Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
LU THAI TEXTILE CO., LTD. SEMI-ANNUAL REPORT 2012
Stock Code: 000726, 200726 Stock Abbr.: LUTHAI A, LUTHAI B Disclosure Date: 15 Aug. 2012
1 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Contents
Section I Important Notes……………………………………………………..………………2 Section II Company Profile……………………………………………………..….…………2 Section III Financial and Business Highlights……………………………………...………...3 Section IV Changes in Share Capital and Particulars about Shareholders……...…...... 5 Section V Directors, Supervisors and Senior Management..………………..……………… ..8 Section VI Report of the Board of Directors……………………………..………..………....14 Section VII Significant Events………………………………………………………………..25 Section VIII Financial Report…………………………...... ……...... 49 Section IX Documents Available for Reference………………………………………………165
I. Important Notes
1. The Board of Directors, the Supervisory Committee, directors, supervisors and senior management of Lu Thai Textile Co., Ltd. (hereinafter referred to as ―the Company‖) warrant that this report does not contain any false or misleading statements or omit any material facts and will take individual and/or joint responsibility for the authenticity, accuracy and completeness of all contents set forth herein. 2. No directors, supervisors or senior executives have declared uncertainty or disagreement about the truthfulness, accuracy and completeness of this report. 3. All directors attended in person the board session for reviewing the semi-annual report. 4. The financial statements for the first half of 2012 have not been audited by a CPAs firm. 5. Mr. Liu Shizhen, company principal, Ms. Zhang Hongmei, head of the accounting work and Mr. Zhang Keming, chief of the Financial Department hereby declare that the financial report enclosed in the semi-annual report is true and complete. English Translation for Reference Only. Should there be any discrepancy between the two versions, the Chinese version shall prevail.
II. Company Profile
（I）Basic information
A-share code 000726 B-share code 200726 A-share abbreviation LUTHAI A B-share abbreviation LUTHAI B Stock exchange listed with Shenzhen Stock Exchange Legal Chinese name of the 鲁泰纺织股份有限公司 Company Abbr. of the legal Chinese 鲁泰纺织 name of the Company Legal English name of the LU THAI TEXTILE CO.,LTD Company Abbr. of the legal English LTTC name of the Company Legal representative of the Liu Shizhen Company Registered address No. 11, Mingbo Road, High-tech Industry Development Zone, Zibo, Shandong
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Postal code for the registered 255086 address Office address No. 81, Songling East Road, Zichuan District, Zibo, Shandong Postal code for the office 255100 address Internet website of the www.lttc.com.cn Company Email address [email protected]
（II）For contact
Secretary to the Board of Directors Securities Affairs Representative Name Qin Guiling Zheng Weiyin No. 81, Songling East Road, Zichuan No. 81, Songling East Road, Zichuan Contact address District, Zibo District, Zibo Tel. 0533-5285166 0533-5285166 Fax 0533-5418805 5282188-234 0533-5418805 E-mail [email protected] [email protected]
（III）About information disclosure and where the semi-annual report is placed
Newspapers designated by the Company for Securities Times, Shanghai Securities News and Ta Kung Pao information disclosure Internet website designated by CSRC for www.cninfo.com.cn disclosing the semi-annual report Where the semi-annual report is placed Securities Department of the Company
III. Financial and Business Highlights
（I）Major accounting data and financial indexes
Any retrospective adjustment in previous financial statements? □Yes √No □ Inapplicable Major accounting data Major accounting data Reporting period (Jan.-Jun.) Same period of last year Increase/decrease (%) Gross operating revenues (RMB Yuan) 2,808,025,564.76 2,980,813,097.20 -5.8% Operating profit (RMB Yuan) 340,105,678.91 623,059,761.14 -45.41% Total profit (RMB Yuan) 358,115,812.42 627,922,258.35 -42.97% Net profit attributable to shareholders of 301,503,288.19 491,647,065.96 -38.67% the Company (RMB Yuan) Net profit attributable to shareholders of the Company after deducting non-recurring 302,733,028.86 476,456,565.30 -36.46% gains and losses (RMB Yuan) Net cash flow from operating activities 417,039,467.46 428,569,250.90 -2.69% (RMB Yuan) As at the end of this As at the end of last year Increase/decrease (%) reporting period Total assets (RMB Yuan) 7,564,204,685.31 7,751,885,340.43 -2.42% Owners’ equity attributable to shareholders 5,136,649,373.99 5,086,100,453.10 0.99% of the Company (RMB Yuan) Share capital (share) 1,008,954,800.00 1,008,954,800.00 0% Major financial indexes Major financial indexes Reporting period (Jan.-Jun.) Same period of last year Increase/decrease (%) Basic EPS (RMB Yuan/share) 0.30 0.49 -38.78% Diluted EPS (RMB Yuan/share) 0.30 0.49 -38.78% Basic EPS after deducting non-recurring 0.30 0.48 -37.5% gains and losses (RMB Yuan/share) Fully diluted ROE（%） 5.79% 10.86% -5.07%
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Weighted average ROE（%） 5.79% 10.86% -5.07% Fully diluted ROE after deducting 5.82% 10.53% -4.71% non-recurring gains and losses（%） Weighted average ROE after deducting 5.82% 10.53% -4.71% non-recurring gains and losses（%） Net cash flow per share from operating 0.41 0.43 -4.65% activities (RMB Yuan/share) As at the end of this As at the end of last year Increase/decrease (%) reporting period Net assets per share attributable to shareholders of the Company (RMB 5.09 5.04 0.99% Yuan/share) Liability/asset ratio（%） 26.93% 29.44% -2.51% Notes to major accounting data and financial indexes before the end of this reporting period (please write an adjustment note if there’s any retrospective adjustment)
（II）Accounting data differences under the domestic and overseas accounting standards
1. Net profit and net asset differences between financial reports disclosed according to the international and Chinese accounting standards respectively
√Applicable □Inapplicable Unit: RMB Yuan Net profit attributable to shareholders of the Owners’ equity attributable to shareholders of Company the Company Reporting period Same period of last year Closing amount Opening amount As per Chinese accounting 301,503,288.19 491,647,065.96 5,136,649,373.99 5,086,100,453.10 standards Items and amounts adjusted according to international accounting standards: Influence on the reporting period of evaluated value increase of fixed asset 265,500.00 investment not being recognized under international accounting standards Influence of tax deduction for home-made equipment being recognized as deferred income 859,000.00 859,000.00 -5,629,000.00 -6,488,000.00 under international accounting standards As per international 302,362,288.19 492,771,565.96 5,131,020,373.99 5,079,612,453.10 accounting standards
2. Net profit and net asset differences between financial reports disclosed according to the overseas and Chinese accounting standards respectively □ Applicable √Inapplicable
3. Specific items involving significant difference
Involved provisions of Items involving significant Amount (RMB Yuan) Reason for the difference international and/or overseas difference accounting standards
4. Notes to accounting data differences under the domestic and overseas accounting standards
1. Influence of evaluated value increase of fixed asset investment 1. The Company invests in Zibo Luqun Textile Co., Ltd. with the evaluated value of fixed assets, and the
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increment value is recorded into capital reserves in accordance with Chinese accounting standards, which is not recognized in accordance with international accounting standards. In accordance with international accounting standards, the differences shall be amortized through the useful life the fixed assets, then relevant net profits and net assets shall be adjusted. 2. Influence of tax deduction for home-made equipment The Company enjoys the tax deduction for home-made equipment, and relevant tax deduction can be directly reduced the income taxes in accordance with Chinese accounting standards, while recognized as deferred income relevant to assets. In accordance with international accounting standards, the differences shall be amortized through the useful life the fixed assets, then relevant net profits and net assets shall be adjusted.
（III）Items of non-recurring gains and losses √Applicable □Inapplicable Items Amount (RMB Yuan) Notes Gains and losses on disposal of non-current assets -167,511.63 Government grants recognized in the current year, except for those acquired in the ordinary course of business or 16,550,426.92 granted at certain quotas or amounts according to the country’s unified standards Gains and losses on fair value changes of transactional financial assets and liabilities, and investment gains on disposal of transactional financial assets and liabilities and -11,445,391.51 available-for-sale financial assets, except for the effective hedging business related to the Company’s normal operation Other non-operating incomes and expenses besides the 1,627,218.22 items above Minority interests effects -1,285,518.00 Income tax effects -6,508,964.67
Total -1,229,740.67 --
IV. Changes in Share Capital and Particulars about Shareholders （I）Changes in share capital 1. Statement of changes of shares √Applicable □Inapplicable Before the change Increase/decrease (+, -) After the change Capitaliz Issuan ation of Proporti ce of Bonus Proporti Amount public Others Subtotal Amount on (%) new shares on (%) reserve shares fund I. Shares subject to trading 133,655,792.00 13.25% 5,500.00 5,500.00 133,661,292.00 13.25% moratorium 1. State-owned shares 2. State-owned legal person shares 3. Other domestic shares 14,090,000.00 1.4% 14,090,000.00 1.4% Including: Shares held by domestic non-state-owned legal persons Shares held by 14,090,000.00 1.4% 14,090,000.00 1.4% domestic individuals 4. Shares held by overseas 118,232,400.00 11.72% 118,232,400.00 11.72% shareholders Including: Shares held by 118,232,400.00 11.72% 118,232,400.00 11.72% overseas legal persons Shares held by overseas individuals 5. Shares held by senior 1,333,392.00 0.13% 5,500.00 5,500.00 1,338,892.00 0.13% management staff
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II. Shares not subject to 875,299,008.00 86.75% -5,500.00 -5,500.00 875,293,508.00 86.75% trading moratorium 1. Ordinary shares 551,321,808.00 54.64% 551,321,808.00 54.64% denominated in RMB 2. Domestically listed 323,977,200.00 32.11% -5,500.00 -5,500.00 323,971,700.00 32.11% foreign shares 3. Overseas listed foreign shares 4. Others III. Total shares 1,008,954,800.00 100% 1,008,954,800.00 100% Other information that the Company considers as necessary or securities regulatory authorities require to be disclosed During the reporting period, the Company’s senior management Mr. Pan Pingli increased to hold 5,500 shares of Luthai B, reaching a total shareholding of 153,796 shares. And it caused the non-tradable shares increase by 5,500 shares while the tradable shares decrease by 5,500 shares.
2. Changes of shares subject to trading moratorium √ Applicable □ Inapplicable Reason for Name of Shares at the Shares released in Shares increased Shares at the trading Date of release shareholder year-begin current year in current year year-end moratorium 40% of the shares will be released on 18 Aug. 2012; Implementation 30% of the shares Equity incentive of Restricted 14,090,000.00 0.00 0.00 14,090,000.00 will be released objects Equity Incentive on 18 Aug. 2013; Plan 30% of the shares will be released on 18 Aug. 2014. Total 14,090,000.00 0.00 0.00 14,090,000.00 -- -- （II）Issuance and listing of securities 1. Securities issues in the previous three years √ Applicable □ Inapplicable Name of stocks Issuing price Tradable and derivative Issuance date (Yuan / Issuing amount Listing date Expiry date amount securities Share) Stocks A-share 18 Aug. 2011 5.025 14,090,000.00 6 Sept. 2011 0.00 Particluars: The Company implemented the Restricted Equity Incentive Plan in Aug. 2011, issuing 14.09 million restricted shares to the Company’s senior management, core management personnel, technical and business personnel, totally 344 persons, with the issuing price of RMB 5.025.
2. Changes of the Company’s share number and structure, as well as the corresponding changes in its asset-liability structure □Applicable √Inapplicable 3. Existing employee shares □Applicable √Inapplicable
（III）Shareholders and actual controller 1. Total number of shareholders at the end of the reporting period The Company had 118,012.00 shareholders in total at the end of the reporting period.
2. Shareholding of the top ten shareholders
Particulars about shares held by the top ten shareholders Name of shareholder (full Nature of Shareholding Total shares held Number of Pledged or frozen shares name) shareholder percentage (%) at the period-end non-tradable Status of shares Number of
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shares held shares ZIBO LUCHENG Domestic TEXTILE INVESTMENT non-state-owne 12.22% 123,314,700.00 0.00 CO., LTD. d corporation Not tradable due TAILUN (THAILAND) Foreign 118,232,400. 11.72% 118,232,400.00 to the lack of TEXTILE CO., LTD corporation 00 application DBS VICKERS (HONG Foreign KONG) LTD A/C 4.02% 40,528,642.00 0.00 corporation CLIENTS FIRST SHANGHAI Foreign 0.52% 5,256,436.00 0.00 SECURITIES LIMITED corporation Foreign AVIVA INVESTORS 0.46% 4,627,328.00 0.00 corporation AVIVA LIFE AND Foreign 0.39% 3,930,923.00 0.00 PENSIONS UK LIMITED corporation CHINA CONSTRUCTION Domestic BANK-CHINA INCOME non-state-owne 0.36% 3,639,157.00 0.00 FUND d corporation INDUSTRIAL Domestic BANK-INDUSTRIAL non-state-owne 0.31% 3,153,442.00 0.00 TREND INVESTMENT d corporation MIXED TYPE FUND GUOTAI JUNAN Foreign SECURITIES(HONGKON 0.3% 3,025,772.00 0.00 corporation G) LIMITED TOYO SECURITIES ASIA Foreign 0.3% 3,004,042.00 0.00 LIMITED-A/C CLIENT. corporation Among the shareholders above, ZIBO LUCHENG TEXTILE INVESTMENT CO., LTD. is the first majority shareholder of the Company, TAILUN (THAILAND) Explanation on particulars of shareholders TEXTILE CO., LTD is the foreign sponsor shareholder, and other shareholders are all tradable A-share and B-share holders. Particulars about shares held by the top ten shareholders holding tradable shares √ Applicable □ Inapplicable Number of tradable Type and number of shares Name of shareholder shares held at Type Number period-end ZIBO LUCHENG TEXTILE INVESTMENT 123,314,700.00 A-shares 123,314,700.00 CO., LTD. DBS VICKERS (HONG KONG) LTD A/C 40,528,642.00 B-shares 40,528,642.00 CLIENTS FIRST SHANGHAI SECURITIES LIMITED 5,256,436.00 B-shares 5,256,436.00 AVIVA INVESTORS 4,627,328.00 B-shares 4,627,328.00 AVIVA LIFE AND PENSIONS UK LIMITED 3,930,923.00 B-shares 3,930,923.00 CHINA CONSTRUCTION BANK-CHINA 3,639,157.00 A-shares 3,639,157.00 INCOME FUND INDUSTRIAL BANK-INDUSTRIAL TREND 3,153,442.00 A-shares 3,153,442.00 INVESTMENT MIXED TYPE FUND GUOTAI JUNAN SECURITIES(HONGKONG) 3,025,772.00 B-shares 3,025,772.00 LIMITED TOYO SECURITIES ASIA LIMITED-A/C 3,004,042.00 B-shares 3,004,042.00 CLIENT. AGRICULTURAL BANK OF CHINA-CHINA 3,000,000.00 A-shares 3,000,000.00 POST CORE GROWTH STOCK FUND Explanation on associated relationship or/and persons acting in concert among the above-mentioned shareholders: Among the shareholders above, ZIBO LUCHENG TEXTILE INVESTMENT CO., LTD. is the first majority shareholder of the Company, TAILUN (THAILAND) TEXTILE CO., LTD is the foreign sponsor shareholder, and other shareholders are all tradable A-share and B-share holders. The Company is unable to tell whether there are related parties or parties acting in concert among them. 3. Controlling shareholder and actual controller （1）Change of the controlling shareholder and actual controller □Applicable √Inapplicable
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（2）Particulars about the controlling shareholder and actual controller Is there a new actual controller? □ Yes √ No □ Inapplicable Name of the actual controller Zibo Lucheng Textile Investment Co., Ltd Type of the actual controller Particulars: Zibo Lucheng Textile Investment Co., Ltd is the first principal shareholder as well as the actual controller of the Company. Legal representative: Liu Shizhen Registered capital: RMB 63.26 million Business scope: Zibo Lucheng Textile Investment Co., Ltd. (hereinafter referred to as Lucheng Investment) was engaged in investment textile, electric power and pharmacy; knitwear and the relevant import and export business; retail of lubricating oil, gas oil and diesel oil; Chinese meal and wholesale and retail of general merchandise and etc. The original name of Lucheng Investment is Zibo Lucheng Textile Co., Ltd., which was founded on 25 Sep. 1998 based on Zibo No. 7th Cotton Textile Plant, sponsor of the Company. It is a Limited Company whose shares held by natural persons. Mr. Liu Shizhen held 21% equity of Lucheng Investment, and is the first principal shareholder of Lucheng Investment as well as the actual controller of Lucheng Investment. Basic information of Liu Shizhen: Chinese nationality, he has not enjoy the residence permit in other countries or regions; he has been taking the post as Chairman of the Board of the Company since 1990. As at the beginning of the reporting period, Lucheng Investment held 123.3147 million shares of the Company, taking up 12.22% of total share capital of the Company
（3）Illustration on the relationship between the Company and its actual controller
Liu Shizhen 21% Zibo Lucheng Textile Investment Co., Ltd. 12.22% Lu Thai Textile Co., Ltd.
（4）The actual controller controls the Company via trust or other ways of asset management. □Applicable √Inapplicable 4. Other corporate shareholders with a shareholding over 10% √Applicable □Inapplicable Registere Legal Incorporated Main operating business or Name of corporate shareholder d capital Currency representative date management activities (’0000) Tailun (Thailand) Textile Co., Ltd Xu Zhinan 29 Jan. 1985 Yarn spinning 60,000 THP Registered capital of Tailun (Thailand) Textile Co., Ltd. is 0.6 billion baht, which is the foreign sponsor of the Company as well as the second principal shareholder. At end of the Notes reporting period, Tailun (Thailand) Textile Co., Ltd held 118.2324 million shares of the Company, taking up 11.72% of total share capital of the Company. The shares are foreign sponsor’ shares as well as non-tradable B shares, which has not been pledged or frozen. （IV）Convertible corporate bonds □Applicable √Inapplicable
V. Directors, Supervisors and Senior Management
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（I）Shareholding changes of directors, supervisors and senior management
Shareholding Shareholding Receives Share Shareholding increase decrease Shareholding Including: payment Beginning Ending date options held at the during this during this at the restricted Reasons for from Name Position Gender Age date of office of office at the period-begin reporting reporting period-end shares held change shareholder term term period-end (share) period period (share) (share) units or other (share) (share) (share) related units? Liu Shizhen Chairman Male 72.00 5 Jun. 2010 4 Jun. 2013 437,295.00 437,295.00 No Vice Xu Zhinan Male 82.00 5 Jun. 2010 4 Jun. 2013 Yes chairman Liu Zibin Director, GM Male 47.00 5 Jun. 2010 4 Jun. 2013 178,290.00 178,290.00 100,000.00 No Fujiwara Director Male 72.00 5 Jun. 2010 4 Jun. 2013 No Hidetoshi Chen Director Male 68.00 5 Jun. 2010 4 Jun. 2013 No Ruimou Zeng Director Male 61.00 5 Jun. 2010 4 Jun. 2013 No Facheng Wang Director, Male 51.00 5 Jun. 2010 4 Jun. 2013 223,238.00 223,238.00 100,000.00 No Fangshui Vice GM Sun Zhigang Director Male 49.00 5 Jun. 2010 4 Jun. 2013 21,604.00 21,604.00 No Qin Guiling Director Female 46.00 5 Jun. 2010 4 Jun. 2013 124,452.00 124,452.00 No Independent Zhou Zhiji Male 49.00 5 Jun. 2010 4 Jun. 2013 No director Independent Wang Lei Female 42.00 5 Jun. 2010 4 Jun. 2013 No director Independent Qi Haodong Male 52.00 5 Jun. 2010 4 Jun. 2013 No director
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Independent Bi Xiuli Female 45.00 5 Jun. 2010 4 Jun. 2013 No director Hong Independent Male 39.00 19 Oct. 2011 4 Jun. 2013 No Xiaobin director Zhu Lingwen Supervisor Male 60.00 5 Jun. 2010 4 Jun. 2013 91,638.00 91,638.00 No Liu Zilong Supervisor Male 44.00 5 Jun. 2010 4 Jun. 2013 No Dong Supervisor Male 43.00 5 Jun. 2010 4 Jun. 2013 5,000.00 5,000.00 No Shibing Li Tongmin Vice GM Male 56.00 5 Jun. 2010 4 Jun. 2013 206,164.00 206,164.00 100,000.00 No Zhang Chief Female 42.00 5 Jun. 2010 4 Jun. 2013 118,100.00 118,100.00 100,000.00 No Hongmei accountant Zhang Financial Male 44.00 5 Jun. 2010 4 Jun. 2013 117,800.00 117,800.00 100,000.00 No Kepeng manager Human Wu Yanzhen resource Female 45.00 5 Jun. 2010 4 Jun. 2013 110,000.00 110,000.00 100,000.00 No manager Chief auditor with the Qu Qingfeng Female 49.00 5 Jun. 2010 4 Jun. 2013 236,300.00 236,300.00 100,000.00 No Audit Department Technical Zhang assistant to Male 44.00 5 Jun. 2010 4 Jun. 2010 118,400.00 118,400.00 100,000.00 No Jianxiang GM International Increase Pan Pingli business Male 44.00 5 Jun. 2010 4 Jun. 2013 148,296.00 5,500.00 153,796.00 100,000.00 No shareholding manager Chief Bai Nianyue Male 46.00 5 Jun. 2010 4 Jun. 2013 113,715.00 113,715.00 100,000.00 No Engineer’s
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Office Manager Yu Energy Male 44.00 5 Jun. 2010 4 Jun. 2013 113,100.00 113,100.00 100,000.00 No Shouzheng manager Vice GM of Lufeng Lu Yongchen Male 44.00 5 Jun. 2010 4 Jun. 2013 117,900.00 117,900.00 100,000.00 No Weaving & Dyeing Zhang QC manager Male 42.00 5 Jun. 2010 4 Jun. 2013 113,100.00 113,100.00 100,000.00 No Shougang Production Wang Jiabin assistant to Male 49.00 5 Jun. 2010 4 Jun. 2013 113,700.00 113,700.00 100,000.00 No GM Vice Yu Yongbin production Male 46.00 5 Jun. 2010 4 Jun. 2013 115,000.00 115,000.00 100,000.00 No GM Vice GM of Zhang Lufeng Male 40.00 5 Jun. 2010 4 Jun. 2013 110,300.00 110,300.00 100,000.00 No Zhanqi Weaving & Dyeing Total ------2,933,392.00 5,500.00 2,938,892.00 1,600,000.00 -- -- Equity incentives granted to directors, supervisors and senior management during the reporting period □Applicable √Inapplicable
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（II）Post-holding particulars Post-holding in shareholders units √Applicable □Inapplicable Name of the Position in Ending person holding Receives payment the Beginning date of date of any post in any Name of the shareholder unit from the shareholder shareholder office term office shareholder unit? unit term unit Chairman of Liu Shizhen Zibo Lucheng Textile Investment Co., Ltd 28 Sept. 1998 No the Board Chairman of Xu Zhinan Tailun (Thailand) Textile Co., Ltd 29 Jan. 1985 Yes the Board Mr. Liu Shizhen is the legal representative of Zibo Lucheng Textile Investment Co., Ltd with shareholding Notes to proportion of 21%, and is the first principal shareholder of Lucheng Investment as well as the actual controller of post-holding in Lucheng Investment. Basic information of Liu Shizhen: Chinese nationality, he has not enjoy the residence permit shareholder in other countries or regions. Mr. Xu Zhinan is the shareholder of Tailun (Thailand) Textile Co., Ltd., which is the units foreign sponsor of the Company and the second principal shareholder. Basic information of Liu Shizhen: Thai nationality. Post-holding in other units √Applicable □Inapplicable Name of the Ending Receives person holding Position in Beginning date of office Name of other unit date of payment from other unit term any post in office term other unit? other units Beijing Innovative Garment Co., Ltd., Lu Thai (HongKong) Co., Ltd., Xinjiang Luthai Harvest Cotton Co., Ltd., Lufeng Weaving & Dyeing Co., Ltd., Zibo Luqun Chairman of Liu Shizhen 11 Jul. 2000 No Textile Co., Ltd., Zibo Xinsheng Thermal the Board Power Co., Ltd., Beijing Lufeng Sunshine Garments Co., Ltd., Shanghai Luthai Textile & Garments Co., Ltd. Xinjiang Luthai Harvest Cotton Co., Ltd., Wang Fangshui Lufeng Weaving & Dyeing Co., Ltd., Zibo Director 17 Jun. 2003 No Luqun Textile Co., Ltd. Sun Zhigang Beijing Innovative Garment Co., Ltd. Director 11 Jul. 2000 No Xinjiang Luthai Harvest Cotton Co., Ltd., Qin Guiling Director 17 Jun. 2003 No Zibo Luqun Textile Co., Ltd. CICC Huifu Equity Investment Chairman of Hong Xiaobin 1 Mar. 2011 Yes Management Co., Ltd. the Board Executive Zhou Zhiji Shangdong Jinheng Counsulting Co., Ltd. director and 1 Jan. 2008 Yes Manager OTC Marketing Department of Qilun General Wang Lei 1 Jun. 2011 Yes Securities Co., Ltd. SME Financing Manager of
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Department in Qilun Securities Co., Ltd. OTC Marketing Department, and concurrently Director of Beijing United Cooperation Center, General Manager Shandong University of Finance and Vice Qi Haodong 4 Jul. 2011 Yes Economy President Bi Xiuli Deiheng Law Offices Partner 1 Jan. 2011 Yes Notes to Except independent directors, other units that the Company’s directors hold positions in are all its controlled post-holding in subsidiaries. other units
（III）Remuneration for directors, supervisors and senior management
The Remuneration Committee under the Board is responsible for promulgating the appraisal standards Decision-making for directors and senior management of the Company as well as appraising them; making and reviewing procedure for the the remuneration policies and plans for directors and senior management so as to be responsible for the remuneration of directors, Board. The Remuneration & Appraisal Committee under the Board proposes the amount of supervisors and senior remuneration and incentive ways for directors and senior management in accordance with position management performance appraisal results and the Incentive & Restraint Plan for Senior Management, and votes for such proposal, and then submits it to the Board after approval. The Company’s Chief Accountant Room, Enterprise Management Department and Human Resources Department are responsible for the preparatory work for making decision by Remuneration & Appraisal Committee, and provide relevant materials of the Company: (1) the completion situation on main financial indexes and operating goals of the Company; (2) the completion situation on relevant indexes of listed companies in the same industry; (3) the work scopes and main responsibilities of senior management of the Company; (4) the completion situation on indexed involved in the work Basis for determining the performance appraisal system for directors and senior management. remuneration of directors, The appraisal procedures of the Remuneration Committee on the directors and senior management: (1) supervisors and senior the senior management of the Company make the work report to the Remuneration & Appraisal management Committee under the Board; (2) the Remuneration Committee reviews the performance appraisal report proposed by Human Resources Department; (3) the Remuneration Committee proposes the annual appraisal results for senior management in accordance with position performance appraisal results and the Incentive & Restraint Plan for Senior Management, and votes for such proposal, and then submits it to the Board after approval.
Actual payment of the The Company has a total of 31 directors, supervisors and senior management, and all of them actually
13 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd. remuneration of directors, withdraw the remuneration from the Company. Up to 30 Jun. 2012, they have withdrawn a total annual supervisors and senior remuneration of RMB 6,202,600 (before tax). management
（IV）Change of directors, supervisors and senior management
Naught
（V）Employees
Number of on-job employees 16,638.00 Number of retired employees for whom the Company shall bear 0.00 expenses Function structure Type of function Number of personnel Production 11,439.00 Sale 549.00 Technical 4,236.00 Financial 75.00 Administration 339.00 Level of education Level of education Number of personnel Doctor’s degree 2.00 Master’s degree 22.00 University 395.00 Junior college 4,872.00 High school and below 11,347.00 VI. Report of the Board of Directors
（I）Discussion and analysis by the management
The Company is a comprehensive textile manufacturer that has integrated cotton planting, spinning, blanching and dyeing, weaving, after-finishing and clothes making. The leading products are the shirt-use yarn-dyed fabric. About 80% of the products produced by the Company are for export, and its markets cover more than 30 countries and districts, including Japan, South Korea, America, Britain, Italy, etc. It is the largest production base of shirt-use yarn-dyed fabric in the world. In the reporting period, along with the continuous European debt crisis, sharply deteriorating market environment, growing difference between domestic and overseas cotton prices, rising domestic labor cost, more and more clients placing orders in Southeast Asia and other factors, the international competitiveness of the domestic textile industry took a series of hits. With the unfavorable actual environment, despite a year-on-year increase of 1.60% on the sales volume, the gross profit amount and rate both showed some phasic drop due to the adjustment of the Company’s market and order structures. In the first half of last year, prices of the Company’s products also increased a bit while cotton prices went up greatly. However, the Company’s product prices rose not so quickly and greatly as cotton prices. And the rise of the Company’s product prices still cushioned impact of the cotton
14 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd. price increase on the Company’s costs. So the business performance data were relatively good in the first half of last year. Affected by the factors above, the year-on-year decrease of the Company’s profit for the first half of the year was great. For the reporting period, the Company achieved operating revenue of RMB 2,808,025,600, operating profit of RMB 340,105,700 and net profit attributable to owners of the Company of RMB 301,503,300, down 5.80%, 45.41% and 38.67% respectively over the same period of last year. The Company continued to support scientific research during the reporting period. 8 of its patent applications were accepted, including 1 invention patent and 7 utility model patents. The Company was granted 9 patents in the reporting period, including 4 invention patents and 5 utility model patents. Accumulatively, the Company has been granted 77 patents, of which 13 are invention patents, 59 are utility model patents and 5 are design patents. In the reporting period, the Company was honored jointly by Shandong Enterprise Association, Shandong Enterprineur Association and Shandong Industry & Economy Association as a ―Unit with Advanced Culture in Shangdong Province‖; honored as a ―May Fourth Red Flag Committee of Shandong‖ by Shandong Communist Youth League; honored as an ―Enterprise that Pays Tax According to Laws for Making the Country Stronger and Benefiting People‖ by Zibo State Administration of Taxation; and honored as one of the ―Top 10 Charity Enterprises‖ by Zibo Red Cross Society.
Is the Company’s actual business performance 20% lower or higher than any earning forecast or business plan for the reporting period which has been publicly disclosed earlier? □ Yes √ No □ Inapplicable
Analysis to the business and performances of the Company’s main subsidiaries and stock-participating companies: Lufeng Weaving & Dyeing Co., Ltd., the Company’s main controlled subsidiary, is mainly engaged in production and sale of piece dyed cloth. The subsidiary’s registered capital is RMB 706.16 million, its total assets are RMB 1,440,416,700 and its net profit for the reporting period is RMB 44,036,500.
All risk factors that might have adverse impact on the Company’s effort to realize its future development strategy and business goals: During the reporting period, due to the deteriorating European debt crisis, growing difference between domestic and overseas cotton prices, weak market demand, rising domestic labor cost, more and more client placing orders in Southeast Asia and other factors, international competitiveness of the domestic textile industry took quite a few hits. In the reporting period, the international cotton prices were much lower than the domestic ones, with the largest difference reaching almost 40%, and the average international cotton price decreased 39% over the same period of last year, which created huge difficulties for production and operation of textile enterprises. The Company was no exception. Due to the normal reserve cycle of raw materials and the relative lag of the influence of product market prices, net profit attributable to owners of the Company went down 38.67% over the same period of last year. The larger fluctuation of the Renminbi exchange rate also produced some impact on the Company in the reporting period. The Company had carried out forward foreign exchange deals against Renminbi appreciation and locked the cost in advance, but the larger fluctuation of the Renminbi exchange rate made it more difficult for the Company to operate its forward foreign exchange deals.
15 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
1. Main business lines and their operating results
（1）Main business lines classified by industries and products
Unit: RMB Yuan Increase/decrease Increase/decrease Increase/decrease of operating of gross profit of operating cost Gross profit revenue rate compared Industry/product Operating revenue Operating cost compared with rate (%) compared with with the same the same period the same period period last year last year (%) last year (%) (%) Industry Textile and 2,502,951,569.95 1,803,668,572.18 27.94% -7.26% 3.67% -7.6% garments Cotton 54,482,474.92 44,457,699.53 18.4% -16.86% -20.58% 3.82% Electricity and 94,492,825.45 88,624,820.99 6.21% 43.78% 32.34% 8.11% gas Others 72,525,706.42 67,142,781.86 7.42% 407.70% 578.86% -23.34% Product Yarn-dyed fabric 1,865,722,025.87 1,375,834,973.23 26.26% -9.46% 4.17% -9.65% Shirts 637,229,544.08 427,833,598.95 32.86% -0.17% 2.13% -1.51% Lint 54,482,474.92 44,457,699.53 18.4% -16.86% -20.58% 3.82% Electricity and 94,492,825.45 88,624,820.99 6.21% 43.78% 32.34% 8.11% gas Others 72,525,706.42 67,142,781.86 7.42% 407.70% 578.86% -23.34% Explanation to the main business performances classified by industries and products: 1. The gross profit rate of the Company’s yarn-dyed fabric in the reporting period went down 9.65% over the same period of last year, which was mainly because along with the continuous European debt crisis, slow recovery of market demand, growing difference between domestic and overseas cotton prices, rising domestic labor cost and more clients placing orders in Southeast Asia, the Company adjusted its market and order structures according to the market situation. 2. The gross profit rate of other main business lines for the reporting period was 7.42%, down 23.34% from a year earlier, which was mainly the variety structure of subsidiary agricultural products for sale changed.
（2）Main business lines classified by regions
Unit: RMB Yuan Increase/decrease compared with the same Region Operating revenue period last year (%) Hong Kong 285,635,416.39 2.58% Japan, South Korea 252,372,289.46 3.26% Southeast Asia 596,972,072.78 -10.15% Europe, America 547,688,476.30 -24.27% Others 302,652,040.67 -29.71% China Mainland 822,705,269.16 28.61%
16 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
（3）Reasons for significant changes in main business and its structure □Applicable √Inapplicable
（4）Reasons for significant changes in profitability of main business (gross profit rate) compared with that in the last year
√Applicable □Inapplicable The overall gross profit rate for the reporting period decreased mainly due to the 9.65% year-on-year decrease of the gross profit rate of yarn-dyed fabric. Along with the continuous European debt crisis, slow recovery of market demand, growing difference between domestic and overseas cotton prices, rising domestic labor cost and more clients placing orders in Southeast Asia, the Company adjusted its market and order structures according to the market situation and the gross profit rate decreased considerably as a result.
（5）Analysis on reasons of significant changes in profit breakdown compared with the last year
□Applicable √Inapplicable
（6）Business nature, main products/services, net profit and other particulars about subsidiaries which made a contribution over 10% to the Company’s net profit for the reporting period √Applicable □Inapplicable Lufeng Weaving & Dyeing Co., Ltd., the Company’s main controlled subsidiary, is mainly engaged in production and sale of piece dyed cloth. The subsidiary’s registered capital is RMB 706.16 million, its total assets are RMB 1,440,416,700 and its net profit for the reporting period is RMB 44,036,500.
(7) Problems and difficulties encountered in operation
2. Internal control rules in relation to fair value measurement
√Applicable □Inapplicable
Items related to fair value measurement: Unit: RMB Yuan Gains/losses on fair Accumulative fair Impairment Item Opening amount value changes in the value changes provisions for the Closing amount reporting period recorded into equity reporting period Financial assets Including: 1. Financial assets measured at fair value whose changes are recorded into
17 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd. current gains and losses Of which: derivative 20,939,380.00 -20,939,380.00 financial assets 2. Available-for-sale financial assets Subtotal of financial 20,939,380.00 -20,939,380.00 assets Financial liabilities 10,107,650.00 10,107,650.00 Investing property Production biological assets Others Total 20,939,380.00 -31,047,030.00 10,107,650.00 Where the value estimation technique was adopted to determine fair value for the same or similar items within the two years, is there any significant difference between the value estimation results? If yes, please state in detail. □ Yes √ No □ Inapplicable
3. Foreign-currency financial assets and liabilities held
√Applicable □Inapplicable Unit: RMB Yuan Gains/losses on fair Accumulative fair Impairment Item Opening amount value changes in the value changes provisions for the Closing amount reporting period recorded into equity reporting period Financial assets Including: 1. Financial assets measured at fair value whose changes 20,939,380.00 -20,939,380.00 are recorded into current gains and losses Of which: derivative 20,939,380.00 -20,939,380.00 financial assets 2. Loans and 375,326,221.05 532,697,817.09 receivables 3. Available-for-sale financial assets 4. Held-to-maturity investments Subtotal of financial 396,265,601.05 -20,939,380.00 532,697,817.09 assets Financial liabilities 810,929,536.74 10,107,650.00 917,790,106.68
18 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
（II）Investments
1. General utilization of the raised funds
√Applicable □Inapplicable Unit: RMB Ten thousand Total raised capital 95,081.45 Total raised capital input in the reporting period 5,631.52 Accumulative raised capital input 93,574.82 Total raised capital of which the use was changed in the 0 reporting period Accumulative raised capital of which the use was 14,000 changed Proportion of accumulative raised capital of which the 14.72% use was changed General utilization of the raised funds In Dec. 2008, the Company carried out a refinancing project, issuing additional 150 million A-shares and raising a net amount of RMB 950,814,500. And the raised funds went to the 150,000-Ingot Top-grade Fine Combed Yarn Project, the 50-thousand Ingot Two-for-one Twisting Production Line Project, the Production Line Project for 10-million-meter Top-grade Jacquard Fabrics for Women’s Wear, the Marketing Network Development Project and the Project for Supplementing the Working Capital. Among the aforesaid projects, the 150,000-Ingot Top-grade Fine Combed Yarn Project, the 50-thousand Ingot Two-for-one Twisting Production Line Project, the Production Line Project for 10-million-meter Top-grade Jacquard Fabrics for Women’s Wear and the Project for Supplementing the Working Capital had been completed before the reporting period. Meanwhile, on 18 Oct. 2011, the proposal on adjusting the raised funds investment projects was reviewed and approved at the 3rd Special Shareholders’ General Meeting for 2011. It was decided to adjust the raised funds investment of RMB 200 million for the Marketing Network Development Project to RMB 60 million, and the remaining RMB 140 million would be invested in a new project—the Production Line Project for 40-million Meter Top-grade Yarn-dyed Fabric. By the end of the reporting period, the cumulative input for the new project stood at RMB 140,000,000.00, including RMB 28,102,963.11 for construction and RMB 111,897,036.89 for equipment purchase. The project investment was paid by raised funds of RMB 140,000,000.00, which was in line with the planned raised funds investment amount. RMB 2,096,900 was invested in the Marketing Network Development Project during the reporting period, and the cumulative investment in the project stood at RMB 44,933,700. Currently, the Company has opened 33 shops and expanded its online marketing channels via ―Lu Thai Online‖.
19 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
2. Projects promised to be invested with raised funds √Applicable □Inapplicable Unit: RMB Ten thousand Project Investment Date when the Material Profit Projects invested with raised capital changed or not Raised capital Investment Accumulative progress up to project reaches Reach the change in the Input in the generated in as promised and investments with (including input as after input up to the the period-end the expected expected profit project reporting year the reporting over-raised capital partially promised adjustment (1) period-end (2) (%)(3)＝ usable or not feasibility or period changed) (2)/(1) condition not Projects invested with raised capital as promised Project for Marketing Network Yes 6,000 6,000 209.69 4,493.37 74.89% 30 Dec. 2012 0 Yes No Development Project for a 40-million Meter Top-grade Yarn-dyed Fabric No 14,000 14,000 5,421.83 14,000 100% 0 Yes No Production Line Subtotal of promised investment - 200,000 200,000 5,631.52 18,493.37 - - 0 - - projects Investments of over-raised capital
Repaying bank loans (if any) - - - - - Supplementing working capital (if - - - - - any) Subtotal of investments with - - - - - over-raised capital Total - 200,000 200,000 5,631.52 18,493.37 - - 0 - - Reason for failing to reach scheduled progress or projected The Project for Marketing Network Development and the Project for a 40-million Meter Top-grade Yarn-dyed Fabric Production Line are proceeding as scheduled. income (explain one project by one
20 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
project) Explanation on significant changes Up to 30 Jun. 2012, no material change had occurred in the feasibility of the Company’s raised capital investment projects. in feasibility of projects Amount, usage and usage progress □Applicable √Inapplicable of over-raised capital Change of the implementation □Applicable √Inapplicable location of any raised funds □ Took place in the reporting period □ Took place in previous years investment project Adjustment of the implementation □Applicable √Inapplicable method of any raised funds □ Took place in the reporting period □ Took place in previous years investment project √Applicable □Inapplicable Advance input and exchange of any On 11 Jan. 2009, Proposal on Replacing the Self-collected Funds of RMB 264,861,646.97 with the Input Raised Capital in Advance at the 27th Meeting of the raised funds investment project 5th Board of Directors. Sponsor Guotai Junan Securities Co., Ltd expressed the same opinion. The Company engaged RSM China Certified Public Accountants to audit investment of self-collected capital to project should be invested with raised capital in advance, and issued certification report ZRYHZS Zi [2008] No. 3754. √Applicable □Inapplicable On 3 Sept. 2010, it was reviewed and approved at the 3rd Session of the 6th Board of Directors to temporarily supplementing working capital with raised funds of RMB 94 million for a term from Sept. 2010 to Mar. 2011. The raised funds used for supplementing working capital accounted for 9.89% of the net raised funds, so the relevant proposal did not need to be submitted to the general meeting for review. Independent directors and Guotai Junan Securities (the sponsor) issued their independent opinion and sponsor opinion respectively. The announcement about temporarily supplementing working capital with raised funds was published on Idle raised capital for temporarily Securities Times, Shanghai Securities News and Ta Kung Pao dated 4 Sept. 2010. On 2 Mar. 2011, the Company returned, in full amount, the raised funds used supplementing working capital previously for supplementing working capital. On 28 Mar. 2011, it was reviewed and approved at the 9th Session of the 6th Board of Directors to temporarily supplementing working capital again with raised funds of RMB 94 million for a term from Mar. 2011 to Sept. 2011. The raised funds used for supplementing working capital accounted for 9.89% of the net raised funds, so the relevant proposal did not need to be submitted to the general meeting for review. Independent directors and Guotai Junan Securities (the sponsor) issued their independent opinion and sponsor opinion respectively. The announcement about temporarily supplementing working capital with raised funds was published on Securities Times, Shanghai Securities News and Ta Kung Pao dated 30 Mar. 2011. On 21 Sept. 2011, the Company returned, in full amount, the raised funds used previously for supplementing working capital. Outstanding raised funds in project □Applicable √Inapplicable
21 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
implementation and reasons Usage and whereabouts of unused The unused raised capital up to 30 Jun. 2012 will be input for the Project for Marketing Network Development. raise capital Problems found in the usage and The Company performed its information disclosure duty in a timely, accurate and complete manner when it used raised funds, temporarily supplemented working disclosure affairs of raised capital capital with raised funds and changed the investment directions of raised funds. No violation of information disclosure rules was found. and other situations
22 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
3. Change of projects invested with raised funds
√Applicable □Inapplicable Unit: RMB Ten thousand Total raised Material Investment Date when funds Actual Profit change in Actual input progress up the project Project planned to cumulative generated in Reach the the Project after for to the reaches the before be input for input by the expected after-change change reporting period-end expected change the project period-end reporting profit or not project period (%)(3)＝ usable after change (2) period feasibility (2)/(1) condition (1) or not Project for a 40-million Project for Meter Marketing Top-grade Network 14,000 5,421.83 14,000 100% 1 Jun. 2013 0 Yes No Yarn-dyed Developme Fabric nt Production Line Total -- 14,000 5,421.83 14,000 -- -- 0 -- -- Due to market changes and other reasons, the implementation of the raised funds-invested project—Project for Marketing Network Development—was slow. It was a project that should be invested persistently on a long-term basis, so some raised funds for the project was idle for a long time, which affected the utilization efficiency of raised funds. In order to Reasons for change, decision-making increase the utilization efficiency of the capital and maximize shareholders’ interests, procedure and relevant information according to relevant stipulations in the management methods for use of raised funds, the disclosure (explain one project by one Company held the 3rd Special Shareholders’ General Meeting for 2011 on 18 Oct. 2011, at project) which the proposal on adjusting the raised funds-invested project was reviewed and approved. According to the said proposal, the raised fund for the Project for Marketing Network Development was adjusted from RMB 200 million to RMB 60 million and the remaining RMB 140 million would be input for a new project—the Project for a 40-million Meter Top-grade Yarn-dyed Fabric Production Line. Reason for failing to reach scheduled The Project for a 40-million Meter Top-grade Yarn-dyed Fabric Production Line is progress or projected income (explain proceeding as scheduled. one project by one project) Explanation on significant changes in Naught feasibility of projects after change
4. Significant projects invested with non-raised funds
√Applicable □Inapplicable
23 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Unit: RMB Ten thousand Disclosure Amount for the Project name date of the first Project progress Project earnings project announcement Project for a 40-million Meter Top-grade Yarn-dyed Fabric 29 Sept. 2011 36,470 69% 0 Production Line 50-million Meter Top-grade Piece 12 May 2011 65,993 68% 0 Dyed Fabric Project A new 230,000-spindle production line project and a new 35,000-ingot 27 Apr. 2012 92,866 0.24% 0 two-for-one twisting production line project Total 195,329 -- -- Notes to significant projects invested with non-raised funds
（III）Revision of the Board of Directors’ business plan for the second half of the year
□Applicable √Inapplicable
（IV）Business performance estimate for Jan.-Sept. 2012
Warnings of estimated possible losses or major changes of the accumulative net profit achieved during the period from the beginning of the year to the end of the next reporting period compared with the same period of last year, as well as the reasons □Applicable √Inapplicable
（V）Explanation of the Board of Directors on “Non-standard Auditing Report” issued by the CPA firm for the reporting period
□Applicable √Inapplicable
（VI）Explanation of the Board of Directors on changes and solutions of the issues involved in the “Non-standard Auditing Report” issued by the CPA firm for last year
□Applicable √Inapplicable
（VII）State the discussion results of the Board of Directors on the reasons and influence of the Company’s accounting policy and estimate alterations or significant accounting error correction
□Applicable √Inapplicable
24 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
（VIII）Formulation and execution of the Company’s cash dividend policy
A. The Company explicitly stipulates in its Articles of Association the conditions for cash dividends, the pricing methods for cash dividends for A-share and B-share holders and other policies. The dividend plan was formulated in strict compliance with relevant requirements in the Articles of Association at the 19th Session of the 6th Board of Directors, which independent directors attended and voted on the plan. Reviewed and approved at the 2011 Annual Shareholders’ General Meeting held on 27 Apr. 2012, execution of the dividend plan was completed on 26 Jun. 2012. The dividend ratio, decision-making procedure, dividend distribution and other matters for 2011 were all in line with the Articles of Association and relevant resolutions of the general meeting. B. According to the Notice of CSRC on Further Implementing Matters Related to Cash Dividend Distribution by Listed Companies, the Company reviewed and approved the Proposal on Amending Some Articles in the Articles of Association at the 22nd Session of the 6th Board of Directors held on 13 Jul. 2012, which was later reviewed and approved at the 3rd Special Shareholders’ General Meeting for 2012 held on 30 Jul. 2012. Article 77, Article 154 and Article 155 of the Articles of Association were amended. And the amended articles specified the decision-making mechanism for the Company’s profit distribution policy and its adjustment, as well as conditions, standards and the ratio for cash dividends. The amended dividend-related articles were in line with the Notice of CSRC on Further Implementing Matters Related to Cash Dividend Distribution by Listed Companies.
（IX）Pre-plan for profit distribution or turning capital reserve into share capital
□Applicable √Inapplicable （X）The accumulative retained profit as at the end of 2011 is a positive number but the Company has not put forward a cash dividend pre-plan. □Applicable √Inapplicable
（XI）Other events to be disclosed
（ XII ） The Company’s liabilities, credit changes and future cash arrangements for debt-clearing (Only listed companies with convertible corporate bonds are required to fill the table below.)
□Applicable √Inapplicable
VII. Significant Events
（I）Corporate governance
The Company continued to perfect the corporate governance structure, establish and perfect the modern enterprise system and ensure the efficient and standardized operation of the Company’s Shareholders’ General Meeting, Board of Directors, Board of Supervisors and Senior Executives strictly according to Company Law, Securities Law and Governing Rules for Listed Company as well as relevant stipulations and requirements from CSRC. It formed a relationship of clear division of rights and responsibilities, assuming each own functions and check and
25 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd. balance each other between the management organ, decision-making organ, supervisory organ and management layer, so as to provide a good internal operational environment for the Company’s standardized and efficient operation. At present, there is no difference between the actual situation of the Company’s corporate governance structure and the requirements on the corporate governance of CSRC and Shenzhen Stock Exchange. During the reporting period, pursuant to the Stock Listing Rules of Shenzhen Stock Exchange, the Basic Norms of Internal Control for Enterprises and the Notice of CSRC on Further Implementing Matters Related to Cash Dividend Distribution by Listed Companies, the Company amended the Internal Control Management Rules of Lu Thai Textile Co., Ltd., the Information Insider Registration Management Rules and the Articles of Association and continued to improve its corporate governance structure.
（II）Execution of the plans for profit distribution, turning capital reserve into share capital or new share issuance which had been made in the previous period and were carried out in the reporting period
√Applicable □Inapplicable On 27 Apr. 2012, the 2011 annual profit distribution plan was reviewed and approved at the 2011 Annual Shareholders’ General Meeting, with details of the plan as follows: based on total share capital of 1,008,954,800 shares as at 31 Dec. 2011, the cash dividend of RMB 2.80 (tax included) should be distributed for every 10 shares, and it tuned to be RMB 2.52 for distribution for every 10 shares after 10% personal income tax was deducted. Of which, the cash dividend to shareholders of B share should be converted into HK dollars by the middle price between RMB and HKD declared by the People’s Bank of China on the first working day after adopting resolution of the Shareholders’ General Meeting. On 19 Jun. 2012, the 2011 Annual Equity Distribution Implementation Plan of Lu Thai Textile Co., Ltd. was published on China Securities Journal, Securities Times and http://www.cninfo.com.cn. And execution of the plan was completed on 26 Jun. 2012.
(III) Significant litigations and arbitrations □Applicable √Inapplicable The Company was not involved in any significant lawsuit or arbitration during the reporting period.
(IV) Bankruptcy or reorganization events
□Applicable √Inapplicable
(V) Holding equity of other listed companies and joint financial enterprises
1. Securities investment
□Applicable √Inapplicable
2. Holding equity of other listed companies
□Applicable √Inapplicable
26 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
3. Holding equity of non-listed financial enterprises
□Applicable √Inapplicable
4. Trading stocks of other listed companies
□Applicable √Inapplicable
(VI) Assets transaction events
27 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
1. Purchase of assets
√Applicable □Inapplicable Net profit Net profit contributed to contributed to the Company Relationship the Company Whether or Ratio of the from the between the from the not the Whether or net profit Transaction acquisition not the transaction Disclosure Asset Transaction year-begin to Related-party ownership of contributed by party or Date of date to the Pricing creditor’s right party and the date of the acquired or price (RMB the period-end transaction or the asset and liabilities the asset to ultimate acquisition period-end principle involved have Company first interim bought in Ten thousand) (applicable for not involved has the Company controller (applicable for been fully (applicable for announcement business been fully transferred to the total business related-party combinations transferred profit (%) combinations transactions) under the not under the same control) same control) ZIBO The LUCHENG 27 units/sets Company’s TEXTILE of spinning 6 Jun. 2012 481.11 Yes Fair price Yes Yes 8 Jun. 2012 parent INVESTMEN equipments company T CO., LTD. Notes to purchase of assets: The Company held the 21st Session of the 6th Board of Directors on 6 Jun. 2012, at which the proposal on the Company’s controlled subsidiary Zibo Luqun Textile Co., Ltd. purchasing 27 units/sets of spinning equipments owned by the parent company of the Company was reviewed and approved. Up to 30 May 2012, the net carrying amount of these equipments was RMB 4,811,056.27, which was made the price for the asset transfer and paid in cash. Independent directors gave consent to the said proposal and expressed their independent opinion before it was submitted to the board for voting.
2. Sale of assets
√Applicable □Inapplicable
28 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Net profit Ratio of the Relationship Whether or contributed by net profit between the not the Whether or the asset from not the contributed to transaction Disclosure Transaction Gain/loss on Related-party ownership of Transaction the Pricing creditor’s right the Company party and the date of the Asset sold Date of sale price (RMB sale (RMB transaction or the asset and liabilities party period-begin principle involved have by the asset Company first interim Ten thousand) Ten thousand) not involved has to the date of been fully sale to the (applicable for announcement been fully transferred sale (RMB total profit related-party transferred Ten thousand) (%) transactions) 13.64% equity interests of Controlled Zibo Limin Zibo Limin Net audited subsidiary of Purified Water 23 Apr. 2012 95.1 -54.9 Yes No No 25 Apr. 2012 Wall Co., Ltd. value the parent Co., Ltd. held by the company Company Notes to sale of assets: The Company held the 30th Session of the 6th Board of Directors on 23 Apr. 2012, at which the proposal on transferring the 13.64% equity interests of Zibo Limin Wall Co., Ltd. held by the Company to Zibo Limin Purified Water Co., Ltd. was reviewed and approved. As audited by RSM China Certified Public Accountants, the net assets of Limin Wall as at 2011 valued RMB 6,971,900 and the corresponding equities valued RMB 951,000, which was made the price for the equity transfer and paid in cash. Independent directors gave consent to the said proposal and expressed their independent opinion before it was submitted to the board for voting.
3. Exchange of assets
□Applicable √Inapplicable
29 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
4. Business combination
□Applicable √Inapplicable
5. Progress of these events after the publication of the assets reorganization report or public notices on the purchases or sales of assets, as well as the influences of these events on the operation results and financial status of the Company in this reporting period
√Applicable □Inapplicable 1. The Company held the 20th Session of the 6th Board of Directors on 23 Apr. 2012, at which the proposal on transferring the 13.64% equity interests of Zibo Limin Wall Co., Ltd. held by the Company to Zibo Limin Purified Water Co., Ltd. was reviewed and approved. And the transfer price was received in full amount on 2 May 2012. Currently, the relevant equity registration change formalities are being dealt with. The purpose of the said related-party transaction is mainly to reduce the external investment loss of the Company, which will not affect the operating results and financial positions in the reporting period or the future. 2. The Company held the 21st Session of the 6th Board of Directors on 6 Jun. 2012, at which the proposal on the Company’s controlled subsidiary Zibo Luqun Textile Co., Ltd. purchasing 27 units/sets of spinning equipments owned by the parent company of the Company was reviewed and approved. The asset transfer formality was completed in the reporting period. The purpose of the said related-party transaction is mainly to reduce related-party transactions, which will not produce any major influence on the Company’s financial position or operating results.
(VII) Explanation on shareholding increase scheme during the reporting period proposed or implemented by the principal shareholders and act-in-concert persons
□Applicable √Inapplicable
(VIII) Implementation situation and influence of equity incentive plan of the Company
√Applicable □Inapplicable GMs, vice GMs, senior executives, core management staff, core technical and Incentive receivers in the reporting period business staff Total equities granted in the reporting period 0.00 (share) Total equities exercised in the reporting period 0.00 (share) Total equities that expired in the reporting period 0.00 (share) Cumulative equities granted but not yet exercised by the end of the reporting period 14,090,000.00 (share)
30 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Cumulative equities granted and exercised by 0.00 the end of the reporting period (share) Adjustments to the granting and exercise prices in the reporting period and the prices after adjustments Equities received and exercised by directors, supervisors and senior management staff Equities not yet exercised Equities received in the Equities exercised in the Name Office title in the reporting period reporting period (share) reporting period (share) (share) 0.00 0.00 0.00 Share capital changes due to the exercise of the Naught incentive receivers The fair value of the restricted shares granted by the Company was subject to the Fair value measurement of equity tools closing A-share price one day before the granting day. Model, parameters and selection criteria adopted Naught for the estimation technique Amortization period and result of the fair value Naught of equity tools
(IX) Significant related-party transactions
31 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
1. Related-party transactions relevant to routine operation √ Applicable □ Inapplicable Reason for significant Pricing Proportion in Settlement Type of the Content of the Transaction Transaction Influence on Market price difference principle of the same kind of method of the Related party Relationship related-party related-party price (RMB amount (RMB the profits of (RMB Ten between the related-party transactions related-party transaction transaction Ten thousand) Ten thousand) the Company thousand) transaction transaction (%) transaction price and the market price A Purchase of Zibo Limin wholly-funded goods/acceptan Sewage Settlement in Purified Water subsidiary of Market price 330.22 330.22 100% 330.22 ce of labor treatment cash Co., Ltd. the Company’s service parent company A controlled Sale of Zibo subsidiary of goods/renderin Settlement in Chengshun Thermal power Market price 321.08 321.08 3.4% 321.08 the Company’s g of labor cash Power Co., Ltd. parent company service Total -- -- 651.3 ------Details of large amount of sales returns Naught Necessity and continuity of related-party transaction as well as 1. Zibo Limin Purified Water Co., Ltd. provided necessary sewage treatment for the Company. 2. Zibo Chengshun Power Co., Ltd. reason of choosing the related party (but not other transaction got thermal power supply from Xinsheng Thermal Power, the Company’s controlled subsidiary. parties) to conduct the said transaction Impacts of related-party transaction on independency of the These related-party transactions only accounted for a small proportion in the Company’s purchase and sale amount, so they wouldn’t Company affect the Company’s independency. 1. Zibo Limin Purified Water Co., Ltd. is the main sewage treatment enterprise in the place where the Company is located and the Dependant degree of the Company on related party and relevant Company 100% depends on it in this respect. 2. Zibo Chengshun Power Co., Ltd. is a thermal power provider in the place where the solutions for the dependence (if any) Company is located and it 100% depends on Xinsheng Thermal Power—the Company’s controlled subsidiary—in this respect.
32 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
As for the prediction on the total amount of routine related-party transactions to be occurred in the reporting period by relevant Naught types, the actual performance in the reporting period Explanation on related-party transaction Naught Related-party transactions relevant to routine operation Selling products and providing labor services to related parties Purchasing products and receiving labor services from related parties Related party Transaction amount (RMB Ten Proportion in same kind of Transaction amount (RMB Ten Proportion in same kind of thousand) transactions (%) thousand) transactions (%) Lucheng Textile 46.82 0.02% 494.8 1.26% Limin Purified Water 8.45 0.01% 330.22 1.36% Stanluian Company 2.01 0.21% 14.36 0.43% Taimei Ties 0.93 0.11% 84.43 0.49% Chengshun Power 321.08 3.4% Total 379.29 923.81 Of which, the funds provided by the Company for the controlling shareholder and its subsidiaries stood at RMB 3,772,800 for the reporting period.
2. Related-party transactions regarding purchase and sales of assets
√ Applicable □ Inapplicable Reason for Influence on any big Carrying Estimated the difference Gain on the Type of the amount of the value of the Market fair Transfer price Company’s Contents of Pricing between Method of asset transfer Related party Relationship related-party transferred transferred value (RMB (RMB Ten operating the transaction principle transfer price settlement (RMB Ten transaction asset (RMB asset (RMB Ten thousand) thousand) results and and carrying thousand) Ten thousand) Ten thousand) financial amount/estima situation ted value Zibo Limin A Sale of equity 13.64% equity As audited by 95.1 95.1 95.1 95.1 Naught In cash The purpose
33 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Purified Water wholly-funded interests interests of RSM China of the said Co., Ltd. subsidiary of Zibo Limin Certified related-party the Wall Co., Ltd. Public transaction is Company’s held by the Accountants, mainly to parent Company the net assets reduce the company were of Limin Wall external transferred to as at 2011 investment Zibo Limin valued RMB loss of the Purified Water 6,971,900 and Company, Co., Ltd. the which will not corresponding affect the equities operating valued RMB results and 951,000. financial positions in the reporting period or the future. The purpose Up to 30 May The Company of the said 2012, the net acquired 27 related-party carrying Zibo Lucheng The units/sets of transaction is amount of Textile Company’s Acquisition of spinning mainly to these 481.11 481.11 481.11 481.11 Naught In cash Investment parent assets equipments reduce equipments Co., Ltd. company from the related-party was made the parent transactions, price for the company. which will not asset transfer. produce any
34 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
major influence on the Company’s financial position or operating results.
3. Significant related-party transitions with joint investments
□ Applicable √ Inapplicable
4. Significant credits and liabilities with related parties
√ Applicable □ Inapplicable Is there any non-operating credit or liability with any related party? √ Yes □ No Funds provided by the Company to the related party (RMB Ten Funds provided by the related party to the Company (RMB Ten thousand) thousand) Related-party Relationship Opening Incurred Repaid Closing Interest Interest Opening Incurred Repaid Closing Interest Interest balance amount amount balance income cost balance amount amount balance income cost For non-operating purposes: The Company’s Lucheng Textile 2,090 2,090 parent company A controlled Taimei Ties 265 265 subsidiary of the
35 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Company’s parent company Related party (share Stanluian Company the same chairman 219 219 with the Company) A controlled subsidiary of the Chengshun Power 300 230 70 Company’s parent company Subtotal 2,574 300 230 2,644 For operating purposes:
Subtotal Total 2,574 300 230 2,644 Funds provided by the Company to the controlling shareholder and 0 its subsidiaries in the reporting period (RMB Ten thousand) Of which: amount incurred for non-operating purposes (RMB Ten thousand) Balance of the funds provided by the Company to the controlling 0 shareholder and its subsidiaries (RMB Ten thousand) Of which: Balance for non-operating purposes (RMB Ten thousand) Liabilities with related parties are all loans of the Company’s controlled subsidiary—Zibo Luqun Textile Co., Ltd. borrowed from Reason for any credit or liability with the related party the Company and its controlled subsidiaries to supplement current funds. Debt-clearing progress of the credit or liability with the related In the reporting period, Zibo Luqun Textile Co., Ltd. has paid back RMB 2.3 million to the Company’s controlled party subsidiary—Chengshun Heating, then the balance of related-party loan at period-end stood at RMB 26.44 million. Commitments made about the credit or liability with the related party
36 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Influence of the credit or liability with the related party on the
Company’s operating results and financial position Capital occupation during the reporting period and debt-clearing progress □Applicable √Inapplicable The accountability plan put forward by the Board of Directors when the Company had not completed collecting the capital occupied for non-operating purposes by the end of the reporting period □Applicable √Inapplicable
37 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
5. Other significant related-party transactions
(X) Significant contracts and execution
1. The trust, contract and lease whose profits reaching more than 10% (including 10%) of the total profits of the Company in the reporting period
(1) Status of trust
□Applicable √Inapplicable
（2）Particulars about contracting
□Applicable √Inapplicable
（3）Particulars about leasing
□Applicable √Inapplicable
2. Guarantees provided by the Company
√ Applicable □ Inapplicable Unit: RMB Ten thousand Guarantees provided by the Company for external parties (excluding those for subsidiaries) Disclosure Guarante Actual date of Actual e for a Amount for occurrence date Type of Period of Executed Guaranteed party relevant guarantee related guarantee (date of guarantee guarantee or not announcem amount party or agreement) ent not
Total external guarantee line Total actual occurred amount approved during the reporting of external guarantee during period (A1) the reporting period (A2) Total external guarantee line that Total actual external guarantee has been approved at the end of balance at the end of the the reporting period (A3) reporting period (A4) Guarantees provided by the Company for its subsidiaries Disclosure Guarante Actual date of Actual e for a Amount for occurrence date Type of Period of Executed Guaranteed party relevant guarantee related guarantee (date of guarantee guarantee or not announcem amount party or agreement) ent not Lufeng Weaving & 23 May 30,000 10 May 2011 2,482.6 Warranty Ends since No Yes
38 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Dyeing Co., Ltd. 2011 the actual occurrence of the loans within the credit line Total guarantee line approved for Total actual occurred amount the subsidiaries during the of guarantee for the 30,000 612.89 reporting period subsidiaries during the (B1) reporting period (B2) Total guarantee line that has been Total actual guarantee balance approved for the subsidiaries at 30,000 for the subsidiaries at the end 2,482.6 the end of the reporting period of the reporting period (B4) (B3) Total guarantee amount provided by the Company (total of the above-mentioned two kinds of guarantees) Total guarantee line approved Total actual occurred amount during the reporting period 30,000 of guarantee during the 612.89 (A1+B1) reporting period (A2+B2) Total guarantee line that has been Total actual guarantee balance approved at the end of the 30,000 at the end of the reporting 2,482.6 reporting period period (A4+B4) (A3+B3) Proportion of total guarantee amount (A4+B4) to the net assets 0.48% of the Company Of which: Amount of guarantee for shareholders, actual controller and 0 related parties (C) Amount of debt guarantee provided for the guaranteed party whose asset-liability ratio is not less than 70% directly or 0 indirectly (D) Part of the amount of the total guarantee over 50% of net assets 0 (E) Total amount of the above three guarantees (C+D+E) 0 According to the Counter-guarantee Agreement signed between the Company and Lufeng on 12 May 2011, Lufeng, the guaranteed party, provided a counter guarantee at the same amount for the Explanation on possible bearing joint responsibility of Company. The decision-making procedure for the said guarantee liquidation due to immature guarantee provided by the Company for its controlled subsidiary was legal, with no harm done to interests of the Company and its shareholders, especially minority shareholders. Explanation on provision of guarantees for external parties in The Company did not provide any external guarantee that violated violation of the prescribed procedure any rule.
39 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
3. Entrusted financial management
□Applicable √Inapplicable
40 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
4. Performance of significant contracts relevant to routine operation
5. Other significant contracts √ Applicable □ Inapplicable (XI) Explanation on issuing corporate bonds
□Applicable √Inapplicable
(XII) Performance of commitments
1. Commitments made by the Company or shareholders holding over 5% of the Company’s shares in the reporting period, or such commitments carried down into the reporting period
√ Applicable □ Inapplicable Time for Commitment Commitment Commitment Contents making the Execution maker period commitment Zibo Lucheng Lucheng will not reduce fulfilled the its shareholding commitment of within 60 Zibo Lucheng increasing its months after will not reduce shareholding share merger its shareholding with the reform and, within 60 dividends it within 24 months after received in 2005 months after share merger and 2006. The that, the price of reform and, total profit for selling holding within 24 2008 went up Zibo Lucheng shares shall not months after 58.06% over Textile be lower than Commitments made in a share reform 12 Jun. 2006 that, the price of 2005. Up to 12 Investment Co., RMB 15 per selling holding Jun. 2011, the Ltd. share (if the shares shall not trading share capital be lower than moratorium on changes, RMB 15 per the 98,358,000 ex-rights will be share (if the shares held by conducted); it share capital Lucheng proposed and changes, expired, which voted for a cash ex-rights will be became tradable distribution not conducted) on 24 Jun. 2011. lower than 50% No shareholding of the profit decrease has available for taken place yet. distribution in
41 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
the year at the 2006 Shareholders’ General Meeting and 2007 Shareholders’ General Meeting; it will increase the LU THAI A shares held by it through trading at the secondary market with the dividends received in 2005 and 2006, and the increase of the LU THAI A shares held shall be accomplished within 12 months after the dividend is transferred to its account. In 2008, the total profit increased by not less than 30% compared with that in 2005. Commitments made in an acquisition Naught Naught Naught report or report on equity changes Commitments made in an asset exchange Naught Naught The 150,000-Ingot Top-grade Fine Rainsed funds Combed Yarn Lu Thai Textile Commitments made in share issuance investment 19 Dec. 2008 Project, the Co., Ltd. projects 50-thousand Ingot Two-for-one Twisting
42 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Production Line Project, the Project for Supplementing the Working Capital and the Production Line Project for 10-million-mete r Top-grade Jacquard Fabrics for Women’s Wear among raised funds investment projects have been completed. On 18 Oct. 2011, as reviewed and approved at the 3rd Special Shareholders’ General Meeting for 2011, raised funds of RMB 140 million for the Marketing Network Development Project were transferred to a new production line project for 40-million Meter top-grade yarn-dyed fabric. By the end of the reporting period, the yarn-dyed fabric project
43 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
had been completed and the Brand and Marketing Network Development is still going on. Other commitments made for minority shareholders of the Naught Naught Naught Naught Company Is the commitment fulfilled in time? √ Yes □ No □ Inapplicable Detailed reason for failing to fulfill Naught and the next plan Make commitments on the problems of horizontal competition and □Yes √No □Inapplicable related-party transactions caused or not? Period for completing the Naught commitments Solution Naught Situation on fulfillment of Naught commitments 2. The Company’s assets or projects exist profitable prediction and the reporting period is in such prediction period, it states the profits from the assets or projects reaching original prediction and relevant reasons
□Applicable √Inapplicable
(XIII) Items of other comprehensive income
Unit: RMB Yuan Items This reporting period Same period of last year 1. Profits/(losses) from available-for-sale financial assets Less: Effects on income tax generating from available-for-sale financial assets Net amount transferred into profit and loss in the current period that recognized into other comprehensive income in prior period Subtotal 2. Interests in the investee entities’ other comprehensive income as per equity method Less: Effects on income tax generating from the interests in the investee entities’ other comprehensive income as per equity method Net amount transferred into profit and loss in the current period that
44 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd. recognized into other comprehensive income in prior period Subtotal 3. Profits/(losses) from cash flow hedging instrument Less: Effects on income tax generating from cash flow hedging instrument Net amount transferred into profit and loss in the current period that recognized into other comprehensive income in prior period The adjustment value that is the converted initial recognition amount of arbitrage project Subtotal 4. Converted amount of foreign currency financial statements 207,989.91 -715,557.69 Less: Net value of disposal of oversea operations that recognized into current profit and loss Subtotal 207,989.91 -715,557.69 5. Other 1,570,000.00 Less: Effects on income tax generating from the others that included into other comprehensive income Net amount transferred into profit and loss in the current period that recognized into other comprehensive income in prior period Subtotal 1,570,000.00 Total 207,989.91 854,442.31
(XIV) Particulars about researches, visits and interviews received in this reporting period
Main discussion and Time of reception Place of reception Way of reception Visitor type Visitor materials provided by the Company Deng Yafeng from Shanghai Reception Room of Hundun Basic information about 12 Jan. 2012 Field research Institution the Company Daorang Asset the Company Management Co., Ltd. Zhao Bin and Zhao Duo from Reception Room of Basic information about 12 Jan. 2012 Field research Institution Sealand the Company the Company Securities Co., Ltd. Wang Bin and Xu Wenfeng Reception Room of Basic information about 12 Jan. 2012 Field research Institution from Rising the Company the Company Securities Co., Ltd.
45 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Zhou Ying and Huang Ruiqing Reception Room of from Caitong Basic information about 12 Jan. 2012 Field research Institution the Company Fund the Company Management Co., Ltd. Dong Lanfeng from Yinhua Reception Room of Basic information about 19 Jan. 2012 Field research Institution Fund the Company the Company Management Co., Ltd. Jin Ge and Liu Reception Room of Basic information about 2 Feb. 2012 Field research Institution Bing from the Company the Company CICC Yuan Li and Reception Room of Basic information about 15 Feb. 2012 Field research Institution Ma Tao from the Company the Company GF Securities Shan Huijin Reception Room of Basic information about 15 Feb. 2012 Field research Institution from the Company the Company ChinaAMC Gao Yuanyuan from ICBC Reception Room of Credit Suisse Basic information about 15 Feb. 2012 Field research Institution the Company Asset the Company Management Co., Ltd. (XV) Particulars about engagement and disengagement of CPAs firm
Has this interim report been audited?
□ Yes √ No □ Inapplicable
Has the CPAs firm been changed? □ Yes √ No □ Inapplicable (XVI) Particulars about punishment and rectification order received by the Company, its directors, supervisors, senior executives, shareholders, actual controller and acquirer □Applicable √Inapplicable
（XVII） Other significant events as well as analysis and explanations on their impact and solutions
√Applicable □Inapplicable Because the performance of its B-share price was not in line with its intrinsic value and leading
46 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd. position in the industry, the Company’s investment value was underestimated, which not only produced adverse impact on the Company’s image in the capital market, but also was not helpful in protecting interests of shareholders. Therefore, the Company planned to buy back some B-shares so as to increase public investors’ confidence in the Company, increase the Company’s value and bring the Company’s value back to a rational level. On 8 Jun. 2012, the Company disclosed the pre-plan for buying back some domestically listed foreign shares, which was later reviewed and approved at the 2nd Special Shareholders’ General Meeting for 2012 held on 25 Jun. 2012. It was decided to, within 12 months since the buy-back resolution was made at the general meeting, buy back domestically listed foreign shares (B-shares) not exceeding 100 million shares with its self-owned funds. The bought-back shares would be written off as stipulated and the registered capital would be reduced accordingly. The buy-back price would not be higher than HK$ 7.73/share. Where the Company carries out bonus shares, turns capital reserve into share capital or distributes cash dividends during the buy-back period, it shall adjust the upper limit of the share buy-back price accordingly since the ex-dividend date. Currently, the Company is going through necessary approval and record-keeping procedures.
(XVIII) Particulars about significant changes in the profitability, asset status and credit status of the Company’s convertible bonds guarantor
□Applicable √Inapplicable
(XIX) Index for information disclosure
Internet website for disclosing Newspapers for disclosing Event Publishing date information and the searching information and relevant page approach Securities Times, Shanghai Announcement on Derivatives Securities News and Ta Kung 17 Feb. 2012 http://www.cninfo.com.cn Transaction Plan Pao Announcement on Resolutions Securities Times, Shanghai Made at the 18th Session of the Securities News and Ta Kung 17 Feb. 2012 http://www.cninfo.com.cn 6th Board of Directors Pao Notice on Convening the First Securities Times, Shanghai Special Shareholders’ General Securities News and Ta Kung 17 Feb. 2012 http://www.cninfo.com.cn Meeting fro Year 2012 Pao Announcement on Resolutions Securities Times, Shanghai Made at the First Special Securities News and Ta Kung 5 Mar. 2012 http://www.cninfo.com.cn Shareholders’ General Meeting Pao for Year 2012 Securities Times, Shanghai 2011 Annual Report Securities News and Ta Kung 23 Mar. 2012 http://www.cninfo.com.cn Pao Summary of Annual Report Securities Times, Shanghai 23 Mar. 2012 http://www.cninfo.com.cn 2011 Securities News and Ta Kung
47 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Pao Announcement on the Newly Added 230-thousand Yarn Ingot Securities Times, Shanghai and 35-thousand Ingot Securities News and Ta Kung 23 Mar. 2012 http://www.cninfo.com.cn Two-for-one Twisting Pao Production Line Project Securities Times, Shanghai Announcement on Securities News and Ta Kung 25 Apr. 2012 http://www.cninfo.com.cn Related-party Transactions Pao Securities Times, Shanghai Report for the First Quarter of Securities News and Ta Kung 25 Apr. 2012 http://www.cninfo.com.cn 2012 Pao Announcement on Resolutions Securities Times, Shanghai Made at the 20th Session of the Securities News and Ta Kung 25 Apr. 2012 http://www.cninfo.com.cn 6th Board of Directors Pao Securities Times, Shanghai Summary of Report for the Securities News and Ta Kung 25 Apr. 2012 http://www.cninfo.com.cn First Quarter of 2012 Pao Announcement on Resolutions Securities Times, Shanghai Made at the 2011 Annual Securities News and Ta Kung 28 Apr. 2012 http://www.cninfo.com.cn Shareholders’ General Meeting Pao Securities Times, Shanghai Announcement on Share Securities News and Ta Kung 2 May 2012 http://www.cninfo.com.cn Trading Suspension Pao Announcement on Share Securities Times, Shanghai Trading Continue to be Securities News and Ta Kung 9 May 2012 http://www.cninfo.com.cn Suspended due to a Significant Pao Event Announcement on Share Securities Times, Shanghai Trading Continue to be Securities News and Ta Kung 16 May 2012 http://www.cninfo.com.cn Suspended due to a Significant Pao Event Announcement on Share Securities Times, Shanghai Trading Continue to be Securities News and Ta Kung 23 May 2012 http://www.cninfo.com.cn Suspended due to a Significant Pao Event Announcement on Resolutions Securities Times, Shanghai Made at the 21st Session of the Securities News and Ta Kung 8 Jun. 2012 http://www.cninfo.com.cn 6th Board of Directors Pao Securities Times, Shanghai Announcement on External Securities News and Ta Kung 8 Jun. 2012 http://www.cninfo.com.cn Investments Pao Announcement on Share Securities Times, Shanghai 8 Jun. 2012 http://www.cninfo.com.cn Trading Resumption Securities News and Ta Kung
48 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Pao Announcement on Convening Securities Times, Shanghai the Second Speical Securities News and Ta Kung 8 Jun. 2012 http://www.cninfo.com.cn Shareholders’ General Meeting Pao for 2012 Securities Times, Shanghai Announcement on Securities News and Ta Kung 8 Jun. 2012 http://www.cninfo.com.cn Related-party Transactions Pao Suggestive Notice on Securities Times, Shanghai Convening the Second Special Securities News and Ta Kung 15 Jun. 2012 http://www.cninfo.com.cn Shareholders’ General Meeting Pao for 2012 Announcement on Securities Times, Shanghai Implementing the Equity Securities News and Ta Kung 19 Jun. 2012 http://www.cninfo.com.cn Distribution for Year 2011 Pao Announcement on Particulars Securities Times, Shanghai about Shares Held by the Top Securities News and Ta Kung 21 Jun. 2012 http://www.cninfo.com.cn Ten Shareholders Issued by the Pao Board Announcement on Repurchase of the Domestically Listed Securities Times, Shanghai Foreign Shares (B-share) & Securities News and Ta Kung 26 Jun. 2012 http://www.cninfo.com.cn Decrease of Registered Capital Pao of the Company Issued by the Board Announcement on Resolutions Securities Times, Shanghai Made at the Second Special Securities News and Ta Kung 26 Jun. 2012 http://www.cninfo.com.cn Shareholders’ General Meeting Pao for 2012
VIII. Financial Report (I) Auditor’s report Has this semi-annual report been audited? □ Yes √ No □ Inapplicable
(II) Financial statements Consolidated statements or not? √Yes □No □ Inapplicable The monetary unit in the financial statements of the financial report is RMB Yuan if not specified otherwise. Monetary unit of notes to financial statements: RMB Yuan 1. Consolidated balance sheet
49 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Prepared by Lu Thai Textile Co., Ltd. Unit: RMB Yuan Item Note 30 Jun. 2012 31 Dec. 2011 Current Assets: Monetary funds 439,679,107.11 811,148,146.93 Transactional financial assets 20,939,380.00 Notes receivable 108,276,877.73 160,499,797.76 Accounts receivable 209,965,750.36 201,327,903.05 Accounts paid in advance 172,417,224.27 304,469,373.14 Other accounts receivable 113,333,271.57 74,534,378.60 Financial assets purchased under agreements to resell Inventories 1,697,202,024.82 1,666,911,255.92 Non-current assets due within 1 year Other current assets Total current assets 2,740,874,255.86 3,239,830,235.40 Non-current assets: Loans by mandate and advances granted Available-for-sale financial assets Held-to-maturity investments Long-term accounts receivable Long-term equity investment 67,442,600.00 68,942,600.00 Investing property Fixed assets 4,094,928,492.85 3,486,072,973.42 Construction in progress 209,315,087.63 502,165,921.54 Engineering materials 40,801,965.90 39,746,597.82 Disposal of fixed assets Production biological assets Oil-gas assets Intangible assets 326,141,695.51 309,099,281.13 R&D expense Goodwill 20,613,803.29 20,563,803.29 Long-term deferred expenses 0.00 0.00 Deferred income tax assets 56,196,094.27 60,061,475.83 Other non-current assets 7,890,690.00 25,402,452.00 Total of non-current assets 4,823,330,429.45 4,512,055,105.03 Total assets 7,564,204,685.31 7,751,885,340.43 Current liabilities: Short-term borrowings 1,101,618,199.90 1,151,414,422.38 Transactional financial liabilities 10,107,650.00 0.00 Notes payable 18,259,051.11 11,981,603.44
50 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Accounts payable 280,732,577.22 284,362,673.51 Accounts received in advance 67,258,743.80 91,026,359.71 Handling charges and commissions payable Employee’s compensation 339,082,493.21 435,106,415.39 payable Tax payable -17,678,712.12 30,576,451.34 Interest payable 3,167,297.54 2,113,143.22 Dividend payable 4,387,509.44 442,309.44 Other accounts payable 114,801,633.29 110,780,795.92 Non-current liabilities due within 36,531,875.00 69,058,740.00 1 year Other current liabilities Total current liabilities 1,958,268,318.39 2,186,862,914.35 Non-current liabilities: Long-term borrowings 0.00 12,675,030.00 Bonds payable Long-term payables 9,735,560.00 9,735,560.00 Specific payables Estimated liabilities Deferred income tax liabilities 2,133,545.52 5,262,675.09 Other non-current liabilities 66,764,478.57 67,441,604.49 Total non-current liabilities 78,633,584.09 95,114,869.58 Total liabilities 2,036,901,902.48 2,281,977,783.93 Owners’ equity (or shareholders’ equity) Paid-up capital (or share capital) 1,008,954,800.00 1,008,954,800.00 Capital reserves 1,231,455,628.85 1,200,110,642.06 Less: Treasury stock Specific reserves Surplus reserves 515,895,752.76 515,895,752.76 Provisions for general risks Retained profits 2,386,185,711.95 2,367,189,767.76 Foreign exchange difference -5,842,519.57 -6,050,509.48 Total equity attributable to owners 5,136,649,373.99 5,086,100,453.10 of the Company Minority interests 390,653,408.84 383,807,103.40 Total owners’ (or shareholders’) 5,527,302,782.83 5,469,907,556.50 equity Total liabilities and owners’ (or 7,564,204,685.31 7,751,885,340.43 shareholders’) equity
Legal representative: Liu Shizhen Person-in-charge of the accounting work: Zhang Hongmei
51 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Chief of the accounting division: Zhang Keming
2. Balance sheet of the Company
Unit: RMB Yuan Item Note 30 Jun. 2012 31 Dec. 2011 Current Assets: Monetary funds 268,644,073.54 443,347,389.73 Transactional financial assets 15,609,030.00 Notes receivable 82,540,660.36 123,468,955.42 Accounts receivable 230,510,354.83 286,596,629.41 Accounts paid in advance 337,164,842.79 390,452,279.69 Interest receivable Dividend receivable Other accounts receivable 66,028,034.54 36,382,500.69 Inventories 1,063,717,808.98 1,089,685,685.73 Non-current assets due within 1 year Other current assets Total current assets 2,048,605,775.04 2,385,542,470.67 Non-current assets: Available-for-sale financial assets Held-to-maturity investments Long-term accounts receivable Long-term equity investment 1,066,995,189.90 1,063,495,189.90 Investing property Fixed assets 2,467,205,136.25 2,216,930,369.90 Construction in progress 98,389,453.14 139,596,130.53 Engineering materials 37,800,914.13 37,171,903.43 Disposal of fixed assets Production biological assets Oil-gas assets Intangible assets 194,483,473.54 176,687,021.73 R&D expense Goodwill Long-term deferred expenses Deferred income tax assets 32,432,109.67 30,180,069.34 Other non-current assets 7,890,690.00 25,402,452.00 Total of non-current assets 3,905,196,966.63 3,689,463,136.83 Total assets 5,953,802,741.67 6,075,005,607.50 Current liabilities: Short-term borrowings 658,143,521.45 687,511,722.38 Transactional financial liabilities 9,088,700.00
52 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Notes payable 11,855,799.86 9,531,302.09 Accounts payable 160,514,291.44 91,559,699.03 Accounts received in advance 35,056,186.78 41,115,833.49 Employee’s compensation 298,369,435.12 379,732,952.85 payable Tax payable 34,240,408.15 44,571,730.86 Interest payable 3,008,764.21 2,113,143.22 Dividend payable 4,387,509.44 442,309.44 Other accounts payable 17,696,321.66 16,585,657.28 Non-current liabilities due within 36,531,875.00 69,058,740.00 1 year Other current liabilities Total current liabilities 1,268,892,813.11 1,342,223,090.64 Non-current liabilities: Long-term borrowings 12,675,030.00 Bonds payable Long-term payables Specific payables Estimated liabilities Deferred income tax liabilities 2,341,354.50 Other non-current liabilities 32,157,331.57 32,494,901.59 Total non-current liabilities 32,157,331.57 47,511,286.09 Total liabilities 1,301,050,144.68 1,389,734,376.73 Owners’ equity (or shareholders’ equity) Paid-up capital (or share capital) 1,008,954,800.00 1,008,954,800.00 Capital reserves 1,237,808,309.94 1,206,463,323.15 Less: Treasury stock Specific reserves Surplus reserves 515,895,752.76 515,895,752.76 Provisions for general risks Retained profits 1,890,093,734.29 1,953,957,354.86 Foreign exchange difference Total owners’ (or shareholders’) 4,652,752,596.99 4,685,271,230.77 equity Total liabilities and owners’ (or 5,953,802,741.67 6,075,005,607.50 shareholders’) equity
3. Consolidated income statement
Unit: RMB Yuan Item Note Jan.-Jun. 2012 Jan.-Jun. 2011 I. Total operating revenues 2,808,025,564.76 2,980,813,097.20
53 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Including: Sales income 2,808,025,564.76 2,980,813,097.20 Interest income II. Total operating cost 2,455,925,494.34 2,377,593,417.11 Including: Cost of sales 2,055,106,728.52 1,966,770,465.74 Interest expenses Taxes and associate charges 2,360,934.93 10,183,946.29 Selling and distribution 77,160,291.09 69,650,595.48 expenses Administrative expenses 281,403,771.58 302,871,120.98 Financial expenses 36,737,830.95 24,919,948.09 Asset impairment loss 3,155,937.27 3,197,340.53 Add: Gain/(loss) from change in fair -31,047,030.00 -20,628,986.72 value (―-‖ means loss) Gain/(loss) from investment 19,052,638.49 40,469,067.77 (―-‖ means loss) Including: share of profits in 0.00 0.00 associates and joint ventures Foreign exchange gains (―-‖ means loss) III. Business profit (―-‖ means loss) 340,105,678.91 623,059,761.14 Add: non-operating income 20,152,942.07 16,132,647.68 Less: non-operating expense 2,142,808.56 11,270,150.47 Including: loss from non-current 626,520.62 8,210,095.87 asset disposal IV. Total profit (―-‖ means loss) 358,115,812.42 627,922,258.35 Less: Income tax expense 49,766,218.79 102,778,942.74 V. Net profit (―-‖ means loss) 308,349,593.63 525,143,315.61 Including: Net profit achieved by combined parties before the combinations Attributable to owners of the 301,503,288.19 491,647,065.96 Company Minority shareholders’ income 6,846,305.44 33,496,249.65 VI. Earnings per share -- -- (I) Basic earnings per share 0.30 0.49 (II) Diluted earnings per share 0.30 0.49 Ⅶ. Other comprehensive incomes 207,989.91 854,442.31 Ⅷ. Total comprehensive incomes 308,557,583.54 525,997,757.92 Attributable to owners of the 301,711,278.10 492,501,508.27 Company Attributable to minority 6,846,305.44 33,496,249.65 shareholders Where business mergers under the same control occurred in this report period, the net profit
54 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd. achieved by the merged parties before the business mergers was RMB ***.
Legal representative: Liu Shizhen Person-in-charge of the accounting work: Zhang Hongmei
Chief of the accounting division: Zhang Keming
4. Income statement of the Company
Unit: RMB Yuan Item Note Jan.-Jun. 2012 Jan.-Jun. 2011 I. Total sales 2,196,615,482.05 2,446,037,080.40 Less: cost of sales 1,679,182,666.68 1,659,122,418.86 Business taxes and surcharges 159,138.51 7,016,584.58 Distribution expenses 29,947,686.71 24,526,783.77 Administrative expenses 206,316,526.48 234,105,097.30 Financial costs 15,578,093.65 3,962,671.65 Assets impairment loss 1,827,033.97 3,803,053.48 Add: gain/(loss) from change in fair -24,697,730.00 -18,153,686.72 value (―-‖ means loss) Gain/(loss) from investment (―-‖ 14,455,234.49 198,590,067.77 means loss) Including: income form investment on associates and joint ventures II. Business profit (―-‖ means loss) 253,361,840.54 693,936,851.81 Add: non-business income 10,435,142.29 4,367,494.26 Less: non-business expense 354,789.74 8,600,188.35 Including: loss from non-current 1,759.87 5,770,478.89 asset disposal III. Total profit (―-‖ means loss) 263,442,193.09 689,704,157.72 Less: income tax expense 44,798,469.66 76,144,162.75 IV. Net profit (―-‖ means loss) 218,643,723.43 613,559,994.97 V. Earnings per share -- -- (I) Basic earnings per share 0.22 0.62 (II) Diluted earnings per share 0.22 0.62 VI. Other comprehensive income 1,570,000.00 VII. Total comprehensive income 218,643,723.43 615,129,994.97
5. Consolidated cash flow statement
Unit: RMB Yuan Item Jan.-Jun. 2012 Jan.-Jun. 2011 I. Cash flows from operating activities: Cash received from sale of 2,844,941,445.62 2,907,657,809.50 commodities and rendering of service
55 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Net increase of disposal of tradable financial assets Cash received from interest, handling charges and commissions Net increase of intra-group borrowings Net increase of funds in repurchase business Tax refunds received 75,614,471.46 137,376,748.67 Other cash received relating to 28,219,248.54 48,671,086.04 operating activities Subtotal of cash inflows from operating 2,948,775,165.62 3,093,705,644.21 activities Cash paid for goods and services 1,682,834,796.41 1,885,346,210.11 Cash paid to and for employees 569,733,755.88 497,151,067.50 Various taxes paid 142,705,722.41 156,133,413.22 Other cash payment relating to 136,461,423.46 126,505,702.48 operating activities Subtotal of cash outflows from 2,531,735,698.16 2,665,136,393.31 operating activities Net cash flows from operating activities 417,039,467.46 428,569,250.90 II. Cash flows from investing activities: Cash received from withdrawal of investments Cash received from return on investments Net cash received from disposal of fixed assets, intangible assets and other 1,129,634.61 1,441,308.55 long-term assets Net cash received from disposal of 951,000.00 subsidiaries or other business units Other cash received relating to 22,371,353.29 43,850,591.47 investing activities Subtotal of cash inflows from 24,451,987.90 45,291,900.02 investing activities Cash paid to acquire fixed assets, intangible assets and other long-term 421,406,791.09 179,444,420.85 assets Cash paid for investment Net increase of pledged loans Net cash paid to acquire subsidiaries and other business units Other cash payments relating to 0.00 0.00
56 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd. investing activities Subtotal of cash outflows from 421,406,791.09 179,444,420.85 investing activities Net cash flows from investing activities -396,954,803.19 -134,152,520.83 III. Cash Flows from Financing
Activities: Cash received from capital contributions Including: Cash received from minority shareholder investments by subsidiaries Cash received from borrowings 698,875,287.78 737,509,387.29 Cash received from issuance of bonds Other cash received relating to 3,000,000.00 87,790,000.00 financing activities Subtotal of cash inflows from financing 701,875,287.78 825,299,387.29 activities Repayment of borrowings 796,047,762.80 762,214,009.23 Cash paid for interest expenses and 295,918,261.39 263,058,159.37 distribution of dividends or profit Including: dividends or profit paid by subsidiaries to minority shareholders Other cash payments relating to 2,300,000.00 13,460,000.00 financing activities Sub-total of cash outflows from 1,094,266,024.19 1,038,732,168.60 financing activities Net cash flows from financing activities -392,390,736.41 -213,432,781.31 IV. Effect of foreign exchange rate 837,032.32 -1,063,249.79 changes on cash and cash equivalents V. Net increase in cash and cash -371,469,039.82 79,920,698.97 equivalents Add: Opening balance of cash and 811,148,146.93 522,955,236.37 cash equivalents VI. Closing balance of cash and cash 439,679,107.11 602,875,935.34 equivalents
6. Cash flow statement of the Company
Unit: RMB Yuan Item Jan.-Jun. 2012 Jan.-Jun. 2011 I. Cash flows from operating activities: Cash received from sale of 2,266,873,036.21 2,355,123,348.10 commodities and rendering of service
57 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Tax refunds received 44,706,953.12 107,772,367.45 Other cash received relating to 10,105,529.44 29,124,826.60 operating activities Subtotal of cash inflows from operating 2,321,685,518.77 2,492,020,542.15 activities Cash paid for goods and services 1,324,874,812.92 1,571,780,676.70 Cash paid to and for employees 434,380,999.92 388,412,338.02 Various taxes paid 64,907,965.96 96,261,008.25 Other cash payment relating to 75,107,632.03 60,275,376.56 operating activities Subtotal of cash outflows from 1,899,271,410.83 2,116,729,399.53 operating activities Net cash flows from operating activities 422,414,107.94 375,291,142.62 II. Cash flows from investing activities: Cash received from retraction of investments Cash received from return on investments Net cash received from disposal of fixed assets, intangible assets and other 729,634.61 1,435,553.94 long-term assets Net cash received from disposal of 951,000.00 subsidiaries or other business units Other cash received relating to 16,817,374.57 36,611,151.54 investing activities Subtotal of cash inflows from 18,498,009.18 38,046,705.48 investing activities Cash paid to acquire fixed assets, intangible assets and other long-term 253,161,722.71 99,193,611.36 assets Cash paid for investment 5,000,000.00 Net cash paid to acquire subsidiaries and other business units Other cash payments relating to investing activities Subtotal of cash outflows from 258,161,722.71 99,193,611.36 investing activities Net cash flows from investing activities -239,663,713.53 -61,146,905.88 III. Cash Flows from Financing
Activities: Cash received from capital contributions Cash received from borrowings 277,649,521.46 277,825,850.55
58 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Cash received from shares issued Other cash received relating to 82,790,000.00 financing activities Subtotal of cash inflows from financing 277,649,521.46 360,615,850.55 activities Repayment of borrowings 353,580,376.87 312,316,771.73 Cash paid for interest expenses and 281,725,956.67 252,267,176.13 distribution of dividends or profit Other cash payments relating to financing activities Sub-total of cash outflows from 635,306,333.54 564,583,947.86 financing activities Net cash flows from financing activities -357,656,812.08 -203,968,097.31 IV. Effect of foreign exchange rate 203,101.48 -258,381.63 changes on cash and cash equivalents V. Net increase in cash and cash -174,703,316.19 109,917,757.80 equivalents Add: Opening balance of cash and 443,347,389.73 280,772,869.89 cash equivalents VI. Closing balance of cash and cash 268,644,073.54 390,690,627.69 equivalents
7. Consolidated statement of changes in owners’ equity
Reporting period Unit: RMB Yuan Reporting period Equity attributable to owners of the Company Paid-up Total Item capital Less: General Minority Capital Specific Surplus Retaine owners’ (or treasury risk Others interests reserve reserve reserve d profit equity share stock reserve capital)
I. Balance at the end of the 1,008,9 1,200,11 515,895 2,367,18 -6,050,5 383,807,1 5,469,907, previous year 54,800. 0,642.06 ,752.76 9,767.76 09.48 03.40 556.50 00 Add: change of accounting policy Correction of errors in previous periods Other II. Balance at the beginning of 1,008,9 1,200,11 515,895 2,367,18 -6,050,5 383,807,1 5,469,907, the year 54,800. 0,642.06 ,752.76 9,767.76 09.48 03.40 556.50
59 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
00 III. Increase/ decrease of 31,344,9 18,995,9 207,989. 6,846,305 57,395,226 amount in the year (―-‖ means 86.79 44.19 91 .44 .33 decrease) 301,503, 6,846,305 308,349,59 (I) Net profit 288.19 .44 3.63 (II) Other comprehensive 207,989. 207,989.91 incomes 91 301,503, 207,989. 6,846,305 308,557,58 Subtotal of (I) and (II) 288.19 91 .44 3.54 (III) Capital paid in and 31,344,9 31,344,986 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 reduced by owners 86.79 .79 1. Capital paid in by owners 2. Amounts of share-based 31,344,9 31,344,966 payments recognized in 66.24 .24 owners’ equity 3. Others 20.55 20.55 -282,50 -282,507,3 (IV) Profit distribution 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 7,344.00 44.00 1. Appropriations to surplus reserves 2. Appropriations to general risk provisions 3. Appropriations to -282,50 -282,507,3 owners (or shareholders) 7,344.00 44.00 4. Other (V) Internal carry-forward of 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 owners’ equity 1. New increase of capital (or share capital) from capital public reserves 2. New increase of capital (or share capital) from surplus reserves 3. Surplus reserves for making up losses 4. Other (Ⅵ) Specific reserve 1. Withdrawn for the period 2. Used in the period (Ⅶ) Other
60 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
1,008,9 1,231,45 515,895 2,386,18 -5,842,5 390,653,4 5,527,302, IV. Closing balance 54,800. 5,628.85 ,752.76 5,711.95 19.57 08.84 782.83 00 Last year Unit: RMB Yuan Last year Equity attributable to owners of the Company Paid-up Total Item capital Less: General Minority Capital Specific Surplus Retaine owners’ (or treasury risk Others interests reserve reserve reserve d profit equity share stock reserve capital)
I. Balance at the end of the 994,864 1,130,44 428,440 1,854,83 - 4,447,8 337,463,6 4,741,597, previous year ,800.00 2,805.12 ,485.70 3,169.63 46.98 82.54 096.01 Add: retrospective adjustments due to business combinations under the same control Add: change of accounting policy Correction of errors in previous periods Other II. Balance at the beginning of 994,864 1,130,44 428,440 1,854,83 -4,447,8 337,463,6 4,741,597, the year ,800.00 2,805.12 ,485.70 3,169.63 46.98 82.54 096.01 III. Increase/ decrease of 14,090, 69,667,8 87,455, 512,356, -1,602,6 46,343,42 728,310,46 amount in the year (―-‖ means 000.00 36.94 267.06 598.13 62.50 0.86 0.49 decrease) 848,528, 43,543,15 892,071,21 (I) Net profit 065.19 1.22 6.41 (II) Other comprehensive -1,602,6 -1,602,662. incomes 62.50 50 848,528, -1,602,6 43,543,15 890,468,55 Subtotal of (I) and (II) 065.19 62.50 1.22 3.91 (III) Capital paid in and 14,090, 69,667,8 57,800,26 141,558,10 0.00 0.00 0.00 0.00 0.00 0.00 reduced by owners 000.00 36.94 9.64 6.58 1. Capital paid in by 14,090, 56,712,6 57,800,26 128,602,92 owners 000.00 54.47 9.64 4.11 2. Amounts of share-based 20,896,6 20,896,644 payments recognized in 44.16 .16 owners’ equity -7,941,4 -7,941,461. 3. Others 61.69 69
61 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
87,455, -336,17 -55,000,0 -303,716,2 (IV) Profit distribution 0.00 0.00 0.00 0.00 0.00 0.00 267.06 1,467.06 00.00 00.00 1. Appropriations to 87,455, -87,455, surplus reserves 267.06 267.06 2. Appropriations to general risk provisions 3. Appropriations to -248,71 -55,000,0 -303,716,2 owners (or shareholders) 6,200.00 00.00 00.00 4. Other (V) Internal carry-forward of 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 owners’ equity 1. New increase of capital (or share capital) from capital public reserves 2. New increase of capital (or share capital) from surplus reserves 3. Surplus reserves for making up losses 4. Other (Ⅵ) Specific reserve 1. Withdrawn for the period 2. Used in the period (Ⅶ) Other 1,008,9 1,200,11 515,895 2,367,18 -6,050,5 383,807,1 5,469,907, IV. Closing balance 54,800. 0,642.06 ,752.76 9,767.76 09.48 03.40 556.50 00
8. Statement of changes in owners’ equity of the Company
Reporting period Unit: RMB Yuan Reporting period Paid-up Less: General Total Item capital (or Capital Specific Surplus Retained treasury risk owners’ share reserve reserve reserve profit stock reserve equity capital)
I. Balance at the end of the 1,008,954, 1,206,463, 515,895,75 1,953,957, 4,685,271, previous year 800.00 323.15 2.76 354.86 230.77 Add: change of accounting policy Correction of errors in
62 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd. previous periods Other II. Balance at the beginning of 1,008,954, 1,206,463, 515,895,75 1,953,957, 4,685,271, the year 800.00 323.15 2.76 354.86 230.77 III. Increase/ decrease of amount 31,344,986 -63,863,62 -32,518,63 in the year (―-‖ means decrease) .79 0.57 3.78 218,643,72 218,643,72 (I) Net profit 3.43 3.43 (II) Other comprehensive incomes 218,643,72 218,643,72 Subtotal of (I) and (II) 3.43 3.43 (III) Capital paid in and 31,344,986 31,344,986 0.00 0.00 0.00 0.00 0.00 0.00 reduced by owners .79 .79 1. Capital paid in by owners 2. Amounts of share-based 31,344,966 31,344,966 payments recognized in owners’ .24 .24 equity 3. Others 20.55 20.55 -282,507,3 -282,507,3 (IV) Profit distribution 0.00 0.00 0.00 0.00 0.00 0.00 44.00 44.00 1. Appropriations to surplus reserves 2. Appropriations to general risk provisions 3. Appropriations to owners -282,507,3 -282,507,3
(or shareholders) 44.00 44.00 4. Other (V) Internal carry-forward of 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 owners’ equity 1. New increase of capital (or share capital) from capital public reserves 2. New increase of capital (or share capital) from surplus reserves 3. Surplus reserves for making up losses 4. Other (Ⅵ) Specific reserve 1. Withdrawn for the period 2. Used in the period (Ⅶ) Other
63 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
1,008,954, 1,237,808, 515,895,75 1,890,093, 4,652,752, IV. Closing balance 800.00 309.94 2.76 734.29 596.99 Last year Unit: RMB Yuan Last year Paid-up Less: General Total Item capital (or Capital Specific Surplus Retained treasury risk owners’ share reserve reserve reserve profit stock reserve equity capital)
I. Balance at the end of the 994,864,80 1,127,872, 428,440,48 1,415,576, 3,966,753, previous year 0.00 338.27 5.70 151.29 775.26 Add: change of accounting policy Correction of errors in previous periods Other II. Balance at the beginning of 994,864,80 1,127,872, 428,440,48 1,415,576, 3,966,753, the year 0.00 338.27 5.70 151.29 775.26 III. Increase/ decrease of amount 14,090,000 78,590,984 87,455,267 538,381,20 718,517,45 in the year (―-‖ means decrease) .00 .88 .06 3.57 5.51 874,552,67 874,552,67 (I) Net profit 0.63 0.63 (II) Other comprehensive incomes 874,552,67 874,552,67 Subtotal of (I) and (II) 0.63 0.63 (III) Capital paid in and 14,090,000 78,590,984 92,680,984 0.00 0.00 0.00 0.00 0.00 reduced by owners .00 .88 .88 14,090,000 56,712,250 70,802,250 1. Capital paid in by owners .00 .00 .00 2. Amounts of share-based 20,896,644 20,896,644 payments recognized in owners’ .16 .16 equity 3. Others 982,090.72 982,090.72 87,455,267 -336,171,4 -248,716,2 (IV) Profit distribution 0.00 0.00 0.00 0.00 0.00 .06 67.06 00.00 1. Appropriations to surplus 87,455,267 -87,455,26 reserves .06 7.06 2. Appropriations to general risk provisions 3. Appropriations to owners -248,716,2 -248,716,2
(or shareholders) 00.00 00.00 4. Other
64 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
(V) Internal carry-forward of 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 owners’ equity 1. New increase of capital (or share capital) from capital public reserves 2. New increase of capital (or share capital) from surplus reserves 3. Surplus reserves for making up losses 4. Other (Ⅵ) Specific reserve 1. Withdrawn for the period 2. Used in the period (Ⅶ) Other 1,008,954, 1,206,463, 515,895,75 1,953,957, 4,685,271, IV. Closing balance 800.00 323.15 2.76 354.86 230.77
(III) Company Profile Lu Thai Textile Co., Ltd. (hereinafter referred to as the Company) is a joint venture invested by Zibo Lucheng Textile Investment Co., Ltd (originally named Zibo Lucheng Textile Co., Ltd, hereinafter referred to as Lucheng Textile) and Thailand Tailun Textile Co., Ltd. On Feb. 3, 1993, the Company is approved by the former Ministry of Foreign Trade and Economy of the State (1993) in WJMZEHZ No. 59 to convert into a joint-stock enterprise. Zibo Administration for Industry and Commerce issued the Company corporate business license with the registration No. of QGLZZZ No. 000066. In July 1997, the Company is approved by the Securities Committee of the Department of the State in the ZWF (1997) No. 47 to issue 80 million shares of domestically listed foreign share( B-shares) at the price of RMB 1.00 per share. Upon approved by Shenzhen Stock Exchange with No. (1997) 296 Listing Notice, the Company is listed on the Shenzhen Stock Exchange on August 19, 1997 with B-shares stock code of 200726. On November 24, 2000, approved by ZJGSZ [2000] No.199 by CSRC, the Company increased publication of 50 million shares of general share (A-shares) at the book value of RMB 1.00, which are listed on the Shenzhen Stock Exchange on December 25, 2000 with A-shares stock code of 000726 through approval by Shenzhen Stock Exchange with No. (2000) 162 Listing Notice. As approved by 2000 Shareholders’ General Meeting in May, 2001, the Company carried out the distribution plan that 10 shares of capital public reserve are converted to 3 more shares for each 10 shares. As approved by Resolutions of 2001 Shareholders’ General Meeting in June 2002, the Company implemented the distribution plan that 10 shares of capital public reserve are converted 3 more shares for each 10 shares again. As approved by 2002 Shareholders’ General Meeting in May 2003, the Company implemented the distribution plan that 10 shares of capital public reserve are 2 more shares for each 10 shares, and inner employees’ shared increased to 40.56 million shares. As examined and approved by ZJGSZ No. [2000] 199 of CSRC, the inner employees’ shares will start circulation 3 years later since listing on the A-share market. On Dec. 25, 2003, the inner employees’ shares
65 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd. reach 3 years since listing on the A-share stock market, and they set out circulation on Dec.26, 2003. As approved by the Shareholders’ General Meeting 2006 held in June 2007, the Company implemented the plan on converting 10 shares to all its shareholders with capital reserves for every 10 shares. After capitalization, the registered capital of the Company was RMB 844.8648 million. The Company, in accordance with the official reply on approving Lu Thai Textile Co., Ltd. to issue additional shares (ZJXK [2008] No. 890 document) from CSRC, issued the Renminbi common shares (A shares) amounting to 150 million shares on 8 Dec. 2008. According to the relevant resolution of the 2nd Special Shareholders’ General Meeting for 2011, the relevant resolution of the 15th Session of the 6th Board of Directors, the Opinion of China Securities Regulatory Commission on the Restricted Share Incentive Plan of Lu Thai Textile Co., Ltd. (Shang-Shi-Bu-Han [2011] No. 206), the Company applied for a registered capital increment of RMB 14.09 million, which was contributed by restricted share incentive receivers with monetary funds. As at 30 Jun. 2012, the Company’s registered capital was RMB 1,008,954,800. The Company’s registered address: No. 11, Mingbo Road, Hi-tech Development Zone, Zibo, Shandong The Company’s legal representative: Liu Shizhen The Company’s business scope includes production of cotton yarn, yarn dyed fabrics, shirts, fashion accessories, health underwear and other textile products and their mating products; domestic and overseas sale of the Company’s self-produced products and provision of after-sales services; acquisition and export of products not under exclusive rights or quota licenses; and hotel, guesthouses and catering services. The Company’s financial statements have been approved for issue by the Board of Directors of the Company on 13 Aug. 2012.
(IV) Main accounting policies and estimates and corrections of previous accounting errors 1. Basis for the preparation of financial statements With the going-concern assumption as the basis, the Company and its subsidiaries (jointly referred to as ―the Group‖ hereafter) prepared its financial statements in light of the actual transactions and events, as well as the Basic Standard and 38 specific standards of Accounting Standards for Business Enterprises issued by the Ministry of Finance of the PRC on 15 Feb. 2006, the Application Guidance of Accounting Standards for Business Enterprises, the Interpretation of Accounting Standards for Business Enterprises and other regulations issued thereafter (jointly referred to as ―the Accounting Standards for Business Enterprises‖), and the Rules for Preparation Convention of Disclosure of Public Offering Companies No.15—General Regulations for Financial Reporting (revised in 2010) by China Securities Regulatory Commission (CSRC). In accordance with the Accounting Standards for Business Enterprises, accounting activities of the Group were conducted on the accrual basis. Except for some financial instruments, the financial statements were prepared on the basis of historical costs. Where impairment occurred in an asset, the corresponding impairment provision was withdrawn according to relevant rules.
2. Statement of Compliance with the Accounting Standards for Business Enterprises The financial statements for the reporting period prepared by the Group are in compliance with the requirements of the Accounting Standards for Business Enterprises, factually and completely
66 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd. presenting the Company’s and the Group’s financial positions as at 30 Jun. 2012, and operating results, cash flows and other relevant information in Jan.-Jun. 2012. Furthermore, these financial statements, in all material respects, are also in line with relevant disclosure requirements for financial statements and notes thereof stipulated in the Rules for Preparation Convention of Disclosure of Public Offering Companies No.15—General Regulations for Financial Reporting (revised in 2010) by CSRC.
3. Fiscal period The Group’s accounting periods are divided into annual periods (yearly) and interim periods. The interim period is a reporting period which is shorter than a full fiscal year. Gregorian calendar is adopted for fiscal year of the Company, namely from 1 Jan. to 31 Dec. every year.
4. Recording currency Renminbi (RMB) is the prevailing currency used in the main economic circumstances of the Company and its domestic subsidiaries. The Company and its domestic subsidiaries adopt RMB as the recording currency. When preparing the financial statements for the reporting period, the Group adopted RMB as the recording currency. In light of the prevailing currency used in their main economic circumstances of the Company’s overseas subsidiaries, they adopt the Hong Kong dollars as the recording currency. When preparing the financial statements for the reporting period, the Group adopted RMB as the recording currency.
5. Accounting treatment methods for business combinations under the same control and those not under the same control. (1) Business combinations under the same control A business combination under the same control is a business combination in which all the enterprises involved in the combination are ultimately controlled by the same party or parties both before and after the business combination and on which the control is not temporary. In a business combination under the same control, the party which obtains control of other enterprise(s) involved in the business combination on the combining date is the combining party, and the other enterprise(s) involved in the business combination is (are) the combined party. The "combining date" refers to the date on which the combining party obtains actual control on the combined party. The assets and liabilities that the combining party obtains in a business combination shall be measured on the basis of their carrying amount in the combined party on the combining date. As for the balance between the carrying amount of the net assets obtained by the combining party and the carrying amount of the consideration paid by it (or the total par value of the shares issued), the additional paid-in capital shall be adjusted. If the additional paid-in capital is not sufficient to be offset, the retained earnings shall be adjusted. The direct cost for the business combination of the combining party shall be recorded into the profits and losses at the current period. (2) Business combinations not under the same control A business combination not under the same control is a business combination in which the combining enterprises are not ultimately controlled by the same party or the same parties both before and after the business combination. In a business combination not under the same control,
67 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd. the party which obtains the control on other combining enterprise(s) on the purchase date is the acquirer, and other combining enterprise(s) is (are) the acquiree. The "acquisition date" refers to the date on which the acquirer actually obtains the control on the acquiree. As for business combinations not under the same control, the combination costs shall be the fair values, on the acquisition date, of the assets paid, the liabilities incurred or assumed and the equity securities issued by the acquirer in exchange for the control on the acquiree, and intermediary agency fees for auditing, legal, consulting services, etc. and other administrative expenditures incurred for the business combination, which were recorded in the profits and losses at the current period when incurred. The trading expenditures arising from the acquirer’s issuance of equity or liabilities securities as the consideration for the business combination are recorded in the initial recognition amount for the equity or liabilities securities. The contingent consideration involved is recorded in the combination costs according to its fair value on the acquisition date. Where new or further evidence against the existing circumstances on the acquisition date occurs within 12 months after the acquisition date, which makes it necessary to adjust the contingent consideration, the combined business reputation is adjusted accordingly. For a business combination realized by two or more transactions of exchange, in the Group’s consolidated financial statements, as for the equity interests of the acquiree held by the Group before the acquisition date, they are re-measured according to their fair value on the acquisition date. The difference between their fair value and their carrying amount is recorded in investment gains for the period comprising the acquisition date. Other comprehensive incomes arising from the equity interests of the acquiree held by the Group before the acquisition date are transferred to investment gains at the current period. The combination costs are the summation of the fair value on the acquisition date of the equity interests of the acquiree held by the Group before the acquisition date and the fair value on the acquisition date of the equity interests of the acquiree acquired by the Group on the acquisition date. The combination costs of the acquirer and the identifiable net assets obtained in the combination are both measured at their fair values on the acquisition date. The positive balance between the combination costs and the fair value of the identifiable net assets the acquirer obtains from the acquiree is recognized as business reputation. The acquirer shall, pursuant to the following provisions, treat the balance between the combination costs and the fair value of the identifiable net assets it obtains from the acquiree: a. it shall reexamine the measurement of the fair values of the identifiable assets, liabilities and contingent liabilities it obtains from the acquiree as well as the combination costs; b. if, after the reexamination, the combination costs are still less than the fair value of the identifiable net assets it obtains from the acquiree, it shall record the balance into the profits and losses of the current period. As for the unrecognized deductible temporary differences of the acquiree obtained by the acquirer due to their not satisfying the recognition criteria for deferred income tax assets on the acquisition date, if new or further information within 12 months after the acquisition date shows that the relevant circumstances on the acquisition date has existed and that the economic benefits arising from the deductible temporary differences of the acquiree on the acquisition date are expected to be realized, the corresponding deferred income tax assets are recognized and the business reputation is written down in the mean time. If the business reputation is not sufficient to offset, the difference is recognized in the profits and losses at the current period. Except for the aforesaid circumstance, the recognized deferred income tax assets in relation to the business combination
68 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd. are recorded in the profits and losses at the current period.
6. Preparation of consolidated financial statements (1) Preparation methods for consolidated financial statements 1) Recognition principles of the consolidation scope The scope of consolidated financial statements shall be confirmed based on the control. Control means the Company can decide the financial and manage policy of investee entity and have authority to earn the benefit from the investee entity. The consolidation scope includes the Company and all its subsidiaries. The Company’s subsidiaries refer to the enterprises or entities controlled by the Company. 2) Preparation methods for consolidated financial statements The Group consolidates a subsidiary from the date when the Group obtains actual control over the subsidiary’s net assets and production and operation decision-making and de-consolidates it from the date when such control ceases. As for a disposed subsidiary, its operating results and cash flows before the disposal date are properly included in the consolidated income statement and the consolidated cash flow statement. As for a subsidiary disposed in the current period, the opening accounts in the consolidated balance sheet are not restated. For a subsidiary acquired in a business combination not under the same control, its operating results and cash flows after the acquisition date are properly included in the consolidated income statement and the consolidated cash flow statement, and the opening accounts and comparative accounts in the consolidated financial statements are not restated. For a subsidiary acquired in a business combination under the same control, its operating results and cash flows for the period from the beginning of the reporting period to the combination date are properly included in the consolidated income statement and the consolidated cash flow statement, and the comparative accounts in the consolidated financial statements are restated in the mean time. In the preparation of the consolidated financial statements, where a subsidiary adopts different accounting policies or accounting periods from those of the Company, the subsidiary’s financial statements are adjusted according to the Company’s accounting policy and accounting periods. For a subsidiary obtained in a business combination not under the same control, its financial statements are adjusted on the basis of the fair value of its identifiable net assets on the acquisition date. All significant balances, transactions and unrealized profits within the Group are offset in the preparation of the consolidated financial statements. The portions in a subsidiary’s shareholders’ equity and net current profits and losses that are not attributable to the Company are separately presented, as minority interests and minority shareholder gains and losses respectively, under the shareholders’ equity item and the net profit item in the consolidated financial statements. The portion in the subsidiary’s current net gains and losses that belongs to minority interests is presented as ―minority shareholder gains and losses‖ under the net profit item in the consolidated income statement. Where the subsidiary’s losses attributable to minority shareholders exceed the portion in the subsidiary’s opening owners’ equity attributable to minority shareholders, minority interests are offset. Where the Company loses control over a former subsidiary due to disposal of some equity investment or other reasons, the residual equity interests are re-measured according to the fair value on the date when such control ceases. The summation of the consideration obtained from the
69 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd. equity disposal and the fair value of the residual equity interests, minus the portion in the former subsidiary’s net assets measured on a continuous basis from the acquisition date that is attributable to the Company according to its former shareholding ratio in the subsidiary, is recorded in the investment gains for the reporting period when the Company’s control over the subsidiary ceases. Other comprehensive incomes in relation to the former equity investment in the subsidiary are transferred to the investment gains at the current period when the Company’s control over the subsidiary ceases. Later on, subsequent measurement is carried out on the residual equity interests in accordance with the ―Accounting Standards for Business Enterprises No.2—Long-term Equity Investment‖ or the ―Accounting Standards for Business Enterprises No.22—Recognition and Measurement of Financial Instruments‖ and other relevant regulations. For more details, please refer to ―10. Long-term Equity Investment‖ or ―7. Financial Instruments‖ under the Note IV. (2) As for the event about purchasing and then selling (or selling and then purchasing) equities of the same subsidiary, the Company shall disclose relevant accounting treatment methods.
7. Recognition standard for cash and cash equivalents The term ―cash‖ refers to cash on hand and deposits that are available for payment at any time. The term ―cash equivalents‖ refers to short-term ( within 3 months from the purchase date) and highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.
8. Foreign currency businesses and translation of foreign currency financial statements (1) Foreign currency 1) Translation of foreign currency transactions At the time of initial recognition of a foreign currency transaction, the Group shall convert the amount in a foreign currency into amount in its Renminbi at the spot exchange rate (generally refer to the middle price of market exchange rate published by the People’s Bank of China, the same below) on the day the transaction is occurred. Of which, as for such transactions as foreign exchange or involving in foreign exchange, the Company shall converted into amount in the Renminbi at actual exchange rate the transaction is occurred. 2) Treatment method for the foreign currency monetary items and foreign currency non-monetary items: On the balance sheet date, the foreign currency monetary items are translated at the spot exchange rate on the date. Exchange differences are recorded in the profits and losses at the current period except for the following circumstances: ① Exchange differences arising from the special foreign currency borrowings for the acquisition and construction of assets eligible for capitalization are treated in accordance with the principle of borrowing cost capitalization; ② Exchange differences arising from the net investment hedging instruments in an overseas operation are recorded in other comprehensive incomes and can be recognized in the profits and losses at the current period only when the net investment is disposed; and ③ Exchange differences arising from changes in the carrying balances other than the amortized costs of foreign currency monetary items available for sale are recorded in other comprehensive incomes. Foreign currency non-monetary items measured at historical costs are translated into RMB at the spot exchange rate on the transaction date. The foreign currency non-monetary items measured at the fair value are translated at the spot exchange rate on the fair value confirming date, from which
70 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd. the exchange difference is treated as change in fair value (including change in exchange rate) and recorded in the profit and loss of the current period, or treated as other comprehensive incomes and recorded in the capital reserves. (2) Translation of foreign currency financial statements Where the consolidated financial statements involve an overseas operation and foreign currency monetary items form in a substantial basis on the net investment in the overseas operation, exchange differences arising from exchange rate changes are recorded in the ―translation difference of foreign currency statements‖ item under the owners’ equity item; and recorded in the profits and losses at the reporting period of the disposal when the overseas operation is disposed. The foreign currency financial statements of an overseas operation are translated in RMB in accordance with the following methods: The asset and liability items in the balance sheets shall be translated at a spot exchange rate on the balance sheet date. Among the owner’s equity items, except the ones as ―retained profits‖, others shall be translated at the spot exchange rate at the time when they are incurred. The income and expense items in the profits statements shall be translated at the average exchange rate of the current period on transaction date. The opening retained profit is the closing retained profit as of the previous year after translation; The closing retained profit is measured and stated according to profit distribution items after translation; And the difference between the asset items and the summation of the liability and shareholders’ equity items after translation, as the translation difference of foreign currency statements, is recognized in other comprehensive incomes and is presented separately under the shareholders’ equity item in the balance sheet. Where an overseas operation is disposed and the Group’s control on the overseas operation ceases, the foreign currency statement translation difference in relation to the overseas operation and presented under the shareholders’ equity items in the balance sheet is, all or according to the disposal rate of the overseas operation, transferred to the profits and losses at the reporting period comprising the disposal. Foreign currency cash flows and cash flows generated by overseas subsidiaries are translated at the average exchange rate for the current period on the date when the cash flow is generated. The influence on cash due to change of exchange rate shall be presented separately under the cash flow statement. The opening amounts and the actual amounts in the previous year are presented on the basis of the translated financial statements for the previous year.
9. Financial instruments Financial instruments include financial assets and financial liabilities as well as equity instruments. (1) Classification of financial assets Financial assets bought in and sold out in the conventional way are recognized and de-recognized in accordance with the transaction dates. In the initial recognition, financial assets are divided into financial assets measured at fair values and whose changes are recorded in current profits and losses, held-to-maturity investments, loans and accounts receivables, and available-for-sale financial assets. In the initial recognition, a financial asset is measured at its fair value. For a financial asset measured at fair value and whose changes are recorded in current gains and losses, the relevant trading expenditures are directly recorded in the gains and losses at the current period. And the trading expenditures for the other financial assets are recorded in the initially recognized
71 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd. amount. In the initial recognition, financial liabilities are divided into the financial liabilities measured at fair values and whose changes are recorded in current gains and losses and other financial liabilities. Financial liabilities are initially recognized at their fair values. As for a financial liability measured at fair value and whose changes are recorded in current gains and losses, the relevant trading expense is directly recorded in the profits and losses for the current period. As for other financial liabilities, the relevant trading expenses are recorded in the initially recognized amounts. (2) Recognition basis and measurements for financial instruments Financial assets ① Financial assets measured at fair values and whose changes are recorded in current profits and losses Such financial assets include transactional financial assets and financial assets designated to be measured at fair values and whose changes are recorded in current gains and losses. The Group’s financial assets measured at fair values and whose changes are recorded in current profits and losses are all transactional financial assets. A transactional financial asset refers to a financial asset meeting any of the following requirements: A. The purpose to acquire the financial asset is mainly for selling or repurchase of it in the near future; B. Forming a part of the identifiable combination of financial instruments which are managed in a centralized way and for which there are objective evidences proving that the Group may manage the combination by way of short-term profit making in the near future; and C. Being a derivative instrument, excluding the designated derivative instruments which are effective hedging instruments, or derivative instruments to financial guarantee contracts, and the derivative instruments which are connected with the equity instrument investments for which there is no quoted price in the active market, whose fair value cannot be reliably measured, and which shall be settled by delivering the said equity instruments. A transactional financial asset is subsequently measured at the fair value. The gains and losses arising from the fair value changes, as well as the dividend and interest incomes from the financial asset, are recorded in the gains and losses for the current period. ② Held-to-maturity investments A held-to-maturity investment refers to a non-derivative financial asset with a fixed date of maturity, a fixed or determinable amount of repo price and which the Group holds for a definite purpose or the Group is able to hold until its maturity. A held-to-maturity investment is subsequently measured according to the amortized cost using the actual interest rate method. The gains or losses arising from de-recognition, impairment or amortization of the investment are recorded in the profits and losses for the current period. The actual interest rate method refers to the method by which the post-amortization costs and the interest incomes of different installments or interest expenses are calculated in light of the actual interest rates of the financial assets or financial liabilities (including a set of financial assets or financial liabilities). The actual interest rate refers to the interest rate adopted to cash the future cash flow of a financial asset or financial liability within the predicted term of existence or within a shorter applicable term into the current carrying amount of the financial asset or financial liability. When calculating the actual interest rate, the Group predicts the future cash flow (not taking into
72 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd. account the future credit losses) on the basis of taking into account all the contractual provisions concerning the financial asset or financial liability. The various fee charges, trading expenses, reduced values, premiums, etc., which are paid or collected by the parties to a financial asset or financial liability contract and which form a part of the actual interest rate, are also taken into account in the determination of the actual interest rate. ③ Loans and accounts receivable Loans and accounts receivable refer to the non-derivative financial assets for which there is no quoted price in the active market and of which the repo amount is fixed or determinable. The financial assets defined by the Group as loans and accounts receivable include notes receivable, accounts receivable, interest receivable, dividend receivable, other receivables, etc.. Loans and accounts receivable are subsequently measured according to the amortized cost using the actual interest rate method. The gains or losses arising from de-recognition, impairment or amortization of the loans and accounts receivable are recorded in the profits and losses for the current period. ④ Available-for-sale financial assets Available-for-sale financial assets include the non-derivative financial assets which are designated as available for sale when they are initially recognized, as well as the financial assets other than the financial assets measured at fair values and whose changes are recorded in current gains and losses, loans and accounts receivable and held-to-maturity investments. Available-for-sale financial assets are subsequently measured at their fair values. Impairment losses and the exchange differences of foreign currency monetary financial assets in relation to the amortized cost are recorded in the profits and losses for the current period. Other gains or losses arising from fair value changes are recognized as other comprehensive incomes and recorded in the capital reserves, and transferred out and recorded in the profits and losses for the current period when the financial asset is de-recognized. Interest obtained during the period of holding an available-for-sale financial asset and the cash dividends declared and distributed by an invested party are recorded in investment gains.
Financial liabilities ① Financial liabilities measured at fair values and whose changes are recorded in current gains and losses Such financial liabilities are divided into transactional financial liabilities and financial liabilities designated to be measured at fair values and whose changes are recorded in current gains and losses in the initial recognition under the same conditions where such financial assets are divided into transactional financial assets and financial assets designated to be measured at fair values and whose changes are recorded in current gains and losses in the initial recognition. Financial liabilities measured at fair values and whose changes are recorded in current gains and losses are subsequently measured at their fair values. Gains or losses arising from the fair value changes, as well as the dividend and interest expenses in relation to the said financial liabilities, are recorded in the profits and losses for the current period. ② Other financial liabilities As for a derivative financial liability connected to an equity instrument for which there is not quoted price in an active market and whose fair value cannot be reliably measured and which must be settled by delivering the equity instrument, it is subsequently measured on the basis of costs.
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Other financial liabilities are subsequently measured according to the amortized cost using the actual interest rate method. Gains or losses arising from de-recognition or amortization of the said financial liabilities is recorded in the profits and losses for the current period. (3) Recognition basis and measurement of financial asset transfers Where a financial asset satisfies any of the following requirements, the recognition of it is terminated: ① The contractual rights for collecting the cash flow of the said financial asset are terminated; ② The said financial asset has been transferred and nearly all of the risks and rewards related to the ownership of the financial asset to the transferee; or ③ The said financial asset has been transferred. And the Group has ceased its control on the said financial asset though it neither transfers nor retains nearly all of the risks and rewards related to the ownership of the financial asset. Where the Group neither transfers nor retains nearly all of the risks and rewards related to the ownership of a financial asset, and it does not cease its control on the said financial asset, it recognizes the relevant financial asset and liability accordingly according to the extent of its continuous involvement in the transferred financial asset. The term "continuous involvement in the transferred financial asset" refers to the risk level that the enterprise faces resulting from the change of the value of the financial asset. If the transfer of an entire financial asset satisfies the conditions for stopping recognition, the difference between the amounts of the following 2 items is recorded in the profits and losses of the current period: (1) The book value of the transferred financial asset; and (2) The sum of consideration received from the transfer, and the accumulative amount of the changes of the fair value originally recorded in other comprehensive incomes. If the transfer of partial financial asset satisfies the conditions to stop the recognition, the book value of the transferred financial asset is apportioned between the portion whose recognition has been stopped and the portion whose recognition has not been stopped according to their respective relative fair value, and the difference between the amounts of the following 2 items is included into the profits and losses of the current period: (1) The summation of the consideration received from the transfer and the portion of the accumulative amount of changes in the fair value originally recorded in other comprehensive incomes which corresponds to the portion whose recognition has been stopped; and (2) The amortized carrying amounts of the aforesaid amounts. (4) De-recognition of financial liabilities Only when the prevailing obligations of a financial liability are relieved in all or in part may the recognition of the financial liability be terminated in all or partly. Where the Group (debtor) enters into an agreement with a creditor so as to substitute the existing financial liabilities by way of any new financial liability, and if the contractual stipulations regarding the new financial liability is substantially different from that regarding the existing financial liability, it terminates the recognition of the existing financial liability, and at the same time recognizes the new financial liability. Where the recognition of a financial liability is totally or partially terminated, the enterprise concerned shall include into the profits and losses of the current period for the gap between the book value which has been terminated from recognition and the considerations it has paid (including the non-cash assets it has transferred out and the new financial liabilities it has assumed). (5) Recognition method of fair values of financial assets and liabilities
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The ―fair value‖ refers to the amount, at which both parties to a transaction who are familiar with the condition exchange assets or clear off debts under fair conditions. As for the financial instrument for which there is an active market, the Group determines its fair value using the quoted price in the active market. The quoted prices in the active market refer to the prices, which are easily available from the stock exchange, brokers, industry associations, pricing service institutions, etc. at a fixed term, and which represent the prices at which actually incurred market transactions are made under fair conditions. Where there is no active market for a financial instrument, the Group adopts value appraisal techniques to determine its fair value. The value appraisal techniques mainly include the prices adopted by the parties, who are familiar with the condition, in the latest market transaction upon their own free will, the current fair value obtained by referring to other financial instruments of the same essential nature, the cash flow capitalization method and the option pricing model, etc.. (6) Withdrawal of impairment provision for financial assets (excluding accounts receivable) For the financial assets other than the financial assets measured at fair values and whose changes are recorded in current gains and losses, the Group runs a check on their carrying amounts on every balance sheet date. Where there is any objective evidence proving that such a financial asset has been impaired, an impairment provision is made. The Group carries out a separate impairment test for every financial asset which is individually significant. As for a financial asset which is individually insignificant, an impairment test is carried out separately or in the financial asset group with similar credit risk. Where the financial asset (individually significant or insignificant) is found not impaired after the separate impairment test, it is included in the financial asset group with similar credit risk and tested again on the group basis. Where the impairment loss is recognized for an individual financial asset, it is not included in the financial asset group with similar credit risk for an impairment test. ① Impairment of held-to-maturity investments, loans and accounts receivable Where a financial asset measured on the basis of costs or amortized costs is impaired, the carrying amount of the said financial asset is written down to the current value of the predicted future cash flow. The amount written down is recognized as the impairment loss of the asset and is recorded in the profits and losses for the current period. Where a financial asset is recognized as having suffered from any impairment loss, if there is any objective evidence proving that the value of the said financial asset has been restored, and it is objectively related to the events that occur after such loss is recognized, the impairment losses as originally recognized are reversed. The reversed carrying amount of the said financial asset does not exceed the amortized cost of the said financial asset on the day of reverse under the assumption that no provision is made for the impairment. ② Impairment of available-for-sale financial assets Where an available-for-sale financial asset is impaired, the accumulative losses arising from the decrease of the fair value of the capital reserve which is directly included are transferred out and recorded in the profits and losses for the current period. The accumulative losses transferred out are the balance obtained from the initially obtained cost of the said financial asset after deducting the principals as taken back, the amortized amount, the current fair value and the impairment loss originally recorded in the profits and losses. Where the impairment loss has been recognized for an available-for-sale financial asset, if, within the accounting periods thereafter, there is any objective evidence proving that the value of the said financial asset has been restored and the restoration is objectively related to the events that occur
75 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd. after the impairment loss was recognized, the originally recognized impairment loss is reversed. The impairment losses on the available-for-sale equity instrument investments are reversed and recognized as other comprehensive incomes, and the impairment losses on the available-for-sale liability instruments are reversed and recorded in the profits and losses for the current period. The impairment loss incurred to an equity instrument investment for which there is no quoted price in the active market and whose fair value cannot be reliably measured, or incurred to a derivative financial asset which is connected with the said equity instrument investment and which must be settled by delivering the said equity investment, is not reversed. (7) As for event about reclassifying the undue held-to-maturity investment into available-for-sale financial assets, the Company shall state the basis of changes in holding purpose or ability
10. Recognition criteria and withdrawal methods for bad debts provision of accounts receivable Receivables include account receivables and other accounts receivables. (1) Recognition of provision for bad debts: The Group shall test the carrying amount of receivables on the balance sheet date. Where there is any objective evidence proving that such receivables have been impaired, an impairment provision shall be made. ① debtor has serious financial difficult; ② debtor goes against the contract clause (for instance, breach of faith or overdue paying interests or principal); ③ debtors has a great probability of bankruptcy or other financial reorganization; ④ other objective evidence proving such accounts receivable has been impaired;
1) Bad debt provision for individually significant accounts receivable Judgement basis or monetary standards of provision for The Group recognized the receivables with amount bad debts of the individually significant accounts above RMB 5 million as receivables with significant receivable single amounts. The Group made an independent impairment test on receivables with significant single amount, the financial assets without impairment by independent impairment test should be included in financial Method of individual provision for bad debts of the assets portfolio with similar credit risk to take the individually significant accounts receivable impairment test. Receivables was recognized with impairment should no longer be included in receivables portfolio with similar credit risk to take the impairment test.
2) Accounts receivable for which bad debt provisions are made on the group basis
Withdrawal method of Name of group bad debt provision on Recognition basis of group the group basis Credit risks group Aging analysis method Receivables that are not individually significant and
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individually significant but without impairment by independent impairment test, are grouped on the basis of similarity and relevance of credit risk. This credit risk usually reflects the debtor’s ability to repay all the due accounts in accordance with contract for such assets, which also are related with the measurement on future cash flow of the examined assets. In the groups, adopting aging analysis method to withdraw bad debt provision: √ Applicable □ Inapplicable Withdrawal proportion for accounts Withdrawal proportion for other accounts receivable Age receivable (%) (%) Within 1 year (including 1 year) 5% 5%
1-2 years 10% 10% 2-3 years 20% 20% Over 3 years 30% 30% 3-4 years 4-5 years Over 5 years
In the groups, adopting balance percentage method to withdraw bad debt provision □ Applicable √ Inapplicable In the groups, adopting other methods to withdraw bad debt provision □ Applicable √ Inapplicable 3) Accounts receivable with an insignificant single amount but for which the bad debt provision is made individually Reason of individually withdrawing bad debt provision: There is objective evidence shows that the accounts receivable has been impaired, such as receivables exist dispute with the other parties or involving lawsuit and arbitration; receivables exist obvious indication showing that the debtors are likely to fail to perform the duty of repayment, etc.. Withdrawal method for bad debt provision: If any objective evidence shows that the accounts receivable has been impaired, impairment loss shall be recognized on the basis of the gap between the current values of the future cash flow lower than its book value so as to withdraw provision for bad debts.
11. Inventory (1) Classification Inventories of the Company are classified as: raw materials, goods in process, processing materials on consignment and merchandise inventory etc. (2) Pricing method for outgoing inventories □ First-in first-out method √ Weighted average method □ Specific identification method □ Other The inventories shall be measured in light of their cost when obtained. The cost of inventory consists of purchase costs, processing costs and other costs. Inventory is accounted by weight
77 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd. average method upon receiving and giving. The difference between planned cost of and actual cost of raw materials is accounted through the cost variance item, and the planned cost is adjusted to the actual cost according to the cost difference which the carryover and given-out inventory should shoulder in the period. (3) Recognition basis of net realizable value and withdrawal method of depreciation reserves for inventories The net realizable value refers, in the ordinary course of business, to the account after deducting the estimated cost of completion, estimated sale expense and relevant taxes from the estimated sale price of inventories. The net realizable value of inventories shall be fixed on the basis of valid evidence as well as under consideration of purpose of inventories and the effect of events after balance-sheet-date. On the balance sheet date, the inventories shall be measured according to the cost or the net realizable value, whichever is lower. If the net realizable value is lower than the cost, it shall withdraw the depreciation reserves for inventories, which was withdrawn in accordance with the balance that the cost of individual inventory item exceeding the net realizable value. After withdrawing the depreciation reserves for inventories, if the factors, which cause any write-down of the inventories, have disappeared, causing the net realizable value of inventories is higher than its carrying amount, the amount of write-down shall be reversed from the original amount of depreciation reserve for inventories. The reversed amount shall be included in the profits and losses of the current period. (4) Inventory system for inventories: √ Perpetual inventory system □ Periodic inventory system □ Other The inventory system for inventories is perpetual inventory system. (5) Amortization method of the low-value consumption goods and packing articles Low-value consumption goods Amortisation method: one-off amortization method Packing articles Amortisation method: one-off amortization method
12. Long-term equity investment (1) Recognition of initial investment cost The initial cost of the long-term equity investment formed in business combination shall be ascertained in accordance with the following provisions: For the business combination under the same control, it shall regard the share of the carrying amount of the owner's equity of the combined party on the date of combination as the initial cost of the long-term equity investment. For the business combination under different control, the combination costs shall be the sum of the fair values of the assets paid, the liabilities incurred or assumed and the equity securities issued by the Company; the commission fees for audit, law services, assessment & consultancy services and other relevant expenses occurred in the business combination by the combining party, shall be recorded into current profits and losses upon their occurrence; the transaction expense from the issuance of equity securities or bonds securities which are as consideration for combination by the combining party, should be recorded as the initial amount of equity securities and bonds securities. Besides the long-term equity investments formed by business combination, the other long-term equity investments shall be initially measured by cost, the cost is fixed in accordance with the ways of gaining, such as actual cash payment paid by the Group, the fair value of equity securities
78 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd. issued by the Group, the agreed value of the investment contract or agreement, the fair value or original carrying amount of exchanged assets from non-monetary assets exchange transaction, the fair value of the long-term equity investments, etc. The expenses, taxes and other necessary expenditures directly related with gaining the long-term equity investments shall also be recorded into investment cost. (2) Follow-up measurement of long-term equity investment and recognized method of profits and losses The long-term equity investment that the Company does not have joint control or significant influences on the invested entity, and has no offer in the active market and its fair value cannot be reliably measured, it shall be measured by adopting the cost method; a long-term equity investment that the Company has joint control or significant influences over the invested entity shall be measured by employing the equity method; a long-term equity investment that the Company does not have control, joint control or significant influence on the invested entity, as well as its fair value can be reliably measured, it shall be accounted as financial assets available-for-sale. Moreover, long-term equity investment adopting the cost method in the financial statements, and which the Company has control on invested entity. ① Long-term equity investment measured by adopting cost method The price of a long-term equity investment measured by adopting the cost method shall be included at its initial investment cost, the return on investment at current period shall be recognized in accordance with the cash dividend or profit announced to distribute by the invested entity, except the announced but not distributed cash dividend or profit included in the actual payment or consideration upon gaining the investment. ②Long-term equity investment measured by adopting equity method If the initial cost of a long-term equity investment is more than the Company's attributable share of the fair value of the invested entity's identifiable net assets for the investment, the initial cost of the long-term equity investment may not be adjusted. If the initial cost of a long-term equity investment is less than the Company's attributable share of the fair value of the invested entity's identifiable net assets for the investment, the difference shall be included in the current profits and losses and the cost of the long-term equity investment shall be adjusted simultaneously. When measured by adopting equity method, the investment profits or losses at current period shall be the attributable share of the net profits or losses of the invested entity. The investing enterprise shall, on the ground of the fair value of all identifiable assets of the invested entity when it obtains the investment, and in accordance with the accounting policies and accounting periods, recognize the attributable share of the net profits and losses of the invested entity after it adjusts the net profits of the invested entity. For the profits and losses of unrealized insider dealing between the Group and joint-operative enterprise or co-operative enterprise, the investment profits and losses shall be recognized after the part attributable to the Group calculated by proportion of shares held being offset. However, if the losses of unrealized insider dealing between the Group and joint-operative enterprise or co-operative enterprise was attributed to the impairment losses of the transferred assets in accordance with the Accounting Standards for Enterprises No. 8— Asset Impairment, which shall not be offset. The other comprehensive profits from invested entity shall be recognized as other comprehensive profits after adjusting the book value of long-term equity investment, and then recorded into capital reserves The Group shall recognize the net losses of the invested enterprise until the book value of the
79 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd. long-term equity investment and other long-term rights and interests which substantially form the net investment made to the invested entity are reduced to zero. However, if the Group has the obligation to undertake extra losses, which shall be recognized as the estimated liabilities in accordance with the estimated duties and then recorded into investment losses at current period. If the invested entity realizes any net profits later, the Group shall, after the amount of its attributable share of profits offsets against its attributable share of the un-recognized losses, resume to recognize its attributable share of profits. For the long-term equity investment on joint-enterprise and co-operative enterprise held by the Group before the initial execution of New Accounting Standards for Enterprise as 1 Jan. 2007, if there existed the balance of debtor for equity investment related with such long-term equity investment, which shall be recorded into current profits and losses with the amount by straight-line amortization in the remained period. ③ Acquiring shares of minority interest In the preparation for the financial statements, the balance existed between the long-term equity investment increased by acquiring shares of minority interest and the attributable net assets on the subsidiary calculated by the increased shares held since the purchase date (or combination date), the capital reserves shall be adjusted, if the capital reserves are not sufficient to offset, the retained profits shall be adjusted.
④ Disposal of long-term equity investment In the preparation of financial statements, the Company disposed part of the long-term equity investment on subsidiaries without losing its controlling right on them, the balance between the disposed price and attributable net assets of subsidiaries by disposing the long-term equity investment shall be recorded into owners’ equity; where the Company losses the controlling right by disposing part of long-term equity investment on such subsidiaries, it shall treated in accordance with the relevant accounting policies in Note IV. 4 (2)— Method on preparation of combined financial statements. For other ways on disposal of long-term equity investment, the balance between the book value of the disposed equity and its actual payment gained shall be recorded into current profits and losses; for the long-term equity investment measured by adopting equity method, the other comprehensive income originally recorded into owners’ equity shall be transferred into current profits and losses by proportions upon the disposal. The remained equity shall be recognized as long-term equity investment or other relevant financial assets in accordance with the book value, and carried out the follow-up measurement in accordance with the above accounting policies for the long-term equity investment or financial assets. If the measurement method of remained equity is transferred from cost method to equity method, it shall be subject to retrospective adjustment in accordance with relevant rules and stipulations. (3) Recognition basis of joint control and significant influences The term "control" refers to the power to determine the financial and operating polices of an enterprise and obtain benefits from its operating activities of the enterprise. The term "joint control" refers to the control over an economic activity in accordance with the contracts and agreements, which does not exist unless the investing parties of the economic activity with one an assent on sharing the control power over the relevant important financial and operating decisions. The term "significant influences" refers to the power to participate in making decisions on the
80 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd. financial and operating policies of an enterprise, but not to control or do joint control together with other parties over the formulation of these policies. When ascertaining whether or not it is able to control or have significant influences on an invested entity, an enterprise shall take into consideration the invested enterprises' current convertible corporate bonds and current executable warrants held by the investing enterprise and other parties, as well as other potential factors concerning the voting rights. (4) Testing method of impairment and withdrawal method of provision for impairment The Group shall, on the day of balance sheet, make a judgment on whether there is any sign of possible impairment of the long-term equity investment. Where there is sign of impairment, the Group shall estimate the recoverable amount of the long-term equity investment. Where the recoverable amount of the long-term equity investment is lower than its book value, which balance shall be withdrawn the provision for impairment and recorded into current profits and losses. Once any loss of impairment of the long-term equity investment is recognized, it shall not be switched back in the future accounting periods.
13. Investment real estates
14. Fixed assets (1)Recognized standard of fixed assets The term "fixed assets" refers to the tangible assets that simultaneously possess the features as follows: they are held for the sake of producing commodities, rendering labor service, renting or business management; and their useful life is in excess of one fiscal year. (2) Recognition basis and pricing method of fixed assets by finance lease The "finance lease" shall refer to a lease that has transferred in substance all the risks and rewards related to the ownership of an asset. Its ownership may or may not eventually be transferred. The fixed assets by finance lease shall adopt the same depreciation policy for self-owned fixed assets. If it is reasonable to be certain that the lessee will obtain the ownership of the leased asset when the lease term expires, the leased asset shall be fully depreciated over its useful life. If it is not reasonable to be certain that the lessee will obtain the ownership of the leased asset at the expiry of the lease term, the leased asset shall be fully depreciated over the shorter one of the lease term or its useful life. (3) Depreciation methods of fixed assets The initial measurement of a fixed asset shall be made at its cost after considering the effect of expected discard expenses. The Group shall withdraw the depreciation of fixed assets by adopting the straight-line method since the second month of its useful life. Useful life, expected net salvage value (refers to the expected amount that the Group may obtain from the current disposal of a fixed asset after deducting the expected disposal expenses at the expiration of its expected useful life) and annual depreciation rate of each fixed assets are as below: Category of fixed assets Useful life (Y) Expected net salvage value Annual deprecation Housing and building 5-20 5-10 19.00-4.50 Machinery equipments 10-13 5-10 6.92-9.50 Electronic equipments and other 5 5-10 19.00-18.00 Transportation vehicle 5 5-10 19.00-18.00
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Other equipments Fixed assets acquired under ------finance lease: Of which: housing and building Machinery equipments Electronic equipments and other Transportation vehicle
Other equipments (4) Testing method of impairment and withdrawal method of provision for impairment on fixed assets For the non-current non-financial assets, such as fixed assets, Construction in process, intangible assets with finite service life, investment real assets measured by cost mode as well as long-term equity investment on subsidiaries, co-operative enterprise and joint-operative enterprise, etc., are tested for impairment if there is any indication that an asset may be impaired at the balance date. If there is any sign of possible assets impairment, the Group shall estimate the recoverable amount and made the impairment tests. No matter whether there is any sign of possible assets impairment, the good will, intangible assets without certain service life, intangible assets not ready for use shall be subject to impairment test every year. If the result of the impairment test indicates that the recoverable amount of the asset is less than its book value, a provision for impairment and an impairment loss are recognized for the amount by which the asset’s book value exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and the present value of the future cash flows expected to be derived from the asset. The fair value of an asset shall be determined in light of the basis of the price as stipulated in the sales agreement. Where there is no sales agreement but there is an active market of assets, the fair value of the asset shall be determined according to the price bidden by the buyer of the asset; Where there is no sales agreement and no active market of assets, the fair value of an asset shall be estimated in light of the best information available. The disposal expenses shall include the relevant legal expenses, relevant taxes, trucking charge as well as the direct expenses for bringing the assets into a marketable state. The current value of the expected future cash flow of an asset shall be determined by the discounted cash with an appropriate discount rate, on the basis of the expected future cash flow generated during the continuous use or final disposal of an asset. A provision for asset Impairment is determined and recognized on an individual asset basis. If it is not possible to estimate the recoverable amount of an individual asset, the recoverable amount of the group of assets to which the asset belongs is determined. A group of assets is the smallest group of assets that is able to generate independent cash inflows. For the goodwill separately listed in the financial statements, during the impairment test, the book value of this goodwill is allocated to the related asset group or groups of asset group which is expected to benefit from the synergies of the business combination. If the result of the test indicates that the recoverable amount of an asset group or groups of asset group including the goodwill allocated is lower than its book value, the corresponding impairment loss is recognized. The impairment loss is first deducted from the book value of goodwill allocated to the asset group or groups of asset group, and then deducted from the book value of the remaining assets of the
82 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd. asset group or groups of asset group pro rata with goodwill. Once the asset impairment loss mentioned above is recognized, it is not allowed to be reversed even if the value is recovered in the subsequent periods. (5) Other explanations The follow-up expenses related to a fixed asset, if the economic benefits pertinent to this fixed asset are likely to flow into the enterprise and its cost can be reliably measured, shall be recorded into cost of fixed assets and ultimately recognized as the book value of the replaced part; otherwise, they shall be included in the current profits and losses. When the Group sells, transfers or discards any fixed assets, or when any fixed assets of the Group is damaged or destroyed, the Group shall deduct the book value of the fixed assets as well as the relevant taxes from the disposal income, and include the amount in the current profits and losses. The Group shall check the useful life, expected net salvage value and depreciation method of the fixed assets at the end of the year at least, if there is any change, it shall be regarded as a change of the accounting estimates.
15. Construction in process (1) Categories of construction in process Construction in process is measured at actual cost. Actual cost comprises construction costs, borrowing costs that are eligible for capitalization before the fixed assets being ready for their intended us and other relevant costs. (2) Standards and time of transferring construction in process into fixed asset Construction in process is transferred to fixed assets when the assets are ready for their intended use. (3) Impairment test method and withdrawal method for impairment provision of construction in process For the non-current non-financial assets, such as fixed assets, Construction in process, intangible assets with finite service life, investment real assets measured by cost mode as well as long-term equity investment on subsidiaries, co-operative enterprise and joint-operative enterprise, etc., are tested for impairment if there is any indication that an asset may be impaired at the balance date. If there is any sign of possible assets impairment, the Group shall estimate the recoverable amount and made the impairment tests. No matter whether there is any sign of possible assets impairment, the good will, intangible assets without certain service life, intangible assets not ready for use shall be subject to impairment test every year. If the result of the impairment test indicates that the recoverable amount of the asset is less than its book value, a provision for impairment and an impairment loss are recognized for the amount by which the asset’s book value exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and the present value of the future cash flows expected to be derived from the asset. The fair value of an asset shall be determined in light of the basis of the price as stipulated in the sales agreement. Where there is no sales agreement but there is an active market of assets, the fair value of the asset shall be determined according to the price bidden by the buyer of the asset; Where there is no sales agreement and no active market of assets, the fair value of an asset shall be estimated in light of the best information available. The disposal expenses shall include the relevant legal expenses, relevant taxes, trucking charge as well as the direct expenses for bringing the assets into a marketable state. The current value of the expected
83 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd. future cash flow of an asset shall be determined by the discounted cash with an appropriate discount rate, on the basis of the expected future cash flow generated during the continuous use or final disposal of an asset. A provision for asset Impairment is determined and recognized on an individual asset basis. If it is not possible to estimate the recoverable amount of an individual asset, the recoverable amount of the group of assets to which the asset belongs is determined. A group of assets is the smallest group of assets that is able to generate independent cash inflows. For the goodwill separately listed in the financial statements, during the impairment test, the book value of this goodwill is allocated to the related asset group or groups of asset group which is expected to benefit from the synergies of the business combination. If the result of the test indicates that the recoverable amount of an asset group or groups of asset group including the goodwill allocated is lower than its book value, the corresponding impairment loss is recognized. The impairment loss is first deducted from the book value of goodwill allocated to the asset group or groups of asset group, and then deducted from the book value of the remaining assets of the asset group or groups of asset group pro rata with goodwill. Once the asset impairment loss mentioned above is recognized, it is not allowed to be reversed even if the value is recovered in the subsequent periods.
16. Borrowing costs (1) Recognition principles for capitalization of borrowing costs The borrowing costs shall include interest on borrowings, amortization of discounts or premiums on borrowings, ancillary expenses, and exchange balance on foreign currency borrowings. Where the borrowing costs incurred to an enterprise can be directly attributable to the acquisition and construction or production of assets eligible for capitalization, it shall start to be capitalized when the asset disbursements have already incurred, the borrowing costs has already incurred and the acquisition and construction or production activities which are necessary to prepare the asset for its intended use or sale have already started; When the qualified asset under acquisition and construction or production is ready for the intended use or sale, it shall stop to be capitalized. Other borrowing costs shall be recognized as costs upon their occurrence. (2) Capitalization period of borrowing costs The capitalization period shall refer to the period from the commencement to the cessation of capitalization of the borrowing costs, excluding the period of suspension of capitalization of the borrowing costs. When the qualified asset under acquisition and construction or production is ready for the intended use or sale, the capitalization of the borrowing costs shall be ceased. When partial projects of a qualified asset under acquisition and construction or production are completed respectively and ready for independent use, the capitalization of borrowing costs for such parts of asset shall be ceased. Where each part of a asset under acquisition and construction or production is completed separately and is ready for use or sale during the continuing construction of other parts, but it can not be used or sold until the asset is entirely completed, the capitalization of the borrowing costs shall be ceased when the asset is completed entirely. (3) Period for ceasing capitalization of borrowing costs Where the acquisition and construction or production of a qualified asset is interrupted abnormally and the interruption period lasts for more than 3 months, the capitalization of the borrowing costs
84 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd. shall be suspended until the acquisition and construction or production of a qualified asset resume again (4) Calculation method of capitalized amount of borrowing costs The to-be-capitalized amount of interests shall be determined in light of the actual interests incurred of the specially borrowed loan at the present period minus the income of interests earned on the unused borrowing loans as a deposit in the bank or as a temporary investment; the enterprise shall calculate and determine the to-be-capitalized amount on the general borrowing by multiplying the weighted average asset disbursement of the part of the accumulative asset disbursements minus the general borrowing by the capitalization rate of the general borrowing used. The capitalization rate shall be calculated and determined in light of the weighted average interest rate of the general borrowing. During the period of capitalization, the exchange balance on foreign currency special borrowings shall be capitalized; the exchange balance on foreign currency general borrowings shall be recorded into current profits and losses. The term ―assets eligible for capitalization‖ refers to the fixed assets, investment real estate, inventories and other assets, of which the acquisition and construction or production may take quite a long time to get ready for its intended use or for sale.
17. Biological assets
18. Oil-gas assets
19. Intangible assets (1) Pricing method of intangible assets The term "intangible asset" refers to the identifiable non-monetary assets possessed or controlled by enterprises which have no physical shape. The intangible assets shall be initially measured according to its cost. The costs related with the intangible assets, if the economic benefits related to intangible assets are likely to flow into the enterprise and the cost of intangible assets can be measured reliably, shall be recorded into the costs of intangible assets; otherwise, it shall be recorded into current profits and losses upon the occurrence. The use right of land gained is usually measured as intangible assets. For the self-developed and constructed factories and other constructions, the related expenditures on use right of land and construction costs shall be respectively measured as intangible assets and fixed assets. For the purchased houses and buildings, the related payment shall be distributed into the payment for use right of land and the payment for buildings, if it is difficult to be distributed, the whole payment shall be treated as fixed assets. (2) Estimated useful life of intangible assets with limited useful life At the end of period, the Group shall check the service life and amortization method of intangible assets with finite service life, if there is any change, it shall be regarded as a change of the accounting estimates. Besides, the Group shall check the service life of intangible assets without certain service life, if there is any evidence showing that the period of intangible assets to bring the economic benefits to the enterprise can be prospected, it shall be estimated the service life and amortized in accordance with the amortization policies for intangible assets with finite service life.
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After checking the service life and amortization method of intangible assets with finite service life, the service life and amortization method of intangible assets at the period-end is same with the previous estimation. Item Estimated useful life Basis
(3) Judgment basis of intangible assets with uncertain useful life There are evidences showing that the service life of intangible assets on bringing economical benefits to the Company is predictable. (4) Withdrawal of impairment provision of intangible assets For the non-current non-financial assets, such as fixed assets, Construction in process, intangible assets with finite service life, investment real assets measured by cost mode as well as long-term equity investment on subsidiaries, co-operative enterprise and joint-operative enterprise, etc., are tested for impairment if there is any indication that an asset may be impaired at the balance date. If there is any sign of possible assets impairment, the Group shall estimate the recoverable amount and made the impairment tests. No matter whether there is any sign of possible assets impairment, the good will, intangible assets without certain service life, intangible assets not ready for use shall be subject to impairment test every year. If the result of the impairment test indicates that the recoverable amount of the asset is less than its book value, a provision for impairment and an impairment loss are recognized for the amount by which the asset’s book value exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and the present value of the future cash flows expected to be derived from the asset. The fair value of an asset shall be determined in light of the basis of the price as stipulated in the sales agreement. Where there is no sales agreement but there is an active market of assets, the fair value of the asset shall be determined according to the price bidden by the buyer of the asset; Where there is no sales agreement and no active market of assets, the fair value of an asset shall be estimated in light of the best information available. The disposal expenses shall include the relevant legal expenses, relevant taxes, trucking charge as well as the direct expenses for bringing the assets into a marketable state. The current value of the expected future cash flow of an asset shall be determined by the discounted cash with an appropriate discount rate, on the basis of the expected future cash flow generated during the continuous use or final disposal of an asset. A provision for asset Impairment is determined and recognized on an individual asset basis. If it is not possible to estimate the recoverable amount of an individual asset, the recoverable amount of the group of assets to which the asset belongs is determined. A group of assets is the smallest group of assets that is able to generate independent cash inflows. For the goodwill separately listed in the financial statements, during the impairment test, the book value of this goodwill is allocated to the related asset group or groups of asset group which is expected to benefit from the synergies of the business combination. If the result of the test indicates that the recoverable amount of an asset group or groups of asset group including the goodwill allocated is lower than its book value, the corresponding impairment loss is recognized. The impairment loss is first deducted from the book value of goodwill allocated to the asset group or groups of asset group, and then deducted from the book value of the remaining assets of the asset group or groups of asset group pro rata with goodwill. Once the asset impairment loss mentioned above is recognized, it is not allowed to be reversed even if the value is recovered in the subsequent periods.
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(5) Criteria of separating the research phase and development phase of internal R&D project The Company’s expenditures for research and development are divided into expenditures in research phase and expenditures in development phase in accordance with their natures and whether the intangible assets ultimately formed from such R&D activities exist significant uncertainty or not. (6) Calculation of the expenditures of internal R&D project Expenditures for research and development shall be recorded into current profits and losses upon the occurrence. The development expenditures for its internal research and development projects of an enterprise may be confirmed as intangible assets when they satisfy the following conditions simultaneously, otherwise，it shall be recorded into current profits and losses. ① It is feasible technically to finish intangible assets for use or sale; ② It is intended to finish and use or sell the intangible assets; ③ The usefulness of methods for intangible assets to generate economic benefits shall be proved, including being able to prove that there is a potential market for the products manufactured by applying the intangible assets or there is a potential market for the intangible assets itself or the intangible assets will be used internally; ④ It is able to finish the development of the intangible assets, and able to use or sell the intangible assets, with the support of sufficient technologies, financial resources and other resources; and ⑤ The development expenditures of the intangible assets can be reliably measured. If the expenditures for research and expenditures for development can not be distinguished from each other, all the expenditures for research and development shall be recorded into current profits and losses.
20. Long-term deferred expenses Long-term deferred expenses refer to general expenses with the apportioned period over one year (one year excluded) that have occurred but attributable to the current and future periods. Long-term deferred expense shall be amortized averagely within benefit period.
21. Assets transfer with repurchasing conditions
22. Estimated liabilities (1) Recognition criteria of estimated liabilities (2) Measurement of estimated liabilities
23. Share-based payment and equity instruments The term "share-based payment" refers to a transaction in which the Company grants equity instruments or undertakes equity-instrument-based liabilities in return for services from employee or other parties. (1) Categories of share-based payment The share-based payments shall consist of equity-settled share-based payments and cash-settled share-based payments. ① Equity-settled share-based payments
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The equity-settled share-based payment in return for employee services shall be measured at the fair value of the equity instruments granted to the employees on the grant day. If the right of the amount of the fair value of the equity instruments cannot be exercised until the vesting period comes to an end or until the prescribed performance conditions are met, then based on the best estimate of the number of vested equity instruments, it shall be included in the relevant costs or expenses by straight-line method, and also increase the capital reserves. An equity-settled share-based payment in return for the service of any other party shall be conducted in accordance with the following circumstances, respectively: If the fair value of the service of any other party can be measured in a reliable way, it shall be measured at the fair value of the service on the acquisition date by any other service party; If the fair value of the service of any other party can not be measured in a reliable way, but the fair value of the equity instruments can be measured in a reliable way, the fair value of the equity instruments on date of the service acquisition shall be included in the relevant costs or expenses, and the owner's equities shall be increased accordingly. ② Cash-settled share-based payments A cash-settled share-based payment shall be measured in accordance with the fair value of liability calculated and confirmed based on the shares or other equity instruments undertaken by the Group. As to the cash-settled share-based payment, if the right may be exercised immediately after the grant, it shall be included in the relevant costs or expenses on the date of the grant, and the liabilities shall be increased accordingly; if the right may not be exercised until the vesting period comes to an end or until the specified performance conditions are met, on each balance sheet date within the vesting period, the services obtained in the current period shall, based on the best estimate of the information about the exercisable right, be included in the relevant costs or expenses and the corresponding liabilities at the fair value of the liability undertaken by the Group. The Group shall, on each balance sheet date and on each account date prior to the settlement of the relevant liabilities, re-measure the fair values of the liabilities and include the changes in the current profits and losses. (2) The measures for the recognition of the fair value of the equity instruments. The fair value of the restricted shares granted by the Group is measured at the closing price of A-share on the day before the grant day. (3) Basis for the recognition of the best estimation of the vested equity instruments On each balance sheet date within the vesting period, the best estimation shall be made in accordance with the newly gained subsequent information on the change of vested number of staffs, and then revise the estimated number of vested equity instrument. (4) Relevant accounting treatment on the implementation, revision and termination of share-based payment plan As to the revision on the share-based payment plan made by the Group, if the fair value of the granted equity instrument increases after the revision, it shall recognize the increase of the service gained according to the increase of the fair value of equity instrument. The increase of the fair value of equity instrument refers to the balance between the fair value on the revising date of the equity instruments before and after the revision. If the total fair value of share-base payment decreases after the revision or adopting other ways against the staffs in the revision, it shall continue to conduct accounting treatment on the service gained as if the revision never happens,
88 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd. only if the Group cancel partial or total granted equity instrument. During the vesting period, if the Group cancels the granted equity instrument, the Group shall treat the cancel of granted equity instrument as accelerating the vesting, and includes the amount shall be recognized during the remained vesting period into current profit and loss, and also recognize the capital reserves. If staffs or other party can choose to meet the non-vesting conditions but not meet them during the vesting period, which will be treated as the cancel of granted equity instrument by the Group.
24. Repurchase of shares of the Company
25. Revenue (1) Criteria for recognition time of revenue from selling goods 1) Revenue from selling goods No revenue from selling goods may be recognized unless the following conditions are met simultaneously: the significant risks and rewards of ownership of the goods have been transferred to the buyer by the enterprise; the enterprise retains neither continuous management right that usually keeps relation with the ownership nor effective control over the sold goods; the relevant amount of revenue can be measured in a reliable way; the relevant economic benefits may flow into the enterprise; and the relevant costs incurred or to be incurred can be measured in a reliable way. (2) Revenue from providing labor services If an enterprise can reliably estimate the outcome of a transaction concerning the labor services it provides, it shall recognize the revenue from providing services employing the percentage-of-completion method on the balance sheet date. The percentage-of-completion is determined by the proportion of the costs incurred against the estimated total costs. The outcome of a transaction concerning the providing of labor services can be measured in a reliable way, means that the following conditions shall be met simultaneously: ① The amount of revenue can be measured in a reliable way; ② The relevant economic benefits are likely to flow into the enterprise; ③ The schedule of completion under the transaction can be confirmed in a reliable way; ④ The costs incurred or to be incurred in the transaction can be measured in a reliable way. If the Company can not measure the result of a transaction concerning the providing of labor services in a reliable way, it shall be conducted in accordance with the following circumstances, respectively: If the cost of labor services incurred is expected to be compensated, the compensation amount for the cost of labor services shall be recognized as the revenue from providing labor service, and the cost of labor service incurred shall be as the current cost; if the cost of labor services incurred is not expected to compensate, no revenue from the providing of labor services may be recognized. Where a contract or agreement signed between Group and other enterprises concerns selling goods and providing of labor services, if the part of sale of goods and the part of providing labor services can be distinguished from each other and can be measured respectively, the part of sale of goods and the part of providing labor services shall be treated respectively. If the part of selling goods and the part of providing labor services can not be distinguished from each other, or if the part of sale of goods and the part of providing labor services can be distinguished from each other but can
89 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd. not be measured respectively, both parts shall be conducted as selling goods. (2) Recognition basis of royalty revenue In accordance with relevant contract or agreement, the amount of royalty revenue should be recognized as revenue on accrual basis. (3) Recognition basis and method for the schedule of contracted project when recognizing the revenue from providing labor services and construction contract by percentage-of-completion method
26. Government subsidies (1) Types A government subsidy means the monetary or non-monetary assets obtained free by the Group from the government, but excluding the capital invested by the government as the owner of the enterprise. Government subsidies consist of the government subsidies pertinent to assets and government subsidies pertinent to income. (2) Accounting treatment method If a government subsidy is a monetary asset, it shall be measured in the light of the received or receivable amount. If a government subsidy is a non-monetary asset, it shall be measured at its fair value. If its fair value cannot be obtained in a reliable way, it shall be measured at its nominal amount. The government subsidies measured at their nominal amounts shall be directly included in the current profits and losses. The government subsidies pertinent to assets shall be recognized as deferred income, equally distributed within the useful lives of the relevant assets, and included in the current profits and losses. The government subsidies pertinent to incomes shall be treated respectively in accordance with the circumstances as follows: those subsidies used for compensating the related future expenses or losses of the enterprise shall be recognized as deferred income and shall included in the current profits and losses during the period when the relevant expenses are recognized; or those subsidies used for compensating the related expenses or losses incurred to the enterprise shall be directly included in the current profits and losses. Where it is necessary to refund any government subsidy which has been recognized, it shall be treated respectively in accordance with the circumstances as follows: if there is the deferred income concerned, the book balance of the deferred income shall be offset against, but the excessive part shall be included in the current profits and losses; or if there is no deferred income concerned to the government subsidy, it shall be directly included in the current profits and losses. The government capital investment is not government subsidies.
27. Deferred income tax assets and deferred income tax liabilities (1) Recognition basis of deferred income tax assets The balance between the book value of deferred tax assets and deferred tax liabilities and its taxable amount, as well as the temporary difference between the book value of those unrecognized as assets and liabilities but with clear taxable amount and the taxable amount should adopt law of liabilities for balance sheet to recognize deferred income tax assets and deferred income tax liabilities. No deferred taxable assets should be recognized for the deductible temporary difference of initial recognition of assets and liabilities arising from the transaction which is not business combination,
90 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd. the accounting profits will not be affected, nor will the taxable amount or deductible loss be affected at the time of transaction. Besides, no deferred taxable assets should be recognized for the deductible temporary difference related to the investments of the subsidiary companies, associated enterprises and joint enterprises, which are not likely to be reversed in the expected future or is not likely to acquire any amount of taxable income tax that may be used for making up such deductible temporary differences. Otherwise, the Company shall recognize the deferred income tax assets arising from a deductible temporary difference basing on the extent of the amount of the taxable income that is likely to be acquired to make up such deductible temporary differences For any deductible loss or tax deduction that can be carried forward to the next year, the corresponding deferred income tax asset shall be determined to the extent that the amount of future taxable income to be offset by the deductible loss or tax deduction to be likely obtained. On the balance sheet date, the deferred income assets and deferred income tax liabilities shall be measured at the tax rate applicable to the period during which the assets are expected to be recovered or the liabilities are expected to be settled. The book value of deferred income tax assets shall be reviewed at each balance sheet date. If it is unlikely to obtain sufficient taxable income to offset against the benefit of the deferred income tax asset, the book value of the deferred income tax assets shall be written down. Any such write-down should be subsequently reversed where it becomes probable that sufficient taxable income will be available. (2) Recognition basis of deferred income tax liabilities The balance between the book value of deferred tax assets and deferred tax liabilities and its taxable amount, as well as the temporary difference between the book value of those unrecognized as assets and liabilities but with clear taxable amount and the taxable amount should adopt law of liabilities for balance sheet to recognize deferred income tax assets and deferred income tax liabilities. No deferred tax liability is recognized for a temporary difference arising from the initial recognition of goodwill, the initial recognition of assets or liabilities due to a transaction other than a business combination, which affects neither accounting profit nor taxable profit (or deductible loss). Besides, no deferred tax assets is recognized for the taxable temporary differences related to the investments of subsidiary companies, associated enterprises and joint enterprises, and the investing enterprise can control the time of the reverse of temporary differences as well as the temporary differences are unlikely to be reversed in the excepted future. Otherwise, the Group should recognize the deferred income tax liabilities arising form other taxable temporary difference.
28. Operating lease and financial lease (1) Accounting treatments of operating lease 1) The Group records the operating lease as the leasee The rental payment from operating leases shall be recorded by the lessee in the relevant asset costs or the profits and losses of the current period by using the straight-line method over each period of the lease term. The initial direct costs incurred by a lessee shall be recognized as the profits and losses of the current period. The contingent rents shall be recorded into the profits and losses of the current period in which they actually arise. 2) The Group records the operating lease as the leasor
91 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
The rental income from operating leases shall be recorded by the lessee in the profits and losses of the current period by using the straight-line method over each period of the lease term. The initial direct costs with large amount shall be capitalized upon the occurrence, and recorded into current profits and losses by using the recognition basis for rental income method over each period of the lease term; the initial direct costs with small amount shall be recorded into current profits and losses upon occurrence. The contingent rents shall be recorded into the profits and losses of the current period in which they actually arise.
(2) Accounting treatments of financial lease 1) The Group records the finance lease as the leasee On the lease beginning date, a lessee shall record the lower one of the fair value of the leased asset and the present value of the minimum lease payments on the lease beginning date as the entering value in an account, recognize the amount of the minimum lease payments as the entering value in an account of long-term account payable, and treat the balance between the recorded amount of the leased asset and the long-term account payable as unrecognized financing charges. Otherwise, the initial direct costs incurred during the process of lease negotiating and signing the leasing agreement which can be included into the items of lease shall be recorded in the asset value of the current period. The balance that the minimum lease payment minus the unrecognized financing charges should be listed as long-term liabilities and long-term liabilities due within 1 year respectively. The unrecognized financing charges should be recorded into current financing charges measured by adopting effective interest method during the lease period. The contingent rents should be recorded into current profits and losses upon occurrence. 2) The Group records the finance lease as the lessor On the beginning date of the lease term, a lessor shall recognize the sum of the minimum lease receipts on the lease beginning date and the initial direct costs as the entering value in an account of the financing lease values receivable, and record the unguaranteed residual value at the same time. The balance between the sums of the minimum lease receipts, the initial direct costs and the unguaranteed residual value, and the sum of their present values shall be recognized as unrealized financing income. A lessor shall present the balances between the financial lease income minus the unrecognized financing income as long-term creditor’s right and long-term creditor’s right due within 1 year respectively. The unrealized financing income should be recorded into current financing income measured by adopting effective interest method during the lease period. The contingent rents should be recorded into current profits and losses upon occurrence.
29. Assets held for sale (1) Recognition criteria of the assets held for sale (2) Accounting treatments of the assets held for sale
30. Capitalization of assets
31. Hedging accounting
92 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
32. Changes in main accounting policies and estimates Were the main accounting policies or estimates changed during the report period? □Yes √No □ Inapplicable (1) Change of accounting policies Were the main accounting policies changed during the report period? □Yes √No □ Inapplicable (2) Change of accounting estimates Were the main accounting estimates changed during the report period? □Yes √No □ Inapplicable
33. Correction of previous accounting errors Was any accounting error made in previous periods discovered in the report period? □Yes √No □ Inapplicable (1) Retrospective restatement method Was any previous accounting error adopting retrospective restatement method discovered in the report period? □Yes √No □ Inapplicable (2) Prospective application method Was any previous accounting error adopting prospective application method discovered in the report period? □Yes √No □ Inapplicable
34. Other main accounting policies and estimates as well as compilation method of financial statements
V. Taxation 1. Main taxes and tax rate Category of taxes Tax basis Tax rate Calculated the output tax at 17%, 13% of taxable income and paid VAT the VAT by the amount after 17%、13% deducting the deductable withholding VAT at current period. Consumption tax Paid by 3%, 5% of taxable Business tax 3%、5% business income Paid at 7%, 5%, 1% of the Urban maintenance and construction tax 7%、5%、1% circulating tax actually paid Paid at 15%, 16.5%, 25% of Enterprise income tax 15%、16.5%、25% taxable income respectively
The income tax rates adopted by each subsidiary and branch factory
2. Tax preference and official documents The Company, in accordance with the Notice on Passing the Re-examination of New High-tech
93 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Enterprise for 504 Companies Including Jinan Shengquan Group Co., Ltd. (Lu-Ke-Gao-Zi [2012] No. 19) from Department of Science & Technology of Shandong Province, Finance Bureau of Shandong Province, National Taxation Bureau of Shandong and Local Taxation Bureau of Shandong Province, was recognized as a New High-tech Enterprise and obtained the Certificate of New High-tech Enterprise on 31 Oct. 2011. The Company shall, in line with the Article 28 of Enterprise Income Tax Law of the People’s Republic of China and Notice of the State Administration of Taxation on the Issues concerning the Administration of Enterprise Income Tax Deduction and Exemption (GSF [2008] No. 111 document), enjoy a 15-percent rate for enterprise income tax. The Company’s wholly-owned subsidiary— Lufeng Weaving & Dyeing Co., Ltd., in accordance with the Notice on Confirmation of New High-tech Enterprise for 430 Companies Including Jinan Feshen Xinng’an Technologies Co., Ltd. (Lu-Ke-Gao-Zi [2012] No. 38) from Department of Science & Technology of Shandong Province, Finance Bureau of Shandong Province, National Taxation Bureau of Shandong and Local Taxation Bureau of Shandong Province, was recognized as a New High-tech Enterprise and obtained the Certificate of New High-tech Enterprise on 30 Nov. 2011.. The above subsidiary shall, in line with the Article 28 of Enterprise Income Tax Law of the People’s Republic of China and Notice of the State Administration of Taxation on the Issues concerning the Administration of Enterprise Income Tax Deduction and Exemption (GSF [2008] No. 111 document), enjoy a 15-percent rate for enterprise income tax. Luthai (Hong Kong) Co., Ltd. (hereinafter refers as Luthai (Hong Kong)), the wholly-owned subsidiary company of the Company, was incorporated in Hong Kong SAR, whose profit tax shall be paid at tax rate of 16.5%.
3. Other notes
VI. Business combination and consolidated financial statement General instruction of business combination and consolidated financial statements 1. Subsidiaries
94 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
95 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
(1) Subsidiaries obtained by establishment and investment Unit: RMB Yuan Balance of parent company’s equity after deducting Actual the The The amount of Other Included in Deductible difference Registered Business Registered Business proportion proportion Minority Subsidiaries Type Currency investments essential consolidated minority that loss of place nature capital scope of holding of voting interest at the investment statement interests minority shares（%） rights（%） period-end interests exceed equity obtained by minority shareholders Beijing Wholesale Lufeng of clothing Sunshine and Wholly-own Garmetnt Wholesale commodity; ed 15,000,000. 15,000,000. Co., Ltd. Beijing and retail CNY costume 100% 100% Yes subsidiary 00 00 (hereinafter industry designing; refer to as service of ―Lufeng technology Sunshine‖) diffusion
96 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Design and Beijing manufacturi Innovative ng of Garment clothing, Wholesale Co., Ltd. Holding 42,000,000. adornment, 25,200,000. 13,476,715. Beijing and retail CNY 60% 60% Yes (hereinafter subsidiary 00 fabric and 00 92 industry refer to as trimmings; ―Beijing sale of Innovative‖) self-made products Import & export trade, Luthai Wholly-own Wholesale collection of 6,000,000.0 6,366,600.0 (Hong ed Hong Kong and retail HKD market 100% 100% Yes 0 0 Kong) subsidiary industry information, information consultation Shanghai Design, Luthai technology Textile Co., R&D of Wholly-own Wholesale Ltd. 5,000,000.0 textile and 5,000,000.0 ed Shanghai and retail CNY 100% 100% Yes (hereinafter 0 garment; 0 subsidiary industry refer to as wholesale ―Shanghai of textile Lutai‖) and garment Xinjiang Holding Xinjiang Manufacturi 146,534,217 CNY Purchase, 82,400,701. 58.24% 58.24% Yes 136,572,800
97 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Luthai subsidiary ng .01 processing 97 .46 Harvest and sale of Cotton Co., cotton and Ltd. cotton-by (hereinafter products; refer to as production ―Xinjiang and sales of Luthai‖) conventiona l seed of crops; foreign trade, production and sale of cotton textile products; processing and sale of edible vegetable oil; wholesale and retail of agricultural materials;
98 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
crops planting Production Lufeng and sale of Weaving & textile and Dyeing Co., printing and Ltd. Holding dyeing Manufacturi 706,160,000 529,620,000 240,603,892 (hereinafter subsidiary Zibo CNY products; 75% 75% Yes ng .00 .00 .46 refer to as wholesale ―Lufeng and retail of Weaving & yarn, Dyeing‖) clothing and adornment Production Zibo Luqun and sale of Textile Co., cotton Ltd. Wholly-own polyester Manufacturi 168,220,000 171,784,550 (hereinafter ed Zibo CNY yarn, 100% 100% Yes ng .00 .00 refer to as subsidiary weaving, ―Luqun clothing, Textile‖) adornment and textile Zibo Power Wholly-own Xinsheng Manufacturi 162,435,600 supply, 176,340,737 ed Zibo CNY 100% 100% Yes Power Co., ng .00 power .93 subsidiary Ltd. generation,
99 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
(hereinafter production refer to as and sale of ―Xinsheng hollow Power‖) brick and cement block for architecture Other notes to subsidiaries obtained by establishment and investment
100 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
(2) Subsidiaries obtained by business combination under same control Naught (3) Subsidiaries obtained by business combination not under same control Naught
2. Special purpose entities or operating entities with control right formed by entrusted operation or lease □ Applicable √ Inapplicable Other explanation on special purpose entities or operating entities with control right formed by entrusted operation or lease: 3. Explanation on changes in consolidated scope Explanation on changes in consolidated scope:
□ Applicable √ Inapplicable 4. Subsidiaries that newly combined into and not combined into consolidation scope in the reporting period
The subsidiaries, special purpose entities and operating entities with control right formed by entrusted operation or lease that newly included in the consolidated scope Unit: RMB Yuan Name Closing net assets Net profit in current period
The subsidiaries, special purpose entities and operating entities with control right formed by entrusted operation or lease that not longer included in the consolidated scope in the reporting period Unit: RMB Yuan Net profit from year-begin to Name Net asset at the disposal date disposal date
Other notes to entities newly combined into and not combined into consolidation scope: 5. Business combination under same control during the reporting period Unit: RMB Yuan Cash flow arising Judgment basis The consolidated The consolidated from operating of business Actual controller income from net profit from activities The combined party combination of the same period-begin to period-begin to between under the same control combination date combination date period-begin and control combination date
Other notes to business combination under same control:
6. Business combination not under same control during the reporting period Unit: RMB Yuan The combined party Amount of goodwill Calculation method of goodwill
Other notes to business combination not under same control:
7. Subsidiaries reduced by selling equities without control right during the reporting period
Recognition method of gains and Name of subsidiary Disposal date losses
Other notes to subsidiaries reduced by selling equities without control right during the reporting period:
8. The counter purchases in the reporting period Calculation method of goodwill recognized or Judgment basis of counter Recognition method of The backdoor party included into current gains purchase combination costs and losses in the combination
Other notes to counter purchases:
101 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
9. Mergers in the reporting period Unit: RMB Yuan Type of merger Main assets merged in Main liabilities merged in Mergers under Mergers under the same control Item Amount Item the same control
Mergers not under the same control Item Amount Item Amount
Other notes to mergers:
10. Exchange rates of major items in financial statements for foreign entities Item Items of assets and liabilities 30 Jun. 2012 1 Jan. 2012 Lu Thai (HongKong) HK $1 = RMB 0.8152 yuan HK $1 = RMB 0.8111 yuan Item Items of income, expense and cash flow Jan. – Jun. 2012 Jan. – Jun. 2011 Lu Thai (HongKong) HK $1 = RMB 0.8132 yuan HK $1 = RMB 0.8419 yuan (Ⅶ) Notes on major items in consolidated financial statements of the Company 1. Monetary funds Unit: RMB Yuan Closing balance Opening balance Excha Amount in Item Amount in Amount in Exchange nge foreign Amount in RMB foreign currency RMB rate rate currency Cash: -- -- 679,890.17 -- -- 1,187,641.58 RMB -- -- 360,909.97 -- -- 918,446.06 USD 14,612.63 6.3249 92,423.42 7,639.07 6.3009 48,133.02 EUR 12,632.11 7.871 99,427.33 16,632.11 8.1625 135,759.59 JPY 225,638.00 0.0796 17,960.78 439,638.00 0.0811 35,654.64 HKD 74,764.53 0.8152 60,948.05 1,644.44 0.8107 1,333.15 THP 120.19 0.1994 23.97 120.19 0.1991 23.93 SGD 91.90 4.969 456.65 91.90 4.8569 446.35 GBP 1,794.36 9.8169 17,615.05 1,794.36 9.7116 17,426.11 AUD 4,746.03 6.3474 30,124.95 4,746.03 6.4093 30,418.73 Bank deposit: -- -- 410,711,633.46 -- -- 804,149,797.35 RMB -- -- 174,835,777.64 -- -- 671,198,883.94 USD 34,955,749.55 6.3249 221,091,620.32 14,694,594.59 6.3009 92,589,171.06 EUR 233,570.73 7.871 1,838,435.22 954,250.12 8.1625 7,789,066.60 130,885,536.0 JPY 14,811,697.00 0.0796 1,179,011.09 0.0811 10,614,816.98 0 HKD 14,432,353.25 0.8152 11,765,254.37 23,013,199.11 0.8107 18,656,800.53 CHF 232.90 6.59 1,534.82 492,070.99 6.7085 3,301,058.24 Other monetary funds: -- -- 28,287,583.48 -- -- 5,810,708.00 RMB ------USD 4,472,379.91 6.3249 28,287,355.69 922,179.97 6.3009 5,810,563.77 EUR 28.93 7.871 227.71 17.67 8.1625 144.23 JPY 1.00 0.0796 0.08 Total -- -- 439,679,107.11 -- -- 811,148,146.93 Special explanation shall be made for the accounts limited by being mortgaged, pledged or frozen, deposited overseas or with potential collecting risks: ① USD, EUR and JPY deposit in the other monetary fund is foreign currency payment, from which the Company exported the products, being in verification stage in accordance with the State Administration of Foreign Exchange.
102 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
② As of 30 Jun. 2012, monetary funds the Group deposited in overseas translated into RMB 11,817,837.17 (RMB 18,656,426.70 on 31 Dec. 2011), all of which was monetary fund deposit of holding subsidy Luthai (Hongkong).
2. Trading financial assets (1) Trading financial assets Unit: RMB Yuan Item Closing fair value Opening fair value Trading bonds investment Trading equity instruments investment The financial assets which are measured at their fair values and the variation of which is recorded into the profits and losses of the current period Derivative financial assets 20,939,380.00 Hedging instruments Others Total 20,939,380.00 (2) Trading financial assets with realizable limit Unit: RMB Yuan Trading restriction or other significant limits in Item Closing balance realization
(3) Hedging instruments and notes to relevant hedging transaction
3. Notes receivable (1) Category of notes receivable Unit: RMB Yuan Category Closing balance Opening balance Bank acceptance bill 13,037,336.30 59,855,568.33 Letter of credit 95,239,541.43 100,644,229.43 Total 108,276,877.73 160,499,797.76 (2) Notes receivable pledged at period-end Unit: RMB Yuan Issuing entity Date of issuance Expiring date Amount Remark
Total ------Notes:
(3) Notes transferred to accounts receivable because drawer of the notes fails to execute the contract or agreement, and undue notes endorsed to other parties at the end of the period Unit: RMB Yuan Issuing entity Date of issuance Expiring date Amount Remark
Total ------Notes:
Undue notes endorsed to other parties by the Company Unit: RMB Yuan Issuing entity Date of issuance Expiring date Amount Remark Qingdao Haoshilai 18 Apr. 2012 17 Oct. 2012 1,000,000.00 Suits Co., Ltd. Jiangsu Baozitou 11 May 2012 9 Nov. 2012 1,000,000.00 Fashion Co., Ltd. Jiangsu Baozitou 1 Feb. 2012 1 Aug. 2012 1,000,000.00 Fashion Co., Ltd. Zhejiang Tianchi 25 May 2012 21 Nov. 2012 940,000.00 Costume Co., Ltd. Qingdao Haoshilai 14 Mar. 2012 13 Sep. 2012 870,000.00 Suits Co., Ltd.
103 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Total -- -- 5,590,000.00 -- Note:
Notes of bank acceptance bill that already discounted or pledged.
4. Dividends receivable Unit: RMB Yuan Increase in current Item Opening balance Decrease in current period Closing balance period Dividends receivable aging less than one year Of which:
Dividends receivable aging over one year Of which: ------
Total Note:
5. Interest receivable (1) Interest receivable Unit: RMB Yuan Increase in current Decrease in current Item Opening balance Closing balance period period
Total (2) Overdue interest Unit: RMB Yuan Borrowing entity Overdue days (day) Amount of overdue interest
Total -- (3) Notes to interest receivable
6. Accounts receivable (1) Accounts receivable listed by categories Unit: RMB Yuan Closing balance Opening balance Book balance Bad debt provision Book balance Bad debt provision Category Proportion Proportion Proportion Proportion Amount Amount Amount Amount (%) (%) (%) (%) Accounts receivable with significant single amount and individually 0.00 0.00 0.00 0.00 withdrawn bad debt provision Accounts receivable for which bad debt provisions are made on the group basis 221,149,00 11,183,257. 212,016,3 10,688,493.9 Common business group 99.41% 5.06% 99.38% 5.04% 7.36 00 96.99 4 221,149,00 11,183,257. 212,016,3 10,688,493.9 Subtotal of the groups 99.41% 5.06% 99.38% 5.04% 7.36 00 96.99 4 Accounts receivable with insignificant single 1,313,784.0 1,313,784.0 1,313,784 amount and individually 0.59% 100% 0.62% 1,313,784.00 100% 0 0 .00 withdrawn bad debt provision 222,462,79 12,497,041. 213,330,1 12,002,277.9 Total ------1.36 00 80.99 4 Notes to category of accounts receivable:
Accounts receivable with significant single amount and individually withdrawn bad debt provision □Applicable □Inapplicable
104 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
In the groups, accounts receivable adopting aging analysis method to withdraw bad debt provision: √ Applicable □ Inapplicable Unit: RMB Yuan Closing balance Opening balance Aging Book balance Provision for bad Book balance Provision for bad Amount Proportion debts Amount Proportion debts Within 1 year Including: ------Subtotal of ithin 1 220,205,721.48 99.57% 11,010,286.08 211,216,781.24 99.62% 10,560,839.06 year 1-2 years 220,205,721.48 99.57% 11,010,286.08 211,216,781.24 99.62% 10,560,839.06 2-3 years 333,390.23 0.15% 33,339.02 498,209.46 0.24% 49,820.94 Over 3 years 433,367.86 0.2% 86,673.56 125,879.50 0.06% 25,175.90 3 to 4 years 176,527.79 0.08% 52,958.34 175,526.79 0.08% 52,658.04 4 to 5 years Over 5 years Total Subtotal of within 221,149,007.36 -- 11,183,257.00 212,016,396.99 -- 10,688,493.94 1 year In the groups, accounts receivable adopting balance percentage method to withdraw bad debt provision □Applicable √Inapplicable In the groups, accounts receivable adopting other methods to withdraw bad debt provision □Applicable √Inapplicable Other closing individually insignificant but provisions for bad debts individually accounts receivable: √Applicable □Inapplicable Unit: RMB Yuan Content of accounts Book value Provision for bad debts Withdrawal proportion Reason for withdrawal receivable It was receivables of subsidiary Xinsheng Power aging over 3 three years. As Xinsheng Zichuan Liaozhai Hotel Power is in bad operation 1,168,548.00 1,168,548.00 100% Co., Ltd. and barely meet the payment that the Company made provision in full amount of its due account. It was receivables of subsidiary Xinsheng Power aging over 3 three years. As Xinsheng ZIBO HUAYANG Power is in bad operation 145,236.00 145,236.00 100% BLANKET CO., LTD and barely meet the payment that the Company made provision in full amount of its due account. Total 1,313,784.00 1,313,784.00 100% -- (2) Accounts receivable reversed or collected in the reporting period Unit: RMB Yuan Reversed or collected Recognition basis of Content of accounts Reversed or amount of the Reversed or collected original bad debt receivable collected reason accrued bad debt amount provision provision
Total ------The withdrawal of bad debt provision of accounts receivable with significant single amount or insignificant single amount but individually made impairment test at the end of reporting period: Withdrawing Content Book balance Bad debt amount Reason proportion（%）
Total -- --
105 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Notes to accounts receivable with insignificant single amount but large risks of groups after grouping by credit risks characteristics:
(3) The write-off accounts receivable Unit: RMB Yuan Nature of Related party Name of entity accounts Write-off time Write-off amount Write-off reason transaction or receivable not?
Total ------Notes to write off of accounts receivable: (4) Particulars about accounts receivable due to shareholders holding 5% (including 5%) voting rights of the Company □ Applicable √ Inapplicable (5) Information of top 5 accounts receivable: Unit: RMB Yuan The relationship with Name of entity Amount Aging Proportion the Company Li & Fung Limited Non-related customer 57,855,039.26 Within 1 year 26% TAL Non-related customer 38,669,219.87 Within 1 year 17.38% Central Heating Office of Zichuan Non-related customer 11,736,069.99 Within 1 year 5.28% District, Zibo Zibo Power Supply Non-related customer 7,725,260.22 Within 1 year 3.47% Company Chen Feng (Jin Tan) Non-related customer 6,822,022.16 Within 1 year 3.07% Garments Co., Ltd. Total -- 122,807,611.50 -- 55.2% (6) The amounts due from related parties Unit: RMB Yuan The relationship with the Name of entity Amount Proportion Company
Total -- (7) Information of accounts receivable that terminated recognition Unit: RMB Yuan Gains or loses related to the termination Item Amount of termination of recognition
Total (8) If securitization is carried out on accounts receivable as the underlying assets, please list amount of assets and liabilities arising from further involvement Unit: RMB Yuan Item Period-end Assets:
Subtotal of assets Liabilities:
Subtotal of liabilities 7. Other accounts receivable (1) Other accounts receivable disclosed by type: Unit: RMB Yuan Closing balance Opening balance Provision for Provision for doubtful Category Balance Balance doubtful debts debts Amount Proporti Amount Proporti Amount Proportio Amount Proporti
106 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
on (%) on (%) n (%) on (%) Other accounts receivable that is individually 0.00 0.00 0.00 0.00 significant and provisions for bad debts individually Other accounts receivable that provisions for bad debts by group Common business 128,090,35 14,757,078. 86,643,935. 12,109,557.2 100% 11.52% 100% 13.98% group 0.43 86 83 3 128,090,35 14,757,078. 86,643,935. 12,109,557.2 Subtotal of group 100% 11.52% 100% 13.98% 0.43 86 83 3 Other accounts receivable that is individually insignificant but provisions for bad debts individually 128,090,35 14,757,078. 86,643,935. 12,109,557.2 Total ------0.43 86 83 3 Notes for categories of other accounts receivable:
Other closing accounts receivable that is individually significant and provisions for bad debts individually. □Applicable√ Inapplicable In the group, other accounts receivable that provisions for bad debts by aging analysis: √ Applicable □ Inapplicable Unit: RMB Yuan Period-end Period-begin Book balance Book balance Aging Provision for Provision for bad Propor Propor Amount bad debts Amount debts tion tion Within 1 year Including: 67.36 59.17 Within 1 year 86,282,622.56 4,314,131.13 51,271,519.53 2,563,575.98 % % Subtotal of within 1 67.36 59.17 86,282,622.56 4,314,131.13 51,271,519.53 2,563,575.98 year % % 1-2 years 8,614,222.29 6.73% 861,422.23 4,489,922.85 5.18% 448,992.29 2-3 years 3,765,261.80 2.94% 753,052.37 1,677,590.86 1.94% 335,518.18 22.97 33.71 Over 3 years 29,428,243.78 8,828,473.13 29,204,902.59 8,761,470.78 % % 3 to 4 years 4 to 5 years Over 5 years Total 128,090,350.43 -- 14,757,078.86 86,643,935.83 -- 12,109,557.23 In the group, other accounts receivable that provisions for bad debts by balance percentage: □Applicable√ Inapplicable In the group, other accounts receivable that provisions for bad debts by other methods: □Applicable√ Inapplicable Other closing individually insignificant but provisions for bad debts individually accounts receivable: √ Applicable □ Inapplicable (2) Information of other accounts receivable reversed or recovered in the reporting period Unit: RMB Yuan Reason for Basis for Accrued amount Other accounts Amount of reversed reversed or determination of bad before reversal or receivable or recovered recovered debts provision recovery
Total ------
107 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Withdrawal of closing individually significant or insignificant but provisions for bad debts individually accounts receivable: Provision for bad Withdrawal Content Book balance Reason debts percentage
Total -- -- Notes of individually insignificant but was of big risk after grouped by credit risk other accounts receivable:
(3) Information of other accounts receivable written off in the reporting period Unit: RMB Yuan Nature of other Whether arising Name of Write off accounts Write off date Write off reason from related party company amount receivable transactions or not
Total ------Notes of written-off of other accounts receivable:
(4) Other accounts receivable is due from shareholders with more than 5% (including 5%) of the voting shares of the Company □ Applicable √ Inapplicable (5) Nature or details of other significant accounts receivable Unit: RMB Yuan Nature or details of Name of entity Amount the amount Proportion of the total (%)
Total -- Notes:
(6) Information of top five other accounts receivable Unit: RMB Yuan Relationship with the Proportion of the Name of entity Amount Aging Company total (%) Export refund tax Not related 49,927,235.33 Within 1 year 38.98% receivable relationship Tianhong State Own Within 1 year, 1 to 2 Not related Assets Investment and 18,801,994.40 years, more than 3 14.68% relationship Business Co., Ltd. years Contracter of cotton Not related 5,507,479.67 Within 1 year 4.3% field relationship Wage margin of Within 1 year, 1 to 2 labourer of Zichuan Not related 2,955,620.10 years, more than 3 2.31% District of Zibo relationship years Municipal Bureau of Finance of Not related Zichuan District of 2,665,685.60 Over 3 years 2.08% relationship Zibo Total -- 79,858,015.10 -- 62.35% (7) Information of the amounts due from related parties Unit: RMB Yuan Relationship with the Name of entity Amount Proportion Company
Total -- (8) Information of other accounts receivable that terminated recognition Unit: RMB Yuan Gains or loses related to the termination Item Amount of termination of recognition
Total
108 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
(9) If securitization is carried out on other accounts receivable as the underlying assets, please list amount of assets and liabilities arising from further involvement Unit: RMB Yuan Item Closing balance Assets:
Subtotal of assets Liabilities:
Subtotal of liabilities 8. Prepayment (1) List by aging analysis: Unit: RMB Yuan Closing balance Opening balance Aging Proportion Proportion Amount Amount (%) (%) Within 1 167,347,853.46 97.07% 303,864,716.05 99.8% year 1 year to 2 4,541,975.92 2.63% 142,552.71 0.05% years 2 years to 3 315,366.43 0.18% 447,247.30 0.15% years Over 3 years 212,028.46 0.12% 14,857.08 0% Total 172,417,224.27 -- 304,469,373.14 -- Notes of aging of prepayment:
(2) Information of the top 5 prepayment Unit: RMB Yuan Relationship with the Name of entity Amount Aging Reason for unsettled Company Non-related-party Advance material Jam Smith Company 50,855,150.81 30 Jun. 2012 supplier payment BRIGHANN COTTON Non-related-party Advance material 16,696,468.43 30 Jun. 2012 MARKETING PTY supplier payment LTD Zibo Power SupplyCompany of Non-related-party Advance material 17,216,789.26 30 Jun. 2012 Shandong Electricity supplier payment Power Corporation Non-related-party Advance material Allenberg Cotton Co. 15,290,805.13 30 Jun. 2012 supplier payment Huahong Cotton Machine Technology Non-related-party Advance material 6,053,445.24 31 Mar. 2012 Service Center of supplier payment Aqsu Total -- 106,112,658.87 -- -- Notes of important companies of prepayment:
(3) Information about amount due from shareholders with more than 5% (including 5%) of the voting shares of the Company in prepayment □ Applicable √ Inapplicable (4) Notes of prepayment
9. Inventory (1) Category Unit: RMB Yuan
109 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Closing balance Opening balance Impairment Item Impairment of Book balance of Book value Book balance Book value inventories inventories 572,484,455.6 596,471,983.5 596,471,983.5 Raw materials 572,484,455.65 5 5 5 Construction 476,352,579.7 568,544,948.1 568,544,948.1 476,352,579.76 contract assets 6 5 5 39,596,505.3 626,170,402.9 531,208,097.4 474,351,481.3 Inventory goods 665,766,908.23 56,856,616.19 2 1 9 0 Turnover material Consumable biological assets Assigned processing 22,194,586.50 22,194,586.50 27,542,842.92 27,542,842.92 products 1,736,798,530.1 39,596,505.3 1,697,202,024. 1,723,767,872. 1,666,911,255. Total 56,856,616.19 4 2 82 11 92 (2) Impairment of inventories Unit: RMB Yuan Decrease Category Opening balance Increase Closing balance Reversal Written off Raw materials Construction contract assets Inventory goods 56,856,616.19 0.00 0.00 17,260,110.87 39,596,505.32 Turnover material Consumable biological assets
Total 56,856,616.19 0.00 0.00 17,260,110.87 39,596,505.32 (3) Details of provision for falling price of inventories Proportion of reversal of Basis on provision for provision for impairment of Item Reasons for reversal falling price of inventories inventories to closing balance Raw materials On the Balance Sheet Date, inventory will be measured at its cost and realizable net value, which is lower. When realizable net value is lower than cost, make provision
for falling price of inventory. Provision for falling price of inventory is withdrawn by the difference between cost of each item of inventory Inventory goods and its realizable net value. Construction contract assets Turnover material Consumable biological assets
Notes of inventory:
10. Other current assets Unit: RMB Yuan
110 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Item Closing balance Opening balance
Total Notes of other current assets:
11. Available-for-sale financial assets (1) Information of available-for-sale financial assets Unit: RMB Yuan Item Closing fair value Opening fair value Available-for-sale bonds Available-for-sale equity instruments Others Total In the reporting period, the Company reclassified the held-to-maturity investment into available-for-sale financial assets, a total of RMB0.00 was reclassified, which takes 0% of total matured investment before reclassification. Notes of available-for-sale financial assets
(2) Long-term liability investment of available-for-sale financial assets Unit: RMB Yuan Accrued Interest in Initial accounts Matured Opening the Closing Item Category Balance investment receivable date balance reporting balance cost or received period interest
Total ------Notes of long-term liability investment of available-for-sale financial assets: 12. Held-to-maturity investment (1) Information Unit: RMB Yuan Item Closing book balance Opening book balance
Total Notes of held-to-maturity investment:
(2) Information of held-to-maturity investment sold in the reporting period but was not matured Unit: RMB Yuan Percentage of the investment amount before Item Amount sales
Total -- Notes of undue held-to-maturity investment sold in the reporting period: 13. Long-term accounts receivable Unit: RMB Yuan Category Closing balance Opening balance Financing leases Including: unrealized financing gains Installment sales Installment offering service Others Total 14. Investment to joint ventures and associated enterprises Unit: RMB Yuan Name Nature Nature Percent Voting Total Total Net Registr Legal Registe Total Net of of of Curren age of percent closing operati profit ation represe red closing closing investe enterpri busines cy holding age of liabiliti on of the place ntative capital assets assets e ses s shares the es revenu reporti
111 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
of the Compa e of the ng Compa ny in reporti period ny investe ng e period I. Joint ventures
II. Associated enterprises
Notes if significant differences exist between the important accounting policies and accounting estimations of joint ventures, associated enterprises and the Company:
15. Long-term equity investment
112 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
(1) List of long-term equity investment Unit: RMB Yuan Explanation for indifferences Withdrawn between the Share holding Voting impairment Cash bonus in Accounting Initial Opening Increase/decrea share holding Impairment Investee Closing balance percentage in percentage in provision in the the reporting method investment cost balance se percentage and provision investee investee reporting period voting period percentage in investee Zibo Chengshun Heating Co., Ltd. Cost method 160,000.00 160,000.00 160,000.00 2% 2% (hereinafter refer to as ―Chengshun Heating‖ ) Zibo Limin Walling Material Co., Cost method 1,500,000.00 1,500,000.00 -1,500,000.00 Ltd. (Limin Walling) Yantai Rongchang Pharmacy Co., Ltd. Cost method 55,282,600.00 55,282,600.00 55,282,600.00 5.555% 5.555% (hereinafter refer to as ―Rongchang Pharmacy‖) Gaoqing Hongqiao Power Co., Ltd. Cost method 12,000,000.00 12,000,000.00 12,000,000.00 20.68% 20.68% (Hongqiao Power) Total -- 68,942,600.00 68,942,600.00 -1,500,000.00 67,442,600.00 ------
113 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
(2) Information of the limitation on the capability to transfer capital to investee Unit: RMB Yuan Item that with limitation on the Accumulated investment losses capability to transfer capital to Reason for limitation unrecognized in current period investee
Notes of long-term equity investment:
16. Investment property (1) Investment property calculated by cost □ Applicable □ Inapplicable (2) Investment property calculated by fair value □ Applicable □ Inapplicable Notes of investment property that altered calculated mode and failed to accomplish certification of property, and notes of reason that the fail accomplish and estimated accomplish date
17. Fixed assets (1) Fixed assets details Unit: RMB Yuan Opening book Decrease in the Closing book Item Increase in the reporting period balance reporting period balance I. Total original book 5,947,370,403.3 6,749,486,956.1 807,594,808.96 5,478,256.09 value 2 9 Including: Property and 1,614,559,815.2 1,884,632,323.6 271,658,561.35 1,586,053.00 building 6 1 4,192,187,039.2 4,712,830,726.5 Machineries 524,140,892.41 3,497,205.09 0 2 Vehicles 61,174,305.72 2,896,362.22 325,407.00 63,745,260.94 Electronic equipments 79,449,243.14 8,898,992.98 69,591.00 88,278,645.12 and other Increase in the Closing book Opening book Withdrawal in the Decrease in the -- reporting balance in the balance reporting period reporting period period reporting period II. Accumulated 2,425,852,353.8 2,619,190,776.6 0.00 197,372,381.53 4,033,958.71 depreciation 3 5 Including: Property and 459,745,300.51 34,236,088.77 864,572.64 493,116,816.64 building 1,876,299,941.8 2,030,075,215.2 Machineries 156,589,161.27 2,813,887.87 7 7 Vehicles 37,702,631.71 2,874,900.70 292,866.30 40,284,666.11 Electronic equipments 52,104,479.74 3,672,230.79 62,631.90 55,714,078.63 and other Closing book Opening book -- -- balance in the balance reporting period III. The net book value 3,521,518,049.4 4,130,296,179.5 -- of fixed assets 9 4 Including: Property and 1,154,814,514.7 1,391,515,506.9 -- building 5 7 2,315,887,097.3 2,682,755,511.2 Machineries -- 3 5 Vehicles 23,471,674.01 -- 23,460,594.83 Other equipment 27,344,763.40 -- 32,564,566.49 IV. Total impairment 35,445,076.07 -- 35,367,686.69 provision Including: Property and 66,031.47 -- 66,031.47 building
114 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Machineries 35,195,517.93 -- 35,119,231.25 Vehicles 61,235.72 -- 61,235.72 Electronic equipments 122,290.95 -- 121,188.25 and other V. Total book value of 3,486,072,973.4 4,094,928,492.8 -- fixed assets 2 5 Including: Property and 1,154,748,483.2 1,391,449,475.5 -- building 8 0 2,280,691,579.4 2,647,636,280.0 Machineries -- 0 0 Vehicles 23,410,438.29 -- 23,399,359.11 Electronic equipments 27,222,472.45 -- 32,443,378.24 and other Depreciation amount of this reporting period was RMB197,372,381.52; original value of RMB536,112,043.20 was transferred into fixed assets from construction project. (2) Temporary idle fixed assets Unit: RMB Yuan Original book Accrued Impairment Item Net book value Note value depreciation provision Property and building Machineries Vehicles
(3) Fixed assets leased in from financing lease □ Applicable √ Inapplicable (4) Fixed assets leased out from operation lease √ Applicable □ Inapplicable Unit: RMB Yuan Category Closing book value House and buildings 1,028,401.78 Machinery equipments Vehicles
(5) Information of hold-for-sale fixed assets at period-end Unit: RMB Yuan Estimated disposal Item Book value Fair value Estimated settle date cost
(6) Information of fixed assets failed to accomplish certification of property Item Reason Estimated accomplish date Ongoing inspection, surveying, Luqun Spinning workshop verification to application 31 Dec. 2012 procedures by Housing authorities Ongoing inspection, surveying, Comprehensive building 3rd factory verification to application 31 Dec. 2012 of spinning procedures by Housing authorities Ongoing inspection, surveying, Main factory building of 6# boiler of verification to application 31 Dec. 2012 Xinsheng Power procedures by Housing authorities Notes of fixed assets: Xinjing Luthai pledged house and buildings, machinery equipments and land use right with a net book value of RMB 36,809,409.52 for short-term borrowings of RMB 77,000,000.00 from the bank. 18. Construction in progress (1) Unit: RMB Yuan Closing balance Opening balance Item Book Impairment Book value Book Impairment Book value
115 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
balance provision balance provision Lu Thai Industry Park 2,050,609.26 2,050,609.26 1,582,502.44 1,582,502.44 Reform project of 8 6,651,874.15 6,651,874.15 1,250,810.63 1,250,810.63 million-meter yarn-dyed Production line project of 25,670,940.3 25,670,940.3 105,799,838. 105,799,838.2 40 million-meter 8 8 29 9 high-grade yarn-dyed Piece dying project 210,151.40 210,151.40 357,288.21 357,288.21 50 million-meter 61,325,970.7 61,325,970.7 320,423,966. 320,423,966.1 high-grade yarn-dyed 9 9 10 0 fabric project Spinning project of 5,188,861.60 5,188,861.60 1,780,848.96 1,780,848.96 Xinjiang Luthai Office district project of 15,961,662.1 15,961,662.1 14,182,206.6 14,182,206.64 Xinjiang Luthai 4 4 4 Power plant expansion 19,360,839.2 19,360,839.2 13,672,588.3 13,672,588.38 project 7 7 8 Production line project of 3 12,152,892.7 million-piece high-grade 6,139,108.27 6,139,108.27 12,152,892.72 2 shirts Increasing production line project of 0.23 million 2,207,404.28 2,207,404.28 spindle and 35,000 twister Arrangement workshop and project of Exhibition 9,328,906.53 9,328,906.53 Building of Luthai 55,218,759.5 55,218,759.5 30,962,979.1 Other small projects 0.00 30,962,979.17 6 6 7 209,315,087. 209,315,087. 502,165,921. 502,165,921.5 Total 0.00 0.00 63 63 54 4
116 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
(2) Changes in significant construction in progress Unit: RMB Yuan Including: Project Capitalizati Transferred Capitalizati capitalizatio Name of Opening Other input Project on of Source of Closing Budget Increase to fixed on of n of project percentage process interest rate funding balance balance decrease interest interest this assets of budget (%) period Lu Thai 3,600,000.0 1,582,502.4 2,050,609.2 Industry 468,106.82 95% 95% Other 0 4 6 Park Reform project of 8 180,000,000 1,250,810.6 5,401,063.5 6,651,874.1 98% 98% Other million-mete .00 3 2 5 r yarn-dyed Production line project Raise of of 40 504,700,000 105,799,838 49,401,102. 129,530,000 25,670,940. 69% 69% funds and million-mete .00 .29 09 .00 38 r high-grade other yarn-dyed Piece dying 26,000,000. 357,288.21 147,136.81 98% 98% Other 210,151.40 project 00 50 million-mete r high-grade 659,930,000 320,423,966 141,058,349 400,156,345 61,325,970. 68% 68% Other yarn-dyed .00 .10 .73 .04 79 fabric project Spinning project of 13,300,000. 1,780,848.9 3,672,789.5 5,188,861.6 264,776.90 97% 97% Other Xinjiang 00 6 4 0 Luthai Office district 20,000,000. 14,182,206. 1,779,455.5 15,961,662. project of 95% 95% Other 00 64 0 14 Xinjiang Luthai Power plant 36,000,000. 13,672,588. 5,688,250.8 53% 53% Other 19,360,839.
117 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd. expansion 00 38 9 27 project Production line project of 3 66,870,000. 12,152,892. 6,013,784.4 6,139,108.2 95% 95% Other million-piec 00 72 5 7 e high-grade shirts Increasing production line project of 0.23 928,860,000 2,207,404.2 2,207,404.2 0.24% 0.24% Other million .00 8 8 spindle and 35,000 twister Arrangemen t workshop and project 20,530,000. 9,328,906.5 9,328,906.5 of 45% 45% Other 00 3 3 Exhibition Building of Luthai Other small 58,090,000. 30,962,979. 24,255,780. 55,218,759. 95% 95% Other projects 00 17 39 56 2,517,880,0 502,165,921 243,261,209 536,112,043 209,315,087 Total 0.00 -- -- 0.00 0.00 -- -- 00.00 .54 .29 .20 .63 Notes of changes in construction in progress:
118 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
(3) Impairment provision of construction in progress Unit: RMB Yuan Increase in the Decrease in the Reason for Item Opening amount Closing balance reporting period reporting period withdrawal
Total 0.00 0.00 -- (4) Information of procedures of significant construction in progress Item Project process Note The process of the project is 50 million-meter high-grade yarn-dyed measured on basis of proportion of 68% fabric project the actual cost occurred to total contract projected cost Production line project of 40 69% Ditto million-meter high-grade yarn-dyed Increasing production line project of 0.23 million spindle and 35,000 0.24% Ditto twister (5) Notes of construction in progress
19. Engineering materials Unit: RMB Yuan Increase in the Decrease in the Item Opening balance Closing balance reporting period reporting period Specific materials 1,950,981.79 949,471.70 2,900,453.49 Specific equipments 37,795,616.03 249,756,952.51 249,651,056.13 37,901,512.41 Total 39,746,597.82 250,706,424.21 249,651,056.13 40,801,965.90 Notes of engineering materials:
20. Clearance of fixed assets Unit: RMB Yuan Reason for transferring to Item Opening book value Closing book value clearance
Total -- Notes of clearance process of fixed assets with a clearance term of over 1 year since the transfer into fixed assets: 21. Productive biological assets (1) Calculated by cost □Applicable □Inapplicable (2) Calculated by fair value □Applicable □Inapplicable 22. Oil and gas assets Unit: RMB Yuan Opening book Closing book Item Increase Decrease balance balance I. Total original book value 1. Property rights of proved mining area 2. Property rights of unproved mining area 3. Well and relevant facilities II. Total accumulated depreciation 1. Property rights of proved mining area 2. Well and relevant
119 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd. facilities a III. Total accumulated oil and gas assets depreciation 1. Property rights of proved mining area 2. Property rights of unproved mining area 3. Well and relevant facilities IV. Total book value of oil and gas assets 1. Property rights of proved mining area 2. Property rights of unproved mining area 3. Well and relevant facilities Notes of oil and gas assets: 23. Intangible assets (1) Information Unit: RMB Yuan Increase in the Decrease in the Item Opening balance Closing balance reporting period reporting period I. Total original book 350,923,245.11 22,302,556.41 0.00 373,225,801.52 value Land use right 244,731,599.56 21,039,802.00 265,771,401.56 Land use right of 12,155,433.14 12,155,433.14 Xinsheng Power Lufeng Weaving & 52,238,474.94 1,252,498.00 53,490,972.94 Dyeing-land use right Luqun Textile-land 39,632,561.00 39,632,561.00 use right Franchise of patent 1,985,176.47 1,985,176.47 Software use right 180,000.00 10,256.41 190,256.41 II. Accumulative 41,823,963.98 5,260,142.03 0.00 47,084,106.01 amortization Land use right 33,044,202.43 3,799,533.93 36,843,736.36 Land use right of 2,930,592.94 253,671.66 3,184,264.60 Xinsheng Power Lufeng Weaving & 2,094,836.38 547,815.44 2,642,651.82 Dyeing-land use right Luqun Textile-land 3,513,728.27 418,346.10 3,932,074.37 use right Franchise of patent 231,603.96 231,603.96 463,207.92 Software use right 9,000.00 9,170.94 18,170.94 III. Total net book value of intangible 309,099,281.13 0.00 0.00 326,141,695.51 assets Land use right 211,687,397.13 228,927,665.20 Land use right of 9,224,840.20 8,971,168.54 Xinsheng Power Lufeng Weaving & 50,143,638.56 50,848,321.12 Dyeing-land use right Luqun Textile-land 36,118,832.73 35,700,486.63 use right
120 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Franchise of patent 1,753,572.51 1,521,968.55 Software use right 171,000.00 172,085.47 IV. Total impairment 0.00 0.00 0.00 0.00 provision Land use right Land use right of
Xinsheng Power Lufeng Weaving &
Dyeing-land use right Luqun Textile-land use right Franchise of patent Software use right Total book value of 309,099,281.13 0.00 0.00 326,141,695.51 intangible assets Land use right 211,687,397.13 228,927,665.20 Land use right of 9,224,840.20 8,971,168.54 Xinsheng Power Lufeng Weaving & 50,143,638.56 50,848,321.12 Dyeing-land use right Luqun Textile-land 36,118,832.73 35,700,486.63 use right Franchise of patent 1,753,572.51 1,521,968.55 Software use right 171,000.00 172,085.47 Amortization was of RMB 5,260,142.03 in the reporting period. (2) Company development expense Unit: RMB Yuan Decrease Recognized into Item Opening balance Increase Recognized as Closing balance current intangible assets gains/losses
Total 0.00 0.00 0.00 0.00 0.00 Development expense percentage of total expenditure of R&D projects in the reporting period. Percentage intangible assets arising from inner R&D of the Company of closing book value of intangible assets. Notes of R&D projects of the Company, those that includes individual value of more than RMB 1 million and recognized with a basis of assessed value, please disclose name of evaluation authority and method of evaluation:
(3) Information of intangible assets that failed to accomplish certification of property
24. Goodwill Unit: RMB Yuan Impairment Name of investee or event Opening Increase in the Decrease in the Closing balance provision at that generated goodwill balance reporting period reporting period period-end Xinsheng Power 20,563,803.29 50,000.00 20,613,803.29 0.00 Total 20,563,803.29 50,000.00 0.00 20,613,803.29 0.00 Notes of test method of goodwill impairment and impairment withdrawal method:
25. Long-term amortization expense Unit: RMB Yuan Opening Amortization Closing Reason for Item Increase Other decrease balance balance balance other decrease
Total 0.00 0.00 0.00 0.00 0.00 -- Notes of long-term amortization expense:
121 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
26. Deferred tax assets and liabilities (1) Deferred tax assets and liabilities are not listed as the net value after offset √ Applicable □ Inapplicable Deferred tax assets and liabilities that already recognized Unit: RMB Yuan Item Closing balance Opening balance Deferred income tax assets: Provision for assets impairment 17,563,384.58 20,001,738.16 Formation expenses Deductible losses 2,676,933.88 2,676,933.88 Fair value changes on trading financial 1,516,147.50 assets One-time listed decoration expenses 1,492,562.20 1,492,562.20 Offset unrealized internal profit 6,256,521.62 11,633,887.90 Payroll payable 14,416,113.01 14,416,113.01 Deferred income 9,738,671.79 9,840,240.68 Stock payment expense 2,535,759.69 Subtotal 56,196,094.27 60,061,475.83 Deferred income tax liabilities: Estimated value of trading financial instruments, derivative financial instruments Fair value changes on available-for-sale financial assets that recognized into capital reserves Accumulated depreciation 2,133,545.52 2,121,768.09 Fair value change on trading financial 3,140,907.00 assets Subtotal 2,133,545.52 5,262,675.09 List of unrecognized deferred income tax assets Unit: RMB Yuan Item Closing balance Opening balance Deductible temporary Deductible losses
Total Deductible losses of unrecognized deferred income tax assets will due in the following years Unit: RMB Yuan Year Closing balance Opening balance Remark
Total -- List of taxable differences and deductible differences items Unit: RMB Yuan Temporary differences amount Item As at period-end As at period-begin Taxable differences items Accumulated depreciation 12,930,578.91 12,859,200.55 Fair value change on available-for-sale 20,939,380.00 financial assets Subtotal 12,930,578.91 33,798,580.55 Deductible differences item Provision for assets impairment 102,218,311.87 116,412,397.08 Fair value changes on trading financial 10,107,650.00 liabilities One-time listed decoration expenses 9,429,958.34 9,429,958.34 Offset unrealized internal profit 41,710,144.16 77,559,252.68 Payroll payable 87,121,659.89 87,121,659.89
122 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Deferred income 64,924,478.57 65,601,604.49 Deductible losses 10,707,735.52 10,707,735.52 Stock payment expense 16,905,064.60 Subtotal 343,125,002.95 366,832,608.00 (2) Deferred income tax assets and liabilities are listed as the net value after offset □Applicable √ Inapplicable Notes of deferred income tax assets and liabilities
27. List of provision for assets impairment Unit: RMB Yuan Opening book Decrease Closing book Item Increase balance Reversal Written off balance 27,254,119.8 I. Provision for bad debt 24,111,835.17 3,155,937.27 13,652.58 6 II. Provision for inventory 39,596,505.3 56,856,616.19 0.00 0.00 17,260,110.87 falling price 2 III. Impairment provision of available-for-sale financial assets IV. Impairment provision of held-to-maturity investment V. Impairment provision of long-term equity investment VI. Impairment provision of investment property VII. Impairment 35,367,686.6 35,445,076.07 77,389.38 provision of fixed assets 9 VIII. Impairment provision of engineering materials IX. Impairment provision of construction in 0.00 0.00 progress X. Impairment provision of productive biological assets Including: mature productive biological assets XI. Impairment provision of oil gas assets XII. Impairment provision of intangible 0.00 0.00 0.00 assets XIII. Impairment 0.00 provision of goodwill XIV. Others 102,218,311. Total 116,413,527.43 3,155,937.27 0.00 17,351,152.83 87 Notes of the list of assets impairment: 28. Other non-current assets Unit: RMB Yuan Item Closing balance Opening balance Advance payment for land 7,890,690.00 25,402,452.00 Total 7,890,690.00 25,402,452.00
123 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Notes of other non-current assets 29. Short-term loan (1)Category Unit: RMB Yuan Category Closing balance Opening balance Pledge loan Mortgage loan 207,000,000.00 125,000,000.00 Guarantee loan 20,000,000.00 20,000,000.00 Credit loan 874,618,199.90 1,006,414,422.38
Total 1,101,618,199.90 1,151,414,422.38 Notes of short-term loan:
(2) List of unsettled mature short-term loan Unit: RMB Yuan Amount of Reason for Name of creditor Rate of loan Usage Estimated settle date loan unsettlement
Total 0.00 ------RMB000 was paid back after the Balance Sheet Date. Notes of short-term loan, for those gaining extended term, notes term of extension and new mature date:
30. Trading financial liabilities Unit: RMB Yuan Item Closing fair value Opening fair value Public trading bonds Financial liabilities designed to recognized with a basis on fair value and with its changes recognized into current gains and losses Derivative financial liabilities 10,107,650.00 0.00 Other financial liabilities Total 10,107,650.00 0.00 Notes of trading financial liabilities: 31. Notes payable Unit: RMB Yuan Category Closing balance Opening balance Trade acceptance bill 18,259,051.11 11,981,603.44 Bank acceptance bill Total 18,259,051.11 11,981,603.44 RMB18,259,051.11 will be due in next fiscal period. Notes of notes payable:
32. Accounts payable (1) Unit: RMB Yuan Item Closing balance Opening balance Within 1 year 269,469,164.16 273,542,707.03 1 to 2 years 3,386,268.04 3,901,412.46 2 to 3 years 2,081,507.11 1,181,009.73 Over 3 years 5,795,637.91 5,737,544.29 Total 280,732,577.22 284,362,673.51 (2) The accounts payable to shareholders with more than 5% (including 5%) of the voting shares of the Company □ Applicable √ Inapplicable Notes of the accounts payable aging over one year:
124 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
33. Advance from customers (1) Unit: RMB Yuan Item Closing balance Opening balance Within 1 year 64,812,914.20 88,987,801.77 1 to 2 years 1,975,257.41 208,454.27 2 to 3 years 184,730.72 563,776.62 Over 3 years 285,841.47 1,266,327.05 Total 67,258,743.80 91,026,359.71 (2) Advanced from customers from shareholders with more than 5% (including 5%) of the voting shares of the Company □ Applicable √ Inapplicable Notes of significant advance from customers aging over one year:
34. Payroll payable Unit: RMB Yuan Item Opening book Increase Decrease Closing book balance balance I. Salary, bonus, allowance, 416,038,868.07 406,980,175.33 523,882,573.28 299,136,470.12 subsidy II. Employee 43,789,026.01 43,789,026.01 welfare III. Social 1,949,051.66 107,965,921.11 90,814,545.84 19,100,426.93 insurance Including: 1. Medical 217,826.11 25,881,085.58 21,617,676.76 4,481,234.93 insurance premiums 2. Basic 1,528,304.65 70,807,697.92 59,322,358.06 13,013,644.51 pension benefits 3. Unemployment 121,116.42 7,622,371.33 6,370,141.16 1,373,346.59 insurance 4. Work-related 32,070.61 2,142,098.98 2,053,631.74 120,537.85 injury insurance 5. Maternity 49,733.87 1,512,667.30 1,450,738.12 111,663.05 insurance IV. Housing fund 69,361.01 5,739,314.22 5,371,655.45 437,019.78 V. Redemption for terminations of labor contract VI. Others 17,049,134.65 12,307,702.92 8,948,261.19 20,408,576.38 Including: Labour union budget and 17,049,134.65 9,244,215.30 5,884,773.57 20,408,576.38 employee education budget
Non-monetary 3,063,487.62 3,063,487.62 benefits Total 435,106,415.39 576,782,139.59 672,806,061.77 339,082,493.21 RMB 0.00 is the amounts in arrears in the payroll payable. The labor union budget and employee education budget is RMB 5,884,773.57, and the non-monetary benefits are RMB 3,063,487.62, as well as the compensation for terminating the labor contract is RMB 0.00. The estimated distribution date and amount as well as other arrangements for payroll payable: Payroll payable is usually distributed on 5th of the following month, and the amount for in need is transferred into an account of
125 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd. payroll service bank before the said date.
35. Taxes payable Unit: RMB Yuan Item Closing balance Opening balance Value-added tax -69,547,680.12 -30,047,161.67 Consumption tax Business tax 469,206.32 678,956.29 Corporate income tax 22,935,812.10 36,607,437.37 Personal income tax 15,931,724.02 1,751,854.91 Urban maintenance and construction tax 4,869,121.70 9,259,206.97 Stamp tax 269,181.63 380,253.54 Property tax 1,301,934.15 2,425,296.90 Land use tax 1,869,468.79 1,459,476.32 Education surtax 2,111,945.03 4,089,602.35 Local education surtax 1,407,963.25 2,647,685.57 Local water conservancy facility construction 702,611.01 1,323,842.79 fund Total -17,678,712.12 30,576,451.34 Notes of taxes payable: for the taxable income of branch companies and factories approved to be inter-adjusted by their local tax authorities, the Company shall specified their calculation procedure.
36. Interest payable Unit: RMB Yuan Item Closing balance Opening balance Interest payable on long-term borrowings that interest was paid by stages and principle was 95,214.71 135,727.46 repay upon due Interest of corporate bond Interest payable on short-term borrowings 3,072,082.83 1,977,415.76
Total 3,167,297.54 2,113,143.22 Notes:
37. Dividends payable Unit: RMB Yuan Reason for unsettlement over Name of company Closing balance Opening balance 1 year Minority shareholders’ dividends paid by subsidiaries Individual shareholders didn’t Individual shareholders’ 442,309.44 442,309.44 withdraw cash dividends on dividends paid by the Group previous years Dividends payable on restricted 3,945,200.00 shares paid by the Group Total 4,387,509.44 442,309.44 -- Notes:
38. Other accounts payable (1) Unit: RMB Yuan Item Closing balance Opening balance Within 1 year 56,171,583.98 46,923,901.20 1 to 2 years 13,643,129.16 11,251,406.33 2 to 3 years 13,001,173.14 13,432,423.50 Over 3 years 31,985,747.01 39,173,064.89 Total 114,801,633.29 110,780,795.92
126 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
(2) Other accounts payable from shareholders with more than 5% (including 5%) of the voting shares of the Company √ Applicable □ Inapplicable Unit: RMB Yuan Name of entity Closing balance Opening balance Lucheng Textile 20,900,000.00 20,900,000.00 Total 20,900,000.00 20,900,000.00 (3) Notes of the other large amount accounts payable aging over 1 year Name of creditor Amount Reason for Whether pay unsettlement after the Balance Sheet Date or not? 11,925,000.00 Received earnest Cotton and Jute Company money for Sale No Contract 9,516,043.40 Receiving Contracting fees in locus contractus contracting fees in No locus contractus Deposit for trees planting 9,257,462.50 Deposit No Total 30,698,505.90
(4) Notes of other accounts payable with significant amount Name of creditor Closing balance Nature or content Lucheng Textile 20,900,000.00 Flow borrowings 11,925,000.00 Earnest money for Cotton and Jute Company Cotton Sale Contract 9,516,043.40 Contracting fees in Contracting fees in locus contractus locus contractus Deposit for trees planting 9,257,462.50 Deposit Employee’s housing deposit 6,995,000.00 Deposit Total 58,593,505.90 39. Estimated liabilities Unit: RMB Yuan Item Opening balance Increase Decrease Closing balance External offering guarantee Unsettled lawsuit Product quality guarantee Responsibility of reorganization Dismissal welfare Loss contract to be executed Other Total Notes:
40. Non-current liabilities due within 1 year (1) Unit: RMB Yuan Item Closing balance Opening balance Long-term loan due within 1 year 36,531,875.00 69,058,740.00 Bonds payable due within 1 year Long-term accounts payable due within 1
127 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
year Total 36,531,875.00 69,058,740.00 (2) Long-term loan due within 1 year Long-term loan due within 1 year Unit: RMB Yuan Item Closing balance Opening balance Pledge loan Mortgage loan Guarantee loan Credit loan 36,531,875.00 69,058,740.00
Total 36,531,875.00 69,058,740.00 RMB000 of long-term loan due within 1 year was of mature loan with extended term. Top five long-term loan due within 1 year Unit: RMB Yuan Closing balance Opening balance Starting Foreign Foreign Creditor Ending date Currency Rate (%) RMB RMB date currency currency balance balance balance balance Societe Generale 29 Sep. 28 Sep. 2,400,000.0 15,179,760. 2,400,000.0 15,122,160. Private USD 3.5% 2010 2012 0 00 0 00 Banking Wuhan China Constructio n Bank 1,000,000.0 7,871,000.0 Corporation 5 Mar. 2007 5 Mar. 2013 EUR 2.82% 0 0 Zibo Zichuan Subbranch China Constructio n Bank 26 Mar. 26 Sep. 2,846,205.0 2,835,405.0 Corporation USD 1.52% 450,000.00 450,000.00 2007 2012 0 0 Zibo Zichuan Subbranch China Constructio n Bank 26 Mar. 26 Dec. 2,846,205.0 2,835,405.0 Corporation USD 1.52% 450,000.00 450,000.00 2007 2012 0 0 Zibo Zichuan Subbranch China Constructio n Bank 26 Mar. 25 Mar. 2,846,205.0 Corporation USD 1.52% 450,000.00 2007 2013 0 Zibo Zichuan Subbranch China Constructio n Bank 29 Mar. 29 Sep. 1,647,500.0 Corporation CHF 2.56% 250,000.00 2007 2012 0 Zibo Zichuan Subbranch
128 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
China Constructio n Bank 29 Mar. 29 Dec. 1,647,500.0 Corporation CHF 2.56% 250,000.00 2007 2012 0 Zibo Zichuan Subbranch China Constructio n Bank 29 Mar. 28 Mar. 1,647,500.0 Corporation CHF 2.56% 250,000.00 2007 2013 0 Zibo Zichuan Subbranch Societe Generale 22 Jun. 22 Jun. 3,600,000.0 22,683,240. Private USD 3.8% 2010 2012 0 00 Banking Wuhan Societe Generale 29 Sep. 29 Mar. 5,040,720.0 Private USD 3.5% 800,000.00 2010 2012 0 Banking Wuhan China Constructio n Bank 1,000,000.0 8,162,500.0 Corporation 5 Mar. 2007 5 Mar. 2012 EUR 2.82% 0 0 Zibo Zichuan Subbranch China Constructio n Bank 26 Mar. 26 Mar. 2,835,405.0 Corporation USD 1.52% 450,000.00 2007 2012 0 Zibo Zichuan Subbranch China Constructio n Bank 26 Mar. 26 Jun. 2,835,405.0 Corporation USD 1.52% 450,000.00 2007 2012 0 Zibo Zichuan Subbranch 36,531,875. 62,350,240. Total ------00 00 Mature loan of long-term loan due within 1 year: Unit: RMB Yuan Amount of Annual rate Reason for Estimated Creditor Overdue date Usage loan (%) unsettlement settle date
Total 0.00 ------RMB000 was paid back after Balance Sheet Date: Notes of long-term borrowings due within 1 year:
(3)Bonds payable due within 1 year Unit: RMB Yuan Issuance Issuing Opening Accrued Interest Closing Closing Name Par value Term date amount interest interest in paid in the interest balance
129 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
payable current reporting payable period period
Notes:
(4) Long-term accounts payable due within 1 year Unit: RMB Yuan Accrued Closing Creditor Term Initial amount Rate (%) Conditions interest balance
Notes of long-term accounts payable due within 1 year:
41. Other current liabilities Unit: RMB Yuan Item Closing book balance Opening book balance
Total Notes:
42. Long-term loan (1)Category of long-term loan Unit: RMB Yuan Item Closing balance Opening balance Pledge loan Mortgage loan Guarantee loan Credit loan 36,531,875.00 81,733,770.00 Less: long-term loan due within 1 year -36,531,875.00 -69,058,740.00 Total 0.00 12,675,030.00 Notes:
(2)The top five long-term loans Unit: RMB Yuan Closing balance Opening balance Starting Foreign Foreign Creditor Ending date Currency Rate (%) RMB RMB date currency currency amount amount amount amount China Constructio n Bank 12 Mar. 1,000,000.0 8,162,500.0 Corporation 5 Mar. 2007 EUR 2.82% 2013 0 0 Zibo Zichuan Subbranch China Constructio n Bank 26 Mar. 25 Mar. 2,835,405.0 Corporation USD 1.52% 450,000.00 2007 2013 0 Zibo Zichuan Subbranch
130 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
China Constructio n Bank 29 Mar. 28 Mar. 1,677,125.0 Corporation CHF 2.56% 250,000.00 2007 2013 0 Zibo Zichuan Subbranch 12,675,030. Total ------0.00 -- 00 Notes of long-term loan: for the long-term loans arising from mature loans with extended term, the Company shall explain the conditions of extension, principal, interest, expected repayment arrangement:
43. Bonds payable Unit: RMB Yuan Interest Opening Closing Closing Issuance Issuing paid in the Closing Name Par value Term interest interest interest date amount reporting balance payable payable payable period
Notes of bonds payable, including the conditions and date of conversion of the convertible corporate bonds:
44. Long-term payable (1) The top five long-term payable Unit: RMB Yuan Accrued Closing Conditions of Company Term Initial amount Rate (%) interest balance loan Power bonds 9,735,560.00 9,735,560.00 Credit payable (2)List of the financing lease payable under the long-term loan Unit: RMB Yuan Closing balance Opening balance Company Foreign currency RMB Foreign currency RMB
Total 0.00 0.00 0.00 0.00 RMB000 was guarantee for the Company’s financing lease provided by the independent third party. Notes of the long-term payable:
45. Specific payable Unit: RMB Yuan Increase in Decrease in Opening Closing Item reporting reporting Note balance balance period period
Total -- Notes of specific payable:
46. Other non-current liabilities Unit: RMB Yuan Item Closing book balance Opening book balance Deferred income 64,924,478.57 65,601,604.49 Other 1,840,000.00 1,840,000.00 Total 66,764,478.57 67,441,604.49
131 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Notes of other non-current liabilities, including each government grants relevant to assets and income received in the reporting period and their closing amounts: In the reporting period, other non-current liabilities mainly were government grants relevant to assets on land subsidies, all of which would continually amortized in service term till the end. 47. Share capital Unit: RMB Yuan Increase/Decrease (+/-) Opening Capitalization Closing Issuing new balance Bonus shares of public Other Subtotal balance shares reserves 1,008,954,80 1,008,954,80 Total shares 0.00 0.00 0.00 Notes of changes in share capital, for those action of increasing capital or decreasing capital in the reporting period, the Company shall disclose the name of the accounting firm executing the capital verification and document number of the capital verification report; for joint-stock companies running for less than three years, only the net assets shall be specified for particulars before establishment; while for case of totally changing the limited liability companies into joint-stock companies, capital verification on the establishment shall be specified:
48. Treasury stock Notes of treasury stock:
49. Special reserves Notes of special reserves:
50. Capital reserves Unit: RMB Yuan Item Opening balance Increase Decrease Closing balance Capital premium (share 1,121,877,528.91 1,121,877,528.91 capital premium) Other capital reserves 75,883,113.15 31,344,986.79 107,228,099.94 Other comprehensive 2,350,000.00 2,350,000.00 income Total 1,200,110,642.06 31,344,986.79 0.00 1,231,455,628.85 Notes: The increase of RMB 31,344,986.79 on other capital reserves was mainly beecause RMB 31,344,966.24 was recoginzed on fair value of share-based instruments that settled by equity method. 51. Surplus reserves Unit: RMB Yuan Item Opening balance Increase Decrease Closing balance Statutory surplus reserves 512,554,180.18 512,554,180.18 Discretional surplus 3,341,572.58 3,341,572.58 reserves Reserve fund Enterprise development funds Other Total 515,895,752.76 0.00 0.00 515,895,752.76 Notes of surplus reserves: for surplus reserves transferred to share capital, compensating losses and distributed as dividends, relevant resolutions shall be explained:
52. Provision for general risk Notes of provision for general risk:
53. Retained profits Unit: RMB Yuan
132 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Withdrawal or Item Amount distributed proportion Opening balance of retained profits -- before adjustments Adjustments of opening balance of retained profits (―+‖ means add, ―-‖ -- means reduce) Opening balance of retained profits 2,386,185,711.95 -- after adjustments Add: Net profit attributable to owners 301,503,288.19 -- of the Company Less: Withdrawal of statutory surplus reserves Withdrawal of discretional surplus reserves Withdrawal of provision for general risk Dividend of common stock payable 282,507,344.00 Dividend of common stock converted into share capital
Closing retained profits 2,386,185,711.95 -- List of adjustment of opening retained profits: 1) RMB0.00 opening retained profits was affected by retrospective adjustment conducted according to the Accounting Standards for Business Enterprises and relevant new regulations. 2) RMB0.00 opening retained profits was affected by changes on accounting policies. 3) RMB0.00 opening retained profits was affected by correction of significant accounting errors. 4) RMB0.00 opening retained profits was affected by changes in combination scope arising from same control. 5) RMB0.00 opening retained profits was affected totally by other adjustments. Notes: as for IPO companies, if the accumulated profits were enjoyed by new and original shareholders according to the resolutions made at the shareholders’ general meeting before public offering, the Company shall explain clearly; if the accumulated profits were distributed before public offering and enjoyed by the original shareholders according to the resolutions made at the shareholders’ general meeting, the Company shall clearly disclose the audited profits of dividends payable enjoyed by the original shareholders.
54. Revenue and Cost of Sales (1) Revenue, Cost of Sales Unit: RMB Yuan Item Reporting period Same period of last year Sales of main business 2,724,452,576.74 2,844,570,820.27 Other operating income 83,572,988.02 136,242,276.93 Cost of sales 2,055,106,728.52 1,966,770,465.74 (2)Main business (Classified by industry) √ Applicable □ Inapplicable Unit: RMB Yuan Reporting period Same period of last year Industry Revenue of sales Costs of sales Revenue of sales Costs of sales
133 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Textile and apparel 2,502,951,569.95 1,803,668,572.18 2,699,031,735.24 1,739,737,238.70 Cotton 54,482,474.92 44,457,699.53 65,534,144.93 55,979,266.60 Electricity and gas 94,492,825.45 88,624,820.99 65,719,852.72 66,968,529.92 Other 72,525,706.42 67,142,781.86 14,285,087.38 9,890,526.85 Total 2,724,452,576.74 2,003,893,874.56 2,844,570,820.27 1,872,575,562.07 (3)Main business (Classified by product) √ Applicable □ Inapplicable Unit: RMB Yuan Reporting period Same period of last year Product Revenue of sales Costs of sales Revenue of sales Costs of sales Yarn-dyed products 1,865,722,025.87 1,375,834,973.23 2,060,726,860.93 1,320,813,606.52 Skirts 637,229,544.08 427,833,598.95 638,304,874.31 418,923,632.18 Ginned cotton 54,482,474.92 44,457,699.53 65,534,144.93 55,979,266.60 Electricity, gas 94,492,825.45 88,624,820.99 65,719,852.72 66,968,529.92 Other 72,525,706.42 67,142,781.86 14,285,087.38 9,890,526.85 Total 2,724,452,576.74 2,003,893,874.56 2,844,570,820.27 1,872,575,562.07 (4) Main business (Classified by area) □ Applicable √ Inapplicable (5) The revenue of sales from the top five customers Unit: RMB Yuan Customer Main business revenue Proportion of total business revenue (%) Li & Fung Limited 336,981,378.47 12% TAL 207,756,665.15 7.4% PVH 127,805,120.28 4.55% OLYMP 120,099,854.53 4.28% Chen Feng 97,931,400.74 3.49% Total 890,574,419.17 31.72% Notes:
55. Revenue from the construction contracts □ Applicable □ Inapplicable Notes of revenue from the construction contracts:
56. Business tax and surtax Unit: RMB Yuan Same period of last Item Reporting period Calculation and payment standard year Consumption tax Business tax Urban maintenance and 7%, 5%, 1% of actual taxed 1,161,154.79 5,884,910.37 construction tax turnover tax Education surtax 640,488.41 2,635,879.50 3% of actual taxed turnover tax Resources tax Local education surtax 395,249.19 1,663,156.42 2% of actual taxed turnover tax Local water conservancy 164,042.54 1% of actual taxed turnover tax construction fund Total 2,360,934.93 10,183,946.29 -- Notes:
57. Gains and losses from changes in fair value Unit: RMB Yuan Source Reporting period Same period of last year Trading financial assets -20,939,380.00 -22,579,700.00
134 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Including: gains from the changes in fair -20,939,380.00 -22,579,700.00 value of derivative financial instruments Trading financial liabilities -10,107,650.00 1,950,713.28 Investment property calculated in fair value Other
Total -31,047,030.00 -20,628,986.72 Notes:
58. Investment income (1) List of investment income Unit: RMB Yuan Item Reporting period Same period of last year Long-term equity investment income 0.00 0.00 accounted by cost method Long-term equity investment income 0.00 0.00 accounted by equity method Investment income arising from disposal of -549,000.00 long-term equity investments Investment income received from holding of trading financial assets Investment income received from holding of held-to-maturity investments Investment income received from holding of available-for-sale financial assets Investment income received from disposal of 19,601,638.49 40,469,067.77 trading financial assets Investment income received from holding of held-to-maturity investments Investment income received from available-for-sale financial assets Other Total 19,052,638.49 40,469,067.77 (2) Long-term equity investment income accounted by cost method Unit: RMB Yuan Same period of last Name of investee Reporting period Reason for increase/decrease year
Total 0.00 0.00 -- (3) Long-term equity investment income accounted by equity method Unit: RMB Yuan Same period of last Name of investee Reporting period Reason for increase/decrease year
Total 0.00 0.00 -- Notes of investment income: make notes if there is significant limitation for recovery of investment income. If there isn’t the said limitation, notes too:
135 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
59. Impairment losses Unit: RMB Yuan Item Reporting period Same period of last year I. Bad debts losses 3,155,937.27 3,002,034.04 II. Inventory falling price losses III. Impairment losses of available-for-sale financial assets IV. Impairment losses of held-to-maturity of investment V. Impairment losses of long-term equity investment VI. Impairment losses of investment property VII. Impairment losses of fixed assets 195,306.49 VIII. Impairment losses of engineering materials IX. Impairment loss of construction in progress X. Impairment losses of productive biological assets XI. Impairment losses of oil and gas assets XII. Impairment losses of intangible assets XIII. Impairment losses of goodwill XIV. Other Total 3,155,937.27 3,197,340.53 60. Non-operating gains (1) Unit: RMB Yuan Item Reporting period Same period of last year Total gains from disposal of non-current assets 459,008.99 856,260.04 Including：Gains from disposal of fixed assets 459,008.99 856,260.04 Gains from disposal of intangible assets Gains from debt reconstruction Gains from non-monetary assets exchange Acceptance of donations Government grants 16,550,426.92 12,444,285.74 Other 3,143,506.16 2,832,101.90 Total 20,152,942.07 16,132,647.68 (2) List of government grants Unit: RMB Yuan Same period of last Item Reporting period Note year Circular on Commending Scientific and Technological Scientific and technological Progress Award of Y2011 of 60,000.00 progress award People’s Government of Zichuan District (Chuan-Zheng-Fa [2012] No.9) Reward for energy-saving and Circular of People’s Government 10,000.00 of Zichuan District on Rewarding consumption reduction Advanced Units and Advanced
136 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Enterprises in Energy-saving and Consumption Reduction in 2011 (Chuan-Zheng-Fa [2012] No.11) Notice on Allotting Subsidy forGovernment Quality Reward Government Quality Reward 200,000.00 of Shangdong Province by Work of Shandong Province Leading Group of ―Quality Help to Thriving Shandong Province‖ Scientific and technological Award Method on Science and 20,000.00 progress award technology of Shandong Province Circular of People’s Government Rewards such as Reward for of Zichuan District on Rewarding energy-saving and 1,160,000.00 Part of Enterprises and Projects consumption reduction of 2012 (Chuan-Wei [2012] No. 16) Notice on Issuing Budget Target Subsidies for export credit of Subsidy for Export Credit 450,000.00 Premium of 2011 by the State of premium Zibo Finance Bureau (Zi-Cai-Qi-Zhi [2011] No.46) Notice on Issuing Budget Target Import subsidies 162,500.00 of Import Subsidies of 2011 (Zi-Cai-Qi-Zhi [2011] No.91) Notice on Issuing Budget Target of Special Funds for Special funds for development Development of Enterprises and of enterprises and colleges as 100,000.00 Colleges as well as Training Base well as training base of 2011 (Zibo-Finance Bureau Document Cai-Qi) of Finance Bureau of Zibo Notice on Issuing Budget Target of Subsidy for Overseas Patent Subsidies for overseas patent 10,000.00 Application of 2011 application (Chuan-Cai-Jiao-Zhi [2012] No.2) Notice on Draft Allocating Budget Target Financial Award Financial award funds on Funds on Transform of transform of energy-saving 2,660,000.00 Energy-saving Technology technology (Phase II) of 2011 (Zi-Cai-Zheng-Zhi [2011] No.108) Notice on Publishing Allotment Method of Awards for Heating Measurement and Energy-saving Subsidies on heat metering Innovation Project of Existing 402,000.00 and energy efficiency Residential Buildings of 2009 (Lu-Jian-Jie-Ke-Zi [2010] No.4) of Housing and Urban-Rural Development Bureau Management Method of Zibo Municipal reward for 200,000.00 Workstation of Academicians workstation of academicians (Trial) Notice on Forward Notice on Subsidies on Heat metering 300,000.00 Putting Forward Heating and energy efficiency Metering and Energy Efficiency
137 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
of Existing residential heating system in North China and Gathering and Submitting Relevant Materials such as Energy-saving Goals etc. (Lu-Cai-Jian [2011] No.14) of Finance Bureau of Shandong Province and Housing and Urban-Rural Development Bureau Notice on Allocating Special Special funds for Independent Funds for Independent Innovation 1,786,000.00 Innovation ([2012] No.6) of Finance Bureau of Zichuan District Notice on Allotting More Special Funds on Supporting Agricultural Product Process Enterprises and Receipt of discount interest on Township Enterprises of 100,000.00 loans of township enterprises Autonomous of 2011 (Xin-Nong-Chan-Cai [2011] No.16) of Xinjiang Uygur Autonomous Region Notice on Issuing Financial Financial subsidies on loans of Subsidy on Loans of Supporting 150,000.00 supporting the poor project the Poor Project of 2011 (A-Di-Cai-Fu [2012] No.2) Notice on Issuing Special Fund for the Development of Special Funds for Agricultural Product Processing Development of Agricultural 300,000.00 Enterprises by Financial Support Product Process Enterprises of Autonomous Region of 2012 ([2012] No.69) of the Finance Bureau of Aqsu District Notice on Printing and Distributing Management Subsidies for Xinjiang Cotton 4,233,848.00 Method on Subsidy for Xinjiang out of Xinjiang Cotton out of Xinjiang by Finance Bureau Notice on Providing Premium Subsidies For Enterprises Involved in Export Credit Subsidies for export credit 41,000.00 130,000.00 Insurance (Zi-Zheng-Ban-Zi premium [2009] No.96)of the General Office of People’s Government of Zibo Municipality Circular on Commending Scientific and Technological Scientific and technological Progress Award of Y2010 of 18,000.00 progress award People’s Government of Zichuan District (Chuan-Zheng-Fa [2011] No.18) Reward for energy-saving and Circular of People’s Government 10,000.00 consumption reduction of Zichuan District on Rewarding
138 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Advanced Units and Advanced Enterprises in Zichuan District in Energy-saving and Consumption Reduction in 2010 (Chuan-Zheng-Fa [2011] No.21) Resolution of Zichuan District Committee of CCP on Reward for outstanding Commending and Rewarding scientific and technological 100,000.00 Some Enterprises and Projects of cooperation projects Y2010 (Chuan-Wei [2011] No.34) – (Resolution of) Zichuan District Committee of CCP Circular of the General Office of People’s Government of Zibo Municipality on Announcing the List of Enterprises Which Win the Special Fund for Supporting Reward for innovative and 900,000.00 the Development of Innovative growth-oriented enterprises and Growth-oriented Enterprises of Zibo Municipality of Y2010 (Zi-Zheng-Ban-Zi [2011] No.37) of the General Office of People’s Government of Zibo Municipality The Circular on Printing and Distributing the Notice on Subsidies for Transferring Temporary Management Method for Subsidies for Transferring Xinjiang Cotton Yarn to 1,162,200.00 3,760,600.00 Xinjiang Cotton Yarn to Warehouses out of Xinjiang Warehouses Out of Xinjiang (Cai-Jian [2009] No. 561) of Ministry of Finance Circular on Transmitting the 4th Batch of Plans on Investment Within the Budget Scope of the Fund for interest discount of Central Government of Y2009 on the loan applied to renovation the Project of Renovating and 250,000.00 Transforming Production and transformation of Equipment of Cotton Processing production equipment Factories in Aqsu Region of the Development and Reform Commission of Aqsu Region (A-Di-Fa-Gai-Ji [2009]No.629) Circular on Distributing Subsidies for Instructors and Subsidies for instructors and Enumerators in Population enumerators in population 15,000.00 Census of the Office of census Population Census of Awat County ([2011] No.5) Circular on Thoroughly Subsidies for social insurance 1,074,860.10 Implementing Relevant Work
139 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Ruled in Xin-Dang-Fa [2009] No.11 Documentof the Department of Human Resources and Social Security, the Department of Finance, the Department of Health, and the Department of Education of the Autonomous Region (Xin-Ren-She-Fa [2010] No.1) Notice on Printing and Distributing Management Method for Key Economic Parks in Gaoqing County (Gao-Cai-Fa [2002] No.28) of People’s Government of Gaoqing County Local support fund 2,365,753.00 3,243,674.72 and Supplementary Agreement Signed between People’s Government of Gaoqing County, the Management Committee of Economic Development District of Gaoqing County, and the Company Fund for environment 600,000.00 protection (air pollution) Circular on Printing and Distributing the Action Plan (2008-2010) for Green Water and Fund for environment Blue Sky in Zibo Municipality 330,000.00 protection (Zi-Zheng-Fa [2008] No.8) of People’s Government of Zibo Municipality in Shandong Province Circular of People’s Government of Zichuan District on Rewarding Advanced Units and Advanced Reward for energy-saving and 10,000.00 Enterprises in Zichuan District in consumption reduction Energy-saving and Consumption Reduction in 2010 (Chuan-Zheng-Fa [2011] No.21) Circular on Submitting the Item of Fund for Constructing the Public Service Platform for Fund for constructing the Foreign Trade 500,000.00 public service platform (Lu-Shang-Wu-Gui-Cai-Han-Zi [2010] No.51) of the Department of Commerce of Shandong Province Subsidies for export credit 500,000.00 Circular on Printing and premium
140 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Distributing the Financial Support Policy for Promoting Fast and Stable Development of International Economy and Trade of Shandong Province of Y2010 (Lu-Cai-Qi [2010] No.26) of the Finance Bureau and the Department of Commerce of Shandong Province Resolution on Science and Technology Reward of Zibo Reward for science and Municipality of Y2010 100,000.00 technology of Zibo Municipal (Zi-Zheng-Fa [2011] No.14) of People’s Government of Zibo Municipality Implementation Opinion on Underemployed University Graduates form Zibo Municipality Engaging in Employment and Apprentice Apprentice subsidies 27,000.00 (Zi-Ren-Fa [2008] No.87)of Human Resource Bureau of Zibo Municipality / Finance Bureau of Zibo Municipality / Labor and Social Security Bureau of Zibo Municipality Circular on Transmitting Development Plans (the 1st Batch) on Science and Technology of Shandong Subsidies for development on 200,000.00 Province of Y2009 (Lu-Ke-Ji-Zi science and technology [2009] No.94) of the Department of Science and Technology and the Finance Bureau of Shandong Province Notice on Signing and Distributing Management Method for Special Funds for Subsidies for patents of Patent Development of Shandong Intellectual Property Office of 8,000.00 Province (Lu-Cai-Jiao [2009] Shandong No.36)of Shandong Province Finance Bureau and Intellectual Property Office of Shandong Amortization of deferred 677,125.92 667,150.92 Amortization of deferred income income Total 16,550,426.92 12,444,285.74 -- Note:
141 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
61. Non-operating expenses Unit: RMB Yuan Item Reporting period Same period of last year Loss on disposal of non-current assets 626,520.62 8,210,095.87 Including: Loss on disposal of fixed assets 626,520.62 8,210,095.87 Loss on disposal of intangible assets Loss on debt reconstruction Loss on exchange of non-monetary assets External donation Penalty expense 10,771.24 18,108.41 Compensation expense 353,029.87 232,679.03 External donation expense 1,152,386.12 2,741,771.83 Other 100.71 67,495.33 Total 2,142,808.56 11,270,150.47 Notes: 62. Income tax expense Unit: RMB Yuan Item Reporting period Same period of last year Current income tax expense accounted by tax and 49,041,744.23 114,651,076.55 relevant regulations Adjustment of income tax 724,474.56 -11,872,133.81
Total 49,766,218.79 102,778,942.74 63. Calculation procedure of basic earnings per share and diluted earnings per share (1) List of earnings per share and diluted earnings per share in each period Profit in reporting Reporting period Same period of last year period Basic EPS Deluted EPS Basic EPS Deluted EPS Net profit attributable 0.30 0.30 0.49 0.49 to common shareholders of the Company Net profit attributable 0.30 0.30 0.48 0.48 to common shareholders of the Company after deduction of non-recurring profit and loss (2) Calculation procedure of basic EPS and deluted EPS During the reporting period, there were no diluted potential common shares in the Company so that EPS-diluted equaled to EPS-basic. 1. When calculated the EPS-basic, the net profits attributable to common shareholders were as follows: Items Reporting period Same period of last year 301,503,288.19 491,647,065.96 Net profit attributable to common shareholders of the Company 301,503,288.19 491,647,065.96 Of which：Net profit attributable to continual
142 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd. operating
Net profit attributable to discontinued operating Net profit attributable to common shareholders of 302,733,028.86 476,456,565.30 the Company after deducting non-recurring gains and losses 302,733,028.86 476,456,565.30 Of which ： Net profit attributable to continual operating
Net profit attributable to terminated operating ②When calculated the EPS-basic, the denominator refers to the weighted average amount of outstanding issued common shares, and the accounting process as follows: Item Reporting period Same period of last year Amount of outstanding issued common shares at 1,008,954,800.00 994,864,800.00 period-begin Add：weighted average amount of common shares issued at current period Deduct：weighted average amount of common shares repurchased at current period Weighted average amount of outstanding issued 1,008,954,800.00 994,864,800.00 common shares at period-end
64. Other comprehensive income Unit: RMB Yuan Item Reporting period Same period of last year 1. Profits/(losses) from available-for-sale financial assets Less: Effects on income tax generating from available-for-sale financial assets Net amount transferred into profit and loss in the current period that recognized into other comprehensive income in prior period Subtotal 2. Interests in the investee entities’ other comprehensive income as per equity method Less: Effects on income tax generating from the interests in the investee entities’ other comprehensive income as per equity method Net amount transferred into profit and loss in the current period that recognized into other comprehensive income in prior period Subtotal 0.00 0.00 3. Profits/(losses) from cash flow hedging instrument
143 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Less: Effects on income tax generating from cash flow hedging instrument Net amount transferred into profit and loss in the current period that recognized into other comprehensive income in prior period The adjustment value that is the converted initial recognition amount of arbitrage project Subtotal 0.00 0.00 4. Converted amount of foreign currency financial 207,989.91 -715,557.69 statements Less: Net value of disposal of oversea operations that recognized into current profit and loss Subtotal 207,989.91 -715,557.69 5. Other 1,570,000.00 Less: Effects on income tax generating from the others that included into other comprehensive income Net amount transferred into profit and loss in the current period that recognized into other comprehensive income in prior period Subtotal 0.00 1,570,000.00 Total 207,989.91 854,442.31 Notes: 65. Notes of Cash Flow Statement (1)Other cash received relevant to operating activities Unit: RMB Yuan Item Amount Government subsidy 15,873,301.00 Collection for employees 1,171,102.88 Claim income 2,149,066.42 Penalty income 28,405.12 Recovery of employee borrowings, petty cash and deposit 1,410,006.90 Other 7,587,366.22 Total 28,219,248.54 Notes:
(2) Other cash paid relevant to operating activities Unit: RMB Yuan Item Amount Transportation fees 24,706,271.13 Rent for sales counters and administration expense 6,950,911.19 Rent 6,315,658.63 Advertising fees 3,826,450.36 Business travel fee 5,042,310.80 Insurance expense 4,728,098.96 Bank charges 1,330,568.61 Inspection charges 2,745,342.80 Copyright royalty 2,939,833.35 Audit, consultancy and public notice expenses 1,876,271.96 Decoration and maintenance expense 2,939,833.35 Water and electricity expense 1,889,985.87
144 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
External donations 1,000,000.00 Advance for agricultural materials 20,730,247.50 Other 49,439,638.95 Total 136,461,423.46 Notes:
(3) Other cash received relevant to investment activities Unit: RMB Yuan Item Amount Interest income 2,769,714.80 Trading financial assets (liabilities) investment income 19,601,638.49 Total 22,371,353.29 Notes:
(4) Other cash paid relevant to investment activities Unit: RMB Yuan Item Amount
Total 0.00 Notes
(5) Other cash received relevant to financing activities Unit: RMB Yuan Item Amount Borrowed related parties accounts 3,000,000.00 Total 3,000,000.00 Notes of other cash received relevant to financing activities:
(6) Other cash paid relevant to financing activities Unit: RMB Yuan Item Amount Settlement account to minority shareholders paid by subsidiaries Accounts paid back to related parties 2,300,000.00 Total 2,300,000.00 Notes
66. Supplemental information for Cash Flow Statement (1) . Supplemental information for Cash Flow Statement Unit: RMB Yuan Supplemental information Reporting period Same period of last year 1. Reconciliation of net profit to net cash flows -- -- generated from operations： Net profit 308,349,593.63 525,143,315.61 Add: Provision for assets impairments 3,155,937.27 3,197,340.53 Depreciation of fixed assets, oil-gas assets and 197,372,381.53 185,587,029.70 productive biological assets Amortization of intangible assets 5,260,142.03 4,916,845.02 Amortization of long-term deferred expense Losses/gains on disposal of property, intangible -296,249.12 6,539,060.77 asset and other long-term assets (gains: negative) Losses/gains on scrapped of fixed assets (gains: 463,760.75 814,775.06 negative) Losses/gains from variation of fair value (gains: 31,047,030.00 20,628,986.72
145 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd. negative) Financial cost (income: negative) 29,576,388.66 24,992,416.97 Investment loss (gains: negative) -19,052,638.49 -40,469,067.77 Decrease in deferred tax assets (increase: 3,865,381.56 -8,237,648.81 negative) Increase in deferred tax liabilities (decrease: -3,129,129.57 -3,684,997.05 negative) Decrease in inventory (increase: negative) -13,030,658.03 -499,402,365.85 Decrease in accounts receivable from operating 110,529,861.85 126,172,267.05 activities (increase: negative) Increase in accounts payable from operating -237,072,334.61 82,371,292.95 activities (decrease: negative) Others Net cash flows generated from operating activities 417,039,467.46 428,569,250.90 2. Significant investing and financing activities -- -- without involvement of cash receipts and payments Debt converted into capital Convertible company bonds due within 1 year Financing leased fixed assets 3. Change of cash and cash equivalent: -- -- Closing balance of Cash 439,679,107.11 602,875,935.34 Less: opening balance of cash 811,148,146.93 522,955,236.37 Plus: closing balance of cash equivalent Less: opening balance of cash equivalents The net increase in cash and cash equivalents -371,469,039.82 79,920,698.97 (2) Relevant information of acquisition or disposal of subsidiaries and other operation entities in the reporting period Unit: RMB Yuan Supplemental information Reporting period Same period of last year I. Relevant information on acquisition of -- -- subsidiaries and other operation entities: 1. Price of acquisition of subsidiaries and other operation entities 2. Cash and cash equivalents paid for acquisition of subsidiaries and other operation entities Less: Cash and cash equivalents held by subsidiaries and other operation entities 3. Net cash acquired from subsidiaries and other operation entities 4. Net assets acquired from subsidiaries 0.00 0.00 Current assets Non-current assets Current liabilities Non-current liabilities
146 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
II. Relevant information on disposal of subsidiaries -- -- and other operation entities 1. Price of disposal of subsidiaries and other 951,000.00 operation entities 2. Cash and cash equivalents received for disposal 951,000.00 of subsidiaries and other operation entities Less: Cash and cash equivalents held by subsidiaries and other operation entities 3. Net cash received from disposal of subsidiaries 951,000.00 and other operation entities 4. Net assets on disposal of subsidiaries 0.00 0.00 Current assets Non-current assets Current liabilities Non-current liabilities (3) Composition of cash and cash equivalents Unit: RMB Yuan Item Closing balance Opening balance I. Cash 439,679,107.11 811,148,146.93 Including: Cash on hand 679,890.17 1,187,641.58 Bank deposit on demand 410,711,633.46 804,149,797.35 Other monetary funds on demand 28,287,583.48 5,810,708.00 Central Bank deposit on demand Due from banks Call loan to banks II. Cash equivalents Including: bond investments due in three months III. Closing balance of cash and cash equivalents 439,679,107.11 811,148,146.93 Notes
67. Notes to statement of changes in owners’ equity Notes on the items under ―Other‖ for adjusting the opening balance and the relevant adjusted amounts as well as retrospective adjustment arising from business combination under the same control, etc.:
(VIII) Accounting treatment of assets securitization business 1. Notes of main trade arrangement and its accounting treatment of assets securitization business as well as articles of bankruptcy remote
2. Main information about the special purpose entities in which the Company has no control right but bears relevant risks: Unit: RMB Yuan Revenue of Net profit in Total closing Total closing Net closing sales in the Name the reporting Note assets liabilities assets reporting period period
147 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
(IX) Related Parties and Related-party Transactions 1. Information of the parent company of the Company Unit: RMB Yuan The The parent The parent ultimate Legal Parent Relationsh Business Registered Business Registered company's company's controllin Organizati Represent Currency company ip Type place nature Capital shareholdi voting g party of on Code ative ng (%) right (%) the Company DongsouH Zibo uanghe Lucheng Industrial Actual Private Road, Liu 63,260,00 Liu 16420039- Textile investmen 12.22% 12.22% controller enterprise Gaoqing Shizhen 0.00 Shizhen 1 Investmen t County, t Co., Ltd Zibo Notes: Zibo Lucheng Textile Investment Co., Ltd is the first principal shareholder as well as the actual controller of the Company. Legal representative: Liu Shizhen Registered capital: RMB 63.26 million Business scope: Zibo Lucheng Textile Investment Co., Ltd. (hereinafter referred to as Lucheng Investment) was engaged in investment textile, electric power and pharmacy; knitwear and the relevant import and export business; retail of lubricating oil, gas oil and diesel oil; Chinese meal and wholesale and retail of general merchandise and etc. Registered capital: RMB 63.26 million Business scope: Zibo Lucheng Textile Investment Co., Ltd. (hereinafter referred to as Lucheng Investment) was engaged in investment textile, electric power and pharmacy; knitwear and the relevant import and export business; retail of lubricating oil, gas oil and diesel oil; Chinese meal and wholesale and retail of general merchandise and etc. As at the end of the reporting period, Lucheng Investment held 123,3147 million shares of the Company, taking up 12.22% of total share capital of the Company.
2. Information of subsidiaries of the Company Unit: RMB Yuan Percentage Legal Percentage Business Registered Business Registered of Organizati Full name Type representat Currency of voting type place nature capital Shareholdi on code ive right (%) ng (%) Beijing Innovative Garment Co., Ltd. Wholesale Controlled Private Liu 42,000,000 71774843- (hereinafte Beijing and retail CNY 60% 60% subsidiary enterprise Shizhen .00 8 r refer to industry as ―Beijing Innovative ‖) Luthai Import and Controlled Private Hong Liu 6,000,000. (Hong export HKD 100% 100% enterprise Kong Shizhen 00 subsidiary trade Kong) Xinjiang Luthai Controlled Private Liu Production 146,534,21 75165238- Xinjiang CNY 58.24% 58.24% Harvest subsidiary enterprise Shizhen and sale 7.01 4 Cotton
148 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Co., Ltd. (hereinafte r refer to as ―Xinjiang Luthai‖) Lufeng Weaving & Dyeing Co., Ltd.
(hereinafte Controlled Private Liu Production 706,160,00 76001835- Zibo CNY 75% 75% r refer to subsidiary enterprise Shizhen and sale 0.00 0 as ―Lufeng Weaving & Dyeing‖) Zibo Luqun Textile
Co., Ltd. Controlled Private Liu Production 168,220,00 76870633- Zibo CNY 100% 100% (hereinafte subsidiary enterprise Shizhen and sale 0.00 4 r refer to as ―Luqun Textile‖) Zibo Xinsheng Power Co., Ltd. Controlled Private Liu Production 162,435,60 61329023- (hereinafte Zibo CNY 100% 100% subsidiary enterprise Shizhen and sale 0.00 1 r refer to as ―Xinsheng Power‖) Beijing Wholesale Lufeng Controlled Private Liu 15,000,000 55488176- Sunshine Beijing and retail CNY 100% 100% enterprise Shizhen .00 X Garments subsidiary industry Co., Ltd. Shanghai Luthai Textile Co., Ltd. Wholesale Controlled Private Liu 5,000,000. 56659750- (hereinafte Shanghai and retail CNY 100% 100% subsidiary enterprise Shizhen 00 4 r refer to industry as ―Shanghai Lutai‖)
149 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
3. Information of joint ventures and associated enterprises Unit: RMB Yuan Total sales Percentage Net profit Legal Percentage Total Total Total of revenue Name of Business Registered Business Registered of in the Relationshi Organizatio representati Currency of voting closing closing closing net in the investee type address nature capital shareholdin reporting p n code ve rights (%) assets liabilities assets reporting g (%) period period I. Joint ------ventures
II. Associated ------enterprises
150 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
4. Information of other related parties of the Company Name of other related party Relationship Organization code Zibo Stanluian Cosmetics Co., Ltd. Affiliated person (same chairman as 61329036-2 (hereinafter called ―Stanluian‖) the Company) Zibo Taimei Ties Co., Ltd. Controlled subsidiary of the parent 61329035-4 (hereinafter called Taimei Ties) company Zibo Limin Purified Water Co., Wholly-owned subsidiary of the Ltd. (hereinafter called Limin 76575998-3 parent company Purified Water) Zibo Luqun Land Co., Ltd Wholly-owned subsidiary of the 77630667-2 (hereinafter called Luqun Land) parent company Dongtai International Development Wholly-owned subsidiary of the CO., Ltd. (hereafter called Dongtai parent company International) Controlled subsidiary of the parent Chengshun Heating 69544896X company Notes:
5. Related-party transactions (1) Purchase of goods and acceptance of service Unit: RMB Yuan Pricing method Reporting period Same period of last year and Content of the Related party decision-making Proporti Proporti transaction Amount Amount procedures for on (%) on (%) the transaction Lucheng Textile Fine staple cotton Market price 1,596,593.14 0.33% T-shirt, towel, sock, Lucheng Textile Market price 2,470,111.77 100% 2,746,597.01 100% oil product Gift box for Stanluian cosmetic, lotion, Market price 75,159.42 100% 61,180.54 100% Company washing-up liquid, Liquid soap, etc. Taimei Ties Purchase of ties Market price 183,858.97 100% 135,292.31 100% Processing charges Lucheng Textile for the leg of a Market price 228,021.26 0.17% 144,998.03 0.11% stocking Processing charges Taimei Ties for commodities and Market price 577,601.73 0.42% 462,288.46 0.34% quilt cover Limin Purified Sewage disposal Market price 3,302,232.84 100% 2,561,816.00 100% Water Loan interest Lucheng Textile Pay for interests rates in the same 653,310.79 1.95% 1,564,130.58 4.59% period
151 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Loan interest Taimei Ties Pay for interests rates in the same 82,836.05 0.25% period Loan interest Stanluian Pay for interests rates in the same 68,456.96 0.2% Company period Sales of goods and rendering of service Unit: RMB Yuan Pricing method Reporting period Same period of last year and Content of the Related party decision-making Proporti Proporti transaction Amount Amount procedures for on (%) on (%) the transaction Materials, Lucheng Textile electricity, running Market price 148,541.60 1.57% 142,459.53 1.39% water and steam Dyed yarn, facing Lucheng Textile material and Market price 319,686.50 0.01% 148,417.36 0% garments Electricity, heating Taimei Ties charges, garment Market price 9,259.95 0.11% 7,824.91 0.07% etc. Materials, Stanluian electricity, running Market price 20,083.86 0.21% 4,715.30 0.05% Company water and heating charges Limin Purified Materials and Market price 84,516.53 0.01% 10,831.88 0% Water garment Heating power, Chenshun Power materials and Market price 3,210,811.85 3.4% 10,119.66 0% garment (2)Information of related party trust/contract Information of entrusted management/contract Unit: RMB Yuan Trust / Information Amount of Pricing contract Name of Type of the Initial date Ending date Name of of the basis for the income Trust/contra entrusting entrusted/co of being of being trustee entrusted/co entrusted/co trust / recognized ct income party/contra ntracted entrusted/co entrusted/co /contractor ntracted ntracted contract in the effect ctee assets ntract ntract assets assets income reporting period
Information of entrusting management/contracted Unit: RMB Yuan Name of Name of Information Amount of Type of the Initial date Ending date Pricing Trust / Entrusting / entrusting trustee of the entrusted/co of of basis for the contract fee contracted party/contra /contractor entrusted/co entrusted/co ntracted entrusting/ entrusting/ trust / recognized income
152 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
ctee ntracted ntracted assets being being contract fee in the effect assets assets contracted contracted reporting period
Notes
(3) Information of related-party lease Rental situation of the Company Unit: RMB Yuan Rental Rental Category Informatio Pricing income Amount of income Name of Name of of the n of the Ending basis for recognized the leased Initial date effect on lessor lessee leased leased date the rental in the assets the assets assets income reporting Company period Luthai Lucheng House and Normal 31 Dec. Market 1 Jul. 2008 76,818.00 76,818.00 Textile Textile building lease 2013 price Xinsheng Chenshun House and Normal 1 Jan. 31 Dec. Market 7,700.00 7,700.00 Power Power building lease 2011 2012 price Lease situation of the Company Unit: RMB Yuan Lease Rental Category Informatio Pricing charges Amount of income Name of Name of of the n of the Ending basis for recognized the leased Initial date effect on lessor lessee leased leased date the lease in the assets the assets assets charges reporting Company period Lucheng Luthai Rent of Normal 31 Dec. Market 1,897,578. 1,897,578. 1 Jan. 2010 Textile Textile land lease 2012 price 00 00 Lucheng Luthai Rent of gas Normal 1 Aug. 31 Dec. Market 241,278.00 241,278.00 Textile Textile station lease 2008 2013 price Rent of Lucheng Luthai Normal 31 Dec. Market land and 1 Jan. 2008 201,720.00 201,720.00 Textile Textile lease 2013 price buildings Rent of Luqun Luthai Normal 31 Dec. Market land and 1 Jan. 2011 901,272.00 901,272.00 Land Textile lease 2012 price buildings Lufeng Lucheng Rent of Normal 31 Dec. Market Weaving & 1 Jan. 2010 348,323.22 348,323.22 Textile houses lease 2012 price Dyeing Lucheng Luqun Rent of Normal 31 Dec. Market 1,758,865. 1,758,865. 1 Jan. 2010 Textile Textile equipments lease 2012 price 20 20 Notes of related-party lease
(4) Information of related-party guarantee Unit: RMB Yuan Whether the Guarantee guarantee was Guarantor Secured party Initial date Due date amount accomplished or not
Notes:
153 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
(5) Related-party call loan Unit: RMB Yuan Related party Amount of call loan Initial date Due date Note Loan from banks and other financial institutions Accounts borrowed Lucheng Textile 20,900,000.00 4 Jul. 2011 31 Dec. 2012 by Luqun Textile Accounts borrowed Taimei Ties 2,650,000.00 5 Jan. 2011 31 Dec. 2012 by Luqun Textile Accounts borrowed Stanluian Company 2,190,000.00 5 Jan. 2011 31 Dec. 2012 by Luqun Textile Accounts borrowed by Luqun Textile, and Chenshun Power 3,000,000.00 7 Jan. 2012 31 Dec. 2012 already paid back 2.3 million Lending to banks and other financial institutions
(6) Information about assets transfer, debt reorganization of related parties Unit: RMB Yuan Pricing Reporting period Same period of last year Type of method and related decision-maki Content of the Related party party ng procedures Proporti Proporti transaction Amount Amount transactio for the on (%) on (%) n related-party transaction Equity transfer Limin Purified Transfer Auditing net of Limin 951,000.00 100% Water of assets value Walling Transfer of Lucheng Transfer equipments of Fair value 4,718,535.99 1.88% Textile of assets Lucheng Textile Limin Purified Transfer Transfer of Fair value 133,142.88 0.05% Water of assets equipments (7) Other related-party transaction
6. Amounts due from/to related parties Amount due from related parties Unit: RMB Yuan Name Related party Closing balance Opening balance
Amount due to related parties Unit: RMB Yuan Name Related party Closing balance Opening balance Other accounts payable Lucheng Textile 20,900,000.00 20,900,000.00 Other accounts payable Taimei Ties 2,650,000.00 2,650,000.00 Other accounts payable Stanluian Company 2,190,000.00 2,190,000.00 Other accounts payable Chenshun Power 700,000.00 (X) Share-based Payment 1. Overview of share-based payment Total of each equity instrument granted 0.00 by the Company in the reporting period Total of each equity instrument excised 0.00
154 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd. by the Company in the reporting period Total of each equity instrument expired 0.00 in the reporting period Scope of excising price and remaining contract term of stock options that 5.025 yuan/share, 38 months externally issued as at the period-end Scope of excising price and remaining contract term of other equity instruments 0 as at the period-end Notes
2. Information of equity-settled share-based payment Unit: RMB Yuan Recognition method on fair value of equity instruments at The closing price of A-share on the day before the grant the grant date day Whether employee service conditions and non-market Recognition method on the best estimate of the number of conditions in incentive plan of the Company meet with the vesting equity instruments best estimate Reason for significant differences of estimate between the reporting period and the same period of last year Accumulated amount of equity-settled share-based 52,241,610.40 payment in capital reserves Total expense recognized for the equity-settle share-based 52,241,610.40 payment Notes
3. Information of cash-settled share-based payment Unit: RMB Yuan Recognition method of fair value of liabilities that are born by the Company and calculated basing on stocks or other equity instruments Accumulated amount of liabilities that arising from cash-settled share-based payment Total expense recognized for the cash-settle share-based payment Notes:
4. Information of share-based payment service Unit: RMB Yuan Total employee service exchanged by share-based payment Total other service exchanged by share-based payment 5. Modification, termination of share-based payment
(XI) Contingency 1. Contingent liabilities and its financial effect arising from unsettled litigation or arbitration
2. Contingent liabilities and its financial effect arising from loan guarantee offered to other companies
155 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Other contingent liabilities and its financial effect: As to 30 Jun. 2012, information about physical assets pledged by controlled subsidiaries for the purpose of acquiring bank loans Company Pledged asset Asset value Acquired loan Term of borrowing
Xinjiang Luthai Inventory 74,143,836.43 50,000,000.00 2011.12.1-2012.7.27 Xinjiang Luthai Inventory 44,486,301.85 30,000,000.00 2012.3.27-2012.12.26 Xinjiang Luthai Inventory 74,143,836.43 50,000,000.00 2012.5.29-2012.12.27 Xinjiang Luthai Fixed assets 36,809,409.52 32,000,000.00 2012.6.25-2013.5.20 Xinjiang Luthai Land-use right 87,488.89 Xinjiang Luthai Land-use right 9,052,157.36 45,000,000.00 2011.8.30-2012.8.29 Total 238,723,030.48 207,000,000.00 (XII) Commitments 1. Significant commitments Item Closing balance Opening balance Commitments signed but hasn’t been recognized in financial statements - Commitment for constructing and 10,456 23,864 purchasing long-term assets Total 10,456 23,864
2. Fulfillment of prior commitments
Contracted amount Fulfillment of prior Item (RMB Ten thousand) commitments Commitment for constructing and purchasing 23,864 Fulfilled long-term assets
(XIII)Events after the Balance Sheet Date 1. Notes of significant events after the Balance Sheet Date Unit: RMB Yuan Influence number on Reason for failing to Item Details financial status and estimate the influence operating results number
2. Notes of profit distribution after Balance Sheet Date Unit: RMB Yuan Drafted distributed profit or dividends Profit or dividends claimed to distribute after review and approval 3. Notes of other events after Balance Sheet Date
(XIV)Notes of other significant events 1. Exchange of non-monetary assets
2. Debt reorganization
156 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
3. Business combination
4. Lease
5. Closing financial instruments that externally issued and convertible into shares
6. Main content and significant changes of annuity plan
7. Other significant events
(XV) Notes of main items in the financial statements of the Company 1. Accounts receivable (1) Accounts receivable Unit: RMB Yuan Closing balance Opening balance Book balance Provision for bad debts Balance Provision for bad debts Category Prop Proport Proport Proport Amount ortio Amount Amount Amount ion (%) ion (%) ion (%) n (%) Accounts receivable with significant single amount and 0.00 0.00 0.00 0.00 individually withdrawn bad debt provision Accounts receivable for which bad debt provisions are made on the group basis
247,479,416. 303,982,000. Subtotal of groups 100% 16,969,061.25 6.66% 100% 17,385,371.27 5.72% 08 68 Accounts receivable with insignificant single amount but 0.00 0.00 0.00 0.00 individually withdrawn bad debt provision 247,479,416. 303,982,000. Total -- 16,969,061.25 -- -- 17,385,371.27 -- 08 68 Notes to category of accounts receivable:
Accounts receivable with significant single amount and individually withdrawn bad debt provision at period-end □ Applicable √ Inapplicable In the groups, accounts receivable adopting aging analysis method to withdraw bad debt provision: √ Applicable □ Inapplicable Unit: RMB Yuan Closing balance Opening balance Book balance Book balance Aging Propor Bad debt Propor Bad debt Amount tion provision Amount tion provision (%) (%) Within 1 year Including: ------
157 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Subtotal for those aging 87.09 215,529,540.60 10,776,477.03 279,974,702.67 92.1% 13,998,735.13 within 1 % year 1-2 years 9,526,423.86 3.85% 952,642.39 14,148,234.65 4.66% 1,414,823.47 2-3 years 14,870,936.58 6.01% 2,974,187.32 9,859,063.36 3.24% 1,971,812.67 Over 3 7,552,515.04 3.05% 2,265,754.51 years 3-4 years 4-5 years Over 5 years Total 247,479,416.08 -- 16,969,061.25 303,982,000.68 -- 17,385,371.27 In the groups, accounts receivable adopting balance percentage method to withdraw bad debt provision: □ Applicable √ Inapplicable In the groups, accounts receivable adopting other methods to withdraw bad debt provision: □ Applicable √ Inapplicable Accounts receivable with insignificant single amount but individually withdrawn bad debt provision at period-end: □ Applicable √ Inapplicable (2) Information of accounts receivable reversed or recovered in the reporting period Unit: RMB Yuan Withdrawal amount Basis on recognition Content of accounts Reason for reversal of bad debt provision Reversed or of provision for bad receivable or recovery before the reversal or recovered amount debts recovery
Total ------The withdrawal of bad debt provision of accounts receivable with significant single amount or insignificant single amount but individually made impairment test at the end of report period: Content of accounts Withdrawal Book balance Amount of bad debts Reason receivable proportion (%)
Total -- -- Notes to accounts receivable with insignificant single amount but large risks of groups after grouping by credit risks characteristics:
(3) Information of accounts receivable that written off in the report period Unit: RMB Yuan Whether arising Name of Nature Date Amount Reason from related-party company transaction or not
Total ------Notes:
(4) Information of shareholders with more than 5% (including 5%) of the voting shares of the Company in accounts receivable in report period □ Applicable √ Inapplicable (5) Nature or content of other accounts receivable with significant amount
158 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
(6) Top five accounts receivable Unit: RMB Yuan Name of company Relationship Amount Term Proportion (%) Li & Fung Limited Non-related customer 53,436,732.61 Within 1 year 21.59% Within 1 year, 1 to 3 Beijing Innovative Controlled subsidiary 53,027,739.27 21.43% years, over 3 years TAL Non-related customer 28,231,602.41 Within 1 year 11.41% Lufeng Weaving & Controlled subsidiary 27,952,819.15 Within 1 year 11.29% Dyeing Chenfeng (Jintan) Non-related customer 6,822,022.16 Within 1 year 2.76% Garments Co., Ltd. Total -- 169,470,915.60 -- 68.48% (7) Accounts receivable due from related parties Unit: RMB Yuan Name of company Relationship Amount Proportion (%) Beijing innovative Controlled subsidiary 53,027,739.27 21.43% Lufeng Weaving & Controlled subsidiary 27,952,819.15 11.3% Dyeing Lufeng Sunshine Controlled subsidiary 2,886,721.30 1.17% Luthai (Hong Kong) Controlled subsidiary 2,119,532.73 0.85% Total -- 85,986,812.45 34.75% (8) RMB0.00 was transferred from the accounts receivable not meeting the conditions of termination recognition. (9) If securitization is carried out on accounts receivale as teh underlying asset, please brief on the arrangement of relevant transactions
2. Other accounts receivable (1) Other accounts receivable Unit: RMB Yuan Closing balance Opening balance Provision for bad Provision for bad Book balance Book balance debts debts Category Prop Prop Prop Prop Amount ortio Amount ortio Amount ortio Amount ortio n (%) n (%) n (%) n (%) Other accounts receivable with significant single amount and individually 0.00 0.00 0.00 0.00 withdrawn bad debt provision Other accounts receivable for which bad debt provisions are made on the group basis
7.02 Subtotal of the groups 71,010,836.53 100% 4,982,801.99 39,121,958.69 100% 2,739,458.00 7% % Other accounts receivable with insignificant single amount but individually 0.00 0.00 0.00 0.00 withdrawn bad debt provision Total 71,010,836.53 -- 4,982,801.99 -- 39,121,958.69 -- 2,739,458.00 --
159 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Notes of category:
Other accounts receivable with significant single amount and individually withdrawn bad debt provision at period-end: □Applicable √ Inapplicable In the groups, other accounts receivable adopting aging analysis method to withdraw bad debt provision: √ Applicable □ Inapplicable Unit: RMB Yuan Closing balance Opening balance Book balance Book balance Aging Propor Bad debt Propor Bad debt provision Amount tion provision Amount tion (%) (%) Within 1 year Including: ------
Subtotal for 79.27 86.61 those aging 56,288,230.06 2,814,411.50 33,882,414.23 1,694,120.71 % % within 1 year 14.32 1-2 years 10,170,154.58 1,017,015.46 2,289,795.87 5.85% 228,979.59 % 2-3 years 2,143,605.38 3.02% 428,721.08 685,668.80 1.75% 137,133.76 Over 3 years 2,408,846.51 3.39% 722,653.95 2,264,079.79 5.79% 679,223.94 3-4 years 4-5 years Over 5 years Total 71,010,836.53 -- 4,982,801.99 39,121,958.69 -- 2,739,458.00 In the groups, other accounts receivable adopting balance percentage method to withdraw bad debt provision: □ Applicable √ Inapplicable In the groups, other accounts receivable adopting other methods to withdraw bad debt provision: □Applicable √Inapplicable Other accounts receivable with insignificant single amount but individually withdrawn bad debt provision at period-end: □ Applicable √ Inapplicable (2) Information of other accounts receivable reversed or recovered in the reporting period Unit: RMB Yuan Withdrawal amount Basis on recognition Content of other Reason for reversal of bad debt provision Reversed or of provision for bad accounts receivable or recovery before the reversal or recovered amount debts recovery
Total ------The withdrawal of bad debt provision of other accounts receivable with significant single amount or insignificant single amount but individually made impairment test at the end of report period: Content of other Withdrawal Book balance Amount of bad debts Reason accounts receivable proportion (%)
Total -- -- Notes to other accounts receivable with insignificant single amount but large risks of groups after grouping by
160 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
credit risks characteristics:
(3) Information of the write-off other accounts receivable Unit: RMB Yuan Whether arising Name of Date of written Nature Amount Reason from related-party company off transactions
Total ------Notes:
(4) The other accounts receivable due from shareholders with more than 5% (including 5%) of the voting shares of the Company in the reporting period □ Applicable √ Inapplicable (5)Nature or content of other accounts receivable with significant amount
(6) Top five other accounts receivable Unit: RMB Yuan Name of company Relationship Amount Term Proportion (%) Export rebates Non-related party 37,666,689.72 Within 1year 53.04% receivable Wholly-owned Within 1 year, 1 to 2 Shanghai Luthai 13,577,039.80 19.12% subsidiary years Deposits for wages paid to migrant Within 1 year, 2 to 3 Non-related party 1,458,593.50 2.05% workers in Zichuan years, over 3 years District, Zibo Zibo customs Non-related party 1,347,071.19 Within 1year 1.9% Payment for Staff Within 1 year, 2 to 3 Non-related party 545,183.78 0.77% dormitories years Total -- 54,594,577.99 -- 76.88% (7) Other account receivable due from related parties Unit: RMB Yuan Name of company Relationship Amount Proportion (%) Shanghai Luthai Wholly-owned subsidiary 13,577,039.80 19.12% Total -- 13,577,039.80 19.12% (8) RMB000 was transferred from the other accounts receivable not meeting the conditions of termination recognition. (9) If securitization is carried out on the other accounts receivable as the underlying asset, please brief on the arrangement of relevant transactions.
3. Long-term equity investments Unit: RMB Yuan Explanatio Withdr ns on Provi awal Cash Share Incre Voting differences sion amount bonus Accou Initial holdi The Opening ase/ Closing right between for of in the nting investment ng investee balance decre balance Proportio shareholdi impai impair reporti method cost Propo ase n ng rment ment ng rtion proportion loss provisi period and voting on in
161 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
right the proportion reporti ng period Beijing Cost 25,200,000. 25,200,000. 25,200,000.00 60% 60% Sichuang method 00 00 Xinjiang Cost 82,400,701. 82,400,701. 58.24 82,400,701.97 58.24% Luthai method 97 97 % Xinsheng Cost 176,340,737.9 176,340,737 176,340,737 100% 100% Power method 3 .93 .93 Lufeng Cost 529,620,000.0 529,620,000 529,620,000 Weaving 75% 75% method 0 .00 .00 & Dyeing Luqun Cost 171,784,550.0 171,784,550 171,784,550 100% 100% Textile method 0 .00 .00 Luthai Cost 6,366,600.0 6,366,600.0 (Hong 6,366,600.00 100% 100% method 0 0 Kong) 5,000 Lufeng Cost 10,000,000. 15,000,000. 15,000,000.00 ,000. 100% 100% 00 00 Sunshine method 00 Shanghai Cost 5,000,000.0 5,000,000.0 5,000,000.00 100% 100% Luthai method 0 0 Rongchan Cost 55,282,600. 55,282,600. 5.555 g 55,282,600.00 5.555% method 00 00 % Pharmacy Limin -1,50 Cost 1,500,000.0 Wall 1,500,000.00 0,000 method 0 Material .00 3,500 1,068,495,189 1,063,495,1 1,066,995,1 Total -- ,000. ------0.00 0.00 0.00 .90 89.90 89.90 00 Notes:
4. Revenue and Cost of Sales (1) Revenue and Cost of Sales Unit: RMB Yuan Item Reporting period Same period of last year Main business revenue 2,114,438,399.15 2,308,393,542.03 Other business revenue 82,177,082.90 137,643,538.37 Cost of sales 1,679,182,666.68 1,659,122,418.86 Total 517,432,815.37 786,914,661.54 (2)Main business (Classified by industry) □ Applicable √ Inapplicable (3)Main business (Classified by product) √ Applicable □ Inapplicable Unit: RMB Yuan Product name Reporting period Same period of last year
162 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Revenue of sales Cots of sales Revenue of sales Cots of sales Yarn-dyed fabric 1,530,542,447.91 1,211,696,693.45 1,727,830,220.45 1,155,080,806.78 Shirts 583,895,951.24 407,329,954.01 580,563,321.58 397,538,558.06 Total 2,114,438,399.15 1,619,026,647.46 2,308,393,542.03 1,552,619,364.84 (4) Main business (Classified by area) □ Applicable √ Inapplicable (5) Revenue of sales from the top five customers Unit: RMB Yuan Proportion of Customers Total revenue of sales total revenue of sales (%) Li & Fung Limited 302,383,117.81 13.77% TAL 156,194,264.20 7.11% Chenfeng 97,931,400.74 4.46% OLYMP 97,782,659.31 4.45% PVH 56,611,280.95 2.58% Total 710,902,723.01 32.36% Notes
5. Investment income (1)List of investment income Unit: RMB Yuan Item Reporting period Same period of last year Long-term equity investment income accounted by -549,000.00 165,000,000.00 cost method Long-term equity investment income accounted by equity method Investment income arising from disposal of long-term equity investments Investment income received from holding of trading financial assets Investment income received from holding of held-to-maturity investments Investment income received from holding of available-for-sale financial assets Investment income received from disposal of trading financial assets Investment income received from holding of 15,004,234.49 33,590,067.77 held-to-maturity investments Investment income received from available-for-sale financial assets Other Total 14,455,234.49 198,590,067.77 (2) Long-term equity investment income accounted by cost method Unit: RMB Yuan Same period of Name of investee Reporting period Reason for increase/decrease last year No dividends distributed in the Lufeng Weaving & Dyeing 165,000,000.00 reporting period
163 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Limin Walling Material -549,000.00 Total -549,000.00 165,000,000.00 -- (3) Long-term equity investment income accounted by equity method Unit: RMB Yuan Same period of Name of investee Reporting period Reason for increase/decrease last year
Total -- Notes:
6. Supplemental information of Cash Flow Statement Unit: RMB Yuan Supplemental information Reporting period Same period of last year 1. Reconciliation of net profit to net cash flows generated -- -- from operations： Net profit 218,643,723.43 613,559,994.97 Add: Provision for assets impairments 1,827,033.97 3,803,053.48 Depreciation of fixed assets, oil and gas assets and 119,369,172.33 106,469,045.00 productive biological assets Amortization of intangible assets 3,243,350.19 2,989,197.76 Amortization of long-term deferred expense Losses/gains on disposal of property, intangible asset and -199,595.78 4,961,425.10 other long-term assets (gains: negative) Losses/gains on scrapped of fixed assets (gains: negative) Losses/gains from variation of fair value (gains: negative) 24,697,730.00 18,153,686.72 Financial cost (income: negative) 13,109,670.45 12,957,180.51 Investment loss (gains: negative) -14,455,234.49 -198,590,067.77 Decrease in deferred tax assets (increase: negative) -2,252,040.33 94,063.76 Increase in deferred tax liabilities (decrease: negative) -2,341,354.50 -3,015,660.00 Decrease in inventory (increase: negative) 38,361,216.37 -670,557,371.95 Decrease in accounts receivable from operating activities 131,976,225.19 17,182,655.65 (increase: negative) Increase in accounts payable from operating activities -109,565,788.89 467,283,939.39 (decrease: negative) Others Net cash flows generated from operating activities 422,414,107.94 375,291,142.62 2. Significant investing and financing activities without -- -- involvement of cash receipts and payments Debt converted into capital Convertible company bonds due within 1 year Financing leased fixed assets 3. Change of cash and cash equivalent: -- -- Closing balance of cash 268,644,073.54 390,690,627.69 Less: opening balance of cash 443,347,389.73 280,772,869.89 Plus: closing balance of cash equivalent
164 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd.
Less: opening balance of cash equivalents The net increase in cash and cash equivalents -174,703,316.19 109,917,757.80 7. Information of assets and liabilities recognized by evaluation value from the counter purchase Unit: RMB Yuan Name Evaluation value Original book value Asset
Liabilities
(XVI)Supplemental information 1. Return on equity and earnings per share Unit: RMB Yuan The weighted average EPS Profit in the reporting period ROE (%) Basic EPS Diluted EPS Net profit attributable to the Company's 5.79% 0.30 0.30 common stock shareholders Net profit attributable to shareholders of the Company's common stock after 5.82% 0.30 0.30 deducting non-recurring gains and losses 2. Particulars on the abnormal conditions of main items in the financial statements of the Company and relevant reasons (1) As of 30 Jun. 2012, closing amount of monetary capital was of RMB 439,679,107.11 yuan, with a decrease of 45.80% compared with opening amount, mainly because the Company made cash dividends payment. (2) As of 30 Jun. 2012, closing amount of trading financial assets was of RMB 0.00 yuan, with a decrease of 100.00% compared with opening amount, mainly because the fair value changes on trading financial assets. (3) As of 30 Jun. 2012, closing amount of notes receivable was of RMB 108,276,877.73 yuan, with a decrease of 32.54% compared with opening amount, mainly because the decrease of closing bank acceptance bill receivable. (4) As of 30 Jun. 2012, closing amount of prepayments was of RMB 172,417,224.27 yuan, with a decrease of 43.37% compared with opening amount, mainly because purchase prepayment of last period was setteled in the reporting period. (5) As of 30 Jun. 2012, closing amount of other accounts receivable was of RMB 113,333,271.54 yuan, with an increase of 52.06% compared to last period, mainly because the increase of export rebates receivable. (6) As of 30 Jun. 2012, closing amount of construction in progress was of RMB 209,315,087.63 yuan, a decrease of 58.32%, mainly because part of 50 million-meter high-grade yarn-dyed fabric project was put into production and then transferred into fixed assets in the reporting period. (7) As of 30 Jun. 2012, closing amount of other non-current assets was of RMB 7,890,690.00 yuan, a decrease of 68.94% compared to opening balance, mainly because land prepayment was transferred into intangible assets in the reporting period. (8) As of 30 Jun. 2012, closing amount of trading financial liabilities was of RMB 10,107,650.00 yuan, an increase of 100.00% compared to opening balance, mainly because the fair value chagnes on trading financial liabilities. (9) As of 30 Jun. 2012, closing amount of notes payable was of RMB 18,259,051.11 yuan, an
165 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd. increase of 52.39% compared to opening balance, mainly because the incsrease of bill payment. (10) As of 30 Jun. 2012, closing amount of tax payable was of RMB -17,678,712.12 yuan, an increase of 157.82% compared to opening balance, mainly because the increase of closing allowance of input tax on taxable VAT. (11) As of 30 Jun. 2012, closing amount of interest payable was of RMB 3,167,297.54 yuan, an increase of 49.89% compared to opening balance, mainly because the increase of withdrawal interest. (12) As of 30 Jun. 2012, closing amount of dividends payable was of RMB 4,387,509.44 yuan, an increase of 891.95%, mainly because the unsettlement of dividends payable of restricted shares in the reporting period. (13) As of 30 Jun. 2012, closing amount of non-current liabilities due within 1 year was of RMB 36,531,875.00 yuan, with a decrease of 47.10% compared to opening balance, mainly because the decrease of long-term borrowings due within 1 year. (14) As of 30 Jun. 2012, closing amount of long-term borrowings was of RMB 0.00 yuan, a decrease of 100.00% compared to opening balance, mainly because the return of due borrowings in the reporting period. (15) As of 30 Jun. 2012, closing amount of deferred income tax was of RMB 2,133,545.52 yuan, a decrease of 59.46% compared to opening balance, mainly because the decrease of taxable temporary difference arising from fair value changes on trading financial assets. (16) Occur amount of operating taxes and surtax from Jan. to Jun. of 2012 was of RMB 2,360,934.93 yuan, a decrease of 76.82% compared to that of same period of last year, mainly because the decrease of city maintenace and contruction tax payable and education surtax payable. (17) Occur amount of financial expense from Jan. to Jun. of 2012 was of RMB 36,737,830.95 yuan, an increase of 47.42% compared to that of same period of last year, mainly because the increase of exchange loss. (18) Occur amount of income on fair value change from Jan. to Jun. of 2012 was of RMB -31,047,030.00 yuan, a decrease of 50.50% compared to that of same period of last year, mainly because the disposal of due trading financial assets made relevant transfer into original recognition of fair value changes, and the fair value changes of trading finacial assets. (19) Occur amount of investment income from Jan. to Jun. of 2012 was of RMB 19,052,638.49 yuan, a decrease of 52.92% compared to that of same period of last year, mainly because the decrease of investment income of trading financial assets. (20) Occur amount of non-operating expense from Jan. to Jun. of 2012 was of RMB 2,142,808.56 yuan, a decrease of 80.99% compared to that of same period of last year, mainly because the decrease of the disposal of non-current assets. (21) Occur amount of income tax expense from Jan. to Jun. of 2012 was of RMB 49,766,218.79 yuan, a decrease of 51.58% compared to that of same period of last year, mainly because toal profit in the reporting period was decreased and then with relevant reduce to income tax expense.
IX. Documents for Reference
Documents for Reference I. Semi-annual Report 2012 signed by legal representative; II. Financial statements signed and sealed by legal representative, principal of accounting work, and manager of
166 Semi-annual Report 2012 of Lu Thai Textile Co., Ltd. finance department; III. In the reporting period, all originals of the Company’s documents and public notices have been publicly disclosed in newspapers designated by CSRC; IV. The text of this report was deposited in Securities Department of the Company.
Chairman of the Board of Directors: Liu Shizhen Date for submission approved by the Board of Directors: 13 August, 2012
167