The 2015 Annual Report of Lu Thai Textile Co., Ltd.
LU THAI TEXTILE CO., LTD.
THE 2015 ANNUAL REPORT
March 2016
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The 2015 Annual Report of Lu Thai Textile Co., Ltd.
Section I Important Statements, Contents & Terms
The Board of Directors, the Supervisory Committee as well as the directors, supervisors and senior
management staff of Lu Thai Textile Co., Ltd. (hereinafter referred to as the “Company”) warrant
that this Report is factual, accurate and complete without any false information, misleading
statements or material omissions. And they shall be jointly and severally liable for that.
Liu Zibin, company principal, Zhang Hongmei, chief of the accounting work, and Zhang Keming,
chief of the accounting organ (chief of accounting), hereby confirm that the Financial Report
enclosed in this Report is factual, accurate and complete.
Except for the following directors, all the other directors attended in person the board meeting for
the review of this Report.
Reason for not attending in
Name Office title Proxy
person
Wang Lei Independent Director For reason of work Zhou Zhiji
Xu Jianjun Independent Director For reason of work Zhao Yao
The Company has described in detail in this Report the possible risks. Please refer to the contents
about the major risks and countermeasures in “Outlook of the Company’s future development” in
“Section IV Discussion & Analysis by the Management” of this Report. Securities Times, Shanghai
Securities News, China Securities Journal, Ta Kung Pao (HK) and www.cninfo.com.cn have been
designated by the Company for its information disclosure in 2016. And all information about the
Company shall be subject to what’s disclosed on the aforesaid media. Investors are kindly reminded
to pay attention to investment risks.
The Company’s preliminary plan for profit distribution upon review and approval at the board
meeting: Based on the total shares of 954,407,896, a cash dividend of RMB5 (tax included) will be
distributed to all the shareholders for every 10 shares that they hold. No bonus shares will be
granted and no capital reserves will be turned into share capital.
This Report is prepared in both Chinese and English. Should there be any understanding
discrepancy between the two versions, the Chinese version shall prevail.
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The 2015 Annual Report of Lu Thai Textile Co., Ltd.
Contents
Section I Important Statements, Contents & Terms ....................................................................... 2
Section II Company Profile & Financial Highlights ....................................................................... 5
Section III Business Profile ............................................................................................................... 9
Section IV Discussion & Analysis by the Management ................................................................ 12
Section V Significant Events ........................................................................................................... 30
Section VI Changes in Shares & Shareholders ............................................................................. 41
Section VII Preference Shares......................................................................................................... 48
Section VIII Directors, Supervisors, Senior Management Staff & Employees .......................... 49
Section IX Corporate Governance ................................................................................................. 63
Section X Financial Report ............................................................................................................. 72
Section XI Documents Available for Reference ........................................................................... 222
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The 2015 Annual Report of Lu Thai Textile Co., Ltd.
Terms
Term Specific meaning
Issuer, Company, the Company Lu Thai Textile Co., Ltd.
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 China Securities Regulation Commission
Yuan, Ten thousand RMB Yuan, RMB Ten thousand
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”
Reporting period 1 Jan. 2015-31 Dec. 2015
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The 2015 Annual Report of Lu Thai Textile Co., Ltd.
Section II Company Profile & Financial Highlights
I. Basic information of the Company
Stock abbr. Lu Thai A, Lu Thai B Stock code 000726, 200726
Stock abbr. after change (if any) No changes
Stock exchange Shenzhen Stock Exchange
Company name in Chinese 鲁泰纺织股份有限公司
Abbr. of Company name in Chinese 鲁泰纺织
Company name in English (if any) LU THAI TEXTILE CO., LTD
Abbr. of Company name in English (if any) LTTC
Legal representative Liu Zibin
No. 11, Mingbo Road, High-tech Industry Development Zone, Zibo, Shandong,
Registered address
P.R.China
Zip code 255086
No. 81, Songling East Road, Zichuan District, Zibo, Shandong, P.R.China; No. 11,
Office address
Mingbo Road, High-tech Industry Development Zone, Zibo, Shandong, P.R.China
Zip code 255100; 255086
Company website www.lttc.com.cn
Email address lttc@lttc.com.cn
II. Contact information
Company Secretary Securities Affairs Representative
Name Qin Guiling Zheng Weiyin
No. 81, Songling East Road, Zichuan District, Zibo, No. 81, Songling East Road, Zichuan District, Zibo,
Contact address
Shandong, P.R.China Shandong, P.R.China
Tel. 0533-5266188 0533-5285166
Fax 0533-5418805；5282188-234 0533-5418805
E-mail address qinguiling@lttc.com.cn wyzheng@lttc.com.cn
III. About information disclosure and where this Report is placed
Newspapers designated by the Company for Securities Times, Shanghai Securities News, China Securities Journal and
information disclosure Ta Kung Pao (HK)
Internet website designated by CSRC for disclosing www.cninfo.com.cn
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The 2015 Annual Report of Lu Thai Textile Co., Ltd.
this Report
Where this Report is placed The Securities Department of the Company
IV. Changes in the registered information
Organizational code 91370300613281175K
Changes in main business since listing (if any) No changes
Changes of controlling shareholder (if any) No changes
V. Other information
The CPAs firm hired by the Company
Name Ruihua Certified Public Accountants LLP
5-11F, West Tower, China Overseas Property Plaza, Block No. 7, Compound No. 8, Xibinhe
Office address
Road, Yongdingmen, Dongcheng District, Beijing, P.R.C.
Signing accountants He Feng, Cui Xiaoli
Sponsor engaged by the Company to conduct consistent supervision during the reporting period
□ Applicable √ Inapplicable
Financial consultant engaged by the Company to conduct consistent supervision during the reporting period
□ Applicable √ Inapplicable
VI. Accounting and financial highlights
Does the Company adjust retrospectively or restate the accounting data of previous years due to changes in the accounting policy or
correction of accounting errors?
□ Yes √ No
Increase/decrease of current
2015 2014 2013
year over last year
Operating revenues (RMB Yuan) 6,173,322,778.61 6,169,688,792.53 0.06% 6,478,245,029.16
Net profits attributable to shareholders of
712,193,243.19 958,725,402.84 -25.71% 999,256,730.65
the Company (RMB Yuan)
Net profits attributable to shareholders of
the Company after extraordinary gains and 718,263,125.89 876,095,180.42 -18.02% 929,001,764.94
losses (RMB Yuan)
Net cash flows from operating activities
1,027,595,404.34 1,112,095,349.02 -7.6% 1,453,925,021.59
(RMB Yuan)
Basic EPS (RMB Yuan/share) 0.750 1.000 -25.00% 1.04
Diluted EPS (RMB Yuan/share) 0.750 1.000 -25.00% 1.04
Weighted average ROE (%) 10.66% 15.39% -4.73% 17.90%
As at 31 Dec. As at 31 Dec. Increase/decrease of current As at 31 Dec.
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The 2015 Annual Report of Lu Thai Textile Co., Ltd.
2015 2014 year-end than last year-end 2013
Total assets (RMB Yuan) 9,091,170,499.22 8,627,671,393.88 5.37% 8,411,948,561.49
Net assets attributable to shareholders of the
6,837,113,075.58 6,588,772,245.55 3.77% 5,988,054,133.73
Company (RMB Yuan)
VII. Differences of the accounting data under the domestic and the overseas accounting
standards
1. Differences of the net profits and the net assets disclosed in the financial reports prepared under the
international and the Chinese accounting standards
√ Applicable □ Inapplicable
Unit: RMB Yuan
Net profits attributable to shareholders of the Net assets attributable to shareholders of the
Company Company
2015 2014 Closing amount Opening amount
According to Chinese accounting
712,193,243.19 958,725,402.84 6,837,113,075.58 6,588,772,245.55
standards
Items and amounts adjusted according to international accounting standards
Impact on domestic equipment tax
credit recognized as deferred
1,015,000.00 1,225,000.00 -1,054,000.00 -2,069,000.00
income under international
accounting standards
According to international
713,208,243.19 959,950,402.84 6,836,059,075.58 6,586,703,245.55
accounting standards
2. Differences of the net profits and the net assets disclosed in the financial reports prepared under the
overseas and the Chinese accounting standards
□ Applicable √ Inapplicable
No such differences for the reporting period
3. Reason for any differences in the accounting data under the domestic and the overseas accounting
standards
√ Applicable □ Inapplicable
Effects of domestic equipment exempted from income tax
The Company exempted from income tax for buying domestic equipment. According to Chinese accounting standards, the income
tax expenses are directly reduced which are recognized as deferred income related to assets by the international accounting standards.
According to the regulations of the international accounting standards, this difference is amortized over the fixed using periods of
year of the fixed assets and adjusting net income and net assets.
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The 2015 Annual Report of Lu Thai Textile Co., Ltd.
VIII. Financial highlights by quarter
Unit: RMB Yuan
Q1 Q2 Q3 Q4
Operating revenues 1,428,557,406.74 1,513,278,490.42 1,569,500,236.21 1,661,986,645.24
Net profits attributable to
152,714,080.35 191,807,436.37 204,342,167.24 163,329,559.23
shareholders of the Company
Net profits attributable to
shareholders of the Company after 131,929,166.88 176,675,290.53 188,913,906.19 220,744,762.29
extraordinary gains and losses
Net cash flows from operating
-97,329,127.52 457,602,609.70 473,236,649.61 194,085,272.55
activities
Any material differences between the financial indicators above or their summations and those which have been disclosed in
quarterly or semi-annual reports?
□ Yes √ No
IX. Extraordinary gains and losses
√ Applicable □ Inapplicable
Unit: RMB Yuan
Item 2015 2014 2013 Note
Gains/losses on disposal of non-current assets (including offset part of
-4,666,157.56 -3,316,012.55 432,380.47
asset impairment provisions)
Government grants recognized in current period, except for those
acquired in ordinary course of business or granted at certain quotas or 43,266,788.43 99,126,878.52 51,990,074.84
amounts according to government’s unified standards
Gains and losses on change in fair value from tradable financial assets
and tradable financial liabilities, as well as investment income from
disposal of tradable financial assets and tradable financial liabilities and -29,145,915.85 -5,319,435.30 33,746,810.30
financial assets available for sales except for effective hedging related
with normal businesses of the Company
Non-operating income and expense other than above 3,432,535.47 21,173,199.30 1,991,154.72
Less: Income tax effects 12,302,309.25 22,913,850.04 12,701,157.60
Minority interests effects (after tax) 6,654,823.94 6,120,557.51 5,204,297.02
Total -6,069,882.70 82,630,222.42 70,254,965.71 --
Explain the reasons if the Company classifies an item as an extraordinary gain/loss according to the definition in the Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Extraordinary Gains and
Losses, or classifies any extraordinary gain/loss item mentioned in the said explanatory announcement as a recurrent gain/loss item
□ Applicable √ Inapplicable
No such cases in the reporting period.
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The 2015 Annual Report of Lu Thai Textile Co., Ltd.
Section III Business Profile
I. Main business during the reporting period
(I) Lu Thai, unremittingly taking “creating wealth, contributing to the society, clothing the country and boosting the development of
the world” as its mission, has been practicing the value of “people foremost policy, rigorous scientific attitude, client oriented
principle and integrity for win-win outcome” for a long time. It is devoted to improving and expanding its industrial chain, making it
a renowned textile and garment business group combing cotton breeding, spinning, bleaching and dyeing, neatening, testing, garment
making and marketing. Lu Thai produces and sells middle and high-grade yarn-dyed fabric and dyeing fabric for shirts and garment.
It claimed its fame for its comprehensive management, R&D ability, advanced technology, international development plan and stable
quality. Moreover, it also attaches great importance to improve the added value of its products, explore the emerging market and
renew its service philosophy. With natural fabric as its flagship, multi-component functional fiber fabric as its spearhead and
wash-and-wear non-ironing technology as its core competency, the company kept a watchful eye on the latest consumption trend.
Great attention was paid to improve its healthy product series so as to satisfy the needs from the diversified and personalized market.
(II) At the current stage, the textile industry of China is encircled by transnational development and is gaining its strength to be
become mature. Lu Thai had already become the largest world renowned manufacturer for high-grade yarn dyed fabric and
premium-brand shirts. It had paved its development pattern featured in going green, low-carbon growth, science and technology and
humanism. Its operation performance was always among the top comparing to its peers. 80% of Lu Thai’s products were exported
over 30 countries and regions in the world, including America, EU and Japan. The export percentage for high-grade yarn dyed
fabric--a self-owned brand attained 70% of its export volume, accounting for 18% of the world’s export market share.
II. Significant changes in the main assets
1. Significant changes in the main assets
Main asset Reason for any significant change
RMB205,094,029.50 as at 31 Dec. 2015, up 65.95% from opening amount, mainly
Construction in progress because of new inputs to Lu Thai (Burma) Garment project and Lu Thai (Vietnam)
Yarn-Dyed Fabric project
2. Main assets overseas
√ Applicable □ Inapplicable
Unit: RMB Yuan
Control
In the Major
Operating measures to
Asset Formation Asset size Location Earnings Company’s impairment
model ensure asset
net assets (%) risk
safety
Lu Thai Incorporated 180,789,341. Hong Kong Marketing Main 2.48% No
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The 2015 Annual Report of Lu Thai Textile Co., Ltd.
(Hong Kong) 72 management -16,409,743.2
Textile Co., personnel 3
Ltd. sent by the
Company
Main
Lu Thai
management
(America)
Incorporated 3,378,019.21 New York Marketing personnel -1,323,176.68 0.05% No
Textile Co.,
sent by the
Ltd.
Company
Main
Lu Thai
management
(Cambodia) 126,607,849.
Incorporated Svay Rieng OEM personnel -3,635,621.46 1.74% No
Textile Co., 74
sent by the
Ltd.
Company
Main
Lu Thai
management
(Burma) 64,795,506.1
Incorporated Rangoon OEM personnel -2,179,265.92 0.89% No
Textile Co., 6
sent by the
Ltd.
Company
Main
Lu Thai
management
(Vietnam) 220,124,832. -11,603,294.8
Incorporated Tay Ninh OEM personnel 3.03% No
Textile Co., 04 4
sent by the
Ltd.
Company
III. Core competitiveness analysis
The comprehensive management ability, research and development ability, technological accumulation and global planning of the
Company’s whole industry chain are the Company's core competitiveness, which did not change during the reporting period.
1. A complete industrial chain and a global network: The Company boasts a complete industrial chain from cotton planting, yarning,
dyeing, weaving and post-processing to cloth manufacturing, and thus enjoys the cost advantage brought by complete steps for
producing high-end dyed textile. The Company has set up production bases in Cambodia, Burma, Vietnam, etc., a design agency in
Italy and a market service agency in America, which helps give full play to its international resources, form a global business
network and solidify its internationally leading position as a yarn-dyed fabric maker.
2. The sound comprehensive management capacity and an efficient quality control system: The Company has passed ISO9000
quality management system, ISO14000 environmental management system, OHSAS18000 occupational health safety management
system, and SA8000 social accountability management system successively from 1995. Ever since 2007, the Company has also
passed WRAP: 1999 global garment production social accountability standard, C-TPAT: 2004 anti-terrorism standard, OE100 and
GOTS organic cotton system certification and CNAS national laboratory recognition, to realize the internationalization and
standardization of the Company’s management. In order to pursue the operational management of performance excellence and better
the Company’s performance and capability, the Company has gradually introduced GB/T19580-2004 -Standards for Performance
Excellence Evaluation, created “Great Quality” system and promoted management innovation, to ensure the Company’s business
quality.
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The 2015 Annual Report of Lu Thai Textile Co., Ltd.
3. It enjoyed strong R&D capability and high-end technological platform for cooperation. The company highly valued self-dependent
innovation and made full use of various technology platforms, inclusive of the National Enterprise Technical Center, National
Talent-indraught Demonstration Base and Shandong Engineering and Technological Research Center. Moreover, Lu Thai also
reinforced its technical cooperation with scientific research institutes, colleges and universities, strategic clines and major suppliers.
It was committed to cutting-edge technical research, and transformed itself from product development to technical researches step by
step. What’s more, the company also upgraded itself from overcoming key technological difficulties to master technical principles
and set up industrial standards. In the past, it only focused on technical innovation, but now, it is exploring new technology on one
hand and boosting innovation on the other for better growth. Consequently, the company pushed forward its development in a green,
low-carbon and cyclic manner and strengthened its vitality and growing momentum. Meanwhile, the share of technology to its
development was also increased, which could push forward industrial upgradation.
4. It boasted considerate and efficient customer’s service. With customer-oriented principle as its guidance, the company
comprehensively enhanced its quality control so as to persistently provide high standard service and set up an industry-leading brand
image, which, in return, could help to win customer’s satisfaction and market recognition. Quality awareness was weaved into every
step of the manufacturing process and the impeccable quality traceability ensured product reputation. Objective analysis and thinking
in the customer’s perspective was the company’s service rule, which also helped to win the customers’ trust.
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The 2015 Annual Report of Lu Thai Textile Co., Ltd.
Section IV Discussion & Analysis by the Management
I. Summary
In 2015, the textile industry faced a complicated external situation characteristic of weak market demand, rising costs of production
factors and a significant cutdown in the cotton import quota. These unfavorable factors further brought up the production costs of
enterprises and weakened the competitiveness in export. Meanwhile, the textile and garment processing industries in Southeast Asia
rose quickly. The Company felt the double pressures from the market and costs. Under the circumstances, the Company, based on its
actual situation and that of the industry, continued to deepen the excellent performance management model, vigorously promoted the
Lu Thai Production System (LTPS), proactively implemented its global planning, accelerated the industrial and informatization
fusion, pushed forward innovation and enhanced corporate culture improvement. As such, the Company managed to maintain a
healthy and steady development trend.
For the reporting period, the Company achieved operating revenues of RMB6.173 billion, operating profits of RMB841 million, net
profits of RMB712 million attributable to shareholders of the Company, and net profits of RMB718 million after deducting
non-recurring gains and losses, up by 0.06%, -19.09%, -25.71% and -18.02% respectively as compared with last year. During the
reporting period, the main business and profit sources of the Company, as well as their composition, remained unchanged.
During the reporting period, substantial promotion had been made in its internationalization layout, management upgradation,
innovation-driven development and qualified service. In 2015, the company won the title of “Pilot Enterprise for Informationalization
Reform of the Textile Industry”, and successively claimed the fame as the “Five-star Enterprise” who had fulfilled its social
responsibility, “National Demonstration Zone for Enterprise Cultural Construction”, “National Benchmarking Enterprise for Quality
and Integrity”, “Demonstration Enterprise for International Layout” and “National Demonstration Enterprise for Technical
Innovation”. It sought its way to go abroad to improve its global layout. With the development of global resource integration getting
momentum with each passing day, the Chinese textile industry goes abroad is an inevitable trend. In order to give full play to the
technology and brand in dyed textile and shirt processing, the company effectively integrated advantageous resources at home and
abroad, efficiently avoided the impacts of potential trade barriers, attained overall international industrial layout and maintained the
company’s leading position in global dyed textile industry. In 2014, the Company successively established Lu Thai (Milan) Office,
Lu Thai (America) Co., Ltd., Lu Thai (Cambodia) Company, Lu Thai (Myanmar) Company and Lu Thai (Vietnam) Company. By
doing so, the company was able to compete fairly in product design, market information gathering, after-sales service and product
manufacturing. During the report period, the 2nd stage of Lu Thai (Cambodia) Company was put into production successfully and
now is under operation, and the Lu Thai (Myanmar) Company was also on its production phase. The 1st stage spinning production
line of the Vietnam yarn-dyed fabric totaled 30,000 spindles, which had been officially put into production at the end of the reporting
period. The weaving project and production line arrangement are being handled orderly and it is expected to put into production in
the second half year of 2016. What’s more, the production line for shirts in Vietnam is under construction according to the plan.
Lu Thai implemented supreme performance management to improve its production mode (LTPS). The company continuously took
the market as its guidance and qualified service as its center to optimize the R&D process. With integrated resources, the company
managed to provide one-to-one service for strategic clients to win their credibility. Besides, it pushed forward the supreme
performance management broadly for the sake of improving its production mode and polishing the management in a scientific and
systemic manner. By doing so, the company’s system was enhanced, working process was standardized and internal control was
improved. During the reporting period, it passed the management system certification for Integrating IT application with
Industrialization. Its subsidiaries passed the ISO 9000 QMSC and BIC Fine Cotton Planting Certificate. Moreover, Lufeng Weaving
Dye Company and Lu Thai (Cambodia) Company passed the SA8000 Social Responsibility Certificate successively, which pushed
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The 2015 Annual Report of Lu Thai Textile Co., Ltd.
its management to a higher level. Great attention was paid to employee relation management, quality training and “craftsmanship”
spirit cultivation. 10 outstanding staff was selected to group a talent pool in the 1st “Lu Thai Golden Craftman” campaign. The
company also created platforms for the development of its working staff, through which, their mental health and stability could be
maintained. By integrating resources from the supply chain and unremittingly polishing its quality, Lu Thai had made great
achievements in shortening production period, reducing product inventory and improving first pass yield (FPY) through one year’s
hard work.
Lu Thai gave full play to R&D and implemented the innovation-driven policy. Investment in R&D was unceasingly increased, which
currently, occupies 4.87% of its operation revenue. In 2015, its key manufacturing process, major equipment and special working
stages had been automated and intelligentialized. “Automated digital polyester yarn dyeing technology and equipment”, which had
won the first prize of the National Scientific and Technological Awards, is promoted throughout the company. Meanwhile, garment
3D measurement, MTM automatic sample making technology and CAM automate tailor system were brought in by the company to
boost upgradation for each and every producing step. As for new product development, the company maintained one-to-one R&D
matchmaking with TMW, PVH in America and Uniqlo and Ltochu in Japan. Thus, a series of Lu Thai-style engraved products,
featuring high technology content cropped out by making full use of the upstream and downstream resources, and integrated
innovation of the whole product chain was achieved. In 2015, its R&D for technology of warp yarn foam sizing and industrial
application won the “First Prize of Scientific and Technological Development” awarded by China Textile Industry Association.
During the reporting period, the company won one first prize and one second prize of scientific and technological development
awarded by the China Textile Industry Association, one second prize of this sort in the provincial level. Besides, 78 patents were
declared and accepted. The company also participated in enacting 1 national standard. Up till now, it altogether won 42 prizes in the
national and provincial level, including 1 first prize and 2 second prizes of National Scientific and Technological Awards and 8 first
prizes at the provincial stage. 333 patents were applied and accepted, of which, 208 were authorized ones. What’s more, the company
also involved in or taking over 26 standards.
It upgraded itself from “made in Lu Thai” to “created in Lu Thai” to improve its brand influence. The company took full advantage
of its Milan Office in Italy and the subsidiary in America to internationalize its creativity and design and advance its upgradation
from “made in Lu Thai” to “created in Lu Thai”. Now, the sales for self-designed fabric takes up to 9.95% of its total production.
Owning to the product promotion conferences convened in Milan, New York andTokyo, Lu Thai established the long-term strategic
cooperation with world-renowned clients, including Burberry (U.K.), Oxford (USA), Armani and Gucci(Italy), Uniqlo (Japan) and
TAL (Hong Kong), which escalated its brand influence and popularity with time passing by. In 2015, its work “Flower Shadowing”
won the only gold prize in the “International Fabric Design Competition (China) and the 33rd (2016 Spring & Summer) Chinese
Fashionable Fabric Contest”.
Beijing Lutai Youxian E-Commerce Co., Ltd, a subsidiary of Lu Thai, was established in 2014. It is equipped with the O2O mode
featuring “place order online and conduct measurement by visiting the customers”. Customers can make an appointment and order
conveniently through Utailor, Vshop, Jingdong Flagship Store or dial 400 telephone. The company provides customized service for
clients ordering high-grade shirts. Since “UTAILORE”, one of its high-end men’s clothing was pushed to the market, repeat purchase
rate from its customers, old and new, is rising consistently. Now, its business covers the first-tire cities, inclusive of Beijing, Shanghai,
Shenzhen and Guangzhou, which paves the way for the promotion of its garment brands.
At the current stage, Lu Thai, with natural fabric as its flagship, multi-component functional fiber fabric as its spearhead,
wash-and-wear non-ironing technology as its core competency, the latest consumption trend as its guidance and internationalized
industrial manufacturing as its basis, is sparing every effort to attain a global integrated development, so as to ensure its leading
position in the yarn-dyed shirt fabric sector.
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The 2015 Annual Report of Lu Thai Textile Co., Ltd.
II. Main business analysis
1. Summary
For the reporting period, the Company achieved operating revenues of RMB6.173 billion, up 0.06% from last year, with operating
costs being RMB4.341 billion, up 2.51% from last year; selling expenses being RMB192 million, up 7.66% from last year; and R&D
expenses being RMB295 million, up 2.05% from last year. And the net cash flows from operating activities stood at RMB10.28
billion, down 7.60% from last year.
2. Revenues and costs
(1) Breakdown of the operating revenues
Unit: RMB Yuan
2015 2014
In operating In operating +/-
Amount Amount
revenues revenues
Operating revenues 6,173,322,778.61 100% 6,169,688,792.53 100% 0.06%
By segment
Textile and apparel 5,666,835,971.98 91.80% 5,491,403,490.30 89.01% 3.19%
Cotton 36,667,302.61 0.59% 169,177,438.50 2.74% -78.33%
Electricity and steam 130,561,983.84 2.11% 193,169,049.60 3.13% -32.41%
Other 339,257,520.18 5.50% 315,938,814.13 5.12% 7.38%
By product
Fabric products 4,497,661,649.68 72.86% 4,398,270,311.79 71.29% 2.26%
Shirts 1,169,174,322.30 18.94% 1,093,133,178.51 17.72% 6.96%
Cotton 36,667,302.61 0.59% 169,177,438.50 2.74% -78.33%
Electricity and steam 130,561,983.84 2.11% 193,169,049.60 3.13% -32.41%
Other 339,257,520.18 5.50% 315,938,814.13 5.12% 7.38%
By area
Hong Kong 319,142,637.77 5.17% 415,169,226.47 6.73% -23.13%
Japan and South
404,101,936.72 6.55% 363,024,424.30 5.88% 11.32%
Korea
Southeast Asia 1,877,255,492.74 30.41% 1,486,896,361.41 24.10% 26.25%
Europe and America 1,002,515,150.25 16.24% 1,020,006,777.63 16.53% -1.71%
Other 486,694,905.10 7.88% 803,797,996.36 13.03% -39.45%
China Mainland 2,083,612,656.03 33.75% 2,080,794,006.36 33.73% 0.14%
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The 2015 Annual Report of Lu Thai Textile Co., Ltd.
(2) Segments, products or areas contributing over 10% of the operating revenues or profits
√ Applicable □ Inapplicable
Unit: RMB Yuan
Operating Gross profit
Operating Gross profit Operating cost:
Operating cost revenue: YoY margin: YoY
revenue margin YoY +/-%
+/-% +/-%
By segment
Textile and
5,666,835,971.98 3,991,647,481.25 29.56% 3.19% 6.54% -2.21%
apparel
By product
Fabric products 4,497,661,649.68 3,169,035,497.16 29.54% 2.26% 5.24% -2.00%
Shirts 1,169,174,322.30 822,611,984.09 29.64% 6.96% 11.85% -3.08%
By area
Southeast Asia 1,877,255,492.74 1,322,693,477.95 29.54% 26.25% 26.88% -0.35%
Europe and
1,002,515,150.25 705,727,873.56 29.60% -1.71% 0.98% -1.88%
America
China Mainland 2,083,612,656.03 1,460,389,306.07 29.91% 0.14% 4.99% -3.24%
Main business data of the previous year restated according to the changed statistical caliber for the reporting period
□ Applicable √ Inapplicable
(3) Product sales revenue higher than the service revenue
√ Yes □ No
Business segment Item Unit 2015 2014 +/-
Sales volume (0,000 meters) 22,207.14 22,459 -1.12%
Textile and fabric Output (0,000 meters) 25,468.85 25,202 1.06%
Stock (0,000 meters) 3,104.67 2,513 23.54%
Sales volume (0,000 pieces) 1,837.08 1,758.74 4.45%
Textile and apparel Output (0,000 pieces) 1,859.32 1,751.19 6.17%
Stock (0,000 pieces) 126.46 108.8 16.23%
Sales volume (ton) 2,903.68 9,119.35 -68.16%
Cotton Output (ton) 13,634 23,469.35 -41.91%
Stock (ton) 4,683 4,926.94 -4.95%
Sales volume (000 KWH) 108,044.04 244,997.45 -55.90%
Electricity Output (000 KWH) 383,485.09 362,383.79 5.82%
Stock (000 KWH)
15
The 2015 Annual Report of Lu Thai Textile Co., Ltd.
Sales volume (ton) 307,894.71 338,604.87 -9.07%
Steam Output (ton) 1,241,941.61 1,222,788.48 1.57%
Stock (ton)
Reason for any over 30% YoY movements in the data above
√ Applicable □ Inapplicable
1. The sales volume of cotton stood at 2,903.68 tons in 2015, down 68.16% over last year, which was mainly because the Lu Thai
subsidiary in Xinjiang sold less reserved cotton. The cotton output stood at 13,634 tons in 2015, down 41.91% over last year, which
was mainly because the output of the unginned cotton decreased due to the weather.
2. 108,044,040 KWH of electricity was sold in 2015, down 55.90% from last year, mainly because the electricity sold by Xinsheng
Thermal Power to the Company increased by 158,054,720 KWH from last year.
(4) Execution progress of major signed sales contracts in the reporting period
□ Applicable √ Inapplicable
(5) Breakdown of the operating costs
By segment and product
Unit: RMB Yuan
2015 2014
Segment Item +/-
Amount In operating costs Amount In operating costs
Textile and
Operating cost 3,991,647,481.25 91.95% 3,746,686,521.54 88.48% 6.54%
apparel
Cotton Operating cost 30,736,539.86 0.71% 160,183,463.13 3.78% -80.81%
Electricity and
Operating cost 92,038,888.21 2.12% 131,997,341.43 3.12% -30.27%
steam
Other Operating cost 226,611,967.72 5.22% 195,717,092.68 4.62% 15.79%
Unit: RMB Yuan
2015 2014
Product Item +/-
Amount In operating costs Amount In operating costs
Fabric products Operating cost 3,169,035,497.16 73.00% 3,011,215,500.88 71.11% 5.24%
Shirts Operating cost 822,611,984.09 18.95% 735,471,020.66 17.37% 11.85%
Cotton Operating cost 30,736,539.86 0.71% 160,183,463.13 3.78% -80.81%
Electricity and
Operating cost 92,038,888.21 2.12% 131,997,341.43 3.12% -30.27%
steam
Other Operating cost 226,611,967.72 5.22% 195,717,092.68 4.62% 15.79%
Note:
Product Period Raw material Labor cost Depreciation Energy Manufacture Total
16
The 2015 Annual Report of Lu Thai Textile Co., Ltd.
expenses
2015 55.56% 17.50% 4.91% 12.92% 9.11% 100.00%
Fabric
2014 54.36% 17.44% 5.10% 12.70% 10.40% 100.00%
2015 55.71% 39.10% 1.61% 0.74% 2.84% 100.00%
Shirts
2014 58.76% 37.33% 1.07% 0.68% 2.16% 100.00%
(6) Changes in the consolidation scope for the reporting period
√ Yes □ No
Lu Thai (Vietnam), a new wholly-funded subsidiary, was incorporated in the current year, which was thus included in the
consolidation scope.
(7) Major changes in the business, products or services in the reporting period
□ Applicable √ Inapplicable
(8) Main customers and suppliers
Main customers
Total sales to top 5 customers (RMB Yuan) 1,344,639,213.27
Ratio of total sales to top 5 customers to annual total sales
21.78%
(%)
Information about the top 5 customers
Serial No. Name of customer Sales (RMB Yuan) Proportion in annual total sales (%)
1 TAL 456,970,643.83 7.40%
2 OLYMP 329,683,575.10 5.34%
CHENFENG (JIANGSU) GARMENT CO.,
3 207,401,266.16 3.36%
LTD.
4 THE MEN’S WEARHOUSE 189,583,188.61 3.07%
5 OXFORD 161,000,539.57 2.61%
Total -- 1,344,639,213.27 21.78%
Other information about the main customers
□ Applicable √ Inapplicable
Main suppliers
Total purchases from top 5 suppliers (RMB Yuan) 699,746,240.69
Ratio of total purchases from top 5 suppliers to annual
17.78%
total purchases (%)
Information about the top 5 suppliers
17
The 2015 Annual Report of Lu Thai Textile Co., Ltd.
Serial No. Name of supplier Purchase amount (RMB Yuan) Proportion in annual total purchases (%)
ZIBO POWER SUPPLY COMPANY OF
1 STATE GRID SHANDONG ELECTRIC 251,015,073.29 6.37%
POWER COMPANY
XINJIANG PRODUCTION AND
2 CONSTRUCTION CORPS COTTON 141,854,898.37 3.61%
AND LINEN COMPANY
AKESU YONGXING COTTON
3 115,594,056.29 2.94%
INDUSTRY CO., LTD.
4 ALLENBERG COTTON CO. 96,911,258.97 2.46%
5 SAN YANG TEXTILE CO., LTD. 94,370,953.77 2.40%
Total -- 699,746,240.69 17.78%
Other information about the main suppliers
□ Applicable √ Inapplicable
3. Expense
Unit: RMB Yuan
2015 2014 +/- Reason for any significant change
Selling expenses 191,933,295.19 178,283,494.87 7.66%
Administrative expenses 670,704,384.29 634,545,131.08 5.70%
Financial expenses 16,481,023.89 15,462,783.19 6.59%
4. R&D input
√ Applicable □ Inapplicable
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 for
transforming the business mode, adjusting the structure and extending the industrial chain. These efforts will promote the Company’s
development towards an energy-saving and environment-friendly enterprise and truly achieve the sustainable development.
Particulars about the R&D input
2015 2014 +/-%
Number of R&D personnel 1,693 1,876 -9.75%
R&D personnel in total
10.17% 11.15% -0.98%
employees
R&D input (RMB Yuan) 294,928,756.29 289,005,271.10 2.05%
R&D input in operating
4.78% 4.68% 0.10%
revenues
Capitalized R&D input (RMB
0.00 0.00 0.00%
Yuan)
Capitalized R&D input in total
0.00% 0.00% 0.00%
R&D input
18
The 2015 Annual Report of Lu Thai Textile Co., Ltd.
Reasons for any marked YoY change of the proportion of the R&D input in the operating revenues
□ Applicable √ Inapplicable
Reasons for any sharp variation of the capitalization rate on the R&D input and rationale
□ Applicable √ Inapplicable
5. Cash flows
Unit: RMB Yuan
Item 2015 2014 +/-
Subtotal of cash inflows from operating activities 6,298,613,072.87 6,463,160,275.90 -2.55%
Subtotal of cash outflows from operating activities 5,271,017,668.53 5,351,064,926.88 -1.50%
Net cash flows from operating activities 1,027,595,404.34 1,112,095,349.02 -7.60%
Subtotal of cash inflows from investing activities 53,217,989.19 45,718,485.58 16.4%
Subtotal of cash outflows from investing activities 572,981,769.64 756,763,199.57 -24.29%
Net cash flows from investing activities -519,763,780.45 -711,044,713.99 26.90%
Subtotal of cash inflows from financing activities 1,535,434,022.24 950,315,336.83 61.57%
Subtotal of cash outflows from financing activities 1,948,641,555.44 1,576,552,414.64 23.60%
Net cash flows from financing activities -413,207,533.20 -626,237,077.81 34.02%
Net increase in cash and cash equivalents 116,301,675.35 -220,515,707.59 152.74%
Main influence factors for any significant YoY changes in the items above
√ Applicable □ Inapplicable
For the reporting period, net cash flows from financing activities stood at RMB-413,207,533.20, up 34.02% over last year, which was
mainly because the cash received as borrowings increased. Net increase in cash and cash equivalents stood at RMB116,301,675.35,
up 152.74% over last year, which was mainly because the net cash flows from financing activities increased as the Company
repurchased its B-shares and invested in storage funds .
Reasons for any big difference between the net operating cash flows and the net profits in the reporting period
□ Applicable √ Inapplicable
III. Non-core business analysis
√ Applicable □ Inapplicable
Unit: RMB Yuan
Amount In total profits (%) Source/reason Continuity
Gains on delivery of financial assets such as
Investment gains 31,540,015.51 3.57% No
forward exchange settlement
Gains/losses on fair value Losses on fair value changes of financial assets
-60,685,931.36 -6.87% No
changes and liabilities
Asset impairment 27,297,445.74 3.09% Inventory falling price provision, bad-debt No
19
The 2015 Annual Report of Lu Thai Textile Co., Ltd.
provision, etc.
Non-business revenue 52,201,733.84 5.91% Governmental subsidies No
Non-business expense 10,168,567.50 1.15% Losses on disposal of non-current assets No
IV. Asset and liability analysis
1. Significant changes in the asset composition
Unit: RMB Yuan
As at 31 Dec. 2015 As at 31 Dec. 2014 Proportion Reason for
In total In total assets change significant
Amount Amount
assets (%) (%) （%） change
Monetary funds 795,501,196.07 8.75% 666,293,798.30 7.72% 1.03%
Accounts receivable 262,848,042.62 2.89% 211,970,554.10 2.46% 0.43%
Inventories 1,743,963,973.24 19.18% 1,752,570,382.21 20.31% -1.13%
Investing real estate 0.00% 0.00% 0.00%
Long-term equity
0.00% 0.00% 0.00%
investment
Fixed assets 4,907,575,469.84 53.98% 4,930,848,056.04 57.15% -3.17%
Construction in progress 205,094,029.50 2.26% 123,585,226.80 1.43% 0.83%
Short-term borrowings 802,766,318.90 8.83% 517,452,946.24 6.00% 2.83%
Long-term borrowings 0.00% 9,904,645.59 0.11% -0.11%
2. Assets and liabilities measured at fair value
√ Applicable □ Inapplicable
Unit: RMB Yuan
Gain/loss on Cumulative fair
Impairment Purchased
Opening fair value value changes Sold amount in Closing
Item provisions in amount in
amount changes in recorded into current period amount
current period current period
current period equity
Financial assets
1. Financial
assets measured
at fair value of
which changes 71,696,678.7
are recorded 0.00 -17,296,256.36 100,348,429.28 7,196,971.33
0
into current
gains/losses
(excluding
derivative
20
The 2015 Annual Report of Lu Thai Textile Co., Ltd.
financial assets)
71,696,678.7
Total of above 0.00 -17,296,256.36 100,348,429.28 7,196,971.33
0
Financial 4,319,714,200. 3,013,340,900. 46,695,875.0
3,306,200.00 43,389,675.00
liabilities 00 00 0
Significant changes in the measurement attributes of the main assets in the reporting period
□ Yes √ No
V. Investment analysis
1. Total investments
□ Applicable √ Inapplicable
2. Significant equity investments made in the reporting period
□ Applicable √ Inapplicable
3. Significant non-equity investments ongoing in the reporting period
□ Applicable √ Inapplicable
4. Financial investments
(1) Securities investments
√ Applicable □ Inapplicable
Unit: RMB Yuan
Gain/los Cumulat
Variety Account s on fair ive fair
Code of Name of Initial Purchas Gain/los
of ing Opening value value Sold in Closing Account Source
ed in s in
securitie securitie investm measure book changes changes current book
securitie current current
ment value in recorde period value ing title of funds
s s ent cost model period period
s current d into
period equity
Guotai Transact
Domesti Fair
Junan 56,047, -17,857, 56,047, 1,939,1 -8,228,1 27,576, ional Own
c/overse 01788 value 0.00 0.00
Internati 956.99 878.38 956.99 45.60 10.00 964.80 financia funds
as stock method
onal l asset
Transact
Domesti Fair
14,918, -1,216,6 14,918, 13,692, ional Own
c/overse 02883 COSL value 0.00
675.44 20.88 675.44 542.85 financia funds
as stock method
l asset
Domesti Lianhua 10,354, Fair 513,605 10,354, 10,872, Transact Own
00980 0.00
c/overse Superma 818.47 value .66 818.47 439.58 ional funds
21
The 2015 Annual Report of Lu Thai Textile Co., Ltd.
as stock rket method financia
l asset
Transact
Domesti Fair
Jinjiang 8,286,1 967,284 8,286,1 9,260,9 ional Own
c/overse 02006 value 0.00
Hotel 27.16 .02 27.16 73.54 financia funds
as stock method
l asset
Transact
Domesti Guangsh Fair
3,559,2 -796,71 3,559,2 2,756,2 ional Own
c/overse 00525 en value 0.00
14.86 3.99 14.86 72.05 financia funds
as stock Railway method
l asset
Tong
Transact
Domesti Ren Fair
3,019,6 176,423 3,019,6 3,197,4 ional Own
c/overse 01666 Tong value 0.00
24.02 .08 24.02 26.40 financia funds
as stock Technol method
l asset
ogies
Transact
Domesti Fair
Wongtee 1,740,3 436,485 1,740,3 2,180,2 ional Own
c/overse 200056 value 0.00
B 18.30 .00 18.30 15.80 financia funds
as stock method
l asset
Transact
Domesti Fair
Chiwan 671,995 159,213 671,995 832,453 ional Own
c/overse 200053 value 0.00
Base B .80 .10 .80 .65 financia funds
as stock method
l asset
Transact
Domesti Fair
Shenzhe 546,310 -76,488. 546,310 469,224 ional Own
c/overse 200058 value 0.00
n SEG B .80 80 .80 .00 financia funds
as stock method
l asset
Transact
Domesti Chow Fair
429,038 -1,363.5 429,038 427,664 ional Own
c/overse 00116 Sang value 0.00
.32 0 .32 .16 financia funds
as stock Sang method
l asset
Other securities
774,349 774,349 399,798 774,349 5,257,8 1,860,0 430,501
investments held at -- 0.00 -- --
.12 .12 .33 .12 25.73 81.11 .87
period-end
100,348 100,348 -17,296, 100,348 7,196,9 -6,368,0 71,696,
Total -- 0.00 -- --
,429.28 ,429.28 256.36 ,429.28 71.33 28.89 678.70
Disclosure date of board
announcement on approval
of securities investment
Disclosure date of general
meeting announcement on
22
The 2015 Annual Report of Lu Thai Textile Co., Ltd.
approval of securities
investment (if any)
(2) Investment in financial derivatives
√ Applicable □ Inapplicable
Unit: RMB Ten thousand
Proporti
on of
closing
investm Actua
Related- Type of Amount Impairm ent l
Initial Opening Amount Closing
party derivativ purchas ent amount gain/l
Operato investm Beginni Ending investm sold in investm
Relation transacti e ed in provisio in the oss in
r ent ng date date ent reportin ent
on or investme reportin n (if Compan report
amount amount g period amount
not nt g period any) y’s ing
closing period
net
assets
(%)
Forward
Commer
Non-rel exchange 249,144. 2014-11 2016-06 21,213.8 227,930. 169,758. 79,386.2 2,827.
cial No 10.91%
ated settleme 24 -14 -28 8 36 03 1 33
bank
nt
Commer Foreign
Non-rel 2015-02 2015-11
cial No exchange 7,123.75 0 7,123.75 7,123.75 0 11.33
ated -11 -13
bank trading
Commer
Non-rel Option 228,752. 2014-10 2016-07 196,917. 124,452. 952.1
cial No 31,835 104,300 14.33%
ated portfolio 31 -21 -10 31 31 4
bank
485,020. 53,048.8 431,971. 301,334. 183,686. 3,790.
Total -- -- 25.24%
3 8 42 09 21 8
Capital source for derivative
Own funds
investment
Lawsuit (if applicable) No lawsuits
Disclosure date of board
announcement on approval of 2015-04-25
derivative investment (if any)
Disclosure date of general meeting
announcement on approval of
derivative investment (if any)
23
The 2015 Annual Report of Lu Thai Textile Co., Ltd.
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 risk of laws and regulations, credit risk,
operation risk and market risk.
1. Risk concerning laws and regulations:
The Company conducted derivatives products transaction in strict accordance with relevant
laws and rules as well as regulatory policies from government securities regulatory
authorities, 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 investment business, and
strictly abided by relevant laws, regulations and the Company’s internal management rules.
2. Credit risk and liquidity risk:
When the contract matures, the Company couldn’t deliver as scheduled due to insufficient
Risk analysis and risk control
liquidity, and the counterparty or the Company couldn’t fulfill the contract due to other
measures for derivative products held
aspects except the liquidity, which would cause credit risk and further economic losses for
in reporting period (including but not
the Company.
limited to market risk, liquidity risk,
credit risk, operation risk, legal risk, Risk control measures: the Company chose the powerful financial institutions with good
etc.) reputation as the counterparty, and signed standard derivative products transaction contract,
as well as strictly controlled the credit risk of counterparty. The Company conducted
derivative investment transactions 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 Investment of Lu Thai Textile Co., Ltd. and the Proposal
on the Plan of Lu Thai Textile Co., Ltd. for Derivative Transactions in 2015 approved at the
20th Session of the 7th Board of Directors on 23 Apr. 2015, and performed relevant
information disclosure responsibilities. The Company decided the up limit for the amount of
derivative products transaction according to the production and operation scale and the
progress of foreign exchange income for the Company, and delivered by phases. It was also
possible to use extension of term and other ways to ensure the fulfillment of contract as
schedules upon the mature of contract, and wouldn’t cause any loss of credit risk for the
Company due to insufficient liquidity or other reasons.
3. Operation risk:
The derivative financial transactions had high specialty and complexity, so imperfect
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 departments, operation procedures and approval
procedures system to conduct derivative products transaction, established special risk
24
The 2015 Annual Report of Lu Thai Textile Co., Ltd.
control positions, implemented strict authorization and post checks and balances system,
meanwhile, it improved the overall quality of relevant personnel through strengthening the
business training and professional ethics education for them. Besides, it established the
System of Reporting the Abnormal Situation Timely, formed an efficient risk management
procedures, so as to ensure to lower the operation risks to the maximum.
4. Market risk:
Since the RMB exchange rate reform on 8 Nov. 2015, the reform towards a market-based
RMB exchange rate regime has stepped into a new stage. In the short run, there is some
depreciation pressure on the RMB, but a sharp depreciation is considered unlikely. In the
long run, the positive economic fundamentals of China, the large surplus of the current
accounts and the faster globalization of the RMB will enable the RMB to remain a strong
currency. In the near future, the RMB exchange rate is expected to be more flexible with a
distinct feature of bidirectional volatility and stable within a rational and balanced range.
The forward settlement of exchange and the option business is important derivative product
transactions of the Company, which was significantly affected by the exchange rate
fluctuation. If the RMB is devalued by a large margin on the basis of the current situation
before the contract is due, so then, the larger losses shall incur in the contract on forward
settlement of exchange or option signed by the Company.
Risk control measures: Although a more flexible RMB exchange rate and the increased
fluctuation range added to the operation difficulty, it provided a certain opportunity.
Therefore, the relevant personnel of the Company will actively analyze market changes,
carefully operate and hold positive opportunity, so as to try the best to reduce the market
risks under the condition of increased market difficulty.
1. Up to 31 Dec. 2015, the Company held 55 undue financial derivative product contracts,
totaling USD326 million, including 26 forward settlement contracts worth USD125.50
million and 29 foreign exchange option contracts worth USD200.50 million (the latest
expiration before Jul. 2016). The financial derivative products above accounted for 25.24%
Changes in market prices or fair value
of the closing net assets.
of invested derivatives in reporting
2. From Jan. 2015 to Dec. 2015, the due financial derivative products of the Company
period (fair value analysis should
totally equaled to USD483.2572 million, and the gain generated was RMB37.9080 million.
include specific analysis methods as
To be specific, the due forward settlement was USD269.6270 million, generating gain of
well as relevant assumptions and
RMB28.2733 million; the due forward foreign exchange trading amount equaled to
parameters)
USD11.6302 million, which generated gain of RMB0.1133 million; and the due foreign
exchange options equaled to USD202 million, of which USD172 million was delivered on
time upon satisfaction of the delivery conditions, generating gain of RMB9.5214 million,
and USD30 million was undelivered due to dissatisfaction of the delivery conditions.
Significant changes in the Company’s
accounting policy and specific
accounting principles for derivatives No significant changes
in reporting period when compared to
last period
Specific opinion from independent The Company’s independent directors Zhou Zhiji, Zhang Chengzhu, Wang Lei, Xu Jianjun
directors on the Company’s and Zhao Yao, concerning conducting derivatives business, have issued the following
25
The 2015 Annual Report of Lu Thai Textile Co., Ltd.
derivatives investment and risk professional advice: We are of the opinion that it will strengthen the Company’s
control 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. Utilization of raised funds
□ Applicable √ Inapplicable
No such cases in the reporting period
VI. Sale of major assets and equity interests
1. Sale of major assets
□ Applicable √ Inapplicable
No such cases in the reporting period
2. Sale of major equity interests
□ Applicable √ Inapplicable
VII. Main controlled and joint stock companies
√ Applicable □ Inapplicable
Main subsidiaries and joint stock companies with an over 10% influence on the Company’s net profits
Unit: RMB Yuan
Relationship Main
Company Registered Operating Operating
with the business Total assets Net assets Net profits
name capital revenues profits
Company
Zibo
Xinsheng
Electricity, 162,435,600. 420,309,415. 345,285,885. 416,575,363. 142,174,769. 111,757,613.
Thermal Subsidiary
steam 00 52 64 30 09 29
Power Co.,
Ltd.
Subsidiaries obtained or disposed in the reporting period
□ Applicable √ Inapplicable
Particulars about the main controlled and joint stock companies
26
The 2015 Annual Report of Lu Thai Textile Co., Ltd.
VIII. Structured bodies controlled by the Company
□ Applicable √ Inapplicable
IX. Outlook of the Company’s future development
1. Competition and development trends in the sector
At present, the global production capacity of high-ended dyed fabric is about 0.8 billion meters, which was the largest production
base of yarn-dyed fabric. The pure cotton yarn-dyed fabric has characters of dyed fastness, clear striped weave, abundant color,
comfort and strong gas permeability, which was always the main shell fabric of medium and high end shirts. In the recent years,
accompanied with the increase of the domestic environmental protection stress, the increasingly improvement of the production
factors and the guiding of the national transformation upgrade strategy, part of the low end and small scale yarn-dyed capacity which
quit the market had been inexorable trend.
The yarn-dyed fabric falls into three categories, i.e. the top, the high-end, and the middle /low end, which have formed a triangular
structure. To be specific, the top-grade yarn dyed fabric is mainly produced by few manufacturers in Italy, France, Germany, etc., and
it mainly targets at the fashion and top-brand shirt market. The high-end yarn dyed fabric was characterized of high-density and
high-counts, and delicateness after-finishing. Though inferior to the top-grade yarn dyed fabric in terms of the pattern design and
fashion, it requires an advanced manufacturing technology and a high product quality, which does not differ much from the former.
In the long run, along with the recovery of the global economy, as well as improvement of urbanization, residents’ incomes and
consumption in China, the market requirements of the future medium and high end yarn dyed fabric would constantly increased and
at the same time would appear the tendency that the market concentrate towards to the medium and large enterprises.
2. Development strategies of the Company
China’s textile industry enjoys outstanding advantages in the world and mainly in the aspects such as the capital, technology and
labor efficiency, and although the cost of the factor cost is increasing day by day, the prominent comprehensive advantage of China’s
textile industry remains unchanged. The Company is a large textile enterprise that boasts a complete industrial chain from cotton
planting, yarning, dyeing, weaving and post-processing to cloth manufacturing. It is the largest production base for dyed textile for
shirts in the world. Now, it has developed three series textiles for shirts, including pure cotton, cotton and natural fiber, and cotton
and functional fiber mixture. At present, the Company has speeded up the integration of internationally advantageous resources while
promoting the upgrading of Luthai manufacturing to Luthai creation as well as improving its product quality and increasing its
production efficiency. This helps realize a reasonable layout for the Company’s international capacity, further improves its
internationalization, and maintains its outstanding edges in global dyed materials for shirts. In terms of brand, the Company will
crave out a new marketing mode through the Internet and mobile terminals, and continuously enhance high-end shirt custom service,
to balance the development of domestic and international markets. Also, the Company will increase its investment in technology
R&D, design and energy saving & emission reduction, to offer more green and low-carbon products to the market.
3. Operating plan (The contents set forth herein do not form any commitment of the Company.)
(1) As for the Company government: The Company will strengthen the system construction of the enterprise internal control,
constantly perfect the organization structure and the legal person government structure as well as the prevention mechanism of the
risks, and guarantee the Company to realize the healthy, stable and sustainable development in the system level.
(2) As for the market expansion: The Company will adhere to the philosophy of attaching equal importance to both the domestic and
overseas markets, vigorously conduct activities for the “Year for Market Service Improvement”, proactively expand emerging
markets on the basis of stabilizing the existing markets, further enlarge the domestic market share, and promote a balanced
development of the domestic and overseas markets.
(3) As for the enterprise management: The Company will follow the guideline of improving its product quality and increasing its
production efficiency, refine management responsibility, deepen promoting excellent performance management mode in all-round,
27
The 2015 Annual Report of Lu Thai Textile Co., Ltd.
carry forward LTPS, further deepen and refine comprehensive budget management, and keep pushing forward management
upgrading.
(4) As for the brand construction: The Company will make great efforts to promote the innovation marketing mode, gain more
customers with quality and service, further optimize resource allocation as well as perfect the integration of the online and offline
marketing mode. Depend on the internet and the mobile terminal means, provide the advanced customization service and satisfy the
individual needs of the market.
(5) Concerning global planning, the Company will let Lu Thai Milan and Lu Thai America play their roles in market expansion,
design and R&D, customer service, talent cultivation, etc. so as to increase the proportion of independently designed products in the
total sales. It will push forward the construction of its production bases in Southeast Asia step by step, integrate its resources at home
and abroad and avoid potential trade barriers to enlarge its international production scale and maintain a leading position in the global
yarn-dyed industry.
4. Fund demand, source and using plan
During the reporting period, the Lu Thai (Cambodia) Phase II project and the Lu Thai (Burma) project were successfully put into
production. The Company incorporated Lu Thai (Vietnam) Textile Co., Ltd. to carry out the 60,000-spindle spinning and
30-million-meter yarn-dyed fabric/year production lines projects. Currently, the first phase of the 60,000-spindle spinning project has
been put into operation, and the 30-million-meter yarn-dyed fabric project is going on as planned. The capital resources of the whole
projects were the self-owned and self-raised funds of the Company. At present, the Company is also preparing to incorporate a
garment factory in Vietnam (Lu An Garments Co., Ltd.) with a designed annual capacity of 6 million pieces of shirts. The funds for
the aforesaid projects all come from the self-owned and self-raised funds of the Company.
5. Risk of reverse effect and countermeasures for the company to achieve development strategy and business goal
(1) Economic environment impact: Compact of persistence of slow resurging of developed economic entity market and domestic
industrial structure deep adjustment on the whole consumption market may possibly cause uncertain for market environment of the
company, and that may possibly influence on increase of oversees sales. The Company will try the best to stabilize the domestic and
international market and actively expand domestic market at the same time, to achieve a balanced development between domestic
and foreign sales.
(2) As the cost for production elements in China increases day by day, and the processing trade for textile garment especially garment
processing has been transferred to countries in southeastern Asia, it seems to be a must for top textile enterprise to go abroad. The
Company will, based on its comprehensive research on production elements, promote the comprehensive utilization of internationally
advantageous resources to create a reasonable layout for processing bases.
(3) The Company mainly uses long-staple cotton as its raw materials, whose price may be affected by market supply-demand,
climate, policy, exchange rate and quota. In 2016, when the government’s cotton quota policy stayed unchanged, the cotton cost will
be mainly affected by domestic market. Therefore, except ensuring stable supply of long-staple cotton from Xinjiang subsidiary, the
Company must carefully study on market developments, and make every effort to reduce the influences of raw material price
fluctuation on its business performance, through actively effective manners and methods.
(4) Change of exchange rate: at present and in the future for a long time, products of the Company are mainly exported to the
international market, and sales income mainly settled with USD; meanwhile, major equipments used in the Company was imported,
part foreign exchange paid for import was not USD. And the overseas production bases of the Company make it more sensitive to
exchange rate changes. Our country executed directional system on fluctuated exchange rate, so the exchange rate fluctuated with
changes of domestic and foreign policy and environment. When exchange rates experienced a great fluctuation, it might cause a
negative influence on the Company. In order to reduce adverse influence of exchange rate fluctuation, the Company adopted the
following measures: firstly, the Company proactively conducted foreign exchange hedging, using forward FX sales and purchase,
forward foreign exchange trading and option portfolios to avoid some risks as well as making reasonable arrangement on settlement
day and currency structure and conclusion of agreements on fixed foreign exchange rate to avoid exchange rate-related risks.
Secondly, the Company actively adjusted the Renminbi and foreign-currency liabilities structure to control financial costs. Thirdly,
28
The 2015 Annual Report of Lu Thai Textile Co., Ltd.
according to the fluctuation trend of exchange rates, the Company properly adjusted imports of raw and auxiliary materials to
partially offset the influence of exchange rate fluctuations on the Company. Fourthly, the Company tried to settle with its customers
in Renminbi whenever was possible.
X. Visits paid to the Company for purposes of research, communication, interview, etc.
1. In the reporting period
√ Applicable □ Inapplicable
Date Way of visit Type of visitor Main inquiry information
2015-03-31 By phone Institution About basic information of the Company
2015-07-21 One-on-one meeting Institution Ditto
2015-08-27 By phone Institution Ditto
2015-09-09 One-on-one meeting Institution Ditto
2015-09-22 Other Other Ditto
2015-09-25 One-on-one meeting Institution Ditto
2015-09-25 One-on-one meeting Institution Ditto
2015-10-29 By phone Institution Ditto
Times of visit 8
Number of visiting institutions 30
Number of visiting individuals 0
Number of other visiting entities 1
Significant undisclosed information disclosed,
No
revealed or leaked
29
2015 Annual Report of Lu Thai Textile Co., Ltd.
Section V Significant Events
I. Profit distribution to the common shareholders & increase of the share capital from the
capital reserves
Formulation, execution or adjustments of the profit distribution policy for the common shareholders, especially the cash dividend
policy, in the reporting period
□ Applicable √ Inapplicable
Profit distribution plans (or preliminary plans) for the common shareholders and plans (or preliminary plans) for turning capital
reserves into share capital for the recent three years (including the reporting period)
1. The 2015 annual profit allocation pre-plan reviewed and approved at the 31st Session of the 7th Board of Directors:
Based on the 954,407,896 shares (the total shares of 955,758,496 as at 31 Dec. 2015 minus the 1,350,600 B-shares repurchased in the
year), the Company is to distribute a cash dividend of RMB5.00 for every 10 shares (including tax). The individual income tax for
Share A shall be subject to related regulations under CS [2012] No. 85 Notice on Certain Question about the Implementation of
Differentiated Individual Income Tax Policy for Share Dividend of Listed Companies jointly issued by Ministry of Finance, SAT, and
CSRC; and that for Share B 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).
Based on the 954,407,896 shares, the Company should distribute cash dividends of RMB477,203,948.00 in total. However, for the
Company is repurchasing its A-shares and B-shares, the repurchased but uncanceled shares in the special securities account for
repurchase on the book closure date shall be excluded in the actual distribution of dividends. As such, the dividends for 2015 shall be
subject to the actually distributed, and the retained profits shall be carried forward to the future. Such plan may only be implemented
after the review and approval on 2015 shareholder’s meeting.
2. The 2014 annual profit allocation pre-plan reviewed and approved at the 19th Session of the 7th Board of Directors:
By December 31 of 2014, the Company’s registered capital was based on 955,758,496 shares, with a cash dividend of RMB5.00
distributed for every 10 shares (including tax). The individual income tax for Share A was subject to related regulations under CS
[2012] No. 85 Notice on Certain Question about the Implementation of Differentiated Individual Income Tax Policy for Share
Dividend of Listed Companies jointly issued by Ministry of Finance, SAT, and CSRC; and that for Share B 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 was free pursuant to CSZ (1994) No. 020 regulations; and non-residential
corporate shareholders were 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).
Based on the above distribution plan, the Company actually distributed RMB477,879,248.00 dividends. The aforesaid profit
distribution plan was implemented in Jun. 2015 after being reviewed and approved by the Shareholders’ General Meeting 2014 held
on 21 May 2015.
3. 2013 profit distribution plan has been approved on the 7th session of the seventh board meeting: By December 31 of 2013, the
Company’s registered capital is based on 955,800,496 shares, with RMB3.80 distributed for every 10 shares (including tax). The
individual income tax for Share A shall be subject to related regulations under CS [2012] No. 85 Notice on Certain Question about
the Implementation of Differentiated Individual Income Tax Policy for Share Dividend of Listed Companies jointly issued by
Ministry of Finance, SAT, and CSRC; and that for Share B shall be conversed to HKD based on the central parity rate on interbank
30
2015 Annual Report of Lu Thai Textile Co., Ltd.
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). Based
on the above distribution plan, the Company actually distributed RMB363,204,188.48 dividends. Such plan was implemented in May
of 2014 after the review and approval on 2013 shareholder’s meeting convened on April 29 of 2014.
Cash dividends distributed to the common shareholders in the recent three years (including the reporting period)
Unit: RMB Yuan
Net profits Proportion in net
attributable to profits attributable
Cash dividend (tax shareholders of the to shareholders of Ratio of cash
Cash dividend in
Year dividend in other
included) Company in the Company in other forms
forms
consolidated consolidated
statements statements (%)
2015 477,203,948.00 712,193,243.19 67.00% 0.00 0.00%
2014 477,879,248.00 958,725,402.84 49.85% 0.00 0.00%
2013 363,204,188.48 999,256,730.65 36.35% 0.00 0.00%
The Company made profits in the reporting period and the profits distributable to the common shareholders of the Company was
positive, but it did not put forward a preliminary plan for cash dividend distribution:
□ Applicable √ Inapplicable
II. Preliminary plan for profit distribution and turning capital reserves into share capital for
the reporting period
√ Applicable □ Inapplicable
Bonus shares for every 10 shares (share) 0
Dividend for every 10 shares (RMB Yuan) (tax
5
included)
Increased shares for every 10 shares (share) 0
Total shares as basis for preliminary distribution 954,407,896
plan (share)
Total cash dividends (RMB Yuan) (tax included) 477,203,948.00
Distributable profits (RMB Yuan) 3,259,342,039.15
Percentage of cash dividends in total distributed 100.00%
profits (%)
About cash dividends
If the Company is in a growth stage and has any plan for significant expenditure, in profit distribution, the proportion of cash
dividends shall be 20% or above.
Details about preliminary plan for profit distribution and turning capital reserves into share capital
31
2015 Annual Report of Lu Thai Textile Co., Ltd.
Based on the 954,407,896 shares (the total shares of 955,758,496 as at 31 Dec. 2015 minus the 1,350,600 B-shares repurchased in
the year), the Company is to distribute a cash dividend of RMB5.00 for every 10 shares (including tax). The individual income tax
for Share A shall be subject to related regulations under CS [2012] No. 85 Notice on Certain Question about the Implementation of
Differentiated Individual Income Tax Policy for Share Dividend of Listed Companies jointly issued by Ministry of Finance, SAT,
and CSRC; and that for Share B 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).
Based on the 954,407,896 shares, the Company should distribute cash dividends of RMB477,203,948.00 in total. However, for the
Company is repurchasing its A-shares and B-shares, the repurchased but uncanceled shares in the special securities account for
repurchase on the book closure date shall be excluded in the actual distribution of dividends. As such, the dividends for 2015 shall
be subject to the actually distributed, and the retained profits shall be carried forward to the future. Such plan may only be
implemented after the review and approval on 2015 shareholder’s meeting.
III. Fulfillment of commitments
1. Commitments of the Company, its shareholders, actual controller, acquirer, directors, supervisors,
senior management staff or other related parties fulfilled in the reporting period or ongoing at the
period-end
√ Applicable □ Inapplicable
Date of
Commitment Type of Period of
Commitment Contents making Fulfillment
maker commitment commitment
commitment
Commitments made in share reform
Commitments made in acquisition
reports or reports on equity changes
Commitments made in asset
reorganization
Commitments made in IPO or
refinancing
Commitments concerning stock
ownership incentive
Zibo Lucheng The biggest Up to 10 Jan.
Textile shareholder 2016, Zibo
Investment Zibo Lucheng Lucheng
Co., Ltd. and Textile 10 Jul. 2015 Textile
Other commitments made to minority Other
directors, Investment 10 Jul. 2015 to 10 Jan. Investment
shareholders commitment
supervisors Co., Ltd. and 2016 Co., Ltd. and
and senior the directors, the directors,
executives of supervisors supervisors
the Company and senior and senior
32
2015 Annual Report of Lu Thai Textile Co., Ltd.
executives of executives of
the Company the Company
committed did not reduce
that the shares their
of the shareholdings
Company held in the
by them Company. As
would not be such, the
decreased commitment
within the six has been
months fulfilled.
starting from
10 Jul. 2015.
Executed on time Yes
Specific reasons for failing to fulfill
commitments on time and plans for Inapplicable
next step
2. Where there had been an earnings forecast for an asset or project and the reporting period was still
within the forecast period, explain why the forecast has been reached for the reporting period.
□Applicable √ Inapplicable
IV. Occupation of the Company’s funds for non-operating purposes by the controlling
shareholder or its related parties
□ Applicable √ Inapplicable
No such cases in the reporting period.
V. Explanations given by the Board of Directors, the Supervisory Committee and the
independent directors (if any) regarding the “non-standard auditor’s report” issued by the
CPAs firm for the reporting period
□ Applicable √ Inapplicable
VI. YoY changes in the accounting policy, estimation and methods
□ Applicable √ Inapplicable
No such cases in the reporting period.
VII. Retrospective restatement due to correction of material accounting errors in the
reporting period
□ Applicable √ Inapplicable
33
2015 Annual Report of Lu Thai Textile Co., Ltd.
No such cases in the reporting period.
VIII. YoY changes in the consolidation scope
√ Applicable □ Inapplicable
The Company incorporated a new wholly-funded subsidiary—Lu Thai (Vietnam) Textile Co., Ltd.—in the current year.
IX. Engagement and dismissal of the CPAs firm
The CPAs firm at present
Name of domestic CPAs firm Ruihua Certified Public Accountants (LLP)
Remuneration of domestic CPAs firm (RMB ten
158.5
thousand)
Consecutive years of audit services provided by
3
domestic CPAs firm
Name of certified public accountants from domestic
He Feng, Cui Xiaoli
CPAs firm
The CPAs firm changed in the current period or not
□ Yes √ No
CPAs firm, financial accountant or sponsor engaged for internal control audit
√ Applicable □ Inapplicable
On 28 Mar. 2015, the Company held the 19th Session of the 7th Board of Directors, which reviewed and approved the Proposal on
Engaging Ruihua Certified Public Accountants (LLP) as the 2015 Financial Report and Internal Control Auditor. The Company paid
RMB435,000 in total for the internal control audit.
X. Listing suspension or termination after the disclosure of this Report
□ Applicable √ Inapplicable
XI. Bankruptcy & reorganization
□ Applicable √ Inapplicable
No such cases in the reporting period.
XII. Significant litigations and arbitrations
□ Applicable √ Inapplicable
No such cases in the reporting period.
34
2015 Annual Report of Lu Thai Textile Co., Ltd.
XIII. Punishments and rectifications
□ Applicable √ Inapplicable
No such cases in the reporting period.
XIV. Credit conditions of the Company as well as its controlling shareholder and actual
controller
□ Applicable √ Inapplicable
XV. Implementation of any equity incentive plan, employee stock ownership plan or other
incentive measures for employees
□ Applicable √ Inapplicable
No such cases in the reporting period.
XVI. Significant related-party transactions
1. Related-party transactions relevant to routine operation
□ Applicable √ Inapplicable
No such cases in the reporting period.
2. Related-party transactions regarding the purchase or sale of assets or equity interests
□ Applicable √ Inapplicable
No such cases in the reporting period.
3. Related-party transitions regarding joint investments
□ Applicable √ Inapplicable
No such cases in the reporting period.
4. Credits and liabilities with the related parties
□ Applicable √ Inapplicable
No such cases in the reporting period.
5. Other significant related-party transactions
□ Applicable √ Inapplicable
No such cases in the reporting period.
35
2015 Annual Report of Lu Thai Textile Co., Ltd.
XVII. Significant contracts and execution
1. Entrustment, contracting and leasing
(1) Entrustment
□ Applicable √ Inapplicable
No such cases in the reporting period.
(2) Contract
□ Applicable √ Inapplicable
There was no any contract of the Company in the reporting period.
(3) Lease
□ Applicable √ Inapplicable
There was no any lease of the Company in the reporting period.
2. Significant guarantee
√ Applicable □ Inapplicable
(1) Guarantees provided by the company
Unit: RMB Ten Thousand Yuan
Particulars on external guarantee of the Company and its subsidiaries (excluding guarantees for subsidiaries)
Date of
disclosure Whether Whether
Date of making
of relevant Actual the guarantee
Name of guarantee Guarantee guarantee (date Type of Guarantee
announcem amount of guarantee ing for
object limit of signing guarantee period
ents on guarantee has been related
agreement)
guarantee fulfilled parties
limit
Particulars about guarantee of the Company for subsidiaries
Date of
disclosure
Whether Whether
of relevant Date of making Actual
the guarantee
Name of guarantee announcem Amount of guarantee (date amount of Type of Guarantee
guarantee ing for
object ents on guarantee of signing guarantee guarantee period
has been related
guarantee agreement)
fulfilled parties
limit
36
2015 Annual Report of Lu Thai Textile Co., Ltd.
From the
date of
implementin
Guarantee of g loan within
Lu Feng Weaving & 13 May joint and credit line to
30,000 10 May 2011 343.76 No Yes
Dyeing Co., Ltd. 2011 several the date of
liability clearing off
loan
principal and
interest
Two years
Guarantee of
since the
Lu Thai (Hong Kong) 27 Mar. joint and
18,300 25 Mar. 2014 1,560.74 approval of No Yes
Textile Co., Ltd. 2014 several
the board of
liability
the Company
Three year
Guarantee of
since the
Lufeng Weaving & 10 Dec. joint and
25,000 9 Dec. 2014 0 approval of No Yes
Dyeing Co., Ltd. 2014 several
the board of
liability
the Company
Two years
Guarantee of
since the
Lu Thai (Vietnam) 27 Aug. joint and
36,681.6 26 Aug. 2015 8,703.62 approval of No Yes
Textile Co., Ltd. 2015 several
the board of
liability
the Company
Total amount of actual
Total amount of approved
guarantee for subsidiaries
guarantee for subsidiaries during 36,681.6 10,264.36
during the reporting period
the reporting period (B1)
(B2)
Total amount of actual
Total amount of approved
guarantee for subsidiaries at
guarantee for subsidiaries at the 109,981.6 9,047.38
the end of the reporting
end of the reporting period (B3)
period (B4)
Guarantees provided by subsidiaries for subsidiaries
Disclosure
date on Guarante
Actual
relevant Actual e for a
Amount for occurrence date Type of Period of Executed
Guaranteed party announcem guarantee related
guarantee (date of guarantee guarantee or not
ent of amount party or
agreement)
guaranteed not
amount
Xinjiang Lu Thai 9 Sep. 2015 10,000 8 Sep. 2015 5,000 Guarantee of 12 months No Yes
37
2015 Annual Report of Lu Thai Textile Co., Ltd.
Textile Co., Ltd. joint and
several
liability
Guarantee of
Xinjiang Lu Thai 10 Dec. joint and
10,000 8 Dec. 2015 1 months No Yes
Textile Co., Ltd. 2015 several
liability
Total actual occurred
Total guarantee line approved for
amount of guarantee for the
the subsidiaries during the 20,000 5,000
subsidiaries during the
reporting period (C1)
reporting period (C2)
Total actual guarantee
Total guarantee line that has been
balance for the subsidiaries
approved for the subsidiaries at the 20,000 5,000
at the end of the reporting
end of the reporting period (C3)
period (C4)
Total guarantee amount provided by the Company (total of the above-mentioned three kinds of guarantees)
Total actual occurred
Total guarantee line approved
amount of guarantee during
during the reporting period 56,681.6 15,264.36
the reporting period
(A1+B1+C1)
(A2+B2+C2)
Total actual guarantee
Total guarantee line that has been
balance at the end of the
approved at the end of the 129,981.6 14,047.38
reporting period
reporting period (A3+B3+C3)
(A4+B4+C4)
Proportion of total guarantee amount (A4+B4+C4) to the net
2.05%
assets of the Company
Of which:
Amount of guarantee provide for shareholders, actual controller
0
and related parties (D)
Amount of guarantee provided directly or indirectly for guarantee
0
objects with asset-liability ratio reaching over 70% (E)
Balance between 50% of net assets and total amount of guarantee
0
which exceeds 50% of net assets (F)
Sum total of the above three guaranteed amounts (D+E+F) 0
According to “Agreement on Counter Guarantee” signed on 12
May 2011 between Lu Thai Company and Lu Feng Company,
Explanations about joint and several liability for repayment in Lu Feng Company, the warrantee Lu Feng Company provided
respect of undue guarantee (if any) the corresponding amount of counter guarantee for Lu Thai
Company. According to “Agreement on Counter Guarantee”
signed on 9 Dec. 2014 between Lu Thai Company and Xinjiang
38
2015 Annual Report of Lu Thai Textile Co., Ltd.
Lu Thai Company, Xinjiang Lu Thai Company, the warrantee
Xinjiang Lu Thai Company provided the corresponding amount
of counter guarantee for Lu Thai Company.
Explanation about external guarantee violating established The Company never provided guarantees for companies except
procedure (if any) controlling subsidiaries.
Explanations about guarantees provided with complex methods
(2) Particulars about illegal external guarantee
□ Applicable √ Inapplicable
There was no particular about illegal external guarantee of the Company in the reporting period.
3. Cash assets management entrustment
(1) Wealth management entrustment
□ Applicable √ Inapplicable
No such situation of the Company during the reporting period.
(2) Entrustment loans
□ Applicable √ Inapplicable
No such situation of the Company during the reporting period.
4 Other significant contracts
□ Applicable √ Inapplicable
No such situation of the Company during the reporting period.
XVIII. Other significant events
√ Applicable □ Inapplicable
On 5 Aug. 2015, the Company held the 2015 1st Extraordinary General Meeting, which reviewed and approved the Proposal on
Repurchasing Part of the A Share and B Share of the Company and had public disclosed the Report of Repurchasing Part of the A
Share and B Share of the Company on 10 Oct. 2015 and as for the details, please refer to the Company’s announcement (No.:
2015-029) and the report of the shares repurchasing that be disclosed on www.cninfo.com.cn respectively on 6 Aug. 2015 and 10 Oct.
2015. Since 10 Nov. 2015, the Company began to execute the repurchasing proposal and up to 31 Dec. 2015, the Company had
accumulatively repurchased the B Share of 1.3506 million shares and as for the specific situation of the event, please refer to the
Company’s announcement (No.: 2016-001) that be be disclosed on www.cninfo.com.cn on 5 Jan. 2016.
XIX. Significant events of subsidiaries
□ Applicable √ Inapplicable
39
2015 Annual Report of Lu Thai Textile Co., Ltd.
XX. Social responsibilities
√ Applicable □ Inapplicable
The Company had compiled the 2015 Social Responsibilities Report and as for the details, please refer to the Social Responsibilities
Report that be disclosed at the same time with the 2015 Annual Report of the Company.
Does the listed company or its subsidiaries belong to the heavily polluting industries stipulated by the environmental protection
authorities of the country?
√ Yes □ No □ Inapplicable
The major pollutant emission of the Company reached the Water Quality Standards of the Sewage Discharged into Urban Sewage
CJ343-2010 with the sewage discharged into the Zibo Limin Purified Water Co., Ltd., of which the effluent quality was higher than
the national level A discharge standards as well as the major pollutant had completely realized the up-to-standard release with the
total volume of the COD emission gradually declined. The Company constantly invested and improved the environmental protection
facilities according to the requirements of the customers and the government and the development strategies, and in 2015, the
Company invested and completed the water reuse project as well as realized the reutilization of the water resources with each
environmental indicators higher than that of the companies in the same industry. The Company vigorously promoted the cleaning
production and did well in the Company environmental protection according to the mode of source control, process governance, and
end treatment. And the Company will upload the testing index of the major pollutant on the website of ZHB for publicity monthly
according to the EIDM (trial). The Company will constantly improve the environmental pollution accident emergency preplan and
will compile the plan for executing the emergency exercise. The Company received the title of “National Water Conservation
Benchmarking Enterprise” successively by the MIIT and the MWR in 2015 and be evaluated as the “Energy Saving Outstanding
Enterprise in Shandong Province” by Shandong Government.
XXI. Corporation bonds
There was no corporation bond public issued and listed in Stock Exchange and maturity or maturity but not fully paid on the approval
report date of annual report of the Company.
40
2015 Annual Report of Lu Thai Textile Co., Ltd.
Section VI. Change in Shares & Shareholders
I. Changes in shares
I. Changes in shares
Unit: share
Before the change Increase/decrease (+/-) After the change
Capitaliza
Newly
Proportio Bonus tion of Proportio
Amount issue Other Subtotal Amount
n shares public n
share
reserves
119,553,9 119,398,4
I. Restricted shares 12.51% -155,423 -155,423 12.49%
13 90
3. Shares held by other
1,321,513 0.14% -155,423 -155,423 1,166,090 0.12%
domestic corporations
Shares held by domestic
1,321,513 0.14% -155,423 -155,423 1,166,090 0.12%
natural persons
4. Shares held by foreign 118,232,4 118,232,4
12.37% 12.37%
investors 00 00
Among which: Shares held 118,232,4 118,232,4
12.37% 12.37%
by foreign corporations 00 00
Shares held by foreign natural 836,204,5 836,360,0
87.49% 155,423 155,423 87.51%
persons 83 06
560,643,7 560,799,2
58.66% 155,423 155,423 58.68%
II. Non-restricted shares 87 10
275,560,7 275,560,7
28.83% 0 0 28.83%
1. Renminbi ordinary shares 96 96
2. Domestically listed foreign 955,758,4 955,758,4
100.00% 0 0 100.00%
shares 96 96
Reasons of changes in shares
√ Applicable □ Inapplicable
The “Shares subject to trading moratorium-shares held by domestic individuals” decreased 155,423 shares owning to the resignation
of the former Supervisory Board Chairman Zhu Lingwen that the shares had been unlocked and the adjustment on the locked shares
of the Senior Executives by the Shenzhen Branch of CSDCC at the year-begin.
Approval of share changes
□ Applicable √ Inapplicable
Transfers in share changes
41
2015 Annual Report of Lu Thai Textile Co., Ltd.
□ Applicable √ Inapplicable
Influence of share changes towards financial indexes in the latest year and latest period such as basic EPS and diluted EPS, and net
assets per share belonging to shareholder with ordinary share
□ Applicable √ Inapplicable
Other contents that the Company thinks necessary or is asked by securities regulators to be disclosed
□ Applicable √ Inapplicable
2. Changes in restricted shares
√ Applicable □ Inapplicable
Unit: share
Number of the Number of the
Number of the
restricted shares restricted shares Number of the
restricted shares
Name unlocked during increased during restricted shares Reason Unlocked date
at the
the reporting the reporting at the period-end
period-begin
period period
Locked the
Qin Guiling (Lu shareholding of
46,989 11,747 35,242 5 Jan. 2015
Thai A) the Senior
Executives
Locked the
Lv Yongchen (Lu shareholding of
45,000 11,250 33,750 5 Jan. 2015
Thai A) the Senior
Executives
Locked the
Wang Changzhao shareholding of
22,500 5,625 16,875 5 Jan. 2015
(Lu Thai A) the Senior
Executives
Locked the
Wang Fangshui shareholding of
95,653 23,913 71,740 5 Jan. 2015
(Lu Thai A) the Senior
Executives
Locked the
Zhang Jianxiang shareholding of
45,000 11,250 33,750 5 Jan. 2015
(Lu Thai A) the Senior
Executives
Locked the
Zhu Lingwen (Lu shareholding of
91,638 91,638 0 27 Mar. 2015
Thai A) the resigned
Supervisors
Total 346,780 155,423 0 191,357 -- --
42
2015 Annual Report of Lu Thai Textile Co., Ltd.
II. Issuance and listing of securities
1. Issuance of securities (excluding preferred stock) in reporting period
□ Applicable √ Inapplicable
2. Explanation on changes in share capital & the structure of shareholders, the structure of assets and
liabilities
□ Applicable √ Inapplicable
3. Existent shares held by internal staffs of the Company
□ Applicable √ Inapplicable
III. Particulars about the shareholders and actual controller
1. Total number of shareholders and their shareholding
Unit: share
Total number of
preferred
stockholder with
Total number of Total number of
vote right
Total number shareholders on preferred
restored on the
of shareholders the 30th trading stockholder with
72,743 70,414 0 30th trading day 0
at the reporting day before the vote right restored
before the
period disclosure date of (if any) (see notes
disclosure date of
the annual report 8)
the annual report
(if any) (see
notes 8)
Shareholding of shareholders holding more than 5% shares
Number Increase Number Number Pledged or frozen shares
of and of shares of shares
Holding sharehold decrease held held not
Name of Nature of
percentag ing at the of shares subject to subject to
shareholder shareholders Status of shares Amount
e (%) end of the during trading trading
reporting reporting moratoriu moratoriu
period period m m
Zibo Lucheng Domestic
140,353,5 140,353,5
Textile Investment non-state-owned 14.69%
83 83
Co., Ltd. corporation
Tailun (Thailand) Foreign 12.37% 118,232,4 0 118,232,4
43
2015 Annual Report of Lu Thai Textile Co., Ltd.
Textile Co., Ltd. corporation 00 00
Central Huijin
Assets State-owned 20,315,30 20,315,30 20,315,30
2.13%
Management Co., corporation 00 0
Ltd.
T.ROWE PRICE
INTL Foreign 18,972,61 18,972,61 18,972,61
1.99%
DISCOVERY corporation 88 8
FUND
China Securities
Finance State-owned 15,679,09 15,679,09
1.64% 15679091
Corporation corporation 1 1
Limited
LYNAS ASIA Foreign 15,664,47 15,664,47
1.64% -1700000
FUND corporation 5 5
FIRST STATE
INVESTMENTS
ICVC-FIRST Foreign 10,714,36 10,714,36
1.12% 10714368
STATE GREATER corporation 8 8
CHINA GROWTH
FUND
Hua’an New Silk
Domestic
Road Theme 10,110,00 10,110,00
Non-stated-owned 1.06% 10110000
Equity Securities 0 0
corporation
Investment Fund
VALUE
Foreign
PARTNERS 0.85% 8,156,383 0 8,156,383
corporation
CLASSIC FUND
First State China A Foreign
0.77% 7,382,120 -754852 7,382,120
Shares Fund corporation
Particulars about strategic investors or
common legal persons who became
the top ten shareholders because of the N/A
issuance of additional shares (if any)
(Notes 3)
Zibo Lucheng Textile Investment Co., Ltd. is the largest shareholder of the Company and
Explanations about associated the actual controller. Tailun (Thailand) Textile Co., Ltd. is the second largest shareholder as
relationship or concerted action among well as sponsor of foreign capital of the Company. All of other shareholders are people
the above shareholders holding circulating A share or circulating B share and the Company is not able to confirm
whether there is associated relationship or concerted action among other shareholders.
Shareholdings of the top ten shareholders not subject to trading moratorium
44
2015 Annual Report of Lu Thai Textile Co., Ltd.
Type of shares
Name of shareholders Name of shareholders
Type Amount
Zibo Lucheng Textile Investment Co., RMB common
140,353,583 140,353,583
Ltd. shares
Central Huijin Assets Management RMB common
20,315,300 20,315,300
Co., Ltd. shares
Domestically
T.ROWE PRICE INTL DISCOVERY
18,972,618 listed foreign 18,972,618
FUND
shares
China Securities Finance Corporation RMB common
15,679,091 15,679,091
Limited shares
Domestically
LYNAS ASIA FUND 15,664,475 listed foreign 15,664,475
shares
FIRST STATE INVESTMENTS Domestically
ICVC-FIRST STATE GREATER 10,714,368 listed foreign 10,714,368
CHINA GROWTH FUND shares
Hua’an New Silk Road Theme Equity RMB common
10,110,000 10,110,000
Securities Investment Fund shares
Domestically
VALUE PARTNERS CLASSIC
8,156,383 listed foreign 8,156,383
FUND
shares
RMB common
First State China A Shares Fund 7,382,120 7,382,120
shares
Domestically
HTHK-MANULIFE CHINA VALUE
6,858,138 listed foreign 6,858,138
FUND
shares
Explanation about associated
relationship and concerted action Zibo Lucheng Textile Investment Co., Ltd. is the largest shareholder of the Company and
among the top ten shareholders not the actual controller. Tailun (Thailand) Textile Co., Ltd. is the second largest shareholder as
subject to trading moratorium as well well as sponsor of foreign capital of the Company. All of other shareholders are people
as between the top ten shareholders holding circulating A share or circulating B share and the Company is not able to confirm
not subject to trading moratorium and whether there is associated relationship or concerted action among other shareholders.
the top ten shareholders
Particulars about the top 10 common
shareholders participating in margin N/A
trading (if any) (Notes 4)
Did any shareholder of the Company carry out an agreed buy-back in the reporting period?
□ Yes √ No
No shareholder of the Company carried out any agreed buy-back in the reporting period.
45
2015 Annual Report of Lu Thai Textile Co., Ltd.
2. Particulars about controlling shareholders of the Company
Nature of controlling shareholder: community collective holding
Type of controlling shareholder: corporation
Name of controlling Legal representative
Date of establishment Organization code Business scope
shareholder / company principal
Investment on textile,
Zibo Lucheng Textile electricity and chemical;
Liu Shizhen 25 Sep. 1998 16420039-1
Investment Co., Ltd. purchase, process and sale
of cotton; retail service etc.
Particulars about shareholding
of controlling shareholders
controlling and holding shares N/A
of other listed companies
during the reporting period
Changes in controlling shareholders during the reporting period
□ Applicable √ Inapplicable
There was no change in controlling shareholders during the reporting period of the Company.
3. Particulars about the actual controller
Nature of actual controller: domestic nature person
Type of actual controller: nature person
Whether gain the right of residence in other countries or
Name of the actual controller Nationality
regions or not
Liu Shizhen China No
Professions and titles over the past five years Chairman of the Board of Lu Thai Textile Co., Ltd.
Particulars about listed companies with
shares ever held by the actual controller over N/A
the past 10 years
Changes in the actual controller during the reporting period
□ Applicable √ Inapplicable
There was no change in the actual controller during the reporting period of the Company.
Block diagram of property rights and controlling relationship between the Company and the actual controller
46
2015 Annual Report of Lu Thai Textile Co., Ltd.
Liu Shizhen
21%
Zibo Lucheng Textile Investment Co., Ltd.
14.69%
Lu Thai Textile Co., Ltd.
The actual controller controls the company in the means of entrustment or other means of assets management
□ Applicable √ Inapplicable
4. Particulars about other corporate shareholders with shareholding proportion over 10%
□ Applicable √ Inapplicable
5. Particulars about restriction of reducing holding-shares of controlling shareholders, actual controller,
restructuring parties and other commitment entities
□ Applicable √ Inapplicable
47
2015 Annual Report of Lu Thai Textile Co., Ltd.
Section VII. Preference Shares
□ Applicable √ Inapplicable
There was no preferred stock during reporting period.
48
2015 Annual Report of Lu Thai Textile Co., Ltd.
Section VIII. Directors, Supervisors, Senior Management Staff &
Employees
I. Changes in shareholding of directors, supervisors and senior management staff
Shares
Shares
held at Increase Decrease
Other held at
Starting Closing the of shares of shares
increase/d the end of
Incumben date of date of beginning in this in this
Name Title Gender Age ecrease the
t or not office office the reporting reporting
changes reporting
term term reporting period period
(share) period
period (share) (share)
(share)
(share)
Director/
Incumben 6 Jun. 5 Jun.
Liu Zibin General Male 51 148,290 148,290
t 2007 2016
Manager
Chairman
Liu Incumben 19 Aug. 5 Jun.
of the Male 76 437,295 437,295
Shizhen t 1997 2016
Board
Vice
Xu Chairman Incumben 6 May 5 Jun.
Male 86
Zhinan of the t 2004 2016
Board
Director/
Fujiwara Senior Incumben 7 May 5 Jun.
Male 76
Hidetoshi Consultan t 1998 2016
t
Chen Incumben 16 Apr. 5 Jun.
Director Male 72
Ruimou t 2000 2016
Zeng Incumben 6 Jun. 5 Jun.
Director Male 65
Facheng t 2007 2016
Director/
Wang Incumben 7 May 5 Jun.
Chief Male 55 151,353 4,600 146,753
Fangshui t 1998 2016
Engineer
Director/
Qin Secretary Incumben 7 May 5 Jun.
Female 50 108,789 1,747 107,042
Guiling to the t 1998 2016
Board of
49
2015 Annual Report of Lu Thai Textile Co., Ltd.
Vice
General
Manager
Independ
Zhou Incumben 5 Jun. 5 Jun.
ent Male 53
Zhiji t 2010 2016
Director
Independ
Incumben 5 Jun. 5 Jun.
Wang Lei ent Female 46
t 2010 2016
Director
Independ
Xu Incumben 6 Jun. 5 Jun.
ent Male 42
Jianjun t 2013 2016
Director
Independ
Zhang Incumben 29 Apr. 5 Jun.
ent Male 65
Chengzhu t 2014 2016
Director
Independ
Incumben 19 Sep. 5 Jun.
Zhao Yao ent Male 46
t 2014 2016
Director
Superviso
Li Incumben 19 Sep. 5 Jun.
ry Board Male 60 176,164 176,164
Tongmin t 2014 2016
Chairman
Liu Superviso Incumben 6 Jun. 5 Jun.
Male 48
Zilong r t 2007 2016
Dong Superviso Incumben 6 Jun. 5 Jun.
Male 47 5,000 5,000
Shibing r t 2007 2016
Vice
Zhang Incumben 6 Jun. 5 Jun.
General Male 48 63,400 11,250 52,150
Jianxiang t 2007 2016
Manager
Chief
Zhang Incumben 6 Jun. 5 Jun.
Accounta Female 46 88,100 4,400 92,500
Hongmei t 2007 2016
nt
Assistant
General
Wang Manager, Incumben 6 Jun. 5 Jun.
Male 53 83,700 83,700
Jiabin Productio t 2007 2016
n
Manager
Assistant
Zhang General Incumben 6 Jun. 5 Jun.
Male 46 83,100 10,000 73,100
Shougang Manager, t 2007 2016
Garment
50
2015 Annual Report of Lu Thai Textile Co., Ltd.
Division
Manager
Assistant
General
Manager,
Deputy
Zhang General Incumben 6 Jun. 5 Jun.
Male 44 80,300 80,300
Zhanqi Manager t 2007 2016
of Lufeng
Weaving
& Dyeing
Co., Ltd.
Manager
Zhang of Incumben 6 Jun. 5 Jun.
Male 48 95,200 17,500 77,700
Keming Financial t 2007 2016
Dep.
Manager
of
Pan Internatio Incumben 6 Jun. 5 Jun.
Male 48 126,096 126,096
Pingli nal t 2007 2016
Business
Dep. III
Deputy
General
Manager
Lv Incumben 6 Jun. 5 Jun.
of Lufeng Male 48 52,900 19,150 33,750
Yongchen t 2007 2016
Weaving
& Dyeing
Co., Ltd.
Manager
Yu
of Energy Incumben 6 Jun. 5 Jun.
Shouzhen Male 48 83,100 83,100
Business t 2007 2016
g
Dep.
Marketin
Quan Incumben 6 Jun. 5 Jun.
g Male 49 37,000 9,250 27,750
Peng t 2013 2016
Manager
Manager
of the
Wang
First Incumben 6 Jun. 5 Jun.
Changzha Male 42 22,500 22,500
Departme t 2013 2016
o
nt of
Internatio
51
2015 Annual Report of Lu Thai Textile Co., Ltd.
nal
Business
Manager
of the
Fujiwara Second
Matsuzak Departme Incumben 9 Dec. 5 Jun.
Male 43
a nt of t 2014 2016
Internatio
nal
Business
Manager
of
Enterprise
Shang
s Incumben 6 Jun. 5 Jun.
Chenggan Male 43 30,000 30,000
Managem t 2013 2016
g
ent
Departme
nt
Total -- -- -- -- -- -- 1,872,287 4,400 73,497 1,803,190
II. Particulars about changes of Directors, Supervisors and Senior Executives
Name Position Type Date Reason
Proposed to resign from the position of Chairman of the
Board to the Board of the Directors on 28 Oct. 2015
Chairman of the while still acted as the Director of the Company and be
Liu Shizhen Former 28 Oct. 2015
Board nominated as the committee members and the Chairman
of the Strategic Decision-making Committee and the
Compensation Committee member.
Be selected as the Chairman of the Board of the 7th Board
Chairman of the Appointed and
Liu Zibin 28 Oct. 2015 of the Directors through the 26th Session of the 7th Board
Board dismissed
of the Directors.
III. Resumes of important personnel
Main working experience of current directors, supervisors and senior management staff
1. Mr. Liu Zibin: Director and concurrently General Manager of the Company. He was born in 1965, and achieved Master Degree.
From Oct. 2004 to Jun. 2007, he acted as Chairman of the Board of Zibo Lucheng Textile Investment Co., Ltd, now concurrently was
Chairman of the Board of Xinsheng Power, Luqun Textile, Xinjiang Lu Thai and the President of Lu Thai (America), Director of
Beijing Innovative, Supervisory Board Chairman of Beijing Lu Thai Youxian and GM of Shanghai Lu Thai.
2. Mr. Liu Shizhen: Chairman of the Board. He was born in 1940, graduated from technical secondary school. From Oct. 1993 to Jun.
2007, he was Chairman of the Board and General Manager of the Company; from Jun. 2007 to Oct. 2015, he acted as Chairman of
52
2015 Annual Report of Lu Thai Textile Co., Ltd.
the Board of the Company. He now acts as the Chairman of the Board of Lucheng Company, Lu Feng Textile and Beijing Innovative,
Director of Xinsheng Power, Luqun Textile and Hong Kong Textile (Lu Thai), Chairman of the Board of Stanluian and Taimei Tie
Company.
3. Mr. Xu Zhinan: Vice Chairman of the Board of the Company. He was born in 1930, Thailand Nationality. Since 2004, he has been
acting as Director and Vice Chairman of the Board of the Company, and General Manager of Tailun (Thailand) Textile Co., Ltd.
4. Mr. Fujiwara Hidetoshi: Director of the Company. He was born in 1940, Japanese Nationality. Since 1998, he has been holding
post of Director and Senior Consultant of Lu Thai Company, and concurrently was Director of Lufeng Weaving & Dyeing Co., Ltd.
5. Mr. Chen Ruimou: Director of the Company. He was born in 1944, and holder of bachelor degree. From 1998 to now, he has been
Director of the Company.
6. Mr. Zeng Facheng, Director of the Company, was born in 1951, Thailand nationality. He acts as Chairman of the Board of GOLD
MINE GARMENT CO., LTD. and BLOSSOM GARMENT MANUFACTURING (THAILAND) CO., LTD.
7. Mr. Wang Fangshui: Director, Vice General Manager and Chief Engineer of the Company. He was born in 1961, holder of MBA
degree. Since 1998, he has been Director and Chief Engineer of the Company, and concurrently is Director and General Manager of
Lufeng Weaving & Dyeing, Director of Xinjiang Lu Thai and Director of Luqun Textile as well as the Executive Director of Lu Thai
(Burma).
8. Ms. Qin Guiling: Director, Vice General Manager and Secretary to the Board of the Company. She was born in 1966, holder of
MBA degree. Since 1998, she has been Director and Secretary to the Board of the Company, and Director of Beijing Lu Thai
Youxian, Supervisory Board Chairman of Xinjiang Lu Thai, Director of Luqun Textile, and Director of Beijing Innovative.
9. Mr. Zhou Zhiji, Independent Director of the Company, was born in 1963 and holder of bachelor degree of accounting. From Aug.
1986 to Jan. 1989, he has acted as cadre of Shandong Provincial Department of Finance; from Jan. 1989 to Jan. 1999, he took the
post as Director of Shandong Certified Public Accountants Co., Ltd; from Jan. 1999 to Jul. 2000, he was Director Accountant in
Shandong Zhengyuan Certified Public Accountants Co., Ltd; from Jul. 2000 to Jan. 2008, he was Director and Mmanager of
Shandong Yingshida Enterprise Management Consulting Co., Ltd. Since Jan. 2008 to now, he was Executive Director and Manager
of Shandong Jinheng Consulting Co., Ltd.
10. Ms. Wang Lei, Independent Director of the Company, was born in 1970 and doctor degree holder. From Jul. 1994 to Sep. 2001,
he was an assistant to General Manager of Investment Bank Department in Tiantong Securities Co., Ltd; from Sep. 2001 to Nov.
2004, he took the post as General Manager of Liaocheng Business Department of Tiantong Securities; since Nov. 2004 up to now, he
has been General Manager of Chaowai Street Operating Department of Tiantong Securities; from Apr. 2005 to Dec. 2006, he was the
General Manager of Investment Bank Department of Tiantong Securities; from Jan. 2009 to Jun. 2011, he was the General Manager
of Beijing United Cooperation Center as well as Chaowai Street Operating Department in Qilun Securities Co., Ltd.; from Jun. 2011
to now, he has been the General Manager of OTC Marketing Department, and concurrently Director of Beijing United Cooperation
Center as well as General Manager of SME Financing Department in Qilun Securities Co., Ltd.
11. Xu Jianjun: Independent Director of the company, born in 1974, master degree holder. Once took the post of Senior Staff Member
of Head Office of Bank of China, Legal Counsel, lawyer at Beijing Jingtian Gongsheng Law Firm. From August of 2004 up to now,
serves as a partner of Beijing Deheng Law Firm. Now he is taking a post of partner and Deputy Director of Beijing Deheng Law
Firm.
12. Mr. Zhang Chengzhu: Independent Director of the Company, born in 1951, senior economist. Once took the post of Principal
Staff Member, Deputy Director of Production System Department and Department Head of Structural Reforms commission of
Shangdong Province from 1986 to 1996; as Department Head of Distribution Department of Shandong Securities Management
Office from 1996 to 1998; as Department Head of CSRC Jinan Securities Management Office, Department Head of General Office,
Associate Counsel, Senior Vice Chairman of Shandong Listed Companies Association; and retired in Mar. 2011.
13. Mr. Zhao Yao: Independent Director of the Company, born in 1970, master degree holder, associate professor of accounting,
master tutor and successively acted as member of a council of Accounting Association in Shandong Province, executive member of
the council of Shandong Province Institute of CPAs, member of Shandong Province internal control consultant experts, member of
53
2015 Annual Report of Lu Thai Textile Co., Ltd.
Shandong Province accounting criterion consultant experts and currently act as Director of Department of Accounting of Shandong
University of Technology.
14. Mr. Li Tongmin: Supervisory Board Chairman of the Company, born in 1956, graduated from technical secondary school and
currently as the Union President of the Company. From Oct. 1993 to 2010, he held the post of Supervisor, Manager of production
department and Vice General Manager of the Company.
15. Mr. Liu Zilong: Supervisor of the Company. He was born in 1968. From 2002 to present, he was General Manager of Lu Thai
(Hong Kong).
16. Mr. Dong Shibing: Supervisor of the Company. He was born in 1969, graduated from technical secondary school. He ever took
the post of Deputy Director of the General Manager Office of the Company, and now holds post of Manager of Property
Management Company.
17. Mr. Zhang Jianxiang: Vice General Manager and Vice-president of Lu Thai Textile Garment Engineering Research Institute as
well as office director. He was born in 1968, and MBA degree holder. He once worked as Manager of Quality Management
Department and Director of Fabric Finishing Plant.
18. Ms. Zhang Hongmei: Chief Accountant. She was born in 1970; holder of MBA degree and senior accountant. She had served
successively as Chief of cost section of financial department of Lu Thai Textile Co., Ltd., director of the accounting department and
deputy chief accountant. Now she serves as Chief Accountant of the Company.
19. Mr. Wang Jiabing: General Manager Assistant and Manager of Production Department of the Company, head of security
checkpoint of production department. He was born in 1963, MBA and once acted as Manager of Dyeing Business Department.
20. Mr. Zhang Shougang: Assistant General Manager, Garment Division Manager of the Company. He was born in 1970, MBA and
senior engineer, once was Director of Weaving Factory, Manager of Weaving Business Department and Manager of Quality Control
Department in the Company.
21. Mr. Zhang Zhanqi: General Manager Assistant and deputy General Manager in Lufeng Weaving & Dyeing of the Company. He
was born in 1972, MBA, once worked as Director of Fabric Finishing Plant and Manager of Quality Control Department.
22. Mr. Zhang Keming: Manager of Financial Department of the Company. He was born in 1968, MBA and senior accountant. From
2002 to 2006, he held the post of Deputy Manager of Financial Department; from Apr. 2006 to present, he has acted as General
Manager of Financial Department.
23. Mr. Pan Pingli: Manager of International Business Department II. He was born in 1968 and MBA degree holder. He ever acted as
General Manager of International Business Department of the Company.
24. Mr. Lv Yongchen: Deputy General Manager of Lufeng Weaving and Dyeing Co., Ltd. He was born in 1968 and MBA degree
holder. From 2002 to 2010, he acted as Deputy Manager of International Business Department in the Company.
25. Mr. Yu Shouzheng: Energy Business Manager of the Company. He was born in 1968, MBA degree holder and engineer. He once
worked as Director of Dynamic Department in the Company. From 2007 to present, he has acted as Manager of Energy Business
Department in the Company.
26. Mr. Quan Peng: Marketing Manager of the Company. He was born in 1967, MBA degree holder. From 2004 to prese
nt, he has acted as Marketing Manager.
27. Mr. Wang Changzhao: General Manager of International Business Department I of the Company. He was born in 1974 and had
acted as General Manger Assistant of International Business Department.
28. Mr. Fujiwara Matsuzaka: General Manager of International Business Department II of the Company. He was born in 1973 and
had acted as General Manager of International Business Department I of the Company.
29. Mr. Shang Chenggang: Manager of Enterprise Management Department and Management Representative. He was born in 1973
and had acted as Vice President of General Manager Office and Present.
Employment in shareholders’ companies
54
2015 Annual Report of Lu Thai Textile Co., Ltd.
√ Applicable □ Inapplicable
Whether receiving
Posts held in subsidies and
Name of Start date of Expiration
Name of shareholders’ companies shareholders’ remuneration in
employers tenure Date of tenure
companies shareholders’
companies
Chairman of
Liu Shizhen Zibo Lucheng Textile Investment Co., Ltd. the Board of 28 Sep. 1998 No
Directors
Chairman of
Xu Zhinan Tailun (Thailand) Textile Co., Ltd. the Board of 29 Jan. 1985 No
Directors
Mr. Liu Shizhen is the legal representative of Zibo Lucheng Textile Investment Co., Ltd., holding 21% equities of
Explanations
Zibo Lucheng Textile Investment Co., Ltd. and he is the largest shareholder as well as the actual controller. Basic
about holding
information about Mr. Liu Shizhen: Chinese, no right of residence in other countries or regions. Mr. Xu Zhinan is
posts in
the sponsor of foreign capital of the Company, shareholder of Tailun (Thailand) Textile Co., Ltd. and Tailun
shareholders’
(Thailand) Textile Co., Ltd. is the second largest shareholder of the Company. Basic information about Mr. Xu
companies
Zhinan: Thai.
Employment in other companies
√ Applicable □ Inapplicable
Whether
Posts held in receiving
Name of Start date of Expiration Date
Name of other companies shareholders’ subsidies and
employers tenure of tenure
companies remuneration in
other companies
Beijing Sichuang Adornments Co., Ltd., Chairman of
Liu Shizhen Lu Thai (Hong Kong) Textile Co., Ltd. the Board of 11 Jul. 2000 No
Lufeng Weaving & Dyeing Co., Ltd. Directors
Zibo Xinsheng Power Co., Ltd., Zibo Luqun
Textile Co., Ltd., Xinjiang Lu Thai Harvest Director,
Cotton Co., Ltd., Xinjiang Lu Thai Textile Supervisor,
Co., Ltd., Beijing Sichuang Adornments Supervisory
Liu Zibin 7 Dec. 2015 No
Co., Ltd., Beijing Lu Thai Youxian Board
E-commerce Co., Ltd., Lu Thai (America) Chairman,
Textile Co., Ltd., Shanghai Lu Thai Textile GM
Garment Co., Ltd.
Xinjiang Lu Thai Harvest Cotton Co., Ltd.,
Xinjiang Lu Thai Textile Co., Ltd., Lufeng
Wang Yongshui Weaving & Dyeing Co., Ltd. Zibo Luqun Director 17 Jun. 2003 No
Textile Co., Ltd., Lu Thai (Burma) Textile
Co., Ltd.
55
2015 Annual Report of Lu Thai Textile Co., Ltd.
Director,
Beijing Lu Thai Youxian E-commerce Co.,
Supervisory
Ltd., Xinjiang Lu Thai Harvest Cotton Co.,
Qin Guiling Board 17 Jun. 2003 No
Ltd., Zibo Luqun Textile Co., Ltd., Beijing
Chairman,
Sichuang Adornments Co., Ltd.
Director
Executive
Zhou Zhiji Shandong Jinheng Consulting Co., Ltd. Director, 1 Jan. 2008 Yes
Manager
General
Manager and
Director of
OTC Marketing Department of Qilun Beijing
Wang Lei Securities Co., Ltd., SME Financing United 1 Jun. 2011 Yes
Department in Qilun Securities Co., Ltd. Cooperation
Center,
General
Manager
Xu Jianjun Beijing Deheng Law Offices Partner 1 Aug. 2004 Yes
Associate
Zhao Yao Shandong University of Technology 1 Mar. 2001 Yes
Professor
Explanations
about
Except independent directors, other companies directors, supervisors, senior executives are holding posts in are all
employment in
controlling subsidiaries of the Company.
other
companies
Particulars about the Company's current directors, supervisors and senior executives ‘punishments from Securities Regulatory
Institution of recent three years in reporting period
□ Applicable √ Inapplicable
IV. Remuneration for directors, supervisors and senior management
Decision-making procedure, determining basis and actual payment for the remuneration of directors, supervisors and senior
management
Decision-making Remuneration committee under the board of directors is responsible for formulating assessment
procedures of standards of directors and senior executives and conducting assessment; for formulating and reviewing
remuneration of directors, remuneration policy and program of directors and senior executives; it is responsible for the board of
supervisors, senior directors. The remuneration committee, according to appraisal results of position performance and
executives 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.
Determinate basis of The Chief Accountant Office, the Corporate Management Department and the HR Department of the
remuneration of directors, Company was responsible for preparations for the decision-making of the Remuneration and Appraisal
56
2015 Annual Report of Lu Thai Textile Co., Ltd.
supervisors, senior Committee by providing relevant information of the Company as follows: (I) accomplishment of main
executives 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.
Actual payment of The number of incumbent directors, supervisors and senior executives is 29, among which there are 28
remuneration of directors, persons actually receiving remuneration from the Company. Till 31 Dec. 2015, the total amount of
supervisors, senior annual payment drawn from the Company by directors, supervisors and senior executives is
executives RMB22.4557 million (before tax).
Remuneration of the directors, supervisors and senior management of the Company during the reporting period is as follow:
Unit: RMB Thousand Yuan
Whether gained
Total before-tax
remuneration
remuneration
Name Position Gender Age Current/former from the related
gained from the
parties of the
Company
Company
Director/General Incumbent
Liu Zibin Male 51 141.64 No
Manager
Chairman of the Incumbent No
Liu Shizhen Board of Male 76 133.78
Directors
Vice chairman of Male Incumbent No
Xu Zhinan the Board of 86 30.85
Directors
Fujiwara Director/Senior Male Incumbent No
76 387.5
Hidetoshi Consultant
Chen Ruimou Director Male 72 Incumbent 30.85 No
Zeng Facheng Director Male 65 Incumbent 1.19 No
Director/Vice Male Incumbent No
Wang Fangshui Director/Chief 55 141.28
Engineer
Director/Vice Dir Incumbent No
Qin Guiling ector/ Chairman Female 50 140.42
Secretary
Independent Incumbent No
Zhou Zhiji Male 53 4.8
Director
57
2015 Annual Report of Lu Thai Textile Co., Ltd.
Independent Incumbent No
Wang Lei Female 46 4.8
Director
Independent Male Incumbent No
Xu Jianjun 42 4.8
Director
Independent Male Incumbent No
Zhang Chengzhu 65
Director
Independent Male Incumbent No
Zhao Yao 46 4.8
Director
Supervisory Male Incumbent No
Li Tongmin 60 140.61
Board Chairman
Liu Zilong Supervisor Male 48 Incumbent 63.42 No
Dong Shibing Supervisor Male 47 Incumbent 61.88 No
Deputy General Male Incumbent No
Zhang Jianxiang 48 96.94
Manager
Zhang Hongmei Chief Accountant 女 46 Incumbent 88.67 No
General Manager Male Incumbent No
Assistant,
Wang Jiabin Manager of 53 84.01
Production
Department
Assistant General Male Incumbent No
Manager,
Zhang Shougang 46 73.83
Garment Division
Manager
Assistant General Male Incumbent No
Manager, Deputy
General Manager
Zhang Zhanqi 44 75.5
of Lufeng
Weaving &
Dyeing Co., Ltd.
Manager of Male Incumbent No
Zhang Keming 48 61.61
Financial Dep.
Manager of Male Incumbent No
Pan Pingli International 48 61.89
Business Dep. III
Deputy General Male Incumbent No
Manager of
Lv Yongchen Lufeng Weaving 48 61.52
& Dyeing Co.,
Ltd.
58
2015 Annual Report of Lu Thai Textile Co., Ltd.
Manager of Male Incumbent No
Yu Shouzheng Energy Business 48 61.35
Dep.
Marketing Male Incumbent No
Quan Peng 49 61.68
Manager
Manager of the Male Incumbent No
First Department
Wang Changzhao 42 59.99
of International
Business
Manager of the Male Incumbent No
Second
Fujiwara
Department of 43 106.26
Matsuzaka
International
Business
Manager of Male Incumbent No
Shang Enterprises
43 59.7
Chenggang Management
Department
Total -- -- -- -- 2,245.57 --
Situations of equity incentives awarded to the directors, supervisors and senior management of the Company during the reporting
period
□ Applicable √ Inapplicable
V. About employees
1. Number of the employees, component difference and educational background
Number of the serving employees of the parent company
16,653
(person)
Number of the serving employees of the major subsidiaries
5,792
(person)
Total number of the serving employees (person) 22,445
Total number of the employees receiving the salary of the
22,445
reporting period (person)
Number of the left and retired employees that the parent
company and the major subsidiaries should undertake the 0
expenses (person)
Component difference
Category Number (person)
Production personnel 15,621
59
2015 Annual Report of Lu Thai Textile Co., Ltd.
Sales personnel 644
Technical personnel 5,714
Financial personnel 86
Administrative personnel 380
Total 22,445
Educational background
Category Number (person)
Doctor 2
Master 80
Bachelor 988
College 5,555
High school and below 15,820
Total 22,445
2. Remuneration policy
The Company has formulated a remuneration management system with its principle being “payment according to
one’s work and more pay for more work”. Through post evaluation and through researches of Social salary levels
carried out as multi-faceted, as well as the formulation of the reasonable salary management system, fully
demonstrates the internal fairness, self fairness and external fairness. It has greatly motivated the employees and
enhanced the corporate management.
3. Training plan
Trainings will be carried out according to requirements of the Company’s strategic development planning,
improvement of employees’ capability, performance management, employees’ career planning, etc. The annual
training plan is determined by carrying out researches on training needs. And the training courses fall into three
major categories, i.e. management, technical skills and general knowledge. Through these trainings, the Company
will improve the knowledge structure of its employees, improve their job skills and increase their comprehensive
quality to provide excellent human resources for the long-term, sustained and stable development of the Company.
4. Labor outsourcing
□ Applicable √ Inapplicable
60
2015 Annual Report of Lu Thai Textile Co., Ltd.
Section IX. Corporate Governance
I. Basic condition of corporate governance
1. The Company continued to perfect the corporate governance structure, establish and perfect the modern enterprise system and
ensure the efficient and standardized operation of the Company’s Shareholders’ General Meeting, Board of Directors, Board of
Supervisors and Senior Executives strictly according to Company Law, Securities Law and Governing Rules for Listed Company as
well as relevant stipulations and requirements from CSRC. It formed a relationship of clear division of rights and responsibilities,
assuming each own functions and check and balance each other between the management organ, decision-making organ, supervisory
organ and management layer, so as to provide a good internal operational environment for the Company’s standardized and efficient
operation. At present, there is no difference between the actual situation of the Company’s corporate governance structure and the
requirements on the corporate governance of CSRC and Shenzhen Stock Exchange.
2. About shareholders and Shareholders’ General Meeting
The Company convened and held the Shareholders’ General Meeting in strict accordance with the requirements from the Rules for
Shareholders’ General Meeting in Listed Companies and the stipulation of the Rules of Procedure for Shareholders’ General Meeting.
During the reporting period, as for the contents such as providing the internet voting platform and the individual voting calculation as
well as the disclosure of the medium and small shareholders, the Company revised part of the regulations of the Articles of
Association and Rules of Procedure of the Shareholders' General Meeting of Lu Thai Textile Co., Ltd. according to the requirements
of the Rules of Procedure of the Shareholders' General Meeting of Listed Companies (revised in 2014) and Articles of Association of
Listed Companies (revised in 2014), which ensured all shareholders especially medium to small shareholders to enjoy equal rights
and fully exercise their own rights.
3. About the relationship between the principal shareholders and the Company
The Company’s principal shareholders acted according to relevant standards without directly or indirectly intervening the Company’s
decision-making and operating activities over the Shareholders’ General Meeting; the Company was independent with its principal
shareholders in business, personnel, assets, organization, finance, and the Company’s Board of Directors, Supervisory Committee
and Internal Organs could completely independent to operate. There was no situation about annexing the assts or occupation of funds
of the Company by principal shareholders or other events on infringing the interest of the Company and other shareholders.
4. About the directors and Board of Directors
The Company nominated and elected directors in strict accordance with the Articles of Association, the structure of the Board of
Directors and the number of independent directors was in compliance with the requirement of laws and regulations. Besides, it
established four special committees such as Strategy Committee, Nomination Committee, Audit Committee and Remuneration &
Appraisal Committee in accordance with the Rules of Procedure for the Board of Directors, and accordingly promulgated the work
rules for the committees. The committees clearly understood their responsibilities and operated well. The directors and independent
directors completely enjoyed the rights stipulated in Company Law and Articles of Association, which ensure the scientific and
impartial decision made by the Board of Directors of the Company. During the reporting period, the Company revised the Rules of
Procedure of the Board of Directors of Lu Thai Textile Co., Ltd. according to the actual situation and revised the number of the
Directors.
5. About supervisors and Supervisory Committee
The Company’s Supervisory Committee and supervisors conscientiously performed their duties by strictly implementing relevant
regulations of Articles of Association and the Rules of Procedure for Supervisory Committee, and conducted effective supervision on
the Company’s finance, the legal and regulatory compliance of directors and senior executive in duty performance.
6. About information disclosure and the transparency
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2015 Annual Report of Lu Thai Textile Co., Ltd.
The Company authentically, accurately, completely and timely performed its information disclosure responsibility in strict
accordance with the stipulations of the Stock Listing Rules of Shenzhen Stock Exchange and relevant laws and regulations. Moreover,
it ensured all shareholders have equal opportunity to gain information by disclosing information in strict accordance with
Management System on Information Disclosure and Management System on Information Insiders as well as relevant stipulations.
7. Investors relationship management
The Company has established the Management System on Investor Relationship, and it paid special attention to the management of
investor relationship and continued to maintain good communication with investors during executing the said system. During the
reporting period, through attending the investor exchanging fair, accepting investors’ on-site visit and consultant by way of on-site
research and phone, the Company introduced its situation of production and operation and development strategy to the investors, so
as to enhance their under standing of the Company and increase the Company’s market transparency, as well as establish a good
corporate image in the capital market. Meanwhile, it fully took advantage of the investor interactive platform of Shenzhen Stock
Exchange to answer the questions and consultant from investors, and accepted the advices and opinion proposed by them, so as to
maintain a healthy and good relationship between the Company and the investors.
8. About relevant beneficiaries
The Company fully respected and protected the legal rights of its customers, banks, suppliers, other creditors, staffs and consumers,
etc., as well as paid special attention to the active cooperation with the said relevant beneficiaries, so as to mutually promote the
sustainable and healthy development of the Company.
Whether it exists any difference between the corporate governance and the Company Law and relevant rules of CSRC or not?
□ Yes √ No
There is no difference between the corporate governance and the Company Law and relevant rules of CSRC.
II. Particulars about the Company’s separation from the controlling shareholder in respect of
business, personnel, assets, organization and financial affairs
1. As for the business: the Company completely separates from the controlling shareholders in the business that possesses the entirely
independent production, supply and sales system and the autonomous operating ability.
2. As for the personnel: the Company remains completely independent in the Human Resources aspects such as the labor, the
personnel and the wages with entirely independent self-controlling ability .
3. As for the assets: the Company possesses the entire and independent legal person property right with independent and perfect the
production system, auxiliary production systems and supporting facilities; and possesses the independent ownership of the intangible
assets such as the i Industrial property, trademarks, non-patented technology.
4. As for the institution: the organizations and institutions of the Company are all independent and perfect that there is no any
situation of working with the controlling shareholders.
5. As for the finance: the Company possesses independent financial departments with normative financial accounting system and
financial management system as well as internal control system with independent bank account.
III. Horizontal competition
□ Applicable √ Inapplicable
62
2015 Annual Report of Lu Thai Textile Co., Ltd.
IV. Particulars about annual shareholders’ general meetings and temporary shareholders’
general meetings held during the reporting period
1. Particulars about annual shareholders’ general meetings during the reporting period
Proportion of
Index to the
Session Type investors' Convening date Disclosure date
disclosed
participation
Announcement on
the Resolution of the
Meeting (No.:
2015-020) disclosed
2014 Annual General Annual General on 21 May 2015 on
0.00% 20 May 2015 21 May 2015
Meeting Meeting Securities Times, Ta
Kung Pao, Shanghai
Securities News and
http://www.cninfo.co
m.cn
Announcement on
the Resolution of the
Meeting (No.:
2015-029) disclosed
2015 1st
Extraordinary on 6 Aug. 2015 on
Extraordinary 0.00% 5 Aug. 2015 6 Aug. 2015
General Meeting Securities Times, Ta
General Meeting
Kung Pao, Shanghai
Securities News and
http://www.cninfo.co
m.cn
Announcement on
the Resolution of the
Meeting (No.:
2015-043) disclosed
2015 2nd
Extraordinary on 30 Sep. 2015 on
Extraordinary 0.00% 29 Sep. 2015 30 Sep. 2015
General Meeting Securities Times, Ta
General Meeting
Kung Pao, Shanghai
Securities News and
http://www.cninfo.co
m.cn
Announcement on
rd
2015 3 the Resolution of the
Extraordinary
Extraordinary 0.00% 30 Dec. 2015 31 Dec. 2015 Meeting (No.:
General Meeting
General Meeting 2015-055) disclosed
on 31 Dec. 2015 on
63
2015 Annual Report of Lu Thai Textile Co., Ltd.
Securities Times, Ta
Kung Pao, Shanghai
Securities News and
http://www.cninfo.co
m.cn
2. Special Shareholders’ General Meeting applied by the preferred stockholder with restitution of voting
right
□ Applicable √ Inapplicable
V. Performance of the Independent Directors
1. Particulars about the independent directors attending the board sessions and the shareholders’ general
meetings
Particulars about the independent directors attending the board sessions
Sessions required Attendance by Non-attendance
to attend during Attendance in way of Entrusted in person for two
Independent director Absence rate
the reporting person telecommunicati presence (times) consecutive
period on times
Zhou Zhiji 12 2 10 0 No
Wang Lei 12 0 11 1 0 No
Xu Jianjun 12 1 11 0 No
Zhang Chengzhu 12 1 11 0 No
Zhao Yao 12 5 7 0 No
General meetings sat in on by
2
independent directors
Notes to non-attendance in person for two consecutive times
2. Particulars about independent directors proposing objection on relevant events
Whether independent directors propose objection on relevant events or not?
□ Yes √ No
During the reporting period, no independent directors proposed any objection on relevant events of the Company.
3. Other explanations about the duty performance of independent directors
Whether advices to the Company from independent directors were adopted or not
√ Yes □ No
Explanation on the advices of independent directors for the Company being adopted or not adopted
64
2015 Annual Report of Lu Thai Textile Co., Ltd.
The Independent Directors of the Company had not raised any objection to the proposals and other events approved and reviewed by
the Board of the Directors while executed the carefully review on the events needed advices and put forward the professional
suggestion and advice as well as stated 13 independent advices which improved the scientificity and objectivity of the
decision-making that exerted the due role on the supervision mechanism for improving the Company.
VI. Performance of the Special Committees under the Board during the reporting period
I. Duty fulfillment of Audit Committee under the Boar
1. The Audit Committee of the 7th Board of the Directors held the 1st Meeting of Y2015 on 22 Apr. 2015, which reviewed and
approved the 2015 Derivatives Trading Plan of Lu Thai Textile Co., Ltd. and stated the written advice：the Company faced with the
pressure of the enlarged fluctuation rage of the exchange rate of the foreign currency market Renminbi to the US dollar and the
derivatives trading plan raised by the Finance Department was the efficient instrument for avoiding the exchange rate risks, and
through the strengthen of the internal control as well as the execution of stop loss processing and the risk prevention measures could
improve the operating and management level and benefit to the fully exertion of the competition advantage of the Company. Under
the premises of guaranteeing the normal operation, the Company used the self-owned funds to execute the derivatives trading, which
was benefit for the avoiding of the changes risks of the Renminbi exchange rate and for improving the prevention ability of the
Company against the exchange rate fluctuation and the operating level as well as for fully exerting the competition advantage of the
Company without any situation that harm the benefits of the Company and the whole shareholders. We believed the derivatives
trading plan was feasible and necessary with the risks were controllable. And we agreed to submit the 2015 Derivatives Trading Plan
of Lu Thai Textile Co., Ltd. to the 20th Session of the 7th Board of the Directors for review and approval.
2. The Audit Committee of the 7th Board of the Directors held the1st Meeting of Y2016 on 3 Mar. 2016, which reviewed and the
approved the Proposal on the Withdrawal of the Assets Impairment Provision and stated the written advice：for fairly reflected the
value of each asset of the Company and according to the relevant regulations of the ASBE and Management System of the
Withdrawal of the Assets Impairment Provision of Lu Thai Textile Co., Ltd. and the Company had executed the examination of each
asset at the year-end of 2015 as well as the impairment test of the assets with impairment indication and when the estimated
recoverable amount of each asset was lower than its book value should execute the withdrawal of the assets impairment provision
through recognition or measurement. We considered that the events of the withdrawal of the assets impairment provision met with
the ASBE and the relevant accounting policies of the Company with sufficient evidence as well as indicated the accounting
conservation principles and met with the actual situation of the Company. After the withdrawal of the assets impairment provision,
the events could more fair to reflect the financial condition, assets value and operating results of the Company up to 31 Dec. 2015,
which made the accounting information of the Company more reasonable. The Company agreed to submit the Proposal on the
Withdrawal of the Assets Impairment Provision to the 30th Session of the 7th Board of the Directors for review and approval.
3. Major work of the 2015 annual report of the Audit Committee:
(1) The Audit Committee had held the 2015 1st Meeting of the Audit Committee on the Financial Audit Work in the meeting room of
the Company on 17 Nov. 2015 and the meeting had confirmed the time and arrangement plan of the 2015 annual financial audit work
unanimously with the 2015 Audit Institution Ruihua CPAs (LLP).
(2) On 30 Jan. 2016, the Audit Committee had held the 2nd Meeting of the 2015 audit work, which reviewed and submitted the
financial report audited by Ruihua CPAs (LLP) and issued the written advice.
(3) During the audit process, the Company had been maintained the contract and communication with the project leader of Ruihua
CPAs (LLP) by the methods such as the telephones and e-mails and had been urged which to submit the audit report within the
appointed time.
(4) The 3rd Meeting on 2015 Annual Audit, as well as the 2015 Annual Work Conference, were convened by the Committee on 27 Mar.
2016, where the following proposals were approved as resolutions, namely, the audited 2015 Financial Report of the Company, the
65
2015 Annual Report of Lu Thai Textile Co., Ltd.
Summary Report on the Audit Conducted by Ruihua CPAs (LLP) on the Company’s 2015 Financial Report, and the Proposal on
Renewing Employment of Ruihua CPAs (LLP) as the Company’s audit agency for 2016.
4. Written opinions, summary report of the annual audit, and resolutions of 2014 Work Conference on Annual Report by Audit
Committee
(1) Audit Committee’s written opinion on the 2015 financial and accounting statements prepared by the Company’s Financial
Department before the presence of the registered accountants for the annual audit:
According to the Rules for Audit Committee of the Board Concerning Annual Reports of Lu Thai Textile Co., Ltd., the Audit
Committee shall perform its duties of conducting supervision and checks in the Company’s preparation and disclosure of its annual
reports. The Committee reviewed the 2015 financial and accounting statements prepared by the Company’s Financial Department
before the presence of the registered accountants for the annual audit, and expressed its opinion as follows:
1. The financial and accounting statements were prepared in accordance with the Company’s accounting policy with proper
application of the accounting policy and reasonable accounting estimates, which were in line with the New Accounting Standards for
Business Enterprises, the Accounting System for Business Enterprises, and the relevant regulations issued by the Ministry of Finance
of PRC;
2. The subsidiary statements included in the Company’s consolidated statements were complete in terms of contents, providing an
accurate basis for the statement combination;
3. The Company’s financial statements were found objective, factual and accurate with no major misstatements or information
omission.
4. Since there is still a certain period of time from this review of the financial statements to the formal issuance of the auditor’s report
and the financial statements, the Company’s Financial Department is advised to pay close attention to and carefully handle 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 accountants for
audit.
(2) Audit Committee’s written opinion on the Company’s financial statements after the preliminary audit opinion was issued by
Ruihua CPAs (LLP):
According to the Rules for Audit Committee of the Board Concerning Annual Reports of Lu Thai Textile Co., Ltd., the Audit
Committee shall perform its duties of conducting supervision and checks in the Company’s preparation and disclosure of its annual
reports. We effectively communicated with the said CPA firm (LLP) at the beginning of the audit. And we once again reviewed the
Company’s 2015 financial and accounting statements following the preliminary audit opinion 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 financial
statements were prepared in a rational and standardized way, which fairly, factually, accurately and completely presented the
Company’s assets, liabilities, shareholders’ equity and operation results by 31 Dec. 2015.
The Audit Committee is of the opinion that the Company’s 2015 financial and accounting statements preliminarily audited by RSM
China Certified Public Accountants (Special General Partnership) are ready to be submitted to the 31st Session of the 7th Board of the
Directors for review.
(3) Resolutions made at 2015 Annual Work Conference of Audit Committee of the Board
The Audit Committee of the Board of Lu Thai Textile Co., Ltd. held its 2015 Annual Work Conference at Banyang Villa Meeting
Room of the Company on 27 Mar. 2016. Three persons were supposed to attend the meeting, and all three of them were in fact
present at the meeting as well as the Chief Accountant, the Manager Assistant of the Audit Department, the project responsible person
of Lu Thai of Ruihua CPAs attended the meeting. Mr. Qi Haodong, Chairman of the Audit Committee, presided over the meeting,
and Chief Accountant and Chief Auditor of the Audit Department sat in on the meeting. The meeting was convened in accordance
with the Company Law and the Articles of Association of the Company. And the following proposals were passed by vote at the
66
2015 Annual Report of Lu Thai Textile Co., Ltd.
meeting:
I. With 3 favorable votes, 0 negative votes and no abstentions, the 2015 Financial Report of the Company audited by Ruihua CPAs
(LLP) was passes;
II. With 3 favorable votes, 0 negative votes and no abstentions, the Summary Report on the Audit Conducted by Ruihua CPAs (LLP)
on the Company’s 2015 Financial Report was passed;
III. With 3 favorable votes, 0 negative votes and no abstentions, the Proposal on Renewing Employment of Ruihua CPAs (LLP) as
the Company’s audit agency and internal control audit agency for 2016 was passed with a valid term of 1 year. The Company paid
RMB1.585 million to the said CPAs firm as fees for the 2015 annual financial report audit and internal control audit.
The Committee agrees to submit the above-mentioned proposals 1 and 3 to the Board of Directors for examination on the 31st Session
of the 7th Board of Directors.
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 2015 at Banyang Villa
Meeting Room of the Company on 27 Mar. 2015. Six persons were supposed to attend the meeting, and all of them were in fact
present at the meeting. The meeting held by the Company met with the relevant regulations of Company Law and the Articles of
Association of the Company and reviewed and approved the Proposal on the 2014 Appraisal Result of the Senior Executives of Lu
Thai Company by the voting method and agreed to submit the above-mentioned proposal to the Board of Directors for examination
on the 19th Session of the 7th Board of Directors.
2. Accoridng to the authorization of the 19th Session the 7th Board of Directors of Lu Thai Company, Remuneration Committee of
the Board of Lu Thai Textile Co., Ltd. held the Second Conference in 2015 at Banyang Villa Meeting Room of the Company on 4
Jun. 2015. Six persons were supposed to attend the meeting, and all of them were in fact present at the meeting. Of which Liu
Shizhen, Liu Zibin and Zhang Yao voted in field while Zhang Chengzhu, Zhou Zhiji and Wang Lei voted by communication
methods with the Chief Accountant, Board Secretary attended the meeting. The meeting held by the Company met with the relevant
regulations of Company Law and the Articles of Association of the Company. And the meeting reviewed and approved the Proposal
on the 2014 Risks Funds Assessment Result and the Grant Quota by the voting method.
III. Duty performance of strategic committee affiliated to the Board of Directors
The Strategic Committee of the Board of Directors of Lu Thai Textile Co., Ltd. held the First Conference in 2015 at Banyang Villa
Meeting Room of the Company on 27 Mar. 2015. 13 persons were supposed to attend the meeting, and all of them in fact present at
the meeting. Mr. Liu Shizhen, Chairman of the Strategic Committee, presided over the meeting, and Chief Accountant sat in on the
meeting. The meeting was convened in accordance with the Company Law and the Articles of Association of the Company. The
following proposals were passed unopposed by vote:
1. Overall Strategic Objectives of Yarn Dyed Fabric of Lu Thai Textile Co., Ltd. for 2015-2017.
2. Overall Strategic Objectives of Shirts Processing of Lu Thai Textile Co., Ltd. for 2015-2017.
3. Brand, R&D, human resources, fabric information, and clothing manufacture ERP engineering sub-plan.
4. 2015 Annual Operation Plan of Lu Thai Textile Co., Ltd.
IX. Duty performance of nominations committee affiliated to the Board of Directors
1. The Company held the 1st meeting of 2015 of the norminations committee of the 7th Board of Directors on 27 Oct. 2015 according
to the relevent regulations of the Articles of Association, with 6 favorable votes, 0 negative votes and no abstentions, the proposal on
nominating the Director and GM-Mr. Liu Zibin as the candicate of the Chairman of the Board of the 7th Board of Director and had
submitted which to the 26th Session of the 7th Board of Directros for approval. The 26th Session of the 7th Board of Directors reviewed
and approved the proposal.
VII. Performance of the Supervisory Committee
During the reporting period, the Supervisory Committee found whether there was risk in the Company in the supervisory activity
67
2015 Annual Report of Lu Thai Textile Co., Ltd.
□ Yes √ No
The Supervisory Committee has no objection on the supervised events during the reporting period.
VIII. Performance Evaluation and Incentive Mechanism for Senior Management Staff
In the reporting period, Remuneration Committee of the Board of Directors appraised operating achievements of the Company for
the year 2014 according to Incentive and Restricted Proposal for Senior Executives of Lu Thai Textile Co., Ltd, and drew up
incentive proposal for senior executives, which will be executed after review and approval by the 19th Session of the 7th Board of
Directors dated 28 Mar. 2015. During the reporting period, the Company constantly improved the performance evaluation
mechanism and made the evaluation and incentive of the Senior Executives concerned with the Company’s performances and the
individual working results. According to the overall development strategy and the annual operating target of the Company at the
period-begin, the Company confirms the annual performance comprehensive indication and the management duty of each Senior
Executives, and executes the performance examination and the redemption of the rewards and punishment for the Senior Executives
by the Remuneration and Examination Committee affiliated to the Board of Directors at the year-end. The Company will constantly
improve the evaluation and incentive mechanism that to tightly concern the salary of the Senior Executives with the management
level and the operating performance so that to fully mobilize and inspire the initiative and creativity of them.
IX. Internal Control
1. Particulars about significant defects found in the internal control during reporting period
□ Yes √ No
2. Self-appraisal report on internal control
Disclosure date of the Self-appraisal
30 Mar. 2016
Report on Internal Control
For the details, please refer to the Self-appraisal Report on Internal Control of Lu Thai
Disclosure index of the Self-appraisal
Textile Co., Ltd. simultaneously disclosed on www.cninfo.com.cn with the 2015
Report on Internal Control
Annual Report of the Company.
The proportion of total assets included in
evaluation scope entities in the
93.72%
Company's total assets of the consolidated
financial statements
The proportion of operation revenue
included in evaluation scope entities in
94.80%
the Company's operation revenue of the
consolidated financial statements
Defect judging standards
Category Financial Report Non-Financial Report
Great defect: malpractices of the Directors, Great defect: violated the national laws
Qualitative criteria
Supervisors and Senior Executives; the and regulations; the decision-making of
68
2015 Annual Report of Lu Thai Textile Co., Ltd.
Company revised the published financial the enterprise was not scientific that led
report; the CPA founded the current financial to the mistakes of itself; outflow of the
report occurred significant misstatement management personnel or the technician
while during the operating process of the personnel was serious; frequently
internal control could not founded the appeared the negative news from the
misstatement; the supervision of the Audit Media; the significant business lacked of
Committee and the internal audit institution systematic control or the systematic
of the Company on the internal control was control was invalid; the result of the
invalid. Significant defeat: had not abide by internal control assessment which was
the generally accepted accounting principles the great defect event had not been
to choose and apply the accounting policies; revised. Significant defeat: violated the
had not built up the anti-fraud and significant enterprise internal regulations that
counterbalance mechanism and control caused rather serious losses; significant
measures; during the financial report business lacked of systematic control;
process, there occurred single or multiple outflow of the rather important personnel
defects which not reached the recognition was serious; the Media reported the
standard of the significant defeat but negative news that caused rather serious
influenced the true and accurate target of the negative influence; rather important
financial report. General defect: other business lacked of systematic control or
internal control defect which had not the systematic control was invalid; the
constructed as the great defeat, significant results of the internal control assessment
defect. 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.
Great defect: misstatement≥2% of the total Great defect: the direct financial losses
profits amount; misstatement≥0.3% of the were more than RMB6 million or had
total assets amount; misstatement≥0.3% of been formally and externally disclosed
the total operating income; and caused negative influences on the
misstatement≥0.4% of the total owners’ disclosure of the periodical report of the
equities amount. Significant defect: 1% of Company. Significant defect: the direct
the total profits amount≤misstatement<2% financial losses were of RMB3 million
of the total profits amount; 0.15% of the total (including RMB3 million)-RMB6
assets amount≤misstatement<0.3% of the million or had been punished by the
Quantitative criteria
total assets amount; 0.15% of the total state-owned government sectors while
operating amount≤misstatement<0.3% of the not caused negative influences on the
total operating amount; 0.2% of the total disclosure of the periodical report of the
owners’ equities Company. General defect: the direct
amount≤misstatement<0.4% of the total financial losses were of RMB0.5 million
owners’ equities amount. General defect: (including RMB0.5 million)-RMB 3
misstatement<1% of the total profits amount; million or had been punished by the
misstatement<0.15% of the total assets below-provincial (including the
amount; misstatement<0.15% of the total provincial level) government sectors
69
2015 Annual Report of Lu Thai Textile Co., Ltd.
operating income; misstatement<0.2% of the while not caused negative influences on
total owners’ equities amount. the disclosure of the periodical report of
the Company.
Number of significant defects of financial
0
report (piece)
Number of significant defects of non-
0
financial report (piece)
Number of important defects of financial
0
report (piece)
Number of important defects of
0
non-financial report (piece)
X. Audit report on internal control
√ Applicable □ Inapplicable
Audit opinion paragraphs in the Audit Report on Internal Control
Internal control audit report RHZSZ [2016] No. 37040001
To the shareholders of Lu Thai Textile Co., Ltd.:
According to the relevant requirements of the Enterprise Internal Control Audit Guidelines and the Practicing Standards for China’s
CPAs, we audited the validity of the internal control of the financial report on 31 Dec. 2015 of Lu Thai Textile Co., Ltd. (hereinafter
referred to as “the Company”).
I. Responsibilities of the Company for the internal control
According to the regulations of the C-SOX, the Enterprise Internal Control Application Guidelines and the Enterprise Internal
Control Evaluation Guidance, the Company built and improved as well as efficiently executed the internal control with the
responsibility of the Board of Directors for evaluating the efficiency of it.
II. Responsibilities of the CPA
Our responsibilities are to state the audit advices on the efficiency of the internal control of the financial report based on the
execution of the audit work and to disclose the noticed great defect of the non-financial report internal control.
III. Inherent limitation of the internal control
The internal control possesses its inherent limitation with the possibility of couldn’t prevent and discover the misstatement.
Besides, owning to the changes of the situation, there may cause the inappropriate of the internal control or the degree of the
compliance to the control policies and the process would decrease. The Company predicted that there were certain risks of the
efficiency of the internal control of the future according to the audit results of the internal control.
IV. Audit opinion of the internal control of the financial report
We believe that the Company has made valid internal control on financial report in all significant aspects on 31 Dec. 2015
according to the Basic Rules for Enterprise Internal Control and other relevant stipulations.
Ruihua CPAs (LLP) CPA: Cui Xiaoli
ChinaBeijing CPA: He Feng
Particulars about Audit Report on
Disclosure
Internal Control
70
2015 Annual Report of Lu Thai Textile Co., Ltd.
Disclosure date of the Audit Report
30 Mar. 2016
on Internal Control
Disclosure index of the Audit For details, please refer to the Auditor’s Report on Internal Control on www.cninfo.com.cn at
Report on Internal Control the same time of disclosing the Company’s 2015 Annual Report.
Type of Audit Report on Internal
Unqualified auditor’s report
Control
Whether there is significant defect
No
in non-financial report
Whether the CPAs firm issues an Audit Report on Internal Control with non-standard opinion or not?
□ Yes √ No
Whether the Audit Report on Internal Control from the CPAs firm is in consistent with the Self-appraisal Report from the Board or
not?
√ Yes □ No
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2015 Annual Report of Lu Thai Textile Co., Ltd.
Section X. Financial Report
I. Auditor’s Report
Type of audit opinions Unqualified auditor’s report
Signing date of audit report 28 Mar. 2016
Name of audit institution Ruihua CPAs (LLP)
Document No. of audit report RHSZ [2016] No. 37040002
Name of CPA He Feng, Cui Xiaoli
Text of the auditor’s report
To the shareholders of Lu Thai Textile Co., Ltd.
We have audited the accompanying financial statements of Lu Thai Textile Company Limited (hereinafter refers as “the Company”)
which comprise the Company’s balance sheet and the consolidated balance sheet as at 31 December 2015, the Company’s profit
statement and the consolidated profit statement, the Company’s cash flow statement and the consolidated cash flow statement, the
Company’s statement of changes in owners’ equity and the consolidated statement of changes in owners’ equity, for the year then
ended, as well as the notes to the financial statements.
I. Management’s responsibility for the financial statements
The management of the Company is responsible for the preparation of these financial statements and fair presentation. These
responsibilities include: (1) preparing financial statements according to the Accounting Standards for Business Enterprises and make
them a fair presentation; and (2) designing, implementing and maintaining internal control relevant to the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
II. Auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance
with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The
procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the
entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
III. Opinion
In our opinion, the accompanying financial statements has been prepared according to the Enterprise Accounting Standards and give
a true and fair view of the financial position of the Company as at 31 December 2015, and of the financial performance and cash
flows for the year then ended in all material aspects.
Ruihua CPAs (LLP) CPA: He Feng
ChinaBeijing CPA: Cui Xiaoli
28 Mar. 2016
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2015 Annual Report of Lu Thai Textile Co., Ltd.
II. Financial statements
Monetary unit of notes to financial statements: RMB Yuan
1. Consolidated balance sheet
Prepared by Lu Thai Textile Co., Ltd.
31 Dec. 2015
Unit: RMB Yuan
Item 31 Dec. 2015 31 Dec. 2014
Current Assets:
Monetary funds 795,501,196.07 666,293,798.30
Settlement reserves
Intra-group lendings
Financial assets measured at fair
value of which changes are recorded in 71,696,678.70
current profits and losses
Derivative financial assets
Notes receivable 133,145,518.39 113,804,477.43
Accounts receivable 262,848,042.62 211,970,554.10
Accounts paid in advance 196,809,904.13 174,865,932.88
Premiums receivable
Reinsurance premiums receivable
Receivable reinsurance contract
reserves
Interest receivable 653,075.08
Dividend receivable
Other accounts receivable 70,821,406.28 63,378,909.28
Financial assets purchased under
agreements to resell
Inventories 1,743,963,973.24 1,752,570,382.21
Assets held for sale
Non-current assets due within 1 year
Other current assets 57,391,316.34 5,167,324.98
Total current assets 3,332,831,110.85 2,988,051,379.18
Non-current assets:
Loans by mandate and advances
granted
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2015 Annual Report of Lu Thai Textile Co., Ltd.
Available-for-sale financial assets 67,442,600.00 67,442,600.00
Held-to-maturity investments
Long-term accounts receivable 4,980,998.00 6,980,998.00
Long-term equity investment
Investing real estate
Fixed assets 4,907,575,469.84 4,930,848,056.04
Construction in progress 205,094,029.50 123,585,226.80
Engineering materials 6,319,783.17 19,885,765.41
Disposal of fixed assets
Production biological assets 1,177,113.89 1,310,500.00
Oil-gas assets
Intangible assets 363,385,986.63 373,760,347.71
R&D expense
Goodwill 20,613,803.29 20,613,803.29
Long-term deferred expenses 85,124,145.25 28,319,033.27
Deferred income tax assets 62,123,091.53 49,963,446.84
Other non-current assets 34,502,367.27 16,910,237.34
Total of non-current assets 5,758,339,388.37 5,639,620,014.70
Total assets 9,091,170,499.22 8,627,671,393.88
Current liabilities:
Short-term borrowings 802,766,318.90 517,452,946.24
Borrowings from Central Bank
Customer bank deposits and due to
banks and other financial institutions
Intra-group borrowings
Financial liabilities measured at fair
value of which changes are recorded in 46,695,875.00 3,306,200.00
current profits and losses
Derivative financial liabilities
Notes payable 3,109,149.48 7,421,979.09
Accounts payable 248,570,405.57 344,082,239.16
Accounts received in advance 95,077,531.32 82,176,191.45
Financial assets sold for repurchase
Handling charges and commissions
payable
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2015 Annual Report of Lu Thai Textile Co., Ltd.
Payroll payable 291,263,599.62 261,539,206.93
Tax payable 80,615,008.14 74,052,405.97
Interest payable 1,851,876.78 511,373.44
Dividend payable 441,113.64 441,456.54
Other accounts payable 62,514,814.53 58,075,873.18
Reinsurance premiums payable
Insurance contract reserves
Payables for acting trading of
securities
Payables for acting underwriting of
securities
Liabilities held for sale
Non-current liabilities due within 1
100,733,898.72
year
Other current liabilities
Total current liabilities 1,632,905,692.98 1,449,793,770.72
Non-current liabilities:
Long-term borrowings 9,904,645.59
Bonds payable
Of which: preferred shares
Perpetual bonds
Long-term payables 220,000.00
Long-term payroll payables 81,499,403.98 80,360,457.97
Specific payables
Estimated liabilities
Deferred income 96,135,077.91 67,057,221.40
Deferred income tax liabilities 2,192,694.35 2,064,713.02
Other non-current liabilities 1,840,000.00 1,840,000.00
Total non-current liabilities 181,667,176.24 161,447,037.98
Total liabilities 1,814,572,869.22 1,611,240,808.70
Owners’ equity:
Share capital 955,758,496.00 955,758,496.00
Other equity instruments
Of which: preferred shares
Perpetual bonds
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2015 Annual Report of Lu Thai Textile Co., Ltd.
Capital reserves 1,007,146,166.97 1,007,039,561.13
Less: Treasury stock 11,610,721.68
Other comprehensive income 17,090,772.31 -8,440,178.37
Specific reserves
Surplus reserves 815,648,504.28 742,347,832.47
Provisions for general risks
Retained profits 4,053,079,857.70 3,892,066,534.32
Total equity attributable to owners of
6,837,113,075.58 6,588,772,245.55
the Company
Minority interests 439,484,554.42 427,658,339.63
Total owners’ equity 7,276,597,630.00 7,016,430,585.18
Total liabilities and owners’ equity 9,091,170,499.22 8,627,671,393.88
Legal representative: Liu Zibin Person-in-charge of the accounting work: Zhang Hongmei
Chief of the accounting division: Zhang Keming
2. Balance sheet of the Company
Unit: RMB Yuan
Item 31 Dec. 2015 31 Dec. 2014
Current Assets:
Monetary funds 361,326,403.14 250,409,717.93
Financial assets measured at fair
value of which changes are recorded in
current profits and losses
Derivative financial assets
Notes receivable 100,449,603.66 87,341,876.69
Accounts receivable 235,128,453.94 321,897,074.61
Accounts paid in advance 194,884,351.36 193,383,406.51
Interest receivable
Dividend receivable
Other accounts receivable 33,540,540.54 28,049,517.79
Inventories 1,194,474,541.81 1,206,795,514.65
Assets held for sale
Non-current assets due within 1 year
Other current assets 20,665,251.54 1,017,648.28
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2015 Annual Report of Lu Thai Textile Co., Ltd.
Total current assets 2,140,469,145.99 2,088,894,756.46
Non-current assets:
Available-for-sale financial assets 55,282,600.00 55,282,600.00
Held-to-maturity investments
Long-term accounts receivable
Long-term equity investment 1,577,704,740.04 1,170,861,572.56
Investing real estate
Fixed assets 3,086,026,962.51 3,115,567,670.72
Construction in progress 47,195,873.42 77,701,863.38
Engineering materials 4,752,722.48 18,626,397.04
Disposal of fixed assets
Production biological assets
Oil-gas assets
Intangible assets 231,714,546.11 239,561,216.15
R&D expense
Goodwill
Long-term deferred expenses
Deferred income tax assets 56,039,573.79 31,683,250.78
Other non-current assets 25,733,137.67 5,406,401.00
Total of non-current assets 5,084,450,156.02 4,714,690,971.63
Total assets 7,224,919,302.01 6,803,585,728.09
Current liabilities:
Short-term borrowings 509,321,176.41 109,116,402.18
Financial liabilities measured at fair
value of which changes are recorded in 39,527,800.00 3,075,000.00
current profits and losses
Derivative financial liabilities
Notes payable 400,000.00 4,126,949.64
Accounts payable 156,939,081.65 370,179,503.31
Accounts received in advance 52,388,447.07 42,230,252.30
Payroll payable 225,146,911.56 201,779,896.86
Tax payable 44,647,234.36 38,755,976.56
Interest payable 830,073.23 401,695.08
Dividend payable 441,113.64 441,456.54
Other accounts payable 19,453,519.54 22,996,300.29
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2015 Annual Report of Lu Thai Textile Co., Ltd.
Liabilities held for sale
Non-current liabilities due within 1
100,733,898.72
year
Other current liabilities
Total current liabilities 1,049,095,357.46 893,837,331.48
Non-current liabilities:
Long-term borrowings 9,904,645.59
Bonds payable
Of which: preferred shares
Perpetual bonds
Long-term payables
Long-term payroll payables 81,499,403.98 80,360,457.97
Specific payables
Estimated liabilities
Deferred income 61,687,374.76 30,469,481.47
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities 143,186,778.74 120,734,585.03
Total liabilities 1,192,282,136.20 1,014,571,916.51
Owners’ equity:
Share capital 955,758,496.00 955,758,496.00
Other equity instruments
Of which: preferred shares
Perpetual bonds
Capital reserves 1,013,498,848.06 1,013,392,242.22
Less: Treasury stock 11,610,721.68
Other comprehensive income
Specific reserves
Surplus reserves 815,648,504.28 742,347,832.47
Retained profits 3,259,342,039.15 3,077,515,240.89
Total owners’ equity 6,032,637,165.81 5,789,013,811.58
Total liabilities and owners’ equity 7,224,919,302.01 6,803,585,728.09
3. Consolidated income statement
Unit: RMB Yuan
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2015 Annual Report of Lu Thai Textile Co., Ltd.
Item 2015 2014
I. Total operating revenues 6,173,322,778.61 6,169,688,792.53
Including: Sales income 6,173,322,778.61 6,169,688,792.53
Interest income
Premium income
Handling charge and commission
income
II. Total operating costs 5,302,761,010.18 5,124,498,428.62
Including: Cost of sales 4,341,034,877.04 4,234,584,418.78
Interest expenses
Handling charge and commission
expenses
Surrenders
Net claims paid
Net amount withdrawn for the
insurance contract reserve
Expenditure on policy dividends
Reinsurance premium
Taxes and associate charges 55,309,984.03 48,737,776.54
Selling and distribution expenses 191,933,295.19 178,283,494.87
Administrative expenses 670,704,384.29 634,545,131.08
Financial expenses 16,481,023.89 15,462,783.19
Asset impairment loss 27,297,445.74 12,884,824.16
Add: Gain/(loss) from change in fair
-60,685,931.36 -33,255,320.00
value (“-” means loss)
Gain/(loss) from investment (“-”
31,540,015.51 28,055,884.70
means loss)
Including: share of profits in
associates and joint ventures
Foreign exchange gains (“-” means
loss)
III. Business profit (“-” means loss) 841,415,852.58 1,039,990,928.61
Add: non-operating income 52,201,733.84 127,350,434.80
Including: Gains on disposal of
959,445.92 2,759,790.52
non-current assets
Less: non-operating expense 10,168,567.50 10,366,369.53
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2015 Annual Report of Lu Thai Textile Co., Ltd.
Including: Losses on disposal of
5,625,603.48 6,075,803.07
non-current assets
IV. Total profit (“-” means loss) 883,449,018.92 1,156,974,993.88
Less: Income tax expense 147,905,990.15 177,597,812.31
V. Net profit (“-” means loss) 735,543,028.77 979,377,181.57
Net profit attributable to owners of
712,193,243.19 958,725,402.84
the Company
Minority shareholders’ income 23,349,785.58 20,651,778.73
VI. After-tax net amount of other
25,530,950.68 -945,858.01
comprehensive incomes
After-tax net amount of other
comprehensive incomes attributable to 25,530,950.68 -945,858.01
owners of the Company
(I) Other comprehensive incomes
that will not be reclassified into gains and
losses
1. Changes in net liabilities or
assets with a defined benefit plan upon
re-measurement
2. Enjoyable shares in other
comprehensive incomes in investees that
cannot be reclassified into gains and
losses under the equity method
(II) Other comprehensive incomes
that will be reclassified into gains and 25,530,950.68 -945,858.01
losses
1. Enjoyable shares in other
comprehensive incomes in investees that
will be reclassified into gains and losses
under the equity method
2. Gains and losses on fair
value changes of available-for-sale
financial assets
3. Gains and losses on
reclassifying held-to-maturity
investments into available-for-sale
financial assets
4. Effective hedging gains and
losses on cash flows
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2015 Annual Report of Lu Thai Textile Co., Ltd.
5. Foreign-currency financial
25,530,950.68 -945,858.01
statement translation difference
6. Other
After-tax net amount of other
comprehensive incomes attributable to
minority shareholders
VII. Total comprehensive incomes 761,073,979.45 978,431,323.56
Attributable to owners of the
737,724,193.87 957,779,544.83
Company
Attributable to minority
23,349,785.58 20,651,778.73
shareholders
VIII. Earnings per share
(I) Basic earnings per share 0.750 1.000
(II) Diluted earnings per share 0.750 1.000
Where business mergers under the same control occurred in this reporting period, the net profit achieved by the merged parties before
the business mergers was RMB0.00, with the corresponding amount for the last period being RMB0.00.
Legal representative: Liu Zibin Person-in-charge of the accounting work: Zhang Hongmei
Chief of the accounting division: Zhang Keming
4. Income statement of the Company
Unit: RMB Yuan
Item 2015 2014
I. Total sales 4,944,030,174.49 4,724,521,057.36
Less: cost of sales 3,648,460,561.91 3,328,499,838.24
Business taxes and surcharges 43,900,218.04 35,182,870.07
Distribution expenses 89,638,305.49 78,585,868.37
Administrative expenses 463,715,559.98 460,305,623.93
Financial costs 11,074,526.15 -3,895,674.90
Impairment loss 105,767,874.66 13,182,245.70
Add: gain/(loss) from change in fair
-36,452,800.00 -28,132,200.00
value (“-” means loss)
Gain/(loss) from investment (“-”
251,963,173.61 84,276,679.09
means loss)
Including: income form investment
on associates and joint ventures
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2015 Annual Report of Lu Thai Textile Co., Ltd.
II. Business profit (“-” means loss) 796,983,501.87 868,804,765.04
Add: non-operating income 21,081,302.96 85,828,034.74
Including: Gains on disposal of
535,631.91 2,643,079.05
non-current assets
Less: non-operating expense 4,557,976.86 5,679,483.40
Including: Losses on disposal of
3,840,466.74 4,845,033.00
non-current assets
III. Total profit (“-” means loss) 813,506,827.97 948,953,316.38
Less: Income tax expense 80,500,109.90 120,859,104.20
IV. Net profit (“-” means loss) 733,006,718.07 828,094,212.18
V. After-tax net amount of other
comprehensive incomes
(I) Other comprehensive incomes that
will not be reclassified into gains and
losses
1. Changes in net liabilities or
assets with a defined benefit plan upon
re-measurement
2. Enjoyable shares in other
comprehensive incomes in investees
that cannot be reclassified into gains
and losses under the equity method
(II) Other comprehensive incomes
that will be reclassified into gains and
losses
1. Enjoyable shares in other
comprehensive incomes in investees
that will be reclassified into gains and
losses under the equity method
2. Gains and losses on fair value
changes of available-for-sale financial
assets
3. Gains and losses on
reclassifying held-to-maturity
investments into available-for-sale
financial assets
4. Effective hedging gains and
losses on cash flows
5. Foreign-currency financial
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2015 Annual Report of Lu Thai Textile Co., Ltd.
statement translation difference
6. Other
VI. Total comprehensive incomes 733,006,718.07 828,094,212.18
VII. Earnings per share
(I) Basic earnings per share 0.77 0.87
(II) Diluted earnings per share 0.77 0.87
5. Consolidated cash flow statement
Unit: RMB Yuan
Item 2015 2014
I. Cash flows from operating activities:
Cash received from sale of
6,030,509,998.21 6,188,950,932.05
commodities and rendering of service
Net increase of deposits from
customers and dues from banks
Net increase of loans from the central
bank
Net increase of funds borrowed from
other financial institutions
Cash received from premium of
original insurance contracts
Net cash received from reinsurance
business
Net increase of deposits of policy
holders and investment fund
Net increase of disposal of financial
assets measured at fair value of which
changes are recorded into current gains
and losses
Cash received from interest, handling
charges and commissions
Net increase of intra-group
borrowings
Net increase of funds in repurchase
business
Tax refunds received 172,608,069.68 169,362,368.52
Other cash received relating to 95,495,004.98 104,846,975.33
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2015 Annual Report of Lu Thai Textile Co., Ltd.
operating activities
Subtotal of cash inflows from operating
6,298,613,072.87 6,463,160,275.90
activities
Cash paid for goods and services 3,307,297,819.20 3,445,428,499.72
Net increase of customer lendings
and advances
Net increase of funds deposited in the
central bank and amount due from
banks
Cash for paying claims of the original
insurance contracts
Cash for paying interest, handling
charges and commissions
Cash for paying policy dividends
Cash paid to and for employees 1,372,174,345.22 1,311,137,432.02
Various taxes paid 356,064,268.45 353,432,796.63
Other cash payment relating to
235,481,235.66 241,066,198.51
operating activities
Subtotal of cash outflows from
5,271,017,668.53 5,351,064,926.88
operating activities
Net cash flows from operating activities 1,027,595,404.34 1,112,095,349.02
II. Cash flows from investing activities:
Cash received from withdrawal of
investments
Cash received from return on
120,000.00
investments
Net cash received from disposal of
fixed assets, intangible assets and other 2,277,031.35 10,105,963.10
long-term assets
Net cash received from disposal of
subsidiaries or other business units
Other cash received relating to
50,940,957.84 35,492,522.48
investing activities
Subtotal of cash inflows from investing
53,217,989.19 45,718,485.58
activities
Cash paid to acquire fixed assets,
intangible assets and other long-term 455,625,977.74 756,763,199.57
assets
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2015 Annual Report of Lu Thai Textile Co., Ltd.
Cash paid for investment
Net increase of pledged loans
Net cash paid to acquire subsidiaries
and other business units
Other cash payments relating to
117,355,791.90
investing activities
Subtotal of cash outflows from
572,981,769.64 756,763,199.57
investing activities
Net cash flows from investing activities -519,763,780.45 -711,044,713.99
III. Cash Flows from Financing
Activities:
Cash received from capital
500,000.00 500,000.00
contributions
Including: Cash received from
minority shareholder investments by 500,000.00 500,000.00
subsidiaries
Cash received from borrowings 1,457,671,792.24 912,000,833.83
Cash received from issuance of
bonds
Other cash received relating to
77,262,230.00 37,814,503.00
financing activities
Subtotal of cash inflows from financing
1,535,434,022.24 950,315,336.83
activities
Repayment of borrowings 1,320,131,980.26 1,115,523,472.45
Cash paid for interest expenses and
505,028,058.43 407,085,121.99
distribution of dividends or profit
Including: dividends or profit paid
9,619,012.38 20,039,282.78
by subsidiaries to minority shareholders
Other cash payments relating to
123,481,516.75 53,943,820.20
financing activities
Sub-total of cash outflows from
1,948,641,555.44 1,576,552,414.64
financing activities
Net cash flows from financing activities -413,207,533.20 -626,237,077.81
IV. Effect of foreign exchange rate
21,677,584.66 4,670,735.19
changes on cash and cash equivalents
V. Net increase in cash and cash
116,301,675.35 -220,515,707.59
equivalents
Add: Opening balance of cash and 649,393,798.30 869,909,505.89
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2015 Annual Report of Lu Thai Textile Co., Ltd.
cash equivalents
VI. Closing balance of cash and cash
765,695,473.65 649,393,798.30
equivalents
6. Cash flow statement of the Company
Unit: RMB Yuan
Item 2015 2014
I. Cash flows from operating activities:
Cash received from sale of
4,961,880,181.41 4,669,563,283.98
commodities and rendering of service
Tax refunds received 129,451,700.19 134,158,073.18
Other cash received relating to
52,352,078.75 83,209,985.16
operating activities
Subtotal of cash inflows from operating
5,143,683,960.35 4,886,931,342.32
activities
Cash paid for goods and services 2.874.742.643.78 2,727,091,114.02
Cash paid to and for employees 1,050,513,463.85 993,656,836.67
Various taxes paid 172,137,702.77 222,404,363.00
Other cash payment relating to
157,926,230.24 156,501,371.04
operating activities
Subtotal of cash outflows from
4,255,320,040.64 4,099,653,684.73
operating activities
Net cash flows from operating activities 888,363,919.71 787,277,657.59
II. Cash flows from investing activities:
Cash received from retraction of
investments
Cash received from return on
investments
Net cash received from disposal of
fixed assets, intangible assets and other 1,738,821.35 9,746,582.62
long-term assets
Net cash received from disposal of
subsidiaries or other business units
Other cash received relating to
37,525,796.60 29,462,018.07
investing activities
Subtotal of cash inflows from investing
39,264,617.95 39,208,600.69
activities
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2015 Annual Report of Lu Thai Textile Co., Ltd.
Cash paid to acquire fixed assets,
intangible assets and other long-term 127,352,558.59 565,687,012.76
assets
Cash paid for investment 442,518,167.48 96,483,109.00
Net cash paid to acquire subsidiaries
and other business units
Other cash payments relating to
investing activities
Subtotal of cash outflows from
569,870,726.07 662,170,121.76
investing activities
Net cash flows from investing activities -530,606,108.12 -622,961,521.07
III. Cash Flows from Financing
Activities:
Cash received from capital
contributions
Cash received from borrowings 742,195,059.14 312,748,768.18
Cash received from issuance of
bonds
Other cash received relating to
61,262,230.00 25,814,503.00
financing activities
Subtotal of cash inflows from financing
803,457,289.14 338,563,271.18
activities
Repayment of borrowings 483,324,013.96 363,070,482.23
Cash paid for interest expenses and
485,161,279.23 372,691,879.61
distribution of dividends or profit
Other cash payments relating to
93,507,094.33 25,943,820.20
financing activities
Sub-total of cash outflows from
1,061,992,387.52 761,706,182.04
financing activities
Net cash flows from financing activities -258,535,098.38 -423,142,910.86
IV. Effect of foreign exchange rate
12,593,972.00 5,178,804.35
changes on cash and cash equivalents
V. Net increase in cash and cash
111,816,685.21 -253,647,969.99
equivalents
Add: Opening balance of cash and
249,509,717.93 503,157,687.92
cash equivalents
VI. Closing balance of cash and cash
361,326,403.14 249,509,717.93
equivalents
87
2015 Annual Report of Lu Thai Textile Co., Ltd.
7. Consolidated statement of changes in owners’ equity
2015
Unit: RMB Yuan
2015
Equity attributable to owners of the Company
Other equity
Other Minorit Total
Item instruments Less: General
Share Capital compre Specific Surplus Retaine y owners’
Prefer Perpet treasury risk
capital reserve hensive reserve reserve d profit interests equity
red ual Other stock reserve
incomes
shares bonds
I. Balance at the 955,75 1,007,0 3,892,0 7,016,4
-8,440,1 742,347 427,658
end of the 8,496. 39,561. 66,534. 30,585.
78.37 ,832.47 ,339.63
previous year 00 13 32 18
Add: change of
accounting policy
Correction of
errors in previous
periods
Business
mergers under the
same control
Other
II. Balance at the 955,75 1,007,0 3,892,0 7,016,4
-8,440,1 742,347 427,658
beginning of the 8,496. 39,561. 66,534. 30,585.
78.37 ,832.47 ,339.63
year 00 13 32 18
III. Increase/
decrease in the 106,605 11,610, 25,530, 73,300, 161,013 11,826, 260,167
period (“-” means .84 721.68 950.68 671.81 ,323.38 214.79 ,044.82
decrease)
(I) Total
25,530, 712,193 23,349, 761,073
comprehensive
950.68 ,243.19 785.58 ,979.45
incomes
(II) Capital
106,605 11,610, 500,000 -11,004,
increased and
.84 721.68 .00 115.84
reduced by owners
1. Common
11,610, 500,000 -11,110,
shares increased
721.68 .00 721.68
by shareholders
2. Capital
88
2015 Annual Report of Lu Thai Textile Co., Ltd.
increased by
holders of other
equity instruments
3. Amounts
of share-based
payments
recognized in
owners’ equity
106,605 106,605
4. Other
.84 .84
-551,17 -489,90
(III) Profit 73,300, -12,023,
9,919.8 2,818.7
distribution 671.81 570.79
1 9
1.
73,300, -73,300,
Appropriations to
671.81 671.81
surplus reserves
2.
Appropriations to
general risk
provisions
3.
-477,87 -489,90
Appropriations to -12,023,
9,248.0 2,818.7
owners (or 570.79
0 9
shareholders)
4. Other
(IV) Internal
carry-forward of
owners’ equity
1. New
increase of capital
(or share capital)
from capital public
reserves
2. New
increase of capital
(or share capital)
from surplus
reserves
3. Surplus
reserves for
making up losses
89
2015 Annual Report of Lu Thai Textile Co., Ltd.
4. Other
(V) Specific
reserve
1. Withdrawn
for the period
2. Used in the
period
(VI) Other
955,75 1,007,1 4,053,0 7,276,5
IV. Closing 11,610, 17,090, 815,648 439,484
8,496. 46,166. 79,857. 97,630.
balance 721.68 772.31 ,504.28 ,554.42
00 97 70 00
2014
Unit: RMB Yuan
2014
Equity attributable to owners of the Company
Other equity Minorit
Other Total
Item instruments Less: General y
Share Capital compre Specific Surplus Retaine owners’
treasury risk interest
Prefer Perpet equity
capital reserve hensive reserve reserve d profit
red ual stock reserve s
Other
incomes
shares bonds
I. Balance at the 955,80 1,000,8 3,379,3 6,414,5
-7,494,3 659,538 426,545
end of the 0,496. 54,805. 54,741. 99,977.
20.36 ,411.25 ,843.68
previous year 00 66 18 41
Add: change of
accounting policy
Correction of
errors in previous
periods
Business
mergers under the
same control
Other
II. Balance at the 955,80 1,000,8 3,379,3 6,414,5
-7,494,3 659,538 426,545
beginning of the 0,496. 54,805. 54,741. 99,977.
20.36 ,411.25 ,843.68
year 00 66 18 41
III. Increase/
decrease in the -42,00 6,184,7 -945,85 82,809, 512,711 1,112,4 601,830
period (“-” means 0.00 55.47 8.01 421.22 ,793.14 95.95 ,607.77
decrease)
90
2015 Annual Report of Lu Thai Textile Co., Ltd.
(I) Total
-945,85 958,725 20,651, 978,431
comprehensive
8.01 ,402.84 778.73 ,323.56
incomes
(II) Capital
-42,00 6,184,7 20,539, 26,682,
increased and
0.00 55.47 282.79 038.26
reduced by owners
1. Common
-42,00 -169,05 20,539, 20,328,
shares increased
0.00 0.00 282.79 232.79
by shareholders
2. Capital
increased by
holders of other
equity instruments
3. Amounts
of share-based
6,041,8 6,041,8
payments
53.38 53.38
recognized in
owners’ equity
311,952 311,952
4. Other
.09 .09
-446,01 -403,28
(III) Profit 82,809, -40,078
3,609.7 2,754.0
distribution 421.22 ,565.57
0 5
1.
82,809, -82,809,
Appropriations to
421.22 421.22
surplus reserves
2.
Appropriations to
general risk
provisions
3.
-363,20 -403,28
Appropriations to -40,078
4,188.4 2,754.0
owners (or ,565.57
8 5
shareholders)
4. Other
(IV) Internal
carry-forward of
owners’ equity
1. New
increase of capital
(or share capital)
91
2015 Annual Report of Lu Thai Textile Co., Ltd.
from capital public
reserves
2. New
increase of capital
(or share capital)
from surplus
reserves
3. Surplus
reserves for
making up losses
4. Other
(V) Specific
reserve
1. Withdrawn
for the period
2. Used in the
period
(VI) Other
955,75 1,007,0 3,892,0 7,016,4
IV. Closing -8,440,1 742,347 427,658
8,496. 39,561. 66,534. 30,585.
balance 78.37 ,832.47 ,339.63
00 13 32 18
8. Statement of changes in owners’ equity of the Company
2015
Unit: RMB Yuan
2015
Other equity instruments Other
Less: Total
Item Share Capital comprehe Specific Surplus Retaine
Preferre Perpetu treasury owners’
capital Other reserve nsive reserve reserve d profit
d shares al bonds stock equity
incomes
I. Balance at the 3,077,5
955,758, 1,013,392 742,347,8 5,789,013
end of the previous 15,240.
496.00 ,242.22 32.47 ,811.58
year 89
Add: change of
accounting policy
Correction of
errors in previous
periods
Other
92
2015 Annual Report of Lu Thai Textile Co., Ltd.
II. Balance at the 3,077,5
955,758, 1,013,392 742,347,8 5,789,013
beginning of the 15,240.
496.00 ,242.22 32.47 ,811.58
year 89
III. Increase/
decrease in the 106,605.8 11,610,72 73,300,67 181,826 243,623,3
period (“-” means 4 1.68 1.81 ,798.26 54.23
decrease)
(I) Total
733,006 733,006,7
comprehensive
,718.07 18.07
incomes
(II) Capital
106,605.8 11,610,72 -11,504,1
increased and
4 1.68 15.84
reduced by owners
1. Common
11,610,72 -11,610,7
shares increased
1.68 21.68
by shareholders
2. Capital
increased by
holders of other
equity instruments
3. Amounts
of share-based
payments
recognized in
owners’ equity
106,605.8 106,605.8
4. Other
4 4
-551,17
(III) Profit 73,300,67 -477,879,
9,919.8
distribution 1.81 248.00
1
1.
73,300,67 -73,300,
Appropriations to
1.81 671.81
surplus reserves
2.
-477,87
Appropriations to -477,879,
9,248.0
owners (or 248.00
0
shareholders)
3. Other
(IV) Internal
carry-forward of
93
2015 Annual Report of Lu Thai Textile Co., Ltd.
owners’ equity
1. New
increase of capital
(or share capital)
from capital public
reserves
2. New
increase of capital
(or share capital)
from surplus
reserves
3. Surplus
reserves for
making up losses
4. Other
(V) Specific
reserve
1. Withdrawn
for the period
2. Used in the
period
(VI) Other
3,259,3
IV. Closing 955,758, 1,013,498 11,610,72 815,648,5 6,032,637
42,039.
balance 496.00 ,848.06 1.68 04.28 ,165.81
15
2014
Unit: RMB Yuan
2014
Other equity instruments Other
Less: Total
Item Share Capital comprehe Specific Surplus Retaine
Preferre Perpetu treasury owners’
capital Other reserve nsive reserve reserve d profit
d shares al bonds stock equity
incomes
I. Balance at the 2,695,4
955,800, 1,007,207 659,538,4 5,317,981
end of the previous 34,638.
496.00 ,486.75 11.25 ,032.41
year 41
Add: change of
accounting policy
Correction of
errors in previous
periods
94
2015 Annual Report of Lu Thai Textile Co., Ltd.
Other
II. Balance at the 2,695,4
955,800, 1,007,207 659,538,4 5,317,981
beginning of the 34,638.
496.00 ,486.75 11.25 ,032.41
year 41
III. Increase/
decrease in the -42,000. 6,184,755 82,809,42 382,080 471,032,7
period (“-” means 00 .47 1.22 ,602.48 79.17
decrease)
(I) Total
828,094 828,094,2
comprehensive
,212.18 12.18
incomes
(II) Capital
-42,000. 6,184,755 6,142,755
increased and
00 .47 .47
reduced by owners
1. Common
-42,000. -169,050. -211,050.
shares increased
00 00 00
by shareholders
2. Capital
increased by
holders of other
equity instruments
3. Amounts
of share-based
6,041,853 6,041,853
payments
.38 .38
recognized in
owners’ equity
311,952.0 311,952.0
4. Other
9 9
-446,01
(III) Profit 82,809,42 -363,204,
3,609.7
distribution 1.22 188.48
0
1.
82,809,42 -82,809,
Appropriations to
1.22 421.22
surplus reserves
2.
-363,20
Appropriations to -363,204,
4,188.4
owners (or 188.48
8
shareholders)
3. Other
(IV) Internal
95
2015 Annual Report of Lu Thai Textile Co., Ltd.
carry-forward of
owners’ equity
1. New
increase of capital
(or share capital)
from capital public
reserves
2. New
increase of capital
(or share capital)
from surplus
reserves
3. Surplus
reserves for
making up losses
4. Other
(V) Specific
reserve
1. Withdrawn
for the period
2. Used in the
period
(VI) Other
3,077,5
IV. Closing 955,758, 1,013,392 742,347,8 5,789,013
15,240.
balance 496.00 ,242.22 32.47 ,811.58
89
III. Company Profile
Lu Thai Textile Co., Ltd. (hereinafter referred to as the Company) is a joint venture invested by Zibo Lucheng
Textile Investment Co., Ltd (originally named Zibo Lucheng Textile Co., Ltd, hereinafter referred to as Lucheng
Textile) and Thailand Tailun Textile Co., Ltd. On Feb. 3, 1993, the Company is approved by the former Ministry
of Foreign Trade and Economy of the State (1993) in WJMZEHZ No. 59 to convert into a joint-stock enterprise.
Zibo Administration for Industry and Commerce issued the Company corporate business license with the
registration No. of QGLZZZ No. 000066. In July 1997, the Company is approved by the Securities Committee of
the Department of the State in the ZWF (1997) No. 47 to issue 80 million shares of domestically listed foreign
share( B-shares) at the price of RMB 1.00 per share. Upon approved by Shenzhen Stock Exchange with No. (1997)
296 Listing Notice, the Company is listed on the Shenzhen Stock Exchange on August 19, 1997 with B-shares
stock code of 200726. On November 24, 2000, approved by ZJGSZ [2000] No.199 by CSRC, the Company
increased publication of 50 million shares of general share (A-shares) at the book value of RMB 1.00, which are
listed on the Shenzhen Stock Exchange on December 25, 2000 with A-shares stock code of 000726 through
approval by Shenzhen Stock Exchange with No. (2000) 162 Listing Notice. As approved by 2000 Shareholders’
96
2015 Annual Report of Lu Thai Textile Co., Ltd.
General Meeting in May, 2001, the Company carried out the distribution plan that 10 shares of capital public
reserve are converted to 3 more shares for each 10 shares. As approved by Resolutions of 2001 Shareholders’
General Meeting in June 2002, the Company implemented the distribution plan that 10 shares of capital public
reserve are converted 3 more shares for each 10 shares again. As approved by 2002 Shareholders’ General
Meeting in May 2003, the Company implemented the distribution plan that 10 shares of capital public reserve are
2 more shares for each 10 shares, and inner employees’ shared increased to 40.56 million shares. As examined and
approved by ZJGSZ No. [2000] 199 of CSRC, the inner employees’ shares will start circulation 3 years later since
listing on the A-share market. On Dec. 25, 2003, the inner employees’ shares reach 3 years since listing on the
A-share stock market, and they set out circulation on Dec.26, 2003. As approved by the Shareholders’ General
Meeting 2006 held in June 2007, the Company implemented the plan on converting 10 shares to all its
shareholders with capital reserves for every 10 shares. After capitalization, the registered capital of the Company
was RMB 844.8648 million. The Company, in accordance with the official reply on approving Lu Thai Textile Co.,
Ltd. to issue additional shares (ZJXK [2008] No. 890 document) from CSRC, issued the Renminbi common
shares (A shares) amounting to 150 million shares on 8 Dec. 2008. According to the relevant resolution of the 2nd
Special Shareholders’ General Meeting for 2011, the relevant resolution of the 15th Session of the 6th Board of
Directors, the Opinion of China Securities Regulatory Commission on the Restricted Share Incentive Plan of Lu
Thai Textile Co., Ltd. (Shang-Shi-Bu-Han [2011] No. 206), the Company applied for a registered capital
increment of RMB 14.09 million, which was contributed by restricted share incentive receivers with monetary
funds. In accordance with the resolution of Proposal on Repurchasing and Canceling Partial Restricted Shares
already Granted for the Original Incentive Targets not Reaching the Incentive Conditions made at the 23rd Session
of the 6th Board of Directors on 13 Aug. 2012, the Company canceling a total of 60,000.00 shares already granted
for the original incentive targets not reaching the incentive conditions. According to the second temporary
resolution of Proposal on counter purchase of part of the domestic listed foreign share (B share) on 25 Jun. 2012,
the Company counter purchase domestic listed foreign share (B share) 48,837,300 shares. According to the
Proposal on Repurchase and Cancel Part of Unlocked Restricted Share of the Original Incentive Personnel not
Conforming to the Incentive Condition, Proposal on Repurchase and Cancel unlocked Restricted Share in Second
Unlocked Period of all the Incentive Personnel reviewed and approved by the 26th meeting of 6th session of the
board of the directors on 27 Mar. 2013, the Company repurchase and cancel 4,257,000 shares owned by original
people whom to motivate. According to the Proposal on Repurchase and Write-off of Partly of the Original
Incentive Targets Not Met with the Incentive Conditions but Granted Restricted Shares approved on the 11th
Session of the 7th Board of Directors on 11 Jun. 2014, to execute repurchase and write-off of the whole granted
shares of 42,000 shares of the original incentive targets not met with the incentive targets of the Company. Up to
31 Dec. 2014, the registered capital of the Company was of RMB955.7585 million.
The Company’s registered address: No. 11, Mingbo Road, Hi-tech Development Zone, Zibo, Shandong
The Company’s legal representative: Liu Zibin
The Company’s business scope includes the production, processing and sales business of cotton yarn, yarn dyed
fabrics, shirts, fashion accessories, health underwear and other textile products and their mating products; design,
R&D and technology services of the textile and garment products; acquisition and export of products not under
exclusive rights or quota licenses; and hotel, guesthouses, catering, conferences, and training services; rental
business of the self-owned houses and land; the construction and management of the purified water projects.
The Company’s financial statements have been approved for issue by the Board of Directors of the Company on
28 Mar. 2016.
There were 15 subsidiaries included into the consolidation scope of the Company in 2015, and for the details,
97
2015 Annual Report of Lu Thai Textile Co., Ltd.
please refer to Notes IX. Equities among Other Entities. There was 1 subsidiary increased of 2015 in the
consolidation scope over the last year, and please refer to Notes VIII. Changes in Consolidation Scope for details.
IV. Basis for the preparation of financial statements
1. Preparation basis
With the going-concern assumption as the basis and based on transactions and other events that actually occurred,
the Group prepared financial statements in accordance with Enterprises—Basic Standard> issued by the Ministry of Finance with Decree No. 33 and revised with Decree No. 76, the 41 specific accounting standards, the Application Guidance of Accounting Standards for Business Enterprises, the Interpretation of Accounting Standards for Business Enterprises and other regulations issued and revised from 15 Feb. 2006 onwards (hereinafter jointly referred to as “the Accounting Standards for Business Enterprises”, “China Accounting Standards” or “CAS”), as well as the Rules for Preparation Convention of Disclosure of Public Offering Companies No.15 – General Regulations for Financial Reporting (revised in 2014) by China Securities Regulatory Commission. In accordance with relevant provisions of the Accounting Standards for Business Enterprises, the Group adopted the accrual basis in accounting. Except for some financial instruments, where impairment occurred on an asset, an impairment reserve was withdrawn accordingly pursuant to relevant requirements. V. Important accounting policies and estimations Indication of specific accounting policies and estimations: The Company and each subsidiary mainly engage in the production and operation of textile products. The Company and each subsidiary according to the actual production and operation characteristics and the regulations of the relevant ASBE, formulated certain specific accounting polices and accounting estimates of the transactions and events such as recognizing the revenues, and please refer to each description of the section for details. As for the notes to the important accounting judgment and estimations made by the management level, please refer to the “Other important accounting policies and estimations” of the section. 1. Statement of Compliance with the Accounting Standards for Business Enterprises The financial statements prepared by the Company are in compliance with in compliance with the Accounting Standards for Business Enterprises, which factually and completely present the Company’s, and the Company’s financial positions as at 31 Dec. 2015, business results and cash flows for the year of 2015, and other relevant information. In addition, the Company’s and the Company’s financial statements meet the requirements of disclosing financial statements and notes thereto stated in the Rules for Preparation Convention of Disclosure of Public Offering Companies No.15 – General Regulations for Financial Reporting (revised in 2014) by China Securities Regulatory Commission. 2. Fiscal period The Company’s fiscal periods include fiscal years and fiscal periods shorter than a complete fiscal year. The 98 2015 Annual Report of Lu Thai Textile Co., Ltd. Company’s fiscal year starts on 1 Jan. and ends on 31 Dec. of every year according to the Gregorian calendar. 3. Operating cycle Normal operating cycle refers to the period from the Group purchases the assets for processing to realize the cash or cash equivalents. The Group regards 12 months as an operating cycle and regards which as the partition criterion of the mobility of the assets and liabilities. 4. Recording currency Renminbi (RMB) is regarded as the prevailing currency used in the main economic circumstances of the Company and its domestic subsidiaries. The Company and its domestic subsidiaries adopt RMB as the recording currency. The Company and its overseas subsidiaries confirm to adopt HK Dollar, US Dollar and Vietnamese Dong as the recording currency according their major economic environment of the operating. When preparing the financial statements for the reporting period, the Company adopted RMB as the recording currency. 5. Accounting treatment methods for business combinations under the same control or not under the same control Business combinations, it is refer to two or more separate enterprises merge to form a reporting entity transactions or events. Business combination is divided into under the same control and those non under the same control. (1) Business combinations under the same control A business combination under the same control is a business combination in which all of the combining enterprises are ultimately controlled by the same party or the same parties both before and after the business combination and on which the control is not temporary. In a business combination under the same control, the party which obtains control of other combining enterprise(s) on the combining date is the combining party, the other combining enterprise(s) is (are) the combined party. The “combining date” refers to the date on which the combining party actually obtains control on the combined party. The assets and liabilities that the combining party obtains in a business combination shall be measured on the basis of their carrying amount in the combined party on the combining date. As for the balance between the carrying amount of the net assets obtained by the combining party and the carrying amount of the consideration paid by it (or the total par value of the shares issued), the additional paid-in capital (share premium) shall be adjusted. If the additional paid-in capital (share premium) is not sufficient to be offset, the retained earnings shall be adjusted. The direct cost for the business combination of the combining party shall be recorded into the profits and losses at the current period. (2) Business combinations not under the same control A business combination not under the same control is a business combination in which the combining enterprises are not ultimately controlled by the same party or the same parties both before and after the business combination. In a business combination not under the same control, the party which obtains the control on other combining enterprise(s) on the purchase date is the 99 2015 Annual Report of Lu Thai Textile Co., Ltd. acquirer, and other combining enterprise(s) is (are) the acquiree. For a business combination not under the same control, the combination costs shall include the fair values, on the acquisition date, of the assets paid, the liabilities incurred or assumed and the equity securities issued by the acquirer in exchange for the control on the acquiree, the expenses for audit, legal services and assessment, and other administrative expenses, which are recorded into the profits and losses in the current period. The trading expenses for the equity securities or debt securities issued by the acquirer as the combination consideration shall be recorded into the amount of initial measurement of the equity securities or debt securities. The involved contingent consideration shall be recorded into the combination costs at its fair value on the acquiring date. Where new or further evidences emerge, within 12 months since the acquiring date, against the existing circumstances on the acquiring date and the contingent consideration thus needs to be adjusted, the combined goodwill shall be adjusted accordingly. The combination costs of the acquirer and the identifiable net assets obtained by it in the combination shall be measured according to their fair values at the acquiring date. The acquirer shall recognize the positive balance between the combination costs and the fair value of the identifiable net assets it obtains from the acquiree as business reputation. Where the combination costs are less then the fair value of the identifiable net assets it obtains from the acquiree, the acquirer shall re-examine the measurement of the fair values of the identifiable assets, liabilities and contingent liabilities it obtains from the acquiree as well as the combination costs. If, after the reexamination, the combination costs are still less than the fair value of the identifiable net assets it obtains from the acquiree, the acquirer shall record the balance into the profits and losses of the current period. As for the deductible temporary differences the acquirer obtains from the acquiree which are not recognized into deferred income tax liabilities due to their not meeting the recognition standards, if new or further information shows that the relevant situation has existed on the acquiring date and the economic benefits brought by the deductible temporary differences the acquirer obtains from the acquiree on the acquiring date can be realized, they shall be recognized into deferred income tax assets and the relevant goodwill shall be reduced. Where the goodwill is not sufficient to be offset, the difference shall be recognized into the profits and losses in the current period. In other circumstances than the above, where the deductible temporary differences are recognized into deferred income tax assets on the acquiring date, they shall be recorded into the profits and losses in the current period. In a business combination not under same control realized by two or more transactions of exchange, according to about the 5th Notice about the Treasury Issuing the Accounting Standards for Enterprises (Finance accounting) [2012] No. 19 Criterion about the “package deal” (see Notes IV, 4 (2)), Whether the deals are “package deal” or not, belong to the “package deal”, see the previous paragraphs described in this section and Notes IV, 10 “long term equity investment transaction” and conduct accounting treatment, those not belong to the "package deal" distinguish between the individual financial statements and the consolidated financial statements and conduct relevant accounting treatment. In the individual financial statements, the sum of the book value and new investment cost of the Company holds in the acquiree before the acquiring date shall be considered as initial cost of the investment. Other related comprehensive gains in relation to the equity interests that the Company holds in the acquiree before the acquiring date shall be treated on the same basis as the acquiree directly disposes the related assets or liabilities when disposing the investment (that is, except for 100 2015 Annual Report of Lu Thai Textile Co., Ltd. the corresponding share in the changes in the net liabilities or assets with a defined benefit plan measured at the equity method arising from the acquiree’s re-measurement, the others shall be transferred into current investment gains). In the Company’s consolidated financial statements, as for the equity interests that the Company holds in the acquiree before the acquiring date, they shall be re-measured according to their fair values at the acquiring date; the positive difference between their fair values and carrying amounts shall be recorded into the investment gains for the period including the acquiring date. Other related comprehensive gains in relation to the equity interests that the Company holds in the acquiree before the acquiring date shall be treated on the same basis as the acquiree directly disposes the related assets or liabilities when disposing the investment (that is, except for the corresponding share in the changes in the net liabilities or assets with a defined benefit plan measured at the equity method arising from the acquiree’s re-measurement, the others shall be transferred into current investment gains on the acquiring date). 6. Methods for preparing consolidated financial statements (1) Principle for determining the consolidation scope The consolidation scope for financial statements is determined on the basis of control. The term “control” is the power of the Company upon an investee, with which it can take part in relevant activities of the investee to obtain variable returns and is able to influence the amount of returns. The consolidated financial statements comprise the financial statements of the Company and its subsidiaries. A subsidiary is an enterprise or entity controlled by the Company. (2) Methods for preparing the consolidated financial statements Subsidiaries are fully consolidated from the date on which the Company obtains control on their net assets and operation decision-making and are de-consolidated from the date when such control ceases. As for a disposed subsidiary, its operating results and cash flows before the disposal date has been appropriately included in the consolidated income statement and cash flow statement; and as for subsidiaries disposed in the current period, the opening items in the consolidated balance sheet are not adjusted. For a subsidiary acquired in a business combination not under the same control, its operating results and cash flows after the acquiring date have been appropriately included in the consolidated income statement and cash flow statement, and the opening items and comparative items in the consolidated financial statements are not adjusted. For a subsidiary acquired in a business combination under the same control or a combined party obtained in a takeover, its operating results and cash flows from the beginning of the reporting period of the combination to the combination date have been appropriately included in the consolidated income statement and cash flow statement, and the comparative items in the consolidated financial statements are adjusted at the same time. The financial statements of subsidiaries are adjusted in accordance with the accounting policies and accounting period of the Company during the preparation of the consolidated financial statements, where the accounting policies and the accounting periods are inconsistent between the Company and subsidiaries. For a subsidiary acquired from a business combination not under the same control, the individual financial statements of the subsidiary are adjusted based on the fair value of the identifiable net assets at the acquisition date. All significant inter-group balances, transactions and unrealized profits are offset in the 101 2015 Annual Report of Lu Thai Textile Co., Ltd. consolidated financial statements. The portion of a subsidiary’s shareholders’ equity and the portion of a subsidiary’s net profits and losses for the period not held by the Company are recognized as minority interests and minority shareholder profits and losses respectively and presented separately under shareholders’ equity and net profits in the consolidation financial statements. The portion of a subsidiary’s net profits and losses for the period that belong to minority interests is presented as the item of “minority shareholder profits and losses” under the bigger item of net profits in the consolidated financial statements. Where the loss of a subsidiary shared by minority shareholders exceeds the portion enjoyed by minority shareholders in the subsidiary’s opening owners’ equity, minority interests are offset. Where the Company losses control on its original subsidiaries due to disposal of some equity investments or other reasons, the residual equity interests are re-measured according to the fair value on the date when such control ceases. The summation of the consideration obtained from the disposal of equity interests and the fair value of the residual equity interests, minus the portion in the original subsidiary’s net assets measured on a continuous basis from the acquisition date that is enjoyable by the Company according to the original shareholding percentage in the subsidiary, is recorded in investment gains for the period when the Company’s control on the subsidiary ceases. Other comprehensive incomes in relation to the equity investment in the original subsidiary are treated on the same accounting basis as the acquiree directly disposes the relevant assets or liabilities (that is, except for the changes in the net liabilities or assets with a defined benefit plan resulted from re-measurement of the original subsidiary, the rest shall all be transferred into current investment gains) when such control ceases. And subsequent measurement is conducted on the residual equity interests according to the No. 2 Accounting Standard for Business Enterprises —Long-term Equity Investments or the No. 22 Accounting Standard for Business Enterprises—Recognition and Measurement of Financial Instruments. For details, see “Long Term Equity Investment” or “Financial Instruments”. Where the Company losses control on its original subsidiaries due to step by step disposal of equity investments through multiple transactions, it need to distinguish the Group losses control on its subsidiaries due to disposal of equity investments whether belongs to a package deal. All the transaction terms, conditions and economic impact of the disposal of subsidiaries’ equity investment are in accordance with one or more of the following conditions, which usually indicate the multiple transactions, should be considered as a package deal for accounting treatment. ① These deals are at the same time or under the condition of considering the influence of each other to concluded; ② These transactions only be as a whole can achieve a complete business result; ③ The occurrence of a deal depends on at least one other transactions；④ A deal alone is not economical, it is economical with other trading together. Those not belong to a package deal, each of them a deal depends on circumstances respectively conduct accounting treatment in accordance with the applicable principles of “part disposal of subsidiaries of a long-term equity investment under the condition of not losing control on its subsidiaries” (see “Long Term Equity Investment”) and “Where the Company losses control on its original subsidiaries due to disposal of some equity investments or other reasons” (see the front paragraph) relevant transactions of the Company losses control on its subsidiaries due to disposal of equity investments belonging to a package deal, considered as a transaction and conduct accounting treatment. However, Before losing control, every disposal cost and corresponding net assets balance of subsidiary of disposal investment are 102 2015 Annual Report of Lu Thai Textile Co., Ltd. confirmed as other comprehensive income in consolidated financial statements, which together transferred into the current profits and losses in the lose of control, when the Company losing control on its subsidiary. 7. Category of the joint venture arrangement and the accounting treatment of the joint operation 8. Recognition standard for cash and cash equivalents The term “cash” refers to cash on hand and deposits that are available for payment at any time. The term “cash equivalents” refers to short-term (within 3 months from the purchase date) and highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value. 9. Foreign currency businesses and translation of foreign currency financial statements (1) Accounting treatments for translation of foreign currency transactions As for a foreign currency transaction, the Company shall convert the amount in a foreign currency into amount in its bookkeeping base at the spot exchange rate (usually referring to the central parity rate announced by the People’s Bank of China, the same below) of the transaction date, while as for such transactions as foreign exchange or involving in foreign exchange, the Company shall converted into amount in the bookkeeping base currency at actual exchange rate the transaction is occurred. (2) Accounting treatments for translation of foreign currency monetary items and non-monetary items On the balance sheet date, the foreign currency monetary items shall be translated at the spot exchange rate on the balance sheet date. The exchange difference arising from the difference between the spot exchange rate on the balance sheet date and the spot exchange rate at the time of initial recognition or prior to the balance sheet date shall be recorded in the profits and losses in the current period, excluding the following situations: ① the exchange difference arising from foreign currency loans related to acquisition of fixed assets shall be treated at the principle of capitalization of borrowing costs; ② the exchange difference arising from the hedging instruments used for effective hedging of net overseas operation investments shall be recorded into other comprehensive incomes, and shall be recognized into current gains and losses when the net investments are disposed; and ③ the exchange difference arising from change in the book balance of foreign currency monetary items available for sale except the amortized costs shall be recorded into other comprehensive gains and losses. A foreign currency non-monetary item measured at the historical costs shall still be translated at the spot exchange rate on the transaction date. Where the foreign non-monetary items measured at the fair value shall be converted into amount in its bookkeeping base currency at spot exchange rate, the exchange gains and losses arising thereof shall be treated as change in fair value, and recorded into the current period gains and losses or as other comprehensive incomes. (3) Translation of foreign currency financial statements When it involves overseas business in preparing the consolidated financial statement, for the translation difference of foreign currency monetary items of net investment in overseas business 103 2015 Annual Report of Lu Thai Textile Co., Ltd. arising from the change in exchange rate, it shall be recorded into the item of “difference of foreign currency financial statement translation” under the owners’ equity; and be recorded into disposal gains and losses at current period when disposing overseas business. The foreign currency financial statement of overseas business should be translated in to RMB financial statement by the following methods: The asset and liability items in the balance sheets shall be translated at a spot exchange rate on the balance sheet date. Among the owner’s equity items, except for the items as “undistributed profits”, other items shall be translated at the spot exchange rate at the time when they are incurred. The income and expense items in the profit statements shall be translated at the spot exchange rate of the transaction date. The undistributed profits at year-begin is the undistributed profits at the end of last year after the translation; undistributed profits at year-end shall be listed as various distribution items after the translation; after the translation, the balance between assets and the sum of liabilities and owners’ equities shall be recorded into other comprehensive gains and losses as difference of foreign currency translation. Where an enterprise disposes of an overseas business without the control right, it shall shift the differences, which is presented under the items of the owner’s equities in the balance sheet and which arises from the translation of foreign currency financial statements relating to this overseas business, into the disposal profits and losses of the current period by all or proportion of the disposed overseas business. Foreign cash flow shall be translated at the spot exchange rate of the date of cash flow incurred. The influence of exchange rate on the cash flow shall be adjustment item and individually listed in the cash flow statement. And the opening balance and the actual balance of last year shall be listed at the amounts after translation of foreign currency financial statement in last year. Where the control of the Company over an overseas operation ceases due to disposal of all or some of the Company’s owner’s equity in the overseas operation or other reasons, the foreign-currency statement translation difference belonging to the parent company’s owner’s equity in relation to the overseas operation which is stated under the shareholders’ equity in the balance sheet shall be all restated as gains and losses of the disposal period. Where the Company’s equity in an overseas operation decreases due to disposal of some equity investment or other reasons but the Company still has control over the overseas operation, the foreign-currency statement translation difference in relation to the disposed part of the overseas operation shall be recorded into minority interests instead of current gains and losses. If what’s disposed is some equity in an overseas associated enterprise or joint venture, the foreign-currency statement translation difference related to the overseas operation shall be recorded into the gains and losses of the current period of the disposal according to the disposal ratio. 10. Financial instruments The Company recognizes a financial asset or liability when it becomes a party of the relevant financial instrument contract. Financial assets and liabilities are measured at fair value in initial recognition. As for the financial assets and liabilities measured at fair value of which changes are recorded into current gains and losses, the relevant dealing expenses are directly recorded into gains and losses; and the dealing expenses on other kinds of financial assets and liabilities are included in the amounts initially recognized. 104 2015 Annual Report of Lu Thai Textile Co., Ltd. (1) Determination of the fair value of main financial assets and financial liabilities Fair value refers to the price that a market participant shall receive for selling an asset or shall pay for transferring a liability in an orderly transaction on the measurement date. As for the financial assets or financial liabilities for which there is an active market, the quoted prices in the active market shall be used to determine the fair values thereof. The quoted prices in the active market refers to the prices available from stock exchange, broker’s agencies, guilds, pricing organization and etc., which represent the actual trading price under equal transaction. Where there is no active market for a financial instrument, the enterprise concerned shall adopt value appraisal techniques, including the prices adopted by the parties, who are familiar with the condition, in the latest market transaction upon their own free will, the current fair value obtained by referring to other financial instruments of the same essential nature, the cash flow capitalization method and the option pricing model, etc., to determine its fair value. (2) Classification, recognition and measurement of financial assets The purchase and sale of financial assets under the normal ways shall be recognized and stopped to be recognized respectively at the price of transaction date. Financial assets shall be classified into the following four categories when they are initially recognized: (a) the financial assets which are measured at their fair values and the variation of which is recorded into the profits and losses of the current period, (b) the investments which will be held to their maturity; (c) loans and the account receivables; and (d) financial assets available for sale. ① The financial assets which are measured at their fair values and the variation of which is recorded into the profits and losses of the current period Including transactional financial assets and the financial assets which are designated to be measured at their fair value when they are initially recognized and of which the variation is recorded into the profits and losses of the current period; The financial assets meeting any of the following requirements shall be classified as transactional financial assets：A. The purpose to acquire the said financial assets is mainly for selling them in the near future; B. Forming a part of the identifiable combination of financial instruments which are managed in a centralized way and for which there are objective evidences proving that the enterprise may manage the combination by way of short-term profit making in the near future; C. Being a derivative instrument, excluding the designated derivative instruments which are effective hedging instruments, or derivative instruments to financial guarantee contracts, and the derivative instruments which are connected with the equity instrument investments for which there is no quoted price in the active market, whose fair value cannot be reliably measured, and which shall be settled by delivering the said equity instruments. A transactional financial asset is subsequently measured at the fair value. The gains and losses arising from the fair value changes, as well as the dividend and interest incomes from the financial asset, are recorded in the gains and losses for the current period. ② Held-to-maturity investment The term "held-to-maturity investment" refers to a non-derivative financial asset with a fixed date of maturity, a fixed or determinable amount of repo price and which the enterprise holds for a definite purpose or the enterprise is able to hold until its maturity. For the held-to-maturity investment adopting actual interest rate method, which is measured at the post-amortization costs, the profits and losses that arise when such financial assets or financial 105 2015 Annual Report of Lu Thai Textile Co., Ltd. liabilities are terminated from recognition, or are impaired or amortized, shall be recorded into the profits and losses of the current period. The actual interest rate method refers to the method by which the post-amortization costs and the interest incomes of different installments or interest expenses are calculated in light of the actual interest rates of the financial assets or financial liabilities (including a set of financial assets or financial liabilities). The actual interest rate refers to the interest rate adopted to cash the future cash flow of a financial asset or financial liability within the predicted term of existence or within a shorter applicable term into the current carrying amount of the financial asset or financial liability. When the actual interest rate is determined, the future cash flow shall be predicted on the basis of taking into account all the contractual provisions concerning the financial asset or financial liability (the future credit losses shall not be taken into account).and also the various fee charges, trading expenses, premiums or reduced values, etc., which are paid or collected by the parties to a financial asset or financial liability contract and which form a part of the actual interest rate. ③ Loans and the accounts receivables Loans and the accounts receivables refer to non-derivative financial assets, which there is no quotation in the active market, with fixed recovery cost or recognizable. Financial assets that are defined as loans and the accounts receivables by the Company including notes receivables, accounts receivables, interest receivable, dividends receivable and other receivables etc.. Loans and the accounts receivables are made follow-up measurement on the basis of post-amortization costs employing the effective interest method. Gains or loss arising from the termination recognition, impairment occurs or amortization shall be recorded into the profits and losses of the current period. ④ Assets available for sales Assets available for sales including non-derivative financial asset that has been assigned as assets available for sales on the initial recognition and financial assets excluded those measured at fair value and of which the variation into profits and losses of the current period, they are some financial assets, loans and accounts receivables, held-to-maturity investment. The cost at the period-end of the available-for-sale liabilities instruments should be confirmed according to its amortized cost method, that is the initially recognized amount which deduct the principal that had been repaid, to plus or minus the accumulative amortization amount formed by the amortization between the difference of the initially recognized amount and the amount on the due date that adopted the actual interest rate method, and at the same time deduct the amount after the impairment loss happened. The cost at the period-end of the available-for-sale liabilities instruments is its initial cost. Financial assets available-for-trade are subsequently measured at fair value, and gains or losses arising from changes in the fair value are recognized as other comprehensive income，and be carried forward when the said financial assets stopped recognition, then it shall be recorded into the profits and losses of the current period. But, the equity instrument investment which neither have quotation in the active market nor its fair value could not be reliable measured, as well as the derivative financial assets that concern with the equity instruments and should be settled through handing over to its equity instruments, should take the follow-up measurement according to the cost. Interest receive during the holding of assets available for sales and cash dividends with distribution 106 2015 Annual Report of Lu Thai Textile Co., Ltd. announcement by invested companies, it shall be recorded into the profits and losses of the current period. (3) Impairment of financial assets The Company assesses at the balance sheet date the carrying amount of every financial asset except for the financial assets that measured by the fair value. If there is objective evidence indicating a financial asset may be impaired, a provision is provided for the impairment. The Company carries out a separate impairment test for every financial asset which is individually significant. As for a financial asset which is individually insignificant, an impairment test is carried out separately or in the financial asset group with similar credit risk. Where the financial asset (individually significant or insignificant) is found not impaired after the separate impairment test, it is included in the financial asset group with similar credit risk and tested again on the group basis. Where the impairment loss is recognized for an individual financial asset, it is not included in the financial asset group with similar credit risk for an impairment test. ① Impairment on held-to maturity investment, loans and receivables The financial assets measured by cost or amortized cost write down their carrying value by the estimated present value of future cash flow. The difference is recorded as impairment loss. If there is objective evidence to indicate the recovery of value of financial assets after impairment, and it is related with subsequent event after recognition of loss, the impairment loss recorded originally can be reversed. The carrying value of financial assets after impairment loss reversed shall not exceed the amortized cost of the financial assets without provisions of impairment loss on the reserving date. ② Impairment of available-for-sale financial assets When it judged that the decrease of fair value of the available-for-sale equity instrument investment is serious and not temporarily after comprehensive considering relevant factors, it reflected that the available-for-sale equity instrument investment occurred impairment. Of which, the “serious decline” refers to the accumulative decline range of the fair value over 20%; while the “non-temporary decline” refers to the consecutive decline time of the fair value over 12 months. Where an available-for-sale financial asset is impaired, the accumulative losses arising from the decrease of the fair value of the capital reserve which is directly included are transferred out and recorded in the profits and losses for the current period. The accumulative losses transferred out are the balance obtained from the initially obtained cost of the said financial asset after deducting the principals as taken back, the amortized amount, the current fair value and the impairment loss originally recorded in the profits and losses. Where the impairment loss has been recognized for an available-for-sale financial asset, if, within the accounting periods thereafter, there is any objective evidence proving that the value of the said financial asset has been restored and the restoration is objectively related to the events that occur after the impairment loss was recognized, the originally recognized impairment loss is reversed. The impairment losses on the available-for-sale equity instrument investments are reversed and recognized as other comprehensive incomes, and the impairment losses on the available-for-sale liability instruments are reversed and recorded in the profits and losses for the current period. The impairment loss incurred to an equity instrument investment for which there is no quoted price in the active market and whose fair value cannot be reliably measured, or incurred to a derivative financial asset which is connected with the said equity instrument investment and which must be 107 2015 Annual Report of Lu Thai Textile Co., Ltd. settled by delivering the said equity investment, is not reversed. (4) Recognition and measurement of financial asset transfers 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 nearly all of the risks and rewards related to the ownership of the financial asset to the transferee; or ③ The said financial asset has been transferred. And the Company has ceased its control on the said financial asset though it neither transfers nor retains nearly all of the risks and rewards related to the ownership of the financial asset. Where the Company neither transfers nor retains nearly all of the risks and rewards related to the ownership of a financial asset, and it does not cease its control on the said financial asset, it recognizes the relevant financial asset and liability accordingly according to the extent of its continuous involvement in the transferred financial asset. The term "continuous involvement in the transferred financial asset" refers to the risk level that the enterprise faces resulting from the change of the value of the financial asset. If the transfer of an entire financial asset satisfies the conditions for stopping recognition, the difference between the amounts of the following 2 items is recorded in the profits and losses of the current period: (1) The book value of the transferred financial asset; and (2) The sum of consideration received from the transfer, and the accumulative amount of the changes of the fair value originally recorded in other comprehensive incomes. If the transfer of partial financial asset satisfies the conditions to stop the recognition, the book value of the transferred financial asset is apportioned between the portion whose recognition has been stopped and the portion whose recognition has not been stopped according to their respective relative fair value, and the difference between the amounts of the following 2 items is included into the profits and losses of the current period: (1) The summation of the consideration received from the transfer and the portion of the accumulative amount of changes in the fair value originally recorded in other comprehensive incomes which corresponds to the portion whose recognition has been stopped; and (2) The amortized carrying amounts of the aforesaid amounts. In respect of the assets using recourse to sell or using endorsement to transfer, the Company needs to determine whether almost all of the risks and rewards of the financial asset ownership are transferred. If almost all of the risks and rewards of the financial asset ownership had been transferred to the transferee, derecognize the financial assets. For almost all of the risks and rewards of the financial asset ownership retained, do not end to recognize the financial assets. For which neither transfer or retain almost all of the risks and rewards of the financial asset ownership, continuously judge whether the Company retain the control of the assets, and conduct accounting treatment according to the principle of mentioned in the previous paragraphs. (5) Classification and measurement of financial liabilities In the initial recognition, financial liabilities are divided into the financial liabilities measured at fair values and whose changes are recorded in current gains and losses and other financial liabilities. Financial liabilities are initially recognized at their fair values. As for a financial liability measured at fair value and whose changes are recorded in current gains and losses, the relevant trading expense is directly recorded in the profits and losses for the current period. As for other financial liabilities, the relevant trading expenses are recorded in the initially recognized amounts. 108 2015 Annual Report of Lu Thai Textile Co., Ltd. ① Financial liabilities measured at fair values and whose changes are recorded in current gains and losses Such financial liabilities are divided into transactional financial liabilities and financial liabilities designated to be measured at fair values and whose changes are recorded in current gains and losses in the initial recognition under the same conditions where such financial assets are divided into transactional financial assets and financial assets designated to be measured at fair values and whose changes are recorded in current gains and losses in the initial recognition. Financial liabilities measured at fair values and whose changes are recorded in current gains and losses are subsequently measured at their fair values. Gains or losses arising from the fair value changes, as well as the dividend and interest expenses in relation to the said financial liabilities, are recorded in the profits and losses for the current period. ② Other financial liabilities As for a derivative financial liability connected to an equity instrument for which there is not quoted price in an active market and whose fair value cannot be reliably measured and which must be settled by delivering the equity instrument, it is subsequently measured on the basis of costs. Other financial liabilities are subsequently measured according to the amortized cost using the actual interest rate method. Gains or losses arising from de-recognition or amortization of the said financial liabilities is recorded in the profits and losses for the current period. (6) De-recognition of financial liabilities Only when the prevailing obligations of a financial liability are relieved in all or in part may the recognition of the financial liability be terminated in all or partly. Where the Company (debtor) enters into an agreement with a creditor so as to substitute the existing financial liabilities by way of any new financial liability, and if the contractual stipulations regarding the new financial liability is substantially different from that regarding the existing financial liability, it terminates the recognition of the existing financial liability, and at the same time recognizes the new financial liability. Where the recognition of a financial liability is totally or partially terminated, the enterprise concerned shall include into the profits and losses of the current period for the gap between the book value which has been terminated from recognition and the considerations it has paid (including the non-cash assets it has transferred out and the new financial liabilities it has assumed) (7) Derivatives and embedded derivatives Derivative financial instruments include derivatives are initially measured at fair value at the date when the derivative contracts are entered into and are substantially re-measured at fair value. The resulting gain and loss is recognized in profit or loss. An embedded derivative is separated from the hybrid instrument, where the hybrid instrument is not designated as a financial asset or financial liability at fair value though profit or loss, and the treated as a standalone derivative if (a) the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host contract; and (b) a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative. If the Company is unable to measure the embedded derivative separately either at acquisition or at a subsequent balance sheet date, it designates the entire hybrid instrument as a financial asset or financial liability at fair value through profit or loss. (8) Offsetting financial assets and financial liabilities 109 2015 Annual Report of Lu Thai Textile Co., Ltd. When the Company has a legal right that is currently enforceable to set off the recognized financial assets and financial liabilities, and intends either to settle on a net basis, or to realize the financial asset and settle the financial liability simultaneously, a financial asset and a financial liability shall be offset and the net amount is presented in the balance sheet. Except for the above circumstances, financial assets and financial liabilities shall be presented separately in the balance sheet and shall not be offset. (9) Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. The Company issues (including refinancing), re-purchases, sells or written-offs the equity instrument as the disposing of the changes of the equity. The Group not recognized the changes of the fair value of the equity instrument. The transaction expenses related to the equity transaction would be deducted from the equity. All types of distribution (excluding stock dividends) made by the Company to holders of equity instruments are deducted from shareholders’ equity. The Company does not recognize any changes in the fair value of equity instruments. 11. Receivables (1) Accounts receivable with significant single amount for which the bad debt provision is made individually Judgement basis or monetary standards of provision for bad Receivables with the amount of RMB 5 million or more than RMB 5 million should recognize as debts of the individually the receivables with significant single amount. significant accounts receivable The Company made an independent impairment test on receivables with significant single amounts; Method of individual the financial assets without impairment by independent impairment test should be included in provision for bad debts of the financial assets portfolio with similar credit risk to take the impairment test. Receivables was individually significant recognized with impairment should no longer be included in receivables portfolio with similar credit accounts receivable risk to take the impairment test. (2) Accounts receivable which the bad debt provision is withdrawn by credit risk characteristics Name of portfolios Bad debt provision method Aging group Aging analysis method In the groups, adopting aging analysis method to withdraw bad debt provision: √ Applicable □ Inapplicable Withdrawal proportion for accounts Withdrawal proportion for other accounts Age receivable (%) receivable (%) Within 1 year (including 1 year) 5.00% 5.00% 1-2 years 10.00% 10.00% 110 2015 Annual Report of Lu Thai Textile Co., Ltd. 2-3 years 20.00% 20.00% Over 3 years 30.00% 30.00% In the groups, adopting balance percentage method to withdraw bad debt provision: □ Applicable √ Inapplicable In the groups, adopting other methods to withdraw bad debt provision: □ Applicable √ Inapplicable (3) Accounts receivable with an insignificant single amount but for which the bad debt provision is made individually Receivables have dispute with the other parties or involving lawsuit and arbitration; receivables have obvious indication Reason of individually withdrawing bad debt provision showing that the debtors are likely to fail to perform the duty of repayment, etc. The Company made independent impairment test on receivables with insignificant amount but with the following characteristics, if any objective evidence shows that the accounts receivable has Withdrawal method for bad debt provision been impaired, impairment loss shall be recognized on the basis of the gap between the current values of the future cash flow lower than its book value so as to withdraw provision for bad debts. 12. Inventory (1) Classification Inventories mainly include raw materials, work-in-progress, product processed on entrustment, consumptive biological assets and stock products etc. (2) Valuation method of inventories acquiring and issuing The inventories should be measured by the actual cost when acquired, and the cost of the inventories including the procurement cost, processing cost and other cost. Bulk chemical raw materials, work-in-progress goods and finished products should be measured by the actual cost and should carry forward the cost by weighted average method when issuing; auxiliary materials, packing materials should be measured by actual cost and adopt the planned cost for accounting as well as included the difference between the actual cost and the planned cost into the material cost variance and according the material cost variance rate, work out the material cost variance which should be shared at the end of the month, and to adjust the planned cost that had issued the materials as the actual cost; low priced and easily worn articles should be recorded by actual cost and should adopt the one-time amortization method for accounting when consuming. (3) Basis for determining net realizable value of inventories and provision methods for decline in value of inventories Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion, the estimated costs necessary to make the sale and relevant taxes. 111 2015 Annual Report of Lu Thai Textile Co., Ltd. Net realizable value is determined on the basis of clear evidence obtained, and takes into consideration the purpose of holding inventories and effect of post balance sheet events. At the balance sheet date, inventories are measured at the lower of the cost and net realizable value. If the net realizable value is below the cost of inventories, a provision for decline in value of inventories is made. The provision for inventories decline in value is determined normally by the difference of the cost of individual item less its realizable value. For large quantity and low value items of inventories, provision for decline in value is made based on categories of inventories. For items of inventories relating to a product line that are produced and marketed in the same geographical area, have the same or similar end users or purposes, and cannot be practicably evaluated separately from other items in that product line provision for decline in value is determined on an aggregate basis. After the provision for decline in value of inventories is made, if the circumstances that previously caused inventories to be written down below cost no longer exist so that the net realizable value of inventories is higher than their cost, the original provision for decline in value is reversed and the reversal is included in profit or loss for the period. (4) The perpetual inventory system is maintained for stock system. (5) Amortization method of the low-value consumption goods and packing articles For the low-value consumption goods, should be amortized by one-off amortization method when consuming; and for the packing articles, should be amortized by one-off amortization method when consuming. 13. Assets held for sale 14. Long-term equity investments The long-term equity investments of this part refer to the long-term equity investments that the Company has control, joint control or significant influence over the investees. The long-term equity investment that the Company does not have control, joint control or significant influence over the investees, should be recognized as available-for-sale financial assets or be measured by fair value with the changes should be included in the financial assets accounting of the current gains and losses, and please refer the details of the accounting polices to “financial instrument”. Joint control, refers to the control jointly owned according to the relevant agreement on an arrangement by the Company and the relevant activities of the arrangement should be decided only after the participants which share the control right make consensus. Significant influence refers to the power of the Company which could anticipate in the finance and the operation polices of the investees, but could not control or jointly control the formulation of the policies with the other parties. (1) Recognition of investment costs As for long-term equity investments acquired by enterprise merger, if the merger is under the same control, the share of the book value of the owner’s equity of the merged enterprise, on the date of merger, is regarded as the initial cost of the long-term equity investment. The difference between the initial cost of the long-term equity investment and the payment in cash, non-cash assets transferred as well as the book value of the debts borne by the merging party shall offset against the 112 2015 Annual Report of Lu Thai Textile Co., Ltd. capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted. If the consideration of the merging enterprise is that it issues equity securities, it shall, on the date of merger, regard the share of the book value of the shareholder's equity of the merged enterprise on the consolidated financial statement of the ultimate control party as the initial cost of the long-term equity investment. The total face value of the stocks issued shall be regarded as the capital stock, while the difference between the initial cost of the long-term equity investment and total face value of the shares issued shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted. The equities of the combined party which respectively acquired through multiple transaction under the same control that ultimately form into the combination of the enterprises under the same control, should be disposed according whether belongs to package deal; if belongs to package deal, each transaction would be executed accounting treatment by the Company as a transaction of acquiring the control right. If not belongs to package deal, it shall, on the date of merger, regard the enjoyed share of the book value of the shareholder's equity of the merged enterprise on the consolidated financial statement of the ultimate control party as the initial cost of the long-term equity investment, and as for the difference between the initial investment cost of the long-term equity investment and sum of the book value of the long-term equity investment before the combination and the book value of the consideration of the new payment that further required on the combination date, should adjust the capital reserve; if the capital reserve is insufficient to dilute, the retained earnings shall be adjusted. The equity investment held before the combination date which adopted the equity method for accounting, or the other comprehensive income confirmed for the available-for-sale financial assets, should not have any accounting disposal for the moment. For the long-term investment required from the business combination under different control, the initial investment cost regarded as long-term equity investment on the purchasing date according to the combination cost, the combination costs shall be the sum of the fair values of the assets paid, the liabilities incurred or assumed and the equity securities issued by the Company. The equities of the acquirees which respectively acquired through multiple transaction that ultimately form into the combination of the enterprises under the different control, should be disposed according whether belongs to package deal; if belongs to package deal, each transaction would be executed accounting treatment by the Company as a transaction of acquiring the control right. If not belongs to package deal, the sum of the book value of the original held equity investment of the acquirees and the newly added investment cost should be regarded as the initial investment cost of the long-term equity investment that changed to be accounted by cost method. If the original held equity is calculated by cost method, the other relevant comprehensive income would not have any accounting disposal for the moment. If the original held equity investment is the financial assets available for sale, its difference between the fair value and the book value as well as the accumulative changes of the fair value that include in the other comprehensive income, should transfer into the current gains and losses. The commission fees for audit, law services, assessment and consultancy services and other relevant expenses occurred in the business combination by the combining party or the purchase party, shall be recorded into current profits and losses upon their occurrence; the transaction expense from the issuance of equity securities or bonds securities which are as consideration for combination by the combining party, should be recorded as the initial amount of equity securities and bonds securities. 113 2015 Annual Report of Lu Thai Textile Co., Ltd. Besides the long-term equity investments formed by business combination, the other long-term equity investments shall be initially measured by cost, the cost is fixed in accordance with the ways of gaining, such as actual cash payment paid by the Company, the fair value of equity securities issued by the Company, the agreed value of the investment contract or agreement, the fair value or original carrying amount of exchanged assets from non-monetary assets exchange transaction, the fair value of the long-term equity investments, etc. The expenses, taxes and other necessary expenditures directly related with gaining the long-term equity investments shall also be recorded into investment cost. (2) Subsequent measurement and recognition of gains or losses A long-term equity investment where the investing enterprise has joint control (except for which forms into common operators) or significant influence over the investors should be measured by equity method. Moreover, long-term equity investment adopting the cost method in the financial statements, and which the Company has control on invested entity. ① Long-term equity investment measured by adopting cost method The price of a long-term equity investment measured by adopting the cost method shall be included at its initial investment cost and append as well as withdraw the cost of investing and adjusting the long-term equity investment. The return on investment at current period shall be recognized in accordance with the cash dividend or profit announced to distribute by the invested entity, except the announced but not distributed cash dividend or profit included in the actual payment or consideration upon gaining the investment. ② Long-term equity investment measured by adopting equity method If the initial cost of a long-term equity investment is more than the Company's attributable share of the fair value of the invested entity's identifiable net assets for investment, the initial cost of the long-term equity investment may not be adjusted. If the initial cost of a long-term equity investment is less than the Company's attributable share of the fair value of the invested entity's identifiable net assets for the investment, the difference shall be included in the current profits and losses and the cost of the long-term equity investment shall be adjusted simultaneously. When measured by adopting equity method, respectively recognize investment income and other comprehensive income according to the net gains and losses as well as the portion of other comprehensive income which should be enjoyed or be shared, and at the same time adjust the book value of the long-term equity investment; corresponding reduce the book value of the long-term equity investment according to profits which be declared to distribute by the investees or the portion of the calculation of cash dividends which should be enjoyed; for the other changes except for the net gains and losses, other comprehensive income and the owners’ equity except for the profits distribution of the investees, should adjust the book value of the long-term equity investment as well as include in the capital reserve. The investing enterprise shall, on the ground of the fair value of all identifiable assets of the invested entity when it obtains the investment, recognize the attributable share of the net profits and losses of the invested entity after it adjusts the net profits of the invested entity. If the accounting polices adopted by the investees is not accord with that of the Company, should be adjusted according to the accounting policies of the Company and the financial statement of the investees during the accounting period and according which to recognize the investment income as well as other comprehensive income. For the transaction happened between the Company and associated enterprises as well as joint ventures, if the assets launched or sold not 114 2015 Annual Report of Lu Thai Textile Co., Ltd. form into business, the portion of the unrealized gains and losses of the internal transaction, which belongs to the Company according to the calculation of the enjoyed proportion, should recognize the investment gains and losses on the basis. But the losses of the unrealized internal transaction happened between the Company and the investees which belongs to the impairment losses of the transferred assets, should not be neutralized. The assets launched by the Company to the associated enterprises or the joint ventures if could form into business, the long-term equity investment without control right which acquired by the investors, should regard the fair value of the launched business as the initial investment cost the newly added long-term equity investment, and for the difference between the initial investment cost and the book value of the launched business, should be included into the current gains and losses with full amount. The Company shall recognize the net losses of the invested enterprise until the book value of the long-term equity investment and other long-term rights and interests which substantially form the net investment made to the invested entity are reduced to zero. However, if the Company has the obligation to undertake extra losses, it shall be recognized as the estimated liabilities in accordance with the estimated duties and then recorded into investment losses at current period. If the invested entity realizes any net profits later, the Company shall, after the amount of its attributable share of profits offsets against its attributable share of the un-recognized losses, resume recognizing its attributable share of profits. For the long-term equity investment held by the Company before the first execution of the new accounting criterion on 1 Jan. 2007 of the associated enterprises and joint ventures, if there is debit difference of the equity investment related to the investment, should be included in the current gains and losses according to the amount of the straight-line amortization during the original remained period. ③ Acquiring shares of minority interest In the preparation for the financial statements, the balance existed between the long-term equity investment increased by acquiring shares of minority interest and the attributable net assets on the subsidiary calculated by the increased shares held since the purchase date (or combination date), the capital reserves shall be adjusted, if the capital reserves are not sufficient to offset, the retained profits shall be adjusted. ④ Disposal of long-term equity investment In the preparation of financial statements, the Company disposed part of the long-term equity investment on subsidiaries without losing its controlling right on them, the balance between the disposed price and attributable net assets of subsidiaries by disposing the long-term equity investment shall be recorded into owners’ equity; where the Company losses the controlling right by disposing part of long-term equity investment on such subsidiaries, it shall treated in accordance with the relevant accounting policies in Method on preparation of combined financial statements. For other ways on disposal of long-term equity investment, the balance between the book value of the disposed equity and its actual payment gained shall be recorded into current profits and losses. For the long-term equity investment measured by adopting equity method, if the remained equity after disposal still adopts the equity method for measurement, the other comprehensive income originally recorded into owners’ equity should adopt the same basis of the accounting disposal of the relevant assets or liabilities directly disposed by the investees according to the corresponding proportion. The owners’ equity recognized owning to the changes of the other owners’ equity except for the net gains and losses, other comprehensive income and the profits distribution of the 115 2015 Annual Report of Lu Thai Textile Co., Ltd. investees, should be transferred into the current gains and losses according to the proportion. For the long-term equity investment which adopts the cost method of measurement, if the remained equity still adopt the cost method, the other comprehensive income recognized owning to adopting the equity method for measurement or the recognition and measurement standards of financial instrument before acquiring the control of the investees, should adopt the same basis of the accounting disposal of the relevant assets or liabilities directly disposed by the investees and should be carried forward into the current gains and losses according to the proportion; the changes of the other owners’ equity except for the net gains and losses, other comprehensive income and the profits distribution among the net assets of the investees which recognized by adopting the equity method for measurement, should be carried forward into the current gains and losses according to the proportion. For those the Company lost the control of the investees by disposing part of the equity investment as well as the remained equity after disposal could execute joint control or significant influences on the investees, should change to measure by equity method when compiling the individual financial statement and should adjust the measurement of the remained equity to equity method as adopted since the time acquired; if the remained equity after disposal could not execute joint control or significant influences on the investees, should change the accounting disposal according to the relevant regulations of the recognition and measurement standards of financial instrument, and its difference between the fair value and book value on the date lose the control right should be included in the current gains and losses. For the other comprehensive income recognized by adopting equity method for measurement or the recognition and measurement standards of financial instrument before the Company acquired the control of the investees, should execute the accounting disposal by adopting the same basis of the accounting disposal of the relevant assets or liabilities directly disposed by the investees when lose the control of them, while the changes of the other owners’ equity except for the net gains and losses, other comprehensive income and the profits distribution among the net assets of the investees which recognized by adopting the equity method for measurement, should be carried forward into the current gains and losses according to the proportion. Of which, for the disposed remained equity which adopted the equity method for measurement, the other comprehensive income and the other owners’ equity should be carried forward according to the proportion; for the disposed remained equity which changed to execute the accounting disposal according to the recognition and measurement standards of financial instrument, the other comprehensive income and the other owners’ equity should be carried forward in full amount. For those the Company lost the control of the investees by disposing part of the equity investment, the disposed remained equity should change to calculate according to the recognition and measurement standards of financial instrument, and difference between the fair value and book value on the date lose the control right should be included in the current gains and losses. For the other comprehensive income recognized from the original equity investment by adopting the equity method, should execute the accounting disposal by adopting the same basis of the accounting disposal of the relevant assets or liabilities directly disposed by the investees when terminate the equity method for measurement, while for the owners’ equity recognized owning to the changes of the other owner’s equity except for the net gains and losses, other comprehensive income and the profits distribution of the investees, should be transferred into the current investment income with full amount when terminate adopting the equity method. 116 2015 Annual Report of Lu Thai Textile Co., Ltd. The Company respectively disposes the equity investment of the subsidiaries through multiple transactions until lose the control right, if the above transactions belongs to the package deal, should execute the accounting disposal by regarding each transaction as a deal of disposing the equity investment of the subsidiaries until lose the control right, while the difference between each expenses of the disposal and the book value of the long-term equity investment in accord with the disposed equity before losing the control right, should firstly be recognized as other comprehensive income then be transferred into the current gains and losses of losing the control right along until the time when lose it. 15. Investment real estate Measurement mode of the investment real estate Inapplicable 16. Fixed assets (1) Conditions for recognition The term “fixed assets” refers to the tangible assets that simultaneously possess the features as follows: (a) they are held for the sake of producing commodities, rendering labor service, renting or business management; and (b) their useful life is in excess of one fiscal year. The fixed assets are only recognized when the relevant economic benefits probably flow in the Company and its cost could be reliable measured. The fixed assets should take the initial measurement according to the cost and at the same time consider the influences of the factors of the estimated discard expenses. (2) Depreciation methods Category of fixed assets Method Useful life Salvage value Annual deprecation Average method of 5-30 years Housing and building 5%-10% 3.00 %-19.00% useful life Average method of 10-18 years Machinery equipments 5%-10% 5.00%-9.50% useful life Average method of 5 years Transportation vehicle 5%-10% 18.00%-19.00% useful life Electronic equipments and others Average method of 5 years 5%-10% 18.00%-19.00% useful life (3) Recognition basis, pricing and depreciation method of fixed assets by finance lease The “finance lease” shall refer to a lease that has transferred in substance all the risks and rewards related to the ownership of an asset. Its ownership may or may not eventually be transferred. The 117 2015 Annual Report of Lu Thai Textile Co., Ltd. fixed assets by finance lease shall adopt the same depreciation policy for self-owned fixed assets. If it is reasonable to be certain that the lessee will obtain the ownership of the leased asset when the lease term expires, the leased asset shall be fully depreciated over its useful life. If it is not reasonable to be certain that the lessee will obtain the ownership of the leased asset at the expiry of the lease term, the leased asset shall be fully depreciated over the shorter one of the lease term or its useful life. 17. Construction in progress Construction in process is measured at actual cost. Actual cost comprises construction costs, borrowing costs that are eligible for capitalization before the fixed assets being ready for their intended us and other relevant costs. Construction in process is transferred to fixed assets when the assets are ready for their intended use. See the details of the impairment test method of the impairment provision withdrawal method of the construction in progress to “Long-term assets impairment”. 18. Borrowing costs The borrowing costs shall include interest on borrowings, amortization of discounts or premiums on borrowings, ancillary expenses, and exchange balance on foreign currency borrowings. When the borrowing costs can be directly attributable to the construction or production of assets eligible for capitalization, and the asset disbursements or the borrowing costs have already incurred, and the construction or production activities which are necessary to prepare the asset for its intended use or sale have already started, the capitalization of borrowing costs begins. When the asset eligible for capitalization under acquisition and construction or production is ready for the intended use or sale, the capitalization of the borrowing costs shall be ceased. Other borrowing costs shall be recognized as expenses when incurred. The to-be-capitalized amount of interests shall be determined in light of the actual interests incurred of the specially borrowed loan at the present period minus the income of interests earned on the unused borrowing loans as a deposit in the bank or as a temporary investment; the enterprise shall calculate and determine the to-be-capitalized amount on the general borrowing by multiplying the weighted average asset disbursement of the part of the accumulative asset disbursements minus the general borrowing by the capitalization rate of the general borrowing used. The capitalization rate shall be calculated and determined in light of the weighted average interest rate of the general borrowing. During the period of capitalization, the exchange balance on foreign currency special borrowings shall be capitalized; the exchange balance on foreign currency general borrowings shall be recorded into current profits and losses. The term “assets eligible for capitalization” refers to the fixed assets, investment real estate, inventories and other assets, of which the acquisition and construction or production may take quite a long time to get ready for its intended use or for sale. Where the acquisition and construction or production of a qualified asset is interrupted abnormally and the interruption period lasts for more than 3 months, the capitalization of the borrowing costs shall be suspended. 118 2015 Annual Report of Lu Thai Textile Co., Ltd. 19. Biological assets (1) Consumptive biological assets Consumptive biological assets refer to the biological assets held for sale or to be harvested as agricultural products in future, including crops, vegetables under growing, timber production forest and domestic animals for sale. The consumptive biological assets shall be measured based on cost. All costs for planting, creating, cultivating or raising of consumptive biological assets shall be the necessary expenses directly added to such assets that accrued before harvest, including any loan that satisfies capitalization conditions. Subsequent expenses for keeping and feeding the consumptive biological assets after the harvest should be recognized as the losses and gains of the current period. Upon harvest or sale, the cost of consumptive biological assets shall be based on its book value through weighted average. On the date of Balance Sheet, the consumptive biological assets shall be measured with lower of cost and net realizable value, and the method for confirming the reserve for inventory price drop shall be adopted to confirm the reserve for price drop of consumptive biological assets. If the impacts of depreciation disappear, the depreciation amount shall be recovered, and the reserve for price drop originally accrued shall be reversed. Such amount reversed shall be recognized as loss and gain for the current period. If consumptive biological assets change its usage to be as productive biological assets, the cost after such change shall be confirmed based on the book value when the usage is changed. If consumptive biological assets are changed as public biological assets, depreciation shall be taken into consideration pursuant to Corporate Accounting Rules No.8 – Assets Depreciation. When depreciation occur, accrued the depreciation reserve first and then confirm based on the book value after such accrual. (2) Productive biological assets Productive biological assets refer to agricultural products produced, and biological assets held for labor provision or lease, including economic forest, firewood forest, productive animals and labor animals. The productive biological assets shall be measured based on cost. All costs for creating or fostering productive biological assets shall be the necessary expenses directly added to such assets that accrued before it reaches expected production purpose, including any loan that satisfies capitalization conditions. The Company shall withdraw the depreciation of the productive biological assets by adopting the straight-line method since the second month of its useful life. Useful life, expected net salvage value and annual depreciation rate of each productive biological assets are as below: Category Useful life (Year) Expected net salvage value Annual deprecation (%) (%) Livestock 5 5% 19 The Company shall review the service life, expected net residuals and depreciation method of the productive biological assets at least by the end of the year. In case of any change, it shall be deemed as accounting estimate change. The difference between proceedings from disposal (sale, loss, death or damage) of the productive 119 2015 Annual Report of Lu Thai Textile Co., Ltd. biological assets deducted by book value and related tax shall be recognized as loss and gain for the current period. The Company shall check on the date of Balance Sheet whether there is a depreciation sign for the productive biological assets. If yes, estimate the recoverable amount. Such recoverable amount shall be estimated based on single asset item. If it is difficult, the recoverable amount of the portfolio shall be confirmed based on the portfolio such assets belong to. If the recoverable amount of the assets is lower than book value, reserve for asset depreciation shall be accrued based on such difference, and recognized as loss and gain for the current period. The above assets impairment losses once be recognized should not be reversed during the accounting periods afterwards. If the productive biological assets changed the usage as the consumptive biological assets, the cost after the change should be recognized as the book value when changing the usage; of the productive biological assets changed the usage as non-profit living assets, should be recognized according to the book value after the withdrawal of the impairment provision in accord with the regulation of No. 8 of ASBE - Assets Impairment for considering whether there was impairment and should withdraw the impairment provision in ahead of it. 20. Oil and gas assets 21. Intangible assets (1) Pricing method, useful life and impairment test The term “intangible asset” refers to the identifiable non-monetary assets possessed or controlled by enterprises which have no physical shape. The intangible assets shall be initially measured according to its cost. The costs related with the intangible assets, if the economic benefits related to intangible assets are likely to flow into the enterprise and the cost of intangible assets can be measured reliably, shall be recorded into the costs of intangible assets; otherwise, it shall be recorded into current profits and losses upon the occurrence. The use right of land gained is usually measured as intangible assets. For the self-developed and constructed factories and other constructions, the related expenditures on use right of land and construction costs shall be respectively measured as intangible assets and fixed assets. For the purchased houses and buildings, the related payment shall be distributed into the payment for use right of land and the payment for buildings, if it is difficult to be distributed, the whole payment shall be treated as fixed assets. For intangible assets with a finite service life, from the time when it is available for use, the cost after deducting the sum of the expected salvage value and the accumulated impairment provision shall be amortized by straight line method during the service life. While the intangible assets without certain service life shall not be amortized. The amortization period of each intangible asset was as follows: 120 2015 Annual Report of Lu Thai Textile Co., Ltd. Category Amortization method Amortization term (Year) Straight-line method Stipulated the term according to the Land use right regulations of the land transfer contract Patent use right Straight-line method 10 Software use right Straight-line method 10 Brand use right Straight-line method 10 At the end of period, the Company shall check the service life and amortization method of intangible assets with finite service life, if there is any change, it shall be regarded as a change of the accounting estimates. Besides, the Company shall check the service life of intangible assets without certain service life, if there is any evidence showing that the period of intangible assets to bring the economic benefits to the enterprise can be prospected, it shall be estimated the service life and amortized in accordance with the amortization policies for intangible assets with finite service life. (2) Accounting polices of internal R & D expenses The expenditures for internal research and development projects of an enterprise shall be classified into research expenditures and development expenditures. The research expenditures shall be recorded into the profit or loss for the current period. The development expenditures shall be confirmed as intangible assets when they satisfy the following conditions simultaneously, and shall be recorded into profit or loss for the current period when they don’t satisfy the following conditions. ① It is feasible technically to finish intangible assets for use or sale; ② It is intended to finish and use or sell the intangible assets; ③ The usefulness of methods for intangible assets to generate economic benefits shall be proved, including being able to prove that there is a potential market for the products manufactured by applying the intangible assets or there is a potential market for the intangible assets itself or the intangible assets will be used internally; ④ It is able to finish the development of the intangible assets, and able to use or sell the intangible assets, with the support of sufficient technologies, financial resources and other resources; ⑤ The development expenditures of the intangible assets can be reliably measured. As for expenses that can’t be identified as research expenditures or development expenditures, the occurred R & D expenses shall be all included in current profits and losses. 22. Impairment of long-term assets For non-current financial Assets of fixed Assets, projects under construction, intangible Assets with limited service life, investing real estate with cost model, long-term equity investment of 121 2015 Annual Report of Lu Thai Textile Co., Ltd. subsidiaries, cooperative enterprises and joint ventures, the Company should judge whether decrease in value exists on the date of balance sheet. Recoverable amounts should be tested for decrease in value if it exists. Other intangible Assets of reputation and uncertain service life and other non-accessible intangible assets should be tested for decrease in value no matter whether it exists. If the recoverable amount is less than book value in impairment test results, the provision for impairment of differences should include in impairment loss. Recoverable amounts would be the higher of net value of asset fair value deducting disposal charges or present value of predicted cash flow. Asset fair value should be determined according to negotiated sales price of fair trade. If no sales agreement exists but with asset active market, fair value should be determined according to the Buyer’s price of the asset. If no sales agreement or asset active market exists, asset fair value could be acquired on the basis of best information available. Disposal expenses include legal fees, taxes, cartage or other direct expenses of merchantable Assets related to asset disposal. Present value of predicted asset cash flow should be determined by the proper discount rate according to Assets in service and predicted cash flow of final disposal. Asset depreciation reserves should be calculated on the basis of single Assets. If it is difficult to predict the recoverable amounts for single Assets, recoverable amounts should be determined according to the belonging asset group. Asset group is the minimum asset combination producing cash flow independently. In impairment test, book value of the business reputation in financial report should be shared to beneficial asset group and asset group combination in collaboration of business merger. It is shown in the test that if recoverable amounts of shared business reputation asset group or asset group combination are lower than book value, it should determine the impairment loss. Impairment loss amount should firstly be deducted and shared to the book value of business reputation of asset group or asset group combination, then deduct book value of all assets according to proportions of other book value of above assets in asset group or asset group combination except business reputation. After the asset impairment loss is determined, recoverable value amounts would not be returned in future. 23. Amortization method of long-term deferred expenses Long-term deferred expenses refer to general expenses with the apportioned period over one year (one year excluded) that have occurred but attributable to the current and future periods. The long-term deferred expenses mainly including the land contract fee. And the long-term deferred expense shall be amortized averagely within benefit period. The amortization term is the term stipulated by the land contracts and the land rental contracts. 24. Payroll (1) Accounting treatment of short-term compensation Short-term compensation mainly including salary, bonus, allowances and subsidies, employee services and benefits, medical insurance premiums, birth insurance premium, industrial injury insurance premium, housing fund, labor union expenditure and personnel education fund, 122 2015 Annual Report of Lu Thai Textile Co., Ltd. non-monetary benefits etc. The short-term compensation actually happened during the accounting period when the active staff offering the service for the Company should be recognized as liabilities and is included in the current gains and losses or relevant assets cost. Of which the non-monetary benefits should be measured according to the fair value. (2) Accounting treatment of the welfare after departure Welfare after demission mainly includes setting drawing plan. Of which setting the drawing plan mainly includes basic endowment insurance, unemployment insurance and annuity etc, and the corresponding payable and deposit amount should be included into the relevant assets cost or the current gains and losses when happen. (3) Accounting treatment of the welfare after dimission The Company relieves the labor relation with the employees before the due date of the labor contacts or puts forward the advice of providing the compensation for urging the employees volunteered to receive the downsizing and when the Company could not unilaterally withdraw the dismission welfare owning to the relieving plan of the labor relation or the downsizing advice, should confirm the liabilities of the employees’ salary from the dismission welfare on the earlier day between the cost confirmed by the Company and the cost related to the reorganization of the payment of the dismission welfare and includes which in the current gains and losses. But as for the dismission welfare be estimated that could not be completed paid within 12 months after the end of the annual report period, should be handled according to the other long-term employee’s salary. The internal retire plan of the employees should be handled by adopting the same principles of the above dismission welfare. The Company includes the salary and the paid social insurance charges planed to pay by the personnel retreated inside during the period from the date when ceased the services to the normal retire date in the current gains and losses (dismission welfare) when met with the recognization conditions of the estimiated liabilities. (4) Accounting treatment of the welfare of other long-term staffs The other long-term welfare that the Company offers to the staffs, if met with the setting drawing plan, should be accounting disposed according to the setting drawing plan, while the rest should be disposed according to the setting revenue plan. 25. Estimated liabilities 26. Share-based payment (1) Accounting treatment of share-based payment Share-based payment refers to the transaction in order to require the service offered by the employees and other parties that grants the equity instruments or responsible for the liabilities recognized on the basis of the equity instruments. Share-based payment divided into equity-settled share-based payment and cash-settled share-based payment. 123 2015 Annual Report of Lu Thai Textile Co., Ltd. ①Equity-settled share-based payment It is a share-based payment settled by equity used for exchange the service offered by the staffs and be measured by the fair value on the grant date of granting the equity instrument for the staffs. When the services are fully rendered during vesting period or specified performance targets are met, based on the best estimate of the number of the vesting equity instruments during vesting period and according to the straight-line method to calculate and to include into the relevant cost or expenses/when using the vesting power immediately after the granting, should include the relevant cost or expenses on the grant date and correspondingly increase the capital reserve. On each balance sheet date within the vesting period, the Company makes the best estimate base on the subsequent information newly required such as the changes of the vesting staffs’ number to modify the number of the estimated vesting equity instrument. The above influences of the estimation should be included into the current relevant cost or expenses and correspondingly adjust the capital surplus. For equity-settled share-based payment made in return of other parties' services and the fair value of the other parties' services can be reliably measured, it will be measured based on the fair value of the other parties' services on the date of grant; if the fair value of the other parties' services cannot be reliably measured but the fair value of equity instruments can be reliably measured, it will be recognized in relevant costs or expenses and the capital reserves shall be adjusted accordingly at the fair value of such instruments on the date of the grant. ② Cash-settled share-based payment The cash-settled share-based payment should be measured according to the fair value of the liabilities recognized based on the shares or other equity instrument undertaken by the Company. For the cash-settled share-based payment made in return for the rendering of employee services that may be exercised immediately after the grant, the fair value of the liability incurred by the Company shall, on the date of the grant, be recognized in relevant costs or expenses and the liabilities shall be increased accordingly. For cash-settled share-based payment made in return for the rendering of employee services that cannot be exercised until the services are fully provided during the vesting period or specified performance targets are met, on each balance sheet date within the vesting period, the services acquired in the current period shall, based on the best estimate of the number of exercisable instruments, be recognized in relevant costs or expenses and the corresponding liabilities at the fair value of the liability incurred by the Company. On each balance sheet date and the settlement date before the settlement of the relevant liabilities, the Company should re-measure the fair value of the liabilities and its changes should be included in the current gains and losses. (2) Relevant accounting treatment about revision and termination of share-based payment plans As to the revision on the share-based payment plan made by the Company, if the fair value of the granted equity instrument increases after the revision, it shall recognize the increase of the service gained according to the increase of the fair value of equity instrument. The increase of the fair value of equity instrument refers to the balance between the fair value on the revising date of the equity instruments before and after the revision. If the total fair value of share-base payment decreases after the revision or adopting other ways against the staffs in the revision, it shall continue to conduct accounting treatment on the service gained as if the revision never happens, only if the Company p cancel partial or total granted equity instrument. During the vesting period, if the Company cancels the granted equity instrument, the Company shall treat the cancel of granted equity instrument as accelerating the vesting, and includes the amount shall be recognized during the remained vesting period into current profit and loss, and also recognize the capital reserves. If staffs or other party can choose to meet the non-vesting conditions but not meets with them during the vesting period, which will be treated as the cancel of granted equity instrument by the Company. 124 2015 Annual Report of Lu Thai Textile Co., Ltd. 27. Other financial instruments such as the preference shares and perpetual capital securities 28. Revenue (1) Selling products No revenue from selling goods may be recognized unless the following conditions are met simultaneously: the significant risks and rewards of ownership of the goods have been transferred to the buyer by the enterprise; the enterprise retains neither continuous management right that usually keeps relation with the ownership nor effective control over the sold goods; the relevant amount of revenue can be measured in a reliable way; the relevant economic benefits may flow into the enterprise; and the relevant costs incurred or to be incurred can be measured in a reliable way. As for the revenues from the domestic sales products, the Company deliveries the products to the buyers according to the contracts agreement, and the revenues amount of the products sales had been confirmed with the goods payment had been withdrawn or had received the receipt voucher of which the relevant economic benefits probably flow into the enterprise as well as the relevant costs of the products could be reliable measured when being confirming as the revenues. As for the revenues from the export sales products, the Company executes the customs declaration and the products departure according to the contracts agreement, and the Company had acquired the bill of lading with the revenues amount of the products sale had been confirmed and the goods payment had been withdrawn or had had received the receipt voucher of which the relevant economic benefits probably flow into the enterprise as well as the relevant costs of the products could be reliable measured when being confirming as the revenues. (2) Providing labor services If the Company can reliably estimate the outcome of a transaction concerning the labor services it provides, it shall recognize the revenue from providing services employing the percentage-of-completion method on the date of the balance sheet. The completed proportion of a transaction concerning the providing of labor services shall be decided by the proportion of the labor service already provided to the total labor service to provide. The outcome of a transaction concerning the providing of labor services can be measured in a reliable way, means that the following conditions shall be met simultaneously: ① The amount of revenue can be measured in a reliable way; ② The relevant economic benefits are likely to flow into the enterprise; ③ The schedule of completion under the transaction can be confirmed in a reliable way; and ④ The costs incurred or to be incurred in the transaction can be measured in a reliable way. If the outcome of a transaction concerning the providing of labor services can not be measured in a reliable way, the revenue from the providing of labor services shall be recognized in accordance with the amount of the cost of labor services incurred and expected to be compensated, and make the cost of labor services incurred as the current expenses. If it is predicted that the cost of labor services incurred couldn’t be compensated, thus no revenue shall be recognized. Where a contract or agreement signed between Company and other enterprises concerns selling goods and providing of labor services, if the part of sale of goods and the part of providing labor services can be distinguished from each other and can be measured respectively, the part of sale of goods and the part of providing labor services shall be treated respectively. If the part of selling goods and the part of providing labor services can not be distinguished from each other, or if the part of sale of goods and the part of providing labor services can be distinguished from each other but can not be measured respectively, both parts shall be conducted as selling 125 2015 Annual Report of Lu Thai Textile Co., Ltd. goods. (3) Royalty revenue In accordance with relevant contract or agreement, the amount of royalty revenue should be recognized as revenue on accrual basis. (4) Interest revenue The amount of interest revenue should be measured and confirmed in accordance with the length of time for which the Company’s monetary fund is used by others and the agreed interest rate. 23. Government subsidies (1) Judgment basis and accounting treatment of government subsidies related to assets Government subsidies consist of the government subsidies pertinent to assets and government subsidies pertinent to income. The Company defines the acquisition of government subsidy of long term assets using in construction or formed in other ways as government subsidiary related to income. If the government document not clearly regulate the subsidy acquirees then adopt the following method to divide the government subsidy into government subsidy related to income and government subsidy related to assets; (1) If the government document clearly regulate the specific project, according to the budget project will form the spending amount of assets and the cost included of spending amount ratio to divide, and division ratio shall be reexamine in every balance sheet date, renew if necessary. (2) The usage in government documents is for general description only, for which do not identify a particular project, consider as government subsidy related to income. The government subsidies pertinent to assets shall be recognized as deferred income, equally distributed within the useful lives of the relevant assets, and included in the current profits and losses. The government subsidies pertinent to incomes shall be treated respectively in accordance with the circumstances as follows: those subsidies used for compensating the related future expenses or losses of the enterprise shall be recognized as deferred income and shall included in the current profits and losses during the period when the relevant expenses are recognized; or those subsidies used for compensating the related expenses or losses incurred to the enterprise shall be directly included in the current profits and losses. Where it is necessary to refund any government subsidy which has been recognized, it shall be treated respectively in accordance with the circumstances as follows: if there is the deferred income concerned, the book balance of the deferred income shall be offset against, but the excessive part shall be included in the current profits and losses; or if there is no deferred income concerned to the government subsidy, it shall be directly included in the current profits and losses. (2) Judgment basis and accounting treatment of government subsidies related to profits Government subsidies consist of the government subsidies pertinent to assets and government subsidies pertinent to income and the rest should be recognized as the government subsidy related to the revenue. The Company defines the acquisition of government subsidy of long term assets using in construction or formed in other ways as government subsidiary related to income. If the government document not clearly regulate the subsidy acquirees then adopt the following method to divide the government subsidy into government subsidy related to income and government subsidy related to assets; (1) If the government document clearly regulate the specific project, according to the budget project will form the spending amount of assets and the cost included of spending amount ratio to divide, and division ratio shall be reexamine in every balance sheet date, renew if necessary. (2) The usage in government documents is for general description only, for which do not identify a particular project, consider as 126 2015 Annual Report of Lu Thai Textile Co., Ltd. government subsidy related to income. The government subsidies pertinent to incomes shall be treated respectively in accordance with the circumstances as follows: those subsidies used for compensating the related future expenses or losses of the enterprise shall be recognized as deferred income and shall included in the current profits and losses during the period when the relevant expenses are recognized; or those subsidies used for compensating the related expenses or losses incurred to the enterprise shall be directly included in the current profits and losses. 30. Deferred income tax assets/deferred income tax liabilities (1) Income tax of the current period On the balance sheet date, for the current income tax liabilities (or assets) of the current period as well as the part formed during the previous period, should be measured by the income tax of the estimated payable (returnable) amount which be calculated according to the regulations of the tax law. The amount of the income tax payable which is based by the calculation of the current income tax expenses, are according to the result measured from the corresponding adjustment of the pre-tax accounting profit of 2014 which in accord to the relevant regulations of the tax law. (2) Deferred income tax assets and deferred income tax liabilities The difference between the book value of certain assets and liabilities and their tax assessment basis, as well as the temporary difference occurs from the difference between the book value of the items which not be recognized as assets and liabilities but could confirm their tax assessment basis according to the regulations of the tax law, the deferred income tax assets and the deferred income tax liabilities should be recognized by adopting liabilities law of the balance sheet. No deferred tax liability is recognized for a temporary difference arising from the initial recognition of goodwill, the initial recognition of assets or liabilities due to a transaction other than a business combination, which affects neither accounting profit nor taxable profit (or deductible loss). Besides, no deferred tax assets is recognized for the taxable temporary differences related to the investments of subsidiary companies, associated enterprises and joint enterprises, and the investing enterprise can control the time of the reverse of temporary differences as well as the temporary differences are unlikely to be reversed in the excepted future. Otherwise, the Group should recognize the deferred income tax liabilities arising form other taxable temporary difference. No deferred taxable assets should be recognized for the deductible temporary difference of initial recognition of assets and liabilities arising from the transaction which is not business combination, the accounting profits will not be affected, nor will the taxable amount or deductible loss be affected at the time of transaction. Besides, no deferred taxable assets should be recognized for the deductible temporary difference related to the investments of the subsidiary companies, associated enterprises and joint enterprises, which are not likely to be reversed in the expected future or is not likely to acquire any amount of taxable income tax that may be used for making up such deductible temporary differences. Otherwise, the Company shall recognize the deferred income tax assets arising from a deductible temporary difference basing on the extent of the amount of the taxable income that is likely to be acquired to make up such deductible temporary differences For any deductible loss or tax deduction that can be carried forward to the next year, the corresponding deferred income tax asset shall be determined to the extent that the amount of future taxable income to be offset by the deductible loss or tax deduction to be likely obtained. 127 2015 Annual Report of Lu Thai Textile Co., Ltd. On the balance sheet date, the deferred income tax assets and the deferred income tax liabilities shall be measured at the tax rate applicable to the period during which the assets are expected to be recovered or the liabilities are expected to be settled. The book value of deferred income tax assets shall be reviewed at each balance sheet date. If it is unlikely to obtain sufficient taxable income to offset against the benefit of the deferred income tax asset, the book value of the deferred income tax assets shall be written down. Any such write-down should be subsequently reversed where it becomes probable that sufficient taxable income will be available. (3) Income tax expenses Income tax expenses include current income tax and deferred income tax. The rest current income tax and the deferred income tax expenses or revenue should be included into current gains and losses except for the current income tax and the deferred income tax related to the transaction and events that be confirmed as other comprehensive income or be directly included in the shareholders’ equity which should be included in other comprehensive income or shareholders’ equity as well as the book value for adjusting the goodwill of the deferred income tax occurs from the business combination. (4) Offset of income tax The current income tax assets and liabilities of the Company should be listed by the written-off net amount which intend to executes the net amount settlement as well as the assets acquiring and liabilities liquidation at the same time while owns the legal rights of settling the net amount. The deferred income tax assets and liabilities of the Company should be listed as written-off net amount when having the legal rights of settling the current income tax assets and liabilities by net amount and the deferred income tax and liabilities is relevant to the income tax which be collected from the same taxpaying bodies by the same tax collection and administration department or is relevant to the different taxpaying bodies but during each period which there is significant reverse of the deferred income assets and liabilities in the future and among which the involved taxpaying bodies intend to settle the current income tax and liabilities by net amount or are at the same time acquire the asset as well as liquidate the liabilities. 31. Lease (1) Accounting treatment of operating lease (1) Business of operating leases recorded by 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 the current period by using the straight-line method over each period of the lease term. The initial direct costs shall be recognized as the profits and losses of the current period. The contingent rents shall be recorded into the profits and losses of the current period in which they actually arise. (2) Business of operating leases recorded by 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-line method over each period of the lease term. The initial direct costs of great amount shall be capitalized when incurred, and be recorded into current profits and losses 128 2015 Annual Report of Lu Thai Textile Co., Ltd. in accordance with the same basis for recognition of rent incomes over the whole lease term. The initial direct costs of small amount shall be recorded into current profits and losses when incurred. The contingent rents shall be recorded into the profits and losses of the current period in which they actually arise. (2) Accounting treatments of financial lease (1) Business of finance leases recorded by 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 the minimum lease payments on the lease beginning date as the entering value in an account, recognize the amount of the minimum lease payments as the entering value in an account of long-term account payable, and treat the balance between the recorded amount of the leased asset and the long-term account payable as unrecognized financing charges. Besides, the initial direct costs directly attributable to the leased item incurred during the process of lease negotiating and signing the leasing agreement shall be recorded in the asset value of the current period. The balance through deducting unrecognized financing charges from the minimum lease payments shall be respectively stated in long-term liabilities and long-term liabilities due within 1 year. Unrecognized financing charges shall be adopted by the effective interest rate method in the lease term, so as to calculate and recognize current financing charges. The contingent rents shall be recorded into the profits and losses of the current period in which they actually arise. (2) Business of finance leases recorded by 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 beginning date and the initial direct costs as the entering value in an account of the financing lease values receivable, and record the unguaranteed residual value at the same time. The balance between the sum of the minimum lease receipts, the initial direct costs and the unguaranteed residual value and the sum of their present values shall be recognized as unrealized financing income. The balance through deducting unrealized financing incomes from the finance lease accounts receivable shall be respectively stated in long-term claims and long-term claims due within 1 year. Unrecognized financing incomes shall be adopted by the effective interest rate method in the lease term, so as to calculate and recognize current financing revenues. The contingent rents shall be recorded into the profits and losses of the current period in which they actually arise. 32. Significant accounting judgments and estimates Due to the internal uncertainty of operating activities, the Company needs to make judgments, estimates and assumptions for carrying amounts of statement items that can’t be measured accurately during the process of applying accounting policies. Such judgments, estimates and assumptions are made on the basis of the past experience of Company’s management staffs and on the consideration of other relevant factors. Such judgments, estimates and assumptions have effect on reporting amount of incomes, expense, assets and liabilities, as well as disclosure of contingent liabilities on the balance sheet date. However, the uncertainty of such estimates may results in major adjustments of carrying amounts of assets or liabilities that will be influenced in future. 129 2015 Annual Report of Lu Thai Textile Co., Ltd. The Company shall have a check on the aforesaid judgments, estimates and assumptions at fixed intervals on the basis of sustainable operation. As for the change in accounting estimates that only effects on the current period of the change, the affected amount thereof shall be recognized at current period of the change. As for accounting estimates that effects on both the current period of the change and future periods, the affected amount thereof shall be recognized at current period of the change and future periods. On balance sheet date, major fields requiring judgments, estimates and assumptions on amounts of financial statement items by the Company are as follows: (1) Classification of leases In line with rules in Accounting Standards for Enterprises No. 21 – Leases, the Company classifies leases into operating leases and finance leases. Upon the classification, the management staffs need to make analysis and judgments on whether to essentially transfer all risks and remuneration relating to the ownership of leased-out assets to the lessee, or whether the Company has essentially undertaken all risks and remuneration relating to the ownership of leased-in assets. (2) Withdrawal of bad debt provisions The Company shall, in accordance with accounting policies of receivables, calculate bad debt provisions by adopting allowance method. Impairment of accounts receivable is based on the assessment of the recovery of accounts receivable. Identification of impairment of accounts receivable requires judgments and estimates by management staffs. The difference between actual outcomes and originally estimated outcomes, which will influence the carrying amount of accounts receivable and bad debt provisions thereof in the estimated period of the change, shall be withdrawn or reversed. (3) Inventory depreciation reserves The Company shall calculate whichever is lower between the cost and realizable net value in light of inventory accounting policies. As for inventories of which the cost is higher than the realizable net value and inventories which are obsolete and unsalable inventory depreciation reserves shall be withdrawn. Impairment of inventories to realizable net value is based on the assessment of the marketing of inventories and realizable net value thereof. Identification of inventory impairment requires well-established evidences by management staffs, as well as judgments and estimates based on consideration of the purpose of holding inventories and other factors such as events occurring after the date of balance sheet. The difference between actual outcomes and originally estimated outcomes, which will influence the carrying amount of inventories and inventory depreciation reserves in the estimated period of the change, shall be withdrawn or reversed. (4) Fair values of financial instruments As for financial instruments not existing in active trading market, the Company shall determine their fair values by all kinds of assessment methods, which include model analysis of discounted cash flow and etc. During the assessment, the Company needs to assess for respects such as future cash flows, credit risks, market volatility, correlation, and choose appropriate discount rate. Such related assumptions have uncertainty, of which the change will effect on fair values of financial instruments. (5) Impairment of financial assets available for sale To a large extent, whether the impairment of financial assets available for sale is recognized or not relies on the judgments and assumptions of the management staffs. In that way, the Company shall 130 2015 Annual Report of Lu Thai Textile Co., Ltd. be certain about whether to recognize impairment losses of financial assets available for sale in the profit statement. During the process of making judgments and assumptions, the Company needs to evaluate how much the fair value of such investment is less than its cost, how long such investment will last, and the financial condition and short-term business outlook of the invested parties, which include industry status, technology transform, credit rating, default rate and risks from the opposite parties. (6) Impairment provisions of non-financial non-current assets The Company shall judge whether there is sign of impairment of non-current assets other than financial assets on balance sheet date. Intangible assets with uncertain service lives, besides being conducted with annual impairment test every year, have to accept impairment tests when there is sign of impairment. Other non-current assets except for financial assets have to accept impairment tests when there is sign indicating the carrying amount thereof is unrecoverable. When the carrying amounts of the asset or group assets are higher than the recoverable amounts, namely whichever is higher between the net amount through deducting disposal charges from the fair value and the present value of the estimated future cash flow, impairment occurs. The net amount of the fair value of an asset minus the disposal expenses shall be determined in light of the amount of the basis of the price as stipulated in the sales agreement or the observable market price in the fair transaction minus the incremental cost directly subject to the disposal of the asset. When estimating present value of future cash flows, it is necessary to make significant judgments on characters of the asset or asset group, such as output, sales price, related operating costs, and discount used to calculate the present value. When estimating recoverable amount, the Company shall adopt all relevant materials that can be required, including estimates relating to output, sales price and relevant operating costs judged by rational and supportable assumptions. The Company tests whether there is impairment of good will at least for every year, which requires itself to estimate the present value of the future cash flow of group assets or combination of group assets. When estimating the present value of the future cash flow, the Company needs to estimate the cash flow arising from future group assets or combination of group assets, and at the same time choose appropriate discount rate to determine the present value of the future cash flow. (7) Depreciation and amortization Upon consideration on the salvage value of investment real estates, fixed assets and intangible assets, the Company shall withdraw depreciation and amortization by straight-line method over their service lives. The Company checks on service lives at fixed intervals, so as to determine the amounts of depreciation expenses and amortization expenses at each period. Service lives are confirmed in accordance with the past experience on similar assets of the Company, along with renewed technology of expectation. If any significant change occurred to previous estimated, depreciation expenses and amortization expenses will be adjusted in future period. (8) Development expenditure When recognizing the capitalized amount, the management layer of the Company needs to make suppose about the estimated future cash flow, the appropriate discounts rate and the estimated benefit period related to the assets. (9) Deferred income tax assets In a limit providing large possibility of offset losses from sufficient taxable profits, the Group shall recognize deferred income tax assets in line with all unused tax losses, which requires management 131 2015 Annual Report of Lu Thai Textile Co., Ltd. staffs of the Group to estimate the time when future taxable profits occurs and the amount thereof by applying plenty of judgments and combining tax planning strategies, so as to determine the amount of the recognizable deferred income tax assets. (10) Income taxes There’s certain uncertainty of disposal and calculation of taxes of partial transactions in normal operating activities. It is uncertain whether some pre-taxed items can set aside the approvals by tax authorities or not. If there are differences between the ultimate recognition outcomes and the originally estimated amounts of such tax issues, then such differences shall effect on the current income tax and deferred income tax during the ultimate recognition period. 33. Changes in main accounting policies and estimates (1) Change of accounting policies □ Applicable √ Inapplicable (2) Change of main accounting estimates □ Applicable √ Inapplicable 34. Other VI. Taxation 1. Main taxes and tax rate Category of taxes Tax basis Tax rate Calculated the output tax at 17%, 13%, 6%, and 0% of taxable VAT income and paid the VAT by the amount after deducting the 17%, 13%, 6%, 3%, 0% deductible withholding VAT at current period. Business tax Paid by 3%, 5% of taxable business income 3%, 5% Urban maintenance Paid at 7%, 5%, 1% of the circulating tax actually paid 7%, 5%, 1% and construction tax Enterprise income tax Paid at 15%, 16.5%, 25% of taxable income respectively 0%, 9%, 15%, 16.5%, 25% Notes to the disclosure of taxpaying bodies in different corporate tax rate Name of taxpaying bodies Rate of income tax The Company 15% Lufeng Weaving & Dyeing Co., Ltd. (hereinafter refer to as 15% “Lufeng Weaving & Dyeing”) Lu Thai (Hong Kong) Textile Co., Ltd. (hereinafter refer to as 16.50% “Lu Thai Hong Kong”) 132 2015 Annual Report of Lu Thai Textile Co., Ltd. Xinjiang Lu Thai Harvest Cotton Co., Ltd. (“Xinjiang Lu Thai”) 25% Zibo Luqun Textile Co., Ltd. (hereinafter refer to as “Luqun 25% Textile”) Zibo Xinsheng Power Co., Ltd. hereinafter refer to as “Xinsheng 25% Power”) Zibo Helijie Energy Saving Technology & Services Co., Ltd. 25% (hereinafter referred to as “Helijie”) Beijing Lufeng Sunshine Garments Co., Ltd. (hereinafter 25% referred to as “Lufeng Sunshine”) Beijing Innovative Garment Co., Ltd. (hereinafter referred to as 25% “Beijing Innovative” Shanghai Lu Thai Textile & Garments Co., Ltd. (hereinafter 25% referred to as “Shanghai Lu Thai”) Beijing Lu Thai Youxian Electronic Commerce Co., Ltd. 25% (hereinafter referred to as “Beijing Youxian”) Xinjiang Lu Thai Textile Co., Ltd. (“Xinjiang Lu Thai Textile”) 9% Lu Thai (Cambodia) Textile Co., Ltd. (hereinafter referred to as 0% “Lu Thai Cambodia”) Lu Thai (Burma) Textile Co., Ltd. (hereinafter referred to as “Lu 0% Thai Burma”) Lu Thai (Vietnam) Textile Co., Ltd. (hereinafter referred to as 0% “Lu Thai Vietnam”) 2. Tax preference The Company, in accordance with the Notice on Passing the Re-examination of New High-tech Enterprise for 504 Companies Including Jinan Shengquan Group Co., Ltd. (Lu-Ke-Gao-Zi [2012] No. 19) from Department of Science & Technology of Shandong Province, Finance Bureau of Shandong Province, National Taxation Bureau of Shandong and Local Taxation Bureau of Shandong Province, was recognized as a New High-tech Enterprise and obtained the Certificate of New High-tech Enterprise on 31 Oct. 2011. The Company shall, in line with the Article 28 of Enterprise Income Tax Law of the People’s Republic of China and Notice of the State Administration of Taxation on the Issues concerning the Administration of Enterprise Income Tax Deduction and Exemption (GSF [2008] No. 111 document), enjoy a 15-percent rate for enterprise income tax. The Company’s controlled subsidiary— Lufeng Weaving & Dyeing Co., Ltd., in accordance with the Notice on Confirmation of New High-tech Enterprise for 430 Companies Including Jinan Feshen Xinng’an Technologies Co., Ltd. (Lu-Ke-Gao-Zi [2012] No. 38) from Department of Science & Technology of Shandong Province, Finance Bureau of Shandong Province, National Taxation Bureau of Shandong and Local Taxation Bureau of Shandong Province, was recognized as a New High-tech Enterprise and obtained the Certificate of New High-tech Enterprise on 30 Nov. 133 2015 Annual Report of Lu Thai Textile Co., Ltd. 2011.. The above subsidiary shall, in line with the Article 28 of Enterprise Income Tax Law of the People’s Republic of China and Notice of the State Administration of Taxation on the Issues concerning the Administration of Enterprise Income Tax Deduction and Exemption (GSF [2008] No. 111 document), enjoy a 15-percent rate for enterprise income tax. Lu Thai (Hong Kong) Textile Co., Ltd. (hereinafter refers as Lu Thai (Hong Kong) Textile), the wholly-owned subsidiary company of the Company, was incorporated in Hong Kong SAR, whose profit tax shall be paid at tax rate of 16.5%. According to the “Announcement of the State Administration of Taxation on Issues of Enterprise Income Tax Concerning In-depth Implementation of the Western Development Strategy” (SAT [2012] No. 12), as well as the “Circular of Xinjiang Uygur Autonomous Region on Tax Policies Concerning Acceleration of the Development of the Textile Industry” (XZF [2010] No. 99), Xinjiang Lu Thai Textile Co., Ltd. (“Xinjiang Lu Thai Textile”), a wholly-funded subsidiary of the Company’s controlled subsidiary Xinjiang Lu Thai Fengshou Cotton Co., Ltd. (“Xinjiang Lu Thai”), enjoys a preferential enterprise income tax rate of 15% as an enterprise under the Western Development Strategy. And the local enjoyable tax is exempted for five years, i.e. a preferential enterprise income tax rate of 9% for the five years. The wholly own subsidiary Lu Thai Cambodia, according to the Lu Thai Cambodia Profits tax free approval issued by Investment Committee of Cambodia, Lu Thai Cambodia enjoys tax preference of tax free on corporate income tax of 3 (3 years start-up period) + 3 (3 years tax holiday)+1 (1 year grace period). If profit during the 3 year start-up period then turn into 3 years tax holiday, after grace period, enterprise income tax rate was of 20%. The wholly own subsidiary Lu Thai Burma, according to the Burma’s Special Economic Zone Law issued by Pyidaungsu Hluttaw, Lu Thai Burma enjoys tax preference on corporate income tax of 7 (7 years tax holiday) + 5 (5 years tax revenues drop by half) + 5 (re-invest the profits within 1 year and continues to enjoy the half tax revenues 5 years afterwards). After grace period, enterprise income tax rate was of 25%. The wholly own subsidiary Lu Thai Vietnam of the wholly own subsidiary Lu Thai Hong Kong, the investment license issued by the Vietnam Fudong Industrial Park Management Committee, Lu Thai Vietnam enjoys tax preference on corporate income tax of 3 (3 years start-up period) + 2 (2 years tax holiday) + 4 half (4 years 50%-reductions period) and if there are profits within the 3 years start-up period should transfer which in the 2 years tax holiday. After grace period, enterprise income tax rate was of 25%. 3. Other VII. Notes on major items in consolidated financial statements of the Company 1. Monetary funds Unit: RMB Yuan Item Closing balance Opening balance Cash on hand 2,111,348.02 1,190,565.56 Bank deposits 742,998,281.72 631,971,943.96 134 2015 Annual Report of Lu Thai Textile Co., Ltd. Other monetary funds 50,391,566.33 33,131,288.78 Total 795,501,196.07 666,293,798.30 Of which total amount of deposited 81,371,297.43 22,970,300.95 abroad Other notes: On 31 Dec. 2015, the monetary capital with restricted ownership of the Company was of RMB29,805,722.42 (31 Dec. 2014: RMB16,900,000.00), which was the the fixed deposit receipt of RMB29,754,422.42 in order to pledge and obtain short term loan by the Company’s subsidiary Lufeng Weaving & Dyeing and the expenses of the L/G margin of RMB51,300.00. 2. Financial assets measured by fair value and the changes be included in the current gains and losses Unit: RMB Yuan Item Closing balance Opening balance Tradable financial assets 71,696,678.70 Derivative financial assets 71,696,678.70 Total 71,696,678.70 Other notes: 3. Derivative financial assets □ Applicable √ Inapplicable 4. Notes receivable (1) Notes receivable listed by category Unit: RMB Yuan Item Closing balance Opening balance Bank acceptance bill 31,611,924.20 21,795,315.09 Letter of credit 101,533,594.19 92,009,162.34 Total 133,145,518.39 113,804,477.43 (2) Notes receivable pledged by the Company at the period-end Unit: RMB Yuan Item Amount at the period-end 135 2015 Annual Report of Lu Thai Textile Co., Ltd. (3) Notes receivable which had endorsed by the Company or had discounted and had not due on the balance sheet date at the period-end Unit: RMB Yuan Amount of recognition termination at the Amount of not terminated recognition at Item period-end the period-end Bank acceptance bill 108,048,795.26 Total 108,048,795.26 (4) Notes transferred to accounts receivable because drawer of the notes fails to executed the contract or agreement Unit: RMB Yuan Amount of the notes transferred to accounts receivable at the Item period-end Other notes 5. Accounts receivable (1) Accounts receivable disclosed by category Unit: RMB Yuan Closing balance Opening balance Book balance Bad debt provision Book balance Bad debt provision Category Withdra Book Proportio wal Proportio Withdrawal Book value Amount Amount value Amount Amount n proportio n proportion n Accounts receivable withdrawn bad debt 276,788, 13,940,1 262,848,0 223,311 11,340,99 211,970,55 provision according 100.00% 5.04% 99.42% 5.08% 146.79 04.17 42.62 ,549.51 5.41 4.10 to credit risks characteristics Accounts receivable with insignificant single amount for 1,313,7 1,313,784 0.58% 100.00% which bad debt 84.00 .00 provision separately accrued 276,788, 13,940,1 262,848,0 224,625 12,654,77 211,970,55 Total 100.00% 5.04% 100.00% 5.63% 146.79 04.17 42.62 ,333.51 9.41 4.10 136 2015 Annual Report of Lu Thai Textile Co., Ltd. Accounts receivable with significant single amount for which bad debt provision separately accrued at the period-end □ Applicable √ Inapplicable In the groups, accounts receivable adopting aging analysis method to accrue bad debt provision: √Applicable □ Inapplicable Unit: RMB Yuan Closing balance Aging Accounts receivable Bad debt provision Withdrawal proportion Subitem within 1 year Within 1 year 275,553,534.73 13,777,676.74 5.00% Subtotal within 1 year 275,553,534.73 13,777,676.74 5.00% 1 to 2 years 844,949.97 84,495.01 10.00% 2 to 3 years 389,662.09 77,932.42 20.00% Total 276,788,146.79 13,940,104.17 5.04% Notes of the basis of recognizing the group: In the groups, accounts receivable adopting balance percentage method to withdraw bad debt provision □ Applicable √ Inapplicable In the groups, accounts receivable adopting other methods to accrue bad debt provision: (2) Accounts receivable withdraw, reversed or collected during the reporting period The withdrawal amount of the bad debt provision during the reporting period was of RMB2,753,411.98; the amount of the reversed or collected part during the reporting period was of RMB0.00. Of which the significant amount of the reversed or collected part during the reporting period: Unit: RMB Yuan Name of the units Reversed or collected amount Method (3) The actual write-off accounts receivable Unit: RMB Yuan Item Amount Actual write-off accounts receivable 1,468,087.22 Of which the significant actual write-off accounts receivable: Unit: RMB Yuan Whether occurred Name of the units Nature Amount Reason Process from the related transactions Notes of the write-off the accounts receivable: 137 2015 Annual Report of Lu Thai Textile Co., Ltd. (4) Top 5 of the closing balance of the accounts receivable colleted according to the arrears party The total amount of the Company’s top 5 of the closing balance of the accounts receivable colleted according to the arrears party was RMB104,309,822.47,37.69% of the total balance of account receivable at period-end. The relevant total balance of bad debt provision was RMB5,215,491.12. (5) Account receivable which terminate the recognition owning to the transfer of the financial assets (6) The amount of the assets and liabilities formed by the transfer and the continues involvement of accounts receivable Other notes: 6. Prepayment (1) List by aging analysis: Unit: RMB Yuan Closing balance Opening balance Aging Amount Proportion Amount Proportion Within 1 year 194,103,626.51 98.63% 172,016,638.95 98.37% 1 to 2 years 1,693,651.78 0.86% 1,937,764.69 1.11% 2 to 3 years 339,302.71 0.17% 1,752.14 0.00% Over 3 years 673,323.13 0.34% 909,777.10 0.52% Total 196,809,904.13 -- 174,865,932.88 -- Notes of the reasons of the prepayment ages over 1 year with significant amount but failed settled in time: (2) Top 5 of the closing balance of the prepayment colleted according to the prepayment target The total amount of top 5 of the closing balance of the prepayment collected according to the prepayment target was RMB135,818,391.39, 69.01% of total balance of prepayment at period-end. Other notes: 7. Interest receivable (1) Category of interest receivable Unit: RMB Yuan 138 2015 Annual Report of Lu Thai Textile Co., Ltd. Item Closing balance Opening balance Fixed time deposit 653,075.08 Total 653,075.08 (2) Significant overdue interest Whether occurred Borrower Closing balance Overdue time Reason impairment and its judgment basis Other notes: 8. Dividend receivable (1) Dividend receivable Unit: RMB Yuan Item (or investees) Closing balance Opening balance (2) Significant dividend receivable aged over 1 year Unit: RMB Yuan Whether occurred Item (or investees) Closing balance Aging Reason impairment and its judgment basis Other notes: 9. Other accounts receivable (1) Other accounts receivable disclosed by category Unit: RMB Yuan Closing balance Opening balance Book balance Bad debt provision Book balance Bad debt provision Category Withdra Book Proportio wal Proportio Withdrawal Book value Amount Amount value Amount Amount n proportio n proportion n Other accounts receivable withdrawn 80,678,2 9,856,83 70,821,40 71,349, 7,971,030 63,378,909. 100.00% 12.22% 100.00% 11.17% bad debt provision 38.51 2.23 6.28 940.05 .77 28 according to credit 139 2015 Annual Report of Lu Thai Textile Co., Ltd. risks characteristics 80,678,2 9,856,83 70,821,40 71,349, 7,971,030 63,378,909. Total 100.00% 12.22% 100.00% 11.17% 38.51 2.23 6.28 940.05 .77 28 Other accounts receivable with significant single amount for which bad debt provision separately accrued at the period-end □ Applicable √ Inapplicable In the groups, other accounts receivable adopting aging analysis method to accrue bad debt provision: √Applicable □ Inapplicable Unit: RMB Yuan Closing balance Aging Other accounts receivable Bad debt provision Withdrawal proportion Subitem within 1 year Within 1 year 46,747,015.73 2,337,350.79 5.00% Subtotal within 1 year 46,747,015.73 2,337,350.79 5.00% 1 to 2 years 5,920,031.84 592,003.18 10.00% 2 to 3 years 14,758,790.28 2,951,758.06 20.00% Over 3 years 13,252,400.66 3,975,720.20 30.00% Total 80,678,238.51 9,856,832.23 12.22% Notes of the basis of recognizing the group: In the groups, other accounts receivable adopting balance percentage method to withdraw bad debt provision □ Applicable √ Inapplicable In the groups, other accounts receivable adopting other methods to accrue bad debt provision: □ Applicable √ Inapplicable (2) Accounts receivable withdraw, reversed or collected during the reporting period The withdrawal amount of the bad debt provision during the reporting period was of RMB2,074,234.32; the amount of the reversed or collected part during the reporting period was of RMB13,652.58. Of which the significant amount of the reversed or collected part during the reporting period: Unit: RMB Yuan Name of units Reversed or collected amount Method (3) The actual write-off other accounts receivable Unit: RMB Yuan Item Amount Actual write-off other accounts receivable 202,085.44 Of which the significant write-off other accounts receivable: Unit: RMB Yuan 140 2015 Annual Report of Lu Thai Textile Co., Ltd. Whether occurred Name of units Nature Amount Reason Process from the related transactions Notes of write-off other accounts receivable: (4) Other accounts receivable classified by the nature of accounts Unit: RMB Yuan Nature Closing book balance Opening book balance Export taxes refund 23,876,307.85 11,213,575.08 Advance payment 33,467,444.93 37,058,192.64 Pledge and guarantee 6,956,093.54 8,062,219.86 Lending and deposit 3,811,593.38 4,777,623.60 Other 12,566,798.81 10,238,328.87 Total 80,678,238.51 71,349,940.05 (5) Top 5 of the closing balance of the other accounts receivable colleted according to the arrears party Unit: RMB Yuan Proportion of the total year end Closing balance of Name of units Nature Closing balance Aging balance of the bad debt provision accounts receivable (%) Export taxes refund Export taxes refund 21,210,622.25 Within 1 year 26.29% 1,060,531.11 receivable Advance money Within 1 year, 1-2 receivable of the Advance money 16,274,560.21 20.17% 2,665,280.34 years, 2-3 years fundraising houses Advance money Advance money for receivable for the the social security social security undertake by the 6,158,992.57 Within 1 year 7.63% 307,949.63 undertake by the individual of the individual of the employee employee Deposits for wages Deposits for wages paid to migrant paid to migrant 2,955,620.10 Over 3 years 3.66% 886,686.03 workers of Zichuan workers of District, Zibo infrastructure works Finance Bureau of Export tax refunds of 2,665,685.60 Over 3 years 3.30% 799,705.68 141 2015 Annual Report of Lu Thai Textile Co., Ltd. Zichuan District, the local government Zibo Total -- 49,265,480.73 -- 61.06% 5,720,152.79 (6) Accounts receivable involved with government subsidies Unit: RMB Yuan Project of government Estimated received time, Name of units Closing balance Closing age subsidies amount and basis (7) Other account receivable which terminate the recognition owning to the transfer of the financial assets (8) The amount of the assets and liabilities formed by the transfer and the continues involvement of other accounts receivable Other notes: 10. Inventory (1) Category of inventory Unit: RMB Yuan Closing balance Opening balance Item Falling price Falling price Book balance Book value Book balance Book value reserves reserves Raw materials 608,670,473.36 1,635,229.99 607,035,243.37 661,246,109.89 1,635,229.99 659,610,879.90 Products in 445,688,953.21 445,688,953.21 478,624,419.09 478,624,419.09 process Inventory goods 714,280,833.84 43,608,998.71 670,671,835.13 636,626,434.14 40,267,108.49 596,359,325.65 Consumptive 869,404.33 392,309.29 477,095.04 biological assets Assigned processing 20,090,846.49 20,090,846.49 17,975,757.57 17,975,757.57 products Total 1,789,600,511.23 45,636,537.99 1,743,963,973.24 1,794,472,720.69 41,902,338.48 1,752,570,382.21 (2) Falling price reserves of inventory Unit: RMB Yuan Item Opening balance Increased amount Decreased amount Closing balance 142 2015 Annual Report of Lu Thai Textile Co., Ltd. Reverse or Withdrawal Other Other write-off Raw materials 1,635,229.99 1,635,229.99 Inventory goods 40,267,108.49 19,510,485.31 16,168,595.09 43,608,998.71 Consumptive 392,309.29 392,309.29 biological assets Total 41,902,338.48 19,902,794.60 16,168,595.09 45,636,537.99 Item Specific basis of withdrawal of Reasons for reversal Reasons for write-off falling price reserves of inventory The lower one between cost of Raw materials each item of inventory and its realizable net value. The lower one between cost of Sale in this year Inventory goods each item of inventory and its realizable net value. Consumptive biological The lower one between cost of assets each item of inventory and its realizable net value. Notes: due to the quality problem in the garment accessories of partial raw materials, raw yarn and dyed yarn of finished goods and long age of partial shirts and fabric at the year-end as well as the falling market price of the consumptive biological assets-Hu-sheep, the costs of inventories became higher than the realizable net value, and the Company withdrew the provision for falling price of inventories according to their balance. (3) Notes of the closing balance of the inventory which includes capitalized borrowing expenses (4) Completed unsettled assets formed from the construction contact at the period-end Unit: RMB Yuan Item Amount Other notes: 11. Assets divided as held-to-sold Unit: RMB Yuan Estimated disposal Item Closing book value Fair value Estimated disposal time expense Other notes: 143 2015 Annual Report of Lu Thai Textile Co., Ltd. 12. Non-current assets due within 1 year Unit: RMB Yuan Item Closing balance Opening balance Other notes: 13. Other current assets Unit: RMB Yuan Item Closing balance Opening balance Prepaid income tax to be deducted 3,108,886.97 3,658,894.10 VAT input tax to be deducted 16,640,924.10 1,508,430.88 Buy-back amount of B Share 20,634,142.65 Payment of the shares 17,007,362.62 Total 57,391,316.34 5,167,324.98 Other notes: 14. Available-for-sale financial assets (1) List of available-for-sale financial assets Unit: RMB Yuan Closing balance Opening balance Item Depreciation Depreciation Book balance Book value Book balance Book value reserves reserves Available-for-sale equity 67,442,600.00 67,442,600.00 67,442,600.00 67,442,600.00 instruments Measured by cost 67,442,600.00 67,442,600.00 67,442,600.00 67,442,600.00 Total 67,442,600.00 67,442,600.00 67,442,600.00 67,442,600.00 (2) Available-for-sale financial assets measured by fair value at the period-end Unit: RMB Yuan Available-for-sale equity Available-for-sale debt Category Total instruments instruments (3) Available-for-sale financial assets measured by cost at the period-end Unit: RMB Yuan Investee Book balance Impairment provision Shareholdi Cash 144 2015 Annual Report of Lu Thai Textile Co., Ltd. ng bonus of Period-beg Period-beg proportion the Increase Decrease Period-end Increase Decrease Period-end in in among the reporting investees period Zibo Chengshu n Heating Co., Ltd. (hereinafte 160,000.00 160,000.00 2.00% r refer to as “Chengshu n Heating” ) Yantai Rongchan g Pharmacy Co., Ltd. (hereinafte 55,282,600 55,282,600 5.56% r refer to .00 .00 as “Rongcha ng Pharmacy” ) Gaoqing Hongqiao Power Co., 12,000,000 12,000,000 20.68% Ltd. .00 .00 (Hongqiao Power) 67,442,600 67,442,600 Total -- .00 .00 (4) Changes of the impairment of the available-for-sale financial assets during the reporting period Unit: RMB Yuan Available-for-sale equity Available-for-sale debt Category Total instruments instruments (5) Relevant notes of the fair value of the available-for-sale equity instruments which seriously fell or temporarily fell but not withdrawn the impairment provision Unit: RMB Yuan 145 2015 Annual Report of Lu Thai Textile Co., Ltd. Item of Falling range of Withdrawn Reason of not available-for-sale Fair value of the Continued falling Investment cost the fair value amount of withdrawn the equity period-end time (month) against the cost impairment impairment instruments Other notes 15. Investment held-to-maturity (1) List of investment held-to-maturity Unit: RMB Yuan Closing balance Opening balance Item Impairment Impairment Book balance Book value Book balance Book value provision provision (2) Significant held-to-maturity investment at the period-end Unit: RMB Yuan Bond item Par value Nominal interest rate Actual interest rate Due date (3) Re-classified held-to-maturity investment during the reporting period Other notes 16. Long-term accounts receivable (1) List of long-term accounts receivable Unit: RMB Yuan Closing balance Opening balance Discount rate Item Bad debt Bad debt Book balance Book value Book balance Book value range provision provision Financing lease 4,980,998.00 4,980,998.00 6,980,998.00 6,980,998.00 10.54% receivables Of which: unrealized 332,959.49 332,959.49 901,978.43 901,978.43 financing income Total 4,980,998.00 4,980,998.00 6,980,998.00 6,980,998.00 -- 146 2015 Annual Report of Lu Thai Textile Co., Ltd. (2) Long-term accounts receivable which terminate the recognition owning to the transfer of the financial assets (3) The amount of the assets and liabilities formed by the transfer and the continues involvement of long-term accounts receivable Other notes 17. Long-term equity investment Unit: RMB Yuan Increase/decrease Closing Gains and Adjustme Cash Withdraw balance Additiona losses nt of Opening Reduced Changes bonus or al of Closing of Investees l recognize other balance investmen of other profits impairme Other balance impairme investmen d under comprehe t equity announce nt nt t the equity nsive d to issue provision provision method income I. Joint ventures II. Associated enterprises Other notes 18. Investment property (1) Investment property adopted the cost measurement mode □ Applicable √ Inapplicable (2) Investment property adopted fair value measurement mode □ Applicable √ Inapplicable (3) Details of investment property failed to accomplish certification of property Unit: RMB Yuan Item Book value Reason Other notes 19. Fixed assets (1) List of fixed assets Unit: RMB Yuan 147 2015 Annual Report of Lu Thai Textile Co., Ltd. Houses and Machinery Transportation Electronic and Item Total buildings equipment equipment other equipment I. Original book value 1. Opening 2,550,640,277.33 5,419,397,227.53 68,406,645.05 103,129,923.73 8,141,574,073.64 balance 2. Increased 132,808,121.89 190,710,235.54 4,953,453.89 13,952,564.78 342,424,376.10 amount of the period (1) Outsourcing 4,937,244.26 139,064,886.17 4,953,453.89 9,938,314.17 158,893,898.49 (2) Transfer of inventory\fixed 127,870,877.63 51,645,349.37 4,014,250.61 183,530,477.61 assets\project under construction (3) Increased from enterprise merger 3. Decreased 5,101,698.96 19,627,926.98 1,348,978.83 5,207,212.22 31,285,816.99 amount of the period (1) Disposal or 5,101,698.96 19,627,926.98 1,348,978.83 5,207,212.22 31,285,816.99 Scrap 4. Closing 2,678,346,700.26 5,590,479,536.09 72,011,120.11 111,875,276.29 8,452,712,632.75 balance II. Accumulative depreciation 1.Opening 664,880,219.81 2,404,560,228.35 47,741,021.91 66,140,558.20 3,183,322,028.27 balance 2. Increased 79,609,991.66 253,672,043.58 5,502,153.37 16,911,882.45 355,696,071.06 amount of the period (1) Withdrawal 79,609,991.66 253,672,043.58 5,502,153.37 16,911,882.45 355,696,071.06 3. Decreased 1,446,473.45 14,768,667.79 1,233,406.57 3,915,041.78 21,363,589.59 amount of the period (1) Disposal or scrap 1,446,473.45 14,768,667.79 1,233,406.57 3,915,041.78 21,363,589.59 4. Closing 743,043,738.02 2,643,463,604.14 52,009,768.71 79,137,398.87 3,517,654,509.74 balance 148 2015 Annual Report of Lu Thai Textile Co., Ltd. III. Depreciation reserves 1.Opening 4,823,890.00 22,457,499.57 53,835.13 68,764.63 27,403,989.33 balance 2. Increased 2,566,270.02 734.82 2,567,004.84 amount of the period (1) Withdrawal 2,566,270.02 734.82 2,567,004.84 3. Decreased 2,488,341.00 2,488,341.00 amount of the period (1) Disposal or scrap 2,488,341.00 2,488,341.00 4. Closing balance 4,823,890.00 22,535,428.59 53,835.13 69,499.45 27,482,653.17 IV. Book value 1. Closing book 1,930,479,072.24 2,924,480,503.36 19,947,516.27 32,668,377.97 4,907,575,469.84 value 2. Opening 1,880,936,167.52 2,992,379,499.61 20,611,788.01 36,920,600.90 4,930,848,056.04 book value (2) List of temporarily idle fixed assets Unit: RMB Yuan Accumulative Impairment Item Original book value Book value Notes depreciation provision (3) Fixed assets leased in from financing lease Unit: RMB Yuan Accumulative Item Original book value Impairment provision Book value depreciation (4) Fixed assets leased out from operation lease Unit: RMB Yuan Item Closing book value Houses and buildings 21,595,758.86 (5) Details of fixed assets failed to accomplish certification of property Unit: RMB Yuan 149 2015 Annual Report of Lu Thai Textile Co., Ltd. Item Book value Reason Ongoing inspection, surveying, Weaving and yarn dying workshop 113,009,638.24 verification to application procedures by Housing authorities Employee’s dormitory building of eastern 46,852,406.82 Same with above area of industrial park Spinning Fourth factory workshop 71,475,577.92 Same with above Employee’s dormitory building of western 122,412,964.85 Same with above area of industrial park Lufeng weaving dye workshop 139,589,989.72 Same with above Other notes 20. Construction in progress (1) List of construction in progress Unit: RMB Yuan Closing balance Opening balance Item Impairment Impairment Book balance Book value Book balance Book value provision provision Complex building and employee’s dormitory 849,549.02 849,549.02 12,939,182.17 12,939,182.17 building in western area of Lu Thai A new 230,000-spindle production line project and a new 35,000-ingot 4,337,162.70 4,337,162.70 4,850,066.53 4,850,066.53 two-for-one twisting production line project East sample 17,204,613.50 17,204,613.50 factory Factory project of 1,153,723.06 1,153,723.06 423,132.50 423,132.50 Xinjiang Lu Thai Reform project of 30,335,215.53 30,335,215.53 22,032,798.42 22,032,798.42 Xinsheng 150 2015 Annual Report of Lu Thai Textile Co., Ltd. Thermal Power Energy conservation 9,445,960.77 9,445,960.77 10,301,098.08 10,301,098.08 project of Helijie Lu Thai (Cambodia) 3,202,357.80 3,202,357.80 12,450,194.68 12,450,194.68 garment project Lu Thai (Burma) 27,134,693.98 27,134,693.98 project Lu Thai 86,589,660.94 86,589,660.94 (Vietnam) project Other small 42,045,705.70 42,045,705.70 43,384,140.92 43,384,140.92 projects Total 205,094,029.50 205,094,029.50 123,585,226.80 123,585,226.80 (2) Changes of significant construction in progress Unit: RMB Yuan Of Amount Proporti which: Accumul that on the Capitaliz Other ative Increase transferr estimate amount ation rate Estimate decrease amount Name o f Opening d amount ed to Closing d of the Project of the of the Capital d d amount of item balance of the fixed balance project progress capitaliz interests resources number of the capitaliz period assets of accumul ed of the period ed the ative interests period interests period input of the period Complex building and employe e’s dormitor 106,500, 12,939,1 9,779,53 21,869,1 849,549. 99.50% 99.50% Other y 000.00 82.17 1.31 64.46 02 building in western area of Lu Thai A new 928,660, 4,850,06 4,781,92 5,294,83 4,337,16 34.30% 34.30% Other 151 2015 Annual Report of Lu Thai Textile Co., Ltd. 230,000- 000.00 6.53 6.85 0.68 2.70 spindle producti on line project and a new 35,000-i ngot two-for- one twisting producti on line project East 30,000,0 17,204,6 27,833,8 45,038,4 sample 100.00% 100% Other 00.00 13.50 25.22 38.72 factory Factory project 15,000,0 423,132. 12,691,5 11,960,9 1,153,72 of 87.00% 87% Other 00.00 50 87.16 96.60 3.06 Xinjiang Lu Thai Reform project of 50,300,0 22,032,7 25,481,2 17,178,8 30,335,2 Xinshen 94.00% 94% Other 00.00 98.42 85.53 68.42 15.53 g Thermal Power Energy conserva tion 28,880,0 10,301,0 11,197,1 12,052,2 9,445,96 84.00% 84% Other project 00.00 98.08 36.85 74.16 0.77 of Helijie Lu Thai (Cambod 123,056, 12,450,1 37,813,6 47,061,4 3,202,35 ia) 70.00% 70% Other 000.00 94.68 20.02 56.90 7.80 garment project Lu Thai 61,136,0 32,142,2 5,007,60 27,134,6 49.50% 49.50% Other 152 2015 Annual Report of Lu Thai Textile Co., Ltd. (Burma) 00.00 99.47 5.49 93.98 project Lu Thai 242,282, 86,589,6 86,589,6 (Vietnam 14.00% 14% Other 300.00 60.94 60.94 ) project Other 43,384,1 16,728,4 18,066,8 42,045,7 small Other 40.92 06.96 42.18 05.70 projects 1,585,81 123,585, 265,039, 183,530, 205,094, Total -- -- -- 4,300.00 226.80 280.31 477.61 029.50 (3) List of the withdrawal of the impairment provision of the construction in progress Unit: RMB Yuan Item Amount Reason Other notes 21. Engineering material Unit: RMB Yuan Item Closing balance Opening balance Specific materials 187,384.85 587,256.00 Specific equipments 6,132,398.32 19,298,509.41 Total 6,319,783.17 19,885,765.41 Notes: 22. Liquidation of fixed assets Unit: RMB Yuan Item Closing balance Opening balance Notes: 23. Productive biological assets (1) Productive biological assets adopted cost measurement mode √ Applicable □ Inapplicable Unit: RMB Yuan Item Planting industry Livestock Forestry Aquaculture Total Hu sheep 153 2015 Annual Report of Lu Thai Textile Co., Ltd. I. Original book value 1. Opening 1,310,500.00 1,310,500.00 balance 2. Increased amount of the 284,971.02 284,971.02 period (1) 24,000.00 24,000.00 Outsourcing (2) Self 260,971.02 260,971.02 cultivate 3. Decreased amount of the 196,600.00 196,600.00 period (1) Disposal 190,500.00 190,500.00 (2) Other 6,100.00 6,100.00 4. Closing 1,398,871.02 1,398,871.02 balance II. Accumulative depreciation 1. Opening balance 2. Increased amount of the 249,624.84 249,624.84 period (1) 249,624.84 249,624.84 Withdrawal 3. Decreased amount of the 27,867.71 27,867.71 period (1) Disposal 26,871.83 26,871.83 (2) Other 995.88 995.88 4. Closing 221,757.13 221,757.13 balance 154 2015 Annual Report of Lu Thai Textile Co., Ltd. III. Depreciation reserves 1. Opening balance 2. Increased amount of the period (1) Withdrawal 3. Decreased amount of the period (1) Disposal (2) Other 4. Closing balance IV. Book value 1. Closing 1,177,113.89 1,177,113.89 book value 2. Opening 1,310,500.00 1,310,500.00 book value (2) Productive biological assets adopted fair value measurement mode □ Applicable √ Inapplicable 24. Oil and gas assets □ Applicable √ Inapplicable 25. Intangible assets (1) List of intangible assets Unit: RMB Yuan Item Land use right Patent right Non-patent right Total I. Original book value 155 2015 Annual Report of Lu Thai Textile Co., Ltd. 1. Opening 445,235,221.44 1,985,176.47 180,000.00 447,400,397.91 balance 2. Increased 1,568,182.20 300,000.00 1,868,182.20 amount of the period (1) Purchase 1,568,182.20 300,000.00 1,868,182.20 (2) Internal R&D (3) Enterprise combination increase 3. Decreased amount of the period (1) Disposal 4. Closing 446,803,403.64 1,985,176.47 480,000.00 449,268,580.11 balance II. Accumulated amortization 1. Opening 72,632,893.20 827,157.00 180,000.00 73,640,050.20 balance 2. Increased 12,014,025.60 198,517.68 30,000.00 12,242,543.28 amount of the period (1) 12,014,025.60 198,517.68 30,000.00 12,242,543.28 Withdrawal 3. Decreased amount of the period (1) Disposal 4. Closing 84,646,918.80 1,025,674.68 210,000.00 85,882,593.48 balance III. Depreciation reserves 1. Opening balance 2. Increased amount of the period (1) 156 2015 Annual Report of Lu Thai Textile Co., Ltd. Withdrawal 3. Decreased amount of the period (1) Disposal 4. Closing balance IV. Book value 1. Closing book 362,156,484.84 959,501.79 270,000.00 363,385,986.63 value 2. Opening 372,602,328.24 1,158,019.47 373,760,347.71 book value The proportion the intangible assets formed from the internal R&D through the Company amount the balance of the intangible assets at the period-end. (2) Details of fixed assets failed to accomplish certification of land use right Unit: RMB Yuan Item Book value Reason Notes: 26. R&D expenses Unit: RMB Yuan Increase Decrease Transfer into Opening Internal Recognized Closing Item current balance development Other as intangible balance profits or expenses assets losses Product 294,178,756. 294,178,756. research 29 29 294,178,756. 294,178,756. Total 29 29 Other notes: 157 2015 Annual Report of Lu Thai Textile Co., Ltd. 27. Goodwill (1) Original book value of goodwill Unit: RMB Yuan Name of the investees or the Opening balance Increase Decrease Closing balance events formed goodwill Xinsheng Power 20,563,803.29 20,563,803.29 Helijie 50,000.00 50,000.00 Total 20,613,803.29 20,613,803.29 (2) Impairment provision of goodwill Unit: RMB Yuan Name of the investees or the Opening balance Increase Decrease Closing balance events formed goodwill Notes of the testing process of goodwill impairment, parameters and the recognition method of goodwill impairment losses: Other notes: 28. Long-term unamortized expenses Unit: RMB Yuan Amortization Item Opening balance Increased amount Decrease Closing balance amount Land contracting fee 28,319,033.27 360,000.00 1,039,650.23 27,639,383.04 of Xinjiang Luthai Land rent of 58,481,467.88 996,705.67 57,484,762.21 overseas subsidiaries Total 28,319,033.27 58,841,467.88 2,036,355.90 85,124,145.25 Other notes: 29. Deferred income tax assets/deferred income tax liabilities (1) Deferred income tax assets had not been off-set Unit: RMB Yuan Item Closing balance Opening balance 158 2015 Annual Report of Lu Thai Textile Co., Ltd. Deductible temporary Deferred income tax Deductible temporary Deferred income tax difference assets difference assets Assets impairment 88,791,730.93 14,770,956.88 80,747,882.90 13,938,629.38 provision Unrealized internal sales 62,610,524.74 8,953,164.62 54,548,472.47 7,895,874.08 gain and loss One-time listed 1,924,508.40 288,676.26 decoration expenses Payroll payable 113,279,841.30 17,414,870.28 114,961,700.46 17,941,934.30 Deferred income 93,945,118.42 13,979,718.50 63,445,242.97 9,402,402.82 Change of fair value of trading financial 46,695,875.00 7,004,381.25 3,306,200.00 495,930.00 liabilities Total 405,323,090.39 62,123,091.53 318,934,007.20 49,963,446.84 (2) Deferred income tax liabilities had not been off-set Unit: RMB Yuan Closing balance Opening balance Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax difference liabilities difference liabilities Depreciation of fixed 13,289,056.67 2,192,694.35 12,513,412.24 2,064,713.02 assets Total 13,289,056.67 2,192,694.35 12,513,412.24 2,064,713.02 (3) Deferred income tax assets or liabilities listed by net amount after off-set Unit: RMB Yuan Mutual set-off amount of Amount of deferred Mutual set-off amount of Amount of deferred deferred income tax income tax assets or deferred income tax income tax assets or Item assets and liabilities at liabilities after off-set at assets and liabilities at liabilities after off-set at the period-end the period-end the period-begin the period-begin Deferred income tax 62,123,091.53 49,963,446.84 assets Deferred income tax 2,192,694.35 2,064,713.02 liabilities (4) List of unrecognized deferred income tax assets Unit: RMB Yuan 159 2015 Annual Report of Lu Thai Textile Co., Ltd. Item Closing balance Opening balance Deductible temporary difference 8,124,396.63 9,184,255.09 Deductible losses 134,950,376.05 86,677,173.05 Total 143,074,772.68 95,861,428.14 (5) Deductible losses of unrecognized deferred income tax assets will due the following years Unit: RMB Yuan Years Closing amount Opening amount Notes Y 2016 9,542,681.08 9,735,028.99 Y 2017 20,826,906.25 22,207,758.19 Y 2018 23,670,032.23 27,926,362.05 Y 2019 23,798,042.42 26,808,023.82 Y 2020 57,112,714.07 Total 134,950,376.05 86,677,173.05 -- Notes: 30. Other non-current assets Unit: RMB Yuan Item Closing balance Opening balance Prepayment for equipment 21,721,084.27 Prepayment for land 12,781,283.00 16,910,237.34 Total 34,502,367.27 16,910,237.34 Notes: 31. Short-term loans (1) Category of short-term loans Unit: RMB Yuan Item Closing balance Opening balance Pledge loan 28,266,701.32 70,000,000.00 Mortgage loan 180,000,000.00 288,230,000.00 Guaranteed loan 50,000,000.00 Credit loan 544,499,617.58 159,222,946.24 Total 802,766,318.90 517,452,946.24 Notes of short-term loans category 160 2015 Annual Report of Lu Thai Textile Co., Ltd. (2) List of the short-term loans overdue but not return The total amount of the overdue but not return short-term borrowings at the period-end was of RMB0, of which the situation of the significant overdue but not return short-term borrowings as follows: Unit: RMB Yuan Entity Closing balance Borrowing rate Overdue time Overdue rate Notes: 32. Financial liabilities measured by fair value and the changes included in the current gains and losses Unit: RMB Yuan Item Closing balance Opening balance Transaction financial liabilities 46,695,875.00 3,306,200.00 Derivative financial liabilities 46,695,875.00 3,306,200.00 Total 46,695,875.00 3,306,200.00 Notes: 33. Derivative financial liabilities √ Applicable □ Inapplicable Unit: RMB Yuan Item Closing balance Opening balance Notes: 34. Notes payable Unit: RMB Yuan Category Closing balance Opening balance Trade acceptance 2,709,149.48 7,421,979.09 Bank acceptance bill 400,000.00 Total 3,109,149.48 7,421,979.09 The total amount of the due but not pay notes payable at the period-end was of RMB0. 35. Accounts payable (1) List of accounts payable Unit: RMB Yuan Item Closing balance Opening balance Purchase of goods 163,649,100.70 257,834,663.07 161 2015 Annual Report of Lu Thai Textile Co., Ltd. Engineering equipments 79,077,530.07 80,701,856.84 Other 5,843,774.80 5,545,719.25 Total 248,570,405.57 344,082,239.16 (2) Notes of the accounts payable aging over one year Unit: RMB Yuan Item Closing balance Unpaid/ Un-carry-over reason Notes: 36. Advance from customers (1) List of advance from customers Unit: RMB Yuan Item Closing balance Opening balance Advance from goods 95,077,531.32 82,176,191.45 Total 95,077,531.32 82,176,191.45 (2) Significant advance from customers aging over one year Unit: RMB Yuan Item Closing balance Unpaid/ Un-carry-over reason (3) Particulars of settled but unfinished projects formed by construction contract at period-end. Unit: RMB Yuan Item Amount Notes: 37. Payroll payable (1) List of Payroll payable Unit: RMB Yuan Item Opening balance Increase Decrease Closing balance I. Short-term salary 261,086,385.47 1,362,127,680.97 1,332,434,718.81 290,779,347.63 II. Post-employment benefit-defined 452,821.46 192,341,685.52 192,310,254.99 484,251.99 contribution plans III. Termination benefits 329,371.85 329,371.85 162 2015 Annual Report of Lu Thai Textile Co., Ltd. Total 261,539,206.93 1,554,798,738.34 1,525,074,345.65 291,263,599.62 (2) List of Short-term salary Unit: RMB Yuan Item Opening balance Increase Decrease Closing balance 1. Salary, bonus, allowance, subsidy 230,521,560.35 1,189,713,669.56 1,167,211,132.07 253,024,097.84 2. Employee welfare 53,661,132.50 53,661,132.50 3. Social insurance 155,792.81 72,469,232.04 72,370,229.29 254,795.56 Including: 1. Medical insurance premiums 90,003.82 61,466,299.87 61,328,922.99 227,380.70 Work-related injury insurance 19,076.12 6,374,396.68 6,381,077.87 12,394.93 Maternity insurance 46,712.87 4,628,535.49 4,660,228.43 15,019.93 4. Housing fund 29,662.62 20,957,062.65 20,964,264.95 22,460.32 5. Labor union budget and employee education 30,379,369.69 25,326,584.22 18,227,960.00 37,477,993.91 budget Total 261,086,385.47 1,362,127,680.97 1,332,434,718.81 290,779,347.63 (3) List of drawing scheme Unit: RMB Yuan Item Opening balance Increase Decrease Closing balance Basic pension benefits 351,444.86 182,394,227.58 182,287,023.75 458,648.69 Unemployment insurance 101,376.60 9,947,457.94 10,023,231.24 25,603.30 Total 452,821.46 192,341,685.52 192,310,254.99 484,251.99 Notes: The Company, in line with the requirement, participate the endowment insurance, unemployment insurance scheme and so on, according to the scheme, the Company monthly pay to the scheme in line with 27% and 1.5% of the endowment insurance base, except the monthly payment, the Company no longer shoulder the further payment obligation, the relevant expense occurred was recorded into current profits and losses or related assets costs. 38. Taxes payable Unit: RMB Yuan Item Closing balance Opening balance VAT 8,095,634.56 6,300,150.34 Business tax 346,838.39 437,293.48 163 2015 Annual Report of Lu Thai Textile Co., Ltd. Corporate income tax 54,874,320.89 47,179,155.84 Personal income tax 677,155.21 1,327,131.46 Urban maintenance and construction tax 3,706,913.14 5,117,786.89 Stamp tax 452,140.04 383,843.12 Property tax 4,554,321.87 4,256,461.03 Land use tax 4,592,696.80 4,556,076.61 Education Surcharge 1,668,460.01 2,254,623.77 Local education surtax 1,112,306.69 1,503,725.02 Local water conservancy facility 534,220.54 736,158.41 construction fund Total 80,615,008.14 74,052,405.97 Notes: 39. Interest payable Unit: RMB Yuan Item Closing balance Opening balance Interest payable on short-term borrowings and long term borrowings 1,851,876.78 511,373.44 Total 1,851,876.78 511,373.44 Particulars of significant overdue unpaid interest: Unit: RMB Yuan Entity Overdue amount Overdue reason Notes: 40. Dividends payable Unit: RMB Yuan Item Closing balance Opening balance Common stock dividends of the Group 441,113.64 441,456.54 Total 441,113.64 441,456.54 Note: Including significant unpaid dividends payable over one year, the unpaid reason shall be disclosed: 41. Other accounts payable (1) Other accounts payable listed by nature of the account Unit: RMB Yuan Item Closing balance Opening balance 164 2015 Annual Report of Lu Thai Textile Co., Ltd. The deposit and guarantee 19,946,789.66 18,533,942.00 Collecting payment on behalf of others 16,801,587.86 11,481,319.14 Intercourse funds 2,941,300.16 10,383,779.31 Other 22,825,136.85 17,676,832.73 Total 62,514,814.53 58,075,873.18 (2) Other significant accounts payable with aging over one year Unit: RMB Yuan Item Closing balance Unpaid/ Un-carry-over reason Cotton and Linen Company 11,925,000.00 Received deposit of sale contract Total 11,925,000.00 -- Other notes 42. Liabilities classified as holding for sale 43. Non-current liabilities due within 1 year Unit: RMB Yuan Item Closing balance Opening balance Long-term loans due within 1 year 100,733,898.72 Total 100,733,898.72 Notes: 44. Other current-liabilities 45. Long-term loan (1) Category of long-term loan Unit: RMB Yuan Item Closing balance Opening balance Pledge loan 0.00 0.00 Mortgage loan 0.00 0.00 Guaranteed loan 0.00 0.00 Credit loan 0.00 110,638,544.31 Less: long-term loans due within 1 year 0.00 -100,733,898.72 Total 0 9,904,645.59 165 2015 Annual Report of Lu Thai Textile Co., Ltd. 46. Bonds payable 47. Long-term payable (1) Long-term payable listed by nature of the account Unit: RMB Yuan Item Closing balance Opening balance Power bonds payable 220,000.00 48. Long term payroll payable (1) List of long term payroll payable Unit: RMB Yuan Item Closing balance Opening balance III. Other long term welfare 81,499,403.98 80,360,457.97 Total 81,499,403.98 80,360,457.97 (2) Changes of defined benefit plans 49. Special payable 50. Accrued liabilities 51. Deferred income Unit: RMB Yuan Item Opening balance Increase Decrease Closing balance Formation reasons Government subsidies 66,155,242.97 31,919,400.00 2,272,524.55 95,802,118.42 Government subsidies Unrealized financing incomes 901,978.43 569,018.94 332,959.49 Finance lease Total 67,057,221.40 31,919,400.00 2,841,543.49 96,135,077.91 -- Items involved in government subsidies: Unit: RMB Yuan Amount of Amount accrued in Other Related to the assets/ Item Opening balance Closing balance newly subsidy non-business income changes income Land 63,445,242.97 1,393,157.88 62,052,085.09 Related to the assets Equipment 1,620,000.00 31,919,400.00 746,366.67 32,793,033.33 Related to the assets Production 1,090,000.00 133,000.00 957,000.00 Related to the assets biological assets 166 2015 Annual Report of Lu Thai Textile Co., Ltd. Total 66,155,242.97 31,919,400.00 2,272,524.55 95,802,118.42 -- 52. Other non-current liabilities Unit: RMB Yuan Item Closing balance Opening balance Other 1,840,000.00 1,840,000.00 Total 1,840,000.00 1,840,000.00 53. Share capital Unit: RMB Yuan Increase/decrease (+/-) Opening Capitalization Closing Newly issue balance Bonus shares of public Other Subtotal balance share reserves The sum of 955,758,496.00 955,758,496.00 shares Notes: The share capital of the Company was reviewed and examined by Ruihua Certificated Public Accountants which the Capital Verification Report Ruihua YZ [2014] No. 37040004. 54. Other equity instruments (1) Basic information of preferred stock, perpetual capital securities and other financial instruments outstanding issued at period-begin (2) Change list of preferred stock, perpetual capital securities and other financial instruments outstanding issued at period-begin Unit: RMB Yuan Financial Opening period Increase Decrease Closing period instruments outstanding Amount Book value Amount Book value Amount Book value Amount Book value issued Changes, reason of change and basis of relevant accounting treatment of other equity instruments in reporting period: Notes: 55. Capital reserves Unit: RMB Yuan Item Opening balance Increase Decrease Closing balance 167 2015 Annual Report of Lu Thai Textile Co., Ltd. Capital premium 948,167,616.39 948,167,616.39 Other capital reserves 58,871,944.74 106,605.84 58,978,550.58 Total 1,007,039,561.13 106,605.84 1,007,146,166.97 Other notes, including changes and reason of change: Other capital reserve increase RMB106,605.84, mainly was the recovery of bonus of original restricted share incentive personnel who left the office 56. Treasury stock Unit: RMB Yuan Item Opening balance Increase Decrease Closing balance The Company’s shared acquired due to the 11,610,721.68 11,610,721.68 reduce of registered capital Total 11,610,721.68 11,610,721.68 Other notes, including changes and reason of change: 57. Other comprehensive income Unit: RMB Yuan Reporting period Less: Amount transferred into profit and loss in the Amount After-tax After-tax Opening current period Less: Closing Item incurred attribute to attribute to balance that income tax balance before the parent minority recognized expense income tax company shareholder into other comprehensive income in prior period II. Other comprehensive reclassified 25,530,950. 25,530,950. 17,090,77 -8,440,178.37 into profits or losses 68 68 2.31 Converted difference of the 25,530,950. 25,530,950. 17,090,77 -8,440,178.37 foreign currency financial statement 68 68 2.31 25,530,950. 25,530,950. 17,090,77 total -8,440,178.37 68 68 2.31 Other notes, including the adjustment of the recognition of initial amount of effective part of the cash flow hedging gains and losses transfer into arbitraged items: 168 2015 Annual Report of Lu Thai Textile Co., Ltd. 58. Special reserves Unit: RMB Yuan Item Opening balance Increase Decrease Closing balance Other notes, including changes and reason of change: 59. Surplus reserves Unit: RMB Yuan Item Opening balance Increase Decrease Closing balance Statutory surplus 739,006,259.89 73,300,671.81 812,306,931.70 reserves Discretional surplus 3,341,572.58 3,341,572.58 reserves Total 742,347,832.47 73,300,671.81 815,648,504.28 Other note, including changes and reason of change 60. Retained profits Unit: RMB Yuan Item Reporting period Last period Opening balance of retained profits before 3,892,066,534.32 3,379,354,741.18 adjustments Opening balance of retained profits after 3,892,066,534.32 3,379,354,741.18 adjustments Add: Net profit attributable to owners of the 712,193,243.19 958,725,402.84 Company Less: Withdrawal of statutory surplus reserves 73,300,671.81 82,809,421.22 Dividend of common stock payable 477,879,248.00 363,204,188.48 Closing retained profits 4,053,079,857.70 3,892,066,534.32 List of adjustment of opening retained profits: 1) RMB0 opening retained profits was affected by retrospective adjustment conducted according to the Accounting Standards for Business Enterprises and relevant new regulations. 2) RMB0 opening retained profits was affected by changes on accounting policies. 3) RMB0 opening retained profits was affected by correction of significant accounting errors. 4) RMB0 opening retained profits was affected by changes in combination scope arising from same control. 5) RMB0opening retained profits was affected totally by other adjustments. 169 2015 Annual Report of Lu Thai Textile Co., Ltd. 61. Revenues and operating costs Unit: RMB Yuan Reporting period Same period of last year Item Revenue Operating costs Revenue Operating costs Main operations 5,909,772,762.98 4,175,234,398.18 5,915,372,574.27 4,086,154,764.14 Other operations 263,550,015.63 165,800,478.86 254,316,218.26 148,429,654.64 Total 6,173,322,778.61 4,341,034,877.04 6,169,688,792.53 4,234,584,418.78 62. Business tax and surcharges Unit: RMB Yuan Item Reporting period Same period of last year Business tax 1,699,505.61 1,543,096.38 Urban maintenance and construction tax 28,144,085.36 25,173,497.57 Education Surcharge 12,865,492.60 11,069,160.40 Local education surtax 8,576,995.04 7,379,440.32 Local water conservancy facility 4,023,905.42 3,572,581.87 construction fund Total 55,309,984.03 48,737,776.54 Notes: 63. Sales expenses Unit: RMB Yuan Item Reporting period Same period of last year Salary 52,872,651.88 52,551,757.68 Transport fees 33,139,133.69 29,390,312.02 Advertising expense 24,551,068.37 19,543,918.94 Mall costs 13,806,476.08 12,103,271.52 Terminal Handing charges 7,552,206.39 6,627,616.75 Depreciation charge 7,225,171.78 6,588,088.96 Business travel charges 5,319,184.05 4,308,622.84 Copyright royalty 3,227,464.60 2,970,940.04 Rental charges 2,681,385.17 3,626,236.55 Marketing costs of the offices 1,913,843.93 2,240,056.21 Other 39,644,709.25 38,332,673.36 170 2015 Annual Report of Lu Thai Textile Co., Ltd. Total 191,933,295.19 178,283,494.87 Notes: 64. Administrative expenses Unit: RMB Yuan Item Reporting period Same period of last year R&D expenses 294,928,756.29 289,005,271.10 Salary 115,940,476.52 121,622,670.65 Taxes 40,962,025.54 34,632,666.02 Depreciation charge 36,733,403.06 24,019,467.83 Warehouse funding 21,383,855.97 19,186,460.22 Rental charges 15,572,868.91 12,020,178.94 Labor-union expenditure 14,842,795.98 13,546,133.52 Employee education budget 10,483,788.24 10,739,493.11 Amortization of intangible assets 10,383,276.33 10,202,923.93 Transport fees 6,815,115.78 6,269,569.17 Stock payment 6,041,853.38 Other 102,658,021.67 87,258,443.21 Total 670,704,384.29 634,545,131.08 Notes: 65. Financial expenses Unit: RMB Yuan Item Reporting period Same period of last year Interest expenses 18,898,648.84 24,513,571.60 Less: Interest income 6,226,423.16 7,556,637.78 Less: Amount of capitalized interest Exchange gains and losses -3,061,394.46 -7,989,225.52 Less: capitalization of foreign currency exchange gains and losses Other 6,870,192.67 6,495,074.89 Total 16,481,023.89 15,462,783.19 Notes: 171 2015 Annual Report of Lu Thai Textile Co., Ltd. 66. Asset impairment loss Unit: RMB Yuan Item Reporting period Same period of last year I. Bad debt loss 4,827,646.30 -5,357,478.80 II. Inventory falling price loss 19,902,794.60 18,132,197.12 VII. Impairment losses of fix asset 2,567,004.84 110,105.84 impairment loss Total 27,297,445.74 12,884,824.16 Notes: 67. Gains on the changes in the fair value Unit: RMB Yuan Source Reporting period Same period of last year 2. Financial assets measured by fair value and the changes be included in the current -17,296,256.36 -29,949,120.00 profits and losses Of which, gains on the changes in the fair value of derivative financial -29,949,120.00 instruments Financial liabilities measured by fair value and the changes included in the current -43,389,675.00 -3,306,200.00 gains and losses Total -60,685,931.36 -33,255,320.00 Notes: 68. Investment income Unit: RMB Yuan Item Reporting period Same period of last year Investment income received from financial assets measured by fair value and the changes 373,901.27 be included in the current profits and losses during holding period Investment income received from disposal of financial assets measured by fair value and the 31,166,114.24 27,935,884.70 changes be included in the current profits and losses during holding period Investment income received from holding of 120,000.00 172 2015 Annual Report of Lu Thai Textile Co., Ltd. available-for-sale financial assets Total 31,540,015.51 28,055,884.70 Notes: 69. Non-operating gains Unit: RMB Yuan Recorded in the amount of the Item Reporting period Same period of last year non-recurring gains and losses Total gains from disposal of 959,445.92 2,759,790.52 959,445.92 non-current assets Including: Gains from disposal 959,445.92 2,759,790.52 959,445.92 of fixed assets Government subsidies 43,266,788.43 99,126,878.52 43,266,788.43 Other 7,975,499.49 25,463,765.76 7,975,499.49 Total 52,201,733.84 127,350,434.80 52,201,733.84 Government subsidies recorded into current profits and losses Unit: RMB Yuan Whether Whether influence the Related to the Distribution Distribution Special Reporting Same period Item Nature/type profits or assets/ entity reason subsidy or period of last year losses of the income not year or not Subsidy for Subsidy from independent R&D innovation Finance Technical Related to the and Bureau of Subsidy Yes No 1,000,000.00 updating and income achievements Zibo transformatio transformatio n, etc. n The Zibo Subsidy from outstanding High-tech R&D contribution Industrial Technical Related to the prize in Development Award Yes No 502,400.00 updating and income science and Zone transformatio technology Management n, etc. innovation Committee Funds for Finance Due to Related to the Subsidy Yes No 422,000.00 encouraging Bureau of engaged in income 173 2015 Annual Report of Lu Thai Textile Co., Ltd. foreign trade Zichuan special development District industry that the state encouraged and supported, gained subsidy (obtaining in line with the law and the regulations of national policy) Due to engaged in special industry that the state Funds for encouraged development Finance and of center Bureau of supported, Related to the Subsidy Yes No 100,000.00 foreign trade Zichuan gained income and economic District subsidy cooperation (obtaining in line with the law and the regulations of national policy) Due to engaged in special industry that the state Finance encouraged Saving Bureau of and Related to the Subsidy Yes No 330,000.00 energy funds Zichuan supported, income District gained subsidy (obtaining in line with the law and the regulations of 174 2015 Annual Report of Lu Thai Textile Co., Ltd. national policy) Due to engaged in special industry that the state encouraged Credit Finance and insurance Bureau of supported, Related to the Subsidy Yes No 372,024.00 premium Zichuan gained income subsidies District subsidy (obtaining in line with the law and the regulations of national policy) Subsidy from R&D Ministry of Project funds Technical Related to the Science and Subsidy Yes No 278,500.00 allowance updating and income Technology transformatio n, etc. Subsidy from R&D Ministry of Project funds Technical Related to the Science and Subsidy Yes No 46,000.00 subsidy updating and income Technology transformatio n, etc. Subsidy gained due to confirming with local Social Career office government Related to the security of Zichuan Subsidy Yes No 7,082.10 attracting income subsidy District investment and local supportive policy etc. Science and Finance Subsidy from Related to the technology Bureau of Subsidy R&D Yes No 4,640,000.00 income innovation Chuan Technical 175 2015 Annual Report of Lu Thai Textile Co., Ltd. fund District updating and transformatio n, etc. Subsidy from People's R&D Award for Government Technical Related to the Science and Award Yes No 100,000.00 of Shandong updating and income Technology Province transformatio n, etc. Subsidy from Science and R&D People's technology Technical Related to the Government Award Yes No 100,000.00 and patent updating and income of Zibo City award transformatio n, etc. Subsidy gained due to confirming Finance with local Industrial Bureau of government Related to the design Subsidy Yes No 400,000.00 Zichuan attracting income support funds District investment and local supportive policy etc. Subsidy gained due to confirming The industry Finance with local and Bureau of government Related to the information Subsidy Yes No 100,000.00 Zichuan attracting income industry District investment support funds and local supportive policy etc. Finance Due to Bureau of engaged in Zichuan special Import District, industry that Related to the discount Subsidy Yes No 30,000.00 Bureau of the state income interest funds Commerce of encouraged Zichuan and District supported, 176 2015 Annual Report of Lu Thai Textile Co., Ltd. gained subsidy (obtaining in line with the law and the regulations of national policy) Due to engaged in special industry that Finance the state Bureau of encouraged Zichuan and Export credit District, supported, Related to the insurance Subsidy Yes No 287,200.00 Bureau of gained income premiums Commerce of subsidy Zichuan (obtaining in District line with the law and the regulations of national policy) Due to engaged in special industry that the state encouraged Finance and Import Bureau of supported, Related to the discount Subsidy Yes No 70,000.00 Zichuan gained income interest funds District subsidy (obtaining in line with the law and the regulations of national policy) Taishan Shandong Subsidy Related to the scholar Provincial Subsidy gained due to Yes No 300,000.00 income construction Party confirming 177 2015 Annual Report of Lu Thai Textile Co., Ltd. funds Committee with local Organization government Department attracting investment and local supportive policy etc. Subsidy Human gained due to Resources confirming Graduate and Social with local employment Security government Related to the Subsidy Yes No 360,000.00 apprentice Bureau of attracting income subsidies Zibo, Finance investment Bureau of and local Zibo supportive policy etc. Due to engaged in special industry that the state Funds for encouraged development Finance and of center Bureau of supported, Related to the Subsidy Yes No 360,446.00 foreign trade Zichuan gained income and economic District subsidy cooperation (obtaining in line with the law and the regulations of national policy) Human Subsidy Resources gained due to and Social confirming Subsidies for Security with local unemployme Bureau of government Related to the Subsidy Yes No 4,214,746.00 nt and stable Shandong, attracting income position Finance investment Bureau of and local Shandong, supportive Development policy etc. 178 2015 Annual Report of Lu Thai Textile Co., Ltd. and Reform Commission of Shandong, the Letter Committee of Shandong Subsidy from R&D Award for Technical Related to the Science and CTEI Award Yes No 50,000.00 updating and income Technology transformatio n, etc. Subsidy gained due to Subsidies for Finance confirming transferring Department with local Xinjiang of the government Related to the cotton to Xinjiang Subsidy Yes No 1,667,800.00 attracting income warehouses Uygur investment out of Autonomous and local Xinjiang Region supportive policy etc. Subsidy gained due to confirming with local Exhibit Commerce government Related to the booths Department Subsidy Yes No 35,500.00 attracting income subsidies of Shandong investment and local supportive policy etc. Subsidy Human gained due to Resources confirming and Social with local Technicians Security government Related to the Subsidy Yes No 50,000.00 subsidies Bureau of attracting income Zibo, Finance investment Bureau of and local Zibo supportive policy etc. Social Financial Subsidy Subsidy Yes No 560,028.43 Related to the 179 2015 Annual Report of Lu Thai Textile Co., Ltd. insurance Department gained due to income subsidies and of Shandong, confirming post subsidies Department with local of Labour government and Social attracting Security of investment Shandong and local supportive policy etc. Subsidy from R&D Patent Finance Technical Related to the development Bureau of Subsidy Yes No 80,000.00 updating and income subsidy Zibo transformatio n, etc. Due to engaged in special industry that the state encouraged and Import credit Finance supported, Related to the insurance Bureau of Subsidy Yes No 45,485.00 gained income premiums Zibo subsidy (obtaining in line with the law and the regulations of national policy) Subsidy gained due to Funds for confirming development with local Finance of foreign government Related to the Bureau of Subsidy Yes No 105,600.00 trade and attracting income Zibo economic investment cooperation and local supportive policy etc. Science and People's Subsidy from Related to the Award Yes No 30,000.00 technology Government R&D income 180 2015 Annual Report of Lu Thai Textile Co., Ltd. and patent of Zibo City Technical award updating and transformatio n, etc. Subsidy Finance gained due to Bureau of confirming Special funds Zichuan with local for the District, government Related to the service Subsidy Yes No 54,600.00 Bureau of attracting income industry Commerce of investment development Zichuan and local District supportive policy etc. Due to engaged in special industry that the state Special funds encouraged for and development Finance supported, Related to the of center Bureau of Subsidy Yes No 37,530.00 gained income foreign trade Zibo subsidy and economic (obtaining in cooperation line with the law and the regulations of national policy) Subsidy from R&D Award for CTEI Award Technical Related to the Science and Award Yes No 10,000.00 Office updating and income Technology transformatio n, etc. Due to engaged in Import Department special Related to the discount of Finance of Subsidy industry that Yes No 80,000.00 income interest funds Shandong the state encouraged and 181 2015 Annual Report of Lu Thai Textile Co., Ltd. supported, gained subsidy (obtaining in line with the law and the regulations of national policy) Subsidy gained due to confirming Economic Energy with local and management government Related to the Information Award Yes No 2,880,000.00 financial attracting income Commission reward investment of Shandong and local supportive policy etc. Due to engaged in special industry that the state Zibo encouraged Environment and Fund for the al Protection supported, Related to the control of air Subsidy Yes No 1,830,000.00 Agency, gained income pollution Zichuan subsidy Branch (obtaining in line with the law and the regulations of national policy) The Letter Subsidy Committee of gained due to the Xinjiang confirming Electricity Uygur with local Related to the Finance Subsidy Yes No 925,204.72 Autonomous government income subsidies Region, attracting Development investment and Reform and local 182 2015 Annual Report of Lu Thai Textile Co., Ltd. Commission supportive of policy etc. Autonomous Region, Finance Department of Autonomous Region, Chinese power company in Xinjiang Subsidy Subsidies for gained due to Finance transferring confirming Department Xinjiang with local of the cotton yarn government Related to the Xinjiang Subsidy Yes No 4,351,400.00 to attracting income Uygur warehouses investment Autonomous out of and local Region Xinjiang supportive policy etc. Finance Subsidy Department Cotton gained due to of Xinjiang production confirming Uygur subsidies and with local Autonomous discounts of government Related to the Region, the Subsidy Yes No 4,472,200.00 Xinjiang attracting income Letter Uygur investment Commission Autonomous and local of Region supportive Autonomous policy etc. Region Subsidy Finance gained due to Department confirming Social of the with local Related to the security Xinjiang Subsidy government Yes No 3,412,264.53 income subsidy Uygur attracting Autonomous investment Region and local supportive 183 2015 Annual Report of Lu Thai Textile Co., Ltd. policy etc. Subsidy gained due to Subsidies for Finance confirming transferring Department with local Xinjiang of the government Related to the cotton to Xinjiang Subsidy Yes No 4,833,500.00 attracting income warehouses Uygur investment out of Autonomous and local Xinjiang Region supportive policy etc. Subsidy gained due to Finance confirming Department with local Social of the government Related to the security Xinjiang Subsidy Yes No 345,790.00 attracting income subsidy Uygur investment Autonomous and local Region supportive policy etc. Subsidy gained due to confirming The county with local Finance government government Related to the Subsidy Yes No 517,000.00 subsidies office of Pupi attracting income Avati investment and local supportive policy etc. Akesu Subsidy Prefecture gained due to Bureau of confirming Finance, with local Office of Financial government Related to the Poverty Subsidy Yes No 262,500.00 Discounts attracting income Alleviation investment and and local Development supportive of Akesu policy etc. Prefecture Financial Akesu Subsidy Subsidy Yes No 150,000.00 Related to the 184 2015 Annual Report of Lu Thai Textile Co., Ltd. Discounts Prefecture gained due to income Bureau of confirming Finance, with local Office of government Poverty attracting Alleviation investment and and local Development supportive of Akesu policy etc. Prefecture Human Subsidy Resources gained due to and Social confirming Security with local Labor Bureau of government Related to the training Akesu Subsidy Yes No 162,305.00 attracting income subsidy Prefecture, investment Akesu and local Prefecture supportive Bureau of policy etc. Finance Subsidy gained due to Finance confirming Department with local Subsidies for of the government Related to the superior crop Xinjiang Subsidy Yes No 25,158.10 attracting income varieties Uygur investment Autonomous and local Region supportive policy etc. Due to engaged in Economic special and industry that Information the state Subsidy for Commission encouraged Related to the key project of Subsidy Yes No 1,000,000.00 of Zibo, and income energy saving Finance supported, Bureau of gained Zibo subsidy (obtaining in line with the 185 2015 Annual Report of Lu Thai Textile Co., Ltd. law and the regulations of national policy) Due to engaged in special industry that the state encouraged Special funds Finance and for Bureau of supported, Related to the encouraging Subsidy Yes No 200,000.00 Zichuan gained income foreign trade District subsidy development (obtaining in line with the law and the regulations of national policy) Subsidy from Department R&D Special fund of Finance of Technical Related to the for Patent Shandong Subsidy Yes No 104,000.00 updating and income Development and IPO of transformatio Shandong n, etc. Due to engaged in special industry that the state Residential encouraged building heat Department and metering and of Housing supported, Related to the energy-savin and Award Yes No 3,468,004.00 gained income g reform Urban-Rural subsidy project of Shandong (obtaining in incentives line with the law and the regulations of national policy) Subsidy for Finance Subsidy Due to Yes No 9,000,000.00 Related to the 186 2015 Annual Report of Lu Thai Textile Co., Ltd. development Bureau of engaged in income of new Zichuan special industries District industry that the state encouraged and supported, gained subsidy (obtaining in line with the law and the regulations of national policy) Subsidy from Finance R&D Subsidy for Bureau of Technical Related to the technical Subsidy Yes No 2,680,000.00 Zichuan updating and income innovation District transformatio n, etc. Department The of Finance of Subsidy from development Shandong R&D of science and Science Technical Related to the Subsidy Yes No 200,000.00 and and updating and income technology Technology transformatio fund Department n, etc. of Shandong Subsidy from Award for People's R&D Science and Government Technical Related to the Award Yes No 50,000.00 Technology of Shandong updating and income of Shandong Province transformatio n, etc. Subsidy from Award for R&D People's Science and Technical Related to the Government Award Yes No 100,000.00 Technology updating and income of Zibo City of Zibo transformatio n, etc. The Finance Subsidy from 33,660,000.0 Related to the Subsidy Yes No traditional Bureau of R&D 0 income 187 2015 Annual Report of Lu Thai Textile Co., Ltd. industry Zichuan Technical upgrade fund District updating and transformatio n, etc. Due to engaged in special industry that The ministry the state Special fund of industry encouraged for deep and and integration of information supported, Related to the informationiz Subsidy Yes No 600,000.00 technology gained income ation and informatizati subsidy industrializati on promotion (obtaining in on department line with the law and the regulations of national policy) Special fund Subsidy from for energy Finance R&D conservation Bureau of Technical Related to the Subsidy Yes No 1,500,000.00 and Zichuan updating and income emissions District transformatio reduction n, etc. Subsidy Human gained due to Resources confirming Graduate and Social with local employment Security government Related to the Subsidy Yes No 331,200.00 apprentice Bureau of attracting income subsidies Zibo, Finance investment Bureau of and local Zibo supportive policy etc. Subsidy from Quality and Standardized R&D Technical funded Technical Related to the Supervision Award Yes No 120,000.00 project updating and income Office of incentives transformatio Zibo n, etc. Business Finance Award Subsidy from Yes No 100,000.00 Related to the 188 2015 Annual Report of Lu Thai Textile Co., Ltd. Administratio Bureau of R&D income n Award of Zichuan Technical Shandong District updating and transformatio n, etc. Due to engaged in special industry that the state encouraged Special funds Finance and for foreign Bureau of supported, Related to the Subsidy Yes No 533,829.00 trade Zichuan gained income development District subsidy (obtaining in line with the law and the regulations of national policy) Due to engaged in special industry that the state encouraged Clean Finance and production Bureau of supported, Related to the demonstratio Subsidy Yes No 6,500,000.00 Zichuan gained income n project District subsidy award (obtaining in line with the law and the regulations of national policy) Subsidy from R&D People's Energy-savin Technical Related to the Government Award Yes No 300,000.00 g incentive updating and income of Zibo City transformatio n, etc. 189 2015 Annual Report of Lu Thai Textile Co., Ltd. Subsidy from Special funds Office of R&D for project Ministry of Technical Related to the Subsidy Yes No 414,000.00 topics project Science and updating and income approval Technology transformatio n, etc. Subsidy from Second prize R&D of science Technical Related to the and CTEI Office Award Yes No 20,000.00 updating and income technology transformatio incentive n, etc. Subsidy gained due to confirming Service Finance with local industry Bureau government Related to the Subsidy Yes No 600,000.00 development Office of attracting income guide fund Zibo investment and local supportive policy etc. Subsidy gained due to confirming with local Social Career office government Related to the security of Zichuan Subsidy Yes No 1,286.82 attracting income subsidy District investment and local supportive policy etc. Subsidy from Finance R&D Special fund Bureau Technical Related to the for Patent Subsidy Yes No 100,000.00 Office of updating and income Development Zibo transformatio n, etc. Special fund Subsidy from Finance for energy R&D Bureau of Related to the conservation Subsidy Technical Yes No 99,000.00 Zichuan income and updating and District emissions transformatio 190 2015 Annual Report of Lu Thai Textile Co., Ltd. reduction n, etc. Subsidy gained due to confirming Finance with local Government Bureau of government 17,228,600.0 Related to the Subsidy Yes No financing Zichuan attracting 0 income District investment and local supportive policy etc. Subsidy Unemployme gained due to nt Insurance confirming Division of Subsidies of with local Human unemployme government Related to the Resources Subsidy Yes No 1,200.00 nt dynamic attracting income and Social monitoring investment Security and local Bureau of supportive Zibo policy etc. Due to engaged in special industry that the state encouraged Finance and Import Department, supported, Related to the discount Subsidy Yes No 60,000.00 Commercial gained income interest funds Department subsidy (obtaining in line with the law and the regulations of national policy) Due to Finance engaged in Export credit Bureau of special Related to the insurance Subsidy Yes No 78,322.00 Zichuan industry that income premiums District the state encouraged 191 2015 Annual Report of Lu Thai Textile Co., Ltd. and supported, gained subsidy (obtaining in line with the law and the regulations of national policy) Due to engaged in special industry that Textile the state Industry encouraged CCPIT Sub and The of China supported, Related to the exhibition Council for Subsidy Yes No 3,209.42 gained income subsidy the subsidy Promotion of (obtaining in International line with the Trade law and the regulations of national policy) Subsidy from R&D People's The Tech Technical Related to the Government Award Yes No 20,000.00 Awards updating and income of Zibo City transformatio n, etc. Subsidy from R&D People's The Tech Technical Related to the Government Award Yes No 450,000.00 Awards updating and income of Zichuan transformatio n, etc. Subsidy from Finance R&D Patent fund Department Related to the Subsidy Technical Yes No 4,000.00 subsidy Office of income updating and Shandong transformatio 192 2015 Annual Report of Lu Thai Textile Co., Ltd. n, etc. Due to engaged in special industry that the state encouraged and Import Department supported, Related to the discount of Finance of Subsidy Yes No 147,960.00 gained income interest funds Shandong subsidy ( obtaining in line with the law and the regulations of national policy) Subsidy gained due to confirming Contract Economic with local energy and government Related to the management Information Award Yes No 2,570,000.00 attracting income financial Commission investment reward of Zibo and local supportive policy etc. Akesu Subsidy Prefecture gained due to Bureau of confirming Finance, with local Fiscal interest Office of government Related to the discount Poverty Subsidy Yes No 187,500.00 attracting income funds Alleviation investment and and local Development supportive of Akesu policy etc. Prefecture Human Subsidy Resources gained due to Training Related to the and Social Subsidy confirming Yes No 55,200.00 subsidies income Security with local Bureau of government 193 2015 Annual Report of Lu Thai Textile Co., Ltd. Akesu attracting Prefecture, investment Akesu and local Prefecture supportive Bureau of policy etc. Finance Subsidy The People's gained due to Government confirming of Finance with local Social Department government Related to the security of the Subsidy Yes No 1,431,240.02 attracting income subsidy Xinjiang investment Uygur and local Autonomous supportive Region policy etc. Subsidy gained due to confirming The County with local People's Production government 10,655,901.4 Related to the Government Subsidy Yes No subsidies attracting 2 income Office of investment Pupi Avati and local supportive policy etc. Subsidy Subsidies for gained due to Finance transferring confirming Department Xinjiang with local of the cotton yarn government Related to the Xinjiang Subsidy Yes No 2,379,268.00 to attracting income Uygur warehouses investment Autonomous out of and local Region Xinjiang supportive policy etc. Subsidy gained due to Deferred confirming Related to the revenue with local 2,272,524.55 2,173,157.84 assets amortization government attracting investment 194 2015 Annual Report of Lu Thai Textile Co., Ltd. and local supportive policy etc. 43,266,788.4 99,126,878.5 Total -- -- -- -- -- -- 3 2 Notes: 70. Non-operating expenses Unit: RMB Yuan Recorded in the amount of the Item Reporting period Same period of last year non-recurring gains and losses Loss on disposal of non-current 5,625,603.48 6,075,803.07 5,625,603.48 assets Including: Loss on disposal of 5,625,603.48 6,075,803.07 5,625,603.48 fixed assets Donation 2,758,673.04 3,239,163.80 2,758,673.04 Other 1,784,290.98 1,051,402.66 1,784,290.98 Total 10,168,567.50 10,366,369.53 10,168,567.50 Notes: 71. Income tax expense (1) Lists of income tax expense Unit: RMB Yuan Item Reporting period Same period of last year Current income tax expense 159,937,653.51 173,888,537.51 Deferred income tax expense -12,031,663.36 3,709,274.80 Total 147,905,990.15 177,597,812.31 (2) Adjustment process of accounting profit and income tax expense Unit: RMB Yuan Item Reporting period Total profits 883,449,018.92 Current income tax expense accounted by tax and relevant 132,517,352.84 regulations Influence of different tax rate suitable to subsidiary 20,121,836.02 195 2015 Annual Report of Lu Thai Textile Co., Ltd. Influence of income tax before adjustment -6,573.12 Influence of non taxable income -5,563,921.42 Influence of not deductable costs, expenses and losses 3,325,862.56 Influence of deductable losses of deferred income tax assets -788,850.57 derecognized used in previous period Influence of deductible temporary difference or deductible losses 13,140,079.84 of deferred income tax assets derecognized in reporting period. Influence of plus deducting costs -14,839,796.00 Income tax expense 147,905,990.15 Other notes 72. Other comprehensive income Refer to the notes 73. Supplementary information to cash flow statement (1) Other cash received relevant to operating activities Unit: RMB Yuan Item Reporting period Same period of last year Government subsidies 72,371,505.78 86,297,819.26 Collection for employees 419,975.80 600,744.31 Claim income 2,044,561.45 1,315,960.25 Penalty income 53,787.00 66,215.97 Recovery of employee borrowings, petty 14,889,234.89 9,635,053.19 cash and deposit Other 5,715,940.06 6,931,182.35 Total 95,495,004.98 104,846,975.33 Notes: (2) Other cash paid relevant to operating activities Unit: RMB Yuan Item Reporting period Same period of last year Freight and miscellaneous charges 52,801,900.32 46,642,382.10 Rental charges and management expenses 19,063,808.42 17,785,897.90 of the shops 196 2015 Annual Report of Lu Thai Textile Co., Ltd. Rental charges 24,130,924.34 21,791,858.34 Advertising expense 8,107,292.05 16,086,754.68 Business travel charges 10,863,337.81 10,214,144.89 Premium 9,069,684.52 8,991,889.03 Copyright royalty 2,893,772.65 3,194,102.88 Audit advisory announcement fee 3,730,447.16 7,557,295.92 Decoration & repair expenses 1,919,818.88 1,128,402.64 Donation 2,758,673.04 3,239,163.80 Other 100,141,576.47 104,434,306.33 Total 235,481,235.66 241,066,198.51 Notes: (3) Other cash received relevant to investment activity Unit: RMB Yuan Item Reporting period Same period of last year Interest income 4,458,340.84 7,556,637.78 Income from forward foreign exchange 37,908,044.40 27,935,884.70 Sale of securities 7,196,971.33 Income from holding of tradable financial 373,901.27 assets during holding period Option cost 1,003,700.00 Total 50,940,957.84 35,492,522.48 Notes: (4) Other cash paid relevant to investment activity Unit: RMB Yuan Item Reporting period Same period of last year Purchase of securities 117,355,791.90 Total 117,355,791.90 Notes: (5) Other cash received relevant to financing activities Unit: RMB Yuan Item Reporting period Same period of last year 197 2015 Annual Report of Lu Thai Textile Co., Ltd. Borrowings from related parties 12,000,000.00 Return of inward bill deposits 25,814,503.00 Return of loan guarantees 77,262,230.00 Total 77,262,230.00 37,814,503.00 Notes: (6) Other cash paid relevant to financing activities Unit: RMB Yuan Item Reporting period Same period of last year Return of the B-share buy-back amount 32,244,864.33 Cash paid back to related parties 12,000,000.00 Cash paid for repurchasing restricted 129,317.20 stocks Inward bill deposits 25,814,503.00 The certificates of deposit pledged 91,016,652.42 16,000,000.00 Power bonds payable 220,000.00 Total 123,481,516.75 53,943,820.20 Notes: 74. Supplementary information to cash flow statement (1) Information of net profit to net cash flows generated from operating activities Unit: RMB Yuan Supplementary materials Reporting period Last period 1. Reconciliation of net profit to net cash -- -- flows generated from operating activities Net profit 735,543,028.77 979,377,181.57 Add: Provision for impairment of assets 27,297,445.74 12,884,824.16 Depreciation of fixed assets, of oil-gas 355,945,695.90 303,020,522.04 assets, of productive biological assets Amortization of intangible assets 12,242,543.28 11,760,038.33 Long-term unamortized expenses 2,036,355.90 1,021,677.72 Losses on disposal of fixed assets, intangible assets and other long-term assets (gains: 3,501,007.84 2,906,728.27 negative) Losses on retirement of fixed assets 1,165,149.72 409,284.28 198 2015 Annual Report of Lu Thai Textile Co., Ltd. Losses from variation of fair value 60,685,931.36 33,255,320.00 Financial cost (gains: negative) 9,610,831.22 12,286,198.63 Investment loss (gains: negative) -31,540,015.51 -28,055,884.70 Decrease in deferred income tax assets -12,159,644.69 8,194,576.35 (gains: negative) Increase in deferred income tax liabilities 127,981.33 -4,485,301.55 (“-” means decrease) Decrease in inventory (gains: negative) 4,872,209.46 -109,327,962.73 Decrease in accounts receivable from -103,447,655.41 48,653,571.32 operating activities (gains: negative) Increase in payables from operating -38,285,460.57 -159,805,424.67 activities (decrease: negative) Net cash flows generated from operating 1,027,595,404.34 1,112,095,349.02 activities 2. Investing and financing activities that do -- -- not involving cash receipts and payment: 3. Net increase in cash and cash equivalents -- -- Closing balance of cash 765,695,473.65 649,393,798.30 Less: Opening balance of cash 649,393,798.30 869,909,505.89 Net increase in cash and cash equivalents 116,301,675.35 -220,515,707.59 (2) Net Cash paid of obtaining the subsidiary (3) Net Cash receive of disposal of the subsidiary (4) Cash and cash equivalents Unit: RMB Yuan Item Closing balance Opening balance I. Cash 765,695,473.65 649,393,798.30 Including: Cash on hand 2,111,348.02 1,190,565.56 Bank deposit on demand 742,998,281.72 631,971,943.96 Other monetary funds on demand 20,585,843.91 16,231,288.78 III. Closing balance of cash and cash 765,695,473.65 649,393,798.30 equivalents 199 2015 Annual Report of Lu Thai Textile Co., Ltd. 75. Note of statement of changes in the owner's equity 76. The assets with the ownership or use right restricted Unit: RMB Yuan Item Closing book value Restricted reason Monetary capital 29,805,722.42 Short term loan pledged, guarantee deposit Intangible assets 31,971,662.37 Short-term loan pledged Total 61,777,384.79 -- Notes: 77. Foreign currency monetary items (1) Foreign currency monetary items Unit: RMB Yuan Closing foreign currency Closing convert to RMB Item Exchange rate balance balance Including: USD 46,035,296.59 6.4936 298,934,801.96 EUR 72,217.31 7.0952 512,396.26 HKD 50,853,805.65 0.8378 42,605,318.37 JPY 809,393.00 0.0539 43,626.28 THB 120.19 0.1799 21.62 SGD 91.90 4.5875 421.59 GBP 688.36 9.6159 6,619.21 AUD 2,821.03 4.7276 13,336.70 CHF 102.68 6.4018 657.35 SEK 920.00 0.7718 710.06 MMK 68,175,156.37 0.0050 338,198.77 Dong 57,910,456,996.00 0.00029 16,909,853.44 Including: USD 26,494,198.26 6.4936 172,042,725.85 HKD 31,563,908.00 0.8378 26,444,242.12 Notes: (2) Note to oversea entities including: for significant oversea entities, shall disclose main operating place, recording currency and selection basis, if there are changes into recording currency, shall also disclose the reason. √ Applicable □ Inapplicable 200 2015 Annual Report of Lu Thai Textile Co., Ltd. The operating places of Company’s subsidiaries Lu Thai (Hong Kong), Lu Thai (Cambodia), Lu Thai (Burma) Co., Ltd. (hereinafter referred to as “Lu Thai (Burma)”) Lu Thai (America) Co., Ltd.( Hereinafter referred to as “Lu Thai (America)”) and Lu Thai (Vietnam) Co., Ltd. were Hong Kong Cambodia, Burma, America and Vietnam, and the recording currency respectively was HKD, USD, USD, USD and Dong. 78. Arbitrage According to arbitrage category to disclose arbitrage item, relevant arbitrage tools and been arbitraged risk qualitative and quantitative information: 79. Other VIII. Changes of merge scope 1. Other reasons for the changes in combination scope Note to reasons for the changes in combination scope (Newly established subsidiary and subsidiary of liquidation) and relevant information: The Company newly set up subsidiary, Lu Thai (Vietnam) Co., Ltd. IX. Equity in other entities 1. Equity in subsidiary (1) The structure of the enterprise group Name of the Main operating Registration Holding percentage (%) Nature of business Way of gaining subsidiary place place Directly Indirectly Lufeng Sunshine Beijing Beijing Wholesale and retail industry 100.00% Set-up Beijing Innovative Beijing Beijing Wholesale and retail industry 60.00% Set-up 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 Business combination not Xinjiang Luthai Xinjiang Xinjiang Manufacturing industry 59.92% under the same control Lufeng Weaving & Zibo Zibo Manufacturing industry 75.00% Set-up Dyeing Luqun Textile Zibo Zibo Manufacturing industry 100.00% Set-up Business Xinsheng Power Zibo Zibo Manufacturing industry 100.00% combination not 201 2015 Annual Report of Lu Thai Textile Co., Ltd. under the same control Xinjiang Luthai Textile Xinjiang Xinjiang Manufacturing industry 100.00% Set-up (sub-subsidiary) Business Helijie combination not Zibo Zibo Service 100.00% (sub-subsidiary) under the same control Beijing Youxian Beijing Beijing Wholesale and retail industry 90.00% Set-up Lu Thai (Cambodia) Cambodia Cambodia Manufacturing industry 100.00% Set-up Lu Thai (Burma) Burma Burma Manufacturing industry 100.00% Set-up Lu Thai (America) America America Wholesale and retail industry 100.00% Set-up Lu Tha i(Vietnam) Vietnam Vietnam Manufacturing industry 100.00% Set-up Notes: holding proportion in subsidiary different from voting proportion: Basis of holding half or less voting rights but still been controlled investee and holding more than half of the voting rights not been controlled investee: Significant structure entities and controlling basis in the scope of combination: Basis of determine whether the Company is the agent or the principal: Notes: (2) Significant not wholly owned subsidiary Unit: RMB Yuan Shareholding The profits and losses Declaring dividends Balance of minority Name of the subsidiary proportion of arbitrate to the minority distribute to minority shareholder at closing minority shareholder shareholders shareholder period Xinjiang Luthai 40.08% 23,787,999.23 12,023,570.79 178,922,484.77 Lufeng Weaving & Dyeing 25.00% 13,310,395.71 289,632,571.55 Holding proportion of minority shareholder in subsidiary different from voting proportion: Notes: (3) The main financial information of significant not wholly owned subsidiary Unit: RMB Yuan Name of Closing balance Opening balance the Non-curr Non-curr Non-curr Non-curr current Total Current Total current Total Current Total subsidiar ent ent ent ent assets assets liabilities liabilities assets assets liabilities liabilities y assets liability assets liability 202 2015 Annual Report of Lu Thai Textile Co., Ltd. Xinjiang 441,261, 327,696, 768,958, 323,538, 5,897,44 329,435, 565,642, 336,357, 902,000, 484,470, 7,358,37 491,828, Luthai 937.21 846.84 784.05 224.44 7.45 671.89 462.56 886.37 348.93 159.82 2.43 532.25 Lufeng Weaving 497,062, 887,529, 1,384,59 195,671, 30,390,2 226,061, 432,310, 947,299, 1,379,60 243,251, 31,069,3 274,320, & 573.74 106.38 1,680.12 138.17 55.70 393.87 138.16 541.89 9,680.05 609.13 67.50 976.63 Dyeing Unit: RMB Yuan Reporting period Same period of last year Name of Total Total the Operation Operating Operation Operating Net profit comprehensi Net profit comprehensi subsidiary revenue cash flow revenue cash flow ve income ve income Xinjiang 59,351,295.4 59,351,295.4 159,852,668. 676,265,353. 46,264,010.2 46,264,010.2 -11,120,727.0 569,106,231.16 Luthai 8 8 02 51 3 3 5 Lufeng 1,450,422,625.9 53,241,582.8 53,241,582.8 24,216,809.3 1,377,696,78 46,206,513.0 46,206,513.0 41,980,782.2 Weaving 1 3 3 2 1.89 6 6 8 & Dyeing X. The risk related financial instruments Main financial instruments of the Company included: Loans, accounts receivable, accounts payable, etc., all the details of the financial instruments, see related projects of “Section VII”. The risk associated with these financial instruments, as well as the Company’s risk management policy to reduce these risks which were described below. The Company's management managed and supervised these risks to ensure that the above risk was controlled in a limited scope. The Company use sensitivity analysis technology to analyze the reasonable of risk variables, influence of probable changes to the current profits and Stockholders' equity. Because rarely any risk variables change in isolation, and the correlation between variables for the eventual impact of the change of a risk variables will have a significant effect, thus, the aforesaid content was processing under the assumption of the change of each variable was conducted independently. Risk management objectives and policies The goals of Company engaged in the risk management is to achieve the proper balance between the risks and benefits, reduced the negative impact to the Company operating performance risk to a minimum, maximized the profits of shareholders and other equity investors. Based on the risk management goal, the basic strategy of the Company's risk management is determine and analyze the various risks faced by the Company, set up the bottom line of risk and conducted appropriate risk management, and timely supervised various risks in a reliable way and controlled the risk within the range of limit. 1. Market risk (1) Foreign exchange risk Foreign exchange risk is referred to the risk incurred due to loss of changes in exchange rate. Foreign exchange risk is referred to the risk incurred due to loss of changes in exchange rate. The Company’s foreign exchange risk was mainly related to USD, HKD and EUR, excepting the 203 2015 Annual Report of Lu Thai Textile Co., Ltd. Company’s several subsidiaries purchase and sale, in USD, HKD and Dong, the other main business settled by RMB. On 31 Dec. 2015, in addition to the following assets or liabilities in statement was USD, HKD and EUR, the Company’s assets or liabilities was RMB balance. The foreign exchange risk incurred by assets and liabilities of foreign balance may have impact to the operation results of the Company. Item Closing amount Opening amount Cash and cash equivalents 359,365,961.61 289,133,077.74 Notes receivable 101,533,594.19 92,009,162.34 Account receivable 198,486,967.97 138,557,390.08 Other accounts receivable 21,499,240.95 5,792,541.34 Accounts payable 20,029,203.14 18,451,521.14 Other account payable 3,773,841.47 1,172,287.39 Short-term loans 572,766,318.90 159,222,946.24 Long-term loans due within 1 year 100,733,898.72 Long-term borrowings 9,904,645.59 Sensitive analysis of foreign exchange risk: Base on the foreign currency monetary assets and liabilities, and ignoring other factors, influence of change of exchange rate to current profits and losses and equity of shareholders was followed: Change Reporting period Same period of last year Influence to the Influence to equity of Influence to the Influence to equity of profits shareholders profits shareholders Up 10% against RMB -6,138,055.73 -6,138,055.73 -22,822,257.83 -22,822,257.83 Down 10% against 6,138,055.73 6,138,055.73 22,822,257.83 22,822,257.83 RMB (2) Interest rate risk The risk of cash flow changes of financial instruments due to change of interest rate mainly was related bank loan (for details, see Section VII). Sensitive analysis of interest rate risk: Influence of interest increasing 100 BP to current profits and losses and equity of shareholders before tax was followed: Change Reporting period Same period of last year Influence to the Influence to equity Influence to the Influence to equity profits of shareholders profits of shareholders Increase 100 BP -7,394,269.19 -6,682,600.60 -4,640,123.66 -4,640,123.66 Decrease 100 BP 7,394,269.19 6,682,600.60 4,640,123.66 4,640,123.66 (3) Other price risk The categories held by the Company are the investment of tradable financial assets measured by fair value on assets liabilities date. Thus, the Company bares the risk of change in securities market. 2 Credit risk, On 31 Dec. 2015, credit risk what may lead to the financial losses was the other party of the contract failed to fulfill the obligations and causes loss of the Company’s financial assets, which including: book value of financial assets recognized in consolidated balance sheet. 204 2015 Annual Report of Lu Thai Textile Co., Ltd. In order to reduce the credit risk, the Company established a special team be responsible for the determination of credit limit to conduct credit approval, and perform other supervising procedures to ensure that taking necessary measures to recycle expired claims. In addition, the Company at each balance sheet date, review every single receivables recycling situation, to ensure that the money unable to recycle withdrawn provision for bad debt fully. Thus, the Company management believed that have assume the credit risk the Company shouldered had been greatly reduced. The company's working capital was in bank with higher credit rating, so credit risk of working capital was low. 3. Liquidity Risk When manage liquidity risk, the Company keep administrators deemed sufficient cash and cash equivalents and supervised it to meet the need of the operation of the Company and reduce the influence of cash flow volatility. The Company management supervised the usage of bank loan and ensured to comply with the loan agreement. In the end of reporting period, the Company held cash and bank deposit of RMB796 million. In recent two years, the average of net cash flow of operation activities was RMB1.070 billion. The Company believed that the liquidity risk was insignificant. XI. The disclosure of the fair value 1. Closing fair value of assets and liabilities calculated by fair value Unit: RMB Yuan Closing fair value Item Fair value measurement Fair value measurement Fair value measurement Total items at level 1 items at level 2 items at level 3 I. Consistent fair value -- -- -- -- measurement (I) Financial assets calculated by fair value 71,696,678.70 71,696,678.70 and changes record into current profits or losses 1. Trading financial assets 71,696,678.70 71,696,678.70 (2) Equity tool investment 71,696,678.70 71,696,678.70 Total assets of consistent 71,696,678.70 71,696,678.70 fair value measurement (V) Tradable financial 46,695,875.00 46,695,875.00 liabilities Financial Derivative 46,695,875.00 46,695,875.00 liabilities II. Inconsistent fair value -- -- -- -- 205 2015 Annual Report of Lu Thai Textile Co., Ltd. measurement 2. Market price recognition basis for consistent and inconsistent fair value measurement items at level 1 The Company recognized in according to the closing price of stock on 31 Dec. 2015 and in line with the forward settlement of exchange offer of the bank fair value measurement items at level 1. 3. Valuation technique adopted and nature and amount determination of important parameters for consistent and inconsistent fair value measurement items at level 2 4. Valuation technique adopted and nature and amount determination of important parameters for consistent and inconsistent fair value measurement items at level 3 5. Sensitiveness analysis on unobservable parameters and adjustment information between opening and closing book value of consistent fair value measurement items at level 3 6. Explain the reason for conversion and the policy governing when the conversion happens if conversion happens among consistent fair value measurement items at different levels 7. Changes in the valuation technique in the current period and the reason for change 8. Fair value of financial assets and liabilities not measured at fair value 9. Other XII. Related party and related Transaction 1. Information related to parent company of the Company Proportion of voting Proportion of share rights owned by Name of parent held by parent Registration place Nature of business Registered capital parent company company company against the against the Company Company (%) (%) Zibo Lucheng Textile, electrical Textile Investment Zibo power and 63,260,000 14.69% 14.69% Co., Ltd. investment Notes: Information on the parent company: The finial control of the Company was Mr. Liu Shizhen Notes: 206 2015 Annual Report of Lu Thai Textile Co., Ltd. 2. Subsidiaries of the Company See details to Notes IX. 1. Equity in subsidiary. 3. Information on the joint ventures and associated enterprises of the Company The details of significant joint venture and associated enterprise of the Company Information on other joint venture and associated enterprise of occurring related party transactions with the Company in reporting period, or form balance due to related party transactions in previous period: Name Relationship Other notes 4. Information on other related parties of the Company Name Relationship Zibo Stanluian Cosmetics Co., Ltd. (hereinafter called Affiliated person (the same chairman of the Board with the “Stanluian”) Company) Zibo Taimei Ties Co., Ltd. (hereinafter called Taimei Ties) Controlled subsidiary of the parent company Zibo Limin Purified Water Co., Ltd. (hereinafter called Limin Wholly-owned subsidiary of the parent company Purified Water) Zibo Luqun Land Co., Ltd (hereinafter called Luqun Land) Wholly-owned subsidiary of the parent company Chengshun Heating Controlled subsidiary of the parent company Zibo Limin Walling Material Co., Ltd. (hereinafter referred to as Controlled subsidiary of the wholly-owned subsidiary of the Limin Walling) Company Zibo Lurui Fine Chemical Co., Ltd. (hereinafter referred to as Controlled subsidiary of the parent company Lurui Chemical) Zibo Lujia Property Management Co. , Ltd. (hereinafter referred Wholly-owned subsidiary of the parent company to as Lujia Property) Other notes 5. List of related-party transactions (1) Information on acquisition of goods and reception of labor service (unit: ten thousand Yuan) Information on acquisition of goods and reception of labor service (unit: ten thousand Yuan) Unit: RMB Yuan The approval trade Whether exceed trade Same period of last Related-party Content Reporting period credit credit or not year Zibo Lucheng Towel, sock, oil 10,664,706.25 15,000,000.00 No 9,008,950.91 Textile Investment product, 207 2015 Annual Report of Lu Thai Textile Co., Ltd. Co., Ltd. supermarket retail, welfare, electronic products, computer equipment, computer supplies, paper core, hose processing fees, etc. Gift box for cosmetic, lotion, Stanluian Company 166,565.07 152,497.47 washing-up liquid, Liquid soap, etc. Goods processing Taimei Ties 989,608.31 1,023,260.31 fee Limin Purified Sewage treatment, 9,152,198.70 14,423,200.00 No 9,105,162.48 Water materials Limin Walling Building materials 224,266.67 Lurui Fine Equipment 29,059.83 Chemical Lurui Fine Auxiliaries 71,967,937.29 80,000,000.00 No 43,683,120.01 Chemical Information of sales of goods and provision of labor service Unit: RMB Yuan Related-party Content Reporting period Same period of last year Sales of materials, electricity, Zibo Lucheng Textile running water, steam and 215,167.98 206,738.98 Investment Co., Ltd. LED lamp Zibo Lucheng Textile Sales of dyed yarn, fabric and 686,963.97 655,798.17 Investment Co., Ltd. garments Sales of electricity, heating Taimei Ties 19,820.34 20,787.92 charges, garment etc. Sales of materials, electricity, Stanluian Company running water, heating 35,778.98 55,253.10 charges, and LED lamp Sales of materials, garment, Limin Purified Water 29,816.47 38,154.29 and LED lamp Sales of garments, equipment, Lurui Fine Chemical LED lamp, fabric, auxiliaries 967,389.83 123,141.44 and lunch components Chengshun Heating Sales of materials, power, hot 5,129,186.09 4,186,147.42 208 2015 Annual Report of Lu Thai Textile Co., Ltd. water, running water, Low temperature hot water, pipe flushing fee and garment Sales of materials and Lujia Property 92,734.28 42,055.19 recycled water Notes: (2) Related trusteeship/contract Lists of related trusteeship/contract: Unit: RMB Yuan Name of the Name of the Income entruster/contract entrustee/ Type Initial date Due date Pricing basis recognized in the ee contractor reporting period Notes: Lists of entrust/contractee Unit: RMB Yuan Name of the Name of the Charge entruster/contract entrustee/ Type Initial date Due date Pricing basis recognized in the ee contractor reporting period Notes: (3) Information of related lease The Company was lessor: Unit: RMB Yuan The lease income confirmed in The lease income confirmed in Name of lessee Category of leased assets this year last year Zibo Lucheng Textile Houses and buildings 390,400.00 390,400.00 Investment Co., Ltd. Chengshun Heating Houses and buildings 1,350.00 The Company was lessee: Unit: RMB Yuan The lease income confirmed in lessor Category of leased assets Category of leased assets this year Zibo Lucheng Textile Rent of land 3,995,600.00 3,995,600.00 Investment Co., Ltd. Zibo Lucheng Textile Rent of gas station 526,800.00 526,800.00 Investment Co., Ltd. Zibo Lucheng Textile Rent of land and buildings 8,197,200.00 8,197,200.00 209 2015 Annual Report of Lu Thai Textile Co., Ltd. Investment Co., Ltd. Luqun Property Rent of land and buildings 1,802,400.00 1,802,400.00 Zibo Lucheng Textile Rent of houses 4,417,200.00 4,417,200.00 Investment Co., Ltd. Notes: (4) Related-party guarantee The Company was guarantor: Unit: RMB Yuan Execution accomplished Secured party Guarantee amount Start date End date or not The Company was Secured party Unit: RMB Yuan Execution accomplished Guarantor: Guarantee amount Start date End date or not Notes: (5) Inter-bank lending of capital of related parties： Unit: RMB Yuan Amount borrowed and Related-party Initial date Due date Explanation loaned Borrowed Loaned (6) Related party asset transfer and debt restructuring Unit: RMB Yuan Related-party Content Reporting period Same period of last year Luqun Property Houses and buildings 31,416,086.66 (7) Rewards for the key management personnel Unit: RMB Yuan Item Reporting period Same period of last year Rewards for the key management 22,455,700.00 22,502,000.00 personnel 210 2015 Annual Report of Lu Thai Textile Co., Ltd. (8) Other related-party transactions 6. Receivables and payables of related parties (1) Receivables Unit: RMB Yuan Closing balance Opening balance Name o f item Related-party Book balance Bad debt provision Book balance Bad debt provision (2) Payables Unit: RMB Yuan Name o f item Related-party Closing book balance Opening book balance Zibo Lucheng Textile Accounts payable 131,696.00 391,531.00 Investment Co., Ltd Accounts payable Taimei Ties 100,485.00 7. Related party commitment 8. Other XIII. Commitments and contingency 1. Significant commitments Significant commitments at balance sheet date Capital commitments Item Closing balance (RMB Ten Opening balance (RMB Ten thousand Yuan) thousand Yuan) Commitments signed but hasn’t been recognized in financial statements -- Commitment for constructing and purchasing 5,524.91 4,234.11 long-term assets Total 5,524.91 4,234.11 2. Contingency (1) Significant contingency at balance sheet date As of 31 Dec. 2015, there was no significant contingency to be disclosed. 211 2015 Annual Report of Lu Thai Textile Co., Ltd. (2) The Company have no significant contingency to disclose, also should be stated There was no significant contingency in the Company. 3. Other XIV. Events after balance sheet date 1. Significant events had not adjusted Unit: RMB Yuan Influence number to the Reason of unable to estimate Item Content financial position and operating influence number results 2. Profit distribution Unit: RMB Yuan Profits or dividends planned for distribution 477,203,948.00 Profits or dividends declared for distribution upon review and 477,203,948.00 approval 3. Sales return 4. Notes of other significant events XV. Other significant events 1. Other important transactions and events have an impact on investors’ decision-making XVI. Notes of main items in the financial statements of the Company 1. Accounts receivable (1) Accounts receivable classified by category Unit: RMB Yuan Closing balance Opening balance Category Book balance Bad debt provision Book Book balance Bad debt provision Book value 212 2015 Annual Report of Lu Thai Textile Co., Ltd. Withdra value Proportio wal Proportio Withdrawal Amount Amount Amount Amount n proportio n proportion n Accounts receivable with insignificant single amount for 120,361, 72,592,9 47,768,13 37.90% 60.31% which bad debt 083.64 47.77 5.87 provision separately accrued Accounts receivable withdrawal of bad 197,230, 9,869,96 187,360,3 348,586 26,689,90 321,897,07 debt provision of by 62.10% 5.00% 100.00% 7.66% 287.58 9.51 18.07 ,979.40 4.79 4.61 credit risks characteristics: 317,591, 82,462,9 235,128,4 348,586 26,689,90 321,897,07 Total 100.00% 25.97% 100.00% 7.66% 371.22 17.28 53.94 ,979.40 4.79 4.61 Accounts receivable with significant single amount for which bad debt provision separately accrued at the period-end √ Applicable □ Inapplicable Unit: RMB Yuan Accounts receivable Closing balance (entity) Account receivable Bad debt provision Withdrawal proportion Withdrawal reason Due to the losses of the Company’s subsidiary Beijing Innovative 120,361,083.64 72,592,947.77 60.31% Beijing Innovative, the amount of net asset was negative. Total 120,361,083.64 72,592,947.77 -- -- In the groups, accounts receivable adopting aging analysis method to withdraw bad debt provision: √ Applicable □ Inapplicable Unit: RMB Yuan Closing balance Aging Account receivable Bad debt provision Withdrawal proportion Subentry within 1 year Within 1 year 197,061,184.98 9,853,059.25 5.00% Subtotal of within 1 year 197,061,184.98 9,853,059.25 5.00% 1 to 2 years 169,102.60 16,910.26 10.00% Total 197,230,287.58 9,869,969.51 5.00% Notes: 213 2015 Annual Report of Lu Thai Textile Co., Ltd. In the groups, accounts receivable adopting balance percentage method to withdraw bad debt provision: □ Applicable √ Inapplicable In the groups, accounts receivable adopting other methods to withdraw bad debt provision: (2) Bad debt provision withdrawal, reversed or recovered in the report period The withdrawal amount of the bad debt provision during the reporting period was of RMB55, 773,012.49; the amount of the reversed or collected part during the reporting period was of RMB000. Significant amount of reversed or recovered bad debt provision: Unit: RMB Yuan Name of the entity Amount Method (3) Particulars of the actual verification of accounts receivable during the reporting period Unit: RMB Yuan Item Amount Of which: significant actual verification of accounts receivable Unit: RMB Yuan Whether occurred Name of the entity Nature Amount Reason Procedure because of related party transactions Notes: (4) Top five of account receivable of closing balance collected by arrears party The total amount of top five of account receivable of closing balance collected by arrears party was RMB193, 100,382.40, 60.80% of total closing balance of account receivable, the relevant closing balance of bad debt provision withdrawn was RMB76, 229,912.71. (5) Derecogniziton of account receivable due to the transfer of financial assets (6) The amount of the assets and liabilities formed by the transfer and the continues involvement of accounts receivable Notes: 2. Other accounts receivable (1) Other account receivable classified by category Unit: RMB Yuan 214 2015 Annual Report of Lu Thai Textile Co., Ltd. Closing balance Opening balance Book balance Bad debt provision Book balance Bad debt provision Category Withdra Book Proportio wal Proportio Withdrawal Book value Amount Amount value Amount Amount n proportio n proportion n Other accounts receivable withdrawn 36,565,3 3,024,83 33,540,54 30,826, 2,777,139 28,049,517. bad debt provision 100.00% 8.27% 100.00% 9.01% 79.68 9.14 0.54 657.21 .42 79 according to credit risks characteristics 36,565,3 3,024,83 33,540,54 30,826, 2,777,139 28,049,517. Total 100.00% 8.27% 100.00% 9.01% 79.68 9.14 0.54 657.21 .42 79 Other accounts receivable with significant single amount for which bad debt provision separately accrued at the period-end □ Applicable √ Inapplicable In the groups, other accounts receivable adopting aging analysis method to withdraw bad debt provision: √ Applicable □ Inapplicable Unit: RMB Yuan Closing balance Aging Other accounts receivable Bad debt provision Withdrawal proportion Subentry within 1 year Within 1 year 31,038,917.83 1,551,945.89 5.00% Subtotal of within 1 year 31,038,917.83 1,551,945.89 5.00% 1 to 2 years 831,732.53 83,173.25 10.00% 2 to 3 years 186,987.98 37,397.60 20.00% Over 3 years 4,507,741.34 1,352,322.40 30.00% Total 36,565,379.68 3,024,839.14 8.27% Notes: In the groups, other accounts receivable adopting balance percentage method to withdraw bad debt provision □ Applicable √ Inapplicable In the groups, other accounts receivable adopting other methods to withdraw bad debt provision: □ Applicable √ Inapplicable (2) Bad debt provision withdrawal, reversed or recovered in the report period The withdrawal amount of the bad debt provision during the reporting period was of RMB247,699.72; the amount of the reversed or collected part during the reporting period was of RMB000. Of which the significant amount of the reversed or collected part during the reporting period: Unit: RMB Yuan 215 2015 Annual Report of Lu Thai Textile Co., Ltd. Name of the entity Reversed or collected amount Method (3) Particulars of the actual verification of other accounts receivable during the reporting period Unit: RMB Yuan Item Amount Of which: significant actual verification of other accounts receivable Unit: RMB Yuan Whether occurred Name of the entity Nature Amount Reason Procedure because of related party transactions Notes of write-off other accounts receivable: (4) Other account receivable classified by account nature Unit: RMB Yuan Nature Closing book balance Opening book balance Intercourse funds 4,175,136.88 2,861,317.03 Export rebates 16,073,852.13 8,218,844.96 Payment on behalf 11,217,554.27 13,311,113.23 The deposit and guarantee 2,427,649.51 2,191,658.50 Borrowings and deposit 757,574.35 2,121,376.44 Other 1,913,612.54 2,122,347.05 Total 36,565,379.68 30,826,657.21 (5) Top 5 of the closing balance of the other accounts receivable collected according to the arrears party Unit: RMB Yuan Closing balance of Name of the entity Nature Closing balance Aging Proportion% bad debt provision Refund of tax for Export rebates 16,073,852.13 Within 1 year 43.96% 803,692.61 export receivable Accounts receivable Advance money for of advance money for the social security the social security undertake by the 6,053,141.26 Within 1 year 16.55% 302,657.06 undertake by the individual of the individual of the employee employee Lu Thai (Cambodia) Intercourse funds 4,097,305.95 Within 1 year 11.21% 204,865.30 216 2015 Annual Report of Lu Thai Textile Co., Ltd. Deposits for wages Deposits for wages paid to migrant paid to migrant 1,458,593.50 Over 3 years 3.99% 437,578.05 workers of Zichuan workers of District, Zibo city infrastructure works Alipay (China) Within 1 The cash pledge and Network Technology 471,537.88 year ,1-2years, 2-3 1.29% 51,265.09 guarantee Co., Ltd. years Total -- 28,154,430.72 -- 77.00% 1,800,058.11 (6) Account receivable involving government subsidies Unit: RMB Yuan Project of government Estimated recovering Name of the entity Closing balance Closing aging subsidies time, amount and basis (7) Other account receivable derecognized due to the transfer of financial assets (8) Amount of transfer other account receivable and assets and liabilities formed by its continuous involvement Notes: 3. Long-term equity investment Unit: RMB Yuan Closing balance Opening balance Item Depreciation Depreciation Book balance Book value Book balance Book value reserves reserves Investment to the 1,613,379,740.04 35,675,000.00 1,577,704,740.04 1,170,861,572.56 1,170,861,572.56 subsidiary Total 1,613,379,740.04 35,675,000.00 1,577,704,740.04 1,170,861,572.56 1,170,861,572.56 (1) Investment to the subsidiary Unit: RMB Yuan Withdrawn Closing balance impairment Investee Opening balance Increase Decrease Closing balance of impairment provision in the provision reporting period Beijing Innovative 25,200,000.00 25,200,000.00 25,200,000.00 25,200,000.00 Xinjiang Luthai 147,303,034.16 147,303,034.16 217 2015 Annual Report of Lu Thai Textile Co., Ltd. Xinsheng Power 176,340,737.93 176,340,737.93 Lufeng Weaving & 529,620,000.00 529,620,000.00 Dyeing Luqun Textile 171,784,550.00 171,784,550.00 Luthai (Hong 6,366,600.00 122,405,200.00 128,771,800.00 Kong) Lufeng Sunshine 15,000,000.00 15,000,000.00 10,475,000.00 10,475,000.00 Shanghai Luthai 20,000,000.00 20,000,000.00 Lu Thai 70,585,030.47 37,638,933.91 108,223,964.38 (Cambodia) Lu Thai (America) 3,670,380.00 3,103,920.00 6,774,300.00 Lu Thai(Burma) 491,240.00 61,836,513.57 62,327,753.57 Beijing Youxian 4,500,000.00 4,500,000.00 9,000,000.00 Lu Thai (Vietnam) 213,033,600.00 213,033,600.00 Total 1,170,861,572.56 442,518,167.48 1,613,379,740.04 35,675,000.00 35,675,000.00 (2) Investment to joint ventures and associated enterprises Unit: RMB Yuan Increase/decrease in reporting period Investme Closing Adjustme nt profit Withdraw balance Additiona nt of Declarati Opening Negative and loss Other n Closing of Investee l other on of cash balance investmen recognize equity impairme Other balance impairme investmen comprehe dividends t d under changes nt nt t nsive or profits the equity provision provision income method I. Joint ventures II. Associated enterprises (3) Other notes 4. Revenues and operating costs Unit: RMB Yuan Reporting period Same period of last year Item Revenue Operating costs Revenue Operating costs Main operations 4,760,669,805.94 3,504,388,812.66 4,567,509,952.85 3,214,341,389.02 218 2015 Annual Report of Lu Thai Textile Co., Ltd. Other operations 183,360,368.55 144,071,749.25 157,011,104.51 114,158,449.22 Total 4,944,030,174.49 3,648,460,561.91 4,724,521,057.36 3,328,499,838.24 Notes: 5. Investment income Unit: RMB Yuan Item Reporting period Same period of last year Long-term equity investment income 217,976,429.21 59,921,434.43 accounted by cost method Investment income received from disposal of financial assets measured by fair value and 33,986,744.40 24,355,244.66 the changes be included in the current profits and losses during holding period Total 251,963,173.61 84,276,679.09 6. Other XVII. Supplementary materials 1. Items and amounts of extraordinary gains and losses √ Applicable □ Inapplicable Unit: RMB Yuan Item Amount Explanation Gains/losses on the disposal of non-current -4,666,157.56 assets Tax rebates, reductions or exemptions due to approval beyond authority or the lack of 43,266,788.43 official approval documents Gain/loss from change of fair value of transactional assets and liabilities, and investment gains from disposal of transactional financial assets and liabilities -29,145,915.85 and available-for-sale financial assets, other than valid hedging related to the Company’s common businesses Other non-operating income and expenses 3,432,535.47 other than the above Less: Income tax effects 12,302,309.25 219 2015 Annual Report of Lu Thai Textile Co., Ltd. Minority interests effects 6,654,823.94 Total -6,069,882.70 -- Explain the reasons if the Company classifies an item as an extraordinary gain/loss according to the definition in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Extraordinary Gains and Losses, or classifies any extraordinary gain/loss item mentioned in the said explanatory announcement as a recurrent gain/loss item □ Applicable √ Inapplicable 2. Return on equity (ROE) and earnings per share (EPS) EPS（Yuan/share） Profit as of reporting period Weighted average ROE (%) EPS-basic EPS-diluted Net profit attributable to common 10.66% 0.750 0.750 shareholders of the Company Net profit attributable to common shareholders of the Company after 10.76% 0.75 0.75 deduction of non-recurring profit and loss 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 international and Chinese accounting standards √ Applicable □ Inapplicable Unit: RMB Yuan Net profit Net asset Reporting period Same period of last year Closing balance Opening balance According to Chinese 712,193,243.19 958,725,402.84 6,837,113,075.58 6,588,772,245.55 accounting standards Items and amounts adjusted according to international accounting standards Impact on domestic equipments tax credit recognized as deferred 1,015,000.00 1,225,000.00 -1,054,000.00 -2,069,000.00 income under international accounting standards According to international 713,208,243.19 959,950,402.84 6,836,059,075.58 6,586,703,245.55 accounting standards 220 2015 Annual Report of Lu Thai Textile Co., Ltd. (2) Differences of net profit and net assets disclosed in financial reports prepared under overseas and Chinese accounting standards □ Applicable √ Inapplicable (3) Explain reasons for the differences between accounting data under domestic and overseas accounting standards, for audit data adjusting differences had been foreign audited, should indicate the name of the foreign institutions Effects of domestic equipment exempted from income tax The Company exempted from income tax for buying domestic equipment. According to Chinese accounting standards, the income tax expenses are directly reduced which are recognized as deferred income related to assets by the international accounting standards. According to the regulations of the international accounting standards, this difference is amortized over the fixed using periods of year of the fixed assets and adjusting net income and net assets. 4. Other 221 2015 Annual Report of Lu Thai Textile Co., Ltd. Section XI. Documents Available for Reference 1. Accounting statement signed by legal representative, responsible person in charge of accounting work and responsible person of accounting department; 2. The original of Auditors’ Report carried with the seal of the accounting firm, as well as the personal signatures of certified public accountants. 3. The originals of all documents and manuscripts of Public Notices of the Company disclosed publicly on Securities Times, Shanghai Securities News and Ta Kung Pao. Board Chairman: Liu Zibin Lu Thai Textile Co., Ltd. 30 Mar. 2016 222
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