whether the Company has adopted the new accounting standards governing revenue and leases since 2020 and restated thebeginning amounts of relevant financial statement line items in the year.Applicable.
Unit: RMB
| 31 December 2020 | 1 January 2020 | Change in percentage (%) | Reason for any significant change | |||
| Amount | As % of total assets | Amount | As % of total assets | |||
| Monetary assets | 1,400,478,034.81 | 11.55% | 924,322,008.17 | 7.78% | 3.77% | |
| Accounts receivable | 522,425,219.87 | 4.31% | 515,306,599.62 | 4.34% | -0.03% | |
| Inventories | 1,988,968,681.64 | 16.40% | 2,421,500,259.30 | 20.37% | -3.97% | |
| Investment property | 22,263,668.85 | 0.18% | 45,896,747.87 | 0.39% | -0.21% | |
| Long-term equity investments | 138,079,577.25 | 1.14% | 103,226,300.00 | 0.87% | 0.27% | |
| Fixed assets | 5,661,592,991.66 | 46.67% | 6,012,094,104.67 | 50.58% | -3.91% | |
| Construction in progress | 356,273,197.49 | 2.94% | 400,235,070.01 | 3.37% | -0.43% | |
| Short-term borrowings | 930,871,008.19 | 7.67% | 2,120,154,330.61 | 17.84% | -10.17% | |
| Long-term borrowings | 495,520,342.78 | 4.09% | 42,364,019.74 | 0.36% | 3.73% | |
2. 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 Reporting Period | Purchased in the Reporting Period | Sold in the Reporting Period | Other change | Ending amount |
| Financial assets | ||||||||
| 1. Held-for-trading financial assets (excluding derivative financial assets) | 330,505,598.85 | -123,644,094.56 | 502,000,000.00 | 300,131,167.06 | 408,730,337.23 | |||
| 2. Derivative financial assets | 16,641,500.00 | 16,641,500.00 | ||||||
| Subtotal of | 330,505,598.85 | -107,002,594.56 | 502,000,000.00 | 300,131,167.06 | 425,371,837.23 | |||
| financial assets | ||||||||
| Others | 26,963,818.87 | -358,052.29 | 28,545,159.76 | 55,150,926.34 | ||||
| Receivables financing | 26,963,818.87 | -358,052.29 | 28,545,159.76 | 55,150,926.34 | ||||
| Total of the above | 357,469,417.72 | -107,002,594.56 | -358,052.29 | 502,000,000.00 | 300,131,167.06 | 28,545,159.76 | 480,522,763.57 | |
| 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
3. Restricted Asset Rights as at the Period-End
For details, see Part XII. VII. 62. Assets with restricted ownership and using right in this Report.V 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 | 169,204.48 | 21 Jan. 2020 | 26 Nov. 2021 | 0 | 169,204.48 | 39,398.69 | 129,805.79 | 16.04% | 228.05 | |
| Commercial bank | Non-related | No | Foreign exchange option | 184,923.62 | 19 Mar. 2020 | 30 Dec. 2021 | 0 | 184,923.62 | 122,773.62 | 62,150 | 7.68% | 162.47 | |
| Commercial bank | Non-related | No | Forward exchange transactions | 15,542.52 | 9 Mar. 2020 | 23 Oct. 2020 | 0 | 15,542.52 | 15,542.52 | 0 | -141.77 | ||
| Total | 369,670.62 | -- | -- | 0 | 369,670.62 | 177,714.83 | 191,955.79 | 23.72% | 248.75 | ||||
| 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 Apr. 2019 | ||||||||||||
| 30 Apr. 2020 | |||||||||||||
| 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 Derivative Transaction of Lu Thai Textile Co., Ltd., the Proposal on Plan for Derivative Transaction of Lu Thai Textile Co., Ltd. approved at the 26th Meeting of the 8th Board of Directors on 29 April 2019, and the Proposal on the Plan of Lu Thai Textile Co., Ltd. for Derivative Transactions approved at the 13th Meeting of the 9th Board of Directors on 28 April 2020, 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 | 1. As of 31 December 2020, the Company held 37 undue financial derivatives contracts, totaling USD294.50 million, among which 29 were forward forex settlement contracts, totaling USD194 million, and 10 were forex option portfolio contracts, totaling USD100.50 million. 2. During 2020, the total amount of all due financial derivatives of the Company was equivalent to USD265.2668 million, which were all executed in accordance with the relevant contracts, generating gains of RMB2.4875 million, among which, gains of RMB2.2805 million were from the delivery of forward forex settlement contracts of USD56.50 million; gains of RMB1.6247 million were from the delivery of forex option contracts of USD186.50 million; gains of RMB-1.4177 million were from the |
| parameters. | delivery of forward forex transactions of USD22.2668 million. |
| Whether significant changes occurred to the Company’s accounting policy and specific accounting principles of derivatives in the Reporting Period compared to the previous Reporting Period | No significant changes |
| 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, concerning conducting derivatives business, have issued the following professional advice: We are of the opinion that it will strengthen the Company’s competitiveness to use derivative transactions with focus on forward settlement and purchase as an effective tool to avoid foreign exchange risks, to strengthen the relevant internal control and to carry out the loss and risk prevention measures so as to improve the operation and management. In conducting derivative transactions with focus on forward settlement and purchase, the Company follows a legal approval procedure, has sound relevant institutions and keeps the risks relatively controllable. No harm has been done to the interests of the Company’s shareholders. |
5. Use of Funds Raised
√ Applicable □ Not applicable
(1) Overall Use of Funds Raised
√ Applicable □ Not applicable
Unit: RMB’0,000
| Raising year | Raising manner | Total of raised capital | Total of raised capital used in this period | Cumulative amount of raised capital used | Total of raised capital which purpose is changed in the report period | Cumulative amount of raised capital which purpose is changed | Ratio of cumulative amount which purpose is changed | Total of raised capital unused | Purpose and direction of raised capital unused | Amount of raised capital unused for two years |
| 2020 | Convertible bonds | 138,800 | 66,499.93 | 66,499.93 | 0 | 0 | 0.00% | 73,261.88 | RMB 47.1572 million, deposited in the special account for raised capital; RMB 685.4616 million, for purchasing financial products and | 0 |
| deposit products (including the net income RMB 9.5622 million from interest income deducted handling charge) | ||||||||||
| Total | -- | 138,800 | 66,499.93 | 66,499.93 | 0 | 0 | 0.00% | 73,261.88 | -- | 0 |
| General use situation of raised capital | ||||||||||
| (I) Amount of actual raised capital and arrival date Upon approval by China Securities Regulatory Commission in the document “ZJXK [2020]299”, the Company publically issued 14,000,000 convertible bonds on April 9, 2020 at par value RMB 100, the issued amount was RMB 1.4 billion, and the Company actually received the amount of raised capital RMB 1.388 billion after deducted the underwriting fee RMB 12 million. The above amount was remitted in cash in RMB. After deducted legal fee, accountant fee, credit rating fee, information disclosure fee, issuing commission and other costs RMB 2.54 million in total from the above actually raised capital, the net amount of raised capital was RMB 1385.46 million, which entered the account on April 15, 2020, and Grant Thornton International Ltd (Special General Partnership) issued the capital verification report with reference No. Grant Thornton Verification [2020] 371ZC0090 for it after verification. (II) Use situation and balance of raised capital By December 31, 2020, the Company directly invested RMB 664.9993 million in total from the raised capital for its capital raising projects, the unused amount was RMB 732.6188 million (including the net income RMB 9.5622 million from interest income deducted handling charge), the balance of the special raised capital account at the end of period was RMB 47.1572 million and the amount of raised capital not redeemed and used for purchasing financial products, deposit products from banks was RMB 685.4616 million. | ||||||||||
(2) Commitments on Projects with Funds Raised
√ Applicable □ Not applicable
Unit: RMB’0,000
| Committed investment projects and use direction of over raised capital | Whether the projects are changed (including partially changed projects) | Total of committed investment of raised capital | Total investment after modification (1) | Amount invested in this report period | Cumulative investment amount by the end of period (2) | Investment progress by the end of period (3) ＝(2)/(1) | Date when the project reached the intended available status | Benefit realized in this report period | Whether reached the expected benefit | Whether project feasibility changed significantly |
| Committed investment projects | ||||||||||
| Functional fabric smart eco-park | No | 85,000 | 85,000 | 36,007.52 | 36,007.52 | 42.36% | 31 May 2023 | N/A | No | |
| project (Phase 1) | ||||||||||
| High-end printing and dyeing fabric production line project | No | 25,000 | 25,000 | 1,686.82 | 1,686.82 | 6.75% | 31 October 2022 | N/A | No | |
| Supplement working capital | No | 28,800 | 28,800 | 28,805.59 | 28,805.59 | 100.02% | N/A | No | ||
| Subtotal of committed investment projects | -- | 138,800 | 138,800 | 66,499.93 | 66,499.93 | -- | -- | -- | -- | |
| Use direction of over raised capital | ||||||||||
| N/A | ||||||||||
| Total | -- | 138,800 | 138,800 | 66,499.93 | 66,499.93 | -- | -- | 0 | -- | -- |
| Situation and reasons that it did not reach the planned progress or expected return (based on specific projects) | In the report period, due to the impact of the COVID-19 epidemic, the capital raising project “High-end Printing and Dyeing Fabric Production Line Project” delayed in its construction progress. | |||||||||
| Note for significant change of project feasibility | N/A | |||||||||
| Amount, purpose and use progress of over raised capital | N/A | |||||||||
| Change of implementation site of capital raising project | N/A | |||||||||
| Adjustment of implementation mode of capital raising project | N/A | |||||||||
| Advance investment and displacement of capital raising project | Applicable | |||||||||
| By 31 December 2020, the total amount of displaced capital was RMB 191.4288 million, including the amount RMB 189.8388 million invested in the project with the self-raised capital of the Company in advance, and payment of issuing cost RMB 1.59 million with its self-raised capital | ||||||||||
| Temporary supplement to working capital with unused raised capital | N/A |
| Balance of raised capital after implement of project and relevant reasons | N/A |
| Purpose and use direction of unused raised capital | By 31 December 2020, RMB 47.1572 million in the unused raised capital was deposited in the raised capital account, and RMB 685.4616 million was used for cash management. |
| Problems existing in use and information disclosure of raised capital or other situation | None |
(3) Changes in Projects with Funds Raised
□ Applicable √ Not applicable
No such cases in the Reporting Period.VI 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
| Counterparty | Asset sold | Sales date | Transaction price (RMB’0,000) | Net profits of the Company generated from the asset for the | Influence of the sale on the Company | Proportion of net profits of the Company generated from the sale | Pricing basis for the sale of asset | Related-party transaction or not | Relationship with the counterparty | The ownership for the equity involved has been transfe | Implemented on schedule or not, if not, explanations and measures taken by | Disclosure date | Disclosure index |
| period from the period-begin to the sales date (RMB’0,000) | of the asset to the total net profits of the Company | rred in full or not | the Company shall be given | ||||||||||
| Li Jingquan | 59.92% equity of Fengshou Cotton Industry held by the Company | 13 August 2020 | 19,586 | -1121 | Achieving the goal of business integration and optimizing the asset structure with no influence on the interests of the Company and non-controlling shareholders | -2.89% | Negotiating the transfer price based on the audited net assets of the latest period after the deduction of the current distributed profits | Not | No | Yes | Yes | 14 August 2020 | Refer to the related announcement (No. 2020-058) disclosed on http://www.cninfo.com.cn for details |
| 8 enterprises such as Shanghai Tan Ying Investment Partnership (L.P.) | The capital contribution of RMB3 million in Remegen held by the Company | 6 March 2020 | 14,162.96 | 0 | Achieve the goal of investment | 0.56% | Bilateral negotiation | Not | No | Yes | Yes | 7 March 2020 | Refer to the related announcement (No. 2020-009) disclosed on http://www.cninfo.com.cn for details |
VII 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 | 1,666,375,062.05 | 1,256,825,211.75 | 1,310,505,310.08 | 21,636,873.05 | 22,061,576.93 |
| Shandong Lulian New Materials Co., Ltd. | Subsidiary | Fabric | 400,000,000 | 923,182,133.38 | 368,386,690.01 | 7,663,754.58 | -40,217,823.40 | -29,488,362.76 |
Subsidiaries obtained or disposed in the Reporting Period:
√ Applicable □ Not applicable
| Name | Method | Influence on overall production operation and performance |
| Fengshou Cotton Industry | Sales transfer | Achieving the goal of business integration and optimizing the asset structure |
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 1.311 billion, down 24.84% year on-year and net profit of RMB 22.0616 million, down 81.07% 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 7,663,800, up 337.99% year on-year and net profit of RMB -29.4884 million, down1287.72% year-on-year.
VIII Structured Bodies Controlled by the Company
□ Applicable √ Not applicable
IX Prospects
1. Industry competition and development trend
The textile industry of China has certain strength in the global textile industry, mainly showing in industry chain, technology, laborefficiency and other aspects. The COVID-19 epidemic impacted the economy and trade of various countries in 2020, but thecompetitive edge of the textile industry of China in the international market still remains. In recent years, when the domesticenvironmental protection requirements are becoming more stringent, production costs are going up and the transformation and upgradepolicy is implemented in China, the textile industry in the post-epidemic era may face structural adjustment, and the demand toyarn-dyed fabric used for shirts will change as diversified products in small batch, functionality and leisure orientation.
2. Development strategy of the Company
The Company is a large-scale textile enterprise with a complete industrial chain integrating spinning, dyeing, weaving, post-treatmentand garment manufacturing. It is the world's largest production base for yarn-dyed fabrics for shirts, providing blending of three majorseries of shirt fabrics of pure cotton and natural fiber, cotton and natural fiber as well as cotton and functional fiber. And the newlydeveloped shirt knitted fabric and elastic fabric are also popular in markets. In order to maintain the outstanding advantages of theCompany in global shirt-dyed fabrics, the Company is pushing intelligent manufacturing upgrades and integrating domestic andforeign advantageous resources to deepen internationalization of the Company with regional advantages. The Company combinesquality innovation and customer needs, and innovates the marketing model with advantages of resources in each channel. High-endshirt customization services are provided to meet various needs of customers. Furthermore, the Company increases investment ininnovation to improve R&D and design and develop new fabrics. The Company holds the concept of low-carbon environmentalprotection for sustainable development.
3. Business plan (the following description does not constitute any commitment of the Company)
(1) In terms of corporate governance, in order to ensure the healthy, stable and sustainable development of the Company at theinstitutional level, the Company will establish an internal control system to improve organizational structure, corporate governancestructure and risk prevention mechanism.
(2) In the aspect of market development, the Company actively develops emerging markets on the basis of maintaining the existingmarket, accurately understands market trend and customers’ demand, and fully improves service capacity, so that the Company couldbe a global dress solution supplier based on leading fabric.
(3) In the aspect of business administration, the Company continually Implements the strategy of “quality and efficiency improvement”and “comprehensive internationalization”, makes more efforts in developing market, adjusting structure and improving capacity,strengthens integrated product development (IPD), promotes innovation while meeting market demand and builds up a flexible, rapidresponse, efficient and traceable supply system chain with internal and external resources.
(4) In terms of industrial overall arrangement, in order to maintain the leading position of the Company in the global yarn-dyed industry,the Company rationally allocates domestic and foreign resources and improves production efficiency while keeping product qualityrelying on the advantages of U.S. companies, Milan and Japan Office in market development, design and R&D, customer service andtalent development, and the cost advantages of Southeast Asian production bases.
4. Capital needs, sources and planning
Within the Reporting Period, the spinning project (phase II) invested by the Company’s wholly-owned sub-subsidiary Lu Thai (TanChau) Textile Co., Ltd. was successfully established and put into operation. The functional fabric intelligent ecological park project(phase I) of the Company’s holding subsidiary Lulian New Materials and the high-end printing and dyeing fabrics production lineproject of Lufeng Weaving & Dyeing were under construction. Corresponding equipment installation and trial production will bearranged successively, and the project fund is from the raised fund of the A Share convertible bonds issued by the Company.
5. Risks that bring adverse impact to company development strategy and business objectives and countermeasures of the Company
(1) Impact of economic environment: under the increasing uncertainty risk of the international trade and the impact of the COVID-19epidemic, the Company will face more challenges. In addition, the economic development of China should be transformed and upgrade,therefore, the Company will continue to strictly execute coronavirus control measures, guarantee production and safety and furtherutilize various resources to develop domestic and overseas markets, so as to catch development opportunities after COVID-19 iscontrolled.
(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 onsettlement 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.
X Communications with the Investment Community such as Researches, Inquiries andInterviews
1. During the Reporting Period
√ Applicable □ Not applicable
| Date of visit | Place of visit | Way of visit | Type of visitor | Visitor | Contents and materials provided | Index to main inquiry information |
| 7 May 2020 | The Company’s conference room | By phone | Institution | Institution investor | About basic information of the Company | Refer to the Investor Relations Management Archive 20200507(1) disclosed on Cninfo by the Company on 11 May 2020 |
| 7 May 2020 | The Company’s conference room | By phone | Institution | Institution investor | About basic information of the Company | Refer to the Investor Relations Management Archive 20200507(2) disclosed on Cninfo by the Company on 11 May 2020 |
| 8 July 2020 | The Company’s conference room | By phone | Institution | Institution investor | About basic information of the Company | Refer to the Investor Relations Management Archive 20200708 disclosed on Cninfo by the Company on 10 July 2020 |
| 28 August 2020 | The Company’s conference room | By phone | Institution | Institution investor | About basic information of the Company | Refer to the Record of Investor Relations Activities on 28 August 2020 (1) disclosed on Cninfo by the Company on 31 August 2020 |
| 28 August 2020 | The Company’s conference room | By phone | Institution | Institution investor | About basic information of the Company | Refer to the Record of Investor Relations Activities on 28 August 2020 (2) disclosed on Cninfo by the Company on 31 August 2020 |
| 2 November 2020 | The Company’s conference room | By phone | Institution | Institution investor | About basic information of the Company | Refer to the Investor Relations Management Archive 20201102 disclosed on Cninfo by the Company on 6 November 2020 |
| Times of communications | 6 | |||||
| Number of institutions communicated with | 56 | |||||
| Number of individuals communicated with | 0 | |||||
| Number of other communication parties | 0 |
| Tip-offs or leakages of substantial supposedly-confidential information during communications | No |
Part V Significant Events
I Profit Distributions to Ordinary Shareholders (in the Form of Cash and/or Stock)How the profit distribution policy, especially the cash dividend policy, for ordinary shareholders was formulated, executed or revisedin the Reporting Period:
□ Applicable √ Not applicable
The profit distributions to ordinary shareholders, either in the form of cash or stock, in the past three years (including the ReportingPeriod) are summarized as follows:
1. The 13
th Meeting of the 9
thBoard of Directors of the Company reviewed and approved 2020 Profit Distribution PlanBased on 858,132,322 shares (including shares transferred from convertible bonds for the Reporting Period), the cash allocated per 10shares is RMB0.50 (including tax). The individual income tax for A Share shall be subject to related regulations under CS [2015] No.101 Notice on Certain Question about the Differentiated Individual Income Tax Policy for Cash Dividend of Listed Companies jointlyissued by Ministry of Finance, SAT, and CSRC; and that for B Share shall be conversed to HKD based on the central parity rate oninterbank exchange market released by the People’s Bank of China on the following day after shareholder’s meeting (for foreignshareholders, tax is free pursuant to CSZ (1994) No. 020 regulations; and non-residential corporate shareholders is entitled to a 10%reduction of enterprise income tax according to related regulations under Enterprise Income Tax Law of the People’s Republic ofChina). Since the Company is in the period of transferring convertible bonds into shares, the profit distribution will be conductedbased on the total share capital on the equity registration date for implementing this profit distribution plan with no change in theamount per share.
2. The 13
th Meeting of the 9
thBoard of Directors of the Company reviewed and approved 2019 Profit Distribution PlanBased on the total capital of 858,121,541 shares as of 31 December 2019, the Company is to distribute a cash dividend of RMB1.00for every 10 shares (including tax). The individual income tax for A Share shall be subject to related regulations under CS [2015] No.101 Notice on Certain Question about the Differentiated Individual Income Tax Policy for Share Dividend of Listed Companiesjointly issued by Ministry of Finance, SAT, and CSRC; and that for B Share shall be conversed to HKD based on the central parityrate on interbank exchange market released by the People’s Bank of China on the following day after shareholder’s meeting (forforeign shareholders, tax is free pursuant to CSZ (1994) No. 020 regulations; and non-residential corporate shareholders is entitled toa 10% reduction of enterprise income tax according to related regulations under Enterprise Income Tax Law of the People’s Republicof China).RMB85,812,154.10 should be allocated based on 858,121,541 shares. The above-mentioned allocation scheme has beenimplemented in July 2020.
3. The 24
th Meeting of the 8
thBoard of Directors of the Company reviewed and approved 2018 Profit Distribution PlanAs of 31 December 2018, the total share capital of the Company was 922,602,311 shares. Since 28 May 2018, the Company hasimplemented B-share repurchase. As of 22 March 2019, the Company has repurchased 64,480,770 shares which have not beencancelled. The repurchase shares were inventory shares and were not entitled the rights of all shareholders, such as profit distribution.Therefore, the Company's profit distribution plan for 2018: Based on 858,121,541 shares (the total share capital of 922,602,311shares deducted 64,480,770 shares which have been repurchased but not cancelled on 31 December 2018), the cash allocated per 10shares is RMB5.00 (including tax). The individual income tax for A Share shall be subject to related regulations under CS [2015] No.101 Notice on Certain Question about the Differentiated Individual Income Tax Policy for Cash Dividend of Listed Companiesjointly issued by Ministry of Finance, SAT, and CSRC; and that for B Share shall be conversed to HKD based on the central parityrate on interbank exchange market released by the People’s Bank of China on the following day after shareholder’s meeting (for
foreign shareholders, tax is free pursuant to CSZ (1994) No. 020 regulations; and non-residential corporate shareholders is entitled toa 10% reduction of enterprise income tax according to related regulations under Enterprise Income Tax Law of the People’s Republicof China).RMB429,060,770.50 should be allocated based on 858,121,541 shares. The above-mentioned allocation scheme has beenimplemented in June 2019.Cash dividend for ordinary shareholders in the past three years (including the Reporting Period):
Unit: RMB
| Year | Cash dividends (tax inclusive) (A) | Net profit attributable to ordinary shareholders of the listed company in consolidated statements for the year (B) | A as % of B (%) | Cash dividends in other forms (such as share repurchase) (C) | C as % of B (%) | Total cash dividends (including those in other forms) (D) | D as % of B (%) |
| 2020 | 42,906,616.10 | 97,308,593.36 | 44.09% | 0.00 | 0.00% | 42,906,616.10 | 43.34% |
| 2019 | 85,812,154.10 | 952,386,011.49 | 9.01% | 20,188,374.10 | 2.12% | 106,000,528.20 | 11.13% |
| 2018 | 429,060,770.50 | 811,526,477.83 | 52.87% | 486,922,944.94 | 59.99% | 915,983,715.44 | 112.87% |
Indicate by tick mark whether the Company fails to put forward a cash dividend proposal for the ordinary shareholders despite thefacts that the Company has made profits in the Reporting Period and the profits of the Company as the parent distributable to theordinary shareholders are positive.
□ Applicable √ Not applicable
II Final Dividend Plan for the Reporting Period
√ Applicable □ Not applicable
| Bonus shares for every 10 shares (share) | 0 |
| Dividend for every 10 shares (RMB) (tax inclusive) | 0.50 |
| Total shares as the basis for the profit distribution proposal (share) | 858,132,322 |
| Cash dividends (RMB) (tax inclusive) | 42,906,616.10 |
| Cash dividends in other forms (such as share repurchase) (RMB) | 0.00 |
| Total cash dividends (including those in other forms) (RMB) | 42,906,616.10 |
| Distributable profit (RMB) | 4,381,640,182.32 |
| Total cash dividends (including those in other forms) as % of total profit distribution | 100% |
| Cash dividend policy |
| If the Company is in a mature development stage and has plans for any significant expenditure, in profit allocation, the ratio of cash dividends in the profit allocation shall be 40% or above. |
| Details about the proposal for profit distribution and converting capital reserve into share capital |
| Based on 858,132,322 shares (including shares transferred from convertible bonds for the Reporting Period), the cash allocated per 10 shares is RMB0.50 (including tax). The individual income tax for A Share shall be subject to related regulations under CS [2015] No. 101 Notice on Certain Question about the Differentiated Individual Income Tax Policy for Cash Dividend of Listed Companies jointly issued by Ministry of Finance, SAT, and CSRC; and that for B Share shall be conversed to HKD based on the central parity rate on interbank exchange market released by the People’s Bank of China on the following day after shareholder’s meeting (for foreign shareholders, tax is free pursuant to CSZ (1994) No. 020 regulations; and non-residential corporate shareholders is entitled to a 10% reduction of enterprise income tax according to related regulations under Enterprise Income Tax Law of the People’s Republic of China). Since the Company is in the period of transferring convertible bonds into shares, the profit distribution will be conducted based on the total share capital on the equity registration date for implementing this profit distribution plan with no change in the amount per share. |
III Fulfillment of Commitments
1. Commitments of the Company’s Actual Controller, Shareholders, Related Parties and Acquirers, as wellas the Company Itself and other Entities Fulfilled in the Reporting Period or 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 convertibl | 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 | 23 May 2019 | From 23 May 2019 to 8 April 2026 | On-going |
| e corporate bonds | 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 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 the completion of the implementation of the Company's public offering of A-share convertible corporate | 23 May 2019 | From 23 May 2019 to 8 April 2026 | On-going |
| 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 | Yes | |||||
2. Where there had been an earnings forecast for an asset or project and the Reporting Period was stillwithin the forecast period, explain why the forecast has been reached for the Reporting Period.
□Applicable √ Not applicable
IV Occupation of the Company’s Capital by the Controlling Shareholder or Its RelatedParties for Non-Operating Purposes
□ Applicable √ Not applicable
No such cases in the Reporting Period.
V Explanations Given by the Board of Directors, the Supervisory Board and the IndependentDirectors (if any) Regarding the Independent Auditor's “Modified Opinion” on the FinancialStatements of the Reporting Period
□Applicable √ Not applicable
VI YoY Changes to Accounting Policies, Estimates and Methods
√ Applicable □ Not applicable
In accordance with the Accounting Standards for Business Enterprises No. 21 – Leases (“New Lease Standards”) revised and issued bythe Ministry of Finance on December 7, 2018, the Company has made relevant changes about the previous fiscal policies. This fiscalpolicy change is the reasonable change made according to the up-to-date rules issued by the Ministry of Finance and it meets theprovisions of relevant laws and regulations. Implementation of the changed fiscal policies can objectively and fairly reflect the financialcondition and operation result of the Company in 2021 and subsequent years, and no significant impact on the financial statements ofthe Company will occur accordingly.
VII Retrospective Restatements due to Correction of Material Accounting Errors in theReporting Period
□ Applicable √ Not applicable
No such cases in the Reporting Period.VIII YoY Changes to the Scope of the Consolidated Financial Statements
√Applicable □ Not applicable
During the Reporting Period, the Company incorporated one subsidiary Beijing Zhishu Trading Co., Ltd., transferred the subsidiaryFengshou Cotton Industry for sale and cancelled the subsidiary Beijing Luthai Prime Fabric E-commerce Corp.IX Engagement and Disengagement of Independent Auditor
Current independent auditor:
| Name of the domestic independent auditor | Grant Thornton China (Special General Partnership) |
| The Company’s payment to the domestic independent auditor (RMB’0,000) | 173.5 |
| How many consecutive years the domestic independent auditor has provided audit service for the Company | 2 |
| Names of the certified public accountants from the domestic independent auditor writing signatures on the auditor’s report | Guo Dongmei, He Feng |
| How many consecutive years the certified public accountants have provided audit service for the Company | 2 |
Indicate by tick mark whether the independent auditor was changed for the Reporting Period.
√ Yes □ No
Independent auditor, financial advisor or sponsor engaged for the audit of internal controls:
√ Applicable □ Not applicable
The Company held the Annual General Meeting of 2019 on 21 May 2020 and approved the Proposal on Renewal Engagement of the2020 Financial Audit and Internal Control Auditor and decided to renew the contract with Grant Thornton China (Special GeneralPartnership) for 2020 financial audit and internal control affairs and paid RMB1.735 million in total for 2019 financial report audit andthe internal control audit.The Company publicly issued A-share convertible corporate bonds in 2020 with Guotai Junan Securities Co., Ltd. as its sponsor andpaid RMB12 million for underwriting and sponsor.
X Possibility of Delisting after Disclosure of this Report
□ Applicable √ Not applicable
XI Insolvency and Reorganization
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XII Major Legal Matters
□ Applicable √ Not applicable
No such cases in the Reporting Period.XIII Punishments and Rectifications
□ Applicable √ Not applicable
No such cases in the Reporting Period.XIV Credit Quality of the Company as well as Its Controlling Shareholder and ActualController
□ Applicable √ Not applicable
XV Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measuresfor Employees
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XVI Major Related-Party Transactions
1. Continuing Related-Party Transactions
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Related-Party Transactions Regarding Purchase or Sales of Assets or Equity Interests
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Related Transactions Regarding Joint Investments in Third Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Credits and Liabilities with Related Parties
√Applicable □ Not applicable
Indicate by tick mark whether there were any credits and liabilities with related parties for non-operating purposes.
√ Yes □ No
Liabilities payable to related parties
| Related party | Relation with the Company | Formation reason | Beginning balance (RMB’0,000) | Amount newly added in current period (RMB’0,000) | Amount returned in current period (RMB’0,000) | Interest rate | Current interest (RMB’0,000) | Ending balance (RMB’0,000) |
| Zibo Lucheng Textile Investment Co., Ltd | The Company as the parent | Currencies deposit | 0 | 16,000 | 16,000 | 4.35% | 131.23 | 0 |
| Influences from liabilities of parties related on operating results and financial situations of the Company | No significant influence | |||||||
5. Other Major Related-Party Transactions
□ Applicable √ Not applicable
No such cases in the Reporting Period.XVII 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
(1) Guarantees
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 | 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 | Term of guarantee | Having expired or not | Guarantee for a related party or not | |||||||
| Continental Textile Co., Ltd. | 25 January 2017 | 10,439.84 | 20 January 2017 | 1,098.01 | Joint-liability | Five years since the approval of the board of the Company | No | Yes | |||||||
| Continental Textile Co., Ltd. | 25 January 2017 | 17,943.48 | 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 | 27,404.58 | 25 October 2017 | 5,934.01 | Joint-liability | Five years since the approval of the shareholders meeting of the Company | No | Yes | |||||||
| Continental Textile Co., Ltd. | 22 August 2018 | 7,177.39 | 20 August 2018 | 2,448.13 | Joint-liability | Three years since the approval of the board of the | No | Yes | |||||||
| Company | ||||||||
| Continental Textile Co., Ltd. | 29 March 2019 | 3,914.94 | 27 March 2019 | 0 | Joint-liability | Three years since the approval of the board of the Company | No | Yes |
| Continental Textile Co., Ltd. | 29 March 2019 | 9,787.35 | 27 March 2019 | 0 | Joint-liability | Two years since the approval of the board of the Company | No | Yes |
| Continental Textile Co., Ltd. | 29 March 2019 | 29,362.05 | 27 March 2019 | 23,489.64 | Joint-liability | Two years since the approval of the board of the Company | No | Yes |
| Continental Textile Co., Ltd. | 29 March 2019 | 5,154.67 | 27 March 2019 | 0 | 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. | 28 September 2019 | 7,503.64 | 27 September 2019 | 5,603.19 | 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 | 6,524.9 | 27 September 2019 | 3,914.94 | Joint-liability | Three years since the approval of the board of the Company | No | Yes |
| Continental Textile Co., Ltd. | 28 September 2019 | 11,092.33 | 27 September 2019 | 9,983.1 | Joint-liability | Three years since the approval of the board of the Company | No | Yes |
| Continental Textile Co., Ltd. | 28 September 2019 | 2,936.21 | 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 | 13,049.8 | 26 August 2020 | 5,057.68 | 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 | 9,134.86 | 14 December 2020 | 1,202.64 | 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 | 3,914.94 | 14 December 2020 | 0 | 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) | 26,099.6 | Total actual amount of such guarantees in the Reporting Period (B2) | 79,505.78 | ||||||||||||
| Total approved line for such guarantees at the end of the Reporting Period (B3) | 165,340.98 | Total actual balance of such guarantees at the end of the Reporting Period (B4) | 58,731.34 | ||||||||||||
| Guarantees provided between subsidiaries | |||||||||||||||
| Obligor | Disclosure date of the guarantee line announcement | Line of guarantee | Actual occurrence date | Actual guarantee amount | Type of guarantee | 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) | 26,099.6 | Total actual guarantee amount in the Reporting Period (A2+B2+C2) | 79,505.78 | ||||||||||||
| Total approved guarantee line at the end of the Reporting Period (A3+B3+C3) | 165,340.98 | Total actual guarantee balance at the end of the Reporting Period (A4+B4+C4) | 58,731.34 | ||||||||||||
| Total actual guarantee amount (A4+B4+C4) as % of the Company’s net assets | 7.64% | ||||||||||||||
| 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 Information
Disclosure 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
(2) Irregularities in Provision of Guarantees
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Cash Entrusted to Other Entities for Management
(1) Cash Entrusted for Wealth Management
√ Applicable □ Not applicable
Overviews of entrusted cash management during the Reporting Period
RMB’0,000
| Specific type | Capital resources | Amount incurred | Undue Balance | Overdue amount |
| Trusted financial products | Self-owned funds | 5,000 | 0 | 0 |
| Bank financial products | Idle raised funds | 62,754 | 32,754 | 0 |
| Bank financial products | Idle self-owned funds | 37,246 | 27,246 | 0 |
| Total | 105,000 | 60,000 | 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) |
| AVIC Trust Co., | Trust company | Constant return | 5,000 | Self-owned funds | 2019-03-07 | 2020-03-09 | No fixed directi | Repay capital when | 8.00% | 400 | 402.19 | Recovery on schedu | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-059) disclosed |
| Ltd | on | expired with annual interests payment | le | on Cninfo on 14 August 2020 | ||||||||||||
| Agricultural Bank of China | Bank | Principal-protected | 10,000 | Raised funds | 2020-07-01 | 2020-09-25 | Bank financial products | One-off repayment of principal and interests at maturity | 3.50% | 81.51 | 76.89 | 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 | 2020-07-01 | 2021-01-08 | Bank financial products | One-off repayment of principal and interests at maturity | 3.50% | 182.19 | 0 | - | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-051) disclosed on Cninfo on 23 May 2020 |
| China Construction Bank | Bank | Principal-protected | 5,000 | Raised funds | 2020-07-03 | 2020-10-11 | Bank financial products | One-off repayment of principal and interests at maturity | 2.05% | 28.09 | 26.5 | 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 | 2020-08-13 | 2020-11-12 | Bank financial products | One-off repayment of principal and interests at maturity | 3.50% | 43.15 | 40.71 | 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 | 2020-09-28 | 2020-12-25 | Bank financial products | One-off repayment of principal and interests at maturity | 3.50% | 82.47 | 77.8 | 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 | 2020-10-15 | 2021-01-14 | Bank financial products | One-off repayment of principal and interests at maturity | 3.50% | 43.15 | 0 | - | 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 | 2020-12-09 | 2021-03-11 | Bank financial products | One-off repayment of principal | 3.50% | 24.03 | 0 | - | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-051) disclosed on Cninfo on 23 May 2020 |
| and interests at maturity | ||||||||||||||||
| Qishang Bank | Bank | Principal-protected | 5,000 | Raised funds | 2020-12-09 | 2021-03-11 | Bank financial products | One-off repayment of principal and interests at maturity | 3.50% | 43.63 | 0 | - | 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 | 2020-12-29 | 2021-03-25 | Bank financial products | One-off repayment of principal and interests at maturity | 3.15% | 72.49 | 0 | - | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-051) disclosed on Cninfo on 23 May 2020 |
| Qishang Bank | Bank | Principal-protected | 4,000 | Self-owned funds | 2020-09-02 | 2020-12-02 | Bank financial products | One-off repayment of principal and interests at maturity | 3.50% | 34.9 | 32.92 | 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 | 1,000 | Self-owned | 2020-09-02 | 2020-12-02 | Bank financi | One-off | 3.50% | 8.73 | 8.24 | Recovery on | 0 | Yes | Not yet | Refer to the related announcement (No.: |
| ected | funds | al products | repayment of principal and interests at maturity | schedule | 2020-059) disclosed on Cninfo on 14 August 2020 | |||||||||||
| Qishang Bank | Bank | Principal-protected | 3,000 | Self-owned funds | 2020-09-02 | 2020-12-02 | Bank financial products | One-off repayment of principal and interests at maturity | 3.50% | 26.18 | 24.7 | 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 | 2020-10-15 | 2021-01-14 | Bank financial products | One-off repayment of principal and interests at maturity | 3.50% | 25.89 | 0 | - | 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 | 2020-11-03 | 2021-02-02 | Bank financial products | One-off repayment of principal and interes | 3.50% | 43.15 | 0 | - | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-059) disclosed on Cninfo on 14 August 2020 |
| ts at maturity | ||||||||||||||||
| Qishang Bank | Bank | Principal-protected | 5,000 | Self-owned funds | 2020-11-10 | 2021-02-09 | Bank financial products | One-off repayment of principal and interests at maturity | 3.50% | 43.15 | 0 | - | 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 | 2020-11-24 | 2020-12-30 | Bank financial products | One-off repayment of principal and interests at maturity | 3.40% | 6.52 | 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 | 6,246 | Self-owned funds | 2020-12-09 | 2021-03-11 | Bank financial products | One-off repayment of principal and interests at maturity | 3.50% | 54.5 | 0 | - | 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 | 2020-12-10 | 2021-01-20 | Bank financial produc | One-off repayment | 3.40% | 11.18 | 0 | - | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-059) disclosed on Cninfo on 14 |
| ts | of principal and interests at maturity | August 2020 | ||||||||||||||
| China Everbright 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% | 11.25 | 0 | - | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-059) disclosed on Cninfo on 14 August 2020 |
| Total | 105,000 | -- | -- | -- | -- | -- | -- | 1,266.16 | 696.1 | -- | 0 | -- | -- | -- | ||
Whether there is the case where the principal cannot be recovered at maturity or other case which may cause impairment forentrusted asset management
□ Applicable √ Not applicable
(2) Entrusted Loans
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Continuing Major Contracts
□ Applicable √ Not applicable
5. Other Major Contracts
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XVIII Corporate Social Responsibility (CSR)
1. Measures Taken to Fulfill CSR Commitment
The Company has prepared social responsibilities report for 2020, for details, see Social Responsibilities Report disclosedsimultaneously with Annual Report 2020 of the Company.
2. Measures Taken for Targeted Poverty Alleviation
(1) Plans
The Company undertakes its social responsibility by carrying out the social poverty alleviation, help poor people to find jobs andpoor farmers of the regions where subsidiaries located in.
(2) Summary of the Related Work Done in the Reporting Period
The Company undertakes its social responsibility by carrying out the social poverty alleviation, help poor people to find jobs and poorfarmers of the regions where subsidiaries located in.
(3) Results
| Indicator | Measurement unit | Quantity/Progress |
| 1. General results | —— | —— |
| Of which: 1.1 Funds | Ten thousand | 22.23 |
| 1.3 Number of persons out of poverty which were helped to set up file card | Person | 94 |
| 2. Itemized results | —— | —— |
| 2.1 Out of poverty by industrial development | —— | —— |
| 2.2 Out of poverty by transferring employment | —— | —— |
| 2.3 Out of poverty by relocation | —— | —— |
| 2.4 Out of poverty by education | —— | —— |
| 2.5 Out of poverty by improving health | —— | —— |
| 2.6 Out of poverty by protecting ecological environment | —— | —— |
| 2.7 Subsidy for the poorest | —— | —— |
| 2.8 Social poverty alleviation | —— | —— |
| 2.9 Other items | —— | —— |
| 2.9.2 Investment amount | Ten thousand | 22.23 |
| 2.9.3 Number of persons out of | Person | 94 |
| poverty which were helped to set up file card | ||
| 3. Accolades received (for what and at what level) | —— | —— |
(4) Subsequent Plans
None
3. Issues Related to Environmental Protection
Indicate by tick mark whether the Company or any of its subsidiaries is identified as a major polluter by the environmental protectionauthorities.
□ Yes √ No
Yes
| 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≤140mg/L; ammonia nitrogen≤10mg/L | Emission standard of water pollutants in textile dyeing and finishing industry GB 4287-2012 COD: 200mg/L, ammonia nitrogen: 20mg/L | COD is 348.57t；ammonia nitrogen is 8.96t | COD is1495.08t; ammonia nitrogen is 149.51t | No |
| LuFeng Company Limited | COD and ammonia nitrogen | Continuous discharge | 1 | Lufeng chief discharge outlet | COD≤140mg/L; ammonia nitrogen≤4mg/L | Emission standard of water pollutants in textile dyeing and finishing industry GB 4287-2012 COD: 200mg/L, ammonia nitrogen: 20mg/L | COD is 263.397t；ammonia nitrogen is 9.003t | 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 44.79t, NQx is 135t, PM 5.36t. | SO2 is 259.09t/a, NQx is 740.25t/a, PM 74.03t/a. | No |
| Continental | Sewage | Disch | 1 | Beside | COD≤50mg/L; | QCVN40: | Sewage | / | No |
| Textile Co., Ltd. | arge into the ecological pond in the park district after treatment | sewage plant | ammonia nitrogen≤2.0mg/L | 2011/BTNMT | discharge is 870,900t | ||||
| Continental Textile Co., Ltd. | Exhaust gas | Direct discharge after treatment | 4 | Beside boiler room | / | QCVN19: 2009/BTNMT | Gas emission is 188 million m3 | / | No |
Construction of pollution prevention equipment and operation condition
Lu Thai Textile Co., Ltd. (hereinafter referred to as “the Company”) and its majority-owned subsidiary LufengWeaving & Dyeing Co., Ltd. (hereinafter referred to as “Lufeng Weaving & Dyeing”) strictly implement the“Three Simultaneous” management system for environmental protection in project constructions. The companiesare equipped with complete facilities for waste gas and waste water treatment. Lu Thai Textile Co., Ltd. and itsmajority-owned subsidiary Lufeng Weaving & Dyeing Co., Ltd. carried out the waste water treatment systemtransformation 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 responsiblefor daily operation maintenance and inspection to guarantee the normal operation of facilities. Both the exhaustemission and waste water discharge meet the emission standards.In 2020, the Company and its majority-owned subsidiary Lufeng Weaving & Dyeing added VOCs onlinemonitoring facilities, and uploaded the emission data of VOCs to the government environmental monitoring systemso as to monitor the emission data of VOCs comprehensively. In 2020, in terms of energy saving, the Company wonthe Ministry of Industry and Information Technology's 2020 Water Efficiency Leader in Key Water-usingEnterprises and China National Textile and Apparel Council's 2020 Textile Industry Water-saving EnterpriseAward, making outstanding contributions to the company's energy-saving development.The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. (hereinafter referred to as “XinshengThermal Power”) enforces the “Three Simultaneous” management system for environmental protection inextension project construction in accordance with the government requirements, and adopts the“limestone-gypsum method” to reduce emission concentration of sulfur dioxide, the “Low-nitrogen combustion +SNCR” and “SNCR+SCR method” to reduce emission concentration of nitrogen oxides, and the “electric-bagelectrostatic precipitator + wet electrostatic precipitator” to reduce soot emission concentration. The overallsystem works well.
The waste water treatment project of the wholly-owned subsidiary Continental Textile Co., Ltd. (hereinafterreferred to as “Continental Textile”) is designed to treat 6,500 tons of sewage water daily, among which, sewageplan I is designed to treat 3,000 tons of sewage water daily, and the sewage plant II is designed to treat 3,500 tons ofsewage water daily. Continental Textile adopts a comprehensive treatment process of “pre-materialization + A2Obiochemistry + post-materialization + ozone oxidation+ active sand filtration” for waste water treatment, and thetreated water quality is better than the QCVN 40: 2011/BTNMT A-level emission standards stipulated by theVietnam government. The treated waste water is all discharged to the ecological pond in the park. Treated waterquality analysis for the year of 2020: The COD (mean value) was 49.5 mg/L, the chrominance (mean value) was 26,the ammonia nitrogen (mean value) was 0.5 mg/L, and the total phosphorus (mean value) was 0.34 mg/L. All theparameters met the A-level emission standards set in the “Regulations on Parameters of Industrial Drainage inVietnam” (QCVN40: 2011/BTNMT). Waste water discharge in the whole year met the standards without violation.The total amount of waste water discharged in the year of 2020 was 870,900 tons, among which, the chemicaloxygen demand (COD) was 43.1 tons, ammonia nitrogen (NH3-N) was 0.38 tons and total phosphorus (TP) was
0.30 ton. Continental Textile is equipped with multi-pipe and water film dust-separation devices to process theexhaust gas discharged from boilers. In the year of 2020, all the equipment was in normal operation, and the exhaustgas inspection parameters were lower than the QCVN19: 2009/BTNMT emission standards set by Vietnamgovernment. In the year of 2020, the total amount of sulfur dioxide emissions was 35.99 tons, and the total amountof nitrogen oxides emissions was 32.52 tons.
Project Environmental Impact Assessment and Other Administrative Permission for Environmental Protection
In 2020, the main part of “Lu Thai Textile Co., Ltd. High-Concentration PVA Wastewater Treatment and SewageComprehensive Upgrading Project (1)” has been completed; the “Lu Thai Textile Co., Ltd. Intelligent TechnologyUpgrading Project of 25 million-meter High-grade Fabric Production Line” has been approved and is underconstruction; the “Engineering Technology Research Institute Project” and the “Technology Upgrading Project ofHigh-end Printing and Dyeing Fabric Finishing Production Process” has been approved and is under construction;the “Liquid Membrane Separation of Dyeing Wastewater and Comprehensive Upgrading of Wastewater TreatmentStation” has been approved and is under construction; the “Lufeng Weaving and Dyeing’s High-end Printing andDyeing 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 theEnvironmental Impact Report of the Shandong Provincial Department of Environmental Protection on theExtension Project of Zibo Xinsheng Thermal Power” (Luhuanjian [2015] No. 241), the phase II of the expansionproject has entered the closing stage. Continental Textile’s Spinning Phase I and Dyeing Park Phase I environmentalprotection projects have been completed and accepted for confirmation. The spinning phase II and yarn dyeing parkPhase II environmental assessment reports have been approved.
Emergency plan for environmental incidents
Lu Thai Textile Co., Ltd. and its majority-owned subsidiary Lufeng Weaving & Dyeing Co., Ltd. prepared theEmergency Plan for Environmental Incidents, which was filed with Zibo Environmental Protection Bureau XichuanBranch. The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. has formulated the “EmergencyPlan for Environmental Incidents” and filed it with the environmental protection management department. Theidentification and risk assessment of environmental risk sources, prevention and early warning mechanisms,emergency protection and supervision and management were included in the plan. The wholly-owned subsidiaryContinental Textile Co., Ltd. has prepared emergency plans for different environmental incidents to reduce theirimpacts.Environmental self-monitoring programLu Thai Textile Co., Ltd. and its majority-owned subsidiary Lufeng Weaving & Dyeing Co., Ltd. observed the
requirements of the competent environment authorities to establish the following year’s environmental self-testplans in every February. In addition, they invited a qualified testing institution quarterly to conduct tests on sewageand waste gas according to the self-monitoring plan, duly disclosed the monitoring data to the Shandong PollutionSource Self-monitoring Sharing System, and submitted the test reports to the competent environment authorities.The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. has implemented online real-timemonitoring of environmental data in accordance with the requirements of the superior environmental protectiondepartment, and has achieved emission standards. The wholly-owned subsidiary Continental Textile Co., Ltd.installs automatic sewage sampling and water quality automatic online monitoring devices, real-time automaticsampling and online monitoring of sewage effluent water quality; the company invites external qualified testinginstitutions to conduct sewage, sludge and exhaust gas quarterly Test and submit the test report to the environmentalsupervision department.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 “ThreeSimultaneous” management system for environmental protection in project construction. The companies areequipped with complete facilities for waste gas and waste water treatment, wastewater is treated with hydrolysisand acidification technique + AO treatment process and finally discharged according to GB4287-2012 theDischarge Standard of Water Pollutants for Dyeing and Finishing of Textile Industry; the boiler exhaust is treatedwith low nitrogen combustion technology and meets DB37/2374-2018 the Emission Standards of Air Pollutantsfor Boilers in Shandong Province. Temporary storage room of common solid waste and hazardous waste isconstructed in accordance with environmental protection requirements, and the Company signs hazardous wastedisposal contracts with third party qualified companies every year to dispose the hazardous waste of the Companyon basis of conformity. The Company strictly observes environmental protection laws and regulations, and itsprojects have complete formalities and its environmental protection facilities are in normal operation; in 2020, theenvironmental protection departments of governments at various levels checked the Company more than 20 timesbut nonconformity was found.Zibo Xinsheng Thermal Power utilizes neutralization basin to teat acidic and alkali wastewater, and reduces pHvalue to 6-9 after precipitation and neutralization. The treated wastewater and reverse osmosis water are used asdesulfurizing water, coal feeding system rinsing water, road sprinkling water and coal yard water. Desulfurizingwastewater is treated with flocculation sedimentation purification process and the design output of wastewatertreatment system is 10m3/h, and the water quality after treatment will meet the requirements of DischargeStandard of Wastewater from Limestone-gypsum Flue Gas Desulfurization System In Fossil Fuel Power PlantDL/T997-2006, and also meet the wastewater recycling requirement of the plant. The treated wastewater is usedfor damping dry dust. The stove ash generating from coal burning and gypsum generating from ultralow emissionin Zibo Xinsheng Thermal Power. are general solid waste, the Company signs boiler ash and desulfurized gypsumsupply and distribution agreements with building material factory, cement factory for full comprehensiveutilization.Intercontinental Textile uses the comprehensive treatment process “pre-materialization +A2O biochemistry +post-materialization + ozone treatment + activated sand filtration” to treat the industrial wastewater of the
Company, and the relevant equipment has been properly operated for five years after installation, and thedischarged wastewater meets the level A discharge standard in the Technical Specifications of Vietnam onIndustrial Wastewater Discharge (QCVN40: 2011/BTNMT). the boiler exhaust of the Company is treated withheat exchange and temperature reduction, dust separation, spraying, water film dust collection, absorption,chemical reaction and etc. Now the equipment has been installed and properly operated for five years. Exhaustdischarge meets the discharge standard of Vietnam, “State Technical Specifications on Discharge of IndustrialInorganic Substances and Dust” (Circular 36/2015/TT-BTNMT). Hazardous waste and industrial wastewarehouses are built up for separated storage of hazardous waste and industrial waste in accordance with theVietnamese regulations, Regulations on Administration of Hazardous Waste (Circular 36/2015/TT-BTNMT) andDecision on Administration of Waste (Decree 38/2015/N?-CP), and waste transportation and disposal contractsare signed with local qualified treatment organizations, and relevant treatment records of waste are reported theenvironmental protection authority of Vietnam quarterly. Intercontinental Textile received local environmentalinspection for five times and nonconformity was not found in 2020.XIX Other Significant Events
□ Applicable √ Not applicable
No such cases in the Reporting Period.XX Significant Events of Subsidiaries
□ Applicable √ Not applicable
Part VI Share Changes and Shareholder InformationI. 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% | 119,038,937 | 13.87% | |||||
| 1. Shares held by State | |||||||||
| 2. Shares held by state-owned legal person | |||||||||
| 3. Shares held by other domestic investors | 806,537 | 0.09% | 806,537 | 0.09% | |||||
| Among which: Shares held by domestic legal person | |||||||||
| Shares held by domestic natural person | 806,537 | 0.09% | 806,537 | 0.09% | |||||
| 4. Shares held by other foreign investors | 118,232,400 | 13.78% | 118,232,400 | 13.78% | |||||
| Among which: Shares held by foreign corporations | 118,232,400 | 13.78% | 118,232,400 | 13.78% | |||||
| Shares held by foreign natural person | |||||||||
| II. Unrestricted shares | 739,082,604 | 86.13% | 10,781 | 10,781 | 739,093,385 | 86.13% | |||
| 1. RMB ordinary shares | 561,264,288 | 65.41% | 10,781 | 10,781 | 561,275,069 | 65.41% | |||
| 2. Domestically listed foreign shares | 177,818,316 | 20.72% | 177,818,316 | 20.72% | |||||
| 3. Overseas listed foreign shares | |||||||||
| 4. Other | |||||||||
| III. Total shares | 858,121,541 | 100.00% | 10,781 | 10,781 | 858,132,322 | 100.00% |
Reasons for share changes:
√ Applicable □ Not applicable
Since the Company issued the A-share convertible bonds on 9 April 2020, as of 31 December 2020, 10781 shares have beentransferred.Approval of share changes:
√ Applicable □ Not applicable
The foreign sponsor shareholder of the Company, Tailun (Thailand) Textile Co., Ltd. holds 118,232,400 non-listed foreign shares,which have changed the registration to be restricted tradable B-shares with 1 year restricted period at China Securities Depositoryand Clearing Co., Ltd. Shenzhen Branch 30 June 2020, and the restriction shall be unlocked on 1 July 2021.Transfer of share ownership:
□ Applicable √ Not applicable
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
II. Issuance and Listing of Securities
1. Issuance of Securities (Excluding Preference Shares) during the Reporting Period
√ Applicable □ Not applicable
| Name of stocks and derivative securities | Issued date | Issue price (or interest rate) | Number | Listing date | Number of listed transaction with approval | Termination date | Index to disclosed information | Disclosure date |
| Stock | ||||||||
| Convertible bonds, separate bargaining convertible bonds and corporate bonds | ||||||||
| Lu Thai convertible | 9 April 2020 | 100 | 14,000,000 | 13 May 2020 | 14,000,000 | 8 April 2026 | Announcement (No. | 7 April 2020 |
| bond | 2020-013) published on http://www.cninfo.co on 9 April 2020 | ||
| Other derivative securities | |||
Notes to issuance of securities (excluding preference shares) during the Reporting Period:
On 9, 10, 13 and 15 April 2020, the Company published the “Suggestive Announcement on the Issue of A-Share Convertible CorporateBonds through Public Offering”, the “Announcement on the Online Winning Rate and Priority Allotment Result of the Public Offeringof A-Share Convertible Corporate Bonds”, the “Announcement on the Online Winning Result of the Public Offering of A-ShareConvertible Corporate Bonds”, and the “Announcement on the Result of the Issue of A-Share Convertible Corporate Bonds throughPublic Offering”. For more detail, refer to the related announcements (No: 2020-017, 2020-018, 2020-020 and 2020-022) onwww.cninfo.com.cn. On 9 April, the Company issued convertible corporate bonds of RMB 1.4 billion (14 million bonds) on ShenzhenStock Exchange under the short name of Lu Thai Convertible Bonds with the bond code of 127016.On 12 May 2020, the Company published the “Announcement on the Listing of A-Share Convertible Corporate Bonds through PublicOffering”. On 13 May 2020, Lu Thai’s convertible corporate bonds were listed on Shenzhen Stock Exchange for trading. The durationof the bonds was set from 9 April 2020 to 8 April 2026. The period for converting into shares will be from 15 October 2020 to 8 April2026. For more detail, refer to the announcement (No.: 2020-043) on www.cninfo.com.cn.On 2 July 2020, the Company published the “Announcement on the Adjustment to the Price for Converting Convertible CorporateBonds into Shares”. According to the “Proposal on the Company’s Profit Distribution Plan for 2019”, which was considered andapproved at the Company’s Annual General Meeting of 2019 held on 21 May 2020, 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 31 December 2019 as the base. The shareregistration date for the Company’s equity distribution of 2019 was 8 July 2020 and the ex-rights and ex-dividend date was 9 July 2020.Therefore, the share conversion price of “Lu Thai Convertible Bonds” was adjusted from RMB 9.01 per share to RMB 8.91 per share,and the new price after the adjustment took effect on and as of 9 July 2020 (the ex-rights and ex-dividend date). For more detail, refer tothe announcement (No.: 2020-054) on www.cninfo.com.cn.On 5 January 2021, the Company published the “Announcement on Converting Convertible Corporate Bonds into Shares for Q42020”. Lu Thai Convertible Bonds starts to enter the period for converting into shares since 15 October 2020. As of 31 December2020, 10,781 shares have been converted into A-shares cumulatively. The convertible bonds decreased RMB96,200.00, and thebalance of it is RMB1,399,903,800.00. For more detail, refer to the announcement (No.: 2021-001) on www.cninfo.com.cn.
2. Changes to Total Shares, Shareholder Structure and Asset and Liability Structures
√ Applicable □ Not applicable
The total shares of the Company at the beginning of 2020 were 858,121,541 shares (including 561,883,400 A-shares and296,238,141 B-shares). 10,781 A-shares have been converted from Lu Thai Convertible Bonds accumulatively from 15 October 2020to 31 December 2020. As of 31 December 2020, the total shares of the Company were 858,132,322 shares (including 561,894,181A-shares and 296,238,141 B-shares), which caused no significant influence on the asset and liability structures of the Company.
3. Existing Staff-Held Shares
□ Applicable √ Not applicable
III Shareholders and Actual Controller
1. Shareholders and Their Shareholdings at the Period-End
Unit: share
| Number of ordinary shareholders | 59,633 | Number of ordinary shareholders at the month-end prior to the disclosure of this Report | 58,570 | Number of preferred shareholders with resumed voting rights (if any) (see note 8) | 0 | Number of preferred shareholders with resumed voting rights at the month-end prior to the disclosure of this Report (if any) (see note 8) | 0 | ||||||||
| 5% or greater shareholders or top 10 shareholders | |||||||||||||||
| Name of shareholder | Nature of shareholder | Shareholding percentage | Total shares held at the period-end | Increase/decrease in the Reporting Period | Restricted shares held | Unrestricted shares held | Shares in pledge or frozen | ||||||||
| Status | Shares | ||||||||||||||
| Zibo Lucheng Textile Investment Co., Ltd. | Domestic non-state-owned legal person | 16.36% | 140,353,583 | 0 | 140,353,583 | ||||||||||
| Tailun (Thailand) Textile Co., Ltd. | Foreign legal person | 13.78% | 118,232,400 | 0 | 118,232,400 | ||||||||||
| Central Huijin Assets Management Co., Ltd. | State-owned legal person | 2.37% | 20,315,300 | 0 | 20,315,300 | ||||||||||
| China Securities Finance Corporation Limited | Domestic non-state-owned legal person | 1.75% | 15,021,260 | -3,292,131 | 15,021,260 | ||||||||||
| National Social Security Fund Portfolio 413 | Domestic non-state-owned legal person | 1.10% | 9,450,051 | 1,140,000 | 9,450,051 | ||||||||||
| Zhang Ying | Domestic natural person | 0.69% | 5,910,600 | 3,569,078 | 5,910,600 | ||||||||||
| Zhong Ou China Securities Asset Management Plan | Other | 0.61% | 5,235,900 | 0 | 5,235,900 | ||||||||||
| Dacheng China Securities Asset Management Plan | Other | 0.61% | 5,235,900 | 0 | 5,235,900 | ||||||||||
| Harvest China Securities Asset Management Plan | Other | 0.61% | 5,235,900 | 0 | 5,235,900 | ||||||||||
| GF China Securities Asset Management Plan | Other | 0.61% | 5,235,900 | 0 | 5,235,900 | ||||||||||
| Strategic investor or general legal person becoming a top-10 ordinary shareholder due to | Naught | ||||||||||||||
| rights issue (if any) (see note 3) | ||||
| Related or acting-in-concert parties among the shareholders above | Zibo Lucheng Textile Investment Co., Ltd. is the largest shareholder of the Company 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. | |||
| Above shareholders involved in Entrusting/being entrusted voting rights and giving up voting rights | Naught | |||
| Top 10 unrestricted shareholders | ||||
| Name of shareholder | Unrestricted shares held at the period-end | Shares by type | ||
| 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 | |
| China Securities Finance Corporation Limited | 15,021,260 | RMB ordinary share | 15,021,260 | |
| National Social Security Fund Portfolio 413 | 9,450,051 | RMB ordinary share | 9,450,051 | |
| Zhang Ying | 5,910,600 | RMB ordinary share | 5,910,600 | |
| Zhong Ou China Securities Asset Management Plan | 5,235,900 | RMB ordinary share | 5,235,900 | |
| Dacheng China Securities Asset Management Plan | 5,235,900 | RMB ordinary share | 5,235,900 | |
| Harvest China Securities Asset Management Plan | 5,235,900 | RMB ordinary share | 5,235,900 | |
| GF China Securities Asset Management Plan | 5,235,900 | RMB ordinary share | 5,235,900 | |
| China China Securities Asset Management Plan | 5,235,900 | RMB ordinary share | 5,235,900 | |
| Related or acting-in-concert parties among top 10 unrestricted public shareholders, as well as between top 10 unrestricted public shareholders and top 10 shareholders | Zibo Lucheng Textile Investment Co., Ltd. is the largest shareholder of the Company 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. | |||
| Top 10 ordinary shareholders involved in securities margin trading (if any) (see | N/A | |||
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.
2. Controlling Shareholder
Nature of the controlling shareholder: Controlled by a natural personType of the controlling shareholder: legal person
note 4)Name of controllingshareholder
| Name of controlling shareholder | Legal representative/person in charge | Date of establishment | Unified social credit code | Principal activity |
| Zibo Lucheng Textile Investment Co., Ltd. | Liu Deming | 25 September 1998 | 91370303164200391J | Investment on textile, electricity and chemical; purchase, process and sale of cotton; retail service etc. |
| Particulars about shareholding of controlling shareholders controlling and holding shares of other listed companies during the Reporting Period | N/A | |||
Change of the controlling shareholder in the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Actual Controller and Its Acting-in-Concert Parties
Nature of the actual controller: Domestic natural personType of the actual controller: natural person
| Name of the actual controller | Relations with the actual controller | Nationality | Whether gain the right of residence in other countries or regions or not |
| Liu Zibin | In person | China | No |
| Liu Deming | Concerted action (including agreement, relatives, and same control) | China | No |
| Professions and titles | Liu Zibin is the Chairman of the Board and President of Lu Thai Textile Co., Ltd. , Liu Deming is the Chairman of the Board and GM of Zibo Lucheng Textile Investment Co., Ltd. | ||
| Particulars about listed companies with shares ever held by the actual | N/A | ||
Change of the actual controller during the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.Ownership and control relations between the actual controller and the Company:
Indicate by tick mark whether the actual controller controls the Company via trust or other ways of asset management.
□ Applicable √ Not applicable
4. Other 10% or Greater Corporate Shareholders
□ Applicable √ Not applicable
5. Limitations on Shareholding Decrease by the Company’s Controlling Shareholder, Actual Controller,Reorganizer and Other Commitment Makers
□ Applicable √ Not applicable
Part VII Preference Shares
□ Applicable √ Not applicable
No preference shares in the Reporting Period.
Part VIII Convertible Corporate Bonds
√ Applicable □ Not applicable
I Previous Adjustments of Conversion PriceOn 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, theCompany held the Annual General Meeting of 2019, where the “Proposal on the Company’s Profit Distribution Planfor 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 31 December 2019 as thebase. The share registration date for the Company’s equity distribution of 2019 was 8 July 2020 and the ex-rightsand ex-dividend date was 9 July 2020. Therefore, the share conversion price of “Lu Thai Convertible Bonds” wasadjusted from RMB9.01 per share to RMB8.91 per share, and the new price after the adjustment took effect on andas of 9 July 2020 (the ex-rights and ex-dividend date).
II 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 | 96,200.00 | 10,781 | 0.00% | 1,399,903,800.00 | 99.99% |
III Top 10 Convertible Bond Holders
Unit: share
| No. | Name of holders | Nature of holders | Number of convertible bonds held at the period-end (share) | Amount of convertible bonds held at the period-end (RMB) | As % of convertible bonds held at the period-end |
| 1 | Guosen Securities Co., Ltd. | State-owned legal person | 1,600,001 | 160,000,100.00 | 11.43% |
| 2 | Shanghai Pudong Development Bank－E Fund Yuxiang Return Bond Securities Investment Fund | Other | 542,427 | 54,242,700.00 | 3.87% |
| 3 | Industrial and Commercial Bank of China－China Universal Convertible Bond Securities Investment Fund | Other | 495,714 | 49,571,400.00 | 3.54% |
| 4 | Industrial and Commercial Bank of China－Fullgoal TianLi Growth Bond Investment Fund | Other | 484,957 | 48,495,700.00 | 3.46% |
| 5 | National Social Security Fund Portfolio 1002 | Domestic non-state-owned legal person | 463,247 | 46,324,700.00 | 3.31% |
| 6 | Genertec Investment Management Co., Ltd. | State-owned legal person | 434,645 | 43,464,500.00 | 3.10% |
| 7 | China Pacific Insurance (Group) Co., Ltd.－Dividend- Individual dividends | Other | 424,882 | 42,488,200.00 | 3.04% |
| 8 | National Social Security Fund Portfolio 1005 | Domestic non-state-owned legal person | 415,369 | 41,536,900.00 | 2.97% |
| 9 | ICBC Credit Suisse Tianfeng Convertible Fixed Benefit Pension Product－Bank of China Limited | Other | 409,986 | 40,998,600.00 | 2.93% |
| 10 | Fullgoal Fuyi Progressive Fixed Benefit Pension Product- Industrial and Commercial Bank of China | Other | 409,112 | 40,911,200.00 | 2.92% |
IV Significant Changes in Profitability, Assets Condition and Credit Status of Guarantors
□ Applicable √ Not applicable
V The Company’s Liabilities, Credit Changes at the Period-end and Cash Arrangements toRepay Debts in Future Years
1. YoY changes of main financial index between the period-end and the end of last year (or the same reporting period as prior year)
| Item | Period-end | The end of last year | Increase/decrease |
| Current ratio | 2.68 | 1.33 | 101.50% |
| Asset-liability ratio | 33.29% | 30.17% | 3.12% |
| Quick ratio | 1.62 | 0.57 | 184.21% |
| Reporting Period | Same period of last year | YoY increase/decrease | |
| EBITDA interest coverage ratio | 7.81 | 18.61 | -58.03% |
| Rate of redemption | 100% | 100% | - |
| Interest coverage | 100% | 100% | - |
Major reasons for more than 30% year-on-year changes in the aforementioned accounting data and financial indicators: the currentratio as at the end of this Reporting Period increased compared with that as at the end of last year, which was mainly due to theincrease in the monetary fund in current assets after the Company issued the convertible corporate bonds; the quick ratio as at the endof this Reporting Period increased compared with that as at the end of last year, which was mainly due to the increase in themonetary fund in quick assets after the Company issued the convertible corporate bonds.
2. United Credit Ratings Co., Ltd. (hereinafter referred to as “Untied Ratings”), the credit ratings institution of the Company’sconvertible bonds, issued the “Credit Ratings Report on the A-Share Convertible Corporate Bonds Publicly Issued by Lu ThaiTextile Co., Ltd.” on 27 September 2019. According to the Report, the Company’s corporate credit rating was “AA+” with a ratingoutlook of “Stable”, and the bond credit rating was “AA+”. United Ratings will perform follow-up rating once every year during theduration of the corporate bonds. On 17 June 2020, United Ratings issued the “Follow-up Ratings Report of 2020 for the ConvertibleCorporate Bonds of Lu Thai Textile Co., Ltd.”. According to the Report, the Company’s corporate credit rating remained “AA+” andthe bond credit rating remained “AA+”. Disclosure index: “Follow-up Ratings Report of 2020 for the Convertible Corporate Bondsof Lu Thai Textile Co., Ltd.” was disclosed on www.cninfo.com.cn on 19 June 2020.
Part IX Directors, Supervisors, Senior Management and StaffI Change in Shareholdings of Directors, Supervisors and Senior Management
| Name | Office title | Incumbent/Former | Gender | Age | Start of tenure | End of tenure | Beginning shareholding (share) | Increase in the Reporting Period (share) | Decrease in the Reporting Period (share) | Other increase/decrease (share) | Ending shareholding (share) |
| Liu Zibin | Chairman and President | Incumbent | Male | 56 | 6 June 2007 | 10 June 2022 | 148,290 | 148,290 | |||
| Xu Zhinan | Vice Chairman | Incumbent | Male | 91 | 6 May 2004 | 10 June 2022 | |||||
| Fujiwara Hidetoshi | Director | Incumbent | Male | 81 | 7 May 1998 | 10 June 2022 | |||||
| Chen Ruimou | Director | Incumbent | Male | 77 | 16 April 2000 | 10 June 2022 | |||||
| Zeng Facheng | Director | Incumbent | Male | 70 | 6 June 2007 | 10 June 2022 | |||||
| Liu Deming | Director, Vice Controller of Global Marketing Department | Incumbent | Male | 30 | 12 May 2017 | 10 June 2022 | |||||
| Qin Guiling | Director | Incumbent | Female | 55 | 7 May 1998 | 10 June 2022 | 126,542 | 126,542 | |||
| Zhang Hongmei | Director and Chief Accountant | Incumbent | Female | 51 | 6 June 2016 | 10 June 2022 | 92,500 | 92,500 | |||
| Zhou Zhiji | Independent Director | Incumbent | Male | 57 | 10 March 2019 | 10 June 2022 | |||||
| Pan Ailing | Independent | Incu | Fe | 56 | 6 June 2016 | 10 June 2022 |
| Director | mbent | male | |||||||||
| Wang Xinyu | Independent Director | Incumbent | Male | 54 | 6 June 2016 | 10 June 2022 | |||||
| Qu Dongmei | Independent Director | Incumbent | Female | 52 | 10 June 2019 | 10 June 2022 | |||||
| Zhang Shougang | Chairman of the Supervisory Committee | Incumbent | Male | 51 | 18 February 2018 | 10 June 2022 | 73,100 | 73,100 | |||
| Liu Zilong | Supervisor | Incumbent | Male | 53 | 6 June 2007 | 10 June 2022 | 10,000 | 10,000 | |||
| Dong Shibing | Supervisor, Manager of Logistics Management Department | Incumbent | Male | 52 | 6 June 2007 | 10 June 2022 | 5,000 | 5,000 | |||
| Zhang Jianxiang | Vice president, Controller of Functional Fabric Product Line | Incumbent | Male | 53 | 6 June 2007 | 10 June 2022 | 52,150 | 52,150 | |||
| Wang Jiabin | Vice president, Security Controller, Controller of Yarn-dyed Fabric Product Line | Incumbent | Male | 58 | 6 June 2007 | 10 June 2022 | 83,700 | 83,700 | |||
| Zhang Zhanqi | Vice president, Controller of Global Marketing Department | Incumbent | Male | 49 | 6 June 2007 | 10 June 2022 | 80,300 | 80,300 | |||
| Zhang | Board Secretary, | Incumbe | M | 53 | 6 June 2007 | 10 June 2022 | 77,700 | 77,700 |
| Keming | Controller of Financial Management Department | nt | ale | ||||||||
| Li Wenji | CIO | Incumbent | Male | 54 | 8 June 2016 | 10 June 2022 | 10,000 | 10,000 | |||
| Zhang Wei | Controller of Strategy and Market Department | Incumbent | Male | 35 | 18 January 2018 | 10 June 2022 | |||||
| Wang Changzhao | CEO of Lu Thai Engineering Technology Institute | Incumbent | Male | 47 | 6 June 2013 | 10 June 2022 | 22,500 | 22,500 | |||
| Fujiwara Matsuzaka | GM of Japan Office | Incumbent | Male | 48 | 9 December 2014 | 10 June 2022 | |||||
| Yu Shouzheng | Controller of Energy and Environment Protection Department | Incumbent | Male | 53 | 6 June 2007 | 10 June 2022 | 83,100 | 83,100 | |||
| Shang Chenggang | Controller of Garment Product Line | Incumbent | Male | 48 | 6 June 2013 | 10 June 2022 | 30,000 | 30,000 | |||
| Du Lixin | Chief Engineer | Incumbent | Male | 45 | 18 January 2018 | 10 June 2022 | |||||
| Guo Heng | Manager of Business Management | Incumbent | Male | 48 | 18 January 2018 | 10 June 2022 | |||||
| Fu Guannan | President Assistant | Incumbent | Female | 38 | 14 December 2020 | 10 June 2022 | |||||
| Lyu Yongchen | Non-director senior management | Former | Male | 53 | 6 June 2007 | 2 March 2020 | 33,750 | 8,400 | 25,350 | ||
| Wang Fangshui | Director | Former | Male | 60 | 7 May 1998 | 26 February 2021 | 146,753 | 146,753 |
| Bi Xiuli | Independent Director | Former | Female | 54 | 6 June 2016 | 25 February 2021 | |||||
| Total | -- | -- | -- | -- | -- | -- | 1,075,385 | 0 | 8,400 | 1,066,985 |
II Change of Directors, Supervisors and Senior Management
√Applicable □ Not applicable
| Name | Office title | Type of change | Date of change | Reason for change |
| Lyu Yongchen | Non-director senior executive | Left | 2 March 2020 | Left for personal reason |
| Fu Guannan | Non-director senior executive | Appointed | 14 December 2020 | |
| Wang Fangshui | Director | Left | 26 February 2021 | Retirement |
| Bi Xiuli | Independent Director | Left | 25 February 2021 | Left for job arrangement |
III Biographical InformationProfessional backgrounds, major work experience and current duties in the Company of the incumbent directors, supervisors andsenior management:
1. Mr. Liu Zibin: Chairman and President of the Company, born in 1965, with a master degree. He served as the GM and chairman ofZibo Lucheng Textile Co., Ltd. And he currently serves as the chairman and president of Luthai Textile Co., Ltd., the chairman ofLufeng Textile Dyeing Co., Ltd., the chairman of Zibo Xinsheng Thermoelectric Co., Ltd., the chairman of Zibo Lu Qun Textile Co.,Ltd., the chairman of Shanghai Luthai Textile and Garment Co., Ltd., the chairman of Luthai Textile (USA) Co., Ltd., the chairmanof Luthai (Hong Kong) Co., Ltd., the chairman of Shanghai Zhinuo Textile New Materials Co., Ltd., the chairman of ShandongLulian New Materials Co., Ltd. and the chairman of Shandong Lujia Import and Export Co., Ltd.
2. Mr. Xu Zhinan: Vice chairman of the Company, a Thailander born in 1930. He served as director and GM of Thailand Fiber ClothFactory Co., Ltd., director of Thailand Fiber Co., Ltd., director of Thailand Fiber Printing and Co., Ltd., director and deputy GM ofLuthai Textile Co., Ltd. And he currently serves as the director and deputy chairman of the Company and GM of Thailand Fiber Co.,Ltd.
3. Mr. Fujiwara Hidetoshi: Director of the Company, a Japanese born in 1940. He served as director of Degang Weaving Factory inJapan, director and senior consultant of Luthai Textile Co., Ltd. He currently serves as a director of Luthai Textile Co., Ltd. and adirector of Lufeng Textile Dyeing Co., Ltd.
4. Mr. Chen Ruimou: Director of the Company, born in 1944 with a university degree. He served as staff of Jinyuan Co., Ltd, staff ofNissin Shokai Co., Ltd., supervisor and director of Luthai Textile Co., Ltd. And he currently serves as a director of the Company.
5. Mr. Zeng Facheng: Director of the Company, a Thailander born in 1951. He is currently the chairman of GOLD MINEGARMENT CO., LTD. and BLOSSOM GARMENT MANUFACTURING (THAILAND) CO., LTD.; he also is the chairman of theThai Shipping and Transportation Association, the chairman of the standing committee of the Thai Garment Industry DevelopmentCharity Foundation, the executive director of the Thai Chamber of Commerce, the Thai industry Director of the Association,Chairman of the Thai Garment Industry Free Trade Association, and Director of Luthai.
6. Mr. Wang Fangshui: Director of the Company, born in 1961, with a master degree of business administration. He served aslaboratory manager of Zibo No.2 Cotton Mill, manager of production department of Zibo No.7 Cotton Mill, chief engineer, directorof Luthai Textile Co., Ltd. & director of LuFeng Company Limited & director of Zibo Lu Qun Textile Co., Ltd., director of ShanghaiZhinuo Textile New Materials Co., Ltd. and Shandong Lulian New Materials Co., Ltd., executive director of Vanguard Apparel Co.,Ltd. and supervisor of Continental Textile Co., Ltd. and Lu Thai (Tan Chau) Textile Co., Ltd.
7. Mr. Liu Deming: Director of the Company, vice director of global marketing department, born in 1990, with a master degree.Currently, he serves as chairman and GM of Zibo Lucheng Textile Investment Co., Ltd., director of Luthai Textile Co., Ltd. and vicedirector of global marketing department of the Luthai Textile Co., Ltd.
8. Ms. Qin Guiling: Director of the Company, born in 1966, with a master degree of business administration. He served as chief ofplanning department, manager of securities department, financial assistant to GM, deputy GM and secretary of board of directors ofLuthai Textile Co., Ltd. In addition, he currently serves as a director of Luthai.
9. Ms. Zhang Hongmei: Director and chief accountant of the Company, born in 1970, with a master degree of business administration.She is a senior accountant. She served as chief of cost department, chief of accounting department and deputy chief accountant ofLuthai Textile Co., Ltd., and currently serves as the director and chief accountant of the Company. He is also a director of Zibo LuQun Textile Co., Ltd. and a supervisor of Shanghai Zhinuo Textile New Materials Co., Ltd. and Shandong Lulian New Materials Co.,Ltd.
10. Ms. Bi Xiuli: Independent director of the Company, born in 1967, with a master degree. He currently serves as a partner ofDeHeng Law Offices and DeHeng Law Offices (Hong Kong). His main fields of practice are domestic and overseas listing, M&A,restructuring, private placement financing, venture capital and so on. He served as a lawyer of Beijing King & Capital Law Firm,Beijing JunZeJun Law Offices and China Legal Adviser of Li & Partners (China), and has been a partner in DeHeng Law Officessince January 2011. She left the Company for personal job arrangement on 25 February 2021.
11. Ms. Pan Ailing: Independent director of the Company, born in 1965, with a doctor degree of economics; and she serves as apostdoctor of financial management. She currently serves as a professor at the School of Management of Shandong University, adoctoral supervisor, a leader in accounting discipline, a director of the Investment and Financing Research Center of ShandongUniversity, a non-practicing member of CICPA, a director of the Shandong Institute of Accounting, a managing director of theShandong Institute of Comparative Management, a visiting professor at Soochow University in Taiwan, a visiting scholar at theUCONN, and a national candidate for the "New Century Talents Project". In addition, she is an outstanding talent of the Ministry ofEducation of the People’s Republic of China in the new century and an expert specially posted by the State Council of the People'sRepublic of China.
12. Mr. Wang Xinyu: Independent director of the Company, born in 1967, with a master's degree. He is in possession of thecertificates of CPA, CTA and CPV. He once taught at Jinan Vocational College, and successively worked as project manager &department manager of Shandong Zhengyuan Hexin Accounting Firm and Zhonglei Certified Public Accountants, and deputy GM ofShandong Branch. In addition, he currently serves as a senior partner of Reanda Certified Public Accountants LLP, Director ofShandong Branch, and independent director of the Company.
13. Mr. Zhou Zhiji: Independent director of the Company, born in 1963, with a bachelor degree. He is in possession of thecertificates of CPA and senior accountant. He served as a cadre of Shandong Provincial Department of Finance, director ofdepartment of Shandong accounting firm, chief accountant of Shandong Zhengyuan Accounting Firm, director and manager ofShandong Yingshida Enterprise Management Consulting Co., Ltd., chairman of Shandong Jinheng Consulting Co., Ltd. Now, heserves as a supervisor of Shandong Jinheng Consulting Co., Ltd.
14. Ms. Qu Dongmei: Independent director of the Company, born in 1969, with a doctor degree of economic law. She currentlyserves as a professor at the School of Law of Shandong Normal University, a master's supervisor in Civil and Commercial Law, adirector of the Western Returned Scholars Association, a lawyer of Grandall Law Firm (Jinan) and an arbitrator of Jinan ArbitrationCommission. In addition, he holds the license of insurance broker in Illinois, USA.
15. Mr. Zhang Shougang: Chairman of the Board of Supervisors, born in 1970, with a master degree of business administration. He
is in possession of a certificate of senior engineer. And he served as director of the weaving factory, manager of the weavingdepartment, manager of the quality management department, manager of the garment production department, manager of theenterprise management department and Director of Human Resources Department of the Company.
16. Mr. Liu Zilong: Supervisor of the Company, born in 1968, with a master degree of business administration. In addition, he hasserved as the GM of Luthai (Hong Kong) since 2002.
17. Mr. Dong Shibing: Supervisor of the Company, born in 1969, with a diploma of technical secondary school. He once served asdeputy director of the GM's office of the Company. Currently, he served as the manager of the Company's logistics managementdepartment.
18. Mr. Zhang Jianxiang: Vice President of the Company and director of the Functional Fabric Product Line, born in 1968, with amaster degree of business administration. He served as the head of the weaving section of Binzhou No.2 Cotton Mill, the director ofthe expansion office of Luthai Textile Co., Ltd., the director of the weaving factory of Luthai Textile Co., Ltd., the deputy managerof the production department of Luthai Textile Co., Ltd., the manager of the quality management department of Luthai Textile Co.,Ltd., the director of the fabric finishing factory of Luthai Textile Co., Ltd., the deputy director and the executive director of theLuthai Textile and Clothing Engineering Research Institute.
19. Mr. Wang Jiabin: Vice president and safety director of the Company, director of yarn-dyed fabric product line. Born in 1963,with a master degree of business administration, he served as workshop director of Zibo No. 1 Cotton Textile Mill, director of laborsafety, weaving workshop director of Luthai Textile Co., Ltd., director of power, director of bleaching and dyeing factory, managerof bleaching and dyeing department and assistant to the GM.
20. Mr. Zhang Zhanqi: Vice president of the Company, director of global marketing department and GM of LuFeng CompanyLimited, born in 1972, with a master degree of business administration. Also, he serves as a senior engineer, once was the factorydirector of fabric finishing factory and manager of quality management department of the Company.
21. Mr. Zhang Keming: Secretary of the board of directors of the Company, and director of Financial Management Department. Bornin 1968, with a master degree of business administration, he is a senior accountant. Once he was deputy manager and manager of thefinancial department of the Company.
22. Mr. Li Wenji: CIO of the Company and manager of the information department of the enterprise management department, bornin 1967. Once he was a teacher of Shandong University of Finance. He has served as the manager of the Company's informationdepartment Since July 2005; and he was appointed CIO in 2016.
23. Mr. Zhang Wei: director of the strategy and marketing department of the Company, born in 1985, with a doctor degree. Heserved as a researcher of Guotai Junan Securities Co., Ltd. and China Asset Management Co, Ltd., manager of the strategic planningdepartment of the Company; he also serves as the director of Shanghai Zhinuo Textile New Materials Co., Ltd.
24. Mr. Wang Changzhao: Executive director of Lu Thai Engineering Technology Institute. Born in 1974, with a college degree, heserved as a security worker in a weaving factory, an equipment manager, a document maker in an international business department,a copy clerk, a deputy section chief in a fabric department, a section chief, an assistant to manager, a manager in No.1 internationalbusiness department, a manager in a marketing department and a manager in a yarn-dyed fabric marketing department.
25. Mr. Fujiwara Matsuzaka: GM of branch office in Japan, Japanese with a bachelor degree. He is a special foreign expert of theCompany, and he once won the Qilu Friendship Award. In addition, he served as deputy manager of international businessdepartment, manager of No.1 international business department, manager of No.2 international business department and manager ofclothing marketing department of Luthai Textile Co., Ltd.
26. Mr. Yu Shouzheng: Director of the energy and environmental protection department of the Company, born in 1968, with a masterdegree of business administration. As an engineer, he once worked as the director of the power department and manager of theenergy division of the Company.
27. Mr. Shang Chenggang: As the director of clothing product line of the Company. Born in 1973, he served as deputy director,director, manager of GM department, management representative and manager of garment production department, director ofgarment manufacturing center & manager of garment production management department of the Company.
28. Mr. Du Lixin: Chief engineer of the Company. Born in 1975, he served as spinning operator, a weaver's planner, a deputydirector of the production department's dispatching room, a weaver's factory director, a manager of the weaving department, and adeputy manager of the production department of Luthai, as well as GM of Continental Textile Co., Ltd. and executive Luthai Instituteof Engineering and Technology.
29. Mr. Guo Heng: Director of enterprise management department of the Company. Born in 1972, he served as the deputy director ofthe spinning factory of Lu Thai, the deputy manager of the yarn business department, and the manager of the yarn businessdepartment of Luthai.
30. Ms. Fu Guannan: President Assistant of the Company. Born in 1983, with a master degree, she served as senior executive directorof Investment Banking Department in Guotai Junan Securities Co., Ltd.Offices held concurrently in shareholding entities:
√Applicable □Not applicable
| Name | Shareholding entity | Office held in the shareholding entity | Start of tenure | End of tenure | Remuneration or allowance from the shareholding entity |
| Liu Zibin | Zibo Lucheng Textile Investment Co., Ltd. | Director | 26 February 1999 | No | |
| Xu Zhinan | Tailun (Thailand) Textile Co., Ltd. | GM | 29 January 1985 | No | |
| Liu Deming | Zibo Lucheng Textile Investment Co., Ltd. | Chairman and GM | 1 February 2017 | No | |
| Explanations about holding posts in shareholders’ companies | Mr. Liu Zibin is the Director of Zibo Lucheng Textile Investment Co., Ltd., holding 4% equities of Zibo Lucheng Textile Investment Co., Ltd. Basic information of Mr. Liu Zibin: Chinese, no right of residence in other countries or regions. Mr. Liu Deming holds the post of Chairman and GM of Zibo Lucheng Textile Investment Co., Ltd., holding 21% equities of Zibo Lucheng Textile Investment Co., Ltd. Basic information of Mr. Liu Deming: Chinese, no right of residence in other countries or regions. Mr. Xu Zhinan is the sponsor of foreign capital of the Company, shareholder of Tailun (Thailand) Textile Co., Ltd. and Tailun (Thailand) Textile Co., Ltd. is the second largest shareholder of the Company. Basic information about Mr. Xu Zhinan: Thai. | ||||
Offices held concurrently in other entities:
√Applicable □Not applicable
| Name | Other entity | Office held in the entity | Start of tenure | End of tenure | Remuneration or allowance from the entity |
| Liu Zibin | Lufeng Weaving & Dyeing Co., Ltd. Zibo Luqun Textile Co., Ltd., Zibo Xinsheng Thermal Power Co., Ltd., Shanghai Lu Thai Textile Garment Co., Ltd., Lu Thai (America) Textile Co., Ltd. Lu Thai (HK) Textile Co., Ltd, Shanghai Zhinuo Textile New Material Co., Ltd, Shandong Lulian New Materials Co., Ltd., Shandong Lujia Import and Export Co., Ltd. | Chairman of the Board, Director, GM | 7 December 2015 | No | |
| Liu Deming | Shanghai Zhinuo Textile New Materials Co., Ltd., Beijing Zhishu Trading Co., Ltd. | Director, GM | 21 August 2017 | No | |
| Zhang Hongmei | Zibo Luqun Textile Co., Ltd., Shanghai Zhinuo | Director, | 17 June 2003 | No |
| Textile New Materials Co., Ltd., Shandong Lulian New Materials Co., Ltd. | Supervisor | ||||
| Zhang Jianxiang | Shandong Lulian New Materials Co., Ltd., Shanghai Lu Thai Textile Garment Co., Ltd. | Director, Supervisor, GM | 30 December 2010 | No | |
| Du Lixin | Continental Textile Co., Ltd., Lu Thai (Vietnam) Textile Co., Ltd. | Director | 29 December 2015 | No | |
| Zhang Wei | Shanghai Zhinuo Textile New Materials Co., Ltd. | Director | 15 October 2018 | No | |
| Pan Ailing | Shandong University School of Management | Professor | 1 July 1986 | Yes | |
| Wang Xinyu | Reanda Certified Public Accountants Shandong Branch | Head | 1 August 2013 | Yes | |
| Zhou Zhiji | Shandong Jinheng Consulting Co., Ltd | Supervisor | 1 October 2015 | Yes | |
| Qu Dongmei | Law School of Shandong Normal University | Professor | 1 July 2003 | Yes | |
| Explanations about holding posts in other entities | Except for independent directors, all other entities the Company’s directors, supervisors and senior management hold posts are majority-owned subsidiaries of the Company. | ||||
Punishments imposed in the recent three years by the securities regulator on the incumbent directors, supervisors and seniormanagement as well as those who left in the Reporting Period:
□ Applicable √ Not applicable
IV Remuneration of Directors, Supervisors and Senior Management
Decision-making procedure, determination basis and actual payments of remuneration for directors, supervisors and seniormanagement:
| Remuneration committee under the board of directors is responsible for formulating assessment standards of directors and senior executives and conducting assessment; for formulating and reviewing remuneration policy and program of directors and senior executives; it is responsible for the board of directors. The remuneration committee, according to appraisal results of position performance and motivation and restriction plan for senior executives, proposes amount of payment and methods of reward for directors and senior executives and submits the above resolutions to the board of directors for ratification after the approval by voting. |
| The Chief Accountant, the Corporate Management Department and the HR Department of the Company was responsible for preparations for the decision-making of the Remuneration and Appraisal Committee by providing relevant information of the Company as follows: (I) accomplishment of main financial and business objectives; (II) accomplishment of relevant indicators of other listed companies in the sector; (III) work scope and main responsibilities of senior management staff. The remuneration committee appraised directors and senior management staff according to the completion situation of the Company’s performance and the annual appraisal results of senior management staff were put forward according to the performance appraisal results and the senior staff |
| incentive and disciplinary plan. Upon approval by voting, the results were reported to the Board of Directors for approval. |
| The number of incumbent directors, supervisors and senior executives is 28, among which there are 28 persons actually receiving remuneration from the Company. Till 31 December 2020, the total amount of annual payment drawn from the Company by directors, supervisors and senior executives is RMB17.4854 million (before tax). |
Remuneration of directors, supervisors and senior management for the Reporting Period
Unit: RMB'0,000
| Name | Office title | Gender | Age | Incumbent/Former | Total before-tax remuneration from the Company | Any remuneration from related party |
| Liu Zibin | Chairman and President | Male | 56 | Incumbent | 95.46 | No |
| Xu Zhinan | Vice Chairman | Male | 91 | Incumbent | 30.3 | No |
| Fujiwara Hidetoshi | Director | Male | 81 | Incumbent | 151.06 | No |
| Chen Ruimou | Director | Male | 77 | Incumbent | 30.3 | No |
| Zeng Facheng | Director | Male | 70 | Incumbent | 1.06 | No |
| Liu Deming | Director, vice controller of Global Marketing Department | Male | 30 | Incumbent | 54.35 | No |
| Qin Guiling | Director | Female | 55 | Incumbent | 91.52 | No |
| Zhang Hongmei | Director and Chief Accountant | Female | 51 | Incumbent | 88.06 | No |
| Zhou Zhiji | Independent Director | Male | 57 | Incumbent | 4.8 | No |
| Pan Ailing | Independent Director | Female | 56 | Incumbent | 4.8 | No |
| Wang Xinyu | Independent Director | Male | 54 | Incumbent | 4.8 | No |
| Qu Dongmei | Independent Director | Female | 52 | Incumbent | 4.8 | No |
| Zhang Shougang | Chairman of the Supervisory Committee | Male | 51 | Incumbent | 74.61 | No |
| Liu Zilong | Supervisor | Male | 53 | Incumbent | 74.05 | No |
| Dong Shibing | Supervisor, Manager of Logistics Management Department | Male | 52 | Incumbent | 71.43 | No |
| Zhang | Vice president, controller of Functional Fabric | Male | 53 | Incumbent | 88.4 | No |
| Jianxiang | Product Line | |||||
| Wang Jiabin | Vice president, Security Controller, controller of Yarn-dyed Fabric Product Line | Male | 58 | Incumbent | 88.3 | No |
| Zhang Zhanqi | Vice president, controller of Global Marketing Department | Male | 49 | Incumbent | 88.78 | No |
| Zhang Keming | Board Secretary, controller of Financial Management Department | Male | 53 | Incumbent | 71.27 | No |
| Li Wenji | CIO | Male | 54 | Incumbent | 73.24 | No |
| Zhang Wei | Controller of Strategy and Market Department | Male | 35 | Incumbent | 83.5 | No |
| Wang Changzhao | Executive director of Lu Thai Engineering Technology Institute | Male | 47 | Incumbent | 82.13 | No |
| Fujiwara Matsuzaka | GM of Japan Office | Male | 48 | Incumbent | 106.66 | No |
| Yu Shouzheng | Controller of Energy and Environment Protection Department | Male | 53 | Incumbent | 71.74 | No |
| Shang Chenggang | Controller of Garment Product Line | Male | 48 | Incumbent | 70.38 | No |
| Du Lixin | Chief engineer | Male | 45 | Incumbent | 54.2 | No |
| Guo Heng | Controller of Business Management Department | Male | 48 | Incumbent | 54 | No |
| Fu Guannan | President Assistant | Female | 38 | Incumbent | 34.54 | No |
| Total | -- | -- | -- | -- | 1,748.54 | -- |
Equity incentives for directors, supervisors and senior management in the Reporting Period:
□ Applicable √ Not applicable
V Employees
1. Number, Functions and Educational Backgrounds of Employees
| Number of in-service employees of the Company as the parent | 10,366 |
| Number of in-service employees of major subsidiaries | 12,217 |
| Total number of in-service employees | 22,583 |
| Total number of paid employees in the Reporting Period | 22,583 |
| Number of retirees to whom the Company as the parent or its major subsidiaries need to pay retirement pensions | 0 |
| Functions | |
| Function | Employees |
| Production | 16,498 |
| Sales | 529 |
| Technical | 4,917 |
| Financial | 108 |
| Administrative | 531 |
| Total | 22,583 |
| Educational backgrounds | |
| Educational background | Employees |
| Doctor | 4 |
| Master | 123 |
| Bachelor | 1,284 |
| College | 4,641 |
| High school and below | 16,531 |
| Total | 22,583 |
2. Employee Remuneration Policy
The Company has formulated a remuneration management system with its principle being “payment according to one’s work andmore pay for more work”. Through post evaluation and through researches of Social salary levels carried out as multi-faceted, as wellas the formulation of the reasonable salary management system, fully demonstrates the internal fairness, self-fairness and externalfairness. It has greatly motivated the employees and enhanced the corporate management.
3. Employee Training Plans
Trainings will be carried out according to requirements of the Company’s strategic development planning, improvement of employees’capability, performance management, employees’ career planning, etc. The annual training plan is determined by carrying outresearches on training needs. And the training courses fall into three major categories, i.e. management, technical skills and generalknowledge. Through these trainings, the Company will improve the knowledge structure of its employees, improve their job skills andincrease their comprehensive quality to provide excellent human resources for the long-term, sustained and stable development of theCompany.
4. Labor Outsourcing
√ Applicable □ Not applicable
| Total man-hours (hour) | 78,066 |
| Total rewards paid (RMB) | 858,729.63 |
Part X Corporate Governance
I General Information of Corporate GovernanceDuring the Reporting Period, the Company strictly conforms to Company Law, Securities Law (Revised in 2019) and Governing Rulesfor Listed Company, Guidelines on Articles of Association of Listed Companies (Revised in 2019) and Standard Operation ofCompanies Listed at Shenzhen Stock Exchange (Revised in 2020) as well as relevant stipulations and requirements from normativedocuments, continuously improves the corporate governance structure, safeguards the standardized and efficient operation of threeCommittees and one Management, forms a sound and effective internal control system so as to safeguard legitimate interests of theCompany and investors. Within the Reporting Period, the Company supplemented and amended 30 systems in accordance with thelatest provisions such as Articles of Association of Lu Thai Textile, Lu Thai Textile Shareholders Meeting Procedural Rules, Lu ThaiTextile Board of Directors Procedural Rules, and Lu Thai Textile Supervisory Committee Procedural Rules.
1. Shareholders and Shareholders’ General Meeting
The Company shall convene and hold the shareholders meeting in strict accordance with the Shareholders Meeting Procedural Rules,and guarantee that all shareholders, especially the minority shareholders, could have equal status and fully execute their rights.
2. The relationship between the majority shareholders and the Company
The Company’s majority shareholders acted according to relevant standards without directly or indirectly intervening the Company’sdecision-making and operating activities; the Company was independent with its majority shareholders in business, personnel, assets,organization, finance, and the Company’s Board of Directors, Supervisory Committee and Internal Organs could completelyindependent to operate. There was no situation about annexing the assets or occupation of funds of the Company by principalshareholders or other events on infringing the interest of the Company and other shareholders.
3. The directors and Board of Directors
The Company’s Board of Directors shall perform their duties in strict accordance with Articles of Association and the Board ofDirectors Procedural Rules. Under the Board of Directors, the Company established the Strategy Committee, the Audit Committee, theNomination Committee and the Remuneration Committee. Various specialized committees would fully perform their functions andfurther guarantee the high-efficient operation and the scientific decision-making of the Board of Directors.
4. Supervisors and Supervisory Committee
The Company’s Supervisory Committee will perform their duties in strict accordance with Articles of Association and the SupervisoryCommittee Procedural Rules. The number of members and the composition of the Company’s Supervisory Committee shall complywith applicable laws and regulations; the Company’s supervisors shall strictly abide by relevant provisions, seriously execute theirduties and supervise the Company’s financial status and the legal execution of duties of the directors, manager and other seniormanagers by adhering to the principle of being responsible for the shareholders and the listed company.
5. Information disclosure
The Company strictly, in accordance with the laws, regulations and the Articles of Association, disclosed relevant information in a true,accurate, complete and timely manner. The Company has formulated the Information Disclosure Management System, InformationInsider Registration Management System and Investor Relations Management System, etc., to ensure the fairness, openness andfairness of information disclosure.
6. Investor relations management
During the reporting period, as required by Investor Relations Management System, to maintain good communication with investors,the Company accepted on-site investigations and consultations of investors through on-site investigations and telephone consultations,and promptly answered questions asked by investors on the SZSE Easy-IR.Indicate by tick market whether there is any material incompliance with the regulatory documents issued by the CSRC governing the
governance of listed companies.
□ Yes √ No
No such cases in the Reporting Period.
II The Company’s Independence from Its Controlling Shareholder in Business, Personnel,Asset, Organization and Financial Affairs
1. As for the business: the Company shall establish its independent and complete business system with the market-oriented independentmanagement ability. In the respect of business operation, the Company is completely separated from the controlling shareholders.
2. As for the personnel: the Company’s labor, personnel and remuneration management departments shall be independent with theirown sound systems, and separated from that of the substantial shareholder. The Company’s senior managers are not allowed tosimultaneously hold any office in any shareholder’s unit.
3. As for the assets: the Company possesses the entire and independent legal person property right with independent and perfect theproduction system, auxiliary production systems and supporting facilities; and possesses the independent ownership of the intangibleassets such as the industrial property, trademarks, non-patented technology.
4. As for the institution: the Company’s Board of Directors, Supervisory Committee and other internal organization shall be sound andinvolved in independent operation. The substantial shareholder shall legally execute its rights, fulfill corresponding obligations and notsurpass the shareholders meeting to directly or indirectly interfere the Company’s business activities.
5. As for the finance: the Company possesses independent financial departments with normative financial accounting system andfinancial management system as well as internal control system with independent bank account.III Horizontal Competition
□ Applicable √ Not applicable
IV Annual and Special General Meetings Convened during the Reporting Period
1. General Meeting Convened during the Reporting Period
| Meeting | Type | Investor participation ratio | Date of the meeting | Disclosure date | Index to disclosed information |
| The 1st Extraordinary General Meeting of 2020 | Extraordinary General Meeting | 40.82% | 8 May 2020 | 9 May 2020 | Announcement on the Resolution of the Meeting (No.: 2020-042) disclosed on 9 May 2020 on Securities Times, China Securities Journal, Shanghai Securities News, Ta Kung Pao, and http://www.cninfo.com.cn |
| The 2019 Annual General Meeting | Annual General Meeting | 42.78% | 21 May 2020 | 22 May 2020 | Announcement on the Resolution of the Meeting (No.: 2020-047) disclosed on 22 May 2020 on Securities Times, China Securities |
| Journal, Shanghai Securities News, Ta Kung Pao, and http://www.cninfo.com.cn | |||||
| The 2nd Extraordinary General Meeting of 2020 | Extraordinary General Meeting | 34.42% | 30 December 2020 | 31 December 2020 | Announcement on the Resolution of the Meeting (No.: 2020-081) disclosed on 31 December 2020 on Securities Times, China Securities Journal, Shanghai Securities News, Ta Kung Pao, and http://www.cninfo.com.cn |
2. Special General Meetings Convened at the Request of Preferred Shareholders with Resumed VotingRights
□ Applicable √ Not applicable
V Performance of Duty by Independent Directors in the Reporting Period
1. Attendance of Independent Directors at Board Meetings and General Meetings
| Attendance of independent directors at board meetings and general meetings | |||||||
| Independent director | Total number of board meetings the independent director was eligible to attend | Board meetings attended on site | Board meetings attended by way of telecommunication | Board meetings attended through a proxy | Board meetings the independent director failed to attend | The independent director failed to attend two consecutive board meetings (yes/no) | General meetings attended |
| Bi Xiuli | 12 | 1 | 11 | 0 | 0 | No | 0 |
| Pan Ailing | 12 | 1 | 11 | 0 | 0 | No | 0 |
| Wang Xinyu | 12 | 2 | 10 | 0 | 0 | No | 1 |
| Zhou Zhiji | 12 | 1 | 11 | 0 | 0 | No | 0 |
| Qu Dongmei | 12 | 2 | 10 | 0 | 0 | No | 1 |
Why any independent director failed to attend two consecutive board meetings:
Not applicable
2. Objections Raised by Independent Directors on Matters of the Company
Indicate by tick mark whether any independent directors raised any objections on any matter of the Company.
□ Yes √ No
No such cases in the Reporting Period.
3. Other Information about the Performance of Duty by Independent DirectorsIndicate by tick mark whether any suggestions from independent directors were adopted by the Company.
√ Yes □ No
Suggestions from independent directors adopted or not adopted by the Company:
The Independent Directors of the Company had not raised any objection to the proposals and other events approved and reviewed bythe Board of the Directors while executed the carefully review on the events needed advices and put forward the professionalsuggestion and advice as well as stated 26 independent advices which improved the scientificity and objectivity of the decision-makingthat exerted the due role on the supervision mechanism for improving the Company.
VI Performance of Duty by Specialized Committees under the Board in the Reporting PeriodI. Duty fulfillment of Audit Committee under the Board
1. Major work of the 2020 annual report of the Audit Committee:
(1) The Audit Committee had held the 1
st
Meeting of the Audit Committee of the 2020 on the Financial Audit Work in the meetingroom of the Company on 11 November 2020 and the meeting had confirmed the time and arrangement plan of the 2020 annual financialaudit work unanimously with the 2020 Audit Institution Grant Thornton China (Special General Partnership).
(2) On 20 January 2021, the Audit Committee had held the 2
nd
Meeting of the 2020 Audit Work, which reviewed the submission of thefinancial report preliminarily audited by Grant Thornton China (Special General Partnership) and issued the written advice.
(3) During the audit process, the Company had been maintained the contract and communication with the project leader of GrantThornton China (Special General Partnership) by the methods such as the telephones and e-mails and had been urged which to submitthe audit report within the appointed time.
(4) The 3
rdMeeting on 2020 Annual Audit and the 2020 Annual Work Conference, was convened by the Committee on 29 March 2021,where the following proposals were approved as resolutions, namely, the audited 2020 Financial Report of the Company, the SummaryReport on the Audit Conducted by Grant Thornton China (Special General Partnership) on the Company’s 2020 Financial Report.Proposal on Appointment Renewal of Grant Thornton China (Special General Partnership) as the Audit Institution for 2021 financialaudit and internal control audit of the Company, Special Report on the Deposit and Usage of Raised Funds for 2020 and Report onImplementation of Internal Audit Plan in 2020.
2. Written opinions, summary report of the annual audit, and resolutions of 2020 Work Conference on Annual Report by AuditCommittee:
(1) According to the Rules for Audit Committee of the Board Concerning Annual Reports of Lu Thai Textile Co., Ltd., the AuditCommittee shall perform its duties of conducting supervision and checks in the Company’s preparation and disclosure of its annualreports. The Committee reviewed the 2020 financial and accounting statements prepared by the Company’s Financial Departmentbefore the presence of the registered accountants for the annual audit, and expressed its opinion as follows:
a. The financial and accounting statements were prepared in accordance with the Company’s accounting policy with proper applicationof the accounting policy and reasonable accounting estimates, which were in line with the New Accounting Standards for BusinessEnterprises, the Accounting System for Business Enterprises, and the relevant regulations issued by the Ministry of Finance of PRC;b. The subsidiary statements included in the Company’s consolidated statements were complete in terms of contents, providing anaccurate basis for the statement combination;c. The Company’s financial statements were found objective, factual and accurate with no major misstatements or informationomission.d. Since there is still a certain period of time from this review of the financial statements to the formal issuance of the auditor’s reportand the financial statements, the Company’s Financial Management Department is advised to pay close attention to and carefullyhandle the matters after the balance sheet date, so as to ensure the fairness, factuality and completeness of the financial statements. The
Audit Committee is of the opinion that the financial and accounting statements are ready to be submitted to the registered accountantsfor audit.
(2) Audit Committee’s written opinion on the Company’s financial statements after the preliminary audit opinion was issued by GrantThornton China (Special General Partnership):
According to the Rules for Audit Committee of the Board Concerning Annual Reports of Lu Thai Textile Co., Ltd., the AuditCommittee shall perform its duties of conducting supervision and checks in the Company’s preparation and disclosure of its annualreports. We effectively communicated with the said CPA firm (LLP) at the beginning of the audit. And we once again reviewed theCompany’s 2020 financial and accounting statements following the preliminary audit opinion to the Company’s 2020 financialstatements issued by the CPA firm (LLP), and expressed our opinions as follows:
In accordance with the New Accounting Standards for Business Enterprises and the Company’s relevant financial rules, the financialstatements were prepared in a rational and standardized way, which fairly, factually, accurately and completely presented theCompany’s assets, liabilities, shareholders’ equity and operation results by 31 December 2020.The Audit Committee is of the opinion that the Company’s 2020 financial and accounting statements preliminarily audited by GrantThornton China (Special General Partnership) are ready to be submitted to the 21
stMeeting of the 9
thBoard of the Directors for review.
(3) Resolutions made at 2020 Annual Work Conference of Audit Committee of the Board
The Audit Committee of the Board of Lu Thai Textile Co., Ltd. held its 2020 Annual Work Conference at F1 Meeting Room of thehead office of the Company on 29 March 2021. Three persons were supposed to attend the meeting, and all three of them were in factpresent at the meeting as well as the Chief Accountant, Board Secretary and Controller of the Audit Department, the projectresponsible person of Lu Thai of Grant Thornton China (Special General Partnership) attended the meeting. Mr. Wang Xinyu,Chairman of the Audit Committee, presided over the meeting. The meeting was convened in accordance with the Company Law andthe Articles of Association of the Company. And the following proposals were passed by vote at the meeting:
a. With 3 favorable votes, 0 negative votes and no abstentions, the 2019 Financial Report of the Company audited by Grant ThorntonChina (Special General Partnership) was passed;b. With 3 favorable votes, 0 negative votes and no abstentions, the Summary Report on the Audit Conducted by Grant ThorntonChina (Special General Partnership) on the Company’s 2020 Financial Report was passed;c. With 3 favorable votes, 0 negative votes and no abstentions, the Proposal on Employment of Grant Thornton China (SpecialGeneral Partnership) as the Company’s audit agency for 2021 Finance and Internal Control was passed. And the Company paidRMB1.735 million to the said CPAs firm as fees for the 2020 annual financial report audit and internal control audit.d. With 3 favorable votes, 0 negative votes and no abstentions, the Special Report on Deposit and Usage of Raised Funds for 2020was passed.f. With 3 favorable votes, 0 negative votes and no abstentions, the Report on Implementation of Internal Audit Plan in 2020 waspassed.The Committee agrees to submit the above-mentioned proposals a, c and d to the Board of Directors for examination on the 21
stMeeting of the 9
thBoard of Directors.
3. Main work of the audit committee stated in the semiannual report and third quarter report:
(1) The audit committee held its third meeting of 2020 of the ninth board of directors at the meeting room of the Company on August 16,2020, heard the internal audit plan execution situation report of the audit department of the Company for the first half of 2020, and thespecial report on deposit and use situation of raised capital for the first half of 2020, and expressed satisfactory to the relevant work inthe first half of 2020.
(2) The audit committee held its fourth meeting of 2020 of the ninth board of directors at the meeting room of the Company on October24, 2020, heard the internal audit plan execution situation report of the audit department of the Company for the third quarter of 2020,and the special report on deposit and use situation of raised capital for the third quarter of 2020, and expressed satisfactory to therelevant work in the third quarter of 2020.II. Duty performance of Remuneration Committee affiliated to the Board of Directors
1. The Remuneration Committee of the Board of Lu Thai Textile Co., Ltd. held the First Conference in 2020 at F1 Meeting Room of thehead office of the Company on 28 April 2020. Five persons were supposed to attend the meeting, and all of them were in fact present atthe meeting. The chief accountant and Board Secretary attended this meeting. The meeting held by the Company met with the relevantregulations of Company Law and the Articles of Association of the Company and reviewed and approved the Proposal on the 2019Appraisal Result of the Senior Executives of Lu Thai Company by the voting method and agreed to submit the above-mentionedproposal to the Board of Directors for examination on the 13
th Meeting of the 9
thBoard of Directors.
2. According to authorization of the 13
th Meeting of the 9
thBoard of Directors of Lu Thai, remuneration committee of board of directorsof Lu Thai Textile Co., Ltd. held the second Meeting of 2020 at F1 Meeting Room of the head office of the Company on 1 June 2020.Five persons should attend the meeting and five persons actually attended the meeting. Among the five persons, Bi Xiuli, Zhao Yao,Wang Xinyu and Pan Ailing voted in the form of communication. Chief accountant and the secretary of board of directors also attendedthe meeting. The meeting accorded with relevant stipulations in Company Law and Articles of Company. Proposal for Risk FundAssessment and Release Amount for 2019 was passed at the meeting in voting form.III. Duty execution of the strategy committee of board of directorsThe Strategy Committee of Board of Directors of Lu Thai Textile Co., Ltd. held the 1
stConference of 2020 at F1 Meeting Room of thehead office of the Company on 28 April 2020. 14 persons should attend the meeting and 14 persons actually attended the meeting. Thismeeting was hosted by Liu Zibin, the president of strategy committee. The meeting accorded with relevant stipulations in CompanyLaw and Articles of Association and passed the following proposal in voting form.
1. Strategic Objectives of Lu Thai Textile Co., Ltd. for 2020-2024
IV. Duty performance of nominations committee affiliated to the Board of Directors
1. The Nomination Committee of the 9
th Board of Directors held the 1
st
Meeting of 2020 of the nominations committee of the 9
th
Board of Directors on 8 December 2020 according to the relevant regulations of the Company Law and Articles of Association, with6 favorable votes, 0 negative votes and no abstentions, which reviewed and approved the Proposal on Nomination for Ms. FuGuannan as A Senior Management of the Company. And it was approved by the 19
th
Meeting of the 9
thBoard of Directors.VII Performance of Duty by the Supervisory CommitteeIndicate by tick mark whether the Supervisory Committee found any risk to the Company during its supervision in the ReportingPeriod.
□ Yes √ No
The Supervisory Committee raised no objections in the Reporting Period.
VIII Appraisal of and Incentive for Senior ManagementIn the Reporting Period, Remuneration Committee of the Board of Directors appraised operating achievements of the Company forthe year 2019 according to Incentive and Restricted Proposal for Senior Executives of Lu Thai Textile Co., Ltd, and drew upincentive proposal for senior executives, which will be executed after review and approval by the 13
th Meeting of the 9
thBoard ofDirectors dated 28 April 2020. During the Reporting Period, the Company constantly improved the performance evaluationmechanism and made the evaluation and incentive of the Senior Executives concerned with the Company’s performances and theindividual working results. According to the overall development strategy and the annual operating target of the Company at theperiod-begin, the Company confirms the annual performance comprehensive indication and the management duty of each SeniorExecutives, and executes the performance examination and the redemption of the rewards and punishment for the Senior Executivesby the Remuneration and Examination Committee affiliated to the Board of Directors at the year-end. The Company will constantlyimprove the evaluation and incentive mechanism that to tightly concern the salary of the Senior Executives with the managementlevel and the operating performance so that to fully mobilize and inspire the initiative and creativity of them.
IX Internal Control
1. Material Internal Control Weaknesses Identified for the Reporting Period
□ Yes √ No
2. Internal Control Self-Evaluation Report
| Disclosure date of the internal control self-evaluation report | 31 March 2021 | ||
| Index to the disclosed internal control self-evaluation report | For details, please refer to the Self-appraisal Report on Internal Control of Lu Thai Textile Co., Ltd. simultaneously disclosed on www.cninfo.com.cn with the 2020 Annual Report of the Company. | ||
| Evaluated entities’ combined assets as % of consolidated total assets | 90.34% | ||
| Evaluated entities’ combined operating revenue as % of consolidated operating revenue | 84.73% | ||
| Identification standards for internal control weaknesses | |||
| Type | Weaknesses in internal control over financial reporting | Weaknesses in internal control not related to financial reporting | |
| Nature standard | Great defect: malpractices of the Directors, Supervisors and Senior Executives; the Company revised the published financial report; the CPA founded the current financial report occurred significant misstatement while during the operating process of the internal control could not founded the misstatement; the supervision of the Audit Committee and the internal audit institution of the Company on the internal control was invalid. Significant defeat: had not abide by the generally accepted accounting principles to choose and apply the accounting policies; had not built up the anti-fraud and significant counterbalance mechanism and control measures; during the financial report process, there occurred single or multiple defects which not reached the recognition standard of the significant defeat but influenced the true and accurate target of the financial report. General defect: other internal control defect which had not constructed as the great defeat, significant defect. | Great defect: violated the national laws and regulations; the decision-making of the enterprise was not scientific that led to the mistakes of itself; outflow of the management personnel or the technician personnel was serious; frequently appeared the negative news from the Media; the significant business lacked of systematic control or the systematic control was invalid; the result of the internal control assessment which was the great defect event had not been revised. Significant defeat: violated the enterprise internal regulations that caused rather serious losses; significant business lacked of systematic control; outflow of the rather important personnel was serious; the Media reported the negative news that caused rather serious negative influence; rather important business lacked of systematic control or the systematic control was invalid; the results of the internal control assessment which as the significant defect had not been revised. General defect: other internal control defect which had not constructed as the great defeat, significant | |
| defect. | ||
| Quantitative standard | Great defect: misstatement≥2% of the total profits amount; misstatement≥0.3% of the total assets amount; misstatement≥0.3% of the total operating income; misstatement≥0.4% of the total owners’ equities amount. Significant defect: 1% of the total profits amount ≤misstatement<2% of the total profits amount; 0.15% of the total assets amount ≤misstatement<0.3% of the total assets amount; 0.15% of the total operating amount ≤misstatement<0.3% of the total operating amount; 0.2% of the total owners’ equities amount ≤misstatement<0.4% of the total owners’ equities amount. General defect: misstatement<1% of the total profits amount; misstatement<0.15% of the total assets amount; misstatement<0.15% of the total operating income; misstatement<0.2% of the total owners’ equities amount. | Great defect: the direct financial losses were RMB6 million and above Significant defect: RMB3 million (including RMB3 million)-RMB6 million General defect: RMB0.5 million (including RMB0.5 million)-RMB 3 million |
| Number of material weaknesses in internal control over financial reporting | 0 | |
| Number of material weaknesses in internal control not related to financial reporting | 0 | |
| Number of serious weaknesses in internal control over financial reporting | 0 | |
| Number of serious weaknesses in internal control not related to financial reporting | 0 | |
X Independent Auditor’s Report on Internal Control
√ Applicable □ Not applicable
| Opinion paragraph in the independent auditor’s report on internal control |
| All shareholders of Lu Thai Textile Co., Ltd.: According to Audit Guidelines for Enterprise Internal Control and the relevant requirements of Auditing Standards for Chinese Certified Public Accountants, we have audited the effectiveness of internal control in the financial report of Lu Thai Textile Co., Ltd. (Hereinafter referred to as "Lu Thai Textile”) by 31 December 2020. I. Responsibilities of Lu Thai Textile for internal control The Board of Directors of Lu Thai Textile is responsible for establishing, improving and implementation the internal controls and |
| evaluating its effectiveness in accordance with Standard for Enterprise Internal Control, Application Guidelines for Enterprise Internal Control, Enterprise Internal Control Audit Guidelines. III. Responsibilities of certified public accountants It is our responsibility to issue an audit opinion on the effectiveness of internal controls in financial report on the basis of the implementation of the audit, and to disclose significant deficiencies in the internal controls of non-financial reports that have been noted. III. Inherent limitations of internal control Internal control has inherent limitations, and there is a possibility that misreporting cannot be prevented. In addition, because the change of circumstances may cause the internal control to become inappropriate or the degree of compliance with the control policies and procedures is reduced, it is risky to infer the effectiveness of the future internal control based on the audit results of the internal control. IV. Audit Opinion on Internal Control in Financial Report We believe that Lu Thai Textile Co., Ltd. kept effectively internal control on financial reporting in all respects according to Enterprise Internal Control Basic Specification and the relevant provisions on 31 December 2020. | |
| Independent auditor’s report on internal control disclosed or not | Disclosed |
| Disclosure date | 31 March 2021 |
| Index to such report disclosed | For details, please refer to the Auditor’s Report on Internal Control on www.cninfo.com.cn at the same time of disclosing the Company’s 2020 Annual Report. |
| Type of the auditor’s opinion | Unmodified unqualified opinion |
| Material weaknesses in internal control not related to financial reporting | None |
Indicate by tick mark whether any modified opinion is expressed in the independent auditor’s report on the Company’s internalcontrol.
□ Yes √ No
Indicate by tick mark whether the independent auditor’s report on the Company’s internal control is consistent with the internalcontrol self-evaluation report issued by the Company’s Board.
√ Yes □ No
Part XI Corporate BondsDoes the Company have any corporate bonds publicly offered on the stock exchange, which were outstanding before the date of thisReport’s approval or were due but could not be redeemed in full?No.
Part XII Financial Statements
I Independent Auditor’s Report
| Type of the independent auditor’s opinion | Unmodified unqualified opinion |
| Date of signing this report | 29 March 2021 |
| Name of the independent auditor | Grant Thornton China (Special General Partnership) |
| Reference number of Audit Report | GTSZ(2021)No. 371A005867 |
| Name of the certified public accountants | He Feng, Guo Dongmei |
Text of the Independent Auditor’s ReportTo the shareholders of Lu Thai Textile Co., Ltd:
I OpinionWe have audited the financial statements of Lu Thai Textile Co., Ltd. (hereinafter referred to as the “Company”), which comprise theconsolidated and parent company balance sheets as of 31 December 2020, the consolidated and parent company statements ofincome, cash flows and changes in owners’ equity for the year then ended, as well as the notes to the financial statements.In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated and parent companyfinancial position of the Company at 31 December 2020, and the consolidated and parent company operating results and cash flowsfor the year then ended, in conformity with the Chinese Accounting Standards (CAS).II Basis for OpinionWe conducted our audits in accordance with the Audit Standards for Chinese Registered Accountants. Our responsibilities underthose standards are further described in the Auditor’s Responsibilities for Audit of Financial Statements section of our report. We areindependent of the Company in accordance with the China Code of Ethics for Certified Public Accountants, and we have fulfilled ourother ethical responsibilities in accordance with the said Code of Ethics. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion.III Key Audit MattersKey audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financialstatements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, andin forming our opinion thereon, and we do not provide a separate opinion on these matters.(I) Recognition of revenueFor details, please refer to the Note III-23 and the Note V-44 of the financial report.
1. Item description
The businesses of Lu Thai Textile Co., Ltd. mainly are production and sales of yarn-dyed fabrics and shirts. The operation revenue ofthe Company in 2020 was RMB 4,751,222,500, of which export income accounted for over 50%. For the income from domesticsales, the amount of product sales income is recognized when the products are delivered to and confirmed by the purchaser accordingto the contract. The income is recognized when the purchaser obtains control of the product. For the income from export sales, theamount of sales income is recognized when products are declared and depart from port according to the contract, and the bill of
lading is received. The income is recognized when the purchaser obtains control of the product.Since income is one of the key performance indicators of Lu Thai Textile Co., Ltd., there is an inherent risk that the managementmanipulates income to achieve specific goals or expectations, therefore, we identify income recognition as a key audit item.
2. Audit response
The audit procedures for revenue recognition mainly include:
(1) Understand and evaluate the design effectiveness of internal control related to revenue recognition, and test the effectiveness ofoperation;
(2) Through interviewing the management and reviewing the relevant contract terms, understand and evaluate whether the incomeconfirmation accounting policy meets the requirements of the enterprise accounting standards and is consistently applied;
(3) Perform analytical procedures on revenue and costs to analyze the rationality of fluctuations in sales volume, unit price, and grossprofit in each month, current year, and previous year of the current period;
(4) Check the supporting evidence such as sales contract, product delivery order, invoice, customs declaration, shipping order, andsigning receipt;
(5) Select samples to verify the balance and transaction amount;
(6) Select samples and conduct spot checks on relevant information such as export sales revenue, export tax rebate declaration forms,and China electronic port export data;
(7) Perform a cut-off test on the revenue recognized before and after the balance sheet date, and check the product delivery slip,invoice, customs declaration, shipping bill, signing receipt, etc., to assess whether the revenue is recognized within the appropriateperiod.(II) Inventory falling price reservesFor details, please refer to the Note III-11 and the Note V-8 of the financial report.
1. Item description
As of 31 December 2020, the inventory balance of Lu Thai Textile Co., Ltd. was RMB2,133,356,500 and the inventory depreciationreserve was RMB144,387,800. The management withdrew the inventory falling price reserves with significant judgments andestimates, and therefore, we identify inventory falling price reserves as a key audit item.
2. Audit response
The audit procedures for inventory falling price reserves mainly include:
(1) Understand and evaluate the design effectiveness of the internal control related to the provision of inventory decline price, andtest the effectiveness of operation;
(2) Understand and evaluate the appropriateness of the company's inventory depreciation reserve provision policy;
(3) Monitor the inventory and pay attention to the status of the inventory, check whether the defective and inventory with long aginghave been identified;
(4) Obtain the inventory age table, and conduct an analytical review of the long-age inventory status and turnover;
(5) Check the changes in the inventory depreciation reserves accrued in previous years and evaluate the rationality of the changes ininventory depreciation reserves;
(6) Obtain the inventory falling price reserves calculation sheet; recheck and evaluate the rationality of major estimations made by
the management during the determination of net realizable value; conduct the recalculation, check the selling price after the periodand analyze the rationality of the predicted selling price.(III) Assessment of fair value of financial assets measured at fair value and changes included in current profit or lossPlease refer to Notes to Financial Statements (Note III 10 and Note V 2, 13 and 52) for details about relevant information disclosure.
1. Event Description
Up to 31 December 2020, the balance of financial asset measured based on the fair value whose variations were included the currentprofit and loss of Lu Thai Textiles was RMB480.5228 million, of which, the fair value of financial asset classified into the tier-2 inputvalue by adopting the observable input value was RMB268.4562 million, and the fair value of financial asset classified into the tier-3input value by adopting the non-observable input value was RMB212.0665 million. Considering that the financial asset’s fair valuevariations had significant impact on the profit and loss of Lu Thai Textiles in 2020, and Lu Thai Textiles adopted the valuationtechnique to determine its fair value (usually, the valuation technique involves various assumptions and estimations based on subjectivejudgment, and huge difference in the estimated fair value of financial instrument may be caused by adopting different valuationtechniques or assumptions), we recognized the event as the key audit event.
2. Audit response
Our audit procedures geared to the evaluation of the financial instrument’s fair value mainly include:
(1) Study and evaluate the effectiveness of the designed internal control for the valuation of financial instruments and test theoperational effectiveness;
(2) Assess the professional quality, competence and objectiveness of the independent appraiser employed by the Company’smanagement; evaluate the rationality of various assumptions applied by the independent appraiser in the evaluation report and theappropriateness of the financial instrument valuation models;
(3) Assess the rationality and appropriateness of the observable key input value applied during the valuation of the tier-2 fair value;
(4) Check the rationality, appropriateness and calculation accuracy of the key input value during the fair value assessment throughexperts for the tier-3 financial instrument measured based the fair value and involving the management’s major judgment.IV Other InformationThe Company’s management is responsible for the other information. The other information comprises all of the information includedin the Company’s 2020 Annual Report other than the financial statements and our auditor’s report thereon.Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusionthereon.In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, considerwhether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit orotherwise appears to be materially misstated.If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required toreport that fact. We have nothing to report in this regard.V Responsibilities of Management and Those Charged with Governance for Financial StatementsThe Company’s management (hereinafter referred to as the “Management”) is responsible for the preparation of the financialstatements that give a fair view in accordance with CAS, and for designing, implementing and maintaining such internal control as themanagement determines is necessary to enable the preparation of financial statements that are free from material misstatement, whetherdue to fraud or error.
In preparing the financial statements, the management is responsible for assessing the Company’s ability to continue as a going concern,disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the managementeither intends to liquidate the Company or to cease operations, or have no realistic alternative but to do so.Those charged with governance are responsible for overseeing the Company’s financial reporting process.VI Auditor’s Responsibilities for Audit of Financial StatementsOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level ofassurance, but is not a guarantee that an audit conducted in accordance with CAS will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they couldreasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.As part of an audit in accordance with CAS, we exercise professional judgment and maintain professional skepticism throughout theaudit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and performaudit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involvecollusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in thecircumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosuresmade by the management.
(4) Conclude on the appropriateness of the management’s use of the going concern basis of accounting and, based on the audit evidenceobtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s abilityto continue as a going concern. If we conclude that a material uncertainty exists, we are required by CAS to draw users’ attention in ourauditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, we should modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events orconditions may cause the Company to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, and whether the financial statements representthe underlying transactions and events in a manner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within theCompany to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of theCompany audit. We remain solely responsible for our audit opinion.We communicate with those charged with governance of the Company regarding the planned scope and timing of the audit andsignificant audit findings, including any noteworthy deficiencies in internal control that we identify during our audit.We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regardingindependence, and communicate with them all relationships and other matters that may reasonably be thought to bear on ourindependence, and where applicable, related safeguards (if applicable).From the matters communicated with those charged with governance, we determine those matters that were of most significance in theaudit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’sreport unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine
that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected tooutweigh the public interest benefits of such communication.
| Grant Thornton China (Special General Partnership) | Chinese CPA (Engagement Partner): Chinese CPA: | |
| Beijing · China | 29 March 2021 | |
II Financial StatementsCurrency unit for the financial statements and the notes thereto: RMB
1. Consolidated Balance Sheet
Prepared by Lu Thai Textile Co., Ltd.
31 December 2020
Unit: RMB
| Item | 31 December 2020 | 31 December 2019 |
| Current assets: | ||
| Monetary assets | 1,400,478,034.81 | 924,322,008.17 |
| Held-for-trading financial assets | 268,456,216.98 | 52,356,098.85 |
| Derivative financial assets | ||
| Notes receivable | 182,994,110.86 | 104,737,949.91 |
| Accounts receivable | 522,425,219.87 | 515,306,599.62 |
| Accounts receivable financing | 55,150,926.34 | 26,963,818.87 |
| Prepayments | 19,611,775.28 | 56,828,987.59 |
| Other receivables | 105,710,818.69 | 59,743,471.84 |
| Including: Interest receivable | ||
| Dividends receivable | 75,488,652.49 | |
| Inventories | 1,988,968,681.64 | 2,421,500,259.30 |
| Current portion of non-current assets | 45,750,018.30 | |
| Other current assets | 433,432,258.63 | 68,788,674.10 |
| Total current assets | 5,022,978,061.40 | 4,230,547,868.25 |
| Non-current assets: |
| Long-term receivables | 41,053,183.15 | 7,058,233.71 |
| Long-term equity investment | 138,079,577.25 | 103,226,300.00 |
| Other equity instrument investment | ||
| Other non-current financial assets | 156,915,620.25 | 278,149,500.00 |
| Investment property | 22,263,668.85 | 45,896,747.87 |
| Fixed assets | 5,661,592,991.66 | 6,012,094,104.67 |
| Construction in progress | 356,273,197.49 | 400,235,070.01 |
| Intangible assets | 373,543,480.84 | 516,479,519.15 |
| Development costs | ||
| Goodwill | 20,563,803.29 | 20,563,803.29 |
| Long-term deferred expenses | 118,340,494.60 | 153,031,253.79 |
| Deferred income tax assets | 122,865,841.69 | 99,307,233.72 |
| Other non-current assets | 95,434,040.18 | 18,841,918.62 |
| Total non-current assets | 7,106,925,899.25 | 7,654,883,684.83 |
| Total assets | 12,129,903,960.65 | 11,885,431,553.08 |
| Current liabilities: | ||
| Short-term borrowings | 930,871,008.19 | 2,120,154,330.61 |
| Derivative financial liabilities | ||
| Notes payable | 85,219,724.63 | |
| Accounts payable | 243,262,473.69 | 305,346,284.94 |
| Advances from customers | 108,783,148.03 | |
| Contract liabilities | 141,339,705.62 | |
| Payroll payable | 265,648,198.38 | 335,576,560.36 |
| Taxes payable | 36,468,978.77 | 25,051,630.06 |
| Other payables | 17,587,470.79 | 104,982,189.40 |
| Including: Interest payable | ||
| Dividends payable | 441,113.64 | 441,113.64 |
| Current portion of non-current liabilities | 43,149,400.13 | 101,111,297.49 |
| Other current liabilities | 192,574,674.68 | |
| Total current liabilities | 1,870,901,910.25 | 3,186,225,165.52 |
| Non-current liabilities: | ||
| Long-term borrowings | 495,520,342.78 | 42,364,019.74 |
| Bonds payable | 1,350,171,526.97 | |
| Lease liabilities |
| Long-term payables | ||
| Long-term payroll payable | 62,137,656.00 | 105,589,249.56 |
| Provisions | ||
| Deferred income | 173,862,983.31 | 157,668,211.41 |
| Deferred income tax liabilities | 85,633,161.44 | 92,440,358.41 |
| Other non-current liabilities | 1,840,000.00 | |
| Total non-current liabilities | 2,167,325,670.50 | 399,901,839.12 |
| Total liabilities | 4,038,227,580.75 | 3,586,127,004.64 |
| Owners’ equity: | ||
| Share capital | 858,132,322.00 | 858,121,541.00 |
| Other equity instruments | 71,386,451.81 | |
| Capital reserves | 255,912,488.01 | 258,046,245.42 |
| Less: Treasury stock | ||
| Other comprehensive income | 1,308,922.89 | 91,626,571.75 |
| Specific reserve | ||
| Surplus reserves | 1,154,017,457.79 | 1,117,267,351.63 |
| General reserve | ||
| Retained earnings | 5,346,819,948.22 | 5,372,073,615.12 |
| Total equity attributable to owners of the Company as the parent | 7,687,577,590.72 | 7,697,135,324.92 |
| Non-controlling interests | 404,098,789.18 | 602,169,223.52 |
| Total owners’ equity | 8,091,676,379.90 | 8,299,304,548.44 |
| Total liabilities and owners’ equity | 12,129,903,960.65 | 11,885,431,553.08 |
Legal representative: Liu Zibin Chief Accountant: Zhang HongmeiFinancial Manager: Zhang Keming
2. Balance Sheet of the Company as the Parent
Unit: RMB
| Item | 31 December 2020 | 31 December 2019 |
| Current assets: | ||
| Monetary assets | 729,437,231.33 | 259,320,863.08 |
| Held-for-trading financial assets | 163,636,075.34 | 52,356,098.85 |
| Derivative financial assets |
| Notes receivable | 108,863,689.79 | 67,898,885.35 |
| Accounts receivable | 326,166,935.10 | 417,599,518.08 |
| Accounts receivable financing | 48,764,088.05 | 2,675,090.00 |
| Prepayments | 13,059,806.74 | 10,178,452.88 |
| Other receivables | 1,500,882,682.19 | 838,523,449.52 |
| Including: Interest receivable | ||
| Dividends receivable | 75,488,652.49 | |
| Inventories | 1,097,438,610.46 | 1,280,620,296.02 |
| Contract assets | ||
| Assets held for sale | ||
| Current portion of non-current assets | 45,750,018.30 | |
| Other current assets | 247,860,882.02 | 5,780,635.28 |
| Total current assets | 4,281,860,019.32 | 2,934,953,289.06 |
| Non-current assets: | ||
| Investments in debt obligations | ||
| Investments in other debt obligations | ||
| Long-term receivables | 41,053,183.15 | |
| Long-term equity investments | 2,555,150,859.13 | 2,510,868,604.84 |
| Investments in other equity instruments | ||
| Other non-current financial assets | 144,915,620.25 | 266,149,500.00 |
| Investment property | 29,734,239.22 | 31,089,260.38 |
| Fixed assets | 2,471,686,117.72 | 2,603,258,003.94 |
| Construction in progress | 48,694,822.74 | 53,443,768.04 |
| Intangible assets | 225,128,308.75 | 235,277,114.25 |
| Development costs | ||
| Goodwill | ||
| Long-term deferred expenses | 1,406,347.76 | |
| Deferred income tax assets | 65,729,304.26 | 60,974,304.57 |
| Other non-current assets | 7,936,745.28 | |
| Total non-current assets | 5,591,435,548.26 | 5,761,060,556.02 |
| Total assets | 9,873,295,567.58 | 8,696,013,845.08 |
| Current liabilities: | ||
| Short-term borrowings | 332,466,931.13 | 816,301,973.60 |
| Held-for-trading financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | 602,741,973.76 | |
| Accounts payable | 132,231,596.74 | 105,588,631.54 |
| Advances from customers | 53,418,950.04 | |
| Contract liabilities | 56,841,289.66 | |
| Payroll payable | 202,694,515.93 | 242,300,723.41 |
| Taxes payable | 21,896,035.49 | 11,995,830.49 |
| Other payables | 79,668,657.80 | 149,255,207.79 |
| Including: Interest payable | ||
| Dividends payable | 441,113.64 | 441,113.64 |
| Liabilities held for sale | ||
| Current portion of non-current liabilities | 4,000,000.00 | |
| Other current liabilities | 166,257,466.30 | |
| Total current liabilities | 996,056,493.05 | 1,981,603,290.63 |
| Non-current liabilities: | ||
| Long-term borrowings | 495,520,342.78 | |
| Bonds payable | 1,350,171,526.97 | |
| Lease liabilities | ||
| Long-term payables | ||
| Long-term payroll payable | 62,137,656.00 | 105,589,249.56 |
| Provisions | ||
| Deferred income | 131,546,549.87 | 112,187,678.66 |
| Deferred income tax liabilities | 58,927,115.71 | 70,445,859.76 |
| Other non-current liabilities | ||
| Total non-current liabilities | 2,098,303,191.33 | 288,222,787.98 |
| Total liabilities | 3,094,359,684.38 | 2,269,826,078.61 |
| Owners’ equity: | ||
| Share capital | 858,132,322.00 | 858,121,541.00 |
| Other equity instruments | 71,386,451.81 | |
| Capital reserves | 317,292,522.25 | 317,206,232.47 |
| Less: Treasury stock | ||
| Other comprehensive income | -424,313.33 | |
| Specific reserve |
| Surplus reserves | 1,150,908,718.15 | 1,114,158,611.99 |
| Retained earnings | 4,381,640,182.32 | 4,136,701,381.01 |
| Total owners’ equity | 6,778,935,883.20 | 6,426,187,766.47 |
| Total liabilities and owners’ equity | 9,873,295,567.58 | 8,696,013,845.08 |
3. Consolidated Income Statement
Unit: RMB
| Item | 2020 | 2019 |
| 1. Revenue | 4,751,222,464.14 | 6,801,381,448.94 |
| Including: Operating revenue | 4,751,490,048.24 | 6,801,381,448.94 |
| 2. Costs and expenses | 4,631,408,764.38 | 5,892,300,065.15 |
| Including: Cost of sales | 3,737,984,083.45 | 4,790,605,105.36 |
| Taxes and surcharges | 66,238,984.28 | 84,541,047.19 |
| Selling expense | 125,717,288.31 | 168,227,064.83 |
| Administrative expense | 360,656,722.39 | 436,171,656.30 |
| Development cost | 231,265,031.12 | 316,575,474.85 |
| Finance costs | 109,546,654.83 | 96,179,716.62 |
| Including: Interest expense | 67,914,115.97 | 91,643,124.97 |
| Interest income | 25,174,851.32 | 10,146,938.67 |
| Add: Other income | 59,711,274.11 | 62,084,864.45 |
| Return on investment (“-” for loss) | 145,968,403.88 | 21,783,896.05 |
| Including: Share of profit or loss of joint ventures and associates | -5,146,737.73 | 7,671,490.10 |
| 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) | -107,002,594.56 | 241,537,682.90 |
| Credit impairment loss (“-” for loss) | -21,892,753.70 | -11,747,033.22 |
| Asset impairment loss (“-” for loss) | -113,460,308.96 | -91,316,988.81 |
| Asset disposal income (“-” for loss) | -317,803.17 | 186,123.30 |
| 3. Operating profit (“-” for loss) | 82,819,917.36 | 1,131,609,928.46 |
| Add: Non-operating income | 6,466,024.36 | 7,833,728.20 |
| Less: Non-operating expense | 4,468,911.08 | 11,939,226.65 |
| 4. Profit before tax (“-” for loss) | 84,817,030.64 | 1,127,504,430.01 |
| Less: Income tax expense | -4,273,027.75 | 138,177,754.10 |
| 5. Net profit (“-” for net loss) | 89,090,058.39 | 989,326,675.91 |
| 5.1 By operating continuity | ||
| 5.1.1 Net profit from continuing operations (“-” for net loss) | 89,090,058.39 | 989,326,675.91 |
| 5.1.2 Net profit from discontinued operations (“-” for net loss) | ||
| 5.2 By ownership | ||
| 5.2.1 Net profit attributable to shareholders of the Company as the parent | 97,308,593.36 | 952,386,011.49 |
| 5.2.1 Net profit attributable to non-controlling interests | -8,218,534.97 | 36,940,664.42 |
| 6. Other comprehensive income, net of tax | -90,369,605.96 | 30,989,758.38 |
| Attributable to owners of the Company as the parent | -90,317,648.86 | 30,989,758.38 |
| 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 | -90,317,648.86 | 30,989,758.38 |
| 6.2.1 Other comprehensive income that will be reclassified to profit or loss under the equity method | ||
| 6.2.2 Changes in the fair value of investments in other debt obligations | ||
| 6.2.3 Other comprehensive income arising from the reclassification of financial assets | ||
| 6.2.4 Credit impairment allowance for investments in other debt obligations | ||
| 6.2.5 Reserve for cash flow hedges | ||
| 6.2.6 Differences arising from the translation of foreign currency-denominated financial statements | -90,065,261.51 | 30,989,758.38 |
| 6.2.7 Other | -252,387.35 | |
| Attributable to non-controlling interests | -51,957.10 | |
| 7. Total comprehensive income | -1,279,547.57 | 1,020,316,434.29 |
| Attributable to owners of the Company as the parent | 6,990,944.50 | 983,375,769.87 |
| Attributable to non-controlling interests | -8,270,492.07 | 36,940,664.42 |
| 8. Earnings per share | ||
| 8.1 Basic earnings per share | 0.11 | 1.11 |
| 8.2 Diluted earnings per share | 0.11 | 1.11 |
Where business combinations under common control occurred in the current period, the net profit achieved by the acquirees beforethe combinations was RMB0.00, with the amount for the same period of last year being RMB0.00.Legal representative: Liu Zibin Chief Accountant: Zhang HongmeiFinancial Manager: Zhang Keming
4. Income Statement of the Company as the Parent
Unit: RMB
| Item | 2020 | 2019 |
| 1. Operating revenue | 3,275,667,055.94 | 5,105,711,442.90 |
| Less: Cost of sales | 2,594,772,449.08 | 3,798,120,617.00 |
| Taxes and surcharges | 43,852,034.14 | 56,539,743.95 |
| Selling expense | 90,924,780.86 | 95,202,970.17 |
| Administrative expense | 223,829,705.58 | 260,145,884.34 |
| R&D expense | 155,781,784.46 | 219,891,715.24 |
| Finance costs | 63,053,311.41 | 31,122,463.38 |
| Including: Interest expense | 29,507,836.33 | 28,708,510.46 |
| Interest income | 12,603,128.63 | 2,861,783.48 |
| Add: Other income | 40,725,385.28 | 31,731,358.99 |
| Return on investment (“-” for loss) | 438,956,821.28 | 185,457,258.88 |
| Including: Share of profit or loss of joint ventures and associates | -5,146,737.73 | 7,671,490.10 |
| 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) | -111,822,736.20 | 241,537,682.90 |
| Credit impairment loss (“-” for loss) | -20,099,155.46 | -7,710,573.04 |
| Asset impairment loss (“-” for loss) | -78,930,638.97 | -62,122,253.32 |
| Asset disposal income (“-” for loss) | -557,994.15 | 11,362,991.28 |
| 2. Operating profit (“-” for loss) | 371,724,672.19 | 1,044,944,514.51 |
| Add: Non-operating income | 4,554,095.15 | 4,653,501.25 |
| Less: Non-operating expense | 1,671,120.09 | 6,099,201.01 |
| 3. Profit before tax (“-” for loss) | 374,607,647.25 | 1,043,498,814.75 |
| Less: Income tax expense | 7,106,585.68 | 113,797,097.25 |
| 4. Net profit (“-” for net loss) | 367,501,061.57 | 929,701,717.50 |
| 4.1 Net profit from continuing operations (“-” for net loss) | 367,501,061.57 | 929,701,717.50 |
| 4.2 Net profit from discontinued operations (“-” for net loss) | ||
| 5. Other comprehensive income, net of tax | -424,313.33 | |
| 5.1 Items that will not be reclassified to profit or loss | ||
| 5.1.1 Changes caused by re-measurements on defined benefit schemes | ||
| 5.1.2 Other comprehensive income that will not be reclassified to profit or loss under the equity method | ||
| 5.1.3 Changes in the fair value of investments in other equity instruments | ||
| 5.1.4 Changes in the fair value arising from changes in own credit risk | ||
| 5.1.5 Other | ||
| 5.2 Items that will be reclassified to profit or loss | -424,313.33 | |
| 5.2.1 Other comprehensive income that will be reclassified to profit or loss under the equity method | ||
| 5.2.2 Changes in the fair value of investments in other debt obligations | ||
| 5.2.3 Other comprehensive income arising from the reclassification of financial assets | ||
| 5.2.4 Credit impairment allowance for investments in other debt obligations | ||
| 5.2.5 Reserve for cash flow hedges | ||
| 5.2.6 Differences arising from the translation of foreign currency-denominated financial statements | ||
| 5.2.7 Other | -424,313.33 | |
| 6. Total comprehensive income | 367,076,748.24 | 929,701,717.50 |
| 7. Earnings per share | ||
| 7.1 Basic earnings per share | 0.43 | 1.08 |
| 7.2 Diluted earnings per share | 0.41 | 1.08 |
5. Consolidated Cash Flow Statement
Unit: RMB
| Item | 2020 | 2019 |
| 1. Cash flows from operating activities: |
| Proceeds from sale of commodities and rendering of services | 4,549,188,241.18 | 6,547,147,672.62 |
| Tax rebates | 106,212,520.44 | 207,866,504.29 |
| Cash generated from other operating activities | 119,614,464.43 | 115,518,461.97 |
| Subtotal of cash generated from operating activities | 4,775,015,226.05 | 6,870,532,638.88 |
| Payments for commodities and services | 2,382,593,861.18 | 3,661,102,468.51 |
| Cash paid to and for employees | 1,443,277,224.36 | 1,623,138,103.34 |
| Taxes paid | 144,996,754.22 | 261,999,883.37 |
| Cash used in other operating activities | 210,611,463.40 | 238,181,608.15 |
| Subtotal of cash used in operating activities | 4,181,479,303.16 | 5,784,422,063.37 |
| Net cash generated from/used in operating activities | 593,535,922.89 | 1,086,110,575.51 |
| 2. Cash flows from investing activities: | ||
| Proceeds from disinvestment | 460,131,152.08 | 60,000,000.00 |
| Return on investment | 149,130,790.55 | 4,875,806.53 |
| Net proceeds from the disposal of fixed assets, intangible assets and other long-lived assets | 102,560,031.90 | 3,260,418.11 |
| Net proceeds from the disposal of subsidiaries and other business units | 76,625,459.68 | |
| Cash generated from other investing activities | 62,232,909.13 | 22,644,079.03 |
| Subtotal of cash generated from investing activities | 850,680,343.34 | 90,780,303.67 |
| Payments for the acquisition of fixed assets, intangible assets and other long-lived assets | 580,156,640.57 | 789,961,925.00 |
| Payments for investments | 1,052,215,000.00 | 50,000,000.00 |
| Net increase in pledged loans granted | ||
| Net payments for the acquisition of subsidiaries and other business units | ||
| Cash used in other investing activities | 6,483,653.47 | 38,875,330.97 |
| Subtotal of cash used in investing activities | 1,638,855,294.04 | 878,837,255.97 |
| Net cash generated from/used in investing activities | -788,174,950.70 | -788,056,952.30 |
| 3. Cash flows from financing activities: | ||
| Capital contributions received | 50,000,000.00 | 50,000,000.00 |
| Including: Capital contributions by non-controlling interests to subsidiaries | 50,000,000.00 | 50,000,000.00 |
| Borrowings raised | 3,398,339,439.58 | 4,010,463,313.14 |
| Cash generated from other financing activities | 174,000,000.00 | 110,000,000.00 |
| Subtotal of cash generated from financing activities | 3,622,339,439.58 | 4,170,463,313.14 |
| Repayment of borrowings | 2,529,112,565.20 | 3,299,893,907.00 |
| Interest and dividends paid | 199,362,285.43 | 573,047,333.34 |
| Including: Dividends paid by subsidiaries to non-controlling interests | 59,618,853.07 | 62,023,566.38 |
| Cash used in other financing activities | 160,200,000.00 | 248,284,104.03 |
| Subtotal of cash used in financing activities | 2,888,674,850.63 | 4,121,225,344.37 |
| Net cash generated from/used in financing activities | 733,664,588.95 | 49,237,968.77 |
| 4. Effect of foreign exchange rates changes on cash and cash equivalents | -21,054,172.59 | -3,867,345.96 |
| 5. Net increase in cash and cash equivalents | 517,971,388.55 | 343,424,246.02 |
| Add: Cash and cash equivalents, beginning of the period | 878,559,018.92 | 535,134,772.90 |
| 6. Cash and cash equivalents, end of the period | 1,396,530,407.47 | 878,559,018.92 |
6. Cash Flow Statement of the Company as the Parent
Unit: RMB
| Item | 2020 | 2019 |
| 1. Cash flows from operating activities: | ||
| Proceeds from sale of commodities and rendering of services | 3,132,082,316.96 | 4,952,756,297.43 |
| Tax rebates | 37,614,591.44 | 142,037,546.90 |
| Cash generated from other operating activities | 77,891,597.93 | 82,964,558.55 |
| Subtotal of cash generated from operating activities | 3,247,588,506.33 | 5,177,758,402.88 |
| Payments for commodities and services | 2,217,942,543.44 | 2,604,536,642.87 |
| Cash paid to and for employees | 889,963,420.68 | 1,050,596,751.37 |
| Taxes paid | 79,127,361.47 | 153,270,926.22 |
| Cash used in other operating activities | 154,885,854.59 | 147,379,613.59 |
| Subtotal of cash used in operating activities | 3,341,919,180.18 | 3,955,783,934.05 |
| Net cash generated from/used in operating activities | -94,330,673.85 | 1,221,974,468.83 |
| 2. Cash flows from investing activities: | ||
| Proceeds from disinvestment | 514,020,256.94 | 60,000,000.00 |
| Return on investment | 316,780,237.87 | 172,852,240.15 |
| Net proceeds from the disposal of fixed assets, intangible assets and other long-lived assets | 114,941,392.08 | 30,472,795.67 |
| Net proceeds from the disposal of subsidiaries and other business units | ||
| Cash generated from other investing activities | 1,484,210,870.85 | 529,651,811.23 |
| Subtotal of cash generated from investing activities | 2,429,952,757.74 | 792,976,847.05 |
| Payments for the acquisition of fixed assets, intangible assets and | 70,577,315.74 | 164,568,732.04 |
| other long-lived assets | ||
| Payments for investments | 955,125,000.00 | 403,072,200.00 |
| Net payments for the acquisition of subsidiaries and other business units | ||
| Cash used in other investing activities | 2,085,396,649.29 | 921,445,294.40 |
| Subtotal of cash used in investing activities | 3,111,098,965.03 | 1,489,086,226.44 |
| Net cash generated from/used in investing activities | -681,146,207.29 | -696,109,379.39 |
| 3. Cash flows from financing activities: | ||
| Capital contributions received | ||
| Borrowings raised | 2,225,619,549.50 | 2,414,848,549.50 |
| Cash generated from other financing activities | 168,980,600.00 | 450,811,100.00 |
| Subtotal of cash generated from financing activities | 2,394,600,149.50 | 2,865,659,649.50 |
| Repayment of borrowings | 791,236,980.16 | 2,243,633,569.59 |
| Interest and dividends paid | 112,547,531.31 | 464,408,760.74 |
| Cash used in other financing activities | 236,619,700.00 | 615,855,904.03 |
| Subtotal of cash used in financing activities | 1,140,404,211.47 | 3,323,898,234.36 |
| Net cash generated from/used in financing activities | 1,254,195,938.03 | -458,238,584.86 |
| 4. Effect of foreign exchange rates changes on cash and cash equivalents | -9,693,224.69 | 389,253.70 |
| 5. Net increase in cash and cash equivalents | 469,025,832.20 | 68,015,758.28 |
| Add: Cash and cash equivalents, beginning of the period | 259,320,863.08 | 191,305,104.80 |
| 6. Cash and cash equivalents, end of the period | 728,346,695.28 | 259,320,863.08 |
7. Consolidated Statements of Changes in Owners’ Equity
2020
Unit: RMB
| Item | 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 shares | Perpetual bonds | Other | |||||||||||||
| 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) | 10,781.00 | 71,386,451.81 | -2,133,757.41 | -90,317,648.86 | 36,750,106.16 | -25,253,666.90 | -9,557,734.20 | -198,070,434.34 | -207,628,168.54 | ||||||
| 3.1 Total comprehensive income | -90,317,648.86 | 97,308,593.36 | 6,990,944.50 | -8,270,492.07 | -1,279,547.57 | ||||||||||
| 3.2 Capital increased and reduced by owners | 10,781.00 | 71,386,451.81 | -2,133,757.41 | 69,263,475.40 | -74,628,239.47 | -5,364,764.07 | |||||||||
| 3.2.1 Ordinary shares increased by shareholders | 10,781.00 | 86,234.48 | 97,015.48 | 50,000,000.00 | 50,097,015.48 | ||||||||||
| 3.2.2 Capital increased by holders of other equity instruments | |||||||||||||||
| 3.2.3 Share-based payments included in owners’ equity | |||||||||||||||
| 3.2.4 Other | 71,386,451.81 | -2,219,991.89 | 69,166,459.92 | -124,628,239.47 | -55,461,779.55 | ||||||||||
| 3.3 Profit distribution | 36,750,106.16 | -122,562,260.26 | -85,812,154.10 | -115,171,702.80 | -200,983,856.90 | ||||||||||
| 3.3.1 Appropriation to surplus reserves | 36,750,106.16 | -36,750,106.16 | |||||||||||||
| 3.3.2 Appropriation to general reserve | |||||||||||||||
| 3.3.3 Appropriation to owners (or shareholders) | -85,812,154.10 | -85,812,154.10 | -115,171,702.80 | -200,983,856.90 | |||||||||||
| 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 | 858,132,322.00 | 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 |
2019
Unit: RMB
| Item | 2019 | ||||||||||||||
| 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 shar | Perpetual bond | Other | |||||||||||||
| es | s | ||||||||||||||
| 1. Balances as at the end of the prior year | 922,602,311.00 | 699,493,647.48 | 486,922,944.94 | 61,157,013.37 | 1,022,717,451.40 | 4,927,500,989.55 | 7,146,548,467.86 | 579,276,247.53 | 7,725,824,715.39 | ||||||
| Add: Adjustments for changed accounting policies | -520,200.00 | 1,579,728.48 | 14,217,556.33 | 15,277,084.81 | 15,277,084.81 | ||||||||||
| Adjustments for corrections of previous errors | |||||||||||||||
| Adjustments for business combinations under common control | |||||||||||||||
| Other adjustments | |||||||||||||||
| 2. Balances as at the beginning of the year | 922,602,311.00 | 699,493,647.48 | 486,922,944.94 | 60,636,813.37 | 1,024,297,179.88 | 4,941,718,545.88 | 7,161,825,552.67 | 579,276,247.53 | 7,741,101,800.20 | ||||||
| 3. Increase/ decrease in the period (“-” for decrease) | -64,480,770.00 | -441,447,402.06 | -486,922,944.94 | 30,989,758.38 | 92,970,171.75 | 430,355,069.24 | 535,309,772.25 | 22,892,975.99 | 558,202,748.24 | ||||||
| 3.1 Total comprehensive income | 30,989,758.38 | 952,386,011.49 | 983,375,769.87 | 36,940,664.41 | 1,020,316,434.28 | ||||||||||
| 3.2 Capital increased and reduced by owners | -64,480,770.00 | -441,447,402.06 | -486,922,944.94 | -19,005,227.12 | 47,975,877.96 | 28,970,650.84 | |||||||||
| 3.2.1 Ordinary shares increased by shareholders | -64,480,770.00 | -442,861,264.14 | -486,922,944.94 | -20,419,089.20 | 49,389,695.10 | 28,970,605.90 | |||||||||
| 3.2.2 Capital increased by holders of other equity instruments | |||||||||||||||
| 3.2.3 Share-based payments included in owners’ equity | |||||||||||||||
| 3.2.4 Other | 1,413,862.08 | 1,413,862.08 | -1,413,817.14 | 44.94 |
| 3.3 Profit distribution | 92,970,171.75 | -522,030,942.25 | -429,060,770.50 | -62,023,566.38 | -491,084,336.88 | ||||||||||
| 3.3.1 Appropriation to surplus reserves | 92,970,171.75 | -92,970,171.75 | |||||||||||||
| 3.3.2 Appropriation to general reserve | |||||||||||||||
| 3.3.3 Appropriation to owners (or shareholders) | -429,060,770.50 | -429,060,770.50 | -62,023,566.38 | -491,084,336.88 | |||||||||||
| 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 | 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 |
8. Statements of Changes in Owners’ Equity of the Company as the Parent
2020
Unit: RMB
| Item | 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) | 10,781.00 | 71,386,451.81 | 86,289.78 | -424,313.33 | 36,750,106.16 | 244,938,801.31 | 352,748,116.73 | |||||
| 3.1 Total comprehensive income | -424,313.33 | 367,501,061.57 | 367,076,748.24 | |||||||||
| 3.2 Capital increased and reduced by owners | 10,781.00 | 71,386,451.81 | 86,289.78 | 71,483,522.59 | ||||||||
| 3.2.1 Ordinary shares increased by shareholders | 10,781.00 | 86,234.48 | 97,015.48 | |||||||||
| 3.2.2 Capital increased by holders of other equity instruments | ||||||||||||
| 3.2.3 Share-based payments included in owners’ equity | ||||||||||||
| 3.2.4 Other | 71,386,451.81 | 55.30 | 71,386,507.11 | |||||||||
| 3.3 Profit distribution | 36,750,106.16 | -122,562,260.26 | -85,812,154.10 | |||||||||
| 3.3.1 Appropriation to surplus reserves | 36,750,106.16 | -36,750,106.16 | ||||||||||
| 3.3.2 Appropriation to owners (or | -85,812,154.10 | -85,812,154.10 |
| 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 period | 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 |
2019
Unit: RMB
| Item | 2019 | |||||||||||
| 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 | 922,602,311.00 | 759,836,756.57 | 486,922,944.94 | 520,200.00 | 1,019,608,711.76 | 3,714,813,049.43 | 5,930,458,083.82 | |||||
| Add: Adjustments for changed accounting policies | -520,200.00 | 1,579,728.48 | 14,217,556.33 | 15,277,084.81 | ||||||||
| Adjustments for corrections of previous errors | ||||||||||||
| Other adjustments | ||||||||||||
| 2. Balances as at the beginning of the year | 922,602,311.00 | 759,836,756.57 | 486,922,944.94 | 1,021,188,440.24 | 3,729,030,605.76 | 5,945,735,168.63 | ||||||
| 3. Increase/ decrease in the period (“-” for decrease) | -64,480,770.00 | -442,630,524.10 | -486,922,944.94 | 92,970,171.75 | 407,670,775.25 | 480,452,597.84 | ||||||
| 3.1 Total comprehensive income | 929,701,717.50 | 929,701,717.50 | ||||||||||
| 3.2 Capital increased and reduced by owners | -64,480,770.00 | -442,630,524.10 | -486,922,944.94 | -20,188,349.16 | ||||||||
| 3.2.1 Ordinary | -64,480,770.00 | -442,630,569.04 | -486,922,944.94 | -20,188,394.10 | ||||||||
| shares increased by shareholders | ||||||||||||
| 3.2.2 Capital increased by holders of other equity instruments | ||||||||||||
| 3.2.3 Share-based payments included in owners’ equity | ||||||||||||
| 3.2.4 Other | 44.94 | 44.94 | ||||||||||
| 3.3 Profit distribution | 92,970,171.75 | -522,030,942.25 | -429,060,770.50 | |||||||||
| 3.3.1 Appropriation to surplus reserves | 92,970,171.75 | -92,970,171.75 | ||||||||||
| 3.3.2 Appropriation to owners (or shareholders) | -429,060,770.50 | -429,060,770.50 | ||||||||||
| 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 | 858,121,541.00 | 317,206,232.47 | 1,114,158,611.99 | 4,136,701,381.01 | 6,426,187,766.47 |
III Company ProfileLu Thai Textile Co., Ltd. (hereinafter referred to as the “Company”) is a joint venture invested byZibo Lucheng Textile Investment Co., Ltd (originally named Zibo Lucheng Textile Co., Ltd,hereinafter referred to as Lucheng Textile) and Thailand Tailun Textile Co., Ltd. On 3 February 1993,the Company is approved by the former Ministry of Foreign Trade and Economy of the State (1993)in WJMZEHZ No. 59 to convert into a joint-stock enterprise. Zibo Administration for Industry andCommerce issued the Company corporate business license with the registration No. of QGLZZZ No.000066.In July 1997, the Company is approved by the Securities Committee of the Department of the State inthe ZWF (1997) No. 47 to issue 80 million shares of domestically listed foreign share( B-shares) atthe price of RMB 1.00 per share. Upon approved by Shenzhen Stock Exchange with No. (1997) 296Listing 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 increased publication of 50 million shares of general share (A-shares) at the book valueof RMB 1.00, which are listed on the Shenzhen Stock Exchange on 25 December 2000 with A-sharesstock code of 000726 through approval by Shenzhen Stock Exchange with No. (2000) 162 ListingNotice.As approved by 2000 Annual General Meeting in May 2001, the Company carried out the distributionplan that 10 shares of capital public reserve are converted to 3 more shares for each 10 shares.As approved by Resolutions of 2001 Annual General Meeting in June 2002, the Companyimplemented the distribution plan that 10 shares of capital public reserve are converted 3 more sharesfor each 10 shares again.As approved by 2002 Annual General Meeting in May 2003, the Company implemented thedistribution plan that 10 shares of capital public reserve are 2 more shares for each 10 shares, andinner employees’ shared increased to 40.56 million shares. As examined and approved by ZJGSZ No.[2000] 199 of CSRC, the inner employees’ shares will start circulation 3 years later since listing onthe A-share market. On 25 December 2003, the inner employees’ shares reach 3 years since listing onthe A-share stock market, and they set out circulation on 26 December 2003.As approved by the Annual General Meeting 2006 held in June 2007, the Company implemented theplan on converting 10 shares to all its shareholders with capital reserves for every 10 shares. Aftercapitalization, 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 issueadditional shares (ZJXK [2008] No. 890 document) from CSRC, issued the Renminbi commonshares (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, therelevant resolution of the 15
th
Meeting of the 6
th
Board of Directors, the Opinion of China SecuritiesRegulatory Commission on the Restricted Share Incentive Plan of Lu Thai Textile Co., Ltd.(Shang-Shi-Bu-Han [2011] No. 206), the Company applied for a registered capital increment of RMB
14.09 million, which was contributed by restricted share incentive receivers with monetary funds.In accordance with the resolution of Proposal on Repurchasing and Canceling Partial RestrictedShares already Granted for the Original Incentive Targets not Reaching the Incentive Conditionsmade at the 23
rd Session of the 6
thBoard of Directors on 13 August 2012, the Company canceling atotal of 60,000.00 shares already granted for the original incentive targets not reaching the incentiveconditions.According to the second temporary resolution of Proposal on counter purchase of part of the domesticlisted foreign share (B share) on 25 June 2012, the Company counter purchase domestic listed foreignshare (B share) 48,837,300 shares.According to the Proposal on Repurchase and Cancel Part of Unlocked Restricted Share of theOriginal Incentive Personnel not Conforming to the Incentive Condition, Proposal on Repurchase andCancel unlocked Restricted Share in Second Unlocked Period of all the Incentive Personnel reviewedand 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 TargetsNot Met with the Incentive Conditions but Granted Restricted Shares approved on the 11
th
Meeting ofthe 7th
Board of Directors on 11 June 2014, to execute repurchase and write-off of the whole grantedshares of 42,000 shares of the original incentive targets not met with the incentive targets of theCompany.As per the Proposal on Buy-back of Some A- and B-shares considered and approved as a resolution atthe 1stspecial meeting of shareholders on 5 August 2015, the Company repurchased 33,156,200domestically 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
nd
Extraordinary General Meeting on 23 March 2018, the Company repurchased 64,480,800domestically listed foreign shares (B-shares).There were 10,800 shares of the Company which were converted from the convertible bonds in2020.As of 31 December 2020, the registered capital of the Company was RMB858.1323 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 the Supervisory Committee. At present, the Company has set up variousdepartments including the Yarn-dyed Fabric Manufacturing Center, Garment Manufacturing Center,the Clothing Marketing Department, the Global Marketing Department, the Supply Chain
Department, Lu Thai Engineering Technology Institute, the Enterprise Management Department, theFinancial Management Department and the Strategy and Market Department etc..The scope of business of the Company and its subsidiaries (hereinafter referred to as “the Group”)shall include: the design, R&D, production and sales of various textiles and garments including yarns,fabrics, blouses/shirts, suits and coats etc.; the textiles and clothing testing; the production and salesof Class I medical devices; the production and sales of non-medical masks and protective clothing;the technical development, service and consultation based on the e-commerce platform; theprocessing and sales of mechanical and electrical products; the procurement of agricultural products;hotel, restaurant, catering, conference and training services; the lease of self-owned premises andlands; the non-quota license management; the procurement and sales of non-exclusive goods.The Company’s financial statements and Notes thereof have been approved by the 21
stMeeting of the
thBoard of Directors held on 29 March 2021 (in line with the date of the audit report).
There were 16 subsidiaries included into the consolidation scope of the Company in 2020, and for the details, please refer to Note VIII.“Changes of Consolidation Scope” and Notes IX. “Equities among Other Entities”.IV Basis for Preparation of Financial Statements
1. Preparation Basis
This financial statement is prepared in accordance with the accounting standards for business enterprises, and the application guide,interpretation and other relevant regulations (hereinafter collectively referred to as “Accounting Standards for Business Enterprises”)issued by the Ministry of Finance. In addition, the Group also disclosed relevant financial information in accordance with 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 Estimates
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 (24).
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 31 December 2020,business results and cash flows for the January to December of 2020, 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 III (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 thetime of initial confirmation, is listed in the item of “inventory”; if amortization term exceeds one year or a normal business cycle at thetime of initial confirmation, is listed in the item of “other non-current assets”.The contract acquiring cost that is confirmed as asset, if amortization term does not exceed one year or a normal business cycle atthe time 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-20.
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-20 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-20 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-20.
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 (20) for the method of provision for impairment of assets for engineering materials.In the balance sheet, the ending balance of engineering materials is listed in the "project under construction" item.
18. Borrowing Costs
(1) Confirmation principle of Capitalized Borrowing Expense
The borrowing expenses incurred by the 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. 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-20.
(2) Accounting Policy for Internal Research and Development Expenditures
The expenditures for internal research and development projects of an enterprise shall be classified into research expenditures anddevelopment 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.
20. Impairment of Long-term Assets
For long term equity investment in subsidiaries, associated enterprises and joint ventures, investment real estate which follow-up
measurement is carried out by cost pattern, fixed assets, 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.
21. 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.
22. Contract liabilities
Refer to Note V. Significant Accounting Policies and Estimates 24. Revenue (1) for details.
23. 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 end
of 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 includethe 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.
24. Revenue
Accounting policies adopted for the recognition and measurement of revenue
(1) General principle
The Company recognizes revenue when it has fulfilled its contract performance obligation in a contract, namely, when the 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 or
shall be collected is liability to the contract.The contract assets and contract liabilities under the same contract are listed in net amount. If net amount is debit balance, it is listedin the items “contract asset” or “other non-current asset” according to its fluidity; if net amount is credit balance, it is listed in theitems “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 business
25. 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.
26. Deferred Income Tax Assets/Deferred Income Tax Liabilities
Income tax includes current income tax and deferred income tax. All shall be included in the current profit and loss as income tax
expense except the adjustment business reputation arising from business merger, or the deferred income tax related to the 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.
27. Lease
(1) Accounting Treatment of Operating Lease
(1) The Group as the lessor
The rent incomes from operating leases shall be recognized as the profits and losses of the current period by using the straight-linemethod over each period of the lease term. The initial direct costs shall be recorded into current profits and losses.
(2) The Group as the lessee
The rent expenses from operating leases shall be recorded by the lessee in the relevant asset costs or the profits and losses of thecurrent period by using the straight-line method over each period of the lease term. The initial direct costs shall be recognized as theprofits and losses of the current period.
(2) Accounting Treatments of Financial Lease
(1) The Company as the lessor
On the beginning date of the lease term, the Company shall recognize the sum of the minimum lease receipts on the lease beginningdate and the initial direct costs as the entering value in an account of the financing lease values receivable, and record theunguaranteed residual value at the same time. The balance between the sum of the minimum lease receipts, the initial direct costs andthe unguaranteed residual value and the sum of their present values shall be recognized as unrealized financing income.Unrecognized financing incomes shall be adopted by the effective interest rate method in the lease term, so as to calculate andrecognize current financing revenues.
(2) The Company as the lessee
On the lease beginning date, the Company shall record the lower one of the fair value of the leased asset and the present value of theminimum lease payments on the lease beginning date as the entering value in an account, recognize the amount of the minimum leasepayments as the entering value in an account of long-term account payable, and treat the balance between the recorded amount of theleased asset and the long-term account payable as unrecognized financing charges. The initial direct costs shall be recorded into valueof leased assets. Unrecognized financing charges shall be adopted by the effective interest rate method in the lease term, so as tocalculate and recognize current financing charges. The Group adopts a depreciation policy consistent with its own fixed assets toaccrue the depreciation of leased assets.
28. 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.
29. 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 ofbusiness 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.
30. 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 5 July 2017, the Ministry of Finance published the revision on the “Accounting Standards for Business Enterprises No. 14 - Revenue”. Main content of the changes in the “Accounting Standards for Business Enterprises No. 14 - Revenue” includes (1) The current two standards for revenue and construction contracts are integrated into a unified revenue recognition model; (2) the transfer of control is used to replace the transfer of risks and remunerations as the criteria to judge the time point of revenue recognition; (3) clearer guidance is provided for the accounting treatment of a contract containing multiple transaction arrangements; (4) specific regulations are provided for the revenue recognition and measurement in some specific transactions (or matters). | The Company held the 13th Meeting of the 9th Board of Directors on 28 April 2020 and decided to implement the said standards since 1 January 2020 and adjusted related contents of accounting policies. | Refer to Note V. 24 for details about new accounting policies. | ||
The Group adjusts the amounts of the retained earnings and other relevant items of financial statements at the beginning of 2020according to the cumulative impact number from first time executing new income standard, and does not adjust the data of thecompared financial statements. The Group only adjusts the amounts of the retained earnings and other relevant items of financial
statements at the beginning of 2020 for the cumulative impact number of the contract not completed as of January 1, 2020.
| Contents of changes in accounting policies and reasons thereof | Affected items of financial statements | Affected amount (1 January 2020) |
| Due to the implementation of the new standards governing revenue, the Group reclassified the advances from customers related to selling goods and providing labor services into contract liabilities. | Contract liabilities | 99,332,618.50 |
| Advances from customers | -108,783,148.03 | |
| Other current liabilities | 9,450,529.53 |
The influence of the implementing the new standards governing revenue on relative items of 2020 financial statements comparedwith the original standards governing revenue is as follows:
| Affected items of the balance sheet | Affected amount (31 December 2020) |
| Contract liabilities | 141,339,705.62 |
| Advances from customers | -152,333,217.97 |
| Other current liabilities | 10,993,512.35 |
| Affected items of the income statement | Affected amount 2020 |
| Cost of sales | 39,711,082.23 |
| Selling expense | -39,711,082.23 |
(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 Revenue or Leases since 2020ApplicableWhether need to adjust items of balance sheet at the beginning of the year
√ Yes □ No
Consolidated balance sheet
Unit: RMB
| Item | 31 December 2019 | 1 January 2020 | Adjusted |
| Current assets: | |||
| Monetary assets | 924,322,008.17 | 924,322,008.17 | |
| Settlement reserve | |||
| Interbank loans granted | |||
| Held-for-trading financial assets | 52,356,098.85 | 52,356,098.85 | |
| Derivative financial assets | |||
| Notes receivable | 104,737,949.91 | 104,737,949.91 | |
| Accounts receivable | 515,306,599.62 | 515,306,599.62 |
| Accounts receivable financing | 26,963,818.87 | 26,963,818.87 | |
| Prepayments | 56,828,987.59 | 56,828,987.59 | |
| Premiums receivable | |||
| Reinsurance receivables | |||
| Receivable reinsurance contract reserve | |||
| Other receivables | 59,743,471.84 | 59,743,471.84 | |
| Including: Interest receivable | |||
| Dividends receivable | |||
| Financial assets purchased under resale agreements | |||
| Inventories | 2,421,500,259.30 | 2,421,500,259.30 | |
| Contract assets | |||
| Assets held for sale | |||
| Current portion of non-current assets | |||
| Other current assets | 68,788,674.10 | 68,788,674.10 | |
| Total current assets | 4,230,547,868.25 | 4,230,547,868.25 | |
| Non-current assets: | |||
| Loans and advances to customers | |||
| Investments in debt obligations | |||
| Investments in other debt obligations | |||
| Long-term receivables | 7,058,233.71 | 7,058,233.71 | |
| Long-term equity investments | 103,226,300.00 | 103,226,300.00 | |
| Investments in other equity instruments | |||
| Other non-current financial assets | 278,149,500.00 | 278,149,500.00 | |
| Investment property | 45,896,747.87 | 45,896,747.87 | |
| Fixed assets | 6,012,094,104.67 | 6,012,094,104.67 | |
| Construction in progress | 400,235,070.01 | 400,235,070.01 | |
| Intangible assets | 516,479,519.15 | 516,479,519.15 | |
| Development costs | |||
| Goodwill | 20,563,803.29 | 20,563,803.29 | |
| Long-term prepaid expense | 153,031,253.79 | 153,031,253.79 |
| Deferred income tax assets | 99,307,233.72 | 99,307,233.72 | |
| Other non-current assets | 18,841,918.62 | 18,841,918.62 | |
| Total non-current assets | 7,654,883,684.83 | 7,654,883,684.83 | |
| Total assets | 11,885,431,553.08 | 11,885,431,553.08 | |
| Current liabilities: | |||
| Short-term borrowings | 2,120,154,330.61 | 2,120,154,330.61 | |
| Held-for-trading financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | 85,219,724.63 | 85,219,724.63 | |
| Accounts payable | 305,346,284.94 | 305,346,284.94 | |
| Advances from customers | 108,783,148.03 | -108,783,148.03 | |
| Contract liabilities | 99,332,618.50 | 99,332,618.50 | |
| Financial assets sold under repurchase agreements | |||
| Customer deposits and interbank deposits | |||
| Payables for acting trading of securities | |||
| Payables for underwriting of securities | |||
| Employee benefits payable | 335,576,560.36 | 335,576,560.36 | |
| Taxes payable | 25,051,630.06 | 25,051,630.06 | |
| Other payables | 104,982,189.40 | 104,982,189.40 | |
| 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 | 101,111,297.49 | 101,111,297.49 | |
| Other current liabilities | 9,450,529.53 | 9,450,529.53 | |
| Total current liabilities | 3,186,225,165.52 | 3,186,225,165.52 | |
| Non-current liabilities: | |||
| Insurance contract reserve | |||
| Long-term borrowings | 42,364,019.74 | 42,364,019.74 | |
| Bonds payable | |||
| Lease liabilities |
| Long-term payables | |||
| Long-term employee benefits payable | 105,589,249.56 | 105,589,249.56 | |
| Provisions | |||
| Deferred income | 157,668,211.41 | 157,668,211.41 | |
| Deferred income tax liabilities | 92,440,358.41 | 92,440,358.41 | |
| Other non-current liabilities | 1,840,000.00 | 1,840,000.00 | |
| Total non-current liabilities | 399,901,839.12 | 399,901,839.12 | |
| Total liabilities | 3,586,127,004.64 | 3,586,127,004.64 | |
| Owners’ equity: | |||
| Share capital | 858,121,541.00 | 858,121,541.00 | |
| Other equity instruments | |||
| Capital reserves | 258,046,245.42 | 258,046,245.42 | |
| Less: Treasury stock | |||
| Other comprehensive income | 91,626,571.75 | 91,626,571.75 | |
| Specific reserve | |||
| Surplus reserves | 1,117,267,351.63 | 1,117,267,351.63 | |
| General reserve | |||
| Retained earnings | 5,372,073,615.12 | 5,372,073,615.12 | |
| Total equity attributable to owners of the Company as the parent | 7,697,135,324.92 | 7,697,135,324.92 | |
| Non-controlling interests | 602,169,223.52 | 602,169,223.52 | |
| Total owners’ equity | 8,299,304,548.44 | 8,299,304,548.44 | |
| Total liabilities and owners’ equity | 11,885,431,553.08 | 11,885,431,553.08 |
Note for adjustmentBalance Sheet of the Company as the Parent
Unit: RMB
| Item | 31 December 2019 | 1 January 2020 | Adjusted |
| Current assets: | |||
| Monetary assets | 259,320,863.08 | 259,320,863.08 | |
| Held-for-trading financial assets | 52,356,098.85 | 52,356,098.85 | |
| Derivative financial assets | |||
| Notes receivable | 67,898,885.35 | 67,898,885.35 | |
| Accounts receivable | 417,599,518.08 | 417,599,518.08 | |
| Accounts receivable financing | 2,675,090.00 | 2,675,090.00 |
| Prepayments | 10,178,452.88 | 10,178,452.88 | |
| Other receivables | 838,523,449.52 | 838,523,449.52 | |
| Including: Interest receivable | |||
| Dividends receivable | |||
| Inventories | 1,280,620,296.02 | 1,280,620,296.02 | |
| Contract assets | |||
| Assets held for sale | |||
| Current portion of non-current assets | |||
| Other current assets | 5,780,635.28 | 5,780,635.28 | |
| Total current assets | 2,934,953,289.06 | 2,934,953,289.06 | |
| Non-current assets: | |||
| Investments in debt obligations | |||
| Investments in other debt obligations | |||
| Long-term receivables | |||
| Long-term equity investments | 2,510,868,604.84 | 2,510,868,604.84 | |
| Investments in other equity instruments | |||
| Other non-current financial assets | 266,149,500.00 | 266,149,500.00 | |
| Investment property | 31,089,260.38 | 31,089,260.38 | |
| Fixed assets | 2,603,258,003.94 | 2,603,258,003.94 | |
| Construction in progress | 53,443,768.04 | 53,443,768.04 | |
| Intangible assets | 235,277,114.25 | 235,277,114.25 | |
| Development costs | |||
| Goodwill | |||
| Long-term prepaid expense | |||
| Deferred income tax assets | 60,974,304.57 | 60,974,304.57 | |
| Other non-current assets | |||
| Total non-current assets | 5,761,060,556.02 | 5,761,060,556.02 | |
| Total assets | 8,696,013,845.08 | 8,696,013,845.08 | |
| Current liabilities: | |||
| Short-term borrowings | 816,301,973.60 | 816,301,973.60 | |
| Held-for-trading financial liabilities |
| Derivative financial liabilities | |||
| Notes payable | 602,741,973.76 | 602,741,973.76 | |
| Accounts payable | 105,588,631.54 | 105,588,631.54 | |
| Advances from customers | 53,418,950.04 | -53,418,950.04 | |
| Contract liabilities | 48,784,755.91 | 48,784,755.91 | |
| Employee benefits payable | 242,300,723.41 | 242,300,723.41 | |
| Taxes payable | 11,995,830.49 | 11,995,830.49 | |
| Other payables | 149,255,207.79 | 149,255,207.79 | |
| 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 | |||
| Other current liabilities | 4,634,194.13 | 4,634,194.13 | |
| Total current liabilities | 1,981,603,290.63 | 1,981,603,290.63 | |
| Non-current liabilities: | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Lease liabilities | |||
| Long-term payables | |||
| Long-term employee benefits payable | 105,589,249.56 | 105,589,249.56 | |
| Provisions | |||
| Deferred income | 112,187,678.66 | 112,187,678.66 | |
| Deferred income tax liabilities | 70,445,859.76 | 70,445,859.76 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 288,222,787.98 | 288,222,787.98 | |
| Total liabilities | 2,269,826,078.61 | 2,269,826,078.61 | |
| Owners’ equity: | |||
| Share capital | 858,121,541.00 | 858,121,541.00 | |
| Other equity instruments | |||
| Capital reserves | 317,206,232.47 | 317,206,232.47 | |
| Less: Treasury stock | |||
| Other comprehensive income |
| Specific reserve | |||
| Surplus reserves | 1,114,158,611.99 | 1,114,158,611.99 | |
| Retained earnings | 4,136,701,381.01 | 4,136,701,381.01 | |
| Total owners’ equity | 6,426,187,766.47 | 6,426,187,766.47 | |
| Total liabilities and owners’ equity | 8,696,013,845.08 | 8,696,013,845.08 |
Note for adjustment
(4) Retroactive Adjustments to Comparative Data of Prior Years when First Execution of any NewStandards Governing Revenue or Leases since 2020
□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 construction tax | Turnover tax payable | 7%, 5%, 1% |
| Enterprise income tax | Income tax payable | 0, 15%, 16.5%, 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 | 0% |
| Lu Thai America | 6.5% |
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 theNo. 23 Announcement revised and published by the State Administration of Taxation in 2018, namely Management of PreferentialPolicy on Corporate Income Tax, the Measures for the Administration of the Recognition of High and New TechnologicalEnterprises (GKFH [2016] No. 195) revised and published by the Ministry of Science and Technology, Ministry of Finance andState Administration of Taxation, the Company and the holding subsidiary Lufeng Weaving & Dyeing enjoy a corporate income taxrate of 15%.According to the Announcement on Implementing the Universal Income Tax Reduction and Exemption Policy Published the StateAdministration of Taxation (SAT) (SAT Announcement No.2 of 2019), from 1 January 2019 to 31 December 2021, the portion ofannual taxable income of within RMB1 million of the wholly-owned subsidiaries of the Company Shanghai Lu Thai, Shanghai Zhinuoand Lujia Import & Export and Zhishu Trading shall be included in taxable income by reduction of 25% based on the enterprise incometax rate of 20%; for the portion exceeding RMB1 million but within RMB3 million, it shall be included in taxable income by reductionof 50% based on the enterprise income tax rate of 20%.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%.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%. In accordance with the minister’s order of 319 MoEF. Br.K on Cambodianincome tax in 2020, 50% exemption of the business income tax could be acquired.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 2020 is the fifth year of tax holiday.The wholly-owned subsidiary Continental Textile shall enjoy the preference of enterprise income tax at 3 years’ starting term + 4 years’duty-free term + 9 years’ half-tax term according to the investment license issued by Vietnamese Tay Ninh Industrial ZoneManagement Committee, and it will enter into 2 years’ duty-free term if it is profitable within 3 years’ starting term. Continental Textileshall enjoy 10% of the preference tax rate within 15 years since the tax year to get the first production and operation income, and theenterprise income tax rate shall be 20% after the preference term ends. Year 2020 is the third year of the duty-free term.The wholly-owned subsidiary of Continental Textile, Lu Thai Tan Chau, shall enjoy the preference of enterprise income tax at 3 years’starting term + 4 years’ duty-free term + 9 years’ half-tax term according to the investment license issued by Vietnamese Tay NinhInvestment Planning Office, and it will enter into 2 years’ duty-free term if it is profitable within 3 years’ starting term. The Companyshall enjoy 10% of the preference tax rate within 15 years since the tax year to get the first production and operation income, and theenterprise income tax rate shall be 20% after the preference term ends. Year 2020 is the second year of the starting term.The wholly-owned subsidiary Lu An Garments Co., Ltd. shall enjoy the preference of enterprise income tax at 3 years’ starting term +2 years’ duty-free term + 4 years’ half-tax term according to the investment license issued by Vietnamese Anjiang Province EconomicZone Management Committee, and it will enter into duty-free term if the profitability is realized at any year within 3 years’ startingterm. The Company shall enjoy 17% of the preference tax rate within 10 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. Year 2020 is the second year of the duty-free
term.Lu Thai America, the wholly-owned subsidiary of the Company registered in New York, America, was imposed the federal enterpriseincome tax at fixed tax rate of 21%, and imposed the New York Enterprise income tax at the fixed tax rate of 6.5%.
VII. Notes to Major Items in the Consolidated Financial Statements of the Company
1. Monetary assets
Unit: RMB
| Item | Ending balance | Beginning balance |
| Cash on hand | 7,009,891.16 | 9,544,377.41 |
| Bank deposits | 1,390,809,492.44 | 870,590,467.70 |
| Other monetary assets | 2,658,651.21 | 44,187,163.06 |
| Total | 1,400,478,034.81 | 924,322,008.17 |
| Including: the total amount deposited overseas | 131,075,580.22 | 299,088,689.18 |
Other notes
(1) On 31 December 2020, the monetary fund with restricted ownership of the Company was RMB2,658,651.21, which included USD 238,877.41 (RMB 1,558,651.21) L/C guarantee deposit for the Company'ssubsidiary Continental Textile Co., Ltd. and RMB 1.1 million guarantee deposit of long-term settlement ofexchange for the Company's subsidiary Lulian New Materials Co., Ltd.
(2) The interest receivable in bank deposits was RMB 1,288,976.13.
2. Trading Financial Assets
Unit: RMB
| Item | Ending balance | Beginning balance |
| Financial assets measured at fair value and whose changes are included in the current profit and loss | 268,456,216.98 | 52,356,098.85 |
| Including: | ||
| Debt instrument investment | 251,814,716.98 | 52,356,098.85 |
| Derivative Financial Assets | 16,641,500.00 | |
| Total | 268,456,216.98 | 52,356,098.85 |
Other notes:
Debt instrument investment in Trading Financial Assets is the purchased bank wealth management product, andDerivative Financial Assets are the long-term settlements of exchange.
3. Notes Receivable
(1) Notes Receivable Listed by Category
Unit: RMB
| Item | Ending balance | Beginning balance |
| Bank's acceptance bill | 141,168,447.70 | 13,622,998.20 |
| L/C | 41,825,663.16 | 91,114,951.71 |
If the bad debt provision for notes receivable was withdrawn in accordance with the general model of expectedcredit losses, information related to bad debt provision shall be disclosed by reference to the disclosure method ofother receivables:
□ Applicable √ Not applicable
(2) Notes Receivable Pledged by the Company at the Period-end
Unit: RMB
| Item | Amount pledged at the Period-end |
| Bank's acceptance bill | 11,763,977.73 |
| Total | 11,763,977.73 |
(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's acceptance bill | 97,593,675.06 | |
| Total | 97,593,675.06 |
4. Accounts Receivable
(1) Accounts Receivable Classified 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 for | 8,378,716.21 | 1.48% | 8,378,716.21 | 100.00% | ||||||
| which bad debt provision accrued separately | ||||||||||
| Including: | ||||||||||
| Accounts receivable withdrawn bad debt provision by group | 558,478,267.74 | 98.52% | 36,053,047.87 | 6.46% | 522,425,219.87 | 546,428,127.56 | 100.00% | 31,121,527.94 | 5.70% | 515,306,599.62 |
| Including: | ||||||||||
| Group 1: Undue accounts (credit insurance insured) | 166,997,706.03 | 29.46% | 1,753,475.92 | 1.05% | 165,244,230.11 | 146,231,602.81 | 26.76% | 1,535,431.83 | 1.05% | 144,696,170.98 |
| Group 2: Undue accounts (no credit insurance) | 269,999,707.80 | 47.63% | 13,499,985.39 | 5.00% | 256,499,722.41 | 298,971,131.80 | 54.72% | 14,948,556.59 | 5.00% | 284,022,575.21 |
| Group 3: Overdue accounts (credit insurance insured) | 46,514,806.33 | 8.21% | 4,977,084.28 | 10.70% | 41,537,722.05 | 59,793,875.78 | 10.94% | 6,397,944.71 | 10.70% | 53,395,931.07 |
| Group 4: Overdue accounts (no credit insurance) | 74,966,047.58 | 13.22% | 15,822,502.28 | 21.11% | 59,143,545.30 | 41,431,517.17 | 7.58% | 8,239,594.81 | 19.89% | 33,191,922.36 |
| Total | 566,856,983.95 | 100.00% | 44,431,764.08 | 7.84% | 522,425,219.87 | 546,428,127.56 | 100.00% | 31,121,527.94 | 5.70% | 515,306,599.62 |
Bad debt provision separately accrued:
Unit: RMB
| Name | Ending balance | |||
| Carrying amount | Bad debt provision | Withdrawal proportion | Withdrawal reason | |
| Client 1 | 4,493,505.62 | 4,493,505.62 | 100.00% | The client applied for bankruptcy protection |
| Client 2 | 1,944,326.18 | 1,944,326.18 | 100.00% | The client applied for bankruptcy protection |
| Other clients | 1,940,884.41 | 1,940,884.41 | 100.00% | The client has financial difficulties or filed for bankruptcy |
| Total | 8,378,716.21 | 8,378,716.21 | -- | -- |
Bad debt provision separately accrued: Bad debt provision withdrawn by groups:
Unit: RMB
| Name | Ending balance |
| Carrying amount | Bad debt provision | Withdrawal proportion | |
| Group 1: Undue accounts (credit insurance insured) | 166,997,706.03 | 1,753,475.92 | 1.05% |
| Group 2: Undue accounts (no credit insurance) | 269,999,707.80 | 13,499,985.39 | 5.00% |
| Group 3: Overdue accounts (credit insurance insured) | 46,514,806.33 | 4,977,084.28 | 10.70% |
| Group 4: Overdue accounts (no credit insurance) | 74,966,047.58 | 15,822,502.28 | 21.11% |
| Total | 558,478,267.74 | 36,053,047.87 | -- |
Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable ifadopting the general mode of expected credit loss to withdraw bad debt provision of accounts receivable.
√ Applicable □ Not applicable
Disclosure by aging
Unit: RMB
| Ageing | Carrying amount |
| Within 1 year (including 1 year) | 549,396,959.57 |
| 1 to 2 years | 16,039,634.28 |
| 2 to 3 years | 1,128,144.03 |
| Over 3 years | 292,246.07 |
| 3 to 4 years | 292,246.07 |
| Total | 566,856,983.95 |
(2) Bad Debt Provision Withdrawn, Reversed or Collected during the Reporting PeriodBad debt provision withdrawn in the reporting Period:
Unit: RMB
| Category | Beginning balance | Increase/decrease | Ending balance | |||
| Withdrawn | Reversed or collected | Verified | Other | |||
| Bad debt provision separately accrued | 8,378,716.21 | 8,378,716.21 | ||||
| Bad debt provision withdrawn by groups | 31,121,527.94 | 5,626,118.99 | 694,599.06 | 36,053,047.87 | ||
| Total | 31,121,527.94 | 14,004,835.20 | 694,599.06 | 44,431,764.08 | ||
(3) Top 5 of Accounts Receivable of Ending Balance Collected by Arrears Party
Unit: RMB
| Name of the entity | Ending balance of accounts receivable | Proportion to total amount of balance carried forward of accounts receivable | Ending balance of bad debt provision |
| Client A | 75,813,611.19 | 13.37% | 7,527,081.57 |
| Client B | 34,666,772.80 | 6.12% | 2,584,846.94 |
| Client C | 22,521,849.77 | 3.97% | 5,146,420.00 |
| Client D | 18,598,564.23 | 3.28% | 384,430.22 |
| Client E | 15,579,441.52 | 2.75% | 1,022,138.89 |
| Total | 167,180,239.51 | 29.49% |
5. Accounts Receivable Financing
Unit: RMBChanges in accounts receivable financing and fair value in the reporting Period
□ Applicable √ Not applicable
Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable ifadopting the general mode of expected credit loss to withdraw bad debt provision of accounts receivablefinancing.
□ Applicable √ Not applicable
Other notes:
There was no bank acceptance bill for which bad debt provision accrued separately in the Company. On 31December 2020, the Company believed that there was no significant credit risk in the bank acceptance bill held bythe Company, and no significant loss caused by bank defaults.
6. Prepayment
(1) List by Aging Analysis
Unit: RMB
| Ageing | Ending balance | Beginning balance |
| Item | Ending balance | Beginning balance |
| Notes Receivable | 55,508,978.63 | 26,963,818.87 |
| Less: Other Comprehensive Income - changes in fair value | -358,052.29 | |
| Total | 55,150,926.34 | 26,963,818.87 |
| Amount | Proportion | Amount | Proportion | |
| Within 1 year | 19,462,310.59 | 99.24% | 53,283,453.85 | 93.76% |
| 1 to 2 years | 113,434.12 | 0.58% | 3,529,989.66 | 6.21% |
| 2 to 3 years | 36,030.57 | 0.18% | ||
| Over 3 years | 15,544.08 | 0.03% | ||
| Total | 19,611,775.28 | -- | 56,828,987.59 | -- |
(2) Top 5 of the Ending Balance of the Prepayment Collected according to the Prepayment TargetThe advances to suppliers from the top five of prepaid parties classified based on the ending balance totals RMB13,120,393.15 in the current period, accounting for 66.90% of the total ending balance of the advances tosuppliers.
7. Other receivables
Unit: RMB
| Item | Ending balance | Beginning balance |
| Dividends receivable | 75,488,652.49 | |
| Other receivables | 30,222,166.20 | 59,743,471.84 |
| Total | 105,710,818.69 | 59,743,471.84 |
(1) Dividends receivable
1) Category of Dividends Receivable
Unit: RMB
| Item (or investees) | Ending balance | Beginning balance |
| Fengshou Cotton Industry Co., Ltd. | 75,488,652.49 | |
| Total | 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 2020 in | —— | —— | —— | —— |
| the reporting period | ||||
| Withdrawal of the reporting period | 3,973,086.97 | 3,973,086.97 | ||
| Balance of 31 December 2020 | 3,973,086.97 | 3,973,086.97 |
Changes of carrying amount with significant amount changed of loss provision in the reporting period
□ Applicable √ Not applicable
Other notes:
The Company did not have dividends receivable in the second and third stages at the Period-end.
(2) Other receivables
1) Other Receivables Classified by Category
Unit: RMB
| Nature | Ending carrying amount | Beginning carrying amount |
| Export rebates | 10,107,773.06 | |
| VAT to be returned | 9,341,623.77 | 28,015,795.39 |
| Advance payment | 13,868,814.75 | 12,156,529.38 |
| Pledged and margin | 5,163,865.78 | 6,749,222.66 |
| Borrowings and petty cash | 4,483,805.85 | 6,971,063.51 |
| Other | 218,743.34 | 1,210,146.25 |
| Total | 33,076,853.49 | 65,210,530.25 |
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 2020 | 3,043,394.21 | 1,831,226.97 | 592,437.23 | 5,467,058.41 |
| Balance of 1 January 2020 in the reporting period | —— | —— | —— | —— |
| Withdrawal of the reporting period | -1,212,810.07 | 494,411.30 | -718,398.77 | |
| Write-off in the current period | 313,730.35 | 987,804.77 | 592,437.23 | 1,893,972.35 |
| Balance of 31 December 2020 | 1,516,853.79 | 1,337,833.50 | 2,854,687.29 |
Changes of carrying amount with significant amount changed of loss provision in the reporting period
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMB
| Ageing | Carrying amount |
| Within 1 year (including 1 year) | 23,416,254.97 |
| 1 to 2 years | 4,479,413.35 |
| 2 to 3 years | 310,403.06 |
| Over 3 years | 4,870,782.11 |
| 3 to 4 years | 306,138.66 |
| 4 to 5 years | 23,815.89 |
| Over 5 years | 4,540,827.56 |
| Total | 33,076,853.49 |
3) Bad Debt Provision Withdrawn, Reversed or Collected during the Reporting PeriodBad debt provision withdrawn in the reporting Period:
Unit: RMB
| Category | Beginning balance | Increase/decrease | Ending balance | |||
| Withdrawn | Reversed or collected | Verified | Other | |||
| Expected credit loss in the next 12 months in the first stage | 3,043,394.21 | -1,212,810.07 | 313,730.35 | 1,516,853.79 | ||
| Expected loss in the duration (credit impairment not occurred) in the second stage | 1,831,226.97 | 494,411.30 | 987,804.77 | 1,337,833.50 | ||
| Expected loss in the duration (credit impairment occurred) in the third stage | 592,437.23 | 592,437.23 | ||||
| Total | 5,467,058.41 | -718,398.77 | 1,893,972.35 | 2,854,687.29 | ||
4) Top 5 of the Ending Balance of the Other Receivables Collected according to the Arrears Party
Unit: RMB
| Name of the entity | Nature | Ending balance | Ageing | Proportion to ending balance of other receivables | Ending balance of bad debt provision |
| Withheld personal endowment insurance | Advance payments | 5,098,655.24 | Within 1 year | 15.41% | 254,932.76 |
| VAT receivable to be returned from Lu Thai Tan Chau | Input VAT | 4,828,640.80 | Within 1 year | 14.60% | 241,432.04 |
| VAT receivable to be returned from Lu Thai (Cambodia) | Input VAT | 4,512,982.97 | Within 1 year | 13.64% | 225,649.15 |
| Xinning Electric Power Company | Current borrowings | 3,275,056.11 | 1 to 2 years | 9.90% | 163,752.81 |
| Migrant workers’ wage margin in Zichuan District of Zibo | Migrant workers’ wage margin of infrastructural project | 2,062,423.00 | 1-2 years、Over 3 years | 6.24% | 103,121.15 |
| Total | -- | 19,777,758.12 | -- | 59.79% | 988,887.91 |
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 | Falling price reserves of inventory or depreciation reserves of contract performance cost | Carrying value | Carrying amount | Falling price reserves of inventory or depreciation reserves of contract performance cost | Carrying value | |
| Raw materials | 849,455,158.83 | 2,547,151.31 | 846,908,007.52 | 1,022,913,125.05 | 1,022,913,125.05 | |
| Goods in process | 393,404,083.58 | 5,437,464.35 | 387,966,619.23 | 583,495,292.95 | 583,495,292.95 | |
| Inventory goods | 877,507,714.63 | 136,403,191.01 | 741,104,523.62 | 888,016,891.18 | 102,276,414.38 | 785,740,476.80 |
| Consumptive biological assets | 1,472,972.75 | 576,304.29 | 896,668.46 | |||
| Assigned processing products | 12,989,531.27 | 12,989,531.27 | 28,454,696.04 | 28,454,696.04 | ||
| Total | 2,133,356,488.31 | 144,387,806.67 | 1,988,968,681.64 | 2,524,352,977.97 | 102,852,718.67 | 2,421,500,259.30 |
(2) Falling Price Reserves of Inventory and Depreciation Reserves of Contract Performance Cost
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance | |||||
| Withdrawn | Other | Reverse or write-off | Other | ||||||
| Raw materials | 4,249,910.21 | 1,702,758.90 | 2,547,151.31 | ||||||
| Goods in process | 5,437,464.35 | 5,437,464.35 | |||||||
| Inventory goods | 102,276,414.38 | 102,640,433.95 | 68,513,657.32 | 136,403,191.01 | |||||
| Consumptive biological assets | 576,304.29 | 576,304.29 | |||||||
| Total | 102,852,718.67 | 112,327,808.51 | 70,792,720.51 | 144,387,806.67 | |||||
| Item | Particular basis for drawing of provision for decline in the value of inventories | Reasons for write-off or write-back | |||||||
| Raw materials | The lower one between cost of each item of inventory and its realizable net value | Selling and transferring subsidiaries | |||||||
| Inventory goods | The lower one between cost of each item of inventory and its realizable net value | Selling and transferring subsidiaries | |||||||
| Goods in process | The lower one between cost of each item of inventory and its realizable net value | ||||||||
| Consumptive biological assets | The lower one between cost of each item of inventory and its realizable net value | Transferring subsidiaries | |||||||
9. Current Portion of Non-current Assets
Unit: RMB
| Item | Ending balance | Beginning balance |
| Long-term accounts receivable due within 1 year | 45,750,018.30 | |
| Total | 45,750,018.30 |
10. Other Current Assets
Unit: RMB
| Item | Ending balance | Beginning balance |
| Input tax | 69,924,309.37 | 49,986,686.74 |
| Prepaid income tax | 8,268,591.39 | 18,801,867.00 |
| Other prepaid taxes | 3,161,080.82 | 120.36 |
| Short-term debt investments | 351,379,736.36 |
| Convertible bond fractional share funds | 199,858.61 | |
| Short-term prepaid expense | 498,682.08 | |
| Total | 433,432,258.63 | 68,788,674.10 |
Other notes:
Note: Short-term Creditors’ Investment is a short-term guaranteed fixed-income bank wealth management productpurchased for the Company.
11. Long-term Receivables
(1) List of Long-term Receivables
Unit: RMB
| Item | Ending balance | Beginning balance | Interval of discount rate | ||||
| Carrying amount | Bad debt provision | Carrying value | Carrying amount | Bad debt provision | Carrying value | ||
| Receivables from financial lease | 250,000.00 | 250,000.00 | 15.37% | ||||
| Including: Unrealized financing incomes | 26,400.76 | 26,400.76 | |||||
| Long-term advances receivable | 7,564,704.12 | 756,470.41 | 6,808,233.71 | ||||
| Equity transfer fee receivable | 91,371,791.00 | 4,568,589.55 | 86,803,201.45 | 3.85% | |||
| Less: long-term accounts receivable due within one year | -48,157,914.00 | -2,407,895.70 | -45,750,018.30 | ||||
| Total | 43,213,877.00 | 2,160,693.85 | 41,053,183.15 | 7,814,704.12 | 756,470.41 | 7,058,233.71 | -- |
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 2020 | 756,470.41 | 756,470.41 | ||
| Balance of 1 January 2020 in the | —— | —— | —— | —— |
| reporting period | ||||
| Withdrawal of the reporting period | 4,633,230.30 | 4,633,230.30 | ||
| Write-off in the current period | 821,111.16 | 821,111.16 | ||
| Balance of 31 December 2020 | 4,568,589.55 | 4,568,589.55 |
Changes of carrying amount with significant amount changed of loss provision in the reporting period
□ Applicable √ Not applicable
12. Long-term Equity Investment
Unit: RMB
| Investees | Beginning balance (carrying value) | Increase/decrease | Ending balance (carrying value) | Ending balance of depreciation reserves | ||||||||
| 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 depreciation reserves | Other | |||||
| I. Joint ventures | ||||||||||||
| II. Associated enterprises | ||||||||||||
| ①Associated ventures | ||||||||||||
| Ningbo Meishan Bonded Port Area Haohong Equity Investment Partnership (L.P.) (hereinafter referred to as “Haohong Investment”) | 103,226,300.00 | 9,999,985.02 | -4,896,392.82 | 88,329,922.16 | ||||||||
| Haohong Equity Investment Partnership (L.P.) (hereinafter referred to as “Haohong | 50,000,000.00 | -250,344.91 | 49,749,655.09 | |||||||||
| Investment”) | |||||||||||
| Subtotal | 103,226,300.00 | 50,000,000.00 | 9,999,985.02 | -5,146,737.73 | 138,079,577.25 | ||||||
| Total | 103,226,300.00 | 50,000,000.00 | 9,999,985.02 | -5,146,737.73 | 138,079,577.25 |
13. Other Non-current Financial Assets
Unit: RMB
| Item | Ending balance | Beginning balance |
| Debt instrument investment | ||
| Equity instrument investment | 144,915,620.25 | 266,149,500.00 |
| Financial assets designated to be measured at fair value with the changes in fair value included in current profits and losses | 12,000,000.00 | 12,000,000.00 |
| Other | ||
| Total | 156,915,620.25 | 278,149,500.00 |
14. Investment Property
(1) Investment Property Adopting 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 | 60,832,966.04 | 60,832,966.04 | ||
| 2. Increased amount of the period | ||||
| (1) Outsourcing | ||||
| (2) Transfer from inventories/fixed assets/construction in progress | ||||
| (3) Enterprise combination increase | ||||
| 3. Decreased amount of the period | 27,255,113.92 | 27,255,113.92 |
| (1) Disposal | ||||
| (2) Other transfer | 27,255,113.92 | 27,255,113.92 | ||
| 4. Ending balance | 33,577,852.12 | 33,577,852.12 | ||
| II. Accumulative depreciation and accumulative amortization | ||||
| 1. Beginning balance | 14,936,218.17 | 14,936,218.17 | ||
| 2. Increased amount of the period | 1,644,530.50 | 1,644,530.50 | ||
| (1) Withdrawal or amortization | 1,644,530.50 | 1,644,530.50 | ||
| 3. Decreased amount of the period | 5,266,565.40 | 5,266,565.40 | ||
| (1) Disposal | ||||
| (2) Other transfer | 5,266,565.40 | 5,266,565.40 | ||
| 4. Ending balance | 11,314,183.27 | 11,314,183.27 | ||
| 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 | 22,263,668.85 | 22,263,668.85 | ||
| 2. Beginning carrying value | 45,896,747.87 | 45,896,747.87 |
(2) Investment Property Adopting the Fair Value Measurement Mode
□ Applicable √ Not applicable
15. Fixed assets
Unit: RMB
| Item | Ending balance | Beginning balance |
| Fixed assets | 5,623,635,171.21 | 6,012,094,104.67 |
| Proceeds from Disposal of Fixed Assets | 37,957,820.45 | |
| Total | 5,661,592,991.66 | 6,012,094,104.67 |
(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 | 3,566,066,620.95 | 6,950,430,267.50 | 66,490,962.47 | 145,125,211.07 | 10,728,113,061.99 |
| 2. Increased amount of the period | 183,832,949.38 | 318,651,192.53 | 6,404,879.61 | 8,040,102.61 | 516,929,124.13 |
| (1) Purchase | 2,972,222.58 | 309,786,821.19 | 6,404,879.61 | 7,640,102.61 | 326,804,025.99 |
| (2) Transfer from construction in progress | 180,860,726.80 | 8,864,371.34 | 400,000.00 | 190,125,098.14 | |
| (3) Enterprise combination increase | |||||
| 3. Decreased amount of the period | 426,107,996.65 | 438,778,750.13 | 19,101,404.78 | 23,722,327.67 | 907,710,479.23 |
| (1) Disposal or scrap | 95,560,697.54 | 32,276,560.34 | 4,814,791.84 | 2,415,058.32 | 135,067,108.04 |
| (2) transferred to construction in progress | 11,888,284.99 | 11,888,284.99 | |||
| (3) Disposal of subsidiaries | 263,916,830.13 | 334,945,459.05 | 13,681,427.17 | 20,946,124.72 | 633,489,841.07 |
| (4) Other decreases | 54,742,183.99 | 71,556,730.74 | 605,185.77 | 361,144.63 | 127,265,245.13 |
| 4. Ending balance | 3,323,791,573.68 | 6,830,302,709.90 | 53,794,437.30 | 129,442,986.01 | 10,337,331,706.89 |
| II. Accumulative depreciation | |||||
| 1. Beginning balance | 1,055,126,921.87 | 3,453,435,496.65 | 45,436,360.53 | 101,913,448.80 | 4,655,912,227.85 |
| 2. Increased amount of the period | 116,278,650.16 | 318,715,961.07 | 5,601,240.03 | 14,968,907.66 | 455,564,758.92 |
| (1) Withdrawal | 116,278,650.16 | 318,715,961.07 | 5,601,240.03 | 14,968,907.66 | 455,564,758.92 |
| 3. Decreased amount of the period | 175,408,531.44 | 238,373,258.06 | 14,062,227.06 | 19,214,208.90 | 447,058,225.46 |
| (1) Disposal or scrap | 57,613,154.19 | 20,902,379.12 | 4,350,491.88 | 2,262,224.92 | 85,128,250.11 |
| (2) transferred to construction in progress | 9,055,252.30 | 9,055,252.30 | |||
| (3) Disposal of subsidiaries | 103,625,162.85 | 203,667,881.95 | 9,455,455.10 | 16,635,991.74 | 333,384,491.64 |
| (4) Other decreases | 5,114,962.10 | 13,802,996.99 | 256,280.08 | 315,992.24 | 19,490,231.41 |
| 4. Ending balance | 995,997,040.59 | 3,533,778,199.66 | 36,975,373.50 | 97,668,147.56 | 4,664,418,761.31 |
| III. Depreciation reserves | |||||
| 1. Beginning balance | 5,090,742.73 | 54,860,025.36 | 26,383.69 | 129,577.69 | 60,106,729.47 |
| 2. Increased amount of the period | 151,952.17 | 971,834.61 | 8,713.67 | 1,132,500.45 | |
| (1) Withdrawal | 151,952.17 | 971,834.61 | 8,713.67 | 1,132,500.45 | |
| 3. Decreased amount of the period | 3,667,964.45 | 8,212,682.85 | 20,712.39 | 60,095.86 | 11,961,455.55 |
| (1) Disposal or scrap | 6,614,112.36 | 19,132.39 | 52,842.19 | 6,686,086.94 | |
| (2) Disposal of subsidiaries | 3,667,964.45 | 1,598,570.49 | 1,580.00 | 7,253.67 | 5,275,368.61 |
| 4. Ending balance | 1,574,730.45 | 47,619,177.12 | 5,671.30 | 78,195.50 | 49,277,774.37 |
| IV. Carrying value | |||||
| 1. Ending 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. Beginning carrying value | 2,505,848,956.35 | 3,442,134,745.49 | 21,028,218.25 | 43,082,184.58 | 6,012,094,104.67 |
(2) Fixed Assets Leased out by Operation Lease
Unit: RMB
| Item | Ending carrying value |
| Houses and buildings | 4,381,848.94 |
(3) Fixed Assets Failed to Accomplish Certification of Property
Unit: RMB
| Item | Carrying value | Reason of certificate of titles have not yet been obtained |
| Lufeng weaving dye gray yarn warehouse | 11,305,711.68 | Under the relevant certificate procedures of acceptance, measurement, examination by the real estate trading center and other departments |
| Yarn dyeing workshop of Lulian New Materials Co., Ltd. | 43,095,867.81 | The project is under acceptance and other related procedures |
| Slashing workshop of Lulian New Materials Co., Ltd. | 8,265,869.35 | The project is under acceptance and other related procedures |
| Dyeing and finishing workshop of Lulian New Materials Co., Ltd. | 38,564,533.66 | The project is under acceptance and other related procedures |
(4) Proceeds from Disposal of Fixed Assets
Unit: RMB
| Item | Ending balance | Beginning balance |
| Zhangdian Industrial Park houses and buildings | 37,957,820.45 | |
| Total | 37,957,820.45 |
Other notesThe land of Zhangdian Industrial Park is recovered by the government because of municipal planning, andthus the ground attachments need to be vacated. As per the Compensation Agreement for State-owned LandRecovery signed with the government of Zibo High-tech Industrial Development Zone in October 2020, thecompensation for land recovery of Zhangdian Industrial Park is RMB 22,161,000.00, and the compensation forground attachments is RMB 73,590,465.00. As of 31 December 2020, neither the ground attachment removal northe relevant acceptances are completed.
16. Construction in progress
Unit: RMB
| Item | Ending balance | Beginning balance |
| Construction in progress | 201,339,271.24 | 165,841,680.32 |
| Engineering Materials | 154,933,926.25 | 234,393,389.69 |
| Total | 356,273,197.49 | 400,235,070.01 |
(1) List of 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 | 15,024,257.20 | 15,024,257.20 | 2,837,138.88 | 2,837,138.88 | ||
| Expansion project of Xinsheng Thermal Power (Phase II) | 24,901,015.93 | 24,901,015.93 | 22,186,638.85 | 22,186,638.85 | ||
| Dormitory project of Lu Thai (Vietnam) | 19,083,725.35 | 19,083,725.35 | 7,701,372.43 | 7,701,372.43 | ||
| Spinning project of Lu Thai (Tan Chau) | 5,296,923.55 | 5,296,923.55 | 52,700,509.90 | 52,700,509.90 | ||
| Functional Fabric Intelligent Ecological Park Project (Phase I) | 95,803,812.78 | 95,803,812.78 | 56,365,451.33 | 56,365,451.33 | ||
| Other sporadic projects | 41,229,536.43 | 41,229,536.43 | 24,050,568.93 | 24,050,568.93 | ||
| Total | 201,339,271.24 | 201,339,271.24 | 165,841,680.32 | 165,841,680.32 |
(2) Changes in Significant Construction in Progress during the Reporting Period
Unit: RMB
| Item | Budget | Beginning balance | Increase | Transferred in fixed assets | Other decreased amount | Ending balance | Proportion of accumulated investment in constructions to budget | Job schedule | Accumulated amount of interest capitalization | Including: 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 | 2,837,138.88 | 17,531,317.81 | 5,344,199.49 | 15,024,257.20 | 58.00% | 58% | Other | ||||
| Expansion project of Xinsheng Thermal Power (Phase II) | 110,690,000.00 | 22,186,638.85 | 4,818,324.41 | 2,103,947.33 | 24,901,015.93 | 111.00% | 99% | Other | ||||
| Dormitory project of Lu Thai (Vietnam) | 21,626,200.00 | 7,701,372.43 | 12,564,277.27 | 1,181,924.35 | 19,083,725.35 | 94.00% | 94% | Other | ||||
| Spinning project of Lu Thai (Tan Chau) | 153,470,000.00 | 52,700,509.90 | 15,378,792.03 | 61,904,926.37 | 877,452.01 | 5,296,923.55 | 92.00% | 92% | Other | |||
| Functional Fabric Intelligent Ecological Park Project (Phase I) | 217,211,000.00 | 56,365,451.33 | 132,526,562.24 | 93,088,200.79 | 95,803,812.78 | 87.00% | 87% | 15,028,199.55 | 15,028,199.55 | 3.68% | Public offering fund | |
| Other sporadic projects | 24,050,568.93 | 45,784,169.83 | 27,683,824.16 | 921,378.17 | 41,229,536.43 | Other | ||||||
| Total | 545,167,200.00 | 165,841,680.32 | 228,603,443.59 | 190,125,098.14 | 2,980,754.53 | 201,339,271.24 | -- | -- | 15,028,199.55 | 15,028,199.55 | -- |
(3) Engineering Materials
Unit: RMB
| Item | Ending balance | Beginning balance | ||||
| Carrying amount | Depreciation reserve | Carrying value | Carrying amount | Depreciation reserve | Carrying value | |
| Special equipment | 154,933,926.25 | 154,933,926.25 | 234,393,389.69 | 234,393,389.69 | ||
| Total | 154,933,926.25 | 154,933,926.25 | 234,393,389.69 | 234,393,389.69 | ||
17. Intangible Assets
(1) List of Intangible Assets
Unit: RMB
| Item | Land use right | Patent right | Non-patent technology | Software use right | Brand use right | Total |
| I. Original carrying value | ||||||
| 1. Beginning balance | 633,234,119.27 | 1,985,176.47 | 5,960,347.27 | 300,000.00 | 641,479,643.01 | |
| 2. Increased amount of the period | 1,383,979.46 | 1,383,979.46 | ||||
| (1) Purchase | 1,383,979.46 | 1,383,979.46 | ||||
| (2) Internal R&D | ||||||
| (3) Enterprise combination increase | ||||||
| 3. Decreased amount of the period | 162,895,625.27 | 1,985,176.47 | 3,716,983.07 | 300,000.00 | 168,897,784.81 | |
| (1) Disposal | 7,493,433.01 | 7,493,433.01 | ||||
| (2) Invalid and recognition terminated portion | 1,985,176.47 | 3,707,015.88 | 5,692,192.35 | |||
| (3) Reduction due to subsidiary transfer | 155,402,192.26 | 300,000.00 | 155,702,192.26 | |||
| (4) Other decreases | 9,967.19 | 9,967.19 | ||||
| 4. Ending balance | 470,338,494.00 | 3,627,343.66 | 473,965,837.66 | |||
| II. Accumulated amortization | ||||||
| 1. Beginning balance | 119,122,908.13 | 1,819,745.40 | 3,907,470.33 | 150,000.00 | 125,000,123.86 | |
| 2. Increased amount of the period | 13,123,868.12 | 165,431.07 | 1,973,247.01 | 20,000.00 | 15,282,546.20 | |
| (1) Withdrawal | 13,123,868.12 | 165,431.07 | 1,973,247.01 | 20,000.00 | 15,282,546.20 |
| 3. Decreased amount of the period | 33,996,710.13 | 1,985,176.47 | 3,708,426.64 | 170,000.00 | 39,860,313.24 | |
| (1) Disposal | 4,756,592.35 | 4,756,592.35 | ||||
| (2) Invalid and recognition terminated portion | 1,985,176.47 | 3,707,015.88 | 5,692,192.35 | |||
| (3) Reduction due to subsidiary transfer | 29,240,117.78 | 170,000.00 | 29,410,117.78 | |||
| (4) Other decreases | 1,410.76 | 1,410.76 | ||||
| 4. Ending balance | 98,250,066.12 | 2,172,290.70 | 100,422,356.82 | |||
| 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 | 372,088,427.88 | 1,455,052.96 | 373,543,480.84 | |||
| 2. Beginning carrying value | 514,111,211.14 | 165,431.07 | 2,052,876.94 | 150,000.00 | 516,479,519.15 |
Ratio of intangible assets formed through internal R&D to the balance of intangible assets at the end of the currentperiod.
18. Development Costs
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance | ||
| Internal development | Other | Recognized as intangible assets | Transfer to current gains and losses | |||
| Product R&D | 231,265,031.12 | 231,265,031.12 | ||||
| Total | 231,265,031.12 | 231,265,031.12 | ||||
19. 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 Thermal Power | 20,563,803.29 | 20,563,803.29 | ||
| Total | 20,563,803.29 | 20,563,803.29 |
20. Long-term Prepaid Expense
Unit: RMB
| Item | Beginning balance | Increase | Amortization amount of the period | Other decreased amount | Ending balance |
| Land contracting fee for Fengshou Cotton Industry Co., Ltd. | 24,521,204.92 | 724,146.00 | 23,797,058.92 | ||
| Renovation costs | 486,407.69 | 5,228,447.29 | 3,930,190.17 | 378,317.05 | 1,406,347.76 |
| Land rent of overseas subsidiaries | 128,023,641.18 | 2,969,034.77 | 8,120,459.57 | 116,934,146.84 | |
| Total | 153,031,253.79 | 5,228,447.29 | 7,623,370.94 | 32,295,835.54 | 118,340,494.60 |
21. Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) Deferred Income Tax Assets that 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 | |
| Depreciation reserves of assets | 232,609,684.18 | 37,624,855.86 | 180,480,880.04 | 29,370,310.33 |
| Unrealized profit of internal transactions | 109,437,547.23 | 17,073,399.27 | 123,500,857.32 | 14,085,213.14 |
| Deductible losses | 80,123,710.98 | 16,776,355.64 | 31,584,302.32 | 5,600,742.22 |
| One-time listed decoration expenses | 93,446.60 | 23,361.65 | 3,496,364.02 | 874,091.01 |
| Payroll Payable | 118,015,305.73 | 17,802,836.18 | 140,654,344.00 | 21,198,255.31 |
| Deferred Income | 173,862,983.31 | 27,188,106.81 | 157,668,211.41 | 24,986,231.71 |
| Contract Liabilities | 16,596,721.35 | 4,149,180.34 | ||
| Changes in the fair value of other non-current financial assets | 14,493,587.33 | 2,174,038.10 | 21,282,600.00 | 3,192,390.00 |
| Changes in fair value of Accounts Receivable Financing | 358,052.29 | 53,707.84 | ||
| Total | 745,591,039.00 | 122,865,841.69 | 658,667,559.11 | 99,307,233.72 |
(2) Deferred Income Tax Liabilities Had not Been Off-set
Unit: RMB
| Item | Ending balance | Beginning balance | ||
| Deductible temporary difference | Deferred income tax liabilities | Deductible temporary difference | Deferred income tax liabilities | |
| Depreciation of fixed assets | 417,366,245.56 | 67,382,126.00 | 349,845,317.15 | 55,676,007.33 |
| Unrealized profit of internal transactions | 10,805,075.00 | 1,620,761.25 | ||
| Changes in fair value of trading assets | 18,456,216.98 | 2,768,432.55 | 2,356,098.85 | 353,414.83 |
| Changes in the fair value of other non-current financial assets | 102,042,774.64 | 15,306,416.20 | 231,934,500.00 | 34,790,175.00 |
| Accrued interests on Creditors’ Investment | 1,174,577.93 | 176,186.69 | ||
| Total | 539,039,815.11 | 85,633,161.44 | 594,940,991.00 | 92,440,358.41 |
(3) List of Unrecognized Deferred Income Tax Assets
Unit: RMB
| Item | Ending balance | Beginning balance |
| Deductible temporary difference | 16,884,024.75 | 19,823,624.86 |
| Deductible losses | 586,187.49 | 23,728,086.37 |
| Total | 17,470,212.24 | 43,551,711.23 |
(4) Deductible Losses of Unrecognized Deferred Income Tax Assets will Due in the Following Years
Unit: RMB
| Years | Ending amount | Beginning amount | Notes |
| Y2020 | 13,393,727.33 |
| Y2021 | 4,250,703.45 | ||
| Y2022 | 3,730,297.90 | ||
| Y2023 | |||
| Y2024 | 1,344.62 | 2,353,357.69 | |
| Y2025 | 584,842.87 | ||
| Total | 586,187.49 | 23,728,086.37 | -- |
22. Other Non-current Assets
Unit: RMB
| Item | Ending balance | Beginning balance | ||||
| Carrying amount | Depreciation reserve | Carrying value | Carrying amount | Depreciation reserve | Carrying value | |
| Prepaid land transfer fee | 86,515,839.05 | 86,515,839.05 | ||||
| Prepayment of equipment | 6,195,947.23 | 6,195,947.23 | 18,841,918.62 | 18,841,918.62 | ||
| Land use rights to be recovered by the government | 2,722,253.90 | 2,722,253.90 | ||||
| Total | 95,434,040.18 | 95,434,040.18 | 18,841,918.62 | 18,841,918.62 | ||
23. Short-term Borrowings
(1) Category of Short-term Borrowings
Unit: RMB
| Item | Ending balance | Beginning balance |
| Pledged borrowings | 11,763,977.73 | |
| Mortgage borrowings | 309,422,409.94 | |
| Guaranteed borrowings | 550,258,596.41 | 479,189,664.03 |
| Credit borrowings | 368,848,434.05 | 1,331,542,256.64 |
| Total | 930,871,008.19 | 2,120,154,330.61 |
Notes of short-term borrowings category:
(1) The period-end pledge borrowing is the short-term borrowing formed by discounted and undue NotesReceivable that have not been terminated recognition at the period-end; The period-end guaranteed borrowing isthe guarantee provided by the Company for the borrowings of its subsidiaries Continental Textile Co., Ltd. and LuThai (Tan Chau) Bank. Refer to Note XIII-2 for details.
(2) The short-term borrowing includes interest payable of RMB 2,489,284.93.
24. Notes Payable
Unit: RMB
| Item | Ending balance | Beginning balance |
| Commercial acceptance bill | 848,873.48 | |
| Bank acceptance bill | 84,370,851.15 | |
| Total | 85,219,724.63 |
The total amount of the due but not paid notes payable at the end of the period was of RMB0.00.
25. Accounts Payable
(1) List of Accounts Payable
Unit: RMB
| Item | Ending balance | Beginning balance |
| Payment for goods | 137,003,680.16 | 159,191,179.02 |
| Payment for engineering equipment | 80,349,348.21 | 135,578,852.63 |
| Other | 25,909,445.32 | 10,576,253.29 |
| Total | 243,262,473.69 | 305,346,284.94 |
26. Advances from Customers
(1) List of Advances from Customers
Unit: RMB
| Item | Ending balance | Beginning balance |
| Payment for goods | 0.00 | 0.00 |
27. Contract Liabilities
Unit: RMB
| Item | Ending balance | Beginning balance |
| Proceeds from sale received in advance | 152,333,217.97 | 108,783,148.03 |
| Less: Contract liabilities included in Other Current Liabilities | -10,993,512.35 | -9,450,529.53 |
| Total | 141,339,705.62 | 99,332,618.50 |
28. Payroll Payable
(1) List of Payroll Payable
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance |
| I. Short-term salary | 327,102,126.87 | 1,312,131,697.21 | 1,373,585,625.70 | 265,648,198.38 |
| II. Post-employment benefit-defined contribution plans | 8,474,433.49 | 114,970,928.98 | 123,445,362.47 | |
| III. Termination benefits | 452,736.00 | 452,736.00 | ||
| Total | 335,576,560.36 | 1,427,555,362.19 | 1,497,483,724.17 | 265,648,198.38 |
(2) List of Short-term Salary
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance |
| 1. Salary, bonus, allowance, subsidy | 267,390,519.63 | 1,161,936,058.92 | 1,226,815,680.24 | 202,510,898.31 |
| 2. Employee welfare | 48,408,814.13 | 48,408,814.13 | ||
| 3. Social insurance | 486,333.39 | 64,689,244.97 | 65,151,375.04 | 24,203.32 |
| Including: Medical insurance premiums | 21,917.76 | 59,247,949.21 | 59,252,787.83 | 17,079.14 |
| Work-related injury insurance | 464,415.63 | 5,435,852.70 | 5,893,413.73 | 6,854.60 |
| Maternity insurance | 5,443.06 | 5,173.48 | 269.58 | |
| 4. Housing fund | 16,565,684.55 | 16,565,684.55 | ||
| 5. Labor union budget and employee education budget | 59,225,273.85 | 20,531,894.64 | 16,644,071.74 | 63,113,096.75 |
| Total | 327,102,126.87 | 1,312,131,697.21 | 1,373,585,625.70 | 265,648,198.38 |
(3) List of Defined Contribution Plans
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance |
| 1. Basic pension benefits | 8,119,137.55 | 109,325,514.82 | 117,444,652.37 | |
| 2. Unemployment insurance | 355,295.94 | 5,645,414.16 | 6,000,710.10 | |
| Total | 8,474,433.49 | 114,970,928.98 | 123,445,362.47 |
Other notes:
The Company participates in pension insurance and unemployment insurance plans established by governmentagencies as required. Under these plans, the Company makes monthly contributions to these plans at 16% and 0.7%of the social insurance contribution base, respectively. The Company undertakes no further obligations exceptmonthly payment of the above expenses. Corresponding expenditures shall be counted in current profit and loss orrelevant asset costs.
29. Taxes Payable
Unit: RMB
| Item | Ending balance | Beginning balance |
| VAT | 12,077,311.75 | 3,285,763.29 |
| Corporate income tax | 11,531,626.63 | 4,184,737.55 |
| Personal income tax | 422,663.35 | 714,935.78 |
| Urban maintenance and construction tax | 3,390,064.57 | 4,805,486.91 |
| Stamp tax | 441,946.14 | 423,497.30 |
| Property tax | 4,868,121.51 | 4,802,550.30 |
| Land use tax | 900,240.84 | 2,477,984.56 |
| Education surcharge | 1,338,871.23 | 2,128,521.32 |
| Local educational surcharges | 876,371.30 | 1,419,014.22 |
| Local water conservancy fund | 218,962.12 | 342,756.22 |
| Resources tax | 70,554.00 | 116,530.00 |
| Environmental protection taxes | 332,245.33 | 349,852.61 |
| Total | 36,468,978.77 | 25,051,630.06 |
30. Other Payables
Unit: RMB
| Item | Ending balance | Beginning balance |
| Dividends payable | 441,113.64 | 441,113.64 |
| Other Payables | 17,146,357.15 | 104,541,075.76 |
| Total | 17,587,470.79 | 104,982,189.40 |
(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 1 year, the unpaid reason shall be disclosed:
| Name of shareholder | Dividends payable amount | Unpaid reason |
| Dividends payable to individual shareholders | 441,113.64 | The cash dividend of the previous year not received by individual shareholders |
| Total | 441,113.64 | -- |
(2) Other Payables
1) Other Payables Listed by Nature
Unit: RMB
| Item | Ending balance | Beginning balance |
| Deposits and cash deposits etc. | 5,571,490.73 | 19,949,169.11 |
| Withholding costs | 1,266,624.26 | 22,312,587.01 |
| Intercourse fund | 73,371.05 | 51,201,798.22 |
| Other | 10,234,871.11 | 11,077,521.42 |
| Total | 17,146,357.15 | 104,541,075.76 |
31. Current Portion of Non-current Liabilities
Unit: RMB
| Item | Ending balance | Beginning balance |
| Current portion of long-term borrowings | 43,149,400.13 | 101,111,297.49 |
| Total | 43,149,400.13 | 101,111,297.49 |
32. Other Current Liabilities
Unit: RMB
| Item | Ending balance | Beginning balance |
| Taxes to be written off | 10,993,512.35 | 9,450,529.53 |
| Relocation compensation received | 95,751,465.00 | |
| Endorsed and undue Notes that have not been terminated recognition | 85,829,697.33 | |
| Total | 192,574,674.68 | 9,450,529.53 |
33. Long-term Borrowings
(1) Category of Long-term Borrowings
Unit: RMB
| Item | Ending balance | Beginning balance |
| Guaranteed borrowings | 39,149,400.13 | 143,475,317.23 |
| Credit borrowings | 499,520,342.78 | |
| Less: Current portion of long-term borrowings | -43,149,400.13 | -101,111,297.49 |
| Total | 495,520,342.78 | 42,364,019.74 |
Notes to the category of long-term borrowings:
(1) The guaranteed borrowing is a guarantee provided by the Company for the borrowings of its subsidiaryLu Thai (Tan Chau) Bank. Refer to Note XIII-2 for details.
(2) The long-term borrowing includes interest payable of RMB 520,342.78.Other notes, including the interval of interest rate:
| Item | Ending balance | Rate range (%) | Beginning balance | Rate range (%) |
| Guaranteed borrowings | 39,149,400.13 | 2.89-3.1 | 143,475,317.23 | 3.27-3.80 |
| Credit borrowings | 499,520,342.78 | 3.06-3.5 |
34. Bonds Payable
(1) Bonds Payable
Unit: RMB
| Item | Ending balance | Beginning balance |
| convertible corporate bond | 1,350,171,526.97 | |
| Total | 1,350,171,526.97 |
(2) Increase/Decrease of Bonds Payable (Excluding Other Financial Instrument Classified as FinancialLiabilities such as Preferred Shares and Perpetual Bonds)
Unit: RMB
| Bonds name | Par value | Issuing date | Duration | Issuing amount | Beginning balance | The current issue | Withdrawal of interest by par value | Amortization of premium and depreciation | Repayment in the reporting Period | Transferred shares in reporting period | Ending balance |
| Lu Thai Convertible Bonds (127016) | 1,400,000,000.00 | 9 April 2020 | 6 years | 1,400,000,000.00 | 1,400,000,000.00 | 3,072,151.30 | -52,804,424.33 | 96,200.00 | 1,350,171,526.97 | ||
| Total | -- | -- | -- | 1,400,000,000.00 | 1,400,000,000.00 | 3,072,151.30 | -52,804,424.33 | 96,200.00 | 1,350,171,526.97 |
(3) Notes to the Conditions and Time of the Shares Transfer of the Convertible Corporate BondsBased on the Reply on Approving Luthai Textile Co., Ltd. to Issue Convertible Bonds to the Public (ZJXK(2020) No.299) of CSRC, the Company issued 14 million convertible corporate bonds, each with a par value ofRMB 100, with a total amount of RMB 1.4 billion and a duration of 6 years, from 9 April 2020 to 8 April 2026.
The coupon rates of convertible corporate bonds issued by the Company are 0.3%, 0.6%, 1%, 1.5%, 1.8%and 2% in the first six periods, with an annually paid interest. The conversion period starts on 15 October 2020(including the same day), the first trading day six months after the issuance date, and ends on the trading daybefore the due date of corporate convertible bonds (8 April 2026) (including the same day). The holder may applyfor bond conversion within the conversion period.
The initial conversion price of convertible corporate bonds was RMB 9.01 per share when it was issued butwas adjusted to RMB 8.91 per share from 9 July 2020, after the Company implemented the cash dividend schemeof RMB 85,812,154.10 (RMB 1 for 10 shares) in 2019 on 8 July 2020.
35. Long-term Payroll Payable
(1) List of Long-term Payroll Payable
Unit: RMB
| Item | Ending balance | Beginning balance |
| III. Other long-term welfare | 62,137,656.00 | 105,589,249.56 |
| Total | 62,137,656.00 | 105,589,249.56 |
36. Deferred Income
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance | Reason for formation |
| Government subsidies | 157,641,810.65 | 33,615,800.00 | 17,394,627.34 | 173,862,983.31 | Government subsidies |
| Unrealized financing income | 26,400.76 | 26,400.76 | Financial lease | ||
| Total | 157,668,211.41 | 33,615,800.00 | 17,421,028.10 | 173,862,983.31 | -- |
Other notes:
Refer to Note VII-64, Government Subsidies for details of government subsidies included in Deferred Income.
37. Other Non-current Liabilities
Unit: RMB
| Item | Ending balance | Beginning balance |
| Project loan | 1,840,000.00 | |
| Total | 1,840,000.00 |
38. Share Capital
Unit: RMB
| Beginning balance | Increase/decrease (+/-) | Ending balance | |||||
| New shares issued | Bonus shares | Capital reserve transferred into share capital | Other | Subtotal | |||
| The sum of shares | 858,121,541.00 | 10,781.00 | 10,781.00 | 858,132,322.00 | |||
Other notes:
A total of 10,781.00 shares of convertible bonds of the Company can be converted at a conversion price of RMB
8.91 per share in the Reporting Period.
39. Other Equity Instruments
(1) Basic Information about Other Outstanding Financial Instruments such as Preferred Shares andPerpetual Bonds at the Period-end
| Item | Period-beginning | Increase | Decrease | Period-end |
| Convertible debt to equity | 71,391,357.42 | 4,905.61 | 71,386,451.81 |
The decrease in other equity instruments in the current period was due to the conversion of convertible bonds.
40. Capital Reserves
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance |
| Capital premium (premium on stock) | 197,609,646.20 | 86,234.48 | 197,695,880.68 | |
| Other capital reserves | 60,436,599.22 | 55.30 | 2,220,047.19 | 58,216,607.33 |
| Total | 258,046,245.42 | 86,289.78 | 2,220,047.19 | 255,912,488.01 |
Other notes: including increase and decrease in the Reporting Period and the reasons for changes:
(1) The increase in equity premium during the current period was due to the conversion of convertible bonds.
(2) The decrease in other capital reserves in the current period was due to the transfer of subsidiary Fengshou Cotton Industry, whilecorrespondingly carried forward other comprehensive income originally included in the capital reserves.
41. Other Comprehensive Income
Unit: RMB
| Item | Beginning balance | Reporting 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 | 91,626,571.75 | -90,371,356.70 | -53,707.84 | -90,317,648.86 | -51,957.10 | 1,308,922.89 | ||
| Differences arising from translation of foreign currency-denominated financial statements | 91,626,571.75 | -90,065,261.51 | -90,065,261.51 | 1,561,310.24 | ||||
| Changes in fair value of receivable financing | -306,095.19 | -53,707.84 | -252,387.35 | -51,957.10 | -252,387.35 | |||
| Total of other comprehensive income | 91,626,571.75 | -90,371,356.70 | -53,707.84 | -90,317,648.86 | -51,957.10 | 1,308,922.89 | ||
42. Surplus Reserves
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance |
| Statutory surplus reserves | 1,113,925,779.05 | 36,750,106.16 | 1,150,675,885.21 | |
| Discretional surplus | 3,341,572.58 | 3,341,572.58 |
| reserves | ||||
| Total | 1,117,267,351.63 | 36,750,106.16 | 1,154,017,457.79 |
Notes, including increase and decrease in the Reporting Period and the reasons for changes:
According to the Company Law and Articles of Association, the Company has withdrawn the statutory surplus reserves on the basisof 10% of net profit.
43. Retained Profits
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Beginning balance of retained profits before adjustments | 5,372,073,615.12 | 4,927,500,989.55 |
| Total beginning retained profits of the adjustments ( “+” for increase, “-” for decrease) | 14,217,556.33 | |
| Beginning balance of retained profits after adjustments | 5,372,073,615.12 | 4,941,718,545.88 |
| Add: Net profit attributable to owners of the Company as the parent | 97,308,593.36 | 952,386,011.49 |
| Less: Withdrawal of statutory surplus reserves | 36,750,106.16 | 92,970,171.75 |
| Dividend of ordinary shares payable | 85,812,154.10 | 429,060,770.50 |
| Ending retained profits | 5,346,819,948.22 | 5,372,073,615.12 |
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.
44. Operating Revenue and Cost of Sales
Unit: RMB
| Item | Reporting Period | Same period of last year | ||
| Operating revenue | Cost of sales | Operating revenue | Cost of sales | |
| Main operations | 4,617,041,425.50 | 3,626,523,021.96 | 6,443,826,769.74 | 4,546,632,402.14 |
| Other operations | 134,181,038.64 | 111,461,061.49 | 357,554,679.20 | 243,972,703.22 |
| Total | 4,751,222,464.14 | 3,737,984,083.45 | 6,801,381,448.94 | 4,790,605,105.36 |
Whether the lower of the audited net profit before and after deduction of non-recurring gains and losses was negative
□ Yes √ No
Other notesNo
45. Taxes and Surtaxes
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Urban maintenance and construction tax | 16,267,317.58 | 25,271,252.17 |
| Education Surcharge | 7,130,143.42 | 11,887,442.41 |
| Resources tax | 505,772.00 | 508,120.00 |
| Property tax | 20,777,433.63 | 21,199,584.04 |
| Land use tax | 10,840,949.57 | 10,165,968.52 |
| Vehicle and vessel usage tax | 117,267.16 | 109,001.08 |
| Stamp duty | 3,613,573.57 | 4,349,998.90 |
| Local education surcharge | 4,753,426.83 | 7,924,176.74 |
| Local water conservancy facility construction fund | 1,160,401.18 | 1,799,843.58 |
| Environmental protection tax | 1,072,699.34 | 1,325,659.75 |
| Total | 66,238,984.28 | 84,541,047.19 |
Other notes:
Please refer to Note VI. Taxes for details of various taxes and additional standards for calculation and payment.
46. Selling Expense
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Salary | 50,666,138.45 | 43,003,351.19 |
| Sales service fee | 20,798,085.79 | 10,733,270.44 |
| Advertising expense | 18,067,874.04 | 17,019,745.40 |
| Repair material consumption | 7,360,671.96 | 6,504,092.84 |
| Depreciation charge | 6,780,645.30 | 5,373,475.36 |
| Business travel charges | 2,313,778.38 | 5,770,588.96 |
| Office expense | 2,030,701.54 | 2,142,542.55 |
| Insurance expense | 1,392,889.17 | 2,828,274.19 |
| Business entertainment expenses | 1,145,955.38 | 2,434,900.79 |
| Transport fees | 50,103,517.38 | |
| Port surcharge | 15,030,918.96 |
| Other | 15,160,548.30 | 7,282,386.77 |
| Total | 125,717,288.31 | 168,227,064.83 |
47. Administrative Expense
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Salary | 133,834,030.11 | 166,606,510.52 |
| Depreciation charge | 35,613,188.28 | 35,449,735.39 |
| Warehouse funding | 33,864,462.81 | 36,066,865.72 |
| Travel expense | 21,654,390.78 | 24,392,736.36 |
| Labor cost | 10,480,835.36 | 14,801,512.54 |
| Rental charges | 13,250,044.64 | 14,442,720.27 |
| Labor-union expenditure | 11,783,103.47 | 14,568,596.20 |
| Employee education budget | 8,330,662.45 | 10,906,172.69 |
| Amortization of intangible assets | 12,415,037.36 | 13,395,982.64 |
| Vehicle costs | 5,896,177.70 | 8,687,963.57 |
| Office expense | 7,536,785.41 | 7,736,881.70 |
| Other | 65,998,004.02 | 89,115,978.70 |
| Total | 360,656,722.39 | 436,171,656.30 |
48. R&D Expense
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Labor cost | 119,008,873.85 | 151,148,710.58 |
| Material expense | 90,657,026.38 | 122,619,853.38 |
| Depreciation charge | 12,610,517.42 | 16,037,122.69 |
| Other | 8,988,613.47 | 26,769,788.20 |
| Total | 231,265,031.12 | 316,575,474.85 |
49. Finance Costs
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Interest expense | 82,942,315.52 | 91,643,124.97 |
| Less: Capitalized interest | 15,028,199.55 |
| Interest income | 25,174,851.32 | 10,146,938.67 |
| Foreign exchange gains or losses | 59,912,996.06 | 5,156,692.19 |
| Less: Capitalized foreign exchange gains or losses | ||
| Commission charge and other | 6,894,394.12 | 9,526,838.13 |
| Total | 109,546,654.83 | 96,179,716.62 |
Other notes:
The amount of interest capitalization has been included in the construction. The capitalization rate used to calculate and determinethe capitalization amount of borrowing expenses during the period was 3.68%.
50. Other Income
Unit: RMB
| Sources | Reporting Period | Same period of last year |
| Government subsidy fund of developing local enterprises | 13,321,100.00 | |
| Transformation subsidy of garden greens | 6,530,776.86 | 6,996,371.19 |
| Post subsidies | 4,970,305.36 | 5,973,681.00 |
| Special award and subsidiy for stabilizing employment | 4,837,950.00 | |
| Freight allowance of cotton yarn | 4,054,494.88 | 11,826,172.27 |
| Preferential policy subsidy of developing local enterprises | 3,048,500.00 | |
| Subsidies for new enterprise apprenticeship training | 2,118,480.00 | |
| R&D rewards | 1,700,000.00 | |
| Electricity fee subsidy | 1,168,761.00 | 3,103,439.88 |
| Reward for key technologies of high-quality textiles | 1,150,000.00 | |
| 2019 National and Provincial Science and Technology Awards Supporting Funds | 1,000,000.00 | |
| Social insurance subsidy | 954,720.99 | 3,991,156.60 |
| Refund of withholding tax handling fee | 903,449.95 | |
| 2019 State Science and Technology Award supporting subsidies | 800,000.00 | |
| Tax relief | 680,073.81 | |
| Employment and apprenticeship subsidy fund | 500,038.00 | |
| 2019 Provincial Innovation Platform Award Fund | 500,000.00 | |
| Subsidy for leading persons project of Mount Tai industry | 850,000.00 | 2,170,000.00 |
| Special fund of Zibo Talents Plan | 400,000.00 | |
| Special funds for the conversion of new and old industrial | 336,600.00 |
| kinetic energy in 2019 | ||
| 2019 Municipal Special Fund Subsidy in the Field of Commerce | 289,900.00 | |
| Municipal subsidy for overseas engineer introduction project | 270,000.00 | |
| Provincial subsidies for commercial development and market development | 256,300.00 | |
| One-off absorption of employment subsidies for college graduates | 208,000.00 | |
| Talent subsidy | 200,000.00 | |
| Central Foreign Trade and Economic Development Fund | 198,000.00 | |
| One-off subsidy for new employment | 196,000.00 | |
| Special fund subsidy for the conversion of new and old industrial kinetic energy in 2019 | 180,000.00 | |
| Vocational Skills Subsidy Fund | 160,000.00 | |
| Subsidies and awards for patent funding | 152,000.00 | |
| The 2019 State Science and Technology Award | 150,000.00 | |
| Award of the 3rd "Governor Cup" Industrial Design Competition | 150,000.00 | |
| Municipal Foreign Economic and Trade Development Special Fund | 123,400.00 | |
| Subsidy for the new enterprise apprenticeship in 2020 | 99,000.00 | |
| Technician workstation subsidy | 80,000.00 | |
| Subsidy award of project research and development | 67,300.00 | |
| Supporting funds and government subsidies for Zibo Talents Program | 60,000.00 | |
| Employee training subsidy | 58,316.18 | |
| 2019 Municipal Special Funds for Commercial Fields | 55,500.00 | |
| 2019 provincial special fund for business development and market expansion | 53,100.00 | |
| Panyang Talent Program Subsidy | 40,000.00 | |
| Subsidies for "Training by Work" from Zibo Employment Service Center | 38,000.00 | |
| Shandong Province Enterprise Research and Development Financial Subsidy Funds in 2020 | 31,000.00 | |
| Excellent system innovation subsidy | 30,000.00 | |
| Talent project support subsidies | 30,000.00 |
| Support funds for domestic private enterprises | 20,000.00 | |
| R&D subsidies | 19,750.00 | |
| "Top Ten Technologies" Prize | 3,000.00 | |
| Unemployment dynamic monitoring subsidy | 1,200.00 | |
| Subsidy of “Six Articles in Developing Local Enterprises” in 2018 | 3,493,500.00 | |
| Employment increase subsidy in 2017 and 2018 | 2,775,000.00 | |
| Reward of demonstration enterprise in single item | 2,000,000.00 | |
| Social insurance subsidy for admission of persons with employment difficulties in 2019 | 1,633,560.80 | |
| Preferential policy subsidy of developing local enterprises | 1,400,000.00 | |
| Subsidy of central foreign trade development in 2018 | 1,293,700.00 | |
| Subsidies for transferring Xinjiang cotton yarn out of Xinjiang | 1,034,400.00 | |
| Provincial subsidy for quality and efficiency improvement and energy conservation in 2018 | 1,000,000.00 | |
| Provincial subsidy for technology development and innovation in 2019 | 1,000,000.00 | |
| Subsidy of 30 Articles of strengthening counties by industry | 500,000.00 | |
| Subsidy for technology development and innovation | 400,000.00 | |
| Return on taxes and commission charges on behalf | 374,835.70 | |
| Probation subsidy of youth | 368,725.50 | |
| New apprenticeship subsidy for 2019 | 360,000.00 | |
| Subsidy for pre-job training in textile and garment enterprises | 338,400.00 | |
| Fund of municipal-level talents introduce major project | 300,000.00 | |
| Reward of innovation in science and technology conference of 2017 | 300,000.00 | |
| Special fund for energy conservation and consumption reduction | 300,000.00 | |
| Reward for science and technology in Shandong in 2018 | 300,000.00 | |
| R&D subsidy | 262,000.00 | |
| Provincial subsidy of 2019 international market expansion | 238,000.00 | |
| Subsidy of innovation and development of technology in 2019 | 215,500.00 | |
| Subsidy of enterprise management and consulting | 200,000.00 |
| Talent matching subsidy for 2016 talent plan | 200,000.00 | |
| Talent support subsidy | 200,000.00 | |
| R&D subsidies for enterprises in 2019 | 158,000.00 | |
| Export credit insurance subsidy | 127,700.00 | |
| Special fund for top 30 industries | 100,000.00 | |
| Subsidy for quality and efficiency improvement of industry and energy conservation in 2018 | 100,000.00 | |
| Subsidy of technician workstation of Shandong province in 2019 | 100,000.00 | |
| Subsidy of municipal industrial design center | 100,000.00 | |
| Subsidy of high-value patent in Zibo | 100,000.00 | |
| Subsidy of job probation | 64,860.00 | |
| Reward of Shandong provincial science popularization and education base in 2019 | 50,000.00 | |
| Subsidy of Banyang Talents Plan | 40,000.00 | |
| Special subsidies for foreign trade and economic development | 25,400.00 | |
| Subsidy of patent creation | 20,000.00 | |
| The third batch of patent subsidy funds of Shandong province in 2018 | 6,000.00 | |
| Subsidies for patent creation in the second half of 2018 | 6,000.00 | |
| Unemployment dynamic monitoring subsidy | 1,200.00 | |
| Land subsidies | 1,380,189.20 | 1,463,797.56 |
| 230,000 spinnings and 35,000 double twist production projects | 222,607.08 | 222,607.08 |
| Production line project of 1.8 million meters of high-grade jacquard fabric | ||
| Intelligent dyeing production and energy and water conservation technology renovation project | ||
| Low-torque high energy-saving and high-quality new spinning projects | 349,473.60 | 349,473.60 |
| Intelligent dyeing production and energy and water conservation renovation projects | 1,718,696.19 | 1,535,378.28 |
| Recycled water reuse project | 451,376.16 | 451,376.16 |
| Technical transformation project of high grade yarn-dyed fabric | 112,144.32 | 112,144.32 |
| Technical transformation project of high-grade grey cloth | 176,767.71 |
| production line | ||
| Support funds for sewage treatment and reuse of recycled water | 103,083.72 | 103,083.72 |
| Technical improvement project of bobbin yarn dyeing | 593,406.60 | 593,406.60 |
| Subsidy for public rental housing | 48,231.48 | 48,231.48 |
| Subsidy of green power | 1,022,818.80 | 1,022,818.80 |
| Subsidies for ultra-low emission technical upgrading projects | 105,109.44 | 105,109.44 |
| Hu sheep subsidies | 56,666.64 | 132,999.96 |
| Subsidy of cotton seed reproduction | 46,666.64 | 69,999.96 |
| Technical Transformation Project of Garment Automation Equipment | 15,589.98 | |
| Subsidy for investment in technical renovation equipment | 263,429.52 | 326,834.55 |
| Total | 59,711,274.11 | 62,084,864.45 |
51. Investment Income
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Long-term equity investment income accounted by equity method | -5,146,737.73 | 7,671,490.10 |
| Investment income from disposal of long-term equity investment | -2,571,504.38 | -50,000.00 |
| Investment income from holding of trading financial assets | 6,793,854.87 | 4,875,806.53 |
| Investment income from disposal of trading financial assets | 144,480,875.90 | 9,286,599.42 |
| Interest income from debt investment during the holding period | 2,411,915.22 | |
| Total | 145,968,403.88 | 21,783,896.05 |
52. Gain on Changes in Fair Value
Unit: RMB
| Sources | Reporting Period | Same period of last year |
| Trading financial assets | -107,002,594.56 | 236,660,082.90 |
| Of which: income from changes in fair value generated by derivative financial instruments | 16,641,500.00 |
| Trading financial liabilities | 4,877,600.00 | |
| Total | -107,002,594.56 | 241,537,682.90 |
53. Credit Impairment Loss
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Bad debt loss of other receivables | 718,398.77 | 217,949.70 |
| Bad debt loss of long-term receivables | -4,633,230.30 | -227,847.00 |
| Bad debt loss of accounts receivable | -14,004,835.20 | -11,737,135.92 |
| Bad debt loss of dividends receivable | -3,973,086.97 | |
| Total | -21,892,753.70 | -11,747,033.22 |
54. Asset Impairment Loss
Unit: RMB
| Item | Reporting Period | Same period of last year |
| II. Inventory falling price loss and impairment provision for contract performance costs | -112,327,808.51 | -71,705,103.35 |
| V. Impairment loss on fixed assets | -1,132,500.45 | -19,611,885.46 |
| Total | -113,460,308.96 | -91,316,988.81 |
55. Asset Disposal Income
Unit: RMB
| Sources | Reporting Period | Same period of last year |
| Fixed asset disposal income (“-” for loss) | -317,803.17 | 186,123.30 |
| Intangible asset disposal income (“-” for loss) | ||
| Total | -317,803.17 | 186,123.30 |
56. Non-operating Income
Unit: RMB
| Item | Reporting Period | Same period of last year | Amount recorded in the current non-recurring profit or loss |
| Government subsidies | 84,000.00 | ||
| Claim income | 5,032,951.79 | 3,745,565.50 | 5,032,951.79 |
| Other | 1,433,072.57 | 4,004,162.70 | 1,433,072.57 |
| Total | 6,466,024.36 | 7,833,728.20 | 6,466,024.36 |
Government subsidies recorded into current profit or loss:
Unit: RMB
| Item | Distribution entity | Distribution reason | Nature | Whether subsidies influence the current profits and losses or not | Special subsidy or not | Reporting Period | Same period of last year | Related to assets/related to income |
| Reward for excellent performance management | Reward | Not | Not | 84,000.00 | Related to income |
57. Non-operating Expense
Unit: RMB
| Item | Reporting Period | Same period of last year | Amount recorded in the current non-recurring profit or loss |
| Donations | 1,752,876.18 | 6,979,965.96 | 1,752,876.18 |
| Losses from damage and scrap of non-current assets | 376,456.28 | 1,332,357.24 | 376,456.28 |
| Other | 2,339,578.62 | 3,626,903.45 | 2,339,578.62 |
| Total | 4,468,911.08 | 11,939,226.65 | 4,468,911.08 |
58. Income Tax Expense
(1) List of Income Tax Expense
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Current income tax expense | 38,469,209.70 | 87,215,574.12 |
| Deferred income tax expense | -42,742,237.45 | 50,962,179.98 |
| Total | -4,273,027.75 | 138,177,754.10 |
(2) Adjustment Process of Accounting Profit and Income Tax Expense
Unit: RMB
| Item | Reporting Period |
| Profit before taxation | 84,817,030.64 |
| Current income tax expense accounted at statutory/applicable tax rate | 12,722,554.60 |
| Influence of applying different tax rates by subsidiaries | 1,776,340.78 |
| Influence of income tax before adjustment | -2,391,666.14 |
| Influence of non-taxable income | -3,233,579.39 |
| Influence of not deductable costs, expenses and losses | 2,852,063.58 |
| Influence of deductable losses of unrecognized deferred income tax assets at the beginning of the Reporting Period | -855,395.55 |
| Influence of deductible temporary difference or deductable losses of unrecognized deferred income tax assets at the beginning of the Reporting Period | 503,161.95 |
| Profit/loss of associated enterprises and joint ventures accounted by equity method | 772,010.66 |
| Influence of additional deduction of R&D expenses (filled in with “-”) | -16,348,517.45 |
| Influence of other expense deduction (filled in with “-”) | -70,000.79 |
| Income tax expense | -4,273,027.75 |
59. Other Comprehensive Income
Refer to Note VII. 41 for details.
60. Cash Flow Statement
(1) Cash Generated from Other Operating Activities
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Government subsidies | 80,076,898.17 | 79,762,831.75 |
| Claim income | 3,931,883.43 | 3,168,466.05 |
| Recovery of employee borrowings, petty cash and deposit | 19,948,308.54 | 26,413,312.84 |
| Collection for employees | 15,442,855.96 | 5,817,182.28 |
| Other | 214,518.33 | 356,669.05 |
| Total | 119,614,464.43 | 115,518,461.97 |
(2) Cash Used in Other Operating Activities
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Freight and miscellaneous charges | 51,802,597.09 | 61,879,244.81 |
| Rental charges | 15,537,996.80 | 17,904,770.64 |
| Advertising expense | 1,540,564.49 | 3,401,127.88 |
| Business travel charges | 24,029,920.48 | 28,404,922.29 |
| Insurance | 3,271,534.17 | 3,431,292.03 |
| Audit advisory announcement fee | 10,381,102.45 | 3,223,952.59 |
| Decoration & repair expenses | 8,348,948.84 | 2,719,362.09 |
| Donation | 1,752,876.18 | 6,979,965.96 |
| Pre-payment | 10,400,000.00 | 1,316,920.07 |
| Payment of employee borrowings, petty cash and deposit | 15,750,161.05 | 33,233,609.55 |
| Other | 67,795,761.85 | 75,686,440.24 |
| Total | 210,611,463.40 | 238,181,608.15 |
(3) Cash Generated from Other Investing Activities
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Interest income | 26,063,185.14 | 8,195,787.89 |
| Income from forward foreign exchange | 6,312,453.22 | 14,448,291.14 |
| Cash deposit of L/C for purchasing equipment | 28,897,270.77 | |
| Option cost | 960,000.00 | |
| Total | 62,232,909.13 | 22,644,079.03 |
(4) Cash Used in Other Investing Activities
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Forward settlement exchange loss | 3,825,002.26 | 5,161,691.72 |
| Intercourse funds payment | 4,816,368.48 | |
| Payment of deposit for the L/C of equipment purchase | 1,558,651.21 | 28,897,270.77 |
| Payment of forward settlement deposit | 1,100,000.00 | |
| Total | 6,483,653.47 | 38,875,330.97 |
(5) Cash Generated from Other Financing Activities
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Return of loan guarantees | 14,000,000.00 | 10,000,000.00 |
| Recovery of intercourse accounts | 160,000,000.00 | 100,000,000.00 |
| Total | 174,000,000.00 | 110,000,000.00 |
(6) Cash Used in Other Financing Activities
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Payment of the B-share buy-back amount | 8,573,104.03 | |
| Guarantee deposit pledged | 14,000,000.00 | |
| Payment for intercourse accounts | 160,000,000.00 | 224,870,000.00 |
| Acquisition of minority equity of subsidiaries | 841,000.00 | |
| Payment of convertible bond fractional stock funds | 200,000.00 | |
| Total | 160,200,000.00 | 248,284,104.03 |
61. 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 | 89,090,058.39 | 989,326,675.91 |
| Add: Provision for impairment of assets | 135,353,062.66 | 103,064,022.03 |
| Depreciation of fixed assets, oil-gas assets, and productive living assets | 457,209,289.42 | 464,235,593.86 |
| Depreciation of right-of-use assets | ||
| Amortization of intangible assets | 15,282,546.20 | 17,672,359.15 |
| Amortization of long-term prepaid expenses | 7,623,370.94 | 4,319,165.44 |
| Losses from disposal of fixed assets, intangible assets and other long-lived assets (gains: negative) | 317,803.17 | -186,123.30 |
| Losses from scrap of fixed assets (gains: negative) | 376,456.28 | 1,332,357.24 |
| Losses from changes in fair value (gains: negative) | 107,002,594.56 | -241,537,682.90 |
| Finance costs (gains: negative) | 101,349,136.17 | 77,353,035.99 |
| Investment loss (gains: negative) | -145,968,403.88 | -21,783,896.05 |
| Decrease in deferred income tax assets (gains: negative) | -35,935,040.48 | -13,448,082.05 |
| Increase in deferred income tax liabilities (“-” means decrease) | -6,807,196.97 | 64,410,262.03 |
| Decrease in inventory (gains: negative) | 183,611,561.73 | -363,689,797.10 |
| Decrease in accounts receivable generated from operating activities (gains: negative) | -59,283,977.32 | -14,785,981.03 |
| Increase in accounts payable used in operating activities (decrease: negative) | -255,685,337.98 | 19,828,666.29 |
| Other | ||
| Net cash generated from/used in operating activities | 593,535,922.89 | 1,086,110,575.51 |
| 2. Significant investing and financing activities without involvement of cash receipts and payments | -- | -- |
| Conversion of debt into capital | ||
| Convertible corporate bonds due within one year | ||
| Fixed assets under financing lease | ||
| 3. Net increase/decrease of cash and cash equivalent: | -- | -- |
| Ending balance of cash | 1,396,530,407.47 | 878,559,018.92 |
| Less: beginning balance of cash | 878,559,018.92 | 535,134,772.90 |
| Add: ending balance of cash | ||
| Less: beginning balance of cash equivalents | ||
| Net increase in cash and cash equivalents | 517,971,388.55 | 343,424,246.02 |
(2) Net Cash Received from Disposal of Subsidiaries in the Current Period
Unit: RMB
| Amount | |
| Disposal of cash or cash equivalents received by subsidiaries in the current period | 100,000,000.00 |
| Of which: | -- |
| Fengshou Cotton | 100,000,000.00 |
| Less: cash and cash equivalents held by the company on the day | 23,374,540.32 |
| when control is lost | |
| Of which: | -- |
| Fengshou Cotton | 23,374,540.32 |
| Of which: | -- |
| Net cash received from disposal of subsidiaries | 76,625,459.68 |
(3) Cash and Cash Equivalents
Unit: RMB
| Item | Ending balance | Beginning balance |
| I. Cash | 1,396,530,407.47 | 878,559,018.92 |
| Including: Cash on hand | 7,009,891.16 | 9,544,377.41 |
| Bank deposit on demand | 1,389,520,516.31 | 869,014,641.51 |
| III. Ending balance of cash and cash equivalents | 1,396,530,407.47 | 878,559,018.92 |
62. Assets with Restricted Ownership or Right to Use
Unit: RMB
| Item | Ending carrying value | Reason for restriction |
| Monetary capital | 2,658,651.21 | L/C and forward settlement margin |
| Notes receivable | 97,593,675.06 | Endorsement or discount has not terminated confirmation |
| Total | 100,252,326.27 | -- |
63. 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 | 26,421,086.29 | 6.5249 | 172,394,945.94 |
| EUR | 964,114.46 | 8.0250 | 7,737,018.54 |
| HKD | 2,731,316.34 | 0.8416 | 2,298,675.83 |
| JPY | 8,763,805.00 | 0.0632 | 553,872.48 |
| GBP | 1,957.18 | 8.8903 | 17,399.92 |
| CHF | 7,000.82 | 7.4006 | 51,810.27 |
| SEK | 800.00 | 0.7962 | 636.96 |
| Dong | 59,932,349,062.70 | 0.00028 | 16,921,358.04 |
| MMK | 63,074,330.87 | 0.0049 | 309,904.90 |
| Riel | 289,926,489.00 | 0.0016 | 463,882.38 |
| Notes receivable | |||
| Of which: USD | 6,410,161.57 | 6.5249 | 41,825,663.16 |
| Accounts receivable | -- | -- | |
| Of which: USD | 50,817,396.93 | 6.5249 | 331,578,433.24 |
| EUR | 151,102.79 | 8.0250 | 1,212,599.89 |
| HKD | |||
| Dong | 19,830,866,520.92 | 0.00028 | 5,599,066.25 |
| Other receivables | |||
| Of which: USD | 97,717.00 | 6.5249 | 637,593.65 |
| JPY | 1,395,040.00 | 0.0632 | 88,166.53 |
| HKD | 1,175,449.00 | 0.8416 | 989,257.88 |
| Dong | 30,419,406,803.00 | 0.00028 | 8,588,645.06 |
| GBP | 7,250.00 | 8.8903 | 64,454.68 |
| Accounts payable | |||
| Of which: USD | 8,662,564.75 | 6.5249 | 56,522,368.77 |
| HKD | 350,463.00 | 0.8416 | 294,949.66 |
| JPY | 30,933,158.00 | 0.0632 | 1,954,975.59 |
| EUR | 170,391.87 | 8.0250 | 1,367,394.76 |
| CHF | 32,860.00 | 7.4006 | 243,183.72 |
| Dong | 13,844,253,242.97 | 0.00028 | 3,908,800.00 |
| MMK | 56,409,217.00 | 0.0049 | 277,157.00 |
| Other payables: | |||
| Of which: USD | 229,439.93 | 6.5249 | 1,497,072.60 |
| Dong | 3,000,000.00 | 0.00028 | 847.02 |
| MMK | 1,000,000.00 | 0.0049 | 4,913.33 |
| Short-term borrowings | |||
| Of which: USD | 139,033,186.42 | 6.5249 | 907,177,638.07 |
| Dong | 42,248,379,780.00 | 0.00028 | 11,929,392.39 |
| Current portion of long-term |
| borrowings | |||
| Of which: USD | 6,000,000.02 | 6.5249 | 39,149,400.13 |
(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),and Continental Textile, Lu An Garment Co., Ltd., and the sub-subsidiary Lu Thai Tan Chau were Hong Kong, Cambodia, Burma,America, Vietnam, Vietnam and Vietnam, and the recording currency was HKD for Lu Thai (Hong Kong), and USD for otheroverseas companies.
64. Government Subsidy
(1) Basic Information on Government Subsidy
Unit: RMB
| Category | Amount | Listed items | Amount recorded in the current profit or loss |
| Equipment subsidy | 28,452,800.00 | Deferred income | 5,181,169.76 |
| Overseas investment subsidy | 1,700,000.00 | Deferred income | |
| R&D subsidy | 3,463,000.00 | Deferred income | 1,700,000.00 |
| Strengthen the enterprise government subsidy | 13,321,100.00 | Other income | 13,321,100.00 |
| Post subsidies | 4,970,305.36 | Other income | 4,970,305.36 |
| Special awards and subsidies for stabilizing employment | 4,837,950.00 | Other income | 4,837,950.00 |
| Freight allowance of cotton yarn | 4,054,494.88 | Other income | 4,054,494.88 |
| Preferential policy subsidy of developing local enterprises | 3,048,500.00 | Other income | 3,048,500.00 |
| New enterprise apprenticeship training subsidy | 2,118,480.00 | Other income | 2,118,480.00 |
| Electricity fee subsidy | 1,168,761.00 | Other income | 1,168,761.00 |
| Reward for key technologies of high-quality textiles | 1,150,000.00 | Other income | 1,150,000.00 |
| 2019 National and Provincial Science and Technology Awards Supporting Funds | 1,000,000.00 | Other income | 1,000,000.00 |
| Social insurance subsidy | 954,720.99 | Other income | 954,720.99 |
| Refund of withholding tax handling fee | 903,449.95 | Other income | 903,449.95 |
| 2019 State Science and Technology Award supporting subsidies | 800,000.00 | Other income | 800,000.00 |
| Tax relief | 680,073.81 | Other income | 680,073.81 |
| Employment and apprenticeship subsidy fund | 500,038.00 | Other income | 500,038.00 |
| 2019 Provincial Innovation Platform Award Fund | 500,000.00 | Other income | 500,000.00 |
| Subsidy for leading persons project of Mount Tai industry | 850,000.00 | Other income | 850,000.00 |
| Special fund of Zibo Talents Plan | 400,000.00 | Other income | 400,000.00 |
| Special funds for the conversion of new and old industrial kinetic energy in 2019 | 336,600.00 | Other income | 336,600.00 |
| 2019 Municipal Special Fund Subsidy in the Field of Commerce | 289,900.00 | Other income | 289,900.00 |
| Municipal subsidy for overseas engineer introduction project | 270,000.00 | Other income | 270,000.00 |
| Provincial subsidies for commercial development and market development | 256,300.00 | Other income | 256,300.00 |
| One-off absorption of employment subsidies for college graduates | 208,000.00 | Other income | 208,000.00 |
| Talent subsidy | 200,000.00 | Other income | 200,000.00 |
| Central Foreign Trade and Economic Development Fund | 198,000.00 | Other income | 198,000.00 |
| One-off subsidy for new employment | 196,000.00 | Other income | 196,000.00 |
| Special fund subsidy for the conversion of new and old industrial kinetic energy in 2019 | 180,000.00 | Other income | 180,000.00 |
| Vocational Skills Subsidy Fund | 160,000.00 | Other income | 160,000.00 |
| Subsidies and awards for patent funding | 152,000.00 | Other income | 152,000.00 |
| The 2019 State Science and Technology Award | 150,000.00 | Other income | 150,000.00 |
| Award of the 3rd "Governor Cup" Industrial Design Competition | 150,000.00 | Other income | 150,000.00 |
| Municipal Foreign Economic and Trade Development Special Fund | 123,400.00 | Other income | 123,400.00 |
| Subsidy for the new enterprise apprenticeship in 2020 | 99,000.00 | Other income | 99,000.00 |
| Technician workstation subsidy | 80,000.00 | Other income | 80,000.00 |
| Subsidy award of project research and development | 67,300.00 | Other income | 67,300.00 |
| Supporting funds and government subsidies for Zibo Talents Program | 60,000.00 | Other income | 60,000.00 |
| Employee training subsidy | 58,316.18 | Other income | 58,316.18 |
| 2019 Municipal Special Funds for Commercial | 55,500.00 | Other income | 55,500.00 |
| Fields | |||
| 2019 provincial special fund for business development and market expansion | 53,100.00 | Other income | 53,100.00 |
| Panyang Talent Program Subsidy | 40,000.00 | Other income | 40,000.00 |
| Subsidies for "Training by Work" from Zibo Employment Service Center | 38,000.00 | Other income | 38,000.00 |
| Shandong Province Enterprise Research and Development Financial Subsidy Funds in 2020 | 31,000.00 | Other income | 31,000.00 |
| Excellent system innovation subsidy | 30,000.00 | Other income | 30,000.00 |
| Talent project support subsidies | 30,000.00 | Other income | 30,000.00 |
| Support funds for domestic private enterprises | 20,000.00 | Other income | 20,000.00 |
| R&D subsidies | 19,750.00 | Other income | 19,750.00 |
| "Top Ten Technologies" Prize | 3,000.00 | Other income | 3,000.00 |
| Unemployment dynamic monitoring subsidy | 1,200.00 | Other income | 1,200.00 |
| Loan discount | 1,646,858.00 | Financial expense | 1,646,858.00 |
(2) Return of Government Subsidy
□ Applicable √ Not applicable
VIII. Changes of Consolidation Scope
1. Disposal of Subsidiary
Whether there is a single disposal of the investment to the subsidiary and lost control?
√ Yes □ No
Unit: RMB
| Name of the subsidiary | The equity disposal price | Equity disposal proportion | Method of equity disposal | Time of losing control | Recognition basis for the time of losing control power | The differences of enjoyed net assets share of the subsidiary in corresponding consolidated statements of the disposal price and the disposal investment | Residual equity proportion on the date of losing control power | Carrying value of residual equity on the date of losing control power | Fair value of residual equity on the date of losing control power | Gains or losses from re-measurement of residual equity at fair value | Recognition method and main assumption of fair value of residual equity on the date of | Amount of other comprehensive income related to former subsidiaries transferred into investment profit or loss |
| losing control power | ||||||||||||
| Fengshou Cotton Industry Co., Ltd. | 195,860,000.00 | 59.92% | Transfer | 31 August 2020 | Out of control | 9,543,029.73 | 0.00% | 0.00 | 0.00 | 0.00 | 0 | 2,220,047.19 |
Other notes:
Whether there are several disposals of the investment to the subsidiary and lost controls?
□ Yes √ No
2. Other Reasons for Changes of Consolidation Scope
Note to changes in combination scope for other reasons (such as newly establishment or liquidation of subsidiaries, etc.) and relevantinformation:
Beijing Zhishu Trading Co., Ltd. were newly-established subsidiaries of the Company; and the subsidiary Beijing Lutai YouxianElectronic Commerce Co., Ltd. was deregistered.
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 | |
| 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 |
(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% | 5,270,444.55 | 50,000,000.00 | 312,002,116.68 |
| Lulian New Materials | 25.00% | -7,372,090.69 | 92,096,672.50 |
(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 | |
| Fengshou Cotton | 420,902,264.09 | 514,128,662.24 | 935,030,926.33 | 441,046,827.41 | 4,493,264.80 | 445,540,092.21 | ||||||
| Lufeng Weaving & Dyeing | 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 | 869,432,992.40 | 806,983,371.55 | 1,676,416,363.95 | 200,786,105.11 | 40,658,795.64 | 241,444,900.75 |
| Lulian New Materials | 508,510,155.05 | 414,671,978.33 | 923,182,133.38 | 551,639,028.01 | 3,156,415.36 | 554,795,443.37 | 64,484,916.71 | 135,649,636.88 | 200,134,553.59 | 2,201,170.77 | 58,330.05 | 2,259,500.82 |
Unit: RMB
| Name | Reporting Period | Same period of last year | ||||||
| Operating revenue | Net profit | Total comprehensive income | Cash flows from operating activities | Operating revenue | Net profit | Total comprehensive income | Cash flows from operating activities | |
| Fengshou Cotton | 723,971,149.38 | 24,876,809.14 | 24,876,809.14 | 85,703,001.27 | ||||
| Lufeng Weaving & Dyeing | 1,310,505,310.08 | 22,061,576.93 | 21,853,748.55 | -11,925,802.56 | 1,743,680,018.67 | 116,519,911.43 | 116,519,911.43 | 184,886,875.03 |
| Lulian New Materials | 7,663,754.58 | -29,488,362.76 | -29,488,362.76 | -62,887,712.36 | 1,749,746.47 | -2,124,947.23 | -2,124,947.23 | -4,558,476.15 |
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 Joint Ventures
Unit: RMB
| Ending balance/Reporting Period | Beginning balance/The same period of last year | |
| Haohong Investment | Haohong Investment | |
| Current assets | 265,506,727.38 | 312,249,946.34 |
| Total assets | 265,506,727.38 | 312,249,946.34 |
| Current liabilities | 517,461.99 | 150,000.00 |
| Total liabilities | 517,461.99 | 150,000.00 |
| Net assets | 264,989,265.39 | 312,099,946.34 |
| Equity attributable to shareholders of the Company as the parent | 264,989,265.39 | 312,099,946.34 |
| Net assets shares calculated at the shareholding proportion | 88,329,922.16 | 104,032,882.42 |
| --Other | -806,582.42 | |
| Carrying value of investment to associated enterprises | 88,329,922.16 | 103,226,300.00 |
| Net profit | -17,110,725.89 | 25,406,847.32 |
| Total comprehensive income | -17,110,725.89 | 25,406,847.32 |
X. The Risk Related to Financial Instruments
The Group’s major financial instruments include the monetary assets, notes receivable, accounts receivables, accounts receivablefinancing, other receivables, other current assets, trading financial assets, other equity instrument investments, other non-currentfinancial assets, long-term receivables, notes payable, accounts payable, other payables, the short-term borrowings, trading financialliabilities, non-current liabilities due within one year and long-term borrowings. Details of various financial instruments are disclosedin relevant 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 to minimizethe adverse influence of financial risks on the Group’s financial performance. According to such risk management objective, theCompany has formulated corresponding risk management policy to recognize and analyze possible risks encountered by the Group,set the appropriate acceptable risk level and designed corresponding internal control procedures to monitor the Group’s risk level.Meanwhile, the Group will regularly review these risk management policies and relevant internal control system so as to cater for themarket or respond to any change in the Group’s business operations. Accordingly, the Group’s internal audit department will alsoregularly or randomly check whether the internal control system is implemented in conformity with relevant risk managementpolicies.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 analyze
possible 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’s bankdeposits are expected not to suffer any major credit risks.For notes receivable, accounts receivable, other accounts receivable and long-term accounts receivable, the Group has establishedrelevant policies to control the credit risk exposure. According to the client’s financial status, credit record and other factors(including the current market condition), the Group will evaluate the client’s credit qualification and set corresponding credit period.In addition, the Group will regularly monitor the client’s credit record. For clients with poor credit records, the Group will issue thewritten Reminder Notice, shorten the credit period or cancel the credit period to guarantee the Group’s overall credit risk undercontrol.The hugest credit risk exposure borne by the Group is the book value of each financial asset reflected in the balance sheet, and theGroup also faces credit risk due to the provision of financial guarantee, as detailed in Note XIII 2.In terms of accounts receivable, the top 5 customers in accounts receivable were accounted for 29.49% of the total amount ofaccounts receivable of the Group (22.71% in 2019). In terms of other receivables, the top 5 of the ending balance according to thearrears party was accounted for 65.27% of the total amount of other receivables of the Group (71.72% in 2019).Investment in debt obligationsThe Group supervised the changes of credit risk through tracking the published external credit ratings. In order to make sure whetherthe credit rating was the latest, and whether the credit risk has increased obviously of evaluation report date but not been reflected inthe published external ratings, the Group has supplemented through examining the changes of bond yield and the available news andsupervision information.On the balance sheet date, the carrying value of investment in debt obligations of the Group are listed as follows according to reportitems (Unit: RMB’0,000).2020.12.31 2019.12.31Trading financial assets 25,181.47 5,235.61Available-for-sale financial assets 35,137.97Total 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 the short-term andlong-term fund demand. The Group shall raise its working capital based on the capital generated from business operations and bankloans.
(3) Market risk
The financial instrument’s market risk refers to the fluctuation risk of fair value of financial instrument or future cash flow caused by
the changes of market price, including the interest rate risk and the exchange rate risk.Interest rate riskInterest rate risk refers to the fluctuation risk of fair value of financial instrument or future cash flow caused by the changes of marketinterest rate. The interest rate can derive from the recognized interest-bearing financial instruments and unrecognized financialinstruments (including certain loan commitment).The Group’s interest rate risk mainly arises from the bank loan. Financial liabilities based on the floating interest rate will cause thecash flow interest rate risk to the Group, and financial liabilities based on the fixed interest rate the fair value interest rate risk.However, the Group has paid close attention the impact of interest rate fluctuations on the Group’s interest rate risk. At present, theGroup 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 interest-bearing financial liabilities held by the Group are as follows (Unit: RMB’0,000):
Item Reporting Period Same period of last yearFinancial liabilities with fixed interest rateOf which: Short-term borrowings 34,385.82 80,788.31Current portion of long-term borrowings 400.00Long-term borrowings 20,000.00Bonds payable 135,017.15Total 189,802.97 80,788.31Financial liabilities with floating interest rateOf which: Short-term borrowings 58,452.36 130,342.44Current portion of long-term borrowings 3,914.94 10,111.13Current portion of long-term borrowings 29,500.00 4,185.72Total 91,867.30 86,029.29On December 31, 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 RMB9.1867 million.Foreign exchange riskForeign exchange risk is referred to the fluctuation risk of fair value of financial instruments or future cash flows resulted from thechange of foreign exchange rate. The foreign exchange rate was originated from the financial instruments denominated in foreigncurrencies other than the recording currency.On December 31, 2020, the amount of foreign currency financial assets and foreign currency financial liabilities converted torenminbi is as follows (Unit: RMB’0,000):
Item Foreign currency liabilities Foreign currency assetsEnding balance Beginning balance Ending balance Beginning balanceUSD 100,434.65 142,862.43 54,643.66 103,091.39EUR 136.74 93.5 894.96 108.54JPY 195.50 178.21 64.20 47.88JPY 29.49 833.05 328.79 4,879.34GBP 0.00 8.19 11.68
CHF 24.32 47.44 5.18 40.82SEK 0.00 0.06 0.06Dong 1,583.90 9,156.70 3,110.91 11,176.75MMK 28.21 30.99 71.2Riel 0.00 46.39 63.82Total 102,432.81 153,171.32 59,133.34 119,491.47The Group pays close attention on the influence of foreign exchange risk due to the changes in exchange rate. At the end of eachreporting periods, for the monetary assets, notes receivable, accounts receivable, accounts payable, short-term borrowings andlong-term borrowings denominated in foreign currency, if renminbi to foreign currency up or down 10% with other variablesunchanged, the influence on the shareholders’ equity and net profit of the Group is as follows (Unit: RMB’0,000):
Exchange rate changes Reporting Period Same period of last yearInfluence on the profits Influence on shareholders’ equity Influence on the profits Influence onshareholders’ equityUp 10% against RMB 4,329.95 4,329.95 3,956.31 3,956.31Down 10% against RMB -4,329.95 -4,329.95 -3,956.31 -3,956.31
2. Capital management
The objectives of capital management policies of the Group are to insure 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 December31, 2020, the asset-liability ratio was 33.29% of the Group (30.17% on December 31, 2019).XI. The 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 | 268,456,216.98 | 268,456,216.98 | ||
| 1. Financial assets at fair value through profit or loss | 251,814,716.98 | 251,814,716.98 | ||
| (3) Derivative financial assets | 16,641,500.00 | 16,641,500.00 | ||
| (II) Accounts receivable financing | 55,150,926.34 | 55,150,926.34 | ||
| (III) other non-current financial assets | 156,915,620.25 | 156,915,620.25 | ||
| The total amount of assets consistently measured at fair value | 268,456,216.98 | 212,066,546.59 | 480,522,763.57 | |
| II. Non-consistent fair value measurement | -- | -- | -- | -- |
2. Market Price Recognition Basis for Consistent and Inconsistent Fair Value Measurement Items at Level
The Company determines the fair value of bank financial products based on the expected rate of return agreed in the contract.The Company determines the fair value of forward foreign exchange settlement based on the bank's forward foreign exchangequotation 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 3For the unlisted equity investment, the Company adopts the comparable listed company comparison method, and the non-observableinput value of the comparable listed company comparison method includes the liquidity discount.The Company evaluates the unlisted and tradable domestic shares of companies listed on the Hong Kong Stock Exchange based onthe quotations of Hong Kong stocks and taking into account unlisted and tradable factors.The investment into Shandong Hongqiao Thermoelectric Co., Ltd. made by Luqun Textile (the Company’s subsidiary) is expected tobe held in the long run for obtaining the discount on power purchase. As no revenue distribution right is vested in the investment, theinvested unit’s operating profit and loss are not shared or borne, and the equity transfer is not proposed, the Company regards it asthe financial asset which shall be measured based on the fair value and whose variations are included in the current profit and loss,and the investment cost is deemed as the fair value of the financial asset.For accounts receivables financing at fair value and the changes included in other comprehensive income, its fair value shall 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, accountsreceivable, other receivables, long-term receivables, short-term borrowings, notes payable, accounts payables, other payables, currentportion 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 (%) |
| Zibo Lucheng Textile Investment Co., Ltd. | Zibo | Textile, chemistry and investment | RMB63.26 million | 16.36% | 16.36% |
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. | Wholly-owned subsidiary of the Company as the parent |
| Lumei New Materials Co., Ltd. | Majority-owned subsidy of wholly-owned subsidiary of the Company as the parent |
| Shandong Xirui New Material Co., Ltd. | Wholly-owned subsidiary of the parent company's wholly-owned subsidiary |
| Zibo Lumei Economic and Trade Co., Ltd. | Wholly-owned subsidiary of the Company as the parent |
5. List of Connected 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 | Reporting Period | The approval trade credit | Whether exceed trade credit or not | Same period of last year |
| Lucheng Textile | Towels, socks, oils, supermarket retail, welfare, etc. | 6,796,682.62 | |||
| Lucheng Textile | Electronics, computer equipment, computer supplies, paper cores, etc. | 3,979,888.83 | |||
| Lucheng Textile | Hosier processing charge | 1,568,132.50 | |||
| Limin Purified Water | Recycled water, sewage treatment, materials | 28,125,943.88 | 30,520,000.00 | No | 21,927,449.10 |
| Chengshun Petroleum | Gas | 35,285,524.00 | |||
| Lurui Chemical | Auxiliaries | 72,807,066.89 | 176,000,000.00 | No | 114,848,768.52 |
| Chengshun Hosiery | Hosier, paper core, hosier processing fees and other benefits | 7,770,989.74 | 10,000,000.00 | No | 716,355.68 |
| Chengshun Economic and Trade | Supermarket retail | 2,333,060.60 | 3,000,000.00 | No | 59,684.06 |
| Lucheng Petrochemical | Oils | 2,232,371.95 | 3,000,000.00 | No | 46,546.34 |
| Chengshun Petrochemical | Gas | 31,169,896.80 | 51,841,000.00 | No | 6,449,413.14 |
| Xirui New Materials | Face mask | 6,187.61 |
Information of sales of goods and provision of labor service
Unit: RMB
| Related party | Content | Reporting Period | Same period of last year |
| Lucheng Textile | Sales of materials, electricity, running water, draught water, gas etc. | 112,274.67 | |
| Lucheng Textile | Sales of grey yarn, dyed yarn, garment etc. | 326,137.94 | |
| Chengshun Hosiery | Materials, electricity, running water, heating, steam | 152,705.47 | 15,859.24 |
| Chengshun | Sales of grey yarn, dyed yarn | 331,813.72 | 15,398.23 |
| Hosiery | |||
| Chengshun Hosiery | Processing fee for woven towels | 1,031.86 | |
| Chengshun Economic and Trade | Materials, electricity, running water | 131,430.59 | 2,270.46 |
| Lucheng Petrochemical | Electric charge, materials | 22,952.62 | 1,898.17 |
| Limin Purified Water | Sales of materials, garment, electricity etc. | 2,155,963.97 | 1,627,664.17 |
| Lurui Fine Chemical | Sales of garment, shell fabric, yarn, water & electricity, lunch components and materials | 164,690.07 | 393,479.14 |
| Lujia Property | Sales of materials and recycled water | 151,056.88 | 96,838.18 |
| Xirui New Materials | Fabric, material, isolation clothing, etc | 45,881,242.54 | |
| Xirui New Materials | Meal | 1,024.38 | |
| Luqun Land | Copy paper, etc. | 652.26 | |
| Luqun Land | Heating facilities supporting fee | 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 Trading | Houses and buildings | 36,108.00 | 36,108.00 |
| Lurui Fine Chemical | Houses and buildings | 6,819.70 | 8,183.64 |
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 |
| Zibo Lucheng Textile Investment Co., Ltd. | Rent of land | 3,614,857.20 | 3,614,857.20 |
| Zibo Lucheng Textile Investment Co., Ltd. | Rent of gas station | 233,142.84 | 501,714.24 |
| Zibo Lucheng Textile Investment Co., Ltd. | Rent of buildings | 11,022,228.60 | 11,022,228.60 |
| Luqun Property | Rent of land and buildings | 1,971,428.52 | 1,394,285.64 |
(3) Information on Inter-bank Lending of Capital of Related Parties
Unit: RMB
| Related party | Amount | Start date | End date | Note |
| Borrowing | ||||
| Lucheng Textile | 160,000,000.00 | January 16, 2020 | April 16, 2020 | |
(4) Information on Remuneration for Key Management Personnel
Unit: RMB
| Item | Reporting period | Same period of last year |
| Remuneration for key management personnel | 17,485,446.61 | 21,034,175.37 |
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 | 2,794.00 |
| Accounts payable | Lurui Chemical | 988,293.00 | |
| Contract liability | Luqun Land | 649,676.55 |
XIII. Commitments and Contingency
1. Significant Commitments
Significant commitments on balance sheet date
Capital commitments
| Commitments signed but hasn’t been recognized in financial statements | 2020.12.31 | 2019.12.31 |
| Commitment on constructing and purchasing long-lived assets (RMB’0,000) | 9,864.22 | 19,386.82 |
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 31 December 2020, the Company provided guarantee to loans of the following entities:
| Name | Item | Currency | Oreign currency amount | Amount converted to RMB | Start date | Due date | Note |
| I. Subsidiary | |||||||
| Continental Textile | Short-term borrowings | USD | 609,432.39 | 3,976,485.40 | 2020/7/6 | 2021/1/2 | |
| Continental Textile | Short-term borrowings | USD | 257,839.62 | 1,682,377.74 | 2020/7/6 | 2021/1/2 | |
| Continental Textile | Short-term borrowings | USD | 144,034.38 | 939,809.93 | 2020/7/24 | 2021/1/20 | |
| Continental Textile | Short-term borrowings | USD | 186,722.66 | 1,218,346.68 | 2020/7/24 | 2021/1/20 | |
| Continental Textile | Short-term borrowings | USD | 820,515.63 | 5,353,782.43 | 2020/12/3 | 2021/6/1 | |
| Continental Textile | Short-term borrowings | USD | 480,559.66 | 3,135,603.73 | 2020/12/16 | 2021/6/14 | |
| Continental Textile | Short-term borrowings | USD | 821,246.09 | 5,358,548.61 | 2020/12/16 | 2021/6/14 | |
| Continental Textile | Short-term borrowings | USD | 219,930.88 | 1,435,027.00 | 2020/12/24 | 2021/6/22 | |
| Continental Textile | Short-term borrowings | USD | 211,697.53 | 1,381,305.21 | 2020/12/29 | 2021/6/27 | |
| Continental Textile | Short-term borrowings | USD | 406,305.00 | 2,651,099.49 | 2020/11/25 | 2021/5/24 | |
| Continental Textile | Short-term borrowings | USD | 376,000.00 | 2,453,362.40 | 2020/12/8 | 2021/6/4 | |
| Continental Textile | Short-term borrowings | USD | 5,000,000.00 | 32,624,500.00 | 2020/3/9 | 2021/3/8 | |
| Continental Textile | Short-term borrowings | USD | 10,000,000.00 | 65,249,000.00 | 2020/7/8 | 2021/7/7 | |
| Continental Textile | Short-term borrowings | USD | 2,000,000.00 | 13,049,800.00 | 2020/7/15 | 2021/7/14 | |
| Continental Textile | Short-term borrowings | USD | 12,000,000.00 | 78,298,800.00 | 2020/8/24 | 2021/2/24 | |
| Continental Textile | Short-term borrowings | USD | 7,000,000.00 | 45,674,300.00 | 2020/8/27 | 2021/3/1 |
| Continental | Short-term | USD | 131,145.10 | 855,708.66 | 2020/7/29 | 2021/1/25 |
| Textile | borrowings | ||||||
| Continental Textile | Short-term borrowings | USD | 71,200.00 | 464,572.88 | 2020/8/18 | 2021/2/14 | |
| Continental Textile | Short-term borrowings | USD | 1,306,408.60 | 8,524,185.47 | 2020/8/28 | 2021/2/24 | |
| Continental Textile | Short-term borrowings | USD | 727,801.88 | 4,748,834.49 | 2020/8/28 | 2021/2/24 | |
| Continental Textile | Short-term borrowings | USD | 858,058.03 | 5,598,742.84 | 2020/9/4 | 2021/3/3 | |
| Continental Textile | Short-term borrowings | USD | 1,339,516.68 | 8,740,212.39 | 2020/9/23 | 2021/3/22 | |
| Continental Textile | Short-term borrowings | USD | 828,192.36 | 5,403,872.33 | 2020/9/24 | 2021/3/23 | |
| Continental Textile | Short-term borrowings | USD | 136,000.00 | 887,386.40 | 2020/9/29 | 2021/3/28 | |
| Continental Textile | Short-term borrowings | USD | 1,841,519.29 | 12,015,729.22 | 2020/12/4 | 2021/6/2 | |
| Continental Textile | Short-term borrowings | USD | 930,238.59 | 6,069,713.78 | 2020/12/10 | 2021/6/8 | |
| Continental Textile | Short-term borrowings | USD | 924,330.67 | 6,031,165.19 | 2020/12/17 | 2021/6/15 | |
| Continental Textile | Short-term borrowings | USD | 1,500,000.00 | 9,787,350.00 | 2020/11/24 | 2021/5/24 | |
| Continental Textile | Short-term borrowings | USD | 1,800,000.00 | 11,744,820.00 | 2020/12/1 | 2021/6/1 | |
| Continental Textile | Short-term borrowings | USD | 6,000,000.00 | 39,149,400.00 | 2020/12/15 | 2021/6/15 | |
| Continental Textile | Short-term borrowings | USD | 6,000,000.00 | 39,149,400.00 | 2020/12/29 | 2021/6/29 | |
| Continental Textile | Short-term borrowings | USD | 5,314,478.07 | 34,676,437.96 | 2020/5/5 | 2021/5/5 | |
| Continental Textile | Short-term borrowings | USD | 166,192.00 | 1,084,386.18 | 2020/7/21 | 2021/1/21 | |
| Continental Textile | Short-term borrowings | USD | 96,872.05 | 632,080.44 | 2020/7/22 | 2021/1/22 | |
| Continental Textile | Short-term borrowings | USD | 602,242.00 | 3,929,568.83 | 2020/8/4 | 2021/2/4 | |
| Continental Textile | Short-term borrowings | USD | 239,052.00 | 1,559,790.39 | 2020/8/6 | 2021/2/6 | |
| Continental Textile | Short-term borrowings | USD | 440,240.00 | 2,872,521.98 | 2020/8/21 | 2021/2/21 | |
| Continental | Short-term | USD | 180,317.00 | 1,176,550.39 | 2020/8/25 | 2021/2/25 |
| Textile | borrowings | ||||||
| Continental Textile | Short-term borrowings | USD | 196,364.00 | 1,281,255.46 | 2020/8/27 | 2021/2/27 | |
| Continental Textile | Short-term borrowings | USD | 992,799.00 | 6,477,914.20 | 2020/9/7 | 2021/3/7 | |
| Continental Textile | Short-term borrowings | USD | 703,609.00 | 4,590,978.36 | 2020/10/5 | 2021/4/5 | |
| Continental Textile | Short-term borrowings | USD | 340,454.00 | 2,221,428.30 | 2020/10/8 | 2021/4/8 | |
| Continental Textile | Short-term borrowings | USD | 171,217.00 | 1,117,173.80 | 2020/10/23 | 2021/4/23 | |
| Continental Textile | Short-term borrowings | USD | 232,472.00 | 1,516,856.55 | 2020/10/27 | 2021/4/27 | |
| Continental Textile | Short-term borrowings | USD | 774,775.00 | 5,055,329.40 | 2020/11/4 | 2021/5/4 | |
| Continental Textile | Short-term borrowings | USD | 374,908.00 | 2,446,237.21 | 2020/11/12 | 2021/5/12 | |
| Continental Textile | Short-term borrowings | USD | 308,362.00 | 2,012,031.21 | 2020/11/20 | 2021/5/20 | |
| Continental Textile | Short-term borrowings | USD | 1,931,483.12 | 12,602,734.21 | 2020/11/20 | 2021/5/20 | |
| Continental Textile | Short-term borrowings | Dong | 5,944,625,944.00 | 1,678,360.64 | 2020/9/17 | 2021/3/16 | |
| Continental Textile | Short-term borrowings | Dong | 4,280,171,720.00 | 1,208,431.24 | 2020/9/21 | 2021/3/19 | |
| Continental Textile | Short-term borrowings | Dong | 4,050,314,860.00 | 1,143,535.21 | 2020/9/24 | 2021/3/23 | |
| Continental Textile | Short-term borrowings | Dong | 6,536,160,268.00 | 1,845,369.97 | 2020/10/16 | 2021/4/14 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 1,360,796.50 | 8,879,061.06 | 2020/5/6 | 2021/5/6 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 44,104.80 | 287,779.41 | 2020/7/23 | 2021/1/19 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 836,466.56 | 5,457,860.66 | 2020/7/24 | 2021/7/19 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 805,709.04 | 5,257,170.92 | 2020/8/4 | 2021/7/30 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 225,838.00 | 1,473,570.37 | 2020/8/26 | 2021/2/22 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 921,692.20 | 6,013,949.44 | 2020/12/1 | 2021/5/30 | |
| Lu Thai Tan Chau | Short-term | USD | 921,461.05 | 6,012,441.21 | 2020/12/7 | 2021/6/5 |
| borrowings | |||||||
| Lu Thai Tan Chau | Long-term borrowings | USD | 146,880.00 | 958,377.31 | 2019/9/30 | 2021/8/30 | |
| Lu Thai Tan Chau | Long-term borrowings | USD | 1,461,600.00 | 9,536,793.84 | 2019/9/30 | 2021/8/30 | |
| Lu Thai Tan Chau | Long-term borrowings | USD | 171,177.84 | 1,116,918.29 | 2019/10/3 | 2021/8/30 | |
| Lu Thai Tan Chau | Long-term borrowings | USD | 96,390.00 | 628,935.11 | 2019/10/3 | 2021/8/30 | |
| Lu Thai Tan Chau | Long-term borrowings | USD | 116,553.60 | 760,500.58 | 2019/10/7 | 2021/8/30 | |
| Lu Thai Tan Chau | Long-term borrowings | USD | 31,104.00 | 202,950.49 | 2019/10/11 | 2021/8/30 | |
| Lu Thai Tan Chau | Long-term borrowings | USD | 103,032.00 | 672,273.50 | 2019/10/17 | 2021/8/30 | |
| Lu Thai Tan Chau | Long-term borrowings | USD | 113,881.75 | 743,067.03 | 2019/10/21 | 2021/8/30 | |
| Lu Thai Tan Chau | Long-term borrowings | USD | 28,818.00 | 188,034.57 | 2019/10/21 | 2021/8/30 | |
| Lu Thai Tan Chau | Long-term borrowings | USD | 4,536.00 | 29,596.95 | 2019/10/21 | 2021/8/30 | |
| Lu Thai Tan Chau | Long-term borrowings | USD | 62,414.43 | 407,247.91 | 2019/11/7 | 2021/8/30 | |
| Lu Thai Tan Chau | Long-term borrowings | USD | 65,794.01 | 429,299.34 | 2019/11/7 | 2021/8/30 | |
| Lu Thai Tan Chau | Long-term borrowings | USD | 1,504,529.33 | 9,816,903.43 | 2019/11/20 | 2021/8/30 | |
| Lu Thai Tan Chau | Long-term borrowings | USD | 276,730.56 | 1,805,639.23 | 2019/11/20 | 2021/8/30 | |
| Lu Thai Tan Chau | Long-term borrowings | USD | 77,112.00 | 503,148.09 | 2019/12/4 | 2021/8/30 | |
| Lu Thai Tan Chau | Long-term borrowings | USD | 1,553,371.99 | 10,135,596.89 | 2019/12/5 | 2021/8/30 | |
| Lu Thai Tan Chau | Long-term borrowings | USD | 186,074.51 | 1,214,117.57 | 2019/12/17 | 2021/8/30 | |
| Total | -- | 587,313,447.40 |
(2) As of 31 December 2020, the Company provided guarantee to L/G of the following entities:
| Name | Item | Currency | Amount | Start date | Due date | Note |
| I. Subsidiaries | ||||||
| Lulian New Materials | L/G | RMB | 5,200,000.00 | 2020/12/3 | 2022/7/20 | |
| Lulian New Materials | L/G | RMB | 2,350,000.00 | 2020/6/18 | 2021/6/30 |
| Lulian New Materials | L/G | RMB | 770,000.00 | 2020/6/18 | 2021/7/30 |
| Lulian New Materials | L/G | RMB | 4,000,000.00 | 2020/10/9 | 2021/11/30 | |
| Lulian New Materials | L/G | RMB | 4,300,000.00 | 2020/4/8 | 2021/2/28 | |
| Lulian New Materials | L/G | RMB | 7,500,000.00 | 2020/3/19 | 2021/7/10 |
| Lulian New Materials | L/G | RMB | 2,000,000.00 | 2020/3/19 | 2021/6/10 | |
| Lulian New Materials | L/G | RMB | 8,250,000.00 | 2019/11/26 | 2021/2/8 |
| Lulian New Materials | L/G | RMB | 17,000,000.00 | 2020/2/26 | 2021/3/31 | |
| Lulian New Materials | L/G | RMB | 3,500,000.00 | 2020/12/11 | 2022/7/20 | |
| Lulian New Materials | L/G | RMB | 18,000,000.00 | 2020/2/28 | 2021/9/19 |
| Total | 72,870,000.00 |
There was no other significant contingency in the Group to disclose.
(2) In Despite of no Significant Contingency to Disclose, the Company Shall Also Make RelevantStatementsThere was no significant contingency in the Company.XIV. Events after Balance Sheet Date
1. Profit Distribution
Unit: RMB
| Profits or dividends to be distributed | 42,906,616.10 |
| Profits or dividends announced to be distributed after the approval | 42,906,616.10 |
2. Notes to Other Events after Balance Sheet Date
(1) The Company established Hainan Huilin International Holdings Co., Ltd. (hereinafter referred to as "Huilin International") onJanuary 18, 2021, and the Company held 100% of the shares. On February 4, 2021, Huilin International invested and establishedLIBRA TNTERNATIONAL INVESTMENT PET.LTD. in Singapore. Huilin International held 100% of its shares, and HuilinInternational invested USD 35.5 million in currency.
(2) In January 2021, the Company provided guarantee for the comprehensive credit line of USD5 million, which was granted byHSBC Bank (Vietnam) Ltd. to the Company's wholly-owned subsidiary Lu An Garments, for a period of 2 years.The Companyprovided guarantee for the comprehensive credit line of USD5 million, which was granted by United Overseas Bank Vietnam Co.,Ltd. to Lu An Garments, for a period of 2 years.As of March 29, 2021, the Company has no other events after balance sheet date that should be disclosed.
XV. 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 of by individual | 5,730,132.44 | 1.60% | 5,730,132.44 | 100.00% | ||||||
| Of which: | ||||||||||
| Accounts receivable withdrawal of bad debt provision of by group | 352,666,401.84 | 98.40% | 26,499,466.74 | 7.51% | 326,166,935.10 | 439,725,290.44 | 100.00% | 22,125,772.36 | 5.03% | 417,599,518.08 |
| Of which: | ||||||||||
| Group 1: Undue accounts (credit insurance insured) | 29,328,670.49 | 8.18% | 307,951.04 | 1.05% | 29,020,719.45 | 87,886,175.56 | 19.99% | 922,804.84 | 1.05% | 86,963,370.72 |
| Group 2: Undue accounts (no credit insurance) | 242,017,947.74 | 67.53% | 12,100,897.39 | 5.00% | 229,917,050.35 | 312,932,456.44 | 71.16% | 15,646,622.82 | 5.00% | 297,285,833.62 |
| Group 3: Overdue accounts (credit insurance insured) | 23,520,765.79 | 6.56% | 2,516,721.94 | 10.70% | 21,004,043.85 | 26,018,416.33 | 5.92% | 2,783,970.55 | 10.70% | 23,234,445.78 |
| Group 4: Overdue accounts (no credit insurance) | 57,799,017.82 | 16.13% | 11,573,896.37 | 20.02% | 46,225,121.45 | 12,888,242.11 | 2.93% | 2,772,374.15 | 21.51% | 10,115,867.96 |
| Total | 358,396,534.28 | 100.00% | 32,229,599.18 | 8.99% | 326,166,935.10 | 439,725,290.44 | 100.00% | 22,125,772.36 | 5.03% | 417,599,518.08 |
Withdrawal of bad debt provision by single item:
Unit: RMB
| Name | Ending balance | |||
| Carrying amount | Bad debt provision | Withdrawal proportion | Provision reason | |
| Customer 1 | 3,410,632.89 | 3,410,632.89 | 100.00% | Customer filed for bankruptcy protection |
| Customer 2 | 1,565,397.64 | 1,565,397.64 | 100.00% | Customer filed for bankruptcy protection |
| Other customer | 754,101.91 | 754,101.91 | 100.00% | Customer financial difficulties or filed for bankruptcy protection |
| Total | 5,730,132.44 | 5,730,132.44 | -- | -- |
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) | 29,328,670.49 | 307,951.04 | 1.05% |
| Group 2: Undue accounts (no credit insurance) | 242,017,947.74 | 12,100,897.39 | 5.00% |
| Group 3: Overdue accounts (credit insurance insured) | 23,520,765.79 | 2,516,721.94 | 10.70% |
| Group 4: Overdue accounts (no credit insurance) | 57,799,017.82 | 11,573,896.37 | 20.02% |
| Total | 352,666,401.84 | 26,499,466.74 | -- |
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 | Carrying amount |
| Within 1 year (including 1 year) | 349,365,647.42 |
| 1 to 2 years | 8,107,091.05 |
| 2 to 3 years | 631,549.74 |
| Over 3 years | 292,246.07 |
| 3 to 4 years | 292,246.07 |
| Total | 358,396,534.28 |
(2) Bad Debt Provision Withdrawal, 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 | Write-off | Other | |||
| Bad debt provision | 22,125,772.36 | 10,103,826.82 | 32,229,599.18 | |||
| Total | 22,125,772.36 | 10,103,826.82 | 32,229,599.18 | |||
(3) Particulars of the Actual Verification of Accounts Receivable during the Reporting Period
Unit: RMB
| Item | Amount |
| Accounts receivable actually verified | 0.00 |
(4) Top5 of the Ending Balance of the Accounts Receivable Collected according to Arrears Party
Unit: RMB
| Name of entity | Ending balance | Proportion to total ending balance of accounts receivable | Ending balance of bad debt provision |
| Customer A | 69,119,513.46 | 19.29% | 7,192,376.69 |
| Customer B | 21,517,138.03 | 6.00% | 1,075,856.90 |
| Customer C | 17,689,576.96 | 4.94% | 2,162,047.54 |
| Customer D | 13,298,720.43 | 3.71% | 664,936.02 |
| Customer E | 12,308,168.48 | 3.43% | 3,863,551.62 |
| Total | 133,933,117.36 | 37.37% |
2. Notes Receivable
| Category | 2020.12.31 | 2019.12.31 | ||||
| Carrying amount | Bad debt provision | Carrying value | Carrying amount | Bad debt provision | Carrying value | |
| Bank acceptance bill | 75,987,373.12 | 75,987,373.12 | 4,849,983.90 | 4,849,983.90 | ||
| L/C | 32,876,316.67 | 32,876,316.67 | 63,048,901.45 | 63,048,901.45 | ||
| Total | 108,863,689.79 | 108,863,689.79 | 67,898,885.35 | 67,898,885.35 |
Note: the Company believes that there is no significant credit risks in bank acceptance bill and L/C held by the Company, and nosignificant losses caused by bank default.
(1) There was no notes receivable pledged in the Company at the period-end.
(2) Notes receivable endorsed by the Company or discounted and not due on the balance sheet date at the period-end
| Category | Derecognized amount at the period-end | Non-derecognized amount at the period-end |
| Bank acceptance bill | 65,004,705.53 | |
| Trade acceptance bill | ||
| Total | 65,004,705.53 |
If the bank acceptance bill used for endorsement and discount is accepted by a bank with high credit grade, the credit risk anddeferred payment risk are low, and the interest rate risk related to the bill has been transferred to the bank. it can be judged that themain risk and reward on the ownership of the bill have been transferred, so the bank acceptance bill was derecognized at theperiod-end. If accepted by a bank with low credit grade, the endorsement and discount do not affect the right of recourse, and thecredit risk and deferred payment risk related to the bill have not been transferred, so the bank acceptance bill was not derecognized atthe period-end.
(3) There was no bad debt provision withdrawn, reversed and recovered in the Reporting Period.
3. Other Receivables
Unit: RMB
| Item | Ending balance | Beginning balance |
| Dividends receivable | 75,488,652.49 | |
| Other receivables | 1,425,394,029.70 | 838,523,449.52 |
| Total | 1,500,882,682.19 | 838,523,449.52 |
(1) Dividends receivable
1) Dividends receivable classification
Unit: RMB
| Item (or investee) | Ending balance | Beginning balance |
| Fengshou Cotton | 79,461,739.46 | |
| Less: bad debt provision | -3,973,086.97 | |
| Total | 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 | Expected loss in the duration (credit | Expected loss in the duration (credit |
| the next 12 months | impairment not occurred) | impairment occurred) | ||
| Balance of 1 January 2020 in the Current Period | —— | —— | —— | —— |
| Withdrawal of the Current Period | 3,973,086.97 | 3,973,086.97 | ||
| Balance of 31 December 2020 | 3,973,086.97 | 3,973,086.97 |
Changes of carrying amount with significant amount changed of loss provision in the Current Period
□ Applicable √ Not applicable
(2) Other Receivables
1) Other Receivables Classified by Account Nature
Unit: RMB
| Nature | Ending carrying amount | Beginning carrying amount |
| Intercourse funds | 1,415,868,182.84 | 820,813,180.93 |
| Export rebates | 9,928,747.48 | |
| Payment on behalf | 11,567,504.63 | 7,908,873.14 |
| Guarantee deposit and cash deposit | 3,119,958.81 | 3,290,964.29 |
| Borrowings and petty cash | 859,406.80 | 998,879.96 |
| Other | 98,063.62 | 248,238.60 |
| Total | 1,431,513,116.70 | 843,188,884.40 |
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 2020 | 3,457,541.15 | 1,207,893.73 | 4,665,434.88 | |
| Balance of 1 January 2020 in the Current Period | —— | —— | —— | —— |
| Withdrawal of the Current Period | 1,448,053.22 | 5,598.90 | 1,453,652.12 | |
| Balance of 31 December 2020 | 4,905,594.37 | 1,213,492.63 | 6,119,087.00 |
Changes of carrying amount with significant amount changed of loss provision in the Current Period
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMB
| Aging | Carrying amount |
| Within 1 year (including 1 year) | 1,427,423,759.58 |
| 1 to 2 years | 464,643.10 |
| 2 to 3 years | 267,885.01 |
| Over 3 years | 3,356,829.01 |
| 3 to 4 years | 36,000.00 |
| Over 5 years | 3,320,829.01 |
| Total | 1,431,513,116.70 |
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 |
| Lulian New Materials | Intercourse funds | 526,743,813.45 | Within 1 year | 36.80% | 1,580,231.44 |
| Continental Textile | Intercourse funds | 510,019,190.40 | Within 1 year | 35.63% | 1,530,057.57 |
| LuFeng Company Limited | Intercourse funds | 152,330,111.80 | Within 1 year | 10.64% | 456,990.34 |
| Lu Thai Tan Chau | Intercourse funds | 128,742,330.61 | Within 1 year | 8.99% | 386,226.99 |
| Lu An Garments | Intercourse funds | 98,030,641.58 | Within 1 year | 6.85% | 294,091.92 |
| Total | -- | 1,415,866,087.84 | -- | 98.91% | 4,247,598.26 |
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 | 2,417,071,281.88 | 2,417,071,281.88 | 2,422,765,316.04 | 15,123,011.20 | 2,407,642,304.84 | |
| Investment to joint ventures and associated enterprises | 138,079,577.25 | 138,079,577.25 | 103,226,300.00 | 103,226,300.00 | ||
| Total | 2,555,150,859.13 | 2,555,150,859.13 | 2,525,991,616.04 | 15,123,011.20 | 2,510,868,604.84 |
(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 depreciation reserve | Other | ||||
| Fengshou Cotton | 147,303,034.16 | 147,303,034.16 | |||||
| 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 | |||||
| Beijing Youxian | 3,717,988.80 | 3,717,988.80 | |||||
| Continental Textile | 834,936,510.00 | 834,936,510.00 | |||||
| Lu An Garments | 64,229,060.00 | 64,229,060.00 | |||||
| Lulian New Materials | 150,000,000.00 | 150,000,000.00 | 300,000,000.00 | ||||
| Lujia Import & Export | 50,000.00 | 9,950,000.00 | 10,000,000.00 | ||||
| Lu Thai Occupational Training School | 100,000.00 | 100,000.00 | |||||
| Zhishu Trading | 500,000.00 | 500,000.00 | |||||
| Total | 2,407,642,304.84 | 160,450,000.00 | 151,021,022.96 | 2,417,071,281.88 |
(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 | Other | ||||
| I. Joint ventures | |||||||||||
| II. Associated enterprises | |||||||||||
| Haohong Investment | 103,226,300.00 | 9,999,985.02 | -4,896,392.82 | 88,329,922.16 | |||||||
| Haoying Investment | 50,000,000.00 | -250,344.91 | 49,749,655.09 | ||||||||
| Subtotal | 103,226,300.00 | 50,000,000.00 | 9,999,985.02 | -5,146,737.73 | 138,079,577.25 | ||||||
| Total | 103,226,300.00 | 50,000,000.00 | 9,999,985.02 | -5,146,737.73 | 138,079,577.25 | ||||||
(3) Other Notes
5. Operating Revenue and Cost of Sales
Unit: RMB
| Item | Reporting Period | Same period of last year | ||
| Operating revenue | Cost of sales | Operating revenue | Cost of sales | |
| Main operations | 3,097,396,791.67 | 2,431,256,287.15 | 4,830,453,763.42 | 3,561,373,245.36 |
| Other operations | 178,270,264.27 | 163,516,161.93 | 275,257,679.48 | 236,747,371.64 |
| Total | 3,275,667,055.94 | 2,594,772,449.08 | 5,105,711,442.90 | 3,798,120,617.00 |
Other notes:
No
6. Investment Income
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Long-term equity investment income accounted by cost method | 247,438,173.08 | 167,976,433.62 |
| Long-term equity investment income accounted by equity method | -5,146,737.73 | 7,671,490.10 |
| Investment income from disposal of long-term equity investment | 43,068,687.97 | |
| Investment income from holding of trading financial assets | 6,793,854.87 | 4,875,806.53 |
| Investment income from disposal of trading financial assets | 144,809,578.16 | 4,933,528.63 |
| Interest income from debt investment during the holding period | 1,993,264.93 | |
| Total | 438,956,821.28 | 185,457,258.88 |
XVI. 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 | -3,265,763.83 | |
| 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 | 61,358,132.11 | |
| 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 liabilities, and derivative financial assets and liabilities, and investment in other debt obligations, other than valid hedging related to the Company’s common businesses | -107,002,594.56 | |
| Other non-operating income and expense other than the above | 2,373,569.56 | |
| Investment income from disposal of trading financial assets, financial liabilities and investment | 153,686,645.99 |
| in debt obligations | ||
| Less: Income tax effects | 24,345,018.31 | |
| Non-controlling interests effects | 5,535,471.63 | |
| Total | 77,269,499.33 | -- |
Explain the reasons if the Company classifies an item as an non-recurring gain/loss according to the definition in the ExplanatoryAnnouncement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Non-recurring Gains andLosses, or classifies any extraordinary gain/loss item mentioned in the said explanatory announcement as a recurrent gain/loss item
□ 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 | 1.26% | 0.11 | 0.11 |
| Net profit attributable to ordinary shareholders of the Company after deduction of non-recurring profit or loss | 0.26% | 0.02 | 0.02 |
3. Differences between Accounting Data under Domestic and Overseas Accounting Standards
(1) Differences of Net Profit and Net Assets Disclosed in Financial Reports Prepared under Internationaland Chinese Accounting Standards
□ Applicable √ Not applicable
(2) Differences of Net profit and Net assets Disclosed in Financial Reports Prepared under Overseas andChinese Accounting Standards
□ Applicable √ Not applicable
Part XIII Documents Available for ReferenceI. The financial statements signed and stamped by the Company’s legal representative, Chief Accountant and Financial Manager;II. The original copy of the Independent Auditors’ Report carrying the seal of the CPA firm, as well as the personal signatures of theengagement certified public accountants.III. The originals of all the Company’s announcements and documents disclosed to the public during the Reporting Period onSecurities Times, Shanghai Securities News, China Securities Journal and Ta Kung Pao.
Chairman of the Board: Liu Zibin
Lu Thai Textile Co., Ltd.
31 March 2021