Lu Thai Textile Co., Ltd. Third Quarter Report 2018 (Summary) Stock Code: 000726, 200726 Stock Name: LTTC, LTTC-B Announcement No. 2018-045 LU THAI TEXTILE CO., LTD.
THIRD QUARTER REPORT 2018 (SUMMARY)
Lu Thai Textile Co., Ltd. Third Quarter Report 2018 (Summary) Part I Important Notes
The Board of Directors (or the “Board”), the Supervisory Committee as well as the directors, supervisors and senior management of Lu Thai Textile Co., Ltd. (together with its consolidated subsidiaries, the “Company”, except where the context otherwise requires) hereby guarantee the factuality, accuracy and completeness of the contents of this Report and its summary, and shall be jointly and severally liable for any misrepresentations, misleading statements or material omissions therein.
All theCompany’s directors have attended the Board meeting for the review of this Report and its summary.
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.
This Report and its summary have been prepared in both Chinese and English. Should there be any discrepancies or misunderstandings between the two versions, the Chinese versions shall prevail.
Lu Thai Textile Co., Ltd. Third Quarter Report 2018 (Summary) Part II Key Corporate Information
I Key Consolidated Financial Information
Indicate by tick mark whether there is any retrospectively restated datum in the table below.
√ Yes□ No
Reason
Business combination under common control
||||||
|-|-|-|-|-|
|||31 December 2017||Change (%)|
||30 September 2018||||
|||Before|Restated|Restated|
|Total assets (RMB)|10,568,327,014.46|10,170,624,027.75|10,170,624,027.75|3.91%|
|Equity attributable to the listed company’s|7,011,958,543.23||7,230,942,770.16||
|||7,230,942,770.16||-3.03%|
|shareholders (RMB)|||||
||Q3 2018|YoY change (%)|Q1-Q3 2018|YoY change (%)|
|Operating revenue (RMB)|1,743,184,011.30|6.51%|5,023,591,787.12|8.42%|
|Net profit attributable to the listed company’s|209,540,056.51||586,896,015.53||
|||5.32%||-1.21%|
|shareholders (RMB)|||||
|Net profit attributable to the listed company’s|||||
||224,130,296.96|23.91%|590,563,214.17|4.01%|
|shareholders before exceptional items (RMB)|||||
|Net cash generated from/used in operating|||1,123,152,616.75||
||--|--||35.24%|
|activities (RMB)|||||
|Basic earnings per share (RMB/share)|0.23|9.52%|0.64|0.00%|
|Diluted earnings per share (RMB/share)|0.23|9.52%|0.64|0.00%|
|Weighted average return on equity (%)|2.95%|0.10%|8.08%|-0.35%|

 Exceptional gains and losses:
√ Applicable□ Not applicable
Unit: RMB
||||
|-|-|-|
|Item|Q1-Q3 2018|Note|
|Gain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs)|21,673,765.75||
|Government subsidies charged to current profit or loss (exclusive of government subsidies|||
|given in the Company’s ordinary course of business at fixed quotas or amounts as per|48,811,115.56||
|government’s uniform standards)|||
|Gain or loss on fair-value changes in trading financial assets and liabilities & investment|||
|income from disposal of trading financial assets and liabilities and available-for-sale|||
||-59,714,283.60||
|financial assets (exclusive of effective portion of hedges that arise in the Company’s ordinary|||
|course of business)|||

Lu Thai Textile Co., Ltd. Third Quarter Report 2018 (Summary)
||||
|-|-|-|
|Non-operating income and expense other than above|3,616,214.59||
|Less: Income tax effects|10,405,601.73||
|Non-controlling interests effects (net of tax)|7,648,409.21||
|Total|-3,667,198.64|--|

 Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item defined or listed in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to thePublic—Exceptional Gain/Loss Items:
□ Applicable√ Not applicable
No such cases for the Reporting Period.
II Total Number of Shareholders and Holdings of Top 10 Shareholders at 30 September 2018 1. Numbers of Ordinary Shareholders and Preferred Shareholders with Resumed Voting Rights as well as Holdings of Top 10 Shareholders
Unit: share
|||||||||
|-|-|-|-|-|-|-|-|
||||Number of preferred shareholders with resumedvoting rights (if any)|||||
|Number of ordinary shareholders|56,205||||||0|
|Top 10 shareholders||||||||
||||Shareholdi|||Shares in pledge or||
|||Nature of||Number of|Restricted|||
|Name of shareholder|||ng|||frozen||
|||shareholder||shares|shares|||
||||percentage|||Status|Shares|
|Zibo Lucheng Textile Investment Co., Ltd.||Domesticnon-state-ownedlegal person|15.21%|140,353,583|0|||
|Tailun (Thailand) Textile Co., Ltd.||Foreign legal person|12.82%|118,232,400|118,232,400|||
|Hong Kong Securities Clearing Co. Ltd||Foreign legal person|3.33%|30,738,071||||
|Central Huijin Assets Management Co., Ltd.||State-owned legalperson|2.20%|20,315,300||||
|T.Rowe Price Intl Discovery Fund||Foreign legal person|2.16%|19,948,219||||
|China Securities Finance Corporation Limited||Domesticnon-state-ownedlegal person|1.98%|18,313,391||||
|National Social Security Fund Portfolio 103||Other|1.30%|11,999,947||||
|Hong Kong Monetary Authority||Foreign legal person|1.22%|11,255,593||||
|Hua’an New Silk Road Theme EquitySecurities Investment Fund||Other|0.85%|7,860,000||||

Lu Thai Textile Co., Ltd. Third Quarter Report 2018 (Summary)
||||||||
|-|-|-|-|-|-|-|
|Bosera Selected Mixed SecuritiesInvestment Fund|Other||0.76%|6,991,034|||
|Top 10 unrestricted shareholders|||||||
||||||Shares by type||
|Name of shareholder||Unrestricted shares|||||
||||||Type|Shares|
|Zibo Lucheng Textile Investment Co., Ltd.||140,353,583|||RMB-denominated||
|||||||140,353,583|
||||||ordinary stock||
|Hong Kong Securities Clearing Co. Ltd||30,738,071|||RMB-denominated||
|||||||30,738,071|
||||||ordinary stock||
|Central Huijin Assets Management Co., Ltd.||20,315,300|||RMB-denominated||
|||||||20,315,300|
||||||ordinary stock||
|T.Rowe Price Intl Discovery Fund||19,948,219|||Domestically listed||
|||||||19,948,219|
||||||foreign stock||
|China Securities Finance Corporation Limited||18,313,391|||RMB-denominated||
|||||||18,313,391|
||||||ordinary stock||
|National Social Security Fund Portfolio 103||11,999,947|||RMB-denominated||
|||||||11,999,947|
||||||ordinary stock||
|Hong Kong Monetary Authority||11,255,593|||RMB-denominated||
|||||||11,255,593|
||||||ordinary stock||
|Hua’an New Silk Road Theme Equity Securities InvestmentFund||7,860,000|||RMB-denominated||
|||||||7,860,000|
||||||ordinary stock||
|Bosera Selected Mixed Securities Investment Fund||6,991,034|||RMB-denominated||
|||||||6,991,034|
||||||ordinary stock||
|Foreningen AP Invest F.M.B.A.||6,055,003|||Domestically listed||
|||||||6,055,003|
||||||foreign stock||
|||Zibo Lucheng Textile Investment Co., Ltd. is the largest|||||
|||shareholder and the actual controller of the Company. Tailun|||||
|||(Thailand) Textile Co., Ltd. is the second largest shareholder and|||||
|Related or acting-in-concert parties among shareholders above|||||||
|||the foreign sponsor of the Company. All the other shareholders are|||||
|||holding tradable A-shares or B-shares. And it is unknown whether|||||
|||there is any related party or acting-in-concert party among them.|||||
|Top 10 ordinary shareholders involved in securities margin|||||||
|||Naught|||||
|trading (if any)|||||||

Indicate by tick mark whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary shareholders of the Company conducted any promissory repo during the Reporting Period.
□ Yea√ No
No such cases in the Reporting Period.
Lu Thai Textile Co., Ltd. Third Quarter Report 2018 (Summary) 2. Number of Preferred Shareholders and Shareholdings of Top 10 of Them
□ Applicable√ Not applicable
Lu Thai Textile Co., Ltd. Third Quarter Report 2018 (Summary) Part III Significant Events
I Changes in Key Consolidated Financial Statement Items and Reasons for Such Changes√ Applicable□ Not applicable
Asset items:
(1) Prepayments rose by RMB93.7771 million (or64.03%) from the amount as at 31 December 2017 to RMB240,240,134.26 as at 30 September 2018, primarily driven by prepayments of subsidiary Xinjiang Luthai Fengshou Cotton Industry Co., Ltd. (hereinafter referred to as “Xinjiang Luthai Fengshou”) for raw materials.
(2) Other receivables rose by RMB19.3907 million (or34.15%) from the amount as at 31 December 2017 to RMB76,163,473.60 as at 30 September 2018, primarily driven by advances paid by Xinjiang Luthai Fengshou for agricultural machinery purchased by cotton farmers, etc.
(3) Other current assets declined by RMB62.7252 million (or52.89%) from the amount as at 31 December 2017 to RMB55,863,530.53 as at 30 September 2018, primarily driven by the withdrawal of capital under wealth management under trust upon maturity in the current period.
(4) Long-term receivables rose by RMB0.6500 million (or100.00%) from the amount as at 31 December 2017 to RMB650,000.00 as at 30 September 2018, primarily driven by finance leases of equipment by Xinjiang Luthai Fengshou.
(5) Construction in progress rose by RMB336.7511 million (or157.11%) from the amount as at 31 December 2017 to RMB551,086,721.63 as at 30 September 2018, primarily driven by more investments and to-be-installed equipment in the second phase of the Lu Thai (Vietnam) project.
(6) Other non-current assets declined by RMB11.1882 million (or30.74%) from the amount as at 31 December 2017 to RMB25,202,247.12 as at 30 September 2018, primarily driven by decrease in prepayments for equipment.
Liability andowners’ equity items:
(7) Short-term borrowings rose by RMB469.5821 million (or41.37%) from the amount as at 31 December 2017 to RMB1,604,707,428.77 as at 30 September 2018, primarily driven by more bank loans.
(8) Financial liabilities at fair value through profit or loss rose by RMB44.1122 million (or100.00%) from the amount as at 31 December 2017 to RMB44,112,150.00 as at 30 September 2018, primarily driven by unsettled forward forex settlement contracts and option contracts as at the end of the current period.
(9) Taxes payable rose by RMB35.0796 million (or106.12%) from the amount as at 31 December 2017 to RMB68,134,645.51 as at 30 September 2018, primarily driven by increase in corporate income tax.
(10) Other payables rose by RMB86.6268 million (or67.10%) from the amount as at 31 December 2017 to RMB215,730,155.67 as at 30 September 2018, primarily driven by increase in loans borrowed by Zibo Xinsheng Thermal Power Co., Ltd. (a subsidiary of the Company) from Zibo Lucheng Textile Investment Co., Ltd. (a shareholder of the Company).
(11) The current portion of non-current liabilities declined by RMB62.7503 million (or100.00%) from the amount as at 31 December 2017 to RMB0.00 as at 30 September 2018, primarily driven by the repayment in the current period of Lu Thai(Vietnam)’s loans due within one year.
(12) Long-term borrowings rose by RMB157.6117 million (or100.00%) from the amount as at 31 December 2017 to RMB157,611,749.70 as at 30 September 2018, primarily driven by the long-term loans taken out by Lu Thai (Vietnam) for the expansion of its second phase.
(13) Treasury stock rose by RMB404.6624 million (or100.00%) from the amount as at 31 December 2017 to RMB404,662,394.01 as at 30 September 2018, primarily driven by the B-share repurchase of the Company as the parent in the current period.
(14) Other comprehensive income rose by RMB52.1264 million (or310.08%) from the amount as at 31 December 2017 to
Lu Thai Textile Co., Ltd. Third Quarter Report 2018 (Summary) RMB68,937,000.11 as at 30 September 2018, primarily driven by more gains from the translation of foreign-currency-denominated financial statements due to exchange rate fluctuations.
Income statement items:
(15) Asset impairment loss rose by RMB1.6903 million (or50.84%) to RMB5,015,397.48 duringQ1~Q3 2018 compared toQ1~Q3 2017, primarily driven by increase in allowances for doubtful accounts in the current period.
(16) Other income rose by RMB15.0887 million (or48.39%) to RMB46,267,401.20 duringQ1~Q3 2018 compared toQ1~Q3 2017, primarily driven by increase in government subsidies received during the ordinary course of business.
(17) Investment income declined by RMB22.7519 million (or521.37%) to RMB-18,388,041.25 duringQ1~Q3 2018 compared toQ1~Q3 2017, primarily driven by greater losses on derivative investments during the current period.
(18) Gain on changes in fair value declined by RMB43.3158 million (or5438.94%) to RMB-44,112,150.00 duringQ1~Q3 2018 compared toQ1~Q3 2017, primarily driven by changes in the fair value of unsettled forward forex settlement contracts and option contracts.
(19) Asset disposal income rose by RMB20.2843 million (or687.84%) to RMB23,233,253.44 duringQ1~Q3 2018 compared toQ1~Q3 2017, primarily driven by increase in income from the disposal of non-current assets during the current period.
II Progress, Influence and Solutions Associated with Significant Events
√ Applicable□ Not applicable
During the Reporting Period, the Company executed the repurchase plan of partial B-share. As of 30 September 2018, the Company accumulatively repurchased 51,948,701 shares accounting for5.6307% of total capital. For more details, please refer to relevant announcements on repurchase of theCompany’s B-share.
||||
|-|-|-|
|Overview of significant events|Disclosure date|Announcement index|
|Report on Repurchase of PartialB-share of the Company||Report on Repurchase of Partial B-share of the Company on|
||16 May 2018||
|||www.cninfo.com.cn|
|Announcement on implementationof repurchase of B-share||Relevant announcements disclosed on Securities Times, Shanghai|
||29 May 2018|Securities News, China Securities Journal, Hongkong Ta Kung Pao|
|||and www.cninfo.com.cn.|
|Announcement on implementationof repurchase of B-share||Relevant announcements disclosed on Securities Times, Shanghai|
||1 June 2018|Securities News, China Securities Journal, Hongkong Ta Kung Pao|
|||and www.cninfo.com.cn.|
|Announcement on implementationof repurchase of B-share||Relevant announcements disclosed on Securities Times, Shanghai|
||8 June 2018|Securities News, China Securities Journal, Hongkong Ta Kung Pao|
|||and www.cninfo.com.cn.|
|Announcement on implementationof repurchase of B-share||Relevant announcements disclosed on Securities Times, Shanghai|
||3 July 2018|Securities News, China Securities Journal, Hongkong Ta Kung Pao|
|||and www.cninfo.com.cn.|
|Announcement on implementationof repurchase of B-share||Relevant announcements disclosed on Securities Times, Shanghai|
||12 July 2018|Securities News, China Securities Journal, Hongkong Ta Kung Pao|
|||and www.cninfo.com.cn.|
|Announcement on implementationof repurchase of B-share||Relevant announcements disclosed on Securities Times, Shanghai|
||26 July 2018||
|||Securities News, China Securities Journal, Hongkong Ta Kung Pao|

Lu Thai Textile Co., Ltd. Third Quarter Report 2018 (Summary)
||||
|-|-|-|
|||and www.cninfo.com.cn.|
|Announcement on implementationof repurchase of B-share||Relevant announcements disclosed on Securities Times, Shanghai|
||1 August 2018|Securities News, China Securities Journal, Hongkong Ta Kung Pao|
|||and www.cninfo.com.cn.|
|Announcement on implementationof repurchase of B-share||Relevant announcements disclosed on Securities Times, Shanghai|
||1 September 2018|Securities News, China Securities Journal, Hongkong Ta Kung Pao|
|||and www.cninfo.com.cn.|

III Commitments that theCompany’s Actual Controller, Shareholders, Related Parties and Acquirers, as well as the Company Itself and Other Parties, Failed to Fulfill on Time during Reporting Period
□ Applicable√ Not applicable
No such cases in the Reporting Period.
IV 2018 Annual Operating Performance Forecast
Warning of a forecast loss on or a forecast significant year-on-year change in net profit for year 2018, as well as explanation of why:□ Applicable√ Not applicable
V Securities Investments
□ Applicable√ Not applicable
No such cases in the Reporting Period.
VI Wealth Management Entrustment
√ Applicable□ Not applicable
Unit:RMB’0,000 (in RMB ten thousand yuan)
||||||
|-|-|-|-|-|
|Type of wealth|||Outstanding amount||
||Funding source|Principal||Overdue amount|
|management|||before maturity||
|Other|Self-funded|0|6,000|0|
|Total||0|6,000|0|

 High-risk wealth management entrustments with amounts that are individually significant, or with low security, low liquidity, or no protection of the principal:
√ Applicable□ Not applicable
Unit:RMB’0,000
||||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|||Typeofwealthmanagement|||||||Refere|||Collec||Throu|Any|Overvie|
|||||||||Way||Expect|Actual||Impairmentallowance (if||||
||Type|||Fundi|||Investme||nce|||tion/pa||gh|plan|w and|
||||Princi||Start|End||of||ed|gain/loss||||||
|Trustee|of|||ng|||nt with||annual|||yment||prescri|for|index to|
||||pal||date|date||paybac||return|in||||||
||trustee|||source|||principal||ized|||of||bed|further|more|
|||||||||k||(if|Reportin||||||
||||||||||return|||gain/lo||proced|entrust|informat|

Lu Thai Textile Co., Ltd. Third Quarter Report 2018 (Summary)
||||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|||product|||||||(%)|any)|g Period|ss in|any)|ure or|ment|ion (if|
|||||||||||||Report||not||any)|
|||||||||||||ing|||||
|||||||||||||Period|||||
||||||||Accounts||||||||||
|||||||||Payme|||||||||
||||||||receivabl||||||||||
|||||||||nt of|||||||||
|Gopher|||||||e bonds||||||||||
||||||18|||princip|||||||||
|Asset|Fund|||||18|between||||||||Tempo||
|||Fixed-i||Self-fu|Dece|||al and|||||||||
|Manage|corpor||3,000|||Januar|Guangdo||7.60%|228||N/A||Yes|rarily||
|||ncome||nded|mber|||interes|||||||||
|ment|ation|||||y 2019|ng||||||||no||
||||||2017|||t upon|||||||||
|Co., Ltd|||||||Chengxin||||||||||
|||||||||maturi|||||||||
||||||||g and||||||||||
|||||||||ty|||||||||
||||||||JDcom||||||||||
|||||||||Annua|||||||||
|||||||||l|||||||||
|||||||||payme|||||||||
|||||||||nt of|||||||||
|Gopher|||||||Granting|interes|||||||||
||||||22|22|||||||||||
|Asset|Fund||||||of trust|ts and|||||||Tempo||
|||Fixed-i||Self-fu|Dece|Dece|||||||||||
|Manage|corpor||3,000||||loans to|payme|8.50%|255||N/A||Yes|rarily||
|||ncome||nded|mber|mber|||||||||||
|ment|ation||||||HOME|nt of|||||||no||
||||||2017|2019|||||||||||
|Co., Ltd|||||||CREDIT|princip|||||||||
|||||||||al|||||||||
|||||||||upon|||||||||
|||||||||maturi|||||||||
|||||||||ty|||||||||
|Total|||6,000|--|--|--|--|--|--|483|0|--||--|--|--|

 Wealth management entrustments with possible impairments including an expectedly unrecoverable principal:
□ Applicable√ Not applicable
VII Investments in Derivative Financial Instruments
√ Applicable□ Not applicable
Unit:RMB’0,000
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|||||||||||||Ending||
|||||||||||Impa||||
|||||||||||||investme||
||Relati|Relate||||||||irme||||
|||||||||||||nt as %|Actual|
||onship|d-part|Type||||Begin|||nt||||
|||||Initial||||Purchased in|Sold in|||of the|gain/loss|
|Count|with|y|of||||ning|||allo|Ending|||
|||||investment|Start date|End date||Reporting|Reporting|||Compan|in|
|erparty|the|transac|derivat||||invest|||wan|investment|||
|||||amount||||Period|Period|||y’s|Reporting|
||Comp|tion or|ive||||ment|||ce||||
|||||||||||||ending|Period|
||any|not||||||||(if||||
|||||||||||||net||
|||||||||||any)||||
|||||||||||||assets||

Lu Thai Textile Co., Ltd. Third Quarter Report 2018 (Summary)
||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|
||||Forwa||||||||||
||||rd||||||||||
|Comm|Non-c||||22||||||||
||||exchan|||25 January|||||||
|ercial|onnect|No||67,367.6|February||0|67,367.6|48,284.94|19,082.66|2.51%|-636.85|
||||ge|||2019|||||||
|bank|ed||||2018||||||||
||||settle||||||||||
||||ment||||||||||
||||Foreig||||||||||
|Comm|Non-c||n||30||||||||
|||||||4 January|||||||
|ercial|onnect|No|exchan|225,451.86|November||19,800|205,651.86|172,327.07|53,124.79|6.99%|-1,118.58|
|||||||2019|||||||
|bank|ed||ge||2017||||||||
||||option||||||||||
||||Forwa||||||||||
||||rd||||||||||
|Comm|Non-c||||||||||||
||||exchan||14 March|8 February|||||||
|ercial|onnect|No||27,868.4|||0|27,868.4|23,486.9|4,381.5|0.58%|-165.35|
||||ge||2018|2019|||||||
|bank|ed||||||||||||
||||transac||||||||||
||||tions||||||||||
||||Foreig||||||||||
|Comm|Non-c||n||||||||||
||||||21 March|11 April|||||||
|ercial|onnect|No|exchan|5,925.81|||0|5,925.81|5,925.81|0|0.00%|3.95|
||||||2018|2018|||||||
|bank|ed||ge||||||||||
||||swap||||||||||
|Total||||326,613.67|--|--|19,800|306,813.67|250,024.72|76,588.95|10.08%|-1,916.83|
|Funding source||||Self-funded|||||||||
|Legal matters involved (if|||||||||||||
|||||N/A|||||||||
|applicable)|||||||||||||
|Disclosure date of board|||||||||||||
|announcement approving||||25 April 2018|||||||||
|derivative investment (if any)|||||||||||||
|||||The Company conducted derivatives products transaction in order for hedging. And the forward settlement|||||||||
|||||hedging was operated by installments, with the relevant amount not more than the planned derivatives products|||||||||
|||||transactions. And all derivatives products transaction was zero-deposit. Meanwhile, the Company had a|||||||||
|Analysis of risks and control|||||||||||||
|||||complete risk control system for sufficient analysis and prevention of possible risks such as market risk,|||||||||
|measures associated with|||||||||||||
|||||liquidity risk and credit risk, operation risk and risk of laws and regulation.|||||||||
|derivative investments held in|||||||||||||
|||||1. Market risk: when the international and domestic economic situations change, the corresponding changes in|||||||||
|Reporting Period (including|||||||||||||
|||||exchange rates and interest rates may have an adverse impact on the financial derivatives transactions of the|||||||||
|but not limited to market risk,|||||||||||||
|||||Company. Precautionary measures to be taken include: the Company chooses risk-controlled financial|||||||||
|liquidity risk, credit risk,|||||||||||||
|||||derivative tools with simple structure and good liquidity to carry out the hedging business, strictly controls the|||||||||
|operational risk, legal risk,|||||||||||||
|||||scale of financial derivatives trading by staged operations, and adjusts the strategy according to market|||||||||
|etc.)|||||||||||||
|||||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|||||||||

Lu Thai Textile Co., Ltd. Third Quarter Report 2018 (Summary)
|||
|-|-|
||to be taken include: the Company determines the upper limit of derivatives transaction amounts according to|
||production and operation scale as well as foreign exchange income, and conducts operations by stage|
||according to the budget of future collections and disbursement. The derivative trades are free of guarantee|
||deposit and can still be guaranteed in performance after the contract expires by means of extension and balance|
||settlement etc. to prevent the Company from credit damages due to lack of liquidity. The Company selects|
||financial institutions with strong capability and good reputation as a counterparty and signs standard derivative|
||trading contracts to strictly control credit risk of the counterparty.|
||3. Operation risk:|
||The derivatives had high specialty and complexity, so imperfect internal operation procedures, staffs and|
||external events would make the Company to undertake risks during the transaction. Risk control measures:|
||The Company promulgated strict authorization and approval system and perfect regulatory mechanism, fixed|
||the 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 so as to ensure to lower the operation risks to the maximum.|
||4. Risk of laws and regulation:|
||The Company conducted derivatives products transaction in strict accordance with relevant laws and rules. If|
||there were no standard operation procedures and strict approval procedures, it was easy to cause compliant and|
||regulatory risks existing in the validity and feasibility of contract, commitments and other legal documents|
||signed. Risk control measures: The Company carefully studied and mastered laws, regulations and policies|
||relevant to derivative products transaction, formulated internal control rules for the forward settlement hedging|
||business, standardized the operation procedures. And strengthened the compliant examination on derivative|
||products transaction business. The Company conducted derivative transaction business according to the|
||relevant approval procedure, which was in line with relevant laws, regulations, the Company’s Articles of|
||Association, the Management Rules for Derivative Transaction of Lu Thai Textile Co., Ltd. and the Proposal|
||on the Plan of Lu Thai Textile Co., Ltd. for Derivative Transactions approved at the 17th Meeting of the 8th|
||Board of Directors on 25 April 2018, and performed relevant information disclosure responsibilities.|
||1. As of 30 September 2018, the Company held a total of 28 immature derivative contracts worth|
||US$120,269,200 in total, which were forward settlement of exchange, foreign exchange options portfolio and|
|Changes in market prices or||
||forward foreign exchange trading. The latest contract expiration date was February 2019. Financial derivatives|
|fair value of derivative||
||occupied 10.08 % of the net assets as at the period end.|
|investments in Reporting||
||2. From January to September 2018, the total amount of the Company’s matured financial derivatives was|
|Period (fair value analysis||
||US$389,641,200, all executed in accordance with the contracts with the losses of RMB19,168,300. Of all the|
|should include measurement||
||derivatives, the matured forward settlement of exchange was US$74.5 million with the losses of|
|method and related||
||RMB6,368,500; the matured foreign exchange options was US$271.6 million with the losses of RMB11.1858|
|assumptions and parameters)||
||million; the matured foreign exchange trading was US$34,141,900with the losses of RMB1.6535 million; the|
||matured foreign exchange swap was US$9,399,300 with the gains of RMB39,500.|
|Major changes in accounting||
|policies and specific||
|accounting principles adopted|No significant changes|
|for derivative investments in||
|Reporting Period compared to||

Lu Thai Textile Co., Ltd. Third Quarter Report 2018 (Summary)
|||
|-|-|
|last reporting 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 derivative transactions with focus on|
|Opinion of independentdirectors on derivativeinvestments and risk control||
||forward settlement and purchase as an effective tool to avoid foreign exchange risks, to strengthen the relevant|
||internal control and to carry out the loss and risk prevention measures so as to improve the operation and|
||management. In conducting derivative transactions with focus on forward settlement and purchase, the|
||Company follows a legal approval procedure, has sound relevant institutions and keeps the risks relatively|
||controllable. No harm has been done to the interests of the Company’s shareholders.|

VIII Visits Paid to the Company for Purposes of Research, Communication, Interview, etc. during Reporting Period
√ Applicable□ Not applicable
|||||
|-|-|-|-|
|Date of visit|Way of visit|Type of visitor|About|
|22 August 2018|By phone|Institution|Key corporate information|

 IX Irregularities in Provision of Guarantees for External Parties
□ Applicable√ Not applicable
No such cases in the Reporting Period.
X Occupation of theCompany’s Capital by Controlling Shareholder or Its Related Parties for Non-Operating Purposes
□ Applicable√ Not applicable
No such cases in the Reporting Period.
Chairman of the Board: Liu Zibin Lu Thai Textile Co., Ltd.
31 October 2018