Lu Thai Textile Co., Ltd. Annual Report 2017 LU THAI TEXTILE CO., LTD.
ANNUAL REPORT 2017
April 2018
Lu Thai Textile Co., Ltd. Annual Report 2017 Part I Important Notes, Table of Contents and Definitions The Board of Directors (or the “Board”), the Supervisory Board as well as the Directors, Supervisors and senior management of Lu Thai Textile Co., Ltd. (the “Company”) hereby guarantee the factuality, accuracy and completeness of the contents of this Report, and shall be jointly and severally liable for any misrepresentations, misleading statements or material omissions in this Report.
Liu Zibin, theCompany’s legal representative, Zhang Hongmei, theCompany’s Chief Accountant, and Zhang Keming, theCompany’s Financial Manager hereby guarantee that the Financial Statements carried in this Report are factual, accurate and complete.
Except for the following Directors, all the other Directors attended in person the Board meeting for the review of this Report.
|||||
|-|-|-|-|
|||Reason for not attending in||
|Name|Office title||Proxy|
|||person||
|Zeng Facheng|Director|For reason of work|Xu Zhinan|
|Xu Jianjun|Independent Director|For reason of work|ZhaoYao|
|Pan Ailing|Independent Director|For reason of work|Wang Xinyu|
|Bi Xiuli|Independent Director|For reason of work|ZhaoYao|

The Company has described in detail in this Report the possible risks. Please refer to the contents about the major risks and countermeasures in “Outlook of theCompany’s future development” in “Part IV Company Performance Discussion and Analysis” of this Report. Securities Times, Shanghai Securities News, China Securities Journal, Ta Kung Pao (HK) and www.cninfo.com.cn
have been designated by the Company for its information disclosure in 2018. And all information about the Company shall be subject towhat’s disclosed on the aforesaid media. Investors are kindly reminded to pay attention to investment risks.
Investors are advised to read the full text of this Report carefully and pay attention to the risk warning and uncertainties stated in Part IV, “Outlook of theCompany’s Future Development”.
The Board has considered and approved the following dividend payout proposal for common shareholders for the Reporting Period: based on the total shares of 922,602,311, a cash dividend of RMB5.00 (tax inclusive) per 10 shares would be distributed to all the common shareholders, with no share dividend.
This Report has been prepared in both Chinese and English. Should there be any discrepancies or misunderstandings between the two versions, the Chinese version shall prevail.
Lu Thai Textile Co., Ltd. Annual Report 2017 Table of Contents
Part I Important Notes, Table of Contents and Definitions ........................................................... 2 Part II Company Profile and Key Financial Information .............................................................. 5 Part III Business Summary ............................................................................................................. 10 Part IV Company Performance Discussion and Analysis ............................................................ 13 Part V Significant Events ................................................................................................................ 32 Part VI Share Changes and Shareholder Information ................................................................. 50 Part VII Preferred Shares ............................................................................................................... 57 Part VIII Directors, Supervisors, Senior Management and Staff................................................ 58 Part IX Corporate Governance ...................................................................................................... 69 Part X Corporate Bonds .................................................................................................................. 79 Part XI Financial Statements .......................................................................................................... 80 Part XII Documents Available for Reference .............................................................................. 207
Lu Thai Textile Co., Ltd. Annual Report 2017 Definitions
|||
|-|-|
|Term|Definition|
||Lu Thai Textile Co., Ltd. and its consolidated subsidiaries, except where the|
|The “Company”, “Issuer” or “we”||
||context otherwise requires|
||Lu Thai Textile Co., Ltd. exclusive of subsidiaries, except where the context|
|Parent, Parent Company||
||otherwise requires|
|The Board of Directors|The Board of Directors of Lu Thai Textile Co., Ltd.|
|The Supervisory Board|The Supervisory Board of Lu Thai Textile Co., Ltd.|
|CSRC|China Securities Regulatory Commission|
|RMB, RMB’0,000|In RMB yuan, in RMB ten thousand yuan|
|The “Company Law”|The “Company Law of the People‘s Republic of China”|
|The “Securities Law”|The “Securities Law of the People‘s Republic of China”|
|The “Reporting Period” or “Current Period”|The period from January 1, 2017 to December 31, 2017|

Lu Thai Textile Co., Ltd. Annual Report 2017 Part II Company Profile and Key Financial Information
I Corporate Information
|||||
|-|-|-|-|
|Stock name|Lu Thai A, Lu Thai B|Stock symbol|000726, 200726|
|Changed stock name (if any)|N/A|||
|Stock exchange|Shenzhen Stock Exchange|||
|Company name in Chinese|鲁泰纺织股份有限公司|||
|Abbr.|鲁泰纺织|||
|Company name in English (if||||
||LU THAI TEXTILE CO., LTD.|||
|any)||||
|Abbr. (if any)|LTTC|||
|Legal representative|Liu Zibin|||
|Registered address|No. 11, Mingbo Road, High-tech Industry Development Zone, Zibo, Shandong, P.R.China|||
|Zip code|255086|||
||No. 81, Songling East Road, Zichuan District, Zibo, Shandong, P.R.China; No. 11, Mingbo Road,|||
|Office address||||
||High-tech Industry Development Zone, Zibo, Shandong, P.R.China|||
|Zip code|255100; 255086|||
|Company website|www.lttc.com.cn|||
|Email address|lttc@lttc.com.cn|||

II Contact Information
||||
|-|-|-|
||Board Secretary|Securities Representative|
|Name|Qin Guiling|Zheng Weiyin and Li Kun|
||No. 81, Songling East Road, Zichuan|No. 81, Songling East Road, Zichuan|
|Address|||
||District, Zibo, Shandong, P.R.China|District, Zibo, Shandong, P.R.China|
|Tel.|0533-5266188|0533-5285166|
|Fax|0533-5418805|0533-5418805|
|Email address|qinguiling@lttc.com.cn|wyzheng@lttc.com.cn，likun@lttc.com.cn|

 III Media for Information Disclosure and Place where this Report Is Kept
|||
|-|-|
|Newspapers designated by the Company for|Securities Times, Shanghai Securities News, China Securities Journal and|
|information disclosure|Ta Kung Pao (HK)|
|Website designated by CSRC for publication of this|www.cninfo.com.cn|

Lu Thai Textile Co., Ltd. Annual Report 2017
|||
|-|-|
|Report||
|Place where this Report is kept|The Securities Department of the Company|

IV Company Registered Information and Alterations
|||
|-|-|
|Unified social credit code|91370300613281175K|
|Changes in main business scope of the||
||No changes|
|Company since going public (if any)||
|Changes of controlling shareholder (if any)|N o changes|

V Other Information
The independent certified public accounting (or “CPA”) firm hired by the Company:
|||
|-|-|
|Name|Ruihua Certified Public Accountants LLP|
||5-11F, West Tower, China Overseas Property Plaza, Block No. 7, Compound No. 8, Xibinhe|
|Office address||
||Road, Yongdingmen, Dongcheng District, Beijing, P.R.C.|
|Accountants writing signatures|He Feng and Cui Xiaoli|

The independent sponsor hired by the Company to exercise constant supervision over the Company in the Reporting Period:□ Applicable√ Not applicable
The independent financial advisor hired by the Company to exercise constant supervision over the Company in the Reporting Period:□ Applicable√ Not applicable
VI Key Financial Information
Indicate by tick mark whether there is any retrospectively restated datum in the table below.
√ Yes□ No
The reasons for the retrospective restatements:
Business mergers under the same control.
||||||||
|-|-|-|-|-|-|-|
|||||2017-over-201|||
|||2016|||2015||
||2017|||6 change|||
|||Before|Restated|Restated|Before|Restated|
||6,409,224,044.97|5,981,751,344.|5,990,493,909.36||6,173,322,778.|6,173,322,778.|
|Sales revenue (RMB)||||6.99%|||
|||63|||61|61|
|Net income attributable to|841,150,934.75||808,760,025.91||||
|shareholders of the listed||805,446,326.99||4.01%|712,193,243.19|712,193,243.19|
|company (RMB)|||||||
|Net income attributable to|||||||
||780,637,833.47|759,471,125.12|762,785,364.02|2.34%|718,263,125.89|718,263,125.89|
|shareholders of the listed|||||||

Lu Thai Textile Co., Ltd. Annual Report 2017
||||||||
|-|-|-|-|-|-|-|
|company before nonrecurring|||||||
|gains and losses (RMB)|||||||
|Net cash flows from operating|1,038,035,053.43|1,310,765,281.|1,314,732,284.45||1,027,595,404.|1,027,595,404.|
|||||-21.05%|||
|activities (RMB)||28|||34|34|
|Basic earnings per share|0.91||0.85||||
|||0.85||7.06%|0.75|0.75|
|(RMB/share)|||||||
|Diluted earnings per share|0.91||0.85||||
|||0.85||7.06%|0.75|0.75|
|(RMB/share)|||||||
|Weighted average return on|||||||
||11.87%|11.71%|11.70%|0.17%|10.66%|10.66%|
|equity (%)|||||||
|||||Change of|||
|||||December 31,|||
||December 31,2017|December 31, 2016||2017 over|December 31, 2015||
|||||December 31,|||
|||||2016|||
|||Before|Restated|Restated|Before|Restated|
||10,170,624,027.75|9,407,103,263.|9,464,604,315.39||9,091,170,499.|9,091,170,499.|
|Total assets (RMB)||||7.46%|||
|||34|||22|22|
|Equity attributable to|7,230,942,770.16||6,970,913,125.59||||
|||6,937,985,729.|||6,837,113,075.|6,837,113,075.|
|shareholders of the listed||||3.73%|||
|||19|||58|58|
|company (RMB)|||||||

VII Accounting Data Differences under Chinese Accounting Standards (CAS) and International Financial Reporting Standards (IFRS) and Foreign Accounting Standards 1. Net Income and Equity Differences under CAS and IFRS
√ Applicable□ Not applicable
Unit: RMB
||||||
|-|-|-|-|-|
||Net income attributable to shareholders of the||Equity attributable to shareholders of the listed||
||listed company||company||
||2017|2016|Closing amount|Opening amount|
|Under CAS|841,150,934.75|808,760,025.91|7,230,942,770.16|6,970,913,125.59|
|Adjustments as per IFRS|||||
|Impact on domestic equipment|||||
|tax credit recognized as|329,000.00|725,000.00||-329,000.00|
|deferred income under IFRS|||||
|Under IFRS|841,479,934.75|809,485,025.91|7,230,942,770.16|6,970,584,125.59|

Lu Thai Textile Co., Ltd. Annual Report 2017 2. Net Income and Equity Differences under CAS and Foreign Accounting Standards
□ Applicable√ Not applicable
No such differences for the Reporting Period.
3. Reason for Accounting Data Differences under CAS and Foreign Accounting Standards
□ Applicable√ Not applicable
VIII Key Financial Information by Quarter
Unit: RMB
||||||
|-|-|-|-|-|
||Q1|Q2|Q3|Q4|
|Sales revenue|1,273,058,505.40|1,717,401,191.03|1,631,824,401.03|1,786,939,947.51|
|Net income attributable to|||||
||157,994,708.53|235,075,273.02|197,038,648.01|251,042,305.19|
|shareholders of the listed company|||||
|Net income attributable to|||||
|shareholders of the listed company|||||
||155,049,414.60|230,031,743.85|179,229,437.40|216,327,237.62|
|before nonrecurring gains and|||||
|losses|||||
|Net cash flows from operating|||||
||-73,576,928.32|416,496,686.62|491,110,150.27|204,005,144.86|
|activities|||||

Indicate by tick mark whether any of the financial data in the table above or their summations differs materially from what have been disclosed in theCompany’s quarterly or semi-annual reports.
□ Yes√ No
IX Nonrecurring Gains and Losses
√ Applicable□ Not applicable
Unit: RMB
||||||
|-|-|-|-|-|
|Item|2017|2016|2015|Note|
|Gains and losses on disposal of non-current|-1,326,737.85||||
|assets (inclusive of offset allowance for||-8,321,693.49|-4,666,157.56||
|asset impairments)|||||
|Government subsidies charged to current|66,031,583.92||||
|profit and loss (exclusive of government|||||
|subsidies given in the Company’s ordinary|||||
|||64,121,633.01|43,266,788.43||
|course of business at fixed quotas or|||||
|amounts as per government’s uniform|||||
|standards )|||||
|Current gains and losses on subsidiaries|4,145,908.17||||
|acquired through business mergers under|||||

Lu Thai Textile Co., Ltd. Annual Report 2017
||||||
|-|-|-|-|-|
|same control from period-beginning to|||||
|merger dates, net|||||
|Gains and losses on changes in fair value of|4,794,598.32||||
|trading financial assets and liabilities &|||||
|investment income from disposal of trading|||||
|financial assets and liabilities and||3,212,471.16|-29,145,915.85||
|available-for-sale financial assets (exclusive|||||
|of effective portion of hedges that arise in|||||
|the Company’s ordinary course of business)|||||
|Non-operating revenue and expense other|4,638,779.84||||
|||3,925,471.62|3,432,535.47||
|than above|||||
|Less: Income tax effects|8,690,224.28|3,065,544.25|12,302,309.25||
|Non-controlling interests effects (net|9,080,806.84||||
|||13,897,676.16|6,654,823.94||
|of tax)|||||
|Total|60,513,101.28|45,974,661.89|-6,069,882.70|--|

Explanation of why the Company classifies an item as a nonrecurring gain/loss according to the definition in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to thePublic—Nonrecurring Gains and Losses, or reclassifies any nonrecurring gain/loss item listed in the said explanatory announcement as a recurring gain/loss:□ Applicable√ Not applicable
No such cases for the Reporting Period.
Lu Thai Textile Co., Ltd. Annual Report 2017 Part III Business Summary
I Main Business Scope of the Company in Reporting Period
Is the Company subject to any disclosure requirements for special industries?
No.
Lu Thai, unremittingly taking “creating wealth, contributing to the society, clothing the country and boosting the development of the world” as its mission, has been practicing the value of “people foremost policy, rigorous scientific attitude, client oriented principle and integrity for win-win outcome” for a long time. It is devoted to improving and expanding its industrial chain, making it a renowned textile and garment business group combing cotton breeding, spinning, bleaching and dyeing, neatening, testing, garment making and marketing. Lu Thai produces and sells middle and high-grade yarn-dyed fabric and dyeing fabric for shirts and garment. It claimed its fame for its comprehensive management,R&D ability, advanced technology, international development plan and stable quality. Moreover, it also attaches great importance to improve the added value of its products, explore the emerging market and renew its service philosophy. With natural fabric as its flagship, multi-component functional fiber fabric as its spearhead and wash-and-wear non-ironing technology as its core competency, the Company kept a watchful eye on the latest consumption trend. Great attention was paid to improve its healthy product series so as to satisfy the needs from the diversified and personalized market. Lu Thai had already become the largest world renowned manufacturer for high-grade yarn dyed fabric and premium-brand shirts. It had paved its development pattern featured in going green, low-carbon growth, science and technology and humanism. Its operation performance was always among the top comparing to its peers.80% of LuThai’s products were exported over 30 countries and regions in the world, including America, EU and Japan. The export percentage for high-grade yarn dyed fabric--a self-owned brand attained70% of its export volume, accounting for18% of theworld’s export market.
II Significant Changes in Major Assets
1. Significant Changes in Major Assets
|||
|-|-|
|Major assets|Reason for significant changes in the period|
||Long-term equity investments stood at RMB97,536,732.02 on December 31, 2017, up|
||100.00% compared to the opening amount, primarily driven by the new investment by|
|Equity assets||
||the Parent Company in Ningbo Meishan Bonded Port Area Haohong Equity Investment|
||Partnership (L.P.) in the Current Period.|
||Engineering materials stood at RMB56,913,806.06 on December 31, 2017, down 51.41%|
|Engineering materials|compared to the opening amount, primarily driven by the decrease in Lu Thai Vietnam’s|
||equipment to be installed.|

2. Major Assets Overseas
√ Applicable□ Not applicable
||||||||||
|-|-|-|-|-|-|-|-|-|
|Asset|Source|Value|Location|Operating|Measures|Earnings|As a|Major|

Lu Thai Textile Co., Ltd. Annual Report 2017
||||||||||
|-|-|-|-|-|-|-|-|-|
|||||model|taken to|generated|percentage of|impairment|
||||||ensure asset||the|risk|
||||||safety||Company’s||
||||||||net value (%)||
||||||Main||||
|Lu Thai|||||||||
||||||management||||
|(Hong Kong)||149,293,602.|||||||
||Incorporated||Hong Kong|Marketing|personnel|1,864,122.58|1.92%|None|
|Textile Co.,||65|||||||
||||||sent by the||||
|Ltd.|||||||||
||||||Company||||
||||||Main||||
|Lu Thai|||||||||
||||||management||||
|(America)|||||||||
||Incorporated|7,467,403.40|New York|Marketing|personnel|-874,210.66|0.10%|None|
|Textile Co.,|||||||||
||||||sent by the||||
|Ltd.|||||||||
||||||Company||||
||||||Main||||
|Lu Thai|||||||||
||||||management||||
|(Cambodia)||141,093,933.||Manufacturin|||||
||Incorporated||Svay Rieng||personnel|6,960,560.40|1.81%|None|
|Textile Co.,||46||g|||||
||||||sent by the||||
|Ltd.|||||||||
||||||Company||||
||||||Main||||
|Lu Thai|||||||||
||||||management||||
|(Burma)||80,653,559.5||Manufacturin|||||
||Incorporated||Rangoon||personnel|-3,895,125.02|1.04%|None|
|Textile Co.,||7||g|||||
||||||sent by the||||
|Ltd.|||||||||
||||||Company||||
||||||Main||||
|Lu Thai|||||||||
||||||management||||
|(Vietnam)||964,981,422.||Manufacturin|||||
||Incorporated||Tay Ninh||personnel|-3,299,669.64|12.41%|None|
|Textile Co.,||42||g|||||
||||||sent by the||||
|Ltd.|||||||||
||||||Company||||
||||||Main||||
|Lu An|||||management||||
|||109,097,323.|Anjiang,|Manufacturin||-12,333,879.4|||
|Garments|Incorporated||||personnel||1.40%|None|
|||90|Vietnam|g||9|||
|Co., Ltd.|||||sent by the||||
||||||Company||||

III Core Competitiveness Analysis
Is the Company subject to any disclosure requirements for special industries?
No.
The comprehensive management ability, research and development ability, technological accumulation and global planning of the
Company’s whole industry chain are the Company's core competitiveness, which did not change during the Reporting Period.
1. A complete industrial chain and a global network: The Company boasts a complete industrial chain from cotton planting, yarning,
Lu Thai Textile Co., Ltd. Annual Report 2017 dyeing, weaving and post-processing to cloth manufacturing, and thus enjoys the cost advantage brought by complete steps for producing high-end dyed textile. The Company has set up production bases in Cambodia, Burma, Vietnam, etc., a design agency in Italy and a market service agency in America, which helps give full play to its international resources, form a global business network and solidify its internationally leading position as a yarn-dyed fabric maker.
2. The sound comprehensive management capacity and an efficient quality control system: The Company has passed ISO9000 quality management system, ISO14000 environmental management system, OHSAS18000 occupational health safety management system, and SA8000 social accountability management system successively from 1995. Ever since 2007, the Company has also passed WRAP: 1999 global garment production social accountability standard, C-TPAT: 2004 anti-terrorism standard, OE100 and GOTS organic cotton system certification and CNAS national laboratory recognition, to realize the internationalization and standardization of theCompany’s management. In order to pursue the operational management of performance excellence and better theCompany’s performance and capability, the Company has gradually introduced GB/T19580-2004 -Standards for Performance Excellence Evaluation, created “Great Quality” system and promoted management innovation, to ensure theCompany’s business quality.
3. It enjoyed strongR&D capability and high-end technological platform for cooperation. The Company highly valued self-dependent innovation and made full use of various technology platforms, inclusive of the National Enterprise Technical Center, National Talent-in draught Demonstration Base and Shandong Engineering and Technological Research Center. Moreover, Lu Thai also reinforced its technical cooperation with scientific research institutes, colleges and universities, strategic clines and major suppliers. It was committed to cutting-edge technical research, and transformed itself from product development to technical researches step by step.What’s more, the Company also upgraded itself from overcoming key technological difficulties to master technical principles and set up industrial standards. In the past, it only focused on technical innovation, but now, it is exploring new technology on one hand and boosting innovation on the other for better growth. Consequently, the Company pushed forward its development in a green, low-carbon and cyclic manner and strengthened its vitality and growing momentum. Meanwhile, the share of technology to its development was also increased, which could push forward industrial up gradation.
4. It boasted considerate and efficientcustomer’s service. With customer-oriented principle as its guidance, the Company comprehensively enhanced its quality control so as to persistently provide high standard service and set up an industry-leading brand image, which, in return, could help to wincustomer’s satisfaction and market recognition. Quality awareness was weaved into every step of the manufacturing process and the impeccable quality traceability ensured product reputation. Objective analysis and thinking in thecustomer’s perspective was theCompany’s service rule, which also helped to win thecustomers’ trust.
Lu Thai Textile Co., Ltd. Annual Report 2017 Part IV Company Performance Discussion and Analysis
I Overview
In 2017, the Company continued to push forward its strategies of “Improve Quality and Efficiency” and “Overall Internationalization”. It kept improving its management capability to ensure a highly efficient production and operation system through improvements through the system, adoption of an excellent performance-promoted model, great efforts in improving the Lu Thai Production System (LTPS), and systematic supply chain management. In 2017, the Company established a global management and control information platform to further promote the integration of “information technology and industrialization” within the Company. Additionally, it continued to pursue high-tech, stylish and green products, adopt a low-carbon, sustainable development model, and actively take on social responsibility.
For 2017, the Company recorded sales revenue of RMB6.409 billion, operating income of RMB1.001 billion, net income attributable to its shareholders of RMB841 million, and net income before non-recurring gains and losses of RMB781 million, up6.99%,3.96%,4.01% and2.34% respectively compared to 2016. During the Reporting Period, the main business and main profit sources and their structures of the Company remained unchanged.
During the Reporting Period, the Company built an internationalized management and control information platform for integration informatization and industrialization. It had successively constructed and implemented a series of information management and control platforms and system software such as APS advanced planning application, cotton sorting process management system, group procurement and inventory management information platform and cost management system, customs supervision information platform and new OA system. The independently developed " yarn-dyed fabric full process industrial control system V1.0" with a multi-network integration, group management and control, multi-language support, remote control and other functions was granted the computer software copyright. This system can be popularized and applied as a module in yarn-dyed factories. In addition, the ERP established by the Company can achieve interconnection with the customs information system to establish a customs supervision information platform for automatic sending of customs declaration data, building a rapid customs clearance capability, and thus the Company becomes the first pilot enterprise of work order reporting in the textile industry. During the Reporting Period, the Company was named "Demonstration Enterprise of Textile Industry on Smart Manufacturing Practice for 2017" by the China Textile Engineering Society, and also was named "Demonstration Enterprise on Manufacturing Item Champion" by the Ministry of Industry and Information Technology and China Federation of Industrial Economics.
During the Reporting Period, in terms ofR&D and innovation, the Company focused on the overall strategic goal to tackle the problems of "bottleneck" technology. In 2017, 226 technical projects of the Company were initiated, covering areas of spinning, weaving, dyeing, treatment, garment manufacturing, energy, environmental protection, information and branding, among which, the projects of "research and application development of key technologies for yarn and fabric color digitization" and"R&D and industrial application of key technologies for salt-free dyeing of reactive dyes" won the first prize in scientific and technological progress granted by the China National Textile And Apparel Council. For new product development, 16 projects were initiated by the Company, among which the development of 37.5 temperature control products, Lu Thai durable white fabrics, wrinkle-free products and freon-free waterproof products had all been successfully completed and the Company had received orders of mass production. In 2017, the projects of "key processing technology of high quality easy-care cotton fabric" and "key technology and application of hygroscopic quick-drying comfortable fabric production" jointly developed by the Company and Jiangnan University, Donghua University and other universities were recognized as the "13th Five-Year" national key research projects, and both projects had been launched for implementation. In 2017, the Company was awarded 3 prizes in scientific and technological progress granted by the China National Textile And Apparel Council, participated in the formulation of 6 national and industrial standards, and was granted 22 licensing patents. Up to now, the Company has successfully developed more than 600 new technologies and new products, among
Lu Thai Textile Co., Ltd. Annual Report 2017 which 46 products have passed the provincial and ministerial level scientific and technological achievements appraisal, including 12 international leading items and 29 international advanced items. Moreover, the Company was granted 49 national, provincial and ministerial awards, and undertook 17 science and technology projects above provincial and ministerial level and 11 major research projects of national and provincial level. In addition, the Company was granted 289 licensing patents 1 software copyright, and hosted or participated in the formulation of 38 national and industrial standards.
During the Reporting Period, in terms of green environmental protection, the Company held the development concept of innovation, coordination, green, open and sharing. It implemented the basic national policy of resource conservation and environmental protection, and aimed to increase energy efficiency and develop energy-saving production processes. The Company intended to accelerate the construction of a resource-saving and environment-friendly society to achieve win-win in economic development and environmental improvement and provide strong support for ecological civilization establishment. Based on the management model of "source governance, process management and control, and end governance", the Company made great efforts on recovery and comprehensive utilization of ammonia, alkali and PVA as well as odor and waste gas treatment, greatly improving the surrounding environmental quality and occupational health and safety of company workplaces. The Company had made chemicals and chemical substances available for inspection and control, and ensured the traceability of chemical substances in fabric products. It had been awarded the honorary title of "Operation Leading Enterprise in Supply Chain Chemical Management Innovation 2020" granted by CNTAC-ZDHC.
In 2017, the Company continued to improve its pollution control facilities and upgraded its waste-water treatment facilities to reduce the total COD emissions by14.9% year-on-year. The treated water quality was superior to the national Class A emission standards. Honors such the "Advanced Energy-saving Enterprise in Shandong", "Water Efficiency Leader of Key Water-use Enterprises" and "Industry Leading Unit of The Fourth Low Carbon Shandong" were granted to the Company. The Company set up a steering group to be in charge of water-saving management, established a long-term water-saving management mechanism, and carried out water-use processes and technical improvements to improve utilization efficiency of water resources and reduce water consumption of unit product. Therefore, the water use indicators and product water consumption indicators of the Company were lower than the average level of water-saving enterprises.
During the Reporting Period, in terms of innovation management, the Company launched the Lu Thai Production System (LTPS) and focused on the basic guideline of "Building new dynamics for economic development with quality improvement". It levered potential tapping, quality and efficiency improvement, development difficulties solving, transformation and upgrading by the implementation of excellent performance and LTPS for the development of new dynamics. In order to solve the seven major problems on wastes, six pilot plants were established for the three major production systems of yarn-dyed, garment production, and printing and dyeing, where work plans were determined and implemented focused on quality, delivery, inventory and low cost for improvement. The Company performed quarterly evaluations of the 39 plants of the Group on the three production systems from the perspectives of 6S and visual management, TPM management, on-site control indicators and LTPS improvement, and granted rewards for encouragement. Moreover, the Company continued to carry out company-level management improvement projects by organizing internal and external experts to establish 149 management projects to further improve management efficiency by the promotion and development of the projects.
During the Reporting Period, in the promotion of independent design, the Company made full use of domestic and foreign resource advantage and followed the "market+ design" concept to carry out targeted fabrics and clothingR&D and design based on the diversity of customer needs. In 2017, the Industrial Design Center of the Company was recognized as a national industrial design center by the Ministry of Industry and Information Technology. At the same time, the Company was awarded the "National Fashion Research Center for Yarn-dyed Fabrics" by the China Textile Information Center (TIC) and China Textiles Development Center. As the only national trend research center for yarn-dyed fabrics, the Company publishes fabric fashion trends for the industry every two quarters each year. In 2017, the Company won the "Product Development Contribution Award of China National Textile And Apparel Council". The Lu Thai GRFF pure cotton fabric was recommended by the China Cotton Textile Industry Association as the "Most Influential Product Brand" of China's cotton textile industry in 2017. In addition, in the "2017 China International Fashion
Lu Thai Textile Co., Ltd. Annual Report 2017 Fabric Design Competition", the design of the Company "Time Fusion" won the "Best Cotton Textile Technology Innovation Award" and the design "Cross the Jungle" won the "Best Market Application Award". The printed fabrics "Falling Petals" and "Blue Waves" developed by the holding subsidiary of the Company, Lufeng Weaving& Dyeing, won the "Best Market Application Award" and "Best Environmental Technology Application Award". The company design works "Chalk Coloring", "Chess and Blossom Charm", "Lines in the Green Wood" and "Essence of Nature" won the "Excellent Award for Spring/Summer Chinese Fashion Fabrics 2018". The works of the Company "Secondary Fusion", "Dazzling Camouflage", "Iron Jungle" and "Dream Magic", "Illusions", "Dreaming the Operatic Circle" and "The Field" of the holding subsidiary Lufeng Weaving& Dyeing won the "Excellence Award for Autumn/Winter Chinese Fashion Fabric 2018/19".
At the current stage, Lu Thai, with natural fabric as its flagship, multi-component functional fiber fabric as its spearhead, wash-and-wear non-ironing technology as its core competency, the latest consumption trend as its guidance and internationalized industrial manufacturing as its basis, is sparing every effort to attain a global integrated development, so as to ensure its leading position in the yarn-dyed shirt fabric sector.
II Analysis of Main Business
1. Summary
For the Reporting Period, the Company recorded sales revenue of RMB6.409 billion (a6.99% year-over-year increase); cost of sales of RMB4.477 billion (an11.73% year-over-year increase), including selling expense of RMB144 million (a9.32% year-over-year drop) and administrative expense of RMB652 million (a1.49% year-over-year drop); research and development expense of RMB328 million (a13.31% year-over-year increase); and net cash flows from operating activities of RMB1.038 billion (a21.05% year-over-year drop).
2. Revenue and Cost
(1) Breakdown of Sales Revenue
Unit: RMB
|||||||
|-|-|-|-|-|-|
||2017||2016|||
|||As a percentage of||As a percentage of||
||||||Change|
||Sales revenue|total sales revenue|Sales revenue|total sales revenue||
|||(%)||(%)||
|Total|6,409,224,044.97|100%|5,990,493,909.36|100%|6.99%|
|By operating division||||||
|Textile and Apparel|5,906,736,459.03|92.16%|5,559,988,040.46|92.81%|6.24%|
|Cotton|35,606,856.03|0.56%|12,617,667.25|0.21%|182.20%|
|Electricity and steam|103,870,652.93|1.62%|111,228,572.38|1.86%|-6.62%|
|Others|363,010,076.98|5.66%|306,659,629.27|5.12%|18.38%|
|By product category||||||
|Fabric products|4,624,849,307.12|72.16%|4,342,679,194.97|72.49%|6.50%|
|Shirts|1,281,887,151.91|20.00%|1,217,308,845.49|20.32%|5.31%|

Lu Thai Textile Co., Ltd. Annual Report 2017
|||||||
|-|-|-|-|-|-|
|Cotton|35,606,856.03|0.56%|12,617,667.25|0.21%|182.20%|
|Electricity and steam|103,870,652.93|1.62%|111,228,572.38|1.86%|-6.62%|
|Others|363,010,076.98|5.66%|306,659,629.27|5.12%|18.38%|
|By operating segment||||||
|Hong Kong|246,434,343.62|3.84%|243,268,777.10|4.06%|1.30%|
|Japan And South||||||
||413,874,632.85|6.46%|367,116,617.59|6.13%|12.74%|
|Korea||||||
|Southeast Asia|1,976,448,225.47|30.84%|1,973,589,974.34|32.95%|0.14%|
|Europe and America|1,044,242,539.46|16.29%|1,065,910,735.22|17.79%|-2.03%|
|Others|376,849,171.78|5.88%|429,694,336.29|7.17%|-12.30%|
|Mainland China|2,351,375,131.79|36.69%|1,910,913,468.82|31.90%|23.05%|

 (2) Operating Division, Product Category or Operating Segment Contributing over10% of Sales Revenue or Income
√ Applicable□ Not applicable
Is the Company subject to any disclosure requirements for special industries?
No.
Unit: RMB
||||||||
|-|-|-|-|-|-|-|
|||||||YoY change in|
||||Gross margin|YoY change in|YoY change in||
||Sales revenue|Cost of sales||||gross margin|
||||percentage|sales revenue|cost of sales||
|||||||percentage|
|By operating division|||||||
|Textile and|||||||
||5,906,736,459.03|4,090,113,368.00|30.76%|6.24%|10.12%|-2.44%|
|apparel|||||||
|By product category|||||||
|Fabric products|4,624,849,307.12|3,170,487,809.95|31.45%|6.50%|10.09%|-2.23%|
|Shirts|1,281,887,151.91|919,625,558.05|28.26%|5.31%|10.24%|-3.21%|
|By operating segment|||||||
|Southeast Asia|1,976,448,225.47|1,355,637,274.13|31.41%|0.14%|3.54%|-2.25%|
|Europe and|||||||
||1,044,242,539.46|738,077,277.54|29.32%|-2.03%|2.33%|-3.01%|
|America|||||||
|China|2,351,375,131.79|1,660,758,668.76|29.37%|23.05%|29.80%|-3.68%|

 Main business data of the previous year restated according to the changed statistical caliber for the Reporting Period
□ Applicable√ Not applicable
Lu Thai Textile Co., Ltd. Annual Report 2017 (3) Whether Revenue from Physical Sales Is Higher than Service Revenue
√ Yes□ No
|||||||
|-|-|-|-|-|-|
|Operating division|Item|Unit|2017|2016|Change|
||Sales volume|(0,000 meters)|23,921.03|22,035.33|8.56%|
|Textile and fabric|Output|(0,000 meters)|26,614.99|25,185.85|5.67%|
||Stock|(0,000 meters)|2,790|3,286.52|-15.11%|
||Sales volume|(0,000 pieces)|1,962.29|1,844.13|6.41%|
|Textile and apparel|Output|(0,000 pieces)|1,914.08|1,856.04|3.13%|
||Stock|(0,000 pieces)|105.56|126.66|-16.66%|
||Sales volume|(ton)|2,110.48|618.91|241.00%|
|Cotton|Output|(ton)|16,737.17|11,013.71|51.97%|
||Stock|(ton)|8,092.61|3,760.35|115.21%|
||Sales volume|(000 KWH)|65,661.68|95,570.01|-31.29%|
|Electricity|Output|(000 KWH)|401,967.71|406,457.36|-1.10%|
||Stock|(000 KWH)||||
||Sales volume|(ton)|307,504.69|318,171.76|-3.35%|
|Steam|Output|(ton)|1,235,609.78|1,235,811.79|-0.02%|
||Stock|(ton)||||

Reason for any over30% YoY movements in the data above
√ Applicable□ Not applicable
1. Sales volume of cotton in 2017 increased by241.00% as compared with last year, mainly due to the increase of external cotton sales from related companies of Xinjiang Lu Thai.
Output in 2017 increased51.97% as compared with last year, mainly because most of the seed cotton purchased by Xinjiang Lu Thai in 2016 that was in rolling season (2016.9-2017.3) was produced and warehoused in 2017, which was influenced by public inspect of cotton
Stock in 2017 increased115.21% as compared with last year, mainly due to the newly added production line of Xinjiang Lu Thai Textile in 2018, and the increase of inventory to produce cotton yarn.
2. Sales volume of electricity in 2017 decreased31.29% as compared with last year, mainly due to the decrease of non-related sales of electricity of Xinsheng Thermal Power.
(4) Execution Progress of Major Signed Sales Contracts in Reporting Period
□ Applicable√ Not applicable
(5) Breakdown of Cost of Sales
By operating division and product category
Unit: RMB
Lu Thai Textile Co., Ltd. Annual Report 2017
||||||||
|-|-|-|-|-|-|-|
|||2017||2016|||
|Operating|||Percentage of||Percentage of||
||Item|||||Change|
|division||Cost of sales|total cost of sales|Cost of sales|total cost of sales||
||||(%)||(%)||
|Textile and|||||||
||Cost of sales|4,090,113,368.00|91.36%|3,714,143,672.96|92.69%|10.12%|
|apparel|||||||
|Cotton|Cost of sales|32,882,009.84|0.73%|11,742,505.52|0.29%|180.03%|
|Electricity and|||||||
||Cost of sales|110,812,770.78|2.48%|96,995,072.89|2.42%|14.25%|
|steam|||||||
|Other|Cost of sales|243,239,636.06|5.43%|184,220,439.28|4.60%|32.04%|

 Unit: RMB
||||||||
|-|-|-|-|-|-|-|
|||2017||2016|||
||||Percentage of||Percentage of||
|Product category|Item|||||Change|
|||Cost of sales|total cost of sales|Cost of sales|total cost of sales||
||||(%)||(%)||
|Fabric products|Cost of sales|3,170,487,809.95|70.82%|2,879,947,896.50|71.87%|10.09%|
|Shirts|Cost of sales|919,625,558.05|20.54%|834,195,776.46|20.82%|10.24%|
|Cotton|Cost of sales|32,882,009.84|0.73%|11,742,505.52|0.29%|180.03%|
|Electricity and|||||||
||Cost of sales|110,812,770.78|2.48%|96,995,072.89|2.42%|14.25%|
|steam|||||||
|Other|Cost of sales|243,239,636.06|5.43%|184,220,439.28|4.60%|32.04%|

 Note:
|||||||||
|-|-|-|-|-|-|-|-|
|Product|Period|Raw material|Labor cost|Depreciation|Energy|Manufactureexpenses|Total|
|Fabric|2017|55.02%|17.51%|5.41%|13.47%|8.59%|100.00%|
||2016|54.82%|17.01%|5.22%|12.86%|10.09%|100.00%|
|Shirts|2017|55.53%|37.50%|2.16%|0.92%|3.89%|100.00%|
||2016|57.10%|37.24%|2.07%|0.83%|2.76%|100.00%|

 (6) Change in Scope of Consolidated Financial Statements for Reporting Period
√ Yes□ No
Chengshun Thermal Power, a subsidiary of Xinsheng Thermal Power, was added into consolidated financial statements.
(7) Major Change in Business Scope or Product or Service Range in Reporting Period
□ Applicable√ Not applicable
Lu Thai Textile Co., Ltd. Annual Report 2017 (8) Main Customers and Suppliers
Main customers:
|||
|-|-|
|Total sales to top 5 customers (RMB)|1,160,240,554.18|
|Ratio of total sales to top 5 customers to annual total sales||
||18.10%|
|(%)||
|Ratio of total sales to top 5 customers to annual total sales||
||0.00%|
|from the related party (%)||

Information about the top 5 customers
|||||
|-|-|-|-|
|Serial No.|Name of customer|Sales (RMB)|Proportion in annual total sales (%)|
|1|SBT|341,377,693.23|5.33%|
|2|OLYMP|232,356,968.38|3.63%|
|3|TAL|230,952,151.17|3.60%|
||CHENFENG (JIANGSU) GARMENT CO.,|||
|4||177,860,580.60|2.78%|
||LTD.|||
|5|PVH-PTU|177,693,160.80|2.77%|
|Total|--|1,160,240,554.18|18.10%|

 Other information about the main customers
□ Applicable√ Not applicable
Main suppliers
|||
|-|-|
|Total purchases from top 5 suppliers (RMB)|722,284,106.95|
|Ratio of total purchases from top 5 suppliers to annual||
||16.88%|
|total purchases (%)||
|Ratio of total purchases from top 5 suppliers to annual||
||0.00%|
|total purchases from related party (%)||

Information about the top 5 suppliers
|||||
|-|-|-|-|
|Serial No.|Name of supplier|Purchase amount (RMB)|Proportion in annual total purchases (%)|
||ZIBO POWER SUPPLY COMPANY OF|||
|1|STATE GRID SHANDONG ELECTRIC|187,900,456.31|4.39%|
||POWER COMPANY|||
|2|ALLENBERG COTTON CO.|171,370,321.64|4.00%|
||AKSU YONGXING COTTON|||
|3||146,639,967.60|3.43%|
||INDUSTRY CO., LTD|||
||JESS SMITH AND SONS COTTON,|||
|4||126,625,297.40|2.96%|
||LLC|||
||XINJIANG PRODUCTION AND|||
|5||89,748,064.00|2.10%|
||CONSTRUCTION CORPS COTTON|||

Lu Thai Textile Co., Ltd. Annual Report 2017
|||||
|-|-|-|-|
||AND LINEN COMPANY|||
|Total|--|722,284,106.95|16.88%|

 Other information about the main suppliers
□ Applicable√ Not applicable
3. Expense
Unit: RMB
||||||
|-|-|-|-|-|
||2017|2016|Change|Reason for material change|
|Selling expenses|144,061,780.39|158,869,993.22|-9.32%||
|Administrative expenses|651,530,968.94|661,355,141.82|-1.49%||
||63,342,671.31|20,949,153.10||Increase of exchange losses resulting|
|Finance costs|||202.36%||
|||||from changes in exchange rate|

 4.R&D Input
√ Applicable□ Not applicable
With leading the technology development in the industry as the goal, the research staff of the Company work hard in new product development, new technology promotion and transformation of new technological results to productivity to explore ways for transforming the business mode, adjusting the structure and extending the industrial chain. These efforts will promote theCompany’s development towards an energy-saving and environment-friendly enterprise and truly achieve the sustainable development. Particulars about theR&D input
|||||
|-|-|-|-|
||2017|2016|Change|
||1,673|1,703|-1.76%|
|Number of R&D personnel||||
|R&D personnel as a percentage|11.72%|10.81%|0.91%|
|of total employees||||
||328,403,990.29|289,826,541.83|13.31%|
|R&D expense (RMB)||||
|R&D expense as a percentage|5.12%|4.84%|0.28%|
|of sales revenue||||
|Capitalized R&D expense|0.00|0.00|0.00%|
|(RMB)||||
|Capitalized R&D expense as a||||
||0.00%|0.00%|0.00%|
|percentage of total R&D||||
|expense||||

Reason for any significant YoY change in the proportion ofR&D expense in sales revenue:
□ Applicable√ Not applicable
Reason for any sharp variation in the percentage of the capitalizedR&D expense and rationale
□ Applicable√ Not applicable
5. Cash Flows
Unit: RMB
Lu Thai Textile Co., Ltd. Annual Report 2017
|||||
|-|-|-|-|
|Item|2017|2016|Change|
|Subtotal of cash generated by|6,543,494,895.58|6,183,425,459.46||
||||5.82%|
|operating activities||||
|Subtotal of cash used in|5,505,459,842.15|4,868,693,175.01||
||||13.08%|
|operating activities||||
|Net cash flows from operating|1,038,035,053.43|1,314,732,284.45||
||||-21.05%|
|activities||||
|Subtotal of cash generated by|84,563,735.04|34,625,847.40||
||||144.22%|
|investing activities||||
|Subtotal of cash used in|828,490,043.09|914,985,442.61||
||||-9.45%|
|investing activities||||
|Net cash flows from investing|-743,926,308.05|-880,359,595.21||
||||15.50%|
|activities||||
|Subtotal of cash generated by|2,389,256,879.43|2,254,527,867.50||
||||5.98%|
|financing activities||||
|Subtotal of cash used in|2,626,785,842.65|2,807,150,042.60||
||||-6.43%|
|financing activities||||
|Net cash flows from financing|-237,528,963.22|-552,622,175.10||
||||57.02%|
|activities||||
|Net increase in cash and cash|17,523,075.19|-109,710,957.16||
||||115.97%|
|equivalents||||

Main influence factors for any significant YoY changes in the items above
√ Applicable□ Not applicable
During the Reporting Period, cash generated by operating activities was RMB84,563,735.04 with a year on year increase of144.22%, mainly due to the recovery and sales of marketable securities; net increase in cash and cash equivalents was RMB17,523,075.19 with a year on year increase of115.97%, mainly due to the increase of net cash flows from financing activities, and decrease of payment of cash for debt and the repurchase of paying B share in the same period of last year.
Reasons for any big difference between the net operating cash flows and the net profits in the Reporting Period
□ Applicable√ Not applicable
III Non-Core Business Analysis
√ Applicable□ Not applicable
Unit: RMB
||||||
|-|-|-|-|-|
|||Percentage of pretax|||
||Amount||Source/Reason|Recurring or not|
|||income (%)|||
||||Gains on delivery and losses||
||||on equity investment of||
|Investment income|2,331,330.34|0.23%|financial assets (financial|No|
||||liabilities) such as forward||
||||exchange settlement||

Lu Thai Textile Co., Ltd. Annual Report 2017
||||||
|-|-|-|-|-|
||||Inventory falling price||
|Asset impairments|37,330,674.24|3.72%|provision, fixed assets|No|
||||impairment provision, etc||
|Non-operating|||||
||12,122,767.09|1.21%|Claims for compensations|No|
|income|||||
|Non-operating|||Donations, losses on damage||
||9,022,725.64|0.90%||No|
|expense|||of non-current assets||

IV Analysis of Assets and Liabilities
1. Material Change in Asset Composition
Unit: RMB
||||||||
|-|-|-|-|-|-|-|
||December 31, 2017||December 31, 2016||||
||||||Change in||
|||Percentage of||Percentage of|||
||||||percentag|Reason for material change|
||Value|total assets|Value|total assets|||
||||||e (%)||
|||(%)||(%)|||
||693,989,293.38||667,304,702.34||||
|Monetary funds||6.82%||7.05%|-0.23%||
|Accounts|334,080,524.05||293,129,727.93||||
|||3.28%||3.10%|0.18%||
|receivable|||||||
||2,100,661,221.93||1,817,542,870.99||||
|Inventories||20.65%||19.20%|1.45%||
|Investing real|24,563,544.58||25,844,090.56||||
|||0.24%||0.27%|-0.03%||
|estate|||||||
|Long-term equity|97,536,732.02||||||
|||0.96%||0.00%|0.96%||
|investment|||||||
||5,421,295,850.03||5,273,148,708.20||||
|Fixed assets||53.30%||55.71%|-2.41%||
|Construction in|157,421,820.68||177,075,655.16||||
|||1.55%||1.87%|-0.32%||
|progress|||||||
|Short-term|1,135,124,996.40||873,261,856.02||||
|||11.16%||9.23%|1.93%||
|borrowings|||||||
|Long-term|||135,678,044.89||||
|||0.00%||1.43%|-1.43%||
|borrowings|||||||

2. Assets and Liabilities Measured at Fair Value
√ Applicable□ Not applicable
Unit: RMB
Lu Thai Textile Co., Ltd. Annual Report 2017
|||||||||
|-|-|-|-|-|-|-|-|
|||Gains/losses on||||||
||||Cumulative fair|Allowance for||||
|||fair value|||Purchased in|Sold in||
||Opening||value changes|impairment for|||Closing|
|Item||changes in|||Reporting|Reporting||
||balance||charged to|Reporting|||balance|
|||Reporting|||Period|Period||
||||equity|Period||||
|||Period||||||
|Financial assets||||||||
|1. Financial||||||||
|assets measured||||||||
|at fair value of||||||||
|which changes||||||||
|are recorded||||||||
||0.00||33,000.00||60,000,000.00||60,330,000.0|
|into current||||||||
|gains/losses||||||||
|(excluding||||||||
|derivative||||||||
|financial assets)||||||||
|Subtotal of||||||||
||0.00||33,000.00||60,000,000.00||60,330,000.0|
|financial assets||||||||
|Total of above|0.00||33,000.00||60,000,000.00||60,330,000.0|
|Financial||||||||
||0.00||||||0.00|
|liabilities||||||||

Material change in the measurement attributes of the main assets in the Reporting Period:
□ Yes√ No
3. Restricted Asset Rights as of End of Reporting Period
Xinjiang Lu Thai, the subsidiary of the Company, took book value of RMB248,632,100.00 inventory, RMB4,316,209.51 fixed asset, and RMB103,162,544.14 land use right as mortgage, and RMB16,000,000.00 certificate of deposit as pledge to obtain the short-term borrowings from Bank of RMB440,000,000.00.
Monetary fund RMB1,350,080.52 whose ownership was restricted, of which, RMB1,200,000.00 was the deposit to handle the letter of credit of Xinjiang Lu Thai; RMB150,080.52 was the deposit to handle the letter of guarantee of theCompany’s subsidiary of Lufeng Weaving& Dyeing.
V Investments Made
1. Total Investment Amount
√ Applicable□ Not applicable
||||
|-|-|-|
|Total investment amount of Reporting|Total investment amount of last year||
|||Change|
|Period (RMB)|(RMB)||
|100,000,000.00|0.00|100.00%|

Lu Thai Textile Co., Ltd. Annual Report 2017 2. Material Equity Investments Made in Reporting Period
√ Applicable□ Not applicable
Unit: RMB
||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||||||||||Investm||Return|||Index|
||Main|||The|||||||||||
||||||Source||||ent||on|Any||to|
||busines||Amoun|Compa||||||Project|||||
|||Way of|||of||Term of|Type of|progres||investm|legal|Disclos|disclose|
|Investe|s scope||t of|ny’s||Joint||||ed|||||
|||investm|||investm||investm|investm|s as of||ent in|matter|ure date|d|
|e|of||investm|stake in||investor||||earning|||||
|||ent|||ent||ent|ent|balance||Reporti|involve|(if any)|i nforma|
||investe||ent|investe||||||s|||||
||||||funds||||sheet||ng|d||tion (if|
||e|||e|||||||||||
||||||||||date||Period|||any)|
|Haohon|||||||||||||||
|g||||||Haojun|||||||||
|Equity||||||Investm|||||||||
|Invest||||||ent and|||||||||
|ment||||||Manage|||||||||
|Partner||||||ment|||||||||
||Equity|Newly|100,00||Self-ow||||||||||
|ship||||||Co.,|||Finishe||-2,463,||10/31/2|2017-0|
||investm|establis|0,000.0|33.33%|ned||3 years|Funds||0.00||No|||
|Enterpr||||||Ltd in|||d||267.98||017|44|
||ent|hed|0||funds||||||||||
|ise in||||||Ningbo|||||||||
|Ningbo||||||Meisha|||||||||
|Meisha||||||n|||||||||
|n||||||bonded|||||||||
|bonded||||||area|||||||||
|area|||||||||||||||
||||100,00||||||||||||
||||||||||||-2,463,||||
|Total|--|--|0,000.0|--|--|--|--|--|--|0.00||--|--|--|
||||||||||||267.98||||
||||0||||||||||||

3. Material Non-Equity Investments Ongoing in Reporting Period
□ Applicable√ Not applicable
4. Financial Investments
(1) Securities Investments
□ Applicable√ Not applicable
No such cases during the Reporting Period.
(2) Investments in Derivative Financial Instruments
√ Applicable□ Not applicable
Lu Thai Textile Co., Ltd. Annual Report 2017RMB’0,000
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|||||||||||||Proporti||
|||||||||||||on of||
|||||||||||||closing|Actua|
|||||||||||||investm||
|||Related-|Type of|||||Amount||Impairm|||l|
|||||Initial|||Opening||Amount||Closing|ent||
||||||||||||||gain/l|
|Operato||party|derivativ||Beginni|Ending||purchas||ent||amount||
||Relation|||investm|||investm||sold in||investm||oss in|
|||t ransacti|e|||||ed inReportin||provisio||in the||
|r||||ent|ng date|date|ent||Reportin||ent||Repor|
|||on ornot|investment|amount|||amount|g Period|g Period|n (ifany)|amount|Company’s|ting|
||||||||||||||Perio|
|||||||||||||closing||
||||||||||||||d|
|||||||||||||net||
|||||||||||||assets||
|||||||||||||(%)||
||||Forward|||||||||||
|Commer||||||||||||||
||Non-rel||exchange|110,898.|01/19/2|12/15/2||110,898.|110,898.||||419.3|
|cial||No|||||0||||0|||
||ated||settleme|18|017|017||18|18||||4|
|bank||||||||||||||
||||nt|||||||||||
|Commer|||foreign|||||||||||
||||foreign|||||||||||
||Non-rel|||139,675.|01/03/2|03/29/2||139,675.|119,875.|||||
|cial||No|exchange||||0||||19,800|2.55%|61.93|
||ated|||82|017|018||82|82|||||
|bank|||option|||||||||||
||||forward|||||||||||
||||forward|||||||||||
|Commer||||||||||||||
||Non-rel||exchange||05/22/2|10/18/2||||||||
|cial||No||9,839.24|||0|9,839.24|9,839.24||0||-6.57|
||ated||transacti||017|017||||||||
|bank||||||||||||||
||||ons|||||||||||
|Commer|||foreign|||||||||||
||||foreign|||||||||||
||Non-rel||||06/20/2|06/30/2||||||||
|cial||No|exchange|12,937.1|||0|12,937.1|12,937.1||0||4.76|
||ated||||017|017||||||||
|bank|||swap|||||||||||
|||||273,350.||||273,350.|253,550.||||479.4|
|Total|||||--|--|0||||19,800|2.55%||
|||||34||||34|34||||6|
|Capital source for derivative||||||||||||||
|||||Self-owned funds||||||||||
|investment||||||||||||||
|Lawsuit (if applicable)||||No||||||||||
|Disclosure date of board||||||||||||||
|announcement on approval of||||04/28/2017||||||||||
|derivative investment (if any)||||||||||||||
|Disclosure date of general meeting||||||||||||||
|announcement on approval of||||||||||||||
|derivative investment (if any)||||||||||||||
|Risk analysis and risk control||||The Company conducted derivatives products transaction in order for hedging. And it was||||||||||
|measures for derivative products held||||operated by installments, with the relevant amount not more than the planned derivatives||||||||||

Lu Thai Textile Co., Ltd. Annual Report 2017
|||
|-|-|
|in Reporting Period (including but not|products transactions. And all derivatives products transaction was zero-deposit. Meanwhile,|
|limited to market risk, liquidity risk,|the Company had a complete risk control system for sufficient analysis and prevention of|
|credit risk, operation risk, legal risk,|possible risks such as market risks, liquidity risk and credit risk, operation risk and risk of|
|etc.)|laws and regulations.|
||1. Market risk: when the international and domestic economic situations change, the|
||corresponding changes in exchange rates and interest rates may have an adverse impact on|
||the financial derivatives transactions of the Company. Precautionary measures to be taken|
||include: the Company chooses risk-controlled financial derivative tools with simple|
||structure and good liquidity to carry out the hedging business, strictly controls the scale of|
||financial derivatives trading by staged operations, and adjusts the strategy according to|
||market changes in a timely manner.|
||2. Liquidity risk and credit risk: a credit risk arising from failure of the contractually due|
||Company or counterparty in performing the contract due to liquidity or factors other than|
||liquidity. Precautionary measures to be taken include: the Company determines the upper|
||limit of derivatives transaction amounts according to production and operation scale as well|
||as foreign exchange income, and conducts operations by stage according to the budget of|
||future collections and disbursement. The derivative trades are free of guarantee deposit and|
||can still be guaranteed in performance after the contract expires by means of extension and|
||balance settlement etc. to prevent the Company from credit damages due to lack of liquidity.|
||The Company selects financial institutions with strong capability and good reputation as a|
||counterparty and signs standard derivative trading contracts to strictly control credit risk of|
||the counterparty.|
||3. Operation risk:|
||The derivative transactions had high specialty and complexity, so imperfect internal|
||operation procedures, staffs and external events would make the Company to undertake risks|
||during the transaction. Risk control measures: The Company promulgated strict|
||authorization and approval system and perfect regulatory mechanism, formulated the|
||operation procedures and approval procedures system to conduct derivative products|
||transaction, established special risk control positions, implemented strict authorization and|
||post checks and balances system, meanwhile, it improved the overall quality of relevant|
||personnel through strengthening the professional ethics education and business training for|
||them. Besides, it established the System of Reporting the Abnormal Situation Timely to|
||lower the operation risks to the maximum.|
||4. Risk concerning laws and regulations:|
||The Company conducted derivatives products transaction in strict accordance with State|
||relevant laws and rules, if there were no standard operation procedures and strict approval|
||procedures, it was easy to cause compliant and regulatory risks existing in the validity and|
||feasibility of contract, commitments and other legal documents signed. Risk control|
||measures: The Company carefully studied and mastered laws, regulations relevant to|
||derivative products transaction, formulated internal control rules for the forward settlement|
||hedging business, standardized the operation procedures, and strengthened the compliant|
||examination on derivative products transaction business. The Company carries out|
||derivative trading business upon fulfillment of relevant approval procedures, complying|

Lu Thai Textile Co., Ltd. Annual Report 2017
|||
|-|-|
||with relevant national laws and regulations, the "Articles of Association", "Lu Thai|
||Derivatives Trading Management System" and the relevant provisions of the "Proposal on|
||the Company's Derivatives Trading Plan" reviewed and passed at the seventh meeting of the|
||eighth session of the Board of Directors held on April 26, 2017. Moreover, the Company|
||fulfilled the relevant information disclosure obligations.|
||1. As of December 31, 2017, the Company held a total of 5 undue financial derivative|
||contracts, totaling US$ 32.5 million, all of which were foreign exchange options. The|
||contract expires at the latest by March 2018. Financial derivatives accounted for 2.55% of|
|Changes in market prices or fair value||
||the net assets at the end of the reporting period. 2. From January to December of 2017, the|
|of invested derivatives in Reporting||
||mature financial derivatives of the Company amounted to US$ 382.1841 million, generating|
|Period (fair value analysis should||
||an income of RMB 4.7946 million, including the expiry long-term foreign exchange|
|include specific analysis methods as||
||settlement of US$162.2818 million, which generated an income of RMB4.1934 million. The|
|well as relevant assumptions and||
||mature foreign exchange options amounted to US$185.8 million, generating an income of|
|parameters)||
||RMB619,300. The long-term foreign exchange sale amounted to US$14.5023 million,|
||generating a loss of RMB65,700. The mature foreign exchange swap amounted to US$ 19|
||million, generating an income of RMB 47,600.|
|Significant changes in the Company’s||
|accounting policy and specific||
|accounting principles for derivatives|No significant changes|
|in Reporting Period when compared||
|to last period||
||The Company’s independent directors Xu Jianjun, Zhao Yao, Bi Xiuli, Pan Ailing and Wang|
||Xinyu, concerning conducting derivatives business, have issued the following professional|
||advice: We are of the opinion that it will strengthen the Company’s competitiveness to use|
|Specific opinion from independent|derivative transactions with focus on forward settlement and purchase as an effective tool to|
|directors on the Company’s|avoid foreign exchange risks, to strengthen the relevant internal control and to carry out the|
|derivatives investment and risk|loss and risk prevention measures so as to improve the operation and management. In|
|control|conducting derivative transactions with focus on forward settlement and purchase, the|
||Company follows a legal approval procedure, has sound relevant institutions and keeps the|
||risks relatively controllable. No harm has been done to the interests of the Company’s|
||shareholders.|

5. Use of Funds Raised
□ Applicable√ Not applicable
No such cases in this Reporting Period.
VI Sale of Major Assets and Equity Interests
1. Sale of Major Assets
□ Applicable√ Not applicable
No such cases in this Reporting Period.
Lu Thai Textile Co., Ltd. Annual Report 2017 2. Sale of Major Equity Interests
□ Applicable√ Not applicable
VII Main Controlled and Joint Stock Companies
√ Applicable□ Not applicable
Main subsidiaries and joint stock companies with an over10% influence on theCompany’s net profit
Unit: RMB
||||||||||
|-|-|-|-|-|-|-|-|-|
||Relationship|Main|||||||
|Company|||Registered|||Sales|Operating||
|||||Total assets|Net assets|||Net income|
|||business|||||||
||with the||||||||
|name|||capital|||revenue|income||
|||scope|||||||
||Company||||||||
|Lufeng|||||||||
|Weaving &|||706,160,000.|1,597,948,86|1,399,594,34|1,664,817,65|118,651,864.|104,083,484.|
||Subsidiary|Fabric|||||||
|Dyeing Co.,|||00|3.87|7.43|9.70|43|23|
|Ltd.|||||||||

Subsidiaries obtained or disposed in the Reporting Period
□ Applicable√ Not applicable
Particulars about the main controlled and joint stock companies:
Lufeng Weaving& Dyeing Co., Ltd. (hereinafter called “Lufeng Weaving& Dyeing”) is the holding subsidiary corporation of the Company. Registration place: Zibo, Shandong; registered capital: RMB 706.160 million. It was authenticated to be high-tech enterprise in October 2014, and authenticated to be high-tech enterprise again for re-evaluation in 2017, mainly manufacturing and selling textile printing and dyeing products and the products of clothing and garments. Its export income accounted for more than75%. During the Reporting Period, market required more and more on the production and environmental protection of printing and dyeing products. Lufeng Weaving& Dyeing had been further acknowledged in market as an enterprise with normative operation and the focus on environmental protection and sustainable development. At the same time, the R& D and innovation of Lufeng Weaving& Dyeing constantly progressed. With the rise of the transfer ratio of scientific and technological achievements, proportion of the sale of new products with high additional value rose largely. In 2017, operation revenue of Lufeng Weaving& Dyeing was RMB 1.665 billion, increasing for3.58% comparing with that of the last year. In another aspect, thanks to comprehensive budget management, costs control and investment in new products R& D, net profit RMB 0.104 billion was achieved in 2017, decreasing for24.02% comparing with that of the last year.
VIII Structured Bodies Controlled by the Company
□ Applicable√ Not applicable
IX Outlook for the Future Development of the Company
1. Industry competition and development trend
China's textile industry possesses outstanding advantages in the global textile industry, mainly in terms of capital, technology and
labor efficiency, etc. Although the cost of production factors is increasing, China's textile industry still has an outstanding advantage
in the global competition. At present, the production capacity of yarn-dyed fabrics for high-end shirts in the world is about 800
Lu Thai Textile Co., Ltd. Annual Report 2017 million meters. Pure cotton-dyed fabrics have always been the fabric used for the production of middle and high-end shirts due to their high color fastness, clear texture, rich colors, comfortableness and good air permeability. In recent years, with the increase of domestic environmental protection requirements and production costs, and the trend of state transformation and upgrading, some low-end and small yarn-dyed production capacities gradually quit the market, and production capacities have been concentrated on large companies, while the demand for yarn-dyed fabrics for shirts is changing to small quantity, variety, diversity, functionality and leisure.
2. Development strategy of the Company
The Company is a large-scale textile enterprise with a complete industrial chain integrating cotton cultivation, spinning, dyeing, weaving, post-treatment and garment manufacturing. It is the world's largest production base for yarn-dyed fabrics for shirts, providing blending of three major series of shirt fabrics of pure cotton and natural fiber, cotton and natural fiber as well as cotton and functional fiber. In order to maintain the outstanding advantages of the Company in global shirt-dyed fabrics, the Company is pushing intelligent manufacturing upgrades and integrating domestic and foreign advantageous resources to deepen internationalization of the Company with regional advantages. The Company combines quality innovation and customer needs, and innovates the marketing model with advantages of resources in each channel. High-end shirt customization services are provided to meet various needs of customers. Furthermore, the Company increases investment in innovation to improveR&D and design and develop new fabrics. The Company holds the concept of low-carbon environmental protection for sustainable economic development.
3. Business plan (the following description does not constitute any commitment of the Company)
(1) In terms of corporate governance, in order to ensure the healthy, stable and sustainable development of the Company at the institutional level, the Company will establish an internal control system to improve organizational structure, corporate governance structure and risk prevention mechanism.
(2) In terms of market development, the Company will follow the business philosophy of "combining end-customer demand withR&D, design and sales services". Based on the stability of existing markets, the Company will adjust operation models, establish diversified sales models and explore new markets to increase domestic market share and balance the development of domestic and foreign markets.
(3) In terms of corporate management, with the goal of "improving quality and increasing efficiency", the Company will fully develop the group system and deeply practice the model of excellence performance. Relying on the Lu Thai Production System (LTPS) and supply chain management, the Company creates a global procurement network to improve the enterprise management system and company upgrade.
(4) In terms of brand building, the Company focuses on quality to integrate corporate philosophy and culture into brand building with innovation. Based on customer demand, the Company innovated the marketing model and integrated online and offline channel resources to push forward the process of brand internationalization and upgrading.
(5) In terms of industrial overall arrangement, in order to maintain the leading position of the Company in the global yarn-dyed industry, the Company rationally allocates domestic and foreign resources and improves production efficiency while keeping product quality relying on the advantages of Milan and U.S. companies in market development, design andR&D, customer service and talent development, and the cost advantages of Southeast Asian production bases.
4. Capital needs, sources and planning
During the reporting period, the new spinning production line with a capacity of 76,000 spindles of the yarn manufacture project Phase II of Lu Thai (Vietnam) Textile Co., Ltd. has been set up. The drawing plans for production workshops have been completed, and the construction was started in December 2017. The expansion project of yarn dyed fabric with a capacity of 40 million meters in Vietnam is in the preparatory stage. With regards to the Vietnam Garment Factory Phase II, the drawing design of production workshops of the expansion project of high-end shirt manufacturing with a capacity of 3 million pieces was completed, and the construction started in December 2017. The funds of the above projects were offered by wholly-owned subsidiaries with their self-owned and self-raised capital.
Lu Thai Textile Co., Ltd. Annual Report 2017 5. Risks that bring adverse impact to company development strategy and business objectives and countermeasures of the Company (1) Economic environment: the world economy is getting better, but trade protectionism and economic policies of advanced economies, especially the uncertain risks of monetary policy, pose greater threats to the recovery of the world economy, producing a certain degree of uncertainty on the market environment that the Company faces. Meanwhile, the new development ofChina’s economy shows more characteristics such as speed change, structural adjustment and dynamic changes. The economic trend towards stability. To cope with these impacts, the Company will work hard to maintain the international market and develop the domestic market to balance development of domestic and foreign sales.
(2) Fluctuations in raw material prices: the raw cotton used by the Company is long-staple cotton, whose price is affected by many factors such as market supply and demand, climate, policies, exchange rates and quotas. Furthermore, with the development of environmental protection policies, the cost of dyeing auxiliaries also increased. Therefore, besides ensuring the stable supply of long-staple cotton by the subsidiary in Xinjiang, the Company must study the market dynamics to reduce the cost fluctuations due to changes in raw cotton price, and develop with the concept of green and environmental protection to meet environmental protection requirements.
(3) Exchange rate changes: at present and in the future, the Company will continue to sell its products mainly in the international market for a long period of time, and US dollars willaccount for a relatively larger portion in sales revenue. In addition, the main machinery and equipment and some of its raw materials of the Company are also imported. The foreign currencies payment for imports includes US dollar and other currencies. Moreover, the commissioning of the Company's overseas production base and subsequent expansion of investment will increase the use of US dollar. Therefore, the Company will still be sensitive to the impact of exchange rate changes.
In order to reduce adverse influence of exchange rate fluctuation, the Company adopted the following measures: firstly, the Company positively conducted foreign exchange hedging, using forward FX sales and purchase, forward foreign exchange trading and option portfolios to avoid some risks Secondly, the Company made reasonable arrangement on settlement day and currency structure and conclusion of agreements on fixed foreign exchange rate to avoid exchange rate-related risks. Thirdly, the Company adjusted the Renminbi and foreign-currency liabilities structure to control financial costs. Fourthly, according to the fluctuation trend of exchange rates, the Company properly adjusted imports of raw and auxiliary materials to partially offset the influence of exchange rate fluctuations on the Company.
X Visits Paid to the Company for Purposes of Research, Communication, Interview, etc. 1. In this Reporting Period
√ Applicable□ Not applicable
||||||
|-|-|-|-|-|
|Date|Way of visit||Type of visitor|Main inquiry information|
|02/23/2017|One-on-one meeting||Institution|About basic information of the Company|
|03/30/2017|By phone||Institution|About basic information of the Company|
|08/30/2017|By phone||Institution|About basic information of the Company|
|10/27/2017|By phone||Institution|About basic information of the Company|
|Times of visit||4|||
|Number of visiting institutions||46|||
|Number of visiting individuals||0|||
|Number of other visiting entities||0|||

Lu Thai Textile Co., Ltd. Annual Report 2017
|||
|-|-|
|Significant undisclosed information disclosed,||
||No|
|revealed or leaked||

Lu Thai Textile Co., Ltd. Annual Report 2017 Part V Significant Events
I Profit Distribution and Converting Capital Reserve into Share Capital for Common Shareholders
Formulation, execution or adjustments of profit distribution policy, especially cash dividend policy, for common shareholders in this Reporting Period
□ Applicable√ Not applicable
Profit distribution plans (or preliminary plans) for the common shareholders and plans (or preliminary plans) for turning capital reserves into share capital for the recent three years (including the Reporting Period)
1. The 2017 annual profit allocation pre-plan reviewed and approved at the 16st Session of the 8th Board of Directors:
Based on the total 922,602,311 shares on December 31, 2017, the Company is to distribute a cash dividend of RMB5.00 for every 10 shares (including tax). The individual income tax for Share A shall be subject to related regulations under CS[2015] No. 101 Notice on Certain Question about the Differentiated Individual Income Tax Policy for Share Dividend of Listed Companies jointly issued by Ministry of Finance, SAT, and CSRC; and that for Share B shall be conversed to HKD based on the central parity rate on interbank exchange market released by thePeople’s Bank of China on the following day aftershareholder’s meeting (for foreign shareholders, tax is free pursuant to CSZ (1994) No. 020 regulations; and non-residential corporate shareholders is entitled to a10% reduction of enterprise income tax according to related regulations under Enterprise Income Tax Law of thePeople’s Republic of China). Based on the 922,602,311 shares, the Company should distribute a cash dividend of RMB5.00 per 10 shares. The aforesaid profit distribution plan is subject to the final approval of the 2017 annual meeting of shareholders.
2. The 2016 annual profit allocation pre-plan reviewed and approved at the 5st Session of the 8th Board of Directors:
Based on the total 922,602,311 shares on December 31, 2016, the Company is to distribute a cash dividend of RMB5.00 for every 10 shares (including tax). The individual income tax for Share A shall be subject to related regulations under CS[2012] No. 85 Notice on Certain Question about the Implementation of Differentiated Individual Income Tax Policy for Share Dividend of Listed Companies jointly issued by Ministry of Finance, SAT, and CSRC; and that for Share B shall be conversed to HKD based on the central parity rate on interbank exchange market released by thePeople’s Bank of China on the following day aftershareholder’s meeting (for foreign shareholders, tax is free pursuant to CSZ (1994) No. 020 regulations; and non-residential corporate shareholders is entitled to a10% reduction of enterprise income tax according to related regulations under Enterprise Income Tax Law of thePeople’s Republic of China).
Based on the above distribution plan, the Company actually distributed RMB 461,301,155.50 dividends. Such plan was implemented in June 2017 after the review and approval on 2016shareholder’s meeting convened on May12, 2017.
3. The 2015 annual profit allocation pre-plan reviewed and approved at the 31th Session of the 7th Board of Directors:
By December 31 of 2015, (the total shares of 954,407,896as at 31 Dec. 2016 minus the 1,350,600 B-shares repurchased in the year), the Company is to distribute a cash dividend of RMB5.00 distributed for every 10 shares (including tax). The individual income tax for Share A was subject to related regulations under CS[2012] No. 85 Notice on Certain Question about the Implementation of Differentiated Individual Income Tax Policy for Share Dividend of Listed Companies jointly issued by Ministry of Finance, SAT, and CSRC; and that for Share B shall be conversed to HKD based on the central parity rate on interbank exchange market released by thePeople’s Bank of China on the following day aftershareholder’s meeting (for foreign shareholders, tax was free pursuant to CSZ (1994) No. 020 regulations; and non-residential corporate shareholders were entitled to a10% reduction of enterprise income tax according to related regulations under Enterprise Income Tax Law of thePeople’s Republic of China).
In the profit distribution, 24,707,749 repurchased but not yet canceled shares in the special account for repurchased shares on the
Lu Thai Textile Co., Ltd. Annual Report 2017 book closure date were excluded. As such, the Company actually distributed RMB 465,525,373.50 dividends for 2015. The aforesaid profit distribution plan was implemented in June 2016 after being reviewed and approved by theShareholders’ General Meeting 2015 held on April 29, 2016.
Cash dividends distributed to the common shareholders in the recent three years (including the Reporting Period)
Unit: RMB
|||||||
|-|-|-|-|-|-|
|||Net profits|Proportion in net|||
|||attributable to|profits attributable|||
||Cash dividend (tax|shareholders of the|to shareholders of||Ratio of cash|
|Year||||Cash dividend in||
||||||dividend in other|
||included)|Company in|the Company in|other forms||
||||||forms|
|||consolidated|consolidated|||
|||statements|statements (%)|||
|2017|461,301,155.50|841,150,934.75|54.84%|0.00|0.00%|
|2016|461,301,155.50|808,760,025.91|57.04%|0.00|0.00%|
|2015|465,525,373.50|712,193,243.19|65.37%|0.00|0.00%|

 Indicate by tick mark whether the Company made profit in this Reporting Period and the profit distributable to common shareholders of the Company was positive, but it did not put forward a proposal for cash dividend distribution to its common shareholders□ Applicable√ Not applicable
II Proposal for Profit Distribution and Converting Capital Reserve into Share Capital for this Reporting Period
√ Applicable□ Not applicable
|||
|-|-|
|Bonus shares for every 10 shares (share)|0|
|Dividend for every 10 shares (RMB) (tax included)|5.00|
|Increased shares for every 10 shares (share)|0|
|Total shares as basis for preliminary distribution||
||922602311|
|plan (share)||
|Total cash dividends (RMB) (tax included)|461,301,155.50|
|Distributable profit (RMB)|3,630,102,526.37|
|Percentage of cash dividends in the total profit to||
||54.84%|
|be distributed (%)||
|Cash dividend policy||
|Where the Company is at a mature stage of development and has plans for considerable spending, in profit distribution, cash||
|dividends shall reach at least 40% in the total profit to be distributed.||
|Details about the proposal for profit distribution and converting capital reserve into share capital||
|1. Based on the total 922,602,311 shares on December 31, 2017, the Company is to distribute a cash dividend of RMB5.00 for||
|every 10 shares (including tax). The individual income tax for Share A shall be subject to related regulations under CS [2015] No.||
|101 Notice on Certain Question about the Differentiated Individual Income Tax Policy for Share Dividend of Listed Companies||

Lu Thai Textile Co., Ltd. Annual Report 2017
||
|-|
|jointly issued by Ministry of Finance, SAT, and CSRC; and that for Share B shall be conversed to HKD based on the central parity|
|rate on interbank exchange market released by the People’s Bank of China on the following day after shareholder’s meeting (for|
|foreign shareholders, tax is free pursuant to CSZ (1994) No. 020 regulations; and non-residential corporate shareholders is entitled|
|to a 10% reduction of enterprise income tax according to related regulations under Enterprise Income Tax Law of the People’s|
|Republic of China).|
|2. Implementing above-mentioned distribution plan with RMB461,301,155.50dividend distribution, and the retained profits|
|RMB3,630,102,526.37 shall be carried forward to the future.|

Note: if the equity base in preliminary distribution plan is not for sure, specific circumstances need to be described in the details of preliminary profit distribution plan; if the system checkcan’t be passed, please contact staff and supervisor of periodic report timely. The Companydidn’t distribute the cash dividend, and there was no bonus share and no turn from capital reserve to share capital of 2017.
III Fulfillment of Commitments
1. Commitments of theCompany’s Actual Controller, Shareholders, Related Parties and Acquirer, as well as the Company and Other Commitment Makers, Fulfilled in this Reporting Period or Ongoing at the Period-end
□ Applicable√ Not applicable
No such cases in this Reporting Period.
2. Where there had been an Earnings Forecast for an Asset or Project and this Reporting Period was still within the Forecast Period, Explain why the Forecast has been Reached for this Reporting Period.
□Applicable√ Not applicable
IV Occupation of theCompany’s Funds by the Controlling Shareholder or its Related Parties for Non-operating Purposes
□ Applicable√ Not applicable
No such cases in this Reporting Period.
V Explanations Given by the Board of Directors, the Supervisory Board and the Independent Directors (if any) regarding the “ModifiedAuditor’s Report” Issued by the CPAs Firm for this Reporting Period
□ Applicable√ Not applicable
VI YoY changes in accounting policies, estimations and methods
√ Applicable□ Not applicable
||||
|-|-|-|
|Contents and reasons|Approval procedure|Remark|
|Before May 1, 2017, inventories of the|Approved by the 7th Meeting of the 8th|For it is unpractical to confirm the|

Lu Thai Textile Co., Ltd. Annual Report 2017
||||
|-|-|-|
|Company shall be measured at planned|Board of Directors of the Company on|accumulative influences from the changes|
|cost when acquired. When acquired and|April 26, 2017|of the accounting policies, according to the|
|delivered, it shall be measured as per the||rules of Accounting Standards for Business|
|weighted average method. According to||Enterprises - Changes in Accounting|
|the requirements of refining operation||Policies and Estimates and Correction of|
|management of the Company, in order to||Errors, the changes in accounting policies|
|further strengthen the refinement of||adopted prospective application method,|
|financial accounting, the Company||which was implemented from May 1,|
|changed the pricing method of acquired||2017.|
|inventories from planned cost to actual|||
|cost from May 1, 2017, and changed the|||
|pricing of delivered grey yarn, dyed yarn,|||
|and plus material from the weighted|||
|average method to first-in first-out method.|||
|||Accounting Standards for Business|
|||Enterprises No. 42—Held-for-sale|
|||Non-current Assets, Disposal Groups and|
|On April 28, 2017, the Ministry of Finance|||
|||Discontinued Operation standardize the|
|released Accounting Standards for|||
|||classification, measurement, and list of|
|Business Enterprises No.|||
|||held-for-sale non-current assets and|
|42—Held-for-sale Non-current Assets,|||
|||disposal group, and the list of termination|
|Disposal Groups and Discontinued|||
|||operation.|
|Operation (CaiKuai [2017] No. 3), which|||
|||According to Notice of the Ministry of|
|came into force from May 28, 2017.|||
||Approved by the Resolutions on the 16th|Finance on Revision and Issuance of|
|On December 25, 2017, the Ministry of|||
||Meeting of the 8th Board of Directors of|Format of General Financial Statements of|
|Finance issued the “Notice on Revision|||
||the Company on April 15, 2018|Enterprises, the Company adjusted the|
|and Issuance of Format of General|||
|||presentation of financial statement. The|
|Financial Statements of Enterprises”|||
|||amount adjusted to “assets disposal|
|(CaiKuai [2017] No. 30) to revise the|||
|||income” in 2017 was RMB1,242,000.54,|
|format of general finance statements of|||
|||and the amount adjusted to “assets disposal|
|enterprises and apply to financial|||
|||income” in 2016 was RMB-6,843,361.94.|
|statements in 2017 and the subsequent|||
|||The changes in accounting policies had no|
|periods.|||
|||significant influences on financial|
|||situations, operating results, and cash|
|||flows of the Company.|
|On May 10, 2017, the Ministry of Finance|||
|released Circular on Issuance and Revision||Government subsidy related to routine|
|of Accounting Standards for Business||activities happened after January 1, 2017|
||Approved by the Resolutions on the 9th||
|Enterprises No. 16—Government Subsidy||shall be calculated into other income;|
||Meeting of the 8th Board of Directors of||
|(CaiKuai [2017] No. 15), and revised||government subsidy that has nothing to do|
||the Company on August 28, 2017||
|Accounting Standards for Business||with routine activities shall be calculated|
|Enterprises No. 16—Government Subsidy,||into non-operating income.|
|which was implemented in the scope of all|||

Lu Thai Textile Co., Ltd. Annual Report 2017
||
|-|
|companies who execute accounting|
|standards for business enterprises from|
|June 12, 2017.|

VII Retroactive Restatement due to Correction of Material Accounting Errors in this Reporting Period
□ Applicable√ Not applicable
No such cases in this Reporting Period.
VIII YoY Changes in the Scope of the Consolidated Financial Statements
√ Applicable□ Not applicable
Chengshun Thermal Power, a subsidiary of Xinsheng Thermal Power, was added into the consolidated financial statements. IX Engagement and Disengagement of CPAs Firm
Current CPAs firm
|||
|-|-|
|Name of domestic CPAs firm|Ruihua Certified Public Accountants (LLP)|
|Remuneration of domestic CPAs firm (RMB’0,000))|173.50|
|Consecutive years of audit services provided by domestic CPAs||
||5|
|firm||
|Name of certified public accountants from domestic CPAs firm|He Feng, Cui Xiaoli|
|Consecutive years of audit services provided by certified public||
||3|
|accountants from domestic CPAs firm||

Indicate by tick mark whether the CPAs firm was changed in this Reporting Period.
□ Yes√ No
CPAs firm, financial advisor or sponsor engaged for internal control audit
√ Applicable□ Not applicable
On May 12, 2017, the Company held the Annual Meetings of Shareholders for 2016, which reviewed and approved the Proposal on Engagement of the 2017 Financial Audit and Internal Control Auditor. The Company paid RMB435,000 in total for the internal control audit.
X Possibility of Listing Suspension or Termination after Disclosure of this Report
□ Applicable√ Not applicable
XI Bankruptcy and Restructuring
□ Applicable√ Not applicable
No such cases in this Reporting Period.
Lu Thai Textile Co., Ltd. Annual Report 2017 XII Significant Litigations and Arbitrations
□ Applicable√ Not applicable
No such cases in this Reporting Period.
XIII Punishments and Rectifications
□ Applicable√ Not applicable
No such cases in this Reporting Period.
XIV Credit Conditions of the Company as well as its Controlling Shareholder and Actual Controller
□ Applicable√ Not applicable
XV Implementation of any Equity Incentive Plan, Employee Stock Ownership Plan or other Incentive Measures for Employees
□ Applicable√ Not applicable
No such cases in this Reporting Period.
XVI Significant Related-party Transactions
1. Related-party Transactions Relevant to Routine Operation
□ Applicable√ Not applicable
No such cases in this Reporting Period.
2. Related Transactions Regarding Purchase or Sales of Assets or Equity Interests
√ Applicable□ Not applicable
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
||||||||||Profits|||
||||||Book|Estimated||||||
||||||||||and losses|||
||||Contents||value of|value of|Transferr||||Index to|
||Relation|Type of||||||Method|of|||
|Related|||of|Pricing|transferre|transferre|ed price|||Disclosur|disclosed|
||with the|transactio||||||of|transactio|||
|party|||transactio|principle|d assets|d assets|(RMB’0,|||e date|informati|
||Company|n||||||settlement|n|||
||||n||(RMB’0,|(RMB’0,|000)||||on|
||||||||||(RMB’0,|||
||||||000)|000)||||||
||||||||||000)|||
|Lucheng|||Purchasin||||||||For|
||Controllin|||Assessed||||||||
|Textile|||g all||||||||details,|
||g|Purchasin||value of||||||09/16/201||
|Investme|||equities||1,359.75|2,343.04|2,343.04|Cash|0||see|
||sharehold|g equity||net||||||7||
|nt Co.,|||of holding||||||||Announc|
||er|||assets||||||||
|Ltd|||subsidiary||||||||ement on|

Lu Thai Textile Co., Ltd. Annual Report 2017
|||||
|-|-|-|-|
||held by||Related|
||controllin||Transacti|
||g||ons of|
||sharehold||Lucheng|
||er||Textile|
||||Co., Ltd|
||||(No.|
||||2017-035|
||||)|
||||disclosed|
||||on|
||||www.cnin|
||||fo.com.cn|
|Reason for great difference of transferred||||
|price and book value or assessed value (if||No||
|any)||||
|Influences on operating results and||||
|||No||
|financial situations of the Company||||
|The achievement of the performance in the||||
|Reporting Period if related transactions||No||
|involved in results appointment||||

3. Related Transactions Regarding Joint Investments in Third Parties
□ Applicable√ Not applicable
No such cases in the Reporting Period.
4. Credits and Liabilities with Related Parties
√ Applicable□ Not applicable
Whether existed non-operating credits and liabilities with related parties
√ Yes□ No
Note: please pay attention to choose it from the aboved “whether exists non-operating credits and liabilities with related parties” Credits of related parties to account receivable
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||||Whether|||||||
|||||||Amount||||
||||||Amount|||||
||||existed|||||||
||||||newly|received in||||
|||||Opening||||Current||
||Relation||occupation||added in|||||
|Related||Formation||balance||current||interest||
||with the||of the Funds||current||Interest rate||Closing|
|party||reason||(RMB’0,00||||(RMB’0,00||
||Company||||period|period|||balance(RM|
||||for|0)||||0)||
||||||(RMB’0,00||||B’0,000)|
|||||||(RMB’0,00||||
||||non-operati||0)|||||
|||||||0)||||
||||ng purposes|||||||

Lu Thai Textile Co., Ltd. Annual Report 2017
||
|-|
|Influences from credits|
|of related parties on|
|operating results and|
|financial situations of|
|the Company|

Liabilities of parties related to account payable
||||||||||
|-|-|-|-|-|-|-|-|-|
|||||Amount|Amount||||
||||Opening|newly added|returned in||Current||
||Relation with|Formation|||||||
|Related party|||balance|in current|current|Interest rate|interest|Closing|
||the Company|reason|||||||
||||(RMB’0,000)|period|period||(RMB’0,000)|balance(RMB|
|||||(RMB’0,000)|(RMB’0,000)|||’0,000)|
|Lucheng|The Parent|Currencies|||||||
||||985.47|16,763|11,848.71|4.35%|104.44|5,900|
|Textile|Company|deposit|||||||
||Wholly-own||||||||
|Limin Purified|ed subsidiary|Currencies|||||||
||||0|700|700|4.35%|3.59||
|Water|of Lucheng|deposit|||||||
||Textile||||||||
||Wholly-own||||||||
||ed subsidiary|Currencies|||||||
|Lujia Property|||0|60||4.35%|1.94|60|
||of Lucheng|deposit|||||||
||Textile||||||||
||Wholly-own||||||||
|Luqun Real|ed subsidiary|Currencies|||||||
||||0|900|900|4.35%|5.03||
|Estate|of Lucheng|deposit|||||||
||Textile||||||||
||Joint-stock||||||||
|Shidanlu|Company of|Currencies|||||||
||||0|275|130|4.35%|2.91|145|
|Company|Lucheng|deposit|||||||
||Textile||||||||
||Controlling||||||||
||subsidiary of|Currencies|||||||
|Taimei Ties|||0|500|370|4.35%|7.32|130|
||Lucheng|deposit|||||||
||Textile||||||||
|Influences from liabilities of|||||||||
|parties related on operating|||||||||
|||No|||||||
|results and financial|||||||||
|situations of the Company|||||||||

5. Other Significant Related Transactions
□ Applicable√ Not applicable
Lu Thai Textile Co., Ltd. Annual Report 2017 No such cases in the Reporting Period.
XVII Significant Contracts and Execution
1. Entrustment, Contracting and Leasing
(1) Entrustment
□ Applicable√ Not applicable
No such cases in the Reporting Period.
(2) Contracting
□ Applicable√ Not applicable
No such cases in the Reporting Period.
(3) Leasing
□ Applicable√ Not applicable
No such cases in the Reporting Period.
2. Significant Guarantees
□ Applicable√ Not applicable
(1) Guarantees Provided by the Company
RMB’0,000
||||||||||
|-|-|-|-|-|-|-|-|-|
|Particulars on external guarantee of the Company and its subsidiaries (excluding guarantees for subsidiaries)|||||||||
||Date of||||||||
||disclosure||||||Whether|Whether|
||||Date of making||||||
||of relevant|||Actual|||the|guarantee|
|Name of guarantee||Guarantee|guarantee (date||Type of|Guarantee|||
||announcem|||amount of|||guarantee|ing for|
|object||limit|of signing||guarantee|period|||
||ents on|||guarantee|||has been|related|
||||agreement)||||||
||guarantee||||||fulfilled|parties|
||limit||||||||
|Particulars about guarantee of the Company for subsidiaries|||||||||
||Date of||||||||
||||||||Whether|Whether|
||disclosure||Date of making|Actual|||||
||||||||the|guarantee|
|Name of guarantee|of relevant|Amount of|guarantee (date|amount of|Type of|Guarantee|||
||||||||guarantee|ing for|
|object|announcem|guarantee|of signing|guarantee|guarantee|period|||
||||||||has been|related|
||ents on||agreement)||||||
||||||||fulfilled|parties|
||guarantee||||||||

Lu Thai Textile Co., Ltd. Annual Report 2017
||||||||||
|-|-|-|-|-|-|-|-|-|
||limit||||||||
|||||||Five years|||
||||||Guarantee of||||
|||||||since the|||
|Lu Thai (Vietnam)|||||joint and||||
||01/25/2017|6,534.2||||approval of|No|Yes|
|Textile Co., Ltd.|||||several||||
|||||||the board of|||
||||||liability||||
|||||||the Company|||
|||||||Two years|||
||||||Guarantee of||||
|||||||since the|||
|Lu Thai (Vietnam)|||||joint and||||
||01/25/2017|5,227.36||288.75||approval of|No|Yes|
|Textile Co., Ltd.|||||several||||
|||||||the board of|||
||||||liability||||
|||||||the Company|||
|||||||Two years|||
||||||Guarantee of||||
|||||||since the|||
|Lu Thai (Vietnam)|||||joint and||||
||01/25/2017|3,920.52||||approval of|No|Yes|
|Textile Co., Ltd.|||||several||||
|||||||the board of|||
||||||liability||||
|||||||the Company|||
|||||||Two years|||
||||||Guarantee of||||
|||||||since the|||
|Lu An Garments Co.,|||||joint and||||
||01/25/2017|26,790.22||487.64||approval of|No|Yes|
|Ltd.|||||several||||
|||||||the board of|||
||||||liability||||
|||||||the Company|||
|||||||Five years|||
||||||Guarantee of||||
|||||||since the|||
|Lu Thai (Vietnam)|||||joint and||||
||01/25/2017|19,602.6||||approval of|No|Yes|
|Textile Co., Ltd.|||||several||||
|||||||the board of|||
||||||liability||||
|||||||the Company|||
|||||||Two years|||
||||||Guarantee of||||
|||||||since the|||
|Lu Thai (Vietnam)|||||joint and||||
||01/25/2017|6,534.2||||approval of|No|Yes|
|Textile Co., Ltd.|||||several||||
|||||||the board of|||
||||||liability||||
|||||||the Company|||
|||||||Two years|||
||||||Guarantee of||||
|Lu Thai (Vietnam)||||||since the|||
||||||joint and||||
|Textile Co., Ltd./Lu|01/25/2017|17,969.05||||approval of|No|Yes|
||||||several||||
|An Garments Co., Ltd.||||||the board of|||
||||||liability||||
|||||||the Company|||
|||||||Three years|||
||||||Guarantee of||||
|Xinjiang Lu Thai||||||since the|||
||||||joint and||||
|Good Yield Cotton|10/14/2017|15,000|10/12/2017|||approval of|No|Yes|
||||||several||||
|Co., Ltd.||||||the board of|||
||||||liability||||
|||||||the Company|||

Lu Thai Textile Co., Ltd. Annual Report 2017
||||||||||
|-|-|-|-|-|-|-|-|-|
|||||||Five years|||
|||||||since the|||
||||||Guarantee of||||
|||||||approval of|||
|Lu Thai (Vietnam)|||||joint and||||
||10/27/2017|67,955.68|10/25/2017|8,880.13||the|No|Yes|
|Textile Co., Ltd.|||||several||||
|||||||shareholders’|||
||||||liability||||
|||||||meeting of|||
|||||||Company|||
|||||Total amount of actual|||||
|Total amount of approved|||||||||
|||||guarantee for subsidiaries|||||
|guarantee for subsidiaries during||169,533.83||||3,344.2|||
|||||during the Reporting Period|||||
|the Reporting Period (B1)|||||||||
|||||(B2)|||||
|||||Total amount of actual|||||
|Total amount of approved|||||||||
|||||guarantee for subsidiaries at|||||
|guarantee for subsidiaries at the||169,533.83||||9,656.52|||
|||||the end of the Reporting|||||
|end of the Reporting Period (B3)|||||||||
|||||Period (B4)|||||
|Guarantees provided by subsidiaries for subsidiaries|||||||||
||Disclosure||||||||
||date on|||||||Guarante|
||||Actual||||||
||relevant|||Actual||||e for a|
|||Amount for|occurrence date||Type of|Period of|Executed||
|Guaranteed party|announcem|||guarantee||||related|
|||guarantee|(date of||guarantee|guarantee|or not||
||ent of|||amount||||party or|
||||agreement)||||||
||guaranteed|||||||not|
||amount||||||||
||||||Guarantee of||||
|Xinjiang Lu Thai|||||joint and||||
||10/14/2017|30,000|10/12/2017|||12 months|No|Yes|
|Textile Co., Ltd.|||||several||||
||||||liability||||
|||||Total actual occurred|||||
|Total guarantee line approved for|||||||||
|||||amount of guarantee for the|||||
|the subsidiaries during the||30,000||||0|||
|||||subsidiaries during the|||||
|Reporting Period (C1)|||||||||
|||||Reporting Period (C2)|||||
|||||Total actual guarantee|||||
|Total guarantee line that has been|||||||||
|||||balance for the subsidiaries|||||
|approved for the subsidiaries at the||30,000||||0|||
|||||at the end of the Reporting|||||
|end of the Reporting Period (C3)|||||||||
|||||Period (C4)|||||
|Total guarantee amount provided by the Company (total of the above-mentioned three kinds of guarantees)|||||||||
|||||Total actual occurred|||||
|Total guarantee line approved|||||||||
|||||amount of guarantee during|||||
|during the Reporting Period||199,533.83||||3,344.2|||
|||||the Reporting Period|||||
|(A1+B1+C1)|||||||||
|||||(A2+B2+C2)|||||
|Total guarantee line that has been||199,533.83||Total actual guarantee||9,656.52|||

Lu Thai Textile Co., Ltd. Annual Report 2017
|||
|-|-|
|approved at the end of the|balance at the end of the|
|Reporting Period (A3+B3+C3)|Reporting Period|
||(A4+B4+C4)|
|Proportion of total guarantee amount (A4+B4+C4) to the net||
||1.34%|
|assets of the Company||
|Of which:||
|Amount of guarantee provide for shareholders, actual controller||
||0|
|and related parties (D)||
|Amount of guarantee provided directly or indirectly for guarantee||
||0|
|objects with asset-liability ratio reaching over 70% (E)||
|Balance between 50% of net assets and total amount of guarantee||
||30,000|
|which exceeds 50% of net assets (F)||
|Sum total of the above three guaranteed amounts (D+E+F)|30,000|
||According to “Agreement on Counter Guarantee” signed on|
||October 12, 2017 between Lu Thai Company and Xinjiang Lu|
|Explanations about joint and several liability for repayment in||
||Thai Company, Xinjiang Lu Thai Company, the warrantee|
|respect of undue guarantee (if any)||
||Xinjiang Lu Thai Company provided the corresponding amount|
||of counter guarantee for Lu Thai Company.|
|Explanation about external guarantee violating established|The Company never provided guarantees for companies except|
|procedure (if any)|controlling subsidiaries.|

Explanations about guarantees provided with complex methods
(2) Particulars about illegal external guarantee
□ Applicable√ Not applicable
No such cases in the Reporting Period.
3. Entrusted Cash Management
(1) Entrusted Cash Management
√ Applicable□ Not applicable
Overviews of entrusted cash management during the Reporting Period
RMB’0,000
||||||
|-|-|-|-|-|
|Specific type|Capital resources|Amount incurred|Undue Balance|Overdue amount|
|Trusted financial|||||
||Self-owned funds|5,000|5,000|0|
|products|||||
|Others|Self-owned funds|6,000|6,000|0|
|Total||11,000|11,000|0|

Particulars of entrusted cash management with single significant amount or low security, bad liquidity, and no capital preservation
Lu Thai Textile Co., Ltd. Annual Report 2017√ Applicable□ Not applicable
RMB’0,000
||||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||||||||||||||||Wheth|Overv|
||||||||||||||||er|iew of|
||||||||||||Amou|Actual|||||
||||||||||||||Amou||there|the|
||||||||||||nt of|recove|||||
||||||||||||||nt|Wheth|is|item|
|||||||||Metho|||actual|ry of|||||
||||||||||Annua|Estima|||withdr|er go|wealth|and|
|||||||||d of|||profits|profits|||||
|Name|Type|Type||Resou|||||l yield|te|||awn|throug|manag|the|
||||Amou||Initial|Ended|Use of|payme|||or|or|||||
|of the|of the|of the||rce of|||||for|profit|||impair|h|ement|relate|
||||nt||date|Date|fund|nt|||losses|losses|||||
|trustee|trustee|product||funds|||||refere|(if|||ment|stator|entrust|d|
|||||||||determ|||in|in|||||
||||||||||nce|any)|||provis|proced|ment|index|
|||||||||ination|||Report|Report|||||
||||||||||||||ion (if|ures|plan|for|
||||||||||||ing|ing|||||
||||||||||||||any)||in|inquiri|
||||||||||||Period|Period|||||
||||||||||||||||future|ng (if|
||||||||||||||||or not|any)|
|||||||||Repay|||||||||
|||||||||capital|||||||||
|||||||||with|||||||||
|Zhong|Trust|Consta||Self-o|||Miya||||||||||
||||||9/14/2|09/14/||interes|||||||Not||
|hang|compa|nt|5,000|wned|||Baobe||7.20%|360||No||Yes|||
||||||017|2018||ts|||||||yet||
|Trust|ny|return||funds|||i||||||||||
|||||||||when|||||||||
|||||||||expire|||||||||
|||||||||d|||||||||
||||||||Accou||||||||||
||||||||nt||||||||||
||||||||receiv||||||||||
|Shang||||||||Repay|||||||||
||||||||ables||||||||||
|hai||||||||capital|||||||||
||||||||bonds||||||||||
|Gophe||||||||with|||||||||
||Fund|Consta||Self-o|||of||||||||||
|r Asset|||||12/18/|01/18/||interes|||||||Not||
||compa|nt|3,000|wned|||Guang||7.60%|228||No||Yes|||
|Manag|||||2017|2019||ts|||||||yet||
||ny|return||funds|||dong||||||||||
|ement||||||||when|||||||||
||||||||Cheng||||||||||
|Co.,||||||||expire|||||||||
||||||||xing||||||||||
|Ltd||||||||d|||||||||
||||||||and||||||||||
||||||||Jingdo||||||||||
||||||||ng||||||||||
|Shang|||||||Granti|Repay|||||||||
|hai|||||||ng|capi|||||||||
|Gophe|Fund|Consta||Self-o|||trust|tal|||||||||
||||||12/22/|12/22/|||||||||Not||
|r Asset|compa|nt|3,000|wned|||loans|whe|8.50%|255||No||Yes|||
||||||2017|2019|||||||||yet||
|Manag|ny|return||funds|||to|n|||||||||
|ement|||||||Jiexin|expi|||||||||
|Co.,|||||||Financ|red|||||||||

Lu Thai Textile Co., Ltd. Annual Report 2017
||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Ltd|||||e|with|||||||||
|||||||ann|||||||||
|||||||ual|||||||||
|||||||inte|||||||||
|||||||rest|||||||||
|||||||s|||||||||
|||||||pay|||||||||
|||||||men|||||||||
|||||||t|||||||||
|Total|11,000|--|--|--|--|--|--|843|0|--|0|--|--|--|

 Whether there is the case where the principal cannot be recovered at maturity or other case which may cause impairment for entrusted asset management
□ Applicable√ Not applicable
(2) Entrusted Loans
√ Applicable□ Not applicable
Overviews of entrusted loans during the Reporting Period
RMB’0,000
|||||
|-|-|-|-|
|Total amount incurred|Capital resources|Undue Balance|Overdue amount|
|0|No|0|0|

 Particulars of entrusted loans with single significant amount or low security, bad liquidity, and no capital preservation
□ Applicable√ Not applicable
Whether there is the case where the principal cannot be recovered at maturity or other case which may cause impairment for entrusted loans
□ Applicable√ Not applicable
4. Other Significant Contracts
□ Applicable√ Not applicable
No such cases in this Reporting Period.
XVIII Social Responsibilities
1. Social Responsibilities Taken
The Company has prepared social responsibilities report for 2017, for details, see Social Responsibilities Report disclosed
simultaneously with Annual Report 2017 of the Company.
Lu Thai Textile Co., Ltd. Annual Report 2017 2. Targeted Measures Taken to Help People Lift themselves out of Poverty
(1) Plan for Targeted Measures
No
(2) Outline of Targeted Measures in the Reporting Period
The Company continued to subsidize the education and poor students in poor areas and continued to carry out the social poverty alleviation in 2017. The Company will continue to subsidize staff in difficulty and help designated poor villages to solve actual difficulties for staffs for the year.
(3) Results of Targeted Measures
||||
|-|-|-|
|Indicator|Measurement unit|Number/Progress|
|I. General condition|——|——|
|Of which: 1. capital|RMB’0,000|101.1|
|II. Itemized investment|——|——|
|1. Out of poverty by industrial development|——|——|
|2. Out of poverty by transferring employment|——|——|
|3. Out of poverty by relocating|——|——|
|4. Out of poverty by education|——|——|
|Of which: 4.3 improve the invested|||
||RMB’0,000|44.29|
|amounts n educational resources of poor areas|||
|5. Out of poverty by improving health|——|——|
|6. Out of poverty by protecting ecological|||
||——|——|
|environment|||
|7. Subsidy for the poorest|——|——|
|8. Social poverty alleviation|——|——|
|Of which: 8.2 the invested amounts in|||
||RMB’0,000|37.05|
|designated poverty alleviation|||
|9. Other items|——|——|
|Of which: 9.2 the invested amounts|RMB’0,000|19.76|
|III. Received awards(contents and rank)|——|——|

(4) Subsequent Targeted Measure Plans
No
Lu Thai Textile Co., Ltd. Annual Report 2017 3. Particulars Relevant to Environmental Protection
Is the Company or any of its subsidiaries a heavily polluting business identified by the environmental protection authorities of China? Yes
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||Name of|||||||||
|Name of the|main|||||Carried||||
||||Number of|Distribution|Emission|||Verified||
|Company or|pollutants|Emission||||emission|Total||Excessive|
||||discharge|of discharge|concentratio|||total||
|its|and|method||||standard of|emission||emission|
||||outlet|outlet|n|||emission||
|subsidiaries|characteristi|||||pollutants||||
||cs|||||||||
|||||||Emission||||
|||||||standard of||||
||||||||COD are|COD are||
|||||Huangjiapu||water||||
||||||COD≤180m||804.54 tons|1495.08||
|||||Industrial||pollutants in||||
|Lu Thai|COD and||||g/L; and||and|tons and||
|||Continuous||Park;||textile||||
|Textile Co.,|ammonia||2||ammonia||ammonia|ammonia|No|
|||discharge||East Zone||dyeing and||||
|Ltd|nitrogen||||nitrogen≤5||nitrogen|nitrogen||
|||||Industrial||finishing||||
||||||mg/L||are|are 149.51||
|||||Park||industry:||||
||||||||32.53tons|tons||
|||||||GB||||
|||||||4287-2012||||
|||||||Emission||||
|||||||standard of||||
||||||||COD are|COD are||
|||||||water||||
||||||COD≤155m||321.43 tons|575.985||
|Lufeng||||Lufeng||pollutants in||||
||COD and||||g/L; and||and|tons and||
|Weaving &||Continuous||chief||textile||||
||ammonia||1||ammonia||ammonia|ammonia|No|
|Dyeing Co.,||discharge||discharge||dyeing and||||
||nitrogen||||nitrogen≤3.||nitrogen|nitrogen||
|Ltd.||||outlet||finishing||||
||||||5mg/L||are 6.959|are 57.6||
|||||||industry:||||
||||||||tons|tons||
|||||||GB||||
|||||||4287-2012||||
|||||||Ultra-low||||
|||||||emission||||
|||||||No. 2||||
||||||||SO2 are|SO2 are||
|||||||modificati||||
||||||SO2:||36.63 tons|217.84 tons||
|Zibo||||Production||on list||||
||||||≤35mg/m3、||/a and NQx|/a and NQx||
|Xinsheng||||plant of||LZJBF||||
||SO2, NQx,|Continuous|||NQx: ≤100||are 302.1|are 622.41||
|Thermal|||3|Xinsheng||(2016) No|||No|
||and smoke|discharge|||mg/m3 and||tons /a and|tons /a and||
|Power Co.,||||Thermal||46 of||||
||||||smoke: ≤10||smoke are|smoke are||
|Ltd.||||Power||Emission||||
||||||mg/m3||6.515 tons|62.24 tons||
|||||||standard of||||
||||||||/a.|/a.||
|||||||air||||
|||||||pollutants||||
|||||||of Thermal||||

Lu Thai Textile Co., Ltd. Annual Report 2017
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|||||||Power||||
|||||||Plant in||||
|||||||Shangdong||||
|||||||Province||||
|||Discharge||||||||
|Lu Thai||into sewage||||||||
|||||Beside||QCVN40:||||
|(Vietnam)||plant in the|||||445,000|||
||Sewage||1|sewage|/|2011/BTN||/|No|
|Textile Co.,||park district|||||tons|||
|||||plant||MT||||
|Ltd.||after||||||||
|||treatment||||||||
|Lu Thai||Direct||||||||
|||||||QCVN19:||||
|(Vietnam)||discharge||Beside|||0.15 billion|||
||Exhaust gas||2||/|2009/BTN||/|No|
|Textile Co.,||after||boiler room|||m3|||
|||||||MT||||
|Ltd.||teratment||||||||

Construction of pollution prevention equipment and operation condition
Lu Thai Textile Co., Ltd. and its holding subsidiary Lufeng Weaving& Dyeing Co., Ltd. strictly implement the "Three Simultaneous" management system for environmental protection in project constructions. The companies are equipped with complete facilities for waste gas and waste water treatment. In 2017, Lu Thai Textile Co., Ltd. and its holding subsidiary Lufeng Weaving& Dyeing Co., Ltd. carried out the waste water treatment system transformation project to improve the treated water quality and reduce the impact on subsequent municipal waste water treatment plants. The river water quality and local ecological environment were improved. Support teams were set up to be responsible for daily operation maintenance and inspection to guarantee the normal operation of facilities. Both the exhaust emission and waste water discharge meet the emission standards. The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. enforces the "Three Simultaneous" management system for environmental protection in extension project construction in accordance with the government requirements, and adopts the "limestone-gypsum method" to reduce emission concentration of sulfur dioxide, the"SNCR+SCR method" to reduce emission concentration of nitrogen oxides, and the "five-field electrostatic precipitator+ wet electrostatic precipitator" to reduce soot emission concentration. The overall system works well. The waste water treatment project of the wholly-owned subsidiary Lu Thai (Vietnam) Textile Co., Ltd. is designed to treat 3,000 tons of sewage water daily, and the project was completed for operation on schedule in 2017. The Company adopts a comprehensive treatment process of "pre-materialization+ A2O biochemistry+ post-materialization+ ozone oxidation" for waste water treatment, and the treated water quality is better than the QCVN 40:2011/BTNMT A-level emission standards stipulated by the Vietnam government. The treated waste water is all discharged to the waste water treatment station in the park. Treated water quality analysis for 2017: The COD (mean value) was 42.35 mg/L, the chrominance (mean value) was 34.57, the ammonia nitrogen (mean value) was 0.87 mg/L, and the total phosphorus (mean value) was 0.12 mg/L. All the parameters met the A-level emission standards set in the "Regulations on Parameters of Industrial Drainage in Vietnam" (QCVN40:2011/BTNMT). Waste water discharge in the whole year met the standards without violation. The total amount of waste water discharged in the year was 445,000 tons, among which, the chemical oxygen demand (COD) was 18.845 tons, ammonia nitrogen (NH3-N) was 387.15 kg and total phosphorus (TP) was 53.4 kg. The Company is equipped with multi-pipe and water film dust-separation devices to process the exhaust gas discharged from boilers of the Company. In 2017, all the equipment was in normal operation, and the exhaust gas inspection parameters were lower than the QCVN19:2009/BTNMT emission standards set by Vietnam government.
Environmental impact assessment of projects and other environmental protection administrative licensing
In 2017, Lu Thai Textile Co., Ltd. completed the acceptance of environmental protection of 3 environmental impact assessment
projects, namely the high-end dyed fabric technical renovation project in the western region, the production line technological
renovation project of high-grade jacquard fabric with an annual output of 1.8 million meters of No. 2 weaving factory and the
Lu Thai Textile Co., Ltd. Annual Report 2017 intelligent dyeing production and energy and water saving technological renovation project. The Company also completed the review and approval of 2 environmental assessment projects, namely treatment and comprehensive improvement project of PVA waste water at high concentration of Lu Thai Textile (I) and treatment and comprehensive improvement project of PVA waste water at high concentration of Lu Thai Textile (II). The environmental protection review and approval of liquid membrane separation of dyeing waste water and treatment station comprehensive upgrading projects of the holding subsidiary Lufeng Weaving& Dyeing Co., Ltd. were completed. The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. got the "Approval of Environmental Impact Assessment Report of the Environmental Protection Department of Shandong Province on the Extension Project of Zibo Xinsheng Thermal Power Co., Ltd." (LHS[2015] No. 241) in accordance with the regulations, and the first phase of the project was put into trial operation at the end of 2017. The completion acceptance of the environmental protection project for the spinning and dyeing zone of the wholly-owned subsidiary Lu Thai (Vietnam) Co., Ltd. has been recognized, and the EIA report for the spinning and dyeing industrial park Phase II is under application.
Emergency plan for environmental incidents
In 2017, Lu Thai Textile Co., Ltd. prepared the Emergency Plan for Environmental Incidents for the head office and factories in eastern district, which was filed with Zibo Environmental Protection Bureau Xichuan Branch. The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. has formulated the "Emergency Plan for Environmental Incidents" and filed it with the environmental protection management department. The identification and risk assessment of environmental risk sources, prevention and early warning mechanisms, emergency protection and supervision and management were included in the plan. The wholly-owned subsidiary Lu Thai (Vietnam) Co., Ltd. has prepared emergency plans for different environmental incidents to reduce their impacts.
Environmental self-monitoring programme
In accordance with the requirements of environmental protection authorities, Lu Thai Textile Co., Ltd. formulates environmental self-testing plan for the following year in December of each year, and implements the self-monitoring plan to submit data to Zibo Automatic Environmental Monitoring System. The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. complies with the requirements of superior environmental protection authorities to meet discharge standards by online real-time monitoring of environmental protection data. The wholly-owned subsidiary Lu Thai (Vietnam) Co., Ltd. installed an on-line monitoring device for real-time treated water quality monitoring. In addition, the Company invites external qualified testing organizations to carry out inspections on waste water, sludge and exhaust gas every quarter, and provides reports to environmental inspection departments. Other environment information that should be disclosed
No
Other related environment protection information
No
XIX Other Significant Events
□ Applicable√ Not applicable
No such cases in the Reporting Period.
XX Significant Events of Subsidiaries
□ Applicable√ Not applicable
Lu Thai Textile Co., Ltd. Annual Report 2017 Part VI Share Changes and Shareholder Information
I Share Changes
1. Share Changes
Unit: share
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||Before||Increase/decrease (+/-)|||||After||
||||||Increase|||||
|||Percentag|New|Bonus|from||||Percentag|
||Number|||||Other|Subtotal|Number||
|||e (%)|issues|shares|capital||||e (%)|
||||||reserve|||||
||119,375,2|||||||119,079,9||
|I. Restricted shares||12.94%||||-295,296|-295,296||12.91%|
||40|||||||44||
|3. Shares held by other||||||||||
||1,142,840|0.12%||||-295,296|-295,296|847,544|0.09%|
|domestic corporations||||||||||
|Shares held by domestic||||||||||
||1,142,840|0.12%||||-295,296|-295,296|847,544|0.09%|
|natural persons||||||||||
|4. Shares held by foreign|118,232,4|||||||118,232,4||
|||12.82%|||||||12.82%|
|investors|00|||||||00||
|Among which: Shares held|118,232,4|||||||118,232,4||
|||12.82%|||||||12.82%|
|by foreign corporations|00|||||||00||
||803,227,0|||||||803,522,3||
|||87.06%||||295,296|295,296||87.09%|
|II. Non-restricted shares|71|||||||67||
||560,822,4|||||||561,150,4||
|||60.79%||||327,971|327,971||60.82%|
|1. RMB ordinary shares|60|||||||31||
|2. Domestically listed foreign|242,404,6|||||||242,371,9||
|||26.27%||||-32,675|-32,675||26.27%|
|shares|11|||||||36||
||922,602,3|||||||922,602,3||
|III. Total shares||100.00%||||0|0||100.00%|
||11|||||||11||

Reasons for any share changes:
√ Applicable□ Not applicable
Due to the adjustment of unlock of seniormanagers’ shares and lock of share increase of Shenzhen branch of China Securities Depository and Clearing Corporation Limited, 295,296 shares of “limited sales condition shares-domestic natural person holding” of the Company decreased.
Approval of share changes:
□ Applicable√ Not applicable
Lu Thai Textile Co., Ltd. Annual Report 2017 Transfer of share ownership:
□ Applicable√ Not applicable
Effects of share changes on the basic EPS, diluted EPS, net assets per share attributable to common shareholders of the Company and other financial indexes of the prior year and the prior period:
□ Applicable√ Not applicable
Other contents that the Company considers necessary or is required by the securities regulatory authorities to disclose:
□ Applicable√ Not applicable
2. Changes in Restricted Shares
√ Applicable□ Not applicable
Unit: share
||||||||
|-|-|-|-|-|-|-|
||||||Reason for||
|Name of|Opening|Unlocked in|Increased in|Closing restricted||Date of|
||||||lock-up/unlockin||
|shareholder|restricted shares|Reporting Period|Reporting Period|shares||unlocking|
||||||g||
||||||Locked the|6 months after|
|Qin Guiling (Lu|||||shareholding of|the departure|
||0|0|19,500|19,500|||
|Thai B)|||||the Senior||
||||||Executives||
||||||Locked the|6 months after|
|Liu Zilong (Lu|||||shareholding of|the departure|
||0|0|9,375|9,375|||
|Thai B)|||||the Senior||
||||||Executives||
||||||Locked the|6 months after|
|Pan Pingli (Lu Thai|||||shareholding of|the departure|
||19,950|0|3,800|23,750|||
|B)|||||the Senior||
||||||Executives||
|Total|19,950|0|32,675|52,625|--|--|

 II Issuance and Listing of Securities
1. Securities (Excluding Preference Shares) Issued in this Reporting Period
□ Applicable√ Not applicable
2. Changes in Total Shares of the Company and the Shareholder Structure, as well as the Asset and
Liability Structures
Lu Thai Textile Co., Ltd. Annual Report 2017□ Applicable√ Not applicable
3. Existing Employee-held Shares
□ Applicable√ Not applicable
III Shareholders and Actual Controller
1. Total Number of Shareholders and their Shareholdings
Unit: share
||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|||||||||||||Total number of|||
|||||||||||||preference|||
||||Total number of||||||||||||
||||||||Total number of|||||shareholders|||
||||common||||||||||||
||||||||preference|||||with resumed|||
|Total number|||shareholders at||||||||||||
||||||||shareholders with|||||voting rights at|||
|of common|||the prior||||||||||||
||62,667||||61,943||resumed voting|||0||the prior||0|
|shareholders at|||month-end||||||||||||
||||||||rights at the|||||month-end|||
|the period-end|||before the||||||||||||
||||||||period-end (if any)|||||before the|||
||||disclosure of this||||||||||||
||||||||(see note 8)|||||disclosure of this|||
||||Report||||||||||||
|||||||||||||Report (if any)|||
|||||||||||||(see note 8)|||
|5% or greater shareholders or the top 10 shareholders|||||||||||||||
||||||Total|Increase/|||||Pledged or frozen shares||||
|||||||||Number|Number||||||
|||||Sharehold|shares|decrease|||||||||
|||||||||of|of||||||
|Name of||Nature of||ing|held at|during|||||||||
|||||||||restricted|non-restric||||||
|shareholder||shareholder||percentag|the|this|||||Status||Number||
|||||||||shares|ted shares||||||
|||||e (%)|period-en|Reporting|||||||||
|||||||||held|held||||||
||||||d|Period|||||||||
|Zibo LuchengTextile InvestmentCo., Ltd.||Domesticnon-state-ownedcorporation||15.21%|140,353,583|0||0|140,353,583||||||
|Tailun (Thailand)Textile Co., Ltd.||Foreigncorporation||12.82%|118,232,400|0||118,232,400|0||||||
|Central HuijinAssetsManagement Co.,Ltd.||State-ownedcorporation||2.20%|20,315,300|0||0|20,315,300||||||
|T.ROWE PRICEINTL||Foreigncorporation||2.16%|19,948,219|0||0|19,948,219||||||

Lu Thai Textile Co., Ltd. Annual Report 2017
||||||||||
|-|-|-|-|-|-|-|-|-|
|DISCOVERYFUND|||||||||
|Hong KongSecurities ClearingCo., Ltd|Foreigncorporation|1.93%|17,826,155|11654438|0|17,826,155|||
|China SecuritiesFinanceCorporationLimited|Domesticnon-state-ownedcorporation|1.70%|15,679,091|0|0|15,679,091|||
|Bank of ChinaLimited-Hua’anNew Silk RoadTheme EquitySecuritiesInvestment Fund|Domesticnon-state-ownedcorporation|1.19%|10,990,000|3790000|0|10,990,000|||
|Hong KongMonetaryAuthority-self-owned funds|Foreigncorporation|0.91%|8,414,637|4031977|0|8,414,637|||
|RBC EMERGINGMARKETSSMALL CAPEQUITY FUND|Foreigncorporation|0.74%|6,785,384|356700|0|6,785,384|||
|LYNAS ASIAFUND|Foreigncorporation|0.72%|6,682,153|-5757847|0|6,682,153|||
|Strategic investors or general|||||||||
|corporations becoming top-ten|||||||||
|||N/A|||||||
|shareholders due to placing of new|||||||||
|shares (if any) (see Note 3)|||||||||
|||Zibo Lucheng Textile Investment Co., Ltd. is the largest shareholder of the Company and|||||||
|||the actual controller. Tailun (Thailand) Textile Co., Ltd. is the second largest shareholder as|||||||
|Related or acting-in-concert parties|||||||||
|||well as sponsor of foreign capital of the Company. All of other shareholders are people|||||||
|among the shareholders above|||||||||
|||holding circulating A share or circulating B share and the Company is not able to confirm|||||||
|||whether there is associated relationship or concerted action among other shareholders.|||||||
|Shareholdings of the top ten non-restricted shareholders|||||||||
|||Number of non-restricted shares held at the|||||Type of shares||
|Name of shareholder|||||||||
|||period-end|||||Type|Number|
|Zibo Lucheng Textile Investment Co.,Ltd.||140,353,583|||||RMB common||
|||||||||140,353,583|
||||||||shares||
|Central Huijin Assets Management||20,315,300|||||RMB common|20,315,300|

Lu Thai Textile Co., Ltd. Annual Report 2017
|||||
|-|-|-|-|
|Co., Ltd.||shares||
|T.ROWE PRICE INTL DISCOVERYFUND|19,948,219|Domestically||
|||listed foreign|19,948,219|
|||shares||
|Hong Kong Securities Clearing Co.,Ltd|17,826,155|RMB common||
||||17,826,155|
|||shares||
|China Securities Finance CorporationLimited|15,679,091|RMB common||
||||15,679,091|
|||shares||
|Bank of China Limited-Hua’an NewSilk Road Theme Equity SecuritiesInvestment Fund|10,990,000|||
|||RMB common||
||||10,990,000|
|||shares||
|Hong Kong MonetaryAuthority-self-owned funds|8,414,637|RMB common||
||||8,414,637|
|||shares||
|RBC EMERGING MARKETSSMALL CAP EQUITY FUND|6,785,384|Domestically||
|||listed foreign|6,785,384|
|||shares||
|LYNAS ASIA FUND|6,682,153|Domestically||
|||listed foreign|6,682,153|
|||shares||
|HTHK-MANULIFE CHINA VALUEFUND|5,730,938|Domestically||
|||listed foreign|5,730,938|
|||shares||
|Explanation about associated||||
|relationship and concerted action|Zibo Lucheng Textile Investment Co., Ltd. is the largest shareholder of the Company and|||
|among the top ten shareholders not|the actual controller. Tailun (Thailand) Textile Co., Ltd. is the second largest shareholder as|||
|subject to trading moratorium as well|well as sponsor of foreign capital of the Company. All of other shareholders are people|||
|as between the top ten shareholders|holding circulating A share or circulating B share and the Company is not able to confirm|||
|not subject to trading moratorium and|whether there is associated relationship or concerted action among other shareholders.|||
|the top ten shareholders||||
|Particulars about the top 10 common||||
|shareholders participating in margin|N/A|||
|trading (if any) (Notes 4)||||

Indicate by tick mark whether any of the top ten common shareholders or the top ten non-restricted common shareholders of the Company conducted any promissory repo during this Reporting Period.
□ Yea√ No
No such cases in this Reporting Period.
Lu Thai Textile Co., Ltd. Annual Report 2017 2. Information about the Controlling Shareholder
Nature of controlling shareholder: controlled by individual
Type of controlling shareholder: corporation
||||||
|-|-|-|-|-|
|Name of controlling|Legal representative||||
|||Date of establishment|Organization code|Business scope|
|shareholder|/ company principal||||
|||||Investment on textile,|
|Zibo Lucheng Textile||||electricity and chemical;|
||Liu Deming|09/25/1998|91370303164200391J||
|Investment Co., Ltd.||||purchase, process and sale|
|||||of cotton; retail service etc.|
|Particulars about shareholding|||||
|of controlling shareholders|||||
|controlling and holding shares|N/A||||
|of other listed companies|||||
|during the Reporting Period|||||

Change of the controlling shareholder during this Reporting Period
□ Applicable√ Not applicable
No such cases in this Reporting Period.
3. Information about the Actual Controller
Nature of actual controller: domestic individual
Type of actual controller: individual
||||
|-|-|-|
|||Whether gain the right of residence in other countries or|
|Name of the actual controller|Nationality||
|||regions or not|
|Liu Zibin|China|No|
|Liu Deming|China|No|
||Liu Zibin is the Chairman of the Board and GM of Lu Thai Textile Co., Ltd. , Liu||
|Professions and titles|Deming is the Chairman of the Board and GM of Zibo Lucheng Textile Investment||
||Co., Ltd.||
|Particulars about listed companies with|||
|shares ever held by the actual controller over|N/A||
|the past 10 years|||

Change of the actual controller during this Reporting Period
□ Applicable√ Not applicable
No such cases in this Reporting Period.
Ownership and control relations between the actual controller and the Company
Lu Thai Textile Co., Ltd. Annual Report 2017 Liu Zibin Liu Deming
4%
21%
Zibo Lucheng Textile Investment Co., Ltd.
0.02%
15.21%
Lu Thai Textile Co., Ltd.
The actual controller controls the Company in the means of entrustment or other means of assets management
□ Applicable√ Not applicable
4.10% or Greater Corporate Shareholders
√ Applicable□ Not applicable
||||||
|-|-|-|-|-|
||Legal representative /|Date of|||
|Name of corporate shareholder|||Registered capital|Business scope|
||company principal|establishment|||
||||600 million baht|600 million baht (Thai)|
|Tailun (Thailand) Textile Co., Ltd.|Xu Zhinan|01/29/1985|||
||||(Thai)||

5. Limitations on Shareholding Decrease by theCompany’s Controlling Shareholder, Actual Controller, Reorganizer and Other Commitment Makers
□ Applicable√ Not applicable
Lu Thai Textile Co., Ltd. Annual Report 2017 Part VII Preferred Shares
□ Applicable√ Not applicable
No preferred shares in the Reporting Period.
Lu Thai Textile Co., Ltd. Annual Report 2017 Part VIII Directors, Supervisors, Senior Management and Staff I Changes in Shareholdings of Directors, Supervisors and Executive Officers
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|||||||||Increase|Decrease|||
||||||||Opening|||Other|Closing|
|||||||||in this|in this|||
||Office|Incumben|||Starting|Ending|sharehold|||increase/d|sharehold|
|Name|||Gender|Age|date of|date of||Reporting|Reporting|||
||title|t/former|||||ing|||ecrease|ing|
||||||tenure|tenure||Period|Period|||
||||||||(share)|||(share)|(share)|
|||||||||(share)|(share)|||
||Chairman||||06/06/200|06/05/201||||||
|Liu Zibin||Current|Male|53|||148,290||||148,290|
||, GM||||7|9||||||
|Xu|Vice||||05/06/200|06/05/201||||||
|||Current|Male|88||||||||
|Zhinan|President||||4|9||||||
|Fujiwara|||||05/07/199|06/05/201||||||
||Director|Current|Male|78||||||||
|Hidetoshi|||||8|9||||||
|Chen|||||04/16/200|06/05/201||||||
||Director|Current|Male|74||||||||
|Ruimou|||||0|9||||||
|Zeng|||||06/06/200|06/05/201||||||
||Director|Current|Male|67||||||||
|Facheng|||||7|9||||||
||Director|||||||||||
||and Vice|||||||||||
|Wang|||||05/07/199|06/05/201||||||
||GM and|Current|Male|57|||146,753||||146,753|
|Fangshui|||||8|9||||||
||Chief|||||||||||
||Engineer|||||||||||
|Liu|||||05/12/201|06/09/201||||||
||Director|Current|Male|27||||||||
|Deming|||||7|9||||||
||Director|||||||||||
|Qin|and||||05/07/199|06/05/201||||||
|||Current|Female|52|||107,042|19,500|||126,542|
|Guiling|Chairman||||8|9||||||
||Secretary|||||||||||
||Director|||||||||||
|Zhang|and Chief||||06/06/201|06/05/201||||||
|||Current|Female|48|||92,500||||92,500|
|Hongmei|Accounta||||6|9||||||
||nt|||||||||||
||Independ|||||||||||
|Xu|||||06/06/201|06/05/201||||||
||ent|Current|Male|44||||||||
|Jianjun|||||3|9||||||
||Director|||||||||||
||Independ||||09/19/201|06/05/201||||||
|Zhao Yao||Current|Male|48||||||||
||ent||||4|9||||||

Lu Thai Textile Co., Ltd. Annual Report 2017
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||Director|||||||||
||Independ|||||||||
||||||06/06/201|06/05/201||||
|Bi Xiuli|ent|Current|Female|51||||||
||||||6|9||||
||Director|||||||||
||Independ|||||||||
|Pan|||||06/06/201|06/05/201||||
||ent|Current|Female|53||||||
|Ailing|||||6|9||||
||Director|||||||||
||Independ|||||||||
|Wang|||||06/06/201|06/05/201||||
||ent|Current|Male|51||||||
|Xinyu|||||6|9||||
||Director|||||||||
||Superviso|||||||||
|Li|||||09/19/201|06/05/201||||
||ry Board|Current|Male|62|||176,164||176,164|
|Tongmin|||||4|9||||
||Chairman|||||||||
|Liu|Superviso||||06/06/200|06/05/201||||
|||Current|Male|50||||10,000|10,000|
|Zilong|r||||7|9||||
|Dong|Superviso||||06/06/200|06/05/201||||
|||Current|Male|49|||5,000||5,000|
|Shibing|r||||7|9||||
|Zhang|||||06/06/200|06/05/201||||
||Vice GM|Current|Male|50|||52,150||52,150|
|Jianxiang|||||7|9||||
||Vice GM,|||||||||
|Wang|||||06/06/200|06/05/201||||
||Product|Current|Male|55|||83,700||83,700|
|Jiabin|||||7|9||||
||Manager|||||||||
||Vice GM,|||||||||
|Zhang|Managem||||06/06/200|06/05/201||||
|||Current|Male|48|||73,100||73,100|
|Shougang|ent||||7|9||||
||Manager|||||||||
||Vice GM,|||||||||
|Zhang|GM of||||06/06/200|06/05/201||||
|||Current|Male|46|||80,300||80,300|
|Zhanqi|Lufeng||||7|9||||
||Company|||||||||
||Manager|||||||||
|Fujiwara|of clothes|||||||||
||||||12/09/201|06/05/201||||
|Matsuzak|marketing|Current|Male|45||||||
||||||4|9||||
|a|departme|||||||||
||nt|||||||||
|Zhang|Financial||||06/06/200|06/05/201||||
|||Current|Male|50|||77,700||77,700|
|Keming|Manager||||7|9||||
||||||06/08/201|06/05/201||||
|Li Wenji|CIO|Current|Male|51|||10,000||10,000|
||||||6|9||||
|Pan|Customs|Current|Male|50|06/06/200|06/05/201|130,496|3,800|134,296|

Lu Thai Textile Co., Ltd. Annual Report 2017
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Pingli|Manager||||7|9||||||
||Vice GM|||||||||||
|Lv|||||06/06/200|06/05/201||||||
||of Lufeng|Current|Male|50|||33,750||||33,750|
|Yongchen|||||7|9||||||
||Company|||||||||||
|Yu|Energy|||||||||||
||||||06/06/200|06/05/201||||||
|Shouzhen|Business|Current|Male|50|||83,100||||83,100|
||||||7|9||||||
|g|Manager|||||||||||
||GM|||||||||||
||assistant,|||||||||||
|Wang|manager|||||||||||
||||||06/06/201|06/05/201||||||
|Changzha|of fabric|Current|Male|44|||22,500||||22,500|
||||||3|9||||||
|o|marketing|||||||||||
||departme|||||||||||
||nt|||||||||||
||Manager|||||||||||
||of brand|||||||||||
|Quan|expandin||||06/06/201|06/05/201||||||
|||Current|Male|51|||27,750||||27,750|
|Peng|g||||3|9||||||
||departme|||||||||||
||nt|||||||||||
||Manager|||||||||||
||of|||||||||||
|Shang|garments|||||||||||
||||||06/06/201|06/05/201||||||
|Chenggan|productio|Current|Male|45|||30,000||||30,000|
||||||3|9||||||
|g|n|||||||||||
||departme|||||||||||
||nt|||||||||||
|Total|--|--|--|--|--|--|1,380,295|33,300|0|0|1,413,595|

 II Changes in Directors, Supervisors and Executive Officers
√ Applicable□ Not applicable
||||||
|-|-|-|-|-|
|Name|Position|Type|Date|Reason|
|||Appointed and|||
|Liu Deming|Director||05/12/2017|Elected as Director of the 8th Board of the Directors.|
|||dismissed|||

III Brief Biographies
Professional backgrounds, main working experience and current responsibilities in the Company of the incumbent directors, supervisors and executive officers
1. Mr. Liu Zibin: Director and concurrently General Manager of the Company. He was born in 1965, and achieved Master Degree.
From Oct. 2004 to Jun. 2007, he acted as Chairman of the Board of Zibo Lucheng Textile Investment Co., Ltd, now concurrently was
Chairman of the Board of Xinjiang Lu Thai Good Yield Cotton Co., Ltd., Xinjiang Lu Thai Textile, Lufeng Weaving& Dyeing,
Lu Thai Textile Co., Ltd. Annual Report 2017 Luqun Textile, Xinsheng Thermal Power, Chengshun Thermal Power, Shanghai Li Thai, and Beijing Lu Thai Youxian, and the President of Lu Thai (America), Director of Lu Thai (Hong Kong).
2. Mr. Xu Zhinan: Vice Chairman of the Board of the Company. He was born in 1930, Thailand Nationality. Since 2004, he has been acting as Director and Vice Chairman of the Board of the Company, and General Manager of Tailun (Thailand) Textile Co., Ltd. 3. Mr. Fujiwara Hidetoshi: Director of the Company. He was born in 1940, Japanese Nationality. Since 1998, he has been holding post of Director of Lu Thai Company, and Director of Lufeng Weaving& Dyeing Co., Ltd.
4. Mr. Chen Ruimou: Director of the Company. He was born in 1944, and holder of bachelor degree. From 1998 to now, he has been Director of the Company.
5. Mr. Zeng Facheng, Director of the Company, was born in 1951, Thailand nationality. He acts as Chairman of the Board of GOLD MINE GARMENT CO., LTD. and BLOSSOM GARMENT MANUFACTURING (THAILAND) CO., LTD.
6. Mr. Wang Fangshui: Director, Vice General Manager and Chief Engineer of the Company. He was born in 1961, holder of MBA degree. Since 1998, he has been Director and Chief Engineer of the Company, and concurrently is Director of Xinjiang Lu Thai Good Yield Cotton Co., Ltd., Lufeng Weaving& Dyeing, Xinjiang Lu Thai Luqun Textile, and the Executive Director of Lu Thai (Burma). 7. Mr. Liu Deming: Director, Assistant of GM of the Company. He was born in 1990, and achieved Master Degree. He is the Chairman and GM of Zibo Lucheng Textile Investment Co., Ltd, and the supervisor of Beijing Lu Thai Youxian.
8. Ms. Qin Guiling: Director, and Secretary to the Board of the Company. She was born in 1966, holder of MBA degree. Since 1998, she has been Director and Secretary to the Board of the Company, and Supervisory Board Chairman of Xinjiang Lu Thai.
9. Ms. Zhang Hongmei: Chief Accountant. She was born in 1970; holder of MBA degree and senior accountant. She had served successively as Chief of cost section of financial department of Lu Thai Textile Co., Ltd., director of the accounting department and deputy chief accountant. Now she serves as Chief Accountant of the Company. At the same time, she is the director of Luqun Textile, and supervisor of Beijing Lu Thai Youxian.
10. Mr. Xu Jianjun: Independent Director of the Company, born in 1974, master degree holder. Once took the post of Senior Staff Member of Head Office of Bank of China, Legal Counsel, lawyer at Beijing Jingtian Gongsheng Law Firm. From August of 2004 up to now, serves as a partner of Beijing Deheng Law Firm. Now he is taking a post of partner and Deputy Director of Beijing Deheng Law Firm.
11. Mr. Zhao Yao: Independent Director of the Company, born in 1970, master degree holder, associate professor of accounting, master tutor and successively acted as member of a council of Accounting Association in Shandong Province, executive member of the council of Shandong Province Institute of CPAs, member of Shandong Province internal control consultant experts, member of Shandong Province accounting criterion consultant experts and currently act as Director of Department of Accounting of Shandong University of Technology.
12. Ms. Bi Xiuli: female, independent director of the Company, born in 1967, master. She worked as a judge of Zibo Intermediate People's Court from 1990 to 1996, worked as a lawyer of Beijing Jingwei Law Firm from 2002 to 2003, worked as a lawyer of Beijing King& Capital Law Firm from 2003 to 2004, worked as a partner of Beijing JunZeJun Law Offices from 2004 to 2011 and works as a partner of Beijing DeHeng Law Offices now.
13. Ms. Pan Ailing: female, independent director of the Company, born in 1965, doctor of economics, postdoctor of financial management. Now, she works as a professor, doctoral supervisor and academic leader of accounting in School of Management of Shandong University, the director of investment and financing research center of Shandong University, a member of Shandong Accounting Society, an executive member of Shandong Research Society of Comparative Management and a visiting professor of Taiwan Soochow University.
14. Mr. Wang Xinyu: male, independent director of the Company, born in 1967, master, certified public accountant, certified tax agent and certified public assets estimator. From December 2007 to August 2013, he worked in Zhonglei Accounting Firm as the vice general manager of Shandong branch. Now he works as the senior partner and director of Shandong branch of Reanda Certified Public Accountants (special general partnership).
15. Mr. Li Tongmin: male, chairman of board of supervisors of the Company, born in 1956, technical secondary school education.
Lu Thai Textile Co., Ltd. Annual Report 2017 Now he works as chairman of the labor union of the Company. From October 1993 to 2010, he worked as supervisor, vice general manager and the manager of production department of the Company.
16. Mr. Liu Zilong: Supervisor of the Company. He was born in 1968, holder of MBA degree. From 2002 to present, he was General Manager of Lu Thai (Hong Kong).
17. Mr. Dong Shibing: Supervisor of the Company. He was born in 1969, graduated from technical secondary school. He ever took the post of Deputy Director of the General Manager Office of the Company, and now holds post of Manager of Property Management Company.
18. Mr. Zhang Jianxiang: male, vice general manager of the Company& the executive director of Lu Thai Textile Garment Engineering Research Institute, born in 1968, Master of Business Administration. He once worked as the manager of quality management department of the Company and the director of textile finishing factory.
19. Mr. Wang Jiabin: General Manager Assistant and Manager of Production Department of the Company, head of security checkpoint of production department. He was born in 1963, MBA and once acted as Manager of Dyeing Business Department. 20. Mr. Zhang Shougang: Assistant General Manager, Garment Division Manager of the Company. He was born in 1970, MBA and senior engineer, once was Director of Weaving Factory, Manager of Weaving Business Department and Manager of Quality Control Department in the Company.
21. Mr. Zhang Zhanqi: General Manager Assistant and deputy General Manager in Lufeng Weaving& Dyeing of the Company. He was born in 1972, MBA, once worked as Director of Fabric Finishing Plant and Manager of Quality Control Department.
22. Mr. Fujiwara Matsuzaka: Manager of clothes marketing department of the Company. He was born in 1973 and had acted as General Manager of International Business Department I of the Company.
23. Mr. Li Wenji: male, CIO& manager of information department of the Company, born in 1967. He once worked as a teacher in Shandong University of Finance and Economics. From July 2005 to now, he works as the manager of information department of the Company. In 2016, he was employed as chief information officer of the Company.
24. Mr. Zhang Keming: Manager of Financial Department of the Company. He was born in 1968, MBA and senior accountant. From 2002 to 2006, he held the post of Deputy Manager of Financial Department; from Apr. 2006 to present, he has acted as General Manager of Financial Department.
25. Mr. Pan Pingli: Customs Manager of the Company. He was born in 1968 and MBA degree holder. He ever acted as General Manager of International Business Department of the Company.
26. Mr. Lv Yongchen: Deputy General Manager of Lufeng Weaving and Dyeing Co., Ltd. He was born in 1968 and MBA degree holder. From 2002 to 2010, he acted as Deputy Manager of International Business Department in the Company.
27. Mr. Yu Shouzheng: Energy Business Manager of the Company. He was born in 1968, MBA degree holder and engineer. He once worked as Director of Dynamic Department in the Company. From 2007 to present, he has acted as Manager of Energy Business Department in the Company.
28. Mr. Wang Changzhao: GM assistant, manager of fabric marketing department of the Company. He was born in 1974 and had acted as General Manger Assistant of International Business Department.
29. Mr. Quan Peng: Manager of brand expanding department of the Company. He was born in 1967, MBA degree holder. From 2004 to present, he has acted as Marketing Manager.
30. Mr. Shang Chenggang: manager of garments production department of the Company, born in 1973. He once worked as the vice director and director of general manager office, the manager of enterprise manager department and the representative of managers. Posts concurrently held in shareholding entities
√Applicable□Not applicable
|||||||
|-|-|-|-|-|-|
|Name of||Posts held in|Start date of||Whether receiving|
||Name of shareholders’ companies|||Expiration||
|employers||shareholders’|tenure||subsidies and|

Lu Thai Textile Co., Ltd. Annual Report 2017
|||||||
|-|-|-|-|-|-|
|||companies||Date of tenure|remuneration in|
||||||shareholders’|
||||||companies|
|Liu Zibin|Zibo Lucheng Textile Investment Co., Ltd.|Director|02/26/1999||No|
|Xu Zhinan|Tailun (Thailand) Textile Co., Ltd.|Chairman|01/29/1985||No|
|||Chairman andGM||||
|Liu Deming|Zibo Lucheng Textile Investment Co., Ltd.||02/01/2017||No|
||Mr. Liu Zibin is the Director of Zibo Lucheng Textile Investment Co., Ltd., holding 4% equities of Zibo Lucheng|||||
|Explanations|Textile Investment Co., Ltd. Basic information of Mr. Liu Zibin: Chinese, no right of residence in other countries|||||
|about holding|or regions. Mr. Liu Deming holds the post of Chairman and GM of Zibo Lucheng Textile Investment Co., Ltd.,|||||
|posts in|holding 21% equities of Zibo Lucheng Textile Investment Co., Ltd. Basic information of Mr. Liu Deming:|||||
|shareholders’|Chinese, no right of residence in other countries or regions. Mr. Xu Zhinan is the sponsor of foreign capital of the|||||
|companies|Company, shareholder of Tailun (Thailand) Textile Co., Ltd. and Tailun (Thailand) Textile Co., Ltd. is the second|||||
||largest shareholder of the Company. Basic information about Mr. Xu Zhinan: Thai.|||||

Posts held concurrently in other entities
√Applicable□Not applicable
|||||||
|-|-|-|-|-|-|
||||||Whetherreceivingsubsidies andremuneration inother companies|
|||Posts held in||||
|Name of|||Start date of|Expiration Date||
||Name of other companies|shareholders’||||
|employers|||tenure|of tenure||
|||companies||||
||Xinjiang Lu Thai Good Yield Cotton Co.,|||||
||Ltd., Xinjiang Lu Thai Textile Co., Ltd.,|||||
||Lufeng Weaving & Dyeing Co., Ltd. Zibo|||||
|||Chairman,||||
||Luqun Textile Co., Ltd., Zibo Xinsheng|||||
|||Director,||||
||Thermal Power Co., Ltd., Zibo Chengshun|||||
|||Chairman of||||
|Liu Zibin|Thermal Power Co., Ltd., Shanghai Lu Thai||12/07/2015||No|
|||Supervisory||||
||Textile Garment Co., Ltd., Beijing Lu Thai|||||
|||Board, and||||
||Youxian E-commerce Co., Ltd., Lu Thai|||||
|||GM||||
||(America) Textile Co., Ltd. Lu Thai (HK)|||||
||Textile Co., Ltd, Beijing Sichuang Garment|||||
||Co., Ltd|||||
||Xinjiang Lu Thai Good Yield Cotton Co.,|||||
||Ltd., Xinjiang Lu Thai Textile Co., Ltd.,|||||
|Wang Fangshui|Lufeng Weaving & Dyeing Co., Ltd. Zibo|Director|06/17/2003||No|
||Luqun Textile Co., Ltd., Lu Thai (Burma)|||||
||Textile Co., Ltd.|||||
||Beijing Lu Thai Youxian E-commerce Co.,|||||
|Liu Deming||Supervisor|08/21/2017||No|
||Ltd.|||||
||Xinjiang Lu Thai Good Yield Cotton Co.,|Supervisory||||
|Qin Guiling|||06/17/2003||No|
||Ltd.|Board||||

Lu Thai Textile Co., Ltd. Annual Report 2017
||||||
|-|-|-|-|-|
|||Chairman|||
||Zibo Luqun Textile Co., Ltd., Beijing Lu|Director and|||
|Zhang Hongmei|||06/17/2003||
||Thai Youxian E-commerce Co., Ltd.|Supervisor|||
|Xu Jianjun|Beijing Deheng Law Offices|Partner|08/01/2004|Yes|
|||Associate|||
|Zhao Yao|Shandong University of Technology||03/01/2001|Yes|
|||Professor|||
|Bi Xiuli|Beijing Deheng Law Offices|Partner|01/01/2011|Yes|
||Shandong University School of||||
|Pan Ailing||Professor|07/01/1986|Yes|
||Management||||
||Reanda Certified Public Accountants||||
|Wang Xinyu||Director|08/01/2013|Yes|
||Shandong Branch||||
|Explanations|||||
|about|||||
||Except independent directors, other companies directors, supervisors, senior executives are holding posts in are all||||
|employment in|||||
||controlling subsidiaries of the Company.||||
|other|||||
|companies|||||

Punishments imposed in the recent three years by the securities regulators on the incumbent directors, supervisors and executive officers as well as those who left in this Reporting Period
□ Applicable√ Not applicable
IV Remuneration of Directors, Supervisors and Executive Officers
Decision-making procedure, determination basis and actual remuneration payment of directors, supervisors and executive officers
|||
|-|-|
|Decision-making|Remuneration committee under the board of directors is responsible for formulating assessment|
|procedures of|standards of directors and senior executives and conducting assessment; for formulating and reviewing|
|remuneration of directors,|remuneration policy and program of directors and senior executives; it is responsible for the board of|
|supervisors, senior|directors. The remuneration committee, according to appraisal results of position performance and|
|executives|motivation and restriction plan for senior executives, proposes amount of payment and methods of|
||reward for directors and senior executives and submits the above resolutions to the board of directors for|
||ratification after the approval by voting.|
|Determinate basis of|The Chief Accountant Office, the Corporate Management Department and the HR Department of the|
|remuneration of directors,|Company was responsible for preparations for the decision-making of the Remuneration and Appraisal|
|supervisors, senior|Committee by providing relevant information of the Company as follows: (I) accomplishment of main|
|executives|financial and business objectives; (II) accomplishment of relevant indicators of other listed companies in|
||the sector; (III) work scope and main responsibilities of senior management staff.|
||The remuneration committee appraised directors and senior management staff according to the|
||completion situation of the Company’s performance and the annual appraisal results of senior|
||management staff were put forward according to the performance appraisal results and the senior staff|
||incentive and disciplinary plan. Upon approval by voting, the results were reported to the Board of|
||Directors for approval.|
|Actual payment of|The number of incumbent directors, supervisors and senior executives is 30, among which there are 30|

Lu Thai Textile Co., Ltd. Annual Report 2017
|||
|-|-|
|remuneration of directors,|persons actually receiving remuneration from the Company. Till December 31, 2017, the total amount of|
|supervisors, senior|annual payment drawn from the Company by directors, supervisors and senior executives is RMB21.|
|executives|8813million (before tax).|

Remuneration of directors, supervisors and executive officers in this Reporting Period
Unit: RMB'0,000
||||||||
|-|-|-|-|-|-|-|
|||||||Whether gained|
||||||Total before-tax||
|||||||remuneration|
||||||remuneration||
|Name|Position|Gender|Age|Current/former||from the related|
||||||gained from the||
|||||||parties of the|
||||||Company||
|||||||Company|
||Chairman and||||||
|Liu Zibin||Male|53|Current|115.7|No|
||GM||||||
|Xu Zhinan|Vice President|Male|88|Current|36.1|No|
|Fujiwara|||||||
||Director|Male|78|Current|440.98|No|
|Hidetoshi|||||||
|Chen Ruimou|Director|Male|74|Current|36.1|No|
|Zeng Facheng|Director|Male|67|Current|1.19|No|
||Director and Vice||||||
|Wang Fangshui|GM and Chief|Male|57|Current|132.42|No|
||Engineer||||||
|Liu Deming|Director|Male|27|Current|4.94|No|
||Director and||||||
|Qin Guiling|Chairman|Female|52|Current|127.62|No|
||Secretary||||||
||Director and||||||
|Zhang Hongmei||Female|48|Current|89.11|No|
||Chief Accountant||||||
||Independent||||||
|Xu Jianjun||Male|44|Current|4.8|No|
||Director||||||
||Independent||||||
|Zhao Yao||Male|48|Current|4.8|No|
||Director||||||
||Independent||||||
|Bi Xiuli||Female|51|Current|4.8|No|
||Director||||||
||Independent||||||
|Pan Ailing||Female|53|Current|4.8|No|
||Director||||||
||Independent||||||
|Wang Xinyu||Male|51|Current|4.8|No|
||Director||||||
||Supervisory||||||
|Li Tongmin||Male|62|Current|128.6|No|
||Board Chairman||||||

Lu Thai Textile Co., Ltd. Annual Report 2017
||||||||
|-|-|-|-|-|-|-|
|Liu Zilong|Supervisor|Male|50|Current|63.6|No|
|Dong Shibing|Supervisor|Male|49|Current|62.15|No|
|Zhang Jianxiang|Vice GM|Male|50|Current|84.69|No|
||Vice GM,||||||
|Wang Jiabin||Male|55|Current|87.93|No|
||Product Manager||||||
||Vice GM,||||||
|Zhang Shougang|Management|Male|48|Current|77.85|No|
||Manager||||||
||Vice GM, GM of||||||
|Zhang Zhanqi||Male|46|Current|78.19|No|
||Lufeng Company||||||
||Manager of||||||
|Fujiwara|||||||
||clothes marketing|Male|45|Current|114.01|No|
|Matsuzaka|||||||
||department||||||
||Financial||||||
|Zhang Keming||Male|50|Current|71.41|No|
||Manager||||||
|Li Wenji|CIO|Male|51|Current|49.07|No|
||Customs||||||
|Pan Pingli||Male|50|Current|58.91|No|
||Manager||||||
||Vice GM of||||||
|Lv Yongchen||Male|50|Current|61.52|No|
||Lufeng Company||||||
||Energy Business||||||
|Yu Shouzheng||Male|50|Current|61.18|No|
||Manager||||||
||GM assistant,||||||
||manager of fabric||||||
|Wang Changzhao||Male|44|Current|60.37|No|
||marketing||||||
||department||||||
||Manager of brand||||||
|Quan Peng|expanding|Male|51|Current|60.94|No|
||department||||||
||Manager of||||||
|Shang|garments||||||
|||Male|45|Current|59.55|No|
|Chenggang|production||||||
||department||||||

Equity incentives for directors, supervisors and executive officers in this Reporting Period
□ Applicable√ Not applicable
Lu Thai Textile Co., Ltd. Annual Report 2017 V Employees
1. Number, Functions and Educational Backgrounds of Employees
|||
|-|-|
|Number of the serving employees of the parent company||
||14,277|
|(person)||
|Number of the serving employees of the major subsidiaries||
||10,926|
|(person)||
|Total number of the serving employees (person)|25,203|
|Total number of the employees receiving the salary of the||
||25,203|
|Reporting Period (person)||
|Number of the left and retired employees that the parent||
|company and the major subsidiaries should undertake the|0|
|expenses (person)||
|Component difference||
|Category|Number (person)|
|Production personnel|18,871|
|Sales personnel|549|
|Technical personnel|5,206|
|Financial personnel|75|
|Administrative personnel|502|
|Total|25,203|
|Educational background||
|Category|Number (person)|
|Doctor|4|
|Master|93|
|Bachelor|1,119|
|College|6,072|
|High school and below|17,915|
|Total|25,203|

 2. Employee Remuneration Policy
The Company has formulated a remuneration management system with its principle being “payment according toone’s work and more pay for more work”. Through post evaluation and through researches of Social salary levels carried out as multi-faceted, as well
as the formulation of the reasonable salary management system, fully demonstrates the internal fairness, self-fairness and external
fairness. It has greatly motivated the employees and enhanced the corporate management.
Lu Thai Textile Co., Ltd. Annual Report 2017 3. Employee Training Plans
Trainings will be carried out according to requirements of theCompany’s strategic development planning, improvement ofemployees’ capability, performance management,employees’ career planning, etc. The annual training plan is determined by carrying out researches on training needs. And the training courses fall into three major categories, i.e. management, technical skills and general knowledge. Through these trainings, the Company will improve the knowledge structure of its employees, improve their job skills and increase their comprehensive quality to provide excellent human resources for the long-term, sustained and stable development of the Company.
4. Labor Outsourcing
□ Applicable√ Not applicable
Lu Thai Textile Co., Ltd. Annual Report 2017 Part IX Corporate Governance
I Basic Situation of 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 theCompany’sShareholders’ General Meeting, Board of Directors, Board of Supervisors and Senior Executives strictly according to Company Law, Securities Law and Governing Rules for Listed Company as well as relevant stipulations and requirements from CSRC. It formed a relationship of clear division of rights and responsibilities, assuming each own functions and check and balance each other between the management organ, decision-making organ, supervisory organ and management layer, so as to provide a good internal operational environment for theCompany’s standardized and efficient operation. During the Reporting Period, the Company revised Articles of Lu Thai Textile Co., Ltd. and Authorized Management System of Lu Thai Textile Co., Ltd. At present, there is no difference between the actual situation of theCompany’s corporate governance structure and the requirements on the corporate governance of CSRC and Shenzhen Stock Exchange.
1. Shareholders andShareholders’ General Meeting
The Company convened and held theShareholders’ General Meeting in strict accordance with the stipulation of the Rules of Procedure forShareholders’ General Meeting. In 2017, as for the convening conditions of extraordinary general meetings and the medias of information disclosure, the Company revised part of the regulations of the Articles of Association and Rules of Procedure of the Shareholders' General Meeting of Lu Thai Textile Co., Ltd. according to the requirements of the Rules of Procedure of the Shareholders' General Meeting of Listed Companies and Index of Articles of Listed Companies (revised in 2016), which ensured that the convening conditions were in line with the actual situations of the Company and the information disclosure was timely and accurate.
2. The relationship between the principal shareholders and the Company
TheCompany’s principal shareholders acted according to relevant standards without directly or indirectly intervening theCompany’s decision-making and operating activities; the Company was independent with its principal shareholders in business, personnel, assets, organization, finance, and theCompany’s Board of Directors, Supervisory Committee and Internal Organs could completely independent to operate. There was no situation about annexing the assets or occupation of funds of the Company by principal shareholders or other events on infringing the interest of the Company and other shareholders.
3. The directors and Board of Directors
The Company nominated and elected directors in strict accordance with the Articles of Association, the structure of the Board of Directors and the number of independent directors was in compliance with the requirement of laws and regulations. Besides, it established four special committees such as Strategy Committee, Nomination Committee, Audit Committee and Remuneration& Appraisal Committee in accordance with the Rules of Procedure for the Board of Directors, and accordingly promulgated the work rules for the committees. The committees clearly understood their responsibilities and operated well. The directors and independent directors completely enjoyed the rights stipulated in Company Law and Articles of Association, which ensure the scientific and impartial decision made by the Board of Directors of the Company. During the Reporting Period, the Company revised the Rules of Procedure of the Board of Directors of Lu Thai Textile Co., Ltd. according to the actual situation and revised the number of the Directors, and review permission of Board of Directors to assets disposal, external guarantee for assets pledge, related-party transactions, and investment plan of derivatives.
4. Supervisors and Supervisory Committee
TheCompany’s Supervisory Committee and supervisors conscientiously performed their duties by strictly implementing relevant regulations of Articles of Association and the Rules of Procedure for Supervisory Committee, and conducted effective supervision on theCompany’s finance, the legal and regulatory compliance of directors and senior executive in duty performance. During the
Lu Thai Textile Co., Ltd. Annual Report 2017 Reporting Period, according to Index of Articles of the Listed Companies (revised in 2016), the Company revised the Rules of Procedure of the Supervisory Board of Lu Thai Textile Co., Ltd combined with the revision of Articles of Association.
5. Information disclosure
In order to ensure the truthfulness, accuracy, completeness and timeliness of company information disclosure, during the reporting period, the Company made revision on the "Information Disclosure Management System of Lu Thai Textile Co., Ltd." in accordance with the "Administrative Measures for the Disclosure of Information of Listed Companies ", "Stock Listing Rules (Revised in 2014)" of Shenzhen Stock Exchange, and " Standard Operation of Companies Listed on the Main Board (Revised in 2015)" and other relevant provisions as well as the "Notice on Further Improving Investor Protection in the Capital Market of Shandong Province (LZJF[2017] No. 6 Document)" issued by the Shandong Securities Regulatory Bureau.
6. Investor relations management
During the reporting period, to maintain good communication with investors, the Company accepted on-site investigations and consultations of investors through on-site investigations and telephone consultations, and promptly answered questions asked by investors on the SZSE Easy-IR. During the reporting period, based on actual situation, the Company made revision on the "Information Disclosure Management System of Lu Thai Textile Co., Ltd." in accordance with the relevant laws, regulations, normative documents of the "Stock Listing Rules of Shenzhen Stock Exchange", "Guidelines for Relations between Listed Companies and Investors", "Guidelines of the Shenzhen Stock Exchange for the Standard Operation of Listed Companies on the Main Board" and the Articles of Associations.
Any significant incompliance with the regulatory documents issued by the CSRC governing the governance of listed companies□ Yes√ No
No such cases in this Reporting Period.
II Independence of Businesses, Personnel, Asset, Organizations and Finance which are Separate from the Controlling Shareholder
1. As for the business: the Company completely separates from the controlling shareholders in the business that possesses the entirely independent production, supply and sales system and the autonomous operating ability.
2. As for the personnel: the Company remains completely independent in the Human Resources aspects such as the labor, the personnel and the wages with entirely independent self-controlling ability.
3. As for the assets: the Company possesses the entire and independent legal person property right with independent and perfect the production system, auxiliary production systems and supporting facilities; and possesses the independent ownership of the intangible assets such as the i Industrial property, trademarks, non-patented technology.
4. As for the institution: the organizations and institutions of the Company are all independent and perfect that there is no any situation of working with the controlling shareholders.
5. As for the finance: the Company possesses independent financial departments with normative financial accounting system and financial management system as well as internal control system with independent bank account.
III Horizontal Competition
□ Applicable√ Not applicable
Lu Thai Textile Co., Ltd. Annual Report 2017 IV Annual and Special Meetings of Shareholders Convened during this Reporting Period 1. Meetings of Shareholders Convened during this Reporting Period
|||||||
|-|-|-|-|-|-|
|||Proportion of||||
||||||Index to the|
|Session|Type|investors'|Convening date|Disclosure date||
||||||disclosed|
|||participation||||
||||||Announcement on|
||||||the Resolution of the|
||||||Meeting (No.:|
||||||2017-010) disclosed|
||||||on March 22, 2017|
|2017 1st||||||
||Extraordinary||||on Securities Times,|
|Extraordinary||0.00%|03/21/2017|03/22/2017||
||General Meeting||||China Securities|
|General Meeting||||||
||||||Journal, Shanghai|
||||||Securities News, Ta|
||||||Kung Pao, and|
||||||http://www.cninfo.co|
||||||m.cn|
||||||Announcement on|
||||||the Resolution of the|
||||||Meeting (No.:|
||||||2017-023) disclosed|
||||||on May 13, 2017 on|
|2016 Annual General|Annual General||||Securities Times,|
|||0.00%|05/12/2017|05/13/2017||
|Meeting|Meeting||||China Securities|
||||||Journal, Shanghai|
||||||Securities News, Ta|
||||||Kung Pao, and|
||||||http://www.cninfo.co|
||||||m.cn|
||||||Announcement on|
||||||the Resolution of the|
||||||Meeting (No.:|
||||||2017-030) disclosed|
||||||on August 25, 2017|
|2017 2nd||||||
||Extraordinary||||on Securities Times,|
|Extraordinary||0.00%|08/24/2017|08/25/2017||
||General Meeting||||China Securities|
|General Meeting||||||
||||||Journal, Shanghai|
||||||Securities News, Ta|
||||||Kung Pao, and|
||||||http://www.cninfo.co|
||||||m.cn|

Lu Thai Textile Co., Ltd. Annual Report 2017
|||||||
|-|-|-|-|-|-|
||||||Announcement on|
||||||the Resolution of the|
||||||Meeting (No.:|
||||||2017-047) disclosed|
||||||on November 9,|
|2017 3rd|||||2017 on Securities|
||Extraordinary|||||
|Extraordinary||0.00%|11/08/2017|11/09/2017|Times, China|
||General Meeting|||||
|General Meeting|||||Securities Journal,|
||||||Shanghai Securities|
||||||News, Ta Kung Pao,|
||||||and|
||||||http://www.cninfo.co|
||||||m.cn|

2. Special Meetings of Shareholders Convened at the Request of Preference Shareholders with Resumed Voting Rights
□ Applicable√ Not applicable
V Performance of Independent Directors in this Reporting Period
1. Attendance of Independent Directors in Board Meetings and General Meetings of Shareholders
|||||||||
|-|-|-|-|-|-|-|-|
|Attendance of independent directors in Board Meetings and General Meetings of Shareholders||||||||
|||||||Absent in||
||Due presence||Presence in|Presence in|||Presence|
|||Presence in|||Absence in|Board||
||in Board||Board|Board|||General|
|Independent||Board|||Board|Meetings for||
||Meetings in||Meetings by|Meetings|||Meetings of|
|director name||Meetings on|||Meetings|two||
||this Reporting||telecommunica|through a|||Shareholders|
|||site (times)|||(times)|consecutive||
||Period (times)||tion (times)|proxy (times)|||(times)|
|||||||times||
|Xu Jianjun|10|1|8|1|0|No|0|
|Zhao Yao|10|2|8|0|0|No|0|
|Bi Xiuli|10|1|8|1|0|No|0|
|Pan Ailing|10|2|8|0|0|No|0|
|Wang Xinyu|10|2|8|0|0|No|1|

 Notes to non-attendance in Board Meetings in person for two consecutive times
Not applicable.
2. Objections Raised by Independent Directors on Issues of the Company
Indicate by tick mark whether any independent directors raised any objections on issues of the Company.
□ Yes√ No
No such cases in this Reporting Period.
Lu Thai Textile Co., Ltd. Annual Report 2017 3. Other Details about the Performance of Duties by Independent Directors
Indicate by tick mark whether any suggestions from independent directors were adopted by the Company.
√ Yes□ No
Suggestions from independent directors adopted or not adopted by the Company:
The Independent Directors of the Company had not raised any objection to the proposals and other events approved and reviewed by the Board of the Directors while executed the carefully review on the events needed advices and put forward the professional suggestion and advice as well as stated 15 independent advices which improved the scientificity and objectivity of the decision-making that exerted the due role on the supervision mechanism for improving the Company.
VI Performance of Duties by Specialized Committees under the Board during this Reporting Period
I. Duty fulfillment of Audit Committee under the Board
1. Major work of the 2017 annual report of the Audit Committee:
(1) The Audit Committee had held the 2017 the 1st Meeting of the Audit Committee on the Financial Audit Work in the meeting room of the Company on November 17, 2017 and the meeting had confirmed the time and arrangement plan of the 2017 annual financial audit work unanimously with the 2017 Audit Institution Ruihua CPAs (LLP).
(2) On January 27, 2018, the Audit Committee had held the 2nd Meeting of the 2017 Audit Work, which reviewed and submitted the financial report audited by Ruihua CPAs (LLP) and issued the written advice.
(3) During the audit process, the Company had been maintained the contract and communication with the project leader of Ruihua CPAs (LLP) by the methods such as the telephones and e-mails and had been urged which to submit the audit report within the appointed time.
(4) The 3rd Meeting on 2017 Annual Audit and the 2017 Annual Work Conference, were convened by the Committee on April 15, 2018, where the following proposals were approved as resolutions, namely, the audited 2017 Financial Report of the Company, the Summary Report on the Audit Conducted by Ruihua CPAs (LLP) on theCompany’s 2017 Financial Report.
2. Written opinions, summary report of the annual audit, and resolutions of 2017 Work Conference on Annual Report by Audit Committee
(1) According to the Rules for Audit Committee of the Board Concerning Annual Reports of Lu Thai Textile Co., Ltd., the Audit Committee shall perform its duties of conducting supervision and checks in theCompany’s preparation and disclosure of its annual reports. The Committee reviewed the 2017 financial and accounting statements prepared by theCompany’s Financial Department before the presence of the registered accountants for the annual audit, and expressed its opinion as follows:
1. The financial and accounting statements were prepared in accordance with theCompany’s accounting policy with proper application of the accounting policy and reasonable accounting estimates, which were in line with the New Accounting Standards for Business Enterprises, the Accounting System for Business Enterprises, and the relevant regulations issued by the Ministry of Finance of PRC;
2. The subsidiary statements included in theCompany’s consolidated statements were complete in terms of contents, providing an accurate basis for the statement combination;
3. TheCompany’s financial statements were found objective, factual and accurate with no major misstatements or information omission.
4. Since there is still a certain period of time from this review of the financial statements to the formal issuance of theauditor’s report and the financial statements, theCompany’s Financial Department is advised to pay close attention to and carefully handle the
Lu Thai Textile Co., Ltd. Annual Report 2017 matters after the balance sheet date, so as to ensure the fairness, factuality and completeness of the financial statements. The Audit Committee is of the opinion that the financial and accounting statements are ready to be submitted to the registered accountants for audit.
(2) AuditCommittee’s written opinion on theCompany’s financial statements after the preliminary audit opinion was issued by Ruihua CPAs (LLP):
According to the Rules for Audit Committee of the Board Concerning Annual Reports of Lu Thai Textile Co., Ltd., the Audit Committee shall perform its duties of conducting supervision and checks in theCompany’s preparation and disclosure of its annual reports. We effectively communicated with the said CPA firm (LLP) at the beginning of the audit. And we once again reviewed theCompany’s 2017 financial and accounting statements following the preliminary audit opinion to theCompany’s 2017 financial statements issued by the CPA firm (LLP), and expressed our opinions as follows:
In accordance with the New Accounting Standards for Business Enterprises and theCompany’s relevant financial rules, the financial statements were prepared in a rational and standardized way, which fairly, factually, accurately and completely presented theCompany’s assets, liabilities,shareholders’ equity and operation results by December 31, 2017.
The Audit Committee is of the opinion that theCompany’s 2017 financial and accounting statements preliminarily audited by RSM China Certified Public Accountants (Special General Partnership) are ready to be submitted to the 16th Session of the 8th Board of the Directors for review.
(3) Resolutions made at 2017 Annual Work Conference of Audit Committee of the Board
The Audit Committee of the Board of Lu Thai Textile Co., Ltd. held its 2017 Annual Work Conference at Banyang Villa Meeting Room of the Company on April 15, 2018. Three persons were supposed to attend the meeting, and all three of them were in fact present at the meeting as well as the Chief Accountant, the Manager Assistant of the Audit Department, the project responsible person of Lu Thai of Ruihua CPAs attended the meeting. Mr. Zhao Yao, Chairman of the Audit Committee, presided over the meeting, and Chief Accountant and Chief Auditor of the Audit Department sat in on the meeting. The meeting was convened in accordance with the Company Law and the Articles of Association of the Company. And the following proposals were passed by vote at the meeting: I. With 3 favorable votes, 0 negative votes and no abstentions, the 2017 Financial Report of the Company audited by Ruihua CPAs (LLP) was passed;
II. With 3 favorable votes, 0 negative votes and no abstentions, the Summary Report on the Audit Conducted by Ruihua CPAs (LLP) on theCompany’s 2017 Financial Report was passed;
III. With 3 favorable votes, 0 negative votes and no abstentions, the Company paid RMB1.735 million to the said CPAs firm as fees for the 2017 annual financial report audit and internal control audit.
IV. With 3 favorable votes, 0 negative votes and no abstentions, the Proposal on Employment of Ruihua CPAs (LLP) as theCompany’s audit agency for 2018 Finance and Internal Control was passed.
The Committee agrees to submit the above-mentioned proposals I and III and IV to the Board of Directors for examination on the 16th Session of the 8th Board of Directors.
II. Duty performance of Remuneration Committee affiliated to the Board of Directors
1. The Remuneration Committee of the Board of Lu Thai Textile Co., Ltd. held the First Conference in 2017 at Banyang Villa Meeting Room of the Company on March 28, 2017. Five persons were supposed to attend the meeting, and all of them were in fact present at the meeting. The meeting held by the Company met with the relevant regulations of Company Law and the Articles of Association of the Company and reviewed and approved the Proposal on the 2016 Appraisal Result of the Senior Executives of Lu Thai Company by the voting method and agreed to submit the above-mentioned proposal to the Board of Directors for examination on the 6th Session of the 8th Board of Directors.
2. According to authorization of the 6th Meeting of the 8th Board of Directors of Lu Thai, remuneration committee of board of directors of Lu Thai Textile Co., Ltd. held the second meeting of 2017 in the meeting room of Panyang Villa Meeting Room of the
Company on May 23, 2017. Five persons should attend the meeting and five persons actually attended the meeting. Among the five
Lu Thai Textile Co., Ltd. Annual Report 2017 persons, Bi Xiuli, Wang Xinyu, Zhao Yao, and Pan Ailing voted in the form of communication. Chief accountant and the secretary of board of directors also attended the meeting. The meeting accorded with relevant stipulations in Company Law and Articles of Company. Proposal for Risk Fund Assessment and Release Amount for 2016 weas passed at the meeting in voting form.
III. Duty execution of the strategy committee of board of directors
The Strategy Committee of Board of Directors of Lu Thai Textile Co., Ltd. held the 1st Conference of 2017 in the meeting room of Panyang Villa Meeting Room of the Company on March 28, 2017. 13 persons should attend the meeting and 13 persons actually attended the meeting. Chief accountant also attended the meeting. This meeting was hosted by Liu Liu Zibin, the president of strategy committee. The meeting accorded with relevant stipulations in Company Law and Articles of Association and passed the following proposals in voting form.
1. Overall Strategic Objectives of Yarn Dyed Fabric of Lu Thai Textile Co., Ltd. for 2017-2019.
2. Overall Strategic Objectives of Shirts Processing of Lu Thai Textile Co., Ltd. for 2017-2019.
3. Brand,R&D, human resources, fabric information, and clothing manufacture information engineering sub-plan.
4. 2018 Annual Operation Plan of Lu Thai Textile Co., Ltd.
IX. Duty performance of nominations committee affiliated to the Board of Directors
1. The Company held the 1st meeting of 2017 of the nominations committee of the 8th Board of Directors on June 8, 2017 according to the relevant regulations of the Company Law and Articles of Association, with 6 favorable votes, 0 negative votes and no abstentions, which reviewed and approved the Proposal on Nominating Candidates of the 8th Board of Directors. Mr. Liu Deming was nominated as the candidate of the director of the 8th Board of Director, and the term of office will expire until June 5, 2019. It was submitted to the 6th Session of the 8th Board of Directors for approval, and the 6th Session of the 8th Board of Directors reviewed and approved the proposal.
VII Performance of Duties by the Supervisory Board
Did the Supervisory Board find any risks to the Company during its supervision in this Reporting Period?
□ Yes√ No
The Supervisory Board raised no objections in this Reporting Period.
VIII Appraisal and Incentive for Executive Officers
In the Reporting Period, Remuneration Committee of the Board of Directors appraised operating achievements of the Company for the year 2016 according to Incentive and Restricted Proposal for Senior Executives of Lu Thai Textile Co., Ltd, and drew up incentive proposal for senior executives, which will be executed after review and approval by the 6st Session of the 8th Board of Directors dated March 28, 2017. During the Reporting Period, the Company constantly improved the performance evaluation mechanism and made the evaluation and incentive of the Senior Executives concerned with theCompany’s performances and the individual working results. According to the overall development strategy and the annual operating target of the Company at the period-begin, the Company confirms the annual performance comprehensive indication and the management duty of each Senior Executives, and executes the performance examination and the redemption of the rewards and punishment for the Senior Executives by the Remuneration and Examination Committee affiliated to the Board of Directors at the year-end. The Company will constantly improve the evaluation and incentive mechanism that to tightly concern the salary of the Senior Executives with the management level and the operating performance so that to fully mobilize and inspire the initiative and creativity of them.
Lu Thai Textile Co., Ltd. Annual Report 2017 IX Internal Control
1. Serious Internal Control Defects Found in this Reporting Period
□ Yes√ No
2. Internal Control Self-evaluation Report
||||
|-|-|-|
|Disclosure date of the Self-appraisal|||
||04/17/2018||
|Report on Internal Control|||
||For details, please refer to the Self-appraisal Report on Internal Control of Lu Thai||
|Disclosure index of the Self-appraisal|||
||Textile Co., Ltd. simultaneously disclosed on www.cninfo.com.cn with the 2017||
|Report on Internal Control|||
||Annual Report of the Company.||
|The proportion of total assets included in|||
|evaluation scope entities in the|||
||88.41%||
|Company's total assets of the consolidated|||
|financial statements|||
|The proportion of operation revenue|||
|included in evaluation scope entities in|||
||90.71%||
|the Company's operation revenue of the|||
|consolidated financial statements|||
|Defect judging standards|||
|Category|Financial Report|Non-Financial Report|
||Great defect: malpractices of the Directors,|Great defect: violated the national laws|
||Supervisors and Senior Executives; the|and regulations; the decision-making of|
||Company revised the published financial|the enterprise was not scientific that led|
||report; the CPA founded the current financial|to the mistakes of itself; outflow of the|
||report occurred significant misstatement|management personnel or the technician|
||while during the operating process of the|personnel was serious; frequently|
||internal control could not founded the|appeared the negative news from the|
||misstatement; the supervision of the Audit|Media; the significant business lacked of|
||Committee and the internal audit institution|systematic control or the systematic|
|Qualitative criteria|||
||of the Company on the internal control was|control was invalid; the result of the|
||invalid. Significant defeat: had not abide by|internal control assessment which was|
||the generally accepted accounting principles|the great defect event had not been|
||to choose and apply the accounting policies;|revised. Significant defeat: violated the|
||had not built up the anti-fraud and significant|enterprise internal regulations that|
||counterbalance mechanism and control|caused rather serious losses; significant|
||measures; during the financial report|business lacked of systematic control;|
||process, there occurred single or multiple|outflow of the rather important personnel|
||defects which not reached the recognition|was serious; the Media reported the|

Lu Thai Textile Co., Ltd. Annual Report 2017
||||
|-|-|-|
||standard of the significant defeat but|negative news that caused rather serious|
||influenced the true and accurate target of the|negative influence; rather important|
||financial report. General defect: other|business lacked of systematic control or|
||internal control defect which had not|the systematic control was invalid; the|
||constructed as the great defeat, significant|results of the internal control assessment|
||defect.|which as the significant defect had not|
|||been revised. General defect: other|
|||internal control defect which had not|
|||constructed as the great defeat,|
|||significant defect.|
|||Great defect: the direct financial losses|
||Great defect: misstatement≥2% of the total||
|||were more than RMB6 million or had|
||profits amount; misstatement≥0.3% of the||
|||been formally and externally disclosed|
||total assets amount; misstatement≥0.3% of||
|||and caused negative influences on the|
||the total operating income;||
|||disclosure of the periodical report of the|
||misstatement≥0.4% of the total owners’||
|||Company. Significant defect: the direct|
||equities amount. Significant defect: 1% of||
|||financial losses were of RMB3 million|
||the total profits amount ≤misstatement<2%||
|||(including RMB3 million)-RMB6|
||of the total profits amount; 0.15% of the total||
|||million or had been punished by the|
||assets amount ≤misstatement<0.3% of the||
|||state-owned government sectors while|
||total assets amount; 0.15% of the total||
|Quantitative criteria||not caused negative influences on the|
||operating amount ≤misstatement<0.3% of||
|||disclosure of the periodical report of the|
||the total operating amount; 0.2% of the total||
|||Company. General defect: the direct|
||owners’ equities amount||
|||financial losses were of RMB0.5 million|
||≤misstatement<0.4% of the total owners’||
|||(including RMB0.5 million)-RMB 3|
||equities amount. General defect:||
|||million or had been punished by the|
||misstatement<1% of the total profits amount;||
|||below-provincial (including the|
||misstatement<0.15% of the total assets||
|||provincial level) government sectors|
||amount; misstatement<0.15% of the total||
|||while not caused negative influences on|
||operating income; misstatement<0.2% of the||
|||the disclosure of the periodical report of|
||total owners’ equities amount.||
|||the Company.|
|Number of significant defects of financial|||
||0||
|report (piece)|||
|Number of significant defects of non-|||
||0||
|financial report (piece)|||
|Number of important defects of financial|||
||0||
|report (piece)|||
|Number of important defects of|||
||0||
|non-financial report (piece)|||

XAuditor’s Report on Internal Control
√ Applicable□ Not applicable
Lu Thai Textile Co., Ltd. Annual Report 2017
|||
|-|-|
|Audit opinion paragraphs in the Audit Report on Internal Control||
|IV. Audit opinion of the internal control of the financial report||
|We believe that the Company has made valid internal control on financial report in all significant aspects on December 31, 2017||
|according to the Basic Rules for Enterprise Internal Control and other relevant stipulations.||
|Particulars about Audit Report on||
||Disclosure|
|Internal Control||
|Disclosure date of the Audit Report||
||04/17/2018|
|on Internal Control||
|Disclosure index of the Audit|For details, please refer to the Auditor’s Report on Internal Control on www.cninfo.com.cn at|
|Report on Internal Control|the same time of disclosing the Company’s 2017Annual Report.|
|Type of Audit Report on Internal||
||Unqualified auditor’s report|
|Control||
|Whether there is significant defect||
||No|
|in non-financial report||

Indicate by tick mark whether any modified opinions are expressed by the CPAs firm in itsauditor’s report on theCompany’s internal control.
□ Yes√ No
Indicate by tick mark whether theauditor’s report on theCompany’s internal control issued by the CPAs firm is consistent with the self-evaluation report of the Board.
√ Yes□ No
Lu Thai Textile Co., Ltd. Annual Report 2017 Part X Corporate Bonds
Are there any corporate bonds publicly offered and listed on the stock exchange, which were undue before the approval date of this Report or were due but could not be redeemed in full?
No.
Lu Thai Textile Co., Ltd. Annual Report 2017 Part XI Financial Statements
I IndependentAuditor’s Report
|||
|-|-|
|Type of auditor’s opinion|Standard unqualified opinion|
|Date of signing the auditor’s report|04/15/2017|
|Name of the auditor|Ruihua Certified Public Accountants LLP|
|No. of the auditor’s report|RHSZ[2018] No.37040003|
|Name of CPA|He Feng, Cui Xiaoli|

Text of theAuditor’s Report
To the shareholders of Lu Thai Textile Co., Ltd:
I Opinion
We have audited the financial statements of Lu Thai Textile Co., Ltd. (hereinafter referred to as the “Company”), which comprise the consolidated and parent company balance sheets as of December 31, 2017, the consolidated and parent company statements of income, cash flows and changes inowners’ equity for the year then ended, as well as the notes to the financial statements.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated and parent company financial position of the Company at December 31, 2017, and the consolidated and parent company operating results and cash flows for the year then ended, in conformity with the Chinese Accounting Standards (CAS).
II Basis for Opinion
We conducted our audits in accordance with the Audit Standards for Chinese Registered Accountants. Our responsibilities under those standards are further described in theAuditor’s Responsibilities for Audit of Financial Statements section of our report. We are independent of the Company in accordance with the China Code of Ethics for Certified Public Accountants, and we have fulfilled our other ethical responsibilities in accordance with the said Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
III Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. And key audit matter identified in our audit is summarized as follows:
(I) Recognition of income
1. Item description
The sales income of Lu Thai Textile Co., Ltd. mainly comes from sales of yarn-dyed fabrics and shirts. The operation income of the Company in 2017 was RMB 6,409,224,000, of which export income accounted for65.71%. As stated in "Note IV 22 Income" of the financial statements, for the income from domestic sales, the amount of product sales income is recognized when the products are
delivered to purchaser according to the contract. The income is also recognized when the purchase price has been recovered or the
receipt certificate has been received and the related economic benefits are likely to flow into the Company, and the product-related
costs can be measured in a reliable way. For the income from export sales, the amount of sales income is recognized when products
Lu Thai Textile Co., Ltd. Annual Report 2017 are declared and depart from port according to the contract, and the bill of lading is received. The income is also recognized when the purchase price has been recovered or the receipt certificate has been received and the related economic benefits are likely to flow into the Company, and the product-related costs can be measured in a reliable way.
Since income is one of the key performance indicators of Lu Thai Textile Co., Ltd., there is an inherent risk that the management manipulates income to achieve specific goals or expectations, therefore, we identify income recognition as a key audit item. 2. Audit response
(1) Evaluate and test the rationality of the internal control design related to income recognition and the operation effectiveness. (2) Understand and assess the rationality of accounting policies related to income recognition by interviews with management and review of relevant contract terms.
(3) Perform analysis procedures on income and costs, and analyze the rationality of fluctuations in sales volume, unit price and gross profit of each month and each year.
(4) Check the supporting documents such as sales contracts, delivery receipts, invoices, customs declarations, shipping orders and receipts.
(5) Confirm the balances of major customers and the amount of transactions, and execute the procedure of customs confirmation of the amount of export income for the year 2017.
(6) Perform cut-off tests on the income recognized before and after the balance sheet date, check the delivery receipts, customs declarations, shipping orders and receipts etc. to assess whether the income is recognized within appropriate period.
(II) Depreciation of inventory
1. Item description
As of December 31, 2017, the inventory balance of Lu Thai Textile Co., Ltd. was RMB2,153,891,300.00 and the inventory depreciation reserve was RMB53,230,100.00. As stated in "Notes IV 10 Inventory" and "Notes VI 7 Inventory" of the financial statements, inventories are measured by cost or net realizable value, which is lower. The management determines the net realizable value of inventories with significant judgments and estimates, and therefore, we identify inventory depreciation as a key audit item. 2. Audit response
(1) Understand the process of provision for inventory depreciation reserves, evaluate and test the internal control related to preparation for inventory depreciation.
(2) Monitor the inventory and check the inventory condition, check whether the defective and long-lived inventory have been identified.
(3) Check the inventory age analysis sheet.
(4) Test the calculation table for inventory depreciation preparation to assess the rationality of estimated selling price, and compare the post-sales price with the estimated selling price.
IV Other Information
TheCompany’s management is responsible for the other information. The other information comprises all of the information included in theCompany’s 2017 Annual Report other than the financial statements and ourauditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
V Responsibilities of Management and Those Charged with Governance for Financial Statements
Lu Thai Textile Co., Ltd. Annual Report 2017 TheCompany’s management (hereinafter referred to as the “Management”) is responsible for the preparation of the financial statements that give a fair view in accordance with CAS, and for designing, implementing and maintaining such internal control as the management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the management is responsible for assessing theCompany’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the management either intends to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing theCompany’s financial reporting process.
VIAuditor’s Responsibilities for Audit of Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue anauditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with CAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with CAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management.
(4) Conclude on the appropriateness of themanagement’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on theCompany’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required by CAS to drawusers’ attention in ourauditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the Company audit. We remain solely responsible for our audit opinion.
Lu Thai Textile Co., Ltd. Annual Report 2017 We communicate with those charged with governance regarding the planned scope and timing of the audit and significant audit findings, including any noteworthy deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in ourauditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Ruihua Certified Public Accountants LLP Chinese CPA (Engagement Partner):
Beijing· China Chinese CPA:
April 15, 2018
II Financial Statements
Currency unit for the statements in the notes to the financial statements: RMB
1. Consolidated Balance Sheet
Prepared by Lu Thai Textile Co., Ltd.
December 31, 2017
Unit: RMB
||||
|-|-|-|
|Item|December 31, 2017|December 31, 2016|
|Current assets:|||
|Monetary assets|693,989,293.38|667,304,702.34|
|Settlement reserve|||
|Interbank loans granted|||
|Financial assets at fair value through|||
|profit or loss|||
|Derivative financial assets|||
|Notes receivable|139,276,742.34|84,161,909.91|
|Accounts receivable|334,080,524.05|293,129,727.93|
|Prepayments|146,463,066.38|212,488,120.48|
|Premiums receivable|||
|Reinsurance receivables|||
|Receivable reinsurance contract|||
|reserve|||

Lu Thai Textile Co., Ltd. Annual Report 2017
||||
|-|-|-|
|Interest receivable|590,003.07||
|Dividends receivable|||
|Other receivables|56,182,782.04|46,720,732.97|
|Financial assets purchased under|||
|resale agreements|||
|Inventories|2,100,661,221.93|1,817,542,870.99|
|Assets classified as held for sale|||
|Current portion of non-current assets|||
|Other current assets|118,588,703.34|108,332,246.24|
|Total current assets|3,589,832,336.53|3,229,680,310.86|
|Non-current assets:|||
|Loans and advances to customers|||
|Available-for-sale financial assets|84,533,000.00|24,500,000.00|
|Held-to-maturity investments|||
|Long-term receivables||2,310,000.00|
|Long-term equity investments|97,536,732.02||
|Investment property|24,563,544.58|25,844,090.56|
|Property, plant and equipment|5,421,295,850.03|5,273,148,708.20|
|Construction in progress|157,421,820.68|177,075,655.16|
|Construction materials|56,913,806.06|117,120,463.50|
|Proceeds from disposal of property,|||
|plant and equipment|||
|Productive living assets||1,381,292.75|
|Oil and gas assets|||
|Intangible assets|498,948,301.48|384,253,077.39|
|R&D expense|||
|Goodwill|20,613,803.29|20,613,803.29|
|Long-term prepaid expense|107,877,194.52|114,227,364.54|
|Deferred income tax assets|74,697,159.71|63,190,080.76|
|Other non-current assets|36,390,478.85|31,259,468.38|
|Total non-current assets|6,580,791,691.22|6,234,924,004.53|
|Total assets|10,170,624,027.75|9,464,604,315.39|
|Current liabilities:|||
|Short-term borrowings|1,135,124,996.40|873,261,856.02|
|Borrowings from central bank|||

Lu Thai Textile Co., Ltd. Annual Report 2017
||||
|-|-|-|
|Customer deposits and deposits from|||
|banks and other financial institutions|||
|Interbank loans obtained|||
|Financial liabilities at fair value|||
|through profit or loss|||
|Derivative financial liabilities|||
|Notes payable|7,301,771.85||
|Accounts payable|366,265,132.65|257,635,466.41|
|Advances from customers|119,785,945.48|97,929,002.93|
|Financial assets sold under|||
|repurchase agreements|||
|Handling charges and commissions|||
|payable|||
|Payroll payable|316,836,488.95|315,678,103.92|
|Taxes payable|33,055,090.58|77,775,673.14|
|Interest payable|1,572,231.86|1,165,730.47|
|Dividends payable|441,113.64|441,113.64|
|Other payables|127,090,009.25|79,744,084.66|
|Reinsurance payables|||
|Insurance contract reserve|||
|Payables for acting trading of|||
|securities|||
|Payables for acting underwriting of|||
|securities|||
|Liabilities directly associated with|||
|assets classified as held for sale|||
|Current portion of non-current|||
||62,750,292.49||
|liabilities|||
|Other current liabilities|||
|Total current liabilities|2,170,223,073.15|1,703,631,031.19|
|Non-current liabilities:|||
|Long-term borrowings||135,678,044.89|
|Bonds payable|||
|Including: Preferred shares|||
|Perpetual bonds|||
|Long-term payables|||
|Long-term payroll payable|93,843,473.02|79,122,422.89|
|Specific payables|||

Lu Thai Textile Co., Ltd. Annual Report 2017
||||
|-|-|-|
|Provisions|||
|Deferred income|126,737,092.32|95,990,489.79|
|Deferred income tax liabilities|2,904,899.46|2,341,089.87|
|Other non-current liabilities|1,840,000.00|1,840,000.00|
|Total non-current liabilities|225,325,464.80|314,972,047.44|
|Total liabilities|2,395,548,537.95|2,018,603,078.63|
|Owners’ equity:|||
|Share capital|922,602,311.00|922,602,311.00|
|Other equity instruments|||
|Including: Preferred shares|||
|Perpetual bonds|||
|Capital reserves|699,493,593.82|761,280,557.83|
|Less: Treasury shares|||
|Other comprehensive income|16,810,574.22|53,293,544.89|
|Specific reserve|||
|Surplus reserves|962,933,579.06|891,870,522.68|
|General reserve|||
|Retained earnings|4,629,102,712.06|4,341,866,189.19|
|Total equity attributable to owners of|||
||7,230,942,770.16|6,970,913,125.59|
|Parent Company|||
|Non-controlling interests|544,132,719.64|475,088,111.17|
|Total owners’ equity|7,775,075,489.80|7,446,001,236.76|
|Total liabilities and owners’ equity|10,170,624,027.75|9,464,604,315.39|

 Legal representative: Liu Zibin Chief Accountant: Zhang Hongmei Financial Manager: Zhang Keming
2. Parent Company Balance Sheet
Unit: RMB
||||
|-|-|-|
|Item|December 31, 2017|December 31, 2016|
|Current assets:|||
|Monetary assets|267,809,829.78|177,016,859.63|
|Financial assets at fair value through|||
|profit or loss|||
|Derivative financial assets|||
|Notes receivable|93,244,480.81|64,421,665.52|

Lu Thai Textile Co., Ltd. Annual Report 2017
||||
|-|-|-|
|Accounts receivable|305,903,590.98|297,026,110.33|
|Prepayments|81,471,605.69|139,013,057.80|
|Interest receivable|220,590.38||
|Dividends receivable|||
|Other receivables|519,788,239.57|340,458,208.20|
|Inventories|1,164,055,145.96|1,086,364,931.72|
|Assets classified as held for sale|||
|Current portion of non-current assets|||
|Other current assets|53,657,308.33|1,126,006.88|
|Total current assets|2,486,150,791.50|2,105,426,840.08|
|Non-current assets:|||
|Available-for-sale financial assets|72,533,000.00|12,500,000.00|
|Held-to-maturity investments|||
|Long-term receivables|||
|Long-term equity investments|1,816,493,348.06|1,711,021,866.04|
|Investment property|15,536,968.08|14,829,443.58|
|Property, plant and equipment|2,811,046,847.91|3,019,132,803.64|
|Construction in progress|25,703,496.87|25,796,329.33|
|Construction materials|1,609,204.75|663,894.82|
|Proceeds from disposal of property,|||
|plant and equipment|||
|Productive living assets|||
|Oil and gas assets|||
|Intangible assets|249,994,817.83|229,433,475.02|
|R&D expense|||
|Goodwill|||
|Long-term prepaid expense|||
|Deferred income tax assets|51,474,007.76|62,042,513.61|
|Other non-current assets|27,077,391.31|8,831,098.34|
|Total non-current assets|5,071,469,082.57|5,084,251,424.38|
|Total assets|7,557,619,874.07|7,189,678,264.46|
|Current liabilities:|||
|Short-term borrowings|622,438,413.87|503,005,010.24|
|Financial liabilities at fair value|||
|through profit or loss|||

Lu Thai Textile Co., Ltd. Annual Report 2017
||||
|-|-|-|
|Derivative financial liabilities|||
|Notes payable|6,124,239.92||
|Accounts payable|147,883,359.29|158,737,347.81|
|Advances from customers|52,314,250.61|54,552,285.78|
|Payroll payable|240,391,459.47|240,389,712.34|
|Taxes payable|17,297,415.92|47,790,003.82|
|Interest payable|973,134.21|646,147.15|
|Dividends payable|441,113.64|441,113.64|
|Other payables|22,933,385.28|19,309,386.42|
|Liabilities directly associated with|||
|assets classified as held for sale|||
|Current portion of non-current|||
|liabilities|||
|Other current liabilities|||
|Total current liabilities|1,110,796,772.21|1,024,871,007.20|
|Non-current liabilities:|||
|Long-term borrowings|||
|Bonds payable|||
|Including: Preferred shares|||
|Perpetual bonds|||
|Long-term payables|||
|Long-term payroll payable|93,843,473.02|79,122,422.89|
|Specific payables|||
|Provisions|||
|Deferred income|80,580,249.14|62,691,326.97|
|Deferred income tax liabilities|4,950.00||
|Other non-current liabilities|||
|Total non-current liabilities|174,428,672.16|141,813,749.86|
|Total liabilities|1,285,225,444.37|1,166,684,757.06|
|Owners’ equity:|||
|Share capital|922,602,311.00|922,602,311.00|
|Other equity instruments|||
|Including: Preferred shares|||
|Perpetual bonds|||
|Capital reserves|759,836,702.91|759,793,238.92|

Lu Thai Textile Co., Ltd. Annual Report 2017
||||
|-|-|-|
|Less: Treasury shares|||
|Other comprehensive income|28,050.00||
|Specific reserve|||
|Surplus reserves|959,824,839.42|888,761,783.04|
|Retained earnings|3,630,102,526.37|3,451,836,174.44|
|Total owners’ equity|6,272,394,429.70|6,022,993,507.40|
|Total liabilities and owners’ equity|7,557,619,874.07|7,189,678,264.46|

 3. Consolidated Income Statement
Unit: RMB
||||
|-|-|-|
|Item|2017|2016|
|1. Operating revenue|6,409,224,044.97|5,990,493,909.36|
|Including: Sales revenue|6,409,224,044.97|5,990,493,909.36|
|Interest revenue|||
|Premium revenue|||
|Handling charge and commission|||
|revenue|||
|2. Cost of operating revenue|5,469,545,482.56|5,023,662,230.26|
|Including: Cost of sales|4,477,047,784.68|4,007,101,690.65|
|Interest expense|||
|Handling charge and commission|||
|expense|||
|Surrenders|||
|Net claims paid|||
|Net amount provided as insurance|||
|contract reserve|||
|Expenditure on policy dividends|||
|Reinsurance premium expense|||
|Taxes and surtaxes|96,231,603.00|86,527,783.76|
|Selling expense|144,061,780.39|158,869,993.22|
|Administrative expense|651,530,968.94|661,355,141.82|
|Finance costs|63,342,671.31|20,949,153.10|
|Asset impairment losses|37,330,674.24|88,858,467.71|
|Add: Gains on changes in fair value (“-”|||
|||63,992,131.36|
|for losses)|||
|Investment income (“-” for loss)|2,331,330.34|-60,779,660.20|

Lu Thai Textile Co., Ltd. Annual Report 2017
||||
|-|-|-|
|Including: Share of profit or loss of|||
||-2,463,267.98||
|joint ventures and associates|||
|Foreign exchange gains (“-” for losses)|||
|Asset disposal income (“-” for loss)|1,242,000.54|-6,843,361.94|
|Other income|58,099,783.92||
|3. Operating income (“-” for loss)|1,001,351,677.21|963,200,788.32|
|Add: Non-operating income|12,122,767.09|73,687,483.32|
|Less: Non-operating expense|9,022,725.64|7,118,710.24|
|4. Pretax income (“-” for loss)|1,004,451,718.66|1,029,769,561.40|
|Less: Income tax expense|121,132,609.06|173,382,412.36|
|5. Net income (“-” for net loss)|883,319,109.60|856,387,149.04|
|5.1 Net income from continuing|||
||883,319,109.60|856,387,149.04|
|operations (“-” for net loss)|||
|5.2 Net income from discontinued|||
|operations (“-” for net loss)|||
|Attributable to owners of Parent|||
||841,150,934.75|808,760,025.91|
|Company|||
|Attributable to non-controlling|||
||42,168,174.85|47,627,123.13|
|interests|||
|6. Other comprehensive income, net of|||
||-36,482,970.67|36,202,772.58|
|tax|||
|Attributable to owners of Parent|||
||-36,482,970.67|36,202,772.58|
|Company|||
|6.1 Items that will not be|||
|reclassified to profit or loss|||
|6.1.1 Changes in net liabilities or|||
|assets caused by remeasurements on|||
|defined benefit pension schemes|||
|6.1.2 Share of other|||
|comprehensive income of investees that|||
|will not be reclassified to profit or loss|||
|under equity method|||
|6.2 Items that may subsequently be|||
||-36,482,970.67|36,202,772.58|
|reclassified to profit or loss|||
|6.2.1 Share of other|||
|comprehensive income of investees that|||
|will be reclassified to profit or loss under|||
|equity method|||
|6.2.2 Gains/Losses on changes in|||
|fair value of available-for-sale financial|28,050.00||
|assets|||

Lu Thai Textile Co., Ltd. Annual Report 2017
||||
|-|-|-|
|6.2.3 Gains/Losses arising from|||
|reclassification of held-to-maturity|||
|investments to available-for-sale financial|||
|assets|||
|6.2.4 Effective gains/losses on|||
|cash flow hedges|||
|6.2.5 Differences arising from|||
|translation of foreign|||
||-36,511,020.67|36,202,772.58|
|currency-denominated financial|||
|statements|||
|6.2.6 Other|||
|Attributable to non-controlling|||
|interests|||
|7. Total comprehensive income|846,836,138.93|892,589,921.62|
|Attributable to owners of Parent|||
||804,667,964.08|844,962,798.49|
|Company|||
|Attributable to non-controlling|||
||42,168,174.85|47,627,123.13|
|interests|||
|8. Earnings per share|||
|8.1 Basic earnings per share|0.91|0.85|
|8.2 Diluted earnings per share|0.91|0.85|

 Where business mergers under the same control occurred in the current period, the net income achieved by the merged parties before the business mergers was RMB4,145,908.17, with the amount for last year being RMB3,313,698.92.
Legal representative: Liu Zibin Chief Accountant: Zhang Hongmei Financial Manager: Zhang Keming
4. Parent Company Income Statement
Unit: RMB
||||
|-|-|-|
|Item|2017|2016|
|1. Sales revenue|5,146,496,112.54|5,078,847,567.10|
|Less: Cost of sales|3,736,059,702.41|3,604,147,665.88|
|Taxes and surtaxes|70,180,764.01|59,722,954.27|
|Selling expense|91,517,514.19|85,012,619.20|
|Administrative expense|442,784,766.99|458,281,382.46|
|Finance costs|21,229,673.23|15,651,562.69|
|Asset impairment losses|12,803,852.07|104,344,445.08|
|Add: Gains on changes in fair value(“-” for losses)|||
|||39,527,800.00|

Lu Thai Textile Co., Ltd. Annual Report 2017
||||
|-|-|-|
|Investment income (“-” for loss)|20,371,762.61|21,172,648.92|
|Including: Share of profit or loss|||
||-2,463,267.98||
|of joint ventures and associates|||
|Asset disposal income (“-” for|||
||-14,364,342.23|1,556,063.22|
|loss)|||
|Other income|41,705,496.22||
|2. Operating income (“-” for loss)|819,632,756.24|813,943,449.66|
|Add: Non-operating income|5,449,927.03|29,667,999.54|
|Less: Non-operating expense|4,693,009.37|2,265,787.24|
|3. Pretax income (“-” for loss)|820,389,673.90|841,345,661.96|
|Less: Income tax expense|109,759,110.09|110,212,874.41|
|4. Net income (“-” for net loss)|710,630,563.81|731,132,787.55|
|4.1 Net income from continuing|||
||710,630,563.81|731,132,787.55|
|operations (“-” for net loss)|||
|4.2 Net income from discontinued|||
|operations (“-” for net loss)|||
|5. Other comprehensive income, net of|||
||28,050.00||
|tax|||
|5.1 Items that will not be reclassified|||
|to profit or loss|||
|5.1.1 Changes in net liabilities or|||
|assets caused by remeasurements on|||
|defined benefit pension schemes|||
|5.1.2 Share of other|||
|comprehensive income of investees that|||
|will not be reclassified into profit or|||
|loss under equity method|||
|5.2 Items that may subsequently be|||
||28,050.00||
|reclassified to profit or loss|||
|5.2.1 Share of other|||
|comprehensive income of investees that|||
|will be reclassified into profit or loss|||
|under equity method|||
|5.2.2 Gains/Losses on changes in|||
|fair value of available-for-sale financial|28,050.00||
|assets|||
|5.2.3 Gains/Losses arising from|||
|reclassification of held-to-maturity|||
|investments to available-for-sale|||
|financial assets|||
|5.2.4 Effective gains/losses on|||

Lu Thai Textile Co., Ltd. Annual Report 2017
||||
|-|-|-|
|cash flow hedges|||
|5.2.5 Differences arising from|||
|translation of foreign|||
|currency-denominated financial|||
|statements|||
|5.2.6 Other|||
|6. Total comprehensive income|710,658,613.81|731,132,787.55|
|7. Earnings per share|||
|7.1 Basic earnings per share|||
|7.2 Diluted earnings per share|||

5. Consolidated Cash Flow Statement
Unit: RMB
||||
|-|-|-|
|Item|2017|2016|
|1. Cash generated by or used in|||
|operating activities:|||
|Proceeds from sale of commodities|||
||6,219,235,885.20|5,883,566,531.04|
|and rendering of services|||
|Net increase in customer deposits and|||
|deposits from banks and other financial|||
|institutions|||
|Net increase in loans from central|||
|bank|||
|Net increase in loans from other|||
|financial institutions|||
|Premiums received on original|||
|insurance contracts|||
|Net proceeds from reinsurance|||
|Net increase in deposits and|||
|investments of policy holders|||
|Net increase in proceeds from|||
|disposal of financial assets at fair value|||
|through profit or loss|||
|Interest, handling charges and|||
|commissions received|||
|Net increase in interbank loans|||
|obtained|||
|Net increase in proceeds from|||
|repurchase transactions|||
|Tax rebates received|219,602,657.95|197,711,424.88|

Lu Thai Textile Co., Ltd. Annual Report 2017
||||
|-|-|-|
|Cash generated by other operating|||
||104,656,352.43|102,147,503.54|
|activities|||
|Subtotal of cash generated by operating|||
||6,543,494,895.58|6,183,425,459.46|
|activities|||
|Payments for goods and services|3,405,465,059.44|2,825,602,104.24|
|Net increase in loans and advances to|||
|customers|||
|Net increase in deposits in central|||
|bank and in interbank loans granted|||
|Payments for claims on original|||
|insurance contracts|||
|Interest, handling charges and|||
|commissions paid|||
|Policy dividends paid|||
|Cash paid to and for employees|1,537,319,127.10|1,428,732,145.22|
|Taxes paid|305,512,465.13|380,705,302.09|
|Cash used in other operating|||
||257,163,190.48|233,653,623.46|
|activities|||
|Subtotal of cash used in operating|||
||5,505,459,842.15|4,868,693,175.01|
|activities|||
|Net cash flows from operating activities|1,038,035,053.43|1,314,732,284.45|
|2. Cash generated by or used in|||
|investing activities:|||
|Proceeds from disinvestments|||
|Investment income received|||
|Net proceeds from disposal of|||
|property, plant and equipment,|||
||8,757,416.99|2,104,478.61|
|intangible assets and other long-lived|||
|assets|||
|Net proceeds from disposal of|||
|subsidiaries or other business units|||
|Cash generated by other investing|||
||75,806,318.05|32,521,368.79|
|activities|||
|Subtotal of cash generated by investing|||
||84,563,735.04|34,625,847.40|
|activities|||
|Payments for acquisition of property,|||
|plant and equipment, intangible assets|617,226,044.44|873,466,208.61|
|and other long-lived assets|||
|Payments for investments|210,000,000.00||
|Net increase in pledged loans granted|||
|Net payments for acquisition of|||

Lu Thai Textile Co., Ltd. Annual Report 2017
||||
|-|-|-|
|subsidiaries and other business units|||
|Cash used in other investing|||
||1,263,998.65|41,519,234.00|
|activities|||
|Subtotal of cash used in investing|||
||828,490,043.09|914,985,442.61|
|activities|||
|Net cash flows from investing activities|-743,926,308.05|-880,359,595.21|
|3. Cash generated by or used in|||
|financing activities:|||
|Capital contributions received|500,000.00||
|Including: Capital contributions by|||
||500,000.00||
|non-controlling interests to subsidiaries|||
|Increase in borrowings|2,156,301,279.43|2,215,183,445.08|
|Net proceeds from issuance of bonds|||
|Cash generated by other financing|||
||232,455,600.00|39,344,422.42|
|activities|||
|Subtotal of cash generated by financing|||
||2,389,256,879.43|2,254,527,867.50|
|activities|||
|Repayment of borrowings|1,924,349,996.85|2,047,960,531.26|
|Payments for interest and dividends|524,005,417.80|497,559,966.43|
|Including: Dividends paid by|||
||12,023,566.38|12,023,566.38|
|subsidiaries to non-controlling interests|||
|Cash used in other financing|||
||178,430,428.00|261,629,544.91|
|activities|||
|Subtotal of cash used in financing|||
||2,626,785,842.65|2,807,150,042.60|
|activities|||
|Net cash flows from financing activities|-237,528,963.22|-552,622,175.10|
|4. Effect of foreign exchange rate|||
||-39,056,706.97|8,538,528.70|
|changes on cash and cash equivalents|||
|5. Net increase in cash and cash|||
||17,523,075.19|-109,710,957.16|
|equivalents|||
|Add: Cash and cash equivalents,|||
||659,116,137.67|768,827,094.83|
|beginning of the period|||
|6. Cash and cash equivalents, end of the|||
||676,639,212.86|659,116,137.67|
|period|||

6. Parent Company Cash Flow Statement
Unit: RMB
||||
|-|-|-|
|Item|2017|2016|
|1. Cash generated by or used in|||
|operating activities:|||

Lu Thai Textile Co., Ltd. Annual Report 2017
||||
|-|-|-|
|Proceeds from sale of commodities|||
||5,031,327,920.20|5,092,041,690.19|
|and rendering of services|||
|Tax rebates received|147,979,834.16|151,105,262.23|
|Cash generated by other operating|||
||48,434,983.38|31,468,452.51|
|activities|||
|Subtotal of cash generated by operating|||
||5,227,742,737.74|5,274,615,404.93|
|activities|||
|Payments for goods and services|2,835,545,725.67|2,705,013,474.52|
|Cash paid to and for employees|1,101,800,926.25|1,072,276,579.49|
|Taxes paid|203,201,646.35|185,976,982.65|
|Cash used in other operating|||
||149,048,367.90|136,946,899.89|
|activities|||
|Subtotal of cash used in operating|||
||4,289,596,666.17|4,100,213,936.55|
|activities|||
|Net cash flows from operating activities|938,146,071.57|1,174,401,468.38|
|2. Cash generated by or used in|||
|investing activities:|||
|Proceeds from disinvestments|||
|Investment income received|17,976,433.62|55,179,470.68|
|Net proceeds from disposal of|||
|property, plant and equipment,|||
||3,857,174.49|1,413,254.61|
|intangible assets and other long-lived|||
|assets|||
|Net proceeds from disposal of|||
|subsidiaries or other business units|||
|Cash generated by other investing|||
||369,607,376.66|2,931,847.14|
|activities|||
|Subtotal of cash generated by investing|||
||391,440,984.77|59,524,572.43|
|activities|||
|Payments for acquisition of property,|||
|plant and equipment, intangible assets|158,989,610.94|163,318,218.59|
|and other long-lived assets|||
|Payments for investments|217,934,750.00|137,295,249.67|
|Net payments for acquisition of|||
|subsidiaries and other business units|||
|Cash used in other investing|||
||547,733,600.00|346,158,324.00|
|activities|||
|Subtotal of cash used in investing|||
||924,657,960.94|646,771,792.26|
|activities|||
|Net cash flows from investing activities|-533,216,976.17|-587,247,219.83|
|3. Cash generated by or used in|||

Lu Thai Textile Co., Ltd. Annual Report 2017
||||
|-|-|-|
|financing activities:|||
|Capital contributions received|||
|Increase in borrowings|1,549,844,124.40|1,498,632,773.04|
|Net proceeds from issuance of bonds|||
|Cash generated by other financing|||
||86,890,400.00||
|activities|||
|Subtotal of cash generated by financing|||
||1,636,734,524.40|1,498,632,773.04|
|activities|||
|Repayment of borrowings|1,387,780,386.17|1,543,292,096.38|
|Payments for interest and dividends|473,154,729.91|474,745,698.14|
|Cash used in other financing|||
||69,000,000.00|253,629,544.91|
|activities|||
|Sub-total of cash used in financing|||
||1,929,935,116.08|2,271,667,339.43|
|activities|||
|Net cash flows from financing activities|-293,200,591.68|-773,034,566.39|
|4. Effect of foreign exchange rate|||
||-20,935,533.57|1,570,774.33|
|changes on cash and cash equivalents|||
|5. Net increase in cash and cash|||
||90,792,970.15|-184,309,543.51|
|equivalents|||
|Add: Cash and cash equivalents,|||
||177,016,859.63|361,326,403.14|
|beginning of the period|||
|6. Cash and cash equivalents, end of the|||
||267,809,829.78|177,016,859.63|
|period|||

7. Consolidated Statements of Changes inOwners’ Equity
2017
Unit: RMB
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||2017|||||||||||||
||Equity attributable to owners of Parent Company|||||||||||||
|||Other equity||||||||||Non-co||
|Item|||||||Other||||Retaine||Total|
|||instruments||||Less:||||||ntrollin||
||Share||||Capital||compre|Specific|Surplus|General|d||owners’|
|||Prefer|Perpe|t||Treasur||||||g||
||capital||||reserves||hensive|reserve|reserves|reserve|earning||equity|
|||red|ual|Other||y shares||||||interests||
||||||||income||||s|||
|||shares|bonds|||||||||||
||922,60||||||||||4,341,8||7,446,0|
|1. Balances as of|||||761,280||53,293,||891,870|||475,088||
||2,311.||||||||||66,189.||01,236.|
|end of prior year|||||,557.83||544.89||,522.68|||,111.17||
||00||||||||||19||76|
|Add: Adjustments||||||||||||||
|for changed||||||||||||||
|accounting||||||||||||||

Lu Thai Textile Co., Ltd. Annual Report 2017
|||||||||
|-|-|-|-|-|-|-|-|
|policies||||||||
|Adjustments for||||||||
|corrections of||||||||
|previous errors||||||||
|Adjustments for||||||||
|business mergers||||||||
|under same control||||||||
|Other||||||||
|adjustments||||||||
|2. Balances as of|922,60||||4,341,8||7,446,0|
|||761,280|53,293,|891,870||475,088||
|beginning of the|2,311.||||66,189.||01,236.|
|||,557.83|544.89|,522.68||,111.17||
|year|00||||19||76|
|3. Increase/||||||||
|decrease in the||-61,786,|-36,482,|71,063,|287,236|69,044,|329,074|
|period (“-” for||964.01|970.67|056.38|,522.87|608.47|,253.04|
|decrease)||||||||
|3.1 Total||||||||
||||-36,482,||841,150|42,168,|846,836|
|comprehensive||||||||
||||970.67||,934.75|174.85|,138.93|
|income||||||||
|3.2 Capital||||||||
|||-61,786,||||38,900,|-22,886,|
|increased and||||||||
|||964.01||||000.00|964.01|
|reduced by owners||||||||
|3.2.1||||||||
|Common shares||||||500,000|500,000|
|increased by||||||.00|.00|
|shareholders||||||||
|3.2.2 Capital||||||||
|increased by||||||||
|holders of other||||||||
|equity instruments||||||||
|3.2.3||||||||
|Share-based||||||||
|payments included||||||||
|in owners’ equity||||||||
|||-61,786,||||38,400,|-23,386,|
|3.2.4 Other||||||||
|||964.01||||000.00|964.01|
||||||-553,91||-494,87|
|3.3 Profit||||71,063,||-12,023,||
||||||4,411.8||4,921.8|
|distribution||||056.38||566.38||
||||||8||8|
|3.3.1||||||||
|||||71,063,|-71,063,|||
|Appropriation to||||||||
|||||056.38|056.38|||
|surplus reserves||||||||
|3.3.2||||||||

Lu Thai Textile Co., Ltd. Annual Report 2017
|||||||||
|-|-|-|-|-|-|-|-|
|Appropriation to||||||||
|general reserve||||||||
|3.3.3||||||||
||||||-482,85||-494,87|
|Appropriation to||||||-12,023,||
||||||1,355.5||4,921.8|
|owners (or||||||566.38||
||||||0||8|
|shareholders)||||||||
|3.3.4 Other||||||||
|3.4||||||||
|Carryforwards||||||||
|within owners’||||||||
|equity||||||||
|3.4.1 Increase||||||||
|in capital (or share||||||||
|capital) from||||||||
|capital reserves||||||||
|3.4.2 Increase||||||||
|in capital (or share||||||||
|capital) from||||||||
|surplus reserves||||||||
|3.4.3 Surplus||||||||
|reserves used to||||||||
|make up losses||||||||
|3.4.4 Other||||||||
|3.5 Specific||||||||
|reserve||||||||
|3.5.1||||||||
|Withdrawn for the||||||||
|period||||||||
|3.5.2 Used||||||||
|during the period||||||||
|3.6 Other||||||||
||922,60||||4,629,1||7,775,075,489.80|
|4. Balances as of||699,493|16,810,|962,933||544,132||
||2,311.||||02,712.|||
|end of the period||,593.82|574.22|,579.06||,719.64||
||00||||06|||

 2016
Unit: RMB
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||2016|||||||||||||
||Equity attributable to owners of Parent Company|||||||||||Non-co||
|Item||Other equity|||||Other|||||ntrollin|Total|
|||||||Less:|||||Retaine|||
||Share|instruments|||Capital||compre|Specific|Surplus|General||g|owners’|
|||||||Treasur|||||d|||
||capital||||reserves||hensive|reserve|reserves|reserve||interest|equity|
|||Prefer|Perpet|Other||y shares|||||earnings|||
||||||||income|||||s||

Lu Thai Textile Co., Ltd. Annual Report 2017
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|||red|ual||||||||
|||shares|bonds||||||||
||955,75|||1,007,1||||4,053,0||7,276,5|
|1. Balances as of|||||11,610,|17,090,|815,648||439,484||
||8,496.|||46,166.||||79,857.||97,630.|
|end of prior year|||||721.68|772.31|,504.28||,554.42||
||00|||97||||70||00|
|Add: Adjustments|||||||||||
|for changed|||||||||||
|accounting|||||||||||
|policies|||||||||||
|Adjustments for|||||||||||
|corrections of|||||||||||
|previous errors|||||||||||
|Adjustments for|||||||||||
|||||7,840,0|||2,777,3|18,996,||29,613,|
|business mergers|||||||||||
|||||00.00|||69.75|327.73||697.48|
|under same control|||||||||||
|Other|||||||||||
|adjustments|||||||||||
|2. Balances as of|955,75|||1,014,9||||4,072,0||7,306,2|
||||||11,610,|17,090,|818,425||439,484||
|beginning of the|8,496.|||86,166.||||76,185.||11,327.|
||||||721.68|772.31|,874.03||,554.42||
|year|00|||97||||43||48|
|3. Increase/|||||||||||
||-33,15|||-253,70|||||||
|decrease in the|||||-11,610,|36,202,|73,444,|269,790|35,603,|139,789|
||6,185.|||5,609.1|||||||
|period (“-” for|||||721.68|772.58|648.65|,003.76|556.75|,909.28|
||00|||4|||||||
|decrease)|||||||||||
|3.1 Total|||||||||||
|||||||36,202,||808,760|47,627,|892,589|
|comprehensive|||||||||||
|||||||772.58||,025.91|123.13|,921.62|
|income|||||||||||
|3.2 Capital|-33,15|||-253,70||||||-275,25|
||||||-11,610,||||||
|increased and|6,185.|||5,609.1||||||1,072.4|
||||||721.68||||||
|reduced by owners|00|||4||||||6|
|3.2.1|||||||||||
||-33,15|||-253,70||||||-275,25|
|Common shares|||||-11,610,||||||
||6,185.|||6,278.0||||||1,741.3|
|increased by|||||721.68||||||
||00|||5||||||7|
|shareholders|||||||||||
|3.2.2 Capital|||||||||||
|increased by|||||||||||
|holders of other|||||||||||
|equity instruments|||||||||||
|3.2.3|||||||||||
|Share-based|||||||||||
|payments included|||||||||||
|in owners’ equity|||||||||||
|3.2.4 Other||||668.91||||||668.91|

Lu Thai Textile Co., Ltd. Annual Report 2017
|||||||||
|-|-|-|-|-|-|-|-|
||||||-538,97||-477,54|
|3.3 Profit||||73,444,||-12,023||
||||||0,022.1||8,939.8|
|distribution||||648.65||,566.38||
||||||5||8|
|3.3.1||||||||
|||||73,444,|-73,444,|||
|Appropriation to||||||||
|||||648.65|648.65|||
|surplus reserves||||||||
|3.3.2||||||||
|Appropriation to||||||||
|general reserve||||||||
|3.3.3||||||||
||||||-465,52||-477,54|
|Appropriation to||||||-12,023||
||||||5,373.5||8,939.8|
|owners (or||||||,566.38||
||||||0||8|
|shareholders)||||||||
|3.3.4 Other||||||||
|3.4||||||||
|Carryforwards||||||||
|within owners’||||||||
|equity||||||||
|3.4.1 Increase||||||||
|in capital (or share||||||||
|capital) from||||||||
|capital reserves||||||||
|3.4.2 Increase||||||||
|in capital (or share||||||||
|capital) from||||||||
|surplus reserves||||||||
|3.4.3 Surplus||||||||
|reserves used to||||||||
|make up losses||||||||
|3.4.4 Other||||||||
|3.5 Specific||||||||
|reserve||||||||
|3.5.1||||||||
|Withdrawn for the||||||||
|period||||||||
|3.5.2 Used||||||||
|during the period||||||||
|3.6 Other||||||||
||922,60||||4,341,8||7,446,0|
|4. Balances as of||761,280|53,293,|891,870||475,088||
||2,311.||||66,189.||01,236.|
|end of the period||,557.83|544.89|,522.68||,111.17||
||00||||19||76|

Lu Thai Textile Co., Ltd. Annual Report 2017 8. Parent Company Statements of Changes inOwners’ Equity
2017
Unit: RMB
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
||2017|||||||||||
|||Other equity instruments|||||Other|||||
|||||||Less:||||Retaine|Total|
|Item|Share||||Capital||comprehe|Specific|Surplus|||
|||Preferre|Perpetu|||Treasury||||d|owners’|
||capital|||Other|reserves||nsive|reserve|reserves|||
|||d shares|a l bonds|||shares||||earnings|equity|
||||||||income|||||
|||||||||||3,451,8||
|1. Balances as of|922,602,||||759,793,2||||888,761,7||6,022,993|
|||||||||||36,174.||
|end of prior year|311.00||||38.92||||83.04||,507.40|
|||||||||||44||
|Add: Adjustments||||||||||||
|for changed||||||||||||
|accounting||||||||||||
|policies||||||||||||
|Adjustments for||||||||||||
|corrections of||||||||||||
|previous errors||||||||||||
|Other||||||||||||
|adjustments||||||||||||
|2. Balances as of||||||||||3,451,8||
||922,602,||||759,793,2||||888,761,7||6,022,993|
|beginning of the||||||||||36,174.||
||311.00||||38.92||||83.04||,507.40|
|year||||||||||44||
|3. Increase/||||||||||||
|decrease in the|||||||||71,063,05|178,266|249,400,9|
||||||43,463.99||28,050.00|||||
|period (“-” for|||||||||6.38|,351.93|22.30|
|decrease)||||||||||||
|3.1 Total||||||||||||
|||||||||||710,630|710,658,6|
|comprehensive|||||||28,050.00|||||
|||||||||||,563.81|13.81|
|income||||||||||||
|3.2 Capital||||||||||||
|increased and|||||43,463.99||||||43,463.99|
|reduced by owners||||||||||||
|3.2.1||||||||||||
|Common shares||||||||||||
|increased by||||||||||||
|shareholders||||||||||||
|3.2.2 Capital||||||||||||
|increased by||||||||||||
|holders of other||||||||||||
|equity instruments||||||||||||
|3.2.3||||||||||||

Lu Thai Textile Co., Ltd. Annual Report 2017
||||||||
|-|-|-|-|-|-|-|
|Share-based|||||||
|payments included|||||||
|in owners’ equity|||||||
|3.2.4 Other||43,463.99||||43,463.99|
||||||-532,36||
|3.3 Profit||||71,063,05||-461,301,|
||||||4,211.8||
|distribution||||6.38||155.50|
||||||8||
|3.3.1|||||||
|||||71,063,05|-71,063,||
|Appropriation to|||||||
|||||6.38|056.38||
|surplus reserves|||||||
|3.3.2|||||||
||||||-461,30||
|Appropriation to||||||-461,301,|
||||||1,155.5||
|owners (or||||||155.50|
||||||0||
|shareholders)|||||||
|3.3.3 Other|||||||
|3.4|||||||
|Carryforwards|||||||
|within owners’|||||||
|equity|||||||
|3.4.1 Increase|||||||
|in capital (or share|||||||
|capital) from|||||||
|capital reserves|||||||
|3.4.2 Increase|||||||
|in capital (or share|||||||
|capital) from|||||||
|surplus reserves|||||||
|3.4.3 Surplus|||||||
|reserves used to|||||||
|make up losses|||||||
|3.4.4 Other|||||||
|3.5 Specific|||||||
|reserve|||||||
|3.5.1|||||||
|Withdrawn for the|||||||
|period|||||||
|3.5.2 Used|||||||
|during the period|||||||
|3.6 Other|||||||
||||||3,630,1|6,272,394,429.70|
|4. Balances as of|922,602,|759,836,7||959,824,8|||
||||28,050.00||02,526.||
|end of the period|311.00|02.91||39.42|||
||||||37||

Lu Thai Textile Co., Ltd. Annual Report 2017 2016
Unit: RMB
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
||2016|||||||||||
|||Other equity instruments|||||Other|||||
|||||||Less:||||Retaine|Total|
|Item|Share||||Capital||comprehe|Specific|Surplus|||
|||Preferre|Perpetu|||Treasury||||d|owners’|
||capital|||Other|reserves||nsive|reserve|reserves|||
|||d shares|a l bonds|||shares||||earnings|equity|
||||||||income|||||
|||||||||||3,259,3||
|1. Balances as of|955,758,||||1,013,498|11,610,72|||815,648,5||6,032,637|
|||||||||||42,039.||
|end of prior year|496.00||||,848.06|1.68|||04.28||,165.81|
|||||||||||15||
|Add: Adjustments||||||||||||
|for changed||||||||||||
|accounting||||||||||||
|policies||||||||||||
|Adjustments for||||||||||||
|corrections of||||||||||||
|previous errors||||||||||||
|Other||||||||||||
|adjustments||||||||||||
|2. Balances as of||||||||||3,259,3||
||955,758,||||1,013,498|11,610,72|||815,648,5||6,032,637|
|beginning of the||||||||||42,039.||
||496.00||||,848.06|1.68|||04.28||,165.81|
|year||||||||||15||
|3. Increase/||||||||||||
|decrease in the|-33,156,||||-253,705,|-11,610,7|||73,113,27|192,494|-9,643,65|
|period (“-” for|185.00||||609.14|21.68|||8.76|,135.29|8.41|
|decrease)||||||||||||
|3.1 Total||||||||||||
|||||||||||731,132|731,132,7|
|comprehensive||||||||||||
|||||||||||,787.55|87.55|
|income||||||||||||
|3.2 Capital||||||||||||
||-33,156,||||-253,705,|-11,610,7|||||-275,251,|
|increased and||||||||||||
||185.00||||609.14|21.68|||||072.46|
|reduced by owners||||||||||||
|3.2.1||||||||||||
|Common shares|-33,156,||||-253,706,|-11,610,7|||||-275,251,|
|increased by|185.00||||278.05|21.68|||||741.37|
|shareholders||||||||||||
|3.2.2 Capital||||||||||||
|increased by||||||||||||
|holders of other||||||||||||
|equity instruments||||||||||||
|3.2.3||||||||||||
|Share-based||||||||||||
|payments included||||||||||||

Lu Thai Textile Co., Ltd. Annual Report 2017
|||||||
|-|-|-|-|-|-|
|in owners’ equity||||||
|3.2.4 Other||668.91|||668.91|
|||||-538,63||
|3.3 Profit|||73,113,27||-465,525,|
|||||8,652.2||
|distribution|||8.76||373.50|
|||||6||
|3.3.1||||||
||||73,113,27|-73,113,||
|Appropriation to||||||
||||8.76|278.76||
|surplus reserves||||||
|3.3.2||||||
|||||-465,52||
|Appropriation to|||||-465,525,|
|||||5,373.5||
|owners (or|||||373.50|
|||||0||
|shareholders)||||||
|3.3.3 Other||||||
|3.4||||||
|Carryforwards||||||
|within owners’||||||
|equity||||||
|3.4.1 Increase||||||
|in capital (or share||||||
|capital) from||||||
|capital reserves||||||
|3.4.2 Increase||||||
|in capital (or share||||||
|capital) from||||||
|surplus reserves||||||
|3.4.3 Surplus||||||
|reserves used to||||||
|make up losses||||||
|3.4.4 Other||||||
|3.5 Specific||||||
|reserve||||||
|3.5.1||||||
|Withdrawn for the||||||
|period||||||
|3.5.2 Used||||||
|during the period||||||
|3.6 Other||||||
|||||3,451,8||
|4. Balances as of|922,602,|759,793,2|888,761,7||6,022,993|
|||||36,174.||
|end of the period|311.00|38.92|83.04||,507.40|
|||||44||

Lu Thai Textile Co., Ltd. Annual Report 2017 III. Company Profile
Lu Thai Textile Co., Ltd. (hereinafter referred to as the “Company”) is a joint venture established 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 2000Shareholders’ 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 2001Shareholders’ 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 2002Shareholders’ 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 inneremployees’ shared increased to 40.56 million shares. As examined and approved by ZJGSZ No.[2000] 199 of CSRC, the inneremployees’ shares will start circulation 3 years later since listing on the A-share market. On Dec. 25, 2003, the inneremployees’ shares reach 3 years since listing on the A-share stock market, and they set out circulation on Dec.26, 2003. As approved by theShareholders’ 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 SpecialShareholders’ General Meeting for 2011, the relevant resolution of the 15th Session of the 6th Board of Directors, the Opinion of China Securities Regulatory Commission on the Restricted Share Incentive Plan of Lu Thai Textile Co., Ltd. (Shang-Shi-Bu-Han[2011] No. 206), the Company applied for a registered capital increment of RMB 14.09 million, which was contributed by restricted share incentive receivers with monetary funds. In accordance with the resolution of Proposal on Repurchasing and Canceling Partial Restricted Shares already Granted for the Original Incentive Targets not Reaching the Incentive Conditions made at the 23rd Session of the 6th Board of Directors on 13 Aug. 2012, the Company canceling a total of 60,000.00 shares already granted for the original incentive targets not reaching the incentive conditions. According to the second temporary resolution of Proposal on counter purchase of part of the domestic listed foreign share (B share) on 25 Jun. 2012, the Company counter purchase domestic listed foreign share (B share) 48,837,300 shares. According to the Proposal on Repurchase and Cancel Part of Unlocked Restricted Share of the Original Incentive Personnel not Conforming to the Incentive Condition, Proposal on Repurchase and Cancel unlocked Restricted Share in Second Unlocked Period of all the Incentive Personnel reviewed and approved by the 26th meeting of 6th session of the board of the directors on 27 Mar. 2013, the Company repurchase and cancel 4,257,000 shares owned by original people whom to motivate. According to the Proposal on Repurchase and Write-off of Partly of the Original Incentive Targets Not Met with the Incentive Conditions but Granted Restricted Shares approved on the 11th Session of the 7th Board of Directors on 11 Jun. 2014, to execute repurchase and write-off of the whole granted shares of 42,000 shares of the original incentive targets not met with the incentive targets of the Company. As per the Proposal on Buy-back of Some A- and B-shares considered and approved as a resolution at the 1st special meeting of shareholders on August 5, 2015, the Company repurchased 33,156,200 domestically listed foreign shares (B-shares). As of December 31, 2017, the registered capital of the Company was RMB922.6023 million.
Lu Thai Textile Co., Ltd. Annual Report 2017 TheCompany’s registered address: No. 11, Mingbo Road, Hi-tech Development Zone, Zibo, Shandong
TheCompany’s legal representative: Liu Zibin
TheCompany’s business scope includes the production, processing and sales business of cotton yarn, yarn dyed fabrics, shirts, fashion accessories, health underwear and other textile products and their mating products; design,R&D and technology services of the textile and garment products; acquisition and export of products not under exclusive rights or quota licenses; and hotel, guesthouses, catering, conferences, and training services; rental business of the self-owned houses and land; the construction and management of the purified water projects.
TheCompany’s financial statements have been approved for issue by the Board of Directors of the Company on April 15, 2018. There were 16 subsidiaries included into the consolidation scope of the Company in 2017, and for the details, please refer to Notes IX. “Equities among Other Entities”. There was 1 increased subsidiary in the consolidation scope as compared with last year, and please refer to Notes VIII. “Changes in Consolidation Scope” for details.
IV Basis for Preparation of Financial Statements
1. Preparation Basis
With the going-concern assumption as the basis and based on transactions and other events that actually occurred, the Group prepared financial statements in accordance with The Accounting Standards for BusinessEnterprises—Basic Standard issued by the Ministry of Finance with Decree No. 33 and revised with Decree No. 76, the 42 specific accounting standards, the Application Guidance of Accounting Standards for Business Enterprises, the Interpretation of Accounting Standards for Business Enterprises and other regulations issued and revised from February 15, 2006 onwards (hereinafter jointly referred to as “the Accounting Standards for Business Enterprises”, “China Accounting Standards” or “CAS”), as well as the Rules for Preparation Convention of Disclosure of Public Offering Companies No.15– General Regulations for Financial Reporting (revised in 2014) by China Securities Regulatory Commission.
In accordance with relevant provisions of the Accounting Standards for Business Enterprises, the Group adopted the accrual basis in accounting. Except for some financial instruments, the financial statements were based on historical costs for measurement. Non-current asset held for sale was priced according to the lower one between the amount of fair value minus estimated costs and the original book value which complies with the conditions of holding for sale. If impairment occurred on an asset, an impairment reserve was withdrawn accordingly pursuant to relevant requirements.
V Important Accounting Policies and Estimations
Is the Company subject to any disclosure requirements for special industries?
No.
Indication of specific accounting policies and estimations:
The Company and each subsidiary mainly engage in the production and operation of textile products. The Company and each subsidiary according to the actual production and operation characteristics and the regulations of the relevant ASBE, formulated certain specific accounting polices and accounting estimates of the transactions and events such as recognizing the revenues, and please refer to each description of the section for details. As for the notes to the important accounting judgment and estimations made by the management level, please refer to the 27. “Other important accounting policies and estimations” of the section.
Lu Thai Textile Co., Ltd. Annual Report 2017 1. Statement of Compliance with the Accounting Standards for Business Enterprises
The financial statements prepared by the Company are in compliance with in compliance with the Accounting Standards for Business Enterprises, which factually and completely present theCompany’s, and theCompany’s financial positions as at December 31, 2017, business results and cash flows for the year of 2017 and other relevant information. In addition, theCompany’s and theCompany’s financial statements meet the requirements of disclosing financial statements and notes thereto stated in the Rules for Preparation Convention of Disclosure of Public Offering Companies No.15– General Regulations for Financial Reporting (revised in 2014) by China Securities Regulatory Commission.
2. Fiscal Year
TheCompany’s fiscal periods include fiscal years and fiscal periods shorter than a complete fiscal year. TheCompany’s fiscal year starts on 1 Jan. and ends on 31 Dec. of every year according to the Gregorian calendar.
3. Operating Cycle
Normal operating cycle refers to the period from the Group purchases the assets for processing to realize the cash or cash equivalents. The Group regards 12 months as an operating cycle and regards which as the partition criterion of the mobility of the assets and liabilities.
4. Recording Currency
Renminbi (RMB) is regarded as the prevailing currency used in the main economic circumstances of the Company and its domestic subsidiaries. The Company and its domestic subsidiaries adopt RMB as the recording currency. The Company and its overseas subsidiaries confirm to adopt HK Dollar, US Dollar and Vietnamese Dong as the recording currency according their major economic environment of the operating. When preparing the financial statements for the Reporting Period, the Company adopted RMB as the recording currency.
5. Accounting Treatment Methods for Business Combinations under the Same Control or not under the Same Control
Business combinations, it is refer to two or more separate enterprises merge to form a reporting entity transactions or events. Business combination is divided into under the same control and those non under the same control.
(1) Business combinations under the same control
A business combination under the same control is a business combination in which all of the combining enterprises are ultimately controlled by the same party or the same parties both before and after the business combination and on which the control is not temporary. In a business combination under the same control, the party which obtains control of other combining enterprise(s) on the combining date is the combining party, the other combining enterprise(s) is (are) the combined party. The “combining date” refers to the date on which the combining party actually obtains control on the combined party.
The assets and liabilities that the combining party obtains in a business combination shall be measured on the basis of their carrying amount in the combined party on the combining date. As for the balance between the carrying amount of the net assets obtained by the combining party and the carrying amount of the consideration paid by it (or the total par value of the shares issued), the additional paid-in capital (share premium) shall be adjusted. If the additional paid-in capital (share premium) is not sufficient to be offset, the retained earnings shall be adjusted.
Lu Thai Textile Co., Ltd. Annual Report 2017 The direct cost for the business combination of the combining party shall be recorded into the profits and losses at the current period. (2) Business combinations not under the same control
A business combination not under the same control is a business combination in which the combining enterprises are not ultimately controlled by the same party or the same parties both before and after the business combination. In a business combination not under the same control, the party which obtains the control on other combining enterprise(s) on the purchase date is the acquirer, and other combining enterprise(s) is (are) the acquiree.
For a business combination not under the same control, the combination costs shall include the fair values, on the acquisition date, of the assets paid, the liabilities incurred or assumed and the equity securities issued by the acquirer in exchange for the control on the acquiree, the expenses for audit, legal services and assessment, and other administrative expenses, which are recorded into the profits and losses in the current period. The trading expenses for the equity securities or debt securities issued by the acquirer as the combination consideration shall be recorded into the amount of initial measurement of the equity securities or debt securities. The involved contingent consideration shall be recorded into the combination costs at its fair value on the acquiring date. Where new or further evidences emerge, within 12 months since the acquiring date, against the existing circumstances on the acquiring date and the contingent consideration thus needs to be adjusted, the combined goodwill shall be adjusted accordingly. The combination costs of the acquirer and the identifiable net assets obtained by it in the combination shall be measured according to their fair values at the acquiring date. The acquirer shall recognize the positive balance between the combination costs and the fair value of the identifiable net assets it obtains from the acquiree as business reputation. Where the combination costs are less then the fair value of the identifiable net assets it obtains from the acquiree, the acquirer shall re-examine the measurement of the fair values of the identifiable assets, liabilities and contingent liabilities it obtains from the acquiree as well as the combination costs. If, after the reexamination, the combination costs are still less than the fair value of the identifiable net assets it obtains from the acquiree, the acquirer shall record the balance into the profits and losses of the current period.
As for the deductible temporary differences the acquirer obtains from the acquiree which are not recognized into deferred income tax liabilities due to their not meeting the recognition standards, if new or further information shows that the relevant situation has existed on the acquiring date and the economic benefits brought by the deductible temporary differences the acquirer obtains from the acquiree on the acquiring date can be realized, they shall be recognized into deferred income tax assets and the relevant goodwill shall be reduced. Where the goodwill is not sufficient to be offset, the difference shall be recognized into the profits and losses in the current period. In other circumstances than the above, where the deductible temporary differences are recognized into deferred income tax assets on the acquiring date, they shall be recorded into the profits and losses in the current period.
In a business combination not under same control realized by two or more transactions of exchange, according to about the 5th Notice about the Treasury Issuing the Accounting Standards for Enterprises (Finance accounting)[2012] No. 19 Criterion about the “package deal” (see 6 (2) in this section), Whether the deals are “package deal” or not, belong to the “package deal”, see the previous paragraphs described in this section and 13. “long term equity investment transaction” in this section and conduct accounting treatment, those not belong to the "package deal" distinguish between the individual financial statements and the consolidated financial statements and conduct relevant accounting treatment.
In the individual financial statements, the sum of the book value and new investment cost of the Company holds in the acquiree before the acquiring date shall be considered as initial cost of the investment. Other related comprehensive gains in relation to the equity interests that the Company holds in the acquiree before the acquiring date shall be treated on the same basis as the acquiree directly disposes the related assets or liabilities when disposing the investment (that is, except for the corresponding share in the changes in the net liabilities or assets with a defined benefit plan measured at the equity method arising from theacquiree’s re-measurement, the others shall be transferred into current investment gains).
In theCompany’s consolidated financial statements, as for the equity interests that the Company holds in the acquiree before the acquiring date, they shall be re-measured according to their fair values at the acquiring date; the positive difference between their fair values and carrying amounts shall be recorded into the investment gains for the period including the acquiring date. Other related
comprehensive gains in relation to the equity interests that the Company holds in the acquiree before the acquiring date shall be
Lu Thai Textile Co., Ltd. Annual Report 2017 treated on the same basis as the acquiree directly disposes the related assets or liabilities when disposing the investment (that is, except for the corresponding share in the changes in the net liabilities or assets with a defined benefit plan measured at the equity method arising from theacquiree’s re-measurement, the others shall be transferred into current investment gains on the acquiring date).
6. Methods for Preparing Consolidated Financial Statements
(1) Principle for determining the consolidation scope
The consolidation scope for financial statements is determined on the basis of control. The term “control” is the power of the Company upon an investee, with which it can take part in relevant activities of the investee to obtain variable returns and is able to influence the amount of returns. The consolidated financial statements comprise the financial statements of the Company and its subsidiaries. A subsidiary is an enterprise or entity controlled by the Company.
Once any changes in the relevant facts or situations resulted in any changes in the elements involved in the aforesaid definition of “control”, the Company shall carry out a reassessment.
(2) Methods for preparing the consolidated financial statements
Subsidiaries are fully consolidated from the date on which the Company obtains control on their net assets and operation decision-making and are de-consolidated from the date when such control ceases. As for a disposed subsidiary, its operating results and cash flows before the disposal date has been appropriately included in the consolidated income statement and cash flow statement; and as for subsidiaries disposed in the current period, the opening items in the consolidated balance sheet are not adjusted. For a subsidiary acquired in a business combination not under the same control, its operating results and cash flows after the acquiring date have been appropriately included in the consolidated income statement and cash flow statement, and the opening items and comparative items in the consolidated financial statements are not adjusted. For a subsidiary acquired in a business combination under the same control or a combined party obtained in a takeover, its operating results and cash flows from the beginning of the Reporting Period of the combination to the combination date have been appropriately included in the consolidated income statement and cash flow statement, and the comparative items in the consolidated financial statements are adjusted at the same time.
The financial statements of subsidiaries are adjusted in accordance with the accounting policies and accounting period of the Company during the preparation of the consolidated financial statements, where the accounting policies and the accounting periods are inconsistent between the Company and subsidiaries. For a subsidiary acquired from a business combination not under the same control, the individual financial statements of the subsidiary are adjusted based on the fair value of the identifiable net assets at the acquisition date.
All significant inter-group balances, transactions and unrealized profits are offset in the consolidated financial statements.
The portion of asubsidiary’sshareholders’ equity and the portion of asubsidiary’s net profits and losses for the period not held by the Company are recognized as minority interests and minority shareholder profits and losses respectively and presented separately undershareholders’ equity and net profits in the consolidation financial statements. The portion of asubsidiary’s net profits and losses for the period that belong to minority interests is presented as the item of “minority shareholder profits and losses” under the bigger item of net profits in the consolidated financial statements. Where the loss of a subsidiary shared by minority shareholders exceeds the portion enjoyed by minority shareholders in thesubsidiary’s openingowners’ equity, minority interests are offset.
Where the Company losses control on its original subsidiaries due to disposal of some equity investments or other reasons, the residual equity interests are re-measured according to the fair value on the date when such control ceases. The summation of the consideration obtained from the disposal of equity interests and the fair value of the residual equity interests, minus the portion in the originalsubsidiary’s net assets measured on a continuous basis from the acquisition date that is enjoyable by the Company according to the original shareholding percentage in the subsidiary, is recorded in investment gains for the period when theCompany’s control on the subsidiary ceases. Other comprehensive incomes in relation to the equity investment in the original subsidiary are treated on
Lu Thai Textile Co., Ltd. Annual Report 2017 the same accounting basis as the acquiree directly disposes the relevant assets or liabilities (that is, except for the changes in the net liabilities or assets with a defined benefit plan resulted from re-measurement of the original subsidiary, the rest shall all be transferred into current investment gains) when such control ceases. And subsequent measurement is conducted on the residual equity interests according to the No. 2 Accounting Standard for Business Enterprises—Long-term Equity Investments or the No. 22 Accounting Standard for BusinessEnterprises—Recognition and Measurement of Financial Instruments. For details, see 13. “Long Term Equity Investment” or 9. “Financial Instruments” in this section.
Where the Company losses control on its original subsidiaries due to step by step disposal of equity investments through multiple transactions, it need to distinguish the Group losses control on its subsidiaries due to disposal of equity investments whether belongs to a package deal. All the transaction terms, conditions and economic impact of the disposal ofsubsidiaries’ equity investment are in accordance with one or more of the following conditions, which usually indicate the multiple transactions, should be considered as a package deal for accounting treatment.① These deals are at the same time or under the condition of considering the influence of each other to concluded;② These transactions only be as a whole can achieve a complete business result;③ The occurrence of a deal depends on at least one othertransactions；④ A deal alone is not economical, but it is economical with other trading together. Those not belong to a package deal, each of them a deal depends on circumstances respectively conduct accounting treatment in accordance with the applicable principles of “part disposal of subsidiaries of a long-term equity investment under the condition of not losing control on its subsidiaries” (see 13 (2)④ in this section) and “Where the Company losses control on its original subsidiaries due to disposal of some equity investments or other reasons” (see the front paragraph) relevant transactions of the Company losses control on its subsidiaries due to disposal of equity investments belonging to a package deal, considered as a transaction and conduct accounting treatment. However, Before losing control, every disposal cost and corresponding net assets balance of subsidiary of disposal investment are confirmed as other comprehensive income in consolidated financial statements, which together transferred into the current profits and losses in the lose of control, when the Company losing control on its subsidiary.
7. 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 and Accounting Method for Foreign Currency
(1) Accounting treatments for translation of foreign currency transactions
As for a foreign currency transaction, the Company shall convert the amount in a foreign currency into amount in its bookkeeping base at the spot exchange rate (usually referring to the central parity rate announced by thePeople’s Bank of China, the same below) of the transaction date, while as for such transactions as foreign exchange or involving in foreign exchange, the Company shall converted into amount in the bookkeeping base currency at actual exchange rate the transaction is occurred.
(2) Accounting treatments for translation of foreign currency monetary items and non-monetary items
On the balance sheet date, the foreign currency monetary items shall be translated at the spot exchange rate on the balance sheet date. The exchange difference arising from the difference between the spot exchange rate on the balance sheet date and the spot exchange rate at the time of initial recognition or prior to the balance sheet date shall be recorded in the profits and losses in the current period, excluding the following situations:① the exchange difference arising from foreign currency loans related to acquisition of fixed assets shall be treated at the principle of capitalization of borrowing costs;② the exchange difference arising from the hedging instruments used for effective hedging of net overseas operation investments shall be recorded into other comprehensive incomes, and shall be recognized into current gains and losses when the net investments are disposed; and③ the exchange difference arising from change in the book balance of foreign currency monetary items available for sale except the amortized costs shall be recorded
Lu Thai Textile Co., Ltd. Annual Report 2017 into other comprehensive gains and losses.
For the preparation for consolidated financial statement involved in foreign operations, if there are items of foreign currency monetary of net investment in foreign operations in essence, then the balance of exchange generated by changes in exchange rate shall included into other comprehensive income; when disposing foreign operations, it shall be converted into the disposal of the current profits and losses.
A foreign currency non-monetary item measured at the historical costs shall still be translated at the spot exchange rate on the transaction date. Where the foreign non-monetary items measured at the fair value shall be converted into amount in its bookkeeping base currency at spot exchange rate, the exchange gains and losses arising thereof shall be treated as change in fair value, and recorded into the current period gains and losses or as other comprehensive incomes.
(3) Translation of foreign currency financial statements
When it involves overseas business in preparing the consolidated financial statement, for the translation difference of foreign currency monetary items of net investment in overseas business arising from the change in exchange rate, it shall be recorded into the item of “difference of foreign currency financial statement translation” under theowners’ equity; and be recorded into disposal gains and losses at current period when disposing overseas business.
The foreign currency financial statement of overseas business should be translated in to RMB financial statement by the following methods: The asset and liability items in the balance sheets shall be translated at a spot exchange rate on the balance sheet date. Among theowner’s equity items, except for the items as “undistributed profits”, other items shall be translated at the spot exchange rate at the time when they are incurred. The income and expense items in the profit statements shall be translated at the spot exchange rate of the transaction date. The undistributed profits at year-begin is the undistributed profits at the end of last year after the translation; undistributed profits at year-end shall be listed as various distribution items after the translation; after the translation, the balance between assets and the sum of liabilities andowners’ equities shall be recorded into other comprehensive gains and losses as difference of foreign currency translation. Where an enterprise disposes of an overseas business without the control right, it shall shift the differences, which is presented under the items of theowner’s equities in the balance sheet and which arises from the translation of foreign currency financial statements relating to this overseas business, into the disposal profits and losses of the current period by all or proportion of the disposed overseas business.
Foreign cash flow shall be translated at the spot exchange rate of the date of cash flow incurred. The influence of exchange rate on the cash flow shall be adjustment item and individually listed in the cash flow statement.
And the opening balance and the actual balance of last year shall be listed at the amounts after translation of foreign currency financial statement in last year.
Where the control of the Company over an overseas operation ceases due to disposal of all or some of theCompany’sowner’s equity in the overseas operation or other reasons, the foreign-currency statement translation difference belonging to the parentcompany’sowner’s equity in relation to the overseas operation which is stated under theshareholders’ equity in the balance sheet shall be all restated as gains and losses of the disposal period.
Where theCompany’s equity in an overseas operation decreases due to disposal of some equity investment or other reasons but the Company still has control over the overseas operation, the foreign-currency statement translation difference in relation to the disposed part of the overseas operation shall be recorded into minority interests instead of current gains and losses. Ifwhat’s disposed is some equity in an overseas associated enterprise or joint venture, the foreign-currency statement translation difference related to the overseas operation shall be recorded into the gains and losses of the current period of the disposal according to the disposal ratio. 9. Financial Instruments
The Company recognizes a financial asset or liability when it becomes a party of the relevant financial instrument contract. Financial assets and liabilities are measured at fair value in initial recognition. As for the financial assets and liabilities measured at fair value
Lu Thai Textile Co., Ltd. Annual Report 2017 of which changes are recorded into current gains and losses, the relevant dealing expenses are directly recorded into gains and losses; and the dealing expenses on other kinds of financial assets and liabilities are included in the amounts initially recognized.
(1) Determination of the fair value of main financial assets and financial liabilities
Fair value refers to the price that a market participant shall receive for selling an asset or shall pay for transferring a liability in an orderly transaction on the measurement date. As for the financial assets or financial liabilities for which there is an active market, the quoted prices in the active market shall be used to determine the fair values thereof. The quoted prices in the active market refers to the prices available from stock exchange,broker’s agencies, guilds, pricing organization and etc., which represent the actual trading price under equal transaction. Where there is no active market for a financial instrument, the enterprise concerned shall adopt value appraisal techniques, including the prices adopted by the parties, who are familiar with the condition, in the latest market transaction upon their own free will, the current fair value obtained by referring to other financial instruments of the same essential nature, the cash flow capitalization method and the option pricing model, etc., to determine its fair value.
(2) Classification, recognition and measurement of financial assets
The purchase and sale of financial assets under the normal ways shall be recognized and stopped to be recognized respectively at the price of transaction date. Financial assets shall be classified into the following four categories when they are initially recognized: (a) the financial assets which are measured at their fair values and the variation of which is recorded into the profits and losses of the current period, (b) the investments which will be held to their maturity; (c) loans and the account receivables; and (d) financial assets available for sale.
① The financial assets which are measured at their fair values and the variation of which is recorded into the profits and losses of the current period
Including transactional financial assets and the financial assets which are designated to be measured at their fair value when they are initially recognized and of which the variation is recorded into the profits and losses of the current period;
The financial assets meeting any of the following requirements shall be classified as transactional financialassets：A. The purpose to acquire the said financial assets is mainly for selling them in the near future; B. Forming a part of the identifiable combination of financial instruments which are managed in a centralized way and for which there are objective evidences proving that the enterprise may manage the combination by way of short-term profit making in the near future; C. Being a derivative instrument, excluding the designated derivative instruments which are effective hedging instruments, or derivative instruments to financial guarantee contracts, and the derivative instruments which are connected with the equity instrument investments for which there is no quoted price in the active market, whose fair value cannot be reliably measured, and which shall be settled by delivering the said equity instruments. A transactional financial asset is subsequently measured at the fair value. The gains and losses arising from the fair value changes, as well as the dividend and interest incomes from the financial asset, are recorded in the gains and losses for the current period.② Held-to-maturity investment
The term "held-to-maturity investment" refers to a non-derivative financial asset with a fixed date of maturity, a fixed or determinable amount of repo price and which the enterprise holds for a definite purpose or the enterprise is able to hold until its maturity.
For the held-to-maturity investment adopting actual interest rate method, which is measured at the post-amortization costs, the profits and losses that arise when such financial assets or financial liabilities are terminated from recognition, or are impaired or amortized, shall be recorded into the profits and losses of the current period.
The actual interest rate method refers to the method by which the post-amortization costs and the interest incomes of different installments or interest expenses are calculated in light of the actual interest rates of the financial assets or financial liabilities (including a set of financial assets or financial liabilities). The actual interest rate refers to the interest rate adopted to cash the future cash flow of a financial asset or financial liability within the predicted term of existence or within a shorter applicable term into the current carrying amount of the financial asset or financial liability.
When the actual interest rate is determined, the future cash flow shall be predicted on the basis of taking into account all the
Lu Thai Textile Co., Ltd. Annual Report 2017 contractual provisions concerning the financial asset or financial liability (the future credit losses shall not be taken into account).and also the various fee charges, trading expenses, premiums or reduced values, etc., which are paid or collected by the parties to a financial asset or financial liability contract and which form a part of the actual interest rate.
③ Loans and the accounts receivables
Loans and the accounts receivables refer to non-derivative financial assets, which there is no quotation in the active market, with fixed recovery cost or recognizable. Financial assets that are defined as loans and the accounts receivables by the Company including notes receivables, accounts receivables, interest receivable, dividends receivable and other receivables etc..
Loans and the accounts receivables are made follow-up measurement on the basis of post-amortization costs employing the effective interest method. Gains or loss arising from the termination recognition, impairment occurs or amortization shall be recorded into the profits and losses of the current period.
④ Assets available for sales
Assets available for sales including non-derivative financial asset that has been assigned as assets available for sales on the initial recognition and financial assets excluded those measured at fair value and of which the variation into profits and losses of the current period, they are some financial assets, loans and accounts receivables, held-to-maturity investment.
The cost at the period-end of the available-for-sale liabilities instruments should be confirmed according to its amortized cost method, that is the initially recognized amount which deduct the principal that had been repaid, to plus or minus the accumulative amortization amount formed by the amortization between the difference of the initially recognized amount and the amount on the due date that adopted the actual interest rate method, and at the same time deduct the amount after the impairment loss happened. The cost at the period-end of the available-for-sale liabilities instruments is its initial cost.
Financial assets available-for-trade are subsequently measured at fair value, and gains or losses arising from changes in the fair value are recognized as other comprehensiveincome，and be carried forward when the said financial assets stopped recognition, then it shall be recorded into the profits and losses of the current period. But, the equity instrument investment which neither have quotation in the active market nor its fair value could not be reliable measured, as well as the derivative financial assets that concern with the equity instruments and should be settled through handing over to its equity instruments, should take the follow-up measurement according to the cost.
Interest receive during the holding of assets available for sales and cash dividends with distribution announcement by invested companies, it shall be recorded into the profits and losses of the current period.
(3) Impairment of financial assets
The Company assesses at the balance sheet date the carrying amount of every financial asset except for the financial assets that measured by the fair value. If there is objective evidence indicating a financial asset may be impaired, a provision is provided for the impairment.
The Company carries out a separate impairment test for every financial asset which is individually significant. As for a financial asset which is individually insignificant, an impairment test is carried out separately or in the financial asset group with similar credit risk. Where the financial asset (individually significant or insignificant) is found not impaired after the separate impairment test, it is included in the financial asset group with similar credit risk and tested again on the group basis. Where the impairment loss is recognized for an individual financial asset, it is not included in the financial asset group with similar credit risk for an impairment test.
① Impairment on held-to maturity investment, loans and receivables
The financial assets measured by cost or amortized cost write down their carrying value by the estimated present value of future cash flow. The difference is recorded as impairment loss. If there is objective evidence to indicate the recovery of value of financial assets after impairment, and it is related with subsequent event after recognition of loss, the impairment loss recorded originally can be reversed. The carrying value of financial assets after impairment loss reversed shall not exceed the amortized cost of the financial
assets without provisions of impairment loss on the reserving date.
Lu Thai Textile Co., Ltd. Annual Report 2017② Impairment of available-for-sale financial assets
When it judged that the decrease of fair value of the available-for-sale equity instrument investment is serious and not temporarily after comprehensive considering relevant factors, it reflected that the available-for-sale equity instrument investment occurred impairment. Of which, the “serious decline” refers to the accumulative decline range of the fair value over20%; while the “non-temporary decline” refers to the consecutive decline time of the fair value over 12 months.
Where an available-for-sale financial asset is impaired, the accumulative losses arising from the decrease of the fair value of the capital reserve which is directly included are transferred out and recorded in the profits and losses for the current period. The accumulative losses transferred out are the balance obtained from the initially obtained cost of the said financial asset after deducting the principals as taken back, the amortized amount, the current fair value and the impairment loss originally recorded in the profits and losses.
Where the impairment loss has been recognized for an available-for-sale financial asset, if, within the accounting periods thereafter, there is any objective evidence proving that the value of the said financial asset has been restored and the restoration is objectively related to the events that occur after the impairment loss was recognized, the originally recognized impairment loss is reversed. The impairment losses on the available-for-sale equity instrument investments are reversed and recognized as other comprehensive incomes, and the impairment losses on the available-for-sale liability instruments are reversed and recorded in the profits and losses for the current period.
The impairment loss incurred to an equity instrument investment for which there is no quoted price in the active market and whose fair value cannot be reliably measured, or incurred to a derivative financial asset which is connected with the said equity instrument investment and which must be settled by delivering the said equity investment, is not reversed.
(4) Recognition and measurement of financial asset transfers
Where a financial asset satisfies any of the following requirements, the recognition of it is terminated:① The contractual rights for collecting the cash flow of the said financial asset are terminated;② The said financial asset has been transferred and nearly all of the risks and rewards related to the ownership of the financial asset to the transferee; or③ The said financial asset has been transferred. And the Company has ceased its control on the said financial asset though it neither transfers nor retains nearly all of the risks and rewards related to the ownership of the financial asset.
Where the Company neither transfers nor retains nearly all of the risks and rewards related to the ownership of a financial asset, and it does not cease its control on the said financial asset, it recognizes the relevant financial asset and liability accordingly according to the extent of its continuous involvement in the transferred financial asset. The term "continuous involvement in the transferred financial asset" refers to the risk level that the enterprise faces resulting from the change of the value of the financial asset.
If the transfer of an entire financial asset satisfies the conditions for stopping recognition, the difference between the amounts of the following 2 items is recorded in the profits and losses of the current period: (1) The book value of the transferred financial asset; and (2) The sum of consideration received from the transfer, and the accumulative amount of the changes of the fair value originally recorded in other comprehensive incomes.
If the transfer of partial financial asset satisfies the conditions to stop the recognition, the book value of the transferred financial asset is apportioned between the portion whose recognition has been stopped and the portion whose recognition has not been stopped according to their respective relative fair value, and the difference between the amounts of the following 2 items is included into the profits and losses of the current period: (1) The summation of the consideration received from the transfer and the portion of the accumulative amount of changes in the fair value originally recorded in other comprehensive incomes which corresponds to the portion whose recognition has been stopped; and (2) The amortized carrying amounts of the aforesaid amounts.
In respect of the assets using recourse to sell or using endorsement to transfer, the Company needs to determine whether almost all of the risks and rewards of the financial asset ownership are transferred. If almost all of the risks and rewards of the financial asset ownership had been transferred to the transferee, derecognize the financial assets. For almost all of the risks and rewards of the financial asset ownership retained, do not end to recognize the financial assets. For which neither transfer or retain almost all of the
Lu Thai Textile Co., Ltd. Annual Report 2017 risks and rewards of the financial asset ownership, continuously judge whether the Company retain the control of the assets, and conduct accounting treatment according to the principle of mentioned in the previous paragraphs.
(5) Classification and measurement of financial liabilities
In the initial recognition, financial liabilities are divided into the financial liabilities measured at fair values and whose changes are recorded in current gains and losses and other financial liabilities. Financial liabilities are initially recognized at their fair values. As for a financial liability measured at fair value and whose changes are recorded in current gains and losses, the relevant trading expense is directly recorded in the profits and losses for the current period. As for other financial liabilities, the relevant trading expenses are recorded in the initially recognized amounts.
① Financial liabilities measured at fair values and whose changes are recorded in current gains and losses
Such financial liabilities are divided into transactional financial liabilities and financial liabilities designated to be measured at fair values and whose changes are recorded in current gains and losses in the initial recognition under the same conditions where such financial assets are divided into transactional financial assets and financial assets designated to be measured at fair values and whose changes are recorded in current gains and losses in the initial recognition.
Financial liabilities measured at fair values and whose changes are recorded in current gains and losses are subsequently measured at their fair values. Gains or losses arising from the fair value changes, as well as the dividend and interest expenses in relation to the said financial liabilities, are recorded in the profits and losses for the current period.
② Other financial liabilities
As for a derivative financial liability connected to an equity instrument for which there is not quoted price in an active market and whose fair value cannot be reliably measured and which must be settled by delivering the equity instrument, it is subsequently measured on the basis of costs. Other financial liabilities are subsequently measured according to the amortized cost using the actual interest rate method. Gains or losses arising from de-recognition or amortization of the said financial liabilities is recorded in the profits and losses for the current period.
(6) De-recognition of financial liabilities
Only when the prevailing obligations of a financial liability are relieved in all or in part may the recognition of the financial liability be terminated in all or partly. Where the Company (debtor) enters into an agreement with a creditor so as to substitute the existing financial liabilities by way of any new financial liability, and if the contractual stipulations regarding the new financial liability is substantially different from that regarding the existing financial liability, it terminates the recognition of the existing financial liability, and at the same time recognizes the new financial liability.
Where the recognition of a financial liability is totally or partially terminated, the enterprise concerned shall include into the profits and losses of the current period for the gap between the book value which has been terminated from recognition and the considerations it has paid (including the non-cash assets it has transferred out and the new financial liabilities it has assumed) (7) Derivatives and embedded derivatives
Derivative financial instruments include derivatives are initially measured at fair value at the date when the derivative contracts are entered into and are substantially re-measured at fair value. The resulting gain and loss is recognized in profit or loss.
An embedded derivative is separated from the hybrid instrument, where the hybrid instrument is not designated as a financial asset or financial liability at fair value though profit or loss, and the treated as a standalone derivative if (a) the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host contract; and (b) a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative. If the Company is unable to measure the embedded derivative separately either at acquisition or at a subsequent balance sheet date, it designates the entire hybrid instrument as a financial asset or financial liability at fair value through profit or loss.
(8) Offsetting financial assets and financial liabilities
When the Company has a legal right that is currently enforceable to set off the recognized financial assets and financial liabilities,
Lu Thai Textile Co., Ltd. Annual Report 2017 and intends either to settle on a net basis, or to realize the financial asset and settle the financial liability simultaneously, a financial asset and a financial liability shall be offset and the net amount is presented in the balance sheet. Except for the above circumstances, financial assets and financial liabilities shall be presented separately in the balance sheet and shall not be offset.
(9) Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. The Company issues (including refinancing), re-purchases, sells or written-offs the equity instrument as the disposing of the changes of the equity. The Group not recognized the changes of the fair value of the equity instrument. The transaction expenses related to the equity transaction would be deducted from the equity.
All types of distribution (excluding stock dividends) made by the Company to holders of equity instruments are deducted fromshareholders’ equity. The Company does not recognize any changes in the fair value of equity instruments.
10. Receivables
(1) Accounts Receivable with Significant Single Amount for which the Bad Debt Provision is Made Individually
|||
|-|-|
||Receivables with the amount of RMB 5 million or more than|
|Judgement basis or monetary standards of provision for bad||
||RMB 5 million should recognize as the receivables with|
|debts of the individually significant accounts receivable||
||significant single amount.|
||The Company made an independent impairment test on|
||receivables with significant single amounts; the financial assets|
||without impairment by independent impairment test should be|
|Method of individual provision for bad debts of the individually||
||included in financial assets portfolio with similar credit risk to|
|significant accounts receivable||
||take the 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 which the Bad Debt Provision is withdrawn by Credit Risk Characteristics
|||
|-|-|
|Name of portfolios|Bad debt provision method|
|Aging group|Aging analysis method|

In the groups, adopting aging analysis method to withdraw bad debt provision:
√ Applicable□ Not applicable
||||
|-|-|-|
||Withdrawal proportion for accounts|Withdrawal proportion for other accounts|
|Age|||
||receivable (%)|receivable (%)|
|Within 1 year (including 1 year)|5.00%|5.00%|
|1-2 years|10.00%|10.00%|
|2-3 years|20.00%|20.00%|
|Over 3 years|30.00%|30.00%|

In the groups, adopting balance percentage method to withdraw bad debt provision:
□ Applicable√ Not applicable
Lu Thai Textile Co., Ltd. Annual Report 2017 In the groups, adopting other methods to withdraw bad debt provision:
□ Applicable√ Not applicable
(3) Accounts Receivable with an Insignificant Single Amount but for which the Bad Debt Provision is Made Independently
|||
|-|-|
||Receivables have dispute with the other parties or involving|
||lawsuit and arbitration; receivables have obvious indication|
|Reason of individually withdrawing bad debt provision||
||showing that the debtors are likely to fail to perform the duty of|
||repayment, etc.|
||The Company made independent impairment test on receivables|
||with insignificant amount but with the following characteristics,|
||if any objective evidence shows that the accounts receivable has|
||been impaired, impairment loss shall be recognized on the basis|
|Withdrawal method for bad debt provision|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: receivables involved in disputes, lawsuits or arbitrations;|
||receivables with clear signs that the debtor is not likely to repay;|
||and the like.|

11. Inventory
Is the Company subject to any disclosure requirements for special industries?
No.
(1) Classification
Inventories mainly include raw materials, work-in-progress, product processed on entrustment, consumptive biological assets and stock products etc.
(2) Valuation method of inventories acquiring and issuing
Inventories shall be measured at actual cost when acquired, and the cost of the inventories including the procurement cost, processing cost and other costs. Grey yarn, dyed yarn, and plus material shall be measured at first-in first-out method when acquired and delivered; other inventories shall be measured as per the weighted average method
(3) Basis for determining net realizable value of inventories and provision methods for decline in value of inventories
Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion, the estimated costs necessary to make the sale and relevant taxes. Net realizable value is determined on the basis of clear evidence obtained, and takes into consideration the purpose of holding inventories and effect of post balance sheet events.
At the balance sheet date, inventories are measured at the lower of the cost and net realizable value. If the net realizable value is below the cost of inventories, a provision for decline in value of inventories is made. The provision for inventories decline in value is determined by the difference of the cost of individual item less its realizable value.
After the provision for decline in value of inventories is made, if the circumstances that previously caused inventories to be written down below cost no longer exist so that the net realizable value of inventories is higher than their cost, the original provision for
decline in value is reversed and the reversal is included in profit or loss for the period.
(4) The perpetual inventory system is maintained for stock system.
Lu Thai Textile Co., Ltd. Annual Report 2017 (5) Amortization method of the low-value consumption goods and packing articles
For the low-value consumption goods, should be amortized by one-off amortization method when consuming; and for the packing articles, should be amortized by one-off amortization method when consuming.
12. Assets Held for Sale
The Company classifies an asset into held-for-sale when its book value is mainly recovered by selling (including the exchanges of non-monetary assets with commercial substance) instead of a non-current asset or disposal group. Specific standards are simultaneously satisfying the following conditions: A asset or disposal group can be sold immediately under current conditions based on the practice of selling such assets or disposal groups in similar transactions; the Company has already made a resolution on sale plan and obtained a confirmed purchase commitment; and the sale is expected to will be completed within one year. A disposal group refers to a group of assets that are disposed of together as a whole by sale or other means in a transaction and the liabilities directly related to these assets transferred in the transaction. Where the asset group or combination of asset groups to which a disposal group belongs apportions the goodwill acquired in the business combination in accordance with the "Accounting Standards for Enterprises No. 8 - Asset Impairment", the disposal group shall include the goodwill allocated to it.
When the Company initially measures or re-measures on the balance sheet date the non-current assets and disposal groups classified as held-for-sale, If the book value is higher than the fair value minus the net amount of the sale costs, the book value will be written down to the net amount of fair value minus the sale costs, and the amount written down will be recognized as impairment loss of assets and included in the current profit and loss, and provision for impairment of held-for-sale assets will be made at the same time. For the confirmed amount of impairment loss of assets of the disposal groups held for sale, the book value of goodwill of the disposal groups will be offset first, and then the book value of various non-current assets applicable to the measurement of Accounting Standards for Business Enterprises No. 42 - Non-current Assets and Disposal Groups Held for Sale and Termination of Operations (hereinafter referred to as “Held for sale standards”) in the disposal groups will be offset according to the proportions. If the net amount that the fair value of the disposal groups held for sale on the follow-up balance sheet date minus the sale costs increases, the previous written-down amount will be restored, and reversed to the asset impairment loss confirmed after the assets being classified as held-for-sale. The reversed amount will be included in the current profit or loss. And its book value shall be increased proportionately to the proportion of the book value of various non-current assets measured by the disposal group in addition to goodwill applicable to the measurement of held-for-sale norms; The book value of deducted goodwill and the non-current assets applicable to the measurement of held-for-sale norms will not be reversed if the asset impairment loss is recognized before it is classified as held for sale.
Non-current assets held for sale or non-current assets in the disposal group are not subject to depreciation or amortization. Interest and other expenses of liabilities in the disposal group held for sale will be confirmed as before.
When a non-current asset or disposal group ceases be classified as held-for-sale or a non-current asset is removed out from the held-for-sale disposal group due to failure in meeting the classification conditions for the category of held-for-sale, it will be measured by one of the followings whichever is lower: (1) The book value before being classified as held for sale will be adjusted according to the depreciation, amortization or impairment that would have been recognized under the assumption that it was not classified as held for sale; (2) The recoverable amount.
13. Long-term Equity Investments
The long-term equity investments of this part refer to the long-term equity investments that the Company has control, joint control or significant influence over the investees. The long-term equity investment that the Company does not have control, joint control or significant influence over the investees, should be recognized as available-for-sale financial assets or be measured by fair value with the changes should be included in the financial assets accounting of the current gains and losses, and please refer the details of the
Lu Thai Textile Co., Ltd. Annual Report 2017 accounting polices to “9. financial instrument” in this section.
Joint control, refers to the control jointly owned according to the relevant agreement on an arrangement by the Company and the relevant activities of the arrangement should be decided only after the participants which share the control right make consensus. Significant influence refers to the power of the Company which could anticipate in the finance and the operation polices of the investees, but could not control or jointly control the formulation of the policies with the other parties.
(1) Recognition of investment costs
As for long-term equity investments acquired by enterprise merger, if the merger is under the same control, the share of the book value of theowner’s equity of the merged enterprise, on the date of merger, is regarded as the initial cost of the long-term equity investment. The difference between the initial cost of the long-term equity investment and the payment in cash, non-cash assets transferred as well as the book value of the debts borne by the merging party shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted. If the consideration of the merging enterprise is that it issues equity securities, it shall, on the date of merger, regard the share of the book value of the shareholder's equity of the merged enterprise on the consolidated financial statement of the ultimate control party as the initial cost of the long-term equity investment. The total face value of the stocks issued shall be regarded as the capital stock, while the difference between the initial cost of the long-term equity investment and total face value of the shares issued shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted.
For the long-term investment required from the business combination under different control, the initial investment cost regarded as long-term equity investment on the purchasing date according to the combination cost, the combination costs shall be the sum of the fair values of the assets paid, the liabilities incurred or assumed and the equity securities issued by the Company.
The commission fees for audit, law services, assessment and consultancy services and other relevant expenses occurred in the business combination by the combining party or the purchase party, shall be recorded into current profits and losses upon their occurrence.
Besides the long-term equity investments formed by business combination, the other long-term equity investments shall be initially measured by cost, the cost is fixed in accordance with the ways of gaining, such as actual cash payment paid by the Company, the fair value of equity securities issued by the Company, the agreed value of the investment contract or agreement, the fair value or original carrying amount of exchanged assets from non-monetary assets exchange transaction, the fair value of the long-term equity investments, etc. The expenses, taxes and other necessary expenditures directly related with gaining the long-term equity investments shall also be recorded into investment cost.
(2) Subsequent measurement and recognition of gains or losses
A long-term equity investment where the investing enterprise has joint control (except for which forms into common operators) or significant influence over the investors should be measured by equity method. Moreover, long-term equity investment adopting the cost method in the financial statements, and which the Company has control on invested entity.
① Long-term equity investment measured by adopting cost method
The price of a long-term equity investment measured by adopting the cost method shall be included at its initial investment cost and append as well as withdraw the cost of investing and adjusting the long-term equity investment. The return on investment at current period shall be recognized in accordance with the cash dividend or profit announced to distribute by the invested entity, except the announced but not distributed cash dividend or profit included in the actual payment or consideration upon gaining the investment.② Long-term equity investment measured by adopting equity method
If the initial cost of a long-term equity investment is more than the Company's attributable share of the fair value of the invested entity's identifiable net assets for investment, the initial cost of the long-term equity investment may not be adjusted. If the initial cost of a long-term equity investment is less than the Company's attributable share of the fair value of the invested entity's identifiable net assets for the investment, the difference shall be included in the current profits and losses and the cost of the long-term equity investment shall be adjusted simultaneously.
Lu Thai Textile Co., Ltd. Annual Report 2017 When measured by adopting equity method, respectively recognize investment income and other comprehensive income according to the net gains and losses as well as the portion of other comprehensive income which should be enjoyed or be shared, and at the same time adjust the book value of the long-term equity investment; corresponding reduce the book value of the long-term equity investment according to profits which be declared to distribute by the investees or the portion of the calculation of cash dividends which should be enjoyed; for the other changes except for the net gains and losses, other comprehensive income and theowners’ equity except for the profits distribution of the investees, should adjust the book value of the long-term equity investment as well as include in the capital reserve. The investing enterprise shall, on the ground of the fair value of all identifiable assets of the invested entity when it obtains the investment, recognize the attributable share of the net profits and losses of the invested entity after it adjusts the net profits of the invested entity. If the accounting polices adopted by the investees is not accord with that of the Company, should be adjusted according to the accounting policies of the Company and the financial statement of the investees during the accounting period and according which to recognize the investment income as well as other comprehensive income. For the transaction happened between the Company and associated enterprises as well as joint ventures, if the assets launched or sold not form into business, the portion of the unrealized gains and losses of the internal transaction, which belongs to the Company according to the calculation of the enjoyed proportion, should recognize the investment gains and losses on the basis. But the losses of the unrealized internal transaction happened between the Company and the investees which belongs to the impairment losses of the transferred assets, should not be neutralized.
The Company shall recognize the net losses of the invested enterprise until the book value of the long-term equity investment and other long-term rights and interests which substantially form the net investment made to the invested entity are reduced to zero. However, if the Company has the obligation to undertake extra losses, it shall be recognized as the estimated liabilities in accordance with the estimated duties and then recorded into investment losses at current period. If the invested entity realizes any net profits later, the Company shall, after the amount of its attributable share of profits offsets against its attributable share of the un-recognized losses, resume recognizing its attributable share of profits.
For the long-term equity investment held by the Company before the first execution of the new accounting criterion on 1 Jan. 2007 of the associated enterprises and joint ventures, if there is debit difference of the equity investment related to the investment, should be included in the current gains and losses according to the amount of the straight-line amortization during the original remained period.③ Acquiring shares of minority interest
In the preparation for the financial statements, the balance existed between the long-term equity investment increased by acquiring shares of minority interest and the attributable net assets on the subsidiary calculated by the increased shares held since the purchase date (or combination date), the capital reserves shall be adjusted, if the capital reserves are not sufficient to offset, the retained profits shall be adjusted.
④ Disposal of long-term equity investment
In the preparation of financial statements, the Company disposed part of the long-term equity investment on subsidiaries without losing its controlling right on them, the balance between the disposed price and attributable net assets of subsidiaries by disposing the long-term equity investment shall be recorded intoowners’ 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 6. (2) “Method on preparation of combined financial statements” in this section.
For other ways on disposal of long-term equity investment, the balance between the book value of the disposed equity and its actual payment gained shall be recorded into current profits and losses.
For the long-term equity investment measured by adopting equity method, if the remained equity after disposal still adopts the equity method for measurement, the other comprehensive income originally recorded intoowners’ equity should adopt the same basis of the accounting disposal of the relevant assets or liabilities directly disposed by the investees according to the corresponding proportion. Theowners’ equity recognized owning to the changes of the otherowners’ equity except for the net gains and losses, other comprehensive income and the profits distribution of the investees, should be transferred into the current gains and losses according
Lu Thai Textile Co., Ltd. Annual Report 2017 to the proportion.
For the long-term equity investment which adopts the cost method of measurement, if the remained equity still adopt the cost method, the other comprehensive income recognized owning to adopting the equity method for measurement or the recognition and measurement standards of financial instrument before acquiring the control of the investees, should adopt the same basis of the accounting disposal of the relevant assets or liabilities directly disposed by the investees and should be carried forward into the current gains and losses according to the proportion; the changes of the otherowners’ equity except for the net gains and losses, other comprehensive income and the profits distribution among the net assets of the investees which recognized by adopting the equity method for measurement, should be carried forward into the current gains and losses according to the proportion.
14. Investment Real Estates
Measurement model of investment real estate
Costing method measurement
Depreciation or amortization method
The investment real estate refers to the real estate gaining the rent or capital appreciation or both. It includes rented land use right, holding land use right to be transferred after the appreciation and rented building, etc.
The investment real estate is measured initially according to the cost. The subsequent expenses related with the investment real estate shall be calculated into the cost of investment real estate if the economic benefit related with the asset may flow in and the cost may be measured reliably. Other subsequent expenses shall be calculated in the current profits and losses at the occurrence.
The Company adopts the cost mode to conduct the subsequent measurement on the investment real estate, depreciates or amortizes according to the policy consistent with the house building or land use right.
The devaluation test method and devaluation provision method for the investment real estate can be seen in Section 20 “Long-term Asset Devaluation”.
When the self-use real estate or stock is converted to the investment real estate or the investment real estate is converted to the self-use real estate, the book value before the conversion shall be the entry value after the conversion.
When the investment real estate is disposed, or out of usage permanently, and it is expected not to get the economic benefit from the disposal, the confirmation on the investment real estate shall be terminated. The disposal income for the sales, transferring, scrap or damage of the investment real estate deducing the book value and related tax shall be calculated in the current profits and losses. 15. Fixed Assets
(1) Recognition Conditions
The term “fixed assets” refers to the tangible assets that simultaneously possess the features as follows: (a) they are held for the sake of producing commodities, rendering labor service, renting or business management; and (b) their useful life is in excess of one fiscal year. The fixed assets are only recognized when the relevant economic benefits probably flow in the Company and its cost could be reliable measured. The fixed assets should take the initial measurement according to the cost and at the same time consider the influences of the factors of the estimated discard expenses.
(2) Depreciation Method
||||||
|-|-|-|-|-|
|Category of fixed assets|Method|Useful life|Salvage value|Annual deprecation|
|Housing and building|Average method of|5-30|0-10%|3.00%-20.00%|

Lu Thai Textile Co., Ltd. Annual Report 2017
||||||
|-|-|-|-|-|
||useful life||||
||Average method of||||
|Machinery equipments||10-18|0-10%|5.00%-10.00%|
||useful life||||
||Average method of||||
|Transportation vehicle||5|0-10%|18.00%-20.00%|
||useful life||||
|Electronic equipments|Average method of||||
|||5|0-10%|18.00%-20.00%|
|and others|useful life||||

(3) Recognition Basis, Pricing and Depreciation Method of Fixed Assets by Finance Lease
The “finance lease” shall refer to a lease that has transferred in substance all the risks and rewards related to the ownership of an asset. Its ownership may or may not eventually be transferred. The 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.
16. Construction in Progress
Is the Company subject to any disclosure requirements for special industries?
No.
Construction in process is measured at actual cost. Actual cost comprises construction costs, borrowing costs that are eligible for capitalization before the fixed assets being ready for their intended us and other relevant costs. Construction in process is transferred to fixed assets when the assets are ready for their intended use.
See the details of the impairment test method of the impairment provision withdrawal method of the construction in progress to 20 “Long-term assets impairment” in this section.
17. Borrowing Costs
Borrowing costs include interest on borrowings, amortization of discounts or premiums, ancillary expenses and exchange differences arising from foreign currency borrowings. The capitalization of borrowing costs, which can be directly attributable to asset acquisition or construction, starts when asset expenditure or borrowing cost are generated, or the asset acquisition or construction is launched to enable the asset to meet the predefined conditions for use or sale, and ends when the acquired or constructed asset conforming to capitalization conditions meet the predefined conditions for use or sale. The other borrowing costs are recognized as expenses in the current period.
The actual interest expenses incurred in the current period of specific borrowings shall be capitalized by subtracting the interest income earned by the bank from unused borrowing funds or investment income gained from temporary investment. For general borrowings, the amount to be capitalized shall be determined based on the weighted average of total asset expenditure exceeding the specific borrowing multiplied by the capitalization rate of general borrowings. The capitalization rate is determined based on the weighted average interest rate of general borrowings.
During the capitalization period, the foreign exchange differences on foreign currency specific borrowings shall be capitalized. The
exchange differences on foreign currency general borrowings shall be included in the current profits and losses.
Assets eligible for capitalization refer to assets such as fixed assets, investment real estate and inventory that require a considerable
Lu Thai Textile Co., Ltd. Annual Report 2017 amount of time for acquisition or construction to be ready for use or sale.
If the acquisition or construction process of the assets eligible for capitalization is stopped unexpectedly for more than 3 months, the capitalization of borrowing costs shall be suspended until the asset acquisition or construction resumes.
18. Biological Assets
(1) Consumptive biological assets
Consumptive biological assets refer to the biological assets held for sale or to be harvested as agricultural products in future, including crops, vegetables under growing, timber production forest and domestic animals for sale. The consumptive biological assets shall be measured based on cost. All costs for planting, creating, cultivating or raising of consumptive biological assets shall be the necessary expenses directly added to such assets that accrued before harvest, including any loan that satisfies capitalization conditions. Subsequent expenses for keeping and feeding the consumptive biological assets after the harvest should be recognized as the losses and gains of the current period.
Upon harvest or sale, the cost of consumptive biological assets shall be based on its book value through weighted average.
On the date of Balance Sheet, the consumptive biological assets shall be measured with lower of cost and net realizable value, and the method for confirming the reserve for inventory price drop shall be adopted to confirm the reserve for price drop of consumptive biological assets. If the impacts of depreciation disappear, the depreciation amount shall be recovered, and the reserve for price drop originally accrued shall be reversed. Such amount reversed shall be recognized as loss and gain for the current period.
If consumptive biological assets change its usage to be as productive biological assets, the cost after such change shall be confirmed based on the book value when the usage is changed. If consumptive biological assets are changed as public biological assets, depreciation shall be taken into consideration pursuant to Corporate Accounting Rules No.8– Assets Depreciation. When depreciation occur, accrued the depreciation reserve first and then confirm based on the book value after such accrual.
(2) Productive biological assets
Productive biological assets refer to agricultural products produced, and biological assets held for labor provision or lease, including economic forest, firewood forest, productive animals and labor animals. The productive biological assets shall be measured based on cost. All costs for creating or fostering productive biological assets shall be the necessary expenses directly added to such assets that accrued before it reaches expected production purpose, including any loan that satisfies capitalization conditions.
The Company shall withdraw the depreciation of the productive biological assets by adopting the straight-line method since the second month of its useful life. Useful life, expected net salvage value and annual depreciation rate of each productive biological assets are as below:
||||
|-|-|-|
|Category|Useful life (Year)|Expected net salvage value(%)|
|Livestock|5|5%|

The Company shall review the service life, expected net residuals and depreciation method of the productive biological assets at least by the end of the year. In case of any change, it shall be deemed as accounting estimate change.
The difference between proceedings from disposal (sale, loss, death or damage) of the productive biological assets deducted by book value and related tax shall be recognized as loss and gain for the current period.
The Company shall check on the date of Balance Sheet whether there is a depreciation sign for the productive biological assets. If yes, estimate the recoverable amount. Such recoverable amount shall be estimated based on single asset item. If it is difficult, the recoverable amount of the portfolio shall be confirmed based on the portfolio such assets belong to. If the recoverable amount of the
assets is lower than book value, reserve for asset depreciation shall be accrued based on such difference, and recognized as loss and
gain for the current period.
The above assets impairment losses once be recognized should not be reversed during the accounting periods afterwards.
Lu Thai Textile Co., Ltd. Annual Report 2017 If the productive biological assets changed the usage as the consumptive biological assets, the cost after the change should be recognized as the book value when changing the usage; of the productive biological assets changed the usage as non-profit living assets, should be recognized according to the book value after the withdrawal of the impairment provision in accord with the regulation of No. 8 of ASBE - Assets Impairment for considering whether there was impairment and should withdraw the impairment provision in ahead of it.
19. Intangible Assets
(1) Pricing Method, Useful Life and Impairment Test
The term “intangible asset” refers to the identifiable non-monetary assets possessed or controlled by enterprises which have no physical shape.
The intangible assets shall be initially measured according to its cost. The costs related with the intangible assets, if the economic benefits related to intangible assets are likely to flow into the enterprise and the cost of intangible assets can be measured reliably, shall be recorded into the costs of intangible assets; otherwise, it shall be recorded into current profits and losses upon the occurrence. The use right of land gained is usually measured as intangible assets. For the self-developed and constructed factories and other constructions, the related expenditures on use right of land and construction costs shall be respectively measured as intangible assets and fixed assets. For the purchased houses and buildings, the related payment shall be distributed into the payment for use right of land and the payment for buildings, if it is difficult to be distributed, the whole payment shall be treated as fixed assets.
For intangible assets with a finite service life, from the time when it is available for use, the cost after deducting the sum of the expected salvage value and the accumulated impairment provision shall be amortized by straight line method during the service life. While the intangible assets without certain service life shall not be amortized.
At the end of period, the Company shall check the service life and amortization method of intangible assets with finite service life, if there is any change, it shall be regarded as a change of the accounting estimates. Besides, the Company shall check the service life of intangible assets without certain service life, if there is any evidence showing that the period of intangible assets to bring the economic benefits to the enterprise can be prospected, it shall be estimated the service life and amortized in accordance with the amortization policies for intangible assets with finite service life.
(2) Accounting Policy for Internal Research and Development Expenditures
The expenditures for internal research and development projects of an enterprise shall be classified into research expenditures and development expenditures.
The research expenditures shall be recorded into the profit or loss for the current period.
The development expenditures shall be confirmed as intangible assets when they satisfy the following conditions simultaneously, and shall be recorded into profit or loss for the current period when theydon’t satisfy the following conditions.
① It is feasible technically to finish intangible assets for use or sale;
② It is intended to finish and use or sell the intangible assets;
③ The usefulness of methods for intangible assets to generate economic benefits shall be proved, including being able to prove that there is a potential market for the products manufactured by applying the intangible assets or there is a potential market for the intangible assets itself or the intangible assets will be used internally;
④ It is able to finish the development of the intangible assets, and able to use or sell the intangible assets, with the support of sufficient technologies, financial resources and other resources;
⑤ The development expenditures of the intangible assets can be reliably measured.
Lu Thai Textile Co., Ltd. Annual Report 2017 As for expenses thatcan’t be identified as research expenditures or development expenditures, the occurred R& D expenses shall be all included in current profits and losses.
(3) Impairment testing method and provision-making method for intangible assets
See 20 “Impairment of long-term assets” in this section.
20. Impairment of Long-term Assets
For non-current financial Assets of fixed Assets, projects under construction, intangible Assets with limited service life, investing real estate with cost model, long-term equity investment of subsidiaries, cooperative enterprises and joint ventures, the Company should judge whether decrease in value exists on the date of balance sheet. Recoverable amounts should be tested for decrease in value if it exists. Other intangible Assets of reputation and uncertain service life and other non-accessible intangible assets should be tested for decrease in value no matter whether it exists.
If the recoverable amount is less than book value in impairment test results, the provision for impairment of differences should include in impairment loss. Recoverable amounts would be the higher of net value of asset fair value deducting disposal charges or present value of predicted cash flow. Asset fair value should be determined according to negotiated sales price of fair trade. If no sales agreement exists but with asset active market, fair value should be determined according to theBuyer’s price of the asset. If no sales agreement or asset active market exists, asset fair value could be acquired on the basis of best information available. Disposal expenses include legal fees, taxes, cartage or other direct expenses of merchantable Assets related to asset disposal. Present value of predicted asset cash flow should be determined by the proper discount rate according to Assets in service and predicted cash flow of final disposal. Asset depreciation reserves should be calculated on the basis of single Assets. If it is difficult to predict the recoverable amounts for single Assets, recoverable amounts should be determined according to the belonging asset group. Asset group is the minimum asset combination producing cash flow independently.
In impairment test, book value of the business reputation in financial report should be shared to beneficial asset group and asset group combination in collaboration of business merger. It is shown in the test that if recoverable amounts of shared business reputation asset group or asset group combination are lower than book value, it should determine the impairment loss. Impairment loss amount should firstly be deducted and shared to the book value of business reputation of asset group or asset group combination, then deduct book value of all assets according to proportions of other book value of above assets in asset group or asset group combination except business reputation.
After the asset impairment loss is determined, recoverable value amounts would not be returned in future.
21. Long-term Deferred Expenses
Long-term deferred expenses refer to general expenses with the apportioned period over one year (one year excluded) that have occurred but attributable to the current and future periods. The long-term deferred expenses mainly including land contract fees, land rental fees and house rental fees, and etc. And the long-term deferred expense shall be amortized by the straight-line method averagely within the benefit period.
22. Payroll
(1) Accounting Treatment of Short-term Compensation
Short-term compensation mainly including salary, bonus, allowances and subsidies, employee services and benefits, medical insurance premiums, birth insurance premium, industrial injury insurance premium, housing fund, labor union expenditure and personnel education fund, non-monetary benefits etc. The short-term compensation actually happened during the accounting period
Lu Thai Textile Co., Ltd. Annual Report 2017 when the active staff offering the service for the Company should be recognized as liabilities and is included in the current gains and losses or relevant assets cost. Of which the non-monetary benefits should be measured according to the fair value.
(2) Accounting Treatment of the Welfare after Departure
Welfare after demission mainly includes basic endowment insurance and unemployment insurance and welfare plans after demission include setting drawing plan. Where the setting drawing plan is adopted, the corresponding payable and deposit amount should be included into the relevant assets cost or the current gains and losses when happen.
(3) Accounting Treatment of the Demission Welfare
The Company relieves the labor relation with the employees before the due date of the labor contacts or puts forward the advice of providing the compensation for urging the employees volunteered to receive the downsizing and when the Company could not unilaterally withdraw the demission welfare owning to the relieving plan of the labor relation or the downsizing advice, should confirm the liabilities of theemployees’ salary from the demission welfare on the earlier day between the cost confirmed by the Company and the cost related to the reorganization of the payment of the demission welfare and includes which in the current gains and losses. But as for the demission welfare be estimated that could not be completed paid within 12 months after the end of the annual Reporting Period, should be handled according to the other long-termemployee’s salary.
The internal retire plan of the employees should be handled by adopting the same principles of the above demission welfare. The Company includes the salary and the paid social insurance charges planed to pay by the personnel retreated inside during the period from the date when ceased the services to the normal retire date in the current gains and losses (demission welfare) when met with the recognition conditions of the estimated liabilities.
(4) Accounting Treatment of the Welfare of Other Long-term Staffs
The other long-term welfare that the Company offers to the staffs, if met with the setting drawing plan, should be accounting disposed according to the setting drawing plan, while the rest should be disposed according to the setting revenue plan.
23. Revenue
Is the Company subject to any disclosure requirements for special industries?
No.
(1) Selling products
No revenue from selling goods may be recognized unless the following conditions are met simultaneously: the significant risks and rewards of ownership of the goods have been transferred to the buyer by the enterprise; the enterprise retains neither continuous management right that usually keeps relation with the ownership nor effective control over the sold goods; the relevant amount of revenue can be measured in a reliable way; the relevant economic benefits may flow into the enterprise; and the relevant costs incurred or to be incurred can be measured in a reliable way.
As for the revenues from the domestic sales products, the Company deliveries the products to the buyers according to the contracts agreement, and the revenues amount of the products sales had been confirmed with the goods payment had been withdrawn or had received the receipt voucher of which the relevant economic benefits probably flow into the enterprise as well as the relevant costs of the products could be reliable measured when being confirming as the revenues.
As for the revenues from the export sales products, the Company executes the customs declaration and the products departure according to the contracts agreement, and the Company had acquired the bill of lading with the revenues amount of the products sale
Lu Thai Textile Co., Ltd. Annual Report 2017 had been confirmed and the goods payment had been withdrawn or had had received the receipt voucher of which the relevant economic benefits probably flow into the enterprise as well as the relevant costs of the products could be reliable measured when being confirming as the revenues.
(2) Providing labor services
If the Company can reliably estimate the outcome of a transaction concerning the labor services it provides, it shall recognize the revenue from providing services employing the percentage-of-completion method on the date of the balance sheet. The completed proportion of a transaction concerning the providing of labor services shall be decided by the proportion of the labor service already provided to the total labor service to provide.
The outcome of a transaction concerning the providing of labor services can be measured in a reliable way, means that the following conditions shall be met simultaneously:① The amount of revenue can be measured in a reliable way;② The relevant economic benefits are likely to flow into the enterprise;③ The schedule of completion under the transaction can be confirmed in a reliable way; and④ The costs incurred or to be incurred in the transaction can be measured in a reliable way.
If the outcome of a transaction concerning the providing of labor servicescan’t be measured in a reliable way, the revenue from the providing of labor services shall be recognized in accordance with the amount of the cost of labor services incurred and expected to be compensated, and make the cost of labor services incurred as the current expenses. If it is predicted that the cost of labor services incurredcouldn’t be compensated, thus no revenue shall be recognized.
Where a contract or agreement signed between Company and other enterprises concerns selling goods and providing of labor services, if the part of sale of goods and the part of providing labor services can be distinguished from each other and can be measured respectively, the part of sale of goods and the part of providing labor services shall be treated respectively. If the part of selling goods and the part of providing labor servicescan’t 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 butcan’t be measured respectively, both parts shall be conducted as selling goods.
(3) Royalty revenue
In accordance with relevant contract or agreement, the amount of royalty revenue should be recognized as revenue on accrual basis. (4) Interest revenue
The amount of interest revenue should be measured and confirmed in accordance with the length of time for which theCompany’s monetary fund is used by others and the agreed interest rate.
24. Government Subsidies
(1) Judgment Basis and Accounting Treatment of Government Subsidies Related to Assets
The government subsidy refers to the Company gets the monetary and non-monetary assets for free from the government, excluding the capital that the government invests as the investor who enjoys the correspondingowner’s equity. It can be divided into the asset-related government subsidy and income-related government subsidy. The Company defines the obtained government subsidy for the acquisition and construction or forming the long-term asset in other ways as the asset-related government subsidy; other government subsidies are defined as the income-related government subsidy. If the government document does not clearly prescribe the subsidy object, the following ways shall be adopted to divide the subsidy into the income-related government subsidy and asset-related government subsidy: (1) The government document clears the specific project for the subsidy, it shall divide according to the relative ratio of asset expenditure amount and entry cost expenditure amount to be formed in the budget of specific project, review according to the division ratio at each balance sheet date, and change when necessary; (2) The government document only makes the general expression on the usage without indicated specific project, it shall be the income-related government subsidy. If the government subsidy is monetary asset, it shall be measured according to the received or receivable amount. If the government subsidy is non-monetary asset, it shall be measured according to the fair value; it the fair valuecan’t be got reliably, it shall be
measured according to the nominal amount. The government subsidy measured according to the nominal amount shall be calculated
Lu Thai Textile Co., Ltd. Annual Report 2017 in the current profits and losses directly.
The asset-related government subsidy shall be confirmed as the deferred income, and it shall be calculated into the current profits and losses by stages in reasonable and systematic way within the service life of related asset.
Government subsidies related to routine activities of the Company shall be calculated into other income or offset related costs according to the essence of economic business; government subsidies that have nothing to do with routine activities shall calculated into non-operating income.
When the confirmed government subsidy needs to be returned and there is the related deferred income balance, the related deferred income book balance shall be deducted, and the surpassing part shall be calculated into the current profits and losses; If in other situations, it shall be calculated in the current profits and losses directly.
(2) Judgment Basis and Accounting Treatment of Government Subsidies Pertinent to Incomes
The Company usually confirms and measures the government subsidy according to the received amount when receiving actually. However, the financial support fund which can be received complying with the related conditions prescribed in the financial support policy indicated by the conclusive evidence shall be measured according to the receivable amount. The following conditions shall be met for the government subsidy measured by the receivable amount: (1) The receivable subsidy amount has been confirmed by the authorized government department, or it can be measured reasonably according to the officially released provisions related with the financial fund management method, and it is expected there is no major uncertainty for the amount; (2) It is based on the financial support project and financial fund management method actively opened released officially by the local financial department and according to the provision in Government Information Disclosure Provisions, the management method shall be universal (any enterprise complying with the prescribed condition can apply) rather than for the specific enterprise; (3) The related subsidy approval document has clearly promised the appropriate term, and the appropriation of the amount shall have the corresponding financial budget for the guarantee, therefore, it can ensure to receive within the prescribed term reasonably.
The income-related government subsidy to compensate the related expense and loss later shall be confirmed as the deferred income, and it shall be calculated in the current profits and losses during the period to confirm the related costs or losses; the occurred related costs or losses for compensation shall be calculated in the current profits and losses directly.
For government subsidy including the asset-related government subsidy and the income-related government subsidy at one time, accounting treatment shall be conducted respectively to distinguish the different parts; if it is difficult to distinguish, then it shall be classified into the income-related government subsidy
25. Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) Income tax of the current period
On the balance sheet date, for the current income tax liabilities (or assets) of the current period as well as the part formed during the previous period, should be measured by the income tax of the estimated payable (returnable) amount which be calculated according to the regulations of the tax law. The amount of the income tax payable which is based by the calculation of the current income tax expenses, are according to the result measured from the corresponding adjustment of the pre-tax accounting profit of this Reporting Period which in accord to the relevant regulations of the tax law.
(2) Deferred income tax assets and deferred income tax liabilities
The difference between the book value of certain assets and liabilities and their tax assessment basis, as well as the temporary difference occurs from the difference between the book value of the items which not be recognized as assets and liabilities but could confirm their tax assessment basis according to the regulations of the tax law, the deferred income tax assets and the deferred income tax liabilities should be recognized by adopting liabilities law of the balance sheet.
No deferred tax liability is recognized for a temporary difference arising from the initial recognition of goodwill, the initial
Lu Thai Textile Co., Ltd. Annual Report 2017 recognition of assets or liabilities due to a transaction other than a business combination, which affects neither accounting profit nor taxable profit (or deductible loss). Besides, no deferred tax assets is recognized for the taxable temporary differences related to the investments of subsidiary companies, associated enterprises and joint enterprises, and the investing enterprise can control the time of the reverse of temporary differences as well as the temporary differences are unlikely to be reversed in the excepted future. Otherwise, the Group should recognize the deferred income tax liabilities arising form other taxable temporary difference.
No deferred taxable assets should be recognized for the deductible temporary difference of initial recognition of assets and liabilities arising from the transaction which is not business combination, the accounting profits will not be affected, nor will the taxable amount or deductible loss be affected at the time of transaction. Besides, no deferred taxable assets should be recognized for the deductible temporary difference related to the investments of the subsidiary companies, associated enterprises and joint enterprises, which are not likely to be reversed in the expected future or is not likely to acquire any amount of taxable income tax that may be used for making up such deductible temporary differences. Otherwise, the Company shall recognize the deferred income tax assets arising from a deductible temporary difference basing on the extent of the amount of the taxable income that is likely to be acquired to make up such deductible temporary differences
For any deductible loss or tax deduction that can be carried forward to the next year, the corresponding deferred income tax asset shall be determined to the extent that the amount of future taxable income to be offset by the deductible loss or tax deduction to be likely obtained.
On the balance sheet date, the deferred income tax assets and the deferred income tax liabilities shall be measured at the tax rate applicable to the period during which the assets are expected to be recovered or the liabilities are expected to be settled.
The book value of deferred income tax assets shall be reviewed at each balance sheet date. If it is unlikely to obtain sufficient taxable income to offset against the benefit of the deferred income tax asset, the book value of the deferred income tax assets shall be written down. Any such write-down should be subsequently reversed where it becomes probable that sufficient taxable income will be available.
(3) Income tax expenses
Income tax expenses include current income tax and deferred income tax.
The rest current income tax and the deferred income tax expenses or revenue should be included into current gains and losses except for the current income tax and the deferred income tax related to the transaction and events that be confirmed as other comprehensive income or be directly included in theshareholders’ equity which should be included in other comprehensive income orshareholders’ equity as well as the book value for adjusting the goodwill of the deferred income tax occurs from the business combination. (4) Offset of income tax
The current income tax assets and liabilities of the Company should be listed by the written-off net amount which intend to executes the net amount settlement as well as the assets acquiring and liabilities liquidation at the same time while owns the legal rights of settling the net amount.
The deferred income tax assets and liabilities of the Company should be listed as written-off net amount when having the legal rights of settling the current income tax assets and liabilities by net amount and the deferred income tax and liabilities is relevant to the income tax which be collected from the same taxpaying bodies by the same tax collection and administration department or is relevant to the different taxpaying bodies but during each period which there is significant reverse of the deferred income assets and liabilities in the future and among which the involved taxpaying bodies intend to settle the current income tax and liabilities by net amount or are at the same time acquire the asset as well as liquidate the liabilities.
Lu Thai Textile Co., Ltd. Annual Report 2017 26. Lease
(1) Accounting Treatment of Operating Lease
(1) Business of operating leases recorded by the Group as the lessee
The rent expenses from operating leases shall be recorded by the lessee in the relevant asset costs or the profits and losses of the current period by using the straight-line method over each period of the lease term. The initial direct costs shall be recognized as the profits and losses of the current period. The contingent rents shall be recorded into the profits and losses of the current period in which they actually arise.
(2) Business of operating leases recorded by the Group as the lessor
The rent incomes from operating leases shall be recognized as the profits and losses of the current period by using the straight-line method over each period of the lease term. The initial direct costs of great amount shall be capitalized when incurred, and be recorded into current profits and losses in accordance with the same basis for recognition of rent incomes over the whole lease term. The initial direct costs of small amount shall be recorded into current profits and losses when incurred. The contingent rents shall be recorded into the profits and losses of the current period in which they actually arise.
(2) Accounting Treatments of Financial Lease
(1) Business of finance leases recorded by the Company as the lessee
On the lease beginning date, the Company shall record the lower one of the fair value of the leased asset and the present value of the minimum lease payments on the lease beginning date as the entering value in an account, recognize the amount of the minimum lease payments as the entering value in an account of long-term account payable, and treat the balance between the recorded amount of the leased asset and the long-term account payable as unrecognized financing charges. Besides, the initial direct costs directly attributable to the leased item incurred during the process of lease negotiating and signing the leasing agreement shall be recorded in the asset value of the current period. The balance through deducting unrecognized financing charges from the minimum lease payments shall be respectively stated in long-term liabilities and long-term liabilities due within 1 year.
Unrecognized financing charges shall be adopted by the effective interest rate method in the lease term, so as to calculate and recognize current financing charges. The contingent rents shall be recorded into the profits and losses of the current period in which they actually arise.
(2) Business of finance leases recorded by the Company as the lessor
On the beginning date of the lease term, the Company shall recognize the sum of the minimum lease receipts on the lease beginning date and the initial direct costs as the entering value in an account of the financing lease values receivable, and record the unguaranteed residual value at the same time. The balance between the sum of the minimum lease receipts, the initial direct costs and the unguaranteed residual value and the sum of their present values shall be recognized as unrealized financing income. The balance through deducting unrealized financing incomes from the finance lease accounts receivable shall be respectively stated in long-term claims and long-term claims due within 1 year.
Unrecognized financing incomes shall be adopted by the effective interest rate method in the lease term, so as to calculate and recognize current financing revenues. The contingent rents shall be recorded into the profits and losses of the current period in which they actually arise.
27. Other Significant Accounting Policies and Estimates
Due to the internal uncertainty of operating activities, the Company needs to make judgments, estimates and assumptions for carrying
amounts of statement items thatcan’t be measured accurately during the process of applying accounting policies. Such judgments,
Lu Thai Textile Co., Ltd. Annual Report 2017 estimates and assumptions are made on the basis of the past experience ofCompany’s management staffs and on the consideration of other relevant factors. Such judgments, estimates and assumptions have effect on reporting amount of incomes, expense, assets and liabilities, as well as disclosure of contingent liabilities on the balance sheet date. However, the uncertainty of such estimates may results in major adjustments of carrying amounts of assets or liabilities that will be influenced in future.
The Company shall have a check on the aforesaid judgments, estimates and assumptions at fixed intervals on the basis of sustainable operation. As for the change in accounting estimates that only effects on the current period of the change, the affected amount thereof shall be recognized at current period of the change. As for accounting estimates that effects on both the current period of the change and future periods, the affected amount thereof shall be recognized at current period of the change and future periods.
On balance sheet date, major fields requiring judgments, estimates and assumptions on amounts of financial statement items by the Company are as follows:
(1) Classification of leases
In line with rules in Accounting Standards for Enterprises No. 21– Leases, the Company classifies leases into operating leases and finance leases. Upon the classification, the management staffs need to make analysis and judgments on whether to essentially transfer all risks and remuneration relating to the ownership of leased-out assets to the lessee, or whether the Company has essentially undertaken all risks and remuneration relating to the ownership of leased-in assets.
(2) Withdrawal of bad debt provisions
The Company shall, in accordance with accounting policies of receivables, calculate bad debt provisions by adopting allowance method. Impairment of accounts receivable is based on the assessment of the recovery of accounts receivable. Identification of impairment of accounts receivable requires judgments and estimates by management staffs. The difference between actual outcomes and originally estimated outcomes, which will influence the carrying amount of accounts receivable and bad debt provisions thereof in the estimated period of the change, shall be withdrawn or reversed.
(3) Inventory depreciation reserves
The Company shall calculate whichever is lower between the cost and realizable net value in light of inventory accounting policies. As for inventories of which the cost is higher than the realizable net value and inventories which are obsolete and unsalable inventory depreciation reserves shall be withdrawn. Impairment of inventories to realizable net value is based on the assessment of the marketing of inventories and realizable net value thereof. Identification of inventory impairment requires well-established evidences by management staffs, as well as judgments and estimates based on consideration of the purpose of holding inventories and other factors such as events occurring after the date of balance sheet. The difference between actual outcomes and originally estimated outcomes, which will influence the carrying amount of inventories and inventory depreciation reserves in the estimated period of the change, shall be withdrawn or reversed.
(4) Fair values of financial instruments
As for financial instruments not existing in active trading market, the Company shall determine their fair values by all kinds of assessment methods, which include model analysis of discounted cash flow and etc. During the assessment, the Company needs to assess for respects such as future cash flows, credit risks, market volatility, correlation, and choose appropriate discount rate. Such related assumptions have uncertainty, of which the change will effect on fair values of financial instruments.
(5) Impairment of financial assets available for sale
To a large extent, whether the impairment of financial assets available for sale is recognized or not relies on the judgments and assumptions of the management staffs. In that way, the Company shall be certain about whether to recognize impairment losses of financial assets available for sale in the profit statement. During the process of making judgments and assumptions, the Company needs to evaluate how much the fair value of such investment is less than its cost, how long such investment will last, and the financial condition and short-term business outlook of the invested parties, which include industry status, technology transform, credit rating, default rate and risks from the opposite parties.
(6) Impairment provisions of non-financial non-current assets
Lu Thai Textile Co., Ltd. Annual Report 2017 The Company shall judge whether there is sign of impairment of non-current assets other than financial assets on balance sheet date. Intangible assets with uncertain service lives, besides being conducted with annual impairment test every year, have to accept impairment tests when there is sign of impairment. Other non-current assets except for financial assets have to accept impairment tests when there is sign indicating the carrying amount thereof is unrecoverable.
When the carrying amounts of the asset or group assets are higher than the recoverable amounts, namely whichever is higher between the net amount through deducting disposal charges from the fair value and the present value of the estimated future cash flow, impairment occurs.
The net amount of the fair value of an asset minus the disposal expenses shall be determined in light of the amount of the basis of the price as stipulated in the sales agreement or the observable market price in the fair transaction minus the incremental cost directly subject to the disposal of the asset.
When estimating present value of future cash flows, it is necessary to make significant judgments on characters of the asset or asset group, such as output, sales price, related operating costs, and discount used to calculate the present value. When estimating recoverable amount, the Company shall adopt all relevant materials that can be required, including estimates relating to output, sales price and relevant operating costs judged by rational and supportable assumptions.
The Company tests whether there is impairment of good will at least for every year, which requires itself to estimate the present value of the future cash flow of group assets or combination of group assets. When estimating the present value of the future cash flow, the Company needs to estimate the cash flow arising from future group assets or combination of group assets, and at the same time choose appropriate discount rate to determine the present value of the future cash flow.
(7) Depreciation and amortization
Upon consideration on the salvage value of investment real estates, fixed assets and intangible assets, the Company shall withdraw depreciation and amortization by straight-line method over their service lives. The Company checks on service lives at fixed intervals, so as to determine the amounts of depreciation expenses and amortization expenses at each period. Service lives are confirmed in accordance with the past experience on similar assets of the Company, along with renewed technology of expectation. If any significant change occurred to previous estimated, depreciation expenses and amortization expenses will be adjusted in future period. (8) Deferred income tax assets
In a limit providing large possibility of offset losses from sufficient taxable profits, the Group shall recognize deferred income tax assets in line with all unused tax losses, which requires management staffs of the Group to estimate the time when future taxable profits occurs and the amount thereof by applying plenty of judgments and combining tax planning strategies, so as to determine the amount of the recognizable deferred income tax assets.
(9) Income taxes
There’s certain uncertainty of disposal and calculation of taxes of partial transactions in normal operating activities. It is uncertain whether some pre-taxed items can set aside the approvals by tax authorities or not. If there are differences between the ultimate recognition outcomes and the originally estimated amounts of such tax issues, then such differences shall effect on the current income tax and deferred income tax during the ultimate recognition period.
(10) Measurement of fair value
Some of assets and liabilities in financial statement of the Company are measured by fair value. When estimating the fair value of a asset or liability, the Company adopts the available and observable market data. During the process of confirming the fair value of various assets and liabilities, relevant information of the adopted valuation technique and input value was disclosure in Note XI.
Lu Thai Textile Co., Ltd. Annual Report 2017 28. Changes in Main Accounting Policies and Estimates
(1) Change of Accounting Policies
√ Applicable□ Not applicable
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|-|-|-|
|Content and reason for changes|Approval procedures|Remark|
|Before May 1, 2017, inventories of the|||
|Company shall be measured at planned|||
|cost when acquired. When acquired and|||
|||For it is unpractical to confirm the|
|delivered, it shall be measured as per the|||
|||accumulative influences from the changes|
|weighted average method. According to|||
|||of the accounting policies, according to the|
|the requirements of refining operation|||
|||rules of Accounting Standards for Business|
|management of the Company, in order to|Approved by the 7th Meeting of the 8th||
|||Enterprises - Changes in Accounting|
|further strengthen the refinement of|Board of Directors of the Company on||
|||Policies and Estimates and Correction of|
|financial accounting, the Company|April 26, 2017||
|||Errors, the changes in accounting policies|
|changed the pricing method of acquired|||
|||adopted prospective application method,|
|inventories from planned cost to actual|||
|||which was implemented from May 1,|
|cost from May 1, 2017, and changed the|||
|||2017.|
|pricing of delivered grey yarn, dyed yarn,|||
|and plus material from the weighted|||
|average method to first-in first-out method.|||
|||Accounting Standards for Business|
|||Enterprises No. 42—Held-for-sale|
|||Non-current Assets, Disposal Groups and|
|On April 28, 2017, the Ministry of Finance|||
|||Discontinued Operation standardize the|
|released Accounting Standards for|||
|||classification, measurement, and list of|
|Business Enterprises No.|||
|||held-for-sale non-current assets and|
|42—Held-for-sale Non-current Assets,|||
|||disposal group, and the list of termination|
|Disposal Groups and Discontinued|||
|||operation.|
|Operation (CaiKuai [2017] No. 3), which|||
|||According to Notice of the Ministry of|
|came into force from May 28, 2017.|||
||Approved by the Resolutions on the 16th|Finance on Revision and Issuance of|
|On December 25, 2017, the Ministry of|||
||Meeting of the 8th Board of Directors of|Format of General Financial Statements of|
|Finance issued the “Notice on Revision|||
||the Company on April 15, 2018|Enterprises, the Company adjusted the|
|and Issuance of Format of General|||
|||presentation of financial statement. The|
|Financial Statements of Enterprises”|||
|||amount adjusted to “assets disposal|
|(CaiKuai [2017] No. 30) to revise the|||
|||income” in 2017 was RMB1,242,000.54,|
|format of general finance statements of|||
|||and the amount adjusted to “assets disposal|
|enterprises and apply to financial|||
|||income” in 2016 was RMB-6,843,361.94.|
|statements in 2017 and the subsequent|||
|||The changes in accounting policies had no|
|periods.|||
|||significant influences on financial|
|||situations, operating results, and cash|
|||flows of the Company.|
|On May 10, 2017, the Ministry of Finance|Approved by Resolutions on the 9th|Government subsidy related to routine|

Lu Thai Textile Co., Ltd. Annual Report 2017
||||
|-|-|-|
|released Circular on Issuance and Revision|Meeting of the 8th Board of Directors of|activities happened after January 1, 2017|
|of Accounting Standards for Business|the Company on August 28, 2017|shall be calculated into other income;|
|Enterprises No. 16—Government Subsidy||government subsidy that has nothing to do|
|(CaiKuai [2017] No. 15), and revised||with routine activities shall be calculated|
|Accounting Standards for Business||into non-operating income.|
|Enterprises No. 16—Government Subsidy,|||
|which was implemented in the scope of all|||
|companies who execute accounting|||
|standards for business enterprises from|||
|June 12, 2017.|||

(2) Significant Changes in Accounting Estimates
□ Applicable√ Not applicable
VI Taxes
1. Main Taxes and Tax Rates
||||
|-|-|-|
|Category of tax|Taxable basis|Tax rate|
||Calculated the output tax at 17%, 11%,||
||6%, 5%, 3% and 0% of taxable income and||
|VAT|paid the VAT by the amount after|17%, 11%, 6%, 5%, 3%, 0%|
||deducting the deductible withholding VAT||
||at current period.||
||Paid at 7%, 5%, 1% of the circulating tax||
|Urban maintenance and construction tax||7%, 5%, 1%|
||actually paid||
||Paid at 0%, 15%, 16.5% and 25% of||
|Enterprise income tax||0%, 15%, 16.5%, 25%|
||taxable income respectively||

Notes of the disclosure situation of the taxpaying bodies with different enterprises income tax rate
|||
|-|-|
|Taxpayer|Income tax rate|
|The Company|15%|
|Lufeng Weaving & Dyeing Co., Ltd. (hereinafter refer to as||
||15%|
|“Lufeng Weaving & Dyeing”)||
|Lu Thai (Hong Kong) Textile Co., Ltd. (hereinafter refer to as||
||16.50%|
|“Lu Thai Hong Kong”)||
|Xinjiang Lu Thai Harvest Cotton Co., Ltd. (“Xinjiang Lu Thai”)|25%|
|Zibo Luqun Textile Co., Ltd. (hereinafter refer to as “Luqun||
||25%|
|Textile”)||
|Zibo Xinsheng Power Co., Ltd. hereinafter refer to as “Xinsheng||
||25%|
|Power”)||

Lu Thai Textile Co., Ltd. Annual Report 2017
|||
|-|-|
|Beijing Innovative Garment Co., Ltd. (hereinafter referred to as||
||25%|
|“Beijing Innovative”||
|Shanghai Lu Thai Textile & Garments Co., Ltd. (hereinafter||
||25%|
|referred to as “Shanghai Lu Thai”)||
|Beijing Lu Thai Youxian Electronic Commerce Co., Ltd.||
||25%|
|(hereinafter referred to as “Beijing Youxian”)||
|Zibo Chengshun Heating Co., Ltd. (hereinafter referred to as||
||25%|
|“Chengshun Heating”)||
|Zibo Helijie Energy-saving Technology Service Co., Ltd.||
||25%|
|(hereinafter referred to as “Helijie”)||
|Xinjiang Lu Thai Textile Co., Ltd. (hereinafter referred to as||
||15%|
|“Xinjiang Textile”)||
|Lu Thai (Cambodia) Textile Co., Ltd. (hereinafter referred to as||
||0%|
|“Lu Thai Cambodia”)||
|Lu Thai (Burma) Textile Co., Ltd. (hereinafter referred to as “Lu||
||0%|
|Thai Burma”)||
|Lu Thai (Vietnam) Textile Co., Ltd. (hereinafter referred to as||
||0%|
|“Lu Thai Vietnam”)||
|Lu An Garments Co., Ltd. (hereinafter referred to as “Lu An||
||0%|
|Garments”||
|Lu Thai (America) Textile Co., Ltd. (hereinafter referred to as||
||Refer to 2. Tax Preference presented as follows for details|
|“Lu Thai America”||

2. Tax Preference
According to the "On the Recognition of 2078 Enterprises as High-tech Enterprises for 2017 such as WeihaiTuozhan Fiber Co., Ltd." (LKZi[2018] No. 37) issued Department of Science and Technology of Shandong Province, Shandong Provincial Finance Department, State Administration of Taxation of Shandong Province and Local Taxation Bureau of Shandong Province, the Company and the holding subsidiary Lufeng Weaving and Dyeing Co., Ltd. were identified as high-tech enterprises. Pursuant to Article 28 of the "Law of the PRC on Enterprise Income Tax” and the No. 76 Announcement published by the State Administration of Taxation in 2015, namely "Management of Preferential Policy on Corporate Income Tax" and the " Measures for the Administration of the Recognition of Hi-tech Enterprises" GKFH[2016] No. 195 revised and published by the Ministry of Science and Technology, Ministry of Finance and State Administration of Taxation, the Company and the holding subsidiary Lufeng Weaving and Dyeing Co., Ltd. enjoy a corporate income tax rate of15%.
According to the "Notice of the Ministry of Finance, the General Administration of Customs and the State Administration of Taxation on Tax Policy Issues concerning Further Implementing the Western China Development Strategy "(CS[2011] No. 58), Xinjiang Textile Co., Ltd., the subsidiary of Lu Thai in Xinjiang, enjoys a preferential corporate income tax rate of15%.
Lu Thai (Hong Kong) Textile Co., Ltd. (hereinafter refers as Lu Thai (Hong Kong) Textile), the wholly-owned subsidiary company of the Company, was incorporated in Hong Kong SAR, whose profit tax shall be paid at tax rate of16.5%.
The wholly own subsidiary Lu Thai Cambodia, according to the Lu Thai Cambodia Profits tax free approval issued by Investment
Committee of Cambodia, Lu Thai Cambodia enjoys tax preference of tax free on corporate income tax of 3 (3 years start-up period)
+ 3 (3 years taxholiday)+1 (1 year grace period). If profit during the 3 year start-up period then turn into 3 years tax holiday, after
Lu Thai Textile Co., Ltd. Annual Report 2017 grace period, enterprise income tax rate was of20%.
The wholly own subsidiary Lu Thai Burma, according to theBurma’s Special Economic Zone Law issued by Pyidaungsu Hluttaw, Lu Thai Burma enjoys tax preference on corporate income tax of 7 (7 years tax holiday)+ 5 (5 years tax revenues drop by half)+ 5 (re-invest the profits within 1 year and continues to enjoy the half tax revenues 5 years afterwards). After grace period, enterprise income tax rate was of25%.
The wholly-owned subsidiary Lu Thai (Vietnam) Textile Co., Ltd. shall enjoy the preference of enterprise income tax at 3years’ starting term+ 2years’ duty-free term+ 4years’ half-tax term according to the investment license issued by Vietnamese Fudong Industrial Zone Management Committee, and it will enter into 2years’ duty-free term if it is profitable within 3years’ starting term. The enterprise income tax rate shall be20% after the preference term ends. The Company shall enjoy17% of the preference tax rate within 10 years since the tax year to get the first production and operation income, and the enterprise income tax rate shall be20% after the preference term ends.
The wholly-owned subsidiary Lu An Garments Co., Ltd. shall enjoy the preference of enterprise income tax at 3years’ starting term+ 2years’ duty-free term+ 4years’ half-tax term according to the investment license issued by Vietnamese Anjiang Province Economic Zone Management Committee, and it will enter into duty-free term if the profitability is realized at any year within 3years’ starting term. The Company shall enjoy17% of the preference tax rate within 10 years since the tax year to get the first production and operation income, and the enterprise income tax rate shall be20% after the preference term ends.
Lu Thai America, the wholly-owned subsidiary of the Company registered in New York, America, was imposed the federal enterprise income tax at progressive tax rate in excess of specific amount of15%-39%, and imposed the New York Enterprise income tax at the rate of6.5%. The income tax rate shall be6.5% when the sales income in New York was below USD1 million, while8.85% when above USD1 million.
VII. Notes to Main Items of Consolidated Financial Statements
1. Monetary Funds
Unit: RMB
||||
|-|-|-|
|Item|Closing balance|Opening balance|
|Cash on hand|8,040,420.28|3,229,473.38|
|Bank deposits|668,598,792.58|655,886,664.29|
|Other monetary funds|17,350,080.52|8,188,564.67|
|Total|693,989,293.38|667,304,702.34|
|Of which: total amount deposited|||
||54,911,636.96|98,109,438.71|
|oversees|||

Other notes
Note: On Dec. 31, 2017, the monetary capital with restricted ownership of the Company was of RMB17,350,080.52 (Dec. 31, 2016: RMB8,188,564.67), which was the fixed deposit receipt of RMB16,000,000.00 pledged in order to obtain the short-term loan (See 23 and 58 in this Section), the cash deposit of 1,200,000.00 for opening the L/C by theCompany’s subsidiary Xinjiang Lu Thai and the margin of RMB150,080.52 for opening L/G by theCompany’s subsidiary Lufeng Weaving& Dyeing.
Lu Thai Textile Co., Ltd. Annual Report 2017 2. Notes Receivable
(1) Notes Receivable Listed by Category
Unit: RMB
||||
|-|-|-|
|Item|Closing balance|Opening balance|
|Bank acceptance bill|28,926,913.53|12,263,703.90|
|L/C|110,349,828.81|71,898,206.01|
|Total|139,276,742.34|84,161,909.91|

 (2) Notes Receivable which Had Endorsed by the Company or Had Discounted and Had not Due on the Balance Sheet Date at the Period-end
Unit: RMB
||||
|-|-|-|
||Amount of recognition termination at the|Amount of not terminated recognition at|
|Item|||
||period-end|the period-end|
|Bank acceptance bill|184,749,663.81||
|Total|184,749,663.81||

3. Accounts Receivable
(1) Accounts Receivable Disclosed by Category
Unit: RMB
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||Closing balance|||||Opening balance|||||
||Book balance||Bad debt provision|||Book balance||Bad debt provision|||
|||||Withdra|||||||
|Category|||||Book||||||
|||Proportio||wal|||Proportio||Withdrawal|Book value|
||Amount||Amount||value|Amount||Amount|||
|||n||proportio|||n||proportion||
|||||n|||||||
|Accounts receivable|||||||||||
|withdrawn bad debt|||||||||||
||351,991,||17,911,3||334,080,5|308,637||15,507,82||293,129,72|
|provision according||100.00%||5.09%|||100.00%||5.02%||
||919.14||95.09||24.05|,549.96||2.03||7.93|
|to credit risks|||||||||||
|characteristics|||||||||||
||351,991,||17,911,3||334,080,524.05|308,637||15,507,82||293,129,727.93|
|Total||100.00%||5.09%|||100.00%||5.02%||
||919.14||95.09|||,549.96||2.03|||

 Accounts receivable with significant single amount for which bad debt provision separately accrued at the period-end
□ Applicable√ Not applicable
In the groups, accounts receivable adopting aging analysis method to accrue bad debt provision:
Lu Thai Textile Co., Ltd. Annual Report 2017√ Applicable□ Not applicable
Unit: RMB
|||||
|-|-|-|-|
||Closing balance|||
|Aging||||
||Accounts receivable|Bad debt provision|Withdrawal proportion|
|Subitem within 1 year||||
|Within 1 year|347,017,932.00|17,350,896.58|5.00%|
|Subtotal within 1 year|347,017,932.00|17,350,896.58|5.00%|
|1 to 2 years|4,636,989.14|463,698.91|10.00%|
|2 to 3 years|42,998.00|8,599.60|20.00%|
|Over 3 years|294,000.00|88,200.00|30.00%|
|Total|351,991,919.14|17,911,395.09|5.09%|

 Notes of the basis for the determination of the group:
In the groups, accounts receivable adopting balance percentage method to withdraw bad debt provision:
□ Applicable√ Not applicable
In the groups, accounts receivable adopting other methods to withdraw bad debt provision:
(2) Bad Debt Provision Withdrawn, Reversed or Collected during the Reporting Period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB2,410,128.05; the amount of the reversed or collected part during the Reporting Period was of RMB0.00.
(3) The Actual Write-off Accounts Receivable
Unit: RMB
|||
|-|-|
|Item|Amount|
|Actual write-off accounts receivable|6,554.99|

 (4) Top 5 of the Closing Balance of the Accounts Receivable Collected according to the Arrears Party The total amount of theCompany’s top 5 of the closing balance of the accounts receivable collected according to the arrears party was RMB102,408,407.58,29.09% of the total balance of account receivable at period-end. The relevant total balance of bad debt provision was RMB5,120,420.38.
4. Prepayment
(1) Listed by Aging Analysis
Unit: RMB
||||||
|-|-|-|-|-|
||Closing balance||Opening balance||
|Aging|||||
||Amount|Proportion|Amount|Proportion|

Lu Thai Textile Co., Ltd. Annual Report 2017
||||||
|-|-|-|-|-|
|Within 1 year|145,673,771.77|99.46%|211,403,422.01|99.49%|
|1 to 2 years|625,210.35|0.43%|805,437.09|0.38%|
|2 to 3 years|162,029.49|0.11%|242,576.42|0.11%|
|Over 3 years|2,054.77|0.00%|36,684.96|0.02%|
|Total|146,463,066.38|--|212,488,120.48|--|

Notes of the reasons of the prepayment aging over 1 year with significant amount but failed to settle in time:
(2) Top 5 of the Closing Balance of the Prepayment Collected according to the Prepayment Target
The total amount of top 5 of the closing balance of the prepayment collected according to the prepayment target was RMB 63,315,827.06,43.23% of total balance of prepayment at period-end.
Other notes:
5. Interest Receivable
(1) Category of Interest Receivable
Unit: RMB
||||
|-|-|-|
|Item|Closing balance|Opening balance|
|Fixed term deposit|590,003.07||
|Total|590,003.07||

6. Other Accounts Receivable
(1) Other Accounts Receivable Disclosed by Category
Unit: RMB
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||Closing balance|||||Opening balance|||||
||Book balance||Bad debt provision|||Book balance||Bad debt provision|||
|||||Withdrawalproportion|||||||
|Category|||||Book||||||
|||Proportio|||||Proportio||Withdrawal|Book value|
||Amount||Amount||value|Amount||Amount|||
|||n|||||n||proportion||
|Other accounts|||||||||||
|receivable withdrawn|||||||||||
||62,067,8||5,885,02||56,182,78|52,492,||5,771,278||46,720,732.|
|bad debt provision||100.00%||9.48%|||100.00%||10.99%||
||08.10||6.06||2.04|011.83||.86||97|
|according to credit|||||||||||
|risks characteristics|||||||||||
||62,067,8||5,885,02||56,182,782.04|52,492,||5,771,278||46,720,732.97|
|Total||100.00%||9.48%|||100.00%||10.99%||
||08.10||6.06|||011.83||.86|||

Lu Thai Textile Co., Ltd. Annual Report 2017 Other receivable with single significant amount and withdrawal bad debt provision separately at the end of the Period:
□ Applicable√ Not applicable
In the groups, other accounts receivable adopting aging analysis method to withdraw bad debt provision:
√ Applicable□ Not applicable
Unit: RMB
|||||
|-|-|-|-|
||Closing balance|||
|Aging||||
||Other accounts receivable|Bad debt provision|Withdrawal proportion|
|Subitem within 1 year||||
|Within 1 year|50,524,037.28|2,526,201.87|5.00%|
|Subtotal within 1 year|50,524,037.28|2,526,201.87|5.00%|
|1 to 2 years|434,035.33|43,403.54|10.00%|
|2 to 3 years|175,000.00|35,000.00|20.00%|
|Over 3 years|10,934,735.49|3,280,420.65|30.00%|
|Total|62,067,808.10|5,885,026.06|9.48%|

 Notes of the basis for the determination of the group:
In the groups, other accounts receivable adopting balance percentage method to withdraw bad debt provision:
□ Applicable√ Not applicable
In the groups, other accounts receivable adopting other methods to withdraw bad debt provision:
□ Applicable√ Not applicable
(2) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
The amount of bad debt provision was RMB168,904.97, the amount of reversed or recovered bad debt provision in the Reporting Period RMB0.00.
(3) Particulars of Other Accounts Receivable Actually Verified during the Reporting Period
Unit: RMB
|||
|-|-|
|Item|Amount|
|Other accounts receivable actually verified|55,157.77|

 (4) Other Accounts Receivable Classified by Account Nature
Unit: RMB
||||
|-|-|-|
|Nature|Closing book balance|Opening book balance|
|Export taxes refund|26,928,248.68|18,563,850.28|
|Advance payment|19,470,920.20|17,597,169.14|
|Pledge and guarantee|5,915,873.52|3,777,964.01|

Lu Thai Textile Co., Ltd. Annual Report 2017
||||
|-|-|-|
|Lending and petty cash|1,533,438.12|1,404,072.87|
|Other|8,219,327.58|11,148,955.53|
|Total|62,067,808.10|52,492,011.83|

 (5) Top 5 of the Closing Balance of the Other Accounts Receivable Collected according to the Arrears Party Unit: RMB
|||||||
|-|-|-|-|-|-|
||||||Closing balance of|
|Name of units|Nature|Closing balance|Aging|Proportion%||
||||||bad debt provision|
|Export taxes refund||||||
||Export taxes refund|24,262,563.08|Within 1 year|39.09%|1,213,128.15|
|receivable||||||
|Advance money||||||
|receivable of the|Advance money|4,909,766.50|Within 1 year|7.91%|245,488.33|
|fundraising houses||||||
|Deposits for wages|Deposits for wages|||||
|paid to migrant|paid to migrant|||||
|||2,955,620.10|Over 3 years|4.76%|886,686.03|
|workers of Zichuan|workers of|||||
|District, Zibo|infrastructure works|||||
|Finance Bureau of||||||
||Export tax refunds of|||||
|Zichuan District,||2,665,685.60|Over 3 years|4.29%|799,705.68|
||the local government|||||
|Zibo||||||
|Advance money||||||
|receivable of the|Advance money|2,024,208.67|Within 1 year|3.26%|101,210.43|
|heating||||||
|Total|--|36,817,843.95|--|59.32%|3,246,218.62|

 7. Inventory
Whether the Company needs to comply with the disclosure requirements of the real estate industry
No
(1) Category of Inventory
Unit: RMB
||||||||
|-|-|-|-|-|-|-|
||Closing balance|||Opening balance|||
|Item||Falling price|||Falling price||
||Book balance||Book value|Book balance||Book value|
|||reserves|||reserves||
|Raw materials|859,429,529.00|1,172,453.02|858,257,075.98|720,197,267.25|620,979.00|719,576,288.25|
|Goods in process|508,535,945.66||508,535,945.66|412,808,521.45||412,808,521.45|
|Inventory goods|754,961,464.17|51,653,377.28|703,308,086.89|731,266,751.73|64,673,863.30|666,592,888.43|

Lu Thai Textile Co., Ltd. Annual Report 2017
||||||||
|-|-|-|-|-|-|-|
|Consumptive|||||||
||1,531,621.67|404,221.67|1,127,400.00|1,141,156.72|671,556.72|469,600.00|
|biological assets|||||||
|Assigned|||||||
|processing|29,432,713.40||29,432,713.40|18,095,572.86||18,095,572.86|
|products|||||||
|Total|2,153,891,273.90|53,230,051.97|2,100,661,221.93|1,883,509,270.01|65,966,399.02|1,817,542,870.99|

 Whether the Company needs to comply with the disclosure requirements of Shenzhen Stock Exchange Industry Information Disclosure Guidelines No. 4 - Listed companies engaged in seed industry and planting business
No
(2) Falling Price Reserves of Inventory
Unit: RMB
||||||||||
|-|-|-|-|-|-|-|-|-|
||||Increased amount|||Decreased amount|||
|Item|Opening balance|||||Reverse or||Closing balance|
||||Withdrawal|Other|||Other||
|||||||write-off|||
|Raw materials|620,979.00||1,172,453.02|||620,979.00||1,172,453.02|
|Inventory goods|64,673,863.30||23,993,839.93|||37,014,325.95||51,653,377.28|
|Consumptive|||||||||
||671,556.72||54,032.48|||321,367.53||404,221.67|
|biological assets|||||||||
|Total|65,966,399.02||25,220,325.43|||37,956,672.48||53,230,051.97|
|Item||Specific basis of withdrawal offalling price reserves ofinventory|||Reasons for reversal||Reasons for write-off||
|Raw materials||The lower one between cost ofeach item of inventory and itsrealizable net value.|||||Sale in this year||
|Inventory goods||The lower one between cost ofeach item of inventory and itsrealizable net value.|||||Sale in this year||
|Consumptive biologicalassets||The lower one between cost ofeach item of inventory and itsrealizable net value.|||||Sale in this year||

Notes:
① Due to the quality problem in the garment accessories of partial raw materials, raw yarn and dyed yarn of finished goods and long age of partial shirts and fabric at the year-end as well as the falling market price of the consumptive biological assets-Hu-sheep, the costs of inventories became higher than the realizable net value, and the Company withdrew the provision for falling price of
inventories according to their balance.
② Lu Thai (Xinjiang) Textile Co., Ltd., theCompany’s subsidiary got the short-term borrowing of RMB210,000,000.00 pleadged
with the inventory with book value of RMB248,632,100.00.
Lu Thai Textile Co., Ltd. Annual Report 2017 (3) Notes of the Closing Balance of the Inventory which Includes Capitalized Borrowing Expenses
(4) Completed Unsettled Assets Formed from the Construction Contact at the Period-end
8. Other Current Assets
Unit: RMB
||||
|-|-|-|
|Item|Closing balance|Opening balance|
|Prepaid income tax to be deducted|302,275.14|1,325,487.99|
|VAT input tax to be deducted|68,286,428.20|41,038,664.17|
|Sales the shares||65,968,094.08|
|Financial products|50,000,000.00||
|Total|118,588,703.34|108,332,246.24|

 Other notes:
9. Available-for-sale Financial Assets
(1) List of Available-for-sale Financial Assets
Unit: RMB
||||||||
|-|-|-|-|-|-|-|
||Closing balance|||Opening balance|||
|Item||Depreciation|||Depreciation||
||Book balance||Book value|Book balance||Book value|
|||reserves|||reserves||
|Available-for-dale debt|||||||
||60,033,000.00||60,033,000.00||||
|instruments:|||||||
|Available-for-sale equity|||||||
||67,282,600.00|42,782,600.00|24,500,000.00|67,282,600.00|42,782,600.00|24,500,000.00|
|instruments:|||||||
|Measured by fair|||||||
||60,033,000.00||60,033,000.00||||
|value|||||||
|Measured by cost|67,282,600.00|42,782,600.00|24,500,000.00|67,282,600.00|42,782,600.00|24,500,000.00|
|Total|127,315,600.00|42,782,600.00|84,533,000.00|67,282,600.00|42,782,600.00|24,500,000.00|

Lu Thai Textile Co., Ltd. Annual Report 2017 (2) Available-for-sale Financial Assets Measured by Fair Value at the Period-end
Unit: RMB
|||||
|-|-|-|-|
|Category of||||
||Available-for-sale equity|Available-for-sale debt||
|available-for-sale|||Total|
||instruments|instruments||
|financial assets||||
|Equity instrument||||
|costs/debt instrument||60,000,000.00|60,000,000.00|
|amortization costs||||
|Fair value||60,033,000.00|60,033,000.00|
|Accumulative amount of||||
|changes in fair value||||
|||33,000.00|33,000.00|
|included in other||||
|comprehensive income||||
|Impairment amount||||
|withdrawn||||

(3) Available-for-sale Financial Assets Measured by Cost at the Period-end
Unit: RMB
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||Book balance||||Depreciation reserves||||Shareholdi|Cash|
||||||||||ng|bonus of|
|Investee|Period-beg||||Period-begin||||proportion|the|
|||Increase|Decrease|Period-end||Increase|Decrease|Period-end|||
||in||||||||among the|Reporting|
||||||||||investees|Period|
|Yantai|||||||||||
|Rongchan|||||||||||
|g|||||||||||
|Pharmacy|||||||||||
|Co., Ltd.|||||||||||
||55,282,600|||55,282,600|42,782,600|||42,782,600|||
|(hereinafte|||||||||3.13%||
|r refer to|.00|||.00|.00|||.00|||
|as|||||||||||
|“Rongcha|||||||||||
|ng|||||||||||
|Pharmacy”|||||||||||
|)|||||||||||
|Shandong|||||||||||
|Hongqiao|||||||||||
||12,000,000|||12,000,000|||||||
|Power Co.,|||||||||19.38%||
|Ltd.|.00|||.00|||||||
|(Hongqiao|||||||||||
|Power)|||||||||||
||67,282,600|||67,282,600|42,782,600|||42,782,600|||
|Total|||||||||--||
||.00|||.00|.00|||.00|||

(3) Changes of the Impairment of the Available-for-sale Financial Assets during the Reporting Period
Unit: RMB
Lu Thai Textile Co., Ltd. Annual Report 2017
|||||
|-|-|-|-|
|Category of the||||
||Available-for-sale equity|Available-for-sale debt||
|available-for-sale financial|||Total|
||instruments|instruments||
|assets||||
|Withdrawn impairment balance||||
||42,782,600.00||42,782,600.00|
|at the period-begin||||
|Withdrawn impairment balance||||
||42,782,600.00||42,782,600.00|
|at the period-end||||

10. Long-term Accounts Receivable
(1) Long-term Accounts receivable
Unit: RMB
|||||||||
|-|-|-|-|-|-|-|-|
||Closing balance|||Opening balance||||
||||||||Discount rate|
|Item||Bad debt|||Bad debt|||
||Book balance||Book value|Book balance||Book value|range|
|||provision|||provision|||
|Financing lease||||||||
|||||2,310,000.00||2,310,000.00|10.54%|
|accounts||||||||
|Of which:||||||||
|unrealized||||55,437.00||55,437.00||
|financing income||||||||
|Total||||2,310,000.00||2,310,000.00|--|

 11. Long-term Equity Investment
Unit: RMB
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|||Increase/decrease||||||||||
||||||||||||Closing|
|||||Gains and|Adjustme|Changesof otherequity||||||
||||||||Cash|Withdrawal of|||balance|
|||Additiona||losses|nt of|||||||
||Opening||Reduced||||bonus or|||Closing|of|
|Investee||||||||||||
|||l||recognize|other|||||||
||balance||investmen||||profits|impairme|Other|balance|impairme|
|||investmen||d under|comprehe|||||||
||||t||||announce|ntprovision|||nt|
|||t||the equity|nsive|||||||
||||||||d to issue||||provision|
|||||method|income|||||||
|I. Joint ventures||||||||||||
|II. Associated enterprises||||||||||||
|Ningbo||||||||||||
|Mei shan||||||||||||
|||100,000,0||-2,463,26||||||97,536,73||
|Bonded||||||||||||
|||00.00||7.98||||||2.02||
|Poer Area||||||||||||
|Haohong||||||||||||

Lu Thai Textile Co., Ltd. Annual Report 2017
|||||
|-|-|-|-|
|Equity||||
|Investme||||
|nt||||
|Partnershi||||
|p (L.P)||||
|(hereinaft||||
|er||||
|referred||||
|to as||||
|“Haohong||||
|Investme||||
|nt”)||||
||100,000,0|-2,463,26|97,536,73|
|Subtotal||||
||00.00|7.98|2.02|
||100,000,0|-2,463,26|97,536,73|
|Total||||
||00.00|7.98|2.02|

Other notes
12. Investment Property
(1) Investment property adopted the cost measurement mode
√Applicable□ Not applicable
Unit: RMB
||||||
|-|-|-|-|-|
|Item|Houses and buildings|Land use right|Construction in process|Total|
|I. Original book value|||||
|1. Opening balance|35,848,151.08|||35,848,151.08|
|2. Increased amount of|||||
||134,231.32|||134,231.32|
|the Period|||||
|(1) Purchase|||||
|(2) Inventory/fixed|||||
|assets / transfer of project|134,231.32|||134,231.32|
|under construction|||||
|(3) Enterprise|||||
|combination increase|||||
|3. Decreased amount|||||
|of the Period|||||
|(1) Disposal|||||
|(2) Other transfers|||||

Lu Thai Textile Co., Ltd. Annual Report 2017
||||
|-|-|-|
|4. Closing balance|35,982,382.40|35,982,382.40|
|II. Accumulative|||
|depreciation|||
|1. Opening balance|10,004,060.52|10,004,060.52|
|2. Increased amount of|||
||1,414,777.30|1,414,777.30|
|the Period|||
|(1) Withdrawal or|||
||1,414,777.30|1,414,777.30|
|amortization|||
|3. Decreased amount|||
|of the Period|||
|(1) Disposal|||
|(2) Other transfers|||
|4. Closing balance|11,418,837.82|11,418,837.82|
|III. Depreciation reserves|||
|1. Opening balance|||
|2. Increased amount of|||
|the Period|||
|(1) Withdrawal|||
|3. Decreased amount|||
|of the Period|||
|(1) Disposal|||
|(2) Other transfers|||
|4. Closing balance|||
|IV. Book value|||
|1. Closing book value|24,563,544.58|24,563,544.58|
|2. Opening book value|25,844,090.56|25,844,090.56|

 13. Fixed Assets
(1) List of Fixed Assets
Unit: RMB
Lu Thai Textile Co., Ltd. Annual Report 2017
|||||||
|-|-|-|-|-|-|
|||||Electronic||
||Houses and|Machinery|Transportation|||
|Item||||equipment and|Total|
||buildings|equipment|equipment|||
|||||others||
|I. Original book||||||
|value:||||||
|1. Opening||||||
||3,003,765,886.38|5,941,366,922.97|69,429,718.17|108,713,752.93|9,123,276,280.45|
|balance||||||
|2. Increased||||||
||208,153,190.55|463,149,612.30|7,726,194.10|15,090,956.38|694,119,953.33|
|amount of the period||||||
|(1) Purchase|2,326,953.12|256,029,802.86|7,726,194.10|10,982,282.94|277,065,233.02|
|(2) Transfer of||||||
|project under|205,826,237.43|207,119,809.44||4,108,673.44|417,054,720.31|
|construction||||||
|(3) Enterprises||||||
|combination increase||||||
|3. Decreased||||||
||75,910,347.45|391,290,078.67|1,550,052.01|5,124,394.42|473,874,872.55|
|amount of the period||||||
|(1) Disposal or||||||
||7,510,494.72|62,639,610.19|1,278,538.07|4,890,261.96|76,318,904.94|
|scrap||||||
|(2) Transferred into||||||
||134,231.32||||134,231.32|
|investment property||||||
|(3) Transferred into||||||
|construction in|46,380,318.04|305,622,079.88|||352,002,397.92|
|progress||||||
|(4) Other decrease|21,885,303.37|23,028,388.60|271,513.94|234,132.46|45,419,338.37|
|4. Closing balance|3,136,008,729.48|6,013,226,456.60|75,605,860.26|118,680,314.89|9,343,521,361.23|
|II. Accumulated||||||
|desperation||||||
|1. Opening||||||
||816,572,289.59|2,881,216,670.95|50,462,170.42|74,337,166.12|3,822,588,297.08|
|balance||||||
|2. Increased||||||
||91,617,551.83|277,500,291.61|4,450,570.19|8,833,897.82|382,402,311.45|
|amount of the period||||||
|(1) Withdrawal|91,617,551.83|277,500,291.61|4,450,570.19|8,833,897.82|382,402,311.45|
|3. Decreased||||||
||19,425,109.86|289,657,965.25|1,120,500.94|4,699,475.40|314,903,051.45|
|amount of the period||||||
|(1) Disposal or||||||
||2,182,298.38|52,437,036.04|1,047,280.95|4,618,229.43|60,284,844.80|
|scrap||||||
|(2) Transferred into||||||
||16,272,025.52|235,175,418.39|||251,447,443.91|
|construction in||||||

Lu Thai Textile Co., Ltd. Annual Report 2017
|||||||
|-|-|-|-|-|-|
|progress||||||
|(3) Other decrease|970,785.96|2,045,510.82|73,219.99|81,245.97|3,170,762.74|
|4. Closing balance|888,764,731.56|2,869,058,997.31|53,792,239.67|78,471,588.54|3,890,087,557.08|
|III. Depreciation||||||
|reserves||||||
|1. Opening||||||
||4,830,670.26|22,596,691.34|27,269.67|84,643.90|27,539,275.17|
|balance||||||
|2. Increased||||||
||1,145,314.29|8,358,377.50||27,624.00|9,531,315.79|
|amount of the period||||||
|(1) Withdrawal|1,145,314.29|8,358,377.50||27,624.00|9,531,315.79|
|3. Decreased||||||
||3,082,567.66|1,831,565.50||18,503.68|4,932,636.84|
|amount of the period||||||
|(1) Disposal or||||||
||3,082,567.66|1,831,565.50||18,503.68|4,932,636.84|
|scrap||||||
|4. Closing balance|2,893,416.89|29,123,503.34|27,269.67|93,764.22|32,137,954.12|
|IV. Book value||||||
|1. Closing book||||||
||2,244,350,581.03|3,115,043,955.95|21,786,350.92|40,114,962.13|5,421,295,850.03|
|value||||||
|2. Opening book||||||
||2,182,362,926.53|3,037,553,560.68|18,940,278.08|34,291,942.91|5,273,148,708.20|
|value||||||

(2) Fixed Assets Leased out from Operation Lease
Unit: RMB
|||
|-|-|
|Item|Closing book value|
|Houses and buildings|62,670,502.74|
|Total|62,670,502.74|

 (3) Details of Fixed Assets Failed to Accomplish Certificate of Property
Unit: RMB
||||
|-|-|-|
|Item|Book value|Reason|
|||Ongoing inspection, surveying,|
|Weaving and yarn dying workshop|105,329,978.75|verification to application procedures by|
|||Housing authorities|
|Employee’s dormitory building of eastern|||
||43,929,532.94|Same with above|
|area of industrial park|||
|Spinning Fourth factory workshop|93,848,170.38|Same with above|

Lu Thai Textile Co., Ltd. Annual Report 2017
||||
|-|-|-|
|Employee’s dormitory building of western|||
||125,869,506.33|Same with above|
|area of industrial park|||
|Eastern sample plant|30,925,295.14|Same with above|
|Lufeng weaving dye workshop|130,621,668.04|Same with above|
|Xinjiang construction project of|||
||67,895,445.45|Same with above|
|100,000-spindle spinning production line|||

Other notes
Note:①Lu Thai (Xinjiang) Textile Co., Ltd., theCompany’s subsidiary got the short-term borrowing of RMB130,000,000.00 mortgaged with the fixed assets with book value of RMM4,316,209.51 and the land use right with book value of RMB1,688,508.95 and pledged with the deposit of RMB16,000,000.00. For details, please refer to 23 and 58 in this Section.
②The original book value and other decrease in accumulative depreciation of fixed assets in the Reporting Period were exchange rate difference generated from the conversion of overseassubsidiaries’ recording currency into RMB due to the fluctuation of the exchange rates.
14. Construction in Progress
(1) List of Construction in Progress
Unit: RMB
||||||||
|-|-|-|-|-|-|-|
||Closing balance|||Opening balance|||
|Item||Depreciation|||Depreciation||
||Book balance||Book value|Book balance||Book value|
|||reserves|||reserves||
|Roof|||||||
|transformation|||||||
|engineering of for|||||||
|the whole eastern|||||||
|weaving complex|||||||
|workshop|||||||
|Reform project of|||||||
|Xinsheng|6,192,038.65||6,192,038.65|13,387,636.75||13,387,636.75|
|Thermal Power|||||||
|Expansion project|||||||
|of Xinsheng|744,000.00||744,000.00|72,155,299.06||72,155,299.06|
|Thermal Power|||||||
|Energy|||||||
|conservation||||9,607,705.02||9,607,705.02|
|project of Helijie|||||||
|Heat supply|||||||
|engineering of|||||||
||1,805,751.30||1,805,751.30|21,966,774.45||21,966,774.45|
|Chengshun|||||||
|Heating|||||||

Lu Thai Textile Co., Ltd. Annual Report 2017
||||||
|-|-|-|-|-|
|Reformengineering of100,000-spindlespinning|||||
||77,875,603.13|77,875,603.13|||
|Lu Thai(Vietnam) project|||||
||34,325,323.53|34,325,323.53|26,114,552.04|26,114,552.04|
|Phase II of Lu|||||
|Thai (Vietnam)|4,922,411.28|4,922,411.28|||
|project|||||
|Project of Lu AnGarments|||||
||3,371,413.19|3,371,413.19|3,966,433.79|3,966,433.79|
|Other retailsprojects|||||
||28,185,279.60|28,185,279.60|29,877,254.05|29,877,254.05|
|Total|157,421,820.68|157,421,820.68|177,075,655.16|177,075,655.16|

 (2) Changes of Significant Construction in Progress
Unit: RMB
||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|
|||Openingbalance||||||||Ofwhich:|||
|||||Amount|||Proporti||||||
||||||||||Accumul||||
|||||that|||on|||the|Capitaliz||
||||||Other||||ative||||
|||||transferr|||estimate|||amount|ation rate||
||Estimate||||decrease||||amount||||
|Name of|||Increase|ed to||Closing|d of the|Project||of the|of the|Capital|
||d||||d amount||||of||||
|item|||d amount|fixed||balance|project|progress||capitaliz|interests|resources|
||number||||of the||||capitaliz||||
|||||assets of|||accumul|||ed|of the||
||||||period||||ed||||
|||||the|||ative|||interests|period||
||||||||||interests||||
|||||period|||input|||of theperiod|||
|Roof|||||||||||||
|transfor|||||||||||||
|mation|||||||||||||
|engineeri|||||||||||||
|ng of for|||||||||||||
|the|36,000,0||44,913,4|44,913,4|||||||||
||||||||100.00%|100.00%||||Other|
|whole|00.00||37.52|37.52|||||||||
|eastern|||||||||||||
|weaving|||||||||||||
|complex|||||||||||||
|worksho|||||||||||||
|p|||||||||||||
|Reform|28,000,0|13,387,6|12,511,2|19,706,8||6,192,03|||||||
||||||||92.00%|92.00%||||Other|
|project|00.00|36.75|13.40|11.50||8.65|||||||

Lu Thai Textile Co., Ltd. Annual Report 2017
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|of||||||||||
|Xinshen||||||||||
|g||||||||||
|Thermal||||||||||
|Power||||||||||
|Expansio||||||||||
|n project||||||||||
|of||||||||||
||240,000,|72,155,2|126,662,|198,073,||744,000.||||
|Xinshen|||||||84.00%|84.00%|Other|
||000.00|99.06|676.94|976.00||00||||
|g||||||||||
|Thermal||||||||||
|Power||||||||||
|Energy||||||||||
|conserva||||||||||
|tion|9,000,00|9,607,70||9,607,70||||||
||||||||100.00%|100.00%|Other|
|project|0.00|5.02||5.02||||||
|of||||||||||
|Helijie||||||||||
|Heat||||||||||
|supply||||||||||
|engineeri||||||||||
||38,000,0|21,966,7|14,667,9|34,828,9||1,805,75||||
|ng of|||||||96.00%|96.00%|Other|
||00.00|74.45|42.42|65.57||1.30||||
|Chengsh||||||||||
|un||||||||||
|Heating||||||||||
|Reform||||||||||
|engineeri||||||||||
|ng of|156,000,||144,344,|66,469,3||77,875,6||||
||||||||85.00%|85.00%|Other|
|100,000-|000.00||984.37|81.24||03.13||||
|spindle||||||||||
|spinning||||||||||
|Lu Thai||||||||||
||242,282,|26,114,5|10,122,2||1,911,46|34,325,3||||
|(Vietnam|||||||99.00%|99.00%|Other|
||300.00|52.04|35.06||3.57|23.53||||
|) project||||||||||
|Phase II||||||||||
|of Lu||||||||||
||52,750,0||4,922,41|||4,922,41||||
|Thai|||||||9.00%|9.00%|Other|
||00.00||1.28|||1.28||||
|(Vietnam||||||||||
|) project||||||||||
|Project||||||||||
||93,035,7|3,966,43|4,291,18|4,676,94|209,260.|3,371,41||||
|of Lu An|||||||88.00%|88.00%|Other|
||00.00|3.79|3.61|3.59|62|3.19||||
|Garment||||||||||

Lu Thai Textile Co., Ltd. Annual Report 2017
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|s||||||||||
|Other||||||||||
|||29,877,2|37,165,5|38,777,4|79,988.4|28,185,2||||
|retails|||||||||Other|
|||54.05|13.89|99.87|7|79.60||||
|projects||||||||||
||895,068,|177,075,|399,601,|417,054,|2,200,71|157,421,||||
|Total|||||||--|--|--|
||000.00|655.16|598.49|720.31|2.66|820.68||||

15. Engineering Material
Unit: RMB
||||
|-|-|-|
|Item|Closing balance|Opening balance|
|Specific materials||6,491.45|
|Specific equipment|56,913,806.06|117,113,972.05|
|Total|56,913,806.06|117,120,463.50|

 Other notes:
16. Productive Biological Assets
(1) Productive Biological Assets Adopted Cost Measurement Mode
√ Applicable□ Not applicable
Unit: RMB
|||||||
|-|-|-|-|-|-|
|Item|Planting industry|Livestock|Forestry|Aquaculture|Total|
|||Hu sheep||||
|I. Original book||||||
|value||||||
|1. Opening||||||
|||1,805,109.43|||1,805,109.43|
|balance||||||
|2. Increased||||||
|||437,306.32|||437,306.32|
|amount of the period||||||
|(1) Outsourcing||260,950.00|||260,950.00|
|(2) Self||||||
|||176,356.32|||176,356.32|
|cultivate||||||
|3. Decreased||||||
|||2,242,415.75|||2,242,415.75|
|amount of the period||||||
|(1) Disposal||878,387.78|||878,387.78|
|(2) Other||1,364,027.97|||1,364,027.97|
|4. Closing balance||||||

Lu Thai Textile Co., Ltd. Annual Report 2017
||||
|-|-|-|
|II. Accumulative|||
|depreciation|||
|1. Opening|||
||423,816.68|423,816.68|
|balance|||
|2. Increased|||
||334,157.96|334,157.96|
|amount of the period|||
|(1) Withdrawal|334,157.96|334,157.96|
|3. Decreased|||
||757,974.64|757,974.64|
|amount of the period|||
|(1) Disposal|439,426.09|439,426.09|
|(2) Other|318,548.55|318,548.55|
|4. Closing balance|||
|III. Depreciation|||
|reserves|||
|1. Opening|||
|balance|||
|2. Increased|||
|amount of the period|||
|(1) Withdrawal|||
|3. Decreased|||
|amount of the period|||
|(1) Disposal|||
|(2) Other|||
|4. Closing balance|||
|IV. Book value|||
|1. Closing book|||
|value|||
|2. Opening book|||
||1,381,292.75|1,381,292.75|
|value|||

17. Intangible Assets
(1) List of Intangible Assets
Unit: RMB
||||||||
|-|-|-|-|-|-|-|
|||||Software use|||
|Item|Land use right|Patent right|Non-patent right||Brand use rights|Total|
|||||rights|||
|I. Original book|||||||

Lu Thai Textile Co., Ltd. Annual Report 2017
|||||||
|-|-|-|-|-|-|
|value||||||
|1. Opening||||||
||479,972,935.82|1,985,176.47|180,000.00|300,000.00|482,438,112.29|
|balance||||||
|2. Increased||||||
|amount of the|124,787,353.74||6,530,503.67||131,317,857.41|
|period||||||
|(1) Purchase|124,787,353.74||6,530,503.67||131,317,857.41|
|(2) Internal R||||||
|&D||||||
|(3) Increase||||||
|from enterprise||||||
|combination||||||
|3. Decrease in||||||
|the Reporting||||||
|Period||||||
|(1) Disposal||||||
|4. Closing||||||
||604,760,289.56|1,985,176.47|6,710,503.67|300,000.00|613,755,969.70|
|balance||||||
|II. Total accrued||||||
|amortization||||||
|1. Opening||||||
||96,720,842.54|1,224,192.36|180,000.00|60,000.00|98,185,034.90|
|balance||||||
|2. Increased||||||
|amount of the|14,321,731.37|198,517.68|2,072,384.27|30,000.00|16,622,633.32|
|period||||||
|(1)||||||
||14,321,731.37|198,517.68|2,072,384.27|30,000.00|16,622,633.32|
|Withdrawal||||||
|3. Decrease in||||||
|the Reporting||||||
|Period||||||
|(1)||||||
|Disposal||||||
|4. Closing||||||
||111,042,573.91|1,422,710.04|2,252,384.27|90,000.00|114,807,668.22|
|balance||||||
|III. Depreciation||||||
|reserves||||||
|1. Opening||||||
|balance||||||
|2. Increased||||||

Lu Thai Textile Co., Ltd. Annual Report 2017
|||||||
|-|-|-|-|-|-|
|amount of the||||||
|period||||||
|(1)||||||
|Withdrawal||||||
|3. Decrease in||||||
|the Reporting||||||
|Period||||||
|(1) Disposal||||||
|4. Closing||||||
|balance||||||
|IV. Book value||||||
|1. Book value of||||||
||493,717,715.65|562,466.43|4,458,119.40|210,000.00|498,948,301.48|
|the period-end||||||
|2. Book value of||||||
||383,252,093.28|760,984.11||240,000.00|384,253,077.39|
|the period-begin||||||

The proportion of the intangible assets formed from the internalR&D through the Company to the balance of the intangible assets at the period-end was0.00%
18.R&D Expenses
Unit: RMB
|||||||
|-|-|-|-|-|-|
||Opening||||Closing|
|Item||Increase|Decrease|||
||balance||||balance|
|Product||328,403,990.||328,403,990.||
|development||29||29||
|||328,403,990.||328,403,990.||
|Total||||||
|||29||29||

Other notes
19. Goodwill
(1) Original Book Value of Goodwill
Unit: RMB
||||||
|-|-|-|-|-|
|Name of the|||||
|investees or the|||||
||Opening balance|Increase|Decrease|Closing balance|
|events formed|||||
|goodwill|||||
|Xinsheng Power|20,563,803.29|||20,563,803.29|
|Helijie|50,000.00|||50,000.00|

Lu Thai Textile Co., Ltd. Annual Report 2017
||||
|-|-|-|
|Total|20,613,803.29|20,613,803.29|

 (2) Impairment Provision of Goodwill
Unit: RMB
||||||
|-|-|-|-|-|
|Name of the|||||
|investees or the|||||
||Opening balance|Increase|Decrease|Closing balance|
|events formed|||||
|goodwill|||||
|Xinsheng Power|||||
|Helijie|||||

Notes of the testing process of goodwill impairment, parameters and the recognition method of goodwill impairment losses: Refer to V-20 for details of the testing method of goodwill impairment.
Other notes
20. Long-term Unamortized Expenses
Unit: RMB
|||||||
|-|-|-|-|-|-|
||||Amortization|||
|Item|Opening balance|Increased amount||Other decrease|Closing balance|
||||amount|||
|Land contracting fee||||||
||26,793,269.36|1,153,160.00|1,252,786.44||26,693,642.92|
|of Xinjiang Luthai||||||
|Decoration fee of||||||
|||873,759.86|8,099.80||865,660.06|
|Xinjiang Lu Thai||||||
|Land rent of||||||
||86,894,972.90||1,926,938.87|4,819,414.86|80,148,619.17|
|overseas subsidiaries||||||
|Housing rent of||||||
||539,122.28||350,104.63|19,745.28|169,272.37|
|overseas subsidiaries||||||
|Total|114,227,364.54|2,026,919.86|3,537,929.74|4,839,160.14|107,877,194.52|

 Other notes
Note: Other decrease was the exchange rate difference generated from the conversion of overseassubsidiaries’ recording currency into RMB due to the fluctuation of exchange rates.
21. Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) Deferred Income Tax Assets Had not Been Off-set
Unit: RMB
||||||
|-|-|-|-|-|
||Closing balance||Opening balance||
|Item|||||
||Deductible temporary|Deferred income tax|Deductible temporary|Deferred income tax|

Lu Thai Textile Co., Ltd. Annual Report 2017
||||||
|-|-|-|-|-|
||difference|assets|difference|assets|
|Assets impairment|||||
||140,256,135.72|22,531,008.74|140,373,275.47|22,088,126.23|
|provision|||||
|Unrealized internal sales|||||
||100,706,925.35|11,627,841.87|81,198,211.62|9,319,462.09|
|gain and loss|||||
|One-time listed|||||
||5,405,702.23|1,351,425.56|2,901,238.68|725,309.67|
|decoration expenses|||||
|Payroll payable|124,021,657.72|18,701,206.18|110,698,173.59|17,032,239.77|
|Deferred income|126,737,092.32|20,485,677.36|94,231,052.79|14,024,943.00|
|Total|497,127,513.34|74,697,159.71|429,401,952.15|63,190,080.76|

 (2) Deferred Income Tax Liabilities Had not Been Off-set
Unit: RMB
||||||
|-|-|-|-|-|
||Closing balance||Opening balance||
|Item|Taxable temporary|Deferred income tax|Taxable temporary|Deferred income tax|
||difference|liabilities|difference|liabilities|
|Depreciation of fixed|||||
||16,820,058.15|2,899,949.46|14,188,423.45|2,341,089.87|
|assets|||||
|Available-for-sale|||||
||33,000.00|4,950.00|||
|financial assets|||||
|Total|16,853,058.15|2,904,899.46|14,188,423.45|2,341,089.87|

 (3) List of Unrecognized Deferred Income Tax Assets
Unit: RMB
||||
|-|-|-|
|Item|Closing balance|Opening balance|
|Deductible temporary difference|11,690,891.52|17,124,084.90|
|Deductible losses|27,993,886.84|28,727,921.83|
|Total|39,684,778.36|45,852,006.73|

 (4) Deductible Losses of Unrecognized Deferred Income Tax Assets will Due in the Following Years Unit: RMB
|||||
|-|-|-|-|
|Years|Closing amount|Opening amount|Remark|
|Y 2018|97,981.65|125,946.78||
|Y 2019|1,456,659.23|1,456,659.23||
|Y 2020|18,458,244.61|22,245,128.73||

Lu Thai Textile Co., Ltd. Annual Report 2017
|||||
|-|-|-|-|
|Y 2021|4,250,703.45|4,250,703.45||
|Y 2022|3,730,297.90|||
|Total|27,993,886.84|28,078,438.19|--|

Other notes:
22. Other Non-current Assets
Unit: RMB
||||
|-|-|-|
|Item|Closing balance|Opening balance|
|Prepayment for equipment|28,984,077.85|5,853,067.38|
|Prepayment for land|7,406,401.00|25,406,401.00|
|Total|36,390,478.85|31,259,468.38|

 Other notes:
23. Short-term Loans
(1) Category of Short-term Loans
Unit: RMB
||||
|-|-|-|
|Item|Closing balance|Opening balance|
|Mortgage loan|440,000,000.00|310,000,000.00|
|Guaranteed loan|28,254,022.53|33,987,976.00|
|Credit loan|666,870,973.87|529,273,880.02|
|Total|1,135,124,996.40|873,261,856.02|

 Notes of the category for short-term loans:
Refer to VII-7, 13, 17 and 58 in this Section for details about the category and amount of mortgaged assets for mortgage loans. 24. Notes Payable
Unit: RMB
||||
|-|-|-|
|Category|Closing balance|Opening balance|
|Commercial acceptance bill|2,441,810.45||
|Trade acceptance|4,859,961.40||
|Total|7,301,771.85||

The total unpaid notes payable due at the Period-end was RMBXXX.
Lu Thai Textile Co., Ltd. Annual Report 2017 25. Accounts Payable
(1) List of Accounts Payable
Unit: RMB
||||
|-|-|-|
|Item|Closing balance|Opening balance|
|Purchase of goods|219,463,023.43|151,401,411.93|
|Engineering equipment|134,864,245.66|86,280,441.98|
|Other|11,937,863.56|19,953,612.50|
|Total|366,265,132.65|257,635,466.41|

 26. Advance from Customers
(1) List of Advance from Customers
Unit: RMB
||||
|-|-|-|
|Item|Closing balance|Opening balance|
|Advance from goods|119,785,945.48|97,929,002.93|
|Total|119,785,945.48|97,929,002.93|

 27. Payroll Payable
(1) List of Payroll Payable
Unit: RMB
||||||
|-|-|-|-|-|
|Item|Opening balance|Increase|Decrease|Closing balance|
|I. Short-term salary|315,597,802.11|1,443,695,983.97|1,442,481,692.91|316,812,093.17|
|II. Post-employment|||||
|benefit-defined|80,301.81|150,331,653.75|150,387,559.78|24,395.78|
|contribution plans|||||
|III. Termination benefits||352,232.50|352,232.50||
|Total|315,678,103.92|1,594,379,870.22|1,593,221,485.19|316,836,488.95|

 (2) List of Short-term Salary
Unit: RMB
||||||
|-|-|-|-|-|
|Item|Opening balance|Increase|Decrease|Closing balance|
|1. Salary, bonus,|||||
||273,092,937.14|1,282,333,309.52|1,288,098,112.33|267,328,134.33|
|allowance, subsidy|||||

Lu Thai Textile Co., Ltd. Annual Report 2017
||||||
|-|-|-|-|-|
|2. Employee welfare||50,521,004.35|50,521,004.35||
|3. Social insurance|42,846.03|70,774,399.38|70,782,014.41|35,231.00|
|Including: 1. Medical|||||
||35,918.60|55,556,064.52|55,563,182.42|28,800.70|
|insurance premiums|||||
|Work-related injury|||||
||6,110.95|7,796,382.28|7,797,428.16|5,065.07|
|insurance|||||
|Maternity insurance|816.48|7,421,952.58|7,421,403.83|1,365.23|
|4. Housing fund|667.07|13,904,994.48|13,904,368.55|1,293.00|
|5. Labor union budget|||||
|and employee education|42,461,351.87|26,162,276.24|19,176,193.27|49,447,434.84|
|budget|||||
|Total|315,597,802.11|1,443,695,983.97|1,442,481,692.91|316,812,093.17|

 (3) List of Drawing Scheme
Unit: RMB
||||||
|-|-|-|-|-|
|Item|Opening balance|Increase|Decrease|Closing balance|
|1. Basic pension benefits|73,723.82|144,833,728.00|144,884,815.12|22,636.70|
|2. Unemployment|||||
||6,577.99|5,497,925.75|5,502,744.66|1,759.08|
|insurance|||||
|Total|80,301.81|150,331,653.75|150,387,559.78|24,395.78|

 Other notes:
The Company, in line with the requirement, participate the endowment insurance, unemployment insurance scheme and so on, according to the scheme, the Company monthly pay to the scheme in line with18% and0.7% of the endowment insurance base, except the monthly payment, the Company no longer shoulder the further payment obligation, the relevant expense occurred was recorded into current profits and losses or related assets costs.
28. Taxes Payable
Unit: RMB
||||
|-|-|-|
|Item|Closing balance|Opening balance|
|VAT|2,639,133.26|8,584,752.76|
|Corporate income tax|13,934,074.08|46,545,105.37|
|Personal income tax|1,453,967.09|1,377,020.01|
|Urban maintenance and construction tax|3,036,340.88|6,314,742.98|
|Stamp duty|400,579.00|469,422.60|
|Property tax|4,618,710.82|4,484,688.82|
|Land use tax|4,537,230.07|4,428,494.17|

Lu Thai Textile Co., Ltd. Annual Report 2017
||||
|-|-|-|
|Education surcharge|1,314,401.95|2,798,858.01|
|Local education surcharge|876,267.97|1,865,905.35|
|Local water conservancy facility|||
||217,869.46|906,683.07|
|construction fund|||
|Resource tax|26,516.00||
|Total|33,055,090.58|77,775,673.14|

 Other notes:
29. Interest Payable
Unit: RMB
||||
|-|-|-|
|Item|Closing balance|Opening balance|
|Interest payable on short-term borrowings|1,572,231.86|1,165,730.47|
|Total|1,572,231.86|1,165,730.47|

 Significant overdue interest:
Unit: RMB
||||
|-|-|-|
|Borrower|Overdue amount|Overdue reason|

Other notes:
30. Dividends Payable
Unit: RMB
||||
|-|-|-|
|Item|Closing balance|Opening balance|
|Dividends payable to individual|||
||441,113.64|441,113.64|
|shareholders by the Company|||
|Total|441,113.64|441,113.64|

 Other notes, including significant unpaid dividends payable over one year, the unpaid reason shall be disclosed:
Note: Dividends payable which were unpaid over one year were previous cash dividends not received by individual shareholders yet. 31. Other Accounts Payable
(1) Other Accounts Payable Listed by Nature of the Account
Unit: RMB
||||
|-|-|-|
|Item|Closing balance|Opening balance|
|The deposit and guarantee|19,600,682.80|19,268,467.36|
|Collecting payment on behalf of others|17,030,878.91|22,870,555.86|
|Intercourse funds|66,354,397.71|12,496,663.17|

Lu Thai Textile Co., Ltd. Annual Report 2017
||||
|-|-|-|
|Other|24,104,049.83|25,108,398.27|
|Total|127,090,009.25|79,744,084.66|

 (2) Other Significant Accounts Payable with Aging Over One Year
Unit: RMB
||||
|-|-|-|
|Item|Closing balance|Unpaid/ Un-carry-over reason|
|Cotton and Linen Company|11,925,000.00|Received deposit of sale contract|
|Total|11,925,000.00|--|

Other notes
32. Non-current Liabilities Due within 1 Year
Unit: RMB
||||
|-|-|-|
|Item|Closing balance|Opening balance|
|Long-term loans due within one year|62,750,292.49||
|Total|62,750,292.49||

Other notes:
33. Long-term Loan
(1) Category of Long-term Loans
Unit: RMB
||||
|-|-|-|
|Item|Closing balance|Opening balance|
|Guaranteed loans|62,750,292.49|135,678,044.89|
|Less: Long-term loans due within one year|||
||-62,750,292.49||
|(Note VII-32 in this Section)|||
|Total||135,678,044.89|

 Notes of the category of long-term loans:
Other notes including interest rate range:
34. Long-term Payroll Payable
(1) List of Long-term Payroll Payable
Unit: RMB
||||
|-|-|-|
|Item|Closing balance|Opening balance|
|III. Other long-term welfare|93,843,473.02|79,122,422.89|

Lu Thai Textile Co., Ltd. Annual Report 2017
||||
|-|-|-|
|Total|93,843,473.02|79,122,422.89|

 35. Government Subsidies
(1) List of government subsidies initially recognized in the Reporting Period
||||||||||
|-|-|-|-|-|-|-|-|-|
|Item|Amount|Related to assets||Related to income||||Whetheractuallyreceived|
|||Deferred income|Offsetthebookvalueofassets|Deferredincome|Other income|Non-operatingincome|Offset thecost expenses||
|Project of intelligentdyeing production andtechnical transformationof energy-saving water|5,027,400.00|5,027,400.00||||||Yes|
|Technical transformationproject of high-gradeyarn-dyed fabric|1,813,000.00|1,813,000.00||||||Yes|
|Financial support fundfor sewage treatment andre-use of recycled water|1,950,000.00|1,950,000.00||||||Yes|
|Technical transformationproject of digitalworkshop of bobbinyarn-dyed|9,000,000.00|9,000,000.00||||||Yes|
|Subsidy for overseasinvestment|100,000.00|100,000.00||||||Yes|
|Subsidy for equipmentinvestment intechnologicaltransformation|685,200.00|685,200.00||||||Yes|
|Ultra-low emissiontransformation fund forutility boiler|12,700,000.00|12,700,000.00||||||Yes|
|Subsidy for the technicaltransformation project oflow-emission|1,200,000.00|1,200,000.00||||||Yes|
|Subsidy for applicationR&D of high quality|584,000.00|||584,000.00||||Yes|

Lu Thai Textile Co., Ltd. Annual Report 2017
|||||||
|-|-|-|-|-|-|
|dope dyeing fiber||||||
|Subsidy for KeyTechnology R & D oftextile equipment withgood shape preservation|1,050,000.00|1,050,000.00|||Yes|
|Subsidy for keytechnology R & D ofpreparation ofcomfortable and coolfabric with function ofmoisture absorption|420,000.00|420,000.00|||Yes|
|Interest subsidy forimport|857,500.00|||857,500.00|Yes|
|Interest subsidy for loans|6 ,044,300.00|||6,044,300.00|Yes|
|Incentive funds for talentsupport|300,000.00||300,000.00||Yes|
|Subsidy for constructingnetwork platform|920,000.00||920,000.00||Yes|
|Subsidy for dyedintegrated system ofinformation managementand control|400,000.00||400,000.00||Yes|
|Subsidy for qualitycontrol innovation|100,000.00||100,000.00||Yes|
|Project subsidy forproduction modeconsultancy of TPSToyota|500,000.00||500,000.00||Yes|
|Subsidy for technicalservice project ofstandardizedmanagement|146,000.00||146,000.00||Yes|
|Rewards for enterpriseswith outstandingperformance inenergy-saving|300,000.00||300,000.00||Yes|
|Rewards for energysystem management andconstruction|30,000.00||30,000.00||Yes|

Lu Thai Textile Co., Ltd. Annual Report 2017
|||||
|-|-|-|-|
|Subsidy for theindustrialization of 3Dfunctional garments|400,000.00|400,000.00|Yes|
|Subsidy for municipalkey talents introductionproject|50,000.00|50,000.00|Yes|
|Subsidy for export creditinsurance premium|135,200.00|135,200.00|Yes|
|Government subsidy fortrade show in Las Vegas|56,000.00|56,000.00|Yes|
|Government subsidy forbrand construction|740,200.00|740,200.00|Yes|
|Government subsidy forservice trade|49,700.00|49,700.00|Yes|
|Government subsidy forgifted and talentedpersons in Zibo|500,000.00|500,000.00|Yes|
|Science & TechnologyProcess Award|1,140,700.00|1,140,700.00|Yes|
|Subsidy forpost-doctoral counterpartfunds|50,000.00|50,000.00|Yes|
|Subsidy for thereconstruction oflandscape|13,700,000.00|13,700,000.00|Yes|
|Subsidy for internshipand employment|277,020.00|277,020.00|Yes|
|Subsidy for municipalstandardized projects|300,000.00|300,000.00|Yes|
|Government subsidy foremploying people withjob hunting difficulties|1,380,028.92|1,380,028.92|Yes|
|Subsidy for Mount TaiIndustry Talents Project|1,000,000.00|1,000,000.00|Yes|
|Subsidy for R & D|179,700.00|179,700.00|Yes|
|Subsidy for posts andsubsidy for socialsecurity|12,649,472.47|12,649,472.47|Yes|

Lu Thai Textile Co., Ltd. Annual Report 2017
||||||
|-|-|-|-|-|
|Subsidy for stabilizingposts|5,228,735.00|5,228,735.00||Yes|
|Subsidy for dynamicmonitoringunemployment|1,200.00|1,200.00||Yes|
|Subsidy for ZiboAcademicianWorkstation|200,000.00|200,000.00||Yes|
|Rewards for outstandingperformancemanagement|100,000.00||100,000.00|Yes|
|Subsidy for systematicdevelopment,popularization ofproducts and training|140,000.00|140,000.00||Yes|
|Mayor Quality Award|30,000.00|30,000.00||Yes|
|Subsidy for export creditinsurance premium|40,800.00|40,800.00||Yes|
|Government subsidy forShandong Science &Technology ProgressAward|100,000.00|100,000.00||Yes|
|Incentive fund forenterprises withadvantage in patentcreation|30,000.00|30,000.00||Yes|
|Patent subsidy|50,000.00|50,000.00||Yes|
|Subsidy for booth fee|21,509.43|21,509.43||Yes|
|Special subsidy forenergy-saving andconsumption reduction|30,000.00|30,000.00||Yes|
|Support fund forenterprises andeconomic community|30,000.00||30,000.00|Yes|
|Subsidy for strategicemerging industry inautonomous region|900,000.00||900,000.00|Yes|
|Subsidy from thefederation trade unions|20,000.00|20,000.00||Yes|

Lu Thai Textile Co., Ltd. Annual Report 2017
|||||||||
|-|-|-|-|-|-|-|-|
|in Awat County||||||||
|Subsidy for electriccharge|1,261,152.00|||1,261,152.00|||Yes|
|Cotton yarn freightsubsidies|3,449,703.38|||3,449,703.38|||Yes|
|Subsidy for socialsecurity|2,931,175.20|||2,931,175.20|||Yes|
|Subsidy for newlyincreased employment|1,285,000.00|||1,285,000.00|||Yes|
|Subsidy for newemployment of securitypersonnel by privateenterprises in fourdistricts of SouthXinjiang|129,778.00|||129,778.00|||Yes|
|Subsidy for pre-jobtraining|495,849.05|||495,849.05|||Yes|
|Subsidy for village-levelcomprehensive culturalservice in Awat County|80,000.00|||80,000.00|||Yes|
|Subsidies fortransferring Xinjiangcotton to warehouses outof Xinjiang|2,723,300.00|||2,723,300.00|||Yes|
|Project subsidy forenergy management|820,000.00|||820,000.00|||Yes|
|Total|96,833,623.45|32,475,600.00|2,054,000.00|54,372,223.45|1,030,000.00|6,901,800.00|——|

(2) List of government subsidies recorded into the current gains and losses
||||||
|-|-|-|-|-|
|Item|Related toassets/income|Recorded into otherincome|Recordedintonon-operating income|Offset costexpenses|
|Land subsidy|Related to assets|1,393,157.88|||
|Subsidy for green power|Related to assets|1,022,818.80|||
|Subsidy for the technical transformation project oflow-emission|Related to assets|105,109.44|||
|Subsidy for equipment investment in|Related to assets|27,136.64|||

Lu Thai Textile Co., Ltd. Annual Report 2017
|||||
|-|-|-|-|
|technological transformation||||
|Production project of 230,000-spindle spinningand 35,000-spindle spinning|Related to assets|222,607.08||
|Project of production line of 1,800,000-meterhigh-grade jacquard fabric|Related to assets|||
|Project of intelligent dyeing production andtechnical transformation of energy-saving water|Related to assets|||
|Project of intelligent dyeing production andtechnical transformation of energy-saving water|Related to assets|94,615.44||
|Project of intelligent dyeing production andenergy-saving and water-saving|Related to assets|187,261.92||
|Technical transformation project of high-gradeyarn-dyed fabric|Related to assets|112,144.32||
|Financial support fund for sewage treatment andre-use of recycled water|Related to assets|77,312.79||
|Technical transformation project of digitalworkshop of bobbin yarn-dyed|Related to assets|3,495.14||
|Project of digital workshop of bobbin yarn-dyed|Related to assets|98,901.10||
|Subsidy for hu-sheep|Related to assets|132,999.96||
|Subsidy for cotton picker|Related to assets|180,000.00||
|Subsidy for cotton seed-breeding|Related to assets|69,999.96||
|Interest subsidy for import|Related to income||857,500.00|
|Interest subsidy for loans|Related to income||6,044,300.00|
|Incentive funds for supporting talents|Related to income|300,000.00||
|Subsidy for constructing network platform|Related to income|920,000.00||
|Subsidy for dyed integrated system of informationmanagement and control|Related to income|400,000.00||
|Subsidy for quality control innovation|Related to income|100,000.00||
|Project subsidy for production mode consultancyof TPS Toyota|Related to income|500,000.00||
|Subsidy for technical service project ofstandardized management|Related to income|146,000.00||
|Rewards for enterprises with outstandingperformance in energy-saving|Related to income|300,000.00||
|Rewards for energy system management andconstruction|Related to income|30,000.00||

Lu Thai Textile Co., Ltd. Annual Report 2017
|||||
|-|-|-|-|
|Subsidy for the industrialization of 3D functionalgarments|Related to income|400,000.00||
|Subsidy for municipal key talents introductionproject|Related to income|50,000.00||
|Subsidy for export credit insurance premium|Related to income|135,200.00||
|Government subsidy for trade show in Las Vegas|Related to income|56,000.00||
|Government subsidy for brand construction|Related to income|740,200.00||
|Government subsidy for service trade|Related to income|49,700.00||
|Government subsidy for gifted and talentedpersons in Zibo|Related to income|500,000.00||
|Science & Technology Process Award|Related to income|1,140,700.00||
|Subsidy for post-doctoral counterpart funds|Related to income|50,000.00||
|Subsidy for the reconstruction of landscape|Related to income|13,700,000.00||
|Subsidy for internship and employment|Related to income|277,020.00||
|Subsidy for municipal standardized projects|Related to income|300,000.00||
|Government subsidy for employing people withjob hunting difficulties|Related to income|1,380,028.92||
|Subsidy for Mount Tai Industry Talents Project|Related to income|1,000,000.00||
|Subsidy for R & D|Related to income|179,700.00||
|Subsidy for posts and subsidy for social security|Related to income|12,649,472.47||
|Subsidy for stabilizing posts|Related to income|5,228,735.00||
|Subsidy for dynamic monitoring unemployment|Related to income|1,200.00||
|Subsidy for Zibo Academician Workstation|Related to income|200,000.00||
|Rewards for outstanding performancemanagement|Related to income||100,000.00|
|Subsidy for systematic development,popularization of products and training|Related to income|140,000.00||
|Mayor Quality Award|Related to income|30,000.00||
|Subsidy for export credit insurance premium|Related to income|40,800.00||
|Government subsidy for Shandong Science &Technology Progress Award|Related to income|100,000.00||
|Incentive fund for enterprises with advantage inpatent creation|Related to income|30,000.00||
|Patent subsidy|Related to income|50,000.00||

Lu Thai Textile Co., Ltd. Annual Report 2017
||||||
|-|-|-|-|-|
|Subsidy for booth fee|Related to income|21,509.43|||
|Special subsidy for energy-saving andconsumption reduction|Related to income|30,000.00|||
|Support fund for enterprises and economiccommunity|Related to income||30,000.00||
|Subsidy for strategic emerging industry inautonomous region|Related to income||900,000.00||
|Subsidy from the federation trade unions in AwatCounty|Related to income|20,000.00|||
|Subsidy for social security|Related to income|2,931,175.20|||
|Subsidy for electric charge|Related to income|1,261,152.00|||
|Cotton yarn freight subsidies|Related to income|3,449,703.38|||
|Subsidy for newly increased employment|Related to income|1,285,000.00|||
|Subsidy for new employment of securitypersonnel by private enterprises in four districts ofSouth Xinjiang|Related to income|129,778.00|||
|Subsidy for pre-job training|Related to income|495,849.05|||
|Subsidy for village-level comprehensive culturalservice in Awat County|Related to income|80,000.00|||
|Subsidies for transferring Xinjiang cotton towarehouses out of Xinjiang|Related to income|2,723,300.00|||
|Project subsidy for energy management|Related to income|820,000.00|||
|Total|——|58,099,783.92|1,030,000.00|6,901,800.00|

 36. Deferred Income
Unit: RMB
|||||||
|-|-|-|-|-|-|
|Item|Opening balance|Increase|Decrease|Closing balance|Formation reasons|
|Government|||||Government|
||95,935,052.79|34,529,600.00|3,727,560.47|126,737,092.32||
|subsidies|||||subsidies|
|Unrealized financing||||||
||55,437.00||55,437.00||Finance lease|
|incomes||||||
|Total|95,990,489.79|34,529,600.00|3,782,997.47|126,737,092.32|--|

Items involved in government subsidies:
Unit: RMB
||||||||||
|-|-|-|-|-|-|-|-|-|
||Opening|Amount of|Amount|Amount|Amount|Other|Closing|Related to the|
|Item|||||||||
||balance|newly|accrued in|accrued in|offset cost|changes|balance|assets/|

Lu Thai Textile Co., Ltd. Annual Report 2017
|||||||||
|-|-|-|-|-|-|-|-|
|||subsidy|non-business|other income|expenses||income|
||||income|||||
|Subsidy for|60,658,927.2|||||59,265,769.3|Related to|
|||||1,393,157.88||||
|land|1|||||3|assets|
|Subsidy for|34,452,125.5|32,375,600.0||||64,626,322.9|Related to|
|||||2,201,402.63||||
|equipment|8|0||||5|assets|
|Subsidy for||||||||
|production|||||||Related to|
||824,000.00|||132,999.96||691,000.04||
|biological|||||||assets|
|assets||||||||
|Subsidy for||||||||
||||||||Related to|
|overseas||100,000.00||||100,000.00||
||||||||assets|
|investment||||||||
|Subsidy for R|||||||Related to|
|||2,054,000.00||||2,054,000.00||
|& D|||||||assets|
||95,935,052.79|34,529,600.0||||126,737,092.32||
|Total||||3,727,560.47|||--|
|||0||||||

Other notes:
37. Other Non-current Liabilities
Unit: RMB
||||
|-|-|-|
|Item|Closing balance|Opening balance|
|Other|1,840,000.00|1,840,000.00|
|Total|1,840,000.00|1,840,000.00|

 Other notes:
38. Share Capital
Unit: RMB
|||||||||
|-|-|-|-|-|-|-|-|
|||Increase/decrease (+/-)||||||
||Opening|||Capitalization|||Closing|
|||Newly issue||||||
||balance||Bonus shares|of public|Other|Subtotal|balance|
|||share||||||
|||||reserves||||
|The sum of|922,602,311.00||||||922,602,311.00|
|shares||||||||

Other notes:
Lu Thai Textile Co., Ltd. Annual Report 2017 39. Capital Reserves
Unit: RMB
||||||
|-|-|-|-|-|
|Item|Opening balance|Increase|Decrease|Closing balance|
|Capital premium|702,301,338.34||61,830,428.00|640,470,910.34|
|Other capital reserves|58,979,219.49|43,463.99||59,022,683.48|
|Total|761,280,557.83|43,463.99|61,830,428.00|699,493,593.82|

 Other notes, including changes and reason of change:
Note: The capital reserves decreased RMB61,830,428.00 in the Reporting Period which was caused by ChengshunHeating’s decrease in capital reserves of RMB23,430,428.00; The debt remission with the subsidiary Beijing innovative was equal to transferring parts of profits to minority shareholders for offsetting capital reserves of RMB38,400,000.00.
40. Other Comprehensive Income
Unit: RMB
|||||||||
|-|-|-|-|-|-|-|-|
|||Reporting Period||||||
||||Less: Amount|||||
||||transferred|||||
||||into profit and|||||
||||loss in the|||||
|||Amount|||After-tax|After-tax||
||Opening||current period|Less:|||Closing|
|Item||||||||
|||incurred|||attribute to|attribute to||
||balance||that|income tax|||balance|
|||before|||the Parent|minority||
||||recognized|expense||||
|||income tax|||Company|shareholder||
||||into other|||||
||||comprehensive|||||
||||income in|||||
||||prior period|||||
|I. Other comprehensive income not||||||||
|reclassified into profits or losses||||||||
|Of which: changes of net assets and||||||||
|liabilities of defined benefit plans||||||||
|recalculated||||||||
|Share in other comprehensive income||||||||
|cannot be reclassified into profits or||||||||
|losses in investment entity under the||||||||
|equity method||||||||
|II. Other comprehensive reclassified|53,293,544.8|-36,478,020|||-36,482,970.67||16,810,57|
|||||4,950.00||||
|into profits or losses|9|.67|||||4.22|
|Share in other comprehensive income||||||||

Lu Thai Textile Co., Ltd. Annual Report 2017
|||||||
|-|-|-|-|-|-|
|reclassified into profits or losses in||||||
|investment entity under the equity||||||
|method||||||
|Profits or losses of change in fair||||28,050.00||
|value of available-for-sale financial||33,000.00|4,950.00||28,050.00|
|assets||||||
|Held-to-maturity investment||||||
|reclassified as available-for-sale||||||
|financial assets profits and losses||||||
|Effective hedging gains and losses||||||
|on cash flows||||||
|Converted difference of the|53,293,544.8|-36,511,020||-36,511,020.67|16,782,52|
|foreign currency financial statement|9|.67|||4.22|
||53,293,544.89|-36,478,020.67||-36,482,970.67|16,810,574.22|
|Total of other comprehensive income|||4,950.00|||

 41. Surplus Reserves
Unit: RMB
||||||
|-|-|-|-|-|
|Item|Opening balance|Increase|Decrease|Closing balance|
|Statutory surplus|||||
||888,528,950.10|71,063,056.38||959,592,006.48|
|reserves|||||
|Discretional surplus|||||
||3,341,572.58|||3,341,572.58|
|reserves|||||
|Total|891,870,522.68|71,063,056.38||962,933,579.06|

 Notes to the surplus reserves including the notes to the increase/decrease during the Reporting Period as well as the reasons: In accordance with the applicable regulations stipulated in Corporation Law and Articles of Association, the Company withdrew the statutory surplus reserves at10% of net profits.
42. Retained Profits
Unit: RMB
||||
|-|-|-|
|Item|Reporting Period|Same period of last year|
|Retained profits of period-end of last year beforeadjustments|||
||4,341,866,189.19|4,053,079,857.70|
|Total retained profits of period-begin in theadjustment (“+” means up; “-“means down)|||
|||18,996,327.73|
|Opening balance of retained profits afteradjustments|4,341,866,189.19||
|||4,072,076,185.43|

Lu Thai Textile Co., Ltd. Annual Report 2017
||||
|-|-|-|
|Add: Net profit attributable to owners of the|||
||841,150,934.75|808,760,025.91|
|Company|||
|Less: Withdrawal of statutory surplus reserves|71,063,056.38|73,444,648.65|
|Withdrawal of discretional surplus reserves|||
|Withdrawal of general risk reserves|||
|Dividend of common stock payable|482,851,355.50|465,525,373.50|
|Dividend of common stock transferred as|||
|share capital|||
|Others|||
|Closing retained profits|4,629,102,712.06|4,341,866,189.19|

 List of adjustment of opening retained profits:
1) RMB000 opening retained profits was affected by retrospective adjustment conducted according to the Accounting Standards for Business Enterprises and relevant new regulations.
2) RMB000 opening retained profits was affected by changes on accounting policies.
3) RMB000 opening retained profits was affected by correction of significant accounting errors.
4) RMB18,996,327.73 opening retained profits was affected by changes in combination scope arising from same control.
5) RMB000 opening retained profits was affected totally by other adjustments.
43. Revenue and Cost of Sales
Unit: RMB
||||||
|-|-|-|-|-|
||Reporting Period||Same period of last year||
|Item|||||
||Sales revenue|Cost of sales|Sales revenue|Cost of sales|
|Main operations|6,117,830,993.8|2 4,289,552,667.57|5,715,045,686.89|3,840,569,957.03|
|Other operations|291,393,051.1|5 187,495,117.11|275,448,222.47|166,531,733.62|
|Total|6,409,224,044.9|7 4,477,047,784.68|5,990,493,909.36|4,007,101,690.65|

 44. Business Tax and Surcharges
Unit: RMB
||||
|-|-|-|
|Item|Reporting Period|Same period of last year|
|Urban maintenance and construction tax|29,433,844.39|30,239,685.31|
|Education surcharge|12,875,631.00|13,667,756.39|
|Resource tax|26,516.00||
|Property tax|19,773,203.46|13,107,952.04|
|Land use tax|18,594,973.00|12,854,644.38|
|Vehicle and vessel usage tax|125,398.56|61,044.20|

Lu Thai Textile Co., Ltd. Annual Report 2017
||||
|-|-|-|
|Stamp duty|3,904,063.89|2,558,253.84|
|Business tax||593,989.16|
|Local education surcharge|8,583,754.04|9,111,881.84|
|Local water conservancy facility|||
||2,914,218.66|4,332,576.60|
|construction fund|||
|Total|96,231,603.00|86,527,783.76|

 Other notes:
Note: Refer to Note VI Tax for details of payable standards for various taxes and surcharges.
45. Sales Expenses
Unit: RMB
||||
|-|-|-|
|Item|Reporting Period|Same period of last year|
|Salary|38,293,547.89|50,423,791.03|
|Transport fees|39,722,184.43|34,708,081.50|
|Advertising expense|16,846,415.91|12,619,004.10|
|Mall costs|2,188,487.89|8,740,936.16|
|Terminal Handing charges|13,661,450.06|10,170,488.09|
|Depreciation charge|5,364,151.04|5,654,563.26|
|Sales service fee|3,439,035.08|6,656,203.48|
|Business travel charges|5,101,239.69|4,928,478.09|
|Rental charges|1,105,273.12|1,524,816.35|
|Design charges|2,355,173.94|2,209,686.15|
|Other|15,984,821.34|21,233,945.01|
|Total|144,061,780.39|158,869,993.22|

 Other notes:
46. Administration Expenses
Unit: RMB
||||
|-|-|-|
|Item|Reporting Period|Same period of last year|
|R&D expenses|328,403,990.29|289,826,541.83|
|Salary|107,277,843.02|133,042,320.62|
|Taxes||14,735,118.17|
|Depreciation charge|24,973,816.12|25,890,615.46|
|Warehouse funding|27,431,827.37|24,187,533.53|

Lu Thai Textile Co., Ltd. Annual Report 2017
||||
|-|-|-|
|Travel expense|26,081,106.36|24,028,836.88|
|Rental charges|14,440,878.80|14,837,609.14|
|Labor-union expenditure|15,289,305.43|14,792,241.78|
|Employee education budget|10,872,970.81|10,797,684.26|
|Amortization of intangible assets|11,112,088.24|10,442,349.46|
|Transport fees|10,015,673.62|6,941,005.81|
|Other|75,631,468.88|91,833,284.88|
|Total|651,530,968.94|661,355,141.82|

 Other notes:
47. Financial Expenses
Unit: RMB
||||
|-|-|-|
|Item|Reporting Period|Same period of last year|
|Interest expenses|23,753,894.13|19,159,848.99|
|Less: Interest income|7,488,918.00|5,883,468.28|
|Less: Amount of capitalized interest|||
|Exchange gains and losses|39,937,734.42|953,185.06|
|Other|7,139,960.76|6,719,587.33|
|Total|63,342,671.31|20,949,153.10|

 Other notes:
48. Asset Impairment Loss
Unit: RMB
||||
|-|-|-|
|Item|Reporting Period|Same period of last year|
|I. Bad debt loss|2,579,033.02|-2,186,419.66|
|II. Inventory falling price loss|25,220,325.43|46,520,981.23|
|III. Impairment losses on available-for-sale|||
|||42,782,600.00|
|financial assets|||
|VII. Impairment losses of fix asset|||
||9,531,315.79|1,741,306.14|
|impairment loss|||
|Total|37,330,674.24|88,858,467.71|

 Other notes:
49. Gains and Losses from Changes in Fair Value
Unit: RMB
Lu Thai Textile Co., Ltd. Annual Report 2017
||||
|-|-|-|
|Source|Reporting Period|Same period of last year|
|Financial assets measured by fair value and|||
|the changes be included in the current||17,296,256.36|
|profits and losses|||
|Financial liabilities measured by fair value|||
|and the changes included in the current||46,695,875.00|
|gains and losses|||
|Total||63,992,131.36|

 Other notes:
50. Investment Income
Unit: RMB
||||
|-|-|-|
|Item|Reporting Period|Same period of last year|
|Investment income received from long-term|||
||-2,463,267.98||
|equity measured by equity method|||
|Investment income received from financial|||
|assets measured by fair value and the changes|||
|||1,381,926.82|
|be included in the current profits and losses|||
|during holding period|||
|Investment income received from disposal of|||
|financial assets measured by fair value and the|||
||4,794,598.32|-62,161,587.02|
|changes be included in the current profits and|||
|losses during holding period|||
|Total|2,331,330.34|-60,779,660.20|

 Other notes:
51. Return on Disposal of Assets
Unit: RMB
||||
|-|-|-|
|Source|Reporting Period|Same period of last year|
|Return on Disposal of fixed assets|1,242,000.54|-6,843,361.94|
|Total|1,242,000.54|-6,843,361.94|

 52. Other Income
Unit: RMB
||||
|-|-|-|
|Source|Reporting Period|Same period of last year|
|Government subsidies|58,099,783.92||

Lu Thai Textile Co., Ltd. Annual Report 2017
|||
|-|-|
|Total|58,099,783.92|

53. Non-operating Gains
Unit: RMB
|||||
|-|-|-|-|
||||Recorded in the amount of the|
|Item|Reporting Period|Same period of last year||
||||non-recurring gains and losses|
|Government subsidies||64,121,633.01||
|Gains from damage and||||
|||6,834.95||
|scrapping of non-current assets||||
|Government subsidies unrelated||||
|to the normal operation of the|1,030,000.00||1,030,000.00|
|Company||||
|Other|11,092,767.09|9,559,015.36|11,092,767.09|
|Total|12,122,767.09|73,687,483.32|12,122,767.09|

 Government subsidies included into the current gains and losses:
Unit: RMB
||||||||||
|-|-|-|-|-|-|-|-|-|
|||||Whether|||||
|||||subsidies|||||
||||||Special|||Related to|
||Distribution|Distribution||influence the||Reporting|Same period||
|Item|||Nature||subsidy or|||assets/related|
||entity|reason||current||Period|of last year||
||||||not|||income|
|||||profits and|||||
|||||losses or not|||||

Other notes:
54. Non-operating Expenses
Unit: RMB
|||||
|-|-|-|-|
||||Recorded in the amount of the|
|Item|Reporting Period|Same period of last year||
||||non-recurring gains and losses|
|Donation|5,004,075.00|1,558,693.43|5,004,075.00|
|Losses from damage and||||
||2,568,738.39|1,485,166.50|2,568,738.39|
|scrapping of non-current assets||||
|Other|1,449,912.25|4,074,850.31|1,449,912.25|
|Total|9,022,725.64|7,118,710.24|9,022,725.64|

 Other notes:
Lu Thai Textile Co., Ltd. Annual Report 2017 55. Income Tax Expense
(1) Lists of Income Tax Expense
Unit: RMB
||||
|-|-|-|
|Item|Reporting Period|Same period of last year|
|Current income tax expense|132,080,828.42|174,301,006.07|
|Deferred income tax expense|-10,948,219.36|-918,593.71|
|Total|121,132,609.06|173,382,412.36|

 (2) Adjustment Process of Accounting Profit and Income Tax Expense
Unit: RMB
|||
|-|-|
|Item|Reporting Period|
|Total profits|1,004,451,718.66|
|Current income tax expense accounted by tax and relevant||
||150,667,757.80|
|regulations||
|Influence of different tax rate suitable to subsidiary|7,805,719.32|
|Influence of income tax before adjustment|629,616.91|
|Influence of non-taxable income|-8,413,254.05|
|Influence of not deductable costs, expenses and losses|1,794,068.47|
|Influence of deductable losses of deferred income tax assets||
||-16,302,949.41|
|derecognized used in previous period||
|Influence of deductible temporary difference or deductible losses||
||1,026,518.68|
|of deferred income tax assets derecognized in Reporting Period.||
|Influence of plus deducting costs|-15,830,353.58|
|Changes in the balance of period-begin deferred income tax||
||-244,515.08|
|assets/liabilities due to the adjustment of tax rate||
|Income tax expense|121,132,609.06|

 Other notes
56. Cash Flow Statement
(1) Other Cash Received Relevant to Operating Activities
Unit: RMB
||||
|-|-|-|
|Item|Reporting Period|Same period of last year|
|Government subsidies|64,358,023.45|62,996,866.30|

Lu Thai Textile Co., Ltd. Annual Report 2017
||||
|-|-|-|
|Claim income|1,292,703.23|2,439,371.55|
|Recovery of employee borrowings, petty|||
||24,879,575.61|8,734,686.33|
|cash and deposit|||
|Collection for employees|5,363,500.00|18,969,901.19|
|Other|8,762,550.14|9,006,678.17|
|Total|104,656,352.43|102,147,503.54|

 Notes:
(2) Other Cash Paid Relevant to Operating Activities
Unit: RMB
||||
|-|-|-|
|Item|Reporting Period|Same period of last year|
|Freight and miscellaneous charges|59,083,362.18|53,789,783.05|
|Rental charges|18,504,054.24|23,992,282.87|
|Advertising expense|4,890,771.45|4,894,117.88|
|Business travel charges|29,550,544.27|26,296,270.48|
|Insurance|5,350,729.67|9,157,201.71|
|Audit advisory announcement fee|4,519,003.71|5,195,501.86|
|Decoration & repair expenses|9,540,186.72|6,068,058.70|
|Donation|5,004,075.00|1,558,693.43|
|Pre-payment|10,793,990.64|7,752,260.57|
|Payment of employee borrowings, petty|||
||28,801,006.36|12,028,200.74|
|cash and deposit|||
|Other|81,125,466.24|82,921,252.17|
|Total|257,163,190.48|233,653,623.46|

 Notes:
(3) Other Cash Received Relevant to Investment Activities
Unit: RMB
||||
|-|-|-|
|Item|Reporting Period|Same period of last year|
|Interest income|6,894,588.05|6,536,543.36|
|Income from forward foreign exchange|4,858,596.97||
|Sale of securities|63,962,133.03|24,602,898.61|
|Income from holding of tradable financial|||
|||1,381,926.82|
|assets during holding period|||
|Option cost|91,000.00||

Lu Thai Textile Co., Ltd. Annual Report 2017
||||
|-|-|-|
|Total|75,806,318.05|32,521,368.79|

 Notes:
(4) Other Cash Paid Relevant to Investment Activity
Unit: RMB
||||
|-|-|-|
|Item|Reporting Period|Same period of last year|
|forward settlement exchange loss|63,998.65|41,519,234.00|
|Payment of deposit for the L/C of|||
||1,200,000.00||
|equipment purchase|||
|Total|1,263,998.65|41,519,234.00|

 Notes:
(5) Other Cash Received Relevant to Financing Activities
Unit: RMB
||||
|-|-|-|
|Item|Reporting Period|Same period of last year|
|Return of loan guarantees|8,000,000.00|29,754,422.42|
|Recovery of intercourse accounts|191,980,000.00|9,590,000.00|
|Government subsidies related to assets|32,475,600.00||
|Total|232,455,600.00|39,344,422.42|

 Notes:
(6) Other Cash Paid Relevant to Financing Activities
Unit: RMB
||||
|-|-|-|
|Item|Reporting Period|Same period of last year|
|Return of the B-share buy-back amount||253,629,544.91|
|The certificates of deposit pledged|16,000,000.00|8,000,000.00|
|Payment of intercourse accounts|139,000,000.00||
|Cash consideration paid in the business|||
||23,430,428.00||
|combination under the same control|||
|Total|178,430,428.00|261,629,544.91|

 Notes:
Lu Thai Textile Co., Ltd. Annual Report 2017 57. Supplemental Information for Cash Flow Statement
(1) Supplemental Information for Cash Flow Statement
Unit: RMB
||||
|-|-|-|
|Supplemental information|Reporting Period|Same period of last year|
|1. Reconciliation of net profit to net cash|||
||--|--|
|flows generated from operating activities|||
|Net profit|883,319,109.60|856,387,149.04|
|Add: Provision for impairment of assets|37,330,674.24|88,858,467.71|
|Depreciation of fixed assets, of oil-gas|||
||384,151,246.71|363,238,407.58|
|assets, of productive biological assets|||
|Amortization of intangible assets|16,622,633.32|12,302,441.42|
|Long-term unamortized expenses|3,537,929.74|2,627,785.85|
|Losses on disposal of fixed assets, intangible|||
|assets and other long-term assets (gains:|-1,242,000.54|6,843,361.94|
|negative)|||
|Losses on retirement of fixed assets|2,568,738.39|1,478,331.55|
|Losses from variation of fair value||-63,992,131.36|
|Financial cost (gains: negative)|63,104,510.55|13,951,394.66|
|Investment loss (gains: negative)|-2,331,330.34|60,779,660.20|
|Decrease in deferred income tax assets|||
||-11,507,078.95|-1,066,989.23|
|(gains: negative)|||
|Increase in deferred income tax liabilities|||
||558,859.59|148,395.52|
|(“-” means decrease)|||
|Decrease in inventory (gains: negative)|-270,382,003.89|-92,876,874.35|
|Decrease in accounts receivable from|||
||-63,289,943.78|30,153,001.02|
|operating activities (gains: negative)|||
|Increase in payables from operating|||
||28,069,308.79|35,899,882.90|
|activities (decrease: negative)|||
|Other|-32,475,600.00||
|Net cash flows generated from operating|1,038,035,053.43|1,314,732,284.45|
|activities|||
|2. Investing and financing activities that do|||
||--|--|
|not involving cash receipts and payment:|||
|3. Net increase in cash and cash equivalents|--|--|
|Closing balance of cash|676,639,212.86|659,116,137.67|
|Less: Opening balance of cash|659,116,137.67|768,827,094.83|

Lu Thai Textile Co., Ltd. Annual Report 2017
||||
|-|-|-|
|Net increase in cash and cash equivalents|17,523,075.19|-109,710,957.16|

 (2) Cash and Cash Equivalents
Unit: RMB
||||
|-|-|-|
|Item|Closing balance|Opening balance|
|I. Cash|676,639,212.86|659,116,137.67|
|Including: Cash on hand|8,040,420.28|3,229,473.38|
|Bank deposit on demand|668,598,792.58|655,886,664.29|
|III. Closing balance of cash and cash|676,639,212.86|659,116,137.67|
|equivalents|||

Other notes:
58. The Assets with Restricted Ownership or Use Right
Unit: RMB
||||
|-|-|-|
|Item|Closing book value|Restricted reason|
|||Pledged for short-term loans, as cash|
|Monetary capital|17,350,080.52||
|||deposit of L/G and L/C|
|Inventory|248,632,100.00|Mortgaged for short-term loans|
|Fixed assets|4,316,209.51|Mortgaged for short-term loans|
|Intangible assets|103,162,544.14|Mortgaged for short-term loans|
|Total|373,460,934.17|--|

Other notes:
59. Foreign Currency Monetary Items
(1) Foreign Currency Monetary Items
Unit: RMB
|||||
|-|-|-|-|
||Closing foreign currency||Closing balance of converting|
|Item||Exchange rate||
||balance||to RMB|
|Monetary capital||||
|Including: USD|81,791,849.81|6.5342|534,444,305.01|
|EUR|55,295.47|7.8023|431,431.85|
|HKD|16,493,608.85|0.8359|13,787,007.63|
|JPY|16,809,184.00|0.0579|973,251.74|
|THB|190.19|0.2000|38.00|

Lu Thai Textile Co., Ltd. Annual Report 2017
|||||
|-|-|-|-|
|SGD|1.90|4.8831|9.28|
|GBP|2,380.86|8.7792|20,902.05|
|AUD|6.03|5.0928|30.71|
|CHF|37.94|6.6779|253.36|
|SEK|920.00|0.7921|728.73|
|Dong|19,603,870,691.00|0.000288|5,645,914.76|
|MMK|207,312,216.61|0.00479|993,122.80|
|Accounts receivable||||
|Including: USD|36,973,156.24|6.5342|241,589,997.51|
|HKD|7,387,921.00|0.8359|6,175,563.16|
|Dong|15,456,009,548.00|0.000288|4,445,099.37|
|Notes receivable:||||
|USD|16,168,756.43|6.5342|105,649,888.28|
|HKD|5,622,611.00|0.8359|4,699,940.53|
|Other accounts receivable||||
|USD|868,482.11|6.5342|5,674,828.81|
|JPY|375,700.00|0.0579|21,753.03|
|Dong|1,088,790,163.00|0.000288|313,571.57|
|Accounts payable||||
|USD|4,823,602.62|6.5342|31,518,390.17|
|JPY|45,504,228.37|0.0579|2,634,193.27|
|EUR|476,032.87|7.8023|3,714,633.67|
|Dong|22,516,901,797.94|0.000288|6,475,789.60|
|Other accounts payable||||
|USD|509,640.00|6.5342|3,330,089.69|
|HKD|28,000.00|0.8359|23,405.20|
|MMK|12,250.00|0.00479|58.68|
|Dong|4,210,268,592.00|0.000288|1,212,478.91|
|Short-term loans||||
|USD|106,382,571.15|6.5342|695,124,996.40|
|Long-term loans due within one||||
|year||||
|USD|9,603,362.69|6.5342|62,750,292.49|

Other notes:
Lu Thai Textile Co., Ltd. Annual Report 2017 (2) Notes to Overseas Entities Including: for Significant Oversea Entities, Main Operating Place, Recording Currency and Selection Basis Shall Be Disclosed; if there Are Changes into Recording Currency, Relevant Reasons Shall Be Disclosed.
√ Applicable□ Not applicable
The operating places ofCompany’s subsidiaries Lu Thai (Hong Kong), Lu Thai (Cambodia), Lu Thai (Burma) Co., Ltd. (hereinafter referred to as “Lu Thai (Burma)”) Lu Thai (America) and Lu Thai (Vietnam) Co., Ltd. , Lu An Garments Co., Ltd. were Hong Kong, Cambodia, Burma, America, Vietnam, Vietnam, and the recording currency respectively was HKD, USD, USD, USD , Dong and Dong.
VIII. Changes of Merger scope
1. Business Combination under the Same Control
(1) Business Combination under the Same Control during the Reporting Period
Unit: RMB
||||||||||
|-|-|-|-|-|-|-|-|-|
|||Basis for the|||Income from|Net profits|||
|||constitution|||the|from this|||
|||||Recognition|||Income|Net profits|
||Proportion of|of the|||period-begin|Reporting|||
|Combined|||Combination|basis of|||during the|during the|
||the equity|business|||to the|Period to the|||
|party|||date|combination|||period of|period of|
||obtained|combination|||combination|combination|||
|||||date|||comparison|comparison|
|||under the|||date of the|date of the|||
|||same control|||combination|combination|||
|||Under the|||||||
|||||Transfer of|||||
|Chengshun||control of the|||16,295,560.3||15,255,896.3||
||100.00%||11/01/2017|controlling||4,145,908.17||3,313,698.92|
|Heating||same final|||9||2||
|||||power|||||
|||controller|||||||

Other notes:
(2) Combination Cost
Unit: RMB
|||
|-|-|
|Combination cost|Chengshun Heating|
|--Cash|23,430,428.00|
|--Book value of non-cash assets|160,000.00|

 Notes of consideration and the changes:
Other notes:
(3) The Book Value of the Assets and Liabilities of the Combined Party on Combining Date
Unit: RMB
Lu Thai Textile Co., Ltd. Annual Report 2017
||||
|-|-|-|
||Chengshun Heating||
|Item|||
||Combination date|Period-end of last period|
|Assets:|64,796,672.73|57,661,052.05|
|Monetary capital|1,798,102.66|4,336,916.85|
|Accounts receivable|3,717,550.07||
|Inventory|2,867,097.92|842,429.14|
|Fixed assets|52,265,026.01|28,813,248.40|
|Prepayment|430,766.93|618.97|
|Other accounts receivable|151,147.47|457,897.50|
|Other current assets|639,495.01|796,356.86|
|Construction in progress|2,876,582.75|22,407,296.20|
|Deferred income tax assets|50,903.91|6,288.13|
|Liabilities:|49,553,368.16|24,573,655.65|
|Accounts payable|2,416,599.70|5,096,903.35|
|Advance from customers|7,810,602.25|8,477,688.31|
|Payroll payable|51,417.05|59,654.01|
|Tax payable|479.66|560,966.47|
|Other accounts payable|39,274,269.50|10,378,443.51|
|Net assets|15,243,304.57|33,087,396.40|
|Net assets obtained|15,243,304.57|33,087,396.40|

 Contingent liabilities of the combined party undertaken in combination
Other notes:
IX. Equity in Other Entities
1. Equity in Subsidiary
(1) The Structure of the Enterprise Group
||||||||
|-|-|-|-|-|-|-|
||Main operating||Nature of|Holding percentage (%)|||
|Name||Registration place||||Way of gaining|
||place||business|Directly|Indirectly||
|Beijing|||Wholesale and||||
||Beijing|Beijing||60.00%||Set-up|
|Innovative|||retail industry||||
|Luthai (Hong|||Wholesale and||||
||Hong Kong|Hong Kong||100.00%||Set-up|
|Kong)|||retail industry||||
||||Wholesale and||||
|Shanghai Luthai|Shanghai|Shanghai||100.00%||Set-up|
||||retail industry||||

Lu Thai Textile Co., Ltd. Annual Report 2017
||||||||
|-|-|-|-|-|-|-|
|||||||Business|
||||Manufacturing|||combination not|
|Xinjiang Luthai|Xinjiang|Xinjiang||59.92%|||
||||industry|||under the same|
|||||||control|
|Lufeng Weaving|||Manufacturing||||
||Zibo|Zibo||75.00%||Set-up|
|& Dyeing|||industry||||
||||Manufacturing||||
|Luqun Textile|Zibo|Zibo||100.00%||Set-up|
||||industry||||
|||||||Business|
||||Manufacturing|||combination not|
|Xinsheng Power|Zibo|Zibo||100.00%|||
||||industry|||under the same|
|||||||control|
|Xinjiang Textile|||Manufacturing||||
||Xinjiang|Xinjiang|||59.92%|Set-up|
|(sub-subsidiary)|||industry||||
|||||||Business|
|Helijie||||||combination not|
||Zibo|Zibo|Service||100.00%||
|(sub-subsidiary)||||||under the same|
|||||||control|
|||||||Business|
|Chengshun|||||||
||||Manufacturing|||combination|
|Heating|Zibo|Zibo|||100.00%||
||||industry|||under the same|
|(sub-subsidiary)|||||||
|||||||control|
||||Wholesale and||||
|Beijing Youxian|Beijing|Beijing||90.00%||Set-up|
||||retail industry||||
|Lu Thai|||Manufacturing||||
||Cambodia|Cambodia||100.00%||Set-up|
|(Cambodia)|||industry||||
||||Manufacturing||||
|Lu Thai (Burma)|Burma|Burma||100.00%||Set-up|
||||industry||||
|Lu Thai|||Wholesale and||||
||America|America||100.00%||Set-up|
|(America)|||retail industry||||
|Lu Tha|||Manufacturing||||
||Vietnam|Vietnam||100.00%||Set-up|
|i(Vietnam)|||industry||||
||||Manufacturing||||
|Lu An Garments|Vietnam|Vietnam||100.00%||Set-up|
||||industry||||

Notes: holding proportion in subsidiary different from voting proportion:
Basis of holding half or less voting rights but still been controlled investee and holding more than half of the voting rights not been controlled investee:
Basis for the control over the significant structured entities included into the consolidated scope:
Basis for determining the Company as the agent or the principal:
Other notes:
Lu Thai Textile Co., Ltd. Annual Report 2017 (2) Significant Non-wholly-owned Subsidiary
Unit: RMB
||||||
|-|-|-|-|-|
|||The profits and losses|Declaring dividends|Balance of minority|
||Shareholding proportion||||
|Name||attributable to the|distributed to minority|shareholder at closing|
||of minority shareholder||||
|||minority shareholders|shareholder|period|
|Xinjiang Luthai|40.08%|16,896,555.94|12,023,566.38|196,443,076.98|
|Lufeng Weaving &|||||
||25.00%|23,794,192.35||347,671,908.14|
|Dyeing|||||

Holding proportion of minority shareholder in subsidiary different from voting proportion:
Other notes:
(3) The Main Financial Information of Significant not Wholly Owned Subsidiary
Unit: RMB
||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|
||Closing balance||||||Opening balance||||||
|||Non-curr|||Non-curr|||Non-curr|||Non-curr||
|Name|Current||Totalassets|Current||Total|Current||Total|Current||Total|
|||ent|||ent|||ent|||ent||
||assets|||liabilities||liabilities|assets||assets|liabilities||liabilities|
|||assets|||liability|||assets|||liability||
|Xinjiang|533,910,|552,920,|1,086,83|593,505,|4,950,67|598,456,|528,219,|350,642,|878,862,|402,356,|5,428,01|407,784,|
|Luthai|300.91|939.85|1,240.76|546.28|5.96|222.24|890.20|671.38|561.58|617.55|8.92|636.47|
|Lufeng|||||||||||||
|Weaving|756,065,|841,883,|1,597,94|168,738,|29,616,0|198,354,|592,276,|843,971,|1,436,24|111,025,|29,711,1|140,737,|
|&|670.02|193.85|8,863.87|484.34|32.10|516.44|639.42|262.60|7,902.02|894.92|43.90|038.82|
|Dyeing|||||||||||||

Unit: RMB
||||||||||
|-|-|-|-|-|-|-|-|-|
||Reporting Period||||Same period of last year||||
||||Total||||Total||
|Name|Operationrevenue|||Operating|Operation|||Operating|
|||Net profit|comprehensi|||Net profit|comprehensi||
|||||cash flow|revenue|||cash flow|
||||ve income||||ve income||
|Xinjiang|477,021,975.|47,297,093.4|47,297,093.4|-18,512,573.3|440,825,035.|61,554,812.9|61,554,812.9|17,047,373.8|
|Luthai|57|1|1|0|33|5|5|0|
|Lufeng|||||||||
||1,664,817,65|104,083,484.|104,083,484.|140,455,230.|1,607,276,25|136,980,576.|136,980,576.|104,830,712.|
|Weaving &|||||||||
||9.70|23|23|55|7.49|95|95|63|
|Dyeing|||||||||

Other notes:
Lu Thai Textile Co., Ltd. Annual Report 2017 2. Equity in Joint Venture Arrangement or Associated Enterprise
(1) Main Financial Information of Significant Associated Enterprise
Unit: RMB
||||
|-|-|-|
||Closing balance/ Reporting Period|Opening balance /same period of last year|
||Haohong Investment|Haohong Investment|
|Current assets|128,880,401.95||
|Non-current assets|163,879,055.06||
|Total assets|292,759,457.01||
|Current liabilities|150,000.00||
|Total liabilities|150,000.00||
|Equity attributable to shareholders of the|||
||292,609,457.01||
|Parent Company|||
|Net assets shares calculated at the|||
||97,536,732.02||
|shareholding proportion|||
|Book value of investment to associated|||
||97,536,732.02||
|enterprises|||
|Net profits|-7,390,542.99||
|Total comprehensive income|-7,390,542.99||

Other notes
X. The Risk Related Financial Instruments
Main financial instruments of the Company included: Loans, accounts receivable, accounts payable, etc., all the details of the financial instruments, see related projects of “Section VI”. The risk associated with these financial instruments, as well as theCompany’s risk management policy to reduce these risks which were described below. The Company's management managed and supervised these risks to ensure that the above risk was controlled in a limited scope.
The Company use sensitivity analysis technology to analyze the reasonable of risk variables, influence of probable changes to the current profits and Stockholders' equity. Because rarely any risk variables change in isolation, and the correlation between variables for the eventual impact of the change of a risk variables will have a significant effect, thus, the aforesaid content was processing under the assumption of the change of each variable was conducted independently.
(I) Risk management objectives and policies
The goals of Company engaged in the risk management is to achieve the proper balance between the risks and benefits, reduced the negative impact to the Company operating performance risk to a minimum, maximized the profits of shareholders and other equity investors. Based on the risk management goal, the basic strategy of the Company's risk management is determine and analyze the various risks faced by the Company, set up the bottom line of risk and conducted appropriate risk management, and timely supervised
various risks in a reliable way and controlled the risk within the range of limit.
1. Market risk
(1) Foreign exchange risk
Lu Thai Textile Co., Ltd. Annual Report 2017 Foreign exchange risk is referred to the risk incurred due to loss of changes in exchange rate. Foreign exchange risk is referred to the risk incurred due to loss of changes in exchange rate. TheCompany’s foreign exchange risk was mainly related to USD, HKD and EUR, excepting theCompany’s several subsidiaries purchase and sale, in USD, HKD and Dong, the other main business settled by RMB. On 31 Dec. 2016, in addition to the following assets or liabilities in statement was USD, HKD and EUR, theCompany’s assets or liabilities was RMB balance. The foreign exchange risk incurred by assets and liabilities of foreign balance may have impact to the operation results of the Company.
||||
|-|-|-|
|Item|Closing amount|Opening amount|
|Cash and cash equivalents|556,296,995.92|295,220,057.63|
|Notes receivable|110,349,828.81|71,898,206.01|
|Account receivable|252,210,660.04|201,635,005.83|
|Other accounts receivable|6,010,153.41|5,624,249.98|
|Other current assets||65,968,094.08|
|Accounts payable|44,343,006.71|47,263,170.03|
|Other accounts payable|4,566,032.47|4,286,466.39|
|Short-term loans|695,124,996.40|563,261,856.02|
|Long-term loans due within one year|62,750,292.49||
|Long-term loans||135,678,044.89|

Sensitive analysis of foreign exchange risk:
Base on the foreign currency monetary assets and liabilities, and ignoring other factors, influence of change of exchange rate to current profits and losses and equity of shareholders was followed:
||||||
|-|-|-|-|-|
|Change|Reporting Period||Same period of last year||
||Influence to theprofits|Influence to equity ofshareholders|Influence to the profits|Influence to equity ofshareholders|
|Up 10% against RMB|-5,234,092.49|-5,234,092.49|14,763,070.22|14,763,070.22|
|Down 10% against RMB|5,234,092.49|5,234,092.49|-14,763,070.22|-14,763,070.22|

(2) Interest rate risk
The risk of cash flow changes of financial instruments due to change of interest rate mainly was related bank loan (for details, see23 in this Section).
Sensitive analysis of interest rate risk:
Influence of interest increasing 100 BP to current profits and losses and equity of shareholders before tax was followed:
||||||
|-|-|-|-|-|
|Change|Reporting Period||Same period of last year||
||Influence to the profits|Influence to equity ofshareholders|Influence to the profits|Influence to equity ofshareholders|
|Increase 100 BP|-11,312,164.38|-10,086,733.25|-7,634,051.31|-6,516,890.66|
|Decrease 100 BP|11,312,164.38|10,086,733.25|7,634,051.31|6,516,890.66|

2. Credit risk
Lu Thai Textile Co., Ltd. Annual Report 2017 On Dec. 31, 2017, credit risk what may lead to the financial losses was the other party of the contract failed to fulfill the obligations and causes loss of theCompany’s financial assets, which including: book value of financial assets recognized in consolidated balance sheet.
In order to reduce the credit risk, the Company established a special team be responsible for the determination of credit limit to conduct credit approval, and perform other supervising procedures to ensure that taking necessary measures to recycle expired claims. In addition, the Company at each balance sheet date, review every single receivables recycling situation, to ensure that the money unable to recycle withdrawn provision for bad debt fully. Thus, the Company management believed that have assume the credit risk the Company shouldered had been greatly reduced.
The Company's working capital was in bank with higher credit rating, so credit risk of working capital was low.
3. Liquidity Risk
When manage liquidity risk, the Company keep administrators deemed sufficient cash and cash equivalents and supervised it to meet the need of the operation of the Company and reduce the influence of cash flow volatility. The Company management supervised the usage of bank loan and ensured to comply with the loan agreement.
In the end of Reporting Period, the Company held cash and bank deposit of RMB694 million. In recent two years, the average of net cash flow of operation activities was RMB1.176 billion. The Company believed that the liquidity risk was insignificant.
XI. The Disclosure of the Fair Value
1. Closing Fair Value of Assets and Liabilities Calculated by Fair Value
Unit: RMB
||||||
|-|-|-|-|-|
||Closing fair value||||
|Item|Fair value measurement|Fair value measurement|Fair value measurement||
|||||Total|
||items at level 1|items at level 2|items at level 3||
|I. Consistent fair value|||||
||--|--|--|--|
|measurement|||||
|(II) Available-for-sale|||||
|||60,033,000.00||60,033,000.00|
|financial assets|||||
|(1) Debt instrument|||||
|||60,033,000.00||60,033,000.00|
|investment|||||
|(2) Equity tool investment|||||
|(3) Others|||||
|Total assets of consistent|||||
|||60,033,000.00||60,033,000.00|
|fair value measurement|||||

Lu Thai Textile Co., Ltd. Annual Report 2017 2. Valuation Technique Adopted and Nature and Amount Determination of Important Parameters for Consistent and Inconsistent Fair Value Measurement Items at Level 2
As for the fund investment without active markets in available-for-sale financial assets, the determination of its fair value was based on the evaluation on the balance sheet date provided by the asset manager.
XII. Related Party and Related Transaction
1. Information Related to the Parent Company
|||||||
|-|-|-|-|-|-|
||||||Proportion of voting|
|||||Proportion of share||
||||||rights owned by|
|Name of parent||||held by parent||
||Registration place|Nature of business|Registered capital||parent company|
|company||||company against the||
||||||against the Company|
|||||Company (%)||
||||||(%)|
|Zibo Lucheng||||||
|||Textile, chemistry||||
|Textile Investment|Zibo||RMB63,260,000|15.21%|15.21%|
|||and investment||||
|Co., Ltd.||||||

Information on the Parent Company
The final controllers of the Company were Mr. Liu zibin and Mr. Liu Deming.
Other notes:
2. Subsidiaries of the Company
Refer to Note IX-1. Equity in Subsidiaries for details.
3. Information on the Joint Ventures and Associated Enterprises of the Company
Refer to IX-2. Equity in Joint Ventures or Associated Enterprises in this Section.
4. Information on Other Related Parties of the Company
|||
|-|-|
|Name|Relationship|
|Zibo Stanluian Cosmetics Co., Ltd. (hereinafter called||
||Joint-stock company|
|“Stanluian”)||
|Zibo Taimei Ties Co., Ltd. (hereinafter called Taimei Ties)|Majority-owned subsidiary of the Parent Company|
|Zibo Limin Purified Water Co., Ltd. (hereinafter called Limin||
||Wholly-owned subsidiary of the Parent Company|
|Purified Water)||
|Zibo Luqun Land Co., Ltd (hereinafter called Luqun Land)|Wholly-owned subsidiary of the Parent Company|
|Zibo Lurui Fine Chemical Co., Ltd. (hereinafter referred to as||
||Majority-owned subsidiary of the Parent Company|
|Lurui Chemical)||
|Zibo Lujia Property Management Co. , Ltd. (hereinafter referred|Wholly-owned subsidiary of the Parent Company|

Lu Thai Textile Co., Ltd. Annual Report 2017
|||
|-|-|
|to as Lujia Property)||
|Shandong Chengshun Petrochemical Co., Ltd. (hereinafter||
||Wholly-owned subsidiary of the Parent Company|
|referred to as Chengshun Petrochemical)||

Other notes
5. List of Related-party Transactions
(1) Information on Acquisition of Goods and Reception of Labor Service (Unit: Ten Thousand Yuan) Information on acquisition of goods and reception of labor service
Unit: RMB
|||||||
|-|-|-|-|-|-|
|||||Whether exceed trade||
||||The approval trade|credit or not Whether|Same period of last|
|Related party|Content|Reporting Period||||
||||credit|exceed trade credit or|year|
|||||not||
||Towel, sock, oil|||||
||product,|||||
||supermarket retail,|||||
||welfare, electronic|||||
|Zibo Lucheng||||||
||products, computer|||||
|Textile Investment||13,051,075.96|18,183,300.00|No|12,157,996.07|
||equipment,|||||
|Co., Ltd.||||||
||computer supplies,|||||
||paper core, hose|||||
||processing fees,|||||
||etc.|||||
||Goods processing|||||
|Taimei Ties||1,072,762.83|1,300,000.00|No|922,555.61|
||fee|||||
||Recycled water,|||||
|Limin Purified||||||
||sewage treatment,|23,742,561.84|25,850,000.00|No|19,438,805.23|
|Water||||||
||materials|||||
|Chengshun||||||
||Gas|19,719,905.39|29,000,000.00|No|742,901.39|
|Petrochemical||||||
|Lurui Fine||||||
||Auxiliaries|91,452,731.48|117,000,000.00|No|81,933,412.13|
|Chemical||||||

Information of sales of goods and provision of labor service
Unit: RMB
|||||
|-|-|-|-|
|Related party|Content|Reporting Period|Same period of last year|
||Sales of materials, electricity,|||
||running water, gas, LED|||
|Lucheng Textile||805,523.94|1,163,940.37|
||lamp, garment, basic yarn and|||
||dyed yarn, etc.|||

Lu Thai Textile Co., Ltd. Annual Report 2017
|||||
|-|-|-|-|
||Sales of electricity, heating|||
|Taimei Ties||17,715.81|20,180.03|
||charges|||
||Sales of materials, electricity,|||
|Stanluian Company||52,431.80|36,152.79|
||and running water|||
||Sales of materials, garment,|||
|Limin Purified Water||71,473.11|4,913.20|
||and LED lamp|||
||Sales of garments, LED lamp,|||
||fabric, yarn, water &|||
|Lurui Fine Chemical||442,833.05|579,514.02|
||electricity and lunch|||
||components|||
||Sales of materials and|||
|Lujia Property||68,442.42|43,831.55|
||recycled water|||

Notes:
(2) Information of Related Lease
The Company was lessor:
Unit: RMB
|||||
|-|-|-|-|
|||The lease income confirmed in|The lease income confirmed in|
|Name of lessee|Category of leased assets|||
|||Reporting Period|last year|
|Zibo Lucheng Textile||||
||Houses and buildings|30,857.15|292,836.83|
|Investment Co., Ltd.||||
|Lurui Fine Chemical|Houses and buildings|8,183.64|4,091.82|

 The Company was lessee:
Unit: RMB
|||||
|-|-|-|-|
|||The lease income confirmed in||
|lessor|Category of leased assets||Category of leased assets|
|||Reporting Period||
|Zibo Lucheng Textile||||
||Rent of land|3,614,857.20|3,675,104.80|
|Investment Co., Ltd.||||
|Zibo Lucheng Textile||||
||Rent of gas station|501,714.24|510,076.16|
|Investment Co., Ltd.||||
|Zibo Lucheng Textile||||
||Rent of land and buildings|11,460,190.52|12,404,419.08|
|Investment Co., Ltd.||||
|Luqun Property|Rent of land and buildings|1,394,285.64|4,017,523.76|

 Notes of related lease
(3) Inter-bank Lending of Capital of Related Parties
Unit: RMB
Lu Thai Textile Co., Ltd. Annual Report 2017
||||||
|-|-|-|-|-|
||Amount borrowed and||||
|Related-party||Initial date|Due date|Explanation|
||loaned||||
|Borrowed|||||
|||||Borrowed by the|
|Zibo Lucheng Textile||||Company’s subsidiaries|
||59,000,000.00|10/24/2017|12/31/2018||
|Investment Co., Ltd.||||Xinsheng Power and|
|||||Chengshun Heating|
|||||Borrowed by the|
|Lujia Property|600,000.00|03/30/2017|12/31/2018|Company’s subsidiary|
|||||Chengshun Heating|
|||||Borrowed by the|
|Stanluian Company|1,450,000.00|08/17/2017|12/31/2018|Company’s subsidiary|
|||||Chengshun Heating|
|||||Borrowed by the|
|Taimei Ties|1,300,000.00|03/31/2017|12/31/2018|Company’s subsidiary|
|||||Chengshun Heating|
|Loaned|||||

(4) Rewards for the Key Management Personnel
Unit: RMB
||||
|-|-|-|
|Item|Reporting Period|Same period of last year|
|Rewards for the key management|||
||21881300|24486300|
|personnel|||

6. Receivables and Payables of Related Parties
(1) Payables
Unit: RMB
|||||
|-|-|-|-|
|Name of item|Related party|Closing book balance|Opening book balance|
|Accounts payable:||||
||Lurui Fine Chemical||790,533.58|
||Zibo Lucheng Textile|||
||||9,214.58|
||Investment Co., Ltd.|||
|Total|||799,748.16|
|Other accounts payable:||||
||Zibo Lucheng Textile|||
|||60,456,317.14|9,854,741.01|
||Investment Co., Ltd.|||

Lu Thai Textile Co., Ltd. Annual Report 2017
|||||
|-|-|-|-|
||Lujia Property|620,010.00||
||Stanluian Company|1,473,828.33||
||Taimei Ties|1,362,942.08||
|Total||63,913,097.55|9,854,741.01|

 XIII. Commitments and Contingency
1. Significant Commitments
Significant commitments on the balance sheet date
Capital commitments
|||
|-|-|
|Item|Closing balance (RMB Tenthousand Yuan)|
|Commitments signed but hasn’t been recognized infinancial statements||
|-- Commitment for constructing and purchasinglong-term assets|6,364.72|
|Total|6,364.72|

 2. Contingency
(1) Significant Contingency on Balance Sheet Date
As of Dec. 31, 2017, there was no significant contingency for the Company to disclose.
(2) In Despite of no Significant Contingency to Disclose, the Company Shall Also Make Relevant Statements.
There was no significant contingency for the Company to disclose.
XIV. Events after Balance Sheet Date
1. Profit Distribution
Unit: RMB
Lu Thai Textile Co., Ltd. Annual Report 2017 XIV. Notes of Main Items in the Financial Statements of the Parent Company
1. Accounts Receivable
(1) Accounts Receivable Classified by Category
Unit: RMB
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||Closing balance|||||Opening balance|||||
||Book balance||Bad debt provision|||Book balance||Bad debt provision|||
|||||Withdrawalproportion|||||||
|Category|||||Book||||||
|||Proportio|||||Proportio||Withdrawal|Book value|
||Amount||Amount||value|Amount||Amount|||
|||n|||||n||proportion||
|Accounts receivable|||||||||||
|with significant|||||||||||
|single amount for||||||102,459||102,459,6|||
||||||||24.68%||100.00%||
|which bad debt||||||,665.95||65.95|||
|provision separately|||||||||||
|accrued|||||||||||
|Accounts receivable|||||||||||
|withdrawn bad debt|||||||||||
||322,076,206.04||16,172,6||305,903,5|312,659||15,633,26||297,026,11|
|provision according||100.00%||5.02%|||75.32%||5.00%||
||||15.06||90.98|,373.66||3.33||0.33|
|to credit risks|||||||||||
|characteristics|||||||||||
||322,076,206.04||16,172,6||305,903,590.98|415,119||118,092,9||297,026,110.33|
|Total||100.00%||5.02%|||100.00%||28.45%||
||||15.06|||,039.61||29.28|||

 Accounts receivable with significant single amount for which bad debt provision separately accrued at the period-end:
□ Applicable√ Not applicable
In the groups, accounts receivable adopting aging analysis method to accrue bad debt provision:
√ Applicable□ Not applicable
Unit: RMB
|||||
|-|-|-|-|
||Closing balance|||
|Aging||||
||Accounts receivable|Bad debt provision|Withdrawal proportion|
|Subitem within 1 year||||
|Within 1 year|320,700,110.68|16,035,005.53|5.00%|
|Subtotal within 1 year|320,700,110.68|16,035,005.53|5.00%|
|1 to 2 years|1,376,095.36|137,609.53|10.00%|
|Total|322,076,206.04|16,172,615.06|5.02%|

Notes of the basis for the determination of the group:
In the groups, accounts receivable adopting balance percentage method to withdraw bad debt provision:
Lu Thai Textile Co., Ltd. Annual Report 2017□ Applicable√ Not applicable
In the groups, accounts receivable adopting other methods to withdraw bad debt provision:
(2) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB-5,913,759.23; the amount of the reversed or collected part during the Reporting Period was of RMB0.00.
(3) Particulars of the Actual Verification of Accounts Receivable during the Reporting Period
Unit: RMB
|||
|-|-|
|Item|Amount|
|Accounts receivable verified actually|96,006,554.99|

 Of which, the verification of significant accounts receivable:
Unit: RMB
|||||||
|-|-|-|-|-|-|
||||||Whether occurred|
|Name of the entity|Nature|Amount|Reason|Procedure|because of related|
||||||party transactions|
||||Under the process ofcancellation|||
|Beijing Innovative|Intercourse accounts|96,000,000.00||Approval of the GM|No|
|Total|--|96,000,000.00|--|--|--|

Notes of the verification of accounts receivable:
(4) Top Five of Account Receivable of Closing Balance Collected by Arrears Party
The total amount of top five of account receivable of closing balance collected by arrears party was RMB132,731,214.06, accounting for41.21% of total closing balance of account receivable, and the relevant closing balance of bad debt provision withdrawn was RMB6,636,560.70.
2. Other Accounts Receivable
(1) Other Account Receivable Classified by Category
Unit: RMB
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||Closing balance|||||Opening balance|||||
||Book balance||Bad debt provision|||Book balance||Bad debt provision|||
|||||Withdrawalproportion|||||||
|Category|||||Book||||||
|||Proportion|||||Proportio||Withdrawal|Book value|
||Amount||Amount||value|Amount||Amount|||
||||||||n||proportion||
|Other accounts|486,974,|93.16%|||486,974,1|317,675|92.64%|||317,675,16|

Lu Thai Textile Co., Ltd. Annual Report 2017
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|receivable with|195.33||||95.33|,160.04||||0.04|
|significant single|||||||||||
|amount for which|||||||||||
|bad debt provision|||||||||||
|separately accrued|||||||||||
|Other accounts|35,729,408.00|||8.16%|||||||
|receivable withdrawn|||||||||||
||||2,915,36||32,814,04|25,228,||2,445,924||22,783,048.|
|bad debt provision||6.84%|||||7.36%||9.69%||
||||3.76||4.24|972.17||.01||16|
|according to credit|||||||||||
|risks characteristics|||||||||||
||522,703,603.33||2,915,36|0.56%|519,788,239.57|342,904||2,445,924||340,458,208.20|
|Total||100.00%|||||100.00%||0.71%||
||||3.76|||,132.21||.01|||

 Other receivable with single significant amount and withdrawal bad debt provision separately at end of period
√ Applicable□ Not applicable
Unit: RMB
||||||
|-|-|-|-|-|
||Closing balance||||
|Other accounts receivable|||||
||Other accountsreceivable||||
|(unit）||Bad debt provision|Withdrawal proportion|Withdrawal reason|
|||||no impairment of the|
|Lu Thai (Vietnam)|404,392,797.42||||
|||||individual test|
|||||no impairment of the|
|Lu An Garments|82,581,397.91||||
|||||individual test|
|Total|486,974,195.33||--|--|

In the groups, other accounts receivable adopting aging analysis method to withdraw bad debt provision:
√ Applicable□ Not applicable
Unit: RMB
|||||
|-|-|-|-|
||Closing balance|||
|Aging||||
||Other accounts receivable|Bad debt provision|Withdrawal proportion|
|Subitem within 1 year||||
|Within 1 year|30,939,672.96|1,546,983.65|5.00%|
|Subtotal within 1 year|30,939,672.96|1,546,983.65|5.00%|
|1 to 2 years|280,702.00|28,070.20|10.00%|
|2 to 3 years|124,000.00|24,800.00|20.00%|
|Over 3 years|4,385,033.04|1,315,509.91|30.00%|
|Total|35,729,408.00|2,915,363.76|8.16%|

Notes of the basis for the determination of the group:
In the groups, other accounts receivable adopting balance percentage method to withdraw bad debt provision:
□ Applicable√ Not applicable
Lu Thai Textile Co., Ltd. Annual Report 2017 In the groups, other accounts receivable adopting other methods to withdraw bad debt provision:
□ Applicable√ Not applicable
(2) Bad Debt Provision Withdrawn, Reversed or Collected during the Reporting Period
The amount of bad debt provision was RMB469,439.75, the amount of reversed or recovered bad debt provision in the Reporting Period RMBXXX.
Of which, the current bad debt provision reversed or collected with significant amount:
Unit: RMB
||||
|-|-|-|
|Name of the entity|Reversed or collected amount|Method|

(3) Other Accounts Receivable Classified by the Nature
Unit: RMB
||||
|-|-|-|
|Nature|Closing book balance|Opening book balance|
|Intercourse funds|486,974,195.33|317,675,160.04|
|Export rebates|16,370,989.66|7,802,287.09|
|Payment on behalf|14,593,482.76|13,285,751.37|
|Guarantee deposit and cash deposit|2,532,658.50|442,488.00|
|Borrowings and petty cash|1,044,226.03|1,013,029.29|
|Other|1,188,051.05|2,685,416.42|
|Total|522,703,603.33|342,904,132.21|

 (4) Top 5 of the Closing Balance of the Other Accounts Receivable Collected according to the Arrears Party Unit: RMB
|||||||
|-|-|-|-|-|-|
|||||Proportion to total||
|||||closing balance of|Closing balance of|
|Name of units|Nature|Closing balance|Aging|||
|||||other accounts|bad debt provision|
|||||receivable||
|Lu Thai (Cambodia)|Intercourse funds|404,392,797.42|Within 1 year|77.37%||
|Lu An Garments|Intercourse funds|82,581,397.91|Within 1 year|15.80%||
|Refund of tax for||||||
||Export rebates|16,370,989.66|Within 1 year|3.13%|818,549.48|
|export receivable||||||
|Accounts receivable||||||
||Advance money for|||||
|of advance money for||||||
||the social security|||||
|the social security||||||
||undertake by the|4,836,084.96|Within 1 year|0.92%|241,804.25|
|undertake by the||||||
||individual of the|||||
|individual of the||||||
||employee|||||
|employee||||||

Lu Thai Textile Co., Ltd. Annual Report 2017
|||||||
|-|-|-|-|-|-|
|Pre-paid heating||||||
||Pre-paid|2,024,208.67|Within 1 year|0.39%|101,210.43|
|charges||||||
|Total|--|510,205,478.62|--|97.61%|1,161,564.16|

 3. Long-term Equity Investment
Unit: RMB
||||||||
|-|-|-|-|-|-|-|
||Closing balance|||Opening balance|||
|Item||Depreciation|||Depreciationreserves||
||Book balance||Book value|Book balance||Book value|
|||reserves|||||
|Investment to thesubsidiary|||||||
||1,744,156,616.04|25,200,000.00|1,718,956,616.04|1,736,221,866.04|25,200,000.00|1,711,021,866.04|
|Investment tojoint ventures andassociatedenterprises|||||||
||97,536,732.02||97,536,732.02||||
|Total|1,841,693,348.06|25,200,000.00|1,816,493,348.06|1,736,221,866.04|25,200,000.00|1,711,021,866.04|

 (1) Investment to the Subsidiary
Unit: RMB
||||||||
|-|-|-|-|-|-|-|
||||||Withdrawn||
|||||||Closing balance|
||||||impairment||
|Investee|Opening balance|Increase|Decrease|Closing balance||of impairment|
||||||provision in the||
|||||||provision|
||||||Reporting Period||
|Beijing Innovative|25,200,000.00|||25,200,000.00||25,200,000.00|
|Xinjiang Luthai|147,303,034.16|||147,303,034.16|||
|Xinsheng Power|176,340,737.93|||176,340,737.93|||
|Lufeng Weaving &|||||||
||529,620,000.00|||529,620,000.00|||
|Dyeing|||||||
|Luqun Textile|171,784,550.00|||171,784,550.00|||
|Luthai (Hong|||||||
||128,771,800.00|||128,771,800.00|||
|Kong)|||||||
|Shanghai Luthai|20,000,000.00|||20,000,000.00|||
|Lu Thai|||||||
||108,242,335.38|||108,242,335.38|||
|(Cambodia)|||||||
|Lu Thai (America)|6,774,300.00|3,434,750.00||10,209,050.00|||
|Lu Thai(Burma)|62,337,238.57|||62,337,238.57|||
|Beijing Youxian|9,000,000.00|4,500,000.00||13,500,000.00|||

Lu Thai Textile Co., Ltd. Annual Report 2017
||||||
|-|-|-|-|-|
|Lu Thai (Vietnam)|318,034,810.00||318,034,810.00||
|Lu An Garments|32,813,060.00||32,813,060.00||
|Total|1,736,221,866.04|7,934,750.00|1,744,156,616.04|25,200,000.00|

 (2) Investment to Joint Ventures and Associated Enterprises
Unit: RMB
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|||Increase/decrease||||||||||
||||||||||||Closing|
|||||Gains and|Adjustme|||||||
||||||||Cash|Withdraw|||balance|
|||Additiona||losses|nt of|||||||
||Opening||Reduced|||Changes|bonus or|al of||Closing|of|
|Investee||||||||||||
|||l||recognize|other|||||||
||balance||investmen|||of other|profits|impairme|Other|balance|impairme|
|||investmen||d under|comprehe|||||||
||||t|||equity|announce|nt|||nt|
|||t||the equity|nsive|||||||
||||||||d to issue|provision|||provision|
|||||method|income|||||||
|I. Joint ventures||||||||||||
|II. Associated enterprises||||||||||||
|Haohong||||||||||||
|||100,000,0||-2,463,26||||||97,536,73||
|Investme||||||||||||
|||00.00||7.98||||||2.02||
|nt||||||||||||
|||100,000,0||-2,463,26||||||97,536,73||
|Subtotal||||||||||||
|||00.00||7.98||||||2.02||
|||100,000,0||-2,463,26||||||97,536,732.02||
|Total||||||||||||
|||00.00||7.98||||||||

4. Revenues and Operating Costs
Unit: RMB
||||||
|-|-|-|-|-|
||Reporting Period||Same period of last year||
|Item|||||
||Sales revenue|Cost of sales|Sales revenue|Cost of sales|
|Main operations|4,912,726,656.13|3,548,107,954.49|4,807,878,511.56|3,378,032,986.90|
|Other operations|233,769,456.41|187,951,747.92|270,969,055.54|226,114,678.98|
|Total|5,146,496,112.54|3,736,059,702.41|5,078,847,567.10|3,604,147,665.88|

 Other notes:
5. Investment Income
Unit: RMB
||||
|-|-|-|
|Item|Reporting Period|Same period of last year|
|Long-term equity investment income|17,976,433.62|55,179,470.68|

Lu Thai Textile Co., Ltd. Annual Report 2017
||||
|-|-|-|
|accounted by cost method|||
|Investment income from disposal of|||
||-2,463,267.98||
|long-term equity investment|||
|Investment income received from disposal of|||
|||-199,507.76|
|long-term equity investment|||
|Investment income received from disposal of|||
|financial assets measured at fair value and|||
||4,858,596.97|-33,807,314.00|
|the changes recorded into the current gains|||
|and losses|||
|Total|20,371,762.61|21,172,648.92|

 XVI. Supplementary Materials
1. Non-recurring Gains and Losses during this Reporting Period
√ Applicable□ Not applicable
Unit: RMB
||||
|-|-|-|
|Item|Amount|Note|
|Gains/losses on the disposal of non-current|||
||-1,326,737.85||
|assets|||
|Tax rebates, reductions or exemptions due to|||
|approval beyond authority or the lack of|66,031,583.92||
|official approval documents|||
|Current net gains and losses of the subsidiary|||
|from the period-begin to the combination|||
||4,145,908.17||
|date generated from the business|||
|combination under the same control|||
|Gain/loss from change of fair value of|||
|transactional assets and liabilities, and|||
|investment gains from disposal of|||
|transactional financial assets and liabilities|4,794,598.32||
|and available-for-sale financial assets, other|||
|than valid hedging related to the Company’s|||
|common businesses|||
|Other non-operating income and expenses|||
||4,638,779.84||
|other than the above|||
|Less: Income tax effects|8,690,224.28||
|Minority interests effects|9,080,806.84||
|Total|60,513,101.28|--|

Explain the reasons if the Company classifies an item as an extraordinary gain/loss according to the definition in the Explanatory
Lu Thai Textile Co., Ltd. Annual Report 2017 Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to thePublic—Extraordinary Gains and Losses, or classifies any extraordinary gain/loss item mentioned in the said explanatory announcement as a recurrent gain/loss item□ Applicable√ Not applicable
2. Return on Equity (ROE) and Earnings Per Share (EPS)
|||||
|-|-|-|-|
|||EPS (Yuan/share)||
|Profit as of Reporting Period|Weighted average ROE (%)|||
|||EPS-basic|EPS-diluted|
|Net profit attributable to common||0.91|0.91|
||11.87%|||
|shareholders of the Company||||
|Net profit attributable to common||||
|shareholders of the Company after||||
||11.02%|0.85|0.85|
|deduction of non-recurring profit||||
|and loss||||

3. Differences between Accounting Data under Domestic and Overseas Accounting Standards
(1) Differences of Net Profit and Net Assets Disclosed in Financial Reports Prepared under International and Chinese Accounting Standards
√ Applicable□ Not applicable
Unit: RMB
||||||
|-|-|-|-|-|
||Net profit||Net asset||
||Reporting Period|Same period of last year|Closing balance|Opening balance|
|According to Chinese|841,150,934.75|808,760,025.91|7,230,942,770.16|6,970,913,125.59|
|accounting standards|||||
|Items and amounts adjusted according to international accounting standards:|||||
|Impact on domestic|||||
|equipment tax credit|||||
|recognized as deferred|||||
||329,000.00|725,000.00||-329,000.00|
|income under|||||
|international accounting|||||
|standards|||||
|According to international|||||
||841,479,934.75|809,485,025.91|7,230,942,770.16|6,970,584,125.59|
|accounting standards|||||

Lu Thai Textile Co., Ltd. Annual Report 2017 Part XII Documents Available for Reference
1. The financial statements signed and stamped by theCompany’s legal representative, Chief Accountant and Financial Manager;
2. The original copy of the IndependentAuditors’ Report carrying the seal of the CPA firm, as well as the personal signatures of the engagement certified public accountants.
3. The originals of all theCompany’s announcements and documents disclosed to the public during the Reporting Period on Securities Times, Shanghai Securities News, China Securities Journal and Ta Kung Pao.
Chairman of the Board: Liu Zibin
Lu Thai Textile Co., Ltd.
April 17, 2018