Lu Thai Textile Co., Ltd. Annual Report 2025
LU THAI TEXTILE CO., LTD.
ANNUAL REPORT 2025
April 2026
Lu Thai Textile Co., Ltd. Annual Report 2025
Annual Report 2025
Part I Important Notes, Table of Contents and Definitions
The Board of Directors (or the “Board”), as well as the directors and senior executives of Lu
Thai Textile Co., Ltd. (hereinafter referred to as the “Company”) hereby guarantee the
factuality, accuracy and completeness of the contents of this Report and its summary, and
shall be jointly and severally liable for any misrepresentations, misleading statements or
material omissions therein.
Liu Zibin, the Company’s legal representative, and Zhang Keming, Head of Accounting
Affairs and Head of the Accounting Department (equivalent to Accounting Manager) hereby
guarantee that the Financial Statements carried in this Report are factual, accurate and
complete.
All the Company’s directors have attended the Board meeting for the review of this Report
and its summary.
The Company has described in detail in this Report the possible risks. Please refer to the
contents about the major risks and countermeasures in Section XI “Prospects” in “Part III
Management Discussion and Analysis” of this Report. Securities Times, Shanghai Securities
News, China Securities Journal, Ta Kung Pao and www.cninfo.com.cn have been designated
by the Company for its information disclosure in 2026. And all information about the
Company shall be subject to what’s disclosed by the Company on the aforesaid media.
Investors are kindly reminded to exercise caution when making investment decisions.
The Company shall abide by relevant disclosure requirements of the Self-Regulatory
Guidelines of Shenzhen Stock Exchange for Listed Companies No.3 - Industry Information
Disclosure on textile and apparel industry.
In 2025, the global economy will recover moderately but with insufficient growth momentum.
Coupled with intensified geopolitical conflicts and trade protectionism, the international
economic and trade order will encounter severe challenges. Faced with the test of sluggish
global economic growth and weak domestic demand, central and local governments at all
levels continue to implement policies to optimize supply and expand domestic demand.
Through the implementation of proactive macro policies, our country's economic
performance has generally maintained a stable and positive trend throughout the year.
According to data from the National Bureau of Statistics, my country's GDP in 2025 will grow
by 5.00% year-on-year, and total retail sales of consumer goods will be RMB50.10 trillion, a
year-on-year growth of 3.70%. In the complex situation of profound changes in the
international environment and major challenges to the world economic and trade order, the
total import and export of goods for the year was RMB45.47 trillion, a year-on-year increase
of 3.8%. Our country's economy has demonstrated strong resilience and vitality. Looking
forward to 2026, the global economic growth rate is expected to maintain 3.3%, and domestic
policies to stabilize growth and promote consumption will continue to be effective. Facing
challenges such as trade barriers, cost pressures, and market competition, the textile and
apparel industry needs to continue to diversify the market, adhere to innovation-driven
policies, optimize global production capacity layout, and on the basis of consolidating the
basic foreign trade base, promote China's textile and apparel industry to move towards the
high end of the global value chain and achieve higher quality development. For details, please
refer to Part III Management Discussion and Analysis.
Lu Thai Textile Co., Ltd. Annual Report 2025
The profit distribution plan approved by the Board of Directors is as follows: Based on a total
of 817525607 shares, a cash dividend of RMB1.50(including tax) will be distributed for every
ten shares to all shareholders, with no bonus shares (including tax) to be issued and no
capitalization of reserves into share capital.
Lu Thai Textile Co., Ltd. Annual Report 2025
Contents
Lu Thai Textile Co., Ltd. Annual Report 2025
Documents Available for Reference
Ⅰ. The financial statements signed and stamped by the Company’s legal representative and head of
accounting affairs and head of the accounting department; and
Ⅱ. The original Independent Auditor’s Report stamped by the CPA firm, as well as signed and
stamped by the relevant certified public accountants; and
Ⅲ. The originals of all the Company’s announcements and documents disclosed to the public
during the Reporting Period on Securities Times, Shanghai Securities News, China Securities
Journal and Ta Kung Pao.
Lu Thai Textile Co., Ltd. Annual Report 2025
Definitions
Term Refers to Definition
The “Company”, “LTTC”, “Issuer” or “we” Refers to Lu Thai Textile Co., Ltd.
The Board of Directors Refers to The Board of Directors of Lu Thai Textile Co., Ltd.
CSRC Refers to The China Securities Regulatory Commission
Expressed in the Chinese currency of Renminbi,
RMB, RMB’0,000 Refers to
expressed in ten thousand Renminbi
The Company Law Refers to Company Law of the People's Republic of China
Securities Law Refers to The Securities Law of the People’s Republic of China
The “Reporting Period” or “Current Period” Refers to January 1, 2025 to December 31, 2025
Lu Thai Textile Co., Ltd. Annual Report 2025
Part II Company Profile and Key Financial Metrics
I. Company Information
Stock name LTTC, LTTC-B Stock code 000726, 200726
Previous stock name (if any) N/A
Stock exchange for stock listing Shenzhen Stock Exchange
Company name in Chinese 鲁泰纺织股份有限公司
Abbr. 鲁泰纺织
Company name in English (if any) LU THAI TEXTILE CO., LTD
Abbr. (if any) LTTC
Legal representative Liu Zibin
Registered address 61 Luthai Boulevard, High-tech Development Zone, Zibo City, Shandong Province, P.R. China
Zip code 255086
Past changes of registered address 11 Mingbo Road, Zibo High-tech Development Zone, Shandong Province, P.R. China
Address 81 Songling East Road, Zichuan District, Zibo City, Shandong Province, P.R. China
Zip code 255100
Company website www.lttc.com.cn
Email address lttc@lttc.com.cn
Ⅱ. Contact Information
Board secretary Securities representative
Name Zheng Weiyin Li Kun
Address
Zibo, Shandong, P.R. China Zibo, Shandong, P.R. China
Tel. 0533-5285166 0533-5285166
Fax 0533-5418805 0533-5418805
Email address wyzheng@lttc.com.cn likun@lttc.com.cn
III. Media for Information Disclosure and Place Where This Report Is Lodged
Stock exchange website where this
Shenzhen Stock Exchange: http://www.Shenzhen Stock Exchange.cn
Report is disclosed
Media and website where this Report Securities Times, Shanghai Securities News, China Securities Journal, Ta Kung Pao,
is disclosed and www.cninfo.com.cn
Place where this Report is lodged Securities Department of the Company
IV. Change to Company Registered Information
Unified social credit code 91370300613281175K
Change to principal activity of the Company since
None
going public (if any)
Every change of controlling shareholder since
None
incorporation (if any)
V. Other Information
The independent audit firm hired by the Company:
Name Grant Thornton China (Special General Partnership)
Office address 5/F, Scitech Palace, No. 22 Jianguomen Wai Avenue, Chaoyang
District, Beijing
Accountants writing signatures Cui Xiaoli, Wei Qianting
The independent sponsor hired by the Company to exercise constant supervision over the Company
in the Reporting Period:
□ Applicable Not applicable
The independent financial advisor hired by the Company to exercise constant supervision over the
Company in the Reporting Period:
Lu Thai Textile Co., Ltd. Annual Report 2025
□ Applicable Not applicable
VI. Key Financial Information
Indicate by tick mark whether there is any retrospectively restated datum in the table below.
□ Yes No
(%)
Operating revenue (RMB) 5,904,308,724.88 6,090,615,025.20 -3.06% 5,961,477,252.98
Net profit attributable to the listed
company’s shareholders (RMB)
Net profit attributable to the listed
company’s shareholders before 388,173,537.09 482,338,741.63 -19.52% 386,135,437.00
exceptional gains and losses (RMB)
Net cash generated from/used in
operating activities (RMB)
EPS-basic 0.73 0.50 46.00% 0.4700
EPS-diluted 0.66 0.47 40.43% 0.4200
Weighted average ROE (%) 6.16% 4.39% 1.77% 4.40%
Year-end
At the end of 2025 At the end of 2024 At the end of 2023
Change YoY
Total assets (RMB) 14,106,762,900.07 13,929,715,649.21 1.27% 13,430,286,222.94
Equity attributable to the listed
company’s shareholders (RMB)
Indicate by tick mark whether the lower of the net profit attributable to the listed company’s
shareholders before and after exceptional gains and losses was negative for the last three accounting
years, and the latest independent auditor’s report indicated that there was uncertainty about the
Company’s ability to continue as a going concern.
□ Yes No
Indicate by tick mark whether the lower of the net profit attributable to the listed company’s
shareholders before and after exceptional gains and losses was negative.
□ Yes No
VII. Accounting Data Differences under PRC GAAP and those under the GAAP of A Foreign
Jurisdiction
financial statement under the International Financial Statements Standards (IFRSs) with
those under the Generally Accepted Accounting Principles of the People's Republic of China
(PRC GAAP)
□ Applicable Not applicable
There was no difference of the net profits and the net assets that were disclosed in the financial
statement under the IFRSs with those under the PRC GAAP during the Reporting Period.
financial statement under the GAAP of a foreign jurisdiction with those under the PRC
GAAP
□ Applicable Not applicable
There was no difference between disclosed net profits and net assets in the financial statement in
Lu Thai Textile Co., Ltd. Annual Report 2025
accordance with Overseas Accounting Standards and Chinese Accounting Standards during the
Reporting Period.
VIII. Principal Financial Indicators by Quarters
Unit: RMB
Q1 Q2 Q3 Q4
Operating revenue 1,452,670,259.98 1,374,439,879.72 1,472,709,146.82 1,604,489,438.36
Net profit attributable to the listed
company’s shareholders
Net profit attributable to the listed
company’s shareholders before 88,658,975.61 136,956,363.18 96,409,926.78 66,148,271.52
exceptional gains and losses
Net cash flow from operating
activities
Indicate by tick mark whether any of the quarterly financial data in the table above or their
summations differs materially from what have been disclosed in the Company’s quarterly or interim
reports.
□ Yes No
IX. Exceptional Gains and Losses
Applicable □ Not applicable
Unit: RMB
Item 2025 2024 2023 Description
Gain or loss on disposal of non-current assets
(inclusive of asset impairment allowance write- 460,280.01 -5,481,717.67 -9,741,769.37
offs)
Government grants recognized in profit or loss for
the current period (except for government grants
closely related to the Company’s normal operating
business, in compliance with national policies and 18,280,408.27 34,326,278.48 45,294,185.95
in accordance with defined criteria, and having a
continuous impact on the Company’s profit or
loss)
Gain/loss on changes in fair value of financial
assets and financial liabilities held by non-
financial enterprises and gains and losses arising
from the disposal of financial assets and financial 210,985,834.37 -116,104,499.14 -18,190,072.86
liabilities, other than effective hedging business
related to the Company’s normal operating
business
Reversed portions of impairment allowances for
receivables which are tested individually for 1,349,345.50 163,992.17
impairment
Non-operating revenue and expense other than the
above
Less: Income tax effects 36,751,642.67 -11,186,738.74 4,629,001.56
Non-controlling interests effects (after tax) 1,475,091.27 676,593.25 407,964.01
Total 205,412,530.72 -72,017,343.46 17,308,817.42 --
Particulars about other items that meet the definition of exceptional gain/loss:
□ Applicable Not applicable
There are no other gain and loss items in line with the definition of non-recurring gains and losses
in the Company.
Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item listed in the
Lu Thai Textile Co., Ltd. Annual Report 2025
Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their
Securities to the Public—Non-recurring Gains and Losses:
□ Applicable Not applicable
The Company involves no circumstances where the exceptional gains and losses listed in the
Explanatory Notice of Information Disclosure by Companies Offering Securities to the Public No.1
- Non-recurring Gains and Losses are defined as recurring gains or losses.
Lu Thai Textile Co., Ltd. Annual Report 2025
Part III Management Discussion and Analysis
I. Principal activity of the Company in the Reporting Period
The Company shall abide by relevant disclosure requirements of the Self-Regulatory Guidelines of
Shenzhen Stock Exchange for Listed Companies No.3 - Industry Information Disclosure on textile
and apparel industry.
In 2025, facing the complex economic situation of slowing global economic growth, intensified
unilateralism and trade protectionism, my country’s textile industry will rise to the challenge and
actively resolve risk pressures through supply innovation, market expansion, and layout innovation.
During the Reporting Period, the company adopted “making progress while maintaining stability,
improving quality and efficiency” as the overarching theme of its work. Grounded in the
macroeconomic situation, industry development trends, and market dynamics, and drawing on its
own competitive strengths, the company upheld the principle of “customer first”, deepened its
presence in the domestic market, expanded overseas markets, advanced its major customer strategy
and R&D reform and innovation, and continued to deepen “cost reduction and efficiency
improvement” and “comprehensive internationalization.” The company’s various production and
operational activities were carried out smoothly.
During the Reporting Period, the company achieved total operating revenue of RMB5.904 billion,
operating profit of RMB679 million, net profit attributable to the parent company of RMB594
million, and net profit attributable to the parent company after deducting exceptional gains and
losses of RMB388 million yuan, representing a decrease of 3.06%, an increase of 45.54%, an
increase of 44.66%, and a decrease of 19.52% respectively compared to the same period of the prior
year. No changes occurred to the Company’s principal operations, primary products, business
models, or the primary factors driving the Company’s growth in the Reporting Period.
During the Reporting Period, the Company was rated an “AAA Credit Enterprise” by the China
Enterprise Confederation and the China Entrepreneurs Association, recognized as a “Continuous
Innovation Unit” for ten categories of textile innovation products by the China Textile Information
Center and the Textile Product Development Center, and was awarded the Shandong Province
Private Economy High-Quality Development Outstanding Contribution Award by the Shandong
Provincial Development and Reform Commission and the Shandong Provincial Department of
Industry and Information Technology. During the reporting period, the Company mainly focused on
the following aspects:
(1) Strengthen strategic leadership and actively respond to market challenges
Facing the severe challenges of a complex and volatile international situation and weak end-market
demand, the company upheld the principle of “customer first”, aligning all production and
operational activities with customer needs and business objectives to drive product delivery and
market development. Internally, the focus was placed on product transformation and improving
delivery capabilities; externally, on researching market and customer needs. Through top-to-bottom
collaboration, the company supported its marketing teams in tapping market potential and
deepening development of both international and domestic markets. From new product
development to new market exploration, from optimizing product structure to maintaining
workforce stability, and from advancing new project commissioning to sustaining stable production
operations, the company broadly achieved its stated objectives.
(2) Adhere to customer first, fully expand market and adjust structure
The Company continued to deepen its major customer strategy, improving and refining the
customer relationship management system and strengthening long-term cooperation with strategic
Lu Thai Textile Co., Ltd. Annual Report 2025
and key customers. It established a professional integrated fabric-and-apparel service team to drive
efficient collaboration across marketing, design, R&D, and production, precisely aligning with
customer needs and delivering tailored solutions to steadily increase the share of integrated fabric-
and-apparel business and enhance customer satisfaction. The Company optimized its marketing
organizational structure and incentive mechanisms to fully energize the marketing team. Driven by
market demand, the Company accelerated the development of casual, functional, and high value-
added products, launching a range of market-responsive and highly competitive products, and
continuously improving the quality of new customer acquisition and incremental business growth.
(3) Build strength with quality, consolidate responsibility across product lines
Grounded in its core business, the company guided its six major product lines to focus on customer
needs and their respective operational targets, actively benchmarking against market competitors,
continuing to advance the Lu Thai Production System (LTPS)and cost reduction and efficiency
improvement initiatives, and striving to enhance product delivery and service capabilities. During
the reporting period, while continuously consolidating its leading position in the yarn-dyed fabric
products, the company persistently improved the quality and delivery capabilities of yarn products,
knitted fabrics, functional fabrics, printed and dyed fabrics, and new apparel product categories. At
the same time, leveraging its global production capacity layout and overseas operation management
centers, the company continued to advance the integrated development of production and operations
across its overseas manufacturing bases, striving to achieve complementary strengths and
coordinated development among these bases in terms of resource integration and management.
(4) Promote R&D transformation and build an efficient product development system
The company strengthened the integration of product development resources and promoted a
customized development service model for major customers. Led by the Lu Thai Engineering
Technology Research Institute and working in coordination with development departments across
product lines, the company engaged with strategic and key customers to deliver one-stop
customized services, encompassing synchronous material development communication, sample
analysis, trial dyeing orders, development sampling, and design revision, continuously deepening
customer engagement and loyalty. On the other hand, the company intensified efforts to tackle key
technological challenges and deepened reform of its R&D system, concentrating on major client
development and workwear series development. Leveraging the integrated advantage of design and
R&D, the company established an efficient, coordinated, and rapidly responsive product
development mechanism, continuously improving the collaborative effectiveness of its R&D and
marketing teams. During the reporting period, the company was granted 33 invention patents and
received 2 Science and Technology Progress Awards from the China National Textile and Apparel
Council, further solidifying its technological innovation capabilities within the textile industry.
II. Industry overview for the Reporting Period
The Company shall abide by relevant disclosure requirements of the Self-Regulatory Guidelines of
Shenzhen Stock Exchange for Listed Companies No.3 - Industry Information Disclosure on textile
and apparel industry.
In 2025, China’s textile and apparel industry demonstrated resilience under pressure, with overall
stable economic performance. According to China Customs data, China’s textile and apparel
exports totaled USD312.18 billion in 2025, a year-on-year decrease of 2.5%, but remained above
USD300 billion for the sixth consecutive year, reflecting solid development resilience. Looking
ahead to 2026, despite the complex and challenging international economic and trade environment
and the multiple pressures facing textile and apparel export enterprises in the near term, China’s
textile and apparel industry continues to hold a solid and enduring competitive advantage in
Lu Thai Textile Co., Ltd. Annual Report 2025
international markets, underpinned by its comprehensive industrial system, globally leading
innovation capabilities, and an efficiently coordinated supply chain network. In response to the new
landscape, textile and apparel foreign trade enterprises must continuously optimize their product
mix, actively innovate trade models, and vigorously develop diversified markets, while deeply
integrating into global industrial and supply chain systems to continuously strengthen the industry’s
resilience and risk resistance.
III. Core Competitiveness Analysis
possesses the whole industrial chain integrating spinning, bleaching and dyeing, neatening, testing,
and garment making, as well as excellent quality control capabilities through various links of the
production of high-grade shirt fabrics. The Company has established well-equipped industrial bases,
design institutions, and market service agencies both domestically and internationally, integrating
global resources and leveraging the advantages of its international industrial footprint to
continuously consolidate its leading position in the production of medium- and high-end shirt
fabrics.
architecture. Since 1995, the Company has successively passed the certification of ISO9001 quality
management system, ISO14001 environmental management system, ISO45001 Occupation Health
Safety Management System, SA8000 Social Responsibility Management System, The Worldwide
Responsible Apparel Production Standard (WRAP), Sustainable Textile Production (STeP), Global
Organic Textile Standard (GOTS), Global Recycle Standard (GRS), HIGG (FEM and FSLM) and
China National Accreditation Service for Conformity Assessment (CNAS), and realized the
internationalization, standardization and normalization of the corporate management. In order to
make outstanding achievement in its operating management, better improve the Company’s
business performance and capabilities, the Company has introduced the GB/T19580 Criteria for
Performance Excellence step by step, set up the “big quality” system, promoted the management
innovation and guaranteed the management quality.
capability. The Company always insists on the independent innovation by relying on technological
platforms such as the National Enterprise Technical Centre, National Industrial Design Centre,
National Post-doctoral Scientific Research Station, and Shandong Provincial key laboratories. It has
established long-term technical cooperation and joint product development with research
institutions, universities, strategic customers, and key suppliers. The Company focuses on both
frontier technology reserves and application technology innovation, continuously strengthening new
product development driven by commercial value realization. It gradually enhances its capabilities
in technological research and product integration development, consistently contributing more
green, low-carbon, and sustainable new technologies and high-quality products to the industry, thus
achieving low-carbon, green, and circular development.
IV. Core business analysis
During the reporting period, the company achieved operating revenue of RMB5.904 billion, a year-
on-year decrease of 3.06%; cost of sales were RMB4.546 billion, a year-on-year decrease of 2.10%;
selling expenses were RMB148 million, a year-on-year decrease of 2.02%; administrative expenses
were RMB337 million, a year-on-year decrease of 1.98%; R&D expense for 2025 was RMB192
million, a year-on-year decrease of 7.05%; and net cash flows from operating activities were
RMB712 million, a year-on-year decrease of 42.74%.
Lu Thai Textile Co., Ltd. Annual Report 2025
(1) Breakdown of operating revenue
Unit: RMB
As % of total As % of total YoY
Operating revenue operating revenue Operating revenue operating revenue increase/decrease
(%) (%)
Total operating
revenue
By operating division
Textile and apparel 5,540,719,030.47 93.84% 5,707,337,704.95 93.71% -2.92%
Electricity and
steam
Other 132,187,565.73 2.24% 151,704,548.64 2.49% -12.87%
By product category
Fabric products 4,009,901,043.36 67.91% 4,335,423,361.05 71.18% -7.51%
Apparel 1,530,817,987.11 25.93% 1,371,914,343.90 22.53% 11.58%
Electricity and
steam
Other 132,187,565.73 2.24% 151,704,548.64 2.49% -12.87%
By operating segment
Japan and South
Korea
Southeast Asia 1,728,839,812.59 29.28% 1,828,264,195.92 30.02% -5.44%
Europe and America 936,638,659.02 15.86% 870,289,906.47 14.29% 7.62%
Other 766,176,342.44 12.98% 769,089,924.78 12.63% -0.38%
Mainland China 2,109,817,802.39 35.73% 2,275,117,045.98 37.35% -7.27%
By sales model
Direct sales 5,904,308,724.88 100.00% 6,090,615,025.20 100.00% -3.06%
(2) Operating division, product category, operating segment or sales model contributing over
□ Applicable Not applicable
(3) Whether revenue from physical sales is higher than service revenue
Yes □ No
YoY
By Industry Item Unit 2025 2024
increase/decrease
Unit sales 0,000 meters 17,845.60 18,662.18 -4.38%
Fabric Output 0,000 meters 19,877.45 20,522.78 -3.14%
Inventory 0,000 meters 3,769.92 4,056.57 -7.07%
Unit sales 0,000 pieces 2,030.65 1,769.07 14.79%
Shirts Output 0,000 pieces 2,014.58 1,825.26 10.37%
Inventory 0,000 pieces 145.76 176.64 -17.48%
Unit sales 000 KWH 190,107.97 188,015.03 1.11%
electrical Output 000 KWH 400,154.64 415,172.76 -3.62%
Inventory 000 KWH
Unit sales Ton 317,040.42 295,936.22 7.13%
Steam Output Ton 982,898.49 1,031,887.31 -4.75%
Inventory Ton
Any over 30% YoY movements in the data above and why:
□ Applicable Not applicable
(4) Execution progress of major signed sales and purchase contracts in the reporting period
□ Applicable Not applicable
Lu Thai Textile Co., Ltd. Annual Report 2025
(5) Cost of sales composition
By operating division and product category
Unit: RMB
YoY
By Industry Item As % of Total As % of Total
Operating Revenue Operating Revenue Increase/Decrease
Cost of Sales (%) Cost of Sales (%)
Textile and Cost of
apparel Sales
Electricity Cost of
and steam Sales
Cost of
Other 108,622,060.32 2.39% 121,225,507.79 2.61% -10.40%
Sales
Unit: RMB
Product YoY
Item As % of Total As % of Total
Category Operating Revenue Operating Revenue Increase/Decrease
Cost of Sales (%) Cost of Sales (%)
Fabric Cost of
products Sales
Cost of
Apparel 1,160,425,703.78 25.53% 1,030,189,019.76 22.19% 12.64%
Sales
Electricity Cost of
and steam Sales
Cost of
Other 108,622,060.32 2.39% 121,225,507.79 2.61% -10.40%
Sales
Description
Name Period Raw Materials Labor Cost Depreciation Energy Manufacture Expenses Total
Fabric
Apparel
(6) Changes in the scope of consolidated financial statements for the reporting period
Yes □ No
During the year, the company deregistered its subsidiary Lu Thai (America) Textile Co., Ltd.
During the year, Lulian New Materials, a subsidiary of the company, established a new subsidiary,
Tianqin International Investment Co., Ltd.
(7) Major changes or adjustments in business, products, or services during the reporting
period
□ Applicable Not applicable
(8) Major customers and suppliers
Major customers:
Total sales to top five customers (RMB) 951,127,913.69
Total sales to top five customers as % of total sales of the
Reporting Period (%)
Proportion of the sales of connected parties in the top five
customers over the year's total
Information on the top five customers
As % of Total Annual Sales
No. Customer Name Sales Amount (RMB)
Revenue
Lu Thai Textile Co., Ltd. Annual Report 2025
Total -- 951,127,913.69 16.11%
Other information of major customers
□ Applicable Not applicable
Major suppliers
Total purchases from top five suppliers (RMB) 647,651,350.33
Total purchases from top five suppliers as % of total purchases of
the Reporting Period (%)
Proportion of purchases of related parties in the top five suppliers
over the year's total
Information on the top five suppliers
% of Total Procurement
No. Supplier Name Procurement Amount (RMB)
Amount of the Year
Total -- 647,651,350.33 17.39%
Other information of major suppliers
□ Applicable Not applicable
During the Reporting Period, revenue from the Company’s trading business accounted for more
than 10% of its total operating revenue.
□ Applicable Not applicable
Unit: RMB
YoY
Increase/Decrease
Selling expense 147,949,523.11 151,004,439.35 -2.02%
Administrative
expense
Financial
expenses
R&D expense 192,232,759.25 206,820,921.71 -7.05%
The Company shall abide by relevant disclosure requirements of the Self-Regulatory Guidelines of
Shenzhen Stock Exchange for Listed Companies No.3 - Industry Information Disclosure on textile
and apparel industry.
For details of selling expense, please refer to “47. Selling expense” of “VII. Notes to main items of
consolidated financial statements” of “Part VIII Financial Statements”.
textile and apparel services
The Company shall abide by relevant disclosure requirements of the Self-Regulatory Guidelines of
Shenzhen Stock Exchange for Listed Companies No.3 - Industry Information Disclosure on textile
and apparel industry.
(1) Capacity
The Company’s own capacity
By Industry Item 2025 2024
Total capacity (10,000
Fabric 28,810.00 28,400.00
meters)
Lu Thai Textile Co., Ltd. Annual Report 2025
Rate of capacity
utilization
The Company’s convertible bond fundraising
project: Equipment and supporting facilities
Plants under for the “Overseas Product Line Project of
construction High-grade Fabric Products (Phase I)” have
been progressively completed and put into
operation.
Total capacity (10,000
standard pieces)
Rate of capacity
Apparel utilization
The overseas investment in the construction
Plants under
of a 3 million-piece apparel line entered the
construction
trial production stage in August 2024.
Year-on-year change in the rate of capacity utilization above 10%
□ Yes √ No
Overseas capacity
√Yes □No
By industry Item Domestic Overseas
Percentage of capacity 68% 32%
Capacity layout Mainly in Shandong Province Mainly in Vietnam
Fabric
Rate of capacity
utilization
Percentage of capacity 28% 72%
Mainly in Vietnam, Cambodia, and
Capacity layout Mainly in Shandong Province
Apparel Myanmar
Rate of capacity
utilization
(2) Sales model and channels
Product sales channels and operation methods
a. Sales model
The Company adopted the order-based sales model. Relying on the self-owned trademark “Luthai”
for its fabric sales, it provided customers with development and design plans based on customer
needs, fabrics and patterns leading the market, fashion and technology, as well as functions and
environmental protection. Shirts were mainly made according to the orders of customers at home
and abroad, and sold by brand owners.
The Company actively expanded its own brand portfolio. The Company operated its self-owned
brand through self-owned exclusive shops such as Lu Thai Exhibition and Sales Pavilion, counters
of affiliated stores in malls and networking marketing, expanding its business footprint through all
channels. In addition, the Company also offered “high-end custom” shirt and corporate attire
customization services to meet the diverse needs of the high-end service industry in a targeted
manner.
b. Sales channels
Direct sales: The Company focused on its own brand, with a dedicated sales department responsible
for managing the sales and after-sales services of the Company’s products. The global market was
divided into different sales regions for management, with unified planning and deployment to
effectively handle fabric and apparel orders, realizing product sales. Additionally, to enrich its
Lu Thai Textile Co., Ltd. Annual Report 2025
terminal brand matrix and expand the market, the Company upgraded and expanded the product
offerings of the “Luthai 1987” brand to continuously meet the diverse needs of end customers.
Online sales channels: In order to adapt to the digital consumption trend, the company actively
expands the construction of online sales channels, building a diversified online ecosystem of
“owned platform + leading e-commerce”. On one hand, by leveraging its own e-commerce platform,
the company deeply integrates core resources such as supply chain management and brand
marketing to achieve direct engagement between the brand and consumers, improving user reach
and service experience. On the other hand, the company has deepened cooperation with major well-
known e-commerce platforms to broaden brand visibility and product sales access points. The
online channel launched the “Luthai Jianxing” brand, targeting the casual consumption needs of
younger consumers and creating lightweight apparel products suited to everyday wear and travel
scenarios. After transactions were completed through the internet, the goods were accurately
delivered to customers via express delivery.
Unit: RMB
Gross YoY change in
Sales YoY change in YoY change in
Operating revenue Cost of Sales profit gross profit
channels operating revenue cost of sales
margin margin
Online
sales
Direct sales 4,019,830,799.72 3,077,445,848.08 23.44% -7.47% -5.85% -1.32%
OEM/ODM 1,518,690,630.87 1,156,249,993.77 23.87% 11.61% 12.67% -0.71%
Total 5,540,719,030.47 4,234,864,991.18 23.57% -2.92% -1.38% -1.19%
(3) Franchise and distribution
Franchisees and distributors recorded more than 30% of sales revenue
□ Yes No
(4) Online sales
Online sales recorded more than 30% of sales revenue
□ Yes No
Self-developed sales platforms
Yes □ No
Start of operation March 30, 2009
Number of registered users 148,000
Average number of active monthly users (AMU) 3,050
Return rate of main brands 2.85%
Return rate of main types 2.85%
Cooperation with third-party sales platforms
Yes □ No
Online sales channels opened or closed by the Company
Applicable □ Not applicable
Main Time for
Name of the Channel Specific reason for Operating condition during
Main brand product commencement
channel status closure the store opening period
categories of construction
The platform decided Sales progressed steadily
Necessary January 20,
NARCISU Shirts Closed to close, and the during the period of
mall 2020
Company accordingly cooperation with the platform.
Lu Thai Textile Co., Ltd. Annual Report 2025
withdrew its presence.
Impact on the Company in the current period and subsequent periods:
The Company will continue to actively expand its online sales channel development; this has no
material impact on the company’s current or future operations.
(5) Agency operation model
Agency operation model involved
□ Yes No
(6) Inventory
Inventory
Year-on-year
Days of
Quantity of Inventory change in
Main products turnover of Reason
inventory age inventory
inventories
balance
Fabrics (10,000 Within one
meters) year
Fabrics (10,000 Over one
meters) year
Primarily attributable to the delivery in the
Shirts (10,000 Within one
pieces) year
at the end of the prior year.
Shirts (10,000 Over one
pieces) year
Inventory valuation allowances:
December 31, 2025
Item Valuation allowance or provision for impairment
Book balance (Yuan) Book value (Yuan)
on contract performance cost (yuan)
Raw materials 948,796,192.27 57,414,663.40 891,381,528.87
Work-in-
progress
Inventory goods 883,354,382.70 178,299,089.81 705,055,292.89
Commissioned
products
Total 2,349,009,322.31 241,709,317.48 2,107,300,004.83
Inventory information of retail channels such as franchised stores or distributors:
Not applicable.
(7) Brand building
Production and sales of brand clothing, apparel and home textile products
Yes □ No
Self-owned brands
Main
Trademark Target consumer Price zone of
Brand name product Characteristics Main sales areas City levels
name group main products
types
Provincial
East China,
capital cities
Shirts Classic South China
LTGRFF LTGRFF Business people RMB500-3000 and other
and suits business attire and Southwest
prefecture-
China
level cities
Luthai 1987 Luthai 1987 Shirts Business Business elite RMB500-3000 East China, Provincial
Lu Thai Textile Co., Ltd. Annual Report 2025
and suits classic casual menswear South China capital cities
and Southwest and other
China prefecture-
level cities
Provincial
capital cities
Luthai Luthai shirt, All over the
Daily leisure young group 300-800 and other
Jianxing Jianxing POLO country
prefecture-
level cities
Trademark right disputes
□ Applicable Not applicable
(8) Other information
Engaged in business related to apparel design
□ Yes No
Whether the Company held meetings for the placement of orders
□ Yes No
Applicable □ Not applicable
Expected Impact on the
Names of Main Objectives to be
Project Objectives Project Progress Future Development of
R&D Projects Achieved
the Company
This effectively enhances
Package yarn Through the development qualification rates and
The project achieves a
high-efficiency and research of new cheese Preliminary exploration of quality levels in the yarn
near-zero defect yarn
green CNC dyeing technology and new dyeing technologies package dyeing process
rate and a loading rate
dyeing complete sets of equipment, has been completed, with 3 under the trend toward
of over 110%, reduces
technology and the variety adaptability and patents granted and large- casual consumption with
dyeing production
automatic quality control level of scale production validation differentiated yarns,
steps, shortens the
production line cheese dyeing can be achieved; further expansion reduces water and energy
production process, and
integration and improved, while energy and of applicable varieties is consumption during
improves production
demonstration water consumption can be still required. dyeing, and advances the
efficiency.
application reduced. company’s green and
sustainable development.
This project addresses
The fibrillation problem has
fibrillation issues in the use
been resolved through This comprehensively
of lyocell fibers, expands
combined dyeing- enhances the Company’s
their application across Anti-fibrillation
crosslinking single-bath capability in applying
various product types, and finishing for lyocell has
treatment and wrinkle-free lyocell and other
investigates green and eco- been realized, with
finishing; liquid ammonia regenerated cellulosic
Green friendly processing fabric surface
finishing technology for fibers and developing
manufacturing of technologies, with the aim smoothness reaching
regenerated cellulosic fibers differentiated products,
lyocell fibers of comprehensively grade 3.2, representing
has also been developed, while meeting customers’
increasing the utilization of a significant
further improving fabric diverse needs and
this eco-friendly fiber improvement in fabric
quality. Two patents have advancing the company’s
category and enhancing the quality.
been granted and large-scale green and sustainable
company's green and
production application has development.
sustainable development
been achieved.
capabilities.
Research and Large quantities of non- Fabric development using Through optimization This effectively enhances
development of biodegradable synthetic recycled cotton, recycled of mechanical opening the company’s
antibacterial and fiber waste create a serious nylon, and degradable process technology, capabilities in applying
deodorizing environmental burden. This polyester fibers has been recycling of waste yarn recycled materials and
functions for project aims to develop completed; the effects of has been achieved, with bio-based functional
recycled and bio- recyclable and naturally bio-based antibacterial large-scale production auxiliaries and in product
based degradable alternative auxiliaries on fabric of at least 3 types of development, promotes
biodegradable materials, and in antibacterial and recycled fiber materials the company’s green and
Lu Thai Textile Co., Ltd. Annual Report 2025
fabrics combination with bio-based deodorizing performance realized; functional low-carbon transition
functional auxiliaries, to have been studied; and 2 auxiliaries are used to while meeting customers’
simultaneously achieve invention patents have been impart excellent diverse needs, and
antibacterial and filed. antibacterial and supports the company’s
deodorizing properties deodorizing properties sustainable development.
along with biodegradability. to the fabrics.
Compact siro spinning has
This project applies dry High-proportion linen Dry-spun linen yarn is
been adopted to address
spinning technology for dry spinning compatible with the
evenness CV issues in dry-
linen to address bottlenecks technology has been development
Research on key spun linen, and key process
in traditional wet-spun linen achieved, with 5 requirements of high-end
processing technologies for ring-spun
processes, including lengthy blended yarn varieties fabrics, helping to
technologies for dry-spun hemp yarn have
production flows and containing a high linen enhance the company’s
eco-friendly been successfully
serious pollution. Dry-spun content (above 50%) production and
short-process developed, providing core
linen yarn achieves higher developed; average processing capabilities in
pure linen dry- technical support for the
yarn counts and a softer hand-combed linen linen fiber spinning and
spun fabrics mass production of pure
hand feel, making it better fiber length ≥22mm better meeting
hemp products. One
suited for the development and fiber length customers’ diverse needs
invention patent application
of high-end fabrics. uniformity ≥70%. for linen fiber materials.
has been filed.
R&D personnels
Number of R&D personnels 1,239 1,255 -1.27%
R&D personnel as % of total
employees
Educational background
Bachelor’s degree 217 185 17.30%
Master 34 29 17.24%
Age distribution of R&D personnels
Aged below 30 130 140 -7.14%
Above 40 426 399 6.77%
Details about R&D investments:
R&D investments (RMB) 192,232,759.25 206,820,921.71 -7.05%
R&D investments as % of operating
revenue
Capitalized R&D investments (RMB) 0.00 0.00 0.00%
Capitalized R&D investments as % of
total R&D investments
Reasons for significant changes in R&D personnel composition and their impacts
□ Applicable Not applicable
Reasons for significant changes in R&D investment as a percentage of operating revenue compared
to the previous year
□ Applicable Not applicable
Reasons for the significant change in R&D investment capitalization ratio and its reasonableness
□ Applicable Not applicable
Unit: RMB
YoY
Item 2025 2024
Increase/Decrease
Subtotal of cash inflows from operating
activities
Subtotal of cash used in operating activities 5,102,795,781.43 4,876,070,158.90 4.65%
Lu Thai Textile Co., Ltd. Annual Report 2025
Net cash flow from operating activities 712,497,388.09 1,244,212,151.94 -42.74%
Subtotal of cash generated from investing
activities
Subtotal of cash used in investing activities 11,324,435,351.68 2,980,405,818.85 279.96%
Net cash generated from/used in investing
activities
Subtotal of cash generated from financing
activities
Subtotal of cash used in financing activities 1,946,810,751.10 2,174,973,262.02 -10.49%
Net cash generated from/used in financing
-344,358,195.20 -27,986,640.72 -1,130.44%
activities
Net increase in cash and cash equivalents 662,027,209.98 17,796,953.59 3,619.89%
Explanation of why any of the data above varies significantly:
Applicable □ Not applicable
During the reporting period, net cash flows from operating activities decreased by 42.74% year-on-
year, primarily due to increased procurement of raw materials and a decrease in cash received from
sales of goods. Net cash flows from investing activities increased by 123.27% year-on-year,
primarily due to increased wealth management investments. Net cash flows from financing
activities decreased by 1,130.44% year-on-year, primarily due to a decrease in cash received from
borrowings. The net increase in cash and cash equivalents increased by 3,619.89% year-on-year,
primarily due to the increase in net cash flows received from investing activities.
Reason for any big difference between the net operating cash flow and the net profit for this
Reporting Period
Applicable □ Not applicable
For further details, please refer to “(1) Supplementary materials for cash flow statement” of
“60.Supplemental information for cash flow statement” of “VII. Notes to main items of
consolidated financial statements” of “Part VIII Financial Statements”.
V Core Business Analysis
Applicable □ Not applicable
Unit: RMB
Proportion to the
Operating revenue Reasons for the Changes Sustainable or not
total profit
Return on Gain on sales of held-for-trading
investment financial assets
Gain/loss on changes Loss on changes in fair value of held-
-55,805,204.39 -8.05% Not
in fair value for-trading financial assets
Provision for inventory write-downs and
Asset impairments -80,423,904.60 -11.60% impairment of fixed assets for the Not
current period
Non-operating Income of non-operating compensation,
revenue etc.
Non-operating
expense
VI. Analysis of Assets and Liabilities
Unit: RMB
At the end of 2025 Beginning of 2025 Main
Increase /
As % of total As % of total reason for
Operating revenue Operating revenue Decrease
assets assets any
Lu Thai Textile Co., Ltd. Annual Report 2025
significant
change
Monetary assets 2,396,851,459.72 16.99% 2,055,856,788.37 14.76% 2.23%
Accounts
receivable
Inventories 2,107,300,004.83 14.94% 2,019,884,406.30 14.50% 0.44%
Investment
property
Long-term
equity 99,877,917.52 0.71% 120,084,271.29 0.86% -0.15%
investments
Fixed assets 5,705,325,739.27 40.44% 6,053,755,987.08 43.46% -3.02%
Construction in
progress
Right-of-use
assets
Short-term loan 652,836,872.89 4.63% 849,686,824.33 6.10% -1.47%
Contract liability 178,735,140.23 1.27% 191,551,003.79 1.38% -0.11%
Long-term
borrowings
Lease liabilities 74,159,267.26 0.53% 91,353,320.80 0.66% -0.13%
Indicate whether overseas assets account for a large proportion of the total assets.
Applicable □ Not applicable
Control Material
Return As % of the
Asset value Management
measures to impairment
Asset Source Location generated Company’s
(RMB) model
protect asset risk
(RMB) net assets
safety (yes/no)
Main
Hong management
Kong Hong personnel sent
Set-up 279,792,766.49 Marketing 14,829,600.82 2.76% Not
The Kong by the
Company Company as
the parent
Main
management
Overseas
Southeast personnel sent
production Set-up 4,690,930,747.11 Manufacturing 203,507,209.37 46.31% Not
Asia by the
bases
Company as
the parent
Applicable □ Not applicable
Unit: RMB
Provision
Gain/loss on Cumulati
set aside
changes in ve fair-
for Purchased in Sold in the
Opening fair value in value Other Closing
Item impairme the Reporting Reporting
balance the changes changes balance
nt in the Period Period
Reporting recorded
Reporting
Period in equity
Period
Financial assets
for-
trading
financial -
assets 79,646,070.
(excludin 58
g
derivativ
e
Lu Thai Textile Co., Ltd. Annual Report 2025
financial
assets)
Derivativ
e 476,450.19 169,152.97 645,603.16
financial
assets
non-
current 88,360,000.00
financial
assets
Subtotal
of 776,772,672. 8,248,187,466. 7,768,615,629. 1,182,427,591.
financial 64 09 81 31
assets
Other 10,335,302.96
Total of -
the 73,916,917.
above 61
Financial 15,858,713.2 15,858,713.
liabilities 2 22
Other changes
Changes in accounts receivable financing.
Significant changes to the measurement attributes of the major assets in the Reporting Period:
□ Yes No
See “Part VIII: Financial Statements, 7. Notes to the Consolidated Financial Statements, 22. Assets
with Restricted Ownership or Right to Use" in this report for relevant details”.
VII. Investment Overview
□ Applicable Not applicable
□ Applicable Not applicable
□ Applicable Not applicable
(1) Securities Investments
□ Applicable Not applicable
No such cases in the Reporting Period.
(2) Investments in Derivative Financial Instruments
Applicable □ Not applicable
Lu Thai Textile Co., Ltd. Annual Report 2025
Applicable □ Not applicable
Unit: RMB10,000
Proportion of
Gain/loss on Investments at
Cumulative
changes in Purchased Sold during the End of the
Types of Initial Fair-Value
Opening fair value in during the the Closing Period to Net
derivative investment Changes
Amount the Reporting Reporting Amount Assets of the
investment amount Recorded in
Reporting Period Period Company at the
Equity
Period End of the
Reporting Period
Foreign
exchange 0 0 0 0 119,206 71,256 47,950 4.89%
option
Forward
foreign
exchange
settlement
Forward
foreign
exchange
purchase
Total 0 0 0 0 138,656.05 90,706.05 47,950 4.89%
Whether
significant
changes
occurred to
the
Company’s
accounting
policy and
specific
No significant changes
accounting
principles of
derivatives in
the Reporting
Period
compared to
the previous
Reporting
Period
Actual
of which were foreign exchange options.
gain/loss in
the Reporting
of USD134,494,600, all executed as per contracts, with a settlement of USD27,194,600 and a loss of
Period
RMB1,505,100.
The Company conducts foreign exchange (FX) derivative transactions with the intention of hedging. Specifically,
Effectiveness the business is carried out to fix costs, avoid foreign exchange risk risks and improve resistance against FX rate
of hedges fluctuations. As a result, the Company has gained better capabilities of avoiding and preventing the risks of FX rate
fluctuations, and the financial robustness of the Company has been enhanced.
Capital source
for derivative Own funds.
investment
Analysis on The Company conducted derivatives products transaction in order for hedging. And the forward settlement hedging
risks and was operated by installments, with the relevant amount not more than the planned derivatives products transactions.
control And all derivatives products transaction was zero-deposit. Meanwhile, the Company had a complete risk control
measures of system for sufficient analysis and prevention of possible risks such as market risk, liquidity risk and credit risk,
derivative operation risk and risk of laws and regulation.
products held 1. Market risk: When the international and domestic economic situations change, the corresponding changes in
in the foreign exchange risks and interest rates may have an adverse impact on the financial derivative transactions of the
Reporting Company. Precautions: The Company chooses financial instruments with simple structures, high liquidity and
Period controllable risk and strictly controls the scale of derivative transactions, performing them by stages and in batches.
(including but Means such as extension and balance settlement can be adopted to ensure contract performance after the contract
Lu Thai Textile Co., Ltd. Annual Report 2025
not limited to expires.
market risk, 2. Liquidity risk and credit risk: Credit risk arises when the Company or counterparties in transactions couldn’t
liquidity risk, perform contracts due now, to liquidity or other factors that result in further economic loss. Precautions: The
credit risk, derivative transactions can only be done with financial institutions qualified for derivative transactions, as
operation risk, authorized by relevant national authorities or financial or foreign exchange authorities in the country or region
law risk, etc.) where the Company operates. Derivative transactions with other institutions or individuals are not allowed so as to
control related risk concerning counterparties.
in derivative transactions due to the imperfect internal control system when business is performed. Precautions: The
Company should strictly implement Management Rules for Derivative Trading of Lu Thai Company, the Proposal
on the Company’s Derivative Transaction Plan, continuously optimize the business operation process and
authorization management system, strengthen professional ethics education and business training for relevant
personnel, clarify job responsibilities, engage in derivative transaction business strictly within the scope of
authorization, and establish a timely reporting system for abnormal conditions to avoid operational risks.
national laws and regulations. Otherwise, signed contracts, commitments and other legal documents may entail
compliance risk and regulatory risk in terms of effectiveness and enforceability. Precautions: The Company should
strengthen the supervision and inspection of the standardization of derivative transactions, the effectiveness of
internal control mechanism, and the authenticity of information disclosure to avoid possible legal risks.
The Company has fulfilled relevant approval procedures for its derivative transactions business, which is in line
with the relevant national laws, regulations, the Articles of Association, the Management Rules for Derivative
Trading of Lu Thai Company, the Proposal on the Company’s Derivative Transaction Plan, the Proposal on the
Company's Derivative Transaction Plan deliberated and adopted at the 22nd meeting of the 10th session of the
Board of Directors held on May 28, 2024, the Proposal on the Company's Derivative Transaction Plan deliberated
and adopted at the 33rd meeting of the 10th session of the Board of Directors held on May 23, 2025 and the first
extraordinary shareholders' meeting held on June 9 2025, and fulfilled the relevant information disclosure
obligations.
Changes of
market prices
or fair values
in the
Reporting
Period of the
invested
derivatives.
In accordance with the relevant provisions and guidelines of the Accounting Standards for Business Enterprises No.
And the
analysis on
No. 37 - Presentation of Financial Instruments issued by the Ministry of Finance, the Company took the relevant
the fair value
accounting measures for its business of FX derivative transactions to reflect the relevant items in the balance sheet
of the
and the income statement. During the Reporting Period, the Company determined the fair value of foreign exchange
derivatives
option based on the bank’s forward option quotations at the end of each month.
should
include the
specific use
methods and
the relevant
assumptions
and
parameters.
Lawsuit (if
N/A
applicable)
Disclosure
date of Board
of Directors
announcement
May 29, 2024
on approval of
derivative
investment (if
any)
Disclosure
date of Board
of Directors
announcement
May 24, 2025
on approval of
derivative
investment (if
any)
Date of the June 10, 2025
Lu Thai Textile Co., Ltd. Annual Report 2025
announcement
disclosing the
approval of
derivative
investments at
shareholders’
meeting (if
any)
□ Applicable Not applicable
No such cases in the Reporting Period.
VIII. Sale of Major Assets and Equity Interests
□ Applicable Not applicable
The Company did not sell material assets in the Reporting Period.
□ Applicable Not applicable
IX. Major Subsidiaries
Applicable □ Not applicable
Major fully/majority-owned subsidiaries and those minority-owned subsidiaries with an over 10%
effect on the Company’s net profit:
Unit: RMB10,000
Company Principal Registered Operating Operating
Company name Total assets Net assets Net profit
type business capital revenue profit
LuFeng
Company Subsidiary Fabric 70616 139,731.66 128,110.56 104,491.25 4,623.77 4,256.62
Limited
Shandong
Lulian New
Subsidiary Fabric 90000 78,087.79 53,986.92 15,994.08 -3,134.86 -3,091.66
Materials Co.,
Ltd.
Acquisition and disposal of subsidiaries during the Reporting Period
Applicable □ Not applicable
How the subsidiary was obtained or Impact on overall operations and
Company name
disposed of during the Reporting Period performance
Lu Thai (America) Textile Co., Ltd. Cancelled No influence
Information about major majority- and minority-owned subsidiaries:
LuFeng Company Limited is the holding subsidiary of the Company. Registration place: Zibo,
Shandong; registered capital: RMB706.16 million. The mainly manufacturing and selling textile
printing and dyeing products and the products of clothing and garments, and it were authenticated
to be high-tech enterprise in November 2011. During the Reporting Period, net profit decreased
year-on-year, mainly due to changes in order structure and market demand.
Shandong Lulian New Materials Co., Ltd. is the wholly-owned subsidiary of the Company.
Registration place: Zibo, Shandong; registered capital: RMB900 million. It is mainly engaged in
Lu Thai Textile Co., Ltd. Annual Report 2025
manufacturing and selling functional fabrics. Steady progress in production and operations led to a
slight reduction in net profit year-on-year during the reporting period.
X Structured Bodies Controlled by the Company
Applicable □ Not applicable
See Part VIII "Financial Statements, X. Equity in Other Entities" in this report for relevant details.
XI. Prospects
Industry Competition and Development Trend
The textile industry of China has certain strength in the global textile industry, mainly showing in
industry chain, technology, labor efficiency and other aspects. The global economic downturn and
supply chain restructuring have impacted the economy and trade of various countries in recent years,
but the competitive edge of the textile industry of China in the international market still remains.
Influenced by domestic environmental requirements, rising factor costs, and the national strategic
direction toward industrial transformation and upgrading, the textile industry may face structural
adjustment, with the development direction centered on building a modernized textile industrial
system characterized by science and technology, fashion, sustainability, and health.
The Company is a large-scale textile enterprise with a complete industrial chain integrating
spinning, dyeing, weaving, post-treatment and garment manufacturing. It is the world’s largest
production base for medium- and high-grade fabrics for shirts, providing blending of three major
series of fabrics of pure cotton and natural fiber, cotton and natural fiber as well as cotton and
functional fiber. And the newly developed knitted fabric and functional fabric are also popular in
markets. In order to maintain the outstanding advantages of the Company in global shirt fabrics, the
Company is pushing intelligent manufacturing upgrades and integrating domestic and foreign
advantageous resources to deepen internationalization of the Company with regional advantages.
The Company is committed to combining quality innovation with customer needs to meet the
diverse demands of its customers. The Company will continue to invest in innovation, continuously
improving R&D and design capabilities, actively developing new advanced fabrics, and adhering to
the principles of low-carbon environmental responsibility, with the goal of building the company
into a global green fashion textile and apparel industrial group centered on leading fabrics.
(1) In terms of corporate governance, in order to ensure the healthy, stable and sustainable
development of the Company at the institutional level, the Company will establish an internal
control system to improve organizational structure, corporate governance structure and risk
prevention mechanism.
(2) In terms of market development, the Company will actively expand into emerging markets
while consolidating existing ones, accurately identifying market trends and customer needs, and
comprehensively enhancing customer service capabilities.
(3) In the aspect of business administration, the Company continually implements the strategy of
“Improve Quality and Efficiency” and “Overall Internationalization”, makes more efforts in
developing market, adjusting structure and improving capacity, promotes innovation while meeting
market demand, integrates internal and external resources, deepens the application of information
technology and big data, builds up a flexible, rapid response, efficient and traceable supply system
chain, and effectively improves operational capabilities.
Lu Thai Textile Co., Ltd. Annual Report 2025
(4) In terms of industrial overall arrangement, in order to maintain the competitive edge of the
Company in the global fabric industry, the Company rationally allocates domestic and foreign
resources and improves production efficiency while keeping product quality relying on the
advantages of Milan Office in market development, design and R&D, customer service and talent
development, and the cost advantages of the overseas production bases.
In 2026, overseas subsidiaries plan to invest RMB119 million to construct an annual production
capacity of 1,839 tons of linen yarn in Vietnam, and RMB144 million to construct an annual
apparel processing capacity of 6.5 million garments in Cambodia. Funding for the above projects
will be sourced from the overseas subsidiaries’ own funds and self-raised capital.
(1) Impact of economic environment: The global economic slowdown and ongoing geopolitical
risks continue to persist, with insufficient growth momentum. The Company will still face
challenges from changes in international trade policies and market dynamics in the future. The
Company will leverage its global industrial layout and vertical supply chain advantages, coordinate
various resources both domestically and internationally, and continuously explore domestic and
international markets.
(2) Price fluctuation of raw materials: cotton is the major production material of the Company, and
the price of cotton is impacted by market supply and demand, climate, policy, foreign exchange risk
and other factors. Therefore, the Company will coordinate domestic and international production,
closely monitor global cotton market trends, develop rational procurement strategies, and fully
leverage the advantages of global procurement of high-quality raw cotton.
(3) Change of foreign exchange risk: the Company has a large ratio in import and export business,
which is mostly settled in USD. In recent years, the bi-directional fluctuations in RMB foreign
exchange risk have become increasingly normal, with a significant increase in foreign exchange risk
flexibility. To lower the impact of foreign exchange risk fluctuations, the Company stuck to the
risk-neutral management philosophy. Based on actual needs arising from production and operations,
it incorporated foreign exchange risk risks into routine operations management, and flexibly
allocated different types and maturities of foreign exchange derivatives for hedging purposes to
minimize the influence of foreign exchange risk risks on its operating results. Firstly, the Company
appropriately conducted foreign exchange hedging, using financial derivatives such as forwards,
swaps, and option portfolios to avoid currency risks. Secondly, the Company made reasonable
arrangement on settlement day and currency and vigorously promoted cross-border settlement with
RMB to avoid foreign exchange risk-related risks. Thirdly, the Company adjusted the Renminbi and
foreign-currency liabilities structure to actively prevent currency fluctuation risks.
XII. Communications with the Investment Community such as Researches, Inquiries and
Interviews during the Reporting Period
Applicable □ Not applicable
Main topics
Type of
Way of Received discussed and Index to communication general
Reception date Place received
communication visitor information information
visitor
provided
The Investor Relations Management
Company’s Institutional Information 20250410 disclosed
April 10, 2025 By phone Institution Company profile
conference investor on www.cninfo.com.cn by the
room Company on April 10, 2025
April 22, 2025 The Online Other Investor Company profile Investor Relations Management
Lu Thai Textile Co., Ltd. Annual Report 2025
Company’s exchange Archive 20250422 disclosed on
conference www.cninfo.com.cn by the
room Company on April 22, 2025
The Investor Relations Management
Company’s Institutional Archive 20250430 disclosed on
April 30, 2025 By phone Institution Company profile
conference investor www.cninfo.com.cn by the
room Company on May 6, 2025
The Investor Relations Management
Company’s Online Archive 20250515 disclosed on
May 15, 2025 Other Investor Company profile
conference exchange www.cninfo.com.cn by the
room Company on May 15, 2025
For details, please refer to the
The
Investor Relations Management
August 29, Company’s Institutional
By phone Institution Company profile Information 20250829 disclosed
by the Company on August 29,
room
For details, please refer to the
The
Investor Relations Management
October 31, Company’s Institutional
By phone Institution Company profile Information 20251031 disclosed
by the company on the Cninfo
room
website on October 10, 2025.
XIII. The Formulation and Implementation of the Market Value Management System and
Valuation Promotion Plan
Has the Company established a market value management system.
□ Yes No
Has the Company disclosed a valuation improvement plan.
Yes □ No
In accordance with the China Securities Regulatory Commission Regulatory Commission’s
Guideline No. 10 for Listed Companies — Market Value Management, companies with long-term
market value below par are required to disclose their plans for improving the company’s valuation.
As at December 31, 2024, the price of Luthai A-shares had fallen into a long-term below-par
situation. Therefore, in line with its industry position, development strategy, and business plans, the
Company has formulated and disclosed a valuation enhancement plan. For specific details, please
refer to the Valuation Enhancement Plan of Lu Thai Textile Co., Ltd. published by the Company on
March 1, 2025 on http://www.cninfo.com.cn.
During the Reporting Period, the company focused on its core business and actively responded to
the severe challenges of a complex and volatile international landscape and weak demand. Through
optimizing resource allocation, asset utilization efficiency was improved. The marketing structure
was streamlined and optimized, domestic and overseas markets were actively developed, and the
major customer strategy and R&D reform and innovation were advanced. The Company continued
to deepen “cost reduction and efficiency improvement” and “comprehensive internationalization”,
and on the basis of continuously promoting new formal wear products, actively expanded the
development and marketing of casual and light business product categories, achieving favorable
results. In 2025, the Company’s earnings per share reached RMB0.73, and net profit attributable to
shareholders of the listed company increased by 44.66% year-on-year. During the Reporting Period,
the Company actively promoted in-depth cooperation with downstream brand enterprises, adjusting
its asset structure to enhance customer stickiness and expand business opportunities in integrated
fabric-and-apparel services. During the Reporting Period, the Company implemented cash dividend
distributions for the full year 2024 and the first half of 2025, providing stable investment returns to
investors. During the Reporting Period, the company continuously improved the quality of its
information disclosure, receiving an A rating for information disclosure from the Shenzhen Stock
Lu Thai Textile Co., Ltd. Annual Report 2025
Exchange for multiple consecutive years. The Company published its 2024 ESG Report, disclosing
its annual performance in fulfilling social responsibilities, and received recognition and
commendation from customers, suppliers, and other stakeholders. During the Reporting Period, the
Company’s operating performance and governance level improved further, the foundation for high-
quality development was further consolidated, and the Company’s market capitalization increased
by the end of the Reporting Period. In accordance with its existing valuation enhancement plan, the
Company will continue to focus on its core business, drive development through innovation,
advance its comprehensive internationalization strategy, continuously increase product value-added
and competitiveness, place sustained emphasis on investor returns, and strengthen communication
and engagement with investors, so as to enhance investor recognition of the Company’s core value
and promote a return to fair investment value.
XIV. Implementation of the “quality and earnings dual improvement” Action Plan
Has the Company disclosed the “quality and return improvement” action plan announcement?
□ Yes No
Lu Thai Textile Co., Ltd. Annual Report 2025
Part IV Corporate Governance, Environmental and Social Matters
I General Information of Corporate Governance
During the Reporting Period, the Company strictly adhered to relevant laws, regulations, and
normative documents, including the Company Law of the People’s Republic of China (2023
Revision), the Securities Law of the People’s Republic of China (2019 Revision), the Governing
Rules for Listed Company in China, the Guidelines for the Articles of Association of Listed
Companies (2025 Revision), the Administrative Measures for Independent Directors of Listed
Companies, and the Self-Regulatory Guidelines No. 1 for Companies Listed on Shenzhen Stock
Exchange - Standard Operation of Listed Companies on the Main Board (Revised in 2025). In
doing so, the Company continuously improved its corporate governance structure, standardized
company operations, established and refined an effective internal control system, and effectively
safeguarded the legitimate rights and interests of the Company and its investors. During the
Reporting Period, the Company formulated the Public Opinion Management System and the Luthai
Textile Co., Ltd. Information Disclosure Deferral and Exemption Management System. Information
Disclosure Deferral and Exemption Management System, and revised relevant provisions in 20
internal governance documents, including the Articles of Association of Luthai Textile Co., Ltd., the
Rules of Procedure for Shareholders’ Meetings of Lu Thai Textile Co., Ltd., and the Rules of
Procedure for the Board of Directors Meetings of Lu Thai Textile Co., Ltd.
The Company shall convene and hold the shareholders’ meeting in strict accordance with the
Shareholders Meeting Procedural Rules, and guarantee that all shareholders, especially the
minority shareholders, could have equal status and fully execute their rights.
The Company’s majority shareholders acted according to relevant standards without directly or
indirectly intervening the Company’s decision-making and operating activities; the Company was
independent with its majority shareholders in business, personnel, assets, organization, finance, and
the Company’s Board of Directors and Internal Organs could completely independent to operate.
There was no situation about annexing the assets or occupation of funds of the Company by
principal shareholders or other events on infringing the interest of the Company and other
shareholders.
The Company’s Board of Directors shall perform their duties in strict accordance with Articles of
Association and the Board of Directors Procedural Rules. Under the Board of Directors, the
Company established the Strategy Committee, the Audit Committee, the Nomination Committee
and the Remuneration and Appraisal Committee. Various specialized committees would fully
perform their functions and further guarantee the high-efficient operation and the scientific
decision-making of the Board of Directors.
The Company strictly, in accordance with the laws, regulations and the Articles of Association,
disclosed relevant information in a true, accurate, complete and timely manner. The Company has
formulated the Information Disclosure Management System, Information Insider Registration
Management System and Investor Relations Management System, etc., to ensure the fairness,
openness and fairness of information disclosure.
Lu Thai Textile Co., Ltd. Annual Report 2025
During the Reporting Period, as required by Investor Relations Management System, to maintain
good communication with investors, the Company accepted on-site investigations and consultations
of investors through on-site investigations and telephone consultations, and promptly answered
questions asked by investors on the Shenzhen Stock Exchange Easy-IR.
Does the actual governance status of the Company differ materially from the relevant laws,
administrative regulations, and the China Securities Regulatory Commission’s rules on corporate
governance for listed companies?
□ Yes No
The actual governance status of the Company does not differ materially from the relevant laws,
administrative regulations, and the China Securities Regulatory Commission’s rules on corporate
governance for listed companies.
II. The Company’s Independence from Its Controlling Shareholder and Actual Controller in
Assets, Personnel, Financial Affairs, Organization and Business
with the market-oriented independent management ability. In the respect of business operation, the
Company is completely separated from the controlling shareholders.
departments shall be independent with their own sound systems, and separated from that of the
substantial shareholder. The Company’s senior executives are not allowed to simultaneously hold
any office in any shareholder’s unit.
with independent and perfect the production system, auxiliary production systems and supporting
facilities; and possesses the independent ownership of the intangible assets such as the industrial
property, trademarks, non-patented technology.
sound and involved in independent operation. The substantial shareholder shall legally execute its
rights, fulfil corresponding obligations and not surpass the shareholders meeting to directly or
indirectly interfere the Company’s business activities.
financial accounting system and financial management system as well as internal control system
with independent bank account.
III. Horizontal Competition
□ Applicable Not applicable
IV. Directors and Senior Executives
Shares Shares
Reason
increased decreased
Initial Final for
End during during Other
Start of shares shares Share
Name Gender Age Office title Incumbent/Former of the the changes
tenure held held Increase
tenure current current (shares)
(shares) (shares) or
period period
Decrease
(shares) (shares)
The Chairman June
June 6,
Liu Zibin Male 61 of the Board Incumbent 8, 148,290 148,290
of Directors 2028
Lu Thai Textile Co., Ltd. Annual Report 2025
June
June 6,
President Incumbent 8,
June
Vice May 6,
Xu Zhinan Male 96 Incumbent 8, 0 0
Chairman 2004
June
June 9,
Xu Jianlyu Female 51 Director Incumbent 8, 0 0
June
Zheng June 9,
Male 38 Director Incumbent 8, 0 0
Huisheng 2022
Director, Vice
Controller of May June
Liu
Male 36 Global Incumbent 12, 8, 0 0
Deming
Marketing 2017 2028
Department
June
Director Incumbent 8,
Vice President
and Director
of the Global
Zhang 54 Marketing 580,300 580,300
Male
Zhanqi Department; June
June 6,
Dean of Lu Incumbent 8,
Thai 2028
Engineering
Technology
Research
Institute
June
June 9,
Director Incumbent 8,
Chief
Zhang Accountant
Male 58 377,700 377,700
Keming and Director June
June 6,
of the Incumbent 8,
Financial 2028
Management
Department
Director and June
June 9,
Du Lixin Male 51 Chief Incumbent 8, 250,000 250,000
Engineer 2028
June
Independent June 9,
Zhu Beina Female 68 Incumbent 8, 0 0
director 2025
June
Yu Independent May 7,
Male 47 Incumbent 8, 0 0
Mingtao director 2025
June
Quan Independent June 9,
Female 70 Incumbent 8, 0 0
Yuhua director 2022
June
Independent June 9,
Wei Jian Male 57 Incumbent 8, 0 0
director 2025
President
June
Shang Assistant, June 9,
Male 53 Incumbent 8, 330,000 330,000
Chenggang Director of the 2025
apparel line
President
Assistant,
June
Yu Head of June 6,
Male 58 Incumbent 8, 383,100 383,100
Shouzheng Energy and 2007
Environmental
Protection
Lu Thai Textile Co., Ltd. Annual Report 2025
Department
General
June
Manager of June 9,
Liu Zilong Male 58 Incumbent 8, 10,000 10,000
Luthai (Hong 2025
Kong)
Chairman of
the Labor
Union, June
Dong June 9,
Male 57 Manager of Incumbent 8, 5,000 5,000
Shibing 2025
Logistics 2028
Management
Department
Head of
January June
Functional
Guo Heng Male 54 Incumbent 18, 8, 300,000 300,000
Fabric Product
Line
Deputy Head
of the Yarn-
dyed Fabric
Product Line, June
Lyu June 9,
Male 53 Manager of Incumbent 8, 200,000 200,000
Wenquan 2022
the Yarn-dyed 2028
Production
Management
Department
Deputy Head
of the Yarn-
dyed Fabric
Product Line, June
June 9,
Xu Feng Male 49 Head of Incumbent 8, 190,000 190,000
Overseas 2028
Operation and
Management
Centre
April June
Zheng Board
Male 60 Incumbent 25, 8, 40,000 40,000
Weiyin Secretary
March May
Independent
Zhou Zhiji Male 63 Resigned 10, 7, 0 0
director
June June
Qu Independent
Female 57 Resigned 10, 8, 0 0
Dongmei director
June
Independent June 9,
Peng Yanli Female 65 Resigned 8, 0 0
director 2022
Total -- -- -- -- -- -- 2,814,390 0 0 0 2,814,390 --
Has there been any resignation of directors or senior executives members during the Reporting
Period?
Yes □ No
Independent director Mr. Zhou Zhiji has served as an independent director of the Company for six
consecutive years, reaching the maximum consecutive tenure limit stipulated in the Administrative
Measures for Independent Directors of Listed Companies, and will no longer serve as an
independent director of the Company’s tenth board of directors or in his related positions on the
board’s various special committees.
Changes in directors and senior executives personnels
Applicable □ Not applicable
Name Office title Type Date Reason
Zhou Zhiji Independent director Retirement after May 7, 2025 Dismissed
Lu Thai Textile Co., Ltd. Annual Report 2025
expiration of term
Retirement after
Qu Dongmei Independent director June 8, 2025 Board Change
expiration of term
Retirement after
Peng Yanli Independent director June 8, 2025 Board Change
expiration of term
Chairman of the Board Retirement after
Shang Chenggang June 8, 2025 Board Change
of Supervisors expiration of term
Shang Chenggang Senior management Appointed June 9, 2025 Board Change
Retirement after
Liu Zilong Supervisor June 8, 2025 Board Change
expiration of term
Liu Zilong Senior management Appointed June 9, 2025 Board Change
Retirement after
Dong Shibing Supervisor June 8, 2025 Board Change
expiration of term
Dong Shibing Senior management Appointed June 9, 2025 Board Change
The professional backgrounds, main work experience, and current primary responsibilities of the
Company’s existing directors, and senior executives
master degree. He served as the GM and Chairman of Zibo Lucheng Textile Co., Ltd. And he
currently serves as the Chairman and President of Lu Thai Textile Co., Ltd., the Chairman of
Lufeng Company Limited, the Chairman of Zibo Xinsheng Thermoelectric Co., Ltd., the Chairman
of Zibo Lu Qun Textile Co., Ltd., the Chairman of Lu Thai (Hong Kong) Textile Co., Ltd., the
Chairman of Shandong Lulian New Materials Co., Ltd., the Chairman of Shanghai Luthai Textile
and Apparel Co., Ltd., the Chairman of Shandong Lujia Import and Export Co., Ltd. and the
Chairman of Hainan Huilin International Holdings Co., Ltd.
degree. He has successively served as director and deputy general manager of the Company,
director and general manager of Thai Fibre Cloth Factory Co., Ltd., director of Thai Fibre Co., Ltd.,
and director of Thai Fibre Printing and Dyeing Co., Ltd. He currently serves as director and Vice
Chairman of the Company, and general manager of Tailun (Thailand) Textile Co., Ltd.
She currently serves as Director of the Company and President of Cassardi International Co., Ltd.
serves as Director of the Company and President of Cassardi International Co., Ltd.
Senior Engineer, born in 1990, with a master degree. Currently, he serves as Chairman and GM of
Zibo Lucheng Textile Investment Co., Ltd., Director of Lu Thai Textile Co., Ltd. and Vice
Controller of Global Marketing Department of Lu Thai Textile Co., Ltd.
the Company; Dean of the Lu Thai Engineering Technology Research Institute; General Manager
of LuFeng Company Limited. Born in 1972, he holds an MBA, holds the title of full senior
engineer, is a National First-Class Textile Fabric Designer, and has been recognized as a “High-End
Think Tank Talent of Shandong Province”. He has previously served as Director of the Fabric
Finishing Factory and Manager of the Quality Management Department of the Company.
Department of the Company. Born in 1968, he holds an MBA and holds professional qualifications
as both a lawyer and a senior accountant. He has previously served as Deputy Manager and
Manager of the Company’s Finance Department, and as Board Secretary.
Lu Thai Textile Co., Ltd. Annual Report 2025
full senior engineer. At Luthai, he has previously served as spinning operator, production planner at
the weaving factory, deputy director of the scheduling office of the Production Department, director
of the weaving factory, manager of the Weaving Division, deputy manager of the Production
Department, and executive dean of the Lu Thai Engineering Technology Research Institute.
and a professor-level senior engineer. She graduated in 1983 from the East China Institute of
Textile Technology (now renamed Donghua University), and has successively served as Deputy
Division Director of the Ministry of Textile Industry of China, President of the China Cotton
Textile (Yarn-Dyed) Industry Association, and independent director of Shijiazhuang Changshan
Textile Co., Ltd. She currently also serves as an independent director of Blum Oriental Co., Ltd.
Accounting and is a Certified Public Accountant and Certified Tax Agent. He currently serves as
Director of the Department of Accounting, School of Management, Shandong University of
Technology, where he is a professor and master’s supervisor. He also serves as a member of the
Digital and Intelligent Finance Committee of the Belt and Road and BRICS Skills Development
International Alliance, a director of the Shandong Enterprise Management Research Association,
and a director of the Digital Accounting and Finance Branch of the Shandong Big Data Research
Association.
She is a Senior Accountant. Moreover, she served as the Principal Staff Member of the Financial
Audit Division of the Jinan Office of the National Audit Office, the Manager of the Financing
Department of the CCB Shandong Branch Trust and Investment Company, the Director Assistant in
the Information and Research Office, the Entrusted Loan Office, and the Fee-based Business
Department of the CCB Shandong Branch, and the level-5 customer manager in the Zhenzhuquan
Branch of CCB in Jinan City.
Economics, has been recognized as an Outstanding Young Talent of the New Century by the
Ministry of Education, and is a recipient of a State Council Special Government Allowance. He
currently serves as President of the Journal of Humanities and Social Sciences at Shandong
University, and as a professor and doctoral supervisor at the Institute of Economics. He also serves
as an independent director of Sinotruk Jinan Truck Co., Ltd.
the Company. Born in 1973. He served as deputy director, director, manager of Enterprise
Management Department, management representative and manager of apparel department, head of
garment manufacturing center & manager of apparel department of the Company.
Protection Department, and General Manager of Zibo Xinsheng Thermal Power Co., Ltd. Born in
Power Department and Manager of the Energy Business Division of the Company.
holds an MBA. He has served as General Manager of Lu Thai (Hong Kong) Textile Co., Ltd.. since
Management Department; Chairman and General Manager of Zibo Banyang Villa Hotel Co., Ltd..
Lu Thai Textile Co., Ltd. Annual Report 2025
Born in 1969. He has previously served as Deputy Director of the General Manager’s Office of the
Company.
Shandong Lulian New Materials Co., Ltd. Born in 1972, he is a senior engineer. He has previously
served as Deputy Factory Director of the Spinning Factory, Deputy Manager of the Yarn Business
Department, Manager of the Yarn Business Department, and Director of the Enterprise
Management Department at Luthai.
dyed Production Management Department, born in 1973.He serves as a Senior Engineer as well as a
Chief Technician in Qilu. Moreover, he is one of the middle-aged and young experts in Zibo City
and one of the “Torch Talents” for Zibo High-tech Zone. In addition, he served as a factory director
and the manager of the fabric finishing business department of Lu Thai.
Overseas Operations Management Center. Born in 1977, he is a senior engineer. He has previously
served as Deputy Manager of the Bleaching and Dyeing Business Department.
holds a bachelor’s degree. Previously served as Head of the Securities Section and Deputy Manager
of the Securities Department of the Company.
Circumstances in which the controlling shareholder or de facto controller concurrently serves as
Chairman and General Manager of the listed company
Applicable □ Not applicable
Mr. Liu Zibin, one of the actual controllers of the Company, serves as both Chairman and President,
which facilitates effective control over business decision-making and execution, enhances
operational efficiency, and ensures the stable implementation of long-term strategies. Mr. Liu Zibin
serves only as a director at Zibo Lucheng Textile Investment Co., Ltd., the controlling shareholder,
and does not participate in its day-to-day operations and management. He has sufficient time and
energy to devote to the management of the listed company. Furthermore, the listed company has
clearly defined the powers and decision-making procedures of the Board Of Directors and the
president in its Articles of Association and other relevant corporate governance documents, thereby
ensuring the independence of the Company’s decision-making and management.
Biographical information in shareholding entities:
Applicable □ Not applicable
Remuneration or
Positions held in End of
Name Shareholder entities Start of tenure allowance from the
shareholder entities tenure
shareholding entity
Zibo Lucheng Textile Investment
Liu Zibin Director February 26, 1999 Not
Co., Ltd.
Tailun (Thailand) Textile Co.,
Xu Zhinan GM January 29, 1985 Not
Ltd.
Zibo Lucheng Textile Investment Chairman of the
Liu Deming February 1, 2017 Not
Co., Ltd. Board and GM
Note on Mr. Liu Zibin is the Director of Zibo Lucheng Textile Investment Co., Ltd., holding 4% equities of Zibo Lucheng
biographical Textile Investment Co., Ltd. General information of Mr. Liu Zibin: Chinese, no right of residence in other countries
information or regions. Mr. Liu Deming holds the post of Chairman and GM of Zibo Lucheng Textile Investment Co., Ltd.,
at the holding 21% equities of Zibo Lucheng Textile Investment Co., Ltd. General information of Mr. Liu Deming: Chinese,
shareholders no right of residence in other countries or regions. Mr. Xu Zhinan is the sponsor of foreign capital of the Company,
of the shareholder of Tailun (Thailand) Textile Co., Ltd. and Tailun (Thailand) Textile Co., Ltd. is the second largest
Company shareholder of the Company. General information about Mr. Xu Zhinan: Thai.
Lu Thai Textile Co., Ltd. Annual Report 2025
Biographical information held in other units
Applicable □ Not applicable
Receives
Positions held End of remuneration or
Name Name of the other entities Start of tenure
in other entities tenure allowance from
other unit (yes/no)
LuFeng Company Limited, Zibo Lu Qun
Textile Co., Ltd., Zibo Xinsheng Thermal
Power Co., Ltd., Lu Thai (Hong Kong)
Chairman of
Textile Co., Ltd., Shanghai Luthai Textile December
Liu Zibin the Board, Not
and Apparel Co., Ltd., Shandong Lulian 7,2015
Director, GM
New Materials Co., Ltd., Shandong Lujia
Import and Export Co., Ltd., Hainan Huilin
International Holdings Co., Ltd.
LuFeng Company Limited, Zibo Xinsheng
Thermal Power Co., Ltd. Zibo Lu Qun
August 21,
Liu Deming Textile Co., Ltd. Shandong Lulian New Director Not
Materials Co., Ltd. Beijing Zhishu
Management Consulting Co., Ltd.
Zhang Director and
LuFeng Company Limited July 5, 2014 Not
Zhanqi GM
Zibo Lu Qun Textile Co., Ltd. Shandong
Zhang Lulian New Materials Co., Ltd. LuFeng Director,
March 3, 2022 Not
Keming Company Limited, Shanghai Luthai Textile Supervisor
and Apparel Co., Ltd.
Independent August 23, August 22,
Zhu Beina Blum Oriental Co., Ltd. Yes
director 2025 2028
Independent May 11,
Wei Jian Sinotruk Jinan Truck Co., Ltd. July 29, 2025 Yes
director 2026
Yu Director and
Zibo Xinsheng Thermal Power Co., Ltd. April 13, 2021 Not
Shouzheng GM
Liu Zilong Lu Thai (Hong Kong) Textile Co., Ltd. GM May 9, 2005 Not
Dong Director and
Zibo Banyang Villa Hotel Co., Ltd. April 2, 2021 Not
Shibing GM
Director and August 28,
Guo Heng Shandong Lulian New Materials Co., Ltd. Not
GM 2021
Note on
biographical
Except for independent directors, all other entities the Company’s directors, and senior executives hold posts are
information
majority-owned subsidiaries of the Company.
in other
organizations
Punishments imposed by securities regulation institutes on current and resigned directors and senior
executives of the Company in the past three years during the Reporting Period
□ Applicable Not applicable
Decision-making procedures, basis for determining, and actual payment of remuneration for
directors and senior executives:
The Remuneration and Appraisal Committee under the Board of Directors of the Company is liable
to not only preparing appraisal criteria for directors and senior executives of the Company and
appraising them, but also preparing and reviewing remuneration policies and plans for directors and
senior executives of the Company, who is liable to the Board of Directors. The Remuneration and
Appraisal Committee shall propose the remuneration amount of directors and senior executives
according to the Company’s management condition and post performance results, and shall report
to the Board of Directors for ratification after the approval by voting.
Lu Thai Textile Co., Ltd. Annual Report 2025
The Director of the Financial Management Department, the Enterprise Management Department
and the HR Department of the Company shall be liable to the preliminary preparation for the
decision of the Remuneration and Appraisal Committee, including but not limited to providing
information such as the Company’s main financial indicators and the completion of management
objectives. The Remuneration and Appraisal Committee shall confirm the annual appraisal results
of directors and officers in accordance with the completion of the Company’s performance and the
remuneration criteria for officers, and shall report to the Board of Directors for ratification after the
approval by voting.
The number of incumbent directors and senior executives during the Reporting Period is 23, among
which there are 19 persons actually receiving remuneration from the Company during the Reporting
Period. By 31 December 2025, the total amount of annual payment drawn from the Company by
directors and senior executives is RMB15,176,200 (before tax).
Remuneration of directors and senior executives during the Reporting Period
Unit: RMB10,000
Pre-tax total
Remuneration
remuneration from
Name Gender Age Office title Incumbent/Former from Related
the Company
Parties
(RMB)
Liu Zibin Male 61 Chairman of the Board and President Incumbent 216.59 Not
Xu Zhinan Male 96 Vice Chairman Incumbent 0 Not
Xu Jianlyu Female 51 Director Incumbent 0 Not
Zheng
Male 38 Director Incumbent 0 Not
Huisheng
Liu Director, Vice Controller of Global
Male 36 Incumbent 114.12 Not
Deming Marketing Department
Board of Directors, Vice President,
Zhang Head of Global Marketing Department,
Male 54 Incumbent 116.36 Not
Zhanqi and Dean of Lu Thai Engineering
Technology Research Institute
Zhang Director, Chief Accountant, Director of
Male 58 Incumbent 116.56 Not
Keming the Financial Management Department
Du Lixin Male 51 Director and Chief Engineer Incumbent 117.54 Not
Zhu Beina Female 68 Independent director Incumbent 3.5 Not
Yu
Male 47 Independent director Incumbent 3.5 Not
Mingtao
Quan
Female 70 Independent director Incumbent 7 Not
Yuhua
Wei Jian Male 57 Independent director Incumbent 3.5 Not
Shang President Assistant, Director of the
Male 53 Incumbent 106.75 Not
Chenggang apparel line
Yu President Assistant, Head of Energy and
Male 58 Incumbent 108.67 Not
Shouzheng Environmental Protection Department
General Manager of Luthai (Hong
Liu Zilong Male 58 Incumbent 100.37 Not
Kong)
Dong Chairman of the Labor Union, Manager
Male 57 Incumbent 98.19 Not
Shibing of Logistics Management Department
Guo Heng Male 54 Head of Functional Fabric Product Line Incumbent 98.9 Not
Deputy Head of the Yarn-dyed Fabric
Lyu Product Line, Manager of the Yarn-
Male 53 Incumbent 97.47 Not
Wenquan dyed Production Management
Department
Deputy Head of the Yarn-dyed Fabric
Xu Feng Male 49 Product Line, Head of Overseas Incumbent 107.95 Not
Operation and Management Centre
Zheng
Male 60 Board Secretary Incumbent 93.65 Not
Weiyin
Zhou Zhiji Male 63 Independent director Resigned 3.5 Not
Qu
Female 57 Independent director Resigned 3.5 Not
Dongmei
Lu Thai Textile Co., Ltd. Annual Report 2025
Peng Yanli Female 65 Independent director Resigned 0 Not
Total -- -- -- -- 1,517.62 --
Performance appraisal basis for actual remuneration of all directors and Compensation and Performance Assessment Plan for
senior executives at the end of the Reporting Period Directors and Senior Executives of the Company
Performance completion status for actual remuneration of all directors and
Completed
senior executives at the end of the Reporting Period
deferred payment arrangements for the remuneration actually received by all
Yes
directors and senior executives at the end of the reporting period
Payment suspension or recourse for the remuneration actually received by
N/A
all directors and senior executives at the end of the Reporting Period
Other explanations
□ Applicable Not applicable
V. Performance of Duty by Directors in the Reporting Period
Attendance of Directors at Board Meetings and General Meetings
Total Board Board
Board Number of Number of Number of
Meetings meetings Consecutive absence
Director meetings telecommunication- board shareholders’
attended in the attended from two board
name attended on based attendance in meeting meetings
Reporting through a meetings
site board meetings absence attended
Period proxy
Liu Zibin 12 12 0 0 0 Not 2
Xu
Zhinan
Xu
Jianlyu
Zheng
Huisheng
Liu
Deming
Zhang
Zhanqi
Zhang
Keming
Du Lixin 12 12 0 0 0 Not 2
Zhu
Beina
Yu
Mingtao
Quan
Yuhua
Wei Jian 6 1 5 0 0 Not 1
Zhou
Zhiji
Qu
Dongmei
Peng
Yanli
Why any independent director failed to attend two consecutive board meetings:
Not applicable.
Did any directors raise objections regarding company matters during the Reporting Period?
□ Yes No
No objections were raised by any director during the Reporting Period.
Lu Thai Textile Co., Ltd. Annual Report 2025
Were the directors’ suggestions regarding the Company adopted?
Yes □ No
Explanation on the adoption or non-adoption of the directors’ relevant suggestions to the Company
During the Reporting Period, directors of the Company carried out their work conscientiously and
responsibly in strict accordance with the Company Law, Securities Law, Governing Rules for Listed
Company in China, Self-Regulatory Guidelines No. 1 for Companies Listed on Shenzhen Stock
Exchange - Standard Operation of Listed Companies on the Main Board, Articles of Association
and Rules of Procedure of the Board of Directors. Based on the Company’s reality, they made
scientifically sound and careful decisions on the Company’s various reviewed matters, and formed
opinions through full communication and discussion. They resolutely supervised and promoted the
implementation of the resolutions of the Board of Directors to ensure scientific, timely and efficient
decision-making and fully safeguard the legitimate rights and interests of the Company and all
shareholders. Rules of Procedures for the Board of Directors
VI. Performance of Duty by Specialized Committees under the Board in the Reporting Period
Specific
Number
Other situations
Committee of Convening Meeting
Members Important opinions and suggestions duties of
name meetings date content
performed objections
held
(if any)
(1) Preparing the Company’s
financial accounting statements in
accordance with the Company’s
accounting policies and applying
accounting policies properly, it
carried out accounting estimate
fully and reasonably, which
conformed to the New Accounting
Mainly, the Standards for Business Enterprises,
Company’s accounting system for enterprises
financial and the requirements of relevant
statements provisions issued by the Ministry of
submitted to Finance;
Grant Thornton (2) Unit statements of the
China (Special Company’s financial statements
General that were included in the scope of
Zhou Partnership) for consolidation were complete, while
Zhiji, Qu preliminary the statement consolidation basis
The Audit January 9,
Dongmei, 3 audit were was accurate; - -
Committee 2025
Liu reviewed, (3) The financial statements of the
Deming written Company were objective, true and
opinions were accurate, without any major
expressed, and misstatement or omission;
communication (4) And due to the fact that there
with Leader of still is a period of time from the day
annual audit for review of the financial
accountant statements to the day for
project was independent audit report and
conducted. financial statement release, the
Financial Management Department
of the Company was submitted to
focus on and cope with events after
balance sheet date, so as to ensure
the fairness, authenticity and
integrity of the financial statements.
The Audit Committee thought that
the financial accounting statements
Lu Thai Textile Co., Ltd. Annual Report 2025
could be submitted to Annual
Certified Public Accountant for
audit according to annual audit
plan.
(1) Regarding the written opinion
issued after the accounting firm’s
preliminary audit opinion on the
The following Company’s financial statements:
matters were The procedure of financial
mainly audited: statement preparation was
(1) The reasonable and normative as the
Company’s Company conformed to the New
Financial Enterprises and relevant provisions
Statements of the Company’s financial system,
audited by the which fairly reflected the
accounting Company’s assets, liabilities,
firm. shareholders’ equity and operating
(2) Evaluation results by 31December 2024, which
Report on the were true, accurate and complete.
Performance of The Audit Committee thought that
the Accounting the Company’s 2024 Annual
Firm in 2024 Financial Accounting Report that
and Report on was preliminarily approved by
the Fulfilment Grant Thornton China (Special
of Supervisory General Partnership) could be
Responsibilities submitted to the 30th Meeting of
by the Audit the 10th Board of Directors for
Committee. review.
(3) Proposal on (2) Regarding the written opinion
the renewal of issued on the Company’s 2024
Grant Thornton internal control self-assessment
China (Special report: According to Fundamental
Zhou General Norms for Internal Control of
Zhiji, Qu Partnership) As Enterprises, Supporting Guidelines
The Audit April 8,
Dongmei, 3 the Company’s for Internal Control of Enterprises - -
Committee 2025
Liu 2025 Annual and relevant provisions prescribed
Deming Financial Audit by securities regulators for the
and Internal internal control establishment of
Control Audit listed companies, combining the
Institution. actual status of the Company’s
(4) 2024 business, the Company established
Internal the internal control system that
Control covers all stages including
Assessment production and management, as
Report and well as adapts to the Company’s
issuance of management requirements and
written development needs. It is relatively
assessment normative and complete, for which
opinions its organization is complete and
(5) Report of reasonably designed, its
the 2024 implementation is basically
Annual Deposit effective, effectively protecting the
and Use of the fundamental interests of all
Raised Funds. shareholders of the Company. It is
(6) Report on relatively normative and complete,
the for which its organization is
Implementation complete and reasonably designed,
of the 2024 its implementation is basically
Annual Internal effective, effectively protecting the
Audit Plan. fundamental interests of all
(7) 2025 shareholders of the Company. We
Annual Internal believe that the assessment and
Audit Plan. evaluation process, as well as the
format of the 2024 Annual Internal
Control Evaluation Report, comply
with the requirements of the
Lu Thai Textile Co., Ltd. Annual Report 2025
Supporting Guidelines for Internal
Control of Enterprises and
Fundamental Norms for Internal
Control of Enterprises and
Regulations on Information
Disclosure and Compilation for
Companies Public Offering
Securities No. 21 -- General
Provisions on Annual Internal
Control Assessment Reports.
The Audit Committee thought that
the 2024 Internal Control Self-
evaluation Report could be
submitted at the 30th Meeting of
the 10th Board of Directors for
review.
The following
matters were
mainly audited: The following proposals were
Zhou (1) Report on approved at this meeting through a
Zhiji, Qu the combination of in-person
The Audit April 25,
Dongmei, 3 Implementation attendance and remote voting: - -
Committee 2025
Liu of Internal Report on the Implementation of
Deming Audit Plan of Internal Audit Plan of 2025 Q1;
(2) 2025 Q1
Report.
The following
matters were
The following proposals were
mainly audited:
approved at this meeting through a
(1) 2025 Semi-
combination of in-person
Annual Report.
attendance and remote voting:
(2) Proposal on
Yu the Company's
Proposal on the Company's 2025
Mingtao, 2025 Semi-
The Audit August Semi-Annual Equity Distribution
Wei Jian, 3 Annual Equity - -
Committee 262025 Plan; Interim Report 2025 on the
Liu Distribution
Implementation of Internal Audit
Deming Plan.
Plan. Meanwhile, the submission of
(3) Interim
the first and second proposal to the
Report 2025 on
the
Directors for deliberation was
Implementation
approved.
of Internal
Audit Plan.
The following The following proposals were
matters were approved at this meeting through a
mainly audited: combination of in-person
Yu (1) 2025 Q3 attendance and remote voting:
Mingtao, Report. 2025 Third Quarter Report; Report
The Audit October
Wei Jian, 3 (2) Report on on the Implementation of the 2025 - -
Committee 28, 2025
Liu the Third Quarter Internal Audit Plan.
Deming Implementation Meanwhile, the submission of the
of Internal second proposal to the 5th Meeting
Audit Plan of of the 11th Board of Directors for
The time The time arrangement plan for 2025
arrangement annual financial audit work was
Yu
for the unanimously determined at the
Mingtao,
The Audit November Company’s meeting through the negotiation
Wei Jian, 3 - -
Committee 10, 2025 2025 annual with the 2025 annual audit
Liu
financial audit institution, Grant Thornton China
Deming
work was (Special General Partnership), of
negotiated. the Company.
Qu The following The Proposal on the Proposal on
Nomination Dongmei, March 28, matters were the Nomination of Candidates for
Committee Liu Zibin, 2025 mainly audited: By-election of Independent
Xu The Proposal Directors of the Tenth Board of
Lu Thai Textile Co., Ltd. Annual Report 2025
Zhinan, on the Directors was deliberated and
Zhou Nomination of approved as well as submitted to
Zhiji, Candidates for the 30th meeting of the 10th Board
Peng By-election of of Directors for deliberation and
Yanli Independent approval.
Directors of the
Tenth Board of
Directors.
The following
matters were
mainly audited:
(1) The
Proposal on the
Election of the The Proposal on the Election of the
Board of Board of Directors and the
Directors and Nomination of the Candidates for
Qu the Nomination Non-independent Directors of the
Dongmei, of the 11th Board of Directors and the
Liu Zibin, Candidates for Proposal on the Nomination of the
Nomination Xu May 19, Non- Candidates for Independent
Committee Zhinan, 2025 independent Directors of the 11th Board of
Peng Directors of the Directors were deliberated and
Yanli, Yu 11th Board of approved. Meanwhile, the
Mingtao Directors. submission of the two proposals to
(2) The the 33rd Meeting of the 10th Board
Proposal on the of Directors for deliberation was
Nomination of approved.
the Candidates
for Independent
Directors of the
Directors.
The following
matters were
mainly audited:
(1) Proposal on
Waiving the
Notice Period
Requirement
for the First
Meeting of the The meeting reviewed and
Nomination approved the Proposal on Waiving
Committee of the Notice Period Requirement for
the Eleventh the First Meeting of the Nomination
Board of Committee of the Eleventh Board of
Directors in Directors in 2025 and the Proposal
Zhu
Beina,
(2) The Committee Members of the Various
Liu Zibin,
Proposal on the Special Committees of the Eleventh
Nomination Yu June 9,
Committee Mingtao, 2025
the Candidates Candidates for President, Vice
Quan
for Members of President, Chief Accountant, Board
Yuhua,
Special Secretary, Securities Affairs
Wei Jian
Committees, Representative, and Other Senior
President, Vice Executives Positions. We agree to
Presidents, submit the above proposal to the 1st
Chief Meeting of the 11th Board of
Accountant, Directors of the Company for
Board deliberation.
Secretary,
Securities
Affairs
Representative
and other
senior
executives of
the 11th Board
Lu Thai Textile Co., Ltd. Annual Report 2025
of Directors.
The following
matters were
The meeting reviewed and
mainly audited:
approved the Proposal on the 2024
Peng Proposal on the
Annual Performance Evaluation
Yanli, 2024 Annual
Remuneration Results for the Company's
Liu Zibin, Performance
and April 8, Directors, Supervisors, and Senior
Zhou 1 Evaluation - -
Assessment 2025 Executives by vote. Meanwhile, the
Zhiji, and Results for the
Committee submission of the proposal to the
Qu Company's
Dongmei Directors,
Directors for deliberation was
Supervisors,
approved.
and Senior
Executives.
Liu Zibin,
Xu
Zhinan,
Liu
Deming,
Xu
The following
Jianlyu,
matters were
Zheng
mainly audited: The following proposal was
Huisheng,
The Overall adopted by a combination of on-site
Zhang
Strategy April 8, Strategic and telecommunication voting: The
Zhanqi, 1 - -
Committee 2025 Planning of Lu Overall Strategic Planning of Lu
Zhang
Thai Group of Thai Group of 2022 to 2026 (2025
Keming,
Du Lixin,
(2025 Revised
Zhou
Version).
Zhiji, Qu
Dongmei,
Peng
Yanli,
Quan
Yuhua
VII. Work Status of the Audit Committee
Whether the Audit Committee identified any risks in its supervisory activities during the Reporting
Period
□ Yes No
The Audit Committee raised no objections regarding its supervisory matters during the Reporting
Period.
VIII. Employees of the Company
Number of in-service employees of the Company at the end of
reporting period
Number of in-service employees of major subsidiaries at the
period-end
Total number of in-service employees 23,593
Total number of paid employees in the Reporting Period 23,593
Number of ex-employees or retired employees for which the
parent company and the major subsidiaries have obligations 0
(person)
professional structure
Category Number of professionals (person)
Production personnel 17,543
Sales 531
Technical 4,855
Financial 107
Administrative 557
Lu Thai Textile Co., Ltd. Annual Report 2025
Total 23,593
Educational level
Category of education level Number of people (person)
Doctorate 3
Master 99
Bachelor’s degree 1,469
College 3,982
High school and below 18,040
Total 23,593
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.
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 employee training plan is determined by carrying out researches on
training needs. And the training courses fall into four major categories, i.e. management, technical
skills, professional 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.
□ Applicable Not applicable
IX. Profit Distributions (in the Form of Cash and/or Stock)
Formulation, execution and adjustments of the profit distribution policies, especially the cash
dividend distribution policy, during the Reporting Period
□ Applicable Not applicable
Indicate by tick mark whether the Company fails to put forward a cash dividend proposal for
shareholders despite the facts that the Company has made profits in the Reporting Period and the
profits of the Company as the parent distributable to shareholders are positive.
□ Applicable Not applicable
Information on profit distribution and the conversion of capital reserves into the share capital during
the Reporting Period
Applicable □ Not applicable
Bonus shares for every ten shares (share) 0
Dividend for every 10 shares (RMB) (tax inclusive) 1.50
Total shares as the basis for the profit distribution proposal (share) 817,525,607
Cash dividends (RMB) (tax inclusive) 122,628,841.05
Cash dividends in other forms (such as repurchase of shares) (RMB) 0.00
Total cash dividends (including those in other forms) (RMB) 122,628,841.05
Distributable profit (RMB) 6,166,600,630.49
Total cash dividends (including those in other forms) as % of total profit
distribution
Cash dividend policy
Lu Thai Textile Co., Ltd. Annual Report 2025
If the Company is in a mature development stage and has plans for any significant expenditure, in profit allocation, the ratio of cash
dividends in the profit allocation shall be 40% or above.
Details about the proposal for profit distribution and converting capital reserve into share capital
Based on the total share capital of 817,525,607 shares as of the end of the convertible bond conversion period, a cash dividend of
RMB1.50(tax inclusive) per 10 shares will be distributed, resulting in a total cash dividend of RMB122,628,841.05. The personal
income tax for A Share shall be subject to related regulations under CS [2015] No. 101 Notice on Certain Question about the
Differentiated Personal Income Tax Policy for Cash Dividend of Listed Companies jointly issued by Ministry of Finance, State
Administration of Taxation (“SAT”), and China Securities Regulatory Commission. The personal income tax for B Share shall be
conversed to HKD based on the central parity rate on interbank exchange market released by the People's Bank of China on the first
working day following the annual shareholders' meeting (for domestic individual shareholders, tax is paid pursuant to CS [2015] No.
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). If the total share capital changes at the time this Equity Distribution Plan is implemented, the total share
capital as of the equity record date for the distribution shall prevail, and the per-share distribution amount shall remain unchanged.
X. Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures for
Employees
□ Applicable Not applicable
No such cases in the Reporting Period.
XI. The Establishment and Implementation of Internal Control System during the Reporting
Period
According to Fundamental Norms for Internal Control of Enterprises, Supporting Guidelines for
Internal Control of Enterprises and relevant provisions prescribed by securities regulators for the
internal control establishment of listed companies, combining the actual status of the Company’s
business, the Company established the internal control system that covers all stages including
production and management, as well as adapts to the Company’s management requirements and
development needs. It is relatively normative and complete, for which its organization is complete
and reasonably designed, its implementation is basically effective, and there is no substantial
omission, so as to ensure that the Company’s operation and management is legal and compliant, the
assets are safe, and the Financial Statements and related information are true and complete, and
maintain the fundamental interests of all shareholders of the Company.
Within Reporting Period, relevant systems and procedures were timely streamlined and optimized
and the sound operation of risk management and internal control system was ensured by the
Company in line with the change of all business procedures and audit results, without any violation
of laws, regulations or Articles of Association.
□ Yes No
XII. Management Control of Subsidiaries by the Company during the Reporting Period
Company Integration Integration Problems encountered in Solution
Measures taken Future plans
name plan progress integration progress
- - - - - - -
Abnormalities in the management and control of subsidiaries
□ Yes No
Lu Thai Textile Co., Ltd. Annual Report 2025
XIII. Internal Control Evaluation Report or Independent Auditor’s Report On Internal
Control
Full disclosure date of the internal control
April 17, 2026
evaluation report
For details, please refer to the Self-appraisal Report on Internal Control of Lu Thai
Index to the disclosed internal control self-
Textile Co., Ltd. simultaneously disclosed on www.cninfo.com.cn with the 2025
evaluation report
Annual Report of the Company.
Evaluated entities’ combined assets as %
of consolidated total assets
Evaluated entities’ combined operating
revenue as % of consolidated operating 84.78%
revenue
Identification standards for internal control weaknesses
Weaknesses in internal control not related
Category Financial Statements
to financial statements
Great defect: (1) seriously violated the
Great defect: (1) malpractices of the national laws and regulations; (2) the
Directors, Supervisors and Senior decision-making of the enterprise was not
Executives; (2) the CPA founded the scientific that led to the serious mistakes
current Financial Statements occurred of itself; (3) outflow of the management
significant misstatement while during the personnel or the technician personnel was
implementation process of the internal serious; (4) frequently appeared the
control could not founded the negative news from the Media; (5) the
misstatement; (3) the supervision of the significant business lacked of systematic
Audit Committee and the internal audit control or the systematic control was
institution of the Company on the internal invalid; (6) the result of the internal
control was invalid; (4) other defects that control assessment which was the great
may cause the Company to deviate defect event had not been revised.
significantly from its control objectives. Significant defeat: (1) violated the
Nature standard Significant defeat: (1) had not abide by the enterprise internal regulations that caused
generally accepted accounting principles rather serious losses; (2) significant
to choose and apply the accounting business lacked of systematic control; (3)
policies; had not built up the anti-fraud outflow of the rather important personnel
and significant counterbalance mechanism was serious; (4) the Media reported the
and control measures; (2) during the negative news that caused rather serious
Financial Statements process, there negative influence; (5) rather important
occurred single or multiple defects which business lacked of systematic control or
not reached the recognition standard of the the systematic control was invalid; (6) the
significant defeat but influenced the true results of the internal control assessment
and accurate target of the Financial which as the significant defect had not
Statements. General defect: other internal been revised. General defect: other
control defect which had not constructed internal control defect which had not
as the great defeat, significant defect. constructed as the great defeat, significant
defect.
Great defect: misstatement ≥ 0.4% of the
Great defect: losses ≥ 0.4% of the total
total operating revenue; misstatement ≥
operating revenue; losses ≥ 0.4% of the
total owners’ equities amount; losses ≥
misstatement ≥ 0.3% of the total assets
amount. Not insignificant: 0.2% of the
defect: 0.2% of the total operating revenue
total operating revenue; ≤ misstatement <
≤ losses < 0.4% of the total operating
revenue; 0.2% of the total owners’ equities
of the total owners’ equities amount ≤
Quantitative standard amount ≤ losses < 0.4% of the total
misstatement < 0.4% of the total owners’
owners’ equities amount; 0.15% of the
equities amount; 0.15% of the total assets
total assets amount ≤ losses < 0.3% of the
amount ≤ misstatement < 0.3% of the total
total assets amount. General defect: losses
assets amount. Insignificant: misstatement
<0.2% of the total operating revenue;
< 0.2% of the total operating revenue;
losses < 0.2% of the total owners’ equities
misstatement < 0.2% of the total owners’
amount; losses < 0.15% of the total assets
equities amount; misstatement < 0.15% of
amount.
the total assets amount.
Number of material weaknesses in internal
control over financial statement
Number of material weaknesses in internal 0
Lu Thai Textile Co., Ltd. Annual Report 2025
control not related to financial statements
Number of serious weaknesses in internal
control over financial statements
Number of serious weaknesses in internal
control not related to financial statements
Applicable □ Not applicable
Review Opinion in the Internal Control Independent Audit Report
To the shareholders of LU THAI TEXTILE CO., LTD.:
According to Audit Guidelines for Enterprise Internal Control and the relevant requirements of Auditing Standards for Chinese
Certified Public Accountants, we have audited the effectiveness of internal control in the Financial Statements of Lu Thai Textile
Co., Ltd. (Hereinafter referred to as Lu Thai Textile) by December 31, 2025.
I. Responsibilities of Lu Thai Textile for internal control
The Board of Directors of Lu Thai Textile is responsible for establishing, improving and implementation the internal controls and
evaluating its effectiveness in accordance with Fundamental Norms for Internal Control of Enterprises, Application Guidelines for
Enterprise Internal Control, Enterprise Internal Control Audit Guidelines.
II. Responsibilities of Certified Public Accountants
It is our responsibility to issue an audit opinion on the effectiveness of internal controls in Financial Statements on the basis of the
implementation of the audit, and to disclose significant deficiencies in the internal controls of non-Financial Statements that have
been noted.
III. Inherent Limitations of Internal Control
Internal control has inherent limitations, and there is a possibility that misreporting cannot be prevented. In addition, because the
change of circumstances may cause the internal control to become inappropriate or the degree of compliance with the control policies
and procedures is reduced, it is risky to infer the effectiveness of the future internal control based on the audit results of the internal
control.
IV. Audit Opinion on Internal Control in Financial Statements
We believe that Lu Thai Textile Co., Ltd. kept effectively internal control on Financial Statements in all respects according to
Fundamental Norms for Internal Control of Enterprises and the relevant provisions on December 31, 2025.
Disclosure of the internal control independent audit report Disclosure
Full disclosure date of the internal control independent audit
April 17, 2026
report
For details, please refer to the Independent Auditor’s Report on
Index to such report disclosed Internal Control on www.cninfo.com.cn at the same time of
disclosing the Company’s 2025 Annual Report.
Opinion type of the internal control independent audit report Standard unqualified opinion
Existence of major defects in non-financial statements Not
Does the accounting firm issue a non-standard opinion in the internal control independent audit
report?
□ Yes No
Does the accounting firm’s internal control independent audit report agree with the Board of
Directors’ self-assessment report?
Yes □ No
Did a non-standard audit opinion on internal control issued during the Reporting Period or the
previous year？
□ Yes No
XIV. Rectifications of Problems Identified by Self-Inspection in the Special Action for Listed
Company Governance
Not applicable.
XV. Environmental Information Disclosure
Whether the listed company and its major subsidiaries are included in the list of enterprises legally
required to disclose environmental information
Lu Thai Textile Co., Ltd. Annual Report 2025
Yes □ No
Number of enterprises included in the list of enterprises
legally required to disclose environmental information
No. Company Name Reference for Statutory Environmental Information Disclosure Report
Enterprise Environmental Information Legal Disclosure System
(http://221.214.62.226:8090/EnvironmentDisclosure/)
Enterprise Environmental Information Legal Disclosure System
(http://221.214.62.226:8090/EnvironmentDisclosure/)
Enterprise Environmental Information Legal Disclosure System
(http://221.214.62.226:8090/EnvironmentDisclosure/)
Enterprise Environmental Information Legal Disclosure System
(http://221.214.62.226:8090/EnvironmentDisclosure/)
The Company shall abide by relevant disclosure requirements of the Self-Regulatory Guidelines of
Shenzhen Stock Exchange for Listed Companies No.3 - Industry Information Disclosure on textile
and apparel industry.
Related environmental accidents information
No such cases for the Reporting Period.
XVI. Social Responsibility
For more details, please refer to the ESG Report 2025 simultaneously disclosed with the Annual
Report 2025.
XVII. Efforts in Poverty Alleviation and Rural Revitalization
Not applicable.
Lu Thai Textile Co., Ltd. Annual Report 2025
Part V Significant Events
I. Fulfilment of Commitments
and other parties related to the Company, which have been fulfilled during the Reporting
Period and those that have not been fulfilled by the end of the Reporting Period.
Applicable □ Not applicable
Commitment Commitment Commitment Commitment Performance
Promisor Commitment content
reason type date term status
operation and management beyond the
authority and not occupy the Company’s
interests;
commitment to the completion of the
implementation of the Company’s
public offering of A-share convertible
corporate bonds, if the China Securities
Regulatory Commission makes other
new regulatory provisions on remedial
Dilution of
measures for returns and the
at sight
commitment, and the above
returns on
Commitments Controlling commitment fails to meet the May 23,
public
made in time shareholder, requirements of the China Securities May 23, 2019 to
offering A- On-going
of IPO or actual Regulatory Commission, the company / 2019 April 8,
share
refinancing controller I promise to issue supplementary 2026
convertible
commitment then in accordance with the
corporate
latest regulations of China Securities
bonds
Regulatory Commission.
Company's relevant remedial measures
for returns and any commitment made
herein by the company / me. If the
company / I violate(s) such commitment
and cause(s) losses to the Company or
investors, the company / I will bear the
compensation responsibility to the
Company or investors in accordance
with the law.
benefits to other units or individuals free
of charge or under unfair conditions,
and no other ways damaging the
interests of the Company will be taken.
Damaging the interests of the Company
in any other manner;
Dilution of
management of the Company, and
at sight
accept the strict supervision and
Directors returns on
Commitments management of the Company to avoid May 23,
and senior public
made in time waste or excessive consumption. Any May 23, 2019 to
executives offering A- On-going
of IPO or position-related consumption behaviors 2019 April 8,
of the share
refinancing of me will occur within the scope 2026
Company convertible
necessary for the performance of my
corporate
duties;
bonds
Company’s assets to engage in
investment and consumption activities
unrelated to the performance of duties;
remuneration system developed by the
Board of Directors or the Remuneration
Committee is linked to the
Lu Thai Textile Co., Ltd. Annual Report 2025
implementation of the Company’s
remedial measures for returns;
conditions for exercising the Equity
Incentive Plan to be issued in the future
will be linked to the implementation of
the Company’s remedial measures for
returns;
commitment to the completion of the
implementation of the Company’s
public offering of A-share convertible
corporate bonds, if the China Securities
Regulatory Commission makes other
new regulatory provisions on remedial
measures for returns and the
commitment, and the above
commitment fails to meet the
requirements of the China Securities
Regulatory Commission, I promise to
issue supplementary commitment then
in accordance with the latest regulations
of China Securities Regulatory
Commission;
Company's relevant remedial measures
for returns and any commitment made
herein by me. If I violate such
commitment and causes losses to the
Company or investors, I will bear the
compensation responsibility to the
Company or investors in accordance
with the law.
Executed on
Yes
time or not
forecast period during the Reporting Period, the Company shall provide an explanation
regarding whether the asset or project has met the original profit forecast, along with the
reasons.
□ Applicable Not applicable
□ Applicable Not applicable
II. Occupation of the Company’s Capital by the Controlling Shareholder or Any of Its
Related Parties for Non-Operating Purposes
□ Applicable Not applicable
The Company has no non-operating funds occupied by controlling shareholders and other related
parties during the Reporting Period.
III. Irregularities in the Provision of Guarantees
□ Applicable Not applicable
The Company did not engage in any violations related to external guarantees during the Reporting
Period.
Lu Thai Textile Co., Ltd. Annual Report 2025
IV. Explanation of the Board of Directors on the Latest “Non-standard Audit Report”
□ Applicable Not applicable
V. Explanations Given by the Board of Directors, and the Independent Directors (If Any)
Regarding the Independent Auditor’s “Modified Opinion” on the Financial Statements of the
Reporting Period
□ Applicable Not applicable
VI. YoY Changes to Accounting Policies, Estimates or Correction of Material Accounting
Errors
□ Applicable Not applicable
During the Reporting Period, there were no changes in accounting policies, estimates, or corrections
of significant accounting errors.
VII. YoY Changes to the Scope of the Consolidated Financial Statements
Applicable □ Not applicable
During the year, the company deregistered its subsidiary Lu Thai (America) Textile Co., Ltd.
During the year, Lulian New Materials, a subsidiary of the company, established a new subsidiary,
Tianqin International Investment Co., Ltd.
VIII. Appointment and Dismissal of the Accounting Firm
Currently appointed accounting firms
Domestic accounting firm name Grant Thornton China (Special General Partnership)
The Company’s payment to the domestic independent auditor
(RMB’0,000)
How many consecutive years the domestic independent auditor
has provided audit service for the Company
Names of the certified public accountants from the domestic
Cui Xiaoli, Wei Qianting
independent auditor writing signatures on the auditor’s report
How many consecutive years the certified public accountants
have provided audit service for the Company
Indicate by tick mark whether the independent auditor was changed for the Reporting Period.
□ Yes No
Appointment of internal control auditing accounting firm, financial consultant or sponsor
Applicable □ Not applicable
The Company held the 2024 Annual General Meeting on May 7, 2025 and approved the Proposal
on Renewal Engagement of the 2025 Financial Audit and Internal Control Auditor and decided to
renew the contract with Grant Thornton China (Special General Partnership) for 2025 financial
audit and internal control affairs and paid RMB1,735,000 in total for 2024 Financial Statements
audit and the internal control audit.
IX. Risk of Delisting after Annual Report Disclosure
□ Applicable Not applicable
X. Insolvency and Reorganization
□ Applicable Not applicable
Lu Thai Textile Co., Ltd. Annual Report 2025
The Company has not experienced any insolvency and reorganization during the Reporting Period.
XI. Major Legal Matters
□ Applicable Not applicable
No such cases in the Reporting Period.
XII. Penalties and Remediation
□ Applicable Not applicable
There were no punishments and rectifications during the Reporting Period.
XIII. Integrity of the Company and its controlling shareholders and de facto controller
□ Applicable Not applicable
XIV. Major Related-Party Transactions
Management
□ Applicable Not applicable
No such cases in the Reporting Period.
□ Applicable Not applicable
The Company did not have any related party transactions in asset or share acquisitions or sales
during the Reporting Period.
□ Applicable Not applicable
The Company had no related party transaction Transactions Regarding Joint Investments in Third
Parties transactions regarding joint investments in third parties in the Reporting Period.
Applicable □ Not applicable
Whether there are credits and liabilities with related parties for non-operating purpose
□ Yes No
There were no credits and liabilities with related parties for non-operating purpose during the
Reporting Period.
□ Applicable Not applicable
There were no deposits, loans, credit extensions, or other financial services between the Company
and any financial company with related party relationships.
□ Applicable Not applicable
Lu Thai Textile Co., Ltd. Annual Report 2025
There were no deposits, loans, credit extensions, or other financial services between the Company’s
controlling financial company and related parties.
□ Applicable Not applicable
There were no other major related-party transactions during the Reporting Period.
XV. Major Contracts and Execution thereof
(1) Custody Matters
□ Applicable Not applicable
There were no custody matters during the Reporting Period.
(2) Contracting Matters
□ Applicable Not applicable
There were no contracting matters during the Reporting Period.
(3) Leases
□ Applicable Not applicable
No such cases in the Reporting Period.
Applicable □ Not applicable
Unit: RMB10,000
External guarantees of the Company and its subsidiaries (excluding guarantees to subsidiaries)
Guarantee
Guarantee
Actual Actual Counter for a
limit Guarantee Type of Collateral Guarantee Fulfilled
Obligor occurrence guarantee guarantee related
disclosure limit guarantee (if any) period (yes/no)
date amount (if any) party or
date
not
Guarantees to Subsidiaries by the Company
Guarantee
Guarantee
Actual Actual Counter for a
limit Guarantee Type of Collateral Guarantee Fulfilled
Obligor occurrence guarantee guarantee related
disclosure limit guarantee (if any) period (yes/no)
date amount (if any) party or
date
not
Three
years
since the
Joint and
Wholly- approval
July 1, June 30, several
owned 7,028.8 0 N/A N/A of the Not Yes
subsidiary Board of
guarantee
Directors
of the
Company
Total actual amount
Total approved line of
of such guarantees in
guarantee in the 0 0
the Reporting Period
Reporting Period (B1)
(B2)
Total approved line of Total actual balance
guarantee at the end of 7,028.8 of such guarantees at 0
the Reporting Period the end of the
Lu Thai Textile Co., Ltd. Annual Report 2025
(B3) Reporting Period (B4)
Guarantees provided between subsidiaries
Guarantee
Guarantee
Actual Actual Counter for a
limit Guarantee Type of Collateral Guarantee Fulfilled
Obligor occurrence guarantee Guarantee related
disclosure limit guarantee (if any) period (yes/no)
date amount (if any) party or
date
not
Three
years
since the
Joint and
Wholly- approval
July 9, July 6, several
owned 24,600.8 2,783.73 N/A N/A of the Not Yes
subsidiary Board of
guarantee
Directors
of the
Company
Three
years
since the
Joint and
Wholly- approval
August August 28, several
owned 21,086.4 10,363.7 N/A N/A of the Not Yes
subsidiary Board of
guarantee
Directors
of the
Company
Total actual amount
Total approved line of
of such guarantees in
guarantee in the 0 13,003.59
the Reporting Period
Reporting Period (C1)
(C2)
Total approved line for Total actual balance
such guarantees at the of such guarantees at
end of the Reporting the end of the
Period (C3) Reporting Period (C4)
Total Guarantee Amount of the Company (i.e., Sum of the First Three Items Above)
Total approved line of Total actual guarantee
guarantee in the amount in the
Reporting Period Reporting Period
(A1+B1+C1) (A2+B2+C2)
Total approved Total actual guarantee
guarantee line at the balance at the end of
end of the Reporting the Reporting Period
Period (A3+B3+C3) (A4+B4+C4)
Total guarantee balance (A4+B4+C4) as % of
the Company’s net assets
Including:
Balance of guarantees provided for shareholders,
de facto controller and their related parties (D)
Balance of debt guarantees provided directly or
indirectly for obligors with an over 70% asset- 0
liability ratio (E)
Amount by which the total guarantee amount
exceeds 50% of the Company’s net assets (F)
Total of the three amounts above (D+E+F) 0
Compound guarantees:
N/A
The Company shall abide by relevant disclosure requirements of the Self-Regulatory Guidelines of
Shenzhen Stock Exchange for Listed Companies No.3 - Industry Information Disclosure on textile
and apparel industry.
Whether the Company provides guarantees or financial assistance for dealers
□ Yes No
Lu Thai Textile Co., Ltd. Annual Report 2025
(1) Entrusted Financial Management Situation
Applicable □ Not applicable
Overview of entrusted financial management during the Reporting Period:
Unit: RMB10,000
Balance of entrusted financial
Product category Risk characteristics management during the Overdue amount (RMB)
Reporting Period
Bank wealth management
Low risk, capital-preserving 66,000 0
products
Others Low risk, capital-preserving 300 0
Private equity fund products R5 40,000 0
Circumstances where the Company acts as the sole entrustor and entrusts financial institutions to
manage assets, or where investments are made in high-risk entrusted wealth management products
with low security and poor liquidity
Applicable □ Not applicable
Unit: RMB10,000
Amount Actual
of Actual Recovery
Type of Overview of
Name of Profit or of Profit
Trustee Direction Matters and
Trustee Risk Product Operating Start End Loss or Loss
Institution of Capital Index of Related
Institution Characteristics Type revenue Date Date during during
(or Investment Inquiries (If
(or Trustee) the the
Trustee) Any)
Reporting Reporting
Period Period
As approved by
the 32nd
meeting of the
Ninth Board of
Directors and
the 5th meeting
of the Tenth
Board of
Directors, the
Company made
cumulative
investments of
RMB400
million in the
Beijing
Private Privately Source Hui
Yuanhui April April
equity offered Dividend No. 2
Investment R5 40,000 11, 10, Other 918.01 0
fund security Open-Ended
Management 2022 2037
manager fund Private
Co., Ltd.
Securities
Investment Fund
(contractual
type). For
details, please
refer to the
Announcement
of Lu Thai
Textile Co., Ltd.
on the
Subscription of
Private
Securities
Investment Fund
Lu Thai Textile Co., Ltd. Annual Report 2025
Units disclosed
on
cninfo.com.cn
on 29 April
February 2023
(announcement
numbers: 2022-
Total 40,000 -- -- -- 918.01 -- --
(2) Entrusted Loan Situation
□ Applicable Not applicable
There were no entrusted loans during the Reporting Period
□ Applicable Not applicable
The Company did not have any other major contracts during the Reporting Period.
XVI. Use of Raised Funds
□ Applicable Not applicable
No such cases in the Reporting Period.
XVII. Other Significant Events
□ Applicable Not applicable
The Company had no other significant events to be stated during the Reporting Period.
XVIII. Significant Events of Subsidiaries
□ Applicable Not applicable
Lu Thai Textile Co., Ltd. Annual Report 2025
Part VI Share Changes and Shareholder Information
I. Share Changes
Unit: share
Before change Change (increase, decrease) After change
Shares as
New dividend
Capitalization
Quantity Proportion shares converted Other Subtotal Quantity Proportion
of reserves
issued from
profit
I. Restricted - -
shares 550,100 550,100
State
state-owned legal
person
- -
other domestic 2,660,892 0.33% 2,110,792 0.26%
investors
Among which:
Shares held by
domestic legal
person
Shares held by
- -
domestic natural 2,660,892 0.33% 2,110,792 0.26%
person
other foreign
investors
Among which:
Shares held by
foreign legal
person
Shares held by
foreign natural
person
II. Unrestricted
shares
shares
listed foreign 226,068,515 27.66% 9,825 9,825 226,078,340 27.66%
shares
foreign shares
III. Total shares 817,306,010 100.00% 910 910 817,306,920 100.00%
Reasons for share changes
Applicable □ Not applicable
a) Due to the fact that the Company had issued convertible A-share bonds on April 09, 2020,
convertible bonds were converted to 910 shares in the period from the beginning of 2025 to
December 31, 2025.
b) The shares held by the directors, supervisors and senior executives shall be adjusted in
accordance with relevant regulations on senior executives share management.
Approval of share changes:
Lu Thai Textile Co., Ltd. Annual Report 2025
□ Applicable Not applicable
Transfer of share ownership:
□ Applicable Not applicable
Effects of share changes on the EPS-basic and EPS-diluted, equity per share attributable to the
Company’s ordinary shareholders and other financial indicators of the prior year and the prior fiscal
year, respectively:
Applicable □ Not applicable
See relevant contents of “VI Key financial information” under “Part II Corporate Information and
Key Financial Information”.
Other necessary disclosures as required by the Company or securities regulatory authorities
□ Applicable Not applicable
Applicable □ Not applicable
Unit: share
Restricted
Opening New restricted shares Closing
Name of the Restricted
restricted shares in the released in restricted Release Date
shareholders reasons
shares current period the current shares
period
Senior
executives Follow the regulations on
Liu Zibin 111,217 111,217
lock-up executive share management
shares
Senior
executives Follow the regulations on
Zhang Zhanqi 435,225 435,225
lock-up executive share management
shares
Senior
executives Follow the regulations on
Zhang Keming 283,275 283,275
lock-up executive share management
shares
Senior
executives Follow the regulations on
Du Lixin 187,500 187,500
lock-up executive share management
shares
Senior
executives Follow the regulations on
Shang Chenggang 247,500 247,500
lock-up executive share management
shares
Senior
executives Follow the regulations on
Yu Shouzheng 287,325 287,325
lock-up executive share management
shares
Senior
executives Follow the regulations on
Guo Heng 225,000 225,000
lock-up executive share management
shares
Senior
executives Follow the regulations on
Lyu Wenquan 150,000 150,000
lock-up executive share management
shares
Senior
Follow the regulations on
Xu Feng 142,500 142,500 executives
executive share management
lock-up
Lu Thai Textile Co., Ltd. Annual Report 2025
shares
Senior
executives Follow the regulations on
Zheng Weiyin 30,000 30,000
lock-up executive share management
shares
Senior
Other restricted executives Follow the regulations on
shareholders lock-up executive share management
shares
Total 2,660,892 0 550,100 2,110,792 -- --
II. Issuance and Listing of Securities
□ Applicable Not applicable
Company’s Asset and Liability Structure
Applicable □ Not applicable
Changes during the current
Beginning of the year (shares) End of the year (shares)
period (shares)
Total shares 817,306,010 910 817,306,920
Including: A shares 591,180,045 910 591,180,955
B shares 226,125,965 0 226,125,965
Luthai convertible bonds were cumulatively converted into 910 A shares from January 1, 2025 to
December 31, 2025, with no material impact on the Company's asset and liability structure.
□ Applicable Not applicable
III. Shareholders and Actual Controller
Unit: share
Total
number of
Number of
preference
Total number ordinary Number of preferred
shareholders
of ordinary shareholders shareholders with resumed
with
shareholders at at the month- voting rights at the month-
the end of the end prior to end prior to the disclosure
voting rights
Reporting the of this Report (If Any) (See
at the
Period disclosure of Note 8)
period-end
this Report
(if any) (see
Note 8)
Shareholding of Shareholders Holding More Than 5% or the Top Ten Shareholders (Excluding Shares Lent via Stock Borrowing and
Lending)
Number of Pledged, marked, or frozen
Changes in Shares Shares with
shares held status
Shareholding shareholding with no
Name of the Shareholder at the end of
percentage during the limited circulation
shareholders type the
(%) Reporting circulation restrictions Share status Quantity
Reporting
Period held held
Period
Domestic
Zibo Lucheng
non-state-
Textile
owned 17.17% 140,353,583 0 0 140,353,583 N/A 0
Investment Co.,
legal
Ltd.
person
Lu Thai Textile Co., Ltd. Annual Report 2025
Tailun
Foreign
(Thailand)
legal 14.10% 115,232,400 0 0 115,232,400 N/A 0
Textile Co.,
person
Ltd.
Central Huijin State-
Asset owned
Management legal
Ltd. person
National Social
Security Fund Other 1.94% 15,870,051 960,000 0 15,870,051 N/A 0
Portfolio 413
Domestic
Yang Sanbao natural 1.35% 11,019,300 11,019,300 0 11,019,300 N/A 0
person
Domestic
Wu Yijun natural 0.91% 7,418,898 7,418,898 0 7,418,898 N/A 0
person
FEDERATED
HERMES
GLOBAL
INVESTMENT
FD
(CAYMAN) Foreign
MASTER, SPC legal 0.74% 6,024,131 -310,580 0 6,024,131 N/A 0
OBOAFTAO person
FEDERATED
HERMES
EMG ASIA
EQUITY FD
MASTER S.P.
ICBC Credit
Suisse
Innovation
Power Stock Other 0.63% 5,160,000 -6,840,000 0 5,160,000 N/A 0
Type Securities
Investment
Fund
Domestic
Yang Hua natural 0.54% 4,435,000 520,400 0 4,435,000 N/A 0
person
Domestic
Hao Jing natural 0.53% 4,335,000 0 0 4,335,000 N/A 0
person
Strategic investors or general
corporations becoming top-
ten shareholders due to N/A.
placing of new shares (if any)
(see Note 3)
Zibo Lucheng Textile Investment Co., Ltd. is the largest shareholder of the Company and the actual
Related or acting-in-concert controller. Tailun (Thailand) Textile Co., Ltd. is the second largest shareholder as well as sponsor of
parties among the foreign capital of the Company. All of other shareholders are people holding public A share or public B
shareholders above share and the Company is not able to confirm whether there is associated relationship or concerted
action among other shareholders.
Explain if any of the
shareholders above was
involved in entrusting/being N/A.
entrusted with voting rights or
waiving voting rights
Special account for share
repurchases (if any) among
N/A.
the top ten shareholders (see
Note 10)
Shareholdings of the top ten non-restricted shareholders(exclusive of shares lent in refinancing and senior executives lock-up shares)
Number of shares with no circulation restrictions at the end of the Share type
Name of the shareholders
Reporting Period Share Type Quantity
Zibo Lucheng Textile RMB
Investment Co., Ltd. ordinary
Lu Thai Textile Co., Ltd. Annual Report 2025
share
Domestically
Tailun (Thailand) Textile Co.,
Ltd.
shares
RMB
Central Huijin Asset
Management Ltd.
share
RMB
National Social Security Fund
Portfolio 413
share
RMB
Yang Sanbao 11,019,300 ordinary 11,019,300
share
RMB
Wu Yijun 7,418,898 ordinary 7,418,898
share
FEDERATED HERMES
GLOBAL INVESTMENT
FD (CAYMAN) MASTER, Domestically
SPC OBOAFTAO 6,024,131 listed foreign 6,024,131
FEDERATED HERMES shares
EMG ASIA EQUITY FD
MASTER S.P.
ICBC Credit Suisse RMB
Innovation Power Stock Type 5,160,000 ordinary 5,160,000
Securities Investment Fund share
RMB
Yang Hua 4,435,000 ordinary 4,435,000
share
RMB
Hao Jing 4,335,000 ordinary 4,335,000
share
Related or acting-in-concert
parties among top ten Zibo Lucheng Textile Investment Co., Ltd. is the largest shareholder of the Company and the actual
unrestricted public controller. Tailun (Thailand) Textile Co., Ltd. is the second largest shareholder as well as sponsor of
shareholders, as well as foreign capital of the Company. All of other shareholders are people holding public A share or public B
between top ten unrestricted share and the Company is not able to confirm whether there is associated relationship or concerted
public shareholders and top action among other shareholders.
ten shareholders
Particular about shareholder
participate in the securities
N/A.
lending and borrowing
business (if any) (Note 4)
refinancing shares lending
□ Applicable Not applicable
Changes occurred in the top ten shareholders and the top ten shareholders of unrestricted tradable
shares compared with the previous period due to shares loan through refinancing/return
□ Applicable Not applicable
The Company’s top ten ordinary shareholders and top ten shareholders with no circulation
restrictions engaged in repurchase transactions during the Reporting Period or not
□ Yes No
The Company’s top ten ordinary shareholders and top ten shareholders with no circulation
restrictions did not engage in repurchase transactions during the Reporting Period
Controlling shareholder nature: Individual shareholder
Lu Thai Textile Co., Ltd. Annual Report 2025
Type of the controlling shareholder: Legal person
Legal
Name of controlling Date of Unified social credit
representative/person Principal activity
shareholder establishment code
in charge
Investment on textile, electricity
Zibo Lucheng Textile and chemical; purchase, process
Liu Deming September 25, 1998 91370303164200391J
Investment Co., Ltd. and sale of cotton; retail service
etc.
Particulars about
shareholding of
controlling shareholders
controlling and holding N/A.
shares of other listed
companies during the
Reporting Period
Changes in the controlling shareholder during the Reporting Period
□ Applicable Not applicable
There were no changes in the controlling shareholder during the Reporting Period
de facto controller type: Domestic individual
de facto controller type: Individual
Name of the De facto Obtained residency rights in other
Relationship with de facto controller Nationality
controller countries or regions
Liu Zibin Himself China Not
Concerted action (including agreement,
Liu Deming China Not
relatives, and same control)
Main occupation and Liu Zibin is the Chairman of the Board and President of Lu Thai Textile Co., Ltd. , Liu Deming is the
position Chairman of the Board and GM of Zibo Lucheng Textile Investment Co., Ltd.
Domestic and foreign
listed companies
controlled by the actual N/A
controller in the last ten
years
Changes in the de facto controller during the Reporting Period
□ Applicable Not applicable
The de facto controller did not change during the Reporting Period.
Property rights and control relationship diagram between the Company and the de facto controller
Liu Zibin Liu Deming
Zibo Lucheng Textile Investment Co., Ltd.
Lu Thai Textile Co., Ltd.
The de facto controller controls the Company through trusts or other asset management methods
Lu Thai Textile Co., Ltd. Annual Report 2025
□ Applicable Not applicable
have pledged shares amounting to 80% of their holdings in the Company
□ Applicable Not applicable
□ Applicable Not applicable
controllers, restructuring parties, and other subject of commitment
□ Applicable Not applicable
IV. Specific Implementation of Share Repurchase During the Reporting Period
Progress on the implementation of the share repurchase
□ Applicable Not applicable
Progress of implementation on reducing the holding of repurchase of shares through call auction
□ Applicable Not applicable
V. Preference Shares Information
□ Applicable Not applicable
There were no preferred shares during the Reporting Period.
Lu Thai Textile Co., Ltd. Annual Report 2025
Part VII Bonds
Applicable □ Not applicable
I Enterprise Bonds
□ Applicable Not applicable
No enterprise bonds in the Reporting Period.
II Corporate Bonds
□ Applicable Not applicable
No corporate bonds in the Reporting Period.
III Debt Financing Instruments of Non-financial Enterprises
□ Applicable Not applicable
No such cases in the Reporting Period.
IV Convertible Corporate Bonds
Applicable □ Not applicable
Pursuant to the approval document titled the Approval of the Public Issue of Convertible Corporate
Bonds of Lu Thai Textile Co., Ltd. (ZH.J.X.K. [2020] No. 299) issued by the China Securities
Regulatory Commission, the Company publicly issued 14 million convertible corporate bonds on
April 9, 2020, each with a par value of RMB100, with a total issuance amount of RMB1.4 billion.
Period
Public Offering of A-Share Convertible Corporate Bonds of Lu Thai Textile
Name of convertible bonds
Co., Ltd. in 2020
Number of holders at the end of the Reporting
Period
Guarantor of the Company's convertible bonds N/A
Significant changes in profitability, assets
N/A
condition and credit status of guarantors
Top ten convertible bond holders are as follows:
Number of Amount of
As % of convertible
Nature of convertible bonds convertible bonds
No. Name of holders bonds held at the
holders held at the period- held at the period-
period-end
end (share) end (RMB)
China Merchants Bank Co., Ltd. – Bosera
Bonds ETF
Bank of China Co., Ltd.- Invesco Great
Bond Securities Investment Fund
Fuguo Fuyi Jinqu Fixed Income Pension
of China Limited
State-owned
legal person
Industrial and Commercial Bank of China
Limited - China Universal Prosperous
Enhanced Bond Initiated Securities
Investment Fund
Lu Thai Textile Co., Ltd. Annual Report 2025
Huatai Yousheng Convertible Bond Fixed
Merchants Bank Co., Ltd.
State-owned
legal person
Lian Life Insurance Co., Ltd. - E Finance
Type)
Basic Endowment Insurance Fund
(Portfolio 101)
Applicable □ Not applicable
Unit: RMB
Increase/Decrease of the change
Name of convertible bonds Before change After change
into shares Redeemed Resold
Public Offering of A-Share
Convertible Corporate Bonds of Lu 1,399,844,700.00 7,700.00 1,399,837,000.00
Thai Textile Co., Ltd. in 2020
Applicable □ Not applicable
Converted
shares
as % of
total shares
Accumulative Accumulative Unconverted
Name of Total issued by
Start Total amount amount shares Unconverted amount as %
convertible circulation the
date (RMB) converted converted Amount (RMB) of total
bonds (piece) Company
(RMB) (share) amount
before the
start date
of
conversion
Public
Offering of
A-Share From
Convertible October
Corporate 15, 2020 14,000,000 1,400,000,000.00 160,000.00 18,055 0.00% 1,399,837,000.00 99.99%
Bonds of Lu to April
Thai Textile 8, 2026
Co., Ltd. in
Adjustment Latest price as at
Adjusted
Name of convertible date of Disclosure Notes on adjustment of conversion the end of the
conversion
bonds conversion time price Reporting Period
price (RMB)
price (RMB)
Public Offering of A-
Share Convertible The Company implemented the
July 2,
Corporate Bonds of Lu July 9, 2020 8.91 2019 Equity Distribution Plan on
Thai Textile Co., Ltd. in July 9, 2020.
Public Offering of A-
The Company implemented the 8.39
Share Convertible
June 4, initial grant of the 2021 restricted
Corporate Bonds of Lu June 7, 2021 8.76
Thai Textile Co., Ltd. in
listing date set for June 7, 2021.
Public Offering of A- June 10, The Company implemented the
June 18, 2021 8.71
Share Convertible 2021 2020 Equity Distribution Plan on
Lu Thai Textile Co., Ltd. Annual Report 2025
Corporate Bonds of Lu June 18, 2021.
Thai Textile Co., Ltd. in
Public Offering of A- The Company implemented the
Share Convertible grant of reserved shares under the
March 22, March 18,
Corporate Bonds of Lu 8.68 2021 restricted stock incentive
Thai Textile Co., Ltd. in scheme, with the listing date set for
Public Offering of A-
Share Convertible The Company implemented the
June 16,
Corporate Bonds of Lu June 23, 2022 8.61 2021 Equity Distribution Plan on
Thai Textile Co., Ltd. in June 23, 2022.
Public Offering of A-
The Company completed the
Share Convertible
May 26, formalities for cancellation of the
Corporate Bonds of Lu May 26, 2023 8.73
Thai Textile Co., Ltd. in
on May 25, 2023.
Public Offering of A-
Share Convertible The Company implemented the
June 9,
Corporate Bonds of Lu June 16, 2023 8.63 2022 Equity Distribution Plan on
Thai Textile Co., Ltd. in June 16, 2023.
Public Offering of A-
The Company completed the
Share Convertible
March 2, formalities for cancellation of the
Corporate Bonds of Lu March 4, 2024 8.87
Thai Textile Co., Ltd. in
on March 1, 2024.
Public Offering of A-
Share Convertible The Company implemented the
June 12,
Corporate Bonds of Lu June 19, 2024 8.74 2023 Equity Distribution Plan on
Thai Textile Co., Ltd. in June 19, 2024.
Public Offering of A-
Share Convertible The Company implemented the
November 8, November
Corporate Bonds of Lu 8.64 2024 Interim Equity Distribution
Thai Textile Co., Ltd. in Plan on November 8, 2024.
Public Offering of A-
Share Convertible The Company implemented the
December 19, December
Corporate Bonds of Lu 8.59 2024 Q3 Equity Distribution Plan
Thai Textile Co., Ltd. in on December 19, 2024.
Public Offering of A-
Share Convertible The Company implemented the
June 13,
Corporate Bonds of Lu June 20, 2025 8.49 2024 Equity Distribution Plan on
Thai Textile Co., Ltd. in June 20, 2025.
Public Offering of A-
Share Convertible The Company implemented the
October 23, October 16,
Corporate Bonds of Lu 8.39 2025 Interim Equity Distribution
Thai Textile Co., Ltd. in Plan on October 23, 2025.
debts in future years
For the relevant indicators, please refer to the Part VII Bonds - VIII The major accounting data and
the Key Financial Information of the Recent Two Years of the Company up the Period-end.
The credit rating of the Company’s convertible bonds for the Reporting Period is AA+, which has
not changed compared with that of the same period of last year.
The Company maintains stable operations with ample cash flow, and has made arrangements for the
potential future redemption of the principal and interest of its convertible corporate bonds.
Lu Thai Textile Co., Ltd. Annual Report 2025
V. Losses of Scope of Consolidated Financial Statements during the Reporting Period
Exceeding 10% of Net Assets up the Period-end of Last Year
□ Applicable Not applicable
VI. Matured Interest-bearing Debt excluding Bonds up the Period-end
□ Applicable Not applicable
VII. Violations of Regulations and Rules During the Reporting Period
□ Yes No
VIII. The Key Financial Information of the Recent Two Years of the Company up the Period-
end
Unit: RMB10,000
Item December 31, 2025 December 31, 2024 Change (%)
Current ratio 1.99 3.39 -41.30%
Asset-liability ratio 28.19% 29.49% -1.30%
Quick ratio 1.36 2.25 -39.56%
Net profit after deducting
exceptional gains and losses
Debt/EBITDA ratio 47.60% 39.11% 8.49%
Interest cover (times) 8.20 5.55 47.75%
Cash-to-interest cover (times) 8.38 12.45 -32.69%
EBITDA interest cover (times) 13.63 10.58 28.83%
Rate of redemption 100.00% 100.00%
Interest coverage 100.00% 100.00%
Lu Thai Textile Co., Ltd. Annual Report 2025
Part VIII Financial Statements
I. Independent Auditor’s Report
Type of the audit opinion Standard unreserved opinion
Signing date of the independent auditor’s report April 15, 2026
Name of the independent auditor Grant Thornton China (Special General Partnership)
No. of independent auditor’s report Grant Thornton SZ (2026) No. 371A011891
Name of the certified public accountants Cui Xiaoli, Wei Qianting
Text of the Independent Auditor’s Report
To the shareholders of Lu Thai Textile Co., Ltd.:
I. Audit Opinion
We have audited the financial statements of Lu Thai Textile Co., Ltd. (hereinafter referred to as the
“Company”), which comprise the consolidated and parent company balance sheets as of December
owners’ equity for the year then ended, as well as the notes to the financial statements.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
consolidated and parent company financial position of the Company at December 31, 2025, and the
consolidated and parent company operating results and cash flows for the year then ended, in
conformity with the Accounting Standards for Business Enterprises.
II Basis for Opinion
We conducted our audits in accordance with the Audit Standards for Chinese CPA. Our
responsibilities under those standards are further described in the “Auditor’s Responsibilities for
Audit of Financial Statements” section of our independent auditor’s report. In accordance with the
Code of Ethics for Chinese CPA and the independence requirements for audits of public interest
entities under the Independence Standards for Chinese CPA(where applicable), we are independent
of Lu Thai Textile Co., Ltd. and have fulfilled our other professional ethics responsibilities. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
III Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the current period. These matters were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters.
i. Recognition of revenue
For details, please refer to the Note III-27 and the Note V-44 of the financial statements.
The main businesses of Lu Thai Textile Co., Ltd. mainly are production and sales of yarn-dyed
fabrics and shirts. The operating revenue of the Company in 2025 was RMB5,904,308,700, of
which export income accounted for over 50%. For the income from domestic sales, the amount of
product sales income is recognized when the products are delivered to and confirmed by the
purchaser according to the contract. The income is recognized when the purchaser obtains control
of the product. For the income from export sales, the amount of sales income is recognized when
Lu Thai Textile Co., Ltd. Annual Report 2025
products are declared and depart from port according to the contract, and the bill of lading is
received. The income is recognized when the purchaser obtains control of the product.
Since income is one of the key performance indicators of Lu Thai Textile Co., Ltd., there is an
inherent risk that the management of Lu Thai Textile Co., Ltd. (hereinafter referred to as the
management) manipulates income to achieve specific goals or expectations, therefore, we identify
income recognition as a key audit matter.
(1) Understand and evaluate the design effectiveness of internal control related to revenue
recognition, and test the effectiveness of operation;
(2) Through interviewing the management and reviewing the relevant contract terms, understand
and evaluate whether the income confirmation accounting policy meets the requirements of the
Accounting Standards for Business Enterprises;
(3) Perform analytical procedures on revenue and costs to analyze the rationality of fluctuations in
sales volume, unit price, and gross profit in each month, current year, and previous year of the
current period;
(4) Select samples to check the supporting evidence such as sales contract, product delivery order,
invoice, customs declaration, lading bill, and signing receipt;
(5) Select samples to verify the balance and transaction amount;
(6) Select samples to verify the amounts related to export sales revenue, export tax refund
declarations, and China E-Port export data, among other relevant information;
(7) Select samples to perform a cut-off test on the revenue recognized before and after the balance
sheet date, and check the product delivery slip, invoice, customs declaration, lading bill, signing
receipt, etc., to assess whether the revenue is recognized within the appropriate period.
ii. Inventory falling price reserves
For details, please refer to the Note III-13 and the Note V-8 of the Financial Statements.
As at December 31, 2025, the inventory balance of Lu Thai Textile Co., Ltd. was
RMB2,349,009,300 and the inventory depreciation reserve was RMB241,709,300. The
management withdrew the inventory falling price reserves with significant judgments and estimates,
and therefore, we identify inventory falling price reserves as a key audit matter.
(1) Understand and evaluate the design effectiveness of the internal control related to the provision
of inventory decline price, and test the effectiveness of operation;
(2) Understand and evaluate the appropriateness of the company's inventory depreciation reserve
provision policy;
(3) Monitor the inventory and pay attention to the status of the inventory, check whether the
defective and inventory with long aging have been identified;
(4) Obtain the inventory age table, and conduct an analytical review of the long-age inventory status
and turnover;
Lu Thai Textile Co., Ltd. Annual Report 2025
(5) Check the changes in the inventory depreciation reserves accrued in previous years and evaluate
the rationality of the changes in inventory depreciation reserves;
(6) Obtain the inventory falling price reserves calculation sheet; recheck and evaluate the rationality
of major estimations made by the management during the determination of net realizable value;
conduct the recalculation, check the selling price after the period and analyze the rationality of the
predicted selling price.
iii. Assessment of fair value of financial assets measured at fair value and changes included in
current profit or loss
Please refer to Notes to Financial Statements (Note III-11 and Note V-2, 12 and 52) for details
about relevant information disclosure.
As of December 31, 2025, Lu Thai Textile Co., Ltd. held financial assets measured at fair value
through profit or loss with a total balance of RMB1,182,427,600. Of these, financial assets
classified as Level 2 inputs (based on observable inputs) had a fair value of RMB1,094,067,600,
and financial assets classified as Level 3 inputs (based on unobservable inputs) had a fair value of
RMB88,360,000. Considering that the fair value changes of this financial asset have a significant
impact on Lu Thai Textile Company’s profit or loss for 2025, and that the company uses valuation
techniques to determine its fair value, which typically involves assumptions and estimates relying
on subjective judgment, the use of different valuation techniques or assumptions could result in
significant differences in the fair value estimation of the financial instrument. Therefore, we
identify this matter as a key audit matter.
The audit procedures for the assessment of financial instrument’s fair value mainly include:
(1) Study and evaluate the effectiveness of the designed internal control for the valuation of
financial instruments and test the operational effectiveness;
(2) Assess the professional quality, competence and objectiveness of the independent appraiser
employed by the Company’s management; evaluate the rationality of various assumptions applied
by the independent appraiser in the evaluation report and the appropriateness of the financial
instrument valuation models;
(3) Assess the rationality and appropriateness of the observable key input value applied during the
valuation of the tier-2 fair value;
(4) Recheck the rationality, appropriateness and calculation accuracy of the key input value during
the fair value assessment for the tier-3 financial instrument measured based the fair value and
involving the management’s major judgment.
IV. Other Information
The Company’s management is responsible for the other information. The other information
comprises all of the information included in the Company’s 2025 Annual Report other than the
financial statements and our independent auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with
Lu Thai Textile Co., Ltd. Annual Report 2025
the financial statements or our knowledge obtained in the audit or otherwise appears to be
materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of the
other information, we are required to report that fact. We have nothing to report in this regard.
V. Responsibilities of Management and Those Charged with Governance for Financial
Statements
The Company’s management is responsible for the preparation of the financial statements that give
a fair view in accordance with Accounting Standards for Business Enterprises, and for designing,
implementing and maintaining such internal control as the management determines is necessary to
enable the preparation of financial statements that are free from material misstatement, whether due
to fraud or error.
In preparing the financial statements, the management is responsible for assessing the Company’s
ability to continue as a going-concern, disclosing, as applicable, matters related to going-concern
and using the going-concern basis of accounting unless the management either intends to liquidate
the Company or to cease operations, or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial statements
process.
VI. Auditor’s Responsibilities for Audit of Financial Statements
Our objectives are to obtain reasonable assurance about whether these financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an
independent Auditor’s Report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with CSAs will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with the Auditing Standards, we exercise professional judgment
and maintain professional skepticism throughout the audit. At the same time, We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Management.
(4) Conclude on the appropriateness of the Management's application of the going-concern
assumption. Meanwhile, draw a conclusion of the matters that might produce major doubts about
the ability of Lu Thai Textile Company to continue as a going-concern, and judge whether there are
major uncertainties, according to the audit evidence obtained. If we conclude that a material
uncertainty exists, we are required to draw attention in our independent auditor’s report to the
related disclosures in these financial statements or; and if such disclosures are inadequate, we shall
Lu Thai Textile Co., Ltd. Annual Report 2025
express non-unqualified opinions. Our conclusions are based on the audit evidence obtained up to
the date of our independent auditor’s report. However, future events or conditions may cause the
Company to cease to continue as a going-concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, and whether
the financial statements represent the underlying transactions and events in a manner that achieves
fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Company to express an opinion on the financial statements. We are
responsible for the direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion.
We communicate with those charged with the governance members regarding, among other matters,
the planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We have also provided those charged with the governance members with a statement on observing
the professional ethics related to independence, and communicated with those charged with
governance on all the relationships and other matters that might be reasonably deemed to affect our
independence, and relevant preventative measures (if applicable).
From the matters communicated with those charged with the governance members, we determine
those matters that were of most significance in the audit of the financial statements of the current
period and are therefore the key audit matters. We describe these matters in our Independent
Auditor’s Report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in our audit
report because the adverse consequences of doing so would reasonably be expected to outweigh the
public interest benefits of such communication.
Chinese CPA:
(Engagement Partner):
Grant Thornton China
(Special General Partnership)
Chinese CPA:
Beijing · China April 15, 2026
II Financial Statements
Currency unit for the financial statements and the notes thereto: RMB
Prepared by Lu Thai Textile Co., Ltd.
December 31, 2025
Unit: RMB
Item Ending balance Balance at the beginning of the period
Current assets:
Monetary assets 2,396,851,459.72 2,055,856,788.37
Held-for-trading financial assets 1,094,067,591.31 693,972,672.64
Derivative financial assets
Notes receivable 37,500,667.56 51,339,990.35
Lu Thai Textile Co., Ltd. Annual Report 2025
Accounts receivable 889,743,214.62 849,168,539.27
Receivables financing 10,335,302.96 10,184,900.59
Prepayments 70,233,122.96 94,340,345.68
Other receivables 35,452,183.40 23,107,489.38
Including: Interest receivable
Dividend receivable 1,267,187.27
Financial assets held under resale
agreements
Inventories 2,107,300,004.83 2,019,884,406.30
Including: Data resources
Contract assets
Available-for-sale assets
Current portion of non-current assets 154,176,585.64
Other current assets 17,765,080.24 59,034,547.73
Total current assets 6,659,248,627.60 6,011,066,265.95
Non-current assets:
Long-term receivables
Long-term equity investments 99,877,917.52 120,084,271.29
Investments in other equity instruments
Other non-current financial assets 88,360,000.00 82,800,000.00
Investment property 17,772,891.33 18,675,533.63
Fixed assets 5,705,325,739.27 6,053,755,987.08
Construction in progress 90,157,178.55 95,026,709.37
Right-of-use assets 437,366,025.27 470,238,928.19
Intangible assets 322,548,576.08 333,384,747.50
Including: Data resources
Development expenses
Including: Data resources
Goodwill 20,563,803.29 20,563,803.29
Long-term deferred expenses 2,966,740.84 5,634,560.27
Deferred income tax assets 147,571,150.02 148,530,519.94
Other non-current assets 515,004,250.30 569,954,322.70
Total non-current assets 7,447,514,272.47 7,918,649,383.26
Total assets 14,106,762,900.07 13,929,715,649.21
Current liabilities:
Short-term loan 652,836,872.89 849,686,824.33
Held-for-trading financial liabilities 15,858,713.22
Derivative financial liabilities
Notes payable
Accounts payable 232,348,158.30 272,079,091.51
Advances from customers
Contract liability 178,735,140.23 191,551,003.79
Payroll payable 301,497,209.62 301,227,361.89
Taxes payable 58,873,433.90 57,261,948.01
Other payables 17,580,817.40 17,437,799.60
Including: Interest payable
Dividends payable 441,113.64 441,113.64
Liabilities held for sale
Current portion of non-current liabilities 1,870,562,551.70 27,788,571.75
Other current liabilities 33,932,228.19 42,829,460.18
Total current liabilities 3,346,366,412.23 1,775,720,774.28
Non-current liabilities:
Insurance contract reserve
Long-term borrowings 247,912,723.61 396,244,110.21
Bonds payable 1,509,420,449.46
Lease liabilities 74,159,267.26 91,353,320.80
Long-term payables
Long-term payroll payable 58,241,342.34 58,494,991.36
Provisions
Deferred income 139,473,294.93 145,395,121.11
Deferred income tax liabilities 110,514,267.42 131,519,037.79
Other non-current liabilities
Total non-current liabilities 630,300,895.56 2,332,427,030.73
Total liabilities 3,976,667,307.79 4,108,147,805.01
Owners’ equity:
Lu Thai Textile Co., Ltd. Annual Report 2025
Share capital 817,306,920.00 817,306,010.00
Other equity instruments 71,383,045.46 71,383,438.11
Including: Preferred shares
Perpetual bonds
Capital reserves 178,932,155.02 178,518,667.31
Less: Treasury stock
Other integrated income 108,712,967.46 166,925,985.26
Specific reserve
Surplus reserves 1,331,218,572.39 1,271,429,282.44
General reserve
Retained earnings 7,303,500,526.72 6,933,165,006.16
Total owners’ equity attributable to
owners of the Company as the parent
Equity of Non-controlling interests 319,041,405.23 382,839,454.92
Total owners’ equity 10,130,095,592.28 9,821,567,844.20
Total liabilities and owners’ equity 14,106,762,900.07 13,929,715,649.21
Legal representative: Liu Zibin Chief Accountant: Zhang Keming Financial Manager: Zhang Keming
Unit: RMB
Item Ending balance Balance at the beginning of the period
Current assets:
Monetary assets 1,433,664,604.80 1,098,738,844.86
Held-for-trading financial assets 660,679,174.82 348,853,051.29
Derivative financial assets
Notes receivable 22,213,122.87 34,955,445.32
Accounts receivable 421,353,996.52 381,343,801.66
Receivables financing 3,531,557.70 8,604,909.79
Prepayments 39,570,454.23 37,339,639.22
Other receivables 1,439,542,031.30 1,444,344,599.59
Including: Interest receivable
Dividend receivable
Inventories 822,593,850.01 833,923,667.33
Including: Data resources
Contract assets
Available-for-sale assets
Current portion of non-current assets 154,176,585.64
Other current assets 201,318.75 1,285,523.29
Total current assets 4,843,350,111.00 4,343,566,067.99
Non-current assets:
Long-term receivables
Long-term equity investments 3,865,995,861.77 3,886,201,497.79
Investments in other equity instruments
Other non-current financial assets 76,360,000.00 70,800,000.00
Investment property 57,726,813.60 61,235,932.80
Fixed assets 1,711,399,901.88 1,829,970,463.91
Construction in progress 4,430,909.18 25,572,141.50
Right-of-use assets 78,265,677.78 94,200,828.47
Intangible assets 185,411,499.73 191,804,122.33
Including: Data resources
Development expenses
Including: Data resources
Goodwill
Long-term deferred expenses 253,990.93
Deferred income tax assets 73,069,006.97 83,559,877.27
Other non-current assets 475,811,170.00 502,059,650.58
Total non-current assets 6,528,470,840.91 6,745,658,505.58
Total assets 11,371,820,951.91 11,089,224,573.57
Current liabilities:
Short-term loan
Held-for-trading financial liabilities
Derivative financial liabilities
Notes payable 28,600,000.00 60,000,000.00
Lu Thai Textile Co., Ltd. Annual Report 2025
Accounts payable 132,387,909.61 202,868,261.19
Advances from customers
Contract liability 47,217,878.86 62,755,259.28
Payroll payable 189,218,607.99 196,441,126.83
Taxes payable 27,349,150.84 38,807,426.46
Other payables 13,911,794.27 14,071,692.51
Including: Interest payable
Dividends payable 441,113.64 441,113.64
Liabilities held for sale
Current portion of non-current liabilities 1,853,750,476.37 26,337,442.97
Other current liabilities 22,774,974.65 31,411,042.17
Total current liabilities 2,315,210,792.59 632,692,251.41
Non-current liabilities:
Long-term borrowings 113,792,695.83 396,244,110.21
Bonds payable 1,509,420,449.46
Lease liabilities 73,634,249.91 88,480,054.92
Long-term payables
Long-term payroll payable 58,241,342.34 58,494,991.36
Provisions
Deferred income 106,580,569.50 110,138,851.32
Deferred income tax liabilities 74,503,325.14 98,766,520.96
Other non-current liabilities
Total non-current liabilities 426,752,182.72 2,261,544,978.23
Total liabilities 2,741,962,975.31 2,894,237,229.64
Owners’ equity:
Share capital 817,306,920.00 817,306,010.00
Other equity instruments 71,383,045.46 71,383,438.11
Including: Preferred shares
Perpetual bonds
Capital reserves 246,468,448.57 246,054,960.86
Less: Treasury stock
Other integrated income -10,900.67 -35,886.10
Specific reserve
Surplus reserves 1,328,109,832.75 1,268,320,542.80
Retained earnings 6,166,600,630.49 5,791,958,278.26
Total owners’ equity 8,629,857,976.60 8,194,987,343.93
Total liabilities and owners’ equity 11,371,820,951.91 11,089,224,573.57
Unit: RMB
Item 2025 2024
I. Revenue 5,904,308,724.88 6,090,615,025.20
Including: Operating revenue 5,904,308,724.88 6,090,615,025.20
II.. Costs and expenses 5,342,971,856.64 5,404,431,529.13
Including: Cost of sales 4,546,124,192.37 4,643,578,944.63
Taxes and surcharges 61,693,143.21 62,450,436.64
Selling expense 147,949,523.11 151,004,439.35
Administrative expense 337,498,704.65 344,326,973.11
R&D expense 192,232,759.25 206,820,921.71
Financial expenses 57,473,534.05 -3,750,186.31
Including: Interest expense 96,258,875.39 102,900,852.62
Interest income 70,150,613.36 60,956,758.61
Add: Other income 26,138,313.05 34,200,236.81
Return on investment (“-” for loss) 262,596,707.59 -46,506,250.57
Including: Return on investment of joint ventures and associated
-6,339,687.10 -23,453,208.47
enterprises
Income from the derecognition of financial assets at amortized cost
Exchange gain ("-" for loss)
Net gain on exposure hedges* ("-" for loss)
Gain on changes in fair value(“-” for loss) -55,805,204.39 -90,826,774.15
Credit impairment loss (“-” for loss) -35,075,548.74 -3,007,666.35
Asset impairment loss (“-” for loss) -80,423,904.60 -110,133,501.21
Asset disposal income (“-” for loss) 557,462.64 -3,139,466.60
III.. Operating profit (“-” for loss) 679,324,693.79 466,770,074.00
Lu Thai Textile Co., Ltd. Annual Report 2025
Add: Non-operating revenue 18,694,454.87 9,574,940.35
Less: Non-operating expense 4,878,895.49 8,534,087.54
IV.. Profit before tax (“-” for loss) 693,140,253.17 467,810,926.81
Less: Income tax expense 88,348,008.74 41,549,193.80
V.. Net profit (“-” for net loss) 604,792,244.43 426,261,733.01
i. Classification by operation continuity
ii. Classification by ownership
VI.. Other comprehensive income, net of tax -58,217,244.11 35,589,812.50
Attributable to owners of the Company as the parent -58,213,017.80 35,582,843.63
i. Other comprehensive income that will not be reclassified to profit
or loss
or loss under the equity method
instruments
ii. Other comprehensive income that will be reclassified to profit or
-58,213,017.80 35,582,843.63
loss
loss under the equity method
financial assets
obligations
-58,225,324.32 35,556,383.35
denominated financial statements
Attributable to non-controlling interests -4,226.31 6,968.87
VII.. Total comprehensive income 546,575,000.32 461,851,545.51
Attributable to owners of the Company as the parent 535,373,050.01 445,904,241.80
Attributable to non-controlling interests 11,201,950.31 15,947,303.71
VIII Earnings per share
i. EPS-basic 0.73 0.50
ii.. EPS-diluted 0.66 0.47
Where business combinations under common control occurred in the current period, the net profit achieved by the acquirees before
the combinations was RMB0.00, with the amount for the same period of last year being RMB0.00.
Legal representative: Liu Zibin Chief Accountant: Zhang Keming Financial Manager: Zhang Keming
Unit: RMB
Item 2025 2024
I. Operating revenue 2,870,402,323.36 3,198,292,063.60
Less: Cost of sales 2,225,934,622.73 2,446,188,630.00
Taxes and surcharges 38,891,777.78 40,423,609.51
Selling expense 93,643,436.46 101,521,242.89
Administrative expense 180,374,424.46 198,977,886.85
R&D expense 137,949,429.27 146,201,535.79
Financial expenses 61,040,712.90 -21,078,637.21
Including: Interest expense 67,409,407.23 56,893,451.24
Interest income 50,166,952.29 45,288,590.49
Add: Other income 16,102,537.08 23,815,868.45
Return on investment (“-” for loss) 633,214,192.54 -56,295,296.97
Including: Return on investment of joint ventures and associated enterprises -6,339,687.10 -23,453,208.47
Income from derecognition of financial assets measured by amortized cost
Lu Thai Textile Co., Ltd. Annual Report 2025
("-" for loss)
Net gain on exposure hedges* ("-" for loss)
Gain on changes in fair value(“-” for loss) -110,794,005.67 -133,010,200.12
Credit impairment loss (“-” for loss) -4,058,193.05 2,110,379.60
Asset impairment loss (“-” for loss) -42,985,465.49 -22,480,583.36
Asset disposal income (“-” for loss) 76,475.46 5,313,762.77
II.. Operating profit (“-” for loss) 624,123,460.63 105,511,726.14
Add: Non-operating revenue 6,828,680.13 6,928,229.84
Less: Non-operating expense 1,921,547.25 2,375,328.10
III. Profit before tax (“-” for loss) 629,030,593.51 110,064,627.88
Less: Income tax expense 31,137,694.03 2,381,956.91
IV. Net profit (“-” for net loss) 597,892,899.48 107,682,670.97
i. Net profit from going-concern (“-” for net loss) 597,892,899.48 107,682,670.97
ii. Net profits from disgoing-concern ("-" for net loss)
V. Other Comprehensive Income, Net of Tax 24,985.43 5,553.69
i. Other comprehensive income that will not be reclassified to profit or loss
under the equity method
ii. Other comprehensive income that will be reclassified to profit or loss 24,985.43 5,553.69
under the equity method
assets
financial statements
VI. Total comprehensive income 597,917,884.91 107,688,224.66
VII. Earnings per share
i. EPS-basic 0.73 0.13
ii. EPS-diluted 0.66 0.16
Unit: RMB
Item 2025 2024
I. Cash flows from operating activities:
Proceeds from sale of commodities and rendering of services 5,697,017,980.09 6,004,666,410.54
Tax rebates 62,692,763.44 71,079,349.71
Cash generated from other operating activities 55,582,425.99 44,536,550.59
Subtotal of cash inflows from operating activities 5,815,293,169.52 6,120,282,310.84
Payments for commodities and services 3,147,259,714.30 3,040,825,877.39
Cash paid to and for employees 1,562,701,568.19 1,551,618,475.12
Taxes paid 206,466,841.87 131,551,451.03
Cash used in other operating activities 186,367,657.07 152,074,355.36
Subtotal of cash used in operating activities 5,102,795,781.43 4,876,070,158.90
Net cash flow from operating activities 712,497,388.09 1,244,212,151.94
II. Cash flows from investing activities:
Proceeds from disinvestment 10,445,800,537.47 1,020,261,000.00
Return on investment 260,554,360.78 7,261,003.02
Net proceeds from the disposal of fixed assets, intangible assets and
other long-lived assets
Net proceeds from the disposal of subsidiaries and other business
units
Cash generated from other investing activities 895,418,781.74 719,648,924.45
Subtotal of cash generated from investing activities 11,611,108,277.26 1,748,289,321.17
Payments for the acquisition of fixed assets, intangible assets and
other long-lived assets
Payments for investments 10,755,517,075.35 1,225,227,200.56
Lu Thai Textile Co., Ltd. Annual Report 2025
Net increase in pledge loans
Net proceeds from acquisition of subsidiaries and other business
entities
Other cash paid relating to investing activities 379,865,202.57 1,537,716,982.54
Subtotal of cash used in investing activities 11,324,435,351.68 2,980,405,818.85
Net cash generated from/used in investing activities 286,672,925.58 -1,232,116,497.68
III. Cash flows from financing activities:
Capital contributions received
Including: Cash received by subsidiaries from capital contributions
of minority shareholders
Borrowings raised 1,602,452,555.90 2,146,986,621.30
Cash generated from other financing activities
Subtotal of cash generated from financing activities 1,602,452,555.90 2,146,986,621.30
Repayment of borrowings 1,627,507,532.26 1,822,885,554.18
Interest and dividends paid 300,558,673.65 293,297,631.61
Including: Dividends paid by subsidiaries to non-controlling
interests
Cash used in other financing activities 18,744,545.19 58,790,076.23
Subtotal of cash used in financing activities 1,946,810,751.10 2,174,973,262.02
Net cash generated from/used in financing activities -344,358,195.20 -27,986,640.72
IV. Effect of foreign exchange risks changes on cash and cash
equivalents
V.Net increase in cash and cash equivalents 662,027,209.98 17,796,953.59
Add: Opening balance of cash and cash equivalents 1,371,412,259.52 1,353,615,305.93
VI. Closing balance of cash and cash equivalents 2,033,439,469.50 1,371,412,259.52
Unit: RMB
Item 2025 2024
I. Cash flows from operating activities:
Proceeds from sale of commodities and rendering of services 2,609,983,836.96 3,098,290,208.00
Tax rebates 11,412,146.06 9,939,935.39
Cash generated from other operating activities 42,708,529.71 37,691,532.06
Subtotal of cash inflows from operating activities 2,664,104,512.73 3,145,921,675.45
Payments for commodities and services 1,610,609,878.52 1,588,520,778.34
Cash paid to and for employees 722,379,821.78 732,960,267.90
Taxes paid 109,742,751.54 62,188,734.71
Cash used in other operating activities 116,387,340.69 102,078,177.17
Subtotal of cash used in operating activities 2,559,119,792.53 2,485,747,958.12
Net cash flow from operating activities 104,984,720.20 660,173,717.33
II. Cash flows from investing activities:
Proceeds from disinvestment 5,962,596,825.11 1,073,041,912.36
Return on investment 583,120,611.49 10,767,395.90
Net proceeds from the disposal of fixed assets, intangible assets and
other long-lived assets
Net proceeds from the disposal of subsidiaries and other business
units
Cash generated from other investing activities 2,371,688,455.48 3,147,468,380.82
Subtotal of cash generated from investing activities 8,942,274,730.00 4,232,076,422.78
Payments for the acquisition of fixed assets, intangible assets and
other long-lived assets
Payments for investments 6,219,708,717.75 1,636,027,200.56
Net proceeds from acquisition of subsidiaries and other business
entities
Other cash paid relating to investing activities 1,863,659,189.23 3,132,102,262.33
Subtotal of cash used in investing activities 8,105,012,611.15 4,799,900,718.28
Net cash generated from/used in investing activities 837,262,118.85 -567,824,295.50
III. Cash flows from financing activities:
Capital contributions received
Borrowings raised 20,000,000.00 760,660,043.27
Cash generated from other financing activities 142,001,000.00
Subtotal of cash generated from financing activities 20,000,000.00 902,661,043.27
Repayment of borrowings 14,676,401.72 700,610,915.91
Interest and dividends paid 197,168,975.96 268,140,822.07
Lu Thai Textile Co., Ltd. Annual Report 2025
Cash used in other financing activities 18,526,287.93 289,369,382.06
Subtotal of cash used in financing activities 230,371,665.61 1,258,121,120.04
Net cash generated from/used in financing activities -210,371,665.61 -355,460,076.77
IV. Effect of foreign exchange risks changes on cash and cash
-10,506,065.78 5,033,615.48
equivalents
V.Net increase in cash and cash equivalents 721,369,107.66 -258,077,039.46
Add: Opening balance of cash and cash equivalents 507,628,886.80 765,705,926.26
VI. Closing balance of cash and cash equivalents 1,228,997,994.46 507,628,886.80
Amount during the current period
Lu Thai Textile Co., Ltd. Annual Report 2025
Unit: RMB
Owners’ equity attributable to owners of the parent company Equity of
Total
Item Other equity instruments Less: Other Non-
Share Capital Specific Surplus General Retained owners’
Preferred Perpetual Treasury integrated Other Subtotal controlling
capital Other reserves reserve reserves reserve earnings equity
shares bonds stock income interests
I. Ending
balances of the
prior year
Add:
Adjustments for
changed
accounting
policies
Adjustments for
corrections of
previous errors
Other
II. Beginning
balances of the
year
III. Increase/
- -
decrease in the 413,487. 59,789,28 370,335,520. 372,325,79 308,527,74
period (“-” for 71 9.95 56 7.77 8.08
.80 69
decrease)
i. Total -
comprehensive 58,213,017
income .80
ii. Capital
increased and 413,487.
reduced by 71
owners
increased by 910.00 7,478.86 8,388.86 8,388.86
shareholders
increased by
holders of other
equity
instruments
payment
recognized in
owner’s equity
Lu Thai Textile Co., Ltd. Annual Report 2025
- - - -
iii. Profit 59,789,28
distribution 9.95
to surplus 59,789,289.9
reserves 5
to general reserve
to owners (or 163,461,257. 163,461,25 75,000,000. 238,461,25
shareholders) 30 7.30 00 7.30
iv. Transfers
within owners’
equity
capital (or share
capital) from
capital reserves
capital (or share
capital) from
surplus reserves
surplus reserves
defined benefit
schemes
transferred to
retained earnings
comprehensive
income
transferred to
retained earnings
v. Specific
reserve
period .82 82 82
period .82 82 82
vi. Others
Lu Thai Textile Co., Ltd. Annual Report 2025
IV. Closing
balance of the
Current Period
Amount of the previous period
Unit: RMB
Owners’ equity attributable to owners of the parent company Equity of
Total
Item Other equity instruments Less: Other Non-
Share Capital Specific Surplus General Retained owners’
Preferred Perpetual Treasury integrated Other Subtotal controlling
capital Other reserves reserve reserves reserve earnings equity
shares bonds stock income interests
I. Ending
balances of
the prior year
Add:
Adjustments
for changed
accounting
policies
Adjustments
for
corrections of
previous
errors
Other
II. Beginning
balances of
the year
III. Increase/
decrease in - - - -
the period (“- 46,301,62 -239.67 156,273,9 193,438,7 3,821,636.9
” for 4.00 47.45 20.78 8
decrease)
i. Total
comprehensiv
e income
ii. Capital
- - - - - -
increased and
reduced by
owners
shares 46,301,62 123,788,3 170,090,00 19,768,940. 189,858,947
increased by 4.00 82.82 6.82 69 .51
Lu Thai Textile Co., Ltd. Annual Report 2025
shareholders
increased by
holders of
other equity
instruments
based
payment
recognized in
owner’s
equity
- -
- - -
iii. Profit 10,768,26
distribution 7.10
Appropriation 10,768,26
to surplus 7.10
.10
reserves
Appropriation
to general
reserve
- - -
Appropriation
to owners (or
shareholders)
iv. Transfers
within
owners’
equity
capital (or
share capital)
from capital
reserves
capital (or
share capital)
from surplus
reserves
Lu Thai Textile Co., Ltd. Annual Report 2025
by surplus
reserves
defined
benefit
schemes
transferred to
retained
earnings
comprehensiv
e income
transferred to
retained
earnings
v. Specific
reserve
the period
period
vi. Others
IV. Closing
balance of the 817,306,0 71,383, 178,518,6 166,925,98 1,271,429 6,933,165, 9,438,728, 382,839,454 9,821,567,8
Current 10.00 438.11 67.31 5.26 ,282.44 006.16 389.28 .92 44.20
Period
Amount during the current period
Unit: RMB
Other equity instruments Less: Other
Item Specific Total owners’
Share capital Preferred Perpetual Capital reserves Treasury integrated Surplus reserves Retained earnings Other
Other reserve equity
shares bonds stock income
I. Ending
balances of the 817,306,010.00 71,383,438.11 246,054,960.86 1,268,320,542.80 5,791,958,278.26 8,194,987,343.93
prior year
Add:
Adjustments for
changed
Lu Thai Textile Co., Ltd. Annual Report 2025
accounting
policies
Adjustments for
corrections of
previous errors
Other
II. Beginning
balances of the 817,306,010.00 71,383,438.11 246,054,960.86 1,268,320,542.80 5,791,958,278.26 8,194,987,343.93
year
III. Increase/
decrease in the
period (“-” for
decrease)
i.. Total
comprehensive 24,985.43 597,892,899.48 597,917,884.91
income
ii. Capital
increased and
reduced by
owners
shares increased 910.00 7,478.86 8,388.86
by shareholders
increased by
holders of other
equity
instruments
payment
recognized in
owner’s equity
iii. Profit
distribution
to surplus 59,789,289.95 -59,789,289.95
reserves
to owners (or -163,461,257.30 -163,461,257.30
shareholders)
iv. Transfers
within owners’
equity
Lu Thai Textile Co., Ltd. Annual Report 2025
capital (or share
capital) from
capital reserves
capital (or share
capital) from
surplus reserves
surplus reserves
defined benefit
schemes
transferred to
retained
earnings
comprehensive
income
transferred to
retained
earnings
v. Specific
reserve
the period
period
vi. Others
IV. Closing
balance of the 817,306,920.00 71,383,045.46 246,468,448.57 1,328,109,832.75 6,166,600,630.49 8,629,857,976.60
Current Period
Amount of the previous period
Unit: RMB
Other equity instruments Less: Other
Item Share Capital Specific Surplus Retained Total owners’
Preferred Perpetua Treasury integrated Other
capital Other reserves reserve reserves earnings equity
shares l bonds stock income
I. Ending
balances of the -41,439.79
prior year
Lu Thai Textile Co., Ltd. Annual Report 2025
Add:
Adjustments for
changed
accounting
policies
Adjustments for
corrections of
previous errors
Other
II. Beginning
balances of the -41,439.79
year
III. Increase/
- - - -
decrease in the
period (“-” for
.00 4 0.78 11
decrease)
i. Total
comprehensive 5,553.69 107,688,224.66
income
ii. Capital
- - -
increased and
reduced by
.00 4 0.78
owners
shares increased 46,301,624 123,788,382.8 -170,090,006.82
by shareholders .00 2
increased by
holders of other
equity
instruments
payment
recognized in
owner’s equity
iii. Profit
distribution
Appropriation
to surplus
reserves
Lu Thai Textile Co., Ltd. Annual Report 2025
Appropriation
to owners (or
shareholders)
iv Transfers
within owners’
equity
capital (or share
capital) from
capital reserves
capital (or share
capital) from
surplus reserves
by surplus
reserves
defined benefit
schemes
transferred to
retained
earnings
comprehensive
income
transferred to
retained
earnings
v. Specific
reserve
the period
period
vi. Others
IV. Closing
balance of the -35,886.10
Current Period
Lu Thai Textile Co., Ltd. Annual Report 2025
III. Company Profile
Lu Thai Textile Co., Ltd. (hereinafter referred to as “the Company”), originally Lu Thai Textile
Ltd., was a Sino-foreign joint venture established by Zibo Lucheng Textile Investment Co., Ltd.
(formerly Zibo Lucheng Textile Co., Ltd., hereinafter referred to as “Lucheng Textile”) and
Tailun (Thailand) Textile Co., Ltd. In February 1993, it was restructured into a joint-stock
company.
In July 1997, with the approval of the Securities Committee of the State Council, 80,000,000
foreign shares (B-shares) were listed domestically. On August 19, 1997, it was listed on the
Shenzhen Stock Exchange, with the B-share stock code being 200726. On November 24, 2000,
the China Securities Regulatory Commission approved the issuance of an additional 50,000,000
ordinary shares (A-shares), which were listed on the Shenzhen Stock Exchange on December
According to the resolution passed at the 10th meeting of the 10th Board of Directors on June
passed at the First Extraordinary General Meeting on July 6, 2023, the Company repurchased
and cancelled 46,176,428.00 B-shares.
According to the resolution passed at the 18th meeting of the 10th Board of Directors on
January 19, 2024 and the Proposal on Repurchase and Cancel Authorized but Unlocked
Restricted Share of the Incentive Personnel not Conforming to the Incentive Condition passed
at the First Extraordinary General Meeting on February 5, 2024, the Company repurchased and
cancelled 66,500.00 shares.
According to the resolution passed at the 22nd meeting of the 10th session of the Board of
Directors on May 28, 2024 and the Proposal on Repurchase and Cancel Authorized but
Unlocked Restricted Share of the Incentive Personnel not Conforming to the Incentive
Condition passed at the Second Extraordinary General Meeting on June 14,2024, the Company
repurchased and cancelled 59,000.00 shares.
After several capital increases and repurchases, as at December 31,2025, the Company’s
registered capital was RMB817,306,900. Specifically, there were 59,118,900 A-shares and
The Company’s registered address: 61 Luthai Boulevard, High-tech Development Zone, Zibo
City, Shandong Province, P.R. China
The Company's unified social credit code: 91370300613281175K.
The Company's legal representative: Liu Zibin.
The scope of business of the Company and its subsidiaries shall include general projects: Fabric
printing and dyeing processing; garment manufacturing, wholesale; procurement of primary
agricultural products; power generation and transmission business.
The Company’s financial statements and Notes thereof have been approved by the 8th Meeting
of the 11th Board of Directors held on 15 April 2026.
IV Basis for Preparation of Financial Statements
These financial statements are prepared in accordance with the Accounting Standards for
Business Enterprises and their application guidelines, interpretations and other relevant
Lu Thai Textile Co., Ltd. Annual Report 2025
regulations issued by the Ministry of Finance (collectively: “ Accounting Standards for
Business Enterprises” ). In addition, the Company also disclosed relevant financial information
in accordance with the Regulations on Information Disclosure and Compilation for Companies
Public Offering Securities No. 15-General Provisions on Financial Statements (Revised in 2023)
issued by China Securities Regulatory Commission.
The Company's accounting is based on the accrual basis. Except for certain financial
instruments, this financial statement is measured on the basis of historical cost. If the asset is
impaired, the corresponding impairment provision shall be made in accordance with relevant
regulations.
The financial statements are based on the going-concern.
V. Significant Accounting Policies and Estimates
Specific accounting policies and accounting estimates indicators:
The Company determines income recognition policy according to its production and operation
characteristics, and the specific accounting policies are shown in Note V-27.
The financial statements prepared by the Company are in compliance with in compliance with
the Accounting Standards for Business Enterprises, which factually and completely present the
consolidated, and the Company’s financial positions as at December 31, 2025, business results
and cash flows for 2025, and other relevant information.
The Company’s fiscal year starts on January 1 and ends on December 31 of every year
according to the Gregorian calendar.
The Company regards 12 months as an operating cycle.
The Company and its domestic subsidiaries adopt RMB as the recording currency. The
Company’s overseas subsidiaries confirm to adopt HKD and USD 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.
Applicable □ Not applicable
Item Materiality criteria
Significant receivables withdrawal of
Individual receivables exceeding 0.3% of total assets
bad debt provision separately accrued
Significant receivables reversed or
Individual receivables exceeding 0.3% of total assets
recovered during the Reporting Period
Significant written-off of receivables
Individual receivables exceeding 0.3% of total assets
during the Reporting Period
Significant prepayments aging over one
Individual prepayment amounts exceeding 0.3% of total assets
year
Significant construction in progress Individual investment amounts exceeding 1% of total assets
Significant accounts payable aging over Individual accounts payable amounts exceeding 0.3% of total assets
Lu Thai Textile Co., Ltd. Annual Report 2025
one year
A subsidiary whose total assets, operating revenue, or total profit (or absolute loss
Significant non-wholly-owned
amount) exceeds 10% of the corresponding item in the consolidated financial
subsidiary
statements is considered a significant non-wholly owned subsidiary
Significant investment activity projects Individual investment amounts exceeding 5% of total assets
under the common control
(1) Business combinations under the same control
For business combinations under the same control, the assets and liabilities of the merged party
acquired by the merger party in the merger, shall be measured at the carrying value of the
merged party in the consolidated financial statement of the final controller on the combination
date. As for the difference between the carrying value of the merger consideration and carrying
value of the net assets obtained in the merger, the capital reserve (capital stock premium) shall
be adjusted, and if the capital reserve (capital stock premium) is insufficient to offset, the
retained earnings shall be adjusted.
Realize business combination under the same control in steps by transaction several times
The assets and liabilities of the combined party acquired by the combining party in the
combination, shall be measured at the carrying value of the combined party in the consolidated
financial statement of the final controller on the combination date; the difference between the
sum of the carrying value of investment held before combination plus the carrying value newly
paid on the combination date, and the carrying value of the net assets acquired in combination,
is used for adjusting the capital reserve (capital stock premium), and if the capital reserves
(capital stock premium) is insufficient to offset, the retained earnings shall be adjusted. The
long-term equity investment held by the merging party before it obtained control of the merged
party has been confirmed to be relevant between the date of acquiring the original equity and
the date when the merging party and the merged party are under the final control of the same
party, whichever is later, to the date of merger. Changes in profits and losses, other
comprehensive income and other owners’ equity should be offset against the opening retained
earnings or current profits and losses during the comparative statement period respectively.
(2) Business combinations not under the same control
For a business combination not under the same control, the cost of the combination is the assets
paid, liabilities incurred or assumed, and the fair value of the equity securities issued on the
acquisition date to obtain control over the purchased party. On the purchase date, the acquired
assets, liabilities and contingent liabilities of the purchased party are recognized at fair value.
The difference between the merger cost and the fair value of the identifiable net assets of the
acquired party acquired in the merger (the former is greater than the latter) is recognized as
goodwill, and subsequent measurement is made based on the cost deducting the accumulated
impairment provision; the difference between the merger cost and the fair value of the
identifiable net assets of the acquired party acquired in the merger (the former is less than the
latter) shall be recorded into the current profit or loss after the recheck.
Achieve business combination not under the same control step by step through multiple
transactions. The cost of consolidation is the sum of the consideration paid at the purchase date
and the fair value at the purchase date of the equity already held by the acquired party before
the purchase date. For equity of the acquired party that is already held before the purchase date,
it shall be re-measured according to the fair value of the equity on the purchase date, and the
difference between the fair value and its book value shall be included in the current return on
Lu Thai Textile Co., Ltd. Annual Report 2025
investment. If the equity of the acquired party held before the purchase date involves other
comprehensive income and the changes of other owner’s equity, it shall be transferred to
current income on the purchase date, other comprehensive income arising from the
remeasurement of the net liability or net asset of a defined benefit schemes by the investee, as
well as other comprehensive income related to investments in non-trading equity instruments
designated at fair value through other comprehensive income, are excluded.
(3) Treatment of expenses in business combinations
Intermediary expenses such as auditing, legal services, evaluation and consulting and other
related administrative expenses incurred for the business combination shall be included in the
current profit and loss when incurred. The transaction expense of equity securities or debt
securities issued as the merger consideration shall be included in the initial recognition amount
of equity securities or debt securities.
statements
(1) Criteria for judging control
The consolidation scope of the consolidated financial statements is determined on the basis of
control. Control means that the Company has the power over the invested unit, enjoys variable
returns by participating in the related activities of the invested unit, and has the ability to use
the power over the invested unit to influence the amount of its return. When changes in relevant
facts and circumstances lead to changes in the elements involved in the definition of control,
the Company will reassess.
In determining whether to include a structured entity within the consolidation scope, the
Company considers all facts and circumstances, including assessing the purpose and design of
the structured entity’s establishment, identifying the types of variable returns, and evaluating
whether the Company controls the structured entity based on whether it has assumed some or
all of the variability in returns by participating in its relevant activities.
(2) Preparation method of consolidated financial statements
The consolidated financial statements are prepared by the Company based on the financial
statements of the Company and its subsidiaries and other information. When preparing
consolidated financial statements, the accounting policies and fiscal year requirements of the
Company and its subsidiaries are consistent, and significant inter-company transactions and
balances are offset.
Subsidiaries and businesses increased due to business combinations under the same control
during the Reporting Period shall be included into the Company’s combination scope since the
date when they are jointly controlled by the final controller, and the operating result and cash
flow since then shall be respectively included into the consolidated income statement and
consolidated cash flow statement.
As for subsidiaries and businesses increase due to business combinations not under the same
control during the Reporting Period, the revenue, expenses and profit or those subsidiaries and
businesses from the purchase date to the end of the Reporting Period shall be included into the
consolidated income statement and the cash flow thereof shall be included into the consolidated
cash flow statement.
The share of shareholders’ equity in subsidiaries not belonging to the Company shall be
regarded as the minority interests and separately listed under the item of shareholders’ equity in
Lu Thai Textile Co., Ltd. Annual Report 2025
the consolidated balance sheet. The share of current portion of net profit or loss in subsidiaries
belonging to minority interests shall presented as the item of minority interests under the item
of net profit in the consolidated income statement. The difference between the losses of
subsidiaries born by not-controlling shareholders and the share of the company’s owners’
equity at the period-beginning the not-controlling shareholders enjoy (the former is larger than
the latter) shall be offset the minority interests.
(3) Purchase of minority shareholders' equity in subsidiaries
The difference between the newly acquired long-term equity investment cost due to the
purchase of minority shares and the share of the subsidiary’s net assets calculated continuously
from the date of purchase or merger based on the new shareholding ratio, and without losing
control The difference between the disposal price obtained from the partial disposal of the
equity investment in the subsidiary and the corresponding share of the subsidiary's net assets
calculated continuously from the date of purchase or merger date corresponding to the disposal
of the long-term equity investment shall be adjusted in the consolidated balance sheet. Capital
reserve (capital stock premium), if the capital reserve is insufficient to offset, the retained
earnings will be adjusted.
(4) Treatment of loss of control of subsidiaries
If the control over the original subsidiary is lost due to the disposal of part of the equity
investment or other reasons, the remaining equity shall be remeasured according to its fair value
on the date of loss of control; the sum of the consideration obtained from the disposal of the
equity and the fair value of the remaining equity shall be less Calculated based on the original
shareholding ratio, the sum of the share of the book value of the net assets and goodwill of the
original subsidiary calculated continuously from the date of purchase shall be included in the
return on investment in the current period when control is lost. Other comprehensive income
related to the equity investment of the original subsidiary should be accounted for on the same
basis as the original subsidiary's direct disposal of relevant assets or liabilities when the control
is lost.
Any income related to the original subsidiary that involves accounting under the equity method
other changes in owners' equity should be transferred to the current profits and losses when
control is lost.
Joint arrangement refers to an arrangement under the joint control of two or more participants.
The Company’s joint arrangements are divided into joint operations and joint ventures.
(1) Joint operations
A joint operation refers to a joint arrangement whereby the Company enjoys relevant assets of
the arrangement, and assumes obligations relevant liabilities of the arrangement.
The Company recognizes the following items related to the interest share in joint operation, and
conducts accounting treatment in accordance with relevant provisions of the Accounting
Standards for Business Enterprises:
A. It recognizes separately held assets and jointly held assets according to the proportion;
B. It recognizes separately assumed liabilities and jointly assumed liabilities according to the
proportion;
Lu Thai Textile Co., Ltd. Annual Report 2025
C. Income from the sale of the proportion of joint operation output is recognized; D. Income
from the sale of the joint operation output is recognized according to the proportion;
E. While the separately incurred fee is recognized, the incurred fee for joint operation is
recognized according to the proportion.
(2) Joint ventures
A joint venture refers to a joint arrangement whereby the Company enjoys the right of the net
assets of the arrangement only.
Accounting treatment of the investment of a joint venture is conducted by the Company in line
with the provisions of relevant equity method of accounting for long-term equity investment.
The term “cash” refers to cash on hand and deposits that are available for payment at any time.
Cash equivalents refer to investments held by the Company that are short-term, highly liquid,
easily convertible into known amounts of cash, and have little risk of change in value.
Statements
(1) Foreign currency transactions
For foreign currency transactions, the Company converts the amounts into the recording
currency at the spot foreign exchange risk or an approximate rate on the transaction date.
On the balance sheet date, foreign currency monetary items are translated at the spot foreign
exchange risk on the balance sheet date. The exchange difference arising from the difference
between the spot foreign exchange risk on the balance sheet date and the spot foreign exchange
risk at the time of initial recognition or the previous balance sheet date is included in the current
profit and loss; for foreign currency non-monetary items measured at historical cost, the
translation adopts the spot foreign exchange risk on the day the transaction occurs; for foreign
currency non-monetary items measured at fair value, the translation adopts the spot foreign
exchange risk on the day when the fair value is confirmed, and the difference between the
amount of recording currency and the amount of original recording currency shall be included
into the current profit or loss or other comprehensive income based on the nature of non-
monetary items.
(2) Conversion of foreign currency financial statements
When converting the foreign currency financial statements of overseas subsidiaries on the
balance sheet date, the assets and liabilities items in the balance sheet shall be converted at the
spot foreign exchange risk on the balance sheet date. Other items of shareholders' equity except
for "retained earnings" shall be converted at the spot foreign exchange risk on the occurrence
date.
Other items of shareholders’ equity except for “retained earnings” shall be converted at the spot
foreign exchange risk on the occurrence date.
Items under income and costs in the income statement are translated at the spot foreign
exchange risk on the transaction date. All items in the cash flow statement are converted
according to the approximate spot foreign exchange risk on the occurrence date of cash flow.
The impact of foreign exchange risk changes on cash is taken as a reconciling item, and the
Lu Thai Textile Co., Ltd. Annual Report 2025
item “impact of foreign exchange risk changes on cash and cash equivalents” is separately
listed in the cash flow statement to reflect.
The difference arising from the conversion of financial statements is reflected in the “other
comprehensive income” under the shareholders’ equity in the balance sheet.
When disposing of the overseas operation and losing control rights, the foreign currency
statement conversion difference related to the overseas operation shown under the shareholders’
equity in the balance sheet shall be transferred to current profit and loss of disposal in whole or
in proportion to the disposal of overseas operation.
Financial instruments refer to contracts that form one party’s financial assets and form other
parties’ financial liabilities or equity instruments.
(1) Recognition and derecognition of financial instruments
The Company recognizes a financial asset or financial liability when it becomes a party to the
financial instrument contract.
Where a financial asset satisfies any of the following requirements, the recognition of it is
terminated:
a) The contractual rights for collecting the cash flow of the said financial asset are terminated;
b) The said financial asset has been transferred and meet the following derecognition conditions
for transfer of financial assets.
Only when the prevailing obligations of a financial liability are relieved in all or in part may the
recognition of the financial liability be terminated in all or partly. Where the Company (debtor)
enters into an agreement with a creditor so as to substitute the existing financial liabilities by
way of any new financial liability, and if the contractual stipulations regarding the new
financial liability is substantially different from that regarding the existing financial liability, it
terminates the recognition of the existing financial liability, and at the same time recognizes the
new financial liability.
The purchase and sale of financial assets under the normal ways shall be recognized and
stopped to be recognized respectively at the price of transaction date.
(2) Classification and measurement of financial assets
The Company classifies financial assets into the following three categories according to the
business mode of managing financial assets and the contractual cash flow characteristics of
financial assets upon initial recognition: financial assets measured at amortized cost, financial
assets measured at fair value and whose changes are included in other comprehensive income,
and financial assets at fair value through profit or loss.
Financial assets are measured at fair value upon initial recognition. For financial assets at fair
value through profit or loss, relevant transaction expenses are directly included in current profit
and loss; for other types of financial assets, relevant transaction expenses are included in the
initial recognition amount. For accounts receivable arising from the sale of products or the
provision of labor services, which do not include or do not consider significant financing
components, the amount of consideration the Company is expected to be entitled to receive is
taken as the initial recognition amount.
Lu Thai Textile Co., Ltd. Annual Report 2025
Financial assets measured at amortized cost
The Company classifies financial assets that meet the following conditions and are not
designated to be measured at fair value through profit
or loss as financial assets measured at amortized cost: The Company's business model for
managing this financial asset is aimed at collecting contractual cash flow; The contractual terms
of this financial asset stipulate that the cash flow generated on the specific date is only the
payment of principal and interest based on the principal amount outstanding.
Such financial assets are measured in amortized cost by the effective interest method after
initial recognition. Gains or losses arising from financial assets measured in amortized cost that
are not part of any hedging relationship are included in current profit and loss when
derecognition, amortization according to the effective interest method, or impairment is
recognized.
Financial assets measured at fair value and whose changes are included in other
comprehensive income
The Company classifies financial assets that meet the following conditions and are not
designated to be measured at fair value through profit or loss as financial assets measured at fair
value and whose changes are included in other comprehensive income:
The Company's business model for managing this financial asset is aimed at both collecting the
contractual cash flow and selling this financial asset; The contractual terms of this financial
asset stipulate that the cash flow generated on the specific date is only the payment of principal
and interest based on the principal amount outstanding.
Such financial assets are subsequently measured at fair value after initial recognition. Interest,
impairment losses or gains and foreign exchange gains or losses calculated by the effective
interest method are included in current profit and loss, while other gains or losses are included
in other comprehensive income. When the financial asset is derecognized, the accumulated
gains or losses previously included in other comprehensive income are transferred out and
included in current profit and loss.
Financial assets at fair value through profit or loss
Except for the financial assets measured at amortized cost and those measured at fair value with
changes recognized in other comprehensive income, the Company classifies all other financial
assets as financial assets measured at fair value with changes recognized in profit or loss. Upon
initial recognition, in order to eliminate or significantly reduce accounting mismatches, the
Company irrevocably designates some financial assets that should have been measured at
amortized cost or at fair value and whose changes are included in other comprehensive income
as financial assets measured at fair value and whose changes are included in current profit and
loss.
Such financial assets are subsequently measured at fair value after initial recognition, and the
resulting gains or losses (including interest and dividend income) are included in current profit
and loss unless the financial assets are part of the hedging relationship.
The business model of managing financial assets refers to how the Company manages financial
assets to generate cash flow. The business model determines whether the cash flow of the
financial assets managed by the Company comes from the collection of contractual cash flow,
the sale of financial assets or both. The Company determines the business model for managing
Lu Thai Textile Co., Ltd. Annual Report 2025
financial assets on the basis of objective facts and specific business objectives decided by key
management personnel to manage financial assets.
The Company evaluates the contractual cash flow characteristics of financial assets to
determine whether the contractual cash flow generated by the relevant financial assets on the
specific date is only the payment of principal and interest based on the principal amount
outstanding. Among them, the principal refers to the fair value of financial assets upon initial
recognition; interest includes consideration for the time value of money, credit risks related to
the principal amount outstanding in the specific period, and other basic lending risks, costs and
profits. In addition, the Company evaluates the contract terms that may lead to changes in the
time distribution or amount of contractual cash flow of financial assets to determine whether
they meet the requirements of the above-mentioned contractual cash flow characteristics.
Only when the Company changes the business mode of managing financial assets will all
affected related financial assets be reclassified on the first day of the first reporting period after
business model changes, otherwise financial assets cannot be reclassified after initial
recognition.
(3) Classification and measurement of financial liabilities
The Company's financial liabilities are classified upon initial recognition into: financial
liabilities measured at fair value with changes recognized in profit or loss, and financial
liabilities measured at amortized cost. For financial liabilities that are not classified as
measured at fair value and whose changes are included in current profit and loss, relevant
expenses are included in the initial recognition amount.
Financial liabilities measured at fair value with changes recognized in profit or loss
Financial liabilities measured at fair value with changes recognized in profit or loss include
held-for-trading financial liabilities and financial liabilities that are designated upon initial
recognition as measured at fair value with changes recognized in profit or loss. Subsequent
measurement shall be carried out according to fair value for such financial liabilities. Gains or
losses resulting from changes in fair value and dividends and interest expenses related to such
financial liabilities shall be included in current profit and loss.
Financial liabilities measured at amortized cost
Other financial liabilities are subsequently measured at amortized cost by using the effective
interest method. Gains or losses resulting from derecognition or amortization are included in
current profit and loss.
Distinction between financial liabilities and equity instruments
Financial liabilities refer to liabilities that meet one of the following conditions:
a) The contractual obligation to deliver cash or other financial assets to other parties.
b) The contractual obligation to exchange financial assets or financial liabilities with other
parties under potentially unfavorable conditions.
c) Non-derivative contracts that must be or can be settled with the enterprise’s own equity
instruments in the future, and the enterprise will deliver a variable number of its own equity
instruments according to the contract.
Lu Thai Textile Co., Ltd. Annual Report 2025
d) Derivative contracts that must be or can be settled with the enterprise’s own equity
instruments in the future, except derivatives contracts that exchange a fixed amount of cash or
other financial assets with a fixed amount of its own equity instruments.
Equity instruments refer to contracts that can prove that an enterprise has the residual equity in
its assets after deducting all liabilities.
If the Company cannot unconditionally avoid performing a contractual obligation by delivering
cash or other financial assets, the contractual obligation meets the definition of financial
liability.
If a financial instrument must be or can be settled with the Company’s own equity instruments,
it is necessary to consider whether the Company’s own equity instruments used to settle the
instrument are used as substitutes for cash or other financial assets or to enable the holder of
this instrument to enjoy the residual equity in the assets after deducting all liabilities from the
issuer. If it is the former, this instrument is the Company’s financial liability; if the latter is the
case, this instrument is the Company’s equity instrument.
(4) Derivative financial instruments and embedded derivatives
The Company's derivative financial instruments include forward foreign exchange contracts,
foreign exchange option contracts, and others. Initially, the fair value on the date when the
derivative transaction contract is signed shall be used for measurement, and the fair value shall
be used for subsequent measurement. Derivative financial instruments with positive fair value
are recognized as an asset, while those with negative fair value are indeed recognized as a
liability. Any gains or losses arising from changes in fair value that do not conform to the
provisions of hedge accounting are directly included in current profit and loss.
For hybrid instruments containing embedded derivatives, such as the main contract is a
financial asset, the relevant provisions on classification of financial assets shall apply to the
hybrid instruments as a whole. If the main contract is not a financial asset, and the hybrid
instrument is not measured at fair value and its changes are included in current profit and loss
for accounting treatment, the embedded derivative instrument has no close relationship with the
main contract in terms of economic characteristics and risks, and has the same conditions as the
embedded derivative instrument, and the separate existing instrument meets the definition of
derivative instrument, the embedded derivative instrument shall be separated from the hybrid
instrument and treated as a separate derivative financial instrument. If it is not possible to
separately measure embedded derivative instruments at the time of acquisition or the
subsequent balance sheet date, the hybrid instruments as a whole are designated as financial
assets or financial liabilities measured at fair value through profit or loss.
(5) Fair value of financial instruments
The methods for determining the fair value of financial assets and financial liabilities are
detailed in Note V-12.
(6) Impairment of financial assets
The Company conducts impairment accounting treatment for the following items and confirms
the loss provision based on the expected credit losses:
Financial assets measured at amortized cost;
Receivables and debt instrument investments measured at fair value through other
comprehensive income;
Lu Thai Textile Co., Ltd. Annual Report 2025
Contract assets as defined under Accounting Standards for Business Enterprises No. 14-
Revenue; Lease receivables;
And financial guarantee contracts (excluding those measured at fair value through profit or loss,
those arising from transfers of financial assets that do not qualify for derecognition, or those
arising from continuing involvement in transferred financial assets).
Measurement of expected credit losses
Expected credit loss refers to the weighted average of the credit losses of a financial instrument,
weighted by the risk of default occurring. Credit loss refers to the difference between all
contractual cash flows discounted at the original effective interest rate and receivable according
to the contract and all cash flows expected to be collected of the Company, i.e. the present
value of all cash shortfalls.
Considering the reasonable and reliable information about past events, current situation and the
forecast of future economic situation, the company takes the risk of default as the weight,
calculates the probability weighted amount of the present value of the difference between the
cash flow receivable from the contract and the cash flow expected to be received, and confirms
the expected credit loss.
The Company separately measures the expected credit losses of financial instruments at
different stages. If the credit risk of financial instruments has not increased significantly since
the initial recognition, it is in the first stage. The Company measures the loss reserve according
to the expected credit loss in the next 12 months; if the credit risk of financial instruments has
increased significantly since its initial recognition but no credit impairment has occurred, it is
in the second stage. The Company measures the loss reserve according to the expected credit
loss during the whole duration of this instrument; if the financial instrument has suffered credit
impairment since its initial recognition, it is in the third stage. The Company measures the loss
reserve according to the expected credit loss during the whole duration of this instrument.
For financial instruments with low credit risk on the balance sheet date, the Company assumes
that their credit risk has not increased significantly since the initial recognition, and measures
the loss reserve according to the expected credit loss in the next 12 months.
The expected credit loss during the whole duration refers to the expected credit loss caused by
all possible default events during the whole expected duration of financial instruments. The
expected credit loss in the next 12 months refers to the expected credit loss caused by the
possible default events of financial instruments within 12 months (or the expected duration if
the expected duration of financial instruments is less than 12 months) after the balance sheet
date, which is part of the expected credit loss in the whole duration.
When measuring the expected credit loss, the longest term that the Company needs to consider
is the longest contract term that the enterprise faces credit risk (including the option to renew
the contract).
For financial instruments with low credit risk in Stage 1 and Stage 2, the Company shall
calculate the interest income according to the carrying balance and effective interest rate before
deducting the impairment allowances. For financial instruments in Stage 3, interest income is
calculated at the effective interest rate and on the amortized cost by reducing the allowance for
asset impairment from the carrying balance.
For receivables such as notes receivable, accounts receivable, accounts receivables financing,
and other receivables, if the credit risk characteristics of a particular customer significantly
Lu Thai Textile Co., Ltd. Annual Report 2025
differ from those of other customers in the portfolio, or if there is a significant change in the
customer's credit risk characteristics, the Company will make receivables withdrawal of bad
debt provision separately accrued. For receivables such as notes receivable, accounts receivable,
accounts receivable financing, other receivables, and contract assets, if the credit risk
characteristics of a particular customer significantly differ from those of other customers in the
portfolio, or if there is a significant change in the customer’s credit risk characteristics, the
Company will make receivables withdrawal of bad debt provision separately accrued. Apart
from receivables withdrawal of bad debt provision separately accrued are made, the Company
classifies receivables into portfolios based on credit risk characteristics and calculates the
allowance for doubtful debts on a portfolio basis.
Notes receivable and accounts receivable For notes receivable and accounts
receivable, regardless of whether there is a significant financing component, the Company
always measures its loss provisions at an amount equivalent to the expected credit losses during
the entire duration.
When information for assessing expected credit losses on individual financial assets or contract
assets cannot be obtained at reasonable cost, the Company groups notes receivable and accounts
receivable based on credit risk characteristics and calculates expected credit losses on a
portfolio basis. The groupings are determined as follows:
A. Notes Receivable:
B. Accounts Receivable:
For notes receivable classified into portfolios, the Company references historical credit loss
experience, incorporating current conditions and forecasts of future economic conditions, and
calculates expected credit losses using default risk exposure and lifetime expected credit loss
rates.
For accounts receivable divided into portfolios, with reference to historical credit loss
experience, combined with current conditions and predictions of future economic conditions,
the Company has prepared a comparison table between the number of aging of accounts
receivable and the expected credit loss rate over the entire duration, and has calculated the
expected credit loss. The aging of accounts receivable is measured from the date of initial
recognition.
Other receivables
The Company classifies other receivables into several portfolios based on credit risk
characteristics and calculates the expected credit loss on a portfolio basis. The basis for
determining the portfolios is as follows: Portfolio 1: Receivables from related parties within the
scope of
consolidation
Lu Thai Textile Co., Ltd. Annual Report 2025
Portfolio 2: Receivables from tax refunds
Portfolio 3: Receivables from deposits and
guarantees
Portfolio 4: Receivables from other amounts
For other receivables classified into portfolios, the Company calculates the expected credit loss
based on the default risk exposure and the expected credit loss rate over the next 12 months or
the entire life of the assets.
For creditors' investment and other creditors' investment, the Company calculates the expected
credit based on the nature of the investment, as well as kinds of types of counterparties and risk
exposures, the default risk exposure and the expected credit loss rate within the next 12 months
or the entire duration loss.
Assessment on significant increase of credit risk
In order to determine the relative changes in the default risk of financial instruments during
their expected life and to assess whether the credit risk of financial instruments has increased
significantly since initial recognition, the Company compares the default risk of financial
instruments on the balance sheet date with the default risk on the initial recognition date.
When determining whether the credit risk has risen greatly since the initial recognition, the
Company considers reasonable and reliable information (forward-looking information inclusive)
that can be obtained without unnecessary extra costs or efforts. The information the Company
considers shall include:
The debtor fails to pay the principal and interest according to the contract expiration date;
The external or internal credit ratings (if any) of financial instruments, which have occurred or
are expected, deteriorate significantly;
The debtor’s operating results, which have occurred or are expected, deteriorate significantly;
Existing or expected changes in technology, market, economy or legal environment will lead to
a great adverse effect on the debtor's ability to repay the Company.
Based on the nature of financial instruments, the Company assesses whether there is great risk
in credit risk on the basis of individual financial instruments or financial instrument portfolios.
During assessment based on financial instrument portfolios, the Company can divide financial
instruments on the basis of common credit risk characteristics, such as overdue information and
credit risk ratings.
In case that the period overdue exceeds 30 days, the Company determines that there is a
significant increase in the credit risk of financial instruments.
Financial assets with depreciation of credit
The Company assesses, on the balance sheet date, whether there is any credit impairment to
financial assets measured at amortized cost and creditors' investment measured at fair value and
whose changes are included in other comprehensive income. In case of one or more events that
adversely affect the expected future cash flow of a financial asset occur, the financial asset will
become financial assets with depreciation of credit. Evidence of credit impairment for financial
assets includes the following observable information:
Lu Thai Textile Co., Ltd. Annual Report 2025
The issuer or debtor experiences significant financial difficulties;
The debtor breaches the contract, such as defaulting on interest or principal payments or
overdue payments;
The Company makes concessions to the debtor due to economic or contractual considerations
related to the debtor's financial difficulties, which would not otherwise be made under normal
circumstances;
The debtor is likely to go bankrupt or undergo other financial restructuring;
Financial difficulties of the issuer or debtor result in the disappearance of an active market for
the financial asset.
Presentation of expected credit loss provision
The Company remeasures expected credit losses on each balance sheet date to reflect the
changes in the credit risk of financial instruments since initial recognition; the increase or
reversal amount of the loss reserve formed there from shall be included in the current profit and
loss as impairment losses or gains. For financial assets measured at amortized cost, the loss
allowance offsets the carrying amount of the financial asset listed in the balance sheet; for
creditors’ investment that are measured at fair value and its changes are included in other
comprehensive income, the Company recognizes its loss reserve in other comprehensive
income and will not offset the carrying amount of the financial asset.
Write-offs
In case that the Company fails to reasonably expect the contract cash flow of the financial asset
to be recovered in a full or partial scale, the book balance of the financial asset will be written
off directly. Such write-downs may constitute the derecognition for related financial assets.
This situation occurs frequently when the Company determines that the debtor does not have
any assets or any source of income to generate sufficient cash flow to repay the amount that
will be written off. However, in accordance with the procedures for recovering due payments of
the Company, the written-off financial assets may still be affected by the execution activities.
In case that the financial asset written off is recovered later, it shall be included in the current
profit and loss as the reversal of the impairment loss.
(7) Transfer of financial assets
The transfer of financial assets refers to the transfer or delivery of financial assets to another
party (transferee) other than the issuer of the financial asset.
If the Company has transferred almost all the risks and rewards of the ownership of financial
assets to the transferee, derecognize the financial asset; if it retains almost all the risks and
rewards of the ownership of financial assets, the financial asset will not be derecognized.
If the Company has neither transferred nor retained almost all the risks and rewards of the
ownership of financial assets, it shall be dealt with in the following situations: if the control of
the financial asset is abandoned, the confirmation of the financial asset shall be terminated and
the generated assets and liabilities shall be confirmed; If the financial assets are controlled, the
relevant financial assets shall be recognized according to the extent of their continued
involvement in the transferred financial assets, and the relevant liabilities shall be recognized
accordingly.
(8) Offsetting financial assets and financial liabilities
Lu Thai Textile Co., Ltd. Annual Report 2025
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.
Fair value refers to the price that market participants can receive from sales of an asset or shall
pay for transfer of a liability in the orderly transaction that occurs on the measurement date.
The Company measures related assets or liabilities at fair value, assuming that the orderly
transaction of selling assets or transferring liabilities is conducted in the main market of related
assets or liabilities; if there is no main market, the Company assumes that the transaction is
conducted in the most beneficial market. The main market (or the most favorable market) is the
trading market that the Company can enter on the measurement date. The Company uses the
assumptions used by market participants to maximize their economic benefits when pricing the
asset or liability.
For financial assets or financial liabilities with active markets, the Company uses the quotation
in active markets to determine its fair value. If there is no active market for financial
instruments, the Company uses valuation techniques to determine its fair value.
When measuring non-financial assets at fair value, the ability of market participants to best use
the asset for generating economic benefits, or the ability to sell the asset to other market
participants that can best use the asset to generate economic benefits shall be considered.
The Company adopts valuation techniques that are applicable in the current situation and have
sufficient available data and other information to support it. Priority is given to using relevant
observable input values. Only when observable input values are unavailable or are not feasible
to obtain, the unobservable input values can be used.
For assets and liabilities measured or disclosed at fair value in the financial statements, the fair
value hierarchy to which they belong is determined based on the lowest level input value that is
important to the fair value measurement as a whole: the first level input value is the unadjusted
quotation of the same assets or liabilities able to be obtained in an active market on the
measurement date; the second level input value is the directly or indirectly observable input
value of the relevant asset or liability except the first level input value; the third level input
value is unobservable input value of related assets or liabilities.
On each balance sheet date, the Company reassessed the assets and liabilities continuously
measured at fair value confirmed in the financial statements to determine whether there is a
transition among levels of fair value measurement.
(1) Classification of inventories
Inventories mainly include raw materials, work-in-progress, stock products, products processed
on entrustment and etc.
(2) Valuation method for issued inventories
Lu Thai Textile Co., Ltd. Annual Report 2025
The Company values inventories at actual cost upon acquisition. Grey yarn, dyed yarn, and plus
material shall be measured at first-in first-out method when acquired and delivered; other
inventories shall be measured as per the weighted average method
(3) Basis and method for determining inventory write-down provisions At the balance sheet
date, inventories are measured at the lower of cost and net realizable value. When their net
realizable value falls below cost, an allowance for inventory impairment is provided.
Net realizable value is the estimated selling price in the ordinary course of business less the
estimated costs of completion, the estimated costs necessary to make the sale and relevant taxes.
Net realizable value is determined on the basis of clear evidence obtained, and takes into
consideration the purpose of holding inventories and effect of events after balance sheet date.
The Company generally provides for inventory depreciation on a per-item basis. For inventories
that are numerous in quantity and low in unit price, an allowance for inventory impairment is
provided based on inventory categories.
On the balance sheet date, if the factors affecting the value of inventories previously written
down have disappeared, the provision for inventory write-downs is reversed to the extent of the
original amount provided.
(4) Inventory system for stock
The perpetual inventory system is maintained for the stock of the Company.
(5) Amortization method for low-value consumables and packaging materials
The Company applies the one-time write-off method for amortizing low-value consumables
upon usage.
Long-term equity investments include equity investments in subsidiaries, joint ventures and
associated enterprises. The investee that the Company is able to exert significant influence is an
associated enterprise of the Company.
(1) Determination of initial investment cost
Long-term equity investment that forms a business combination: Long-term equity investment
obtained by business combination under the same control, on the merger date, based on the
carrying value share of the merged party’s owners’ equity in the final controller’s consolidated
financial statements as investment cost; The long-term equity investment acquired by a business
combination shall be the investment cost of the long-term equity investment according to the
cost of the combination.
For long-term equity investments obtained by other means: the long-term equity investment
obtained by paying cash shall be the initial investment cost according to the actual purchase
price; the long-term equity investment obtained by issuing equity securities shall be the initial
investment cost of the fair value of the equity securities issued.
(2) Subsequent measurement and profit or loss recognition method
Investments in subsidiaries are accounted for using the cost method, unless the investment
meets the conditions for classification as held for sale. Investments in associated enterprises
and joint ventures are accounted for using the equity method.
Lu Thai Textile Co., Ltd. Annual Report 2025
For long-term equity investments that are accounted for using the cost method, in addition to
the cash dividends or profits that have been declared but not yet included in the actual payment
or consideration included in the investment, the cash dividends or profits declared by the
invested entity are recognized as return on investment and recorded into the current profit and
loss.
For long-term equity investments accounted for using the equity method, where the initial
investment cost is greater than the fair value share of the investee’s identifiable net assets at the
time of investment, the investment cost of the long-term equity investment is not adjusted;
when the initial investment cost is less than the investment, the investee’s If the fair value share
of net assets is identified, the book value of the long-term equity investment is adjusted, and the
difference is included in the current profit and loss of the investment.
When using the equity method of accounting, the return on investment and other comprehensive
income are recognized separately according to the share of net profit and loss and other
comprehensive income realized by the invested unit that should be enjoyed or shared, and the
book value of the long-term equity investment is adjusted at the same time; The distribution of
profits or cash dividends should be calculated to reduce the book value of long-term equity
investment; the investee’s other changes in owner’s equity other than net profit and loss, other
comprehensive income and profit distribution, adjust the book value of long-term equity
investment and Included in capital reserves (other capital reserves). When confirming the share
of the investee’s net profit or loss, based on the fair value of the investee’s identifiable assets at
the time of investment, and in accordance with the Company’s accounting policies and fiscal
year, the net profit of the investee Confirm after making adjustments.
If the additional investment and other reasons can exert significant influence on the investee or
exercise joint control but do not constitute control, on the conversion date, the sum of the fair
value of the original equity plus the additional investment cost will be used as the initial
accounting for the equity method cost of investment. If the original equity is classified as non-
trading equity instrument investment measured at fair value whose changes are included in
other comprehensive income, the relevant original and accumulative changes in fair value
included in other comprehensive income shall be transferred to retained earnings when
accounting by equity method.
If the joint control or significant influence on the invested unit is lost due to the disposal of part
of the equity investment, etc., the remaining equity after the disposal shall be changed to the
Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of
Financial Instruments is performed, and the difference between fair value and book value is
included in the current profit and loss. Other comprehensive income recognized by the original
equity investment due to the equity method of accounting shall be accounted for on the same
basis as the investee’s direct disposal of related assets or liabilities when the equity method of
accounting is terminated; changes in other owners’ equity related to the original equity
investment Transfer to current profit and loss.
If the control of the invested unit is lost due to the disposal of part of the equity investment, if
the remaining equity after the disposal can exercise joint control or exert significant influence
on the invested unit, the equity method is used for accounting and the remaining equity is
treated as When acquiring, the equity method is adopted for adjustment; if the remaining equity
after disposal cannot exercise joint control or exert significant influence on the investee, the
accounting shall be changed according to the relevant provisions of Accounting Standards for
Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments The
Lu Thai Textile Co., Ltd. Annual Report 2025
difference between the fair value and the book value on the date of loss of control is included in
the current profit and loss.
If the shareholding ratio of the Company decreases due to the capital increase of other investors,
thereby losing control but being able to exercise joint control or exert significant influence on
the investee, the new shareholding ratio shall be used to confirm that the Company should enjoy
the capital increase of the investee. The difference between the increase in share and the
increase in the share of net assets and the original book value of the long-term equity
investment corresponding to the decrease in the proportion of the shareholding that should be
carried forward are included in the current profit and loss; That is, adjustments are made using
the equity method of accounting.
The unrealized internal transaction gains and losses that occur between the Company and
associated enterprises and joint ventures are calculated according to the shareholding ratio and
are attributed to the Company, and the investment gains and losses are recognized on the basis
of offset. However, the unrealized internal transaction losses incurred by the Company and the
investee are the asset impairment losses of the transferred assets and shall not be offset.
(3) Basis for determining joint control and significant influence over the invested entity
Joint control refers to shared control over an arrangement according to relevant agreements,
where the related activities of the arrangement can only be decided with the unanimous consent
of the participants sharing control. When judging whether there is joint control, first determine
whether all participants or a combination of participants collectively control the arrangement,
and secondly determine whether the decision-making related activities of the arrangement must
be unanimously agreed by the participants who collectively control the arrangement. If all
participants or a company of participants must act in concert to determine the relevant activities
of an arrangement, it is considered that all participants or a company of participants collectively
control the arrangement; if there is a combination of two or more participants can collectively
Controlling an arrangement does not constitute joint control. When judging whether there is
joint control, the protective rights enjoyed are not considered.
Significant influence means that the investor has the right to participate in the decision-making
of the financial and operating policies of the invested unit, but cannot control or jointly control
the formulation of these policies with other parties. When determining whether it can exert
significant influence on the invested unit, consider that the investor directly or indirectly holds
the voting shares of the invested unit and the current executable potential voting rights held by
the investor and other parties are assumed to be converted into the invested unit After the equity
of the company, the impact includes the current convertible warrants, stock options and
convertible corporate bonds issued by the investee.
When the Company directly or indirectly through subsidiaries owns more than 20% (inclusive)
but less than 50% of the voting shares of the invested unit, it is generally considered to have a
significant influence on the invested unit, unless there is clear evidence that this situation It is
unable to participate in the production and operation decisions of the invested unit and does not
have a significant impact; when the Company owns less than 20% (exclusive) of the voting
shares of the invested unit, it is generally not considered to have a significant impact on the
invested unit, unless there is clear evidence that this Under such circumstances, we can
participate in the production and operation decisions of the invested unit and have a significant
influence.
(4) Impairment testing method and provision for impairment
Lu Thai Textile Co., Ltd. Annual Report 2025
The method for recognizing asset impairment on investments in subsidiaries, associated
enterprises, and joint ventures is detailed in Note V-22.
Measurement model of investment property
Cost method measurement
Depreciation or amortization method
The investment property refers to the real estate gaining the rent or capital appreciation or both.
It includes rented land use right, holding land use right to be transferred after the appreciation
and rented building, etc.
The investment property is measured initially according to the cost and withdrawn depreciation
or amortization as regulations of fixed assets or intangible assets.
The Company adopts the cost mode to conduct the subsequent measurement on the investment
property, see the Note V-22 for the method of withdrawing asset impairment provision.
The difference between the disposal income of investment property sales, transfer, scrap or
damage after deducting its book value and related taxes is included in the current profit and loss.
(1) Conditions for recognition
The term “fixed assets” refers to the tangible assets that simultaneously possess the features as
follows: (a) they are held for the sake of producing commodities, rendering labor service,
renting or business management; and (b) their useful life is in excess of one fiscal year.
The fixed assets are only recognized when the relevant economic benefits probably flow in the
Company and its cost could be reliable measured.
The fixed assets of the Company are initially measured at the actual cost at the time of
acquisition.
The subsequent expenditures related to the fixed assets shall be included in the cost of the fixed
assets when the economic benefits related to the fixed assets are likely to flow into the
Company and the costs can be measured reliably. The daily repair expenses of fixed assets that
do not meet the conditions of capitalized subsequent expenditures of fixed assets shall be
included in the current profit and loss or the cost of relevant assets according to the
beneficiaries when incurred. The carrying value of the replaced part shall be terminated.
(2) Depreciation methods
Annual deprecation
Category Depreciation method Useful life Salvage value (%)
(%)
Properties and Average method of
buildings useful life
Machinery and Average method of
equipment useful life
Average method of
Transportation vehicle 5 0-10.00 20.00-18.00
useful life
Electronic devices and Average method of
others useful life
Lu Thai Textile Co., Ltd. Annual Report 2025
(3) Recognition basis, pricing and depreciation method of fixed asset under financial lease
See the Note V-22 for details.
(4) At the end of each year, review is carried out by the Company for the service life,
estimated net residual value and depreciation method of fixed assets.
If there is any difference between the expected service life and the original estimated service
life, the service life of fixed assets will be adjusted; if there is any difference between the
expected net residual value and the original estimated net residual value, the expected net
residual value will be adjusted
(5) Disposal of Fixed Assets
A fixed asset shall be derecognized when it is disposed of or it is expected that no economic
benefit can be generated by using or disposing of it. The amount of the disposal income of sales,
transfer, scrap or damage of the fixed asset after deducting its carrying value and related taxes
is included in the current profit and loss.
Construction in progress 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 expenses.
Construction in progress is transferred to fixed assets when the assets are ready for their
intended use.
See the details of the asset impairment provision withdrawal method of the construction in
progress to Note V-22.
Engineering materials of the Company refer to various materials prepared for construction in
progress, including engineering materials, equipment not yet installed, tools and instruments
prepared for production, etc.
The purchased engineering materials will be measured according to the cost. The received
engineering materials will be transferred to the construction in progress, and the remaining
engineering materials after the completion of the project will be stored as inventory.
Please refer to Note V-22 for the method of provision for impairment of assets for engineering
materials.
In the balance sheet, the ending balance of engineering materials is listed in the “construction in
progress” item.
(1) Confirmation principle of capitalized borrowing costs
The borrowing costs incurred by the Company, if can directly belong to acquisition,
construction or production of assets meeting capitalization conditions, are capitalized and
included in relevant asset cost; other borrowing costs are confirmed as expense according to its
amount at the time of occurrence and included in the current profits and losses. Borrowing costs
are capitalized when they meet the following conditions:
Lu Thai Textile Co., Ltd. Annual Report 2025
a) Asset expenditures have been incurred. Asset expenditures include those incurred for the
acquisition, construction, or production of assets that meet the capitalization criteria, through
cash payments, transfer of non-cash assets, or the incurrence of interest-bearing debts.
b) Borrowing costs have been incurred.；
c) The acquisition, construction, or production activities necessary to bring the asset to the
condition for intended use or sale have begun.
(2) Capitalization period for borrowing costs
When the Company acquires, constructs or produces assets, which meet capitalization
conditions and reach the intended usable or saleable status, the borrowing costs stop
capitalization. The borrowing costs that occur after the assets meeting capitalization conditions
reach the intended usable or saleable status are confirmed as expenses according to its amount
at the time of occurrence and are included in the current profits and losses.
If the assets meeting capital conditions generate improper interruption in the course of
acquisition, construction or production, and the interruption time continuously exceeds three
months, capitalization of borrowing costs suspends; the borrowing costs in the normal
interruption period are continually capitalized.
(3) Capitalization rate of borrowing costs and calculation method
of capitalized amount The interest expenses of special borrowing actually occurring in the
current period, minus the interest income of the unused borrowed capital obtained from
depositing in bank or the gain on temporary investment, are capitalized; for common borrowing,
the weighted average of asset expenditure of the part that the cumulative asset expenditure
exceeds special borrowing is multiplied by the capitalization rate of the occupied common
borrowing to determine capitalization amount. Capitalization rate is calculated and determined
according to the weighted average rate of common borrowing.
In the period of capitalization, the exchange difference of special borrowing in foreign currency
is fully capitalized; the exchange difference of special borrowing in foreign currency is
included in the current profits and losses.
(1) Useful life and its determination basis, estimation, amortization method, or review
procedure
The Company’s intangible assets include land use rights, software licenses, patents, and others.
Intangible assets are initially measured at cost, and their service life is analyzed and determined
when intangible assets are acquired. If the service life of intangible assets is limited, the
intangible assets shall be amortized by the method that can reflect the expected realization
method of the economic benefits related to the assets within the expected service life since they
are available for use. The method of line shall be used for amortization if no expected
realization method can be determined reliably. Intangible assets with uncertain service life shall
not be amortized.
The amortization method of intangible assets with limited service life is as follows:
Amortization
Category Service life Notes
method
Land use right Stipulated in the land certificate Method of line
Lu Thai Textile Co., Ltd. Annual Report 2025
Patent use right Ten years Method of line
Software use rights 1-3 years Method of line
Trademark right Ten years Method of line
At the end of each year, the Company reviews the service life and amortization method of
intangible assets with limited service life. If the estimate is different from the previous one, the
original estimate shall be adjusted and treated as per accounting estimate change.
If it is estimated that an intangible asset can no longer bring future economic benefits to the
enterprise on the date of balance sheet, this carrying amount of the intangible asset shall be
transferred into the current profit and loss.
The method of withdrawing asset impairment on intangible assets was stated in the Note V-22.
The Company’s R&D expense relates directly to R&D activities, including R&D personnel’s
employee remuneration, direct input expenses, depreciation expenses and long-term deferred
expenses, design expenses, equipment commissioning expenses, amortization expenses of
intangible assets, commissioned external research and development expenses, and other
expenses, etc. The wages of R&D personnel are allocated to R&D expense based on project
hours. R&D activities that share equipment, production lines, or sites with other production and
operational activities are allocated to R&D expense based on the proportion of hours or area
used.
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 can be capitalized only when they satisfy the following
conditions simultaneously: It is feasible technically to finish intangible assets for use or sale; It
is intended to finish and use or sell the intangible assets; 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; 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; The development expenditures of the intangible assets can be reliably measured. The
development expenditures shall be recorded into profit or loss for the current period when they
don’t satisfy the following conditions.
The research and development project of the Company will enter the development stage after
meeting the above conditions and the project is approved and initiated through technical
feasibility and economic feasibility study.
The capitalized expenditure in the development stage is listed as expenditure for development
on the balance sheet, and it will be transferred to intangible assets from the date when the
project reaches the intended purpose.
For long-term equity investment in subsidiaries, associated enterprises and joint ventures,
investment property which follow-up measurement is carried out by cost pattern, fixed assets,
construction in progress, right-of-use assets, intangible assets, goodwill, etc. (excluding
Lu Thai Textile Co., Ltd. Annual Report 2025
inventory, deferred income tax assets, financial assets), the impairment of assets shall be
determined according to the following methods:
On the date of the balance sheet, determination shall be made to see whether there is any sign of
possible impairment of assets. If there is, the Company will estimate its recoverable amount and
conduct impairment test. For goodwill, intangible assets with uncertain service life and
intangible assets that have not reached the intended use status due to business merger,
impairment test shall be carried out every year regardless of whether there is any sign of
impairment.
The recoverable amount is determined according to the net amount of the fair value of the asset
minus the disposal expenses and the present value of the expected future cash flow of the asset,
the higher amount shall prevail. The Company estimates the recoverable amount on the basis of
a single asset. If it is difficult to estimate the recoverable amount of a single asset, the
recoverable amount of the asset group shall be determined based on the asset group to which
the asset belongs. The asset group is determined on the basis of whether the main cash inflow
generated by the asset group is independent of the cash inflow of other assets or asset groups.
When the recoverable amount of an asset or asset group is lower than its carrying amount, the
group will write down its carrying amount to the recoverable amount, and the written down
amount will be included in the current profit and loss, and the corresponding asset impairment
reserve will be accrued.
Regarding the impairment test of goodwill, the carrying amount of goodwill formed by business
merger shall be apportioned to the relevant asset group in a reasonable way from the date of
purchase. If it is difficult to apportion to the relevant asset group, it shall be apportioned to the
relevant combination of asset group. The relevant asset group or combination of asset groups is
the one that can benefit from the synergy effect of business merger, and is the one smaller than
the reportable segment determined by the Company.
In the impairment test, if there is any sign of impairment in the asset group or combination of
asset groups related to goodwill, first, impairment test shall be carried out on the asset group or
combination of asset groups not containing goodwill, to calculate the recoverable amount and
recognize the corresponding impairment loss. Then impairment test shall be carried out on the
asset group or combination of asset group containing goodwill to compare the carrying amount
with the recoverable amount. If the recoverable amount is lower than the carrying amount, the
impairment loss of goodwill shall be recognized.
Once the asset impairment loss of assets is recognized, it will not be reversed in the future
fiscal year.
The long-term deferred expenses to be amortized incurred by the Company are valued at the
actual cost and amortized averagely according to the expected benefit period. For long-term
deferred expenses, the amortized value that cannot benefit the future fiscal year shall be
included in the current profit and loss.
(1) Scope of employee remuneration
Payroll refers to the various forms of remuneration or compensation given by an enterprise for
services provided by employees or for the termination of employment relations. Payroll mainly
includes short-term salary, welfare after departure, demission welfare, and other long-term staff
Lu Thai Textile Co., Ltd. Annual Report 2025
welfare. Benefits provided to employees' spouses, children, dependents, survivors of deceased
employees, and other beneficiaries also belong to the payroll.
Based on liquidity, payroll is presented in the balance sheet under the items “payroll payable”
and “long-term payroll payable”.
(2) Short-term salary
During the fiscal year in which employees provide services, the Company recognizes the actual
employee wages, bonuses, social insurance premiums such as medical insurance premiums,
work-related injury insurance premiums, and maternity insurance premiums and housing fund
paid to employees according to the prescribed standards and proportions as liabilities and
included them in the current profit and loss or related asset costs.
(3) Post-employment benefits
The post-employment benefit scheme includes a defined withdrawal plan and a defined benefit
scheme. Among them, the defined withdrawal plan refers to the post-employment benefit
scheme that the enterprise no longer assumes further payment obligations after the fixed fund
has paid a fixed fee; the defined benefit scheme refers to the post-employment benefit scheme
other than the defined benefit scheme.
Set withdrawal plan
The set withdrawal plan includes basic pension insurance and unemployment insurance.
During the fiscal year in which employees provide services, the amount of deposit payable
calculated according to the set withdrawal plan is recognized as a liability and included in the
current profit and loss or related asset costs.
Defined benefit scheme
For defined benefit schemes, actuarial valuation is performed by an independent actuary on the
balance sheet date of the year, and the cost of providing benefits is determined using the
projected unit credit method. Employee compensation costs arising from the Company's defined
benefit schemes comprise the following components:
a) Service cost, including current service cost, past service cost, and gains or losses on
settlement. Current service cost refers to the increase in the present value of the defined benefit
scheme obligation resulting from employee service rendered in the current period. Past service
cost refers to the increase or decrease in the present value of the defined benefit scheme
obligation related to employee service in prior periods arising from amendments to the defined
benefit scheme.
b) Net interest on the net defined benefit liability or asset, comprising interest income on plan
assets, interest expense on the defined benefit scheme obligation, and interest arising from the
effect of any asset ceiling.
c) Changes arising from the remeasurement of the net defined benefit liability or asset.
Unless other accounting standards require or permit employee benefit costs to be included in
the cost of assets, the Company recognizes items a) and b) above in profit or loss for the current
period. Item c) is recognized in other comprehensive income and will not be reclassified to
profit or loss in subsequent fiscal years. Upon termination of the original defined benefit
scheme, the amount previously recognized in other comprehensive income is transferred in full
within equity to retained earnings.
Lu Thai Textile Co., Ltd. Annual Report 2025
(4) Demission welfare
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 demission welfare owning to the relieving plan of the labor relation or the downsizing
advice, should confirm the liabilities of the employees’ salary from the demission welfare on
the earlier day between the cost confirmed by the Company and the cost related to the
reorganization of the payment of the demission welfare and includes which in the current gains
and losses.
For internal early retirement plans implemented for employees, economic compensation
provided before the formal retirement date constitutes demission welfare. From the date the
employee ceases to provide service until the normal retirement date, the wages and social
insurance contributions payable to internally retired employees are recognized in full as a one-
time charge to profit or loss for the current period. Economic compensation payable after the
formal retirement date (such as regular pension retirement benefits) is accounted for as post-
employment benefits.
(5) Other long-term benefits
Other long-term employee benefits provided by the Company to employees that meet the
conditions of defined withdrawal plans shall be handled in accordance with the above-
mentioned relevant provisions on defined withdrawal plans. Those in line with the defined
benefit scheme shall be handled in accordance with the above-mentioned relevant provisions on
the defined benefit scheme. However, the part of "changes caused by remeasuring the net
liabilities or net assets of the defined benefit scheme" in the salary cost of relevant employees
shall be included in the current profit and loss or the relevant asset cost.
The Company recognizes an obligation related to a contingency as a provision when all of the
following conditions are met:
(1) The obligation is a present obligation of the Company;
(2) It is probable that an outflow of economic benefits will be required to settle the obligation;
(3) The amount of the obligation can be reliably measured.
The provisions are initially measured in accordance with the optimal estimate of the necessary
expenditures for the fulfillment of the current obligation, with factors such as risks, uncertainty
and the time value of money related to contingencies taken into consideration comprehensively.
Where the time value of money has a significant impact, the best estimate is determined by
discounting the relevant future cash outflow. The Company re-checks the carrying value of the
provisions on the balance sheet date and adjusts the carrying value to reflect the current best
estimate.
If all or part of the expenditure required to settle recognized provisions is expected to be
compensated by a third party or other parties, the amount of compensation shall be recognized
separately as an asset only when it is substantially certain that it will be received. The
recognized amount of compensation shall not exceed the book value of the recognized
liabilities.
Lu Thai Textile Co., Ltd. Annual Report 2025
(1) Category of share-based payment
The share-based payments of the Company are divided into equity-settled share payments and
cash-settled share payments.
(2) Method of determining the fair value of equity instruments
The Company shall determine the fair value of equity instruments such as options granted in
active markets according to the quotations in active markets. For granted equity instruments
such as options without active markets, the fair value is determined by option pricing model.
The following factors shall be considered for the selected option pricing model: A. Exercise
price of the option; B. Expiration date of the option; C. Current price of the object shares; D.
Expected fluctuation rate of stock price; E. Estimated dividends of shares; F. Risk-free interest
rate within the option term.
(3) Ground for recognizing the optimal estimation of feasible right equity instruments
On each balance sheet date during the waiting period, the Company shall make the optimal
estimate based on subsequent information such as the latest change in the number of employees
with feasible rights, and revise the number of equity instruments for the estimated feasible
rights. On the feasible right date, the final estimated number of feasible right equity instruments
shall be the same as the actual number of feasible rights.
(4) Relevant accounting treatment for implementing, modifying and terminating share-based
payment plan Equity-settled share-based payments shall be measured at the fair value of the
equity instruments granted to employees. Where the right is exercised immediately after the
grant, relevant costs or expenses shall be included in accordance with the fair value of the
equity instruments on the grant date to accordingly increase the capital reserve. Where the right
is exercised upon the completion of the services during the waiting period or the achievement
of the specified result conditions, the services obtained in the current period shall be included in
the relevant costs or expenses and the capital reserve according to the fair value of the equity
instruments on the grant date based on the optimal estimate of the number of feasible right
equity instruments on each balance sheet date during the waiting period. The recognized related
costs or expenses and total owner’s equity after the feasible right date shall not be adjusted any
more.
The cash-settled share-based payments shall be measured according to the fair value of
liabilities calculated and determined on the basis of shares or other equity instruments, which
are assumed by the Company. Where the right is exercised immediately after the grant, the fair
value of the liabilities assumed by the Company shall be included in the relevant costs or
expenses on the grant date, so as to accordingly increase the liabilities. For the cash-settled
share-based payments, for which the right is exercised upon the completion of the services
during the waiting period or the achievement of the specified result conditions, the services
obtained in the current period shall be included in costs or expenses and corresponding
liabilities according to the fair value amount of liabilities assumed by the Company based on
the optimal estimate of feasible status on each balance sheet date during the waiting period. On
each balance sheet date and settlement date before the relevant liabilities are settled, the fair
value of the liabilities shall be re-measured, and the changes shall be included in the current
profit and loss.
When the Company modifies a share-based payment plan, if the modification increases the fair
value of the equity instruments granted, the increase in the services acquired shall be
Lu Thai Textile Co., Ltd. Annual Report 2025
recognized accordingly according to the increase in the fair value of the equity instruments; if
the modification increases the number of equity instruments granted, the fair value of the
increased equity instruments shall be recognized accordingly as the increase in the services
acquired. The increase in the fair value of the equity instruments refers to the difference
between the fair values of the equity instruments before and after the modification on the
modification date. If the modification reduces the total fair value of the share-based payment or
any other method not conducive to the employees is adopted to modify the terms and conditions
of the share-based payment plan, the accounting treatment of the services acquired would
continue, as if such change had never occurred, unless the Company cancels some or all of the
granted equity instruments.
During the waiting period, if the granted equity instrument is cancelled (Excluding those
cancelled due to failure to meet non-market-based vesting conditions, such as service
conditions or non-market-based performance conditions.), the Company shall treat the
cancelled equity instrument as an accelerated exercise, immediately include the left amount to
be recognized during the waiting period in the current profit and loss, and recognize the capital
reserve at the same time. Where the employee or other party can choose to meet the non-
feasible right condition but fails during the waiting period, it shall be treated as the cancellation
of the granted equity instrument.
(5) Restricted shares
In the equity incentive plan, the Company grants restricted stocks to the incentive personnel,
who firstly subscribe the stocks. If the unlocking conditions specified in the equity incentive
plan are not met, the Company will repurchase the stocks at the previously agreed price. Where
the restricted stocks issued to the employees has gone through capital increase procedures such
as registration in accordance with relevant provisions, the Company shall, on the grant date,
recognize the share capital and the capital reserve (capital stock premium) in conformity with
the subscription payment received from the employees. Meanwhile, it shall recognize the
treasury stocks and other payables with respect to repurchase obligations.
Accounting policies adopted for the recognition and measurement of revenue disclosed by type
of business
(1) General principle
The Company recognizes revenue when it has fulfilled its contract performance obligation in a
contract, namely, when the customer obtains the control over the related commodity or service.
If a contract contains two or more performance obligations, the Company allocates transaction
price to single performance obligations on the contract commencement date according to the
relative ratio of separate price of goods or services committed by single performance obligation,
and income is measured according to the transaction price allocated to single performance
obligation.
When meeting one of the following conditions, the Company belongs to performance of
contract performing obligations in a period, or otherwise, the Company belongs to performance
of contract performing obligations at a point of time:
a) While the Company is performing the contract, the customer acquires and consumes the
economic benefit arising from performance by the Company.
Lu Thai Textile Co., Ltd. Annual Report 2025
b) The customer can control the goods in construction in the course of performance by the
Company.
c) The goods outputted in the course of performance by the Company have irreplaceable
purpose, and the Company has the right to collection of money for the completed performance
part cumulative up to now in the whole term of contract.
For the performance obligation performed in a period, the Company confirms income according
to the performance progress in such period. When the performance progress cannot be
reasonably determined, if the cost that the Company has incurred is expected to be compensated,
income is confirmed according to the cost amount that has occurred, until the performance
progress can be reasonably determined.
For the performance obligation performed at a point of time, income is confirmed at the point
of time when the customer acquires the control right to relevant goods or services. When it
judges whether the customer has acquired the control right to the goods or services, the
Company will consider the following indications:
a) The Company enjoys the current collection right to the goods or services, i.e. the customer
undertakes current payment obligation to the goods.
b) The Company has transferred the legal ownership of the goods to the customer, that is, the
customer has owned the legal ownership of the goods.
c) The Company has transferred the kind of the goods to the customer, namely, the customer
has possessed the good in kind.
d) The Company has transferred the major risks and remuneration on the ownership of the
goods, i.e. the customer has acquired the major risks and remuneration on the ownership of the
goods.
e) The customer has accepted the goods or services.
f) Other indications showing that the customer has acquired the control right to the goods.
(2) Specific methods
The specific income confirming methods of the Company are following:
For income of domestic products, after the Company delivers products to the purchaser
according to the provisions of the contract and the purchaser confirms receipt, the purchaser
acquires the control right of products, and the Company confirms income.
For income of exportable products, after the Company completes customs declaration of
products, departure and obtains bill of lading according to the provisions of the contract, the
purchaser acquires the control right of products, and the Company confirms income.
Differences in methods for the recognition and measurement of revenue caused by different
business models for the same type of business
Not applicable.
Contract cost includes the incremental cost incurred for acquiring contract and contract
performance cost.
Lu Thai Textile Co., Ltd. Annual Report 2025
The incremental cost incurred for acquiring contract refers to the cost that will not occur if the
Company has not acquired contract (for example, sales commission). If the cost is expected to
be recovered, the Company regards it as contract acquiring cost and confirms it as an asset. The
expenses incurred by the Company for acquiring contract, other than the incremental cost
expected to be recovered, are included in the current profits and losses at the time of occurrence.
If the cost incurred for performance of contract does not belong to inventory and
other scope of other Accounting Standards for Business Enterprises and meets the following
conditions, the Company will regard it as contract performance cost and confirm it as an asset:
a) The cost is directly related to a copy of contract currently acquired or expected to be
acquired, including direct labor, direct materials, manufacture expenses (or similar expenses),
cost determined to be undertaken by the customer and other cost incurred due to the contract;
b) The cost increases the resources of the Company that will be used for performance of
contract obligations in the future；
c) The cost is expected to be recovered.
The assets confirmed by the contract acquiring cost and the assets confirmed by the contract
performance cost (“assets related to contract cost”) are amortized according to the same basis as
confirmation of goods or service income related to the asset and are included in the current
profits and losses. If the amortization term does not exceed one year, it will be included in the
current profits and losses at the time of occurrence.
When the carrying value of an asset related to contract cost is higher than the difference
between the following two items, the Company accrues provision for asset impairment to the
excessive part and confirms it as asset impairment loss:
a) The remaining consideration that the Company expects to acquire from transfer of goods or
services related to the asset;
b) The cost that will occur for transfer of such related goods or services as estimated.
Government grants are recognized when they meet the conditions attached to government
grants and when they can be received.
Government grants for monetary assets shall be measured according to the amount received or
receivable. Government grants for non-monetary assets are measured at fair value; if the fair
value cannot be obtained reliably, they are measured at a nominal amount of 1 yuan.
Asset related government grants refer to the government grants obtained by the Company for
acquisition and construction or other forms of long-term assets. In addition, they are
government grants related to income.
Regarding the government grants that the government document does not specify the object of
subsidy and can form long-term assets, the part of government subsidy corresponding to the
asset value shall be regarded as the asset-related government subsidy and the rest shall be
regarded as income-related government subsidy. If it is difficult to distinguish, the government
subsidy shall be regarded as the income-related government subsidy.
The government grants related to assets shall be recognized as the deferred income, which shall
be included in the profit and loss in installment in a reasonable and systematic way within the
service life of the relevant assets. Income-related government grants which are used to
Lu Thai Textile Co., Ltd. Annual Report 2025
compensate the relevant costs or losses incurred shall be included in the current profit and loss.
Those used to compensate the relevant costs or losses in the later period shall be included in the
deferred income, and shall be included in the current profit and loss during the recognition
period of the relevant expenses or losses. The government grants measured according to the
nominal amount shall be directly included in the current profit and loss. The same method is
adopted for the same or similar government grants businesses of the Company.
Government grants related to daily activities shall be included in other incomes according to the
essence of business transactions. Government grants irrelevant to daily activities are included in
non-operating revenue.
When the recognized government grants need to be returned, and are used to offset the carrying
value of related assets when initially recognized, the carrying amount of the assets shall be
adjusted; the book balance of relevant deferred income shall be offset if there is a balance of
relevant deferred income, and the excess part shall be included in the current profit and loss.
Otherwise, it shall be directly included in the current profit and loss.
Regarding the interest subsidy of the policy preferential loan obtained, if the Ministry of
Finance allocates the interest subsidy to the loan bank, the actual received loan amount shall be
taken as the entry value of the loan, and the borrowing cost shall be calculated according to the
loan principal and the policy preferential interest rate. If the Ministry of Finance allocates the
interest subsidy directly to the Company, the interest subsidy will offset the borrowing costs.
Income tax includes current income tax and deferred income tax. All shall be included in the
current profit and loss as income tax expense except the adjustment goodwill arising from
business combination, or the deferred income tax related to the transactions or events directly
included in the owner’s equity is included in the owner’s equity.
Pursuant to the temporary difference between the carrying value of assets and liabilities on the
date of balance sheet and the tax basis, the Company recognizes the deferred income tax by
balance sheet liability method.
Deferred income tax liabilities are recognized for all taxable temporary differences, unless the
taxable temporary difference arises from: (1) the initial recognition of goodwill, or the initial
recognition of an asset or liability in a transaction with the following characteristics: the
transaction is not a business combination, and at the time of the transaction, the transaction
affects neither accounting profit nor taxable income (except for single transactions in which the
initial recognition of both the asset and liability gives rise to equal taxable and deductible
temporary differences); or (2) taxable temporary differences associated with investments in
subsidiaries, joint ventures, and associated enterprises, where the Company is able to control
the timing of the reversal of the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future.
For deductible temporary differences, deductible losses, and tax credits that can be carried
forward to future years, the Company recognizes the resulting deferred income tax assets only
to the extent that it is probable that sufficient future taxable income will be available against
which the deductible temporary differences, deductible losses, and tax credits can be utilized,
unless the deductible temporary difference arises from: (1) a transaction that is not a business
combination and that, at the time of the transaction, affects neither accounting profit nor taxable
income (except for single transactions in which the initial recognition of both the asset and
liability gives rise to equal taxable and deductible temporary differences); or (2) deductible
Lu Thai Textile Co., Ltd. Annual Report 2025
temporary differences associated with investments in subsidiaries, joint ventures, and
associated enterprises, in which case a deferred tax asset is recognized only when both of the
following conditions are met: it is probable that the temporary difference will reverse in the
foreseeable future, and it is probable that sufficient taxable income will be available in the
future against which the deductible temporary difference can be utilized.
On the balance sheet date, the income tax assets and deferred income tax liabilities shall be
measured by the Company on the basis of the applicable tax rate during the period when the
assets are expected to be recovered or the liabilities are expected to be paid off, and the income
tax impact on the expected recovery of assets on the date of the balance sheet or on the method
to pay off the liabilities shall be reflected.
The carrying value of deferred income tax assets shall be reviewed at each balance sheet date. If
it is unlikely to obtain sufficient income tax payable to offset against the benefit of the deferred
income tax asset, the carrying 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 income tax payable will be available.
At the balance sheet date, deferred income tax liabilities and deferred income tax liabilities are
presented on a net basis when both of the following conditions are met: (1) the taxable entity
within the Company has a legally enforceable right to set off current tax assets against current
tax liabilities; and (2) the deferred income tax liabilities and deferred income tax liabilities
relate to income taxes levied by the same tax authority on the same taxable entity within the
Company.
(1) Identification of lease
On the start date of the contract, the Company assessed as the lessee or the lessor whether the
customers in the contract are entitled to obtain almost all the economic benefits arising from the
use of the identified assets during the use period, and have the right to dominate the use of the
identified assets during the use period. If a party to the contract transferred the right allowing
the control over the use of one or more assets that have been identified within a certain period,
in exchange for a consideration, such contract is determined by the Company to be a lease or
includes a lease.
(2) As the lessee
On the commencement date of the lease term, the Company recognizes the right-of-use assets
and lease liabilities for all leases, except for short-term leases and low-value asset leases with
simplified treatment.
For accounting policies for the right-of-use assets, see Note V-32.
Lease liabilities are initially measured in line with the lease payments not yet paid on the
commencement date of the lease term using the present value calculated by the interest rate
implicit in lease. If the interest rate implicit in lease cannot be determined, the incremental
borrowing rate shall be used as the discount rate. Lease payments include: Fixed payment and
substantial fixed payment, and the relevant amount after deducting the lease incentive if any;
variable lease payments depending on index or ratio; exercise price of the purchased option,
provided that the lessee reasonably determines that the option will be exercised; the amount to
be paid for the exercise of the lease termination options, provided that the lease term reflects
that the lessee will exercise the options to terminate the lease; and estimated payments due to
Lu Thai Textile Co., Ltd. Annual Report 2025
the guaranteed residual value provided by the lessee. Subsequently, it calculates the interest
expenses of the lease liabilities during each period of the lease term at a fixed periodic interest
rate, and includes them in current profit and loss. Variable lease payments that are not covered
in the measurement of the lease liabilities are included in current profit or loss when actually
incurred.
Short-term lease
A short-term lease refers to a lease for a period not exceeding 12 months on the commencement
date of the lease, except for leases with a purchase option.
The Company includes the short-term lease payment in the cost of relevant assets or the current
profit and loss in each period of the lease term by the method of line.
Low-value asset
lease A low-value asset lease refers to a lease where the value of a single leased asset is less
than RMB 40,000 when the asset is new.
The Company includes the lease payment of the low-value asset lease in the cost of relevant
assets or the current profit and loss in each period of the lease term by the method of line.
For low-value asset lease, it chooses to adopt the aforesaid simplified treatment method in line
with the specific status of each lease.
Lease change
If a lease changes and meets the following conditions simultaneously, the lease change shall be
regarded as a separate lease for accounting treatment: a) The lease change expands its lease
scope by increasing one or multiple use rights of lease assets; and b) The increased
consideration is equivalent to the amount of the separate price for the expanded part of the lease,
which is adjusted according to the contract.
Where the lease change is not regarded as a separate lease for accounting treatment, on the
effective date of the lease change, by the Company, the consideration of the contract is
amortized again upon change, the lease term is redetermined, and the lease liabilities are
remeasured according to the present value that is calculated by the lease payments and the
revised discount rate upon change.
The Company shall correspondingly reduce the book value of the right-of-use assets and
include the profit or loss of the lease terminated in part or whole in the current profit or loss, if
the lease change narrows the scope of lease or shortens the lease term.
The Company shall correspondingly adjust the book value of the right-of-use assets, if other
lease changes result in the re-calculation of the lease liability.
(3) As the lessor
When the Company is a lessor, it shall recognize leases that substantially transfer all risks and
remuneration related to the ownership of assets as financial leases, and leases other than
financial leases as operating leases.
financial lease
In a financial lease, the Company recognizes the net lease investment as the book value of
financial lease receivables on the commencement date of the lease term. The net lease
investment is the sum of the unguaranteed residual value and the present value of lease
Lu Thai Textile Co., Ltd. Annual Report 2025
receivables not yet received on the commencement date of the lease term at the interest rate
implicit in lease. As the lessor, the Company calculates and confirms the interest income at a
fixed periodic interest rate in each period in the lease term. Variable lease payments obtained
that are not included in the net lease investment for measurement, where the Company is the
lessor, are included in the profit or loss of the current period when actually incurred.
Accounting treatment shall be conducted for the derecognition and impairment of financial
lease receivables in accordance with the provisions of the Accounting Standards for Business
Enterprises No.22 - Recognition and Measurement of Financial Instruments and the Accounting
Standards for Business Enterprises No.23 - Transfer of Financial Assets.
Operating lease
The Company shall recognize the current profit and loss of the rent of the operating lease in
each period of the lease term by the method of line. The initial direct expenses related to the
operating lease shall be capitalized, amortized within the lease term on the same basis as the
recognition of rental earning, and included in profit or loss for the current period. The received
variable lease payments related to the operating lease that are not included in the lease
payments receivable are included in profit or loss for the current period when they are actually
incurred.
Lease change
Where an operating lease changes, the accounting treatment is conducted for it which is
regarded as a new lease from the effective date of the change, and receivables in advance or
lease receivables related to lease before change are deemed as the receivables in the new lease.
Where a financial lease changes and meets the following conditions simultaneously, the change
is regarded as a separate lease by the Company for accounting treatment: a) The change
expands its lease scope by increasing one or multiple use rights of lease assets; and b) The
increased consideration is equivalent to the amount of the separate price for the expanded part
of the lease, which is adjusted according to the contract.
Where a financial lease changes and is not regarded as a separate lease for accounting treatment,
the Company treats the changed lease under the following circumstances: a) If the change
comes into force on the commencement date of the lease term, the lease will be clarified as an
operating lease, while it will be regarded as a new lease for accounting treatment by the
Company on the effective date of the lease change, and the net lease investment before the
effective date of lease change will be regarded as the book value of lease assets; and b) If the
change comes into force on the commencement date of the lease term, the lease will be clarified
as a financial lease, the Company will carry out accounting treatment in accordance with the
provisions on modification or renegotiation of a contract of the Accounting Standards for
Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments.
(1) Recognition conditions for right-of-use assets
The term “right-of-use assets” refers to the right of the lessee to use the leased assets during the
lease term.
At the start date of the lease term, the Company initially measures the right-of-use assets at cost.
The cost includes: the initial measurement amount of lease liabilities; the lease payments paid
on or prior to the inception of the lease (less the related amount of lease incentives already
enjoyed if any); the initial direct expense incurred by the Company as the lessee; and the
Lu Thai Textile Co., Ltd. Annual Report 2025
anticipated cost of dismantling and removing the leasehold property, restoring the site where
the leasehold property is located, or bringing the leasehold property back to the state agreed
upon in the lease terms borne by the Company as the lessee. As the lessee, the Company shall
recognize and measure the cost of demolition and restoration in accordance with the
Accounting Standards for Business Enterprises No.13 - Contingencies. Subsequent adjustments
are made for any re-measurement of the lease liabilities.
(2) Depreciation method of right-of-use assets
The Company uses the method of line for depreciation. Where it can be reasonably certain that
the Company, the lessee, can obtain ownership of the leased assets at the expiry of the lease
term, the leased assets are depreciated over the residual service life. Where it cannot be
reasonably certain that the Company can obtain ownership of the leased assets at the end of the
lease term, the leased assets are depreciated at the shorter of the lease term and the residual
service life of the leased assets.
(3) Impairment test method and impairment provision method of right-of-use assets See Note
V-22.
In accordance with the regulations of the Notice on Issuing the Management Measures for the
Provision and Use of Enterprise Production Safety Costs (C.Z. [2022] No. 136) issued by the
Ministry of Finance and the Ministry of Emergency, and based on the above actual annual
operating revenue of power generation and supply enterprises, the Company adopts the method
where the deduction rate declines when the operating revenue increases to deduct safety
production costs according to the following standards:
Annual actual sales revenue standard Withdrawal proportion of safety production expense (%)
Not exceeding RMB10 million 3
RMB10 million to RMB100 million 1.5
RMB100 million to RMB1 billion 1
RMB1 billion to RMB5 billion 0.8
Cost of safety production and maintenance are included in the cost of relevant production or
current loss and profit when deducted, and are simultaneously included in the “specific reserve”.
When using the deducted safety production costs and the costs for sustaining simple
reproduction in conformity with regulations, the outgoing expenditures shall directly be used to
offset the specific reserve; the costs becoming fixed assets shall be aggregated under
“construction in progress” and then be recognized as fixed assets when the safety project is
completed and reaches the intended available status. The aforesaid fixed assets will not be
depreciated as accrued in the future period.
Before the shares repurchased by the Company are cancelled or transferred, they are managed
as treasury stocks, and all expenditures for the repurchase of shares are transferred to the cost of
treasury stocks. Consideration and expenses paid in share repurchase reduce owners’ equity.
When buying back, transferring or cancelling shares in the Company, no profits or losses are
recognized.
The transfer of inventory shares shall be credited to the capital reserve on the basis of the
difference between the amount actually received and the carrying amount of the treasury stock.
Write off surplus reserves and retained earnings if capital reserves are insufficient to offset.
Lu Thai Textile Co., Ltd. Annual Report 2025
Write-off of treasury stocks can reduce shares in par with par value and number of write-out
stocks. The capital reserve is offset based on the difference between book balance and face
value of cancelled treasury stocks. Write off surplus reserves and retained earnings if capital
reserves are insufficient to offset.
The Company evaluates the important accounting estimates and key assumptions adopted on an
ongoing basis, based on historical experience and other factors, including reasonable
expectations of future events. Important accounting estimates and critical assumptions that have
a significant risk of causing a material adjustment to the carrying value of assets and liabilities
within the next fiscal year are listed as follows:
Classification of financial assets The significant judgments involved when the Company
determines the classification of financial assets include analysis of business models and
contractual cash flow characteristics.
The Company determines the business model for managing financial assets at the level of the
financial asset portfolio, taking into account factors such as the approach of evaluating and
reporting the performance of financial assets to key management personnel, the risks affecting
the performance of financial assets and the manner in which they are managed, and way in
which the relevant business management personnel are compensated.
When the Company evaluates whether the contractual cash flows of financial assets are
consistent with the basic lending arrangements, it makes the following main judgments:
whether the time distribution or amount of the principal may change during the duration due to
early repayment; whether the interest is only Includes time value of money, credit risk, other
fundamental lending risks and consideration against costs and profits. For example, whether the
amount of early repayment reflects only the outstanding principal and interest based on the
outstanding principal, as well as reasonable compensation paid for early termination of the
contract.
Measurement of expected credit losses of accounts receivable
The Company calculates the expected credit loss of accounts receivable using the exposure to
default risk of accounts receivable and the expected credit loss ratio, and determines the
expected credit loss ratio based on the probability of default and the default loss ratio. When
determining the expected credit loss ratio, the Company uses data such as internal historical
credit loss experience and adjusts historical data to take into account current conditions and
forward-looking information. When considering forward-looking information, the Company
uses indicators such as the risk of economic downturn and changes in the external market
environment, technological environment and customer profile. The Company regularly
monitors and reviews the assumptions related to the calculation of expected credit losses.
Goodwill impairment
The Company assesses at least annually whether goodwill has been impaired. This requires
estimating the use value of the asset group to which goodwill has been assigned. When
estimating the use value, the Company shall estimate the future cash flows from the asset group
and select the appropriate discount rate to calculate the present value of future cash flows at the
same time.
Deferred income tax assets
Lu Thai Textile Co., Ltd. Annual Report 2025
To the extent that it is probable that sufficient taxable profit will be available to offset the
losses, the Company recognizes deferred income tax assets for all unused tax losses. This
requires the Company’s management to use many judgments to estimate the timing and amount
of future taxable profits, taking into account tax planning strategies, so as to determine the
amount of deferred income tax assets to be recognized.
Determination of fair value of unlisted equity investment The
fair value of unlisted equity investment is the expected future cash flows discounted at the
current discount rate for items with similar terms and risk characteristics. Such valuation
requires the Company to estimate expected future cash flows and discount rates and is therefore
subject to uncertainty. Under limited circumstances, if the information used to determine fair
value is insufficient, or if the range of possible estimates of fair value is wide and the cost
represents the best estimate of fair value within that range, the cost may represent its
appropriate estimate of fair value within that range of distribution.
(1) Significant Changes in Accounting Policies
□ Applicable Not applicable
(2) Significant Changes in Accounting Estimates
□ Applicable Not applicable
(3) Adjustments to Financial Statement Items at the Beginning of the Year of the First
Implementation of the New Accounting Standards Implemented since 2025
□ Applicable Not applicable
VI. Taxation
Category of taxes Tax basis Tax rate
Taxable value-added amount (the taxable amount is
calculated by multiplying the taxable sales by the
VAT 13%, 9%, 6%, 5%, 3%, 0%
applicable tax rate and deducting the input tax allowed
to be deducted in the current period)
City maintenance &
Turnover tax actually paid 7%, 5%
construction tax
Enterprise income
Income tax payable 0%, 11%, 15%, 16.5%, 20%, 25%
tax
Notes of the disclosure situation of the taxpaying bodies with different enterprises income tax
rate
Taxpayer Income tax rate
The Company 15%
LuFeng Company 15%
Lulian New Materials 15%
Lu Thai Hong Kong 16.50%
Luqun Textile 25%
Xinsheng Thermal Power 25%
Shanghai Luthai 20%
Lujia Import & Export 20%
Zhishu Consulting 20%
Lu Thai Occupational Training School 0%
Banyang Mountain Villa 20%
Huilin International 15%
Lu Thai Textile Co., Ltd. Annual Report 2025
Tianyi Apparel 0%
VACL 11%
In accordance with the Notice for Announcing the First Batch of Hi-tech Enterprise
Identification List of Shandong Province in 2023 with reference No. Lu Ke Zi [2024] 4, the
Company was identified as a hi-tech enterprise, and the certificate issuing date was 29
November 2023; the majority-owned subsidiary LuFeng Company Limited was identified as a
hi-tech enterprise, and the certificate issuing date was 29 November 2023. In accordance with
the Notice for Announcing Hi-tech Enterprise List of Shandong Province in 2025, the majority-
owned subsidiary Lulian New Materials was identified as a hi-tech enterprise, and the
certificate issuing date was 12 December 2022. Therefore, in accordance with Article 28 of the
Enterprise Income Tax Law of the People’s Republic of China and the Announcement of the
State Administration of Taxation on Issues Concerning the Implementation of Preferential
Income Tax Policies for High-tech Enterprises (Announcement No. 24 [2017] of the State
Administration of Taxation (“SAT”)), the applicable enterprise income tax rate shall be 15%.
The wholly-owned subsidiaries, including Shanghai Luthai, Zhishu Consulting, Banyang
Mountain Villa, and Lujia Import & Export have been recognized as small, low-profit
enterprises. According to the Announcement of the Ministry of Finance and the State Taxation
Administration on Preferential Income Tax Policies for Small, Low-profit Enterprises and
Privately or Individually-owned Businesses (Announcement No. 6 [2023] of the Ministry of
Finance and the State Taxation Administration) and Announcement of the Ministry of Finance
and the State Taxation Administration on Further Implementing the Preferential Income Tax
Policies for Micro and Small Enterprises (Announcement No. 13 [2022] of the Ministry of
Finance and the State Taxation Administration), the portion of the annual taxable income of
small, low-profit enterprises not exceeding RMB3 million shall be included in the taxable
income at a reduced rate of 25%, and the enterprise income tax shall be paid at the tax rate of
The wholly-owned subsidiary, Lu Thai Occupational Training School, has been recognized as a
non-profit making organization exempt from tax between 2021 and 2025. According to Article
whereby eligible non-profit making organizations are exempt from enterprise income tax shall
apply to the foregoing subsidiary.
Lu Thai Hong Kong. (hereinafter refers as Lu Thai (Hong Kong) Textile), the wholly-owned
subsidiary of the Company, was incorporated in Hong Kong SAR, whose profit tax shall be
paid at tax rate of 16.5%.
The wholly own subsidiary VACL, according to the Burma’s Special Economic Zone Law
issued by Pyidaungsu Hluttaw, VACL enjoys tax preference on enterprise 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 22%. Year 2025 is the third year of tax halving period with the
enterprise income tax rate at 11%.
The wholly-owned subsidiary, Tianyi Apparel, enjoys a five-year enterprise income tax
preference starting from the operating year, in accordance with the Myanmar Investment Law
issued by the Myanmar Parliament. After grace period, enterprise income tax rate was of 22%.
Lu Thai Textile Co., Ltd. Annual Report 2025
The wholly-owned subsidiary, Huilin International, which was registered in the Hainan Free
Trade Port and operates in the encouraged industry, shall pay enterprise income tax at a reduced
tax rate of 15% between January 1, 2020 and December 31, 2027, according to the
Announcement of the Ministry of Finance and the State Taxation Administration on the
Preferential Income Tax Policies for Enterprises Registered in the Hainan Free Trade Port
(Announcement No. 31 [2020] of the Ministry of Finance and the State Taxation
Administration) and the Notice of the Ministry of Finance and the State Taxation
Administration on Continuing to Implement the Preferential Income Tax Policies for
Enterprises Registered in the Hainan Free Trade Port (C.S. [2025] Document No. 3).
VII. Notes to Main Items of Consolidated Financial Statements
Unit: RMB
Item Ending balance Balance at the beginning of the period
Cash on hand 5,336,336.72 4,283,695.11
Bank deposits 2,338,764,463.79 2,051,573,093.26
Other monetary assets 52,750,659.21
Total 2,396,851,459.72 2,055,856,788.37
Of which: total amount deposited
overseas
Other notes:
(1) As of 31 December 2025, monetary assets subject to restricted ownership amounted to
RMB1,910,848.94, representing a margin deposit for L/C.
(2) Bank deposits include accrued interest of RMB24,281,462.47.
Unit: RMB
Balance at the beginning of the
Item Ending balance
period
Financial assets at fair value through profit or loss 1,094,067,591.31 693,972,672.64
Including:
Debt instrument investment 684,327,576.29 230,874,092.14
Equity instrument investment 409,094,411.86 462,622,130.31
Derivative financial assets 645,603.16 476,450.19
Including:
Total 1,094,067,591.31 693,972,672.64
(1) Notes receivable listed by category
Unit: RMB
Item Ending balance Balance at the beginning of the period
Bank acceptance bills 34,764,092.88 50,959,990.35
Commercial acceptance bills notes 2,736,574.68 380,000.00
Total 37,500,667.56 51,339,990.35
(2) Disclosure by withdrawal methods for bad debts
Unit: RMB
Ending balance Balance at the beginning of the period
Category Book value Bad debt provision Carrying Book value Bad debt provision
Carrying amount
Operating Proportio Operating Withdrawa amount Operating Proportio Operatin Withdrawa
Lu Thai Textile Co., Ltd. Annual Report 2025
revenue n revenue l revenue n g l
proportion revenue proportion
Including:
Notes
receivable
of bad debt 37,644,697.8 144,030.2 37,500,667.5 51,359,990.3 20,000.0
provision 1 5 6 5 0
by
portfolio
Including:
Commercia
l 144,030.2 20,000.0
acceptance 5 0
bills
Bank
acceptance
bills with 92.35% 99.22% 50,959,990.35
low credit
ratings
Total 100.00% 0.38% 100.00% 0.04% 51,339,990.35
Provision for bad debt provision on a portfolio basis: Bank acceptance bills with low credit
ratings
Unit: RMB
Ending balance
Name
Book value Bad debt provision Withdrawal proportion
Bank acceptance bills with low
credit ratings
Total 34,764,092.88
Notes to the determination basis for the group:
Based on the fact that the likelihood of loss on the notes receivable is minimal and the amount
of expected credit losses on the notes receivable is not material, the Company has not provided
for bad debt provision on the notes receivable.
Bad debt provision for commercial acceptance bills is made on a portfolio basis, considering
the aging and credit risk characteristics of the bills.
Unit: RMB
Ending balance
Name
Book value Bad debt provision Withdrawal proportion
Commercial acceptance bills 2,880,604.93 144,030.25 5.00%
Total 2,880,604.93 144,030.25
Notes to the determination basis for the group:
For notes receivable divided into portfolios, with reference to historical credit loss experience,
combined with current conditions and predictions of future economic conditions, the Company
has calculated expected credit losses through default risk exposure and expected credit loss rate
for the entire duration.
If adopting the general mode of expected credit loss to withdraw bad debt provision of notes
receivable:
□ Applicable Not applicable
(3) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
Withdrawal of bad debt provision:
Lu Thai Textile Co., Ltd. Annual Report 2025
Unit: RMB
Balance at the Change in the reporting period
Category beginning of Reversed or Ending balance
Accrual Write-offs Other
the period recovered
Commercial
acceptance bills
Total 20,000.00 124,030.25 144,030.25
Including: Significant amount of provision for bad debt provision recovered or reclassified in
the Reporting Period:
□ Applicable Not applicable
(4) 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
Derecognized amount at the end of the Non-derecognized amount at the end of
Item
reporting period the reporting period
Bank acceptance bills 25,504,417.18
Commercial acceptance bills notes 190,000.00
Total 25,694,417.18
(1) Disclosure by aging
Unit: RMB
Carrying Balance at the Beginning of
Aging Closing Carrying Balance
the Period
Within one year (inclusive) 920,652,598.73 904,143,884.57
One to two years 49,370,421.45 2,598,409.10
Two to three years 1,304,300.21 767,071.40
More than three years 878,541.40 435,318.77
Three to four years 736,346.40 206,818.00
Four to five years 5,055.00 195,961.82
Over 5 years 137,140.00 32,538.95
Total 972,205,861.79 907,944,683.84
(2) Disclosure by withdrawal methods for bad debts
Unit: RMB
Ending balance Balance at the beginning of the period
Book value Bad debt provision Book value Bad debt provision
Category Carrying Carrying
Operating Operating Withdrawal Operating Operating Withdrawal
Proportion amount Proportion amount
revenue revenue proportion revenue revenue proportion
Accounts
receivable
withdrawal
of Bad 1,766,564 1,380,525. 1,380,525.
debt .79 86 86
provision
separately
accrued
Including:
Accounts
receivable
of bad
debt 963,720,249.31 99.13% 75,743,599.48 7.86% 99.85% 6.33%
provision
by
portfolio
Including:
Group 1: 188,652,027.41 19.41% 188,652,0 164,066,9 18.07% 164,066,9
Lu Thai Textile Co., Ltd. Annual Report 2025
Undue 27.41 67.38 67.38
accounts
(L/C)
Group 2:
Undue
accounts 576,222,816.54 59.27% 25,930,026.64 4.50% 65.85% 4.29%
(excluding
L/C)
Portfolio
amounts
Total 972,205,861.79 100.00% 82,462,647.17 8.48% 100.00% 6.47%
Bad debt provision separately accrued: 2025
Unit: RMB
Balance at the beginning of the
Ending balance
period
Name Withdrawa
Bad debt Bad debt Reasons for the
Book value Book value l
provision provision provision
proportion
Customer in
Customer 1 4,094,029.81 2,327,465.02 56.85%
financial difficulty
Customer in
Customer 2 2,357,076.95 2,357,076.95 100.00%
financial difficulty
Customer in
Customer 3 1,380,525.86 1,380,525.86 1,600,187.96 1,600,187.96 100.00%
financial difficulty
Customer in
Customer 4 327,314.12 327,314.12 100.00%
financial difficulty
Customer in
Customer 5 107,003.64 107,003.64 100.00%
financial difficulty
Total 1,380,525.86 1,380,525.86 8,485,612.48 6,719,047.69
If adopting the general mode of expected credit loss to withdraw bad debt provision of accounts
receivable:
□ Applicable Not applicable
(3) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
Withdrawal of bad debt provision:
Unit: RMB
Balance at the Change in the reporting period
Category beginning of the Reversed or Ending balance
Accrual Write-offs Other
period recovered
Bad debt
provision
Total 58,776,144.57 23,851,388.31 -225,109.87 389,995.58 82,462,647.17
(4) Accounts receivable written-off in the current period
Unit: RMB
Item Written-off amount
Written-off accounts receivable 389,995.58
(5) Top 5 of the closing balance of the accounts receivable and the contract assets collected
according to arrears party
Unit: RMB
Closing balance of Closing Ending balance of Proportion to total Closing balance of bad
Name
accounts receivable balance of accounts closing balance of debt provision of accounts
Lu Thai Textile Co., Ltd. Annual Report 2025
contract receivable and accounts receivable and asset
assets contract assets receivable and impairment provision for
contract assets contract assets
Customer A 63,534,774.01 63,534,774.01 6.54% 25,656.88
Chenfeng
(Jiangsu) Textile 60,470,777.27 60,470,777.27 6.22% 7,624,047.74
Co., Ltd.
Zichuan District
Heating
Guarantee
Service Center
Customer B 28,931,548.17 28,931,548.17 2.98% 3,097,072.66
Customer C 26,530,280.73 26,530,280.73 2.72% 2,652,459.21
Total 232,188,338.38 232,188,338.38 23.88% 30,526,616.17
(1) Receivables financing listed by category
Unit: RMB
Item Ending balance Balance at the beginning of the period
Other comprehensive income-fair value
-40,498.90 -50,005.02
change
Total 10,335,302.96 10,184,900.59
(2) Other Notes
The Company and some subsidiaries, based on their daily cash management needs, discount and
endorse a portion of the bank acceptance bills. Therefore, the bank acceptance bills with high
credit ratings from the Company and these subsidiaries are classified as financial assets
measured at fair value with changes recognized in other comprehensive income.
There was no bank acceptance bill for which bad debt provision accrued separately in the
Company. By the end of the period, the Company believed that there was no significant credit
risk in the bank acceptance bill held by the Company, and no significant loss caused by bank
defaults.
(1) At the end of the period, the Company has no pledged notes receivables
(2) At the end of the period, the Company has endorsed or discounted receivables that are not
yet due.
Derecognized amount at the end of Non-derecognized amount at the end
Category
the reporting period of the reporting period
Bank acceptance bills 207,438,602.98
Commercial acceptance bills notes
Total 207,438,602.98
Unit: RMB
Item Ending balance Balance at the beginning of the period
Dividend receivable 1,267,187.27
Other receivables 34,184,996.13 23,107,489.38
Total 35,452,183.40 23,107,489.38
Lu Thai Textile Co., Ltd. Annual Report 2025
(1) Dividend receivable
Unit: RMB
Project (or investee) Ending balance Balance at the beginning of the period
Dividend receivable 1,267,187.27
Total 1,267,187.27
Applicable □ Not applicable
Unit: RMB
Ending balance Balance at the beginning of the period
Book value Bad debt provision Book value Bad debt provision
Carryin
Category Withdrawa Carrying
Operating Operating Operating Operating Withdrawal g
Proportion l amount Proportion
revenue revenue revenue revenue proportion amount
proportion
Including:
Provision
for bad 1,333,881.3
debts by 4
groupings
Including:
Dividend 1,333,881.3
receivable 4
Total 66,694.07 1,267,187.27
Changes of book balance with significant amount changed of loss provision in the current
period
□ Applicable Not applicable
(2) Other Receivables
Unit: RMB
Carrying Balance at the Beginning of
Nature Closing Carrying Balance
the Period
Export rebates 7,018,001.62 4,399,746.28
VAT to be returned 7,360,072.76 7,514,820.14
Payment on behalf 26,960,896.72 8,666,645.96
Guarantee deposit and cash deposit 1,891,753.34 2,181,386.82
Borrowings and petty cash 1,463,362.43 1,255,511.54
Other 6,744,955.59 5,311,251.41
Total 51,439,042.46 29,329,362.15
Unit: RMB
Carrying Balance at the Beginning of
Aging Closing Carrying Balance
the Period
Within one year (inclusive) 40,698,373.07 18,125,208.20
One to two years 1,582,916.07 1,153,509.15
Two to three years 995,281.34 6,434,852.90
More than three years 8,162,471.98 3,615,791.90
Three to four years 4,924,357.74 166,000.00
Four to five years 166,000.00 846.87
Over 5 years 3,072,114.24 3,448,945.03
Total 51,439,042.46 29,329,362.15
Lu Thai Textile Co., Ltd. Annual Report 2025
Bad debt provision in the first stage at the period-end
Expected rate of
credit losses in Bad debt Carrying
Category Book value Reason
the next 12 provision amount
months (%)
Bad debt provision separately
accrued
Provision for bad debts by
groupings
Tax receivable 7,018,001.62 5.00 350,900.08 6,667,101.54 Not past due
Security deposit and margin
receivable
VAT to be returned 1,274,505.95 5.00 63,725.30 1,210,780.65 Not past due
Other receivables 12,677,265.21 5.00 633,863.22 12,043,401.99 Not past due
Total 22,861,526.12 5.00 1,143,076.29 21,718,449.83
Bad debt provision in the second stage at the period-end
Expected credit
loss rate for the Bad debt Carrying
Category Book value Reason
entire duration provision amount
(%)
Bad debt provision separately
accrued
Provision for bad debts by
groupings
VAT to be returned 6,085,566.81 48.83 2,971,582.27 3,113,984.54 Overdue
Other receivables 3,947,956.69 48.83 1,927,787.22 2,020,169.47 Overdue
Total 28,364,504.29 56.05 15,897,957.99 12,466,546.30
Bad debt provision in the third stage at the period-end
Expected credit loss
Bad debt Carrying
Category Book value rate for the entire Reason
provision amount
duration (%)
Bad debt provision
separately accrued
Customer in financial
Customer 1 163,012.05 100.00 163,012.05 0
difficulty
Customer in financial
Customer 2 50,000.00 100.00 50,000.00 0
difficulty
Total 213,012.05 100.00 213,012.05 0
Bad debt provision in the first stage at the end of the previous year
Expected rate of credit
Bad debt Carrying
Category Book value losses in the next 12 Reason
provision amount
months (%)
Bad debt provision
separately accrued
Provision for bad debts
by groupings
Tax receivable 4,399,746.28 5.00 219,987.32 4,179,758.96 Not past due
Security deposit and
margin receivable
VAT to be returned 879,184.02 5.00 43,959.20 835,224.82 Not past due
Other receivables 11,209,698.93 5.00 560,484.94 10,649,213.99 Not past due
Total 18,670,016.05 5.00 933,500.80 17,736,515.25
Bad debt provision in the second stage at the end of the previous year
Lu Thai Textile Co., Ltd. Annual Report 2025
Expected credit loss
Bad debt Carrying
Category Book value rate for the entire Reason
provision amount
duration (%)
Bad debt provision
separately accrued
Provision for bad debts
by groupings
VAT to be returned 6,635,636.12 48.83 3,240,181.12 3,395,455.00 Overdue
Other receivables 3,860,697.93 48.83 1,885,178.80 1,975,519.13 Overdue
Total 10,496,334.05 48.83 5,125,359.92 5,370,974.13
Bad debt provision in the third stage at the end of the previous year
Expected credit loss rate
Bad debt Carrying
Category Book value for the entire duration Reason
provision amount
(%)
Bad debt provision
separately accrued
Customer in
Customer 1 163,012.05 100.00 163,012.05
financial difficulty
Total 163,012.05 100.00 163,012.05
Withdrawal of bad debt provision:
Unit: RMB
Change in the reporting period
Balance at the
Charged-
Category beginning of the Reversed or Ending balance
Accrual off/Verificatio Other
period recovered
n
Expected credit loss of
the next 12 months at 933,500.80 209,575.49 1,143,076.29
the first stage
Expected credit loss in
the duration (credit
impairment not 5,125,359.92 10,772,598.07 15,897,957.99
occurred) at the second
stage
Expected credit loss in
the duration (credit
impairment occurred)
at the third stage
Total 6,221,872.77 11,033,436.11 1,262.55 17,254,046.33
Arrears Party
Unit: RMB
Proportion to total
Ending balance of
Name Nature Ending balance Aging closing balance of
bad debt provision
other receivables %
Payment
Haideng Co., Ltd. 18,330,980.79 Within one year 35.63% 10,998,588.50
on behalf
Within 1 year, 1 to 2
VAT to be
VAT 7,360,072.76 years, 2 to 3 years and 14.31% 3,035,307.57
returned
over 3 years
Export
Export rebates 7,018,001.62 Within one year 13.64% 350,900.08
rebates
Withholding and
remitting of Payment
personal on behalf
endowment
Lu Thai Textile Co., Ltd. Annual Report 2025
insurance
Withholding and
remitting of Payment
personal medical on behalf
insurance
Total 38,987,050.77 75.79% 14,698,695.93
(1) Prepayments listed by aging analysis
Unit: RMB
Ending balance Balance at the beginning of the period
Aging
Operating revenue Proportion Operating revenue Proportion
Within one year 70,200,605.55 99.95% 94,018,468.42 99.66%
One to two years 20,116.61 0.03% 321,877.26 0.34%
Two to three years 12,400.80 0.02%
Total 70,233,122.96 94,340,345.68
Notes of the reasons of the prepayments aging over 1 year with significant amount but failed
settled in time:
There were no significant prepayments aged over one year during the year.
(2) Top 5 Prepayment in Ending balance Collected according to the Prepayment Target
The total amount of the top five prepayments, aggregated by payee, at the end of the period is
RMB 46,105,285.61, accounting for 65.65% of the total balance of prepayments at the end of
the period.
Whether the Company needs to comply with the disclosure requirements for the real estate
industry
Not
(1) Category of inventory
Unit: RMB
Ending balance Balance at the beginning of the period
Falling price Falling price
reserves or reserves or
provision for provision for
Item Carrying Carrying
Book value impairment on Book value impairment on
amount amount
contract contract
performance performance
cost cost
Raw materials 948,796,192.27 57,414,663.40 891,381,528.87 806,501,875.49 55,650,999.99 750,850,875.50
Work-in-
progress
Inventory
goods
Commissioned
products
Total 241,709,317.48 270,737,112.88
(2) Falling price reserves of inventory and impairment reserves for contract performance
costs
Unit: RMB
Lu Thai Textile Co., Ltd. Annual Report 2025
Increase amount of the
Balance at the Decrease in the current period
current period
Item beginning of the Ending balance
Reclassification or
period Accrual Other Other
charge-off
Raw
materials
Work-in-
progress
Inventory
goods
Total 270,737,112.88 65,102,820.47 94,130,615.87 241,709,317.48
Reasons for charge-off/write-off of
Item The specific basis for determining the net realizable value inventory falling price reserves in the
current period
Raw Estimated selling price deducts the estimated selling expense and the
Sales
materials relevant taxes
Inventory Estimated selling price deducts the estimated selling expense and the
Sales
goods relevant taxes
Work-in- Estimated selling price of finished goods deducts the cost estimated
Sales
progress until completion, estimated selling expenses and relevant taxes
Unit: RMB
Item Ending balance Balance at the beginning of the period
Debt investment due within one year 150,000,000.00
Interest payable of bond investment 4,176,585.64
Total 154,176,585.64
(1) Investments in debt obligations due within one year
□ Applicable Not applicable
(2) Other investments in debt obligations due within one year
□ Applicable Not applicable
Unit: RMB
Item Ending balance Balance at the beginning of the period
Other tax 9,076,861.29 8,592,405.88
Prepaid income tax 1,916,166.81 37,101.68
Prepaid other taxes 538,923.85 205,457.78
Convertible broken lot fund 199,652.61 199,662.42
Deposit for recognizance 4,033,475.68 49,999,919.97
OTC securities clearing funds 2,000,000.00
Total 17,765,080.24 59,034,547.73
Unit: RMB
Increase/decrease for the current period
Opening Closing
Profits or Cash
Opening balance of Closing balance of
losses of Changes in dividends Withdrawal
balance the Increase in Changes balance the
Investee Reduced investment other or profits of
(carrying provision the in other Other (carrying provision
investment recognized comprehensive declared impairment
value) for investment equities value) for
by the equity income to be provision
impairment impairment
method distributed
I. Joint ventures
II. Associated enterprises
Lu Thai Textile Co., Ltd. Annual Report 2025
Ningbo
Meishan
Bonded Port
Area
Haohong
Equity
Investment 13,866,666.67 788,895.95 18,247,919.86
Partnership
(L.P.)
(hereinafter
referred to as
“Haohong
Investment”)
Ningbo
Haoying
Equity
Investment
Partnership 88,758,58 -
(L.P) 0.71 7,128,583.05
(hereinafter
referred to as
“Haoying
Investment”)
Subtotal 13,866,666.67 99,877,917.52
Total 13,866,666.67 99,877,917.52
The recoverable amount is determined based on the net amount of the fair value minus disposal
costs
□ Applicable Not applicable
The recoverable amount is determined by the present value of the forecasted future cash flow.
□ Applicable Not applicable
Unit: RMB
Balance at the beginning of
Item Ending balance
the period
Equity instrument investment 76,360,000.00 70,800,000.00
Financial assets assigned measured by fair value through
profit or loss
Total 88,360,000.00 82,800,000.00
(1) Investment property adopting the cost measurement mode
Applicable □ Not applicable
Unit: RMB
Houses and Construction in
Item Land Use Right Total
buildings progress
I. Original carrying value
period
(1) Outsourcing
(2) Transfer from inventory/fixed
assets/construction in progress
(3) Increase for business combination
(1) Disposal
Lu Thai Textile Co., Ltd. Annual Report 2025
(2) Other transfer
II. Accumulative depreciation and
accumulative amortization
period
(1) Withdrawal or amortization 902,642.30 902,642.30
(1) Disposal
(2) Other transfer
III. Impairment provisions
period
(1) Accruing
(1) Disposal
(2) Other transfer
IV. Carrying value
The recoverable amount is determined based on the net amount of the fair value minus disposal
costs
□ Applicable Not applicable
The recoverable amount is determined by the present value of the forecasted future cash flow.
□ Applicable Not applicable
(2) Investment Property Adopting the Measurement of Fair Value Mode
□ Applicable Not applicable
Unit: RMB
Item Ending balance Balance at the beginning of the period
Fixed assets 5,705,325,739.27 6,053,755,987.08
Liquidation of fixed assets
Total 5,705,325,739.27 6,053,755,987.08
(1) List of Fixed Assets
Unit: RMB
Properties and Machinery and Transportation Electronic devices
Item Total
buildings equipment vehicle and others
I. Original
Carrying Value:
beginning of the 4,153,405,489.18 7,999,497,701.26 57,627,023.34 146,359,617.54 12,356,889,831.32
period
amount for the 137,720,310.38 73,157,162.98 3,528,980.57 4,729,702.12 219,136,156.05
current period
(1) Purchase 72,173,806.05 3,528,980.57 4,729,702.12 80,432,488.74
(2) Transfer from
construction in 137,720,310.38 983,356.93 138,703,667.31
progress
Lu Thai Textile Co., Ltd. Annual Report 2025
(3) Increase for
business
combination
(4) Other increase
Reporting Period
(1) Disposal or
scrap
(2) Transfer from
construction in 4,235,147.07 4,235,147.07
progress
(3) Transfer from
investment
properties
(4) Other decrease 34,340,955.17 44,404,493.51 409,043.45 1,978,628.81 81,133,120.94
II. Accumulated
depreciation
beginning of the 1,451,849,601.15 4,617,189,627.38 43,584,449.86 121,401,888.54 6,234,025,566.93
period
amount for the 138,321,169.15 331,830,753.50 3,461,345.65 6,920,230.82 480,533,499.12
current period
(1) Accruing 138,321,169.15 331,830,753.50 3,461,345.65 6,920,230.82 480,533,499.12
(2) Other Increases
Reporting Period
(1) Disposal or
scrap
(2) Transfer from
construction in 1,098,863.69 1,098,863.69
progress
(3) Transfer from
investment
properties
(4) Other decrease 8,293,713.63 14,048,751.52 242,756.17 157,753.51 22,742,974.83
III. Impairment
provisions
beginning of the 25,815,444.48 43,157,303.24 5,671.30 129,858.29 69,108,277.31
period
amount for the 3,111,371.47 12,416,704.28 27,325.23 15,555,400.98
current period
(1) Accruing 3,111,371.47 12,416,704.28 27,325.23 15,555,400.98
(2) Other Increases
Reporting Period
(1) Disposal or
scrap
(2) Other decrease
IV. Carrying value
at the end of the 2,642,844,688.39 3,027,865,347.60 13,902,749.11 20,712,954.17 5,705,325,739.27
period
carrying value
(2) Fixed Assets Leased out by Operation Lease
Unit: RMB
Item Closing carrying value
Lu Thai Textile Co., Ltd. Annual Report 2025
Properties and buildings 4,537,148.39
(3) Fixed assets failed to accomplish certification of property
Unit: RMB
Item Carrying amount Reason
Lufeng weaving dye grey Under the relevant certificate procedures of acceptance, measurement,
yarn warehouse examination by the real estate trading center and other departments
Lu Thai Textile
Warehouse 01, 02
Lulian New Materials
Yarn Warehouse
Overseas production base To be submitted to the relevant department for processing upon
factory completion
Unit: RMB
Item Ending balance Balance at the beginning of the period
Construction in progress 76,276,743.94 77,047,650.62
Engineering materials 13,880,434.61 17,979,058.75
Total 90,157,178.55 95,026,709.37
(1) List of Construction in Progress
Unit: RMB
Ending balance Balance at the beginning of the period
Provision Provision
Item for for
Book value Carrying amount Book value Carrying amount
impairmen impairmen
t losses t losses
Production line
project of high-
grade fabric
products (Phase I)
Reform project of
Xinsheng Thermal 8,146,973.06 8,146,973.06 1,824,455.78 1,824,455.78
Power
Thermoelectric
cogeneration 42,120,224.61 42,120,224.61
project
Other sporadic
projects
Total 76,276,743.94 76,276,743.94 77,047,650.62 77,047,650.62
(2) Changes in Significant Construction in Progress during the Reporting Period
Unit: RMB
Amount of Other Of which: Capitalizati
Balance at Proportion of
Increase transfer decreased Accumulated Amount of on rate of
the accumulated
amount of into fixed amount Ending Project amount of interest interests Source of
Item Budget beginning investment in
the current assets in for the balance progress interest capitalization for the Fund
of the constructions
period the current current capitalization in the current current
period to budget
period period period period
Production
line Self-raised
project of funds +
high-grade 119.00% 99.50 proceeds
fabric from
products fundraising
(Phase I)
Reform
project of 983,356.93 65.00% 65.00
Xinsheng
Lu Thai Textile Co., Ltd. Annual Report 2025
Thermal
Power
Thermoele
ctric 250,000,00 42,120,224 42,120,2 Self-
cogenerati 0.00 .61 24.61 financing
on project
Other
sporadic Other
projects
Total
(3) Impairment Test of Construction in Progress
□ Applicable Not applicable
(4) Engineering materials
Unit: RMB
Ending balance Balance at the beginning of the period
Provision Provision
Item for for
Book value Carrying amount Book value Carrying amount
impairmen impairmen
t losses t losses
Special materials 405,004.07 405,004.07
Special
equipment to be 13,475,430.54 13,475,430.54 17,979,058.75 17,979,058.75
installed
Total 13,880,434.61 13,880,434.61 17,979,058.75 17,979,058.75
(1) List of Right-of-use Assets
Unit: RMB
Item Properties and buildings Land Use Right Total
I. Original carrying value
of the period
current period
(1) Rent 639,402.43 3,290,638.15 3,930,040.58
(2) Lease Liabilities
Adjustment
(3) Other Increase
Period
(1) Sublease is a financial
lease
(2) Transfer or hold for sale
(3) Maturity or termination 1,964,809.54 47,085.76 2,011,895.30
(4) Other decrease 73,986.69 9,144,315.98 9,218,302.67
II. Accumulated depreciation
of the period
current period
(1) Accruing 11,463,884.47 15,520,412.72 26,984,297.19
(2) Other Increases
Period
(1) Disposal
(2) Sublease is a financial
lease
Lu Thai Textile Co., Ltd. Annual Report 2025
(3) Transfer or hold for sale
(4) Maturity or termination 542,734.79 47,085.76 589,820.55
(5) Other decrease 63,466.86 758,264.25 821,731.11
III. Impairment provisions
of the period
current period
(1) Accruing
Period
(1) Disposal
IV. Carrying value
of the period
(2) Impairment Test of Right-of-use Assets
□ Applicable Not applicable
Other notes:
The company recognizes lease expenses related to short-term leases and leases of low-value
assets, as detailed in Note 7, Note 62.
(1) List of intangible assets
Unit: RMB
Non-patent Software use Trademark
Item Land Use Right Patent right Total
technologies rights right
I. Original
carrying value
the beginning 470,338,494.00 409,550.00 2,264,253.12 283,018.87 473,295,315.99
of the period
amount for the 97,640.71 97,640.71
current period
(1) Purchase 97,640.71 97,640.71
(2) Internal
R&D
(3) Increase for
business
combination
(4) Other
increase
the Reporting 553,166.45 553,166.45
Period
(1) Disposal
(2) Invalid and
recognition
terminated
portion
(3) Other
decrease
balance
II.
Lu Thai Textile Co., Ltd. Annual Report 2025
Accumulated
amortization
the beginning 138,514,719.12 153,581.40 1,235,686.14 6,581.83 139,910,568.49
of the period
amount for the 10,096,399.24 40,955.04 716,162.74 78,981.96 10,932,498.98
current period
(1) Accruing 10,096,399.24 40,955.04 716,162.74 78,981.96 10,932,498.98
(2) Other
increases
the Reporting 551,853.30 551,853.30
Period
(1) Disposal
(2) Invalid and
recognition
terminated
portion
(3) Other
decrease
balance
III. Impairment
provisions
the beginning
of the period
amount for the
current period
(1) Accruing
(2) Other
Increases
the Reporting
Period
(1) Disposal
(2) Other
decrease
balance
IV. Carrying
value
value at the end 321,727,375.64 215,013.56 408,731.80 197,455.08 322,548,576.08
of the period
carrying value
The proportion of intangible assets formed from the internal R&D of the Company at the
Period-end to the ending balance of intangible assets was 0.00%.
(2) Impairment Test of Intangible Assets
□ Applicable Not applicable
(1) Original carrying value of goodwill
Unit: RMB
Name of the invested Increase in the reporting Decrease in the
Balance at the beginning
units or events period reporting period Ending balance
of the period
generating goodwill Formed through Disposal
Lu Thai Textile Co., Ltd. Annual Report 2025
business
combinations
Xinsheng Thermal
Power
Total 20,563,803.29 20,563,803.29
Unit: RMB
Balance at the Amortization
Increase amount of
Item beginning of the amount in the Other decreases Ending balance
the current period
period reporting period
Decoration fee 5,558,870.87 2,665,604.54 2,893,266.33
Technical service
charges
Other prepaid
expense
Total 5,634,560.27 110,211.79 2,778,031.22 2,966,740.84
(1) Deferred Income Tax Assets Had Not Been Off-set
Unit: RMB
Ending balance Balance at the beginning of the period
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
differences assets differences assets
Provision for assets
impairment
Internal unrealized
profit
Deductible losses 46,957,871.96 7,051,615.58 46,878,524.12 7,031,778.62
Payroll payable 73,467,747.86 11,020,204.95 73,682,968.78 11,052,700.68
Deferred income 139,239,353.54 21,445,645.55 145,143,951.32 22,467,375.60
Contract liability 75,875,498.44 18,790,050.86 78,698,329.68 19,615,211.56
The changes of
accounts receivables 40,498.90 6,074.84 50,005.02 7,500.75
financing in fair value
Lease liabilities 85,127,159.16 12,762,030.00 99,332,484.45 14,899,872.67
Convertible bonds 26,560,767.92 3,984,115.19 72,707,821.06 10,906,173.16
Associated enterprises 29,847,820.21 4,477,173.03 30,636,716.16 4,595,507.42
Accrued expenses 2,575,386.13 386,307.92
Fund losses 17,968,191.53 2,695,228.73
Total 929,869,745.14 147,571,150.02 922,633,520.95 148,530,519.94
(2) Deferred Income Tax Liabilities Had Not Been Off-set
Unit: RMB
Ending balance Balance at the beginning of the period
Item Taxable temporary Deferred income tax Taxable temporary Deferred income tax
differences liabilities differences liabilities
Depreciation of fixed
assets
Changes in fair value
of held-for- trading 680,555.64 102,083.34 122,951,766.13 18,442,764.92
financial assets
Changes in the fair
value of other non- 19,077,400.00 2,861,610.00 13,517,400.00 2,027,610.00
current financial assets
Associated enterprises 5,872,181.17 880,827.18 13,000,764.22 1,950,114.63
Right-of-use assets 75,721,216.95 11,349,507.46 91,572,241.18 13,735,836.18
Fund income 45,621,634.18 6,843,245.13
Total 710,215,288.96 110,514,267.42 847,547,480.70 131,519,037.79
Lu Thai Textile Co., Ltd. Annual Report 2025
(3) Deferred Income Tax Assets or Liabilities Had Been Off-set Listed in Net Amount
Unit: RMB
Beginning off-set
Ending off-set amount Ending balance of Beginning balance of
amount of deferred
Item of deferred income tax deferred income tax deferred income tax
income tax assets and
assets and liabilities assets and liabilities assets and liabilities
liabilities
Deferred income tax
assets
Deferred income tax
liabilities
(4) List of Unrecognized Deferred Income Tax Assets
Unit: RMB
Item Ending balance Balance at the beginning of the period
Deductible temporary differences 40,525,358.98 42,605,021.03
Deductible losses 352,599,532.44 315,591,935.20
Total 393,124,891.42 358,196,956.23
(5) Deductible Losses of Unrecognized Deferred Income Tax Assets Will Due in the
Following Years
Unit: RMB
Year Closing Amount Opening Amount Notes
Y2025 299.83
Y2026 371.30
Y2027 416.69
Y2028 702,282.74 702,444.07
Y2029 760,443.41 762,214.46
Y2030 1,182,124.10
Total 352,599,532.44 315,591,935.20
Unit: RMB
Ending balance Balance at the beginning of the period
Provision Provision
Item for for
Book value Carrying amount Book value Carrying amount
impairmen impairmen
t losses t losses
Project prepayment 200,000.00 200,000.00
Prepayment for
equipment
Prepayment for
land transfer fee
Term deposits over
Interest receivable
from term deposits 14,994,355.84 14,994,355.84 18,724,767.80 18,724,767.80
over 1 year
Total 515,004,250.30 515,004,250.30 569,954,322.70 569,954,322.70
Unit: RMB
Lu Thai Textile Co., Ltd. Annual Report 2025
Period-end Period-beginning
Item Carrying Type of Restriction Carrying Type of Restriction
Book value Book value
amount restriction details amount restriction details
Monetary Deposits for
assets L/Cs
Endorsed or Endorsed or
discounted discounted
but not yet but not yet
receivable 8 8 1 1
due for due for
derecognition derecognition
Other current Deposit for 49,999,919.9 49,999,919.9 Deposit for
assets recognizance 7 7 recognizance
Total
(1) Category of short-term loans
Unit: RMB
Item Ending balance Balance at the beginning of the period
Borrowings secured by guarantee 130,196,987.50 91,941,851.96
Credit loan 522,639,885.39 757,744,972.37
Total 652,836,872.89 849,686,824.33
Notes of the category for short-term loans:
The short-term loan includes accrued interest of RMB 1,010,045.59.
(2) List of the Short-term Loan Overdue but not Returned
There was no outstanding short-term loan overdue at the end of the Reporting Period.
Unit: RMB
Item Ending balance Balance at the beginning of the period
Held-for-trading financial liabilities 15,858,713.22
Including:
Derivative financial liabilities 15,858,713.22
Including:
Total 15,858,713.22
(1) List of accounts payable
Unit: RMB
Item Ending balance Balance at the beginning of the period
Payment for goods 118,175,135.19 174,951,225.51
Engineering equipment 77,362,678.88 58,703,628.27
Other 36,810,344.23 38,424,237.73
Total 232,348,158.30 272,079,091.51
(2) Significant Accounts Payable Aging over One Year or Overdue
No significant accounts payable over one year at the period-end.
Unit: RMB
Item Ending balance Balance at the beginning of the period
Dividends payable 441,113.64 441,113.64
Lu Thai Textile Co., Ltd. Annual Report 2025
Other payables 17,139,703.76 16,996,685.96
Total 17,580,817.40 17,437,799.60
(1) Dividends payable
Unit: RMB
Item Ending balance Balance at the beginning of the period
Dividends payable to individual
shareholders
Total 441,113.64 441,113.64
Other notes, including the reasons for non-payment of significant dividends payable that have
not been paid for more than one year:
Name of the shareholders Amount of dividends payable Reason
Dividends payable to individual Cash dividend of previous year not
shareholders received by individual shareholders
Total 441,113.64 --
(2) Other Payables
Unit: RMB
Item Ending balance Balance at the beginning of the period
Deposits and cash deposits etc. 5,950,933.17 5,412,393.10
Collecting payment on behalf of others 643,709.44 2,071,915.32
Other 10,545,061.15 9,512,377.54
Total 17,139,703.76 16,996,685.96
Unit: RMB
Item Ending balance Balance at the beginning of the period
Advance from sales 186,972,951.24 200,833,613.26
Less: Contract liability recorded in other
-8,237,811.01 -9,282,609.47
current liabilities
Total 178,735,140.23 191,551,003.79
Significant contract liabilities aging over one year
Unit: RMB
Item Ending balance Reason for non-repayment or carry-over
N/A 0.00
Total 0.00
(1) List of payroll payable
Unit: RMB
Balance at the
Increase in the Decrease in the
Item beginning of the Ending balance
reporting period reporting period
period
I. Short-term salary 301,211,370.26 1,417,013,684.15 1,416,746,568.65 301,478,485.76
II. Post-employment benefit-
defined withdrawal plans
III. Demission welfare 1,920,422.59 1,920,422.59
Total 301,227,361.89 1,590,176,854.05 1,589,907,006.32 301,497,209.62
Lu Thai Textile Co., Ltd. Annual Report 2025
(2) List of short-term salary
Unit: RMB
Balance at the
Increase in the Decrease in the
Item beginning of the Ending balance
reporting period reporting period
period
subsidy
Of which: Medical insurance
premiums
Work-related injury insurance
premiums
Maternity insurance 775.35 8,861.07 8,907.64 728.78
employee education budget
Total 301,211,370.26 1,417,013,684.15 1,416,746,568.65 301,478,485.76
(3) List of defined withdrawal plans
Unit: RMB
Balance at the Increase in the Decrease in the
Item Ending balance
beginning of the period reporting period reporting period
insurance
insurance premiums
Total 15,991.63 171,242,747.31 171,240,015.08 18,723.86
Other notes:
The Company, in line with the requirement, participates in endowment insurance,
unemployment insurance plans, and so on. Under these plans, the Company makes monthly
contributions to these plans at 16% and 0.7% of the social security contribution base,
respectively. No further payment obligations will be incurred by the Company beyond the
above monthly contribution fees. The relevant expense occurred was recorded into current
profits and losses or related asset costs.
Unit: RMB
Item Ending balance Balance at the beginning of the period
VAT 6,777,237.80 13,958,538.83
Enterprise income tax 37,231,505.40 27,102,242.22
Personal income tax 2,188,488.20 1,581,994.81
City maintenance & construction tax 2,609,448.44 3,433,797.45
Stamp duty 601,861.56 826,522.82
Real estate tax 5,230,109.92 5,239,688.51
Land use tax 1,927,644.52 2,097,384.98
Educational fee 1,311,350.61 1,551,805.29
Local education surcharge 775,166.23 1,039,303.54
Tax on natural resources 20,275.20 160,264.60
Environmental protection tax 200,346.02 270,404.96
Total 58,873,433.90 57,261,948.01
Unit: RMB
Lu Thai Textile Co., Ltd. Annual Report 2025
Item Ending balance Balance at the beginning of the period
Long-term borrowings matured within
one year
Current portion of bonds payable 1,539,049,797.44
Lease liabilities matured within 1 year 16,086,352.54 15,112,170.03
Total 1,870,562,551.70 27,788,571.75
Other notes:
(1) Current portion of long-term borrowings
Item Ending balance Closing balance of last year
Credit loan 315,426,401.72 12,676,401.72
Total 315,426,401.72 12,676,401.72
Unit: RMB
Item Ending balance Balance at the beginning of the period
Tax to be charged off 8,237,811.01 9,282,609.47
Endorsed undue bill under non-
derecognition
Total 33,932,228.19 42,829,460.18
(1) Category of long-term borrowings
Unit: RMB
Item Ending balance Balance at the beginning of the period
Credit loan 563,339,125.33 408,920,511.93
Long-term borrowings matured within
-315,426,401.72 -12,676,401.72
one year
Total 247,912,723.61 396,244,110.21
Note to the category of long-term borrowings:
Other notes, including the interest rate range:
Closing balance of last
Item Ending balance Interest rate range (%) Interest rate range (%)
year
Credit loan 563,339,125.33 1.95-2.90 408,920,511.93 2.05-2.80
(1) Bonds payable
Unit: RMB
Item Ending balance Balance at the beginning of the period
Convertible bonds 0.00 1,509,420,449.46
Total 0.00 1,509,420,449.46
(2) Changes of bonds payable (excluding other financial instruments divided as financial
liabilities such as preferred shares and perpetual bonds)
Unit: RMB
Balance at
Issued in Interest Amortization Repaid in
the Current
Par Coupon Issue Bond Issue the accrued of premium the Ending Default
Name beginning shares
value rate date duration amount Reporting at par and Reporting balance or not
of the converted
Period value depreciation Period
period
LuThai 1,400,0 0.3%, 2020/4 6 years 1,400,000,0 1,509,420, 119,415,2 - 25,197,229. 7,700.00 1,539,049 Not
Lu Thai Textile Co., Ltd. Annual Report 2025
Converti 00,000. 0.6%, 1%, /9 00.00 449.46 95.18 64,581,017.34 86 ,797.44
ble Bond 00 1.5%,
(127016) 1.8%, 2%
Current
portion
of bonds
,797.44
payable
Total -- 7,700.00 0.00 --
(3) Notes to the convertible corporate bonds
According to the Approval of the Public Issue of Convertible Corporate Bonds of Lu Thai
Textile Co., Ltd. (ZH.J.X. K [2020] No. 299) of the China Securities Regulatory Commission,
the Company issued 14 million convertible bonds with a face value of RMB100 each for a total
issue amount of RMB1.4 billion with a maturity of 6 years, i.e. from 9 April 2020 to 8 April
The coupon rates of the convertible corporate bonds issued by the Company are 0.3%, 0.6%,
interest payable annually. The conversion period shall commence from (and include) the first
trading day on October 15, 2020, six months after the date of issue, and shall end on (and
include) the trading day prior to the maturity date of the convertible corporate bonds (April 8,
following the maturity of the convertible bonds, the Company will redeem all unconverted
convertible bonds from holders at a price equal to 111% of the par value of the convertible
bonds issued (inclusive of the final year’s interest).
The initial conversion price of convertible corporate bonds was RMB9.01 per share when it was
issued but was adjusted to RMB8.91 per share since 9 July 2020, after the Company
implemented the 2019 profit sharing agreement on 9 July 2020. After the Company
implemented the restricted stock incentive plan in 2021, the price was adjusted to RMB8.76 per
share accordingly since June 7, 2021. Upon the implementation of the 2020 Distribution of
Profit by the Company on June 18, 2021, it was adjusted to RMB8.71 per share accordingly
again since June 18, 2021. The Company completed the registration procedures for the grant of
reserved shares under the 2021 Restricted Stock Incentive Plan at the Shenzhen Branch of
China Securities Depository and Clearing Co., Ltd. on 21 March 2022, with a listing date of 22
March 2022. The conversion price of the convertible bonds was adjusted accordingly to
RMB8.68 per share with effect from 22 March 2022. Upon the implementation of the 2021
Distribution of Profit by the Company on June 23, 2022, it was adjusted to RMB8.61 per share
accordingly again since June 23, 2022. The Company completed the formalities for cancellation
of the repurchase of shares on May 25, 2023, and the conversion price of the convertible bond
was adjusted accordingly to RMB8.73 per share on May 26, 2023. Upon the implementation of
the 2021 Distribution of Profit by the Company on June 16, 2023, the conversion price of the
convertible bond was adjusted to RMB8.63 per share accordingly on June 16, 2023. The
Company completed the formalities for cancellation of the repurchase of shares on March 1,
per share on March 4, 2024. Upon the implementation of the 2023 Equity Distribution Plan by
the Company on June 19, 2024, the conversion price of the convertible bond was adjusted to
RMB8.74 per share accordingly on June 19, 2024. Upon the implementation of the 2024
Interim Equity Distribution Plan by the Company on November 8, 2024, the conversion price of
the convertible bond was adjusted to RMB8.64 per share accordingly on November 8, 2024.
Upon the implementation of the 2024 Q3 Equity Distribution Plan by the Company on
December 19, 2024, the conversion price of the convertible bond was adjusted to RMB8.59 per
share accordingly on December 19, 2024. Upon the implementation of the 2024 Equity
Lu Thai Textile Co., Ltd. Annual Report 2025
Distribution Plan by the Company on 20 June 2025, the conversion price of the convertible
bond was adjusted to RMB8.49 per share accordingly on 20 June 2025. Upon the
implementation of the 2025 Interim Equity Distribution Plan by the Company on 23 October
accordingly on 23 October 2025.
Unit: RMB
Item Ending balance Balance at the beginning of the period
Lease payments 111,879,716.39 133,128,147.33
Unrecognized financing expenses -21,634,096.59 -26,662,656.50
Lease liabilities matured within 1 year -16,086,352.54 -15,112,170.03
Total 74,159,267.26 91,353,320.80
Other notes:
Interest expense on lease liabilities accrued in 2025 amounted to RMB4,417,854.04, which was
recognized in financial expenses — interest expense in the same amount.
(1) List of long-term payroll payable
Unit: RMB
Item Ending balance Balance at the beginning of the period
III. Other long-term welfare 58,241,342.34 58,494,991.36
Total 58,241,342.34 58,494,991.36
Unit: RMB
Balance at the
Increase in the Decrease in the
Item beginning of the Ending balance Source
reporting period reporting period
period
Government grants 145,395,121.11 1,415,000.00 7,336,826.18 139,473,294.93 Government grants
Total 145,395,121.11 1,415,000.00 7,336,826.18 139,473,294.93 --
Other notes:
Refer to Note XI Government Grants for the government grants included in the deferred income
Unit: RMB
Change this time (+, -)
Shares as
Balance at the
dividend
beginning of the New shares Capitalizatio Ending balance
converted Other Subtotal
period issued n of reserves
from
profit
Total shares 817,306,010.00 910.00 910.00 817,306,920.00
Other notes:
During the current period, the Company converted 910.00 shares of convertible bonds into
equity.
Lu Thai Textile Co., Ltd. Annual Report 2025
(1) Changes of outstanding financial instruments such as preferred shares and perpetual
bonds at the period-end
Unit: RMB
Increase in the Decrease in the
Outstanding Period-beginning Period-end
reporting period reporting period
financial
Quantit Quantit Carrying Quantit Carrying
instruments Carrying amount Quantity Carrying amount
y y amount y amount
Convertible
debt to equity
Total 71,383,438.11 392.65 71,383,045.46
Unit: RMB
Balance at the
Increase in the Decrease in the
Item beginning of the Ending balance
reporting period reporting period
period
Capital premium (capital
stock premium)
Other capital reserves 53,155,587.31 406,008.85 53,561,596.16
Total 178,518,667.31 413,487.71 178,932,155.02
Other notes, including a description of the increase or decrease for the current period and the
reasons for the change:
The conversion of convertible bonds during the period increased capital reserve — share
premium by RMB7,478.86; the recovery of restricted shares from departing participants under
the restricted stock incentive plan increased other capital reserves by RMB405,921.27.
Unit: RMB
Amount accounted for in the current period
Less: Amount Less: Amount
recognized as recognized as
other other
Amount
comprehensiv comprehensiv
before
Balance at the e income in e income in Less: Attributable Attributabl
deducting Ending
Item beginning of the previous the previous Income to the parent e minority
income tax balance
the period period and period and tax company shareholder
for the
transferred to transferred to expense after tax s after tax
current
profits and retained
period
losses in the earnings in
reporting the reporting
period period
II. Other
comprehensiv
e income that
- -
may 166,925,985.2 108,712,967.4
subsequently 6 6
be
reclassified to
profit or loss
Differences
arising from
- -
the translation 166,966,834.9 108,741,510.6
of foreign 9 7
currency-
denominated
Lu Thai Textile Co., Ltd. Annual Report 2025
financial
statements
The changes
of accounts
receivables -40,849.73 9,506.12 1,425.91 12,306.52 -4,226.31 -28,543.21
financing in
fair value
Total of other - -
comprehensiv 58,215,818.2 1,425.91 58,213,017.8 -4,226.31
e income 0 0
Unit: RMB
Balance at the Increase in the Decrease in the
Item Ending balance
beginning of the period reporting period reporting period
Safety production fund 5,695,543.82 5,695,543.82
Total 5,695,543.82 5,695,543.82
Unit: RMB
Balance at the Increase in the Decrease in the
Item Ending balance
beginning of the period reporting period reporting period
Other capital reserves 1,268,087,709.86 59,789,289.95 1,327,876,999.81
Statutory surplus
reserves
Total 1,271,429,282.44 59,789,289.95 1,331,218,572.39
Unit: RMB
Item The current period The previous period
Beginning balance of retained earnings
before adjustments
Beginning balance of retained earnings
after adjustments
Add: Net profit attributable to owners of
the parent company
Less: Withdrawal of statutory surplus
reserves
Dividends of common shares payable 163,461,257.30 228,845,667.98
Ending retained profits 7,303,500,526.72 6,933,165,006.16
Details on adjustment of retained earnings at the beginning of the period:
retroactive adjustment according to the Accounting Standards for Business Enterprises and
relevant new provisions.
in accounting policies.
correction of major accounting errors.
in the combination scope arising from the same control.
other adjustments.
Lu Thai Textile Co., Ltd. Annual Report 2025
Unit: RMB
Amount accounted for in the current period Amount accounted for in the previous period
Item
Income Cost Income Cost
Main operations 5,772,121,159.15 4,437,502,132.05 5,938,910,476.56 4,522,353,436.84
Others 132,187,565.73 108,622,060.32 151,704,548.64 121,225,507.79
Total 5,904,308,724.88 4,546,124,192.37 6,090,615,025.20 4,643,578,944.63
The lowest of the Company’s audited total profit, net profit, and net profit after the deduction of
exceptional gains and losses during the Reporting Period was negative.
□ Yes No
Unit: RMB
Amount accounted for in the current Amount accounted for in the previous
Item
period period
City maintenance & construction tax 15,695,814.14 15,631,280.11
Educational fee 6,901,141.36 6,743,881.62
Tax on natural resources 371,574.00 452,338.60
Real estate tax 21,862,772.47 21,869,937.53
Land use tax 9,274,736.67 9,267,774.49
Vehicle and vessel usage tax 69,142.17 73,457.91
Stamp duty 2,175,820.16 2,752,099.21
Local education surcharge 4,494,760.00 4,495,921.14
Environmental protection tax 847,382.24 1,163,746.03
Total 61,693,143.21 62,450,436.64
Other notes:
Please refer to Note VI. Taxes for details of various taxes and surcharges standards for
calculation and payment.
Unit: RMB
Amount accounted for in the current Amount accounted for in the previous
Item
period period
Salary 140,303,977.09 151,357,352.41
Warehouse funding 37,934,415.72 37,943,652.85
Depreciation charge 37,570,294.25 35,024,005.14
Office operating fee 23,171,598.43 23,139,520.72
Restricted stock incentive expenses 2,817,226.19
Amortization of intangible assets 10,861,155.58 13,540,031.82
Labor-union expenditure 10,677,669.06 12,900,758.43
Travel expense 11,360,838.99 11,242,624.14
Security service charges 10,114,454.40 9,637,131.16
Decoration & repair expenses 6,995,672.62 5,797,832.50
Employee education budget 7,710,265.72 7,570,924.52
Energy cost 5,777,602.39 6,788,543.36
Insurance premium 5,057,554.16 3,810,379.01
Audit and assessment fees 4,036,048.54 3,470,923.10
Others 25,927,157.70 19,286,067.76
Total 337,498,704.65 344,326,973.11
Unit: RMB
Item Amount accounted for in the current Amount accounted for in the previous
Lu Thai Textile Co., Ltd. Annual Report 2025
period period
Salaries 65,997,888.66 64,888,185.22
Sales service expenses 22,182,245.72 23,663,931.01
Advertising expense 21,303,120.24 22,152,800.12
Depreciation charge 4,823,494.80 6,730,304.45
Expense for repairmen and loss 7,963,592.31 3,787,945.84
Business entertainment expenses 4,107,115.35 5,577,169.95
Travel expenses 8,296,586.20 7,551,720.70
Insurance 1,597,461.68 2,083,319.33
Office cost 1,487,339.36 1,819,802.88
Inspection fees 2,843,999.22 2,133,986.68
Other 7,346,679.57 10,615,273.17
Total 147,949,523.11 151,004,439.35
Other notes:
The increase in repair material consumption was primarily attributable to asset renovation
within the sales department, and the increase in inspection fees was primarily due to a higher
number of inspections requested by certain customers.
Unit: RMB
Amount accounted for in the current Amount accounted for in the previous
Item
period period
Labor cost 105,144,332.79 111,941,746.30
Material expense 58,613,476.70 63,752,049.15
Depreciation charge 16,567,167.11 17,615,844.34
Other 11,907,782.65 13,511,281.92
Total 192,232,759.25 206,820,921.71
Unit: RMB
Amount accounted for in the current Amount accounted for in the previous
Item
period period
Interest expense 96,258,875.39 102,900,852.62
Less: Capitalized interest
Interest income -70,150,613.36 -60,956,758.61
Foreign exchange gains or losses 24,716,383.45 -51,830,925.57
Less: Capitalized foreign exchange
gains or losses
Commission charge and other 6,648,888.57 6,136,645.25
Total 57,473,534.05 -3,750,186.31
Unit: RMB
Amount accounted for in the current Amount accounted for in the previous
Sources
period period
Subsidies for equipment 5,831,228.28 5,831,228.28
Subsidy for environmental protection 396,018.86 953,396.23
Human resources subsidy 4,357,806.73 5,460,951.18
Additional tax deductions and tax relief 9,571,020.32 17,985,047.46
R&D subsidy 424,624.01 460,115.21
Subsidies for the price of heating coal 200,000.00
Special fund for foreign trade and
commerce and circulation
Land subsidy 1,354,251.84 1,354,251.84
Financing subsidy 700,000.00
Greening and landscaping maintenance
subsidy
Lu Thai Textile Co., Ltd. Annual Report 2025
Rebate of surcharges for withholding
taxes
Reward for science and technology 50,000.00 50,000.00
Subsidy for public rental housing 48,231.48 48,231.48
Reward or funding for supporting high-
quality development
Design reward 71,000.00
Total 26,138,313.05 34,200,236.81
Unit: RMB
Amount accounted for in the Amount accounted for in the
Sources of gain on changes in fair value
current period previous period
Held-for-trading financial assets -71,663,917.61 -121,753,892.40
Of which: Gain on changes in fair value generated by
derivative financial instruments
Held-for-trading financial liabilities 15,858,713.22 30,927,118.25
Total -55,805,204.39 -90,826,774.15
Other notes:
The details of the gain on changes in fair value in held-for-trading financial assets are as
follows:
Amount accounted for Amount accounted for
Item
in the current period in the previous period
Trading equity instrument investments - Equity investments -73,826,741.74 -114,115,577.69
Trading debt instrument investments - Debt investments -193,536.50 -1,871,633.37
Derivatives not designated as hedging 2,356,360.63 -5,766,681.34
Included: Forward foreign exchange contracts 2,253,000.00
Other 103,360.63 -5,766,681.34
Total -71,663,917.61 -121,753,892.40
Unit: RMB
Amount accounted for in the current Amount accounted for in the previous
Item
period period
Long-term equity return on investment
-6,339,687.10 -23,453,208.48
calculated by the equity method
Return on investment from holding of held-
for-trading financial asset
Return on investment from disposal of held-
for-trading financial assets
Interest income from debt investments during
the holding period
Total 262,596,707.59 -46,506,250.57
Other notes:
The details of return on investment obtained from the disposal of held-for-trading financial
assets are as follows:
Amount accounted for Amount accounted for
Item
in the current period in the previous period
Trading equity instrument investments - Equity investments 250,676,957.11 1,376,121.43
Trading debt instrument investments - Debt investments 1,375,487.34 136,311.38
Derivatives not designated as hedging -9,528,741.71 -37,392,464.89
Included: Forward foreign exchange contracts 5,760,865.47 -4,694,000.00
Others -15,289,607.18 -32,698,464.89
Total 242,523,702.74 -35,880,032.08
Lu Thai Textile Co., Ltd. Annual Report 2025
Unit: RMB
Amount accounted for in the current Amount accounted for in the previous
Item
period period
Bad debt loss of notes receivable -124,030.25 -20,000.00
Loss on uncollectible accounts
-23,851,388.31 -2,992,091.75
receivable
Loss on uncollectible other receivables -11,033,436.11 4,425.40
Bad debt losses on dividend receivable -66,694.07
Total -35,075,548.74 -3,007,666.35
Unit: RMB
Amount accounted for in the Amount accounted for in the
Item
current period previous period
I. Inventory Falling Price Loss and Impairment
-64,868,503.62 -77,535,640.73
Provision for Contract Performance Costs
IV. Impairment loss on fixed assets -15,555,400.98 -32,597,860.48
Total -80,423,904.60 -110,133,501.21
Unit: RMB
Amount accounted for in the Amount accounted for in the previous
Source of asset disposal income
current period period
Fixed asset disposal income ("-" for loss) 557,462.64 -3,139,466.60
Unit: RMB
Amount accounted
Amount accounted for Amount Included in the Current
Item for in the current
in the previous period Exceptional Gains and Losses
period
Claim income 9,484,734.95 5,774,318.01 9,484,734.95
Carbon emission allowance
income
Other 2,598,052.10 3,800,622.34 2,598,052.10
Total 18,694,454.87 9,574,940.35 18,694,454.87
Unit: RMB
Amount Included in the
Amount accounted for in the Amount accounted for in the
Item Current Exceptional Gains
current period previous period
and Losses
Donations 3,727,042.96 970,430.10 3,727,042.96
Losses from damage and
scrap of non-current assets
Other 1,054,669.90 5,221,406.37 1,054,669.90
Total 4,878,895.49 8,534,087.54 4,878,895.49
(1) List of income tax expense
Unit: RMB
Amount accounted for in the current Amount accounted for in the previous
Item
period period
Lu Thai Textile Co., Ltd. Annual Report 2025
Income tax expenses of the reporting
period
Deferred income tax expense -20,046,826.36 -14,340,865.19
Total 88,348,008.74 41,549,193.80
(2) Adjustment process of accounting profit and income tax expense
Unit: RMB
Amount accounted for in the current
Item
period
Total profits 693,140,253.17
Current income tax expense accounted at statutory/applicable tax rate 103,971,037.98
Influence of applying different tax rates by subsidiaries -6,231,109.71
Influence of income tax before adjustment 855,942.71
Influence of non-taxable income -2,948,716.33
Influence of not deductible costs, expenses and losses 6,156,221.39
Influence of utilizing deductible losses of unrecognized deferred income tax assets
from prior years
Effect of deductible temporary differences or deductible losses on deferred income
tax assets not recognized in the period
Influence of additional deduction of R&D expenses (filled in with “-”) -19,332,516.91
Influence of other expense deduction (filled in with “-”) -76,286.11
Income tax expense 88,348,008.74
(1) Cash related to operating activities
Cash generated from other operating activities
Unit: RMB
Amount accounted for in the Amount accounted for in the
Item
current period previous period
Government grants 10,558,762.06 8,844,125.34
Claim income 5,784,051.88 6,749,891.76
Refund of prepaid income tax 4,524,464.01
Recovery of employee borrowings, petty cash and
deposit
Collection for employees 6,049,533.26 7,175,308.33
Carbon emission allowance income 7,008,367.90
Other 2,653,553.04 1,942,997.19
Total 55,582,425.99 44,536,550.59
Notes to other cash received related to operating activities:
Other cash paid related to operating activities
Unit: RMB
Amount accounted for in the current Amount accounted for in the previous
Item
period period
Business travel charges 43,868,558.86 46,363,110.18
Insurance 6,575,539.81 4,816,280.91
Audit advisory announcement fee 5,481,712.01 8,021,658.82
Decoration fee 11,696,368.16 16,812,233.45
Donation 2,633,635.54 1,265,841.05
Payment of employee borrowings, petty
cash and deposit
Agency service fee 24,209,440.36 25,314,251.64
Other 68,960,167.92 32,694,802.04
Total 186,367,657.07 152,074,355.36
Lu Thai Textile Co., Ltd. Annual Report 2025
(2) Cash related to investing activities
Cash generated from other investing activities
Unit: RMB
Amount accounted for in the current Amount accounted for in the previous
Item
period period
Interest income 64,198,894.91 50,343,450.79
Forward exchange contract income 9,518,960.00 920,000.00
Time deposit maturity 773,484,482.54 666,771,403.91
Recovery of cash deposit 48,216,444.29 1,614,069.75
Total 895,418,781.74 719,648,924.45
Cash generated from important investing activities
Unit: RMB
Amount accounted for in the current Amount accounted for in the previous
Item
period period
Government bond reverse repo 5,785,056,000.00 321,061,000.00
Structural deposits 4,447,100,000.00 699,200,000.00
Wealth management products 199,700,000.00
Total 10,431,856,000.00 1,020,261,000.00
Notes to other cash received related to investing activities:
Other cash paid related to investing activities
Unit: RMB
Amount accounted for in the current Amount accounted for in the previous
Item
period period
Forward settlement exchange loss 1,505,094.53 5,614,000.00
Term deposits 376,110,108.04 1,532,102,982.54
Deposit for recognizance 2,250,000.00
Total 379,865,202.57 1,537,716,982.54
Cash used in significant investing activities
Unit: RMB
Amount accounted for in the current Amount accounted for in the previous
Item
period period
Government bond reverse repo 5,788,056,000.00 270,102,000.56
Structural deposits 4,877,100,000.00 779,200,000.00
Wealth management products 49,700,000.00 150,000,000.00
Total 10,714,856,000.00 1,199,302,000.56
(3) Cash Related to Financing Activities
Cash used in other financing activities
Unit: RMB
Amount accounted for in the current Amount accounted for in the previous
Item
period period
Repayment of lease liabilities and
prepaid rent
B shares repurchase 37,825,088.34
Total 18,744,545.19 58,790,076.23
Changes in liabilities arising from financing activities
Applicable □ Not applicable
Lu Thai Textile Co., Ltd. Annual Report 2025
Unit: RMB
Balance at the Increase in the reporting period Decrease in the reporting period
Item beginning of the Non-cash Non-cash Ending balance
Cash changes Cash changes
period changes changes
Short-term 1,432,452,555.9 1,642,575,692.9
loan 0 0
Long-term
borrowings
Bonds 1,539,049,797.4
payable 4
Lease
liabilities
Total 2,874,493,276.55 96,399,992.07 19,204,061.31
(1) Supplemental information for cash flow statement
Unit: RMB
Amount during the current Amount of the previous
Supplemental information
period period
operating activities:
Net profit 604,792,244.43 426,261,733.01
Add: Provision for asset impairment 115,499,453.34 113,141,167.56
Depreciation of fixed assets, oil-gas assets, and productive
biological assets
Depreciation of right-of-use assets 26,984,297.19 26,592,180.81
Amortization of intangible assets 10,932,498.98 10,757,436.27
Amortization of long-term deferred expenses 2,778,031.22 1,992,490.31
Losses from disposal of fixed assets, intangible assets and other
-557,462.64 3,139,466.60
long-lived assets (gains: negative)
Losses from scrap of fixed assets (gains: negative) 97,182.63 2,342,251.07
Losses from changes in fair value (gains represented by “-”) 55,805,204.39 90,826,774.15
Financial expenses (gains: negative) 50,965,762.14 -11,085,007.09
Investment loss (gains represented by “-”) -262,596,707.59 46,506,250.57
Decrease in deferred income tax assets (gains: negative) 957,944.01 9,318,894.06
Increase in deferred income tax liabilities (“-” means decrease) -21,004,770.37 -23,659,759.25
Decrease in inventory (gains: negative) -58,387,803.13 74,756,772.23
Decrease in accounts receivable generated from operating
-100,831,108.25 -25,459,430.42
activities (gains represented by “-”)
Increase in accounts payable used in operating activities
-194,373,519.68 20,077,714.84
(decrease represented by “-”)
Other
Net cash flow from operating activities 712,497,388.09 1,244,212,151.94
involvement of cash receipts and payments
Debts converted to capital
Convertible corporate bonds due within one year 1,539,049,797.44
Fixed asset under financial lease
Addition of right-of-use assets 3,930,040.58 6,482,765.48
Closing balance of cash 2,033,439,469.50 1,371,412,259.52
Less: Beginning balance of cash 1,371,412,259.52 1,353,615,305.93
Plus: Ending balance of cash equivalents
Less: Opening balance of cash equivalents
Net increase in cash and cash equivalents 662,027,209.98 17,796,953.59
(2) Cash and cash equivalents
Unit: RMB
Item Ending balance Balance at the beginning of the
Lu Thai Textile Co., Ltd. Annual Report 2025
period
I. Cash 2,033,439,469.50 1,371,412,259.52
Including: Cash on hand 5,336,336.72 4,283,695.11
Bank deposits on demand 1,977,263,322.51 1,367,128,564.41
Other monetary assets on demand 50,839,810.27
III. Ending balance of cash and cash
equivalents
(3) Monetary assets not classified as cash and cash equivalents
Unit: RMB
Amount during the Amount of the Reasons for not classifying the funds as cash
Item
current period previous period and cash equivalents
The Company will hold time deposits to
Bank deposits - Time deposits with
maturity of less than one year
short-term cash needs for external payments.
Bank deposits -- interest receivable 24,281,462.47 10,960,046.31 Interest receivable
Other monetary assets — LC
margin deposit
Total 363,411,990.22 684,444,528.85
(1) Foreign currency monetary items
Unit: RMB
Foreign currency balance at
Ending balance converted to
Item the end of the reporting Foreign exchange risk
RMB
period
Monetary assets 1,610,611,212.79
Of which: USD 216,250,509.48 7.0288 1,519,981,581.04
EUR 78,461.02 8.2355 646,339.85
HKD 1,739,684.58 0.9032 1,571,288.94
JPY 3,789,820.00 0.0448 169,783.93
GBP 27.18 9.4346 256.43
Dong 307,663,474,471.20 0.0002675 82,304,941.85
MMK 1,302,141,056.64 0.0033 4,358,328.30
Riel 901,333,591.00 0.0017 1,578,692.45
Accounts receivable
Of which: USD 87,334,883.51 7.0288 613,859,429.17
EUR 282,592.15 8.2355 2,333,307.53
HKD
Dong 34,473,533,368.00 0.0002675 9,222,226.09
MMK 2,142,360,173.00 0.0033 7,170,581.79
Other receivables:
Of which: USD 1,624,570.74 7.0288 11,418,782.83
EUR 16,620.00 8.2355 136,874.01
JPY 1,350,000.00 0.0448 60,480.00
Dong 73,404,102,577.00 0.0002675 19,636,781.40
MMK 120,538,630.00 0.0033 403,448.57
Accounts payable:
Of which: USD 10,923,079.56 7.0288 76,776,141.57
JPY 6,399,059.00 0.0448 287,510.20
EUR 45,752.46 8.2355 377,075.46
Dong 50,596,271,876.00 0.0002675 13,535,318.66
MMK 489,182,904.40 0.0033 1,637,318.51
CHF 4,400.00 8.8510 38,944.40
Other payables:
Of which: USD 37,392.00 7.0288 262,820.90
Dong 418,985,035.00 0.0002675 112,085.25
MMK 1,000,000.00 0.0033 3,953.21
Short-term loans:
Of which: USD 80,792,925.70 7.0288 567,877,316.16
Dong 246,562,916,450.93 0.0002675 65,959,556.74
Lu Thai Textile Co., Ltd. Annual Report 2025
Long-term borrowings
Of which: USD
EUR
HKD
(2) Notes to overseas entities including: for significant oversea entities, main operating
place, recording currency and selection basis shall be disclosed; if there are changes in
recording currency, relevant reasons shall be disclosed.
Applicable □ Not applicable
The operating places of the Company’s overseas subsidiaries were Hong Kong, Burma,
America, Vietnam, Singapore and Cambodia, and the recording currency was HKD for Hong
Kong and USD for other overseas companies.
(1) The Company as lessee:
Applicable □ Not applicable
Variable lease payments that are not covered in the measurement of the lease liabilities
□ Applicable Not applicable
Simplified short-term lease or lease expense for low-value assets
Applicable □ Not applicable
Amount accounted for in the
Item
current period
Expense relating to short-term leases 491,961.71
Low-value lease expenses
Variable lease payments that are not covered in the measurement of the lease
liabilities
Total 491,961.71
Circumstances involving sale and leaseback transactions
(2) The Company was lessor:
Operating leases with the Company as lessor
Applicable □ Not applicable
Unit: RMB
Of which: Income related to variable
Item Rental income lease payments not included in lease
receipts
Rental income 3,384,105.19
Total 3,384,105.19
Financial leases with the Company as lessor
□ Applicable Not applicable
Undiscounted lease receipts for each of the next five years
Applicable □ Not applicable
Unit: RMB
Lu Thai Textile Co., Ltd. Annual Report 2025
Annual undiscounted lease receipts
Item
Closing Amount Opening Amount
First year 807,699.96 1,240,588.20
The second year 173,644.40 426,120.60
The third year 52,378.30 20,160.00
Total undiscounted lease receipts after
five years - -
Reconciliation statement of undiscounted lease receipts and net investment in leases
(3) Recognition of gain or loss on sales under financial leases with the Company as a
manufacturer or distributor
□ Applicable Not applicable
VIII. Research and Development Expenditure
Unit: RMB
Amount accounted for in the current Amount accounted for in the previous
Item
period period
Labor cost 105,144,332.79 111,941,746.30
Material expense 58,613,476.70 63,752,049.15
Depreciation charge 16,567,167.11 17,615,844.34
Other 11,907,782.65 13,511,281.92
Total 192,232,759.25 206,820,921.71
Of which: Expensed research and
development expenditure
Increase in the reporting
Balance at Decrease in the reporting period
period
the
Recognized in Ending
Item beginning Internal
Other Recognized as profit or loss for Other balance
of the development
increase intangible assets the current decrease
period expenditures
period
R&D of
products
Total 192,232,759.25 192,232,759.25
IX. Change of Consolidation Scope
Whether there were any transactions or events during the period in which control of the
subsidiary was lost
□ Yes No
Whether there was a step-by-step disposal of investment in a subsidiary through multiple
transactions and loss of control during the current period
□ Yes No
Notes of other changes in the combination scope (e.g., new subsidiaries, liquidation of
subsidiaries, etc.) and relevant situations:
During the year, the company deregistered its subsidiary Lu Thai (America) Textile Co., Ltd.
During the year, Lulian New Materials, a subsidiary of the company, established a new
subsidiary, Tianqin International Investment Co., Ltd.
Lu Thai Textile Co., Ltd. Annual Report 2025
X. Equity in Other Entities
(1) Compositions of the Group
Unit: RMB
Main Shareholding percentage
Name of Registratio Nature of Way of
Registered capital operating (%)
subsidiaries n place business gaining
place Directly Indirectly
Lu Thai (Hong
Kong) Textile
Wholesale
Co., Ltd. Hong Hong
(hereinafter Kong Kong
industry
referred to as "Lu
Thai (HK)")
Shanghai Luthai
Textile and
Apparel Co., Ltd. Wholesale
(hereinafter 20,000,000.00 Shanghai Shanghai and retail 100.00% Set-up
referred to as industry
"Shanghai
Luthai")
LuFeng Company
Limited
(hereinafter Manufacturin
referred to as g industry
"LuFeng
Company")
Zibo Lu Qun
Textile Co., Ltd.
Manufacturin
(hereinafter 168,220,000.00 Zibo Zibo 100.00% Set-up
g industry
referred to as
"Luqun Textile")
Zibo Xinsheng
Thermal Power Business
Co., Ltd. combination
Manufacturin
(hereinafter 162,435,600.00 Zibo Zibo 100.00% not under
g industry
referred to as the same
"Xinsheng control
Power")
Shandong Lulian
New Materials
Co., Ltd.
Manufacturin 15,654,746.9
(hereinafter 900,000,000.00 Zibo Zibo 75.00% Set-up
g industry 3
referred to as
"Lulian New
Materials")
Shandong Lujia
Import and
Export Co., Ltd.
Import and
(hereinafter 10,000,000.00 Zibo Zibo 100.00% Set-up
export trade
referred to as
"Lujia Import &
Export")
Beijing Zhishu
Management
Consulting Co.,
Management
Ltd. (hereinafter 2,000,000.00 Beijing Beijing 100.00% Set-up
consulting
referred to as
"Zhishu
Consulting")
Lu Thai
Occupational 100,000.00 Zibo Zibo Skill training 100.00% Set-up
Training School
Lu Thai Textile Co., Ltd. Annual Report 2025
Zibo Banyang
Villa Hotel Co.,
Catering
Ltd. (hereinafter 5,000,000.00 Zibo Zibo 100.00% Set-up
services
referred to as
"Banyang Villa")
Hainan Huilin
International Modern
Wenchan
Holdings Co., 880,000,000.00 Wenchang service 100.00% Set-up
g
Ltd. ("Huilin industry
International")
Wholesale
textiles and
TP Company 398,203,876.00 Singapore Singapore leather, 100.00% Set-up
holding
company
Vanguard
Apparel Co., Ltd.
(hereinafter Manufacturin
referred to as g industry
“Vanguard
Apparel”)
Tianyi Apparel
Co., Ltd.
Manufacturin
(hereinafter 10,719,000.00 Burma Burma 100.00% Set-up
g industry
referred to as
“Tianyi Apparel”)
Tianqin
International Wholesale
Investment Co., textiles and
Ltd. (hereinafter 129,911,892.00 Singapore Singapore leather, 100.00% Set-up
referred to as holding
"Tianqin company
International")
Yuanhui
Dividend No. 2
Private Securities 100.00% Subscribe
Investment Fund
(“Yuanhui Fund”)
Basis of controlling significant structural entities incorporated in the scope of combination:
The structural entity incorporated in the scope of consolidation of the Group is Yuanhui
Dividend No. 2 Private Securities Investment Fund. The Group assesses its share of investment
holdings, the power it enjoys and variable returns comprehensively and includes the structural
entity that the Company has control power into the consolidation scope.
(2) Significant non-wholly-owned subsidiary
Unit: RMB
The profit or loss Dividends declared to
Shareholding Equity of Non-
attributable to the non- be distributed to
Name of subsidiaries proportion of non- controlling interests at
controlling interests in minority shareholders
controlling interests the end of the period
the current period in the current period
LuFeng Company 15,654,746.93 11,206,176.62 75,000,000.00 319,041,405.23
(3) The main financial information of significant not wholly-owned subsidiary
Unit: RMB
Ending balance Balance at the beginning of the period
Name of Non- Non- Non- Non-
Current Total Current Total Current Total Current Total
subsidiaries current current current current
assets assets liabilities liabilities assets assets liabilities liabilities
assets liabilities assets liabilities
LuFeng 851,605, 545,71 1,397,31 69,938,5 46,272,4 116,210,9 1,096,9 648,235, 1,745,1 156,224,2 50,393,2 206,617,
Company 157.37 1,428.1 6,585.50 70.13 18.96 89.09 38,632. 124.19 73,756. 47.67 32.00 479.67
Lu Thai Textile Co., Ltd. Annual Report 2025
Unit: RMB
Amount accounted for in the current period Amount accounted for in the previous period
Name of Total Cash flows Total Cash flows of
Operating Operating Net
subsidiaries Net profit comprehensive of operating comprehensive operating
revenue revenue profit
income activities income activities
LuFeng 1,044,912,4 42,566,224 78,615,688. 1,335,514,726. 89,930,9 401,125,951.
Company 84.64 .76 17 95 61.56 79
(1) Significant joint ventures or associated enterprises
Shareholding percentage Accounting
(%) treatment of the
Name of joint
Main operating Registration Nature of investment to joint
ventures or associated
place place business venture or
enterprises Directly Indirectly
associated
enterprise
I. Joint ventures
II. Associated
enterprises
Equity
Haohong Investment Ningbo Ningbo 33.33% Equity method
investment
Equity
Haoying Investment Ningbo Ningbo 47.62% Equity method
investment
(2) Main financial information of significant associated enterprises
Unit: RMB
Balance at the end of the period/Amount Beginning balance/the same period of last
incurred in the Reporting Period year
Haoying
Haohong Investment Haoying Investment Haohong Investment
Investment
Current assets 57,988,670.36 174,505,531.00 97,221,745.84 193,217,687.26
Non-current assets
Total assets 57,988,670.36 174,505,531.00 97,221,745.84 193,217,687.26
Current liabilities 3,253,866.05 3,253,866.05
Non-current liabilities
Total liabilities 3,253,866.05 3,253,866.05
Net assets 54,734,804.31 174,505,531.00 93,967,879.79 193,217,687.26
Equity of Non-controlling
interests
Equities attributable to
shareholders of the parent 54,734,804.31 174,505,531.00 93,967,879.79 193,217,687.26
company
Net assets shares calculated at
the shareholding proportion
Adjusted items
- Goodwill
- Unrealized profits of
internal transactions
- Others -1,469,536.20 -3,251,681.96
Carrying value of investment
to associated enterprises
Fair value of equity
investments in associated
enterprises with publicly
quoted prices
Operating revenue
Net profit 2,366,924.52 -18,712,156.26 -50,801,107.48 -17,117,805.92
Net profit from discontinued
operations
Other integrated income
Lu Thai Textile Co., Ltd. Annual Report 2025
Total comprehensive income 2,366,924.52 -18,712,156.26 -50,801,107.48 -17,117,805.92
Dividends received from the
associated enterprises in the
current period
XI. Government Grants
Balance at the
Increase in the Decrease in the
Category beginning of the Ending balance Source
reporting period reporting period
period
Government
grants
Total 145,395,121.11 1,415,000.00 7,336,826.18 139,473,294.93
(1) Government grants included in deferred income and subsequently measured using the gross
method
Amounts carried Listed items
Amount of
Balance at the forward to Other carried forward
newly subsidy Related to
Item Category beginning of the profit or loss for change Ending balance to profit or loss
for the current assets/income
period the current s for the current
period
period period
Financial
Land Related to
appropriatio 47,996,330.57 1,354,251.84 46,642,078.73 Other gains
subsidy assets
n
Subsidies
Financial
for Related to
appropriatio 86,789,119.00 5,831,228.28 80,957,890.72 Other gains
equipmen assets
n
t
Financial
R&D Related to
appropriatio 9,661,118.29 1,415,000.00 103,114.58 10,973,003.71 Other gains
subsidies income
n
Subsidy
Financial
for public Related to
appropriatio 948,553.25 48,231.48 900,321.77 Other gains
rental assets
n
housing
Total 145,395,121.11 1,415,000.00 7,336,826.18 139,473,294.93
Amounts included
Amounts included Listed items
in profit or loss Related to
Item Category in profit or loss in included in profit
for the current assets/income
the prior period or loss
period
Financial
Subsidy for environmental
appropriatio 396,018.86 953,396.23 Other gains Related to income
protection
n
Financial
Human resources subsidy appropriatio 4,357,806.73 5,460,951.18 Other gains Related to income
n
Financial
Subsidies for the price of
appropriatio 200,000.00 Other gains Related to income
heating coal
n
Financial
Financing subsidy appropriatio 700,000.00 Other gains Related to income
n
Special fund for foreign Financial
trade and commerce and appropriatio 3,349,760.36 691,350.26 Other gains Related to income
circulation n
Financial
Greening and landscaping
appropriatio 300,000.00 Other gains Related to income
maintenance subsidy
n
Financial
R&D subsidy appropriatio 321,509.43 230,000.00 Other gains Related to income
n
Lu Thai Textile Co., Ltd. Annual Report 2025
Financial
Reward for science and
appropriatio 50,000.00 50,000.00 Other gains Related to income
technology
n
Financial
Reward for supporting
appropriatio 200,000.00 Other gains Related to income
high-quality development
n
Financial
Design reward appropriatio 71,000.00 Other gains Related to income
n
Total 8,975,095.38 8,356,697.67
Amounts of Amounts of
Listed items of
offsetting related offsetting related Related to
Item Category offsetting related
costs in the current costs in the assets/income
costs
period previous period
Financial discount funds Financial
for loans discount
Total 168,666.68 126,041.67
XII. Risks Associated with Financial Instruments
The Company’s major financial instruments include monetary assets, notes receivable, accounts
receivable, accounts receivable financing, other receivables, other current assets, trading
financial assets, other non-current financial assets, other non-current assets - time deposits over
one year, accounts payable, other payables, short-term loan, trading financial liabilities, current
portion of non-current liabilities, other current liabilities - endorsed outstanding notes, long-
term borrowings, bonds payable, lease liabilities, and other equity instruments. Details of
various financial instruments are disclosed in relevant Notes. Risks related to these financial
instruments, and risk management policies the Company has adopted to reduce these risks are
described as follows. The Company management manages and monitors the risk exposure to
ensure the above risks are controlled in a limited scope.
The major risks caused by financial instruments of the Company are credit risk, liquidity risk
and market risk (including foreign exchange risk, interest rate risk and commodity price risk).
The Company has conducted the risk management to achieve an appropriate balance between
the risk and the income and to minimize the adverse influence of financial risks on the
Company’s financial performance. According to such risk management objective, the Company
has formulated corresponding risk management policy to recognize and analyze possible risks
encountered by the Company, set the appropriate acceptable risk level and designed
corresponding internal control procedures to monitor the Company’s risk level. Meanwhile, the
Company will regularly review these risk management policies and relevant internal control
system so as to cater for the market or respond to any change in the Company’s business
operations. Accordingly, the Company’s internal audit department will also regularly or
randomly check whether the internal control system is implemented in conformity with relevant
risk management policies.
The Board of Directors shall be responsible for planning and establishing the risk management
framework for the Company, determining the Company’s risk management policies and
relevant guidelines and monitoring the implementation of various risk management measures.
However, the Company has established corresponding risk management policies to recognize
Lu Thai Textile Co., Ltd. Annual Report 2025
and analyze possible risks encountered by the Company. Besides, various risks are specified in
these risk management policies, including the credit risk, the liquidity risk and the market risk
management etc. On a regular basis, the Company will evaluate the specific marketing
environment and various changes in the Company’s business operations so as to determine
whether any risk management policy and system need be updated.
(1) Credit risk
Credit risk means that the Company will suffer any financial losses due to the counterparty’s
failure in fulfilling the contract obligations.
The Company shall manage the credit risk based on the specific Group Classification, and the
credit risk mainly arises from bank deposit, notes receivable, accounts receivable, other
receivables and debt investment etc.
The Group’s bank deposits are mainly saved in state-owned banks and other large and medium-
sized banks. The Group’s bank deposits are expected not to suffer any major credit risks.
For notes receivable, accounts receivable, and other accounts receivable, the Company has
established relevant policies to control the credit risk exposure. According to the client’s
financial status, credit record and other factors (including the current market condition), the
Company will evaluate the client’s credit qualification and set corresponding credit period. The
Company regularly monitors the credit records of customers. For customers with bad credit
records, the Company adopted corresponding methods, such as written pressing for payment,
shortening credit period, and canceling credit period, so as to ensure the Company’s overall
credit risk is controllable.
The hugest credit risk exposure borne by the Company is the book value of each financial asset
reflected in the balance sheet.
In terms of accounts receivable, the top 5 customers in accounts receivable were accounted for
other receivables, the top 5 of the ending balance according to the arrears party was accounted
for 75.79% of the total amount of other receivables of the Company (69.61% in 2024).
Debt investment The Company generally limits its exposure to credit risk
by investing only in securities for which there is an active market (other than long-term
strategic investments) and for which the counterpart has a high credit rating.
The Group supervised the changes of credit risk through tracking the published external credit
ratings. In order to make sure whether the credit rating was the latest, and whether the credit
risk has increased obviously of evaluation report date but not been reflected in the published
external ratings, the Company has supplemented through examining the changes of bond yield
and the available news and supervision information.
On the balance sheet date, the carrying value of investment in debt obligations of the Company
are listed as follows according to report items.
Ending balance Closing balance of last year
Held-for-trading financial assets 684,327,576.29 230,874,092.14
Debt investment due within one year 154,176,585.64
Total 684,327,576.29 385,050,677.78
(2) Liquidity risk
Lu Thai Textile Co., Ltd. Annual Report 2025
Liquidity risk refers to the risk of capital shortage encountered by the Company during the cash
payment or the settlement of other financial assets.
During the management of liquidity risk, the Company shall reserve and monitor corresponding
cash and cash equivalent deemed sufficient by the management so as to meet the Company’s
operational requirements and mitigate the impact caused by the cash flow fluctuation. The
Company’s management will monitor the use of bank loans and guarantee the fulfillment of
loan agreement. Meanwhile, major financial institutions shall promise to provide the Company
with sufficient reserve funds in order to satisfy the short-term and long-term fund demand. The
Company shall raise its working capital based on the capital generated from business operations
and bank loans.
At the end of the period, the analysis of financial liabilities and off-balance sheet guarantee
items held by the Company based on the maturity period of the undiscounted remaining
contractual cash flows is as follows:
Ending balance
Item Within one to five
Within one year Over five years Total
years
Financial liabilities:
Short-term loan 657,674,037.79 657,674,037.79
Accounts payable 232,348,158.30 232,348,158.30
Other payables 17,580,817.40 17,580,817.40
Long-term borrowings 321,424,010.14 253,279,126.91 574,703,137.05
Bonds payable 1,399,837,000.00 1,399,837,000.00
Lease liabilities 19,781,352.15 49,311,573.87 42,786,790.37 111,879,716.39
Total 2,648,645,375.78 302,590,700.78 42,786,790.37 2,994,022,866.93
At the end of the previous year, the analysis of financial liabilities and off-balance sheet
guarantee items held by the Company based on the maturity period of the undiscounted
remaining contractual cash flows is as follows:
Closing balance of last year
Item
Within one year Within one to five years Over five years Total
Financial liabilities:
Short-term loan 855,549,333.86 855,549,333.86
Accounts payable 272,079,091.51 272,079,091.51
Other payables 17,437,799.60 17,437,799.60
Long-term
borrowings
Bonds payable 1,399,844,700.00 1,399,844,700.00
Lease liabilities 20,183,287.07 58,411,429.64 54,533,430.61 133,128,147.33
Total 1,187,197,858.37 1,863,600,546.05 54,533,430.61 3,105,331,835.04
The amounts of financial liabilities disclosed in the table above represent undiscounted
contractual cash flows and may differ from the carrying amounts in the balance sheet.
(3) Market risk
The financial instrument’s market risk refers to the fluctuation risk of fair value of financial
instrument or future cash flow caused by the changes of market price, including the interest rate
risk, the foreign exchange risk and other price risk.
Interest rate risk
Interest rate risk refers to the risk of fluctuations in the fair value or future cash flows of
financial instruments arising from changes in market interest rates. The interest rate can derive
from the recognized interest-bearing financial instruments and unrecognized financial
instruments (including certain loan commitment).
Lu Thai Textile Co., Ltd. Annual Report 2025
The Group’s interest rate risk mainly arises from the long-term interest-bearing debt, such as
the bank loan. Financial liabilities based on the floating interest rate will cause the cash flow
interest rate risk to the Company, and financial liabilities based on the fixed interest rate the fair
value interest rate risk.
However, the Company has paid close attention the impact of interest rate fluctuations on the
Company’s interest rate risk. At present, the Company has not taken any interest rate hedging
measures. The rise of interest rate will increase the cost of newly-added interest-bearing debts
and the interest cost of the Company’s unsettled interest-bearing debts based on the floating
interest rate, and cause major adverse influence on the Company’s financial performance. The
management will timely make corresponding adjustment according to the latest market situation,
and corresponding interest rate swap will be arranged to reduce the interest rate risk.
The interest-bearing financial instruments held by the Company are as follows (Unit:
RMB’0,000):
Item Amount of Current Period Amount of the Previous Period
Fixed-interest financial instruments
Including: short-term loans 61,552.74 70,968.68
Long-term borrowings matured within one
year
Current portion of bonds payable 153,904.98
Bonds payable 150,942.04
Total 215,457.72 222,335.73
Floating-interest financial instruments
Financial assets 68,432.76 38,505.07
Including: Held-for-trading financial assets 68,432.76 23,087.41
Debt investment due within one year 15,417.66
Financial liabilities 58,164.86 40,467.05
Including: short-term loans 1,830.95
Long-term borrowings matured within one
year
Long-term borrowings 24,791.27 39,624.41
Total 126,597.62 78,972.12
On 31 December 2025, if the lending rate calculated at floating interest rate up or down 100
basis points with other variables unchanged, the net profit and shareholders’ equity will be
decreased or increased about RMB3,439,700 (compared to RMB4,962,300 as of the end of last
year).
For financial instruments held at the balance sheet date that expose the Company to fair value
interest rate risk, the impact on net income and shareholders’ equity in the sensitivity analysis
above is the impact of re-measuring the above financial instruments at the new interest rate,
assuming that there is a change in interest rates at the balance sheet date. For floating rate non-
derivative instruments held at the balance sheet date that expose the Company to cash flow
interest rate risk, the impact on net profit and shareholders’ equity in the above sensitivity
analysis is the impact of changes in the above interest rates on interest expense or income
estimated on an annualized basis. The previous year’s analysis was based on the same
assumptions and methodology.
Foreign exchange risk
Foreign exchange risk is referred to the fluctuation risk of fair value of financial instruments or
future cash flows resulted from the change of foreign exchange risk. The foreign exchange risk
was originated from the financial instruments denominated in foreign currencies other than the
recording currency.
Lu Thai Textile Co., Ltd. Annual Report 2025
The Company’s recognized foreign currency assets and liabilities as well as future foreign
currency transactions (the denomination currencies of foreign currency assets and liabilities and
foreign currency transactions are mainly USD, Dong, EUR, and HKD) are exposed to foreign
exchange risk.
On December 31, 2025, the amount of foreign currency financial assets and foreign currency
financial liabilities converted to renminbi is as follows (Unit: RMB’0,000):
Foreign currency liabilities Foreign currency assets
Item Closing balance of Closing balance of
Ending balance Ending balance
last year last year
USD 64,491.63 73,605.67 214,525.98 178,017.80
EUR 37.71 18.79 311.65 412.75
JPY 28.75 14.91 23.03 14.43
HKD 157.13 100.84
GBP 0.03 0.02
CHF 3.89
Dong 7,960.70 7,442.45 11,116.39 6,964.15
MMK 164.13 224.19 1,193.24 710.25
Riel 157.87 96.76
Total 72,686.81 81,306.01 227,485.32 186,317.00
The Group has paid close attention the impact of foreign exchange risk fluctuations on the
Group’s foreign exchange risk. The Company has signed contracts of futures exchange for the
purpose of the aversion of foreign exchange risk. As at the end of each reporting period, for the
Company’s monetary assets, notes receivable, accounts payable, other payables, short-term
loans and long-term borrowings denominated in foreign currencies, assuming a 10%
appreciation or depreciation of RMB against foreign currencies, while other factors remain
unchanged, the impact of possible reasonable changes in the Company’s foreign currency
foreign exchange risk against RMB on the Company’s profit and loss for the current period is
as follows (Unit: RMB’0,000):
This year Last year
foreign exchange risk
Impact on after-tax Impact on Impact on after-tax Impact on
fluctuations
profit shareholders’ equity profit shareholders’ equity
-13,030.78 -13,030.78 -8,567.83 -8,567.83
against RMB
against RMB
Other price risks
Other price risks are the risks of fluctuations due to changes in market prices other than foreign
exchange risk and interest rate risk, whether these changes result from factors relating to a
single financial instrument or its issuer, or from those relating to all similar financial
instruments traded within the market. Other price risks can arise from changes in commodity
prices, stock market index, equity instrument prices, and other risk variables.
Investments in listed equity instruments held by the Company, which are classified as
transactional financial assets are measured at fair value at the balance sheet date. As a
consequence, the Company is undertaking the risk of changes in equity markets.
The Company closely monitors the impact of price changes on the price risk of the Company’s
investments in equity and securities. The Company does not currently take any steps for other
price risk aversion. Nevertheless, the management is liable for supervisory control on other
price risks and shall consider reducing the price risk of investments in equity and securities by
holding a diversified portfolio investment in equity and securities when required.
Lu Thai Textile Co., Ltd. Annual Report 2025
With all other variables being constant, the pre-tax impact on the Company’s profit or loss for
the current period and other comprehensive income of a 10% change in the price of investments
in equity and securities for the year is as follows (Unit: RMB’0,000):
After-tax profits up (down) Other comprehensive income up (down)
Item Amount of Current Amount of the Amount of Current Amount of the
Period Previous Period Period Previous Period
Due to increase in the price of
investments in equity securities
Due to a decline in the price of
-3,477.30 -3,932.29
investments in equity securities
The objectives of capital management policies of the Company are to ensure the continuous
operation of the Company so as to provide return to shareholders and benefit other stakeholders,
as well as to reduce capital cost by maintaining the optimal capital structure.
In order to maintain or adjust capital structure, the Company might adjust financing method and
the dividends paid to shareholders, return capital to shareholders, issue new shares and other
equity instrument or sell assets to reduce debts.
The Group supervised the capital structure based on the asset-liability ratio (namely total
liabilities divide total assets). On December 31, 2025, the asset-liability ratio was 28.19% of the
Company (29.49% on December 31, 2024).
(1) Classification of transfer methods
Transfer Nature of financial Amount of financial
Derecognition Basis for Determining Derecognition
modality assets transferred assets transferred
Bills
Almost all risks and remuneration have
endorsemen Receivables financing 177,437,502.98 Derecognition
been transferred.
t
Bills Almost all risks and remuneration have
Receivables financing 30,001,100.00 Derecognition
discounting been transferred.
Bills
endorsemen 4. Notes receivable 25,694,417.18 Not derecognized
t
Total 233,133,020.16
(2) Financial assets derecognized due to transfer
Gains or Losses Related to
Item Transfer modality Derecognized amount
Derecognition
Receivables financing Bills endorsement 177,437,502.98
Receivables financing Bills discounting 30,001,100.00 -27,553.95
Total 207,438,602.98 -27,553.95
The total carrying value of the bank acceptance bills endorsed by the Company to the supplier
but not due and bank acceptance bills discounted to the bank but not due amounted to
RMB233,133,020.16, of which the Company believed that the notes receivable with a carrying
value of RMB207,438,602.98 (31 December 2024: RMB154,967,910.84) had transferred
almost all risks and rewards at the time of endorsement or discounting, meeting the conditions
for derecognition of financial assets. Therefore, the related notes receivable were derecognized.
The maximum exposure to risk that continues to be associated with these derecognized notes
receivable is equal to the undiscounted cash flows from the repurchase of the notes, which is
Lu Thai Textile Co., Ltd. Annual Report 2025
equal to the carrying value of the notes receivable. The Company does not consider the
continued involvement in the fair value of the derecognized notes receivable to be material.
(3) Amount of assets and liabilities formed due to transfer of financial assets and continuous
involvement
Asset transfer Amount of assets formed due to Amount of liabilities formed due to
Item
methods continuous involvement continuous involvement
Total 25,694,417.18 25,694,417.18
XIII. Disclosure of Fair Value
Unit: RMB
Closing fair value
Item Level-1 fair value Level-2 fair value Level-3 fair value
Total
measurement measurement measurement
I. Consistent Fair Value
-- -- -- --
Measurement
i. Held-for-trading financial
assets
through profit or loss
(1) Investment in debt
instruments
(2) Equity investments 409,094,411.86 409,094,411.86
(3) Derivative financial assets 645,603.16 645,603.16
ii. Accounts receivable
financing
iii. Other non-current financial
assets
II. Non-continuous Fair Value
-- -- -- --
Measurement
Measurement Items at Level 1
Quoted prices in active markets for identical assets or liabilities (unadjusted).
parameters for consistent and inconsistent fair value measurement items at level 2
The Company determines the fair value of structural deposits and wealth management products
based on the prospective earning rate as agreed in the contract.
The Company determines the fair value of fund products based on the changes in net value
published by the private equity funds.
The Company determines the fair value of forward options based on bank forward foreign
exchange quotations at the end of the period.
parameters for consistent and inconsistent fair value measurement items at level 3
For the unlisted equity investment, the Company adopts the comparable listed company
comparison method, and the non-observable input value of the comparable listed company
comparison method includes the liquidity discount.
Lu Thai Textile Co., Ltd. Annual Report 2025
The investment into Shandong Hongqiao Thermoelectric Co., Ltd. made by Luqun Textile (the
Company’s subsidiary) is expected to be held in the long run for obtaining the discount on
power purchase. As no revenue distribution right is vested in the investment, the invested unit’s
operating profit and loss are not shared or borne, and the equity transfer is not proposed, the
Company regards it as the financial asset which shall be measured based on the fair value and
whose variations are included in the current profit and loss, and the investment cost is deemed
as the fair value of the financial asset.
For accounts receivables financing at fair value and the changes included in other
comprehensive income, its fair value shall be determined by the discount cash flow method.
Hierarchy
Total gains or losses for Purchase, issuance, sale, and For assets
the current period settlement held at the
end of the
reporting
period, the
Item
Balance at change in
(amount Transferre
the Transferre Ending unrealized
for the d out of Recognized Recognized in
beginning of d to Level 3 other Purchas Issuanc Sal Settlemen balance gains or
current Level 3 as profit or
the period comprehensiv e e of e t losses
period) loss
e income recognized in
profit or loss
for the
current
period
Held-for-
trading
financial
assets:
Debt
instrumen
t
investmen
t
Equity
instrumen
t
investmen
t
Other
non-
current 5,560,000.00
financial
assets
Total 5,560,000.00
The following is the information on gains and losses related to financial and non-financial
assets included in the gains and losses recognized in profit or loss for the current period:
Gains and losses related to Gains and losses related to
Item (amount for the current period)
financial assets non-financial assets
Total gains or losses for the current period recognized
in profit or loss
For assets held at the end of the reporting period, the
change in unrealized gains or losses recognized in 5,560,000.00
profit or loss for the current period
Item For assets
Balance at
(Amount Transfer Transfer Total gains or losses for the current Purchase, issuance, sale, Ending held at the
the beginning
for the in out period and settlement balance end of the
of the period
Previous reporting
Lu Thai Textile Co., Ltd. Annual Report 2025
Period) period, the
change in
unrealized
gains or
losses
recognized
in profit or
loss for the
current
period
Recognized in
Recognized
Third Third other Issuance
as profit or Purchase Sale Settlement
level level comprehensive of
loss
income
Held-for-
trading
financial
assets:
Debt
instrument
investment
Equity
instrument
investment
Other non-
current - -
financial 5,950,000.00 5,950,000.00
assets
- -
Total 88,750,000.00 82,800,000.00
The following is the information on gains and losses related to financial and non-financial
assets included in the gains and losses recognized in profit or loss for the previous period:
Gains and losses related to Gains and losses related to non-
Item (Amount for the Previous Period)
financial assets financial assets
Total gains or losses for the current period
-5,950,000.00
recognized in profit or loss
For assets held at the end of the reporting period, the
change in unrealized gains or losses recognized in -5,950,000.00
profit or loss for the current period
The financial assets and financial liabilities measured at amortized cost mainly include
monetary assets, other non-current assets - time deposits, notes receivable, accounts receivable,
other receivables, short-term loan, notes payable, accounts payables, other payables, current
portion of long-term borrowings, current portion of bonds payable, long-term borrowings, and
bonds payable.
XIV. Related Party and Related-party Transactions
Proportion of
voting rights
Proportion of share held
Registration Registered owned by the
Name Nature of business by the parent company
place capital parent company
against the company (%)
against the
company (%)
Textile, chemistry and
Lucheng Textile Zibo 6326 17.17% 17.17%
investment
Notes: information on the parent company
The final controllers of the Company are Mr. Liu Zibin and Mr. Liu Deming.
Lu Thai Textile Co., Ltd. Annual Report 2025
Refer to Note X-1.
Refer to Note X-2.
Relationship with the
Name
company
Wholly-owned subsidiary of
Zibo Limin Purified Water Co., Ltd. (hereinafter referred to as "Limin Purified Water")
the Company as the parent
Wholly-owned subsidiary of
Zibo Luqun Land Co., Ltd (hereinafter referred to as "Luqun Land")
the Company as the parent
Majority-owned subsidiary of
Zibo Lurui Fine Chemical Co., Ltd. (hereinafter referred to as "Lurui Chemical")
the Company as the parent
Wholly-owned subsidiary of
Zibo Lujia Property Management Co., Ltd. (hereinafter referred to as "Lujia Property")
the Company as the parent
Hong Kong Tung Hoi International Company Limited (hereinafter referred to as "Tung Hoi Wholly-owned subsidiary of
International") the Company as the parent
Wholly-owned subsidiary of
Zibo Chengshun Hosiery Co., Ltd. (hereinafter referred to as "Chengshun Hosiery")
the Company as the parent
Zibo Chengshun Economic and Trade Co., Ltd. (hereinafter referred to as "Chengshun Wholly-owned subsidiary of
Economic and Trade") the Company as the parent
Chengshun Petrochemical (Zhoushan) Co., Ltd. (hereinafter referred to as "Chengshun Wholly-owned subsidiary of
Petrochemical") the Company as the parent
Zibo Lucheng Petrochemical Sales Co., Ltd. (hereinafter referred to as "Lucheng Wholly-owned subsidiary of
Petrochemical") the Company as the parent
Shanghai Hengjiu Textile New Materials Co., Ltd. (hereinafter referred to as "Hengjiu Wholly-owned subsidiary of
Textile") the Company as the parent
Subsidiary of the parent
Shandong Xirui New Materials Co., Ltd. (hereinafter referred to as the "Xirui New Material")
company’s subsidiary
Zibo Lumei Economic and Trade Co., Ltd. (hereinafter referred to as "Lumei Economic and Wholly-owned subsidiary of
Trade") the Company as the parent
Zibo Hesheng Chemical Trading Co., Ltd. (hereinafter referred to as "Hesheng Chemical Subsidiary of the parent
Trading") company’s subsidiary
ZhiFeng (Vietnam) International Trading Co., Ltd. (hereinafter referred to as "ZhiFeng Subsidiary of the parent
International") company’s subsidiary
Liu Zibin, Xu Zhinan, Xu Jianlv, Zheng Huisheng, Liu Deming, Zhang Zhanqi, Zhang
Keming, Du Lixin, Zhu Beina, Yu Mingtao, Quan Yuhua, Wei Jian, Shang Chenggang, Yu Key management personnel
Shouzheng, Liu Zilong, Dong Shibing, Guo Heng, Lv Wenquan, Xu Feng, Zheng Weiyin
(1) Information on acquisition of goods and reception of labor service
Information on acquisition of goods and reception of labor service
Unit: RMB
Amount accounted Whether Amount accounted
Related party The approval trade
Related party for in the current exceed trade for in the previous
transaction credit
period credit or not period
Chengshun Paper cores, socks,
Hosiery accessories, etc.
Limin Purified Recycled water,
Water sewage treatment, etc.
Lurui Chemical,
Donghai
International, Auxiliaries 126,174,665.72 131,900,000.00 Not 113,904,742.76
Hesheng Industry
and Trade
Chengshun Supermarket retail,
Economic and service fees
Lu Thai Textile Co., Ltd. Annual Report 2025
Trade
Lucheng
Petrochemical and Oil products, urea,
Chengshun natural gas
Petrochemical
Luqun Property electrical 93,944.07 147,619.12
Information of sales of goods and provision of labor service
Unit: RMB
Amount accounted for in the Amount accounted for in the
Related party Related party transaction
current period previous period
Chengshun Materials, electricity, running water,
Hosiery heating, steam
Chengshun
Yarn, garments, fabrics 318,190.31 390,647.37
Hosiery
Chengshun
Materials, electricity, running water, yarn,
Economic and 353,615.70 443,521.90
garments, fabrics, food, heating, steam
Trade
Lucheng
electrical 16,322.41 14,652.32
Petrochemical
Limin Purified Materials, electricity, apparel, fabric,
Water service fees, equipment
Limin Purified
Sludge treatment 943,396.23
Water
Lurui Fine
Apparel, fabric, service fees, food 1,326,731.31 1,584,349.53
Chemical
Lujia Property Materials, heating 42,669.13 40,571.28
Xirui New
Clothing 27,351.24 550.44
Materials
Xirui New
Catering service, drinks, benefits 134,208.19 50,541.98
Materials
(2) Information on related-party lease
The Company was lessor:
Unit: RMB
The lease income confirmed
Rental income recognized in
Name of lessee Type of leased assets in the same period of last
the reporting period
year
Chengshun Economic and
Rent of houses and buildings 65,164.00 55,478.67
Trade
Chengshun Hosiery Rent of houses and buildings 16,800.00 16,800.00
The Company was lessee:
Unit: RMB
Rental expense of
Variable lease payments
simplified short-term
not included in the Interest expenses on lease Added right-of-use
leases and low-value Rental paid
measurement of lease liabilities borne assets
asset leases (if
Type of liabilities (if applicable)
Name of applicable)
leased
lessor Amount Amount Amount Amount Amount Amount Amount Amount Amount Amount
assets
accounted accounted accounted accounted accounted accounted for accounted accounted accounted accounted
for in the for in the for in the for in the for in the in the for in the for in the for in the for in the
current previous current previous current previous current previous current previous
period period period period period period period period period period
Lucheng Rent of 3,614,857.
Textile land 20
Lucheng Rent of 233,142.8
Textile gas station 4
Lucheng Rent of 11,022,22 11,022,228.6 1,621,268.1 2,122,455.6
Textile buildings 8.60 0 4 4
Luqun Rent of 1,971,428. 1,971,428.52 1,045,979.6 1,087,948.3
Lu Thai Textile Co., Ltd. Annual Report 2025
Property land and 52 2 9
buildings
(3) Information on remuneration for key management personnel
Unit: RMB
Amount accounted for in the current Amount accounted for in the previous
Item
period period
Remuneration for key management
members
(1) Accounts payable
Unit: RMB
Carrying Balance at the
Item Related party Closing Carrying Balance
Beginning of the Period
Accounts payable Lurui Fine Chemical 708,092.56 230,514.74
Accounts payable Tung Hoi International 8,053,417.70 3,445,679.03
Accounts payable Hesheng Trade 920,603.97
XV. Commitments and Contingencies
Significant commitments on balance sheet date
(1) Capital commitments
Commitments signed but hasn’t been recognized in financial
Ending balance Closing balance of last year
statements
Commitment on constructing and purchasing long-lived assets
(RMB’0,000)
(1) Explanation shall be given even if there is no significant contingency for the Company
to disclose
There was no significant contingency in the Company to disclose.
XVI. Post-balance Sheet Matters
Amount to be distributed for every ten shares
(RMB)
Dividend shares to be distributed for every ten
shares (share)
Number of shares to be converted into share
capital for every ten shares (share)
Amount to be distributed for every ten shares
after consideration and approval (RMB)
Dividend shares to be distributed for every ten
shares after consideration and approval
Number of shares to be converted into share
capital for every ten shares after consideration 0
and approval (share)
On 15 April 2026, the eighth meeting of the Eleventh Board of Directors
approved the 2025 Equity Distribution Plan: based on the total share
Distribution of profit
capital of 817,525,607.00 shares as of the end of the convertible bond
conversion period, the Company proposes to distribute RMB1.50 (tax
Lu Thai Textile Co., Ltd. Annual Report 2025
inclusive) per 10 shares, with total proposed cash dividends of
RMB122,628,841.05. The above distribution plan will be implemented
after it is submitted to the 2025 Annual General Meeting of Shareholders
for consideration and approval.
As at April 15, 2026, the Company has no other events after balance sheet date that should be
disclosed.
XVII. Notes of Main Items in the Financial Statements of the Company as the Parent
(1) Disclosure by aging
Unit: RMB
Carrying Balance at the Beginning of
Aging Closing Carrying Balance
the Period
Within one year (inclusive) 447,952,834.23 405,094,184.12
One to two years 2,058,512.47 1,507,926.77
Two to three years 798,993.21 550,870.00
More than three years 795,210.00 367,200.00
Three to four years 550,870.00 200,763.00
Four to five years 107,200.00 166,437.00
Over 5 years 137,140.00
Total 451,605,549.91 407,520,180.89
(2) Disclosure by withdrawal methods for bad debts
Unit: RMB
Ending balance Balance at the beginning of the period
Book value Bad debt provision Book value Bad debt provision
Category Withdrawa Carrying Withdrawa Carrying
Operating Proportio Operating Operating Proportio Operating
l amount l amount
revenue n revenue revenue n revenue
proportion proportion
Accounts
receivable
withdrawa
l of Bad
debt
provision
separately
accrued
Including:
Accounts
receivable
of bad
debt 99.41% 6.14% 99.66% 6.11%
provision
by
portfolio
Including:
Group 1:
Undue
accounts
(L/C)
Group 2:
Undue
accounts 74.63% 4.50% 76.02% 4.85%
(excludin
g L/C)
Portfolio
Overdue 9
amounts
Total 100.00% 6.70% 100.00% 6.42%
Lu Thai Textile Co., Ltd. Annual Report 2025
Bad debt provision separately accrued: 2025
Unit: RMB
Balance at the beginning of the
Ending balance
period
Name
Bad debt Bad debt Withdrawal Reasons for the
Book value Book value
provision provision proportion provision
Customer in
Customer 1 1,380,525.86 1,380,525.86 1,600,187.96 1,600,187.96 100.00% financial
difficulty
Customer in
Customer 2 640,627.61 640,627.61 100.00% financial
difficulty
Customer in
Customer 3 327,314.12 327,314.12 100.00% financial
difficulty
Customer in
Customer 4 107,003.64 107,003.64 100.00% financial
difficulty
Total 1,380,525.86 1,380,525.86 2,675,133.33 2,675,133.33
If adopting the general mode of expected credit loss to withdraw bad debt provision of accounts
receivable:
□ Applicable Not applicable
(3) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
Withdrawal of bad debt provision:
Unit: RMB
Balance at the Change in the reporting period
Category beginning of the Reversed or Ending balance
Accrual Write-offs Other
period recovered
Bad debt
provision
Total 26,176,379.23 3,853,109.32 -225,109.87 3,045.03 30,251,553.39
(4) Accounts receivable written-off in the current period
Unit: RMB
Item Written-off amount
Written-off accounts receivable 3,045.03
Notes to verification of accounts receivable:
There were no write-offs of significant accounts receivable.
(5) Top 5 of the closing balance of the accounts receivable and the contract assets collected
according to arrears party
Unit: RMB
Closing balance of
Proportion to total bad debt provision
Ending balance of
Closing balance of closing balance of of accounts
Closing balance of accounts
Name accounts accounts receivable and
contract assets receivable and
receivable receivable and asset impairment
contract assets
contract assets provision for
contract assets
Qiming Apparel
Co., Ltd.
Lu Thai Textile Co., Ltd. Annual Report 2025
Chenfeng
(Jiangsu) Textile 60,080,047.64 60,080,047.64 13.30% 7,540,822.33
Co., Ltd.
SH Company 28,928,376.98 28,928,376.98 6.41% 1,301,776.96
Vanguard Apparel
Co., Ltd.
Customer D 12,365,044.65 12,365,044.65 2.74% 8,222.44
Total 186,679,240.61 186,679,240.61 41.34% 12,689,581.44
Ending balance Closing balance of last year
Category Bad debt Carrying Bad debt Carrying
Book value Book value
provision amount provision amount
Bank acceptance bills 19,476,548.19 34,575,445.32
Commercial
acceptance bills
Total 144,030.25 22,213,122.87 20,000.00 34,955,445.32
(1) At the end of the period, the Company has no pledged receivables
(2) At the end of the period, the Company has endorsed or discounted receivables that are not
yet due
Derecognized amount at the end of the Non-derecognized amount at the end of
Category
reporting period the reporting period
Bank acceptance bills 19,183,768.10
Commercial acceptance bills notes 190,000.00
Total 19,373,768.10
(3) Disclosure by withdrawal methods for Bad debt provision
Ending balance Closing balance of last year
Book value Bad debt provision Book value Bad debt provision
Category Expected Carrying Expected Carrying
Operating Percentage Operating credit amount Operating Percentage Operating credit amount
revenue (%) revenue loss rate revenue (%) revenue loss rate
(%) (%)
Bad debt
provision
separately
accrued
Provision
for bad
debts by
groupings
Including:
Commercial
acceptance 2,880,604.93 12.88 144,030.25 5 2,736,574.68 400,000.00 1.14 20,000.00 5 380,000.00
bills
Bank
acceptance
bills with 19,476,548.19 87.12 19,476,548.19 34,575,445.32 98.86 34,575,445.32
low credit
ratings
Total 22,357,153.12 100 144,030.25 22,213,122.87 34,975,445.32 100 20,000.00 34,955,445.32
Receivables for which bad debt provisions are made on a portfolio basis Portfolio provision
item: Bank acceptance bills with low credit ratings
Ending balance
Name Bad debt
provision
Bank acceptance bills with low credit
ratings
Lu Thai Textile Co., Ltd. Annual Report 2025
Total 19,476,548.19
Note: Based on the fact that the likelihood of loss on the notes receivable is minimal and the
amount of expected credit losses on the notes receivable is not material, the Company has not
provided for Bad debt provision on the notes receivable.
Item for which bad debt provision is accrued by portfolio: Commercial acceptance bills
Ending balance Closing balance of last year
Expected Expected
Name 4. Notes Bad debt 4. Notes Bad debt
credit loss credit loss
receivable provision receivable provision
rate (%) rate (%)
Commercial
acceptance bills
Total 2,880,604.93 144,030.25 5.00 400,000.00 20,000.00 5.00
(4) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
Amount of Bad Debt Provision
Balance at the beginning of the period 20,000.00
Withdrawal of the Current Period 124,030.25
Recovery or transfer in the current period
Write-off in the Reporting Period
Ending balance 144,030.25
Unit: RMB
Item Ending balance Balance at the beginning of the period
Other receivables 1,439,542,031.30 1,444,344,599.59
Total 1,439,542,031.30 1,444,344,599.59
(1) Other receivables
Unit: RMB
Carrying Balance at the Beginning of
Nature Closing Carrying Balance
the Period
Trading funds 1,429,802,870.14 1,438,423,895.04
Export rebates 2,938,078.95
Payment on behalf 6,556,079.00 6,572,485.56
Guarantee deposit and cash deposit 1,793,585.03 2,109,217.68
Borrowings and petty cash 940,291.04 949,740.81
Other 3,958,251.59 2,656,594.02
Total 1,445,989,155.75 1,450,711,933.11
Unit: RMB
Carrying Balance at the Beginning of
Aging Closing Carrying Balance
the Period
Within one year (inclusive) 1,135,915,012.24 1,371,173,184.48
One to two years 237,366,753.23 27,700,512.72
Two to three years 26,699,785.22 13,105,000.00
More than three years 46,007,605.06 38,733,235.91
Three to four years 12,651,840.00 36,109,026.05
Four to five years 31,109,026.05
Over 5 years 2,246,739.01 2,624,209.86
Total 1,445,989,155.75 1,450,711,933.11
Lu Thai Textile Co., Ltd. Annual Report 2025
Unit: RMB
Ending balance Balance at the beginning of the period
Book value Bad debt provision Book value Bad debt provision
Category Carrying Carrying
Operating Operating Withdrawal Operating Operating Withdrawal
Proportion amount Proportion amount
revenue revenue proportion revenue revenue proportion
Including:
Provision
for bad 1,445,989, 6,447,124. 1,439,542,0 1,450,711,9 6,367,333. 1,444,344,5
debts by 155.75 45 31.30 33.11 52 99.59
groupings
Including:
Bad debt
provision 99.80% 0.34% 99.79% 0.33%
in Stage 1
Bad debt
provision 0.18% 48.83% 0.20% 48.83%
in Stage 2
Bad debt
provision 213,012.05 0.02% 213,012.05 100.00% 0.00 163,012.05 0.01% 163,012.05 100.00% 0.00
in Stage 3
Total 100.00% 0.45% 100.00% 0.44%
Withdrawal of bad debt provision by adopting the general mode of expected credit loss:
Unit: RMB
Phase I Phase II Phase III
Expected credit loss in
Expected credit Expected credit loss in the
Bad debt provision the duration (credit Total
loss of the next duration (credit impairment
impairment not
occurred)
Balance of January 1, 2025 4,775,185.04 1,429,136.43 163,012.05 6,367,333.52
Balance of January 1, 2025
in the current period
Withdrawal of the Current
Period
Write-off in the Reporting
Period
Balance on December 31,
Basis of classification of stages and percentage of provision for Bad debt provision
Changes of book balance with significant amount changed of loss provision in the current
period
□ Applicable Not applicable
Withdrawal of bad debt provision:
Unit: RMB
Balance at the Change in the reporting period
Category beginning of Reversed or Charged- Ending balance
Accrual Other
the period recovered off/Verification
Bad debt
provision
Total 6,367,333.52 81,053.48 1,262.55 6,447,124.45
Lu Thai Textile Co., Ltd. Annual Report 2025
Arrears Party
Unit: RMB
Proportion to total
closing balance of Ending balance of
Name Nature Ending balance Aging
other bad debt provision
receivables %
Within one year; one
Intercompan
to two years; two to
WX Company y 829,191,768.74 57.34% 2,487,575.31
three years; Over three
transactions
years
Shandong Lulian Intercompan
Within 1 year, 2 to 3
New Materials y 215,486,375.20 14.90% 646,459.13
years and over 3 years
Co., Ltd. transactions
Intercompan
XZ Company y 155,111,590.59 Within one year 10.73% 465,334.77
transactions
Zibo Xinsheng Intercompan
Thermal Power y 150,000,000.00 Within one year 10.37% 450,000.00
Co., Ltd. transactions
Intercompan
ZJ Company y 60,676,237.39 Within one year 4.20% 182,028.71
transactions
Total 1,410,465,971.92 97.54% 4,231,397.92
Unit: RMB
Ending balance Balance at the beginning of the period
Provision
Provision for
Item for Carrying
Book value Carrying amount Book value impairment
impairment amount
losses
losses
Investment in 3,766,117,944.2 3,776,326,276.5 3,766,117,226.5
subsidiaries 5 0 0
Investment to
joint ventures
and associated
enterprises
Total 3,865,995,861.77 10,209,050.00
(1) Investment to subsidiaries
Unit: RMB
Increase/decrease for the current period Closing
balance of
Opening
Opening Increase Withdrawa the
balance of the Closing balance
Investee balance in the Reduced l of provision
provision for Other (carrying value)
(carrying value) investmen investment impairmen for
impairment
t t provision impairmen
t
Xinsheng
Thermal 176,340,737.93 176,340,737.93
Power
LuFeng
Company
Luqun
Textile
Luthai
(Hong 128,771,800.00 128,771,800.00
Kong)
Lu Thai Textile Co., Ltd. Annual Report 2025
Shanghai
Luthai
Lu Thai 10,209,050.0
(America) 0
VACL 62,337,238.57 717.75 62,337,956.32
Lulian New
Materials
Lujia
Import & 10,000,000.00 10,000,000.00
Export
Lu Thai
Occupationa
l Training
School
Zhishu
Consulting
Huilin
Internationa 1,630,000,000.00
l
Banyang
Mountain 5,000,000.00 5,000,000.00
Villa
Tianyi
Apparel
Yuanhui
Fund
Total 10,209,050.00 717.75 3,766,117,944.25
(2) Investment to joint ventures and associated enterprises
Unit: RMB
Increase/decrease for the current period
Opening Closing
Profits or Cash
balance of balance of
Opening losses of dividends Closing
the Increase Changes in Change Withdrawa the
balance investment or profits balance
Investee provision in the Reduced other s in l of Othe provision
(carrying recognized declared (carrying
for investmen investment comprehensiv other impairmen r for
value) by the to be value)
impairmen t e income equities t provision impairmen
equity distribute
t t
method d
I. Joint ventures
II. Associated enterprises
Haohong
Investmen 31,325,690.58 788,895.95
t
Haoying -
Investmen 88,758,580.71 7,128,583.0
t 5
Subtotal 6,339,687.1
Total 6,339,687.1
The recoverable amount is determined based on the net amount of the fair value minus disposal
costs
□ Applicable Not applicable
The recoverable amount is determined by the present value of the forecasted future cash flow.
□ Applicable Not applicable
Unit: RMB
Lu Thai Textile Co., Ltd. Annual Report 2025
Amount accounted for in the current period Amount accounted for in the previous period
Item
Income Cost Income Cost
Main operations 2,733,349,517.79 2,100,360,528.26 2,943,776,911.86 2,279,103,044.60
Others 137,052,805.57 125,574,094.47 254,515,151.74 167,085,585.40
Total 2,870,402,323.36 2,225,934,622.73 3,198,292,063.60 2,446,188,630.00
Unit: RMB
Amount accounted for in the current Amount accounted for in the previous
Item
period period
Long-term equity investments income
accounted by cost method
Long-term equity return on investment
-6,339,687.10 -23,453,208.48
calculated by the equity method
Return on investment from disposal of long-
-55,556,100.00
term equity investment
Return on investment from holding of held-
for-trading financial asset
Return on investment from disposal of held-
for-trading financial assets
Interest income from debt investments during
the holding period
Total 633,214,192.54 -56,295,296.97
XVIII. Supplementary Materials
Applicable □ Not applicable
Unit: RMB
Item Operating revenue Description
Gains and losses on disposal of non-current assets 460,280.01
Government grants recognized in profit or loss for the current period (except for
government grants closely related to the Company’s normal operating business, in
compliance with national policies and in accordance with defined criteria, and having
a continuous impact on the Company’s profit or loss)
Gain/loss on changes in fair value of financial assets and financial liabilities held by
non-financial enterprises and gains and losses arising from the disposal of financial
assets and financial liabilities, other than effective hedging business related to the
Company’s normal operating business
Non-operating revenue and expense other than the above 13,912,742.01
Less: Income tax effects 36,751,642.67
Non-controlling interests effects (after tax) 1,475,091.27
Total 205,412,530.72 --
Particulars about other items that meet the definition of exceptional gain/loss:
□ Applicable Not applicable
There are no other gain and loss items in line with the definition of non-recurring gains and
losses in the Company.
Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item listed in
the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their
Securities to the Public—Non-recurring Gains and Losses:
□ Applicable Not applicable
Profit as of the Reporting Period Weighted average EPS
Lu Thai Textile Co., Ltd. Annual Report 2025
ROE (%) EPS-basic EPS-diluted
Net profit attributable to ordinary
shareholders of the Company
Net profit attributable to ordinary
shareholders of the Company after
deduction of exceptional gains and
losses
Chairman of the Board: Liu Zibin
Lu Thai Textile Co., Ltd.
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