SHANDONG CHENMING PAPER HOLDINGS LIMITED
Annual Report 2021
March 2022
I Important Notice, Table of Contents and Definitions
The board of directors (the “Board”), the supervisory committee (the “Supervisory Committee”) and the directors (the
“Directors”), supervisors (the “Supervisors”) and senior management (the “Senior Management”) of the Company hereby
warrant the truthfulness, accuracy and completeness of the contents of the annual report, guarantee that there are no false
representations, misleading statements or material omissions contained in this annual report, and are jointly and severally
responsible for the liabilities of the Company.
Chen Hongguo, head of the Company, Dong Lianming, head in charge of accounting and Zhang Bo, head of the accounting
department (Accounting Officer), declare that they warrant the truthfulness, accuracy and completeness of the financial report
in the annual report.
All Directors have attended the board meeting to review this report.
The Company is exposed to various risk factors such as macro-economic fluctuation, state policies and regulations and
competition in the industry. Investor should be aware of investment risks. For further details, please refer to the risk factors
likely to be faced and the measures to be taken to address them as set out in the outlook on the future development of the
Company in Management Discussion and Analysis.
The Company does not propose distribution of cash dividends or bonus shares, and there will be no increase of share capital
from reserves.
2021 ANNUAL REPORT 1
I Important Notice, Table of Contents and Definitions
Table of Contents
I Important Notice, Table of Contents and Definitions ........................................................................................ 1
II Company Profile and Key Financial Indicators ................................................................................................. 6
III Chairman’s Report ............................................................................................................................................ 11
IV Management Discussion and Analysis.............................................................................................................. 13
V Directors’ Report ............................................................................................................................................... 44
VI Corporate Governance ...................................................................................................................................... 53
VII Environment and Social Responsibility ............................................................................................................. 93
VIII Material Matters ................................................................................................................................................ 101
IX Changes in Share Capital and Shareholders .................................................................................................... 124
X Preference Shares ............................................................................................................................................. 133
XI Bonds ................................................................................................................................................................ 138
XII Financial Report ................................................................................................................................................ 146
2 SHANDONG CHENMING PAPER HOLDINGS LIMITED
I Important Notice, Table of Contents and Definitions
Documents Available for Inspection
I. The financial statements signed and sealed by the legal representative, financial representative and head of the financial
department of the Company;
II. The original copy of the auditor’s report which is sealed by the accounting firm and signed and sealed by the certified public
accountant;
III. The original copies of the documents and announcements of the Company disclosed in the designated newspaper and on
the website as approved by the CSRC during the reporting period;
IV. The annual report disclosed on the website of The Stock Exchange of Hong Kong Limited;
V. Other related information.
2021 ANNUAL REPORT 3
I Important Notice, Table of Contents and Definitions
Definitions
Item Definition
Company, Group, Chenming Group or means Shandong Chenming Paper Holdings Limited and its subsidiaries
Chenming Paper
Parent Company or Shouguang Headquarters means Shandong Chenming Paper Holdings Limited
Chenming Holdings means Chenming Holdings Company Limited
Shenzhen Stock Exchange means Shenzhen Stock Exchange
Stock Exchange means The Stock Exchange of Hong Kong Limited
CSRC means China Securities Regulatory Commission
Shandong CSRC means Shandong branch of China Securities Regulatory Commission
Zhanjiang Chenming means Zhanjiang Chenming Pulp & Paper Co., Ltd.
Jiangxi Chenming means Jiangxi Chenming Paper Co., Ltd.
Wuhan Chenming means Wuhan Chenming Hanyang Paper Holdings Co., Ltd.
Shanghai Chenming means Shanghai Chenming Industry Co., Ltd.
Huanggang Chenming means Huanggang Chenming Pulp & Paper Co., Ltd.
Chenming (HK) means Chenming (HK) Limited
Jilin Chenming means Jilin Chenming Paper Co., Ltd.
Shouguang Meilun means Shouguang Meilun Paper Co., Ltd.
Shouguang Art Paper means Shouguang Chenming Art Paper Co., Ltd.
Finance Company means Shandong Chenming Group Finance Co., Ltd.
Chenming Leasing means Shandong Chenming Financial Leasing Co., Ltd. and its
subsidiaries
Chenming GDR Fund means Weifang Chenming Growth Driver Replacement Equity Investment
Fund Partnership (Limited Partnership)
Chenrong Fund means Weifang Chenrong Growth Driver Replacement Equity Investment
Fund Partnership (Limited Partnership)
Chenchuang Fund means Weifang Chenchuang Equity Investment Fund Partnership (Limited
Partnership
4 SHANDONG CHENMING PAPER HOLDINGS LIMITED
I Important Notice, Table of Contents and Definitions
Item Definition
Corporate Bonds means 17 Chenming Bond 01 and 18 Chenming Bond 01
Preference Shares means Chenming You 01, Chenming You 02 and Chenming You 03
Perpetual Bonds means 17 Lu Chenming MTN001
B-to-H Share Conversion means Change of listing venue of the domestic listed foreign shares on
the Main Board of The Stock Exchange of Hong Kong Limited by
way of conversion
the reporting period or the year means The period from 1 January 2021 to 31 December 2021
the beginning of the year or the period means 1 January 2021
the end of the year or the period means 31 December 2021
the prior year means The period from 1 January 2020 to 31 December 2020
2021 ANNUAL REPORT 5
II Company Profile and Key Financial Indicators
I. Company profile
Stock abbreviation Stock code 000488
B 200488
Stock exchanges on which the shares are listed Shenzhen Stock Exchange
Stock abbreviation Chenming Paper Stock code 01812
Stock exchanges on which the shares are listed The Stock Exchange of Hong Kong Limited
Legal name in Chinese of the Company
Legal short name in Chinese of the Company
Legal name in English of the Company (if any) SHANDONG CHENMING PAPER HOLDINGS LIMITED
Legal short name in English of the Company (if any) SCPH
Legal representative of the Company Chen Hongguo
Registered address No. 595 Shengcheng Road, Shouguang City, Shandong Province
Postal code of registered address 262700
Office address No.2199 Nongsheng East Road, Shouguang City, Shandong Province
Postal code of office address 262705
Website of the Company http://www.chenmingpaper.com
Email address chenmmingpaper@163.com
II. Contact persons and contact methods
Secretary to the Board Hong Kong Company Secretary
Name Yuan Xikun Chu Hon Leung
Correspondence Address No. 2199 Nongsheng East Road, 22nd Floor, World Wide House, Central,
Shouguang City, Shandong Province Hong Kong
Telephone 0536-2158008 00852-21629600
Facsimile 0536-2158977 00852-25010028
Email address chenmmingpaper@163.com liamchu@li-partners.com
III. Information disclosure and places for inspection
Websites of the stock exchanges where the Company Domestic: http://www.szse.cn; Overseas: http://www.hkex.com.hk
discloses its annual report
Names and websites of the media where the Company China Securities Journal, Shanghai Securities News, Securities
discloses its annual report Times, Securities Daily, Hong Kong Commercial Daily and CNINFO
( http://www.cinifo.com.cn)
Places for inspection of the Company’s annual report Securities investment department of the Company
IV. Change in registration
Organisation registration code 913700006135889860
Change of principal activities since its listing (if any) No
Change of the controlling shareholder (if any) No
6 SHANDONG CHENMING PAPER HOLDINGS LIMITED
II Company Profile and Key Financial Indicators
V. Other relevant information
CPAs engaged by the Company
Name of CPAs Grant Thornton (Special General Partnership
CPAs’ Office Address Floor 11, Building No. 4, HuaChuang GuanLi Center, 219 Shunhai
Road, Lixia District, Jinan
Name of the Signing Certified Public Accountants Liu Jian and Jiang Lei
Sponsors engaged by the Company to continuously perform its supervisory function during the reporting period
Applicable √ Not applicable
Financial advisors engaged by the Company to continuously perform its supervisory function during the reporting period
Applicable √ Not applicable
VI. Major accounting data and financial indicators
Retrospective adjustment to or restatement of the accounting data for prior years by the Company
Yes √ No
Increase/decrease
for the year as
compared to the
2021 2020 prior year 2019
Revenue (RMB) 33,019,812,294.14 30,736,517,996.90 7.43% 30,395,434,073.35
Net profit attributable to shareholders
of the Company (RMB) 2,065,513,108.71 1,712,029,078.52 20.65% 1,656,566,584.88
Net profit after extraordinary gains or losses
attributable to shareholders of the Company (RMB) 1,743,876,537.12 1,119,103,808.75 55.83% 702,329,086.29
Net cash flows from operating activities (RMB) 8,581,888,192.64 11,259,802,676.28 -23.78% 12,232,707,222.94
Basic earnings per share (RMB per share) 0.56 0.36 55.56% 0.33
Diluted earnings per share (RMB per share) 0.56 0.36 55.56% 0.33
Rate of return on weighted average net assets 9.60% 5.84% Increased by 3.76 5.57%
percentage points
Increase/decrease
as at the end of
the year compared
to the end of the
As at the end of 2021 As at the end of 2020 prior year As at the end of 2019
Total assets (RMB) 82,841,454,602.24 91,575,457,828.62 -9.54% 97,958,909,935.15
Net assets attributable to shareholders of the
Company (RMB) 19,089,778,227.64 24,276,968,789.00 -21.37% 25,169,743,863.75
2021 ANNUAL REPORT 7
II Company Profile and Key Financial Indicators
Data specification: The net profit attributable to shareholders of the Company does not exclude the effect of the interest
payment deferred and accumulated to subsequent periods for Perpetual Bonds under other equity instruments and the
effect of the dividends on Preference Shares under other equity instruments that have been considered and approved for
distribution. When calculating financial indicators such as earnings per share and rate of return on weighted average net
assets, the interest on Perpetual Bonds of RMB89,700,000.00, the dividends on Preference Shares of RMB323,390,968.66
declared to be distributed and the cash dividends of RMB14,202,450.00 attributable to the shareholders of restricted shares
expected to be unlocked in the future among the dividends distributed during the reporting period are deducted.
The lower of the Company’s net profit before or after extraordinary gains or losses in the last three accounting years is
negative, and the audit report for the last year shows that the Company’s ability to continue as a going concern is uncertain
Yes √ No
The lower of net profit before or after extraordinary gains or losses is negative
Yes √ No
VII. Differences in accounting data under domestic and overseas accounting standards
1. Differences between the net profit and net assets disclosed in accordance with international
accounting standards and China accounting standards in the financial report
Applicable √ Not applicable
There was no difference between the net profit and net assets disclosed in accordance with international accounting
standards and China accounting standards in the financial report during the reporting period.
2. Differences between the net profit and net assets disclosed in accordance with overseas accounting
standards and China accounting standards in the financial report
Applicable √ Not applicable
There was no difference between the net profit and net assets disclosed in accordance with overseas accounting
standards and China accounting standards in the financial report during the reporting period.
VIII. Key Financial Indicators by Quarter
Unit: RMB
Q1 Q2 Q3 Q4
Revenue 10,205,724,007.89 6,967,092,346.64 8,588,800,889.56 7,258,195,050.05
Net profit attributable to shareholders of the
Company 1,179,076,577.84 842,018,839.70 161,233,847.41 -116,816,156.24
Net profit after extraordinary gains or
losses attributable to shareholders of the
Company 1,165,076,739.34 799,641,441.36 -9,419,328.18 -211,422,315.40
Net cash flows from operating activities 3,386,890,222.27 1,360,295,299.67 2,479,120,720.53 1,355,581,950.17
Whether the above indicators or their aggregated amounts have any material difference with the respective amounts as
disclosed in the quarterly report or interim report
Yes √ No
8 SHANDONG CHENMING PAPER HOLDINGS LIMITED
II Company Profile and Key Financial Indicators
IX. Five-year financial summary under paragraph 19 of appendix 16 of the Hong Kong Listing
Rules
Unit: RMB’0,000
For the year ended 31 December
2021 2020 2019 2018 2017
Before After
adjustment adjustment
Revenue 3,301,981 3,073,652 3,039,543 2,887,576 2,985,174 2,947,245
Profit before tax 230,618 217,227 204,848 320,632 453,648 453,648
Tax 21,650 26,606 29,518 64,158 77,752 77,752
Profit for the current period attributable to shareholders of the
Company 206,551 171,203 165,657 250,983 376,933 376,933
Minority interests 2,417 19,418 9,673 5,491 -1,036 -1,036
Basic earnings per share (RMB/share) 0.56 0.36 0.33 0.51 1.13 1.13
Rate of return on weighted average net assets (%) 9.60% 5.84% 5.57% 8.51% 15.80% 15.80%
Unit: RMB’0,000
For the year ended 31 December
2021 2020 2019 2018 2017
Before After
adjustment adjustment
Total assets 8,284,145 9,157,546 9,795,891 10,531,873 10,562,510 10,562,510
Total liabilities 6,029,463 6,577,519 7,161,914 7,944,704 7,535,092 7,535,092
Minority interests 345,705 152,329 117,003 82,296 249,565 249,565
Equity attributable to shareholders of the Company 1,908,978 2,427,697 2,516,974 2,504,873 2,777,853 2,777,853
Net current assets (liabilities) -1,766,446 -1,516,398 -774,633 -1,344,718 -783,090 -783,090
Total assets less current liabilities 3,230,650 4,052,922 4,526,014 4,390,405 4,837,646 4,837,646
2021 ANNUAL REPORT 9
II Company Profile and Key Financial Indicators
X. Items and amounts of extraordinary gains or losses
√ Applicable Not applicable
Unit: RMB
Item Amount for 2021 Amount for 2020 Amount for 2019
Profit or loss from disposal of non-current assets (including
write-off of provision for assets impairment 162,163,302.50 -51,477,216.37 135,669,108.82
Government grants (except for the government grants
closely related to the normal operation of the Company
and granted constantly at a fixed amount or quantity in
accordance with a certain standard in compliance with
national policies and regulations) accounted for in profit
or loss for the current period 261,974,874.53 943,720,129.34 623,277,014.49
Gain arising from investment costs for acquisition of
subsidiaries, associates and joint ventures by the
corporation being less than its share of fair value of
identifiable net assets of the investees on acquisition 364,597,001.77
Profit or loss from debt restructuring 24,593,731.72 -14,942,498.74 -55,792,548.82
Except for effective hedging business conducted in the
ordinary course of business of the Company, gain or
loss arising from the change in fair value of financial
assets held for trading and financial liabilities held for
trading, as well as investment gains from disposal of
financial assets held for trading, financial liabilities held
for trading and financial assets available for sale -54,802,461.29 21,166,216.02 46,445,653.55
Consumable biological assets subsequently measured at
fair value -41,899.05 -13,329,852.55 -19,752,911.94
Other non-operating income and expenses other than the
above items -15,461,704.28 8,582,997.62 24,876,982.31
Loss on abnormal work stoppage -24,567,901.71
Less: Effect of income tax 60,135,956.19 120,949,832.54 131,148,729.27
Effect of minority interests (after tax) -3,346,683.65 155,276,771.30 33,934,072.32
Total 321,636,571.59 592,925,269.77 954,237,498.59
Details of other gain or loss items that fall within the definition of extraordinary gain or loss:
Applicable √ Not applicable
The Company did not have details of other gain or loss items that fall within the definition of extraordinary gain or loss.
Explanation on the extraordinary gain or loss items as illustrated in the Explanatory Announcement on Information
Disclosure for Companies Offering Their Securities to the Public No.1 – Extraordinary Gains or Losses defined as its
recurring gain or loss items
Applicable √ Not applicable
No extraordinary gain or loss items as illustrated in the Explanatory Announcement on Information Disclosure for Companies
Offering Their Securities to the Public No. 1 – Extraordinary Gains or Losses were defined by the Company as its recurring
gain or loss items.
10 SHANDONG CHENMING PAPER HOLDINGS LIMITED
III Chairman’s Report
Dear shareholders,
In 2021, the efficient control of the Chinese government over the COVID-19 epidemic created a stable internal environment for the
Chinese economy, while for the whole world, the recurring waves of the COVID-19 epidemic still hindered the global economic
recovery with conflicts such as supply chain crises and energy shortages also being magnified during the epidemic. During the
2021 financial year, the sharp rise in commodity prices and the significant increase in energy costs brought new challenges to
the development of the manufacturing industry in China, and the paper industry was no exception. Despite all challenges, the
Company still achieved steady growth in its results in 2021, manifesting powerful development resilience.
Across the “severe winter” and moving forward tenaciously
In 2021, in the face of complex and ever-changing internal and external situations, the Company worked together to face up to the
new problems, solve new difficulties and adapt to the new normal. Under the premise of doing a good job in epidemic prevention
and control, the Company strictly controlled product quality, expanded sales channels, tapped potential market demand, reduced
operating costs, optimised industrial layout and improved comprehensive operational efficiency. With the joint efforts of all cadres
and employees, in 2021, the Company completed the production of machine-made paper of 5.50 million tonnes and achieved
sales of 5.45 million tonnes. The Company achieved revenue of RMB33,020 million, representing a year-on-year increase of
7.43%. Total profit and net profit attributable to equity holders of the Company were RMB2,306 million and RMB2,066 million
respectively, up by 6.16% and 20.65% year on year. The Company has been successively honoured over 20 titles above the
provincial level including the Top 500 Chinese Enterprises, and its paper and paper board production ranks among the top ten in
the world, continuously maintaining its sound and steady development.
Constructing raw material safety net with the integration of pulp and paper
The ever-changing international trade relationship and stricter environmental protection requirements have pushed the importance
of supply chain stability to a new height, and also showed the urgency of an optimised raw material structure for the peers in
the industry. As a result, the Company has taken the lead in the construction of a “pulp-paper integration” base in Zhanjiang
Chenming as a pilot project, and the “pulp-paper integration strategy” is further implemented successively in Shouguang,
Huanggang and other places. Having built machine-made paper capacity of approximately 6.8 million tonnes and self-made wood
pulp capacity of approximately 4.3 million tonnes as at the end of 2021 the Company continuously has a leading pulp-paper
integration level in the industry, which builds a safety barrier of raw materials supply for our future sustainable development.
2021 ANNUAL REPORT 11
III Chairman’s Report
Seizing the opportunity arising from “dual carbon” with green vitality
In 2021, the PRC government put forward the “dual carbon” goal of “striving to hit peak carbon emissions before 2030 and
achieve carbon neutrality before 2060”. Under this background, it is richer and more profound to accelerate the pace of
carbon reduction, promote green development, lead technological innovation for China’s manufacturing industry and enhance
international competitiveness. The Company actively participates in energy structure transformation and low-carbon production.
In addition to the existing biomass power generation projects, the Company also introduces new photovoltaic power generation
projects and carbon sink development, gaining new momentum for green development with new vitality into clean production and
resource conservation.
Under the pandemic, China has attracted worldwide attention for its economic and social stability. With the popularisation of
vaccines and the gradual improvement of pandemic prevention systems in various countries, it is expected that the recovery of
the global economy, consumption and export will accelerate, which will benefit the development of the paper making industry.
The implementation of environmental protection policies such as “dual carbon” and “dual control” will also accelerate resources
optimisation and integration, and help the industry pattern continuously improve.
Not afraid of challenges, we have great expectation for the future. Under the new pattern of international and domestic double
circulation, the Company will deepen its principal business and gather momentum, make good use of international and domestic
markets, comprehensively improve the management level and operation quality of the Company, improve the supply chain
construction, enhance market recognition, strive to open a new chapter of high-quality development for the Company, and build
an international reputation for China’s paper making industry and even China’s manufacturing industry.
On behalf of the board of directors, I would like to take this opportunity to express my heartfelt gratitude to all colleagues,
partners, clients and investors for their understanding, supporting and acknowledgement of our enterprise in the previous year.
Chen Hongguo
Chairman
30 March 2022
12 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IV Management Discussion and Analysis
I. Industry Situation of the Company during the Reporting Period
The industry in which the Company operates is paper making and paper product industry.
The paper industry is one of the basic industries of the national economy that has the typical characteristics of large-scale
industrial production such as continuous and efficient operation and significant scale benefits, which is closely related
to social and economic development and people’s lives. Since the reform and opening up, with the sustained and rapid
development of the national economy, China‘s paper making industry has gradually begun to transform from extensive
growth to intensive growth. At the same time, driven by the upgrade of social demand, the increase of environmental
protection policies, the continuous progress of technology and the change of resource supply, the reduction of low-end
production capacity has been accelerated, and the structure of the paper industry has been continuously optimised.
During the reporting period, the “waste ban” was fully implemented, which further escalated the importance of the
transformation of the raw material structure, together with the “plastic restriction order” that spawned the demand for
“replacement of plastic with paper”, broadening the prospects for the white cardboard market. The successively issued
“dual carbon” and “dual control” policies had put forward higher requirements for the environmental protection level of the
manufacturing industry, and carbon reduction became an important issue for the sustainable development of enterprises.
The global spread of mutant strains had pressed the slowdown button for the operation of the supply chain, and the prices
of bulk commodities, chemical raw materials and basic energy had risen sharply, bringing new challenges to the supply
chain management and cost management capabilities of enterprises.
As an overview of the paper making industry in 2021, despite the difficulties such as the tightening upstream supply chain
and rising prices of various raw materials, the paper making industry still achieved rapid development. According to the data
from the National Bureau of Statistics, from January to December 2021, the national output of machine-made paper and
cardboard reached 135.839 million tonnes, representing a year-on-year increase of 8.833 million tonnes or 6.8%, breaking
the 130 million tonnes mark for the first time and hitting a record high; among the industrial enterprises above designated
size, enterprises in the paper making and paper product industry realised total profit of RMB88.48 billion, representing
a year-on-year increase of 6.9%, which was better than that of the prior year in general. As an overview by stage, from
January to mid-April 2021, the prices of wood pulp-based paper products such as white cardboard and cultural paper
showed an upward trend; from mid-to-late April to the end of September, the price of wood pulp-based paper products
signalled a downward trend until bottoming out in October, delineating an “N”-shaped route.
2021 ANNUAL REPORT 13
IV Management Discussion and Analysis
II. Principal activities of the Company during the Reporting Period
The Company is a large modern conglomerate principally engaged in pulp production and paper making. Its key indicators
in respect of business and economic efficiency have been in a leading position in the industry in China for over 20
consecutive years. The Company has been on the Fortune 500 China list for 12 years. During the reporting period, the
machine-made paper business is the major source of revenue and profit of the Company, and there was no significant
change in the principal activities of the Company.
1. Business overview
Taking “revitalising the Chinese papermaking industry” as its mission, the Company has been adhering to the general
keynote of green, low-carbon, recycling and sustainable development, and committing itself to implementing a pulp
and paper integration strategy. At present, the Company has 6 production bases in Shandong, Guangdong, Hubei,
Jiangxi, Jilin and other places, with annual pulp and paper production capacity of more than 11 million tonnes. It is the
first domestic paper making enterprise that achieves a balance between pulp production and paper making capacity.
During the reporting period, in the face of the complex domestic and international market economic environment
and various challenges against the backdrop of normalisation of epidemic prevention and control, all cadres and
employees of the Company pulled together to address the difficulties, improve efficiency, reduce costs, ensure the
steady progress of the Company‘s production and operation, and continuously improve the operating quality and
profitability of the Company. In 2021, the Company completed the production of machine-made paper of 5.50 million
tonnes and achieved sales of 5.45 million tonnes. The Company realised revenue of RMB33,020 million, representing
a year-on-year increase of 7.43%. Total profit and net profit attributable to equity holders of the Company were
RMB2,306 million and RMB2,066 million respectively, up by 6.16% and 20.65% year on year.
14 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IV Management Discussion and Analysis
II. Principal activities of the Company during the Reporting Period (Continued)
2. Products
As a leading player in the papermaking industry of China, the Company adopts the market-oriented approach,
attaches great importance to technology research and development and brand benefits, and boasts the largest and
most advanced pulping and papermaking production lines in the world, with machine-made paper products covering
more than 200 types in seven series, including cultural paper, coated paper, white cardboard, copy paper, industrial
paper, special paper, and household paper. The Company owns “BIYUNTIAN”, “GOLDEN MINGYANG”, “CHENMING
CLOUDY MIRROR”, “CHENMING CLOUDLY LION”, “CHENMING SNOW SHARK”, “CHENMING EAGLE”,
“CHENMING GONGHAO”, “XINGZHILIAN” and other famous brands, with each major product ranking among the
highest in terms of market share in China.
Category Major brands and types Major production companies Range of application
Cultural paper series 1. “BIYUNTIAN”, “CLOUDY MIRROR”, “CLOUDY Shouguang Headquarters Printing publications, textbooks, magazines, covers, illustrations,
LEOPARD” and “YUNJIN” all-wood pulp offset paper Zhanjiang Chenming notebooks, test papers, teaching materials, reference books, etc.
and electrostatic base paper Wuhan Chenming
2. “CLOUDY LION” and “CLOUDY CRANE” original white Jilin Chenming
offset paper
3. “CLOUDY PINE” and “GREEN PINE” light weight paper
4. Blueprint paper, colour offset paper, pure texture paper,
non-fluorescent offset paper, PE offset paper
5. Beige and high white book paper
6. Light weight coated paper
Coated paper series 1. “SNOW SHARK” and “EAGLE” one-sided coated paper Shouguang Headquarters Double-sided coated paper is suitable for high quality printing, such
2. “SNOW SHARK”, “EAGLE” and “RABBIT” double-sided Shouguang Meilun as high-grade picture albums, picture, magazines and so on,
coated paper promotional materials such as interior pages of high-end books,
3. “EAGLE” and “RABBIT” matte coated paper wall calendars, posters and so on, and suitable for suitable for
high-speed sheet printing and high-speed rotary printing;
One-sided coated paper is suitable for upscale tobacco package
paper, adhesive sticker, shopping bags, slipcases, envelopes,
gift wrapping and so on, and suitable for large format printing and
commercial printing.
White cardboard series 1. White cardboard of “LIYA” series, white cardboard Shouguang Headquarters High-end gift boxes, cosmetics boxes, tags, shopping bags, publicity
and ivory cardboard of “LIPIN” and “POPLAR” series, Jiangxi Chenming pamphlets, high-end postcards; cigarette package printing of
high bulk cardboard and ivory cardboard of “LIZZY” Zhanjiang Chenming medium and high quality; milk package, beverage package,
and “BAIYU” series, and super high bulk cardboard of disposable paper cups, milk tea cups, and noodle bowls.
“LIYING” and “BAIYU” series
2. Food package board of “LIYA” and “LIZZY” series
3. Coated cattle card and LIYA book card
4. Playcard paper board
5. Chenming cigarette cardboard
Copy paper series “GOLDEN MINGYANG” and “GOLDEN CHENMING” Shouguang Meilun Printing and copying business documents, training materials, and
copy paper, “BOYA” and “BIYUNTIAN” copy paper, Zhanjiang Chenming writing.
“MINGYANG”, “LUCKY CLOUDS”, “BOYANG” and
“SHANYIN” copy paper, and “GONGHAO” and
“TIANJIAN” copy paper
Industrial paper series High-grade yellow anti-sticking base paper, ordinary yellow/ Shouguang Headquarters Anti-stick base paper is mainly used for producing the paper base of
white anti-sticking base paper and PE paper Wuhan Chenming stripping paper or anti-sticking base paper;
Jiangxi Chenming
Zhanjiang Chenming Cast coated base paper is suitable for producing adhesive paper or
playcard compound paper after coating.
Special paper series Thermal paper and glassine paper Shouguang Art Paper High-grade adhesive backing paper for electronics, medicine, food,
Wuhan Chenming washing supplies, supermarket labels, double-sided tapes, etc.
Household paper series Toilet paper, facial tissue, pocket tissue, napkin, paper Shouguang Meilun Daily toilet supplies; used in restaurants and other catering industries,
towels and “XINGZHILIAN” Wuhan Chenming and used in public toilets in hotels, guesthouses, and office
buildings, and also suitable for home and other environment.
2021 ANNUAL REPORT 15
IV Management Discussion and Analysis
II. Principal activities of the Company during the Reporting Period (Continued)
3. Operation model
(1) Purchase model
The Company has established a supply chain management centre which adopts a supply chain management
model of “centralised procurement by the Group, source as the first priority, hierarchical separation and one-
vote veto”. Through continuous improvement of the procurement information system, the Company has
fully realised machine control management, and optimised the authorisation approval process, effectively
standardising the procurement management system. Based on the needs of production bases, the Group
integrates the resources of related parties and implements centralised procurement. The Company seeks
sources and high-quality suppliers through industry exhibitions, on-site inspections and competitive factory
research to strengthen procurement at source and reduce procurement costs; and introduces a supplier
competition mechanism by establishing a three-level joint review mechanism for suppliers and implementing a
system of eliminating substandard suppliers, so as to improve supply quality. Meanwhile, the Company actively
cooperates with financial institutions and third parties in the supply chain financial business, and fully utilises the
funds from contributing parties to lower procurement costs, deepen strategic cooperation and enhance supply
chain competitiveness.
(2) Production model
The Company has committed itself to implementing a pulp and paper integration strategy. Adhering to the
concept of “placing green development and environmental protection as its priority”, the Company has actively
promoted clean production and vigorously carried out energy conservation and emission reduction, aiming to be
a resource-saving and environmentally friendly model enterprise. It is innovating an integrated use of resources
and a circular industrial development mode, and an “ecological chain” featuring resources, products and
recycled resources has been established. As for production process, the Company takes planned management
as the focus and implements a hierarchical planned management model for the Group, the Company,
factories and workshops. Its production volume is determined based on the sales, its production is arranged
scientifically, and its inventories are under strict control. The Group has set up a production scheduling centre
to monitor the operation of the production lines of each subsidiary around the clock on a real-time basis, so as
to ensure normal production. It has actively built and promoted the MES management system, and realised the
timely information transfer between the management and the production control unit through bridging the gap
between the ERP and DCS systems.
(3) Marketing model
The Company has always adhered to the marketing concept of “Good faith, Win-Win and Sharing” while
wholeheartedly serving its customers. The Company has a relatively mature sales network, and has set up
specialised sales companies responsible for the development of domestic and overseas markets, product
sales, and formulation of sales policies. The sales companies’ management systems are divided into product
lines, product companies, management areas, and branches to achieve matrix management. The sales
companies are divided into product companies of cultural paper series, coated paper series, white cardboard
series, electrostatic paper series, special paper series and household paper series according to product line.
Each product company has its administrative district. A regional general manager is responsible for his/her
administrative district, under which branch companies are set up. The chief representatives of the branch
companies have full authority to deal with branch business.
The Company has implemented a three-level scheduling mechanism. Branch companies, administrative
districts, and sales companies schedule task indicators daily to ensure the effective implementation of the plans.
It sticks to a “four-level visit mechanism” to gain deep market insights and meet customer needs. Meanwhile,
by leveraging its comprehensive information systems, the Company has realised It-based management. It has
also established and improved the complaint handling system and customer satisfaction system to enhance the
Company’s marketing management level.
16 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IV Management Discussion and Analysis
II. Principal activities of the Company during the Reporting Period (Continued)
3. Operation model (Continued)
(4) R&D Mode
The Company is market-oriented, and innovation is it driving force. It highly values technological R&D, and has
formed a variety of R&D modes such as independent R&D, technology introduction, and industry university-
research cooperation. At present, the Company has a number of domestically leading innovative R&D platforms,
including the national enterprise technology centre, the post-doctoral working station, the state certified CNAS
pulp and paper testing centre, Shandong Pulp and Paper Making Engineering Lab and the Guangdong Pulp and
Paper Production Technology Research Centre, which have enhanced its independent innovation capabilities.
Meanwhile, on the basis of introducing internationally advanced pulp and paper production lines and advanced
technologies, the Company has made technological improvements and re-innovations, and established
new standards for processes and product quality, forming distinctive core technologies. The Company also
works hard on the following aspects: carrying out academic research with colleges and universities and R&D
institutions such as Qilu University of Technology, Qingdao University of Science and Technology, Tianjin
University of Science and Technology, and Institute of Chemical Industry of Forest Products of the Chinese
Academy of Forestry, introducing, digesting and absorbing scientific research and innovation achievements,
accelerating the industrialisation of new and high technologies, optimising product mix, and improving the
competitiveness of its products in the market.
4. The position of the company in the industry during the reporting period
2021 was the first year for China to build a new development pattern. In the face of multiple challenges such as the
complicated and severe international environment and sporadic and repeated local pandemic outbreaks, all regions
and departments strictly implemented the decisions and arrangements made by the CPC Central Committee and the
State Council, scientifically coordinated pandemic prevention and control and economic and social development.
China’s economy experienced sustained and stable recovery, and made new achievements in high-quality
development, marking a good start for the 14th Five-Year Plan. As an important basic raw material industry closely
related to the national economy and social development, the paper making industry, in the first half of 2021, improved
its returns significantly due to the boost of upstream raw material costs, the recovery of downstream demand and the
paper product price rise. Although the overall prosperity of the paper making industry was frustrated and the profit
growth rate declined since the third quarter, the paper making industry in general maintained steady growth during
the reporting period. According to the data of the National Bureau of Statistics, the paper making and paper product
industrial enterprises above designated size realised total profit of RMB88.48 billion, representing a year-on-year
increase of 6.9%.
Focusing on the principal business of pulp production and paper making, the Company has made a strategic layout
in the whole industrial chain, and built three major product bases with Shouguang in the north, Huanggang in the
middle and Zhanjiang in the south. It has become the first pulp and paper integration enterprise in China with basically
balanced pulp and paper production capacity, and is ranked among the top 10 in the world in terms of paper and
paperboard output, commanding a leading position in the industry. The Company attaches great importance to
technology research and development and product service quality, continuously develops high-grade and high
value-added products, leads the market direction, and becomes the enterprise with the largest and most complete
product varieties in the paper making industry, with a leading market share for its principal products in China. During
the reporting period, the Company continuously promoted high-quality development, winning over 20 awards which
reflected the high recognition of the Company from all walks of life, including Top 500 Chinese Enterprises, Top
500 Manufacturers in the PRC, Fortune China 500, Top 10 Enterprises in the PRC Light Industry – Paper Sector,
Shandong Province High-end Brand Continuous Cultivation Enterprise, Shandong Province Governor Quality Award
Nomination Award, 2021 Shandong Province Science and Technology Leading Enterprise, “Top Ten Enterprises” of
Shandong Paper Association.
2021 ANNUAL REPORT 17
IV Management Discussion and Analysis
II. Principal activities of the Company during the Reporting Period (Continued)
4. The position of the company in the industry during the reporting period (Continued)
In the future, the Company will remain true to its original aspiration and forge ahead, continue to focus on its principal
business and strengthen the industry, and focus on the construction of Huanggang Chenming production base. It
will give full play to the core advantages of its whole industrial chain layout, comprehensively improve the corporate
management level and operation quality, and enhance the enterprise‘s ability to resist risks, so that the Company
can achieve steady progress in economic benefits, have far-reaching development, and strive to build a world-class
enterprise group with global competitiveness, making greater contributions to the development of the paper making
industry
III. Analysis of Core Competitiveness
After innovation and development for more than 60 years, the Company has created a strong brand influence and cultivated
a solid comprehensive competitiveness. It promotes product upgrades, enhances R&D strength and improves core
competitiveness by building a supply chain, details of which are as follows:
1. Advantages of pulp and paper integration
The Company has unwaveringly implemented a pulp and paper integration strategy. At present, its major production
bases located in Shouguang, Zhanjiang, and Huanggang are equipped with chemical pulp production lines, with
total production capacity of wood pulp reaching 4.30 million tonnes. It is the first modern large-scale paper making
company that basically realises wood pulp self-sufficiency in China. A complete supply chain not only creates cost
advantage for the Company, but also safeguards the safety, stability and quality of upstream raw materials, and
renders strong support for the Company to maintain its long-term competitiveness.
2. Scale advantages
The paper making industry is a typical capital-intensive and technology-intensive industry that follows the laws of
economies of scale. The Company is a leading player in the paper making industry in China. Its large-scale production
bases can be found in the major markets in Southern, Central, Northern, and Northeast China, with annual pulp and
paper production capacity reaching 11 million tonnes, where reasonable production scale creates the marginal cost
advantage. Meanwhile, by leveraging the scale advantages, the Company has built an international logistics centre
and supporting railway dedicated lines and docks, and constructed a comprehensive logistics service platform
covering unitised transportation, bonded warehousing, transfer and storage at stations and terminals, realising the
improvement of logistics efficiency and the stability of logistics costs.
3. Product advantages
The Company is an enterprise that offers the widest product range in the paper making industry. The product series
include cultural paper, white paper board, coated paper, copy paper, household paper, thermal paper, etc., with
each major product ranking among the best in terms of market share. Over the years, the Company has attached
great importance to technology research and development, introduced the most advanced pulping and paper
making technology and equipment, refined its products and promoted dynamic upgrade of products by persisting
in technological innovation and work process optimisation, so as to continuously enhance the value of the brand of
Chenming and improve brand benefits.
4. Industry layout advantages
Closely centring on the pulp and paper integration strategy, the Company has integrated resources and established
its production bases in the core target market to promote the coordinated development of all regions. Currently,
the Company adopts the market-oriented approach and has six production bases in Shandong, Guangdong,
Hubei, Jiangxi, Jilin and other places. With all products sold at close distances, the Company substantially reduces
transportation costs while improving service efficiency, achieving a “win-win” between the Company and its users.
18 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IV Management Discussion and Analysis
III. Analysis of Core Competitiveness (Continued)
5. Advantages in technical equipment
The Company highly values the introduction and upgrades of technical equipment and boasts the largest and most
advanced pulping and paper making production line in the world. The Company’s major production equipment
has been imported from internationally renowned manufacturers, including Metso and Valmet of Finland, Voith of
Germany, Andritz of Austria, etc. and reached the advanced international level. For the moment, the Company has
three production lines with a paper width of more than 11 metres, which ensures production efficiency and product
quality.
6. Advantages in research and innovation
The Company has scientific research institutions including the national enterprise technology centre, the post-doctoral
working station, the state certified CNAS pulp and paper testing centre. At the same time, the Company actively
carries out in-depth industry-university-research cooperation with prestigious domestic universities and research
institutes, continuously improves technical innovation capabilities and scientific research and development levels,
and develops a series of new products with high technology contents and high added value as well as proprietary
technologies. The Company and its subsidiaries Zhanjiang Chenming, Shouguang Meilun, Jiangxi Chenming, Jilin
Chenming, Huanggang Chenming and Wuhan Chenming are high and new technology enterprises. As at the end
of the reporting period, the Company had obtained over 360 national patents, and took the lead in obtaining the
ISO9001 quality system certification, the ISO14001 environmental protection system certification and the FSC-COC
international forest system certification among domestic peers.
7. Team management advantages
With a reasonable and balanced professional structure, the Company possesses a complete and reasonable talent
structure consisting of experienced personnel, including high-end talents specialising in production, technology,
sales, finance, laws, etc. In the course of business operations, the stable core team has developed an internal
corporate culture that ties in with the Company’s development, summarised management experience with industry
characteristics, and formed a team advantage combining management and culture, allowing it to accurately grasp
the industry development trend and direction. At the same time, the Company has paid attention to the construction
of a talent reserve cultivation mechanism. With advanced business concepts and enormous development space, the
Company has attracted an array of high-calibre professionals and improved the level of talent pool, providing solid
guarantee for the Company’s long-term sustainable development.
8. Advantages in environmental governance capacity
The Company has actively upheld the concept of “lucid waters and lush mountains are invaluable assets”, adhered
to the development idea of “placing green development and environmental protection as its priority”, always
regarded environmental protection as the “life project”, clung to the green development model of clean production
and resource recycling, and earnestly shouldered the corporate responsibility of environmental protection. In recent
years, the Company and its subsidiaries have invested more than RMB8 billion in total in environmental protection,
and have constructed the pollution treatment facilities including the alkali recovery system, middle water treatment
system, middle water reuse system, white water recovery system and black liquor comprehensive utilisation system.
The environmental indicators of the Company rank high in the country and in the world. At present, the Company
adopts the world’s most advanced “ultrafiltration membrane + reverse osmosis membrane” technology to complete
the reclaimed water recycling membrane treatment project, which is the largest middle water reuse project in the
domestic paper industry. The reclaimed water recycle rate reaches more than 75%. The reclaimed water quality
meets drinking water standards, which can save fresh water of 170,000 cubic metres every day. Meanwhile, in
response to the “dual carbon” policy, the Company actively introduces photovoltaic power generation and biomass
power generation, continuously optimises the energy structure and improves the level of low-carbon production.
2021 ANNUAL REPORT 19
IV Management Discussion and Analysis
IV. Analysis of principal operations
1. Overview
In 2021, under the dual impacts of repeated COVID-19 outbreaks and global macroeconomic shocks, the paper
making industry also staged a round of “cyclical” fluctuations, and the market price of paper products showed
an “N”-shaped trend of “sharp rise – downward oscillation – bottoming out”. In terms of upstream raw materials,
the pandemic disrupted the rhythm of the supply chain operations. The prices of bulk commodities such as coal
and chemicals rose sharply in 2021, and shipping costs increased significantly, bringing greater cost pressure on
companies. In terms of the market, the market demand for paper products undergone a phased adjustment after
experiencing rapid growth in the first half of the year, and bottomed out in the fourth quarter. Nevertheless, the paper
making industry in China maintained a steady development in 2021.
During the reporting period, on the premise of ensuring pandemic prevention and control work, the Company
strengthened safety production, had strict control over product quality, orderly tapped the markets, consolidated
scientific research strength, optimised resource deployment, improved its supply chain system, enhanced cost
management, and improved regional linkage, so that the enterprise synergy effects were further improved, and the
comprehensive capability was continuously reinforced. Although the corporate operation difficulty intensified due
to the impact of upstream commodity supply fluctuation and downstream market demand fluctuation for paper
products, the Company still presented a comparatively steady growth momentum through the implementation of the
above measures to minimise the adverse effects caused by external fluctuation.
20 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IV Management Discussion and Analysis
IV. Analysis of principal operations (Continued)
2. Revenue and cost
(1) Components of revenue
Unit: RMB
2021 2020 Increase/
Amount % of revenue Amount % of revenue decrease
Total revenue 33,019,812,294.14 100% 30,736,517,996.90 100% 7.43%
By industry
Machine-made paper 29,071,777,731.50 88.04% 26,799,197,492.54 87.19% 8.48%
Construction materials 349,945,005.51 1.06% 419,138,839.41 1.36% -16.51%
Financial leasing 327,001,050.30 0.99% 935,121,026.20 3.04% -65.03%
Electricity and steam 303,940,594.69 0.92% 195,367,954.91 0.64% 55.57%
Hotel and property rentals 148,941,357.80 0.45% 93,370,973.05 0.30% 59.52%
Chemicals 131,104,964.35 0.40% 144,274,657.39 0.47% -9.13%
Others 2,687,101,589.99 8.14% 2,150,047,053.40 7.00% 24.98%
By product
White paper board 9,579,581,625.05 29.01% 7,900,414,595.22 25.70% 21.25%
Duplex press paper 7,287,152,353.07 22.07% 6,880,399,009.21 22.39% 5.91%
Coated paper 4,310,744,513.87 13.06% 4,134,523,188.76 13.45% 4.26%
Electrostatic paper 3,857,097,045.49 11.68% 4,052,403,877.82 13.18% -4.82%
Anti-sticking raw paper 1,168,436,835.30 3.54% 1,118,932,774.91 3.64% 4.42%
Thermal paper 540,941,351.36 1.64% 519,335,040.60 1.69% 4.16%
Other machine-made paper 2,327,824,007.36 7.05% 2,193,189,006.02 7.14% 6.14%
Construction materials 349,945,005.51 1.06% 419,138,839.41 1.36% -16.51%
Financial leasing 327,001,050.30 0.99% 935,121,026.20 3.04% -65.03%
Electricity and steam 303,940,594.69 0.92% 195,367,954.91 0.64% 55.57%
Hotel and property rentals 148,941,357.80 0.45% 93,370,973.05 0.30% 59.52%
Chemicals 131,104,964.35 0.40% 144,274,657.39 0.47% -9.13%
Others 2,687,101,589.99 8.14% 2,150,047,053.40 7.00% 24.98%
By geographical segment
Mainland China 28,894,011,653.20 87.51% 27,683,360,047.76 90.07% 4.37%
Other countries and regions 4,125,800,640.94 12.49% 3,053,157,949.14 9.93% 35.13%
By sales model
Distribution 21,812,237,365.81 66.06% 19,689,343,007.56 64.06% 10.78%
Direct sales 11,207,574,928.33 33.94% 11,047,174,989.34 35.94% 1.45%
2021 ANNUAL REPORT 21
IV Management Discussion and Analysis
IV. Analysis of principal operations (Continued)
2. Revenue and cost (Continued)
(2) Industries, products, regions and sales model accounting for over 10% of revenue or operating profit of the
Company
√ Applicable Not applicable
Unit: RMB
Increase/
Increase/ Increase/ decrease of
decrease of decrease of gross profit
revenue as operating costs margin as
compared as compared compared
to the to the to the
corresponding corresponding corresponding
Gross profit period of the period of the period of the
Revenue Operating costs margin prior year prior year prior year
By industry
Machine-made paper 29,071,777,731.50 22,238,585,916.66 23.50% 8.48% 4.76% 2.71%
By product
White paper board 9,579,581,625.05 6,540,978,628.51 31.72% 21.25% 13.47% 4.68%
Duplex press paper 7,287,152,353.07 6,004,341,245.63 17.60% 5.91% 6.12% -0.16%
Coated paper 4,310,744,513.87 3,130,491,004.15 27.38% 4.26% -3.78% 6.07%
Electrostatic paper 3,857,097,045.49 3,140,962,690.62 18.57% -4.82% -1.74% -2.56%
By geographical segment
Mainland China 28,894,011,653.20 21,524,347,994.37 25.51% 4.37% 2.16% 1.62%
Other countries and regions 4,125,800,640.94 3,697,927,800.91 10.37% 35.13% 43.57% -5.27%
By sales model
Distribution 21,812,237,365.81 16,685,368,166.13 23.50% 10.78% 6.99% 2.71%
Direct sales 11,207,574,928.33 8,536,907,629.15 23.83% 1.45% 6.05% -3.30%
Under the circumstances that the statistics specification for the Company’s principal operations data
experienced adjustment in the reporting period, the principal activity data upon adjustment of the statistics
specification as at the end of the reporting period in the latest year
Applicable √ Not applicable
22 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IV Management Discussion and Analysis
IV. Analysis of principal operations (Continued)
2. Revenue and cost (Continued)
(3) Whether revenue from sales in kind is higher than revenue from services
√ Yes No
Increase/
By industry Item Unit 2021 2020 decrease
Machine-made paper Sales ‘0,000 tonnes 545 561 -2.85%
Production output ‘0,000 tonnes 550 577 -4.68%
Inventories ‘0,000 tonnes 45 40 12.50%
Explanation on why the related data varied by more than 30%
Applicable √ Not applicable
(4) Performance of material sales contracts and material procurement contracts of the Company during the
reporting period
Applicable √ Not applicable
2021 ANNUAL REPORT 23
IV Management Discussion and Analysis
IV. Analysis of principal operations (Continued)
2. Revenue and cost (Continued)
(5) Composition of operating costs
By industry
Unit: RMB
2021 2020
% of % of
operating operating Increase/
By industry Item Amount costs Amount costs decrease
Machine-made paper Raw materials 13,347,618,450.08 60.02% 12,830,708,837.34 60.44% 4.03%
Chemicals 2,762,896,811.85 12.42% 2,571,910,928.88 12.12% 7.43%
Energy and power 2,796,822,991.34 12.58% 2,278,028,439.77 10.73% 22.77%
Shipping fee 986,623,212.89 4.44% 1,108,102,345.78 5.22% -10.96%
Depreciation 926,703,946.26 4.17% 1,024,679,469.64 4.83% -9.56%
Labour costs 284,597,722.29 1.28% 273,064,171.97 1.29% 4.22%
Other production costs 1,133,322,781.95 5.10% 1,140,961,560.11 5.37% -0.67%
Subtotal 22,238,585,916.66 100.00% 21,227,455,753.49 100.00% 4.76%
Power and steam Raw materials 198,834,959.40 76.47% 100,417,013.28 76.99% 98.01%
Depreciation 19,199,537.95 7.38% 11,986,604.72 9.19% 60.17%
Labour costs 6,844,347.79 2.63% 5,042,260.92 3.87% 35.74%
Energy and power 25,124,584.80 9.66% 5,424,201.15 4.16% 363.19%
Chemicals 746,078.65 0.29% 197,996.81 0.15% 276.81%
Other production costs 9,269,615.37 3.56% 7,367,419.47 5.65% 25.82%
Subtotal 260,019,123.96 100.00% 130,435,496.35 100.00% 99.35%
Construction materials Raw materials 222,297,889.45 70.37% 253,136,606.53 70.56% -12.18%
Energy and power 32,115,179.94 10.17% 40,584,938.35 11.31% -20.87%
Labour costs 14,568,778.00 4.61% 22,635,978.10 6.31% -35.64%
Depreciation 9,626,644.95 3.05% 10,376,987.54 2.89% -7.23%
Shipping fee 14,416,949.06 4.56% 9,368,706.78 2.61% 53.88%
Other production costs 22,887,012.53 7.24% 22,626,450.43 6.31% 1.15%
Subtotal 315,912,453.93 100.00% 358,729,667.72 100.00% -11.94%
24 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IV Management Discussion and Analysis
IV. Analysis of principal operations (Continued)
2. Revenue and cost (Continued)
(6) Change of scope of consolidation during the reporting period
√ Yes No
During the reporting period, 6 companies were added to the scope of consolidation. In particular, 5 companies
were newly established subsidiaries, namely Shanghai Chenyin Trading Co., Ltd., Nanchang Shengheng
Trading Co., Ltd., Nanchang Kunheng Trading Co., Ltd., Weifang Chendu Equity Investment Partnership (Limited
Partnership) and Huanggang Chenming Pulp & Fiber Trading Co., Ltd. During the reporting period, a subsidiary
was acquired not within the definition of business, namely Wuhan Junheng Property Management Co., Ltd.
During the reporting period, 7 companies were reduced from the scope of consolidation. In order to further
focus on the principal business of pulp production and paper making, divest non-principal business assets
and optimise resource allocation, the Company disposed of 100% equity interest in Zhanjiang Chenming New-
style Wall Materials Co., Ltd., Chengdu Chenming Culture Communication Co., Ltd., Shandong Chenming
Power Supply Holdings Co., Ltd., Shandong Chenming Panels Co., Ltd., Shouguang Chenming Cement Co.,
Limited and Shouguang Chenming Floor Board Co., Ltd. Such companies were excluded from the scope of
consolidation. A subsidiary, Shandong Chenming Coated Paper Sales Co. Ltd., was absorbed into the Group.
(7) Significant change in or adjustment of the businesses, products or services of the Company during the
reporting period
Applicable √ Not applicable
(8) Sales to major customers and major suppliers
Sales to major customers of the Company
Total sales to top 5 customers (RMB) 5,259,350,805.45
Total sales to top 5 customers as a percentage of the total sales for the year 15.93%
Sales to top 5 customers who are related parties as a percentage of
the total sales for the year 0.00%
Information on top 5 customers of the Company
As a percentage of the
No. Name of customer Sales (RMB) total sales for the year (%)
1 Customer A 1,343,002,399.70 4.07%
2 Customer B 1,032,917,716.77 3.13%
3 Customer C 977,311,240.64 2.96%
4 Customer D 976,565,580.69 2.96%
5 Customer E 929,553,867.65 2.82%
Total 5,259,350,805.45 15.93%
Other explanation of the major customers
Applicable √ Not applicable
2021 ANNUAL REPORT 25
IV Management Discussion and Analysis
IV. Analysis of principal operations (Continued)
2. Revenue and cost (Continued)
(8) Sales to major customers and major suppliers (Continued)
Major suppliers of the Company
Total purchases from top 5 suppliers (RMB) 4,691,196,028.43
Total purchases from top 5 suppliers as a percentage of the total purchases for the year 18.60%
Total purchases from top 5 suppliers who are related parties as a percentage of
the total purchases for the year 0.00%
Information on top 5 suppliers of the Company
As a percentage of the total
No. Name of supplier Purchases (RMB) purchases for the year (%)
1 Supplier A 2,413,919,229.39 9.57%
2 Supplier B 815,678,586.65 3.23%
3 Supplier C 542,935,665.28 2.15%
4 Supplier D 476,972,812.83 1.89%
5 Supplier E 441,689,734.27 1.75%
Total 4,691,196,028.43 18.60%
Other explanation of the major suppliers
Applicable √ Not applicable
3. Expenses
Unit: RMB
Increase/ Reasons for material
2021 2020 Decrease (%) changes
Selling and distribution expenses 293,509,692.51 298,246,355.91 -1.59% Sales commission decreased year on
year during the reporting period.
General and administrative expenses 942,360,735.54 1,025,420,660.39 -8.10% Expenses on strengthening the
control over various administrative
expenses during the reporting
period.
Finance expenses 2,387,471,286.46 2,562,065,063.22 -6.81% Interest expenses of the Company
decreased year on year during the
reporting period.
Research and development 1,453,766,371.46 1,274,355,241.49 14.08% The Company and its subsidiaries
expenditure stepped up efforts in research and
development during the reporting
period.
26 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IV Management Discussion and Analysis
IV. Analysis of principal operations (Continued)
4. Research and development expenditure
√ Applicable Not applicable
During the reporting period, the Company’s technological R&D centre was always guided by customers’ needs.
Improving economic benefits was its goal. The Company kept pushing technological innovations, the production
of products with high added value, and technological optimisation, aiming to improve its product quality. In 2021,
the Company obtained 59 patents. The “Technological Development of Coated Paper for High-end Books and
Periodicals” was included in the technological innovation project plans of Shandong Province for 2021. The project
“Key Technologies and Industrialisation of Green Preparation and High-value Utilisation of High-Performance Wood
Chemical Pulp” won the second prize of the National Science and Technology Progress Award, which promoted
the green production of the paper industry. The Company will continue adhering to the orientation of technological
innovation, and improve its R&D and product quality in a sustained way, aiming to take its core competence in
developing the enterprise to a higher level.
Objectives to be Expected impact on the future
Name of major R&D project Project purpose Project progress achieved development of the Company
Technological development of low-weight Enhancing product Pilot testing stage To become Improving customer satisfaction with
and high-bulk duplex press paper functionality or improving domestically products and increasing market
performance leading share.
Technological development of low-weight Saving raw materials Pilot testing stage To become Lowering production costs and
and high-bulk thin paper domestically improving the Company’s
leading economic benefits.
Technological development of chemical Reducing energy Industrialisation To become Improving the quality of raw material
mechanical pulp prepared by co- consumption or stage domestically products so that they can be
processing hydrothermal mixed wide improving energy leading applied in high-end products with
leaves and biologicals efficiency high added values and increasing
the proportion of the Company’s
high-end products.
Technological development of white paper Enhancing product Small testing stage To become Improving customer satisfaction with
board with natural colour in the core layer functionality or improving domestically products and increasing market
performance leading share.
New technology development for AKD sizing Enhancing product Pilot testing stage To become Improving customer satisfaction with
of electrostatic paper functionality or improving domestically products and increasing market
performance leading share.
Technological development of embossed Enhancing product Small testing stage To become Improving customer satisfaction with
high-end napkin functionality or improving domestically products and increasing market
performance leading share.
Technological development of coated paper Enhancing product Small testing stage To become Improving customer satisfaction with
for high-end books and periodicals functionality or improving domestically products and increasing market
performance leading share.
2021 ANNUAL REPORT 27
IV Management Discussion and Analysis
IV. Analysis of principal operations (Continued)
4. Research and development expenditure (Continued)
R&D personnel of the Company
Percentage
2021 2020 of change
R&D headcount 1,900 1,933 -1.71%
Ratio of R&D personnel 15.45% 15.16% 0.29%
Academic background of R&D personnel – – –
Bachelor’s degree 185 198 -6.57%
Master’s degree 11 9 22.22%
Age composition of R&D personnel – – –
Under 30 387 423 -8.51%
30~40 years old 1,034 1,079 -4.17%
Research and development expenditure of the Company
Percentage
2021 2020 of change
R&D expenditure (RMB) 1,453,766,371.46 1,274,355,241.49 14.08%
R&D expenditure to revenue 4.40% 4.15% 0.25%
Amount of R&D expenditure capitalised (RMB) 0.00 0.00 0.00%
Capitalised R&D expenditure to R&D expenditure 0.00% 0.00% 0.00%
Reasons for and effects of significant changes in the composition of the Company’s R&D personnel
Applicable √ Not applicable
Reasons for significant change in total R&D expenditure to revenue
Applicable √ Not applicable
Reasons for and reasonableness of the significant change of the capitalisation rate of R&D expenditure
Applicable √ Not applicable
28 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IV Management Discussion and Analysis
IV. Analysis of principal operations (Continued)
5. Cash flows
Unit: RMB
Increase/
Item 2021 2020 decrease (%)
Subtotal of cash inflows from operating activities 39,306,294,223.43 40,142,770,644.64 -2.08%
Subtotal of cash outflows from operating activities 30,724,406,030.79 28,882,967,968.36 6.38%
Net cash flows from operating activities 8,581,888,192.64 11,259,802,676.28 -23.78%
Subtotal of cash inflows from investing activities 1,321,827,995.68 800,515,222.13 65.12%
Subtotal of cash outflows from investing activities 1,156,106,779.05 981,555,028.94 17.78%
Net cash flows from investing activities 165,721,216.63 -181,039,806.81 191.54%
Subtotal of cash inflows from financing activities 33,237,001,445.83 31,654,325,203.77 5.00%
Subtotal of cash outflows from financing activities 43,177,497,483.93 41,248,363,106.56 4.68%
Net cash flows from financing activities -9,940,496,038.10 -9,594,037,902.79 -3.61%
Net increase in cash and cash equivalents -1,220,254,116.77 1,498,841,936.38 -181.41%
Explanation on main effects of material changes in relevant data year-on-year
√ Applicable Not applicable
(1) Net cash flows from operating activities decreased by 23.78% as compared to the corresponding period of the
prior year mainly because the net cash received during the reporting period decreased year-on-year with the
reduction of the scale of the financial leasing business.
(2) Net cash flows from investing activities increased by 191.54% as compared to the corresponding period of
the prior year mainly because Chenming GDR Fund, a subsidiary, recovered its investment of RMB200 million
in Chenrong GDR Fund, and Huanggang Chenming disposed of RMB164 million of land during the reporting
period, leading to a year-on-year increase in cash inflows from investment activities.
Explanation on reasons leading to the material difference between net cash flows from operating activities during the
reporting period and net profit for the year
Applicable √ Not applicable
V. Analysis of non-principal operations
Applicable √ Not applicable
2021 ANNUAL REPORT 29
IV Management Discussion and Analysis
VI. Analysis of assets and liabilities
1. Material changes of asset items
Unit: RMB
As of the end of 2021 As of the beginning of 2021
As a percentage As a percentage Percentage
Amount of total assets Amount of total assets change Description
Monetary funds 14,119,782,939.66 17.04% 17,759,537,598.98 19.39% -2.35% Mainly due to the year-on-year decrease
of the Company’s existing financing
deposits at the end of the reporting
period.
Inventories 5,282,631,922.12 6.38% 5,135,293,347.82 5.61% 0.77% Mainly due to the increase in the
Company’s inventory of finished
goods at the end of the reporting
period.
Non-current assets 5,216,934,172.61 6.30% 4,222,744,207.34 4.61% 1.69% Mainly due to the increase in long-term
due within receivables due within one year at
one year the end of the reporting period.
Other current assets 1,903,929,492.85 2.30% 2,716,918,695.85 2.97% -0.67% Mainly due to continued reduction of the
scale of the financial leasing business
during the reporting period.
Long-term 1,788,759,975.35 2.16% 4,658,884,857.95 5.09% -2.93% Mainly due to the reclassification of
receivables long-term receivables due within
one year at the end of the reporting
period.
Investment 6,473,538,431.91 7.81% 5,943,159,568.00 6.49% 1.32% Mainly due to the merger of Wuhan
properties Junheng during the reporting period,
which resulted in the increase of
investment properties.
Long-term equity 1,866,587,685.35 2.25% 3,906,158,402.45 4.27% -2.02% Mainly due to the application of the
investments new financial instrument standards
by Guangdong Nanyue Bank, an
investee of the Company, at the end
of the reporting period.
Fixed assets 35,653,492,676.15 43.04% 37,651,706,658.97 41.12% 1.92% Mainly due to the Company’s disposal
of certain non-principal business
assets during the reporting period.
Short-term 33,523,025,186.22 40.47% 32,793,992,957.86 35.81% 4.66% Mainly due to the increase in the size of
borrowings short-term debts at the end of the
reporting period.
Contract liabilities 1,382,289,597.54 1.67% 1,051,147,044.74 1.15% 0.52% Mainly due to the increase in customer
prepayments at the end of the
reporting period.
Long-term 5,276,340,154.98 6.37% 8,077,150,979.15 8.82% -2.45% Mainly due to the maturity of the
borrowings Company’s project loans and
property loans during the reporting
period.
A higher proportion of overseas assets
Applicable √ Not applicable
30 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IV Management Discussion and Analysis
VI. Analysis of assets and liabilities (Continued)
2. Assets and liabilities measured at fair value
√ Applicable Not applicable
Unit: RMB
Profit or loss Cumulative
from change fair value Impairment Additions/ Recovery/
in fair value change provided purchases disposal
Opening during the charged to during the during the during the Other Closing
Item balance period equity period period period changes balance
Financial assets
1. Held-for-trading financial assets
(excluding derivative financial assets) 192,907,800.62 -82,021,617.74 -84,798,634.27 110,886,182.88
2. Other non-current financial assets 145,910,000.00 1,600,000.00 57,510,000.00 396,000,000.00 23,582,996.75 519,927,003.25
3. Consumable biological assets
measured at fair value 1,535,386,865.44 -41,899.05 20,060,762.93 28,750,027.63 44,789,143.25 1,519,305,850.77
Total 1,874,204,666.06 -80,463,516.79 -7,227,871.34 – 424,750,027.63 68,372,140.00 – 2,150,119,036.90
Whether there were any material changes on the measurement attributes of major assets of the Company during the
reporting period
Yes √ No
3. Restriction on asset rights as at the end of the reporting period
Carrying amount as at
Item the end of the period Reasons for such restriction
Monetary funds 10,756,936,714.59 As deposits for bank acceptance bills and
letters of credit, deposit reserves, etc.
Bills receivable/accounts receivable 3,778,108.58 As collateral for letters of guarantee and letters
financing of credit
Accounts receivable 232,200,000.00 As collateral for borrowings
Held-for-trading financial assets 55,443,091.44 As deposits for borrowings from CMB
International Securities
Fixed assets 12,866,125,795.19 As collateral for bank borrowings and
long-term payables
Intangible assets 1,210,395,050.42 As collateral for bank borrowings and
long-term payables
Investment properties 5,033,765,366.00 As collateral for bank borrowings
Total 30,158,644,126.22
2021 ANNUAL REPORT 31
IV Management Discussion and Analysis
VII. Investments
1. Overview
√ Applicable Not applicable
Investments during the
corresponding period of
Investments during the reporting period (RMB) prior year (RMB) Change
1,707,210,000.00 1,940,190,000.00 -12.01%
2. Material equity investments during the reporting period
√ Applicable Not applicable
Unit: RMB
Progress as Profit or loss Date of
Form of Investment at the date of Estimated from investment Involvement disclosure Disclosure index
Name of investee Principal activities investment amount Shareholding Source of fund Partner(s) Period of investment Product type balance sheet return for the period in lawsuit (if any) (if any)
Weifang Chenming Equity investment Capital 627,210,000.00 79.00% Self-owned funds Weifang Hengxin Operating period of Equity Completed N/A 14,761,352.08 No 26 August http://www.cninfo.
Growth Driver and related increase Capital 7 years, subject investment 2020 com.cn
Replacement consulting Management Co., to extension of 26 June
Equity services Ltd., Weifang 2 years after 2021
Investment Fund Financial Holding maturity
Partnership Group Co., Ltd.,
(Limited etc.
Partnership)
Weifang Chendu Engaging in Newly 255,000,000.00 79.69% Self-owned funds Guodo Venture Investment Equity Completed N/A -1,833,424.35 No 26 June 2021 http://www.cninfo.
Equity investment established Capital Co., Ltd. operation investment com.cn
Investment activities and Chenming period of
Partnership (Qingdao) Asset 3 years,
(Limited Management Co., automatic
Partnership) Ltd. extension upon
maturity
Nanchang Sales of pulp, non- Newly 10,000,000.00 100.00% Self-owned funds Subsidiary Long-term Trading Completed N/A -11,331,824.00 No N/A N/A
Shengheng residential real established
Trading Co., Ltd. estate leasing
Nanchang Kunheng Sales of pulp, non- Newly 10,000,000.00 100.00% Self-owned funds Subsidiary Long-term Trading Completed N/A -5,191,218.11 No N/A N/A
Trading Co., Ltd. residential real established
estate leasing
Shanghai Chenyin Sales of pulp, Newly 210,000,000.00 51.00% Self-owned funds Shanghai Xuenai Long-term Sales of pulp Completed N/A -300.00 No N/A N/A
Trading Co., Ltd. sales of paper established Industrial Co., Ltd.
products
Wuhan Junheng Leasing of self- Acquisition 595,000,000.00 100.00% Self-owned funds Subsidiary Long-term Leasing and Completed N/A 0.00 No N/A N/A
Property owned houses, property
Management property services
Co., Ltd. services
32 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IV Management Discussion and Analysis
VII. Investments (Continued)
3. Material non-equity investments during the reporting period
Applicable √ Not applicable
4. Financial asset investment
(1) Security investments
√ Applicable Not applicable
Unit: RMB
Book value at Profit or loss Accumulated Purchased Sold Book value
Accounting the beginning from changes in changes in fair amount in amount in Profit or loss at the end of
Abbreviation of Initial measurement of the reporting fair value in the value included the current the current during the the reporting Classification i
Type of security Stock code stock name investment cost model period current period in equity period period reporting period period n accounts Source of fund
Domestic and foreign 09668 China Bohai Bank 195,684,817.15 Measured at 192,907,800.62 -82,021,617.74 -84,798,634.27 0.00 0.00 -82,021,617.74 110,886,182.88 Held-for-trading Self-owned
shares fair value financial assets funds and
borrowings
Total 195,684,817.15 192,907,800.62 -82,021,617.74 -84,798,634.27 0.00 0.00 -82,021,617.74 110,886,182.88
Disclosure date of announcement in relation to the 20 June 2020
consideration and approval of securities investments by
the Board
Disclosure date of announcement in relation to the Not applicable
consideration and approval of securities investments by
the shareholders’ general meeting (if any)
(2) Derivatives investments
Applicable √ Not applicable
The Company did not have any derivative investments during the reporting period.
5. Use of proceeds
Applicable √ Not applicable
The Company did not use any proceeds during the reporting period.
2021 ANNUAL REPORT 33
IV Management Discussion and Analysis
VIII. Disposal of material assets and equity interest
1. Disposal of material assets
Applicable √ Not applicable
The Company did not dispose any material assets during the reporting period.
2. Disposal of material equity interest
√ Applicable Not applicable
Net profit
contribution Carried
to the Net profit out on
Company contribution schedule or
from the to the not, if not,
beginning of Company the reasons
the period on equity Relevant and
up to the disposal as Related asset measures
Transaction disposal Effect of a percentage Pricing basis party title fully taken
Equity interest consideration date disposal on the of total net of disposal of transaction Relationship with transferred by the Disclosure Disclosure
Counterparty(ies) disposed of Disposal date (RMB’0,000) (RMB’0,000) Company profit (%) equity interest or not counterparty(ies) or not Company date index
Zhanjiang Junchen Zhanjiang Chenming 1 January 1,258.00 67.66 Beneficial for 0.03% Appraised value No Not related party Yes Transfer Not applicable Not applicable
Trading Co., Ltd. New-style Wall 2021 resources completed
Materials Co., Ltd. integration of
Jinan Kunhe Trading Chengdu Chenming 30 September 1,104.00 221.53 the Company, 0.11% Appraised value No Not related party Yes Transfer Not applicable Not applicable
Co., Ltd. Culture 2021 asset portfolio completed
Communication optimisation, and
Co., Ltd. concentration
Shandong Shandong Chenming 30 September 29,800.00 11,026.25 of competitive 5.28% Appraised value No Not related party Yes Transfer Not applicable Not applicable
Daienmeng Power Supply 2021 edges on principle completed
Trading Co., Ltd. Holdings Co., Ltd. businesses to
improve quality and
efficiency
34 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IV Management Discussion and Analysis
IX. Analysis of major subsidiaries and investees
√ Applicable Not applicable
Major subsidiary and investees accounting for over 10% of the net profit of the Company
Unit: RMB
Name of company Type of company Principal activities Registered capital Total assets Net assets Revenue Operating profit Net profit
Zhanjiang Chenming Subsidiary Production and sale of duplex 5,765,833,333.00 24,616,085,934.98 7,712,328,762.92 13,110,229,643.09 1,250,425,083.79 1,093,678,580.62
Pulp & Paper Co., press paper, electrostatic
Ltd. paper, and white paper
board
Shouguang Meilun Subsidiary Production and sale of 4,801,045,519.00 17,670,520,791.10 8,308,079,024.35 8,705,143,361.05 260,755,737.63 245,313,174.65
Paper Co., Ltd. coated paper, cultural
paper, household paper
and chemical pulp
Huanggang Chenming Subsidiary Production and sale of 2,850,000,000.00 7,424,304,841.11 2,888,611,886.17 2,534,006,692.38 248,006,384.94 240,671,319.34
Pulp & Paper Co., chemical pulp
Ltd.
2021 ANNUAL REPORT 35
IV Management Discussion and Analysis
IX. Analysis of major subsidiaries and investees (Continued)
Acquisition and disposal of subsidiaries during the reporting period
√ Applicable Not applicable
Methods to acquire and dispose
of subsidiaries during the Impact on overall production
Name of company reporting period and operation and results
Shanghai Chenyin Trading Co., Ltd. Newly established Net profit decreased by RMB300.
Nanchang Shengheng Trading Co., Ltd. Newly established Net profit decreased by RMB11.33
million.
Nanchang Kunheng Trading Co., Ltd. Newly established Net profit decreased by RMB5.19 million.
Weifang Chendu Equity Investment Newly established Net profit decreased by RMB1.83 million.
Partnership (LLP)
Huanggang Chenming Pulp & Fiber Newly established There were few business operations and
Trading Co., Ltd. no impact at the moment
Wuhan Junheng Property Management Acquisition There were few business operations and
Co., Ltd. no impact at the moment
Shandong Chenming Coated Paper Merger Net profit increased by RMB0.07 million.
Sales Co. Ltd
Zhanjiang Chenming New-style Wall Transfer of 100% equity interest Net profit increased by RMB0.68 million.
Materials Co., Ltd.
Chengdu Chenming Culture Transfer of 100% equity interest Net profit increased by RMB2.22 million.
Communication Co., Ltd.
Shandong Chenming Power Supply Transfer of 100% equity interest
Holdings Co., Ltd.
Shandong Chenming Panels Co., Ltd. Transfer of 100% equity interest
Net profit increased by RMB110.26
Shouguang Chenming Cement Co., Transfer of 100% equity interest
million.
Limited
Shouguang Chenming Floor Board Co., Transfer of 100% equity interest
Ltd.
Particulars of major subsidiaries and investees
1. For the integrated forestry, pulp and paper project of Zhanjiang Chenming, the gross profit margin of its main
products, white paper board and cultural paper, reached a high level, showing strong profitability.
2. For the integrated forestry, pulp and paper project of Shouguang Meilun, the gross profit margin of its main products,
coated paper and cultural paper, reached a high level, showing strong profitability.
3. During the reporting period, the 600,000-tonne chemical wood pulp project of Huanggang Chenming gradually
achieved profitability.
36 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IV Management Discussion and Analysis
X. Structured entities controlled by the Company
Applicable √ Not applicable
XI. Outlook on the future development of the Company
(i) Overview and trend of the industry
The paper making industry is closely related to national economic security, and the consumption level of paper and
paper board is an important indicator to measure the economy and civilisation of a country. Since the reform and
opening up, with the sustained and rapid development of the national economy, China’s paper making industry
has gradually begun to transform from extensive growth to intensive growth. In general, China’s industrial economy
continuously recovered steadily in 2021, and the production and operation of paper making enterprises were
smoothly. During the reporting period, the “waste ban” was fully implemented, which further escalated the importance
of the transformation of the raw material structure. The “plastic restriction order” that spawned the demand for
“replacement of plastic with paper” broadened the prospects for the white cardboard market has a broader prospect.
The successively issued “dual carbon” and “dual control” policies had put forward higher requirements for the
environmental protection level of the manufacturing industry, and carbon reduction became an important issue for
the sustainable development of manufacturing enterprises. With the spread of overseas pandemic outbreaks and
the sporadic and repeated local pandemic outbreaks, the prices of commodities, chemical raw materials, and basic
energies rose sharply, and the supply chain management and cost management capabilities of enterprises were
facing new challenges. The price of paper products in the downstream market was further consolidated along the
N-shaped trend of “rising-falling-bottoming out”.
According to the national strategy of “dual circulation” and the goal that by 2035 China per capita GDP will reach the
level of moderately developed countries, as well as the experience of developed countries, the future paper market
demand in China will still increase greatly, and the industry still has a large scope for development. In the context
of the accelerated restructuring of the international economic and political landscape, the only way to the pursuit
of sustainable development is to insist on promoting the high-quality development of the industry in an all-round
way, regain the initiative, turn difficulties and challenges into opportunities, and further enhance the comprehensive
competitiveness of China’s paper making industry. Urgent actions are needed to prevent global warming, resource
barriers are yet to be broken, supply chain security is in urgent need, and people‘s yearning for a better life should be
satisfied. At this particular moment, constant energy conservation and emission reduction, optimising raw material
structure, securing supply chain security, and improving product and service quality will become the focus and new
trends in the sustainable development in the industry. Driven by the policy focusing on supply-side structural reform,
low-end backward production capacity will be eliminated in an accelerated way and the industry structure is expected
to continue its optimisation, and the major enterprises will have a greater say in the market and the returns on high-
quality industrial development in the long run.
2021 ANNUAL REPORT 37
IV Management Discussion and Analysis
XI. Outlook on the future development of the Company (Continued)
(ii) Development strategy of the Company
The Company always takes “revitalising the Chinese papermaking industry” as its mission and adheres to the general
keynote of a green, low-carbon, recycling and sustainable development with scientific development as main theme.
Centring on efficiency enhancement, the Company focuses on pulp production and papermaking as major operation.
The Company will adhere to the strategic layout of pulp and paper integration, vigorously implement the innovation-
driven development strategy, and accelerate the growth driver replacement. With transformation and upgrade guided
by green ecology, the Company will fully exploit its advantages in full industry chain. The Company will commit itself
to implementing the green development strategy. Leveraging technological advancement, advanced equipment and
strict management, it will properly carry out clean production, develop a circular economy, and build a resource-
saving and environment-friendly enterprise benchmark, so that it can seek development while protecting the
environment, and improve the level of environmental protection in scientific development, achieving both economic
and environmental benefits. Adhering to the strategy of strengthening the enterprise with talents, the Company will
improve the talent training, introduction, use and incentive mechanism, and actively cultivate high-end, compound,
innovative and international talent teams, so as to promote the Company’s high-quality development, consolidate
its position as a leading Chinese papermaking enterprise, and develop Chenming as a RMB100 billion enterprise
with sustainable operation for a century, striving to become the most globally competitive world-class papermaking
enterprise
(iii) Operation plans for 2022
In 2022, the Company will continue to adhere to the general keynote of seeking progress while maintaining stability,
resolutely and thoroughly implement the new management concept of “people-orientation, refined management,
problem-orientation, and practical work”, thus generally demonstrating the spirit of responsibility and accountability,
and make every effort with greater determination and practical measures to accelerate the implementation of supply
chain management, production management, sales management, financial management and corporate management,
so as to comprehensively improve the level of corporate management and operating quality, effectively strengthen
team building, enhance comprehensive management capabilities, solidify basic management, apply a firmer grip
on systematic and procedural early warning, and focus on efficiency-oriented management, thereby ensuring
continuous and stable growth of corporate economic benefits and creating a new landscape of high-quality corporate
development.
1. Adhere to market-oriented operation with higher prices and greater benefits
In 2022, the Company will continuously adopt a market-oriented approach and remain strict adherence to
higher prices and greater benefits. It will strengthen the adjustment to the product structure, and formulates
measures to boost the sales volume of high margin products, thus ensuring rapid increase in sales volume and
achieving steady delivery. The Company will leverage the advantages of its self-produced pulp to facilitate the
development of its household paper business, so as to realise higher sales volume and efficiency of finished
paper. It will put more effort in the development of new products overseas, especially high-weight coated paper,
coated linerboard, special paper for masks, beige micro-coated paper and other new varieties.
2. Strengthen financial management and optimise financial indicators
Faced with complicated economic situation, the Company will further strengthen the credit management,
reasonably plan the short, medium and long term financing and expand the equipment financing channels and
revitalise fixed assets. The Company will proactively introduce strategic investors and promote refinancing and
other equity financing projects in due course, continuously reduce the size of its financial leasing business, and
reduce the Company’s gearing ratio. The Company will conduct strict fund management, balance revenue and
expenditure, and ensure fund security; make reasonable tax planning and implement preferential tax policies;
reduce the scale of liabilities, replace high-cost financing, and lower financial expenses.
38 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IV Management Discussion and Analysis
XI. Outlook on the future development of the Company (Continued)
(iii) Operation plans for 2022 (Continued)
3. Enhance production management and achieve quality and efficiency improvement
Refined management will be implemented in production systems to generally demonstrate the spirit of
responsibility and accountability and enable the production management to make greater progress. The
upgrade and transformation of paper making machines of Zhanjiang Chenming, pulp production lines of
Huanggang Chenming and paper making machines of Shouguang headquarters will be implemented to increase
the pulp and paper production capacity, thus providing a new source of growth in benefits. The Company
will step up research and development efforts to develop new products with high added value on a market-
oriented basis, and optimise its product structure and the slurry rate to save production costs. It will strengthen
equipment management to realise spare parts managed by SAP, thus reducing the funds appropriated by spare
part inventory. The Company will push waste heat power generation powered by chemical pulp in Shouguang,
Zhanjiang and Huanggang, and the photovoltaic power generation project of Shouggang Chenming forward.
The steam out of mechanical pulp production lines will be recycled for use to increase benefits. The Company
will pay close attention to the safety and environmental protection work, implement the construction of a dual
safety management system of safety risk control and hidden danger inspection under the background of the
“dual carbon” and “dual control” policies, and strengthen the management on waste water, exhaust gas and
solid waste to ensure compliance with stable emission standards, strengthen the management and control of
clean water use, increase the amount of white water reuse, stably operate the membrane treatment system, and
achieve energy saving and consumption reduction.
4. Optimise supply chain management and reduce procurement costs
The Company will continue to focus on efficiency, pay close attention to market changes, make full use of
market conditions to seize the timing of procurement and ensure procurement efficiency. At the same time,
it will refine supplier classification management and evaluation to improve cooperation levels. It will realise
mechanical control at management points such as inventory funds, contract execution, over-consumption
of chemicals, committed life, provisional valuation and coal acceptance and settlement, improve mechanical
control efficiency and strictly control capital occupation. The Company will strengthen futures market research,
actively utilise futures tools to optimise raw material pricing, prevent price risks, and achieve futures pricing
benefits. It will continue to improve the construction of information systems, build information platforms, and
realise resource sharing.
5. Strengthen the internal management and improve the management level
In 2022, the Company will continue to strengthen the system construction and supervision, timely revise and
improve the system process according to the problems arising from the production and operation process.
The Company will enhance performance appraisal and timely optimise and improve the appraisal plan in light
of the working priority in various stages. The Company will strengthen the function demonstration of vertical
management personnel, improve management efficiency, conduct monthly evaluation, reward and punishment
according to the completion of corporate management work of subsidiaries, and organise job rotation according
to the work situation, so as to achieve multiple capabilities in one post.
2021 ANNUAL REPORT 39
IV Management Discussion and Analysis
XI. Outlook on the future development of the Company (Continued)
(iv) Future capital requirements and source of funds
Future capital requirements of the Company will mainly focus on: the continuous investment in existing production
facilities due to technology upgrade or production expansion; and capital requirement for business expansion and
daily operation. The phase II whole industry chain project of Huanggang Chenming planned and constructed by
the Company will be partly funded by self-owned funds of the Company, as well as government guide funds, policy
support funds and syndicated loans.
While focusing on the development of its main business of pulp and paper making and improving its operating
performance, the Company will expand its financing channels and optimise financing structure through well planned
long and short-term bond issue, introduction of third-party strategic investors, refinancing and other means, thus
providing stable financial support for the operation and development of the Company.
(v) Risk factors likely to be faced and measures to be taken
1. Macroeconomic and policy risk
Paper making industry is a basic raw materials industry, thus is being supported by national industry policies.
Over the years, relevant competent departments issued a series of relevant policies and regulations, including
the Policy on the Development of Papermaking Industry, aiming to improve industry structure, enhance product
technology standard, energy saving and emission reduction, as well as eliminate outdated production capacity.
With the continuous economic development, the policies on the papermaking industry may further adjust in
the future. In addition, the fiscal and financial policies, bank interest rate, import and export policy and other
policies may be adjusted in the future. All the above industrial policies and related policy adjustments will have
an impact on the Company’s operation and development.
Focusing on its principal operation on pulp production and papermaking, the Company will strive to its
innovation-driven strategy. Centring on improving quality and efficiency, the Company will comprehensively
optimise industrial structure and regional layout, establish coordinated, efficient industry system, and respond
to challenges arose by leveraging on its cost advantages, thus realising steady growth in operating results. At
the same time, the Company will strengthen the financial information system construction, regulate financial
management, expand financing channels, lower capital cost and strengthen its macroeconomic and policy risk
aversion capability.
40 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IV Management Discussion and Analysis
XI. Outlook on the future development of the Company (Continued)
(v) Risk factors likely to be faced and measures to be taken (Continued)
2. Environmental protection risk
In recent years, policies such as the Announcement on Adjusting the Catalogue of Prohibited Commodities
in Processing Trade, The 14th Five-Year (2021-2025) Plan for National Economic and Social Development of
the People’s Republic of China and the Outline of Long-term Goals for 2035, the Opinions on Accelerating the
High-Quality Development of the Manufacturing Services Industry and the Guiding Opinions on Accelerating
the Establishment and Improvement of a Green, Low-Carbon and Cyclical Economic System have been issued
one after another, with increasingly stringent environmental protection requirements. Such higher national
environmental protection standards will further increase the investment in pollution control by enterprises in the
industry and increase the operating costs of the Company in the short term.
The Company always adheres to the development idea of “placing green development and environmental
protection as its priority” and conducts clean production. The Company widely adopts new technologies for
energy saving and emission reduction and strives to achieve its waste emission target. At present, the Company
adopts the world’s most advanced “ultrafiltration membrane+reverse osmosis membrane” technology to
complete the reclaimed water recycling membrane treatment project. The reclaimed water recycle rate reaches
more than 75%. The reclaimed water quality meets drinking water standards, which can save fresh water of
170,000 cubic metres every day. At the same time, the Company actively explores the comprehensive utilisation
of innovative resources and industrial recycling development models, and built three major circular economy
ecological chains of “resources-products-renewable resources”.
3. Risk of price fluctuation of raw materials
Wood pulp and wood clips are the major raw materials of the industry. If the prices of wood pulp and wood
chips fluctuate sharply in the future, they will bring upward pressure on the production costs of enterprises,
which will have a certain impact on the normal production and operation of enterprises in the industry.
The Company strives to implement the development strategy of pulp and paper integration. At present,
its production capacity of wood pulp has reached 4.3 million tonnes, and it has cultivated a strong self-
sufficiency of wood pulp. At the same time, it has established a more comprehensive supply chain management
mechanism, practiced source procurement, carried out long-term cooperation, closely followed the price trends
of the raw materials market, and strived to improve its forecasting ability, in order to minimise the impact of
fluctuations in raw material prices on the Company.
2021 ANNUAL REPORT 41
IV Management Discussion and Analysis
XI. Outlook on the future development of the Company (Continued)
(v) Risk factors likely to be faced and measures to be taken (Continued)
4. Risk of intensifying market competition
As a strategic and fundamental industry closely related to the national economy, the papermaking industry
has made significant progress along with the steady development of the Chinese economy. Although the
papermaking industry has accelerated the elimination of outdated production capacity after several rounds
of environmental protection policies, the industry structure has been optimised. However, there remains the
phenomena of a large number of enterprises, excess and scattered production capacity, a large number of mid
– and low-end products, and product homogeneity. The market competition is fierce.
The Company will focus on improving product quality and supporting services, improve process technology,
strengthen research and development capabilities, and enhance scientific and technological added value. Being
market-oriented, it will produce products that meet market demand and enhance core competitiveness, with a
view to ensuring a stable and sustainable improvement in its operating results.
5. Risk on financial leasing business
The Company may suffer from loss if the lessees of its financial leasing business cannot make full rental
payment on time due to any reason and there are abuses on equipment or any other short-term behaviour.
Although the risk of such rental being unrecoverable is minimal, the Company will also make bad debt provision
as required under its accounting policy. If such amounts cannot be recovered on time, the Company may be
exposed to risk of bad debts.
Chenming Leasing has comprehensive risk prevention and control measures for the financial leasing business,
with strong risk resistance and low risk of default. At present, Chenming Leasing continues to implement the
business strategy of continuous reduction, with a reduction of the scale of the financial leasing business by
RMB2.2 billion in 2021, which effectively put risk exposures under control.
42 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IV Management Discussion and Analysis
XII. Reception of research investigations, communications and interviews during the reporting
period
√ Applicable Not applicable
Major discussion
points and information Index of the basic
Date of reception Site of reception Way of reception Type of recipient Recipient provided particulars of the survey
31 March 2021 Meeting room of Field research Institutions, Guotai Anbao Fund, Company’s main For details, please
the Company and individuals and Northeast Securities, operating conditions, refer to the Investor
production plant media Orient Securities, business conditions, Relations Activity
Dongxing Securities, project progress, etc. Record Sheet
minority shareholders, on www.cninfo.com.
Securities Times, etc. cn
31 March 2021 Panorama Interactive Others Individuals and Investors participating Company and industry For details, please
Platform for Investors institutions in the 2020 annual overview, the refer to the Investor
Relationship results briefing of the Company’s 2020 Relations Activity
Company operating results and Record Sheet
future prospects, on www.cninfo.com.
project progress, etc. cn
19 April 2021 Meeting room of the Conference call Institutions Essence Fund, Bosera Company’s main For details, please
Company Fund, Northeast operating conditions, refer to the Investor
Securities, China business conditions, Relations Activity
AMC, etc. industry outlook, etc. Record Sheet
on www.cninfo.com.
cn
20 April 2021 Meeting room of the Conference call Institutions Zheshang Securities, Company’s main For details, please
Company Wanjia Fund, Huatai operating conditions, refer to the Investor
Insurance, CPIC Fund, business conditions, Relations Activity
etc. project progress, Record Sheet
redemption of on www.cninfo.com.
Preference Shares, cn
etc.
16 November 2021 Panorama Roadshow Others Individuals and Investors who Corporate governance, Panorama Roadshow
platform institutions participated in development strategy, http://rs.p5w.net/
the 2021 Investor operating status, etc.
Online Collective
Reception Day of
Listed Companies in
Shandong
2021 ANNUAL REPORT 43
V Directors’ Report
The Directors (the “Directors”) of the Company hereby present the annual report and the audited consolidated financial statements
of the Company and the Group for the year ended 31 December 2021.
I. Principal activities
Please refer to “II. Principal operations of the Company during the Reporting Period” and “IV. Analysis of principal
operations” under section IV “Management Discussion and Analysis” for details of principal activities of the Company.
II. Results and profit distribution
Please refer to section XII “Financial Report” for the results of the Group for the year ended 31 December 2021.
III. Dividends
Considering factors such as the current macroeconomic environment and the Company’s strategic planning, the Board
proposed not to pay cash dividend, issue bonus shares and increase share capital from reserves for 2021 to further reduce
its liability size, optimise its capital structure, enhance the Company’s financial resilience, and satisfy the capital needs for,
among other things, day-to-day production and operation, and project construction, thereby securing the sustainable and
steady development of the pulp production and paper making business, the principal business of the Company, and better
safeguarding the long-term interests of all shareholders, subject to approval of shareholders at the forthcoming annual
general meeting of the Company held on 11 May 2022 (the “AGM”).
44 SHANDONG CHENMING PAPER HOLDINGS LIMITED
V Directors’ Report
IV. Closure of register of members
The register of members of the Company will be closed from 5 May 2022 (Thursday) to 11 May 2022 (Wednesday) (both
days inclusive), during which no transfer of shares of the Company will be registered. In order to be eligible to attend and
vote at the annual general meeting to be held on 11 May 2022 (Wednesday), all share transfer documents accompanied
by the corresponding share certificates must be lodged with the Company’s Hong Kong share registrar and transfer office,
Computershare Hong Kong Investor Services Limited at shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road
East, Wan Chai, Hong Kong for registration not later than 4:30 p.m. on 4 May 2022 (Wednesday).
V. Five-year financial summary
Please refer to “IX. Five-year financial summary under paragraph 19 of appendix 16 of the Hong Kong Listing Rules”
under section II “Company Profile and Key Financial Indicators” for the financial summary of the Company for the past five
financial years.
VI. Donations
During the year, the Company donated RMB1,142,550.00 (2020: RMB8,922,077.88) to non-profit making organisations.
VII. Subsidiaries
Please refer to “IX. Analysis of major subsidiaries and investees” under section IV “Management Discussion and Analysis”
and “XVII. Matters of significant of subsidiaries of the Company” under section VIII “Material Matters” for the details of
acquisition and disposal of subsidiaries by the Company during the year.
VIII. Property, plant and equipment
Please refer to “II. Financial Statements 1. Consolidated Balance Sheet” under section XII “Financial Report” for the details
of changes in property, plant and equipment of the Group for the year ended 31 December 2021.
IX. Share capital
Please refer to “I. Changes in shares” under section IX “Changes in Share Capital and Shareholders” for details of changes
in share capital of the Company for the year ended 31 December 2021.
X. Pre-emptive rights
In accordance with the Articles of Association and the PRC laws, there are no rules requiring the Company to grant existing
shareholders pre-emptive rights on newly issued shares of the Company in proportion to their shareholdings.
XI. Transfer into reserves
The Company’s contributed surplus is distributable to shareholders in accordance with the Companies Law. As at 31
December 2021, the Company’s reserves available for cash distribution and/or distribution in specie, including contributed
surplus of the Company, amounted to RMB9,676,329,673.78 (2020: RMB10,465,721,088.71) as set out in “II. Financial
Statements 1. Consolidated Balance Sheet” under section XII “Financial Report”.
2021 ANNUAL REPORT 45
V Directors’ Report
XII. Directors
As at 31 December 2021, the Directors of the Company were:
1. Executive Directors
Mr. Chen Hongguo
Mr. Hu Changqing
Mr. Li Xingchun
Mr. Li Feng
2. Non-executive Directors
Mr. Han Tingde
Mr. Li Chuanxuan
3. Independent Non-executive Directors
Ms. Yin Meiqun
Mr. Yang Biao
Mr. Sun Jianfei
According to the Articles of Association of the Company, all Directors, including non-executive Directors, have been
elected at the general meetings with a term of three years from June 2019 to June 2022. They may be re-elected for
another term upon expiry of tenure.
XIII. Directors’ and Supervisors’ service contracts
All Directors and Supervisors have entered into service contracts with the Company for a term from 11 June 2019 to 11
June 2022.
None of the Directors and Supervisors who have offered themselves for re-election at the forthcoming AGM have entered
into any service contract with the Company or any of its subsidiaries which cannot be terminated by the Group within one
year without payment of compensation other than statutory compensation.
46 SHANDONG CHENMING PAPER HOLDINGS LIMITED
V Directors’ Report
XIV. Directors and Senior Management’s remuneration and the five highest paid individuals
Details of Directors and the Senior Management’s remuneration and the five highest paid individuals of the Company or/and
its subsidiaries are set out in “V. Directors, Supervisors and Senior Management” in section VI “Corporate Governance” and
“XII. Related parties and related party transactions” in section XII “Financial Report”.
In 2021, the Company had 24 Senior Management members in total, which included Directors, Supervisors and the Senior
Management. The remuneration of the Senior Management falls within the following ranges:
Range of remuneration (RMB) Number
4.8 million to 5.2 million 2
4.0 million to 4.8 million
3.6 million to 4.0 million
3.2 million to 3.6 million 1
2.8 million to 3.2 million 2
2.4 million to 2.8 million
2.0 million to 2.4 million 1
1.6 million to 2.0 million 2
1.2 million to 1.6 million
0.8 million to 1.2 million 3
Below 0.8 million 13
XV. Independent Non-executive Directors
The Company has received from each of the independent non-executive Directors a confirmation of independence for the
year pursuant to Rule 3.13 of the Hong Kong Listing Rules and considered all of the independent non-executive Directors to
be independent during the year.
2021 ANNUAL REPORT 47
V Directors’ Report
XVI. Securities interests held by Directors, Supervisors and Chief Executives
As at 31 December 2021, interests of the Company or its associated corporations (within the meaning of Part XV of SFO)
held by each of the Directors, Supervisors and Chief Executives of the Company under section 352 of the SFO are set out
as follows:
Associated corporations
Number of shares (A shares)
held as at the end of the
Name Position reporting period (shares)
Directors
Chen Hongguo (Note 1) Chairman 31,080,044
Hu Changqing Executive Director and Vice Chairman 5,042,857
Li Xingchun Executive Director and Vice Chairman 5,000,000
Li Feng Executive Director 3,906,027
Han Tingde Non-executive Director –
Li Chuanxuan Non-executive Director –
Sun Jianfei Independent non-executive Director –
Yin Meiqun Independent non-executive Director –
Yang Biao Independent non-executive Director –
Supervisors
Li Kang Supervisor 149,300
Pan Ailing Supervisor –
Zhang Hong Supervisor –
Sang Ailing Supervisor –
Qiu Lanju Supervisor –
Associated corporations
Number of Number of
shares held at shares held at
the beginning the end of the
Name of associated of the reporting Change during reporting period
Name Position corporations period (shares) the period (+/-) (shares)
Chen Hongguo Chairman Shouguang Henglian 231,000,000 – 231,000,000
Enterprise Investment Co.
Ltd. (Note 2)
Note 1: Save for the 31,080,044 A shares held personally, Chen Hongguo is deemed to be interested in the 3,861,322 A shares held by his spouse,
Li Xueqin.
Note 2: Chen Hongguo and his spouse, Li Xueqin, collectively hold 76.79% equity interests in Shouguang Henglian Enterprise Investment Co.
Ltd., (hereinafter referred to as “Shouguang Henglian”), as a result, Shouguang Henglian is deemed to be controlled by Chen Hongguo.
As a result, the 231,000,000 shares in Chenming Holdings (approximately 18.65% of the total share capital of Chenming Holdings) held by
Shouguang Henglian is also deemed to be held by Chen Hongguo.
48 SHANDONG CHENMING PAPER HOLDINGS LIMITED
V Directors’ Report
XVI. Securities interests held by Directors, Supervisors and Chief Executives (Continued)
Save as disclosed above, as at 31 December 2021, none of the Directors, Supervisors or chief executives of the Company
had any interests or short positions in the shares, underlying shares or debentures of the Company or any of its associated
corporations which were required to be filed in the register of the Company required to be maintained pursuant to section
352 of the SFO or which were required to be notified to the Company and Hong Kong Stock Exchange pursuant to the
Model Code for Securities Transactions by Directors of Listed Issuers as contained in Appendix 10 to the Rules Governing
the Listing of Securities on Hong Kong Stock Exchange (hereinafter referred to as the “Hong Kong Listing Rules”).
As at 31 December 2021, none of the Directors, Supervisors or chief executives or their respective spouses or children
under the age of 18 held or exercised any rights to subscribe for the share capital or debentures of the Company or its
associated corporations.
XVII. Interests and short position of substantial shareholders in shares and underlying shares
As at 31 December 2021, the following shareholders (other than the Directors, Supervisors or chief executives of the
Company) had interests or short positions in the Company’s shares and underlying shares as shown in the share register
maintained by the Company in accordance with Section 336 of the SFO (Chapter 571 of the Laws of Hong Kong):
Approximate shareholding as
a percentage of
Number of shares Total share Class of
Name held (shares) capital (%) shares (%)
Chenming Holdings Co., Ltd. 457,322,919 A shares (L) 15.32 26.14
Chenming Holdings (Hong Kong) Limited 210,717,563 B shares (L) 7.06 29.83
Chenming Holdings (Hong Kong) Limited 153,414,000 H shares (L) 5.14 29.04
(L) – Long position (S) – Short position (P) – Lending pool
Save as disclosed above, as at 31 December 2021, no other person had interests or short positions in the Company’s
shares or underlying shares as recorded in the register maintained under section 336 of the SFO.
XVIII. Relationship with employees, customers and suppliers
Please refer to “IX. Personnel of the Company” under section VI “Corporate Governance”, and “2. (8) Sales to major
customers and major suppliers” of “IV. Analysis of principal operations” under section IV “Management Discussion and
Analysis” for details of the relationship between the Company and its employees, customers and suppliers.
XIX. Directors’ interests in material contracts and indemnity provision
None of the Company or any of its subsidiaries entered into any material contracts, in which Directors or Supervisors had
significant interests (either directly or indirectly), that subsisted at the end of the financial year or at any time during the
reporting period. The Company did not have any indemnity provision in favour of any Director and Supervisor.
2021 ANNUAL REPORT 49
V Directors’ Report
XX. Interests in competing business
None of the Directors or controlling shareholders of the Company was interested in any business which competes or is
likely to compete with the businesses of the Company and any of its subsidiaries.
XXI. Directors’ rights to purchase shares or debentures
As considered and approved at the 2020 second extraordinary general meeting, the 2020 first class meeting for holders
of domestic-listed shares and the 2020 first class meeting for holders of overseas-listed shares of the Company held on
15 May 2020, the Company implemented the 2020 restricted A share incentive scheme. As considered and approved at
the tenth extraordinary meeting of ninth session of the Board and the fifth extraordinary meeting of the ninth session of
the Supervisory Committee of the Company held on 29 May 2020, an aggregate of 79.6 million restricted A shares were
granted to 111 participants. In particular, Mr. Chen Hongguo, Mr. Hu Changqing, Mr. Li Xingchun and Mr. Li Feng, all being
Directors, were granted 20 million shares, 5 million shares, 5 million shares and 3 million shares, respectively.
Save for the above, neither was the Company nor any of its subsidiaries a party to any arrangements to enable any Director
to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.
XXII. Preference shares
Please refer to section X “Preference Shares” for details of the issue of Preference Shares of the Company.
XXIII. Management contracts
No contracts concerning the management and administration of the whole or any substantial part of the business of the
Company were entered into or existed in 2021.
XXIV. Major risk factors
Please refer to “(V) Risk factors likely to be faced and the measures to be taken” of “XI. Outlook on the future development
of the Company” under section IV “Management Discussion and Analysis” for details of major risk factors of the Company.
XXV. Material matters
Please refer to section VIII “Material Matters” for details of material matters of the Company.
XXVI. Future development
Please refer to “(I) Overview and trends of the industry”, “(II) Development strategy of the Company”, “(III) Operating plan
for 2022” and “(IV) Future capital requirements and source of funds” of “XI. Outlook on the future development of the
Company” under section IV “Management Discussion and Analysis” for details of future development of the Company.
XXVII. Environment, social and governance report and social responsibility
Please refer to section VII “Environment and social responsibility” for details of fulfilment of social responsibility. Please
refer to the environment, social and governance report as required by the Hong Kong Listing Rules, which will be issued
separately by the Company before 31 May 2022.
50 SHANDONG CHENMING PAPER HOLDINGS LIMITED
V Directors’ Report
XXVIII. Purchase, sale and redemption of shares
During the reporting period, the Company redeemed 45 million Preference Shares. Please refer to relevant content of
section X “Preference Shares”.
Save for the above, the Company and its subsidiaries did not purchase, sell or redeem any listed securities of the Company
during the reporting period.
XXIX. Sufficiency of public float
During the reporting period, based on the information that is publicly available to the Company and within the knowledge of
the Directors, the Company has maintained a sufficient prescribed amount of public float as required under the Hong Kong
Listing Rules.
XXX. Review of the Audit Committee
The audited consolidated financial statements of the Company for the year ended 31 December 2021 has been reviewed by
the Audit Committee of the Company.
XXXI. Gearing ratio
As at 31 December 2021, the Company’s gearing ratio (including minority interest) was 61.57%, representing an increase of
0.70 percentage point from 60.87% for 2020.
The ratio was calculated as: total borrowings/total assets (whereas total borrowings represent borrowings due within one
year, borrowings due after one year, short-term commercial paper and medium and long-term notes and others).
XXXII. Going Concern Basis
Established in 1958, the Company is a leading paper making enterprise in China and one of the top 500 Chinese
enterprises. It is also a modern large-scale comprehensive conglomerate mainly engaged in pulp production and paper
making. It has six production bases in Shandong, Guangdong, Hubei, Jiangxi, Jilin and others, which deliver annual pulp
and paper production capacity of over 11,000,000 tonnes. As a large integrated pulp and paper enterprise in China that
achieves a complete balance of pulp production and paper making, the Company have maintained a leading position
among its industry peers for over 20 consecutive years in terms of its main indicators of corporate economic efficiency.
The Company has good sustainable profitability. In 2021, the Company realised revenue of RMB33,020 million, net profit of
RMB2,090 million and net cash inflows from operating activities of RMB39,306 million.
In compiling the accounts for the year ended 31 December 2021, the Directors have chosen and thoroughly applied the
appropriate accounting policies with due and reasonable judgement and estimates having been made, and prepared the
accounts on a going concern basis. The auditor of the Company has prepared the 2021 annual financial report on a going
concern basis, and has issued a standard unqualified audit opinion (see Financial Report section).
Therefore, the Board believes the Company has the ability to continue as a going concern.
XXXIII. Connected Transactions
As of the years ended 31 December 2021, the Group did not enter into any connected transaction required under the Listing
Rules of the Stock Exchange.
2021 ANNUAL REPORT 51
V Directors’ Report
XXXIV. Major Investment, Acquisition and Disposal
During the year ended 31 December 2021, the Group entered into the following major transaction agreements.
1. Entering into capital contribution agreement for introducing investors to contribute capital to
Shouguang Meilun
On 25 June 2021, the Company, Weifang Chenrong New and Old Kinetic Energy Conversion Equity Investment Fund
Partnership (Limited Partnership), Dongxing Securities Investment Co., Ltd., Weifang Chenchuang Equity Investment
Fund Partnership (Limited Partnership, CCB Financial Asset Investment Co., Ltd., SWSC Innovation Investment Co.,
Ltd. and Shouguang Meilun entered into the Capital Contribution Agreement., pursuant to which CCB Investment
and SWSC Innovation Investment Co., Ltd. agreed to contribute capital to Shouguang Meilun in accordance with the
terms and conditions of the Capital Contribution Agreement in aggregate amount of RMB1,600,000,000. Please refer
to the announcement of the Company dated 25 June 2021.
52 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VI Corporate Governance
I. Corporate governance in practice
Taking the actual situation of the Company into account, the Company continuously improved its legal person governance
structure, strengthened its internal control system, proactively organised Directors, Supervisors and the Senior Management
of the Company to attend the special training sessions of the regulatory departments to enhance their competence, and
continuously strengthened its information disclosure in strict compliance with the requirement of Companies Law ( ),
Securities Law ( ), Code of Corporate Governance for Listed Companies ( ), Rules Governing
Listing of Stocks on Shenzhen Stock Exchange ( ), the Listing Rules of Hong Kong Stock
Exchange and the related requirements as required by CSRC, thereby further enhancing the standardised operation level of
the Company
As of the end of the reporting period, the actual practice of corporate governance complied with the requirements of the
regulatory documents issued by the CSRC regarding the governance of listed companies.
(I) Shareholders and general meeting
The Company regulates the convening, holding and proceedings of shareholder meetings in strict compliance with the
requirements of the Rules Governing Shareholders’ General Meetings of Listed Companies, the Articles of Association
and the Company’s Rules of Procedure of the General Meeting of Shareholders, and both on-site voting and online
voting are provided as channels to participate in such meetings. Where material matters which affect the interests of
minority shareholders are considered, the votes by minority shareholders are counted separately to ensure that the
minority shareholders enjoy equal status and all shareholders can exercise their rights in full. During the reporting
period, the general meetings convened by the Company were witnessed by lawyers with issue of their legal opinions
to effectively safeguard the legitimate rights and interests of the listed company and all shareholders.
(II) Controlling shareholder and the listed company
During the reporting period, the Company remained independent of its controlling shareholder, beneficial controllers
and related parties in terms of its business, assets, finance, personnel and organisations, and the Board, the
Supervisory Committee and internal departments of the Company operated independently, which complied with the
relevant provisions of the China Securities Regulatory Commission on the independence of listed companies. The
controlling shareholder and beneficial controllers strictly regulated their behaviour, and exercised their rights and
performed their obligations in accordance with the laws, and there was no appropriation of capital and assets of the
Company by the controlling shareholder, beneficial controllers and their related parties.
(III) Directors and the Board
The Board of the Company has a total of 9 Directors, of which 3 are independent Directors. They are professionals
with professional knowledge in finance, law, management, etc., ensuring the quality and level of decision-making
by the Board. During the reporting period, the Board held a total of 11 meetings, and the convening and holding
of Board meetings were in strict compliance with the Articles of Association and the Rules of Procedure of Board
Meetings and other relevant provisions. Directors of the Company were able to diligently perform their duties. They
attended meetings on time and reviewed each proposal earnestly, which had pivotal impact on decision in corporate
governance. Independent Directors performed their duties independently and expressed their independent opinions
on material matters, which solidly safeguarded the interests of the Company and the investing public.
The four special committees under the Board of the Company, namely the Strategic Committee, the Audit Committee,
the Nomination Committee and the Remuneration and Assessment Committee, performed their duties normally and
provided scientific and professional opinions for the decision-making of the Board during the reporting period.
2021 ANNUAL REPORT 53
VI Corporate Governance
I. Corporate governance in practice (Continued)
(IV) Supervisors and the Supervisory Committee
The supervisors of the Supervisory Committee of the Company has a total of 5 supervisors, including 3 shareholder
supervisors and 2 employee supervisors. During the reporting period, the Supervisory Committee of the Company
held a total of 4 meetings. The Supervisory Committee strictly followed the requirement of relevant laws and
regulations including the Companies Law, the Articles of Associations and the Rules of Procedure of the Supervisory
Committee in fulfilling its duties. In the spirit of being accountable to the shareholders and the Company, the
Supervisory Committee independently and effectively exercised its supervision and inspection functions to supervise
the Company’s operation and management, decision-making procedures, financial position and the duty of care
and diligence of the Company‘s Directors and Senior Management, so as to safeguard the legitimate interests of the
Company and the shareholders.
(V) Information disclosure and transparency
The Company earnestly fulfils its information disclosure obligation, and makes true, accurate, timely, complete and
fair disclosure in respect of the Company’s information without false information, misleading statement or material
omission in accordance with the requirements of the Articles of Association, Rules Governing the Listing of Stocks
on Shenzhen Stock Exchange, the Listing Rules of Hong Kong Stock Exchange and relevant laws and regulations
of the CSRC. During the reporting period, the Company issued a total of more than 150 periodic reports, interim
announcements, and related documents through the designated information disclosure media, and a total of more
than 180 periodic reports, interim announcements, and related documents through the website of Hong Kong Stock
Exchange, ensuring that all shareholders had fair access to company-related information and had full right to know.
(VI) Prevention and control of insider information
During the reporting period, the Company strictly complied the provisions of the “Registration Management System
of Personnel with Insider Information” to strengthen the confidentiality of insider information and improve the
registration and management of personnel with insider information. The Directors, Supervisors, Senior Management
and other related personnel of the Company were able to strictly observe their confidentiality obligations throughout
the preparation of periodic reports, temporary announcements and the planning of major events. There was no case
where insiders use inside information to buy and sell company shares before the disclosure of material and sensitive
information that affects the stock price of the Company, and there is no case where they are investigated by the
regulatory authorities.
(VII) Relevant stakeholders
During the reporting period, the Company always insisted on honest operation and was able to fully respect and
safeguard the legitimate rights and interests of stakeholders such as bankers and other creditors, employees,
suppliers and consumers, strengthened communication and exchange with all parties, and actively cooperate to
jointly promote the sustainable, stable and healthy development of the Company.
Any material non-compliance of the laws, administrative regulations and the regulatory documents on the governance
of listed companies issued by the CSRC in respect of actual governance of the Company
Yes √ No
There was no material non-compliance of the laws, administrative regulations and the regulatory documents on the
governance of listed companies issued by the CSRC in respect of the actual governance of the Company.
54 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VI Corporate Governance
II. Particulars about the independence in terms of assets, personnel, finance, organisations,
and business from the controlling shareholder and beneficial controllers
The Company was completely separated from the controlling shareholder in terms of business, personnel, assets,
organisations and finance. The Company had a comprehensive internal structure, independent and complete businesses as
well as the capability of self-operation.
1. In terms of business: the Company had its own R&D, production, procurement and sales system, and was completely
independent of controlling shareholder in terms of business. The controlling shareholder and its other subsidiaries
were not competitors of the Company in the same industry.
2. In terms of personnel: the Company had an independent workforce, and had established independent departments
including the research and development department, production department, administration department, finance
department, procurement department and sales department. The Company had also established a comprehensive
management system with respect to labour, personnel and salary. Personnel of the Company were independent of
the controlling shareholder. The Company’s Chairman was elected at the general meeting, while the general manager,
deputy general manager, secretary to the Board, chief financial officer and other Senior Management members all
worked at and received remuneration from the Company. They did not receive remuneration from related companies
of the controlling shareholder, nor did they serve at any position therein other than a director or supervisor. The
appointment of the Company’s Directors, Supervisors and Senior Management was conducted through legal
procedures and in strict compliance with the relevant requirements of Companies Law and the Articles of Association.
None of the controlling shareholders interfered with the Company’s Board, or the appointment and dismissal
decisions at general meetings.
3. In terms of assets: the title relationship between the Company and the controlling shareholder was clear, and the
Company’s funds, assets and other resources were not illegally occupied or dominated by the controlling shareholder.
The Company’s assets were complete, and possessed production equipment, auxiliary production equipment,
patents and other assets that were in line with its production and operation scope. The Company had complete
control and dominance over all assets.
4. In terms of organisations: the Board, Supervisory Committee, management and other internal organisations of the
Company operated independently. Each functional department was completely separated from the controlling
shareholder in terms of authority, personnel, etc. There was no subordinate relationship between the controlling
shareholder and its functional departments, and the Company and its functional departments. The Company’s
independence in terms of its production, operation and management was not affected by the controlling shareholder.
5. In terms of finance: the Company had its own finance department, accounting and auditing system and financial
management system, and was able to make independent financial decisions, with a standardised financial accounting
system and financial management system for subsidiaries. None of the controlling shareholders interfered with the
Company’s finance and accounting activities. The Company had a separate account in a commercial bank and there
was no sharing of bank accounts with the controlling shareholder. The Company reported on tax return and fulfilled its
tax obligations independently in accordance with the law.
III. Competition in the industry
Applicable √ Not applicable
2021 ANNUAL REPORT 55
VI Corporate Governance
IV. Annual general meeting and extraordinary general meeting convened during the reporting
period
1. General meetings during the reporting period
Attendance rate
Meeting Type of meeting of investors Convening date Disclosure date Meeting Resolution
2021 first extraordinary Extraordinary general 24.42% 9 March 2021 10 March 2021 http://www.cninfo.com.cn
general meeting meeting (announcement no.:
2021 first class meeting Class meeting 25.11% 9 March 2021 10 March 2021 2021-018)
for holders of
domestic-listed shares
2021 first class meeting Class meeting 21.43% 9 March 2021 10 March 2021
for holders of
overseas-listed shares
2020 annual general Annual general 23.09% 18 June 2021 19 June 2021 http://www.cninfo.com.cn
meeting meeting (announcement no.:
2021-044)
2021 second Extraordinary general 20.45% 13 December 14 December http://www.cninfo.com.cn
extraordinary general meeting 2021 2021 (announcement no.:
meeting 2021-099)
2. Extraordinary general meeting requested by holders of the Preference Shares with voting right
restored
Applicable √ Not applicable
56 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VI Corporate Governance
V. Directors, Supervisors and Senior Management
1. General information
Increase in Decrease in
Shareholding the number the number
at the Restricted of shares of shares Shareholding
Date of beginning of shares to held during held during at the end of
Status of the beginning Date of the the period be granted the period the period Other changes the period Reason for
Name Position Office Gender Age of the term end of the term (shares) Share Option (shares) (shares) (shares) (shares) (shares) changes
Chen Hongguo Chairman In office M 57 6 September 2001 11 June 2022 31,080,044 0 0 0 0 0 31,080,044 N/A
Hu Changqing Vice Chairman In office M 56 23 June 2018 11 June 2022 5,042,857 0 0 0 0 0 5,042,857 N/A
Li Xingchun Vice Chairman In office M 56 11 June 2019 11 June 2022 5,000,000 0 0 0 0 0 5,000,000 N/A
Li Feng Director In office M 48 19 June 2020 11 June 2022 3,906,027 0 0 0 0 0 3,906,027 N/A
General Dismissed 9 November 2019 8 August 2021 0 0 0 0 0 N/A
manager
Han Tingde Director In office M 53 11 June 2019 11 June 2022 0 0 0 0 0 0 0 N/A
Li Chuanxuan Director In office M 44 11 June 2019 11 June 2022 0 0 0 0 0 0 0 N/A
Sun Jianfei Independent In office M 49 11 June 2019 11 June 2022 0 0 0 0 0 0 0 N/A
Director
Yin Meiqun Independent In office F 51 11 June 2019 11 June 2022 0 0 0 0 0 0 0 N/A
Director
Yang Biao Independent In office M 42 11 June 2019 11 June 2022 0 0 0 0 0 0 0 N/A
Director
Li Kang Supervisor In office F 40 27 July 2020 11 June 2022 149,300 0 0 0 0 0 149,300 N/A
Pan Ailing Supervisor In office F 57 11 June 2019 11 June 2022 0 0 0 0 0 0 0 N/A
Zhang Hong Supervisor In office F 57 11 June 2019 11 June 2022 0 0 0 0 0 0 0 N/A
Qiu Lanju Supervisor In office F 48 11 June 2019 11 June 2022 0 0 0 0 0 0 0 N/A
Sang Ailing Supervisor In office F 43 19 April 2021 11 June 2022 0 0 0 0 0 0 0 N/A
Chen Gang General In office M 49 8 August 2021 11 June 2022 1,139,700 0 0 0 0 0 1,139,700 N/A
manager
Li Xueqin Deputy general In office F 56 18 March 2003 11 June 2022 3,861,322 0 0 0 0 0 3,861,322 N/A
manager
Li Weixian Deputy general In office M 40 6 November 2019 11 June 2022 2,240,200 0 0 0 0 0 2,240,200 N/A
manager
Li Zhenzhong Deputy general In office M 48 20 March 2011 11 June 2022 2,113,000 0 0 0 0 0 2,113,000 N/A
manager
Dong Lianming Financial In office M 47 12 October 2018 11 June 2022 1,069,600 0 0 0 0 0 1,069,600 N/A
controller
Yuan Xikun Secretary to the In office M 36 16 May 2018 11 June 2022 344,700 0 0 0 0 0 344,700 N/A
Board
Chu Hon Leung Hong Kong In office M 39 11 June 2019 11 June 2022 0 0 0 0 0 0 0 N/A
company
secretary
Li Xinggui Supervisor Resigned M 57 11 June 2019 19 April 2021 0 0 0 0 0 0 0 N/A
Zhao Xuegang Deputy general Dismissed M 49 11 June 2019 25 March 2021 0 0 0 0 0 0 0 N/A
manager
Geng Guanglin Deputy general Dismissed M 48 11 June 2019 9 July 2021 2,716,950 0 0 0 0 0 2,716,950 N/A
manager
Total 58,663,700 0 0 0 0 0 58,663,700
During the reporting period, did any directors and supervisors resign and was any members of the Senior
Management dismissed during their term of office
√ Yes No
2021 ANNUAL REPORT 57
VI Corporate Governance
V. Directors, Supervisors and Senior Management (Continued)
1. General information (Continued)
During the reporting period, Mr. Li Xinggui, the staff representative Supervisor of the Company, resigned from the
position of staff supervisor due to work adjustment, and continued to serve in the Company after his resignation. Mr.
Li Feng, a Director and the general manager of the Company, resigned from the position of the general manager due
to the expiry of the term of rotation, and continued to serve as a Director of the Company after his resignation. Mr.
Zhao Xuegang and Mr. Geng Guanglin, deputy general managers of the Company, resigned from their position as
deputy general managers of the Company due to personal reasons, and no longer held any position in the Company
after their resignation.
Changes of Directors, Supervisors and Senior Management of the Company
√ Applicable Not applicable
Name Position Type Date Reason
Li Xinggui Supervisor Resigned 19 April 2021 Resignation from the office of Supervisor of the
Company due to work adjustment.
Li Feng General Dismissed 8 August 2021 Expiry of the term of rotation.
manager
Zhao Xuegang Deputy general Dismissed 25 March 2021 Resignation from the position of deputy general
manager manager of the Company for personal reasons.
Geng Guanglin Deputy general Dismissed 9 July 2021 Resignation from the position of deputy general
manager manager of the Company for personal reasons.
Sang Ailing Supervisor Elected 19 April 2021 Elected as a Supervisor of the ninth session of
the Supervisory Committee of the Company at
the twelfth meeting of the ninth session of the
staff representative meeting.
Chen Gang General Engaged 8 August 2021 Elected as the general manager of the Company
manager at the twenty-first extraordinary meeting of the
ninth session of the Board.
58 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VI Corporate Governance
V. Directors, Supervisors and Senior Management (Continued)
2. Employment
Professional background, major working experiences and current duties at the Company of Directors, Supervisors
and the Senior Management
1. Brief biographies of Directors
(1) Brief biographies of executive Directors
Mr. Chen Hongguo is a member of the Communist Party of the PRC. He holds a bachelor’s degree. He is
a senior economist and holds the titles including Nationwide Light Industry Top Ten Youth Experts (
), Labour Medal on Enriching Shandong Province (
), Excellent Entrepreneur of Shandong Province ( ), Nationwide May 1st Labor
Medal ( ), Nationwide Excellent Entrepreneur ( ) and USA RISI
CEO of the Year ( “ CEO ”). He is vice chairman of the China National Light Industry
Council. He joined the Company in 1987 and had held positions including chief officer of manufacturing
section, chief officer of branch factory, deputy general manager, Director of the Company and the
chairman of Wuhan Chenming. He is currently the chairman and general manager of Chenming Holdings,
the chairman of the Company and a Party Committee Secretary. Mr. Chen Hongguo is the spouse of Ms.
Li Xueqin, a deputy general manager of the Company.
Mr. Hu Changqing is a member of the Communist Party of the PRC. He holds a bachelor’s degree. He
joined the Company in 1988. He had held various positions in the Company such as the chief of the
technological reform department, the chief officer of branch factory, the deputy general manager and the
Director. He is currently a director of Chenming Holdings and a vice chairman of the Company.
Mr. Li Xingchun holds a doctorate from School of Engineering Management and Engineering at Nanjing
University and is a visiting professor of Shanghai Finance University. He has successively worked in
Ctrip.com, Fuyou Securities Co., Ltd. ( ) and Western Development Holdings Co.,
Ltd., accumulating more than 30 years of experience in industry, securities, trust and other fields. He is
currently the chairman of Leadbank Technology Ltd., director of Western Leadbank Fund Management
Co., Ltd., independent director of Huadian International Power Co., Ltd., executive director and vice
chairman of Shanghai branch of China Mergers and Acquisitions Association, chairman of Kunpeng Asset
Management Co., Ltd., vice chairman of its Shanghai branch, and vice chairman of the Company.
Mr. Li Feng is a member of the Communist Party of the PRC. He holds a bachelor’s degree. He joined the
Company in 1992 and had held different positions including the chief officer of manufacturing section and
assistant to the general manager of the Company, chairman, marketing director, deputy general manager
and general manager of Wuhan Chenming. He is currently a director of Chenming Holdings and an
executive Director and the chairman of the financial division of the Company. Mr. Li Feng is the younger
brother of Ms. Li Xueqin, a deputy general manager of the Company.
2021 ANNUAL REPORT 59
VI Corporate Governance
V. Directors, Supervisors and Senior Management (Continued)
2. Employment (Continued)
1. Brief biographies of Directors (Continued)
(2) Brief biographies of non-executive Directors
Mr. Han Tingde graduated with a bachelor’s degree. He was the deputy general manager and the general
manager of operational department of Jinan, Liaocheng and Linyi offices of Shandong Securities Co.,
Ltd., the deputy general manager and the general manager of operational department of Zibo and Jinan
offices of Tiantong Securities Co., Ltd. in China, the general management of each of the customer service
department, the brokerage headquarters and the legal affairs department, as well as a deputy general
manager of the retail headquarters of Zhongtai Securities Co., Ltd., etc. He is currently the manager of the
bond business department of Hengtai Changcai Securities Co., Ltd. and a non-executive Director of the
Company.
Mr. Li Chuanxuan holds a doctorate in law. He is a professor at Fudan University, Shanghai. From 2008
to 2012, he was a lecturer in the Law School of Fudan University. From 2012 to 2013, he was a visiting
scholar of the Law School of Columbia University in the United States, focusing on the research on
green finance laws and policies. He is currently the secretary general of the Association of Shanghai
Environmental Resources Law ( ), the director of the Association of China
Environmental Resources Law ( ), the director of the Association of Shanghai
Economic Law ( ), as well as the evaluation expert of the National Judicial Verification
of Environmental Damages ( ). He has been selected into Shanghai Pujiang Talent
Program. He has been in charge of and undertook over 10 national and provincial scientific research
projects. Moreover, he has participated in the drafting of several laws and regulations of different
legislatures including the Standing Committee of the National People’s Congress, the Ministry of Ecology
and Environment and Shanghai National People’s Congress. He concurrently serves as a director of
Jiangsu Guanlian New Material Technology Co., Ltd., and is currently a non-executive Director of the
company.
(3) Brief biographies of independent non-executive Directors
Mr. Sun Jianfei holds a doctorate in finance. He was a lecturer at University of Nevada, Reno, and
concurrently served as the consultant of hedge funds such as Eagle Peak Fund LP. From August 2010 to
February 2017, he was an assistant professor at Antai College of Economics & Management, Shanghai
Jiao Tong University. He was selected in the National Academic Leadership Talent Programme in
Accounting (Standby List) ( ( ) ) organised by the Ministry of Finance, as
well as the Shanghai Pujiang Talent Programme ( ). From February 2017 to August
2020, he was a professor at the Institute for Social and Economic Research of Nanjing Audit University,
and a part-time professor at Antai College of Economics & Management and Advanced Institute of
Finance, Shanghai Jiao Tong University. He is currently an Associate professor of Shanghai Advanced
Institute of Finance of Shanghai Jiao Tong University, supervisor of Boyang (Shanghai) Energy Technology
Co., Ltd., supervisor of Shanghai Xuyang New Energy Technology Co., Ltd., supervisor of Shanghai
Tingwei Business Consultation Co., Ltd., independent director of Zhejiang Yueling Co., Ltd., independent
director of Nanya New Material Technology Co., Ltd., independent director of Suzhou Tianwo Technology
Co., Ltd., independent director of Cubic Digital Technology Co., Ltd. and an independent Director of the
Company.
60 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VI Corporate Governance
V. Directors, Supervisors and Senior Management (Continued)
2. Employment (Continued)
1. Brief biographies of Directors (Continued)
(3) Brief biographies of independent non-executive Directors (Continued)
Mr. Yang Biao holds a doctorate in law, and is currently a professor and doctoral tutor in the School
of Law of Sun Yat-sen University. He is, among others, one of the “Guangzhou Top Ten Young and
Middle-aged Jurists”, an outstanding young talent in the “Guangdong Special Support Program”,
a selected member in the “Double Thousand Plan ( )” of the Ministry of Education and the
Central Politics and Law Committee, a training candidate in the “Thousand-Hundred-Ten project (
)” for universities in Guangdong Province, a member of the first council of the Civil Prosecution
Professional Committee of the Procuratorial Research Association of the China Law Society, a member
of the Expert Advisory Committee to Guangdong People’s Procuratorate, a supervisory member and
judicial advisory expert of the Standing Committee of Guangzhou People’s Congress, an expert certified
in Major Administrative Decision-Making and Argumentation in Guangzhou and a member of the Expert
Committee of the Department of Emergency Management of Guangdong Province. He has served
in Guangdong High People’s Court and People’s Court of Guangzhou Huangpu District. He has also
served as independent director of Guangdong Guangzhou Daily Media Co., Ltd., independent director
of Guangdong Tianhe Agricultural Resources Co., Ltd., independent director of Guangdong Yuehai Feed
Group Co., Ltd., independent director of Qiaoyi Logistics Co., Ltd., an external director of Science City
(Guangzhou) Investment Group Co., Ltd., a director of Guangzhou Sun Yat-sen University Science Park
Co., Ltd., a director of Guangzhou Zhongda Nansha Technology Innovation Industrial Park Co., Ltd., a
director of Guangzhou Zhongda Intellectual Property Service Co., Ltd., a supervisor of Dongguan Rural
Commercial Bank Co., Ltd., a supervisor of Guangzhou Chuanwen Education Consulting Co., Ltd.,. He is
currently an independent Director of the Company.
Ms. Yin Meiqun is a university professor, an advisor to doctoral students, and a certified public accountant
in China. She holds a doctorate in accounting degree. She paid academic visits to Sweden, Finland,
Denmark and the Iowa State University in the United States. From July 1993 to June 2007, she was a
professor in the department of accounting at Harbin University of Science and Technology. From July
2007 to August 2021, she was a professor of Beijing International Studies University. She is currently a
professor of China University of Political Science and Law, a representative of the 15th Beijing Municipal
People’s Congress, a member of the Accounting Education Committee of the Accounting Society of
China, a council member of the Accounting Society of China, a member of the IMA China Management
Accounting Expert Committee, an independent director of Beijing Life Insurance Co., Ltd, and an
independent director of China Best Group Holding Limited. She is currently an independent Director of
the Company.
2021 ANNUAL REPORT 61
VI Corporate Governance
V. Directors, Supervisors and Senior Management (Continued)
2. Employment (Continued)
2. Brief biographies of Supervisors
Ms. Li Kang is a member of the Communist Party of the PRC. She holds a bachelor’s degree. She joined the
Company in 2001. She has successively served as the section chief, deputy minister, minister, assistant to
the general manager of the management section of purchasing department, and deputy financial controller
of the Company. She is currently the assistant to the general manager of the Company, responsible for the
management of the audit department.
Ms. Pan Ailing is a Ph.D. in Economics and holds a post-doctoral degree in Financial Management. She is
currently a level-2 professor of the School of Management, an advisor to doctoral students, and the chief of
the Investment and Financing Research Centre ( ) in Shandong University and a non-practising
member of CICPA (Chinese Institute of Certified Public Accountants). She is also the vice chairperson of the
Accounting Institute, Shandong Province ( ), a council member of Shandong Comparative
Management Association, a visiting scholar at University of Connecticut in the United States and a state-level
candidate for the New Century Ten Million Talents Project ( “ ”). She is a specialist entitled
to the State Council Special Allowance ( ), and a special expert of the Taishan Scholar. She
is the chief expert of the Major Tender Projects of National Social and Science Fund (
). She has finished various research projects at national and provincial level. She is also an independent
director of Shandong Xinhua Medical Equipment Co., Ltd., independent director of Lutai Textile Co., Ltd.,
independent director of Shandong Denghai Seed Industry Co., Ltd., and independent director of Shandong
Sunway Chemical Group Co., Ltd. She is currently a Supervisor of the Company.
Ms. Zhang Hong holds a doctoral degree in Economics, and is currently a professor and advisor to doctoral
students at Shandong University, head of a multinational corporation research institute, a non-practising
member of the Chinese Institute of Certified Public Accountants, a director of China Association of International
Trade, a director of Shandong Province External Trade Association, an independent director of Shandong Hi-
speed Road & Bridge Group Co., Ltd., an independent director of Shandong Zhangqiu Blower Co., Ltd., an
independent director of Vosges Group Co., Ltd., an independent director of China National Heavy Duty Truck
Group Jinan Truck Co., Ltd. and an independent director of Cisen Pharmaceutical Co., Ltd. She is currently a
Supervisor of the Company.
Ms. Qiu Lanju graduated with a diploma. She joined the Company in 1995 and served as the deputy chief of
the price audit section of the Company’s inspection department, the chief of the implementation section of the
procurement department, the chief of the general management section of the procurement department, and the
director of the procurement department. She is currently the assistant to the general manager of the Company,
responsible for the management of the human resources department.
Ms. Sang Ailing holds a bachelor’s degree and is a member of the Communist Party of the PRC She joined the
Company in 2000 and served as the chief of the personnel management section of the marketing department of
a sales company, the deputy director and director of the marketing department of a sales company, etc. She is
currently an employee supervisor of the Company.
62 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VI Corporate Governance
V. Directors, Supervisors and Senior Management (Continued)
2. Employment (Continued)
3. Brief biographies of Senior Management
Mr. Chen Gang is a member of the Communist Party of the PRC. He joined the Company in 1996 and served
as the director of the Company‘s branch factory, the general manager of Zhanjiang Chenming, the general
manager of Jilin Chenming, the leader in charge of Jiangxi Chenming, the assistant to the Company‘s
production director, the general manager of Huanggang Chenming, the Company‘s deputy production director
and an executive director and a deputy general manager of the Company. He is currently the general manager
of the Company.
Ms. Li Xueqin is a member of the Communist Party of the PRC. She holds a bachelor’s degree. She was
successively awarded titles including “Model Worker in Shandong Province ( ), Model Worker
in the Country ( ) and Nationwide May 1st Labour Medal ( )” and a deputy of
the Tenth, Eleventh, Twelfth and Thirteenth National People’s Congress. She joined the Company in 1987 and
had held the positions of the chief of audit department and deputy general manager of the Company. She has
been a deputy general manager of the Company since March 2003. Ms. Li Xueqin is the spouse of Mr. Chen
Hongguo, chairman of the Company.
Mr. Li Weixian graduated with a postgraduate degree. He joined the Company in 2002 and served as the deputy
manager of a Shenzhen coated paper subsidiary of the Company, manager of Shandong Chenming Paper Sales
Company Limited, vice chairman of a household paper company, deputy marketing director and marketing
director of a sales company, the general manager of the Group, and chairman of the financial division of a
group. He is currently a deputy general manager and marketing director of the Company.
Mr. Li Zhenzhong is a member of the Communist Party of the PRC. He holds a bachelor’s degree. He joined
the Company in 1995 and had served as principal representative of the Shanghai management region of a
sales company, sales manager of light weight coated cultural paper products, general manager of the Sales
Company. He is currently a deputy general manager of the Company.
Mr. Dong Lianming is a member of the Communist Party of the PRC and an accountant. He holds a bachelor’s
degree. He joined the Company in 1997 and had held positions as the chief of accounting and auditing section
under the financial department of the Company, the deputy chief and chief of the financial department, chief
accountant of Jiangxi Chenming, chief accountant of Shandong Chenming Panels and financial controller and
deputy general manager of Zhanjiang Chenming. He is currently the financial controller of the Company.
2021 ANNUAL REPORT 63
VI Corporate Governance
V. Directors, Supervisors and Senior Management (Continued)
2. Employment (Continued)
3. Brief biographies of Senior Management (Continued)
Mr. Yuan Xikun is a member of the Communist Party of the PRC. He holds a bachelor’s degree in management.
He joined the Company in 2010 and had held positions as the accountant for consolidated financial statements
in the financial department of the Company, manager of disclosure department, security affairs specialist and
chief of the security investment section. He is currently the secretary to the Board of the Company.
Mr. Chu Hon Leung is a lawyer. He obtained a bachelor’s degree in business from Macquarie University,
Sydney, Australia, and a postgraduate diploma in law from The College of Law, London, England. He graduated
from the City University of Hong Kong and obtained a diploma in Hong Kong law. He had been a lawyer in
local and international law firms in Hong Kong and served and an internal consultant for leading Chinese asset
management companies. He has been a practicing lawyer in Hong Kong since 2009 and currently works for Li &
Partners.
Employment at the shareholder of the Company
√ Applicable Not applicable
Whether
receiving any
remuneration
or allowance
Position at the Date of the from the
Name of shareholder shareholder of the beginning of the Date of the end of shareholder of
Name of employee of the Company Company term the term the Company
Chen Hongguo Chenming Holdings Chairman and 22 September 2016 29 December 2023 No
Company Limited general manger
Hu Changqing Chenming Holdings Director 22 September 2016 29 December 2023 No
Company Limited
Li Xueqin Chenming Holdings Director 22 September 2016 29 December 2023 No
Company Limited
Li Feng Chenming Holdings Director 13 August 2021 29 December 2023 No
Company Limited
Explanation of the Nil
employment at the
shareholder of the
Company
64 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VI Corporate Governance
V. Directors, Supervisors and Senior Management (Continued)
2. Employment (Continued)
3. Brief biographies of Senior Management (Continued)
Employment at other units
√ Applicable Not applicable
Whether receiving
any remuneration or
allowance from the
Name of Date of the Date of the shareholder of the
employee Name of other units Position at other units beginning of the term end of the term Company
Yang Biao Guangdong Guangzhou Daily Media Co., Ltd. Independent director 19 August 2019 19 August 2022 Yes
Yang Biao Guangdong Tianhe Agricultural Means of Independent director 17 May 2018 16 May 2024 Yes
Production Co., Ltd.
Yang Biao Qiaoyi Logistics Co., Ltd. Independent director 2 February 2018 30 March 2024 Yes
Yang Biao Dongguan Rural Commercial Bank Co., Ltd. External supervisor 1 October 2019 1 October 2022 Yes
Sun Jianfei Nanya New Material Technology Co., Ltd. Independent director 1 August 2017 8 October 2023 Yes
Sun Jianfei Suzhou Thvow Technology Co., Ltd. Independent director 8 May 2020 6 November 2022 Yes
Sun Jianfei Cubic Digital Technology Co., Ltd. Independent director 18 May 2021 18 May 2024 Yes
Sun Jianfei Zhejiang Yueling Co., Ltd. Independent director 1 November 2016 Until a new independent Yes
director is elected at a
general meeting
Yin Meiqun Shangqiu Dingfeng Wood Co., Ltd. Independent director 13 May 2021 12 May 2024 Yes
Yin Meiqun China Best Group Holding Limited Independent director 1 December 2021 30 November 2024 Yes
Li Xingchun Huadian International Power Co., Ltd. Independent director 30 June 2020 29 June 2023 Yes
Pan Ailing Shinva Medical Instrument Co., Ltd. Independent director 27 July 2020 27 July 2023 Yes
Pan Ailing Lu Thai Textile Co., Ltd. Independent director 6 June 2016 10 June 2022 Yes
Pan Ailing Shandong Denghai Seed Industry Co., Ltd., Independent director 12 April 2019 12 April 2022 Yes
Pan Ailing Shandong Sunway Chemical Group Co., Ltd. Independent director 15 May 2020 15 May 2023 Yes
Zhang Hong Shandong Zhangqiu Blower Co., Ltd. Independent director 27 March 2019 26 March 2022 Yes
Zhang Hong Sunvim Group Co., Ltd. Independent director 15 July 2019 27 May 2023 Yes
Zhang Hong Sinotruck Jinan Truck Co., Ltd. Independent director 28 April 2020 28 April 2023 Yes
Zhang Hong Cisen Pharmaceutical Co., Ltd. Independent director 28 November 2017 8 December 2023 Yes
Zhang Hong Shandong Hi-speed Road & Bridge Group Co., Ltd. Independent director 23 April 2019 22 June 2023 Yes
Sanctions against current Directors, Supervisors and Senior Management of the Company and those who
resigned during the reporting period by securities regulatory authorities in the past three years
Applicable √ Not applicable
2021 ANNUAL REPORT 65
VI Corporate Governance
V. Directors, Supervisors and Senior Management (Continued)
3. Remuneration of Directors, Supervisors and Senior Management
Decision process, basis for determining the remuneration and actual payment for the remuneration of Directors,
Supervisors and the Senior Management
(1) Determination basis for remuneration of Directors, Supervisors and the Senior Management: The annual
remuneration of each of the executive Directors and the Senior Management of the Company was in the band of
RMB0.20 million to 5.00 million and the specific amount for each of them was determined by the remuneration
committee based on the main financial indicators and operation target completed by the Company, the
scope of work and main responsibilities of the Directors and Senior Management of the Company, the target
completion of the Directors and Senior Management as assessed by the duty and performance appraisal
system, as well as business innovation capability and profit generation ability of the Directors and the Senior
Management. The annual remuneration of Supervisors assuming specific managerial duties in the Company
were determined by the general manager office of the Company based on specific managerial duties assumed
by them. Fixed annual remuneration policy was adopted on external Supervisors who did not hold actual
management positions in the Company. As approved by the first extraordinary meeting of the ninth session of
the Board and the 2019 first extraordinary general meeting, the Company paid each of the independent non-
executive Directors and non-executive Directors of the Company allowance of RMB200,000 (before tax). The
remuneration of external Supervisors amounted to RMB100,000 (before tax). The travel expenses for attending
board meetings, supervisory meetings and general meetings of the Company and fees reasonably incurred in
the performance of their duties under the Articles of Association by independent non-executive Directors, non-
executive Directors and external supervisors are reimbursed as expensed.
(2) Decision process for remuneration of Directors, Supervisors and Senior Management: In accordance with the
relevant policies and regulations such as the Implementation Rules Of The Remuneration And Assessment
Committee Under The Board, any remuneration plan for the Company’s executive Directors proposed by the
remuneration and assessment committee shall be agreed on by the Board and then submitted to the general
meeting for consideration and approval prior to implementation. Any proposal of remuneration distribution
plan for the Senior Management officers of the Company shall be submitted to the Board for approval. The
remuneration of independent non-executive Directors, non-executive Directors and external Supervisors of the
Company shall be agreed on by the Board and then submitted to the general meeting for consideration and
approval prior to implementation.
(3) The remuneration and assessment committee, which was set up by the Board according to the resolution of the
general meeting, is mainly responsible to formulate the standards of, carry out appraisal in respect of the non-
independent Directors and Senior Management of the Company; formulate and examine the remuneration policy
and scheme of the non-independent Directors and Senior Management of the Company, and accountable to
the Board.
66 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VI Corporate Governance
V. Directors, Supervisors and Senior Management (Continued)
3. Remuneration of Directors, Supervisors and Senior Management (Continued)
Decision process, basis for determining the remuneration and actual payment for the remuneration of Directors,
Supervisors and the Senior Management (Continued)
Remuneration of Directors, Supervisors and Senior Management
Unit: RMB’0,000
Total Received
remuneration remuneration
before tax from related
received from parties of the
Name Position Gender Age Status the Company Company
Chen Hongguo Chairman M 57 In office 499.00 No
Hu Changqing Vice Chairman M 56 In office 350.00 No
Li Xingchun Vice Chairman M 56 In office 480.00 Yes
Li Feng Director M 48 In office 295.98 No
Han Tingde Director M 53 In office 20.00 No
Li Chuanxuan Director M 44 In office 20.00 No
Sun Jianfei Independent Director M 49 In office 20.00 No
Yin Meiqun Independent Director F 51 In office 20.00 No
Yang Biao Independent Director M 42 In office 20.00 No
Li Kang Supervisor F 40 In office 100.57 No
Pan Ailing Supervisor F 57 In office 10.00 No
Zhang Hong Supervisor F 57 In office 10.00 No
Qiu Lanju Supervisor F 48 In office 59.98 No
Sang Ailing Supervisor F 43 In office 24.87 No
Chen Gang General manager M 49 In office 102.47 No
Li Xueqin Deputy general manager F 56 In office 232.13 No
Li Weixian Deputy general manager M 40 In office 310.50 No
Li Zhenzhong Deputy general manager M 48 In office 169.01 No
Dong Lianming Financial controller M 47 In office 175.92 No
Yuan Xikun Secretary to the Board M 36 In office 80.82 No
Chu Hon Leung Hong Kong company secretary M 39 In office 0.00 No
Li Xinggui Supervisor M 57 Resigned 3.41 No
Zhao Xuegang Deputy general manager M 49 Dismissed 0.00 No
Geng Guanglin Deputy general manager M 48 Dismissed 46.93 No
Total 3,051.59
2021 ANNUAL REPORT 67
VI Corporate Governance
VI. Performance of Directors during the reporting period
1. Board meetings during the reporting period
Meeting Convening date Disclosure date Resolutions of meeting
The seventeenth extraordinary 29 January 2021 30 January 2021 http://www.cninfo.com.cn
meeting of the ninth session of (announcement no.: 2021-003)
the Board
The eighteenth extraordinary 18 February 2021 19 February 2021 http://www.cninfo.com.cn
meeting of the ninth session of (announcement no.: 2021-013)
the Board
The eighth meeting of the ninth 25 March 2021 26 March 2021 http://www.cninfo.com.cn
session of the Board (announcement no.: 2021-024)
The ninth meeting of the ninth 19 April 2021 Not applicable The Full Text and Content of the
session of the Board Company‘s 2021 First Quarterly
Report was reviewed and
approved. It was exempted
from disclosure by resolution
announcements.
The nineteenth extraordinary 25 June 2021 26 June 2021 http://www.cninfo.com.cn
meeting of the ninth session of (announcement no.: 2021-046)
the Board
The twentieth extraordinary 15 July 2021 16 July 2021 http://www.cninfo.com.cn
meeting of the ninth session of (announcement no.: 2021-060)
the Board
The twenty-first extraordinary 8 August 2021 9 August 2021 http://www.cninfo.com.cn
meeting of the ninth session of (announcement no.: 2021-068)
the Board
The tenth meeting of the ninth 26 August 2021 Not applicable The Full Text and Summary of the
session of the Board Company‘s 2021 Interim Report
was reviewed and approved. It
was exempted from disclosure by
resolution announcements.
The twenty-second extraordinary 23 September 2021 24 September 2021 http://www.cninfo.com.cn
meeting of the ninth session of (announcement no.:2021-082)
the Board
The eleventh meeting of the ninth 29 October 2021 Not applicable The Company’s 2021 Third
session of the Board Quarterly Report was reviewed
and approved. It was exempted
from disclosure by resolution
announcements.
The twenty-third extraordinary 15 November 2021 16 November 2021 http://www.cninfo.com.cn
meeting of the ninth session of (announcement no.: 2021-090)
the Board
68 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VI Corporate Governance
VI. Performance of Directors during the reporting period (Continued)
2. Attendance of Directors at Board meetings and general meetings
Attendance of Directors at Board meetings and general meetings
Number of
attendance
required
for Board Absent
meetings Attendance Attendance Attendance from Board
during the at Board at Board at Board Absence meetings twice Attendance
reporting meetings in meetings by meetings by from Board in a row (in at general
Name of Directors period person communication proxy meetings person) meetings
Chen Hongguo 11 0 11 0 0 No 0
Hu Changqing 11 0 11 0 0 No 5
Li Xingchun 11 0 11 0 0 No 0
Li Feng 11 0 11 0 0 No 2
Han Tingde 11 0 11 0 0 No 1
Li Chuanxuan 11 0 11 0 0 No 5
Sun Jianfei 11 0 11 0 0 No 5
Yin Meiqun 11 0 11 0 0 No 5
Yang Biao 11 0 11 0 0 No 5
Explanation for absent from Board meetings twice in a row (in person)
During the reporting period, none of the Directors was absent from Board meetings twice in a row (in person).
3. Objections from Directors on related issues of the Company
Were there any objections on related issues of the Company from Directors
Yes √ No
There was no objection on related issues of the Company from Directors during the reporting period.
2021 ANNUAL REPORT 69
VI Corporate Governance
VI. Performance of Directors during the reporting period (Continued)
4. Other details about the performance of duties by Directors
Were there any suggestions from Directors adopted by the Company
√ Yes No
Explanation on the adoption or non-adoption with related suggestions from the Directors
During the reporting period, Directors of the Company performed their duties with integrity, diligence, responsibility
and faithfulness, actively participated in corporate governance and decision-making activities, carefully reviewed
various proposals that need to be reviewed at Board meetings, and made resolutions in accordance with the
regulations and requirement of the Companies Law, the Rules Governing Listing of Stocks on Shenzhen Stock
Exchange, the Guidelines of the Shenzhen Stock Exchange for Standardised Operation of Listed Companies and the
Articles of Association and other relevant laws, regulations and regulatory documents. In accordance with the Guiding
Advice on Establishing an Independent Director System in Listed Companies, Work System of Independent Directors
and other regulations, independent Directors of the Company performed their duties independently and learned
about the financial assistance provided by the Company to its investees through communication diligently and
responsibly. They also issued independent and impartial opinions for related party transactions, external guarantees
and the appointment of audit institutions of the Company and other matters requiring independent Directors’ opinions
that occurred during the reporting period, which better safeguarded the overall interests of the Company and the
legitimate rights and interests of all shareholders, especially minority shareholders, and played a positive role in the
Company’s standardised, stable and healthy development.
70 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VI Corporate Governance
VII. Special committees under the Board during the reporting period
Number of Details of
Name of the meeting Important opinion objection
committee Member convened Convening date Details of the meeting and advice Other performance of duty (if any)
Audit Yin Meiqun, Li 4 25 March 2021 Reviewed the Company’s Agreed to submit to the Communication with external Nil
Committee Chuanxuan and 2020 Financial Final Board for review auditing institution engaged
Sun Jianfei Accounts Report, Full by the Company and the
Text and Summary financial department of the
of the Company’s Company in respect of the
2020 Annual Report, 2020 financial report auditing,
Proposal on the review of the 2020 auditor’s
Appointment of report and financial report;
Auditor for 2021 and review of the independence,
Proposal on Provision professional competence,
for Impairment of investor protection ability,
Assets in 2020 and practice qualifications of
Grant Thornton.
19 April 2021 Reviewed the Full Agreed to submit to the Review of the 2021 first quarter Nil
Text and Content Board for review report of the Company as of
of the 2021 First 31 March 2021.
Quarter Report of the
Company
26 August 2021 Reviewed the Full Text Agreed to submit to the Review of the 2021 interim Nil
and Summary of the Board for review financial statements as of 30
2021 Interim Report of June 2021.
the Company
29 October 2021 Reviewed the 2021 Third Agreed to submit to the Review of the 2021 third quarter Nil
Quarter Report of the Board for review report of the Company as of
Company 30 September 2021.
Remuneration Yang Biao, Li 1 25 March 2021 Reviewed the Proposal Agreed to submit to the The Remuneration and Nil
and Xingchun and Sun on Determination Board for review Assessment Committee under
Assessment Jianfei of Remuneration of the Board of the Company
Committee Directors, Supervisors determined the remuneration
and Senior of Directors, Supervisors
Management for 2020 and the senior management,
which was arrived at based on
the operations in 2020.
Strategy Chen Hongguo, Hu 1 25 June 2021 Reviewed the Proposal Agreed to submit to the The Strategy Committee Nil
Committee Changqing and on the Capital Increase Board for review communicated and discussed
Yang Biao of Shanghai Chenming the capital increase of
by Jiangxi Chenming Shanghai Chenming based on
its operations.
Nomination Sun Jianfei, Chen 1 8 August 2021 Reviewed the Proposal Agreed to submit to the The Nomination Committee Nil
Committee Hongguo and Yin on Changing the Board for review conducted a review of the
Meiqun Rotating General candidate
Manager
2021 ANNUAL REPORT 71
VI Corporate Governance
VIII. Performance of duties by the Supervisory Committee
Were there any risks of the Company identified by the Supervisory Committee when performing its duties
during the reporting period
Yes √ No
None of those issues under the supervision was objected by the Supervisory Committee during the reporting period.
IX. Personnel of the Company
1. Number of staff, specialty composition and education level
Number of staff at the Company (person) as at the end of the reporting period 3,144
Number of staff at major subsidiaries (person) as at the end of the reporting period 8,384
Total number of staff (person) as at the end of the reporting period 12,296
Total number of staff receiving remuneration during the period (person) 12,296
Number of retired/resigned staff the Company and its major subsidiaries are required to
compensate (person) 0
Specialty composition
Number of
Category of specialty composition people (person)
Production staff 8,276
Sales staff 564
Technical staff 573
Financial staff 183
Administrative staff 1,419
Other staff 1,281
Total 12,296
Education level
Number of
Category of education level people (person)
Postgraduate and above 25
Undergraduate 997
Post-secondary 2,504
Technical secondary and below 8,770
Total 12,296
72 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VI Corporate Governance
IX. Personnel of the Company (Continued)
2. Remuneration policies
The remuneration of the employees of the Company includes their salaries, bonuses and other fringe benefits. Subject
to the relevant laws and regulations, the Company adopts different standards of remuneration for different employees,
which are determined based on their position, skill variety, performance etc. with reference to the remuneration level
in the labour market, the average level of salary in the society and the corporate reference line set by the government.
The Company provides various benefits to the employees, including social insurance, housing allowance and paid
leaves etc.
3. Training programmes
In 2022, the Company will strictly implement the “people-oriented” management concept, focus on talent training,
further strengthen training, set up a professional training team, formulate concise and effective training measures,
and carry out employee skill improvement training, cadre training, and reserve talent team building. At the same time,
the Company will design three career development channels of management, profession and skill to broaden the
career development paths of employees. The Company will continue to strengthen cooperation with professional
training institutions to innovate learning forms and carry out talent training with the help of external training resources
and teachers. The Company will cultivate internal trainers, establish a team of lecturers, develop high-quality training
materials at different levels and professions, carry out internal training, and improve employees’ business skills.
4. Labour outsourcing
Applicable √ Not applicable
X. Profit distribution of the Company and conversion of capital reserves into share capital
Formulation, implementation or adjustment of profit distribution policy, especially the cash dividend during the reporting
period
√ Applicable Not applicable
The Company implemented its profit distribution policy in compliance with the Articles of Association. Its cash dividend
policy was formulated and implemented in compliance with the requirements of the Articles of Association and the
resolution of the general meeting with well-defined and clear dividend distribution criteria and proportion. The legal interests
of the small shareholders were fully protected as the related decision-making process and mechanism were in place,
the duties of independent Directors were well-defined so that they played a role, and the small shareholders were given
opportunities to sufficiently voice their opinion and make requests.
2021 ANNUAL REPORT 73
VI Corporate Governance
X. Profit distribution of the Company and conversion of capital reserves into share capital
(Continued)
Implementation of the Company’s profit distribution plan in 2020: Based on the total number of ordinary shares of the
Company as at the end of 2020 of 2,984,208,200 shares and the 589,005,236 simulated ordinary shares converted from the
second and third tranches of Preference Shares using a conversion ratio of 1 share valued at RMB3.82, a cash dividend of
RMB1.85 (tax inclusive) was to be distributed to ordinary shareholders for every 10 shares held; a cash dividend of RMB1.85
(tax inclusive) per 10 simulated ordinary shares converted from the second and third tranches of Preference Shares was to
be distributed to holders of Preference Shares. No bonus shares would be issued and there was no increase of share capital
from reserves. The cash dividend distributed to ordinary shareholders amounted to RMB552,078,517.00 and a variable cash
dividend distributed to holders of the second and third tranches of Preference Shares amounted to RMB108,965,968.66.
That is, the holders of the second and third tranches of Preference Shares would receive a cash dividend of RMB4.84 (tax
included) per Preference Share (par value of RMB100 per share). The dividend distribution was implemented and completed
on 18 August 2021. For details, please refer to the Payment of Final Dividend and Withholding and Payment of Enterprise
Income Tax for Non-resident Enterprise Shareholders published on Hong Kong Stock Exchange on 5 August 2021, and
the Announcement on the Implementation of the 2020 Dividend Distribution Plan for A Shares and B Shares and the
Announcement on the Implementation of the Distribution of Residual Profits of 2020 to Preference Shareholders published
on CNINFO on 6 August 2021.
Particulars of Cash Dividend Policy
Was it in compliance with the requirements of the Articles of Association and the resolutions of the general
meeting: Yes
Were the dividend distribution criteria and proportion well-defined and clear: Yes
Were the related decision-making process and mechanism in place: Yes
Did independent Directors fulfil their duties and play their role: Yes
Were the minority shareholders given opportunities to sufficiently voice their opinion
and make requests and were the legal interests of the minority shareholders fully protected: Yes
Were conditions and procedures legal and transparent in respect of cash
dividend policy with adjustments and changes: Yes
The Company was profitable during the reporting period and the Parent Company’s profit available for distribution to
shareholders was positive, but no cash dividend distribution plan was proposed
√ Applicable Not applicable
Explanation on why it was profitable during the reporting period Use and plan of use of the Company’s undistributed profits
and the Parent Company’s profit available for distribution to
shareholders was positive but no cash dividend distribution
plan was proposed
Considering factors such as the current macroeconomic The retained undistributed profits of the Company are
environment and the Company’s strategic planning, in order accumulated and carried forward to the next year,
to further optimise its capital structure, reduce its scale of which will be mainly used for day-to-day operation and
debt, lower its gearing ratio, enhance the Company’s financial development, repayment of interest-bearing liabilities
resilience, and satisfy the capital needs for, among other and project construction of the Company to ensure the
things, day-to-day production and operation, and project normal production, operation and business expansion of
construction, thereby securing the sustainable and steady the Company, and to provide a reliable guarantee for the
development of the pulp production and paper making implementation of the Company’s medium and long-term
business, the principal operation of the Company, and better development strategy, thus effectively safeguarding the
safeguarding the long-term interests of all shareholders. interests of the Company and all shareholders, especially
small and medium shareholders.
74 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VI Corporate Governance
X. Profit distribution of the Company and conversion of capital reserves into share capital
(Continued)
Profit distribution and conversion of capital reserves into share capital during the reporting period
Applicable √ Not applicable
The Company does not propose distribution of cash dividends or bonus shares for the year, and there will be no increase of
share capital from reserves.
XI. Implementation of the equity incentive plan, employee shareholding plan or other employee
incentive measures of the Company
√ Applicable Not applicable
1. On 30 March 2020, the ninth extraordinary meeting of the ninth session of the Board of the Company considered and
approved the Resolution in Relation to the 2020 Restricted Share Incentive Scheme of Shandong Chenming Paper
Holdings Limited (Draft) and Its Summary and other resolutions. On the same date, the fourth extraordinary meeting
of the ninth session of the Supervisory Committee of the Company considered and approved the above resolutions
and verified the list of proposed participants of the incentive scheme. Independent Directors of the Company issued
independent opinions on the incentive scheme.
2. On 3 April 2020, the Company announced the list of participants through the Company’s internal website for a period
from 3 April 2020 to 12 April 2020. During the period, the Supervisory Committee of the Company and relevant
departments did not receive any objection against the proposed participants. The Supervisory Committee verified the
list of participants under the grant of the incentive scheme.
3. On 15 May 2020, the Resolution in Relation to the 2020 Restricted Share Incentive Scheme of Shandong Chenming
Paper Holdings Limited (Draft) and Its Summary and other resolutions were considered and approved at the 2020
second extraordinary general meeting, the 2020 first class meeting for holders of domestic-listed shares and the 2020
first class meeting for holders of overseas-listed shares of the Company. On 16 May 2020, the Company disclosed
the Self-Examination Report for the Trading of Shares of the Company by Insiders and Participants of the 2020
Restricted A Share Incentive Scheme.
4. On 29 May 2020, the Resolution on the Matters Relating to Adjustments to the 2020 Restricted A Share Incentive
Scheme of the Company and the Resolution in Relation to the Grant of Restricted Shares to the Participants were
considered and approved at the tenth extraordinary meeting of ninth session of the Board and the fifth extraordinary
meeting of the ninth session of the Supervisory Committee of the Company, approving the issue of 79,600,000
restricted A shares to 111 participants at the price of RMB2.85 per share on 29 May 2020.
5. On 15 July 2020, the 79,600,000 restricted A shares granted to the participants were listed.
2021 ANNUAL REPORT 75
VI Corporate Governance
XI. Implementation of the equity incentive plan, employee shareholding plan or other employee
incentive measures of the Company (Continued)
Share options granted to Directors and the Senior Management of the Company as incentives
√ Applicable Not applicable
Unit: share
Exercise
price of Number
the shares Market Number of of newly
Number Number exercised price at the restricted Number of granted Grant Number of
of shares of shares during the end of the shares unlocked restricted price of restricted
exercisable exercised reporting reporting held at the shares shares restricted shares
during the during the period period beginning during the during the shares held at the
reporting reporting (RMB/ (RMB/ of the current reporting (RMB/ end of the
Name Position period period share) share) period period period share) period
Chen Hongguo Chairman 0 0 0 7.24 20,000,000 0 0 2.85 20,000,000
Hu Changqing Vice Chairman 0 0 0 7.24 5,000,000 0 0 2.85 5,000,000
Li Xingchun Vice Chairman 0 0 0 7.24 5,000,000 0 0 2.85 5,000,000
Li Feng Director 0 0 0 7.24 3,000,000 0 0 2.85 3,000,000
Chen Gang General manager 0 0 0 7.24 1,000,000 0 0 2.85 1,000,000
Deputy general
Li Xueqin manager 0 0 0 7.24 3,000,000 0 0 2.85 3,000,000
Deputy general
Li Weixian manager 0 0 0 7.24 2,000,000 0 0 2.85 2,000,000
Deputy general
Li Zhenzhong manager 0 0 0 7.24 2,000,000 0 0 2.85 2,000,000
Dong Lianming Financial controller 0 0 0 7.24 1,000,000 0 0 2.85 1,000,000
Yuan Xikun Secretary to the Board 0 0 0 7.24 300,000 0 0 2.85 300,000
Total 0 0 42,300,000 0 0 42,300,000
Assessment and incentive mechanism for the Senior Management
The Senior Management of the Company is assessed on monthly and annually basis. Monthly assessments were conducted
in line with the direction of the annual major tasks, and were focused on appraisals of two fixed indicators, namely the
completion status of each month and the evaluation on important performance indicators. It was carried out monthly by
way of cross assessment and supervision among the related departments. The annual assessments were carried out by the
Remuneration and Assessment Committee with reference to the results of monthly assessments and overall performances
during the year, including the integrated quality of Senior Management and internal training of talents.
76 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VI Corporate Governance
XII. Construction and implementation of internal control system during the reporting period
1. Construction and implementation of internal control system
During the reporting period, the Company strictly complied with various laws and regulations and the Company’s
internal control system to standardise operations, optimise governance, and manage and control risks. Taking
internal and external environment, internal organisation and management requirements into account, the Company
updated and improved its internal control system in a timely manner. The daily work flow and related systems of
each department and business segment of the company were comprehensively reviewed. The relevant content of the
Internal Control Management Manual was revised and improved. A scientific, applicable and effective internal control
system had been established to effectively prevent and timely discover and correct deviations in the Company’s
operation and management process, thus reasonably protecting the safety and integrity of the Company’s assets, and
reasonably ensuring the authenticity, accuracy and integrity of accounting information.
The internal control system was able to cover the main aspects of the Company’s operation and management, and
there were no major omissions. The units, businesses and events included in the evaluation scope and high-risk areas
covered the main aspects of the Company’s operation and management, and there were no major omissions. The
design of the internal control system was sound and reasonable. The implementation specifications were effective
and there were no major omissions. Through the operation, analysis and evaluation of the internal control system, the
Company effectively prevented risks in operation and management and promoted the realisation of internal control
objectives.
2. Particulars of material deficiencies in internal control detected during the reporting period
Yes √ No
XIII. The Company’s management and control of subsidiaries during the reporting period
Issue
encountered
Integration during Implemented Solution Follow-up
Name of the company Integration plan progress integration solution progress solution
Wuhan Junheng In December 2021, the leasing Completed Nil Not Not Not
Property company acquired 100% equity applicable applicable applicable
Management Co., interest in Wuhan Junheng Property
Ltd. Management Co., Ltd. to offset the
amount due to it. The company’s
major assets were the shops on South
Xizang Road, Shanghai, which were
mainly used for leasing purpose. Upon
completion of the merger, the finance
departments of the leasing company
shall be responsible for auditing.
2021 ANNUAL REPORT 77
VI Corporate Governance
XIV. Self-assessment report on internal control or auditor’s report on internal control
1. Self-assessment Report on Internal Controls
Date of Disclosure of Assessment Report on Internal Controls 31 March 2022
Index of Assessment Report on Internal Controls Disclosure http://www.cninfo.com.cn
Percentage of Total Assets Included in Assessment to Total Assets in Consolidated Financial 99.80%
Statements of the Company
Percentage of Revenue Included in Assessment to Revenue in Consolidated Financial 99.00%
Statements of the Company
Basis for identifying deficiencies
Type Financial reporting Non-financial reporting
Qualitative criteria Indicators of material deficiencies in the internal control of financial Indicators of material deficiencies in the internal control of non-financial
reporting include: ineffective control environment, material loss to reporting include: major failure as a result of the decision making
and adverse impact on the Company as a result of misconduct process; lack of control system or occurrence of systematic failure
by Directors, Supervisors and Senior Management; material in principal activities and lack of effective compensation control,
misstatement of non-exceptional incidents; ineffectiveness in high turnover rate of mid to senior level management and senior
supervision of internal control of the Company by the Board, or its technical staff; failure to address the findings of internal control
delegated authorities, and the internal audit department. assessment, in particular material deficiencies; and other factors
Indicators of major deficiencies in internal control of financial which impose material adverse impact on the Company.
reporting include: failure in selecting and applying accounting Indicators of major deficiencies in internal control of nonfinancial
policies in accordance with generally accepted accounting reporting include: general failure as a result of the decision-making
principles; failure to establish procedures and control measures to process; deficiencies in major business procedure or system; high
prevent corrupt practices; failure to establish corresponding control turnover rate of key staff; failure to address the findings of internal
mechanism for the accounting of unusual or special transactions control assessment, in particular major deficiencies; and other
or failure to implement or set up the corresponding compensation factors which impose great adverse impact to the Company.
control; failure to reasonably ensure the truthfulness and accuracy Indicators of general deficiencies in internal control of non-financial
in the preparation of financial statement, as a result of one or more reporting include: low efficiency of decision making process;
deficiencies in the control of financial reporting as of the end of the deficiencies in general business procedure or system; high turnover
period. rate of employees; and failure to rectify general deficiencies.
General deficiencies: other deficiencies in internal control that do not
constitute material or major deficiencies.
Quantitative criteria General deficiencies: deviation of less than or equal to 0.1% from the General deficiencies: quantitative criterion (financial loss) less
target of accounting error/the total revenue; Major deficiencies: than RMB5,000,000; major deficiencies: quantitative criterion
deviation of 0.1% – 0.5% from the target of accounting error/the (financial loss) between RMB5,000,000 and RMB20,000,000;
total revenue; material deficiencies: deviation greater than 0.5% material deficiencies: quantitative criterion (financial loss) over
from the target of accounting error/the total revenue. RMB20,000,000.
Number of material deficiencies in financial reporting: (number) 0
Number of material deficiencies in non-financial reporting: (number) 0
Number of major deficiencies in financial reporting: (number) 0
Number of major deficiencies in non-financial reporting: (number) 0
78 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VI Corporate Governance
XIV. Self-assessment report on internal control or auditor’s report on internal control (Continued)
2. Auditor’s report on internal control
√ Applicable Not applicable
Auditor’s opinion contained in the Auditor’s report on internal control
We are of the opinion that Shandong Paper Company had in all material aspects maintained effective internal control
over the financial statements in accordance with the Basic Internal Control Norms for Enterprises as of 31 December
2021.
Disclosure of Auditor’s Report on Internal Control Disclosed
Date of Disclosure of Auditor’s report on internal control 31 March 2022
Index of Auditor’s Report on Internal Control Disclosure http://www.cninfo.com.cn
Type of Opinion in Auditor’s Report on Internal Control Standard and unqualified opinion
Material deficiencies in non-financial reporting No
Any opinions of non-standardisation set out in the Auditor’s Report on Internal Control issued by accountants
Yes √ No
Auditor’s Report on Internal Control issued by accountants was in line with Directors’ opinions contained in Self-
assessment Report
√ Yes No
XV. Rectification of problems found in self-inspection under the special initiative on corporate
governance of the listed company
Not applicable
2021 ANNUAL REPORT 79
VI Corporate Governance
XVI. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited
(i) Compliance with the Code on Corporate Governance
The Company maintained high standards of corporate governance through various internal controls. The Board
reviewed the corporate governance practices of the Company from time to time to enhance the corporate governance
standards of the Company.
Save for the details set out in III Board, IV Chairman and General Manager and XVII Communications with
shareholders in this section, the Company had fully complied with all the principles and code provisions of the Code
on Corporate Governance as set out in Appendix 14 to the Hong Kong Listing Rules during the reporting period.
(ii) Securities transactions by Directors
The Directors of the Company confirmed that the Company had adopted the Model Code for Securities Transactions
by Directors of Listed Companies as set out in Appendix 10 to the Hong Kong Listing Rules. Having made adequate
enquiries with all Directors and Supervisors of the Company, the Company was not aware of any information that
reasonably suggested that the Directors and Supervisors had not complied with the requirements as stipulated in this
code during the reporting period.
(iii) Board
The members of the Board of the Company are elected at the general meeting and held accountable to the general
meeting, and shall exercise the following functions and powers: (1) to be responsible for convening the general
meeting and to report on its work to the general meeting; (2) to carry out the resolutions of general meetings; (3)
to decide on the business plans and investment proposals of the Company; (4) to formulate the proposed annual
financial budget and final accounts of the Company; (5) to formulate the plan for profit distribution and the plan
making up losses of the Company; (6) to formulate plans for the increase or reduction in the registered capital of the
Company and for the issue and listing of Company’s debentures or other securities; (7) to draft plans for material
acquisition and repurchase of the Company’s own shares; (8) to draft plans for the merger, division or dissolution or
the change of formation of the Company; (9) to decide on external investment, acquisition and disposal of assets,
pledge of assets, matter in relation to external guarantee, entrusted wealth management, connected transactions,
etc. within the scope of mandate of the general meeting; (10) to decide on the establishment of the Company’s
internal management organisation; (11) to employ or dismiss the manager or secretary to the Board of the Company;
to employ or dismiss the Senior Management, such as the deputy general manager(s) and personnel in charge
of financial affairs, as proposed by the general manager; and to decide on their remuneration and rewards and
punishments; (12) to formulate the basic management system of the Company; (13) to formulate proposals for
amending the Articles of Association; (14) to administrate matter related to information disclosure of the Company;
(15) to propose to the general meeting for the engagement or replacement of accounting firm performing audit for the
Company; (16) to review work reports from managers of the Company and to inspect on their work; (17) to exercise
the functions and powers as conferred upon by the Articles of Association or the general meeting.
The Board comprised four executive Directors: Chen Hongguo (Chairman), Hu Changqing, Li Xingchun and Li Feng;
two non-executive Directors: Han Tingde and Li Chuanxuan; and three independent non-executive Directors: Sun
Jianfei, Yin Meiqun and Yang Biao. Please refer to part V of this section for their brief biographies.
80 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VI Corporate Governance
XVI. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(iii) Board (Continued)
The Board is responsible for leading and monitoring the Company, and is wholly responsible for the administration and
supervision of the Company’s businesses to facilitate its success. The Executive Director or the Senior Management
is authorised to be responsible for the various divisions and functions and management of the processing. Directors
of the Company shall act objectively and make decisions in the interests of the Company. The management and
the Senior Management of the Company held regular meetings with the Board to discuss the ordinary business
operations and performance of the Company, and carried out the relevant decisions of the Board. The Company will
arrange independent legal advice upon the request from the Directors or any committees of the Board, if the Board or
any committees of the Board consider it necessary to seek for independent professional advice.
Pursuant to Code A.1.8 of the code provisions, the Company should arrange appropriate insurance cover in respect
of legal action against its Directors. As at the date of this report, the Company has not reached an agreement with
the original insurance company, and therefore has not arranged relevant insurance cover for Directors. However, the
Company is currently under negotiation with another insurance Company with respect to director liability insurance in
2022.
During the reporting period, the Board held 11 meetings, 4 of which were regular meetings and 7 were extraordinary
meetings. None of the Directors were absent from any Board meetings.
Attendance at the relevant meetings (attention required/attended)
Remuneration
and
Audit Nomination Assessment Strategic
Board Committee Committee Committee Committee General
Name Position meetings meetings meetings meetings meetings meetings
I. Executive Directors
Chen Hongguo Chairman 11/11 N/A 1/1 N/A 1/1 5/0
Hu Changqing Vice Chairman 11/11 N/A N/A N/A 1/1 5/5
Li Xingchun Vice Chairman 11/11 N/A N/A 1/1 N/A 5/0
Li Feng Executive Director 11/11 N/A N/A N/A N/A 5/2
II. Non-executive Directors
Li Chuanxuan Director 11/11 4/4 N/A N/A N/A 5/5
Han Tingde Director 11/11 N/A N/A N/A N/A 5/1
III. Independent non-executive
Directors
Sun Jianfei Independent Director 11/11 4/4 1/1 1/1 N/A 5/5
Yin Meiqun Independent Director 11/11 4/4 1/1 N/A N/A 5/5
Yang Biao Independent Director 11/11 N/A N/A 1/1 1/1 5/5
Save for those disclosed in the brief profile of Directors of the Company in this Report, none of the members of the
Board had any financial, business, family relations or material connections with each other.
The Board held 4 regular meetings during the year, each by giving a 10-day notice in advance to ensure that all
Directors could participate in discussions of matters in the agenda. Reasonable prior notification was given for the
other meetings of the Board to ensure all Directors could take time to attend.
All Directors had access to opinions and services of the secretary to the Board to ensure the procedures governing
the Board and all applicable regulations and rules were complied with.
2021 ANNUAL REPORT 81
VI Corporate Governance
XVI. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(iii) Board (Continued)
Directors’ training and professional development
All newly appointed Directors are provided with necessary orientation information, with an aim to ensure that they will
have a better understanding of operations and business of the Company as well as relevant laws and regulations and
obligations under the Listing Rules.
Directors and Supervisors of the Company were arranged by the Company to attend training courses 2021 for
directors and supervisors held by China Securities Regulatory Commission, Shandong; and, briefing paper in respect
of amendments to Hong Kong Listing Rules prepared by Advisor to Hong Kong Law of the Company was distributed
to all Directors and Supervisors, the above of which were to ensure all Directors and Supervisors to comply with
relevant laws and sound corporate governance practice, and enhance their awareness of sound corporate governance
practice.
(iv) Chairman and General Manager
The chairman of the Company is Mr. Chen Hongguo, and the general manager of the Company is Mr. Chen Gang.
Please refer to part V of this section for their brief biographies.
According to the Articles of Association of the Company, the chairman shall exercise the following powers: (1)
presiding over general meetings, and convening and presiding over Board meetings; (2) supervising and inspecting
the implementation of the resolutions of the Board; (3) signing the shares, the securities and bonds issued by the
Company; (4) signing important documents of the Board and other documents which are required to be signed by
legal representative of the Company; (5) performing the powers of a legal representative; (6) nominating candidates
for general manager for the Board; (7) exercising the special right to operate the Company in accordance with the
laws and acting for the benefits of the Company in the event of emergency situation as a result of act of God or
natural disaster, and reporting to the Board meetings and general meeting afterwards; and (8) exercising other powers
authorised by the Board.
82 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VI Corporate Governance
XVI. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(iv) Chairman and General Manager (Continued)
The general manager shall exercise the following powers: (1) in charge of the operation and management of the
Company, and organising the implementation of the resolutions of the Board; (2) organising the implementation of
the Company’s annual business plans and investment plans; (3) drafting plans for the establishment of the internal
organisational structure of the Company; (4) drafting the basic management system of the Company; (5) formulating
specific rules and regulations for the Company; (6) proposing the appointment or dismissal of the deputy general
manager and chief financial officer; (7) appointing or dismissing management personnel other than those required
to be appointed or dismissed by the Board; (8) proposing the wages, welfare, rewards, and penalties of staff and to
decide the appointment or dismissal of staff of the Company; (9) proposing the convening of extraordinary meeting of
the Board; and (10) exercising other powers conferred by the Articles of Association of the Company and the Board
(v) Independent Non-executive Directors
There are three independent non-executive Directors in the Board, which is in compliance with the minimum
requirement of the number of independent non-executive directors set out in the Hong Kong Listing Rules. Yin Meiqun
and Sun Jianfe, the independent non-executive Directors of the Company, have appropriate accounting or related
financial management expertise, which is compliance with the requirement of Rule 3.10 of the Hong Kong Listing
Rules. Please refer to part V of this section for their brief biographies. The Company has received from each of the
independent non-executive Directors a confirmation of independence for the year pursuant to Rule 3.13 of the Hong
Kong Listing Rules and considered all of the independent non-executive Directors to be independent during the year.
(vi) Terms of Directors
According to the Articles of Association of the Company, all Directors, including non-executive Directors, are elected
at general meetings with a term of three years from June 2019 to June 2022. They may be re-elected for another term
upon expiry of tenure.
(vii) Directors’ Responsibility for the Financial Statements
The Directors acknowledged their responsibility to prepare financial statements for each financial year which give
a true and fair view of the state of affairs of the Company. The Directors believed that the Company had adopted
and applied consistently appropriate accounting policies in preparing the financial statements in compliance with all
related accounting standards.
(viii) Board Committees
Pursuant to Code on Corporate Governance, the Board has established four committees, namely, Audit Committee,
Remuneration and Assessment Committee, Strategic Committee and Nomination Committee, for overseeing particular
aspects of the Company’s affairs. Each Board Committee has its own defined written terms of reference. The written
terms of reference of each Board Committee are published on websites of stock exchange and the Company.
Save for requirements of Code on Corporate Governance, the Company also set up Strategic Committee, for
overseeing and studying long-term strategic development plan of the Company and making recommendations.
2021 ANNUAL REPORT 83
VI Corporate Governance
XVI. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(ix) Audit Committee
The Audit Committee of the Company comprises three members, including Yin Meiqun (as the chairman), Li
Chuanxuan and Sun Jianfei. Two of them, including the chairman, are independent non-executive Directors. The
primary duties of the Audit Committee are serving as a communication media between internal and external audit
and the related review and supervision. Yin Meiqun and Sun Jianfei have appropriate professional qualifications or
appropriate accounting or related financial management expertise, which is in compliance with the requirement of the
Hong Kong Listing Rules.
The primary duties of the Audit Committee of the Company are: (1) proposing the appointment or dismissal of the
external auditor; (2) supervising the internal control system of the Company and its implementation; (3) serving as
a communication media between internal and external audit; (4) auditing the financial information of the Company
and its disclosures; (5) reviewing the financial control, risk control and internal control system of the Company and
audit the significant connected transactions; (6) discussing the risk management and internal control system with
the management to ensure the management has performed its duties to establish effective systems. The discussion
should include the adequacy of resources, staff qualifications and experience, training programs and budget of the
accounting and financial reporting functions of the Company; (7) studying the major investigation findings on risk
management and internal control matters on its own initiative or as delegated by the Board and the management’s
response to these findings; (8) where the annual report includes statements in relation to the risk management and
internal control system of the Company, reviewing such statements prior to submission to the Board for approval; and
(9) dealing with other matters as delegated by the Board.
The Audit Committee discussed with the management of the Company the accounting standards and practices
adopted by the Group and discussed and reviewed this report, including the review of the financial statements of the
Group for the year ended 31 December 2021 prepared in accordance with China Accounting Standards for Business
Enterprises.
Particulars of the meetings held by the Audit Committee during the reporting period were detailed in part VII of this
section.
Risk Management and Internal Control
The Board is responsible for the risk management and internal control systems and reviewing their effectiveness.
Such systems are designed to manage rather than eliminate the risk of failure to achieve business objectives, and can
only provide reasonable but not absolute assurance against material misstatement or loss.
The Audit Committee (on behalf of the Board) oversees management in the design, implementation and monitoring
of the risk management and internal control systems, and the management has provided confirmation to the Audit
Committee (and the Board) on the effectiveness of these systems for the year ended 31 December 2021.
In respect of internal control system, procedures have been designed for safeguarding assets against unauthorised
use or disposition, ensuring the maintenance of proper accounting records for the provision of reliable financial
information for internal use or for publication, and ensuring compliance of applicable laws, rules and regulations.
84 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VI Corporate Governance
XVI. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(x) Remuneration and Assessment Committee
The Remuneration and Assessment Committee of the Company comprises three members, including Yang Biao,
the Chairman, and other members, namely Li Xingchun and Sun Jianfei. Two members, including the Chairman,
are independent non-executive Directors, which is in compliance with Code on Corporate Governance Practices.
The Remuneration and Assessment Committee is primarily responsible for formulating the criteria of appraisal of
the Directors and managers and conducting the appraisal, and studying and formulating the remuneration policy
and package of the Directors and the Senior Management of the Company. The Remuneration and Assessment
Committee is accountable to the Board.
The primary duties of the Remuneration and Assessment Committee of the Company are: (1) formulating the
remuneration plan or package based on the major scope of work, duties and importance of the Directors and the
management and the remuneration level of other counterparts; (2) formulating the remuneration plan or package
which mainly includes but not limited to standards, procedures and a system for performance appraisals as well
as major plans and a system for rewards and sanctions; (3) examining the performance of the Directors, excluding
the independent non-executive Directors, and the Senior Management and conduct annual performance appraisals
for them; (4) supervising the implementation of the remuneration policy of the Company; and (5) dealing with other
matters as delegated by the Board.
Particulars of the meetings held by the Remuneration and Assessment Committee during the reporting period are
detailed in part VII of this section.
(xi) Nomination Committee
The Nomination Committee of the Company comprises three members, including Sun Jianfei (as the chairman), Chen
Hongguo and Yin Meiqun. Two of them, including the chairman, are independent non-executive Directors, which is
in compliance with Code on Corporate Governance Practices. The Nomination Committee is primarily responsible
for selecting candidates for directors and the management of the Company, determining the selection criteria and
procedure and making recommendations.
The primary duties of the Nomination Committee are (1) advising the Board on the size and composition of the Board
in light of the Company’s operating activities, asset scale and shareholding structure; (2) studying the selection criteria
and procedure for Directors and the management and advising the Board on the same; (3) extensively identifying
qualified candidates for Directors and the management; (4) examining candidates for Director and the management
and advising on the same; (5) examining other Senior Management staff pending referral to the Board for decision on
their employment and advising on the same; (6) advising to the Board on appointment and re-appointment of directors
and on skills, knowledge, experience, background, gender and other characteristics required in serving as a director
taking into consideration diversity, balance and efficiency of the Board and benefits thereto; (7) reviewing the Board
diversity policy, revising thereon in a timely manner and making relevant disclosure in the corporate governance report
in the corresponding annual report; and (8) dealing with other matters as delegated by the Board.
2021 ANNUAL REPORT 85
VI Corporate Governance
XVI. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(xi) Nomination Committee (Continued)
During the reporting period, the Nomination Committee, after studying the needs of the Company for new Directors
and managerial personnel and taking into consideration the Board diversity policy, identified suitable candidates for
Director and managerial positions through various channels (including from the Group internally and from the human
resources market). Upon acceptance of nomination by the nominated person, the Nomination Committee performed
qualification review on preliminary candidates by holding meetings, review criteria include the academic qualifications,
relevant experience and specialised skills of the preliminary candidates. One to two months prior to election of new
Directors, the Nomination Committee submitted recommendations and relevant materials of the directorial candidates
to the Board; prior to engaging new Senior Management, the Nomination Committee submitted recommendations
and relevant materials of the new Senior Management personnel to the Board.
Particulars of the meetings held by the Nomination Committee during the reporting period are detailed in part VII of
this section
(xii) Strategic Committee
The Company set up a Strategic Committee which comprised three members, including Chen Hongguo, the
Chairman, and other members, namely, Hu Changqing and Yang Biao. The Strategic Committee is primarily
responsible for studying the long term strategic development and major investments of the Company and making
recommendations.
The primary duties of the Strategic Committee are (1) conducting research and submitting proposals regarding the
long term development strategic plan; (2) conducting research and submitting proposals regarding the financing
plans for major investments which require approval from the Board as stipulated in the Articles of Association of the
Company; (3) conducting research and submitting proposals regarding major capital operations and assets operation
projects which require approval from the Board as stipulated in the Articles of Association of the Company; (4)
conducting research and submitting proposals regarding other material matters that may affect the development of
the Company; (5) carrying out examination on the implementation of the above matters; (6) dealing with other matters
as delegated by the Board.
Particulars of the meetings held by the Strategic Committee during the reporting period are detailed in part VII of this
section.
(xiii) Auditor
Based on the operation development and auditing needs of the Company, the Company convened the 2019 second
extraordinary general meeting on 23 October 2019, and considered and approved the Resolution in relation to the
Change of the Auditor, pursuant to which the Company’s auditor for 2019 was changed from Ruihua Certified Public
Accountants (Special General Partnership) to Grant Thornton (Special General Partnership). On 19 June 2020, the
Company convened the 2019 annual general meeting, and considered and approved the Resolution in relation to
the Appointment of the Auditor for 2020, and continued to engage Grant Thornton (Special General Partnership) as
the domestic auditor of the Company for 2020. On 18 June 2021, the Company convened the 2020 annual general
meeting, and considered and approved the Resolution in relation to the Appointment of the Auditor for 2021, and
continued to engage Grant Thornton (Special General Partnership) as the domestic auditor of the Company for 2021
and be responsible for domestic auditing of the Company for 2021.
86 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VI Corporate Governance
XVI. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(xiv) Remuneration for the Auditor
The financial statements for 2021 prepared in accordance with Accounting Standards for Business Enterprises by
the Group were audited by Grant Thornton (Special General Partnership). The Company paid the auditor in aggregate
RMB2,500,000 and RMB800,000 in respect of financial statements audit and non-audit services in relation to internal
control for 2021 respectively.
Grant Thornton (Special General Partnership) has stated their reporting responsibilities on the financial statements of
the Group in XII. Financial Report of this annual report.
(xv) Supervisors and Supervisory Committee
The Supervisory Committee comprises three shareholder representatives and two staff representatives. The
shareholder representatives shall be elected and removed at a general meeting and the staff representatives shall
be elected and removed democratically by the staff of the Company. During the reporting period, the Supervisory
Committee of the Company convened 4 meetings, and all supervisors attended Supervisory Committee meetings
convened during the year, and carefully reviewed the 2020 Annual Report, 2021 First Quarterly Report, 2021 Interim
Report and 2021 Third Quarterly Report, and issued special opinions. The Supervisory Committee is accountable to
the shareholders. It monitors the financial position of the Company and the performance of the Directors, managers
and Senior Management of the Company as to whether they are in accordance with relevant requirements of the laws
and regulations to protect the lawful rights of the Company and the shareholders.
(xvi) Company Secretary
During the year, the company secretary confirmed that he has received relevant professional training for not less than
15 hours in accordance with Rule 3.29 of the Listing Rules.
(xvii) Communications with Shareholders
The Company considers effective communication with Shareholders is essential to enable them to have a clear
assessment of the Group’s performance as well as accountability of the Board. Principal means of communication
with Shareholders of the Company are as follows:
Information disclosure on the Company’s website
The Company endeavours to disclose all material information about the Group to all interested parties as widely and
timely as possible. The Company maintains its website at www.chenmingpaper.com where important information
about the Group’s activities and corporate matters such as annual reports and interim reports to Shareholders,
announcements, business development and operations, corporate governance practices and other information are
available for review by Shareholders and other stakeholders.
2021 ANNUAL REPORT 87
VI Corporate Governance
XVI. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(xvii) Communications with Shareholders (Continued)
Information disclosure on the Company’s website (Continued)
When announcements are made through the Stock Exchange, the same information will be made available on the
Company’s website.
General meetings
The Company’s annual general meeting provides a useful platform for direct communication between the Board and
Shareholders. Various resolutions are proposed on each substantially separate issue at the general meetings. Save
for the annual general meeting held on 18 June 2021 by the Company, two extraordinary general meetings, 1 Class
Meeting for Holders of Domestically listed Shares and 1 Class Meeting for Holders of Overseas-listed Shares were
convened in 2021. The attendance record of Directors at each general meeting is set out below:
Name Directors attending general meetings in person
2021 first extraordinary general meeting Hu Changqing, Li Chuanxuan, Sun Jianfei, Yin Meiqun, Yang Biao
2021 first class meeting for holders of Hu Changqing, Li Chuanxuan, Sun Jianfei, Yin Meiqun, Yang Biao
domestic-listed shares
2021 first class meeting for holders of Hu Changqing, Li Chuanxuan, Sun Jianfei, Yin Meiqun, Yang Biao
overseas-listed shares
2020 annual general meeting Hu Changqing, Li Feng, Han Tingde, Li Chuanxuan, Sun Jianfei,
Yin Meiqun, Yang Biao
2021 second extraordinary general meeting Hu Changqing, Li Feng, Li Chuanxuan, Sun Jianfei, Yin Meiqun,
Yang Biao
88 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VI Corporate Governance
XVI. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(xvii) Communications with Shareholders (Continued)
General meetings (Continued)
The Company’s external auditor also attended the Annual General Meeting and scrutinised voting.
Code E.1.2 of the code provisions – This code provision requires the chairman to invite the chairmen of the audit,
remuneration and nomination committees to attend the Annual General Meeting.
Mr. Chen Hongguo, the chairman of the Company and its strategy committee, was absent from the annual general
meeting due to business commitments.
Code A.6.7 of the code provisions – This code provision requires independent non-executive Directors and other
non-executive Directors, as equal board members, should give the Board and any committees on which they serve
the benefit of their skills, expertise and varied backgrounds and qualifications through regular attendance and active
participation. They should also attend general meetings and develop a balanced understanding of the views of
shareholders.
Mr. Han Tingde was absent from the 2021 first extraordinary general meeting, the 2021 first class meeting for holders
of domestic-listed shares and the 2021 first class meeting for holders of overseas-listed shares due to business
commitments.
Mr. Han Tingde was absent from the 2021 second extraordinary general meeting due to business commitments.
Voting by poll
Resolutions put to vote at the general meetings of the Company are taken by poll. Procedures regarding the conduct
of the poll are explained to the shareholders at the commencement of each general meeting, and questions from
shareholders regarding the voting procedures are answered. The poll results are posted on the websites of the Stock
Exchange and the Company respectively on the same day.
2021 ANNUAL REPORT 89
VI Corporate Governance
XVI. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(xvii) Communications with Shareholders (Continued)
Shareholders’ right
1. Procedures for convening an extraordinary general meeting by Shareholder
Pursuant to Article 100 of the Articles of Association of the Company, Shareholder(s) alone or in aggregate
holding 10% or more of the Company’s shares shall be entitled to request the Board to convene extraordinary
general meetings, provided that such request shall be made in writing. The Board shall, in accordance with
provisions of the laws, administrative regulations and the Articles of Association, furnish a written reply stating
its agreement or disagreement to the convening of an extraordinary general meeting within ten days after
receiving such proposal of the same.
In the event that the Board agrees to convene an extraordinary general meeting, the notice of general meeting
shall be issued within five days after the passing of the relevant resolution of the Board. Any changes in the
original request made in the notice shall require prior approval of Shareholders concerned.
In the event that the Board does not agree to convene an extraordinary general meeting or does not furnish any
reply within ten days after receiving such proposal, Shareholder(s) alone or in aggregate holding 10% or more of
the Company’s Shares shall be entitled to propose to the Supervisory Committee the convening of extraordinary
general meeting, provided that such proposal shall be made in writing.
In the event that the Supervisory Committee agrees to convene an extraordinary general meeting, the notice of
general meeting shall be issued within five days after receiving such request. Any changes in the original request
made in the notice shall require prior approval of Shareholders concerned.
Failure of the Supervisory Committee to issue a notice of general meeting within the stipulated period shall
be deemed as failure of the Supervisory Committee to convene and preside over a general meeting, and
Shareholder(s) alone or in aggregate holding 10% or more of the Company’s shares for ninety consecutive days
or more shall be entitled to convene and preside over the meeting on a unilateral basis.
Pursuant to Article 101 of the Articles of Association of the Company, if Shareholders determine to convene a
general meeting on their own, they shall give a written notice to the Board and file the same with the local office
of CSRC at the place where the Company is located and the stock exchange for records. The shareholding
percentage of shareholders who convened shall not be lower than 10% prior to the announcement of
resolutions of the general meeting.
Shareholders who convened shall submit relevant certifications to the local office of CSRC at the place where
the Company is located and the stock exchange upon the issuance of the notice of general meeting and the
announcement of resolutions of the general meeting.
The Board and its secretary shall cooperate with respect to matters relating to general meetings convened
by Shareholders on their own. The Board shall provide Shareholder registers as of the date of shareholding
register. If a general meeting is convened by shareholders on their own, all necessary expenses incurred shall
be borne by the Company.
90 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VI Corporate Governance
XVI. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(xvii) Communications with Shareholders (Continued)
Shareholders’ right (Continued)
2. Procedures for sending shareholders’ enquiries to the Board
Shareholders may at any time send their enquiries and concerns to the Board of the Company in writing through
the Company Secretary/Secretary to the Board whose contact details are as follows:
Secretary to the Board Hong Kong Company Secretary
Name Yuan Xikun Chu Hon Leung
Address No. 2199 East Nongsheng Road, 22/F, Universal Building, Central,
Shouguang City, Shandong Province Hong Kong
Telephone 0536-2158008 00852-21629600
Facsimile 0536-2158977 00852-25010028
Email chenmmingpaper@163.com liamchu@li-partners.com
The Company Secretary and the secretary to the Board shall forward shareholders’ enquiries and concerns
to the Board and/or relevant Board Committees of the Company, where appropriate, to answer shareholders’
questions.
3. Procedures for putting forward proposals of Shareholders at general meetings
Pursuant to Article 111 of the Articles of Association of the Company, shareholders individually or jointly holding
over 3% of the total shares of the Company with voting right are entitled to propose motions to the Company.
Shareholders individually or jointly holding over 3% of the total shares of the Company with voting right may
submit extraordinary motions to the Board or the secretary to the Board ten working days before the convening
of the General Meeting. The Board or the secretary to the Board shall issue supplementary notice of the General
Meeting to announce the extraordinary motions within two working days after receiving the proposed motions.
Save for provided above, the Board or Secretary to the Board shall not amend proposals stated in the notice of
general meeting or add new proposals therein following the notice of general meeting has been issued.
No voting or resolution shall be effected or adopted at the general meeting for proposals that have not been
stated in the notice of general meeting or that do not comply with provisions of the Articles of Association.
Extraordinary general meeting shall not resolve issues that are not contained in the notice.
Relationships with investors
The Company recognises its responsibility to explain its activities to those with a legitimate interest and to respond to
their questions. Investors are received and visited at appropriate times to explain the Group’s business. In addition,
questions received from the general public and individual shareholders are answered promptly. In all cases, great care
is taken to ensure that no price-sensitive information is disclosed selectively.
(xviii) Internal Control
For details of internal control of the Company, please refer to XII. Internal control system development and
implementation during the reporting period and XIV. Internal control self-assessment report or Internal control audit
report of this section.
2021 ANNUAL REPORT 91
VI Corporate Governance
XVI. Disclosures as required by the Hong Kong Listing Rules issued by the Stock Exchange of
Hong Kong Limited (Continued)
(xix) Articles of Association
On 3 December 2019, the Company amended the new Articles of Association. The amendments were primarily
relating to the time for convening general meetings. Memorandum of Association and the amended version of the
new Articles of Association of the Company are available on websites of the Company and Stock Exchange. On 29
January 2021, the Company made amendments to its new Articles of Association, and the scope of amendments was
primarily related to relevant matters of domestic listed foreign shares after the Company’s implementation of change
of listing venue of the domestic listed foreign shares and their listing and trading on the Main Board of The Stock
Exchange of Hong Kong Limited by conversion. The aforementioned amendments were considered and approved at
the 2021 first extraordinary general meeting, the 2021 first class meeting for holders of domestic-listed shares and
the 2021 first class meeting for holders of overseas-listed shares of the Company, and shall be effective on the date
of the listing of the Company’s domestic listed foreign shares converted into overseas-listed foreign shares. Before
the listing of domestic listed foreign shares converted into overseas-listed foreign shares, the Articles of Association
amended by the Company on 3 December 2019 shall continue to be effective.
(xx) Board Diversity
On 21 August 2013, the Company formulated policies to diversify Board members and amended the implementing
rules of the nomination committee. Pursuant to the new policies, the nomination committee shall regularly review the
Board diversity policy to improve efficiency and ensure interest thereof.
Such policies are summarised as follows:
The Company recognises and embraces the benefits of having a diverse Board, and sees diversity at Board level as
an essential element in maintaining a competitive advantage. A truly diverse Board will include and make good use
of differences in the talents, skills, regional and industry experience, backgrounds, genders and other qualities of the
members of the Board. These differences will be considered in determining the optimum composition of the Board
and when possible should be balanced appropriately. All appointments of the members of the Board are made on
merit, and in the context of the talents, skills and experience of the Board as a whole.
The Nomination Committee of the Company reviews and assesses the composition of the Board and makes
recommendations to the Board on appointment of new directors of the Company. The Nomination Committee
also oversees the conduct of the annual review of the effectiveness of the Board. In reviewing and assessing the
composition of the Board, the Nomination Committee will consider the benefits of all aspects of diversity, including
without limitation those described above, in order to maintain an appropriate range and balance of talents, skills,
experience and backgrounds on the Board. In recommending candidates for appointment to the Board, the
Nomination Committee will consider candidates on merit against objective criteria and with due regard for the benefits
of diversity on the Board.
The composition of the Board of the Company is basically diversified. For details, please refer to (iii) Board of this
section.
(xxi) Dividend policy
Considering factors such as the current macroeconomic environment and the Company’s strategic planning, in order
to further optimise its capital structure, reduce its scale of debt, lower its gearing ratio, enhance the Company’s
financial resilience, satisfy the Company’s capital needs for, among other things, day-to-day production and
operation, and project construction, thereby securing the sustainable and steady development of the Company’s pulp
production and paper making business, the principal operation of the Company, and better safeguarding the long-
term interests of all shareholders, the Company proposed not to pay cash dividend, issue bonus shares or increase
share capital from reserves.
92 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VII Environment and Social Responsibility
I. Major environmental protection matters
Are the Company and its subsidiaries classified as key pollutant discharging unit as specified by environmental protection
authority
√ Yes No
Name of major
pollutants Number of
Name of company and specific emission Distribution of Pollutant emission Approved Excessive
or subsidiary pollutants Way of emission outlets emission outlets Emission concentration standards implemented Total emissions total emissions emissions
Shandong Chenming SO2 Organised 2 Chenming Industrial Power plant no. 1: 5.45mg/m3 35mg/m3 Power plant no. 1: 11.8t 160.32t/year No
Paper Holdings emission Park Power plant no. 2: 4.63mg/m3 Power plant no. 2: 9.68t
Limited
NOx Organised 2 Chenming Industrial Power plant no. 1: 38.4mg/m3 50mg/m3 Power plant no. 1: 83.5t 233.91t/year No
emission Park Power plant no. 2: 39.1mg/m3 Power plant no. 2: 77.7t
Particulates Organised 2 Chenming Industrial Power plant no. 1: 0.898mg/m3 5mg/m3 Power plant no. 1: 1.98t 23.39t/year No
emission Park Power plant no. 2: 0.905mg/m3 Power plant no. 2: 1.71t
COD Indirect emission 2 Chenming Industrial Sewage outlet no. 1: 169mg/L 300mg/L Sewage outlet no. 1: 1207t 6510.74t/year No
Park Sewage outlet no. 2: 155mg/L Sewage outlet no. 2: 1624t
Ammonia Indirect emission 2 Chenming Industrial Sewage outlet no. 1: 2.69mg/L 30mg/L Sewage outlet no. 1: 18.5t 650.7t/year No
nitrogen Park Sewage outlet no. 2: 1.25mg/L Sewage outlet no. 2: 13.5t
Shouguang Meilun Paper SO2 Organised 4 Chenming Industrial Power plant no. 1: 8.58mg/m3 35mg/m3 (self-owned Power plant no. 1: 34.3t 342.89t/year No
Co., Ltd. emission Park Power plant no. 2: 9.9mg/m3 power plant), 50mg/m3 Power plant no. 2: 34.1t
Alkali recovery: 1.42mg/m3 (chemical pulp mill) Alkali recovery: 13.7t
Lime kiln: 11mg/m3 Lime kiln: 15.4t
NOx Organised 4 Chenming Industrial Power plant no. 1: 30.8mg/m3 50mg/m3 (self-owned Power plant no. 1: 122t 1202.75t/year No
emission Park Power plant no. 2: 31.6mg/m3 power plant), 100mg/m3 Power plant no. 2: 103t
Alkali recovery: 67.4mg/m3 (chemical pulp mill) Alkali recovery: 631t
Lime kiln: 21.1mg/m3 Lime kiln: 29.1t
Particulates Organised 4 Chenming Industrial Power plant no. 1: 0.842mg/m3 5mg/m3 (self-owned Power plant no. 1: 3.39t 121.979t/year No
emission Park Power plant no. 2: 0.938mg/m3 power plant), 10mg/m3 Power plant no. 2: 3.05t
Alkali recovery: 1.17mg/m3 (chemical pulp mill) Alkali recovery: 11t
Lime kiln: 1.36mg/m3 Lime kiln: 1.72t
Wuhan Chenming SO2 Organised 2 Within Qianneng 130T/h furnace: 5.9mg/m3 50mg/m3 3.523t 102.58t/year No
Hanyang Paper emission Electric Power 75T/h furnace: 2.56mg/m3
Holdings Co., Ltd. factory area
NOx Organised 2 Within Qianneng 130T/h furnace: 79.58mg/m3 100mg/m3 45.351t 205.16t/year No
emission Electric Power 75T/h furnace: 41.2mg/m3
factory area
Particulates Organised 2 Within Qianneng 130T/h furnace: 2.58 mg/m3 20mg/m3 2.553t 41.032t/year No
emission Electric Power 75T/h furnace: 2.53mg/m3
factory area
COD Direct emission 1 Total wastewater 56mg/L 80mg/L 66.64t 184.3t/year No
discharge
Ammonia Direct emission 1 Total wastewater 1.71mg/L 8mg/L 2.12t 17.3t/year No
nitrogen discharge
Jiangxi Chenming Paper SO2 Organised 1 Thermal power plant 240T/h furnace: 11.6049mg/m3 200mg/m3 31.584t 806t/year No
Co., Ltd. emission
NOx Organised 1 Thermal power plant 240T/h furnace: 57.7725mg/m3 200mg/m3 157.2359t 806t/year No
emission
Particulates Organised 1 Thermal power plant 240T/h furnace: 6.3513mg/m3 30mg/m3 17.2860t 135t/year No
emission
COD Direct emission 1 Total wastewater 44.75mg/L 90mg/L 372t 1260t/year No
discharge
Ammonia Direct emission 1 Total wastewater 1.74mg/L 8mg/L 14.50t 112t/year No
nitrogen discharge
2021 ANNUAL REPORT 93
VII Environment and Social Responsibility
Name of major
pollutants Number of
Name of company and specific emission Distribution of Pollutant emission Approved Excessive
or subsidiary pollutants Way of emission outlets emission outlets Emission concentration standards implemented Total emissions total emissions emissions
Jilin Chenming Paper SO2 Organised 3 (2 in use, Within factory area 11.72mg/m3 100mg/m3 11.97t 97t/year No
Co., Ltd emission 1 spare)
NOx Organised 3 (2 in use, Within factory area 31.68mg/m3 100mg/m3 32.54t 213t/year No
emission 1 spare)
Particulates Organised 3 (2 in use, Within factory area 10.74mg/m3 30mg/m3 11.14t 51.66t/year No
emission 1 spare)
COD Indirect emission 1 Total wastewater 60.51mg/L 90mg/L 250.99 t 357t/year No
discharge
Ammonia Indirect emission 1 Total wastewater 1.41mg/L 8mg/L 5.40t 34t/year No
nitrogen discharge
Zhanjiang Chenming Pulp SO2 Organised 5 Within factory area Alkali recovery: 10.119mg/m3 Alkali recovery: 200mg/m3 114.168t 620t/year No
& Paper Co., Ltd. emission Power plant no. 1: 1.605mg/m3 1#2#3#4# circulating
Power plant no. 2: 4.333mg/m3 fluidised bed boilers:
Power plant no. 3: 4.990mg/m3 35mg/m3
Power plant no. 4: 3.996mg/m3
NOx Organised 5 Within factory area Alkali recovery: 138.664mg/m3 Alkali recovery: 200mg/m3 1090.244t 2169.70t/year No
emission Power plant no. 1: 6.638mg/m3 1#2#3#4# circulating
Power plant no. 2: 9.372mg/m3 fluidised bed boilers:
Power plant no. 3: 8.932mg/m3 50mg/m3
Power plant no. 4: 11.991mg/m3
Particulates Organised 5 Within factory area Alkali recovery: 16.548mg/m3 Alkali recovery: 30mg/m3 123.621t 196t/year No
emission Power plant no. 1: 0.536mg/m3 1#2#3#4# circulating
Power plant no. 2: 1.376mg/m3 fluidised bed boilers:
Power plant no. 3: 0.858mg/m3 10mg/m3
Power plant no. 4: 2.163mg/m3
COD Direct emission 1 Within factory area 44.093mg/L 90mg/L 797.430t 1943t/year No
Ammonia Direct emission 1 Within factory area 0.804mg/L 8mg/L 14.763t 43.9t/year No
nitrogen
Total Direct emission 1 Within factory area 0.154mg/L 0.8mg/L 2.669t 21.36t/year No
phosphorus
Total nitrogen Direct emission 1 Within factory area 4.383mg/L 12mg/L 79.204t 320.4t/year No
Huanggang Chenming SO2 Organised 1 Lime kiln chimney 22.9mg/m3 80mg/m3 16.23t 471.289t/year No
Pulp & Paper Co., Ltd. emission
SO2 Organised 1 Alkali furnace 8.68mg/m3 200mg/m3 19.61t No
emission chimney
NOX Organised 1 Alkali furnace 174.07mg/m3 200mg/m3 629.26t 1,132.716t/year No
emission chimney
Particulates Organised 1 Lime kiln chimney 7.51mg/m3 200mg/m3 4.34t 129.07t/year No
emission
Particulates Organised 1 Alkali furnace 10.52mg/m3 30mg/m3 27.28t No
emission chimney
COD Indirect emission 1 Total wastewater 14.08mg/L 150mg/L 126.41t 398.911t/year No
discharge
Ammonia Indirect emission 1 Total wastewater 0.08mg/L 14mg/L 0.69t 39.891t/year No
nitrogen discharge
94 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VII Environment and Social Responsibility
I. Major environmental protection matters (Continued)
Construction and operation of facilities for pollution prevention and control
(1) The Company and its subsidiaries strictly comply with laws, regulations and relevant rules regarding environmental
protection of the central and local government. The construction of projects strictly adheres to the “three
simultaneities” on environmental protection. In order to ensure pollutants are discharged strictly in accordance with
the requirements under laws and regulations and disposed properly, production and operation strictly comply with the
national Law on the Prevention and Control of Environmental Pollution, Law on the Prevention and Control of Water
Pollution, Law on the Prevention and Control of Air Pollution, Action Plan for Prevention and Control of Water Pollution
and Law on the Prevention and Control of Environmental Pollution by Solid Waste and other laws.
(2) The Company and its subsidiaries are equipped with perfect environmental protection treatment facilities, the main
process of sewage treatment is: pre-treatment – anaerobic – aerobic – deep treatment process, which can achieve the
standard discharge of sewage; and each subsidiary is equipped with water reuse system, reuse the treated sewage
as much as possible to reduce the pollution of emissions. The Company has built nine sewage treatment plants with
a daily treatment capacity of 350,000 cubic meters; and every quarter, government departments regularly visit the
Company to compare the online monitoring data, and the data comparison is qualified.
(3) Each subsidiary’s organised emission outlets are equipped with an online monitoring system for real-time monitoring.
All subsidiaries have their own power plants. Each self-owned plant has its own environmental protection facilities
for de-dusting, desulphurisation and denitrification. Denitrification is conducted through SCR or SNCR, while
desulphurisation is primarily conducted through gypsum desulphurisation (ammonia desulphurisation is adopted in
the self-owned plant of Jiangxi Chenming). The emissions indicators are better than the national and local execution
standards. Other alkali recovery boilers and lime kilns are also in compliance with the emission standards.
Environmental impact assessment of construction projects and other environmental protection
administrative licensing
The Company has strictly complied with the environmental laws and regulations all along to carry out environmental impact
assessment of construction projects. The construction projects are all subject to environmental impact assessment.
During the construction process, a reasonable environmental protection project construction plan is formulated and strictly
implemented. The environmental protection facilities and the main project are designed, constructed and put into operation
at the same time. At present, all construction projects put into production have obtained environmental impact assessment
approvals and acceptance approvals
In June 2017, the Company and its subsidiaries completed the formalities for new discharge permits in accordance with
the Measures for the Administration of Pollutant Discharge Permits of the Ministry of Environmental Protection, and the
discharge permits of the new projects were renewed according to the environmental protection requirements in a timely
manner.
Emergency plan for emergency environmental incidents
The Company has strictly implemented emergency regulations for emergency environmental incidents, and formulated
various emergency plans for emergency environmental incidents according to the technical requirements in the “Technical
Guidelines for Emergency Environmental Pollution Accidents”. The plans are reviewed by and filed with the Environmental
Protection Bureau, and regular emergency training and emergency drills are conducted. Emergency measures in relation
to dangerous chemicals are formulated in accordance with the environmental protection requirements. At the same time,
necessary emergency supplies are provided with regular inspections and updates.
2021 ANNUAL REPORT 95
VII Environment and Social Responsibility
I. Major environmental protection matters (Continued)
Environmental self-monitoring programme
The Company has strictly complied with self-monitoring laws and regulations, and conducted self-monitoring in accordance
with the environmental protection requirements to establish and perfect the corporate environmental management ledgers
and materials. At present, self-monitoring is a combination of manual monitoring and automatic monitoring. At the same
time, qualified units are engaged to conduct regular monitoring. Automatically monitored items include: total wastewater
discharge (COD, ammonia nitrogen, flow rate, total phosphorus, total nitrogen and PH); power plant, alkali recovery boilers
and lime kiln exhaust emissions (sulphur dioxide, nitrogen oxide and smoke). Manually monitored items include: daily
monitoring of COD, ammonia nitrogen, SS, chroma, PH, total phosphorus and total nitrogen indicators. Sewage and other
monitoring items, unorganised exhaust emission, solid waste, and noise at the plant boundary, are monitored on a monthly
or quarterly basis by qualified units engaged in accordance with the local environmental protection requirements in relation
to each subsidiary.
The self-monitoring data and environmental monitoring programmes for pollutants discharge of various subsidiaries are
published on the national key pollution source information disclosure website and the provincial key pollution source
information disclosure websites.
Administrative penalty for environmental problems during the reporting period
Impact on the production
Name of company and operation of listed Corrective measures of the
or subsidiary Reasons for penalty Violations Penalty results company Company
Jiangxi Chenming Operation and On 17 December 2020, the Nanchang The Nanchang The violations did In response to the foregoing
Paper Co., Ltd. maintenance and Municipal Ecological Environment Municipal Ecological not result in issues, Jiangxi Chenming
management Bureau, together with the Northern Environment environmental immediately organised
irregularities of Jiangxi Commissioner’s Office Bureau imposed pollution. Jiangxi the rectification of online
online monitoring and the Environmental Information an administrative Chenming has facilities, strengthened the
equipment Center, inspected the wastewater penalty of a fine completed operation and maintenance
station of Jiangxi Chenming RMB21,000 on rectification, and management of online
and found that there were some Jiangxi Chenming in paid the fine on devices, and regularly
operation and maintenance and accordance with the time. There is no conducted comparison
management irregularities in law. significant impact to ensure the normal
respect of the wastewater online on the production operation of the monitoring
monitoring equipment. Although the and operation of the equipment.
normal operation of the monitoring listed company.
equipment was not guaranteed, no
environmental pollution was caused
as a result.
96 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VII Environment and Social Responsibility
I. Major environmental protection matters (Continued)
Other environmental information to be disclosed
The relevant environmental protection information of the pollutant discharge permit information and the pollutant discharge
permit requirements is announced on the national sewage discharge permit management information platform.
Measures taken to reduce its carbon emissions during the reporting period and their effectiveness
√ Applicable Not applicable
1. The Group strengthened energy management, and compared and analysed the consumption of coal, electricity, on a
daily basis with strict control.
2. The Group implemented the conversion of old and new energy sources, eliminated high energy-consuming
equipment, replaced high-efficiency inverter and energy-saving motors, and reduced energy consumption.
3. According to the zero position of the air cover of the paper machine dryer, the Group reduced the frequency of the fan
appropriately to improve the drying efficiency of the zero position and save electricity consumption.
4. For moisture content of screening unit and squeezing unit of paper machine, the Group reduced out of the press
moisture and the amount of steam used of drying unit.by adjusting the lip plate flow rate, retention rate and line
pressure and other measures.
5. The Group strengthened daily energy-saving management by developing a system for temperature of air conditioning
and switching on and off of various power supplies, with tracking and inspection.
6. The Group vigorously developed clean energy and energy recycling projects to reduce carbon emissions. The
construction of Shouguang Chenming 33 MW and Zhanjiang Chenming 24 MW photovoltaic power generation
projects was being promoted, which would reduce carbon emissions by about 68,000 tonnes per year after operation.
7. The Group constructed Shouguang Chemical Pulp, Huanggang Chenming and Zhanjiang Chenming waste heat power
generation projects, and connected to Chenming’s internal power grid nearby, with net power generation capacity of
2,400 KW per hour, to reduce part of coal consumption.
8. The Group carried out energy saving and emission reduction at different factories, so that the amount of clean water
was under strict control, the amount of water produced by membrane treatment was increased and the amount of
wastewater recycled was increased.
Through a range of emission reduction measures, carbon emissions were reduced by approximately 600,000 tonnes in 2021
compared to 2020.
Other environmental protection related information
Other environmental protection related information is announced on the Company’s website.
2021 ANNUAL REPORT 97
VII Environment and Social Responsibility
II. Social responsibility
For a long time, the Company always sticks to take “Creating high-quality paper products and sincerely repaying the
society” as its guiding policy. While pursuing economic benefits of the company, it effectively performs social responsibility,
proactively assumes its due responsibility for national and social development, natural environment and for shareholders,
staff, customers, suppliers and other stakeholders and achieves organic integration of economic, social and ecological
benefits through charitable activities. During the reporting period, the Company continuously made efforts and fulfilled its
duties in good faith in terms of shareholders’ benefits, staff interests, environmental protection, aid and poverty alleviation
and so on, and was highly praised by all sectors of society. The Company has successively been on the list of “2021
Shandong Social Responsibility Enterprise” and “2021 Top 500 Chinese Enterprises for Philanthropy”, and was awarded
the honorary titles of “National Model Workers’ Home”, “The Seventh Shandong Charity Award Shandong Province Worker
Pioneer” and other honorary titles.
1. Fulfilment of Shareholders’ Rights and Responsibilities
The recognition and support of shareholders is the driving force for the Company to promote the sustainable and
healthy development, and it is the Company’s obligation and responsibility to protect the rights and interests of
shareholders. During the reporting period, the Company adopted a combination of on-site and online voting to
convene 5 general meetings strictly in accordance with the Articles of Association, Rules of Procedure of General
Meetings to ensure the right of shareholders to know, participate and vote on the Company’s major issues, especially
for the minority shareholders. The Company smoothly implemented the 2020 profit distribution scheme with a cash
dividend of RMB1.85 (tax inclusive) per 10 shares to ordinary shareholders, and a cash dividend of RMB1.85 (tax
inclusive) per 10 simulated ordinary shares converted from the Preference Shares to holders of the second and
third tranches of Preference Shares. Since 2003, the Company has distributed cash dividend to shareholders in 19
consecutive years, granting recurring and stable investment returns to all shareholders.
2. Fulfilment of Staff’s Rights and Responsibilities
The Company sticks to the people-oriented concept and strictly complies with the Labour Law, the Labour Contract
Law, the Women’s Rights Protection Law and other relevant laws and regulations and advocates the policy of equal
employment to fully protect various legitimate interests of the employees. During the reporting period, the Company
established Safety Production Responsibility System and strengthened the staff’s awareness of safety production and
effectively protected their personal safety by carrying out activities such as “Safety Production Month”, emergency
drills, and organising the troubleshooting and dealing with potential hazards. The Company improved the evaluation
mechanism and performance appraisal system, focusing on employee growth, and carried out multi-level vocational
training through online learning platforms, cadre teaching and other methods to continuously improve the professional
level of employees. In order to improve employees’ happiness and enhance corporate cohesion, the Company
sent greeting cards and cakes to employees on their birthdays, provided free on-the-job meals to employees, and
continuously improved the environment of employees’ apartments. The Company enriched employees’ spare time by
carrying out billiards games, basketball games, fun sports and games and other activities. Meanwhile, the Company
established staff mutual aid foundation and successively helped more than 200 employees in difficulty, concentrating
the huge enterprise development power with care, and promoting the sustainable, healthy and rapid development of
the enterprise.
98 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VII Environment and Social Responsibility
II. Social responsibility (Continued)
3. Fulfilment of environmental protection responsibilities
For a long time, the Company has always been adhering to the concept of green and ecological development,
taking environmental protection as a “life project”, thoroughly implementing the national energy conservation and
environmental protection policy, and unswervingly taking the road of green development, low-carbon development
and circular development. The Company has invested more than RMB8 billion to actively carry out environmental
protection governance, and is now leading in all environmental protection indicators. In the paper making industry,
the Company has taken the lead in exploring black liquor resource recovery technology, launched the largest
alkali recycling project in the domestic paper making industry, and built the first domestic medium-pressure steam
generator with the utilisation of alkali furnaces which could save 750,000 tonnes of standard coal per annum, with the
alkali recovery rate reaching 99.8%; adopts the world’s most advanced osmosis and filtration technology to recycle
greywater, with a conversion rate of up to 75% or above, and the standard of treated greywater is up to drinking
water standard. At the same time, the Company fully implements clean production, vigorously implements energy
conservation and emission reduction, explores the mode of innovative comprehensive utilisation of resources and
industrial circular development, and builds three circular economic ecological chains of “resources-products-renewable
resources”, creating a green, clean and low-carbon production system to achieve the goal of “energy saving,
consumption reduction, pollution reduction and efficiency improvement”.
4. Fulfilment of Responsibilities for Aid and Poverty Alleviation
While standardising operation, paying taxes, and creating economic value, the Company proactively participates in
social public welfare undertakings, fulfils social responsibility and creates social values. During the reporting period,
the Company continuously conduct charitable relief public welfare projects such as “Sunrise Aid for Education”,
“Sunset Assistance to Elderly “, and “Aid for the Disabled”, actively took the lead in participating in “Daily Donation
with Compassion” activity in Shouguang City, donated RMB1 million to the Shouguang Federation of Trade Unions,
and played a demonstrating and leading role as a leading enterprise. At the same time, the Company fully contributed
to the fight against the pandemic and poverty alleviation, and donated 40 tonnes of disinfectant to the Wuchuan
Municipal Government to overcome the current difficulties and help fight the pandemic; actively participated in the
“Guangdong Poverty Alleviation Day” activity, donated a total of RMB11 million, and made active contributions to the
targeted poverty alleviation work. The Company donated funds to help poor students through the Love Education
Foundation, and donated funds through the Education Alliance Foundation to commend outstanding teachers and
contribute to the construction of the teaching staff.
In the future, the Company will remain true to its original aspiration and fulfil its mission, and strive for development.
While improving and strengthening the principal business of pulp production and paper making and improving
economic benefits, the Company earnestly fulfils its social responsibilities and achieves a benign interaction between
the economic value and the social value to create a shared value, and better demonstrate the strength and style
as a leading paper making enterprise in China, and make greater contributions to high-quality economic and social
development.
2021 ANNUAL REPORT 99
VII Environment and Social Responsibility
III. Consolidate and expand the achievements of poverty alleviation and rural revitalisation
2021 was the first year to consolidate and expand the achievements of poverty alleviation and achieve effective connection
with rural revitalisation. Chenming Group was concerned about its hometown, and led its subsidiaries to take the initiative
and the responsibility to alleviate poverty, making positive contributions to the local targeted poverty alleviation work and
helping the poor and vulnerable groups shake off poverty as soon as possible.
During the reporting period, Chenming Group actively carried out the “Daily Donation with Compassion” activity, donated
a total of RMB1 million to the Charity Federation, supported the communities in pair with Shouguang City No. 3 Middle
School, donated love student grants, and helped the construction of local education course. The labour union of the Group,
Jilin Chenming, Jiangxi Chenming and other subsidiaries actively applied for municipal-level charitable disability assistance,
charitable medical care and other relief funds for employees who became impoverished due to illness, used the Company’s
mutual aid funds to help them get rid of poverty, and set up documentation for them in respect of poverty alleviation.
Zhanjiang Chenming, a subsidiary of the Company, under the guidance and cooperation of the Mazhang Town Committee
and Town Government, conducted field research in 40 administrative villages and communities in the town to learn about
the village’s collective economic income, its infrastructure, and its construction of the village party branch; interviewed 429
registered households alleviated from poverty in Mazhang Town, established dynamic monitoring and aiding work book to
prevent returning to poverty, and dynamic monitored the changes in income and expenditure, “no two worries about food
and clothing, and three guarantees of compulsory education, basic medical care and housing security”, drinking water,
employment and other basic information, thereby consolidating the results of poverty alleviation work while maintaining real-
time monitoring. The Youth Civilisation Unit Project of Wuhan Chenming, a subsidiary of the Company, actively responded
to the call of the Youth League Municipal Committee and organised a paired assistance activity with the theme of “Poverty
Alleviation and Student Aid”. The labour union and the Youth League Committee of Zhuankou Street Office fulfilled a small
wish for impoverished children every quarter, delivering living supplies and school supplies to children from poor families. In
the next step, the Company will actively participate in “poverty alleviation” and other activities to support poverty alleviation
and rural revitalisation & construction, while striving to achieve steady economic performance improvement.
100 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VIII Material Matters
I. Performance of undertakings
1. Undertakings made by parties involved in undertakings including the Company’s beneficial controllers,
shareholders, related parties, bidders and the Company during the reporting period or prior periods
but subsisting to the end of the reporting period
√ Applicable Not applicable
Party involved Type of Undertaking Particulars on
Undertaking in undertaking undertaking Details of undertaking date Term the performance
Undertaking Chenming Non- (1) Chenming Holdings Co., Ltd. (“Chenming Holdings”) 22 May 2008 During the Implementing as
made on initial Holdings competitive shall not engage, whether solely, jointly, or by period when normal
public offering Co., Ltd undertaking representing itself or any other persons or companies, Chenming
or refinancing and shall not procure its associates (as defined in The Holdings
Listing Rules of Hong Kong Stock Exchange) to engage, was the
in any business which competes with the business of major
the Company and its subsidiaries (“Chenming Group” shareholder
or “we”) directly or indirectly, in any country and region of the
which our business exists (or any part of the world if in Company
any form of electronics business), or in any business
that directly or indirectly competes with Chenming
Group’s business which we operate from time to time
(including but not limited to any business in the form
of sole proprietorship, joint ventures or acquisitions,
or holding interests directly or indirectly in such
enterprises, or by any other means); (2) in the event
that Chenming Holdings is required by its business to,
whether solely, jointly, or by representing itself or any
other persons or companies, engage in business which
directly or indirectly competes against the business of
Chenming Group, or obtain any business opportunity
which directly or indirectly competes against the
business of Chenming Group, it shall endeavour to
procure that Chenming Group shall have priority to
obtain the right to operate such business or to obtain
such business opportunity; (3) if Chenming Holdings is
in breach of the abovementioned undertakings, it shall
indemnify the Company for any loss caused by such
breach and the Company shall have the right to acquire
all businesses of Chenming Holdings, which directly or
indirectly compete with the businesses of our Group, at
market price or cost price (whichever price is lower); (4)
Chenming Holdings shall not make use of its position
as the controlling shareholder (as defined in The Listing
Rules of Hong Kong Stock Exchange) of our Group to
jeopardise the legal interests of Chenming Group and
its shareholders with other persons or companies or on
their behalf.
2021 ANNUAL REPORT 101
VIII Material Matters
I. Performance of undertakings (Continued)
1. Undertakings made by parties involved in undertakings including the Company’s beneficial controllers,
shareholders, related parties, bidders and the Company during the reporting period or prior periods
but subsisting to the end of the reporting period (Continued)
Party involved Type of Undertaking Particulars on
Undertaking in undertaking undertaking Details of undertaking date Term the performance
Chenming Defective (1) According to the plan on defective properties of the 16 January During the Implementing as
Holdings properties Company, Chenming Holdings Co., Ltd. (“Chenming 2008 period when normal
Co., Ltd Holdings”) has guaranteed and undertaken that: Chenming
according to the application of the Company, for Holdings
defective property(ies) owned by the Company and was the
its holding subsidiary company which situated in the major
administrative area of Shouguang city, Chenming shareholder
Holdings will purchase it (them) and have it(them) being of the
transferred to itself pursuant to the law in accordance Company
with the result of the related asset valuation if the
Company decides to transfer and dispose of it(them)
and there is no other transferee; (2) before the Company
transfers and disposes of the defective properties
pursuant to the law, if the Company suffers any
economic losses due to the defects of the title (including
but not limited to damages, penalties and relocation
costs), Chenming Holdings will bear such economic
losses; (3) during the regulatory process taken to the
defective properties of buildings and land of subsidiaries
of the Company situated outside the local areas
(outside the administrative area of Shouguang city),
the economic losses such as penalties or relocation
costs imposed by competent administrative authorities
to be borne by the subsidiaries arising from defects of
insufficient title documents shall be paid pursuant to the
law by Chenming Holdings after verification.
Shandong Specific In view of the impacts on dilution of current returns for 25 March 2016 24 September Has been
Chenming remedial ordinary shareholders under the Preference Shares 2021 implemented
Paper measures issuance, and in order to implement the Notice of
Holdings for non- the General Office of the State Council on Further
Limited public Strengthening Protection of the Lawful Rights of Small
issuance of Investors in Capital Markets, protect the interests
Preference of ordinary shareholders and provide remedies for
Shares the possible dilution on current returns as a result
of Preference Shares issuance, the Company has
undertaken that it will implement various measures
to ensure the effective utilisation of proceeds raised,
which can prevent dilution on current returns effectively,
thereby enhancing future returns.
Whether undertakings performed on time Yes
If the undertakings are not performed within Not applicable
specified period, details of the specific reasons
for the incomplete performance and the next
steps should be provided
2. Description on the Company’s assets and items in meeting original profit forecast and its explanation
as there is profit forecast for assets and items of the Company and the reporting period is still within
the profit forecast period
Applicable √ Not applicable
102 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VIII Material Matters
II. Appropriation of funds of the Company by the controlling shareholder and other related
parties for non-operating purposes
Applicable √ Not applicable
There was no appropriation of funds of the Company by the controlling shareholder and other related parties for non-
operating purposes during the reporting period.
III. External guarantees against the rules and regulations
Applicable √ Not applicable
There was no external guarantee provided by the Company which was against the rules and regulations during the reporting
period.
IV. Opinions of the Directors regarding the latest “modified auditor’s report”
Applicable √ Not applicable
V. Opinions of the Board, the Supervisory Committee and independent Directors (if any)
regarding the “modified auditor’s report” for the reporting period issued by the accountants
Applicable √ Not applicable
VI. Changes in accounting policies, accounting estimates or correction of major accounting
errors as compared to the financial report for the prior year
Applicable √ Not applicable
There were no retrospective restatements to correct major accounting errors of the Company during the reporting period.
VII. Reason for changes in scope of the consolidated financial statements as compared to the
financial report for the prior year
√ Applicable Not applicable
During the reporting period, 6 companies were added to the scope of consolidation, including 5 newly established
subsidiaries, namely Shanghai Chenyin Trading Co. Ltd, Nanchang Shengheng Trading Co., Ltd., Nanchang Kunheng
Trading Co., Ltd., Weifang Chendu Equity Investment Partnership (Limited Partnership) and Huanggang Chenming Pulp
& Fiber Trading Co., Ltd., and a subsidiary was acquired not within the definition of business, namely Wuhan Junheng
Property Management Co. Ltd.
During the reporting period, 7 companies were reduced from the scope of consolidation. A subsidiary, Shandong Chenming
Coated Paper Sales Co Ltd, was absorbed into the Group. In order to further focus on the principal business of pulp
production and paper making, divest non-principal business assets and optimise resource allocation, the Company
disposed of 6 subsidiaries, namely Zhanjiang Chenming New-style Wall Materials Co., Ltd, Chengdu Chenming Culture
Communication Co., Ltd., Shandong Chenming Power Supply Holdings Co., Ltd, Shandong Chenming Panels Co., Ltd.,
Shouguang Chenming Cement Co., Limited and Shouguang Chenming Floor Board Co., Ltd.
2021 ANNUAL REPORT 103
VIII Material Matters
VIII. Engagement or dismissal of accounting firms
Current accounting firm engaged
Grant Thornton (Special
Name of the domestic accounting firm General Partnership)
Remuneration of the domestic accounting firm (RMB’0,000) 330
Continued term of service of the domestic accounting firm 3
Name of certified public accountants of the domestic accounting firm Liu Jian and Jiang Lei
Continued term of service of certified public accountants of the domestic accounting firm 2
Whether to appoint another accounting firm during the period
Yes √ No
Particulars on recruitment of accounting firms, financial consultants or sponsors for internal control and auditing purposes
√ Applicable Not applicable
During the year, the Company engaged Grant Thornton (Special General Partnership) as the auditor for internal control of
the Company for 2021. The Company paid RMB800,000 as internal control audit fees during the period. The Company
engaged Guotai Junan Securities Co., Ltd. as its domestic financial advisor due to the change of listing venue of the
domestic listed foreign shares and their listing and trading on the Main Board of The Stock Exchange of Hong Kong Limited
by conversion, and paid RMB1,500,000 as financial advisor fees during the period. The Company engaged Guotai Junan
Capital Limited as its overseas financial advisor, and paid RMB500,000 as financial advisor fees during the period.
IX. Prospects of withdrawal from listing subsequent to the publication of the annual report
Applicable √ Not applicable
X. Matters related to bankruptcy and reorganisation
Applicable √ Not applicable
There was no matter related to bankruptcy and reorganisation during the reporting period.
XI. Material litigation and arbitration
√ Applicable Not applicable
General information Whether
on the litigation provisions are Enforcement of
(arbitration) Amount involved made Progress Trial results and impact judgment Date of disclosure Disclosure index
Statutory demand and HK$389,112,432.44 Yes No progress during the reporting No Not applicable Not applicable Not applicable
winding-up petition period
104 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VIII Material Matters
XII. Punishment and rectification
√ Applicable Not applicable
Type of investigation
Name Type Reason punishment Conclusion (if any) Disclosure date Disclosure index
Jiangxi Chenming Subsidiary Improper operation and General administrative On 17 December 2020, the Nanchang Not applicable Not applicable
Paper Co., Ltd. management of online penalties Municipal Ecological Environment
monitoring equipment Bureau, together with the Northern
Jiangxi Commissioner’s Office
and the Environmental Information
Center, inspected the wastewater
station of Jiangxi Chenming Paper
Co., Ltd. and found that there were
some operation and maintenance
and management irregularities in
respect of the wastewater online
monitoring equipment. Although
the normal operation of the testing
equipment was not guaranteed, no
environmental pollution was caused
as a result. Hence, Jiangxi Chenming
was fined RMB21,000 in accordance
with the law.
Rectification
√ Applicable Not applicable
In response to the above issues, Jiangxi Chenming immediately organised the rectification of online facilities, strengthened
the operation and maintenance management of online devices, and regularly conducted comparison to ensure the normal
operation of the monitoring equipment.
XIII. Credibility of the Company, its controlling shareholders and beneficial controllers
Applicable √ Not applicable
2021 ANNUAL REPORT 105
VIII Material Matters
XIV. Significant related party transactions
1. Related party transactions associated with day-to-day operation
√ Applicable Not applicable
Pricing Amount of Percentage Amount of Market price
Relationship Types of the Subject matter of basis of the Related party related party as the amount transactions Whether Settlement of of available
Related party with the related party the related party related party transaction transactions of similar approved exceeding related party similar Disclosure Disclosure
transactions Company transactions transactions transaction price (RMB’0,000) transactions (RMB’0,000) approved cap transactions transaction date index
Weifang Sime Darby Joint venture Labour service Port miscellaneous Market price Market price 6,435.19 6.69% Not applicable No Bank acceptance Not applicable Not applicable Not applicable
West Port Co., fees and telegraphic
Ltd. transfer
Total 6,435.19
Particulars on refund of bulk sale Nil
Estimated total amount for day-to-day related party transactions to be conducted during the period (by types of Nil
transactions) and their actual implementing during the reporting period (if any)
Reasons for large differences between transaction price and market reference price (if applicable) Not applicable
2. Related party transaction in connection with purchase or sale of assets or equity interest
Applicable √ Not applicable
There was no related party transaction of the Company in connection with purchase or sale of assets or equity interest
during the reporting period.
3. Related party transaction connected to joint external investment
Applicable √ Not applicable
There was no related party transaction of the Company connected to joint external investment during the reporting
period.
106 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VIII Material Matters
XIV. Significant related party transactions (Continued)
4. Related creditors’ rights and debts transactions
√ Applicable Not applicable
Was there any non-operating related creditors’ rights and debts transaction
√ Yes No
Creditor’s rights payable to related parties:
Amount Amount
Was there increased repaid
any non- during the during the Interest for
operating Opening current current the current Closing
Relationship with capital balance period period period balance
Related party the Company Reason occupation (RMB’0,000) (RMB’0,000) (RMB’0,000) Interest rate (RMB’0,000) (RMB’0,000)
Chenming Holdings The controlling Financial No 0.00 45,250.00 45,250.00 Market 160.16 0.00
Company Limited shareholder support interest rate
Guangdong Nanyue Bank An associate Borrowing No 171,666.46 260,100.00 211,666.46 Market 9,088.74 220,100.00
Co., Ltd. interest rate
Effect of related creditors’ rights on the operating results and Financial support was provided by Chenming Holdings without requiring any pledge or guarantee,
financial position of the Company which was a testament to its support and confidence in the future development of the Company,
and helped the Company promote project construction and satisfy its needs for working capital.
Debts receivable from any related party:
Amount Amount
Was there increased recovered
any non- during the during the Interest for
operating Opening current current the current Closing
Relationship with capital balance period period period balance
Related party the Company Reason occupation (RMB’0,000) (RMB’0,000) (RMB’0,000) Interest rate (RMB’0,000) (RMB’0,000)
Shouguang Meite A joint venture Financial No 1,630.72 0.00 0.00 6.00% 99.20 1,729.92
Environmental support
Technology Co., Ltd.
Weifang Sime Darby A joint venture Financial No 6,847.61 6,800.00 5,950.00 6.00% 369.18 8,066.79
West Port Co., Ltd. support
Effect of related creditors’ rights on the operating results and The above creditors’ rights do not affect the ordinary operation of the Company. Moreover, they have
financial position of the Company catered to the needs for development of existing businesses of Shouguang Meite Environmental
and Weifang Sime Darby West Port and lowered the financing costs.
2021 ANNUAL REPORT 107
VIII Material Matters
XIV. Significant related party transactions (Continued)
5. Deals with related financial companies
Applicable √ Not applicable
There were no deposits, loans, credits, or other financial services between the Company, its related financial
companies and the related parties.
6. Deals between financial companies controlled by the company and related parties
Applicable √ Not applicable
There were no deposits, loans, credits, or other financial services between the financial companies controlled by the
Company and the related parties.
7. Other significant related party transactions
Applicable √ Not applicable
There was no other significant related party transaction of the Company during the reporting period.
XV. Material contracts and implementation
1. Custody, contracting and leasing
(1) Custody
Applicable √ Not applicable
There was no custody of the Company during the reporting period.
(2) Contracting
Applicable √ Not applicable
There was no contracting of the Company during the reporting period.
108 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VIII Material Matters
XV. Material contracts and implementation (Continued)
1. Custody, contracting and leasing (Continued)
(3) Leasing
√ Applicable Not applicable
Leasing description:
As a lessee
The Company has simplified the treatment of short-term leases and leases of low-value assets by not
recognising right-of-use assets and lease liabilities. The charges to expense for short-term leases, low-value
assets and variable lease payments not included in the measurement of lease liabilities during the current period
are as follows:
Unit: RMB
Item 2021
Short-term leases 8,342,848.21
Total 8,342,848.21
As a lessor
Where an operating lease is formed:
According to paragraph 58 of the new lease standard, the lessor shall disclose in the notes the following
information related to operating leases:
Lease income, and make separate disclosure of income related to variable lease payments not included in
lease receipts;
Unit: RMB
Item 2021
Lease income 126,934,400.32
2021 ANNUAL REPORT 109
VIII Material Matters
XV. Material contracts and implementation (Continued)
1. Custody, contracting and leasing (Continued)
(3) Leasing (Continued)
As a lessor (Continued)
The amount of undiscounted lease receipts to be received in each of the five consecutive fiscal years
after the balance sheet date and the total amount of undiscounted lease receipts to be received in the
remaining years.
Unit: RMB
Year 2021.12.31
Within 1 year after the balance sheet date 183,225,224.23
1 to 2 years after the balance sheet date 189,101,114.41
2 to 3 years after the balance sheet date 143,884,024.48
3 to 4 years after the balance sheet date 95,451,939.66
4 to 5 years after the balance sheet date 76,068,806.83
More than 5 years after the balance sheet date 87,970,613.99
Total 775,701,723.61
Items that bring profit or loss of more than 10% of the total profit of the Company during the reporting
period
Applicable √ Not applicable
The Company did not have any leasing project that brought profit or loss to the Company amounting to
more than 10% of the total profit of the Company during the reporting period.
110 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VIII Material Matters
XV. Material contracts and implementation (Continued)
2. Significant guarantees
√ Applicable Not applicable
(1) Guarantees
During the reporting period, the Company provided guarantee to subsidiaries and the guarantee amount
incurred was RMB7,760.6715 million. The subsidiaries provided guarantee to their subsidiaries and the
guarantee amount incurred was RMB213.0852 million.
As at 31 December 2021, the balance of the external guarantee provided by the Company (including the
guarantee to its subsidiaries by the Company and the guarantee provided to subsidiaries by subsidiaries)
amounted to RMB10,949.3184 million, representing 57.36% of the equity attributable to shareholders of the
Company as at the end of 2021.
Unit: RMB’0,000
External guarantees of the Company and its subsidiaries (excluding guarantees to subsidiaries)
Date of the related
announcement Guarantee
disclosing the Amount of Guarantee Type of Counter- Fulfilled to related
Name of obligee guarantee amount guarantee Guarantee date provided guarantee Collateral guarantee Term or not parties or not
Weifang Sime Darby 24 July 2017 17,500.00 20 December 2017 12,000.00 General Credit guarantee Shareholders’ 10 years No Yes
West Port Co., Ltd guarantee pro rata
guarantee
Zhanjiang Runbao 4 December 2020 16,000.00 4 December 2020 16,000.00 Pledge 34.64% equity Equity transfer 2 years No No
Trading Co., Ltd. interest in payment of
Wuhan RMB160 million
Chenming
Zhanjiang Dingjin Trading 4 December 2020 13,558.19 4 December 2020 13,558.19 Pledge Properties Equity transfer 2 years No No
Co., Ltd. payment of
RMB136 million
Total external guarantees approved during the 0.00 Total actual external guarantees during the reporting 0.00
reporting period (A1) period (A2)
Total external guarantees approved 47,058.19 Balance of total actual guarantees at the end of the 41,558.19
at the end of the reporting period (A3) reporting period (A4)
2021 ANNUAL REPORT 111
VIII Material Matters
XV. Material contracts and implementation (Continued)
2. Significant guarantees (Continued)
(1) Guarantees (Continued)
Guarantees between the Company and its subsidiaries
Date of
the related
announcement Guarantee
disclosing to related
the guarantee Amount of Guarantee Type of Counter- Fulfilled parties or
Name of obligee amount guarantee Guarantee date provided guarantee Collateral guarantee Term or not not
Zhanjiang Chenming Pulp & Paper 30 March 2019 1,088,000.00 27 December 374,138.46 General Credit 5 years No No
Co., Ltd. 2019 guarantee guarantee
Zhanjiang Chenming Pulp & Paper 27 March 2020 150,000.00 16 October 2020 36,240.00 General Credit 5 years No No
Co., Ltd. guarantee guarantee
Shouguang Meilun Paper Co., Ltd. 27 March 2020 400,000.00 7 July 2021 122,532.06 General Credit 5 years No No
guarantee guarantee
Huanggang Chenming Pulp & Paper 25 March 2021 500,000.00 19 July 2021 71,500.00 General Credit 2 years No No
Co., Ltd. guarantee guarantee
Huanggang Chenming Pulp & Paper 25 March 2021 500,000.00 10 years No No
Technology Co., Ltd.
Jiangxi Chenming Paper Co., Ltd. 30 March 2019 350,000.00 28 June 2019 189,580.55 General Credit 5 years No No
guarantee guarantee
Jilin Chenming Paper Co., Ltd. 30 March 2019 150,000.00 31 March 2021 11,658.00 General Credit 5 years No No
guarantee guarantee
Wuhan Chenming Hanyang Paper 18 October 2019 100,000.00 17 December 3,000.00 General Credit 3 years No No
Holdings Co., Ltd. 2021 guarantee guarantee
Shandong Chenming Group Finance 25 March 2021 300,000.00 3 years No No
Co., Ltd.
Shandong Chenming Financial 25 March 2021 200,000.00 2 years No No
Leasing Co., Ltd.
Qingdao Chenming Nonghai Financial 25 March 2021 20,000.00 3 years No No
Leasing Co., Ltd.
Guangzhou Chenming Financial 25 March 2021 20,000.00 3 years No No
Leasing Co., Ltd.
Shandong Chenming Paper Sales Co., 30 March 2019 600,000.00 7 May 2021 67,358.55 General Credit 5 years No No
Ltd. guarantee guarantee
112 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VIII Material Matters
XV. Material contracts and implementation (Continued)
2. Significant guarantees (Continued)
(1) Guarantees (Continued)
Guarantees between the Company and its subsidiaries
Date of
the related
announcement Guarantee
disclosing to related
the guarantee Amount of Guarantee Type of Counter- Fulfilled parties or
Name of obligee amount guarantee Guarantee date provided guarantee Collateral guarantee Term or not not
Chenming (HK) Limited 25 March 2021 100,000.00 11 March 2021 57,493.96 General Credit 3 years No No
guarantee guarantee
Shouguang Chenming Import and 30 March 2019 50,000.00 5 years No No
Export Trade Co., Ltd.
Shanghai Chenming Pulp & Paper 30 March 2019 300,000.00 21 June 2021 12,000.00 General Credit 5 years No No
Sales Co., Ltd. guarantee guarantee
Shandong Chenming Commercial 25 March 2021 100,000.00 3 years No No
Factoring Co., Ltd.
Kunshan Tuoan Plastic Products Co., 25 March 2021 10,000.00 3 years No No
Ltd.
Shouguang Hongyi Decorative 25 March 2021 5,000.00 3 years No No
Packaging Co., Ltd.
Shouguang Hongxin Printing and 25 March 2021 5,000.00 3 years No No
Packaging Co., Ltd
Shouguang Chenming Modern 25 March 2021 5,000.00 3 years No No
Logistic Co., Ltd
Shandong Grand View Hotel Co., Ltd. 25 March 2021 5,000.00 3 years No No
Shouguang Chenming Papermaking 25 March 2021 5,000.00 3 years No No
Machine Co., Ltd.
Total amount of guarantee provided for subsidiaries 1,775,000.00 Total amount of guarantee provided for subsidiaries during the reporting period 776,067.15
approved during the reporting period (B1) (B2)
Total amount of guarantee provided for subsidiaries 4,963,000.00 Total balance of guarantee provided for subsidiaries as at the end of the reporting 945,501.58
approved as at the end of the reporting period (B3) period (B4)
2021 ANNUAL REPORT 113
VIII Material Matters
XV. Material contracts and implementation (Continued)
2. Significant guarantees (Continued)
(1) Guarantees (Continued)
Guarantees between subsidiaries
Date of the related
announcement Guarantee
disclosing the Amount of Guarantee Type of Counter- Fulfilled to related
Name of obligee guarantee amount guarantee Guarantee date provided guarantee Collateral guarantee Term or not parties or not
General Credit
Chenming (HK) Limited 30 March 2019 200,000.00 28 March 2019 9,563.55 guarantee guarantee 5 years No No
General Credit
Chenming (HK) Limited 30 March 2019 100,000.00 17 March 2021 9,308.52 guarantee guarantee 5 years No No
Zhanjiang Chenming Pulp & General Credit
Paper Co., Ltd. 7 August 2020 12,000.00 16 August 2021 12,000.00 guarantee guarantee 3 years No No
Shouguang Meilun Paper Co.,
Ltd. 4 December 2020 20,000.00 4 December 2020 20,000.00 Pledge Properties 2 years No No
Shouguang Meilun Paper Co.,
Ltd. 4 December 2020 36,400.00 4 December 2020 36,400.00 Pledge Properties 3 years No No
Wuhan Chenming Hanyang
Paper Holdings Co., Ltd. 4 December 2020 3,000.00 4 December 2020 600.00 Pledge Properties 3 years No No
Huanggang Chenming Pulp &
Paper Co., Ltd. 4 December 2020 20,000.00 4 December 2020 20,000.00 Pledge Properties 3 years No No
Total amount of guarantee provided for subsidiaries 0.00 Total amount of guarantee provided for subsidiaries during the reporting period (C2) 21,308.52
approved during the reporting period (C1)
Total amount of guarantee provided for subsidiaries 391,400.00 Total balance of guarantee provided for subsidiaries as at the end of the reporting period (C4) 107,872.07
approved as at the end of the reporting period (C3)
Total amount of guarantee provided (i.e. sum of the above three guarantee amount)
Total amount of guarantee approved during the reporting 1,775,000.00 Total amount of guarantee during the reporting period (A2+B2+C2) 797,375.67
period (A1+B1+C1)
Total amount of guarantee approved as at the end of the 5,401,458.19 Total balance of guarantee as at the end of the reporting period (A4+B4+C4) 1,094,931.84
reporting period (A3+B3+C3)
The percentage of total amount of guarantee provided (i.e. 57.36%
A4+B4+C4) to the net assets of the Company
Of which:
Balance of guarantee provided for shareholders, beneficial controllers and its related parties (D) 0.00
Balance of guarantee directly or indirectly provided for obligors with gearing ratio over 70% (E) 91,358.55
Total amount of guarantee provided in excess of 50% of net assets (F) 140,442.93
Sum of the above three amount of guarantee (D+E+F) 231,801.48
For outstanding guarantee contracts, a description of the circumstances under which the guarantee obligation has occurred Nil
during the reporting period or where there is evidence of potential joint and several liability (if any)
External guarantees against the rules and regulations (if any) Nil
114 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VIII Material Matters
XV. Material contracts and implementation (Continued)
3. Entrusted cash and asset management
(1) Entrusted wealth management
Applicable √ Not applicable
The Company did not have any entrusted wealth management during the reporting period.
(2) Entrusted loans
Applicable √ Not applicable
The Company did not have any entrusted loans during the reporting period.
4. Other material contracts
Applicable √ Not applicable
The Company did not have any other material contracts during the reporting period
2021 ANNUAL REPORT 115
VIII Material Matters
XVI. Other matters of significance
√ Applicable Not applicable
1. Change of listing venue of the domestic listed foreign shares and their listing and trading on the Main
Board of the Stock Exchange of Hong Kong Limited by conversion (B-to-H Conversion)
On 29 January 2021 and 9 March 2021, the Company held the seventeenth extraordinary meeting of the ninth session
of the Board and the 2021 first extraordinary general meeting, the 2021 first class meeting for holders of domestic-
listed shares, and the 2021 first class meeting for holders of overseas-listed shares. Proposal on the Domestic Listed
Foreign Shares of the Company Changing Listing Venue to be Listed and Traded on the Main Board of the Stock
Exchange of Hong Kong Limited by Way of Conversion and related matters were considered and approved.
On 29 June 2021, the Company received the CSRC Acceptance Notice of the Application for Administrative
Permission issued by the China Securities Regulatory Commission, stating that it had decided to accept the
administrative license application.
On 6 August 2021, the Company disclosed the Announcement of 2020 Dividend Distribution Implementation for A
Shares and B Shares. The dividend on B Shares would be paid in Hong Kong dollar at the medium exchange rate of
Renminbi to Hong Kong dollar (HK$: RMB = 1: 0.8315) as announced by the People’s Bank of China on 21 June 2021,
and a dividend of approximately HK$0.222 per share would be distributed to the holders of B Shares. According to
the relevant mandates from the 2021 first extraordinary general meeting, the 2021 first class meeting for holders of
domestic-listed shares and the 2021 first class meeting for holders of overseas-listed shares of the Company, the
cash option cash consideration was adjusted from HK$3.33/share to HK$3.11/share upon ex-dividend.
On 12 November 2021, China Securities Regulatory Commission approved the conversion of 706,385,266 domestic-
listed foreign shares into overseas-listed shares by the Company and their listing on the Main Board of the Hong Kong
Stock Exchange.
For details, please refer to the relevant announcements (announcement no.: 2021-003, 2021-018, 2021-053, 2021-074
and 2021-094) of the Company published on CNINFO on 30 January, 10 March, 1 July, 19 August and 23 November
in 2021.
2. Full redemption of 45 million Preference Shares
On 18 February 2021, the Company held the eighteenth extraordinary meeting of the ninth session of the Board
to consider and approve the Resolution on Redemption of the First-tranche Preference Shares, and agreed to the
Company redeeming in full 22.5 million first-tranche Preference Shares, with the redeeming price being the par value
of the Preference Shares (RMB100 per share) plus current resolved payment of but unpaid fixed dividends. The
accounting date of the redemption amount was the date of distribution of fixed dividends of the Preference Shares.
The independent Directors provided independent opinions.
On 17 March 2021, the Company entrusted the Shenzhen Branch of China Securities Depository and Clearing
Corporation Limited to pay shareholders of the first-tranche Preference Shares a total of RMB2,348,100,000 in full to
redeem all the 22.5 million first-tranche Preference Shares in issue of the Company, and such Preference Shares were
delisted from the Shenzhen Stock Exchange on 18 March 2021.
116 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VIII Material Matters
XVI. Other matters of significance (Continued)
2. Full redemption of 45 million Preference Shares (Continued)
On 15 July 2021, the Company held the twentieth extraordinary meeting of the ninth session of the Board to consider
and approve the Resolution on Redemption of the Second-tranche and Third-tranche Preferred Shares, and agreed to
the Company redeeming in full 10 million second-tranche Preference Shares and 12.5 million third-tranche Preference
Shares, with the redeeming price being the par value of the Preference Shares (RMB100 per share) plus current
resolved payment of but unpaid fixed dividends. The accounting date of the redemption amount was the date of
distribution of fixed dividends of the Preference Shares. The independent Directors provided independent opinions.
On 16 August 2021, the Company entrusted the Shenzhen Branch of China Securities Depository and Clearing
Corporation Limited to pay shareholders of the second-tranche Preference Shares a total of RMB1,051,700,000 in full
to redeem all the 10 million second-tranche Preference Shares in issue of the Company, and such Preference Shares
were delisted from the Shenzhen Stock Exchange on 19 August 2021.
On 22 September 2021, the Company entrusted the Shenzhen Branch of China Securities Depository and Clearing
Corporation Limited to pay shareholders of the third-tranche Preference Shares a total of RMB1,314,625,000 in full
to redeem all the 12.50 million third-tranche Preference Shares in issue of the Company, and such Preference Shares
were delisted from the Shenzhen Stock Exchange on 24 September 2021.
For further details, please refer to the relevant announcements (announcement No.: 2021-013, 2021-014, 2021-023,
2021-060, 2021-061, 2021-073 and 2021-081) disclosed by the Company on CNINFO on 19 February, 19 March, 16
July, 19 August and 24 September in 2021.
3. Completion of resale and delisting for “17 Chenming Bond 01”
The Company implemented the resale of the corporate bonds “17 Chenming Bond 01” as agreed in the Prospectus
on the Public Issuance of the Corporate Bonds of Shandong Chenming Paper Holdings Limited to Qualified Investors
in 2017 (phase I) at the resale price of RMB107.28 per bond (including accrued interest of RMB7.28 per bond for the
current period and the accrued interest including tax). During the resale declaration period (from 12 July 2021 to 16
July 2021), 900,000 bonds were registered for resale. After the resale, the number of outstanding bonds to be resold
was 0. On 23 August 2021, the Company entrusted the Shenzhen Branch of China Securities Depository and Clearing
Corporation Limited with the completion of the payment of principle and interest of the partial resale of “17 Chenming
Bond 01”, and such bonds were delisted from the Shenzhen Stock Exchange on the same date.
For further details, please refer to the relevant announcements No. 2021-075 and No.2021 – 076 disclosed by the
Company on CNINFO on 19 August 2021.
2021 ANNUAL REPORT 117
VIII Material Matters
XVI. Other matters of significance (Continued)
4. Information disclosure index for 2021
Announcement no. Subject matter Date of publication Publication website and index
2021-001 Announcement on the Release of Pledge of Shares held by 5 January 2021 http://www.cninfo.com.cn
Shareholders
2021-002 Announcement on the Release of Pledge and Continued Pledge 19 January 2021 http://www.cninfo.com.cn
of Shares held by Shareholders
2021-003 Announcement on Resolutions of the Seventeenth Extraordinary 30 January 2021 http://www.cninfo.com.cn
Meeting of the Ninth Session of the Board
2021-004 Notice of the 2021 First Extraordinary General Meeting, the 2021 30 January 2021 http://www.cninfo.com.cn
First Class Meeting for Holders of Domestic-listed Shares and
the 2021 First Class Meeting for Holders of Overseas-listed
Shares
2021-005 Announcement on the Solicitation of Voting Rights by the 30 January 2021 http://www.cninfo.com.cn
Independent Director
2021-006 Announcement on Receipt of Government Subsidies by Wholly- 30 January 2021 http://www.cninfo.com.cn
owned Subsidiaries
2021-007 Supplemental Notice on Convening the 2021 First Extraordinary 3 February 2021 http://www.cninfo.com.cn
General Meeting, the 2021 First Class Meeting for Holders of
Domestic Listed Shares and the 2021 First Class Meeting for
Holders of Overseas-listed Shares
2021-008 Announcement on Unusual Movement in Share Trading 4 February 2021 http://www.cninfo.com.cn
2021-009 Announcement in respect of Provision of Guarantee in Favour of 10 February 2021 http://www.cninfo.com.cn
a Subsidiary for Financing
2021-010 Announcement on Receipt of High and New Technology 10 February 2021 http://www.cninfo.com.cn
Enterprise Certificate by a Subsidiary
2021-011 Amendment Announcement on The Proposal on the Domestic 18 February 2021 http://www.cninfo.com.cn
Listed Foreign Shares of the Company Changing Listing
Venue to be Listed and Traded on the Main Board of The
Stock Exchange of Hong Kong Limited by way of Conversion
2021-012 Announcement on Unusual Movement in Share Trading 18 February 2021 http://www.cninfo.com.cn
2021-013 Announcement in respect of Resolutions of the Eighteenth 19 February 2021 http://www.cninfo.com.cn
Extraordinary Meeting of the Ninth Session of the Board of
Directors
2021-014 The First Indicative Announcement on the Redemption of the 19 February 2021 http://www.cninfo.com.cn
First-tranche Preference Shares
2021-015 Announcement on Unusual Movement in Share Trading 19 February 2021 http://www.cninfo.com.cn
118 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VIII Material Matters
XVI. Other matters of significance (Continued)
4. Information disclosure index for 2021 (Continued)
Announcement no. Subject matter Date of publication Publication website and index
2021-016 The Second Indicative Announcement on the Redemption of the 26 February 2021 http://www.cninfo.com.cn
First-tranche Preference Shares
2021-017 The Third Indicative Announcement on the Redemption of the 5 March 2021 http://www.cninfo.com.cn
First-tranche Preference Shares
2021-018 Announcement on Resolution of the 2021 First Extraordinary 10 March 2021 http://www.cninfo.com.cn
General Meeting, the 2021 First Class Meeting for Holders of
Domestic-listed Shares, and the 2021 First Class Meeting for
Holders of Overseas-listed Shares
2021-019 Announcement on the Full Redemption and Delisting of the 12 March 2021 http://www.cninfo.com.cn
First-tranche Preference Shares
2021-020 The First Indicative Announcement on the Delisting of the First- 12 March 2021 http://www.cninfo.com.cn
tranche Preference Shares
2021-021 Supplemental Announcement on the Poll Results of 2021 First 13 March 2021 http://www.cninfo.com.cn
Class Meeting for Holders of Overseas-listed Shares
2021-022 Announcement on the Delisting of the First-tranche Preference 16 March 2021 http://www.cninfo.com.cn
Shares
2021-023 Announcement on the Redemption Result of the First-tranche 19 March 2021 http://www.cninfo.com.cn
Preference Shares
2021-024 Announcement in respect of Resolutions of the Eighth Meeting 26 March 2021 http://www.cninfo.com.cn
of the Ninth Session of the Board of Directors
2021-025 Announcement on Resolutions of the Eighth Extraordinary 26 March 2021 http://www.cninfo.com.cn
Meeting of the Ninth Session of the Supervisory Committee
2021-026 Notice of 2020 Annual General Meeting 26 March 2021 http://www.cninfo.com.cn
2021-027 Announcement on Appointment of Auditor for 2021 26 March 2021 http://www.cninfo.com.cn
2021-028 Announcement on the Adjustment to the Guarantee Amount for 26 March 2021 http://www.cninfo.com.cn
Certain Subsidiaries
2021-029 Announcement on Carrying out Factoring Business of Accounts 26 March 2021 http://www.cninfo.com.cn
Receivable
2021-030 Announcement on the Receipt of Financial Assistance and 26 March 2021 http://www.cninfo.com.cn
Related Party Transaction
2021-031 Announcement on the Resignation of Senior Management of the 26 March 2021 http://www.cninfo.com.cn
Company
2021-032 2020 Annual Report Summary 26 March 2021 http://www.cninfo.com.cn
2021-033 Announcement on the 2020 Annual Online Performance Briefing 26 March 2021 http://www.cninfo.com.cn
2021-034 Announcement on the Signing of the Convertible Bond Strategic 26 March 2021 http://www.cninfo.com.cn
Cooperation Framework Agreement
2021-035 Supplemental Announcement in respect of Resolutions of the 27 March 2021 http://www.cninfo.com.cn
Eighth Meeting of the Ninth Session of the Board of Directors
2021-036 Shandong Chenming Paper Holdings Limited Announcement on 31 March 2021 http://www.cninfo.com.cn
Payment of 2021 Interest with Respect to the First Tranche of
Corporate Bonds Publicly Issued to Qualified Investors in 2018
2021-037 Announcement on the Release of Pledge of Shares held by 2 April 2021 http://www.cninfo.com.cn
Shareholders
2021-038 2021 First Quarterly Results Forecast 7 April 2021 http://www.cninfo.com.cn
2021 ANNUAL REPORT 119
VIII Material Matters
XVI. Other matters of significance (Continued)
4. Information disclosure index for 2021 (Continued)
Announcement no. Subject matter Date of publication Publication website and index
2021-039 2021 First Quarterly Report 20 April 2021 http://www.cninfo.com.cn
2021-040 Announcement on the Resignation of Employee Representative 20 April 2021 http://www.cninfo.com.cn
Supervisors and the By-election of Supervisors
2021-041 Announcement on Pledge of Shareholders’ Shares 22 April 2021 http://www.cninfo.com.cn
2021-042 Announcement on the Development of Financing Business and 30 April 2021 http://www.cninfo.com.cn
the Provision of Guarantees
2021-043 Announcement on Receipt of Government Subsidies by 15 June 2021 http://www.cninfo.com.cn
Subsidiaries
2021-044 Announcement on Resolutions of 2020 Annual General Meeting 19 June 2021 http://www.cninfo.com.cn
2021-045 Announcement in respect of Provision of Guarantee in Favour of 23 June 2021 http://www.cninfo.com.cn
a Subsidiary
2021-046 Announcement on Resolutions of the Nineteenth Extraordinary 26 June 2021 http://www.cninfo.com.cn
Meeting of the Ninth Session of the Board of Directors
2021-047 Announcement on Capital Increase and Introduction of Strategic 26 June 2021 http://www.cninfo.com.cn
Investors of a Majority-owned Subsidiary
2021-048 Announcement on the Development of Equipment Financing 26 June 2021 http://www.cninfo.com.cn
Business
2021-049 Announcement on External Investment 26 June 2021 http://www.cninfo.com.cn
2021-050 Announcement in respect of Provision of Guarantee in Favour of 26 June 2021 http://www.cninfo.com.cn
Subsidiaries by a Wholly-owned Subsidiary
2021-051 Announcement on Receipt of Government Subsidies by the 26 June 2021 http://www.cninfo.com.cn
Subsidiary Zhanjiang Chenming
2021-052 Announcement on Pledge of Shareholders’ Shares 29 June 2021 http://www.cninfo.com.cn
2021-053 Announcement on Progress of Change of Listing Venue of the 1 July 2021 http://www.cninfo.com.cn
Domestic Listed Foreign Shares and their Listing and Trading
on the Main Board of the Stock Exchange of Hong Kong
Limited by Conversion
2021-054 The First Indicative Announcement on Non-adjustment of 9 July 2021 http://www.cninfo.com.cn
Coupon Rate of “17 Chenming Bond 01” and Implementation
Measures for Resale by Investors
2021-055 Announcement on the Resignation of Senior Management of the 10 July 2021 http://www.cninfo.com.cn
Company
2021-056 2021 Interim Results Forecast 10 July 2021 http://www.cninfo.com.cn
2021-057 Announcement on Pledge of Shareholders’ Shares 14 July 2021 http://www.cninfo.com.cn
2021-058 The Second Indicative Announcement on Non-adjustment of 14 July 2021 http://www.cninfo.com.cn
Coupon Rate of “17 Chenming Bond 01” and Implementation
Measures for Resale by Investors
2021-059 The Third Indicative Announcement on Non-adjustment of 15 July 2021 http://www.cninfo.com.cn
Coupon Rate of “17 Chenming Bond 01” and Implementation
Measures for Resale by Investors
2021-060 Announcement on Resolutions of the Twentieth Extraordinary 16 July 2021 http://www.cninfo.com.cn
Meeting of the Ninth Session of the Board of Directors
120 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VIII Material Matters
XVI. Other matters of significance (Continued)
4. Information disclosure index for 2021 (Continued)
Announcement no. Subject matter Date of publication Publication website and index
2021-061 The First Indicative Announcement on the Matters Relating to 16 July 2021 http://www.cninfo.com.cn
Redeeming the Second and Third Tranches of Preference
Shares
2021-062 The Second Indicative Announcement on the Matters Relating 23 July 2021 http://www.cninfo.com.cn
to Redeeming the Second and Third Tranches of Preference
Shares
2021-063 Announcement on the Continued Pledge of Shares held by 24 July 2021 http://www.cninfo.com.cn
Shareholders
2021-064 The Third Indicative Announcement on the Matters Relating 30 July 2021 http://www.cninfo.com.cn
to Redeeming the Second and Third Tranches of Preference
Shares
2021-065 Announcement on the Implementation of the Participation of 6 August 2021 http://www.cninfo.com.cn
Preferred Shareholders in the Remaining Profit Distribution for
2020
2021-066 Announcement on the Implementation of Dividend Distribution 6 August 2021 http://www.cninfo.com.cn
to Holders of A Shares and B Shares for 2020
2021-067 Announcement on Pledge of Shares and Partial Release of 9 August 2021 http://www.cninfo.com.cn
Pledge of Shares by Shareholders
2021-068 Announcement on Resolutions of the Twenty-first Extraordinary 9 August 2021 http://www.cninfo.com.cn
Meeting of the Ninth Session of the Board
2021-069 Announcement on the Change and Rotation of the General 9 August 2021 http://www.cninfo.com.cn
Manager
2021-070 Announcement on the Full Redemption of the Second-tranche 11 August 2021 http://www.cninfo.com.cn
Preference Shares
2021-071 Announcement in respect of Provision of Guarantee in Favour of 12 August 2021 http://www.cninfo.com.cn
a Subsidiary for Financing
2021-072 Announcement on Halt of Trading of the Second Tranche of 14 August 2021 http://www.cninfo.com.cn
Preference Shares
2021-073 Announcement on Redemption Result and Delisting of the 19 August 2021 http://www.cninfo.com.cn
Second Tranche of Preference Shares
2021-074 Announcement on Adjustment of Cash Option Cash 19 August 2021 http://www.cninfo.com.cn
Consideration Regarding Change of Listing Venue of the
Domestic Listed Foreign Shares and Their Listing and Trading
on the Main Board of the Stock Exchange of Hong Kong
Limited by Conversion
2021-075 Announcement on Payment of 2021 Interest with respect to the 19 August 2021 http://www.cninfo.com.cn
First Tranche of Corporate Bonds Publicly Issued to Qualified
Investors in 2017
2021-076 Announcement on “17 Chenming Bond 01” Resale Result and 19 August 2021 http://www.cninfo.com.cn
Delisting
2021-077 2021 Interim Report Summary 27 August 2021 http://www.cninfo.com.cn
2021-078 Announcement in respect of Provision of Guarantee in Favour of 9 September 2021 http://www.cninfo.com.cn
a Subsidiary for Financing
2021-079 Announcement on Full Redemption of the Third Tranche of 10 September 2021 http://www.cninfo.com.cn
Preference Shares
2021-080 Announcement on Trading Halt of the Third Tranche of 18 September 2021 http://www.cninfo.com.cn
Preference Shares
2021 ANNUAL REPORT 121
VIII Material Matters
XVI. Other matters of significance (Continued)
4. Information disclosure index for 2021 (Continued)
Announcement no. Subject matter Date of publication Publication website and index
2021-081 Announcement on the Third Tranche of Preference Shares 24 September 2021 http://www.cninfo.com.cn
Redemption Result and Delisting
2021-082 Announcement on Resolutions of the Twenty-second 24 September 2021 http://www.cninfo.com.cn
Extraordinary Meeting of the Ninth Session of the Board
2021-083 Announcement on Capital Increase and Introduction of Strategic 24 September 2021 http://www.cninfo.com.cn
Investors of a Majority-owned Subsidiary
2021-084 Announcement in respect of Provision of Guarantee in Favour of 24 September 2021 http://www.cninfo.com.cn
a Subsidiary for Financing
2021-085 Announcement on the Receipt of Government Grants 30 September 2021 http://www.cninfo.com.cn
2021-086 Announcement on Estimated Results for the Nine Months Ended 15 October 2021 http://www.cninfo.com.cn
30 September 2021
2021-087 2021 Third Quarterly Report 30 October 2021 http://www.cninfo.com.cn
2021-088 Announcement on Pledge of Shares and Partial Release of 10 November 2021 http://www.cninfo.com.cn
Pledge of Shares by Shareholders
2021-089 Announcement on Participation in the 2021 Annual Online Group 13 November 2021 http://www.cninfo.com.cn
Reception Day for Investors of Listed Companies in Shandong
Jurisdiction
2021-090 Announcement on Resolutions of the Twenty-third Extraordinary 16 November 2021 http://www.cninfo.com.cn
Meeting of the Ninth Session of the Board
2021-091 Announcement on the provision of financial support to a 16 November 2021 http://www.cninfo.com.cn
shareholding company and connected transaction
2021-092 Notice of the Second Extraordinary General Meeting of 2021 16 November 2021 http://www.cninfo.com.cn
2021-093 Announcement in respect of Provision of Guarantee in Favour of 20 November 2021 http://www.cninfo.com.cn
a Subsidiary for Financing
2021-094 Announcement on Change of listing venue of the domestic listed 23 November 2021 http://www.cninfo.com.cn
foreign shares and their listing and trading on the Main Board
of the Stock Exchange of Hong Kong Limited by conversion
approved by China Securities Regulatory Commission
2021-095 Supplemental Announcement in respect of Provision of 27 November 2021 http://www.cninfo.com.cn
Guarantee in Favour of a Subsidiary for Financing
2021-096 Announcement on Pledge of Shares and Partial Release of 27 November 2021 http://www.cninfo.com.cn
Pledge of Shares by Shareholders
2021-097 Announcement in respect of Provision of Guarantee in Favour of 6 December 2021 http://www.cninfo.com.cn
a Subsidiary for Financing
2021-098 Announcement in respect of Provision of Guarantee in Favour of 11 December 2021 http://www.cninfo.com.cn
a Subsidiary for Financing
2021-099 Announcement on Resolutions of the Second Extraordinary 14 December 2021 http://www.cninfo.com.cn
General Meeting of 2021
2021-100 Announcement on the Development of Equipment Financing 31 December 2021 http://www.cninfo.com.cn
Business
122 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VIII Material Matters
XVII. Matters of significant of subsidiaries of the Company
√ Applicable Not applicable
1. Introduction of strategic investors by Shouguang Meilun
On 25 June 2021, the 19th extraordinary meeting of the ninth session of the Board of the Company considered and
approved the Proposal on Capital Contribution and Introduction of Strategic Investors of a Majority-owned Subsidiary.
The Company introduced CCB Financial Assets Investment Company Limited (on behalf of the CCB Investment-
Shandong Development Debt-to-Equity Swap Investment Scheme) and SWSC Innovation Investment Co., Ltd. to
contribute capital to Shouguang Meilun. CCB Financial Assets Investment Company Limited (on behalf of the CCB
Investment-Shandong Development Debt-to-Equity Swap Investment Scheme) and SWSC Innovation made a capital
contribution amount of RMB1.4 billion and RMB0.2 billion, respectively.
For details, please refer to the relevant announcements (announcement no.: 2021-046 and 2021-047) of the Company
published on CNINFO on 26 June 2021.
2. Introduction of strategic investors by Zhanjiang Chenming
On 23 September 2021, the 22nd extraordinary meeting of the ninth session of the Board of the Company considered
and approved the Proposal on Capital Contribution and Introduction of Strategic Investors of a Majority-owned
Subsidiary. The Company introduced Beijing Chuanfa Investment Management Co., Ltd. to contribute capital
amounting to RMB350,000,000 to Zhanjiang Chenming Pulp & Paper Co., Ltd.
For further details, please refer to the relevant announcements no. 2021-082 and No. 2021 – 083 disclosed by the
Company on CNINFO on 24 September 2021.
2021 ANNUAL REPORT 123
IX Changes in Share Capital and Shareholders
I. Changes in shares
1. Changes in shares
Unit: share
Opening balance Change during the reporting period (+/-) Closing balance
Converted
Amount Percentage New issue Bonus issue from reserves Others Subtotal Amount Percentage
I. Restricted shares 90,276,324 3.03% -5,542,803 -5,542,803 84,733,521 2.84%
1. Shares held by other 90,276,324 3.03% -5,542,803 -5,542,803 84,733,521 2.84%
domestic investors
Of which: Shares held by 90,276,324 3.03% -5,542,803 -5,542,803 84,733,521 2.84%
domestic natural persons
II. Non-restricted shares 2,893,931,876 96.97% 5,542,803 5,542,803 2,899,474,679 97.16%
1. RMB ordinary shares 1,659,241,360 55.60% 5,542,803 5,542,803 1,664,784,163 55.79%
2. Domestic listed foreign 706,385,266 23.67% 706,385,266 23.67%
shares
3. Overseas listed foreign shares 528,305,250 17.70% 528,305,250 17.70%
III. Total number of shares 2,984,208,200 100.00% 2,984,208,200 100.00%
The reasons for such changes
√ Applicable Not applicable
According to the Practice Guidance for the Company’s Shares Held by the Directors, Supervisors and Senior
Management of the Listed Companies of Shenzhen Stock Exchange, during the reporting period, 18,750
restricted RMB ordinary shares (A shares) held by Supervisors who resigned became non-restricted shares; and
179,238 unrestricted RMB ordinary shares (A shares) held by the Senior Management who resigned became
restricted shares.
On 15 July 2020, 79,600,000 A shares granted to the participants under the 2020 Restricted A Shares Incentive
Scheme of the Company were issued and listed. From 1 January 2021, the Shenzhen Branch of China
Securities Depository and Clearing Corporation Limited had adjusted the calculation base of the transfer quota
for Directors and Senior Management granted restricted shares, and 5,703,291 restricted RMB ordinary shares (A
shares) became non-restricted shares.
Approval of changes in shareholding
Applicable √ Not applicable
Transfer of shares arising from changes in shareholding
Applicable √ Not applicable
124 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Changes in Share Capital and Shareholders
I. Changes in shares (Continued)
1. Changes in shares (Continued)
The effects of changes in shareholding on financial indicators such as basic earnings per share, diluted earnings
per share and net assets per share attributable to ordinary shareholders of the Company for the latest year and
the latest period
Applicable √ Not applicable
Other information considered necessary by the Company or required by the securities regulatory authorities to be
disclosed
Applicable √ Not applicable
2. Changes in restricted shares
√ Applicable Not applicable
Unit: share
Restricted Restricted Restricted
shares at the shares released shares increased Restricted
beginning of during the during the shares at the
Name of shareholders period period period end of period Reason for restriction Date of release from restriction
Chen Hongguo 28,310,033 5,000,000 23,310,033 Restricted share of the participants In accordance with the equity incentive
of the Share Incentive Scheme plan (draft) and relevant requirements
Locked-up shares of Directors, for shares held by Directors,
Supervisors and Senior Supervisors and Senior Management
Management
Li Xueqin 3,645,991 645,991 3,000,000 Restricted share of the participants In accordance with the equity incentive
of the Share Incentive Scheme plan (draft) and relevant requirements
Locked-up shares of Directors, for shares held by Directors,
Supervisors and Senior Supervisors and Senior Management
Management
Li Weixian 2,060,900 57,300 2,003,600 Restricted share of the participants In accordance with the equity incentive
of the Share Incentive Scheme plan (draft) and relevant requirements
Locked-up shares of Directors, for shares held by Directors,
Supervisors and Senior Supervisors and Senior Management
Management
Li Dong 75,000 18,750 56,250 Locked-up shares of Directors, Under relevant requirements for shares
Supervisors and Senior held by Directors, Supervisors and
Management Senior Management
Geng Guanglin 2,537,712 179,238 2,716,950 Restricted share of the participants In accordance with the equity incentive
of the Share Incentive Scheme plan (draft) and relevant requirements
Locked-up shares of Directors, for shares held by Directors,
Supervisors and Senior Supervisors and Senior Management
Management
Total 36,629,636 179,238 5,722,041 31,086,833
2021 ANNUAL REPORT 125
IX Changes in Share Capital and Shareholders
II. Issuance and listing of securities
1. Issuance of securities (excluding Preference Shares) during the reporting period
Applicable √ Not applicable
2. Changes in the total number of shares and structure of shareholders and the structure of the assets
and liabilities of the Company
Applicable √ Not applicable
3. Existing staff shares
Applicable √ Not applicable
126 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Changes in Share Capital and Shareholders
III. Shareholders and beneficial controllers
1. Total number of shareholders and shareholdings
Unit: share
Total number of ordinary 183,981, of which 161,495 Total number of ordinary 175,747, of which 153,135 Total number of holders 0 Total number of holders 0
shareholders as at the end were holders of A shares, shareholders as at the were holders of A shares, of Preference Shares with of Preference Shares with
of the reporting period 22,152 were holders of end of the month prior to 22,279 were holders of restored voting right as at restored voting right as at
B shares and 334 were the publication date of B shares and 333 were the end of the reporting the end of the month prior
holders of H shares this annual report holders of H shares period (if any) (Note VIII) to the disclosure date of
the annual report (if any)
(Note VIII)
Shareholdings of shareholders interested in more than 5% of the shares of the Company or Top 10 shareholders
Changes
Number of (increase or
shares held decrease)
Percentage at the end of during the Number of Number of non-
Nature of of the reporting reporting restricted restricted shares
Name of shareholders shareholders shareholding period period shares held held Share pledged or locked-up
Status of
shares Number
CHENMING HOLDINGS COMPANY LIMITED State-owned 15.32% 457,322,919 0 0 457,322,919 Pledged 255,150,000
legal person
HKSCC NOMINEES LIMITED Overseas legal 12.52% 373,506,375 147,250 0 373,506,375
person
CHENMING HOLDINGS (HONG KONG) LIMITED Overseas legal 12.20% 364,131,563 0 0 364,131,563
person
Chen Hongguo Domestic natural 1.04% 31,080,044 0 23,310,033 7,770,011
person
SHANDONG SUN HOLDINGS GROUP CO., LTD. Domestic non- 0.55% 16,387,817 16,387,817 0 16,387,817
state-owned
legal person
VANGUARD TOTAL INTERNATIONAL STOCK Overseas legal 0.50% 14,771,945 0 0 14,771,945
INDEX FUND person
HONG KONG SECURITIES CLEARING COMPANY Overseas legal 0.47% 14,060,971 -20,107,359 0 14,060,971
LIMITED person
VANGUARD EMERGING MARKETS STOCK INDEX Overseas legal 0.47% 14,013,646 891,700 0 14,013,646
FUND person
GOLDMAN SACHS INTL Overseas legal 0.39% 11,687,819 11,678,100 0 11,687,819
person
MORGAN STANLEY & CO. INTERNATIONAL PLC Overseas legal 0.37% 11,041,883 10,822,774 0 11,041,883
person
Strategic investors or general legal persons who Nil
become the top ten shareholders due to the
placement of new shares
Related party relationship or acting in concert A shareholder, Chenming Holdings (Hong Kong) Limited, which is an overseas legal person, is a wholly-owned subsidiary of a shareholder,
among the above shareholders Chenming Holdings Company Limited, which is a state-owned legal person; A shareholder, Chen Hongguo, is the legal representative,
chairman and general manager of Chenming Holdings Company Limited. Save for the above, it is not aware that any other shareholders of
tradable shares are persons acting in concert. It is also not aware that any other shareholders of tradable shares are related to each other.
Explanation of the aforementioned shareholders’ Nil
entrusted/entrusted voting rights and waiver of
voting rights
Special explanation for designated repurchase Nil
accounts among the top ten shareholders
2021 ANNUAL REPORT 127
IX Changes in Share Capital and Shareholders
III. Shareholders and beneficial controllers (Continued)
1. Total number of shareholders and shareholdings (Continued)
Shareholdings of the top ten non-restricted ordinary shareholders
Number of non-
restricted ordinary
shares held as
at the end of the
Name of shareholder reporting period Class of shares
Class of shares Number
CHENMING HOLDINGS COMPANY LIMITED 457,322,919 RMB ordinary shares 457,322,919
HKSCC NOMINEES LIMITED 373,506,375 Overseas listed 373,506,375
foreign shares
CHENMING HOLDINGS (HONG KONG) LIMITED 210,717,563 Domestic listed 210,717,563
foreign shares
153,414,000 Overseas listed 153,414,000
foreign shares
SHANDONG SUN HOLDINGS GROUP CO., LTD. 16,387,817 RMB ordinary shares 16,387,817
VANGUARD TOTAL INTERNATIONAL STOCK 14,771,945 Domestic listed 14,771,945
INDEX FUND foreign shares
HONG KONG SECURITIES CLEARING 14,060,971 RMB ordinary shares 14,060,971
COMPANY LIMITED
VANGUARD EMERGING MARKETS STOCK 14,013,646 Domestic listed 14,013,646
INDEX FUND foreign shares
GOLDMAN SACHS INTL 11,687,819 Domestic listed 11,687,819
foreign shares
MORGAN STANLEY & CO. INTERNATIONAL 11,041,883 Domestic listed 11,041,883
PLC foreign shares
GUOTAI JUNAN SECURITIES(HONGKONG) 10,513,163 Domestic listed 10,513,163
LIMITED foreign shares
Related party relationship or acting in concert A shareholder, Chenming Holdings (Hong Kong) Limited, which
among the top ten shareholders of non- is an overseas legal person, is a wholly-owned subsidiary of a
restricted shares, and between the top ten shareholder, Shouguang Chenming Holdings Company Limited,
shareholders of non-restricted shares and the which is a state-owned legal person. Save for the above, it is not
top ten shareholders aware that any other shareholders of tradable shares are persons
acting in concert. It is also not aware that any other shareholders
of tradable shares are related to each other.
Securities margin trading of top ten ordinary Chenming Holdings Company Limited held 457,322,919 RMB
Shareholders ordinary shares, of which 368,522,919 shares were held through
ordinary account and 88,800,000 shares were held through credit
guarantee security account.
Shandong Sun Holdings Group Co., Ltd. held 16,387,817 RMB
ordinary shares, of which no share was held through ordinary
account and 16,387,817shares were held through credit
guarantee security account.
128 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Changes in Share Capital and Shareholders
III. Shareholders and beneficial controllers (Continued)
1. Total number of shareholders and shareholdings (Continued)
Whether an agreed repurchase transaction was entered into during the reporting period by the top 10 ordinary
shareholders and top 10 non-restricted ordinary shareholders of the Company
Yes √ No
The top 10 ordinary shareholders and top 10 non-restricted ordinary shareholders of the Company did not enter into
any agreed repurchase transaction during the reporting period.
2. Controlling shareholders of the Company
Nature of controlling shareholder: regional state-owned enterprise
Type of controlling shareholder: legal person
Legal representative/Person
Name of controlling shareholders in charge of the unit Date of establishment Enterprise code Principal business
CHENMING HOLDINGS COMPANY LIMITED Chen Hongguo 30 December 2005 91370783783485189Q Investment in paper making, electricity, heat
and arboriculture by its own capital
Shareholdings of controlling shareholders who have control or hold shares in other Save for the Company, Chenming Holdings Company Limited does not have control over or hold any equity
domestic or overseas listed companies during the reporting period interest of other domestic or overseas listed companies.
Change of controlling shareholders during the reporting period
Applicable √ Not applicable
There was no change in the controlling shareholders of the Company during the reporting period.
2021 ANNUAL REPORT 129
IX Changes in Share Capital and Shareholders
III. Shareholders and beneficial controllers (Continued)
3. Beneficial controller of the Company and persons acting in concert
Nature of the beneficial controller: Regional state-owned assets administration authority
Type of the beneficial controller: legal person
Legal
representative/
Name of beneficial Person in charge Date of
controller of the unit establishment Enterprise code Principal business
State-owned Assets N/A 1 August 1991 N/A Responsible for the
Supervision and management and capital
Administration Bureau of operation of the state-
Shouguang City owned assets of enterprises
and business units in
Shouguang city.
Shareholdings of beneficial Save for the Company, State-owned Assets Supervision and Administration Office
controller who has control of Shouguang City is also the beneficial controller of Shandong Molong Petroleum
or holds shares in other Machinery Co. Ltd.
domestic or overseas
listed companies during
the reporting period
130 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Changes in Share Capital and Shareholders
III. Shareholders and beneficial controllers (Continued)
3. Beneficial controller of the Company and persons acting in concert (Continued)
Change of beneficial controller during the reporting period
Applicable √ Not applicable
There was no change in the beneficial owner of the Company during the reporting period.
Chart illustrating the relationship between the Company and the beneficial controller
State-owned Assets Supervision and
Administration Commission of Shouguang City
100%
Shandong Shouguang Jinxin Investment
Development Holdings Group Co., Ltd.
45.21%
Chenming Holdings Company Limited
100%
Chenming Holdings 15.32%
(Hong Kong) Limited
12.20%
Shandong Chenming Paper Holdings Limited
Beneficial controller controlling the Company through trust or other asset management method
Applicable √ Not applicable
4. The number of shares pledged by the controlling shareholder or the largest shareholder of the
Company and persons acting in concert with it reaches 80% of the number of shares held by them in
aggregate
Applicable √ Not applicable
2021 ANNUAL REPORT 131
IX Changes in Share Capital and Shareholders
III. Shareholders and beneficial controllers (Continued)
5. Other legal person shareholders interested in over 10% of the shares of the Company
Applicable √ Not applicable
6. Restrictions on decrease in shareholding by controlling shareholders, beneficial controller,
reorganising party and other undertaking parties
Applicable √ Not applicable
IV. The implementation of share repurchase during the reporting period
Progress of share repurchase
Applicable √ Not applicable
Progress of decrease in the holding of repurchased shares by way of bidding
Applicable √ Not applicable
132 SHANDONG CHENMING PAPER HOLDINGS LIMITED
X Preference Shares
√ Applicable Not applicable
I. Issue and listing of Preference Shares during the past three years at the end of the reporting
period
√ Applicable Not applicable
Issue With listing Information
price (RMB/ Coupon Issue size permission Information of of changes to
Method Issue date share) rate (share) Listing date (share) Delisting date use of proceeds proceeds
Private 16 March 2016 100 4.36% 22,500,000 8 April 2016 22,500,000 17 March 2021 http://www.cninfo.com.cn Not applicable
Private 16 August 2016 100 5.17% 10,000,000 12 September 2016 10,000,000 19 August 2021 http://www.cninfo.com.cn Not applicable
Private 21 September 2016 100 5.17% 12,500,000 24 October 2016 12,500,000 24 September 2021 http://www.cninfo.com.cn Not applicable
2021 ANNUAL REPORT 133
X Preference Shares
II. Profit distribution for Preference Shares
√ Applicable Not applicable
Profit distribution for preference shares during the reporting period
√ Applicable Not applicable
Whether it is in Whether it
compliance with the Whether participates
Distributed conditions and the Way of it was an in distribution
Dividend amount (RMB) relevant procedures dividend accumulated of remaining
Date of Distribution ratio (tax inclusive) of distribution payment dividend profit
17 March 2021 4.36% 98,100,000.00 Yes Cash No No
12 August 2021 4.84% 108,965,968.66 Yes Cash No Yes
16 August 2021 5.17% 51,700,000.00 Yes Cash No No
22 September 2021 5.17% 64,625,000.00 Yes Cash No No
Any adjustment or change in profit distribution policy for preference shares
Yes √ No
Both earnings of the Company and retained profit of the parent company are positive during the reporting period but
without profit distribution for preference shares
Applicable √ Not applicable
Explanation on other matters regarding distribution for preference shares
√ Applicable Not applicable
Holders of Preference Shares participate in profit distribution in two portions, namely the fixed dividend distributed based
on a fixed dividend rate and the distribution of retained earnings realised for the year.
134 SHANDONG CHENMING PAPER HOLDINGS LIMITED
X Preference Shares
II. Profit distribution for Preference Shares (Continued)
1. Distribution of fixed dividend
According to the Articles of Association, the Company shall distribute fixed dividends to holders of the Preference
Shares at fixed dividend rate if there are distributable profits after making good losses and the contribution to
reserve fund according to law. The Board is authorised by the general meeting to declare and pay all dividends on
the Preference Shares in accordance with the issuance plan under the framework and principles considered and
approved in the general meeting in respect of the Preference Shares. The general meeting of the Company has the
right to cancel part of or all of the current dividends on the Preference Shares. However, when the general meeting
of the Company will consider the cancellation of part of or all of the current dividends on the Preference Shares, the
Company shall inform the holders of Preference Shares at least 10 working days before the date of dividend payment
in accordance with the requirements of the related authorities.
2. Participation in the distribution of retained earnings realised for the year
Holders of Preference Shares participate in the distribution of the retained earnings through receipt of cash which
is non-cumulative and non-deferrable. In the event of making good losses and the contribution to reserve fund
according to law, after receiving fixed dividends at fixed dividend rate as agreed, holders of Preference Shares can
also participate in the distribution of the retained earnings for the year in proportion. Specific terms are as follows: the
retained earnings for the year arises from net profit attributable to owners of the parent company on a consolidated
basis upon distribution of relevant fixed income to holders of financial instruments such as the Preference Shares
which may be classified under equity. 50% of the retained earnings shall be distributed to holders of Preference
Shares and ordinary shareholders. Holders of Preference Shares shall participate in the distribution of the retained
earnings by receiving cash dividends, and the ordinary shareholders shall participate in the distribution of the retained
earnings by receiving cash dividends or dividends on ordinary shares.
2021 ANNUAL REPORT 135
X Preference Shares
III. Repurchase or conversion
√ Applicable Not applicable
1. Repurchase
√ Applicable Not applicable
End date Entity to
Start date of of the Repurchase Number Proportion Total amount Term of the Source of exercise the
the repurchase repurchase Price of shares of shares of funds for repurchase funds for the repurchase
period period (RMB/share) Pricing principle repurchased repurchased repurchase (RMB) of shares repurchase option
17 March 2021 17 March 2021 104.36 In accordance with the Prospectus of 22,500,000 100.00% 2,348,100,000.00 N/A Self-owned The Company
Non-public Issuance of Preference funds
Shares, the redemption price of
“Chenming You 01” shall be the
par value of the Preference Shares
(RMB100 per share) plus the amount
of dividend declared but not yet paid
for the current period (i.e. RMB4.36
per share)
16 August 2021 16 August 2021 105.17 In accordance with the Prospectus of 10,000,000 100.00% 1,051,700,000.00 N/A Self-owned The Company
Non-public Issuance of Preference funds
Shares, the redemption price of
“Chenming You 02” shall be the
par value of the Preference Shares
(RMB100 per share) plus the amount
of fixed dividend declared but not
yet paid for the current period (i.e.
RMB5.17 per share)
22 September 2021 22 September 105.17 In accordance with the Prospectus of 12,500,000 100.00% 1,314,625,000.00 N/A Self-owned The Company
2021 Non-public Issuance of Preference funds
Shares, the redemption price of
“Chenming You 03” shall be the
par value of the Preference Shares
(RMB100 per share) plus the amount
of fixed dividend declared but not
yet paid for the current period (i.e.
RMB5.17 per share)
Impact on the capital structure of the As at the end of the reporting period, the total number of the Preference Shares of the Company changed from 45 million shares to 0 shares.
Company
Procedures in respect of the repurchase On 13 February 2015, the Resolution on the Company’s Proposal on the Non-public Issue of Preference Shares was considered and approved at the 2015 first
of Preference Shares extraordinary general meeting of the Company. According to the Company’s proposal on the non-public issue of Preference Shares, with the authority of the
general meeting and under the framework and principles approved by the general meeting, the Board shall handle every matter related to the redemption with full
power subject to related requirements, approval under laws and regulations as well as market conditions.
On 18 February 2021, the Resolution on Redemption of the First-tranche Preference Shares was considered and approved at the 18th extraordinary meeting of the
ninth session of the Board of the Company. The independent Directors issued independent opinions, agreeing the Company to redeem “Chenming You 01” in full.
On 15 July 2021, the Resolution on Redemption of the Second – and Third – tranche Preference Shares was considered and approved at the 20th extraordinary
meeting of the ninth session of the Board of the Company. The independent Directors issued independent opinions, agreeing the Company to redeem “Chenming
You 02” and “Chenming You 03” in full.
136 SHANDONG CHENMING PAPER HOLDINGS LIMITED
X Preference Shares
III. Repurchase or conversion (Continued)
2. Conversion
Applicable √ Not applicable
There was no conversion during the reporting period.
IV. Resumption and exercise of voting rights
1. Resumption and exercise of voting rights
Applicable √ Not applicable
2. Shareholders and beneficial owner involved in resumption of voting rights of Preference Shares
Applicable √ Not applicable
V. Accounting policy and reasons thereof
√ Applicable Not applicable
Pursuant to the requirements of Accounting Standard for Business Enterprises No. 22 – Recognition and Measurement of
Financial Instruments, Accounting Standard for Business Enterprises No. 37 – Presentation of Financial Instruments, and
Provisions for Differentiation between Financial Instruments and Equity Instruments and Relevant Accounting Treatment, the
Preference Shares were accounted for as equity instruments as their terms satisfied requirements for such treatments.
2021 ANNUAL REPORT 137
XI Bonds
√ Applicable Not applicable
I. Enterprise bonds
Applicable √ Not applicable
The Company had no enterprise bonds during the reporting period.
II. Corporate Bonds
√ Applicable Not applicable
1. Basic information on Corporate Bonds
Unit: RMB
Outstanding
Bond Maturity amount of the Interest Payment Trading
Name of bond abbreviation Bond code Issue date Value date date bonds rate method venue
The public issuance of the Corporate Bonds of Shandong 18 Chenming 112641 29 March 2 April 2018 2 April 2023 350,000,000.00 7.60% Interest is Shenzhen
Chenming Paper Holdings Limited to qualified Bond 01 2018 paid annually. Stock
investors in 2018 (phase I) The principal Exchange
amount will
be paid on
the maturity
date.
Investor eligibility arrangement (if any) Online subscription: Public investors with A share security account opened under China Securities
Depository and Clearing Co., Ltd. Offline subscription: Institutional investors with A share security
account opened under China Securities Depository and Clearing Co., Ltd.
Applicable trading mechanism Dual listing and trading on the centralised bidding system and the Integrated Negotiated Trading Platform
of the Shenzhen Stock Exchange
Whether there are delisting risks (if any) and counter-measures No
Overdue and outstanding bonds
Applicable √ Not applicable
138 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XI Bonds
II. Corporate Bonds (Continued)
2. Triggering and execution of issuer’s or investor’s option clause or investor protection clause
Applicable √ Not applicable
3. Particulars of intermediary organisations
Name of the Name of Contact person of
intermediary signing the intermediary
Bond Name organisation Business address accountant organisation Contact no.
The public issuance of GF Securities 37th Floor, Taikang N/A Jiang Chuan 021-38003800-
the Corporate Bonds of Co., Ltd. Insurance Building, 3705
Shandong Chenming No. 429 Nanquan
Paper Holdings Limited North Road, Pudong
to qualified investors in New Area, Shanghai
2018 (phase I)
China Chengxin Building 6, Yinhe N/A Sun Shu 010-66428877
Securities Soho, No. 2
Rating Co., Nanzhugan Hutong,
Ltd. Chaoyangmennei
Street, Dongcheng
District, Beijing
Beijing 19th Floor, Jintai N/A Yao Zhengwang 010-64402232
Zhonglun Building, No. 1
W&D Law Xibahe South Road,
Firm Chaoyang District,
Beijing
Ruihua China Corporate Square, Wang Wang Zongpei 010-88091190
CPAs (Special 35 Finance Street, Zongpei
Ordinary Xicheng District, and Zhao
Partnership) Beijing Yanmei
Change of the above intermediary organisations during the reporting period
Yes √ No
2021 ANNUAL REPORT 139
XI Bonds
II. Corporate Bonds (Continued)
4. Use of proceeds
Unit: RMB
Is the use
of proceeds
consistent
with the use
of proceeds
guaranteed
under the
Rectification prospectus,
of irregularities proposed use
in the use of of proceeds
Total amount Utilised Unutilised Operation of special proceeds (if and other
Bond Name of proceeds amount amount account for the proceeds any) agreement
The public issuance of the Corporate 900,000,000.00 900,000,000.00 0.00 Special account for Nil Consistent
Bonds of Shandong Chenming Paper proceeds is used for the
Holdings Limited to qualified investors deposit of special capital
in 2018 (phase I) from bonds.
Proceeds to be used for construction projects
Applicable √ Not applicable
Change in the use of proceeds from the above bonds during the reporting period
Applicable √ Not applicable
5. Adjustment of credit rating results during the reporting period
Applicable √ Not applicable
140 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XI Bonds
II. Corporate Bonds (Continued)
6. Implementation of and changes in guarantee, debt repayment plan and other repayment guarantee
measures during the reporting period and their impacts on the rights and interests of bond investors
√ Applicable Not applicable
The repayment guarantee measures of “18 Chenming Bond 01” include: setting up a special repayment working
group; opening special accounts for proceeds; engaging GF Securities as the bond custodian of the bonds, and
entering into the bond custody agreement with GF Securities to systematically guarantee the timely and full repayment
of bond principal and interests; formulating bondholders’ meeting rules for the bonds and making reasonable and
systematic arrangements to guarantee the timely and full repayment of bond principal and interests; undertaking to
make strict information disclosure. The Company has designated the planning and finance department to be in charge
of the coordination of bond repayment.
The Company has set up special accounts for bonds with Bank of China Limited, Shandong Branch for the bonds,
and entered into the Agreement on the Supervision of Special Accounts for Corporate Bonds with Bank of China
Limited, Shandong Branch (as the supervising bank of the special accounts) and GF Securities, stipulating that the
special accounts shall be used specifically for receipt, deposit, transfer and repayment of principal and interest of
bond proceeds, so as to ensure that the bond proceeds are used strictly in accordance with the provisions of the
prospectuses, and to ensure the timely collection and transfer of bond repayments. The Company has engaged GF
Securities as the bond custodian for the bonds in accordance with the Administrative Measures and entered into
the Bond Custody Agreement with GF Securities. The Company has strictly fulfilled its obligation of information
disclosure.
There was no change in credit enhancement mechanism, repayment plan and other repayment guarantee measures,
which were consistent with relevant commitments as set out in the prospectuses, during the reporting period.
2021 ANNUAL REPORT 141
XI Bonds
III. Non-financial corporate debt financing instruments
√ Applicable Not applicable
1. Basic information of non-financial corporate debt financing instruments
Unit: RMB
Outstanding
Bond Maturity amount of the Interest
Name of bond abbreviation Bond code Issue date Value date date bonds rate Payment method Trading venue
2017 first tranche 17 Lu Chenming 101779001 2017-07-11 2017-07-12 N/A 1,000,000,000.00 8.97% Interest on Inter-bank bond market
of medium-term MTN001 perpetual
notes of Shandong medium-term
Chenming Paper notes is paid
Holdings Limited annually and the
principal is repaid
upon maturity.
2019 first tranche 19 Lu Chenming 101900930 2019-07-15 2019-07-17 2022-07-17 700,000,000.00 6.5% Interest is paid Inter-bank bond market
of medium-term MTN001 annually and the
notes of Shandong principal is repaid
Chenming Paper upon maturity.
Holdings Limited
2019 second tranche 19 Lu Chenming 101901058 2019-08-09 2019-08-13 2022-08-13 500,000,000.00 6.5% Interest is paid Inter-bank bond market
of medium-term MTN002 annually and the
notes of Shandong principal is repaid
Chenming Paper upon maturity.
Holdings Limited
Investor eligibility arrangement (if any) Nil
Applicable trading mechanism Inter-bank bond market trading mechanism
Whether there are delisting risks (if any) and countermeasures N/A
Overdue and outstanding bonds
Applicable √ Not applicable
2. Triggering and execution of issuer’s or investor’s option clause or investor protection clause
Applicable √ Not applicable
142 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XI Bonds
III. Non-financial corporate debt financing instruments (Continued)
3. Particulars of intermediary organisations
Contact person of
Name of the intermediary Name of signing the intermediary
Bond Name organisation Business address accountant organisation Contact no.
2017 first tranche of medium-term notes of Shandong China Galaxy Securities 11/F, Tower C, Corporate Square 35 N/A Dong Desen 010-66568876
Chenming Paper Holdings Limited Co., Ltd Finance Street, Xicheng District, Beijing
Hengfeng Bank Co., Ltd. No. 248 South Street, Zhifu District, Yantai, N/A Wang Wanjun 010-83571412
Shandong Province
China Chengxin Building 6, Yinhe Soho, No. 2 Nanzhugan N/A Sun Shu 010-66428877
Securities Rating Hutong, Chaoyangmennei Street,
Co., Ltd. Dongcheng District, Beijing
Beijing Zhonglun W&D 19th Floor, Jintai Building, No. 1 Xibahe N/A Yao Zhengwang 010-64402232
Law Firm South Road, Chaoyang District, Beijing
Ruihua China CPAs Corporate Square, 35 Finance Street, Wang Zongpei and Wang Zongpei 010-88091190
(Special Ordinary Xicheng District, Beijing Zhao Yanmei
Partnership)
2019 first tranche of medium-term notes of Shandong China Minsheng Banking No. 2 Fuxingmennei Avenue, Xicheng N/A Su Dawei 010-56366523
Chenming Paper Holdings Limited Corp., Ltd. District, Beijing
Postal Savings Bank of No. 3 Finance Street, Xicheng District, N/A Zhu Weiliang 010-68857403
China Co., Ltd. Beijing
China Chengxin Building 6, Yinhe Soho, No. 2 Nanzhugan N/A Sun Shu 010-66428877
Securities Rating Hutong, Chaoyangmennei Street,
Co., Ltd. Dongcheng District, Beijing
Beijing Zhonglun W&D 19th Floor, Jintai Building, No. 1 Xibahe N/A Yao Zhengwang 010-64402232
Law Firm South Road, Chaoyang District, Beijing
Ruihua China CPAs Corporate Square, 35 Finance Street, Liu Jian and Jiang Liu Jian 010-88091190
(Special Ordinary Xicheng District, Beijing Lei
Partnership)
2019 second tranche of medium-term notes of China Minsheng Banking No. 2 Fuxingmennei Avenue, Xicheng N/A Su Dawei 010-56366523
Shandong Chenming Paper Holdings Limited Corp., Ltd. District, Beijing
Postal Savings Bank of No. 3 Finance Street, Xicheng District, N/A Zhu Weiliang 010-68857403
China Co., Ltd. Beijing
China Chengxin Building 6, Yinhe Soho, No. 2 Nanzhugan N/A Sun Shu 010-66428877
Securities Rating Hutong, Chaoyangmennei Street,
Co., Ltd. Dongcheng District, Beijing
Beijing Zhonglun W&D 19th Floor, Jintai Building, No. 1 Xibahe N/A Yao Zhengwang 010-64402232
Law Firm South Road, Chaoyang District, Beijing
Ruihua China CPAs Corporate Square, 35 Finance Street, Liu Jian and Jiang Liu Jian 010-88091190
(Special Ordinary Xicheng District, Beijing Lei
Partnership)
Change of the above intermediary organisations during the reporting period
Yes √ No
2021 ANNUAL REPORT 143
XI Bonds
III. Non-financial corporate debt financing instruments (Continued)
4. Use of proceeds
Unit: RMB
Is the use
of proceeds
consistent
with the use
of proceeds
guaranteed
Rectification under the
of prospectus,
irregularities proposed use
Operation of in the use of of proceeds
Total amount of Unutilised special account for proceeds (if and other
Bond Name proceeds Utilised amount amount the proceeds any) agreement
2017 first tranche 1,000,000,000.00 1,000,000,000.00 0.00 Special account for No Consistent
of medium-term proceeds is used
notes of Shandong for the deposit
Chenming Paper of special capital
Holdings Limited from bonds.
2019 first tranche 700,000,000.00 700,000,000.00 0.00 Special account for No Consistent
of medium-term proceeds is used
notes of Shandong for the deposit
Chenming Paper of special capital
Holdings Limited from bonds.
2019 second tranche 500,000,000.00 500,000,000.00 0.00 Special account for No Consistent
of medium-term proceeds is used
notes of Shandong for the deposit
Chenming Paper of special capital
Holdings Limited from bonds.
Proceeds to be used for construction projects
Applicable √ Not applicable
Change in the use of proceeds from the above bonds during the reporting period
Applicable √ Not applicable
5. Adjustment of credit rating results during the reporting period
Applicable √ Not applicable
6. Implementation of and changes in guarantee, debt repayment plan and other repayment guarantee
measures during the reporting period and their impacts on the rights and interests of bond investors
Applicable √ Not applicable
144 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XI Bonds
IV. Convertible bonds
Applicable √ Not applicable
The Company had no convertible bonds during the reporting period.
V. The loss in the scope of the consolidated financial statements during the reporting period
exceeding 10% of the net assets as at the end of the prior year
Applicable √ Not applicable
VI. Overdue interest-bearing debts other than bonds at the end of the reporting period
Applicable √ Not applicable
VII. Breaches of the regulations during the reporting period
Yes √ No
VIII. Major accounting data and financial indicators of the Company over the past two years as at
the end of the reporting period
Unit: RMB0’000
Increase/decrease as at
As at the end the end of the reporting
of the reporting As at the end of period as compared to
Item period the prior year the end of the prior year
Current ratio 65.05% 70.29% -5.24%
Gearing ratio 72.78% 71.83% 0.95%
Quick ratio 54.59% 60.23% -5.64%
Increase/decrease of
the reporting period
The corresponding as compared to
The reporting period of the prior corresponding period of
period year the prior year
Net profit after extraordinary gains or losses 174,387.65 111,910.38 55.83%
Proportion of EBITDA to total debts 13.43% 12.22% 1.21%
Interest coverage ratio 2.12 1.96 8.16%
Cash interest coverage ratio 4.45 4.71 -5.52%
EBITDA interest coverage ratio 3.32 3.02 9.93%
Loans payment ratio 100.00% 100.00% 0.00%
Interest payment ratio 100.00% 100.00% 0.00%
Note: EBITDA=Total profit+interest expenses-interest income+depreciation of fixed assets+amortisation of investment property+amortisation of
intangible assets+amortisation of long-term prepaid expenses
2021 ANNUAL REPORT 145
XII Financial Report
I. Auditors’ Report
Type of auditor’s opinion Standard and unqualified opinions
The date of the audit report signed 30 March 2022
Name of the auditor Grant Thornton (Special General Partnership)
Reference number of the auditor’s report Audit Report No. 371A006186 (2022)
Name of certified public accountants Liu Jian and Jiang Lei
Text of the auditor’s report
To all shareholders of Shandong Chenming Paper Holdings Limited:
I. Auditor’s opinion
We have audited the financial statements of Shandong Chenming Paper Holdings Limited (hereinafter “Chenming
Paper”), which comprise the consolidated and the Company’s balance sheets as at 31 December 2021, the
consolidated and the Company’s profit and loss statements, the consolidated and the Company’s cash flow
statements and the consolidated and the Company’s statements of changes in shareholders’ equity for 2021 and
notes to the relevant financial statements.
In our opinion, the accompanying financial statements were prepared in accordance with the Accounting Standards
for Business Enterprises in all material aspects and give a true and fair view of the consolidated and the Company’s
financial position of Chenming Paper as at 31 December 2021 and of its consolidated and the Company’s operating
results and cash flows for 2021.
II. Basis of opinions
We have conducted our audit in accordance with the Chinese Auditing Standards issued by the Chinese Institute of
Certified Public Accountants. Our responsibilities under those standards are further described in the responsibilities
of certified public accountants for the audit of the financial statements section of the auditor’s report. We are
independent of Chenming Paper in accordance with the ethical codes of Chinese certified public accountants, and
we have fulfilled our other ethical responsibilities in accordance with the codes. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our opinion.
146 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
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 for 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, we do not provide a separate opinion on these matters.
(I) Net realisable value of inventories
For detailed disclosures of relevant information, please see note V. 11 and note VII. 7 of the financial statements.
1. Details
The inventory balance of Chenming Paper for the year 2021 was RMB5,312,234,600, of which the
inventory balance related to machine-made paper was RMB3,792,928,700, with a provision for impairment
of RMB29,602,700 and a carrying value of RMB3,763,326,100. As at the balance sheet date, inventories
are measured at the lower of cost or net realisable value, and provision for impairment of inventories is
made on the basis of the excess of the cost of an individual inventory over its net realisable value. The
management determines the estimated selling price based on historical selling prices, contracted selling
prices, etc., taking into account the purpose for which the inventories are held, and the net realisable value
of inventories is determined by deducting the estimated costs to be incurred to completion, estimated
selling expenses and related taxes from the estimated selling price.
We have identified net realisable value of inventories as a key audit matter due to the significant amount
of inventories and the significant management judgement involved in determining the net realisable value
of inventories.
2. Application for auditing
(1) we identified and assessed the effectiveness of the design of internal controls relating to the
provision for impairment of inventories and tested the effectiveness of such operation;
(2) we identified and evaluated the appropriateness of the Company’s policy of provision for impairment
of inventories;
(3) we supervised inventory taking and monitored the status of inventories, and checked the
identification of obsolete and aged inventories;
(4) we obtained an inventory ageing schedule and performed an analytical review of the status and
turnover of aged inventories;
(5) we obtained a copy of the inventory impairment table, and reviewed and assessed the
reasonableness of the significant estimates made by management in determining the net realisable
value; performed recalculations against the table, reviewed subsequent selling prices and analysed
the reasonableness of the estimated selling prices.
2021 ANNUAL REPORT 147
XII Financial Report
(II) Recognition of revenue from machine-made paper
For detailed disclosures of relevant information, please see note V. 26 and note VII. 47 of the financial
statements.
1. Details
For the year 2021, Chenming Paper achieved operating revenue of RMB33,019,812,300, of which
RMB29,071,777,700 was from machine-made paper, accounting for 88.04% of the operating revenue.
For domestic machine-made paper sales business, Chenming Paper recognised the revenue after the
goods were delivered and signed by the customer for confirmation; for foreign machine-made paper sales
business, Chenming Paper recognised the revenue after the goods were loaded on board and declared.
As revenue is one of the key performance indicators of Chenming Paper, and the revenue from the sales
of machine-made paper accounts for a relatively huge proportion of the total revenue due to its enormous
sales volume, there may be potential misstatement in relation to whether revenue recognition is accounted
for in the appropriate period of the financial statements, which has a significant impact on the financial
statements. Therefore, we have identified recognition of revenue from machine-made paper as a key audit
matter.
2. Application for auditing
We have carried out the following audit procedures for the recognition of revenue from machine-made
paper:
(1) we identified and evaluated and tested the effectiveness of the design and operation of key internal
controls conducted by the management related to revenue recognition;
(2) we conducted sampling inspections on sales contracts, identified contract terms and conditions
related to the transfer of control of the goods, assessed whether the timing of recognition of sales
revenue from Chenming Paper meets the requirements of the Accounting Standards for Business
Enterprises;
(3) we analysed revenue and gross profit by taking into account product types and identified whether
the abnormal fluctuations in the amount of revenue are reasonable in the current period;
(4) we inspected the occurrence of on-the-spot recognition of sales at the end of the inspection period
and inspected goods returns after the inspection period to determine the accuracy of revenue
recognition during the period;
(5) we collected samples from sales revenue recorded around the balance sheet date for cut-off
tests; verified delivery orders and other supporting documents to assess whether sales revenue is
recorded in the appropriate accounting period; and
(6) we sought external confirmations for clients with larger sales during the period.
148 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
IV. Other information
The management of Chenming Paper is responsible for other information. Other information includes the information
covered in the 2021 annual report of Chenming Paper, but does not include the financial statements and our audit
report.
Our audit opinions published in the financial statements do not cover other information and we do not publish any
form of assurance conclusion on other information.
In conjunction with our audit of the financial statements, our responsibility is to read other information, during which
we consider whether there is significant inconsistency or other material misstatement of other information with the
financial statements or what we have learned during the audit.
Based on the work we have performed, if we determine that there is a material misstatement of other information, we
should report that fact. In this regard, we have nothing to report.
V. Management and management responsibility for financial statements
The management of Chenming Paper is responsible for the preparation of financial statements in accordance with the
requirements of the Accounting Standards for Business Enterprises to enable them to achieve fair reflection, and to
achieve the design, implementation and maintenance of necessary internal controls so that the financial statements
are free of material misstatements due to fraud or errors.
In the preparation of the financial statements, the management is responsible for assessing the continuing operations
capabilities of Chenming Paper, disclosing issues related to going concern (if applicable), and applying the going
concern assumption unless the management plans to liquidate Chenming Paper, terminate operations or have no
other realistic options.
The management is responsible for supervising the financial reporting process of Chenming Paper.
VI. Auditor’s responsibility for auditing financial statements
Our objective is to obtain reasonable assurance as to whether the entire financial statements are free from material
misstatement due to fraud or errors and to issue an audit report containing audit opinions. Reasonable assurance is
a high level of assurance, but it does not guarantee that an audit performed in accordance with auditing standards
can always discover a major misstatement when it exists. Misstatements may be caused by fraud or errors, and are
generally considered to be material if it is reasonably expected that misstatements, individually or in aggregate, may
affect the economic decision made by users of financial statements based on the financial statements.
In the process of conducting audit work in accordance with auditing standards, we use professional judgment and
maintain professional suspicion. At the same time, we also perform the following tasks:
(1) To identify and assess risks of material misstatement of financial statements due to fraud or errors, design
and implement audit procedures to address these risks, and obtain adequate and appropriate audit evidence,
together perform as a basis for issuing audit opinions. Since fraud may involve collusion, falsification, intentional
omission, misrepresentation or override of internal controls, the risk of failing to detect a material misstatement
due to fraud is higher than the risk of failing to detect a material misstatement due to an error.
(2) To understand audit-related internal controls to design appropriate audit procedures, but not for the purpose of
expressing an opinion as to the effectiveness of internal control.
2021 ANNUAL REPORT 149
XII Financial Report
(3) To evaluate the appropriateness of accounting policies adopted by the management and the reasonableness of
accounting estimates and related disclosures.
(4) To conclude on the appropriateness of management’s use of the continuing operation assumption. At the same
time, according to the audit evidence obtained, it may lead to conclusions as to whether there are significant
uncertainties in matters or circumstances that have significant doubts about the ability of Chenming Paper to
continue its operations. If we conclude that there are significant uncertainties, the auditing standards require
us to request the users of the report to pay attention to the relevant disclosures in the financial statements in
the audit report; if the disclosure is not sufficient, we should publish modified audit report. Our conclusions are
based on the information available as of the date of the audit report.
(5) Evaluate the overall presentation, structure, and content of the financial statements and evaluate whether the
financial statements fairly reflect the relevant transactions and matters.
(6) To obtain sufficient and appropriate audit evidence on the financial information of entities or business activities
in Chenming Paper to express opinions on the financial statements. We are responsible for guiding, supervising
and executing group audits, and take full responsibility for the audit opinion.
We communicate with the management on planned audit scope, time arrangements and major audit findings,
including communication of the internal control deficiencies that we identified during the audit.
We also provide statements to the management on compliance with ethical requirements related to independence,
and communicate with the management on all relationships and other matters that may reasonably be considered to
affect our independence, as well as related preventive measures (if applicable).
From the matters we communicated with the management, we determine which matters are most important for the
audit of the financial statements for the current period and thus constitute the key audit matters. We describe these
matters in our audit report, unless laws and regulations prohibit the public disclosure of these matters, or in rare
cases, if it is reasonably expected that the negative consequences of disclosing something in the audit report will
outweigh the benefits to the public interest, we determine that the matter should not be reported in the audit report.
Grant Thornton Chinese Certified Public Accountant: Liu Jian
(Special General Partnership) (Project Partner)
Chinese Certified Public Accountant: Jiang Lei
Beijing, China 30 March 2022
150 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
II. Financial Statements
The unit in the notes to the financial statements is: RMB
1. Consolidated Balance Sheet
Prepared by: Shandong Chenming Paper Holdings Limited
31 December 2021
Unit: RMB
Item 31 December 2021 31 December 2020
CURRENT ASSETS:
Monetary funds 14,119,782,939.66 17,759,537,598.98
Financial assets held for trading 110,886,182.88 192,907,800.62
Bills receivable
Accounts receivable 2,656,517,150.46 1,984,931,665.82
Accounts receivable financing 435,459,341.76 488,385,666.76
Prepayments 891,485,078.46 964,290,512.36
Other receivables 2,252,864,083.00 2,417,240,559.46
Including: Interest receivable
Dividend receivable
Inventories 5,282,631,922.12 5,135,293,347.82
Non-current assets due within one year 5,216,934,172.61 4,222,744,207.34
Other current assets 1,903,929,492.85 2,716,918,695.85
Total current assets 32,870,490,363.80 35,882,250,055.01
2021 ANNUAL REPORT 151
XII Financial Report
Item 31 December 2021 31 December 2020
NON-CURRENT ASSETS:
Long-term receivables 1,788,759,975.35 4,658,884,857.95
Long-term equity investments 1,866,587,685.35 3,906,158,402.45
Other non-current financial assets 519,927,003.25 145,910,000.00
Investment property 6,473,538,431.91 5,943,159,568.00
Fixed assets 35,653,492,676.15 37,651,706,658.97
Construction in progress 197,749,526.05 179,857,941.83
Right-of-use assets 197,429,176.44 205,876,719.75
Intangible assets 1,592,672,934.54 1,774,624,509.33
Goodwill 26,946,905.38 32,916,531.95
Long-term prepaid expenses 49,141,773.14 51,061,485.49
Deferred income tax assets 1,114,781,456.78 1,084,164,679.14
Other non-current assets 489,936,694.10 58,886,418.75
Total non-current assets 49,970,964,238.44 55,693,207,773.61
Total assets 82,841,454,602.24 91,575,457,828.62
152 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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Item 31 December 2021 31 December 2020
CURRENT LIABILITIES:
Short term borrowings 33,523,025,186.22 32,793,992,957.86
Bills payable 3,089,512,327.40 2,998,936,736.34
Accounts payable 3,871,131,345.34 4,042,430,732.31
Receipts in advance 38,274,028.20 –
Contract liabilities 1,382,289,597.54 1,051,147,044.74
Employee benefits payable 169,899,008.01 232,376,585.31
Taxes payable 321,495,480.67 652,647,840.63
Other payables 1,538,013,585.93 1,956,715,367.83
Including: Interest payable 55,437,777.80 178,992,959.85
Non-current liabilities due within one year 6,601,311,227.98 7,160,949,615.93
Other current liabilities 157,037,833.35
Total current liabilities 50,534,951,787.29 51,046,234,714.30
2021 ANNUAL REPORT 153
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Item 31 December 2021 31 December 2020
NON-CURRENT LIABILITIES:
Long-term borrowings 5,276,340,154.98 8,077,150,979.15
Bonds payable 155,000,000.00 1,536,877,351.46
Lease liabilities 57,281,205.81 60,271,769.90
Long-term payables 2,358,901,022.99 2,295,309,357.74
Provisions 325,259,082.28 325,259,082.28
Deferred income 1,573,681,684.25 1,637,996,636.51
Deferred income tax liabilities 13,210,529.74 6,572,535.97
Other non-current liabilities 789,521,686.07
Total non-current liabilities 9,759,673,680.05 14,728,959,399.08
Total liabilities 60,294,625,467.34 65,775,194,113.38
154 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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Item 31 December 2021 31 December 2020
OWNERS’ EQUITY:
Share capital 2,984,208,200.00 2,984,208,200.00
Other equity instruments 996,000,000.00 5,473,500,000.00
Including: Preference Shares 4,477,500,000.00
Perpetual Bonds 996,000,000.00 996,000,000.00
Capital reserves 5,282,805,114.62 5,321,911,413.75
Less: Treasury shares 226,860,000.00 226,860,000.00
Other comprehensive income -445,582,729.36 -561,686,607.66
Surplus reserves 1,212,009,109.97 1,212,009,109.97
General risk provisions 76,825,918.60 74,122,644.20
Retained profit 9,210,372,613.81 9,999,764,028.74
Total equity attributable to owners of the Company 19,089,778,227.64 24,276,968,789.00
Minority interest 3,457,050,907.26 1,523,294,926.24
Total owners’ equity 22,546,829,134.90 25,800,263,715.24
Total liabilities and owners’ equity 82,841,454,602.24 91,575,457,828.62
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
2. Balance sheet of the Company
Unit: RMB
Item 31 December 2021 31 December 2020
CURRENT ASSETS:
Monetary funds 6,827,656,382.37 4,720,330,804.07
Bills receivable 3,625,270,000.00 1,470,720,000.00
Accounts receivable 141,601,245.51 694,836,561.24
Accounts receivable financing 7,923,732.09 24,339,933.19
Prepayments 239,461,509.15 1,697,770,445.12
Other receivables 8,900,179,262.54 10,637,425,503.02
Including: Interest receivable
Dividend receivable 126,325,018.50 200,000,000.00
Inventories 639,423,803.30 637,293,495.29
Non-current assets due within one year 146,934,211.22
Other current assets 44,894,366.29 45,764,272.71
Total current assets 20,426,410,301.25 20,075,415,225.86
2021 ANNUAL REPORT 155
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Item 31 December 2021 31 December 2020
NON-CURRENT ASSETS:
Long-term receivables 13,612,038.99 64,762,373.99
Long-term equity investments 18,806,029,815.18 22,192,108,035.92
Other non-current financial assets 119,927,003.25 141,910,000.00
Fixed assets 3,753,927,591.49 3,984,339,880.51
Construction in progress 94,436,880.66 80,192,749.46
Intangible assets 520,068,337.11 534,900,368.31
Deferred income tax assets 393,918,032.54 418,717,829.13
Other non-current assets 7,000,000.00
Total non-current assets 23,708,919,699.22 27,416,931,237.32
Total assets 44,135,330,000.47 47,492,346,463.18
156 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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Item 31 December 2021 31 December 2020
CURRENT LIABILITIES:
Short-term borrowings 13,761,223,259.09 10,929,616,612.59
Bills payable 9,725,713,524.15 7,603,416,890.27
Accounts payable 1,129,675,956.85 812,111,491.23
Contract liabilities 888,114,906.08 156,487,086.88
Staff remuneration payables 57,487,223.39 89,416,732.50
Tax payables 115,257,929.68 147,669,266.97
Other payables 970,585,670.47 5,869,352,883.62
Including: Interest payable 55,437,777.80 97,497,305.56
Non-current liabilities due within one year 2,111,092,964.34 2,374,029,490.27
Other current liabilities 312,130,833.35
Total current liabilities 28,759,151,434.05 28,294,231,287.68
2021 ANNUAL REPORT 157
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Item 31 December 2021 31 December 2020
NON-CURRENT LIABILITIES:
Long-term borrowings 1,779,135,700.00 1,295,000,000.00
Bonds payable 155,000,000.00 439,957,250.00
Long-term payables 52,376,768.35 631,776,192.80
Provisions 325,259,082.28 325,259,082.28
Deferred income 35,232,490.83 38,017,165.55
Other non-current liabilities 1,194,883,344.67
Total non-current liabilities 2,347,004,041.46 3,924,893,035.30
Total liabilities 31,106,155,475.51 32,219,124,322.98
158 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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Item 31 December 2021 31 December 2020
OWNERS’ EQUITY:
Share capital 2,984,208,200.00 2,984,208,200.00
Other equity instruments 996,000,000.00 5,473,500,000.00
Including: Preference Shares 4,477,500,000.00
Perpetual Bonds 996,000,000.00 996,000,000.00
Capital reserves 5,154,365,336.31 5,124,308,464.42
Less: Treasury shares 226,860,000.00 226,860,000.00
Surplus reserves 1,199,819,528.06 1,199,819,528.06
Retained profit 2,921,641,460.59 718,245,947.72
Total owners’ equity 13,029,174,524.96 15,273,222,140.20
Total liabilities and owners’ equity 44,135,330,000.47 47,492,346,463.18
2021 ANNUAL REPORT 159
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3. Consolidated Income Statement
Unit: RMB
Item Amount for 2021 Amount for 2020
I. Total revenue 33,019,812,294.14 30,736,517,996.90
Including: Revenue 33,019,812,294.14 30,736,517,996.90
II. Total operating costs 30,583,840,093.56 29,056,210,362.62
Including: Operating costs 25,222,275,795.28 23,645,594,186.21
Taxes and surcharges 284,456,212.31 250,528,855.40
Sales and distribution expenses 293,509,692.51 298,246,355.91
General and administrative expenses 942,360,735.54 1,025,420,660.39
Research and development expense 1,453,766,371.46 1,274,355,241.49
Finance expenses 2,387,471,286.46 2,562,065,063.22
Including: Interest expenses 2,648,200,417.05 3,125,361,069.00
Interest income 587,289,410.33 887,004,185.02
Plus: Other income 220,600,635.49 363,884,128.32
Investment income (“-” denotes loss) -69,578,338.92 173,363,537.49
Including: Investment income from associates and joint
ventures 31,476,499.83 272,022,434.54
Gains on derecognition of financial assets
measured at amortised cost -258,113,630.19 -93,431,738.91
Gain on change in fair value (“-” denotes loss) -77,073,812.67 6,261,281.76
Credit impairment loss (“-” denotes loss) -268,735,361.31 -651,724,871.57
Loss on impairment of assets (“-” denotes loss) -11,285,890.45 -13,573,717.76
Gain on disposal of assets (“-” denotes loss) 51,559,551.66 26,203,497.56
160 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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Item Amount for 2021 Amount for 2020
III. Operating profit (“-” denotes loss) 2,281,458,984.38 1,584,721,490.08
Plus: Non-operating income 71,694,386.81 600,465,688.15
Less: Non-operating expenses 46,973,061.20 12,917,235.69
IV. Total profit (“-” denotes total loss) 2,306,180,309.99 2,172,269,942.54
Less: Income tax expenses 216,496,288.54 266,056,648.05
V. Net profit (“-” denotes net loss) 2,089,684,021.45 1,906,213,294.49
(I) Classification according to the continuity of operation
1. Net profit from continuing operations
(“-” denotes net loss) 2,089,684,021.45 1,906,213,294.49
2. Net profit from discontinued operations
(“-” denotes net loss)
(II) Classification according to ownership
1. Net profit attributable to shareholders of the Company 2,065,513,108.71 1,712,029,078.52
2. Profit or loss of minority interest 24,170,912.74 194,184,215.97
VI. Net other comprehensive income after tax 116,103,878.30 317,765,527.44
Net other comprehensive income after tax attributable to
shareholders of the Company 116,103,878.30 317,765,527.44
Other comprehensive income that will be reclassified to profit and
loss in subsequent periods 116,103,878.30 317,765,527.44
Including: Exchange differences arising from translation of
financial statements denominated in foreign
currencies 114,257,267.36 330,124,670.94
Other comprehensive income that may be reclassified
to profit and loss under the equity method 1,846,610.94 -12,359,143.50
VII. Total comprehensive income 2,205,787,899.75 2,223,978,821.93
Total comprehensive income attributable to shareholders of
the Company 2,181,616,987.01 2,029,794,605.96
Total comprehensive income attributable to minority interest 24,170,912.74 194,184,215.97
VIII. Earnings per share:
(I) Basic earnings per share 0.56 0.36
(II) Diluted earnings per share 0.56 0.36
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
2021 ANNUAL REPORT 161
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4. Income statement of the Company
Unit: RMB
Item Amount for 2021 Amount for 2020
I. Revenue 8,761,491,410.08 8,510,073,793.88
Less: Operating costs 7,357,969,445.55 6,899,160,821.06
Taxes and surcharges 73,724,285.85 63,211,127.50
Sales and distribution expenses 9,558,862.03 7,441,664.84
General and administrative expenses 225,572,928.07 322,407,985.30
Research and development expense 357,549,848.69 286,590,211.63
Finance expenses 596,154,250.94 501,171,122.74
Including: Interest expenses 1,026,360,435.96 1,481,718,871.40
Interest income 538,879,542.11 1,057,852,559.80
Plus: Other income 7,369,035.15 59,165,073.44
Investment income (“-” denotes loss) 2,932,306,416.92 348,093,079.09
Including: Investment income from associates and joint
ventures -3,156,467.36 -6,412,281.95
Gains on derecognition of financial assets
measured at amortised cost (“-” denotes loss) -12,601,533.35
Gains on changes in fair value (“-” denotes loss) 1,600,000.00 9,464,346.45
Credit impairment loss (“-” denotes loss) 60,361,147.28 42,369,727.64
Loss on impairment of assets (“-” denotes loss) -1,108,450.71
Gain on disposal of assets (“-” denotes loss) 5,690,737.73 40,134,455.47
II. Operating profit (“-” denotes loss) 3,147,180,675.32 929,317,542.90
Plus: Non-operating income 50,666,803.06 5,225,205.90
Less: Non-operating expenses 4,482,683.25 1,891,387.34
III. Total profit (“-” denotes total loss) 3,193,364,795.13 932,651,361.46
Less: Income tax expenses 24,799,796.59 7,994,080.85
IV. Net profit (“-” denotes net loss) 3,168,564,998.54 924,657,280.61
(I) Net profit from continuing operations (“-” denotes net loss) 3,168,564,998.54 924,657,280.61
(II) Net profit from discontinued operations
(“-” denotes net loss)
V. Total comprehensive income 3,168,564,998.54 924,657,280.61
VI. Earnings per share:
(I) Basic earnings per share
(II) Diluted earnings per share
162 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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5. Consolidated cash flow statement
Unit: RMB
Item Amount for 2021 Amount for 2020
I. Cash flows from operating activities:
Cash received from sales of goods and rendering of services 37,026,791,230.42 35,114,699,022.80
Tax rebates received 59,547,522.63 71,675,835.40
Cash received relating to other operating activities 2,219,955,470.38 4,956,395,786.44
Subtotal of cash inflows from operating activities 39,306,294,223.43 40,142,770,644.64
Cash paid for goods and services 25,422,330,671.57 24,341,006,232.03
Cash paid to and for employees 1,467,112,946.72 1,421,974,787.06
Payments of taxes and surcharges 1,426,328,693.53 1,285,210,254.65
Cash paid relating to other operating activities 2,408,633,718.97 1,834,776,694.62
Subtotal of cash outflows from operating activities 30,724,406,030.79 28,882,967,968.36
Net cash flows from operating activities 8,581,888,192.64 11,259,802,676.28
2021 ANNUAL REPORT 163
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Item Amount for 2021 Amount for 2020
II. Cash flows from investing activities:
Cash received from investments 222,670,944.63 15,000,000.00
Cash received from investment income 81,429,872.21 26,760,712.33
Net cash received from disposal of fixed assets, intangible assets
and other long-term assets 217,787,583.26 131,924,763.00
Net cash received from disposal of subsidiaries and other
business units 306,239,547.48 217,547,669.15
Cash received relating to other investing activities 493,700,048.10 409,282,077.65
Subtotal of cash inflows from investing activities 1,321,827,995.68 800,515,222.13
Cash paid for purchase of fixed assets, intangible assets and
other long-term assets 632,606,779.05 254,202,396.70
Cash paid on investments 396,000,000.00 471,299,932.73
Net cash paid for acquisition of subsidiaries and other business
units 256,052,699.51
Cash paid relating to other investing activities 127,500,000.00
Subtotal of cash outflows from investing activities 1,156,106,779.05 981,555,028.94
Net cash flows from investing activities 165,721,216.63 -181,039,806.81
III. Cash flows from financing activities:
Cash received from investments 2,350,000,000.00 952,070,000.00
Including: Cash received from subsidiaries from minority
investment 2,350,000,000.00 725,210,000.00
Cash received from borrowings 26,078,252,949.16 25,471,909,126.85
Cash received relating to other financing activities 4,808,748,496.67 5,230,346,076.92
Subtotal of cash inflows from financing activities 33,237,001,445.83 31,654,325,203.77
Cash repayments of amounts borrowed 29,423,534,354.33 30,646,227,554.94
Cash paid for dividend and profit distribution or interest payment 3,327,088,059.92 3,090,605,089.86
Including: Dividend and profit paid by subsidiaries to minority
shareholders 126,809,125.87 17,444,349.31
Cash paid relating to other financing activities 10,426,875,069.68 7,511,530,461.76
Subtotal of cash outflows from financing activities 43,177,497,483.93 41,248,363,106.56
Net cash flows from financing activities -9,940,496,038.10 -9,594,037,902.79
IV. Effect of foreign exchange rate changes on cash and cash
equivalents -27,367,487.94 14,116,969.70
V. Net increase in cash and cash equivalents -1,220,254,116.77 1,498,841,936.38
Plus: Balance of cash and cash equivalents as at
the beginning of the period 4,389,169,963.79 2,890,328,027.41
VI. Balance of cash and cash equivalents as at the end of the period 3,168,915,847.02 4,389,169,963.79
164 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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6. Cash flow statement of the Company
Unit: RMB
Item Amount for 2021 Amount for 2020
I. Cash flows from operating activities:
Cash received from sales of goods and rendering of services 9,921,458,290.29 8,315,495,593.76
Tax rebates received
Cash received relating to other operating activities 318,480,435.45 1,094,213,214.09
Subtotal of cash inflows from operating activities 10,239,938,725.74 9,409,708,807.85
Cash paid for goods and services 7,949,092,113.55 7,355,500,996.59
Cash paid to and for employees 324,850,174.01 413,161,984.36
Payments of taxes and surcharges 296,341,765.94 225,151,450.32
Cash paid relating to other operating activities 835,108,368.36 872,500,967.87
Subtotal of cash outflows from operating activities 9,405,392,421.86 8,866,315,399.14
Net cash flows from operating activities 834,546,303.88 543,393,408.71
II. Cash flows from investing activities:
Cash received from investments 3,488,670,944.63 1,481,345,237.36
Cash received from investment income 3,346,501,947.10 405,420,123.68
Net cash received from disposal of fixed assets, intangible assets
and other long-term assets 3,871,823.30 104,624,763.00
Net cash received from disposal of subsidiaries and other
business units
Cash received relating to other investing activities 493,655,373.48 409,282,077.65
Subtotal of cash inflows from investing activities 7,332,700,088.51 2,400,672,201.69
Cash paid for purchase of fixed assets, intangible assets and
other long-term assets 19,676,071.84 10,850,791.93
Cash paid on investments 882,210,000.00 82,290,000.00
Net cash paid for acquisition of subsidiaries and
other business units
Cash paid relating to other investing activities
Subtotal of cash outflows used in investing activities 901,886,071.84 93,140,791.93
Net cash flows from investing activities 6,430,814,016.67 2,307,531,409.76
III. Cash flows from financing activities:
Cash received from investments 226,860,000.00
Cash received from borrowings 22,083,489,278.32 15,865,741,633.57
Cash received relating to other financing activities 110,000,000.00 5,490,509,924.46
Subtotal of cash inflows from financing activities 22,193,489,278.32 21,583,111,558.03
2021 ANNUAL REPORT 165
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Item Amount for 2021 Amount for 2020
Cash repayments of amounts borrowed 18,497,803,668.52 16,517,425,606.56
Cash paid for dividend and profit distribution or interest payment 996,025,461.24 1,188,678,703.00
Cash paid relating to other financing activities 9,373,355,123.84 6,565,598,116.70
Subtotal of cash outflows from financing activities 28,867,184,253.60 24,271,702,426.26
Net cash flows from financing activities -6,673,694,975.28 -2,688,590,868.23
IV. Effect of foreign exchange rate changes on cash and cash
equivalents 504,245.77 2,622,051.57
V. Net increase in cash and cash equivalents 592,169,591.04 164,956,001.81
Plus: Balance of cash and cash equivalents as at
the beginning of the period 301,284,723.52 136,328,721.71
VI. Balance of cash and cash equivalents as at the end of the period 893,454,314.56 301,284,723.52
166 SHANDONG CHENMING PAPER HOLDINGS LIMITED
7. Consolidated statement of changes in owners’ equity
Amount for the reporting period
Unit: RMB
2021
Equity attributable to owners of the Company
Other
Other equity instruments Less: comprehensive Special General Total
Item Share capital Preference Shares Perpetual Bonds Others Capital reserves treasury shares income reserves Surplus reserves risk provisions Retained profit Others Subtotal Minority interest owners’ equity
I. Balance as at the end of
the prior year 2,984,208,200.00 4,477,500,000.00 996,000,000.00 5,321,911,413.75 226,860,000.00 -561,686,607.66 1,212,009,109.97 74,122,644.20 9,999,764,028.74 24,276,968,789.00 1,523,294,926.24 25,800,263,715.24
XII Financial Report
Plus: Others -1,887,031,763.57 -1,887,031,763.57 -1,887,031,763.57
II. Balance as at the
beginning of the year 2,984,208,200.00 4,477,500,000.00 996,000,000.00 5,321,911,413.75 226,860,000.00 -561,686,607.66 1,212,009,109.97 74,122,644.20 8,112,732,265.17 22,389,937,025.43 1,523,294,926.24 23,913,231,951.67
III. Changes in the period
(“-” denotes decrease) -4,477,500,000.00 -39,106,299.13 116,103,878.30 2,703,274.40 1,097,640,348.64 -3,300,158,797.79 1,933,755,981.02 -1,366,402,816.77
(I) Total comprehensive
income 116,103,878.30 2,065,513,108.71 2,181,616,987.01 24,170,912.74 2,205,787,899.75
(II) Capital paid in and
reduced by owners -4,477,500,000.00 -39,106,299.13 -4,516,606,299.13 2,312,271,861.82 -2,204,334,437.31
1. Ordinary shares paid
by owners 2,312,271,861.82 2,312,271,861.82
2. Capital paid by
holders of other
equity instruments -4,477,500,000.00 -22,500,000.00 -4,500,000,000.00 -4,500,000,000.00
3. Amount of share-
based payments
recognised in
owners’ equity 52,556,871.89 52,556,871.89 52,556,871.89
4. Others -69,163,171.02 -69,163,171.02 -69,163,171.02
(III) Profit distribution 2,703,274.40 -967,872,760.07 -965,169,485.67 -126,809,125.87 -1,091,978,611.54
1. Transfer to general
risk provisions 2,703,274.40 -2,703,274.40
2. Distribution
to owners (or
shareholders) -965,169,485.67 -965,169,485.67 -126,809,125.87 -1,091,978,611.54
(IV) Transfer within
owners’ equity -275,877,667.67 -275,877,667.67
1. Others -275,877,667.67 -275,877,667.67
IV. Balance as at the end of
the period 2,984,208,200.00 996,000,000.00 5,282,805,114.62 226,860,000.00 -445,582,729.36 1,212,009,109.97 76,825,918.60 9,210,372,613.81 19,089,778,227.64 3,457,050,907.26 22,546,829,134.90
2021 ANNUAL REPORT
167
168
Amount for the prior period
Unit: RMB
2020
Equity attributable to owners of the Company
Other
Other equity instruments Less: comprehensive Special General Total
Item Share capital Preference Shares Perpetual Bonds Others Capital reserves treasury shares income reserves Surplus reserves risk provisions Retained profit Others Subtotal Minority interest owners’ equity
I. Balance as at the end of
the prior year 2,904,608,200.00 4,477,500,000.00 2,988,000,000.00 5,086,686,427.30 -879,452,135.10 1,212,009,109.97 74,122,644.20 9,306,269,617.38 25,169,743,863.75 1,170,029,016.80 26,339,772,880.55
XII Financial Report
II. Balance as at the
beginning of the year 2,904,608,200.00 4,477,500,000.00 2,988,000,000.00 5,086,686,427.30 -879,452,135.10 1,212,009,109.97 74,122,644.20 9,306,269,617.38 25,169,743,863.75 1,170,029,016.80 26,339,772,880.55
III. Changes in the period (“-”
denotes decrease) 79,600,000.00 -1,992,000,000.00 235,224,986.45 226,860,000.00 317,765,527.44 693,494,411.36 -892,775,074.75 353,265,909.44 -539,509,165.31
(I) Total comprehensive
income 317,765,527.44 1,712,029,078.52 2,029,794,605.96 194,184,215.97 2,223,978,821.93
(II) Capital paid in and
reduced by owners 79,600,000.00 -1,992,000,000.00 235,224,986.45 226,860,000.00 -1,904,035,013.55 646,180,728.23 -1,257,854,285.32
1. Ordinary shares paid
SHANDONG CHENMING PAPER HOLDINGS LIMITED
by owners 646,180,728.23 646,180,728.23
2. Capital paid by
holders of other
equity instruments -1,992,000,000.00 -8,000,000.00 -2,000,000,000.00 -2,000,000,000.00
3. Amount of share-
based payments
recognised in
owners’ equity 178,751,029.23 226,860,000.00 31,491,029.23 31,491,029.23
4. Others 64,473,957.22 64,473,957.22 64,473,957.22
(III) Profit distribution -1,018,534,667.16 -1,018,534,667.16 -17,444,349.31 -1,035,979,016.47
1. Distribution
to owners (or
shareholders) -1,018,534,667.16 -1,018,534,667.16 -17,444,349.31 -1,035,979,016.47
(IV) Transfer within owners’
equity -469,654,685.45 -469,654,685.45
1. Others -469,654,685.45 -469,654,685.45
IV. Balance as at the end of
the period 2,984,208,200.00 4,477,500,000.00 996,000,000.00 5,321,911,413.75 226,860,000.00 -561,686,607.66 1,212,009,109.97 74,122,644.20 9,999,764,028.74 24,276,968,789.00 1,523,294,926.24 25,800,263,715.24
8. Statement of changes in equity of owners of the Company
Amount for the reporting period
Unit: RMB
2021
Other equity instruments
Less: Other
Preference Perpetual Capital treasury comprehensive Special Surplus Retained Total owners’
Item Share capital Shares Bonds Others reserves shares income reserves reserves profit Others equity
XII Financial Report
I. Balance as at the end of
the prior year 2,984,208,200.00 4,477,500,000.00 996,000,000.00 5,124,308,464.42 226,860,000.00 1,199,819,528.06 718,245,947.72 15,273,222,140.20
II. Balance as at the
beginning of the year 2,984,208,200.00 4,477,500,000.00 996,000,000.00 5,124,308,464.42 226,860,000.00 1,199,819,528.06 718,245,947.72 15,273,222,140.20
III. Changes in the period (“-”
denotes decrease) -4,477,500,000.00 30,056,871.89 2,203,395,512.87 -2,244,047,615.24
(I) Total comprehensive
income 3,168,564,998.54 3,168,564,998.54
(II) Capital paid in and
reduced by owners -4,477,500,000.00 30,056,871.89 -4,447,443,128.11
1. Ordinary shares paid
by owners
2. Capital paid by
holders of other
equity instruments -4,477,500,000.00 -22,500,000.00 -4,500,000,000.00
3. Amount of share-
based payments
recognised in
owners’ equity 52,556,871.89 52,556,871.89
(III)Profit distribution -965,169,485.67 -965,169,485.67
1. Transfer to surplus
reserves
2. Distribution
to owners (or
shareholders) -965,169,485.67 -965,169,485.67
IV. Balance as at the end of
the period 2,984,208,200.00 996,000,000.00 5,154,365,336.31 226,860,000.00 1,199,819,528.06 2,921,641,460.59 13,029,174,524.96
2021 ANNUAL REPORT
169
170
Amount for the prior period
Unit: RMB
2020
Other equity instruments
Less: Other
Preference Perpetual Capital treasury comprehensive Special Surplus Retained Total owners’
Item Share capital Shares Bonds Others reserves shares income reserves reserves profit Others equity
I. Balance as at the end of
XII Financial Report
the prior year 2,904,608,200.00 4,477,500,000.00 2,988,000,000.00 4,953,557,435.19 1,199,819,528.06 812,690,534.91 17,336,175,698.16
Others -567,200.64 -567,200.64
II. Balance as at the
beginning of the year 2,904,608,200.00 4,477,500,000.00 2,988,000,000.00 4,953,557,435.19 1,199,819,528.06 812,123,334.27 17,335,608,497.52
III. Changes in the period
(“-” denotes decrease) 79,600,000.00 -1,992,000,000.00 170,751,029.23 226,860,000.00 -93,877,386.55 -2,062,386,357.32
SHANDONG CHENMING PAPER HOLDINGS LIMITED
(I) Total comprehensive
income 924,657,280.61 924,657,280.61
(II) Capital paid in and
reduced by owners 79,600,000.00 -1,992,000,000.00 170,751,029.23 226,860,000.00 -1,968,508,970.77
1. Ordinary shares paid
by owners 79,600,000.00 79,600,000.00
2. Capital paid by
holders of other
equity instruments -1,992,000,000.00 -8,000,000.00 -2,000,000,000.00
3. Amount of share-
based payments
recognised in
owners’ equity 178,751,029.23 226,860,000.00 -48,108,970.77
(III)Profit distribution -1,018,534,667.16 -1,018,534,667.16
1. Transfer to surplus
reserves
2. Distribution
to owners (or
shareholders) -1,018,534,667.16 -1,018,534,667.16
IV. Balance as at the end
of the period 2,984,208,200.00 4,477,500,000.00 996,000,000.00 5,124,308,464.42 226,860,000.00 1,199,819,528.06 718,245,947.72 15,273,222,140.20
XII Financial Report
III. General Information of the Company
1. Company overview
The predecessor of Shandong Chenming Paper Holdings Limited (hereinafter referred to as the “Company”) was
Shandong Shouguang Paper Mill Corporation, which was changed as a joint stock company with limited liability
through offering to specific investors in May 1993. In December 1996, with approval by Lu Gai Zi [1996] No. 270
issued by the People’s Government of Shandong Province and Zheng Wei [1996] No. 59 of the Securities Committee
of the State Council, the Company was changed as a joint stock company with limited liability established by share
offer.
In May 1997, with approval by Zheng Wei Fa [1997] No. 26 issued by the Securities Committee of the State Council,
the Company issued 115,000,000 domestic listed foreign shares (B shares) under public offering, which were listed
and traded on Shenzhen Stock Exchange from 26 May 1997.
In September 2000, with approval by Zheng Jian Gong Si Zi [2000] No. 151 issued by the China Securities Regulatory
Commission, the Company issued an additional 70,000,000 RMB ordinary shares (A shares), which were listed and
traded on Shenzhen Stock Exchange from 20 November 2000.
In June 2008, with approval by the Stock Exchange of Hong Kong Limited, the Company issued 355,700,000 H
shares. At the same time, 35,570,000 H shares were allocated to the National Council for Social Security Fund by
our relevant state-owned shareholder and converted into overseas listed foreign shares (H shares) for the purpose of
reducing the number of state-owned shares. The additionally issued H shares were listed and traded on Hong Kong
Stock Exchange on 18 June 2008.
As at 31 December 2021, the total share capital of the Company was changed to 2,984,208,200 shares. For details,
please refer to Note VII. 39.
The Company has established a corporate governance structure comprising the general meeting, the board of
directors and the supervisory committee, and has manufacturing business center, supply chain management center,
business department, marketing department, financial capital management center, enterprise management center,
public utilities center, securities investment department, audit department and other departments.
The Company and its subsidiaries are principally engaged in, among other things, processing and sale of
paper products (including machine-made paper and paper board), paper making raw materials and machinery;
generation and sale of electric power and thermal power; forestry, saplings growing, processing and sale of timber;
manufacturing, processing and sale of wood products; and hotel service, and equipment financial and operating
leasing, investment properties and property service etc.
The financial statements and notes thereto were approved at the twelfth meeting of the ninth session of the board of
directors of the Company (the “Board”) on 30 March 2022.
2. Scope of consolidation
Subsidiaries of the Company included in the scope of consolidation in 2021 totalled 75. For details, please refer to
Note IX “Equity in other entities”. The scope of consolidation of the Company during the year had six more companies
included and seven companies less compared to the prior year. For details, please refer to Note VIII “Changes in the
scope of consolidation”.
2021 ANNUAL REPORT 171
XII Financial Report
IV. Basis of Preparation of the Financial Statements
1. Basis of preparation
These financial statements are prepared in accordance with the accounting standards for business enterprises, the
application guidelines thereof, interpretations and other related rules (hereinafter referred to as “ASBEs”) promulgated
by the Ministry of Finance. In addition, the Company also discloses relevant financial information in accordance with
the “Preparation Rules for Information Disclosure by Companies Offering Securities to the Public No. 15 – General
Provisions on Financial Reports” (revised in 2014) of the CSRC.
The financial statements are presented on a going concern.
The Company’s financial statements have been prepared on an accrual basis. Except for certain financial instruments,
the financial statements are prepared under the historical cost convention. In the event that depreciation of assets
occurs, a provision for impairment is made accordingly in accordance with the relevant regulations.
2. Going concern
No facts or circumstances comprise a material uncertainty about the Company’s going concern basis within 12
months since the end of the reporting period.
V. Significant Accounting Policies and Accounting Estimates
Specific accounting policies and accounting estimates are indicated as follows:
The Company and its subsidiaries are principally engaged in machine-made paper, electricity and heat, construction
materials, paper making chemical products, financial leasing, hotel management and other operations. The Company and its
subsidiaries formulated certain specific accounting policies and accounting estimates for the transactions and matters such
as revenue recognition, determination of performance progress and R&D expenses based on their actual production and
operation characteristics pursuant to the requirements under the relevant accounting standards for business enterprises.
For details, please refer to this Note V. 26 “Revenue”. For the critical accounting judgments and estimates made by the
management, please refer to Note V. 31 “Change of Significant accounting policies and accounting estimates”.
1. Statement of compliance with the Accounting Standards for Business Enterprises
These financial statements have been prepared in conformity with the ASBEs, which truly and fully reflect the financial
position of the consolidated entity and the Company as at 31 December 2021 and relevant information such as the
operating results and cash flows of the consolidated entity and the Company for 2021.
2. Accounting period
The accounting period of the Company is from 1 January to 31 December of each calendar year.
172 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
3. Operating cycle
The operating cycle of the Company lasts for 12 months.
4. Functional currency
The functional currency of the Company and its domestic subsidiaries is Renminbi (“RMB”). Overseas subsidiaries
of the Company recognise U.S. dollar (“USD” or “US$”), Japanese yen (“JPY”), Euro (“EUR”) and South Korean
Won (“KRW”) as their respective functional currency according to the general economic environment in which these
subsidiaries operate. The Company prepares the financial statements in RMB.
5. Accounting treatment of business combinations under common control and not under common
control
(1) Business combination under common control
For the business combination involving entities under common control, the assets and liabilities of the party
being merged that are obtained in the business combination by the absorbing party shall be measured at the
carrying amounts as recorded by the ultimate controlling party in the consolidated financial statements at the
combination date, except for the adjustments of different accounting policies. The difference between the
carrying amount of the consideration paid for the combination (or the aggregate nominal value of shares issued
as consideration) and the carrying amount of the net assets obtained in the combination is charged to the
capital reserve (share capital premium/capital premium). If the capital reserve (share capital premium/capital
premium) is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings.
Business combinations involving entities under common control and achieved in stages
In the separate financial statements, the initial investment cost is calculated based on the shareholding portion
of the assets and liabilities obtained and are measured at the carrying amounts as recorded by the party being
merged at the combination date. The difference between the initial investment cost and the sum of the carrying
amount of the original investment cost prior to the combination and the carrying amount of consideration paid
for the combination is adjusted to the capital reserve (share capital premium/capital premium), if the capital
reserve is not sufficient to absorb the difference, the excess difference shall be adjusted to retained earnings.
In the consolidated financial statements, the assets and liabilities of the party being merged that are obtained
at the combination by the absorbing party shall be measured at the carrying value as recorded by the ultimate
controlling party in the consolidated financial statements at combination date, except for adjustments of
different accounting policies. The difference between the sum of the carrying value from original shareholding
portion and the new investment cost incurred at combination date and the carrying value of net assets obtained
at combination date shall be adjusted to capital reserve (share capital premium/capital premium), if the balance
of capital reserve is not sufficient to absorb the differences, any excess is adjusted to retained earnings.
The long-term investment prior to the absorbing party obtaining the control of the party being merged, the
recognised profit or loss, comprehensive income and other change of owners’ equity at the closer date of the
acquisition date and combination date under common control shall separately offset the opening balance of
retained earnings and profit or loss during comparative statements.
2021 ANNUAL REPORT 173
XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
5. Accounting treatment of business combinations under common control and not under common
control (Continued)
(2) Business combination not under common control
For business combinations involving entities not under common control, the cost for each combination is
measured at the aggregate fair value at acquisition date, of assets given, liabilities incurred or assumed, and
equity securities issued by the acquirer in exchange for control of the acquiree. At acquisition date, the acquired
assets, liabilities or contingent liabilities of acquiree are measured at their fair value.
Where the cost of combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable net
assets, the difference is recognised as goodwill, and subsequently measured on the basis of its cost minus
accumulative impairment provision; Where the cost of combination is less than the acquirer’s interest in the fair
value of the acquiree’s identifiable net assets, the difference is recognised in profit or loss for the current period
after reassessment.
Business combinations involving entities not under common control and achieved in stages
In the separate financial statements, the initial investment cost of the investment is the sum of the carrying
amount of the equity investment held by the entity prior to the acquisition date and the additional investment
cost at the acquisition date. The disposal accounting policy of other comprehensive income related with
equity investment prior to the acquisition date recognised under equity method shall be compliance with the
method when the acquiree disposes the related assets or liabilities. Owners’ equity due to the changes of other
owners’ equity other than the changes of net profit, other comprehensive income and profit distribution shall
be transferred to profit or loss for current period when disposed of. If the equity investment held by the entity
prior to the acquisition date is measured at fair value, the cumulative changes in fair value recognised in other
comprehensive income shall be transferred to retained earnings for current period when accounted for using
cost method.
In the consolidation financial statements, the combination cost is the sum of consideration paid at acquisition
date and fair value of the acquiree’s equity investment held prior to acquisition date; the cost of equity of the
acquiree held prior to acquisition date shall be remeasured at the fair value at acquisition date, the difference
between the fair value and carrying amount shall be recognised as investment income or loss for the current
period. Other comprehensive income and changes of investment equity related with acquiree’s equity held
prior to acquisition date shall be transferred to investment profit or loss for current period at acquisition date,
except for the other comprehensive income incurred by the changes of net assets or net liabilities due to the
remeasurement of defined benefit plans.
(3) Transaction fees attribution during business combination
The audit, legal, valuation advisory and other intermediary fees and other relevant administrative expenses
arising from business combinations are recognised in profit or loss when incurred. Transaction costs of equity
or debt securities issued as the considerations of business combination are included in the initial recognition
amounts.
174 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
6. Preparation of consolidated financial statements
(1) Scope of consolidation
The scope of consolidation of the consolidated financial statements is determined on the basis of control. The
term “control” refers to the fact that the Company has power over the investee and is entitled to variable returns
from its involvement with the investee and the ability to use its power over the investee to affect the amount of
those returns. A subsidiary is an entity controlled by the Company (including an enterprise, a separable part of
an investee, a structured entity, etc.).
(2) Basis for preparation of the consolidated financial statements
The consolidated financial statements are prepared by the Company based on the financial statements of the
Company and its subsidiaries and other relevant information. In preparing the consolidated financial statements,
the accounting policies and accounting periods of the Company and its subsidiaries shall be consistent, and
intracompany significant transactions and balances are eliminated.
A subsidiary and its business acquired through a business combination involving entities under common control
during the reporting period shall be included in the scope of the consolidation of the Company from the date
of being controlled by the ultimate controlling party, and its operating results and cash flows from the date of
being controlled by the ultimate controlling party are included in the consolidated profit or loss statement and
the consolidated cash flow statement, respectively.
For a subsidiary and its business acquired through a business combination involving entities not under common
control during the reporting period, its income, expenses and profits are included in the consolidated profit or
loss statement, and cash flows are included in the consolidated cash flow statement from the acquisition date
to the end of the reporting period.
The shareholders’ equity of the subsidiaries that is not attributable to the Company is presented under
shareholders’ equity in the consolidated balance sheet as minority interest. The portion of net profit or loss of
subsidiaries for the period attributable to minority interest is presented in the consolidated income statement
under the “profit or loss of minority interest”. When the amount of loss attributable to the minority shareholders
of a subsidiary exceeds the minority shareholders’ portion of the opening balance of owners’ equity of the
subsidiary, the excess amount shall be allocated against minority interest.
(3) Acquisition of non-controlling interests in subsidiaries
The difference between the long-term equity investments costs acquired by the acquisition of non-controlling
interests and the share of the net assets from subsidiaries from the date of acquisition or the date of
combination based on the new shareholding ratio, as well as the difference between the proceeds from the
partial disposal of the equity investment without losing control over its subsidiary and the disposal of the
long-term equity investment corresponding to the share of the net assets of the subsidiaries from the date of
acquisition or the date of combination, is adjusted to the capital reserve (share capital premium), if the capital
reserve is not sufficient, any excess is adjusted to retained earnings.
2021 ANNUAL REPORT 175
XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
6. Preparation of consolidated financial statements (Continued)
(4) Accounting treatment for loss of control over subsidiaries
For the loss of control over a subsidiary due to disposal of a portion of the equity investment or other reasons,
the remaining equity is measured at fair value on the date when the control is lost. The difference arising from
the sum of consideration received for disposal of equity interest and the fair value of remaining equity interest
over the sun of the share of the carrying amount of net assets of the former subsidiary calculated continuously
from the purchase date based on the shareholding percentage before disposal and the goodwill is recognised
as investment income in the period when the control is lost.
Other comprehensive income related to equity investment in the former subsidiary shall be transferred to current
profit or loss at the time when the control is lost, except for other comprehensive income arising from changes
in net assets or net liabilities due to remeasurement of defined benefit plan by the investee.
7. Classification of joint arrangements and accounting treatment for joint ventures
A joint arrangement refers to an arrangement of two or more parties have joint control. The joint arrangements of the
Company comprise joint operations and joint ventures.
(1) Joint operations
Joint operations refer to a joint arrangement during which the Company is entitled to relevant assets and
obligations of this arrangement.
The Company recognises the following items in relation to its interest in a joint operation and accounts for them
in accordance with the relevant ASBEs:
A. the assets held solely by it and assets held jointly according to its share;
B. the liabilities assumed solely by it and liabilities assumed jointly according to its share;
C. the revenue from sale of output from joint operations;
D. the revenue from sale of output from joint operations according to its share;
E. the fees solely incurred by it and fees incurred from joint operations according to its share.
(2) Joint ventures
Joint ventures refer to a joint arrangement during which the Company only is entitled to net assets of this
arrangement.
The Company accounts for its investments in joint ventures in accordance with the requirements relating to
accounting treatment using equity method for long-term equity investments.
176 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
8. Standards for recognising cash and cash equivalents
Cash refers to cash on hand and deposits readily available for payment purpose. Cash equivalents refer to short-
term and highly liquid investments held by the Company which are readily convertible into known amount of cash and
which are subject to insignificant risk of value change.
9. Foreign currency operations and translation of statements denominated in foreign currency
(1) Foreign currency operations
The foreign currency operations of the Company are translated into the functional currency at the prevailing
spot exchange rate on the date of exchange.
On the balance sheet date, 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 upon initial recognition or the last balance sheet date will
be recognised in profit or loss for the period. The foreign currency non-monetary items measured at historical
cost shall still be measured by the functional currency translated at the spot exchange rate on the date of the
transaction. Foreign currency non-monetary items measured at fair value are translated at the spot exchange
rate on the date of determination of the fair value. The difference between the amounts of the functional
currency before and after the translation will be recognised in profit or loss or other comprehensive income for
the period based on the nature of the non-monetary items.
(2) Translation of financial statements denominated in foreign currency
When translating the financial statements denominated in foreign currency of overseas subsidiaries, assets and
liabilities on the balance sheet are translated at the spot exchange rate prevailing at the balance sheet date;
owner’s equity items except for “retained profit” are translated at the spot exchange rates at the dates on which
such items arose.
Income and expenses items in the profit or loss statement are translated at the prevailing spot exchange rate on
the transaction date.
All items in the cash flow statements shall be translated at the prevailing spot exchange rate on the date that
the cash flow transaction occurred. Effects arising from changes of exchange rate on cash shall be presented
separately as the “effect of foreign exchange rate changes on cash and cash equivalents” item in the cash flow
statements.
The differences arising from translation of financial statements shall be included in the “other comprehensive
income” item in owners’ equity in the balance sheet.
On disposal of foreign operations and loss of control, exchange differences arising from the translation of
financial statements denominated in foreign currencies related to the disposed foreign operations which
has been included in owners’ equity in the balance sheet, shall be transferred to profit or loss in whole or in
proportionate share in the period in which the disposal took place.
2021 ANNUAL REPORT 177
XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
10. Financial instruments
A financial instrument is a contract that gives rise to a financial asset of one party and a financial liability or equity
instrument of another party.
(1) Recognition and derecognition of financial instruments
Financial asset or financial liability will be recognised when the Company became one of the parties under a
financial instrument contract.
Financial asset that satisfied any of the following criteria shall be derecognised:
the contract right to receive the cash flows of the financial asset has terminated;
the financial asset has been transferred and meets the derecognition criteria for the transfer of financial
asset as described below.
A financial liability (or a part thereof) is derecognised only when the present obligation is discharged in full or in
part. If an agreement is entered between the Company (debtor) and a creditor to replace the existing financial
liabilities with new financial liabilities, and the contractual terms of the new financial liabilities are substantially
different from those of the existing financial liabilities, the existing financial liabilities shall be derecognised and
the new financial liabilities shall be recognised.
Conventionally traded financial assets shall be recognised and derecognised at the trading date.
(2) Classification and measurement of financial assets
The Company classifies the financial assets according to the business model for managing the financial assets
and characteristics of the contractual cash flows as follows: financial assets measured at amortised cost,
financial assets measured at fair value through other comprehensive income, and financial assets measured at
fair value through profit or loss.
Financial assets measured at amortised cost
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated
at fair value through other comprehensive income:
The Company’s business model for managing such financial assets is to collect contractual cash flows;
The contractual terms of the financial asset stipulate that cash flows generated on specific dates are solely
payments of principal and interest on the principal amount outstanding.
Subsequent to initial recognition, such financial assets are measured at amortised cost using the effective
interest method. A gain or loss on a financial asset that is measured at amortised cost and is not part of a
hedging relationship shall be recognised in profit or loss for the current period when the financial asset is
derecognised, amortised using the effective interest method or with impairment recognised.
178 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
10. Financial instruments (Continued)
(2) Classification and measurement of financial assets (Continued)
Financial assets measured at fair value through other comprehensive income
A financial asset is classified as measured at fair value through other comprehensive income if it meets both of
the following conditions and is not designated at fair value through profit or loss:
The Company’s business model for managing such financial assets is achieved both by collecting collect
contractual cash flows and selling such financial assets;
The contractual terms of the financial asset stipulate that cash flows generated on specific dates are solely
payments of principal and interest on the principal amount outstanding.
Subsequent to initial recognition, such financial assets are subsequently measured at fair value. Interest
calculated using the effective interest method, impairment losses or gains and foreign exchange gains and
losses are recognised in profit or loss for the current period, and other gains or losses are recognised in
other comprehensive income. On derecognition, the cumulative gain or loss previously recognised in other
comprehensive income is reclassified from other comprehensive income to profit or loss.
Financial assets measured at fair value through profit or loss
The Company classifies the financial assets other than those measured at amortised cost and measured at fair
value through other comprehensive income as financial assets measured at fair value through profit or loss.
Upon initial recognition, the Company irrevocably designates certain financial assets that are required to be
measured at amortised cost or at fair value through other comprehensive income as financial assets measured
at fair value through profit or loss in order to eliminate or significantly reduce accounting mismatch.
Upon initial recognition, such financial assets are measured at fair value. Except for those held for hedging
purposes, gains or losses (including interests and dividend income) arising from such financial assets are
recognised in the profit or loss for the current period.
The business model for managing financial assets refers to how the Company manages its financial assets
in order to generate cash flows. That is, the Company’s business model determines whether cash flows will
result from collecting contractual cash flows, selling financial assets or both. The Company determines the
business model for managing financial assets on the basis of objective facts and specific business objectives
for managing financial assets determined by key management personnel.
The Company assesses the characteristics of the contractual cash flows of financial assets to determine
whether the contractual cash flows generated by the relevant financial assets on a specific date are solely
payments of principal and interest on the principal amount outstanding. The principal refers to the fair value
of the financial assets at the initial recognition. Interest includes consideration for the time value of money, for
the credit risk associated with the principal amount outstanding during a particular period of time and for other
basic lending risks, costs and profits. In addition, the Company evaluates the contractual terms that may result
in a change in the time distribution or amount of contractual cash flows from a financial asset to determine
whether it meets the requirements of the above contractual cash flow characteristics.
2021 ANNUAL REPORT 179
XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
10. Financial instruments (Continued)
(2) Classification and measurement of financial assets (Continued)
Financial assets measured at fair value through profit or loss (Continued)
All affected financial assets are reclassified on the first day of the first reporting period following the change in
the business model where the Company changes its business model for managing financial assets; otherwise,
financial assets shall not be reclassified after initial recognition.
Financial assets are measured at fair value upon initial recognition. For financial assets measured at fair
value through profit or loss, relevant transaction costs are directly recognised in profit or loss for the current
period. For other categories of financial assets, relevant transaction costs are included in the amount initially
recognised. Accounts receivable or notes receivable arising from sales of goods or rendering services, without
significant financing component are initially recognised based on the transaction price expected to be entitled
by the Company.
(3) Classification and measurement of financial liabilities
At initial recognition, financial liabilities of the Company are classified as financial liabilities measured at fair
value through profit or loss and financial liabilities measured at amortised cost. For financial liabilities not
classified as measured at fair value through profit or loss, relevant transaction costs are included in the amount
initially recognised.
Financial liabilities measured at fair value through profit or loss
Financial liabilities measured at fair value through profit or loss comprise held-for-trading financial liabilities and
financial liabilities designated at fair value through profit or loss upon initial recognition. Such financial liabilities
are subsequently measured at fair value, and the gains or losses from the change in fair value and the dividend
or interest expenses related to the financial liabilities are included in the profit or loss of the current period.
Financial liabilities measured at amortised cost
Other financial liabilities are subsequently measured at amortised cost using the effective interest rate method,
and the gains or losses arising from derecognition or amortisation are recognised in profit or loss for the current
period.
180 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
10. Financial instruments (Continued)
(3) Classification and measurement of financial liabilities (Continued)
Classification between financial liabilities and equity instruments
A financial liability is a liability if:
it has a contractual obligation to pay in cash or other financial assets to other parties.
it has a contractual obligation to exchange financial assets or financial liabilities under potential adverse
condition with other parties.
it is a non-derivative instrument contract which will or may be settled with the entity’s own equity
instruments, and the entity will deliver a variable number of its own equity instruments according to such
contract.
it is a derivative instrument contract which will or may be settled with the entity’s own equity instruments,
except for a derivative instrument contract that exchanges a fixed amount of cash or other financial asset
with a fixed number of its own equity instruments.
Equity instruments are any contract that evidences a residual interest in the assets of an entity after deducting
all of its liabilities.
If the Company cannot unconditionally avoid the performance of a contractual obligation by paying cash or
delivering other financial assets, the contractual obligation meets the definition of financial liabilities.
Where a financial instrument must or may be settled with the Company’s own equity instruments, the
Company’s own equity instruments used to settle such instrument should be considered as to whether it is as
a substitute for cash or other financial assets or for the purpose of enabling the holder of the instrument to be
entitled to the remaining interest in the assets of the issuer after deducting all of its liabilities. For the former, it is
a financial liability of the Company; for the latter, it is the Company’s own equity instruments.
(4) Fair value of financial instruments
The methods for determining the fair value of the financial assets or financial liabilities are set out in Note V. 12.
2021 ANNUAL REPORT 181
XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
10. Financial instruments (Continued)
(5) Impairment of financial assets
The Company makes provision for impairment based on expected credit losses (ECLs) on the following items:
Financial assets measured at amortised cost;
Receivables and debt investments measured at fair value through other comprehensive income;
Contract assets as defined in the Accounting Standards for Business Enterprises No. 14 – Revenue;
Lease receivables;
Financial guarantee contracts (except those measured at fair value through profit or loss or formed by
continuing involvement of transferred financial assets or the transfer does not qualify for derecognition).
Measurement of ECLs
ECLs are the weighted average of credit losses of financial instruments weighted by the risk of default. Credit
losses refer to the difference between all contractual cash flows receivable according to the contract and
discounted according to the original effective interest rate and all cash flows expected to be received, i.e. the
present value of all cash shortages.
The Company takes into account reasonable and well-founded information such as past events, current
conditions and forecasts of future economic conditions, and calculates the probability-weighted amount of
the present value of the difference between the cash flows receivable from the contract and the cash flows
expected to be received weighted by the risk of default.
The Company measures ECLs of financial instruments at different stages. If the credit risk of the financial
instrument did not increase significantly upon initial recognition, it is at the first stage, and the Company makes
provision for impairment based on the ECLs within the next 12 months; if the credit risk of a financial instrument
increased significantly upon initial recognition but has not yet incurred credit impairment, it is at the second
stage, and the Company makes provision for impairment based on the lifetime ECLs of the instrument; if the
financial instrument incurred credit impairment upon initial recognition, it is at the third stage, and the Company
makes provision for impairment based on the lifetime ECLs of the instrument.
For financial instruments with low credit risk on the balance sheet date, the Company assumes that the credit
risk did not increase significantly upon initial recognition, and makes provision for impairment based on the
ECLs within the next 12 months.
Lifetime ECLs represent the ECLs resulting from all possible default events over the expected life of a financial
instrument. The 12-month ECLs are the ECLs resulting from possible default events on a financial instrument
within 12 months (or a shorter period if the expected life of the financial instrument is less than 12 months) after
the balance sheet date, and is a portion of lifetime ECLs.
182 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
10. Financial instruments (Continued)
(5) Impairment of financial assets (Continued)
Measurement of ECLs (Continued)
The maximum period to be considered when estimating ECLs is the maximum contractual period over which
the Company is exposed to credit risk, including renewal options.
For the financial instruments at the first and second stages and with low credit risks, the Company calculates
the interest income based on the book balance and the effective interest rate before deducting the impairment
provisions. For financial instruments at the third stage, interest income is calculated based on the amortised
cost after deducting impairment provisions made from the book balance and the effective interest rate.
Bills receivable and accounts receivable
For bills receivable and accounts receivable, regardless of whether there is a significant financing component,
the Company always makes provision for impairment at an amount equal to lifetime ECLs.
When the Company is unable to assess the information of ECLs for an individual financial asset at a reasonable
cost, it classifies bills receivable and accounts receivable into portfolios based on the credit risk characteristics,
and calculates the ECLs on a portfolio basis. The basis for determining the portfolios is as follows:
A. Bills receivable
Bills receivable portfolio 1: Bank acceptance bills
Bills receivable portfolio 2: Commercial acceptance bills
B. Accounts receivable
Accounts receivable portfolio 1: Due from related party customers
Accounts receivable portfolio 2: Receivables from non-related party customers
Accounts receivable portfolio 3: Factoring receivables
2021 ANNUAL REPORT 183
XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
10. Financial instruments (Continued)
(5) Impairment of financial assets (Continued)
Bills receivable and accounts receivable (Continued)
For bills receivable and contract assets classified as a portfolio, the Company refers to the historical credit loss
experience, combined with the current situation and the forecast of future economic conditions, to calculate the
ECLs based on default risk exposure and lifetime ECL rate.
For accounts receivable classified as a portfolio, the Company refers to the historical credit loss experience,
combined with the current situation and the forecast of future economic conditions, to prepare a comparison
table of the ageing/overdue days of accounts receivable and the lifetime ECL rate to calculate the ECLs.
Other receivables
The Company classifies other receivables into portfolios based on credit risk characteristics, and calculates the
ECLs on a portfolio basis. The basis for determining the portfolios is as follows:
Other receivables portfolio 1: Amount due from government authorities
Other receivables portfolio 2: Amount due from related parties
Other receivables portfolio 3: Other receivables
For other receivables classified as a portfolio, the Company calculates the ECLs based on default risk exposure
and the ECL rate over the next 12 months or the entire lifetime.
Long-term receivables
The Company’s long-term receivables include finance lease receivables and deposits receivable.
184 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
10. Financial instruments (Continued)
(5) Impairment of financial assets (Continued)
Long-term receivables (Continued)
The Company classifies the finance lease receivables, deposits receivable and other receivables into portfolios
based on the credit risk characteristics, and calculates the ECLs on a portfolio basis. The basis for determining
the portfolios is as follows:
A. Finance lease receivables
Finance lease receivables portfolio 1: Receivables not past due
Finance lease receivables portfolio 2: Overdue receivables
B. Other long-term receivables
Other long-term receivables portfolio 1: Deposits receivable
Other long-term receivables portfolio 2: Other receivables
For deposits receivable and receivables for construction projects, the Company refers to the historical credit
loss experience, combined with the current situation and the forecast of future economic conditions, and
calculates the ECLs based on default risk exposure and lifetime ECL rate.
Except for those of finance lease receivables and deposits receivable, the ECLs of other receivables and long-
term receivables classified as a portfolio are measured based on default risk exposure and ECL rate over the
next 12 months or the entire lifetime.
Debt investments and other debt investments
For debt investments and other debt investments, the Company measures the ECLs based on the nature of the
investment, the types of counterparty and risk exposure, and default risk exposure and ECL rate within the next
12 months or the entire lifetime.
2021 ANNUAL REPORT 185
XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
10. Financial instruments (Continued)
(5) Impairment of financial assets (Continued)
Assessment of significant increase in credit risk
In assessing whether the credit risk of a financial instrument has increased significantly upon initial recognition,
the Company compares the risk of default of the financial instrument at the balance sheet date with that at the
date of initial recognition to determine the relative change in risk of default within the expected lifetime of the
financial instrument.
In determining whether the credit risk has increased significantly upon initial recognition, the Company considers
reasonable and well-founded information, including forward-looking information, which can be obtained without
unnecessary extra costs or efforts. Information considered by the Company includes:
The debtor’s failure to make payments of principal and interest on their contractually due dates;
An actual or expected significant deterioration in a financial instrument’s external or internal credit rating (if any);
An actual or expected significant deterioration in the operating results of the debtor;
Existing or expected changes in the technological, market, economic or legal environment that have a significant
adverse effect on the debtor’s ability to meet its obligation to the Company.
Depending on the nature of the financial instruments, the Company assesses whether there has been a
significant increase in credit risk on either an individual basis or a collective basis. When the assessment is
performed on a collective basis, the financial instruments are grouped based on their common credit risk
characteristics, such as past due information and credit risk ratings.
The Company determines that the credit risk on a financial asset has increased significantly if it is more than 30
days past due.
Credit-impaired financial assets
At balance sheet date, the Company assesses whether financial assets measured at amortised cost and debt
investments measured at fair value through other comprehensive income are credit-impaired. A financial asset
is credit-impaired when one or more events that have an adverse effect on the estimated future cash flows
of the financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following
observable events:
Significant financial difficulty of the issuer or debtor;
A breach of contract by the debtor, such as a default or delinquency in interest or principal payments;
186 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
10. Financial instruments (Continued)
(5) Impairment of financial assets (Continued)
Credit-impaired financial assets (Continued)
For economic or contractual reasons relating to the debtor’s financial difficulty, the Company having granted to
the debtor a concession that would not otherwise consider;
It becoming probable that the debtor will enter bankruptcy or other financial reorganisation;
The disappearance of an active market for that financial asset because of financial difficulties of the issuer or
debtor.
Presentation of provisions for ECLs
ECLs are remeasured at each balance sheet date to reflect changes in the financial instrument’s credit risk
upon initial recognition. Any change in the ECL amount is recognised as an impairment gain or loss in profit
or loss for the current period. For financial assets measured at amortised cost, the provisions of impairment is
deducted from the carrying amount of the financial assets presented in the balance sheet; for debt investments
at fair value through other comprehensive income, the Company makes provisions of impairment in other
comprehensive income without reducing the carrying amount of the financial asset.
Write-offs
The book balance of a financial asset is directly written off to the extent that there is no realistic prospect of
recovery of the contractual cash flows of the financial asset (either partially or in full). Such write-off constitutes
derecognition of such financial asset. This is generally the case when the Company determines that the debtor
does not have assets or sources of income that could generate sufficient cash flows to repay the amounts
subject to the write-off. However, financial assets that are written off could still be subject to enforcement
activities in order to comply with the Company’s procedures for recovery of amounts due.
If a write-off of financial assets is subsequently recovered, the recovery is credited to profit or loss in the period
in which the recovery occurs.
2021 ANNUAL REPORT 187
XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
10. Financial instruments (Continued)
(6) Transfer of financial assets
Transfer of financial assets refers to the transfer or delivery of financial assets to another party other than the
issuer of such financial assets (the transferee).
If the Company transfers substantially all the risks and rewards of ownership of the financial asset to the
transferee, the financial asset shall be derecognised. If the Company retains substantially all the risks and
rewards of ownership of a financial asset, the financial asset shall not be derecognised.
If the Company neither transfers nor retains substantially all the risks and rewards of ownership of the financial
asset, it accounts for the transaction as follows: if the Company does not retain control, it derecognises the
financial asset and recognises any resulting assets or liabilities; if the control over the financial asset is not
waived, the relevant financial asset is recognised according to the extent of its continuing involvement in the
transferred financial asset and the relevant liability is recognised accordingly.
(7) Offset of financial assets and financial liabilities
If the Company owns the legitimate rights of offsetting the recognised financial assets and financial liabilities,
which are enforceable currently, and the Company plans to realise the financial assets or to clear off the
financial liabilities on a net amount basis or simultaneously, the net amount of financial assets and financial
liabilities shall be presented in the balance sheet upon offsetting. Otherwise, financial assets and financial
liabilities are presented separately in the balance sheet without offsetting.
11. Inventories
(1) Classification of inventories
Inventories of the Company mainly include raw materials, work in progress, goods in stock, development
products, consumable biological assets, etc.
(2) Pricing of inventories dispatched
Inventories of the Company are measured at their actual cost when obtained. Cost of raw materials, goods in
stock and others will be calculated with weighted average method when being dispatched.
Consumable biological assets refer to biological assets held-for-sale which include growing timber. Consumable
biological assets without a stock are stated at historical cost at initial recognition, and subsequently measured
at fair value when there is a stock. Changes in fair values shall be recognised as profit or loss in the current
period. The cost of self-planting, self-cultivating consumable biological assets is the necessary expenses
directly attributable to such assets prior to canopy closure, including borrowing costs eligible for capitalisation.
Subsequent expenses such as maintenance cost incurred after canopy closure shall be included in profit or loss
for the current period.
The cost of consumable biological assets shall, at the time of harvest or disposal, be carried forward at carrying
amount using the stock volume proportion method.
188 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
11. Inventories (Continued)
(3) Recognition of net realisable value of inventories and provision for inventory impairment
Net realisable value of inventories refers to the amount of the estimated price of inventories less the estimated
cost incurred upon completion, estimated sales expenses and taxes and levies. The realisable value of
inventories shall be determined on the basis of definite evidence, purpose of holding the inventories and effect
of events after the balance sheet date.
At the balance sheet date, provision for inventory impairment is made when the cost is higher than the net
realisable value. The Company usually make provision for inventory impairment based on categories of
inventories. At the balance sheet date, in case the factors causing inventory impairment no longer exists, the
original provision for inventory impairment shall be reversed.
(4) Inventory stock taking system
The Company implements permanent inventory system as its inventory stock taking system.
(5) Amortisation of low-value consumables and packaging materials
The low-value consumables of the Company are amortised when issued for use.
Packaging materials for turnover are amortised when issued for use.
12. Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
The Company measures the relevant asset and liability at fair value, based on the presumption that the orderly
transaction to sell the asset or transfer the liability takes place either in the principal market for the relevant asset or
liability, or in the absence of a principal market, in the most advantageous market for relevant the asset or liability. The
principal or the most advantageous market must be a trading market accessible by the Company at the measurement
date. The Company adopts the presumption that market participants would use when pricing the asset or liability in
their best economic interest.
If there exists an active market for a financial asset or financial liability, the Company uses the quotation on the active
market as its fair value. If the market for a financial instrument is inactive, the Company uses valuation technique to
recognise its fair value.
Fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic
benefits by using the asset in its best use or by selling it to another market participant that would use the asset in its
best use.
The Company adopts valuation techniques that are appropriate in the current circumstance and for which sufficient
data and other information are available, prioritises the use of relevant observable inputs and uses unobservable
inputs only under the circumstances where such relevant observable inputs cannot be obtained or practicably
obtained.
2021 ANNUAL REPORT 189
XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
12. Fair value measurement (Continued)
Assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within
the fair value hierarchy based on the lowest level input that is significant to the fair value measurement as a whole.
Level 1: based on quoted prices (unadjusted) in active markets for identical assets or liabilities obtainable at the
measurement date. Level 2: observable inputs for the relevant asset or liability, either directly or indirectly, except for
Level 1 input. Level 3: unobservable inputs for the relevant assets or liability
At each balance sheet date, the Company reassesses assets and liabilities measured at fair value that are recognised
in the financial statements on a recurring basis to determine whether transfers have occurred between fair value
measurement hierarchy levels.
13. Long-term equity investments
Long-term equity investments include the equity investments in subsidiaries, joint ventures and associates. Associates
of the Company are those investees that the Company imposes significant influence over.
(1) Determination of initial investment cost
Long-term equity investments acquired through business combinations: for a long-term equity investment
acquired through a business combination involving enterprises under common control, the investment cost shall
be the absorbing party’s share of the carrying amount of the owners’ equity under the consolidated financial
statements of the ultimate controlling party on the date of combination. For a long-term equity investment
acquired through a business combination involving enterprises not under common control, the investment cost
of the long-term equity investment shall be the cost of combination.
Long-term equity investments acquired through other means: for a long-term equity investment acquired
by cash payment, the initial investment cost shall be the purchase cost actually paid; for a long-term equity
investment acquired by issuing equity securities, the initial investment cost shall be the fair value of equity
securities issued.
(2) Subsequent measurement and method for profit or loss recognition
Investments in subsidiaries shall be accounted for using the cost method. Except for the investments which
meet the conditions of holding for sale, investments in associates and joint ventures shall be accounted for
using the equity method.
For a long-term equity investment accounted for using the cost method, the cash dividends or profits declared
by the investees for distribution shall be recognised as investment gains and included in profit or loss for the
current period, except the case of receiving the actual consideration paid for the investment or the declared but
not yet distributed cash dividends or profits which is included in the consideration.
For a long-term equity investment accounted for using the equity method, where the initial investment cost
exceeds the investor’s interest in the fair value of the investee’s identifiable net assets at the acquisition date,
no adjustment shall be made to the investment cost of the long-term equity investment. Where the initial
investment cost is less than the investor’s interest in the fair value of the investee’s identifiable net assets at the
acquisition date, adjustment shall be made to the carrying amount of the long-term equity investment, and the
difference shall be charged to profit or loss for the current period.
190 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
13. Long-term equity investments (Continued)
(2) Subsequent measurement and method for profit or loss recognition (Continued)
Under the equity method, investment gain and other comprehensive income shall be recognised based on
the Company’s share of the net profits or losses and other comprehensive income made by the investee,
respectively. Meanwhile, the carrying amount of long-term equity investment shall be adjusted. The carrying
amount of long-term equity investment shall be reduced based on the Group’s share of profit or cash dividend
distributed by the investee. In respect of the other movement of net profit or loss, other comprehensive income
and profit distribution of investee, the carrying amount of long-term equity investment shall be adjusted and
included in the capital reserves (other capital reserves). The Group shall recognise its share of the investee’s net
profits or losses based on the fair values of the investee’s individual separately identifiable assets at the time of
acquisition, after making appropriate adjustments thereto according to the accounting policies and accounting
periods of the Company.
For additional equity investment made in order to obtain significant influence or common control over investee
without resulted in control, the initial investment cost under the equity method shall be the aggregate of
fair value of previously held equity investment and additional investment cost on the date of transfer. For
investments in non-trading equity instruments that were previously classified as at fair value through other
comprehensive income, the cumulative fair value changes associated with them that were previously included
in other comprehensive income are transferred to retained earnings upon the change to the equity method of
accounting.
In the event of loss of common control or significant influence over investee due to partial disposal of equity
investment, the remaining equity interest after disposal shall be accounted for according to the Accounting
Standard for Business Enterprises No. 22 – Recognition and measurement of Financial Instruments. The
difference between its fair value and carrying amount shall be included in profit or loss for the current period. In
respect of other comprehensive income recognised under previous equity investment using equity method, it
shall be accounted for in accordance with the same accounting treatment for direct disposal of relevant asset or
liability by investee at the time when equity method was ceased to be used. Movement of other owners’ equity
related to the previous equity investment shall be transferred to profit or loss for the current period.
In the event of loss of control over investee due to partial disposal of equity investment, the remaining equity
interest which can apply common control or impose significant influence over the investee after disposal shall
be accounted for using equity method. Such remaining equity interest shall be treated as accounting for using
equity method since it is obtained and adjustment was made accordingly. For the remaining equity interest
which cannot apply common control or impose significant influence over the investee after disposal, it shall be
accounted for using the Accounting Standard for Business Enterprises No. 22 – Recognition and measurement
of Financial Instruments. The difference between its fair value and carrying amount as at the date of losing
control shall be included in profit or loss for the current period.
If the shareholding ratio of the Company is reduced due to the capital increase of other investors, and as a
result, the Company loses the control of but still can apply common control or impose significant influence over
the investee, the net asset increase due to the capital increase of the investee attributable to the Company shall
be recognised according to the new shareholding ratio, and the difference with the original carrying amount of
the long-term equity investment corresponding to the shareholding ratio reduction part that should be carried
forward shall be recorded in the profit or loss for the current period; and then it shall be adjusted according to
the new shareholding ratio as if equity method is used for accounting when acquiring the investment.
2021 ANNUAL REPORT 191
XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
13. Long-term equity investments (Continued)
(2) Subsequent measurement and method for profit or loss recognition (Continued)
In respect of the transactions between the Company and its associates and joint ventures, the share of
unrealised gain or loss arising from internal transactions shall be eliminated by the portion attributable to the
Company. Investment gain or loss shall be recognised accordingly. However, any unrealised loss arising from
internal transactions between the Company and an investee is not eliminated to the extent that the loss is
impairment loss of the transferred assets.
(3) Basis for determining the common control and significant influence on the investee
Common control is the contractually agreed sharing of control over an arrangement, which relevant activities
of such arrangement must be decided by unanimously agreement from parties who share control. When
determining if there is any common control, it should first be identified if the arrangement is controlled by
all the participants or the group consisting of the participants, and then determined if the decision on the
arranged activity can be made only with the unanimous consent of the participants sharing the control. If all the
participants or a group of participants can only decide the relevant activities of certain arrangement through
concerted action, it can be considered that all the participants or a group of participants share common
control on the arrangement. If there are two or more participant groups that can collectively control certain
arrangement, it does not constitute common control. When determining if there is any common control, the
relevant protection rights will not be taken into account.
Significant influence is the power of the investor to participate in the financial and operating policy decisions
of an investee, but to fail to control or joint control the formulation of such policies together with other parties.
When determining if there is any significant influence on the investee, the influence of the voting shares of the
investee held by the investor directly and indirectly and the potential voting rights held by the investor and
other parties which are exercisable in the current period and converted to the equity of the investee, including
the warrants, stock options and convertible bonds that are issued by the investee and can be converted in the
current period, shall be taken into account.
When the Company holds directly or indirectly through the subsidiary 20% (inclusive) to 50% of the voting
shares of the investee, it is generally considered to have significant influence on the investee, unless there is
concrete evidence to prove that it cannot participate in the production and operation decision-making of the
investee and cannot pose significant influence in this situation. When the Company owns less than 20% of the
voting shares of the investee, it is generally considered that it has not significantly influenced on the investee,
unless there is concrete evidence to prove that it can participate in the production and operation decision-
making of the investee and cannot pose significant influence in this situation.
(4) Held-for-sale equity investments
The equity investments to associates or joint ventures are all or partially classified as assets held for sale.
The remaining equity investments that are not classified as assets held for sale shall be accounted for using
equity method.
The equity investments to associates or joint ventures already classified as held for sale no longer meet the
conditions of assets held for sale shall be adjusted retroactively using equity method from the date of being
classified as assets held for sale.
192 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
13. Long-term equity investments (Continued)
(5) Impairment test method and Impairment provision
For the method for making impairment provision for the investment in subsidiaries, associates and joint
ventures, please refer to Note V. 20.
14. Investment property
Investment property refers to real estate held to earn rentals or for capital appreciation, or both. The investment
property of the Company includes leased land use rights, land use rights held for sale after appreciation, and leased
buildings.
The investment property of the Company is measured initially at cost upon acquisition, and subject to depreciation or
amortisation in the relevant periods according to the relevant provisions on fixed assets or intangible assets.
For the method for making impairment provision for the investment property adopted cost method for subsequent
measurement, please refer to Note V. 20.
When an investment property is sold, transferred, retired or damaged, the amount of proceeds on disposal of the
property net of the carrying amount and related tax and surcharges is recognised in profit or loss for the current
period.
15. Fixed assets
(1) Conditions for recognition
Fixed assets represent the tangible assets held by the Company using in the production of goods, rendering of
services and for operation and administrative purposes with useful life over one year.
Fixed assets are recognised when it is probable that the related economic benefits will flow to the Company and
the costs can be reliably measured.
The Company’s fixed assets are initially measured at the actual cost at the time of acquisition.
Subsequent expenditures incurred for a fixed asset are included in the cost of the fixed asset when it is probable
that the associated economic benefits will flow to the Company and the related cost can be reliably measured.
The cost of routine repairs of fixed assets that do not qualify as capitalised subsequent expenditure is charged
to current profit or loss or included in the cost of the related assets in accordance with the beneficiary object
when incurred. The carrying amount of the replaced part is derecognised.
2021 ANNUAL REPORT 193
XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
15. Fixed assets (Continued)
(2) Depreciation method
The Company adopts the straight-line method for depreciation. Provision for depreciation will be started
when the fixed asset reaches its expected usable state, and stopped when the fixed asset is derecognised
or classified as a non-current asset held for sale. Without regard to the depreciation provision, the Company
determines the annual depreciation rate by category, estimated useful lives and estimated residual value of the
fixed assets as below:
Useful lives of Estimated Annual
depreciation residual depreciation
Category Depreciation method (Year) value (%) rate (%)
Housing and building structure Straight-line method 20-40 5-10 2.25-4.75
Machinery and equipment Straight-line method 8-20 5-10 4.50-11.88
Transportation equipment Straight-line method 5-8 5-10 11.25-19.00
Electronic equipment and
others Straight-line method 5 5-10 18.00-19.00
Where, for the fixed assets for which impairment provision is made, to determine the depreciation rate, the
accumulated amount of the fixed asset impairment provision that has been made shall be deducted.
(3) The impairment test method and impairment provision method of the fixed assets are set out in Note V. 20.
(4) The Company will re-check the useful lives, estimated net residual value and depreciation method of the
fixed assets at the end of each year.
When there is any difference between the useful lives estimate and the originally estimated value, the useful
lives of the fixed asset shall be adjusted. When there is any difference between the estimated net residual value
estimate and the originally estimated value, the estimated net residual value shall be adjusted.
(5) Disposal of fixed assets
A fixed asset is derecognised on disposal or when it is expected that there shall be no economic benefit arising
from using or after disposal. Where the fixed assets are sold, transferred, retired or damaged, the income
received after disposal after deducting the carrying amount and related taxes are recognised in profit or loss for
the current period.
194 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
16. Construction in progress
Construction in progress of the Company is recognised based on the actual construction cost, including all necessary
expenditures incurred for construction projects, capitalised borrowing costs for the construction in progress before it
has reached the working condition for its intended use, and other related expenses during the construction period.
A construction in progress is reclassified to fixed assets when it has reached the working condition for its intended
use.
The method for impairment provision of construction in progress is set out in Note V. 20.
17. Borrowing costs
(1) Recognition principle for the capitalisation of the borrowing costs
The borrowing costs incurred by the Company directly attributable to the acquisition, construction or production
of a qualifying asset will be capitalised and included in the cost of relevant asset. Other borrowing costs will be
recognised as expenses when incurred according to the incurred amount, and included in the profit or loss for
the current period. When the borrowing costs meet all the following conditions, capitalisation shall be started:
The capital expenditure has been incurred, which includes the expenditure incurred by paying cash,
transferring non-cash assets or undertaking interest-bearing liabilities for acquiring, constructing or
producing the qualifying assets;
The borrowing costs have been incurred;
The acquisition, construction or production activity necessary for the asset to be ready for its intended
use or sale has been started.
(2) Capitalisation period of borrowing costs
When a qualifying asset acquired, constructed or produced by the Company is ready for its intended use or
sale, the capitalisation of the borrowing costs shall discontinue. The borrowing costs incurred after a qualifying
asset is ready for its intended use or sale shall be recognised as expenses when incurred according to the
incurred amount, and included in the profit or loss for the current period.
Capitalisation of borrowing costs shall be suspended during periods in which the acquisition, construction or
production of a qualifying asset is interrupted abnormally, when the interruption is for a continuous period of
more than 3 months. The capitalisation of the borrowing costs shall be continued in the normal interruption
period.
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V. Significant Accounting Policies and Accounting Estimates (Continued)
17. Borrowing costs (Continued)
(3) Calculation methods for capitalisation rate and capitalised amount of the borrowing costs
Where funds are borrowed for a specific purpose, the amount of interest to be capitalised shall be the actual
interest expense incurred on that borrowing for the period less any bank interest earned from depositing the
borrowed funds before being used into banks or any investment income on the temporary investment of those
funds. Where funds are borrowed for general purpose, the Company shall determine the amount of interest
to be capitalised on such borrowings by applying a capitalisation rate to the weighted average of the excess
amounts of cumulative expenditures on the asset over and above the amounts of specific-purpose borrowings.
The capitalisation rate shall be the weighted average of the interest rates applicable to the general-purpose
borrowings.
During the capitalisation period, exchange differences on a specific purpose borrowing denominated in foreign
currency shall be capitalised. Exchange differences related to general-purpose borrowings denominated in
foreign currency shall be included in profit or loss for the current period.
18. Right-of-use assets
Conditions for recognition of right-of-use assets.
Right-of-use assets are defined as the right of underlying assets in the lease term for the Company as a lessee.
Right-of-use assets are initially measured at cost at the commencement date of the lease. The cost includes the
amount of the initial measurement of lease liability; lease payments made at or before the inception of the lease
less any lease incentives enjoyed; initial direct costs incurred by the Company as lessee; costs to be incurred in
dismantling and removing the underlying assets, restoring the site on which it is located or restoring the underlying
asset to the condition required by the terms and conditions of the lease incurred by the Company as lessee. As
a lessee, the Company recognises and measures the costs of dismantling and restoration in accordance with the
Accounting Standard for Business Enterprises No. 13 – Contingencies. Subsequently, the lease liability is adjusted for
any remeasurement of the lease liability.
Depreciation method of right-of-use assets
The Company uses the straight-line method for depreciation. Where the Company, as a lessee, is reasonably certain
to obtain ownership of the leased asset at the end of the lease term, such asset is depreciated over the remaining
useful life of the leased asset. Where ownership of the lease assets during the lease term cannot be reasonably
determined, right-of-use assets are depreciated over the lease term or the remainder of useful lives of the lease
assets, whichever is shorter.
For the methods of impairment test and impairment provision of right-of-use assets, please refer to Note V. 20.
196 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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V. Significant Accounting Policies and Accounting Estimates (Continued)
19. Intangible assets
The intangible assets of the Company include land use rights, software and certificates of third party right.
The intangible asset is initially measured at cost, and its useful life is determined upon acquisition. If the useful life
is finite, the intangible asset will be amortised over the estimated useful life using the amortisation method that
can reflect the estimated realisation of the economic benefits related to the asset, starting from the time when it is
available for use. If it is unable to reliably determine the estimated realisation, straight-line method shall be adopted
for amortisation. The intangible assets with uncertain useful life will not be amortised.
The amortisation methods for the intangible assets with finite useful life are as follows:
Method of
Type Useful life (year) amortisation Remark
Land use rights 50-70 Straight-line method
Software 5-10 Straight-line method
Certificates of third party right 3 Straight-line method
The Company reviews the useful life and amortisation method of the intangible assets with finite useful life at the end
of each year. If it is different from the previous estimates, the original estimates will be adjusted, and will be treated as
a change in accounting estimate.
If it is estimated on the balance sheet date that certain intangible asset can no longer bring future economic benefit
to the company, the carrying amount of the intangible asset will be entirely transferred into the profit or loss for the
current period.
The impairment method for the intangible assets is set out in Note V. 20.
20. Asset impairment
Impairment of long-term equity investments in subsidiaries, associates and joint ventures, asset impairment on
investment property, fixed assets, construction in progress, materials for project, right-of-use assets, intangible
assets, goodwill and others (excluding inventories, deferred tax assets and financial assets) subsequently measured
at cost is determined as follows:
The Company determines if there is any indication of asset impairment as at the balance sheet date. If there is any
evidence indicating that an asset may be impaired, recoverable amount shall be estimated for impairment test.
Goodwill arising from business combinations, intangible assets with an indefinite useful life and intangible assets not
ready for use will be tested for impairment annually, regardless of whether there is any indication of impairment.
2021 ANNUAL REPORT 197
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V. Significant Accounting Policies and Accounting Estimates (Continued)
20. Asset impairment (Continued)
The recoverable amount of an asset is the higher of its fair value less costs of disposal and the present value of the
future cash flows expected to be derived from the asset. The Company estimates the recoverable amount of an
individual asset. If it is not possible to estimate the recoverable amount of the individual asset, the Company shall
determine the recoverable amount of the asset group to which the asset belongs. The determination of an asset group
is based on whether major cash inflows generated by the asset group are independent of the cash inflows from other
assets or asset groups.
When the recoverable amount of an asset or an asset group is less than its carrying amount, the carrying amount is
reduced to its recoverable amount. The reduction amount is charged to profit or loss and an impairment provision is
made accordingly.
For the purpose of impairment test of goodwill, the carrying amount of goodwill acquired in a business combination is
allocated to the relevant asset groups on a reasonable basis from the acquisition date; where it is difficult to allocate
to the related asset groups, it is allocated to the combination of related asset groups. The related asset groups or
combination of asset groups are those which can benefit from the synergies of the business combination and are not
larger than the reportable segments identified by the Company.
In the impairment test, if there is any indication that an asset group or a combination of asset groups related to
goodwill may be impaired, the Group first tests the asset group or set of asset groups excluding goodwill for
impairment, calculates the recoverable amount and recognises the corresponding impairment loss. An impairment test
is then carried out on the asset group or combination of asset groups containing goodwill by comparing its carrying
amount with its recoverable amount. If the recoverable amount is lower than the carrying amount, an impairment loss
is recognised for goodwill.
An impairment loss recognised shall not be reversed in a subsequent period.
21. Long-term prepaid expenses
The long-term prepaid expenses incurred by the Company shall be recognised based on the actual cost, and evenly
amortised over the estimated benefit period. For the long-term prepaid expense that cannot benefit the subsequent
accounting periods, its value after amortisation shall be entirely included in the profit or loss for the current period.
22. Employee benefits
(1) Scope of employee benefits
Employee benefits are all forms of considerations or compensation given by an entity in exchange for
services rendered by employees or for the termination of employment. Employee benefits include short-term
staff remuneration, post-employment benefits, termination benefits and other long-term employee benefits.
Employee benefits include benefits provided to employees’ spouses, children, other dependants, survivors of
the deceased employees and other beneficiaries.
Employee benefits are presented as “employee benefits payable” and “long-term employee benefits payable” in
the balance sheet, respectively, according to liquidity.
198 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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V. Significant Accounting Policies and Accounting Estimates (Continued)
22. Employee benefits (Continued)
(2) Short-term staff remuneration
Employee wages or salaries actually incurred, bonuses, and social insurance contributions such as medical
insurance, work injury insurance, maternity insurance, and housing fund, contributed at the applicable
benchmarks and rates, are recognised as a liability as the employees provide services, with a corresponding
charge to profit or loss or included in the cost of assets where appropriate. Where the payment of liability is
expected not to be fully settled within 12 months after the end of the annual reporting period in which the
employees render the related services, and the financial impact would be material, these liabilities are measured
at their discounted values.
(3) Post-employment benefits
Post-employment benefit plans include defined contribution plans and defined benefit plans. A defined
contribution plan is a post-employment benefit plan under which the Group pays fixed contributions into
a separate fund and the Group has no further obligations for payment. A defined benefit plan is a post-
employment benefit plan other than a defined contribution plan.
Defined contribution plans
Defined contribution plans include basic pension insurance and unemployment insurance.
During the accounting period in which an employee provides service, the amount payable calculated according
to the defined contribution plan is recognised as a liability and included in the profit or loss for the current period
or the cost of relevant assets.
(4) Termination benefits
When the Company provides termination benefits to employees, employee benefits liabilities arising from
termination benefits are recognised in profit or loss for the current period at the earlier of the following dates:
when the Company cannot revoke unilaterally compensation for dismissal due to the cancellation of labour
relationship plans and employee redundant proposals; the Company recognises cost and expenses related to
payment of compensation for dismissal and restructuring.
For the early retirement plans, economic compensations before the actual retirement date were classified as
termination benefits. During the period from the date of cease of render of services to the actual retirement
date, relevant wages and contribution to social insurance for the employees proposed to be paid are recognised
in profit or loss on a one-off basis. Economic compensation after the official retirement date, such as normal
pension, is accounted for as post-employment benefits.
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V. Significant Accounting Policies and Accounting Estimates (Continued)
23. Provisions
Obligations pertinent to the contingencies which satisfy the following conditions are recognised as provisions:
(1) the obligation is a current obligation borne by the Company;
(2) it is likely that an outflow of economic benefits from the Company will be resulted from the performance of the
obligation;
(3) the amount of the obligation can be reliably measured.
The provisions shall be initially measured based on the best estimate for the expenditure required for the performance
of the current obligation, after taking into account relevant risks, uncertainties, time value of money and other
factors pertinent to the contingencies. If the time value of money has significant influence, the best estimates shall
be determined after discounting the relevant future cash outflow. The Company reviews the carrying amount of the
provisions on the balance sheet date and adjust the carrying amount to reflect the current best estimates.
If all or some expenses incurred for settlement of recognised provisions are expected to be borne by the third party,
the compensation amount shall, on a recoverable basis, be recognised as asset separately, and compensation
amount recognised shall not be more than the carrying amount of provisions.
24. Share-based payments
(1) Category of share-based payment
The Company’s share-based payment is either equity-settled or cash-settled.
(2) Determination of fair value of equity instruments
For the existence of an active market for options and other equity instruments granted by the Company, the
fair value is determined at the quoted price in the active market. For options and other equity instruments with
no active market, option pricing model shall be used to estimate the fair value of the equity instruments. The
following factors shall be taken into account using option pricing models: A. the exercise price of the option; B.
the validity period of the option; C. the current market price of the share; D. the expected volatility of the share
price; E. predicted dividend of the share; and F. risk-free rate of the option within the validity period.
(3) Recognition of vesting of equity instruments based on the best estimate
On each balance sheet date within the vesting period, the estimated number of equity instruments expected to
vest is revised based on the best estimate made by the Company according to the latest available subsequent
information as to changes in the number of employees with exercisable rights. On the vesting date, the final
estimated number of equity instruments expected to vest should equal the actual number of equity instruments
expected to vest.
200 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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V. Significant Accounting Policies and Accounting Estimates (Continued)
24. Share-based payments (Continued)
(4) Accounting treatment of implementation, modification and termination of share-based payment
Equity-settled share-based payment shall be measured at the fair value of the equity instruments granted to
employees. For those may immediately vest after the grant, the fair value of equity instrument at the grant date
shall be included in the relevant costs or expenses, and the capital reserve shall be increased accordingly.
If the right may not be exercised until the vesting period comes to an end or until the specified performance
conditions are met, within the vesting period, the services obtained in the current period shall, based on the
best estimate of the number of vested equity instruments, be included in the relevant costs or expenses and the
capital reserve at the fair value of the equity instrument at the grant date. After the vesting period, relevant costs
or expenses and total shareholders’ equity which have been recognised will not be adjusted.
Cash-settled share-based payment shall be measured in accordance with the fair value of liability calculated
and recognised based on the shares or other equity instruments undertaken by the Company. For those may
immediately vest after the grant, the fair value of the liability undertaken by the Company shall, on the date
of the grant, be included in the relevant costs or expenses, and the liabilities shall be increased accordingly.
If the right may not be exercised until the vesting period comes to an end or until the specified performance
conditions are met, within the vesting period, the services obtained in the current period shall, based on the
best estimate of the information about the exercisable right, be included in the relevant costs or expenses and
the corresponding liabilities at the fair value of the liability undertaken by the Company. For each of the balance
sheet date and settlement date before the settlement of the relevant liabilities, fair value of the liabilities shall be
remeasured and the changes will be included in the profit or loss for the current period.
When there are changes in Company’s share-based payment plans, if the modification increases the fair value
of the equity instruments granted, corresponding recognition of service increase in accordance with the increase
in the fair value of the equity instruments; if the modification increases the number of equity instruments
granted, the increase in fair value of the equity instruments is recognised as a corresponding increase in service
achieved. Increase in the fair value of equity instruments refer to the difference between the fair values of the
modified date. If the modification reduces the total fair value of shares paid or not conductive to the use of other
employees share-based payment plans to modify the terms and conditions of service, it will continue to be
accounted for in the accounting treatment, as if the change had not occurred, unless the Company cancelled
some or all of the equity instruments granted.
During the vesting period, if the cancelled equity instruments (except for failure to meet the conditions of the
non-market vesting conditions) granted by the Company to cancel the equity instruments granted amount
treated as accelerated vesting of the remaining period should be recognised immediately in profit or loss, while
recognising capital reserves. If employees or other parties can choose to meet non-vesting conditions but they
are not met in the vesting period, the Company will treat them as cancelled equity instruments granted.
25. Preference Shares, Perpetual Bonds and other financial instruments
(1) Classification of financial liabilities and equity instruments
Financial instruments issued by the Company are classified into financial assets, financial liabilities or equity
instruments on the basis of the substance of the contractual arrangements and the economic nature not only
its legal form, together with the definition of financial asset, financial liability and equity instruments on initial
recognition.
2021 ANNUAL REPORT 201
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V. Significant Accounting Policies and Accounting Estimates (Continued)
25. Preference Shares, Perpetual Bonds and other financial instruments (Continued)
(2) Accounting treatment of preference shares, perpetual bonds and other financial instruments
Financial instruments issued by the Company are initially recognised and measured in accordance with the
financial instrument standards; thereafter, interest or dividends are accrued on each balance sheet date
and accounted for in accordance with relevant specific ASBEs, i.e. to determine the accounting treatment
for interest expenditure or dividend distribution of the instrument based on the classification of the financial
instrument issued. For financial instruments classified as equity instruments, their interest expenses or dividend
distributions are treated as profit distribution of the Company, and their repurchases and cancellations are
treated as changes in equity; for financial instruments classified as financial liabilities, their interest expenses or
dividend distribution are in principle accounted for with reference to borrowing costs, and the gains or losses
arising from their repurchases or redemption are included in the profit or loss for the current period.
For the transaction costs such as fees and commissions incurred by the Company for issuing financial
instruments, if such financial instruments are classified as debt instruments and measured at amortised cost,
they are included in the initial measured amount of the instruments issued; if such financial instruments are
classified as equity instruments, they are deducted from equity.
26. Revenue
(1) General principles
The Company recognises revenue when it satisfies a performance obligation in the contract, i.e. when the
customer obtains control of the relevant goods or services.
Where a contract has two or more performance obligations, the Company allocates the transaction price to
each performance obligation based on the percentage of respective unit price of goods or services guaranteed
by each performance obligation, and recognises as revenue based on the transaction price that is allocated to
each performance obligation.
If one of the following conditions is fulfilled, the Company performs its performance obligation within a certain
period; otherwise, it performs its performance obligation at a point of time:
when the customer simultaneously receives and consumes the benefits provided by the Company when
the Company performs its obligations under the contract;
when the customer is able to control the goods in progress in the course of performance by the Company
under the contract;
when the goods produced by the Company under the contract are irreplaceable and the Company has
the right to payment for performance completed to date during the whole contract term.
For performance obligations performed within a certain period, the Company recognises revenue by measuring
the progress towards complete of that performance obligation within that certain period. When the progress
of performance cannot be reasonably determined, if the costs incurred by the Company are expected to
be compensated, the revenue shall be recognised at the amount of costs incurred until the progress of
performance can be reasonably determined.
202 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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V. Significant Accounting Policies and Accounting Estimates (Continued)
26. Revenue (Continued)
(1) General principles (Continued)
For performance obligation performed at a point of time, the Company recognises revenue at the point of time
at which the customer obtains control of relevant goods or services. To determine whether a customer has
obtained control of goods or services, the Company considers the following indications:
The Company has the current right to receive payment for the goods, which is when the customer has the
current payment obligations for the goods.
The Company has transferred the legal title of the goods to the customer, which is when the client
possesses the legal title of the goods.
The Company has transferred the physical possession of goods to the customer, which is when the
customer obtains physical possession of the goods.
The Company has transferred all of the substantial risks and rewards of ownership of the goods to the
customer, which is when the customer obtain all of the substantial risks and rewards of ownership of the
goods to the customer.
The customer has accepted the goods.
Other information indicates that the customer has obtained control of the goods.
The Company’s right to consideration in exchange for goods or services that the Company has transferred to
customers (and such right depends on factors other than passage of time) is accounted for as contract assets,
and contract assets are subject to impairment based on ECLs (Note VII. 47). The Company’s unconditional
right to receive consideration from customers (only depends on passage of time) is accounted for as accounts
receivable. The Company’s obligation to transfer goods or services to customers for which the Company has
received or should receive consideration from customers is accounted for as contract liabilities.
Contract assets and contract liabilities under the same contract are presented on a net basis. Where the net
amount has a debit balance, it is presented in “contract assets” or “other non-current assets” according to its
liquidity. Where the net amount has a credit balance, it is presented in “contract liabilities” or “other non-current
liabilities” according to its liquidity.
(2) Specific methods
Specific method for revenue recognition of machine-made paper business of the Company: in terms of
domestic sales of machine-made paper, revenue is recognised when goods are delivered to the customers and
such deliveries are confirmed; while in terms of overseas sales of machine-made paper, revenue is recognised
on the day when goods are loaded on board and declared.
Specific method for recognition of finance lease income of the Company: according to the repayment schedule,
the income is recognised by instalments according to the effective interest rate.
Specific method for recognition of revenue from real estate of the Company: revenue is recognised by
amortising the rental income on a straight-line basis over the lease term.
2021 ANNUAL REPORT 203
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V. Significant Accounting Policies and Accounting Estimates (Continued)
27. Government grants
A government grant is recognised when the grant will be received and that the Company will comply with the
conditions attaching to the grant.
If a government grant is in the form of a monetary asset, it is measured at the amount received or receivable. If a
government grant is in the form of non-monetary asset, it is measured at fair value; if the fair value cannot be obtained
in a reliable way, it is measured at the nominal amount of RMB1.
Government grants obtained for acquisition or construction of long-term assets or other forms of long-term asset
formation are classified as government grants related to assets, while the remaining government grants are classified
as government grants related to revenue.
Regarding the government grant not clearly defined in the official documents and can form long-term assets, the
part of government grant which can be referred to the value of the assets is classified as government grant related
to assets and the remaining part is government grant related to revenue. For the government grant that is difficult to
distinguish, the entire government grant is classified as government grant related to revenue.
A government grant related to an asset shall be recognised as deferred income, and evenly amortised to profit or loss
over the useful life of the asset in a reasonable and systematic manner. For a government grant related to revenue,
if the grant is a compensation for related costs, expenses or losses incurred, the grant shall be recognised in profit
or loss for the current period; if the grant is a compensation for related costs, expenses or losses to be incurred
in subsequent periods, the grant shall be recognised as deferred income, and recognised in profit or loss over the
periods in which the related costs, expenses or losses are recognised. A government grant measured at nominal
amount is directly included in profit or loss for the current period. The Company adopts a consistent approach to the
same or similar government grants.
A government grant related to daily activities is recognised in other gains relying on the essence of economic
business; otherwise, recognised in non-operating income or non-operating expenses.
For the repayment of a government grant already recognised, if there is any related deferred income, the repayment
shall be off set against the carrying amount of the deferred income, and any excess shall be recognised in profit or
loss for the current period; otherwise, the repayment shall be recognised immediately in profit or loss for the current
period.
For the policy preferential interest subsidy, if it is provided by the financial authority through banks, it is recognised
at the amount of borrowings actually received, and the borrowings costs are calculated based on the principal
of the borrowings and the policy preferential interest rate; if it is provided by the financial authority directly, the
corresponding interest will be used to offset the relevant borrowing expenses.
28. Deferred income tax assets/deferred income tax liabilities
Income tax comprises current income tax expense and deferred income tax expense, which are included in profit or
loss for the current period as income tax expenses, except for deferred tax related to transactions or events that are
directly recognised in owners’ equity which are recognised in owners’ equity, and deferred tax arising from a business
combination, which is adjusted against the carrying amount of goodwill.
Temporary differences arising from the difference between the carrying amount of an asset or liability and its tax base
at the balance sheet date of the Company shall be recognised as deferred income tax using the balance sheet liability
method.
204 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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V. Significant Accounting Policies and Accounting Estimates (Continued)
28. Deferred income tax assets/deferred income tax liabilities (Continued)
All the taxable temporary differences are recognised as deferred income tax liabilities except for those incurred in the
following transactions:
(1) The initial recognition of goodwill, and the initial recognition of an asset or liability in a transaction which is
neither a business combination nor affects accounting profit or taxable profit (or deductible loss) when the
transaction occurs;
(2) The taxable temporary differences associated with investments in subsidiaries, associates and joint ventures,
and the Company is able to control the timing of the reversal of the temporary difference and it is probable that
the temporary difference will not reverse in the foreseeable future.
The Company recognises a deferred income tax asset for the carry forward of deductible temporary differences,
deductible losses and tax credits to subsequent periods, to the extent that it is probable that future taxable profits
will be available against which the deductible temporary differences, deductible losses and tax credits can be utilised,
except for those incurred in the following transactions:
(1) The transaction is neither a business combination nor affects accounting profit or taxable profit (or deductible
loss) when the transaction occurs;
(2) The deductible temporary differences associated with investments in subsidiaries, associates and joint ventures,
the corresponding deferred income tax asset is recognised when both of the following conditions are satisfied:
it is probable that the temporary difference will reverse in the foreseeable future, and it is probable that taxable
profits will be available in the future, against which the temporary difference can be utilised.
At the balance sheet date, deferred income tax assets and deferred income tax liabilities are measured at the tax
rates that are expected to apply to the period when the asset is realised or the liability is settled, and their tax effect is
reflected accordingly.
At the balance sheet date, the Company reviews the carrying amount of a deferred income tax asset. If it is probable
that sufficient taxable profits will not be available in future periods to allow the benefit of the deferred tax asset to be
utilised, the carrying amount of the deferred tax asset is reduced. Any such reduction in amount is reversed when it
becomes probable that sufficient taxable profits will be available.
29. Lease
(1) Identification of leases
On the beginning date of the contract, the Company (as a lessee or lessor) assesses whether the customer in
the contract has the right to obtain substantially all of the economic benefits from use of the identified asset
throughout the period of use and has the right to direct the use of the identified asset throughout the period of
use. If a contract conveys the right to control the use of an identified asset and multiple identified assets for a
period of time in exchange for consideration, the Company identifies such contract is, or contains, a lease.
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V. Significant Accounting Policies and Accounting Estimates (Continued)
29. Lease (Continued)
(2) The Company as lessee
On the beginning date of the lease, the Company recognises right-of-use assets and lease liabilities for all
leases, except for short-term lease and low-value asset lease with simplified approach.
The accounting policy for right-of-use assets is set out in Note V. 18.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
beginning date of the lease using the interest rate implicit in the lease. Where the interest rate implicit in the
lease cannot be determined, the incremental borrowing rate is used as the discount rate. Lease payments
include fixed payments and in-substance fixed payments, less any lease incentives receivable; variable
lease payments that are based on an index or a rate; the exercise price of a purchase option if the lessee is
reasonably certain to exercise that option; payments for terminating the lease, if the lease term reflects the
lessee exercising that option of terminating; and amounts expected to be payable by the lessee under residual
value guarantees. Subsequently, the interest expense on the lease liability for each period during the lease term
is calculated using a constant periodic rate of interest and is recognised in profit or loss for the current period.
Variable lease payments not included in the measurement of lease liabilities are charged to profit or loss in the
period in which they actually arise. The Company calculates the interest expense of the lease liability for each
period of the lease term based on the fixed periodic interest rate and is included in the current profit and loss.
The variable lease payments that are not included in the measurement of the lease liability are recognised in
profit or loss when incurred.
Short-term lease
Short-term leases refer to leases with a lease term of less than 12 months from the commencement date,
except for those with a purchase option.
Lease payments on short-term leases are recognised in the cost of related assets or current profit or loss on a
straight-line basis over the lease term.
For short-term leases, the Company chooses to adopt the above simplified approach for the following types of
assets that meet the conditions of short-term lease according to the classification of leased assets.
Low-value equipment
Transportation vehicles
206 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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V. Significant Accounting Policies and Accounting Estimates (Continued)
29. Lease (Continued)
(2) The Company as lessee (Continued)
Low-value asset lease
A low-value asset lease is a lease that the value of a single leased asset is below RMB40,000 when it is a new
asset.
Lease payments on low-value asset leases are recognised on a straight-line basis over the lease term, and
either included in the cost of the related asset or charged to profit or loss for the current period.
For a low-value asset lease, the Company chooses the above simplified approach based on the specific
circumstances of each lease.
Lease modification
The Company accounts for a lease modification as a separate lease when the modification occurs and the
following conditions are met: the lease modification expands the scope of lease by adding the right to use
one or more of the leased assets; and the increase in consideration is equivalent to the separate price for the
expanded scope of lease adjusted for that contractual situation.
Where a lease modification is not accounted for as a separate lease, at the effective date of the lease
modification, the Company reallocates the consideration of the modified contract, redetermines the lease term
and remeasures the lease liability based on the present value of the lease payments after the modification and
the revised discount rate.
If a lease modification results in a reduction in the scope of the lease or a shortening of the lease term, the
Company reduces the carrying amount of the right-of-use asset accordingly and includes in the profit or loss for
the period the gain or loss associated with the partial or complete termination of the lease.
Where other lease modifications result in a remeasurement of the lease liability, the Company adjusts the
carrying amount of the right-of-use asset accordingly.
(3) The Company as lessor
When the Company is a lessor, a lease is classified as a finance lease whenever the terms of the lease transfer
substantially all the risks and rewards of asset ownership to the lessee. All leases other than financial leases are
classified as operating leases.
2021 ANNUAL REPORT 207
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V. Significant Accounting Policies and Accounting Estimates (Continued)
29. Lease (Continued)
(3) The Company as lessor (Continued)
Finance leases
Under finance leases, the Company accounts for finance lease receivables at the beginning of the lease term
at the net lease investment, which is the sum of the unsecured residual value and the present value of the
lease receipts outstanding at the commencement date of the lease, discounted at the interest rate implicit in
the lease. The Company as lessor calculates and recognises interest income for each period of the lease term
based on a fixed periodic interest rate. Variable lease payments acquired by the Company as lessor that are not
included in the net measurement of lease investments are included in profit or loss for the period when they are
actually incurred.
Derecognition and impairment of finance lease receivables are accounted for in accordance with the
requirements under the Accounting Standard for Business Enterprises No. 22 – Recognition and Measurement
of Financial Instruments and the Accounting Standards for Business Enterprises No. 23 – Transfer of Financial
Assets.
Operating lease
Lease payments under operating leases are recognised in profit or loss on a straight-line basis over the lease
term. Initial direct costs incurred in relation to operating leases are capitalised and amortised over the lease term
on the same basis as rental income and recognised in profit or loss for the current period. The variable lease
payments obtained in relation to operating leases that are not included in the lease payments are recognised in
profit or loss in the period in which they actually incurred.
Lease modification
The Company accounts for a modification in an operating lease as a new lease from the effective date of the
modification and the amount of lease receipts received in advance or receivable in respect of the lease prior to
the modification is treated as a receipt under the new lease.
The Company accounts for a modification in a finance lease as a separate lease when the change occurs and
the following conditions are met: the modification expands the scope of lease by adding the right to use one
or more of the leased assets; and the increase in consideration is equivalent to the separate price for the
expanded scope of lease adjusted for that contractual situation.
Where a finance lease is modified and not accounted for as a separate lease, the Company accounts for the
modified lease in the following circumstances: If the modification takes effect on the lease commencement
date, the lease will be classified as an operating lease, the Company will account for it as a new lease from the
effective date of the lease modification, and use the net lease investment before the effective date of the lease
modification; If the modification takes effect on the lease commencement date, the lease will be classified
as a finance lease, and the Company will conduct accounting treatment in accordance with the Accounting
Standards for Business Enterprises No. 22 – Recognition and Measurement of Financial Instruments on
modifying or renegotiating contracts.
208 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
29. Lease (Continued)
(4) Sublease
When the Company is an intermediate lessor, the sublease is classified with reference to the right-of-use assets
arising from the head lease. If the head lease is a short-term lease for which the Company adopts a simplified
approach, then the Company classifies the sublease as an operating lease.
(5) Sale and leaseback
The lessee and the lessor shall assess and determine whether the transfer of assets in a sale and leaseback
transaction is a sale in accordance with the requirements of the Accounting Standard for Business Enterprises
No. 14 – Revenue.
Where asset transfer under the sale and leaseback transactions is a sale, the lessee shall measure the right-
of-use assets created by the sale and leaseback based on the portion of carrying amount of the original
assets related to right of use obtained upon leaseback, and only recognise relevant profit or loss for the right
transferred to the lessor. The lessor shall account for the purchase of assets in accordance with other applicable
ASBEs and account for the lease of assets in accordance with this standard.
Where asset transfer under the sale and leaseback transactions is not a sale, the lessee shall continue to
recognise the transferred assets while recognising a financial liability equal to the transfer income and account
for such liability according to the Accounting Standard for Business Enterprises No. 22 – Recognition and
Measurement of Financial Instruments; or not to recognise the transferred assets but recognise a financial asset
equal to the transfer income and account for such asset according to the Accounting Standard for Business
Enterprises No. 22 – Recognition and Measurement of Financial Instruments.
30. Critical accounting judgments and estimates
The Company gives continuous assessment on, among other things, the reasonable expectations of future events
and the critical accounting estimates and key assumptions adopted according to its historical experience and other
factors. The critical accounting estimates and key assumptions that are likely to lead to significant adjustment risks of
the carrying amount of assets and liabilities for the next financial year are listed as follows:
Classification of financial assets
Significant judgements involved in determining the classification of financial assets include the analysis of business
models and contractual cash flow characteristics.
Factors considered by the Company in determining the business model for a group of financial assets include how the
asset’s performance is evaluated and reported to key management personnel, how risks are assessed and managed
and how the relevant management personnel are compensated.
When the Company assesses whether the contractual cash flows of the financial assets are consistent with basic
lending arrangements, the main judgements are described as below: whether the principal amount may change over
the life of the financial asset (for example, if there are repayments of principal); whether the interest includes only
consideration for the time value of money, credit risk, other basic lending risks and a profit margin and cost. For
example, whether the amount repaid in advance reflects only the outstanding principal and interest thereon, as well as
reasonable compensation paid for early termination of the contract.
2021 ANNUAL REPORT 209
XII Financial Report
V. Significant Accounting Policies and Accounting Estimates (Continued)
30. Critical accounting judgments and estimates (Continued)
Measurement of the ECLs of accounts receivable
The Company calculates the ECLs of accounts receivable using the exposure to default risk and ECL rate of accounts
receivable, and determines the ECL rate based on default probability and default loss rate. When determining the
ECL rate, the Company adjusts its historical data by referring to information such as historical credit loss experience
as well as current situation and forward-looking information. When considering the forward-looking information,
indicators used by the Company include the risk of economic downturn, external market environment, technology
environment and changes in customers. The assumptions relating to the ECL calculation are monitored and reviewed
by the Company on a regularly basis.
Impairment of goodwill
The Company assesses the impairment of goodwill at least annually, which requires estimates on the use value of
asset groups allocated with goodwill. When estimating use value, the Company is required to estimate the future cash
flow from such asset groups while selecting the appropriate discount rate to calculate the present value of future cash
flow.
Deferred income tax assets
Deferred income tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit
will be available against which the losses can be utilised. Significant management judgement is required to determine
the amount of deferred income tax assets that can be recognised, based upon the likely timing and level of future
taxable profits together with future tax planning strategies.
Share-based payments
When calculating the liabilities and expenses related to the equity incentive plan, the management of the Company is
required to make judgments and estimates on issues such as the turnover rate and vesting conditions. Differences in
the judgments and estimates will have a material effect on the financial statements.
31. Changes in significant accounting policies and estimates
(1) Changes in significant accounting policies
The Company did not have any change in significant accounting policies during the year.
(2) Changes in significant accounting estimates
The Company did not have any change in significant accounting estimates during the year.
(3) Adjustment to the relevant items in the financial statements at the beginning of the year due to the first
adoption of the New Leases Standard in 2021
Applicable √ Not applicable
(4) Reason for retrospective adjustment to the comparative data in the prior period due to the first adoption the
New Leases Standard in 2021
Applicable √ Not applicable
210 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
VI. Taxation
1. Main tax types and tax rates
Tax type Tax base Tax rate (%)
Value added tax (VAT) Taxable income 13/9/6
Property tax Rental income and property price 1.2/12
Urban maintenance and construction tax Turnover tax payable 7
Enterprise income tax (EIT) Taxable income 25
Disclosure of taxable entities subject to different EIT tax rates
Name of taxable entity EIT tax rate (%)
Shandong Chenming Paper Holdings Limited 15
Shouguang Meilun Paper Co., Ltd. 15
Jilin Chenming Paper Co., Ltd. 15
Jiangxi Chenming Paper Co., Ltd. 15
Zhanjiang Chenming Pulp & Paper Co., Ltd. 15
Wuhan Chenming Hanyang Paper Holdings Co., Ltd. 15
Huanggang Chenming Pulp & Paper Co., Ltd. 15
Kunshan Tuoan Plastic Products Co., Ltd. 15
Shouguang Shun Da Customs Declaration Co, Ltd. 20
Qingdao Chenming Pulp & Paper Electronic Commodity Spot Trading Co., Ltd. 20
Zhanjiang Chenming Arboriculture Development Co., Ltd. Exempt from EIT
Nanchang Chenming Arboriculture Development Co., Ltd. Exempt from EIT
Chenming Arboriculture Co., Ltd. Exempt from EIT
Yangjiang Chenming Arboriculture Development Co., Ltd. Exempt from EIT
2. Tax incentives
(1) Enterprise income tax
On 15 December 2021, the Company received a high and new technology enterprise certificate with a
certification number of GR202137005666. Pursuant to the requirements under the Law of the People’s Republic
of China on Enterprise Income Tax and the relevant policies, the Company is subject to a corporate income tax
rate of 15% of taxable income, and is entitled to the preferential treatment from 2021 to 2023.
Shouguang Meilun Paper Co., Ltd., a subsidiary of the Company, received a high and new technology
enterprise certificate with a certification number of GR202137005468 on 15 December 2021. Pursuant to the
requirements under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant
policies, Shouguang Meilun is subject to an enterprise income tax rate of 15% of taxable income, and is entitled
to the preferential treatment from 2021 to 2023.
Jilin Chenming Paper Co., Ltd., a subsidiary of the Company, received a high and new technology enterprise
certificate with a certification number of GR201922000658 on 2 September 2019. Pursuant to the requirements
under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies, Jilin
Chenming is subject to an enterprise income tax rate of 15% of taxable income, and is entitled to the
preferential treatment from 2019 to 2021.
2021 ANNUAL REPORT 211
XII Financial Report
VI. Taxation (Continued)
2. Tax incentives (Continued)
(1) Enterprise income tax (Continued)
Jiangxi Chenming Paper Co., Ltd., a subsidiary of the Company, received a high and new technology enterprise
certificate with a certification number of GR201936002184 on 3 December 2019. Pursuant to the requirements
under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies, Jiangxi
Chenming is subject to an enterprise income tax rate of 15% of taxable income, and is entitled to the
preferential treatment from 2019 to 2021.
Zhanjiang Chenming Pulp & Paper Co., Ltd., a subsidiary of the Company, received a high and new technology
enterprise certificate with a certification number of GR202144001212 on 20 December 2021. Pursuant to the
requirements under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant
policies, Zhanjiang Chenming is subject to an enterprise income tax rate of 15% of taxable income, and is
entitled to the preferential treatment from 2021 to 2023.
Wuhan Chenming Hanyang Paper Holdings Co., Ltd., a subsidiary of the Company, received a high and
new technology enterprise certificate with a certification number of GR202042001502 on 1 December 2020.
Pursuant to the requirements under the Law of the People’s Republic of China on Enterprise Income Tax and
the relevant policies, Wuhan Chenming is subject to an enterprise income tax rate of 15% of taxable income,
and is entitled to the preferential treatment from 2020 to 2022.
Huanggang Chenming Pulp & Paper Co., Ltd., a subsidiary of the Company, received a high and new
technology enterprise certificate with a certification number of GR202042001471 on 1 December 2020. Pursuant
to the requirements under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant
policies, Huanggang Chenming is subject to an enterprise income tax rate of 15% of taxable income, and is
entitled to the preferential treatment from 2020 to 2022.
Kunshan Tuoan Plastic Products Co., Ltd., a subsidiary of the Company, received a high and new technology
enterprise certificate with a certification number of GR202032004526 on 2 December 2020. Pursuant to the
requirements under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant
policies, Kunshan Tuoan is subject to an enterprise income tax rate of 15% of taxable income, and is entitled to
the preferential treatment from 2020 to 2022.
Pursuant to the requirements of Rule 27(1) of Law of the People’s Republic of China on Enterprise Income Tax
and Rule 86(1) of regulations for the Implementation of Law of the People’s Republic of China on Enterprise
Income Tax, Zhanjiang Chenming Arboriculture Development Co., Ltd., Yangjiang Chenming Arboriculture
Development Co., Ltd., Nanchang Chenming Arboriculture Development Co., Ltd. and Chenming Arboriculture
Co., Ltd., which are the subsidiaries of the Company, have completed the filings for EIT reduction for exemption
from EIT.
212 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
VI. Taxation (Continued)
2. Tax incentives (Continued)
(1) Enterprise income tax (Continued)
Shouguang Shun Da Customs Declaration Co, Ltd. and Qingdao Chenming Pulp & Paper Electronic Commodity
Spot Trading Co., Ltd., which are subsidiaries of the Company, are small and micro enterprises. Pursuant to the
Notice on Implementing the Inclusive Tax Deduction and Exemption Policies for Micro and Small Enterprises (Cai
Shui [2019] No. 13), the annual taxable income of a small low-profit enterprise that is less than RMB1 million
shall be included in its taxable income at a reduced rate of 12.5%, with the applicable enterprise income tax
rate of 20%. The annual taxable income of a small low-profit enterprise that is more than RMB1 million but not
exceeding RMB3 million shall be included in its taxable income at a reduced rate of 50%, with the applicable
enterprise income tax rate of 20%.
Guangdong Chenming Panels Co., Ltd., a subsidiary of the Company, meets the requirements of Rule 99 of the
Regulations for the Implementation of Law of the People’s Republic of China on Enterprise Income Tax (Decree
No. 512 of the State Council of the People’s Republic of China) and the Notice of the Ministry of Finance and
the State Taxation Administration on Issues Concerning the Implementation of the Catalogue of Preferential
Tax Treatments for Comprehensive Resource Utilisation Enterprises (Cai Shui [2008] No. 47): since 1 January
2008, for enterprises that derive income from the products listed in the Catalogue which are in line with related
national or industry standards by making use of the resources listed in the Catalogue as the main raw materials,
taxable income will be calculated at a reduced rate of 90% of the total revenue for that year. To be entitled
to the above tax benefits, the ratio of the resources listed in the Catalogue and the raw materials used for the
product shall be consistent with the required technical standards stated in the Catalogue.
(2) Value-added Tax (“VAT”)
Pursuant to Rule 10 of the Interim Regulation of the People’s Republic of China on Value Added Tax, Zhanjiang
Chenming Arboriculture Development Co., Ltd., Yangjiang Chenming Arboriculture Development Co., Ltd.,
Nanchang Chenming Arboriculture Development Co., Ltd. and Chenming Arboriculture Co., Ltd., which are
subsidiaries of the Company, are exempt from VAT, and have completed the filings for VAT reduction for
exemption from VAT.
Pursuant to the Value-added Tax Preferential Catalogue on Products and Services Applying Integrated Use of
Resources (Cai Shui [2015] No. 78), taxpayers who sell self-produced products and services applying integrated
use of resources may enjoy the immediate VAT refund policy. Guangdong Chenming Panels Co., Ltd., a
subsidiary of the Company, produces products applying integrated use of resources, and is therefore subject to
the immediate VAT refund policy in 2021.
2021 ANNUAL REPORT 213
XII Financial Report
VII. Notes to items of the consolidated financial statements
1. Monetary funds
Unit: RMB
Item Closing balance Opening balance
Treasury cash 2,926,080.68 2,161,684.57
Bank deposit 3,166,431,843.70 4,387,725,487.05
Other monetary funds 10,950,425,015.28 13,369,650,427.36
Total 14,119,782,939.66 17,759,537,598.98
Of which: Total deposits in overseas banks 462,952,909.20 229,837,092.53
Including: Total restricted amount due to mortgages,
pledges or freezes 10,756,936,714.59 13,022,652,331.98
Other explanation:
Other monetary funds of RMB7,801,613,023.62 were the guarantee deposit for the application for bank acceptance with the banks by
the Company;
Other monetary funds of RMB1,775,828,450.84 were the guarantee deposit for the application for letter of credit with the banks by the
Company;
Other monetary funds of RMB961,122,545.14 were the guarantee deposit for the application for guarantees with the banks by the
Company;
Other monetary funds of RMB70,000,000.00 were the guarantee deposit for the application for loans with the banks by the Company;
Other monetary funds of RMB125,980,000.00 were the Company’s statutory reserve deposits at the People’s Bank of China;
Other monetary funds of RMB22,392,694.99 were locked-up due to litigations, resulting in restriction on the use of that account’s
balance;
Bank deposit included interest receivable of RMB442,077.36, and other monetary funds included interest receivable of
RMB193,488,300.69.
2. Financial assets held for trading
Unit: RMB
Item Closing balance Opening balance
Financial assets measured at fair value through profit or loss 110,886,182.88 192,907,800.62
Or which:
Investment in debt instruments
Investment equity instruments 110,886,182.88 192,907,800.62
Total 110,886,182.88 192,907,800.62
Explanation: Financial assets held for trading were shares of Bohai Bank subscribed by the Company.
214 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
3. Accounts receivable
(1) Disclosure of accounts receivable by category
Unit: RMB
Closing balance Opening balance
Book balance Bad debt provision Book balance Bad debt provision Carrying amount
Provision Carrying Provision
Category Amount Percentage Amount percentage amount Amount Percentage Amount percentage
Accounts receivable
assessed individually for
bad debt provision 224,831,742.24 7.24% 224,831,742.24 100.00% 338,943,643.26 13.70% 338,943,643.26 100.00%
Of which:
Accounts receivable
assessed collectively for
bad debt provision 2,880,986,860.24 92.76% 224,469,709.78 7.79% 2,656,517,150.46 2,135,216,813.32 86.30% 150,285,147.50 7.04% 1,984,931,665.82
Of which:
Due from related party
customers 109,385.42 0.004% 109,385.42 2,000,017.96 0.08% 87,306.27 4.37% 1,912,711.69
Receivables from non-
related party customers 1,855,021,764.82 59.73% 84,870,622.11 4.58% 1,770,151,142.71 1,815,359,418.67 73.37% 97,096,893.56 5.35% 1,718,262,525.11
Factoring receivables 1,025,855,710.00 33.03% 139,599,087.67 13.61% 886,256,622.33 317,857,376.69 12.85% 53,100,947.67 16.71% 264,756,429.02
Total 3,105,818,602.48 100.00% 449,301,452.02 14.47% 2,656,517,150.46 2,474,160,456.58 100.00% 489,228,790.76 19.77% 1,984,931,665.82
2021 ANNUAL REPORT 215
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
3. Accounts receivable
(1) Disclosure of accounts receivable by category
Items assessed individually for bad debt provision:
Unit: RMB
Closing balance
Bad debts Provision
Name Book balance provision percentage Provision reason
Hengfeng Hongyuan Real Estate
Holdings Co., Ltd. 45,493,811.40 45,493,811.40 100.00% Long outstanding
Ningxia Lingwu Baota Dagu
Storage and Transportation
Co., Ltd. 27,600,000.00 27,600,000.00 100.00% Long outstanding
Foshan Shunde Xingchen Paper
Co., Ltd. 26,236,528.70 26,236,528.70 100.00% Long outstanding
Shanxi Printing Materials Co.,
Ltd. 15,526,488.04 15,526,488.04 100.00% Long outstanding
Zhengzhou Hongyang Paper
Products Co., Ltd. 15,491,432.93 15,491,432.93 100.00% Long outstanding
Shandong Bisheng Printing
Materials Co., Ltd. 14,813,369.27 14,813,369.27 100.00% Long outstanding
95 companies including Henan
Yibang Technology Trading
Co., Ltd. 79,670,111.90 79,670,111.90 100.00% Long outstanding
Total 224,831,742.24 224,831,742.24 100.00%
Items assessed collectively for bad debt provision: Due from related party customers
Unit: RMB
Closing balance
Name Book balance Bad debt provision Provision percentage
Within 1 year 109,385.42
Total 109,385.42
216 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
3. Accounts receivable (Continued)
(1) Disclosure of accounts receivable by category (Continued)
Items assessed collectively for bad debt provision: Receivables from non-related party customers
Unit: RMB
Closing balance
Name Book balance Bad debt provision Provision percentage
Within 1 year 1,750,739,072.87 20,246,468.54 1.16%
1-2 years 7,011,563.74 1,637,130.07 23.35%
2-3 years 27,294,968.10 12,900,091.05 47.26%
Over 3 years 69,976,160.11 50,086,932.45 71.58%
Total 1,855,021,764.82 84,870,622.11 4.58%
Items assessed collectively for bad debt provision: Factoring receivables
Unit: RMB
Closing balance
Name Book balance Bad debt provision ECL rate
Within 1 year 820,016,666.64 82,001,666.66 10.00%
1-2 years 11,785,852.50 2,357,670.71 20.00%
2-3 years 169,370,528.43 47,834,951.58 28.24%
Over 3 years 24,682,662.43 7,404,798.72 30.00%
Total 1,025,855,710.00 139,599,087.67 13.61%
2021 ANNUAL REPORT 217
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
3. Accounts receivable (Continued)
(1) Disclosure of accounts receivable by category (Continued)
If the bad debt provision of accounts receivable is made in accordance with the general model of ECLs, please
disclose the information about bad debt provision with reference to the way of disclosure of other receivables:
√ Applicable Not applicable
Disclosure by ageing
Unit: RMB
Ageing Closing balance Opening balance
Within 1 year (including 1 year) 2,570,865,124.93 1,822,584,474.74
1-2 years 128,884,575.48 379,812,071.80
2-3 years 196,893,864.00 87,426,356.99
Over 3 years 209,175,038.07 184,337,553.05
Total 3,105,818,602.48 2,474,160,456.58
(2) Provision, recovery or reversal of bad debt provision for the period
Bad debt provision for the period:
Unit: RMB
Changes in the period
Opening Recovery or Closing
Category balance Provision reversal Transfer Written-off balance
Bad debt provision 489,228,790.76 229,439,721.79 233,334,350.93 19,046,894.91 16,985,814.69 449,301,452.02
Total 489,228,790.76 229,439,721.79 233,334,350.93 19,046,894.91 16,985,814.69 449,301,452.02
218 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
3. Accounts receivable (Continued)
(3) Top five accounts receivable based on closing balance of debtors
The total amount of top five accounts receivable based on closing balance of debtors for the period amounted
to RMB774,792,293.32 in total, accounting for 24.95% of the total closing balance of accounts receivable. The
closing balance of the corresponding bad debt provision amounted to RMB104,503,899.01 in total.
Unit: RMB
Percentage to closing
Closing balance of balance of other Closing balance of
Name of entity accounts receivable receivables bad debt provision
Customer 1 300,000,000.00 9.66% 30,000,000.00
Customer 2 148,138,960.00 4.77% 41,838,565.68
Customer 3 115,480,000.00 3.72% 11,548,000.00
Customer 4 111,173,333.32 3.58% 11,117,333.33
Customer 5 100,000,000.00 3.22% 10,000,000.00
Total 774,792,293.32 24.95% 104,503,899.01
4. Accounts receivable financing
Unit: RMB
Item Closing balance Opening balance
Bills receivable 435,459,341.76 488,385,666.76
Total 435,459,341.76 488,385,666.76
Changes (increase or decrease) during the period and change in fair value of accounts receivable financing
Applicable √ Not applicable
If the provision for impairment of accounts receivable financing is made in accordance with the general model of
ECLs, please disclose the information about provision for impairment with reference to the way of disclosure of other
receivables:
Applicable √ Not applicable
2021 ANNUAL REPORT 219
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
5. Prepayments
(1) Presentation of prepayments according to ageing analysis
Unit: RMB
Closing balance Opening balance
Item Amount Percentage Amount Percentage
Within 1 year 803,771,958.81 90.16% 871,877,663.55 90.42%
1-2 years 87,713,119.65 9.84% 92,412,848.81 9.58%
Total 891,485,078.46 100.00% 964,290,512.36 100.00%
(2) Top five prepayments based on closing balance of prepaid parties
The total amount of top five prepayments based on closing balance of prepaid parties for the period amounted
to RMB388,782,923.49, accounting for 43.61% of the closing balance of the total prepayments.
Percentage of the
Closing balance closing balance of the
Name of entity of prepayments total prepayments
Customer 1 100,728,705.51 11.30%
Customer 2 100,533,400.00 11.28%
Customer 3 76,523,442.85 8.58%
Customer 4 66,797,145.28 7.49%
Customer 5 44,200,229.85 4.96%
Total 388,782,923.49 43.61%
220 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
6. Other receivables
Unit: RMB
Item Closing balance Opening balance
Other receivables 2,252,864,083.00 2,417,240,559.46
Total 2,252,864,083.00 2,417,240,559.46
(1) Other receivables
1) Other receivables by nature
Unit: RMB
Nature Closing book balance Opening book balance
Open credit 2,692,253,554.58 2,675,531,581.63
Guarantee deposit 5,125,826.96 11,732,998.24
Insurance premium 588,343.66 636,635.53
Reserve and borrowings 11,980,522.29 43,437,509.57
Others 79,972,395.80 229,207,636.15
Total 2,789,920,643.29 2,960,546,361.12
2021 ANNUAL REPORT 221
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
6. Other receivables (Continued)
(1) Other receivables (Continued)
2) Particulars of bad debt provision
Closing bad debt provision at phase 1:
Unit: RMB
ECL rate (%)
for the next Bad debt Carrying
Category Book balance 12 months provision amount Reason
Bad debt provision assessed
individually
Interests receivable
Dividends receivable
Bad debt provision assessed
collectively 494,496,617.62 13.16% 65,083,288.44 429,413,329.18
Amount due from
government agencies 19,012,602.80 88.87% 16,896,802.27 2,115,800.53
Amount due from related
parties 103,408,120.64 7.20% 7,445,333.02 95,962,787.62
Other receivables 372,075,894.18 10.95% 40,741,153.15 331,334,741.03
Total 494,496,617.62 13.16% 65,083,288.44 429,413,329.18
As at the end of the period, the Group did not have interest receivables, dividends receivables and other
receivables in phase 2.
As at the end of the period, closing bad debt provision at phase 3:
Unit: RMB
ECL rate (%)
over the Bad debt Carrying
Category Book balance entire life provision amount Reason
Bad debt provision assessed
individually 2,295,424,025.67 20.56% 471,973,271.85 1,823,450,753.82
Total 2,295,424,025.67 20.56% 471,973,271.85 1,823,450,753.82
222 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
6. Other receivables (Continued)
(1) Other receivables (Continued)
2) Particulars of bad debt provision (Continued)
Disclosure by ageing
Unit: RMB
Ageing Closing balance Open balance
Within 1 year (including 1 year) 797,531,460.41 1,356,457,308.62
1-2 years 1,344,225,352.93 813,310,977.70
2-3 years 484,647,394.76 634,042,365.77
Over 3 years 163,516,435.19 156,735,709.03
Total 2,789,920,643.29 2,960,546,361.12
3) Provision, recovery or reversal of bad debt provision for the period
Provision of bad debt provision for the period:
Unit: RMB
Changes in the period
Recovery
Category Opening balance Provision or reversal Transfer Others Closing balance
Bad debt provision 543,305,801.66 293,910,655.32 260,287,400.18 39,872,496.51 537,056,560.29
Total 543,305,801.66 293,910,655.32 260,287,400.18 39,872,496.51 537,056,560.29
2021 ANNUAL REPORT 223
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VII. Notes to items of the consolidated financial statements (Continued)
6. Other receivables (Continued)
(1) Other receivables (Continued)
4) Top five other receivables based on closing balance of debtors
The total amount of the Company’s top five other receivables based on closing balance of debtors for the
period was RMB2,028,415,346.66 which accounted for 72.71% of the closing balance of the total other
receivables. The closing balance of corresponding bad debt provision amounted to RMB327,237,152.54.
Unit: RMB
Percentage
to closing
balance of Closing balance
other of bad debt
Name of entity Nature Closing balance Maturity receivables provision
Customer 1 Consideration for equity
transfer 684,000,000.00 1-2 years 24.52% 102,600,000.00
Customer 2 Consideration for equity
transfer 533,800,000.00 1-2 years 19.13% 53,380,000.00
Customer 3 Consideration for equity
transfer 467,402,316.85 2-3 years 16.75% 93,480,463.37
Customer 4 Consideration for equity
transfer 219,054,783.56 1-2 years 7.85% 21,905,478.36
Customer 5 Consideration for equity
transfer 124,158,246.25 Within 1 year 4.45% 55,871,210.81
Total 2,028,415,346.66 72.71% 327,237,152.54
7. Inventories
Whether the Company needs to comply with the disclosure requirements for real estate industries
No
(1) Categories of inventories
Unit: RMB
Closing balance Opening balance
Impairment Impairment
provision for provision for
inventories or inventories or
Item Book balance performance costs Carrying amount Book balance performance costs Carrying amount
Raw materials 1,734,387,984.21 24,660,967.32 1,709,727,016.89 1,712,610,505.63 20,535,018.69 1,692,075,486.94
Work-in-process products 148,489,098.95 148,489,098.95 128,761,554.31 128,761,554.31
Goods in stock 1,910,051,642.16 4,941,686.65 1,905,109,955.51 1,464,455,062.79 1,464,455,062.79
Developing products 314,614,378.34 314,614,378.34
Consumable biological assets 1,519,305,850.77 1,519,305,850.77 1,535,386,865.44 1,535,386,865.44
Total 5,312,234,576.09 29,602,653.97 5,282,631,922.12 5,155,828,366.51 20,535,018.69 5,135,293,347.82
Note: Consumable biological assets are forestry assets.
224 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
7. Inventories (Continued)
(2) Impairment provision for inventories or performance costs
Unit: RMB
Increase during the period Decrease during the period
Opening Reversal Closing
Item balance Provision Others or transfer Others balance
Raw materials 20,535,018.69 11,952,470.02 7,826,521.39 24,660,967.32
Goods in stock 4,941,686.65 4,941,686.65
Total 20,535,018.69 16,894,156.67 7,826,521.39 29,602,653.97
Basis for recognition of net Reason for reversal or written-off of
realisable value/residual consideration impairment provision for inventories/
Item with future cost performance costs during the period
Raw materials The cost of raw materials is higher Written-off of impairment provision
than their net realisable value for inventories due to sales of impaired
spare parts during the period
Goods in stock The cost of goods in stock is higher
than their net realisable value
8. Non-current assets due within one year
Unit: RMB
Item Closing balance Opening balance
Long-term receivables due within one year 5,216,934,172.61 4,222,744,207.34
Total 5,216,934,172.61 4,222,744,207.34
Explanations:
(1) Long-term receivables due within one year amounting to RMB5,188,103,553.61 (amount for the beginning of the period:
RMB4,039,428,218.16) were financial lease receivables;
(2) Long-term receivables due within one year amounting to RMB28,830,619.00 (amount for the beginning of the period:
RMB183,315,989.18) were deposits receivable.
2021 ANNUAL REPORT 225
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
9. Other current assets
Unit: RMB
Item Closing balance Opening balance
Input tax amount to be deducted 807,004,437.68 1,041,552,455.22
Prepaid tax 132,297,740.90 53,146,519.47
Receivables under financial lease due within one year 388,156,667.35 601,364,577.40
Factoring receivables due within one year 303,281,361.74 596,856,928.35
Prepaid expenses 195,453,994.69 329,739,882.81
Other payments 77,735,290.49 94,258,332.60
Total 1,903,929,492.85 2,716,918,695.85
10. Long-term receivables
(1) Particulars of long-term receivables
Unit: RMB
Closing balance Opening balance
Bad debt Carrying Bad debt Carrying Discount
Item Book balance provision amount Book balance provision amount rate range
Finance lease payments 8,344,107,765.88 1,211,551,549.72 7,132,556,216.16 9,963,461,389.49 1,103,339,754.72 8,860,121,634.77 4%-12%
Less: Unrealised
financing income 366,945,292.53 366,945,292.53 351,498,895.63 351,498,895.63
Equipment lease
financing 272,996,696.64 272,996,696.64 412,239,088.74 412,239,088.74
Less: Unrealised
financing income 32,913,472.31 32,913,472.31 39,232,762.59 39,232,762.59
Subtotal 8,217,245,697.68 1,211,551,549.72 7,005,694,147.96 9,984,968,820.01 1,103,339,754.72 8,881,629,065.29
Less: long-term
receivables due within
one year 6,244,230,790.74 1,027,296,618.13 5,216,934,172.61 4,808,190,306.85 585,446,099.51 4,222,744,207.34
Total 1,973,014,906.94 184,254,931.59 1,788,759,975.35 5,176,778,513.16 517,893,655.21 4,658,884,857.95
226 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
10. Long-term receivables (Continued)
(1) Particulars of long-term receivables (Continued)
Particulars of bad debt provision impairment
Unit: RMB
Closing balance Opening balance
Book balance Bad debts provision Book balance Bad debts provision
ECL Carrying ECL Carrying
Category Amount Percentage Amount rate (%) amount Amount Percentage Amount rate (%) amount
Accounts receivable
assessed individually
for impairment 1,716,394,801.61 86.99% 183,801,256.59 10.71% 1,532,593,545.02 4,839,015,749.92 93.48% 516,412,930.95 10.67% 4,322,602,818.97
Of which:
Financial lease
payments 1,716,394,801.61 86.99% 183,801,256.59 10.71% 1,532,593,545.02 4,839,015,749.92 93.48% 516,412,930.95 10.67% 4,322,602,818.97
Accounts receivable
assessed collectively
for impairment 256,620,105.33 13.01% 453,675.00 0.18% 256,166,430.33 337,762,763.24 6.52% 1,480,724.26 0.44% 336,282,038.98
Of which:
Receivables not past
due 45,367,500.00 2.30% 453,675.00 1.00% 44,913,825.00 148,072,426.27 2.86% 1,480,724.26 1.00% 146,591,702.01
Deposits receivable 211,252,605.33 10.71% 211,252,605.33 189,690,336.97 3.66% 189,690,336.97
Total 1,973,014,906.94 100.00% 184,254,931.59 9.34% 1,788,759,975.35 5,176,778,513.16 100.00% 517,893,655.21 10.00% 4,658,884,857.95
Accounts receivable assessed collectively for bad debt provision:
Collectively assessed item: receivables not past due
Closing balance
Book balance Bad debt provision ECL rate (%)
Within 1 year
1 – 2 years 45,367,500.00 453,675.00 1.00%
2 – 3 years
Total 45,367,500.00 453,675.00 1.00%
2021 ANNUAL REPORT 227
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
10. Long-term receivables (Continued)
(1) Particulars of long-term receivables (Continued)
Collectively assessed item: Deposits receivable
Closing balance
Book balance Bad debt provision ECL rate (%)
Within 1 year
1-2 years 81,445,239.80
2-3 years 77,641,082.85
Over 3 years 52,166,282.68
Total 211,252,605.33
Changes in book balance with significant changes in loss provision for the year
Applicable √ Not applicable
(2) Provision, recovery or reversal of bad debt provision for the period
Provision of bad debt provision for the period:
Unit: RMB
Changes in the period
Opening Recovery Closing
Category balance Provision or reversal Write-off Others balance
Bad debt provision 517,893,655.21 259,974,174.66 593,612,898.28 184,254,931.59
Total 517,893,655.21 259,974,174.66 593,612,898.28 184,254,931.59
228 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
11. Long-term equity investments
Unit: RMB
Change for the period
Investment Distribution
Opening gain or loss Adjustment Other of cash Closing Closing
balance recognised of other change in dividend balance balance of
(carrying Additional Withdrawn under equity comprehensive equity or profit Impairment (carrying impairment
Investee amount) contribution contribution method income interest declared provision Others amount) provision
I. Joint ventures
Shouguang Chenming Huisen
New-style Construction
Materials Co., Ltd. 4,945,742.03 2,957,127.84 1,000,000.00 6,902,869.87
Weifang Sime Darby West
Port Co., Ltd. 81,943,506.92 -4,572,508.17 77,370,998.75
Shouguang Meite
Environmental Technology
Co., Ltd. 17,087,192.44 -2,471,067.73 14,616,124.71
Weifang Chenrong New
and Old Kinetic Energy
Conversion Equity
Investment Fund
Partnership (Limited
Partnership) 199,705,636.28 200,247,244.02 17,501,451.16 16,959,843.42
Weifang Xingxing United
Chemical Co., Ltd. 91,874,385.12 -7,250,597.38 84,623,787.74
Subtotal 395,556,462.79 200,247,244.02 6,164,405.72 17,959,843.42 183,513,781.07
II. Associates
Zhuhai Dechen New Third
Board Equity Investment
Fund Company (Limited
Partnership) 52,401,659.62 -433,763.31 15,000,000.00 36,967,896.31
Ningbo Kaichen Huamei
Equity Investment Fund
Partnership (Limited
Partnership) 198,549,926.27 -1,252,440.68 197,297,485.59
Jiangxi Chenming Port Co.,
Ltd. 1,310,585.65 -756,003.20 554,582.45
Goldtrust Futures Co., Ltd. 189,366,931.59 -3,914,469.09 185,452,462.50
Chenming (Qingdao) Asset
Management Co., Ltd. 8,674,551.18 145,116.96 1,886,000.00 6,933,668.14
Guangdong Nanyue Bank
Co., Ltd. 3,060,298,285.35 31,523,653.43 1,846,610.94 77,231,023.14 28,000,000.00 -1,887,031,763.57 1,255,867,809.29
Subtotal 3,510,601,939.66 25,312,094.11 1,846,610.94 77,231,023.14 44,886,000.00 -1,887,031,763.57 1,683,073,904.28
Total 3,906,158,402.45 200,247,244.02 31,476,499.83 1,846,610.94 77,231,023.14 62,845,843.42 -1,887,031,763.57 1,866,587,685.35
Explanation: For other changes of Guangdong Nanyue Bank Co., Ltd., please refer to VII. 46. Retained profit.
2021 ANNUAL REPORT 229
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
12. Other non-current financial assets
Unit: RMB
Item Closing balance Opening balance
Investment in debt instruments 400,000,000.00 4,000,000.00
Investment in equity instruments 119,927,003.25 141,910,000.00
Total 519,927,003.25 145,910,000.00
230 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
13. Investment property
(1) Investment property under the cost method
√ Applicable Not applicable
Unit: RMB
Housing and Construction
Item building structure Land use rights in progress Total
I. Original carrying amount
1. At 31 December 2020 6,446,222,194.78 6,446,222,194.78
2. Increase during the period 763,625,528.06 763,625,528.06
(1) Purchase
(2) Transferred from
construction in progress 21,853,611.35 21,853,611.35
(3) Without additions
arising from business
combinations 741,771,916.71 741,771,916.71
3. Decrease during the period 13,037,866.22 13,037,866.22
(1) Disposal 13,037,866.22 13,037,866.22
4. At 31 December 2021 7,196,809,856.62 7,196,809,856.62
II. Accumulated depreciation and
accumulated amortisation
1. At 31 December 2020 503,062,626.78 503,062,626.78
2. Increase during the period 221,180,376.65 221,180,376.65
(1) Provision or amortisation 162,228,719.27 162,228,719.27
(2) Without additions
arising from business
combinations 58,951,657.38 58,951,657.38
3. Decrease during the period 971,578.72 971,578.72
(1) Disposal 971,578.72 971,578.72
4. At 31 December 2021 723,271,424.71 723,271,424.71
III. Provision for impairment
1. At 31 December 2020
2. Increase during the period
(1) Provision
3. Decrease during the period
(1) Provision
4. At 31 December 2021
IV. Carrying amount
1. Carrying amount at 31
December 2021 6,473,538,431.91 6,473,538,431.91
2. Carrying amount at 31
December 2020 5,943,159,568.00 5,943,159,568.00
2021 ANNUAL REPORT 231
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
13. Investment property (Continued)
(1) Investment property under the cost method (Continued)
Note: Investment properties under the Company primarily include:
Pujiang International Finance Plaze, located at No. 1098, Dongdaming Road, Hongkou District, Shanghai, is a long-term held
office property of Shanghai Hongtai Real Estate Co., Ltd., a subsidiary of the Company, mainly used for external rental or office
purposes;
Jinan Chenming Finance Building ( ), located in No. 7 Zone, Hanyu Financial Business Center, No. 7000, Jingshi
Road, Jinan Innovation Zone, is a long-term held office property of Shandong Chenming Investment Limited, a subsidiary of the
Company, mainly used for external rental or office purposes;
Fatum Apartment ( ), located at No. 463, Anbo Road, No. 22, Lane 467, Anbo Road, Yangpu District, Shanghai, is a
long-term held apartment property of Shanghai Herui Investment Co., Ltd., a subsidiary of the Company, mainly used for external
rental purposes;
Guangzhou Zhengjia Plaza ( ), located at Room 3901-3926, No. 372, Huanshi East Road, Yuexiu District,
Guangzhou, is a long-term held office property of Guangzhou Chenming Financial Leasing Co., Ltd., a subsidiary of the
Company, mainly used for external rental purposes;
Shenzhen Zhuoyue Baozhong Times Square ( ), located at Room 3201-3210, Building C, Zhuoyue
Baozhong Times Square (Phase 2), Xin’an Sub-district, Bao’an District, Shenzhen, is a long-term held office property of
Guangzhou Chenming Financial Leasing Co., Ltd., a subsidiary of the Company, mainly used for external rental purposes.
14. Fixed assets
Unit: RMB
Item Closing balance Opening balance
Fixed assets 35,653,492,676.15 37,651,706,658.97
Total 35,653,492,676.15 37,651,706,658.97
232 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
14. Fixed assets (Continued)
1) Particulars of fixed assets
Unit: RMB
Housing and Electronic
building Machinery and equipment and
Item structure equipment Vehicles others Total
I. Original carrying amount:
1. At 31 December 2020 10,640,660,046.65 44,092,418,191.46 308,616,664.66 456,461,101.41 55,498,156,004.18
2. Increase during the period 149,459,764.51 117,225,399.26 4,916,941.02 6,891,328.77 278,493,433.56
(1) Acquisition 149,459,764.51 56,838,420.09 4,916,941.02 6,891,328.77 218,106,454.39
(2) Transferred from
construction in progress 60,386,979.17 60,386,979.17
3. Decrease during the period 116,822,260.05 411,472,907.09 17,332,165.03 6,308,408.71 551,935,740.88
(1) Disposal or retirement 116,822,260.05 411,472,907.09 17,332,165.03 6,308,408.71 551,935,740.88
4. At 31 December 2021 10,673,297,551.11 43,798,170,683.63 296,201,440.65 457,044,021.47 55,224,713,696.86
II. Accumulated depreciation
1. At 31 December 2020 2,055,823,328.64 15,125,890,831.31 182,038,050.14 276,762,643.94 17,640,514,854.03
2. Increase during the period 309,980,598.66 1,841,513,062.77 23,898,494.75 28,470,778.31 2,203,862,934.49
(1) Provision 309,980,598.66 1,841,513,062.77 23,898,494.75 28,470,778.31 2,203,862,934.49
3. Decrease during the period 63,673,178.21 394,560,345.52 15,023,027.18 4,855,662.64 478,112,213.55
(1) Disposal or retirement 63,673,178.21 394,560,345.52 15,023,027.18 4,855,662.64 478,112,213.55
4. At 31 December 2021 2,302,130,749.09 16,572,843,548.56 190,913,517.71 300,377,759.61 19,366,265,574.97
III. Provision for impairment
1. At 31 December 2020 27,808,852.79 170,676,515.34 13,889.13 7,435,233.92 205,934,491.18
2. Increase during the period
(1) Provision
3. Decrease during the period 979,045.44 979,045.44
(1) Disposal or retirement 979,045.44 979,045.44
4. At 31 December 2021 27,808,852.79 169,697,469.90 13,889.13 7,435,233.92 204,955,445.74
IV.Carrying amount
1. Carrying amount at 31
December 2021 8,343,357,949.23 27,055,629,665.17 105,274,033.81 149,231,027.94 35,653,492,676.15
2. Carrying amount at 31
December 2020 8,557,027,865.22 28,795,850,844.81 126,564,725.39 172,263,223.55 37,651,706,658.97
2021 ANNUAL REPORT 233
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
14. Fixed assets (Continued)
(2) Particulars of temporarily idle fixed assets
Unit: RMB
Original Accumulated Provision for Carrying
Item carrying amount depreciation impairment amount Remark
Housing and building
structure 100,192,301.63 37,821,385.00 3,093,008.64 59,277,907.99
Machinery and
equipment 902,412,382.63 520,140,669.14 151,618,968.02 230,652,745.47
Electronic equipment 754,860.94 672,773.80 7,187.27 74,899.87
Total 1,003,359,545.20 558,634,827.94 154,719,163.93 290,005,553.33
(3) Particulars of fixed assets without obtaining property right certificates
Unit: RMB
Reason for not yet
obtaining property
Item Carrying amount right certificates
Housing and building structure
(Zhanjiang Chenming Pulp & Paper Co., Ltd.) 1,096,012,481.78 Under application
Housing and building structure
(Huanggang Chenming Pulp & Paper Co., Ltd.) 527,801,819.33 Under application
Housing and building structure
(Shouguang Meilun Paper Co., Ltd.) 470,657,826.65 Under application
Housing and building structure
(Jilin Chenming Paper Co., Ltd.) 379,117,972.03 Under application
Housing and building structure
(Jiangxi Chenming Paper Co., Ltd.) 205,518,010.27 Under application
Housing and building structure
(Shandong Chenming Paper Holdings Limited) 112,402,583.17 Under application
Housing and building structure
(Wuhan Chenming Hanyang Paper Holdings Co., Ltd.) 77,285,113.28 Under application
234 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
15. Construction in progress
Unit: RMB
Item Closing balance Opening balance
Construction in progress 189,818,292.48 171,178,595.73
Materials for project 7,931,233.57 8,679,346.10
Total 197,749,526.05 179,857,941.83
(1) Particulars of construction in progress
Unit: RMB
Closing balance Opening balance
Impairment Carrying Impairment Carrying
Item Book balance provision amount Book balance provision amount
Technological transformation project 50,534,096.04 50,534,096.04 59,209,256.24 59,209,256.24
Integrated forestry, pulp and paper
project (Huanggang Pulp & Paper) 16,687,683.29 16,687,683.29 16,235,880.67 16,235,880.67
Fly ash cement ceramsite production
project (Shandong Chenming) 54,246,139.19 54,246,139.19 54,246,139.19 54,246,139.19
Light calcium carbonate project (Meilun) 13,836,002.27 13,836,002.27
Relocation of Wuhan household paper
project (Phase II) (Meilun) 28,705,483.25 28,705,483.25 10,210,593.75 10,210,593.75
Others 60,783,562.47 21,138,671.76 39,644,890.71 47,129,181.78 29,688,458.17 17,440,723.61
Total 210,956,964.24 21,138,671.76 189,818,292.48 200,867,053.90 29,688,458.17 171,178,595.73
2021 ANNUAL REPORT 235
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
15. Construction in progress (Continued)
(2) Changes in material construction in progress projects for the period
Unit: RMB
Of which: Capitalisation
Transfer Transfer Other Capitalised rate of the
Increase to fixed into Deductions Accumulated Accumulated Interest interest
Opening during asset during investment during Closing Investment Construction Capitalised amount during amount for Source
Project name Budget balance the period the period property the period balance to budget in progress interest the period the period of fund
Relocation
of Wuhan
household
paper project Self-owned
(Phase II) funds and
(Meilun) 270,000,000.00 10,210,593.75 18,494,889.50 28,705,483.25 10.63% 50.00% borrowings
Light calcium Self-owned
carbonate funds and
project (Meilun) 24,000,000.00 13,836,002.27 8,017,609.08 21,853,611.35 91.06% 100.00% borrowings
Forestry-pulp-
paper project
(Huanggang Self-owned
Pulp & Paper) 70,000,000.00 16,235,880.67 44,844,691.36 44,392,888.74 16,687,683.29 87.26% 99.00% funds
Total 364,000,000.00 40,282,476.69 71,357,189.94 44,392,888.74 21,853,611.35 45,393,166.54 –
(3) Materials for project
Unit: RMB
Closing balance Opening balance
Impairment Carrying Impairment Carrying
Item Book balance provision amount Book balance provision amount
Special materials 7,931,233.57 7,931,233.57 8,679,346.10 8,679,346.10
Total 7,931,233.57 7,931,233.57 8,679,346.10 8,679,346.10
236 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
16. Right-of-use assets
Unit: RMB
Housing and
Item Land use rights building structure Total
I. Original carrying amount:
1. Opening balance 219,101,390.27 5,571,378.54 224,672,768.81
2. Increase during the period
(1) Lease
3. Decrease during the period 1,003,531.21 1,003,531.21
(1) Sublease to finance lease
(2) Transfer or held for sale
(3) Other deductions 1,003,531.21 1,003,531.21
4. Closing balance 218,097,859.06 5,571,378.54 223,669,237.60
II. Accumulated depreciation
1. Opening balance 18,548,990.80 247,058.26 18,796,049.06
2. Increase during the period 7,447,711.11 525,070.61 7,972,781.72
(1) Provision 7,447,711.11 525,070.61 7,972,781.72
(2) Other increases
3. Decrease during the period 528,769.62 528,769.62
(1) Sublease to finance lease
(2) Transfer or held for sale
(3) Other deductions 528,769.62 528,769.62
4. Closing balance 25,467,932.29 772,128.87 26,240,061.16
III. Provision for impairment
1. Opening balance
2. Increase during the period
(1) Provision
3. Decrease during the period
(1) Sublease to finance lease
4. Closing balance
IV. Carrying amount
1. Closing carrying amount 192,629,926.77 4,799,249.67 197,429,176.44
2. Opening carrying amount 200,552,399.47 5,324,320.28 205,876,719.75
Explanation: Other deductions during the period were the termination of some lease contracts of Zhanjiang Arboriculture and Yangjiang
Arboriculture.
2021 ANNUAL REPORT 237
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
17. Intangible assets
(1) Particulars of intangible assets
Unit: RMB
Unpatented Certificates of
Item Land use rights Patents technology third party right Total
I. Original carrying amount
1. Opening balance 2,191,720,025.23 21,573,963.25 27,358,613.05 15,908,674.87 2,256,561,276.40
2. Increase during the
period 430,015.51 430,015.51
(1) Acquisition 430,015.51 430,015.51
3. Decrease during the
period 151,593,041.88 57,153.12 151,650,195.00
(1) Disposal 151,593,041.88 57,153.12 151,650,195.00
4. Closing balance 2,040,126,983.35 21,946,825.64 27,358,613.05 15,908,674.87 2,105,341,096.91
II. Accumulated amortisation
1. Opening balance 448,158,030.38 20,561,952.90 911,953.77 12,304,830.02 481,936,767.07
2. Increase during the
period 46,466,945.50 1,252,638.07 28,200.00 3,603,844.85 51,351,628.42
(1) Provision 46,466,945.50 1,252,638.07 28,200.00 3,603,844.85 51,351,628.42
(2) Other increases
3. Decrease during the
period 20,620,233.12 20,620,233.12
(1) Disposal 20,620,233.12 20,620,233.12
4. Closing balance 474,004,742.76 21,814,590.97 940,153.77 15,908,674.87 512,668,162.37
III. Impairment provision
1. Opening balance
2. Increase during the
period
(1) Provision
(2) Other increases
3. Decrease during the
period
(1) Disposal
(2) Other deductions
4. Closing balance
IV. Carrying amount
1. Closing carrying
amount 1,566,122,240.59 132,234.67 26,418,459.28 1,592,672,934.54
2. Opening carrying
amount 1,743,561,994.85 1,012,010.35 26,446,659.28 3,603,844.85 1,774,624,509.33
Explanation:
For details of restricted ownership, please refer to note VII. 65.
Certificates of third party right refer to enterprise emission rights, with the validity period between 14 September 2021 and 13
September 2026.
238 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
18. Goodwill
(1) Original carrying amount of goodwill
Unit: RMB
Increase during
the period Decrease
Arising from during
Name of investee or event Opening business the period Closing
generating goodwill balance combinations Disposal balance
Shandong Chenming Panels Co., Ltd. 5,969,626.57 5,969,626.57
Jilin Chenming Paper Co., Ltd. 14,314,160.60 14,314,160.60
Kunshan Tuoan Plastic Products Co., Ltd. 26,946,905.38 26,946,905.38
Total 47,230,692.55 5,969,626.57 41,261,065.98
(2) Provision for impairment of goodwill
Unit: RMB
Increase during Decrease during
Name of investee or event Opening the period the period Closing
generating goodwill balance Provision Disposal balance
Jilin Chenming Paper Co., Ltd. 14,314,160.60 14,314,160.60
Total 14,314,160.60 14,314,160.60
Explanation:
The Company assessed the recoverable amount of goodwill and determined that the goodwill related to the Company’s plastic
business was not impaired. With the category of the principal activities as the basis for determining the reporting segments, the
Company regarded Kunshan Tuoan Plastic Products Co., Ltd. as an asset group. The recoverable amount was determined based on
the present value of the estimated future cash flows. Future cash flows were determined based on the financial budget for 2022 to 2026
as approved by the management, and adopted 7.28% as the discount rate which was the interest rate of the 5-year bonds issued by
the Company in 2018. The cash flows for more than 5 years are calculated based on the growth rate of 5%. Other key assumptions
used in estimating future cash flows included the estimated sales and gross profit based on the performance of such asset group in
the past and the expectation to market development by the management. The management believed that any reasonable change in
the above assumptions will not result in the total book value of the asset group Kunshan Tuoan Plastic Products Co., Ltd. exceeding its
recoverable amount.
2021 ANNUAL REPORT 239
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
19. Long-term prepaid expenses
Unit: RMB
Increase during Amortisation
Item Opening balance the period during the period Other deductions Closing balance
Woodland expenses 9,036,428.60 37,323.97 686,703.84 8,387,048.73
Others 42,025,056.89 2,007,010.16 3,277,342.64 40,754,724.41
Total 51,061,485.49 2,044,334.13 3,964,046.48 49,141,773.14
20. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets before offsetting
Unit: RMB
Closing balance Opening balance
Deductible Deferred Deductible Deferred
temporary income tax temporary income tax
Item difference assets difference assets
Provision for impairment of assets 2,323,311,804.03 544,452,793.22 2,210,402,262.82 509,732,949.61
Unrealised profit arising from intra-
group transactions 110,621,031.60 27,655,257.90 205,628,008.40 51,407,002.10
Outstanding payables 646,596,211.53 97,758,308.63 538,679,932.17 88,774,034.53
Deferred income 202,273,476.76 30,341,021.50 127,445,713.46 21,358,762.71
Deductible loss 2,508,683,883.40 409,890,367.80 2,445,427,000.05 400,915,339.22
Debt reconstructing 18,734,830.91 4,683,707.73 47,906,363.94 11,976,590.97
Total 5,810,221,238.23 1,114,781,456.78 5,575,489,280.84 1,084,164,679.14
(2) Deferred income tax liabilities before offsetting
Unit: RMB
Closing balance Opening balance
Taxable Deferred Taxable Deferred
temporary income tax temporary income tax
Item differences liabilities differences liabilities
Asset valuation increment from business
combinations involving entities not
under common control 22,697,097.44 5,674,274.36 43,816,906.47 6,572,535.97
Debt reconstructing 30,145,021.52 7,536,255.38
Total 52,842,118.96 13,210,529.74 43,816,906.47 6,572,535.97
240 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
20. Deferred income tax assets/deferred income tax liabilities (Continued)
(3) The breakdown of unrecognised deferred income tax assets
Unit: RMB
Item Closing balance Opening balance
Deductible temporary difference 1,671,856.52 59,564,220.72
Deductible loss 730,122,476.10 776,900,858.71
Total 731,794,332.62 836,465,079.43
(4) Expiry of deductible loss of unrecognised deferred income tax assets falls in the periods as follows
Unit: RMB
Year Closing balance Opening balance Remark
2021 66,234,527.65
2022 166,532,843.73 187,801,057.21
2023 129,523,478.05 138,151,854.93
2024 90,461,838.25 108,619,258.72
2025 249,242,062.93 276,094,160.20
2026 94,362,253.14
Total 730,122,476.10 776,900,858.71
21. Other non-current assets
Unit: RMB
Closing balance Opening balance
Book Impairment Carrying Book Impairment Carrying
Item balance provision amount balance provision amount
Land transfer fees 298,072,250.68 298,072,250.68
Consideration for acquisition of companies 127,500,000.00 127,500,000.00
Payments for engineering and equipment 64,364,443.42 64,364,443.42 58,886,418.75 58,886,418.75
Total 489,936,694.10 489,936,694.10 58,886,418.75 58,886,418.75
2021 ANNUAL REPORT 241
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
22. Short-term borrowings
(1) Classification of short-term borrowings
Unit: RMB
Item Closing balance Opening balance
Mortgage borrowings 675,627,536.66 279,524,407.05
Guaranteed borrowings 7,734,756,765.41 7,536,960,272.39
Credit borrowings 8,847,850,884.15 8,189,875,845.09
Discounted borrowings 16,194,790,000.00 16,752,556,600.00
Pledged borrowings 70,000,000.00 35,075,833.33
Total 33,523,025,186.22 32,793,992,957.86
Other explanations:
For classification and amount of pledged assets of mortgage borrowings, please see notes in relation, please see 1. Monetary
funds and 65. Assets with restricted ownerships or right to use in Note VII;
For classification and amount of mortgage assets of mortgage borrowings, please see notes in relation, please see 1. Monetary
funds and 65. Assets with restricted ownerships or right to use in Note VII;
Overdue short-term borrowings: total outstanding short-term borrowing past due as at the end of the year amounted to
RMB0.00.
Short-term borrowings included interest payable of RMB21,320,661.85
23. Bills payable
Unit: RMB
Item Closing balance Opening balance
Commercial acceptance bills 1,398,922,636.21 984,661,462.19
Bank acceptance bills 1,690,589,691.19 2,014,275,274.15
Total 3,089,512,327.40 2,998,936,736.34
Total outstanding bills payable due as at the end of the period amounted to RMB0.
242 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
24. Accounts payable
(1) Particulars of accounts payable
Unit: RMB
Item Closing balance Opening balance
Payment for goods 3,074,700,464.48 3,416,069,031.99
Payment for engineering 307,195,168.83 139,679,646.76
Payment for equipment 249,371,719.69 260,995,383.02
Others 239,863,992.34 225,686,670.54
Total 3,871,131,345.34 4,042,430,732.31
(2) Disclosure by ageing
Unit: RMB
Ageing Closing balance Opening balance
Within 1 year (including 1 year) 3,282,236,529.52 3,478,181,213.77
1-2 years 229,465,372.73 252,769,346.06
2-3 years 164,915,158.41 131,122,082.59
Over 3 years 194,514,284.68 180,358,089.88
Subtotal 3,871,131,345.34 4,042,430,732.30
(3) Significant advance receipts for over 1 year
Unit: RMB
Item Closing balance Reasons
BEIJING GUODIAN FUTONG SCIENCE AND
DEVELOPMENT CO., LTD. 46,122,225.40 Not due for payment
WEIFANG XINGXING UNITED CHEMICAL CO., LTD. 23,311,078.67 Not due for payment
OMYA HAIMING (NANCHANG) CHEMICAL CO. LTD. 16,000,000.00 Not due for payment
CSSC 704TH RESEARCH INSTITUTE 15,654,258.23 Not due for payment
ZHEJIANG JNDIA PIPELINE INDUSTRY CO., LTD. 6,728,957.42 Not due for payment
TOTAL 107,816,519.72 –
2021 ANNUAL REPORT 243
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
25. Receipts in advance
Unit: RMB
Item Closing balance Open balance
Prepaid property rents 38,274,028.20
Total 38,274,028.20
26. Contract liabilities
Unit: RMB
Item Closing balance Reasons
Payment for goods in advance 1,382,289,597.54 1,051,147,044.74
Total 1,382,289,597.54 1,051,147,044.74
27. Staff remuneration payables
(1) Particulars of staff remuneration payables
Unit: RMB
Opening Increase during Decrease during Closing
Item balance the period the period balance
I. Short-term remuneration 231,749,583.09 1,249,838,322.01 1,311,733,655.40 169,854,249.70
II. Retirement benefit plan-defined
contribution scheme 627,002.22 217,038,437.98 217,620,681.89 44,758.31
III. Termination benefits 1,031,921.95 1,031,921.95
Total 232,376,585.31 1,467,908,681.94 1,530,386,259.24 169,899,008.01
244 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
27. Staff remuneration payables (Continued)
(2) Particulars of short-term remuneration
Unit: RMB
Opening Increase during Decrease during Closing
Item balance the period the period balance
1. Salaries, bonuses, allowance and
subsidies 170,642,761.74 1,002,414,649.76 1,012,871,371.68 160,186,039.82
2. Staff welfare 57,305,121.60 57,305,121.60
3. Social insurance premium 585,607.73 97,321,175.44 97,559,834.49 346,948.68
Of which: Medical insurance
premium 575,413.71 88,822,377.06 89,053,438.61 344,352.16
Work-related injury
insurance premium 3,538.60 5,051,271.91 5,054,712.07 98.44
Maternity insurance
premium 6,655.42 3,447,526.47 3,451,683.81 2,498.08
4. Housing provident funds 7,998,911.38 78,972,630.28 81,876,733.99 5,094,807.67
5. Union funds and workers’
education 30,774,839.48 11,636,725.47 40,923,229.44 1,488,335.51
6. Other short-term remuneration 21,747,462.76 2,188,019.46 21,197,364.20 2,738,118.02
Total 231,749,583.09 1,249,838,322.01 1,311,733,655.40 169,854,249.70
(3) Defined contribution plan
Unit: RMB
Opening Increase during Decrease during Closing
Item balance the period the period balance
1. Basic pension insurance premiums 559,683.60 208,864,586.33 209,380,659.99 43,609.94
2. Unemployment insurance premiums 67,318.62 8,173,851.65 8,240,021.90 1,148.37
Total 627,002.22 217,038,437.98 217,620,681.89 44,758.31
2021 ANNUAL REPORT 245
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
28. Taxes payable
Unit: RMB
Item Closing balance Opening balance
Enterprise income tax 89,597,918.41 274,637,537.42
Value added tax 125,522,336.03 294,438,467.26
Land use tax 9,240,921.98 7,522,959.20
Property tax 13,083,934.41 9,232,558.17
Urban maintenance and construction tax 3,748,576.77 10,137,043.67
Educational surcharges and others 2,931,140.78 8,112,168.27
Individual income tax 61,378,163.24 41,648,852.90
Land appreciation tax 4,076,160.22 2,024,028.20
Environmental Protection Tax 3,959,856.45 2,263,933.52
Resource tax 4,500,000.00 255.00
Stamp duty 3,456,472.38 2,630,037.02
Total 321,495,480.67 652,647,840.63
29. Other payables
Unit: RMB
Item Closing balance Opening balance
Interest payable 55,437,777.80 178,992,959.85
Dividend payable
Other payables 1,482,575,808.13 1,777,722,407.98
Total 1,538,013,585.93 1,956,715,367.83
(1) Interest payable
Unit: RMB
Item Closing balance Opening balance
Interest on borrowings 81,495,654.29
Interest on Corporate Bonds 21,132,222.24 17,401,472.25
Interest on medium-term notes 34,305,555.56 80,095,833.31
Total 55,437,777.80 178,992,959.85
246 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
29. Other payables (Continued)
(2) Other payables
1) Other payables by nature
Unit: RMB
Item Closing balance Opening balance
Open credit 550,223,956.81 625,546,672.65
Deposit 261,990,665.03 259,341,777.01
Accrued expenses 341,923,505.85 525,268,287.87
The obligation to repurchase shares under the share
incentive scheme 226,860,000.00 226,860,000.00
Others 101,577,680.44 140,705,670.45
Total 1,482,575,808.13 1,777,722,407.98
2) Significant advance receipts for over 1 year
Unit: RMB
Item Closing balance Reasons
SHANGHAI SHUILAN PROPERTY MANAGEMENT
CO., LTD. 136,000,000.00 Not yet due
NINE DRAGONS DAWEI HOLDINGS CO., LTD. 30,000,000.00 Not yet due
WEIFANG XINGXING UNITED CHEMICAL CO., LTD. 16,860,000.00 Not yet due
WUHAN TIANRUI PAPER CO., LTD. 7,941,708.00 Not yet due
SHENZHEN BAIYIXUAN PAPER CO., LTD. 4,050,000.00 Not yet due
Total 194,851,708.00 –
30. Non-current liabilities due within one year
Unit: RMB
Item Closing balance Opening balance
Long-term receivables due within one year 2,583,730,366.67 2,935,835,697.30
Bonds payable due within one year 1,270,636,933.46
Long-term payables due within one year 1,543,620,543.60 1,621,095,530.96
Lease liabilities due within one year 4,606,717.58 4,606,717.58
Other non-current liabilities due within one year 1,198,716,666.67 2,599,411,670.09
Total 6,601,311,227.98 7,160,949,615.93
2021 ANNUAL REPORT 247
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
31. Other current liabilities
Unit: RMB
Item Closing balance Opening balance
Short-term bonds payable 157,037,833.35
Total 157,037,833.35
Increase/decrease in short-term bonds payable:
Unit: RMB
Issue Interest Amortisation Redemption
Name of commercial Date of Opening during the at par of premium/ During the Closing
paper Par value issue Term Amount balance period value discount period balance
2020 first tranche of
super & short-term
commercial paper 300,000,000.00 2020-4-22 270 days 299,550,000.00 157,037,833.35 157,037,833.35
Total – – – 299,550,000.00 157,037,833.35 157,037,833.35
32. Long-term borrowings
(1) Types of long-term borrowings
Unit: RMB
Item Closing balance Opening balance
Pledged borrowings 3,921,048,883.74 4,618,249,057.65
Guarantee borrowings 2,028,979,800.00 4,319,737,618.80
Credit borrowings 1,910,041,837.91 2,075,000,000.00
Less: long-term borrowings due within 1 year 2,583,730,366.67 2,935,835,697.30
Total 5,276,340,154.98 8,077,150,979.15
Other explanation:
For classification and amount of pledged assets of pledged borrowings, please see 1. Monetary funds and 65. Assets with
restricted ownerships or right to use in Note VII.
Long-term borrowings included interest payable of RMB11,954,863.48.
248 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
33. Bonds payable
(1) Bonds payable
Unit: RMB
Item Closing balance Opening balance
17 Chenming Bond 01 – Chenming Group 89,957,250.00
18 Chenming Bond 01 – Chenming Group 155,000,000.00 350,000,000.00
Chenming USD Bonds 1,096,920,101.46
Total 155,000,000.00 1,536,877,351.46
(2) Increase/decrease in bonds payable (excluding other financial instruments such as Preference Shares and
Perpetual Bonds classified as financial liabilities)
Unit: RMB
Changes
Issue in foreign
during Amortisation Redemption exchange
Name of Date of Opening the Interest of premium/ during the gains and Closing
commercial paper Par value issue Term Amount balance period at par value discount period losses balance
17 Chenming Bond
01 – Chenming
Group 1,200,000,000.00 2017-8-22 5 years 1,198,200,000.00 89,957,250.00 3,753,750.00 42,750.00 93,753,750.00
18 Chenming Bond
01 – Chenming
Group 350,000,000.00 2018-4-2 5 years 350,000,000.00 350,000,000.00 26,600,000.00 26,600,000.00 350,000,000.00
Chenming USD
Bonds 1,137,120,600.00 2019-8-6 2.6 years 1,125,276,863.46 1,096,920,101.46 94,314,839.95 4,104,713.26 94,909,032.00 -24,793,689.21 1,075,636,933.46
Less: bonds
payable due
within one year 1,270,636,933.46
Total 2,687,120,600.00 – – 2,673,476,863.46 1,536,877,351.46 124,668,589.95 4,147,463.26 215,262,782.00 -24,793,689.21 155,000,000.00
34. Lease liabilities
Unit: RMB
Item Closing balance Opening balance
Lease payments payable 81,362,458.45 85,933,149.45
Less: Unrecognised financing expenses 19,474,535.06 21,054,661.97
Less: Lease liabilities due within one year 4,606,717.58 4,606,717.58
Total 57,281,205.81 60,271,769.90
2021 ANNUAL REPORT 249
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
35. Long-term payables
Unit: RMB
Item Closing balance Opening balance
Long-term payables 2,358,901,022.99 2,295,309,357.74
Total 2,358,901,022.99 2,295,309,357.74
(1) By nature
Unit: RMB
Item Closing balance Opening balance
Retention for the financial leasing operations 1,000,000.00 64,196,192.92
China Development Bank Special Fund 488,000,000.00 517,500,000.00
Contributions by other partners 225,000,000.00 34,210,000.00
Financial leasing 3,188,521,566.59 3,300,498,695.78
Subtotal 3,902,521,566.59 3,916,404,888.70
Less: Long-term payables due within 1 year 1,543,620,543.60 1,621,095,530.96
Total 2,358,901,022.99 2,295,309,357.74
Other explanations:
Contributions by other partners refer to the contributions made by other partners to Weifang Chenming Growth Driver Replacement
Equity Investment Fund Partnership (Limited Partnership), the Company’s special structured entity, Huanggang Chenming Pulp & Paper
Co., Ltd., Zhanjiang Chenming Pulp & Paper Co., Ltd. and Weifang Chendu Equity Investment Partnership (Limited Partnership), and
such contributions are reclassified as financial liabilities on a consolidation basis.
36. Provisions
Unit: RMB
Item Closing balance Opening balance Reason
Pending litigation Losses from
325,259,082.28 325,259,082.28 Arjo’s lawsuit
Total 325,259,082.28 325,259,082.28 –
Other explanations:
In February 2017, Arjowiggins HKK2 Limited (“HKK2 Company”) submitted a H share winding-up petition against the Company to Hong Kong
High Court due to a joint venture dispute, which required a compensation for economic loss of RMB167 million and interest thereon, and legal
costs of USD3.54 million and arbitration fee of HK$3.3 million and interest thereon to HKK2. The Company made provision of RMB320 million
for such pending litigation in 2017. On 5 August 2020, Hong Kong High Court rejected the Company’s appeal. On 21 January 2022, Hong Kong
Court of Final Appeal accepted the Company’s appeal, and no ruling has been made.
250 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
37. Deferred income
Unit: RMB
Increase during Decrease during
Item Opening balance the period the period Closing balance Reason
Government grants 1,637,996,636.51 53,605,132.80 117,920,085.06 1,573,681,684.25 Financial provision
Total 1,637,996,636.51 53,605,132.80 117,920,085.06 1,573,681,684.25 –
Items in respect of government grants:
Unit: RMB
Include in Amount
New grants non-operating Include in charged
Opening during the income for other income against Asset-related/
Liability item balance period the period for the period cost expenses Other changes Closing balance income-related
Project fund for National Key
Technology Research and Asset-related
Development Program 1,287,825.00 164,700.00 1,123,125.00 government grants
Infrastructure and environmental Asset-related
protection engineering 233,097,511.46 12,227,345.28 12,835,606.22 13,216,025.00 219,273,225.52 government grants
Huanggang forestry-pulp paper Asset-related
project 479,669,171.13 41,377,787.52 24,200,216.24 496,846,742.41 government grants
Zhanjiang forestry-pulp paper project Asset-related
54,901,230.11 4,094,632.92 50,806,597.19 government grants
Financial subsidies for technological Asset-related
transformation project 155,686,141.08 11,535,807.72 144,150,333.36 government grants
Funding for environmental protection Asset-related
677,639,567.56 50,592,141.88 627,047,425.68 government grants
Others Asset-related
35,715,190.17 1,280,955.08 34,434,235.09 government grants
Total 1,637,996,636.51 53,605,132.80 104,704,060.06 13,216,025.00 1,573,681,684.25
2021 ANNUAL REPORT 251
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
38. Other non-current liabilities
Unit: RMB
Item Closing balance Opening balance
Medium-term notes 1,198,716,666.67 3,388,933,356.16
Less: Other non-current liabilities due within 1 year 1,198,716,666.67 2,599,411,670.09
Total 789,521,686.07
39. Share capital
Unit: RMB
Increase/decrease during the year (+/-)
Shares
converted
Opening balance New issue Bonus issue from reserves Others Subtotal Closing balance
Total number of shares 2,984,208,200.00 2,984,208,200.00
40. Other equity instruments
(1) Preference Shares, Perpetual Bonds and other financial instruments outstanding at the end of the period
Maturity
Outstanding financial Year of Accounting Dividend or date or Condition for
instruments issuance classification interest rate Issue price Issue size Amount (RMB) renewal status conversion Conversion
17 Lu Chenming MTN001 No defined
2017 Equity instrument 6.80% 100.00 10,000,000.00 1,000,000,000.00 maturity date None Non-convertible
Total 10,000,000.00 1,000,000,000.00
252 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
40. Other equity instruments (Continued)
(2) Changes in Preference Shares, Perpetual Bonds and other financial instruments outstanding at the end of
the period
Unit: RMB
Beginning of the period Increase during the period Decrease during the period End of the period
Outstanding financial
instruments Number Carrying amount Number Carrying amount Number Carrying amount Number Carrying amount
17 Lu Chenming MTN001 10,000,000.00 996,000,000.00 10,000,000.00 996,000,000.00
Chenming You 01 22,500,000.00 2,238,750,000.00 22,500,000.00 2,238,750,000.00
Chenming You 02 10,000,000.00 999,000,000.00 10,000,000.00 999,000,000.00
Chenming You 03 12,500,000.00 1,239,750,000.00 12,500,000.00 1,239,750,000.00
Total 55,000,000.00 5,473,500,000.00 45,000,000.00 4,477,500,000.00 10,000,000.00 996,000,000.00
Changes (increase or decrease) in other equity instruments during the period, the reasons for such changes, and the basis for relevant
accounting treatment:
The Company issued medium-term notes amounting to RMB1,000 million on 12 July 2017 at a coupon rate of 6.80%. The
proceeds net of issue costs amounted to RMB996.00 million.
The notes are debts without a defined maturity date and will continue indefinitely until the exercise of the right of redemption by
the Company. The interest rate of the bills is determined by the basic interest rate + the initial interest rate + 300BP. It has the
feature of capped interest rates and the capped interest rate does not exceed the average interest rate level of the same type
of instruments in the same industry in the same period; The Company has the right to defer any payment of interest. The right
of redemption of the notes is vested in the Company so that it is up to the Company to decide whether to redeem or not; the
priority of repayment of the principal and interest of medium-term notes for the period is the same as other outstanding debt
financing instruments of the issuers in the event of winding up, because there is low probability of bankruptcy that the Company
will not be liable for contractual obligations to deliver cash or other financial assets expected.
Based on the above, the notes do not contain any term giving rise to any contractual obligation to deliver cash or other financial
assets to any other entity, or to exchange any financial asset or financial liability with any other entity under potential adverse
circumstances. Consequently, they are eligible to be recognised and accounted for as equity instruments and included under
other equity instruments.
The Company non-publicly issued Preference Shares amounting to RMB4,500 million on 17 March, 17 August and 22 September
2016 respectively. The proceeds net of issue costs amounted to RMB4,477.50 million.
2021 ANNUAL REPORT 253
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
40. Other equity instruments (Continued)
(2) Changes in Preference Shares, Perpetual Bonds and other financial instruments outstanding at the end of
the period (Continued)
Holders of Preference Shares participate in profit distribution in two portions, namely the fixed dividend distributed based on a fixed
dividend rate and the distribution of retained earnings realised for the year.
Distribution of fixed dividend
According to the Articles of Association, the Company shall distribute fixed dividends to holders of the Preference Shares at fixed
dividend rate if there are distributable profits after making good losses and the contribution to reserve fund according to law. The
Board is authorised by the general meeting to declare and pay all dividends on the Preference Shares in accordance with the issuance
plan under the framework and principles considered and approved in the general meeting in respect of the Preference Shares. The
general meeting of the Company has the right to cancel part of or all of the current dividends on the Preference Shares. However, when
the general meeting of the Company considers the cancellation of part of or all of the current dividends on the Preference Shares,
the Company shall inform the shareholders of Preference Shares at least 10 working days before the date of dividend payment in
accordance with the requirements of the related authorities.
Participation in the distribution of retained earnings realised for the year
Holders of Preference Shares participate in the distribution of the retained earnings through receipt of cash which is non-cumulative
and non-deferrable. In the event of making good losses and the contribution to reserve fund according to law, after receiving fixed
dividends at fixed dividend rate as agreed, holders of Preference Shares can also participate in the distribution of the retained earnings
for the year in proportion. Specific terms are as follows: the retained earnings for the year arises from net profit attributable to owners
of the parent company on a consolidated basis upon distribution of relevant fixed income to holders of financial instruments such as
the Preference Shares which may be classified under equity. 50% of the retained earnings shall be distributed to holders of Preference
Shares and ordinary shareholders. Holders of Preference Shares shall participate in the distribution of the retained earnings by receiving
cash dividends, and the ordinary shareholders shall participate in the distribution of the retained earnings by receiving cash dividends or
dividends on ordinary shares.
Based on the above, the Preference Shares do not contain any term giving rise to any contractual obligation to deliver cash or other
financial assets to any other entity, or to exchange any financial asset or financial liability with any other entity under potential adverse
circumstances. Consequently, they were accounted for as other equity instruments – Preference Shares.
The Company redeemed in full the Preference Shares in issue during the year.
254 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
41. Capital reserves
Unit: RMB
Opening Increase during Decrease during Closing
Item balance the period the period balance
Capital premium (share premium) 4,619,101,981.31 141,595,645.49 233,258,816.51 4,527,438,810.29
Other capital reserves 702,809,432.44 52,556,871.89 755,366,304.33
Total 5,321,911,413.75 194,152,517.38 233,258,816.51 5,282,805,114.62
Other explanations, including changes (increase or decrease) during the period and reasons for such changes:
the Company repaid equity-settled Preference Shares with a decrease of capital reserves of RMB22,500,000.00 during the year;
the Company recognised the management fees during the vesting period for the share-based payments with an increase of capital
reserves of RMB52,556,871.89;
the Company acquired the non-controlling interests of Wuhan Chenming Hanyang Paper Holdings Co., Ltd. and Jiangxi Chenming
Paper Co., Ltd. with a decrease of capital reserves of RMB184,122,332.33;
a capital increase of Shouguang Meilun Paper Co., Ltd., a subsidiary of the Company, was contributed on the part of other
investors, which causing a decrease in the Company’s shareholding without loss of control, and a decrease of capital reserves of
RMB26,636,484.18;
a capital increase of Zhanjiang Chenming Pulp & Paper Co., Ltd., a subsidiary of the Company, was contributed on the part of other
investors, which causing a decrease in the Company’s shareholding without loss of control, and an increase of capital reserves of
RMB64,364,622.35;
Guangdong Nanyue Bank Co., Ltd., an associate of the Company, introduced investment on the part of other investors, which diluted
the Company’s equity interest, and an increase of capital reserves of RMB77,231,023.14.
42. Treasury shares
Unit: RMB
Opening Increase during Decrease during Closing
Item balance the period the period balance
Share incentive 226,860,000.00 226,860,000.00
Total 226,860,000.00 226,860,000.00
Other explanations, including changes (increase or decrease) during the period and reasons for such changes:
During the year, the Company issued additional 79,600,000 A shares by implementing the share incentive scheme
and recognised treasury shares for the obligation to repurchase.
2021 ANNUAL REPORT 255
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
43. Other comprehensive income
Unit: RMB
During the period
Less: Transferred Less: Transferred
from other from other
comprehensive comprehensive
income in prior income in prior Attributable Attributable
Incurred before periods to profit periods to Less: to parent to minority
income tax or loss during retained earnings Income tax company shareholders
Item Opening balance for the period the period during the period expenses after tax after tax Closing balance
I. Other comprehensive income that
cannot be reclassified to profit or loss
in subsequent periods
II. Other comprehensive income that will
be reclassified to profit and loss in
subsequent periods -561,686,607.66 116,103,878.30 116,103,878.30 -445,582,729.36
1. Other comprehensive income that
may be reclassified to profit and
loss under the equity method -12,359,143.50 1,846,610.94 1,846,610.94 -10,512,532.56
2. Translation differences of financial
statements denominated in foreign
currency -549,327,464.16 114,257,267.36 114,257,267.36 -435,070,196.80
Total other comprehensive income -561,686,607.66 116,103,878.30 116,103,878.30 -445,582,729.36
44. Surplus reserves
Unit: RMB
Opening Increase during Decrease during
Item balance the period the period Closing balance
Statutory surplus reserves 1,212,009,109.97 1,212,009,109.97
Total 1,212,009,109.97 1,212,009,109.97
45. General risk reserves
Opening Increase during Decrease during
Item balance the period the period Closing balance
General risk reserves 74,122,644.20 2,703,274.40 76,825,918.60
Total 74,122,644.20 2,703,274.40 76,825,918.60
256 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
46. Retained profit
Unit: RMB
Item The period The prior period
Retained profit as at the end of the prior year before adjustment 9,999,764,028.74 9,306,269,617.38
Adjustment to opening balance of retained earnings (increase +,
decrease -) -1,887,031,763.57
Opening balance of retained profit after adjustment 8,112,732,265.17 9,306,269,617.38
Plus: Net profit for the period attributable to shareholders of the
parent company 2,065,513,108.71 1,712,029,078.52
Less: Transfer of statutory surplus reserves
Transfer of discretionary surplus reserves
Transfer of general risk reserves 2,703,274.40
Ordinary dividend payable 552,078,517.01 437,433,593.74
Perpetual Bonds interest payable 89,700,000.00 194,000,000.00
Preference Shares interest payable 323,390,968.66 387,101,073.42
Retained profit as at the end of the period 9,210,372,613.81 9,999,764,028.74
Breakdown of adjustments to opening balance of retained earnings:
The Company implemented the new financial instrument standard earlier than its associate, Guangdong Nanyue
Bank Co., Ltd., but during the period in which the associate had yet to implement the new standard, the Company
did not adjust the financial statements of associates or joint ventures in accordance with the new standard when it
adopted the equity method of accounting due to objective limitations. Pursuant to the “Fifth Batch of Questions and
Answers on the Implementation of Accounting Standards for Enterprises for 2021 – (I) Questions and Answers on the
Implementation of Long-term Equity Investment Standards” of the Accounting Department of the Ministry of Finance,
since 1 January 2021, the associate adjusted the opening balances of the financial statements in accordance with the
convergence requirements of the new standard, and the Company should adjust the opening balances of its 2021
financial statements accordingly when adopting the equity method of accounting.
47. Revenue and operating costs
Unit: RMB
Amount for the period Amount for the prior period
Item Revenue Operating costs Revenue Operating costs
Principal activities 31,933,583,202.54 24,460,067,257.53 30,047,258,084.97 23,046,708,818.72
Other activities 1,086,229,091.60 762,208,537.75 689,259,911.93 598,885,367.49
Total 33,019,812,294.14 25,222,275,795.28 30,736,517,996.90 23,645,594,186.21
Whether the lower of the audited net profit before or after deducting extraordinary gains or losses is a negative
number
Yes √ No
2021 ANNUAL REPORT 257
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
47. Revenue and operating costs (Continued)
Information related to revenue:
Unit: RMB
Machine-made Hotel and
Category of contract paper segment Financial services property rentals Others Total
Type of goods 31,681,986,516.67 352,102,173.73 166,355,538.98 819,368,064.76 33,019,812,294.14
Including:
Machine-made paper 29,071,777,731.50 29,071,777,731.50
Financial leasing 327,001,050.30 327,001,050.30
Electricity and steam 303,940,594.69 303,940,594.69
Construction materials 349,945,005.51 349,945,005.51
Paper chemicals 131,104,964.35 131,104,964.35
Hotel and property rentals 148,941,357.80 148,941,357.80
Others 2,175,163,226.13 25,101,123.43 17,414,181.18 469,423,059.25 2,687,101,589.99
By geographical area 31,681,986,516.67 352,102,173.73 166,355,538.98 819,368,064.76 33,019,812,294.14
Including:
Mainland China 27,556,185,875.73 352,102,173.73 166,355,538.98 819,368,064.76 28,894,011,653.20
Other countries and regions 4,125,800,640.94 4,125,800,640.94
By the timing of delivery 31,681,986,516.67 352,102,173.73 166,355,538.98 819,368,064.76 33,019,812,294.14
Including:
Goods (at a point in time) 31,371,259,273.12 19,738,820.03 819,253,881.74 32,210,251,974.89
Services (within a certain
period) 303,940,594.69 346,399,581.11 32,285,743.13 682,625,918.93
Leasing income 6,786,648.86 5,702,592.62 114,330,975.82 114,183.02 126,934,400.32
Breakdown of revenue from principal activities
By industry
Unit: RMB
Amount for the year Amount for the prior year
Name of industry Revenue Costs Revenue Costs
Machine-made paper 29,071,777,731.50 22,238,585,916.66 26,799,197,492.54 21,227,455,753.49
Construction materials 349,945,005.51 315,912,453.93 419,138,839.41 358,729,667.72
Financial leasing 327,001,050.30 21,147,808.43 935,121,026.20 127,620,095.42
Electricity and steam 303,940,594.69 260,019,123.96 195,367,954.91 130,435,496.35
Hotels and property rentals 148,941,357.80 124,619,857.81 93,370,973.05 165,846,288.06
Paper chemicals 131,104,964.35 117,040,239.12 144,274,657.39 124,475,985.43
Others 1,600,872,498.39 1,382,741,857.62 1,460,787,141.47 912,145,532.25
Total 31,933,583,202.54 24,460,067,257.53 30,047,258,084.97 23,046,708,818.72
258 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
47. Revenue and operating costs (Continued)
Machine-made paper, by main product type
Unit: RMB
Amount for the year Amount for the prior year
Name of industry Revenue Costs Revenue Costs
White paper board 9,579,581,625.05 6,540,978,628.51 7,900,414,595.22 5,764,493,788.34
Duplex press paper 7,287,152,353.07 6,004,341,245.63 6,880,399,009.21 5,658,261,879.44
Coated paper 4,310,744,513.87 3,130,491,004.15 4,134,523,188.76 3,253,634,912.22
Electrostatic paper 3,857,097,045.49 3,140,962,690.62 4,052,403,877.82 3,196,464,794.41
Anti-sticking raw paper 1,168,436,835.30 872,987,808.22 1,118,932,774.91 868,748,128.10
Thermal paper 540,941,351.36 475,188,142.15 519,335,040.60 460,436,980.49
Others 2,327,824,007.36 2,073,636,397.38 2,193,189,006.02 2,025,415,270.49
Total 29,071,777,731.50 22,238,585,916.66 26,799,197,492.54 21,227,455,753.49
Machine-made paper, by geographical segment
Unit: RMB
Amount for the year Amount for the prior year
Name of industry Revenue Costs Revenue Costs
Mainland China 24,945,977,090.56 18,540,658,115.75 23,746,039,543.40 18,651,686,646.79
Other countries and regions 4,125,800,640.94 3,697,927,800.91 3,053,157,949.14 2,575,769,106.70
Total 29,071,777,731.50 22,238,585,916.66 26,799,197,492.54 21,227,455,753.49
Revenue from top 5 customers
Unit: RMB
Percentage of the
Total revenue from total revenue in the
Period top 5 customers same period (%)
2021 5,259,350,805.45 15.93%
2020 4,206,250,003.00 13.68%
Information related to the transaction price allocated to residual performance obligations:
At the end of the reporting period, the amount of revenue with signed contracts but unfulfilled or uncompleted
performance obligation was RMB862,831,558.41, which was expected to be recognised in 2022.
2021 ANNUAL REPORT 259
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
48. Taxes and surcharges
Unit: RMB
Amount for Amount for the
Item the period prior period
Property tax 77,555,756.03 68,375,017.95
Urban maintenance and construction tax 46,766,679.96 52,280,034.26
Land use tax 40,855,126.39 29,847,867.46
Stamp duty 35,545,109.19 31,389,172.39
Resource tax 22,892,129.80 10,367,209.74
Educational surcharges 20,195,996.39 22,418,855.28
Local education surcharges 13,463,933.81 9,679,449.17
Land appreciation tax 9,175,506.88 2,681,494.52
Water conservation funds 697,713.50 2,683,161.08
Vehicle and vessel tax 142,969.16 125,784.05
Others 17,165,291.20 20,680,809.50
Total 284,456,212.31 250,528,855.40
49. Selling and distribution expenses
Unit: RMB
Amount for Amount for the
Item the period prior period
Wages 133,989,802.96 122,235,622.89
Hospitality expenses 59,259,329.16 55,229,939.72
Travel expenses 21,203,755.03 18,618,459.51
Selling commissions 11,490,724.59 27,552,636.35
Depreciation expenses 11,299,358.22 12,008,055.46
Rental expenses 8,941,037.14 6,714,594.29
Office expenses 2,318,832.06 3,071,737.33
Warehouse expenses 555,915.72 1,108,765.35
Others 44,450,937.63 51,706,545.01
Total 293,509,692.51 298,246,355.91
260 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
50. General and administrative expenses
Unit: RMB
Amount for Amount for the
Item the period prior period
Wages and surcharges 287,370,208.75 320,742,683.51
Production interruption loss 153,841,164.26 94,624,006.41
Depreciation expenses 104,079,387.00 104,091,133.86
Business hospitality expenses 75,588,054.15 87,331,837.47
Welfare expenses 67,448,271.74 64,686,363.40
Amortisation of intangible assets and long-term expenses 47,623,471.69 44,383,804.21
Repair cost and consumption of materials 29,577,039.42 23,829,844.68
Insurance premium 21,399,854.79 29,822,263.59
Travel expenses 14,082,788.42 16,069,151.86
Office expenses 6,016,174.24 3,759,121.11
Audit fees 5,211,323.99 5,668,334.66
Waste disposal expenses 1,438,177.80 9,862,736.52
Others 128,684,819.29 220,549,379.11
Total 942,360,735.54 1,025,420,660.39
Note: Audit fees include audit fees for annual financial statements and internal control reports of the Company, and
other fees for audit matters of the Company occurring during the reporting period.
51. R&D expenses
Unit: RMB
Amount for Amount for the
Item the period prior period
Consumption of materials 1,008,124,599.58 875,193,790.53
Energy and power 194,161,253.86 147,453,048.82
Wages and surcharges 155,808,154.72 148,290,430.65
Depreciation expenses 53,538,054.01 62,483,794.25
Insurance premium 29,407,238.86 20,343,290.79
Housing provident funds 5,375,717.76 9,489,172.29
Welfare expenses 2,838,027.33 4,551,325.39
Union funds 1,601,052.82 779,789.00
Installation expenses 1,423,823.71 1,885,550.14
Travel expenses 17,449.73 25,245.51
Other expenses 1,470,999.08 3,859,804.12
Total 1,453,766,371.46 1,274,355,241.49
2021 ANNUAL REPORT 261
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
52. Finance expenses
Unit: RMB
Amount for Amount for the
Item the period prior period
Interest expenses 2,648,200,417.05 3,144,464,077.81
Less: capitalised interest amount 19,103,008.81
interest income 587,289,410.33 887,004,185.02
Foreign exchange gains and losses -9,455,468.81 -27,516,846.19
Less: capitalisation of foreign exchange gains and losses
Bank charges and others 336,015,748.55 351,225,025.43
Total 2,387,471,286.46 2,562,065,063.22
53. Other income
Unit: RMB
Amount for Amount for the
Source of other income the period prior period
Government grants – amortised deferred income included in
profit or loss 104,704,060.06 108,476,698.60
Government grants – directly included in profit or loss 115,896,575.43 255,407,429.72
Total 220,600,635.49 363,884,128.32
54. Investment income
Unit: RMB
Amount for Amount for the
Item the period prior period
Investment gain on derecognition of financial assets -258,113,630.19 -93,431,738.91
Investment gain on disposal of long-term equity investments 112,907,083.05 16,778,042.01
Income from long-term equity investments accounted for using
the equity method 31,476,499.83 272,022,434.54
Investment gain on debt restructuring 24,593,731.72 -22,005,200.15
Dividend on financial assets held for trading and other non-
current financial assets 19,557,976.67
Total -69,578,338.92 173,363,537.49
262 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
55. Gain on change in fair value
Unit: RMB
Amount for Amount for the
Source of gain on change in fair value the period prior period
Financial assets held for trading -78,631,913.62 10,126,787.86
Other non-current financial assets 1,600,000.00 9,464,346.45
Gain on change in fair value of consumable biological assets
measured at fair value -41,899.05 -13,329,852.55
Total -77,073,812.67 6,261,281.76
56. Credit impairment loss
Unit: RMB
Amount for Amount for the
Item the period prior period
Bad debt loss of bills receivable 20,880,443.83 63,022,468.83
Bad debt loss of financial lease payments -239,469,507.89 -650,157,592.24
Bad debt loss of other receivables -33,623,255.14 -47,955,924.76
Bad debt loss of other payments -16,523,042.11 -16,633,823.40
Total -268,735,361.31 -651,724,871.57
57. Loss on impairment of assets
Unit: RMB
Amount for Amount for the
Item the period prior period
Loss on inventory impairment -11,285,890.45
Loss on fixed asset impairment -13,410,000.00
Loss on construction in progress impairment -163,717.76
Total -11,285,890.45 -13,573,717.76
2021 ANNUAL REPORT 263
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
58. Asset disposal income
Unit: RMB
Amount for Amount for the
Source of asset disposal income the period prior period
Gain on disposal of fixed assets (“-” denotes loss) 9,375,163.93 17,450,629.19
Gain on disposal of intangible assets (“-” denotes loss) 42,184,387.73 8,752,868.37
Total 51,559,551.66 26,203,497.56
59. Non-operating income
Unit: RMB
Amount included in
extraordinary gains
Amount for Amount for or losses for
Item the period the prior period the period
Government grants 42,486,362.10 577,140,958.93 42,355,655.95
Non-current assets damage and scrap profits 1,035,196.66 879,060.70 1,035,196.66
Exempted debts 12,729,703.07 7,086,812.20 12,729,703.07
Fine income 5,723,762.72 1,811,183.88 5,723,762.72
Others 9,719,362.26 13,547,672.44 9,719,362.26
Total 71,694,386.81 600,465,688.15 71,563,680.66
Government grants included in profit or loss for the period:
Unit: RMB
Amount for Amount for Asset-related/
Grants item the period the prior period income-related
Grant income 42,486,362.10 43,750,958.93 Income-related
Relocation subsidy 533,390,000.00 Income-related
Total 42,486,362.10 577,140,958.93
264 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
60. Non-operating expenses
Unit: RMB
Included in
non-recurring
Amount for Amount for profit or loss in
Item the period the prior period the period
Trading of carbon emission quota 42,396,793.42 42,396,793.42
Loss from destroyed and damaged non-current
assets 3,338,528.87 2,178,029.29 3,338,528.87
Donation 1,142,550.00 8,922,077.88 1,142,550.00
Others 95,188.91 1,817,128.52 95,188.91
Total 46,973,061.20 12,917,235.69 46,973,061.20
61. Income tax expenses
(1) Particulars of income tax expenses
Unit: RMB
Amount for Amount for
Item the period the prior period
Current income tax calculated according to tax law and
related regulations 185,879,510.90 457,778,696.15
Deferred income tax expenses 30,616,777.64 -191,722,048.10
Total 216,496,288.54 266,056,648.05
(2) The reconciliation between accounting profit and income tax expenses
Unit: RMB
Item Amount for the period
Total profit 2,306,180,309.99
Income tax expenses calculated at statutory (or applicable) tax rates 345,927,046.50
Effect of different tax rates applicable to certain subsidiaries 566,463,757.61
Adjustments to income tax for prior periods 5,048,497.22
Profit and loss of joint ventures and associates accounted for using the equity method 4,721,474.97
Income not subject to tax (listed with “-”) -516,586,757.30
Non-deductible costs, expenses and losses 17,359,539.31
The effect of tax rate changes on the opening balance of deferred income tax
Tax effect of utilisation of unrecognised deductible losses and deductible temporary
differences in the previous year (listed with “-”) -121,859,010.96
Tax effect of utilisation of unrecognised deductible losses and deductible temporary
differences 83,208,654.66
Tax effect of R&D fee deduction (listed with“-”) -154,331,913.47
The pre-tax deduction of the interest on Perpetual Bonds accounted as equity -13,455,000.00
Income tax expense 216,496,288.54
2021 ANNUAL REPORT 265
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
62. Items on statements of cash flow
(1) Cash received relating to other operating activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Net proceedings from the financial leasing business 1,153,242,827.87 3,562,339,444.74
Finance expenses – Interest income 506,274,390.31 380,426,195.87
Open credit and other income 349,416,906.77 200,271,888.17
Government grants actually received 199,176,622.64 792,045,853.85
Default penalty and fine 11,844,722.79 21,312,403.81
Total 2,219,955,470.38 4,956,395,786.44
(2) Cash paid relating to other operating activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Transportation expenses 961,442,438.95 1,098,519,658.39
Net investment in factoring business 737,000,000.00
Financial institutions charge 210,288,974.16 244,065,319.39
Business hospitality expenses 106,007,628.02 114,049,421.75
Intermediary service expenses 39,555,241.62 49,981,129.73
Travel expenses 35,150,617.24 34,480,991.74
Repair expenses 33,427,722.45 30,764,539.64
Cargo handling charges 30,088,978.09 36,441,851.25
Office expenses 28,618,557.15 25,301,574.10
Insurance premium 22,171,792.20 30,058,435.52
Leasing expenses 17,039,644.42 11,613,158.79
Waste disposal expenses 20,081,650.19 18,878,944.13
Donation 1,142,550.00 8,922,077.88
Others 166,617,924.48 131,699,592.31
Total 2,408,633,718.97 1,834,776,694.62
266 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
62. Items on statements of cash flow (Continued)
(3) Cash received relating to other investing activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Recovery of consideration for equity transfer 493,655,373.48 409,282,077.65
Net cash received from subsidiaries 44,674.62
Total 493,700,048.10 409,282,077.65
(4) Cash paid relating to other investing activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Equity payment for acquisition of companies 127,500,000.00
Total 127,500,000.00
(5) Cash received relating to other financing activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Short-term commercial paper 200,000,000.00 814,457,000.00
Equipment leaseback 2,071,358,708.00 900,000,000.00
Deposit for finance lease 60,000,000.00 362,299,603.12
Net recovery of guarantee deposit 2,286,599,788.67 3,153,589,473.80
Contributions by other partners 190,790,000.00
Total 4,808,748,496.67 5,230,346,076.92
2021 ANNUAL REPORT 267
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
62. Items on statements of cash flow (Continued)
(6) Cash paid relating to other financing activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Repayment of short-term commercial paper and MTN 2,745,000,000.00 2,190,000,000.00
Repayment of bonds 90,000,000.00 900,000,000.00
Repayment of equipment leaseback 2,252,587,404.38 2,568,988,488.34
Redemption of Preference Shares 4,500,000,000.00
Payment of Preference Shares dividend 323,390,968.66 387,101,073.42
Payment of Perpetual Bonds interest 89,700,000.00 194,000,000.00
Repayment of financial support from shareholders 708,440,900.00
Security deposit for financial leasing 96,696,696.64 35,500,000.00
Repurchase of equity in China Development Bank funds 29,500,000.00 77,500,000.00
Acquisition of non-controlling interests 300,000,000.00 450,000,000.00
Total 10,426,875,069.68 7,511,530,461.76
268 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
63. Supplementary information on cash flow statement
(1) Supplementary information on cash flow statement
Unit: RMB
Amount for Amount for
Supplementary information the period the prior period
1. Reconciliation of net profit as cash flows from operating
activities: – –
Net profit 2,089,684,021.45 1,906,213,294.49
Plus: Provision for impairment of assets 280,021,251.76 665,298,589.33
Depreciation of fixed assets, depreciation of investment
property 2,366,091,653.76 2,260,280,953.35
Depreciation of right-of-use assets 7,972,781.72 7,602,966.21
Amortisation of intangible assets 51,351,628.42 49,691,095.45
Amortisation of long-term prepaid expenses 3,964,046.48 2,916,033.48
Loss on disposal of fixed assets, intangible assets and
other long-term assets (“-” denotes gain) -51,559,551.66 -26,203,497.56
Loss on scrapped fixed assets (“-” denotes gain) 2,303,332.21 1,298,968.59
Loss on changes in fair value (“-” denotes gain) 77,073,812.67 -6,261,281.76
Finance expenses (“-” denotes gain) 2,648,200,417.05 2,139,908,266.82
Investment loss (“-” denotes gain) 69,578,338.92 -173,363,537.49
Decrease in deferred income tax assets (“-” denotes
increase) -30,616,777.64 -191,722,048.10
Increase in deferred income tax liabilities (“-” denotes
decrease) 6,637,993.77 5,161,410.38
Decrease in inventories (“-” denotes increase) -156,406,209.61 -360,128,826.69
Decrease in operating receivables (“-” denotes increase) 3,208,289,966.45 5,956,184,790.79
Increase in operating payables (“-” denotes decrease) -1,990,698,513.11 -977,074,501.01
Others
Net cash flows from operating activities 8,581,888,192.64 11,259,802,676.28
2. Major investing and financing activities not involving cash
settlements:
Capital converted from debts
Convertible bonds of the Company due within one year
Finance leases of fixed assets
3. Net change in cash and cash equivalents:
Closing balance of cash 3,168,915,847.02 4,389,169,963.79
Less: Opening balance of cash 4,389,169,963.79 2,890,328,027.41
Plus: Closing balance of cash equivalents
Less: Opening balance of cash equivalents
Net increase in cash and cash equivalents -1,220,254,116.77 1,498,841,936.38
2021 ANNUAL REPORT 269
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
63. Supplementary information on cash flow statement (Continued)
(2) Net Cash of Acquisition Subsidiaries Paid in Current Period
Unit: RMB
Amount
Cash or cash equivalents paid in the current period for business combinations that
occurred during the period: –
Of which: Wuhan Junheng Property Management Co. Ltd. –-
Less: Cash and cash equivalents held by the subsidiary on the acquisition date 44,674.62
Of which: Wuhan Junheng Property Management Co. Ltd. 44,674.62
Plus: Cash or cash equivalents paid in the current period for business combinations
that occurred during previous periods
Of which: Wuhan Junheng Property Management Co. Ltd. –-
Net cash paid for acquisition of subsidiaries -44,674.62
(3) Net cash received from disposal of subsidiaries during the current period
Unit: RMB
Amount
Cash or cash equivalents received from disposal of subsidiaries during the period 318,000,000.00
Of which: –-
Shandong Chenming Power Supply Holdings Co., Ltd. 298,000,000.00
Chengdu Chenming Culture Communication Co., Ltd. 10,000,000.00
Zhanjiang Chenming New-style Wall Materials Co., Ltd. 10,000,000.00
Less: Cash and cash equivalents held by subsidiaries as at the date of loss of control 11,760,452.52
Of which: –-
Shandong Chenming Power Supply Holdings Co., Ltd. 6,233,192.36
Chengdu Chenming Culture Communication Co., Ltd. 30,677.96
Zhanjiang Chenming New-style Wall Materials Co., Ltd. 5,496,582.20
Plus: Cash or cash equivalents received in the current period for disposal of
subsidiaries during previous periods
Of which: –-
Net cash received from disposal of subsidiaries 306,239,547.48
270 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
63. Supplementary information on cash flow statement (Continued)
(3) Cash and cash equivalents composition
Unit: RMB
Item Closing balance Opening balance
I. Cash 3,168,915,847.02 4,389,169,963.79
Of which: Treasury cash 2,926,080.68 2,161,684.57
Bank deposit that can be used for payment at any time 3,165,989,766.34 4,387,008,279.22
Other monetary funds that can be used for payment at
any time
Deposit at central bank deposit that can be used for
payment
Amount due from banks
Amount due to banks
II. Cash equivalents
Of which: Bond investment with maturity within 3 months
III. Balance of cash and cash equivalent at end of period 3,168,915,847.02 4,389,169,963.79
Of which: Restricted cash and cash equivalents used by
the Company or subsidiaries within the Group
64. Notes to items of statements of changes in owners’ equity
The Company implemented the new financial instrument standard earlier than its associate, Guangdong Nanyue Bank
Co., Ltd., but during the period in which the associate had yet to implement the new standard, the Company did not
adjust the financial statements of associates or joint ventures in accordance with the new standard when it adopted
the equity method of accounting due to objective limitations. Since 1 January 2021, the associate adjusted the
opening balances of the financial statements in accordance with the convergence requirements of the new standard,
and the Company should adjust the opening balances of its 2021 financial statements accordingly when adopting the
equity method of accounting, resulting in opening balance of retained earnings – other decrease.
2021 ANNUAL REPORT 271
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
65. Assets with restricted ownerships or right to use
Unit: RMB
Item Closing carrying amount Reason for such restrictions
Monetary funds 10,756,936,714.59 As guarantee deposits for bank acceptance bills and
letter of credit and deposit reserves (Note VII. 1)
Bills receivable/accounts receivable 3,778,108.58 As collateral for letters of guarantee and letters of
financing credit (Note VII. 4)
Accounts receivables 232,200,000.00 As deposits to obtain loans (Note VII. 3)
Financial assets held for trading 55,443,091.44 As deposits for borrowings from CMB International
Securities (Note VII. 2)
Fixed assets 12,866,125,795.19 As collateral for bank borrowings and long-term
payables (Note VII. 14)
Intangible assets 1,210,395,050.42 As collateral for bank borrowings and long-term
payables (Note VII. 17)
Investment property 5,033,765,366.00 As collateral for bank borrowings (Note VII. 13)
Total 30,158,644,126.22 –
Other explanation:
As at 31 December 2021, housing, building structure and equipment with the carrying amount of RMB12,866,125,795.19 (31 December
2020: carrying amount of RMB11,147,836,807.04), intangible assets with the carrying amount of RMB1,210,395,050.42 (31 December 2020:
carrying amount of RMB1,247,015,765.23), and investment properties with the carrying amount of RMB5,033,765,366.00 (31 December 2020:
carrying amount of RMB4,929,794,589.62) was pledged as collateral for long-term borrowings of RMB3,921,048,883.74 (31 December 2020:
RMB4,618,249,057.65) and short-term borrowings of RMB70,000,000.00 (31 December 2020: RMB35,075,833.33).
272 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
66. Foreign currency items
(1) Foreign currency items
Unit: RMB
Closing foreign Closing balance
Item currency balance Exchange rate in RMB
Monetary funds
Of which: USD 73,901,874.68 6.3757 471,176,182.40
EUR 1,411,646.44 7.2197 10,191,663.80
HKD 854,853.23 0.8176 698,928.00
GBP 8,174.64 8.6064 70,354.22
JPY 1,197.00 0.0554 66.31
Accounts receivables
Of which: USD 31,844,557.98 6.3757 203,031,348.31
EUR 3,952,003.65 7.2197 28,532,280.75
JPY 146,734,998.00 0.0554 8,129,118.89
Other receivables
Of which: USD 266,342.71 6.3757 1,698,121.22
EUR 79,086.83 7.2197 570,983.19
Accounts payable
Of which: USD 62,361,234.07 6.3757 397,596,520.06
EUR 2,518,428.32 7.2197 18,182,296.94
Other payables
Of which: USD 17,729,514.03 6.3757 113,038,062.60
EUR 127,684.25 7.2197 921,841.98
Short-term borrowings
Of which: USD 301,125,515.81 6.3757 1,919,885,951.15
HKD 49,602,769.39 0.8176 40,555,224.25
Long-term borrowings
Of which: USD 1,589,700.00 6.3757 10,135,450.29
Non-current liabilities due within one year
Of which: USD 183,708,837.22 6.3757 1,171,272,433.46
2021 ANNUAL REPORT 273
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
66. Foreign currency items (Continued)
(2) Explanation on overseas operating entities (including major overseas operating entities), which shall disclose
their overseas principal places of business, functional currency and basis. Reasons shall be disclosed if
there is any change in the functional currency.
√ Applicable Not applicable
Principal place of
No. Name of subsidiary business Place of incorporation Functional currency
1 Chenming GmbH Hamburg, Germany Hamburg, Germany EUR
2 Chenming Paper Korea Co., Ltd. Seoul, Korea Seoul, Korea KRW
3 Chenming International Co., Ltd. Los Angeles, USA Los Angeles, USA USD
4 Chenming Paper Japan Co., Ltd. Tokyo, Japan Tokyo, Japan JPY
5 Chenming Paper United States Co., Ltd. Los Angeles, USA Los Angeles, USA USD
6 Chenming (Overseas) Limited Hong Kong, China Hong Kong, China USD
7 Chenming (Singapore) Limited Singapore Singapore USD
8 Chenming (HK) Limited Hong Kong, China Hong Kong, China USD
274 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
67. Government grants
(1) General information of government grants
Unit: RMB
Amount included
in the current
Type Amount Reporting item profit and loss
Project Funding for National Key
Technology Research and
Development Program 164,700.00 Other income 164,700.00
Infrastructure and environmental
protection engineering 12,835,606.22 Other income 12,835,606.22
Zhanjiang forestry-pulp-paper project 4,094,632.92 Other income 4,094,632.92
Enterprise reform and development Other income and non-
subsidies 74,297,897.20 operating income 74,297,897.20
Financial subsidies for technological
transformation project 38,603,317.72 Other income 38,603,317.72
Funding for environmental protection 50,794,311.52 Other income 50,794,311.52
Huanggang forestry-pulp-paper project 24,200,216.24 Other income 24,200,216.24
Refund of VAT upon assessment 768,780.56 Other income 768,780.56
Subsidy for top-notch talents 660,000.00 Other income 660,000.00
Subsidy for inviting investments 22,921,843.36 Other income 22,921,843.36
Employment stabilisation subsidies 1,626,174.63 Other income 1,626,174.63
Subsidies for social insurance 345,163.82 Other income 345,163.82
Subsidies for R&D 2,476,800.00 Other income 2,476,800.00
Subsidies for financing 576,300.00 Other income 576,300.00
Refund of tax 8,149,743.76 Other income 8,149,743.76
Government Incentive 6,821,907.00 Non-operating income 6,821,907.00
Subsidies for the pandemic 200,000.00 Non-operating income 200,000.00
Subsidies for forestation 1,404,769.00 Other income 1,404,769.00
Other income and non-
Others 12,144,833.64 operating income 12,144,833.64
Total 263,086,997.59 263,086,997.59
2021 ANNUAL REPORT 275
XII Financial Report
VII. Notes to items of the consolidated financial statements (Continued)
67. Government grants (Continued)
(2) The condition of the refund of government grants
√ Applicable Not applicable
Unit: RMB
Item Amount Reason
Infrastructure and environmental
protection engineering 13,216,025.00 The government repossessed the land
Total 13,216,025.00
VIII. Change in scope of consolidation
1. Disposal of subsidiaries
Whether there is loss of control over subsidiaries on a single disposal
√ Yes No
Unit: RMB
Difference
between
consideration Determination
and share of and key
net assets Carrying assumption Relevant other
of relevant amount of Fair value of of fair value Comprehensive
Basis for subsidiary Remaining remaining remaining Gain or of remaining income
Way of determining as per shareholding shareholding shareholding loss in fair shareholding of former
Consideration Shareholding disposal of Time of the time of consolidated as of the as of the as of the value of as of the subsidiary
Name of of disposal of of disposal of equity loss of loss of financial date of loss date of loss date of loss remaining date of loss transferred to
subsidiary equity interest equity interest interest control control statements of control of control of control shareholding of control profit or loss
Zhanjiang Chenming
New-style
Wall Materials Co., Ltd. 12,580,000.00 100.00% Transfer 2021/1/1 Without control 676,586.27 0.00% 0.00 0.00 0.00 0.00
Chengdu Chenming
Culture
Communication
Co., Ltd. 11,040,000.00 100.00% Transfer 2021/9/30 Without control 2,215,273.26 0.00% 0.00 0.00 0.00 0.00
Shandong Chenming
Power Supply
Holdings Co., Ltd. 298,000,000.00 100.00% Transfer 2021/9/30 Without control 110,262,467.54 0.00% 0.00 0.00 0.00 0.00
276 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
VIII. Change in scope of consolidation (Continued)
1. Disposal of subsidiaries (Continued)
Other explanation:
Whether there was disposal of the investment in a subsidiary in stages through multiple transactions and loss of
control during the period
Yes √ No
Transactions in a basket
Applicable √ Not applicable
2. Others
During the reporting period, 6 companies were added to the scope of consolidation. In particular, 5 companies were
newly established subsidiaries, namely Shanghai Chenyin Trading Co., Ltd., Nanchang Shengheng Trading Co., Ltd.,
Nanchang Kunheng Trading Co., Ltd., Weifang Chendu Equity Investment Partnership (Limited Partnership) and
Huanggang Chenming Pulp & Fiber Trading Co., Ltd. During the reporting period, a subsidiary was acquired not within
the definition of business, namely Wuhan Junheng Property Management Co., Ltd.
During the reporting period, 7 companies were reduced from the scope of consolidation. In order to further focus
on the principal business of pulp production and paper making, divest non-principal business assets and optimise
resource allocation, the Company disposed of 100% equity interest in Zhanjiang Chenming New-style Wall Materials
Co., Ltd., Chengdu Chenming Culture Communication Co., Ltd., Shandong Chenming Power Supply Holdings Co.,
Ltd., Shandong Chenming Panels Co., Ltd., Shouguang Chenming Cement Co., Limited and Shouguang Chenming
Floor Board Co., Ltd. Such companies were excluded from the scope of consolidation. A subsidiary, Shandong
Chenming Coated Paper Sales Co. Ltd., was absorbed into the Group.
2021 ANNUAL REPORT 277
XII Financial Report
IX. Interest in other entities
1. Interest in subsidiaries
(1) Constitution of the Group
Principle
place Place of Nature of Shareholding Issued debt Issued
Name of subsidiary of business incorporation business Type of legal person Direct Indirect Acquisition securities share capital
Zhanjiang Chenming Pulp & Paper Zhanjiang Zhanjiang Paper making For-profit corporation 96.26% Establishment 0 0
Co., Ltd.
Shouguang Meilun Paper Co., Ltd. Shouguang Shouguang Paper making For-profit corporation 62.4864% Establishment 0 0
Jilin Chenming Paper Co., Ltd. Jilin Jilin Paper making For-profit corporation 100% Acquisition 0 0
Huanggang Chenming Pulp & Huanggang Huanggang Pulp production For-profit corporation 70.15% 29.85% Establishment 0 0
Paper Co., Ltd.
Shandong Chenming Paper Sales Shouguang Shouguang Sales of For-profit corporation 100% Establishment 0 0
Co., Ltd. paper product
Shouguang Chenming Import and Shouguang Shouguang Trading For-profit corporation 100% Establishment 0 0
Export Trade Co., Ltd.
Jiangxi Chenming Supply Chain Jiangxi Jiangxi Trading For-profit corporation 70% Establishment 0 0
Management Co., Ltd.
Chenming GmbH Germany Germany Paper product For-profit corporation 100% Establishment 0 0
trading
Shouguang Chenming Shouguang Shouguang Machinery For-profit corporation 100% Establishment 0 0
Papermaking Machine Co., Ltd. manufacturing
Shouguang Hongxiang Printing Shouguang Shouguang Printing and For-profit corporation 100% Acquisition 0 0
and Packaging Co., Ltd. packaging
Shouguang Chenming Modern Shouguang Shouguang Transportation For-profit corporation 100% Establishment 0 0
Logistic Co., Ltd
Jinan Chenming Paper Sales Jinan Jinan Investment For-profit corporation 100% Establishment 0 0
Co., Ltd. management/
Paper product
trading
Huanggang Chenming Huanggang Huanggang Arboriculture For-profit corporation 100% Establishment 0 0
Arboriculture Development
Co., Ltd.
Chenming Arboriculture Co., Ltd. Wuhan Wuhan Arboriculture For-profit corporation 100% Establishment 0 0
Chenming Paper Korea Co., Ltd. Korea Korea Paper product For-profit corporation 100% Establishment 0 0
trading
Shouguang Shun Da Customs Shouguang Shouguang Customs For-profit corporation 100% Establishment 0 0
Declaration Co, Ltd. declaration
Shanghai Chenming Industry Shanghai Shanghai Property For-profit corporation 100% Establishment 0 0
Co., Ltd. investment and
management
Shanghai Chenyin Trading Shanghai Shanghai Trading For-profit corporation 51% Establishment 0 0
Co., Ltd.
278 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
IX. Interest in other entities (Continued)
1. Interest in subsidiaries (Continued)
(1) Constitution of the Group (Continued)
Principle
place Place of Nature of Shareholding Issued debt Issued
Name of subsidiary of business incorporation business Type of legal person Direct Indirect Acquisition securities share capital
Shandong Chenming Group Jinan Jinan Finance For-profit corporation 80% 20% Establishment 0 0
Finance Co., Ltd.
Jiangxi Chenming Paper Co., Ltd. Nanchang Nanchang Paper making For-profit corporation 100% Establishment 0 0
Nanchang Shengheng Trading Nanchang Nanchang Trading For-profit corporation 100% Establishment 0 0
Co. Ltd.
Nanchang Kunheng Trading Nanchang Nanchang Trading For-profit corporation 100% Establishment 0 0
Co. Ltd.
Shouguang Chenming Art Paper Shouguang Shouguang Paper making For-profit corporation 75% Establishment 0 0
Co., Ltd.
Hailaer Chenming Paper Co., Ltd. Hailaer Hailaer Paper making For-profit corporation 75% Establishment 0 0
Shandong Grand View Hotel Shouguang Shouguang Catering For-profit corporation 70% Establishment 0 0
Co., Ltd.
Wuhan Chenming Hanyang Paper Wuhan Wuhan Paper making For-profit corporation 65.205% 34.64% Establishment 0 0
Holdings Co., Ltd
Shandong Chenming Financial Jinan Jinan Financial leasing For-profit corporation 100% Establishment 0 0
Leasing Co., Ltd.
Qingdao Chenming Nonghai Qingdao Qingdao Financial leasing For-profit corporation 100% Establishment 0 0
Financial Leasing Co., Ltd
Chenming (HK) Limited Hong Kong Hong Kong Paper product For-profit corporation 100% Establishment 0 0
trading
Shouguang Hongyi Decorative Shouguang Shouguang Packaging For-profit corporation 100% Merger and 0 0
Packaging Co., Ltd. acquisition
Shouguang Xinyuan Coal Co., Ltd. Shouguang Shouguang Coal For-profit corporation 100% Merger and 0 0
acquisition
Shouguang City Run Sheng Shouguang Shouguang Purchase and For-profit corporation 100% Merger and 0 0
Wasted Paper Recycle Co., Ltd. sale of waste acquisition
Shouguang Wei Yuan Logistics Shouguang Shouguang Logistics For-profit corporation 100% Merger and 0 0
Company Limited acquisition
Wuhan Chenming Qianneng Wuhan Wuhan Thermal power For-profit corporation 51% Establishment 0 0
Electric Power Co., Ltd.
Shandong Chenming Investment Jinan Jinan Investment For-profit corporation 100% Establishment 0 0
Limited
2021 ANNUAL REPORT 279
XII Financial Report
IX. Interest in other entities (Continued)
1. Interest in subsidiaries (Continued)
(1) Constitution of the Group (Continued)
Principle
place Place of Nature of Shareholding Issued debt Issued
Name of subsidiary of business incorporation business Type of legal person Direct Indirect Acquisition securities share capital
Japan Chenming Paper Co., Ltd. Japan Japan Paper product For-profit corporation 100% Establishment 0 0
trading
Chenming International Co., Ltd. the United the United Paper product For-profit corporation 100% Establishment 0 0
States States trading
Zhanjiang Chenming Arboriculture Zhanjiang Zhanjiang Arboriculture For-profit corporation 100% Establishment 0 0
Development Co., Ltd.
Yangjiang Chenming Arboriculture Yangjiang Yangjiang Arboriculture For-profit corporation 100% Establishment 0 0
Development Co., Ltd.
Nanchang Chenming Arboriculture Nanchang Nanchang Arboriculture For-profit corporation 100% Establishment 0 0
Development Co., Ltd.
Guangdong Huirui Investment Zhanjiang Zhanjiang Investment For-profit corporation 100% Establishment 0 0
Co., Ltd.
Jilin Chenming New-style Wall Jilin Jilin Wall materials For-profit corporation 100% Establishment 0 0
Materials Co., Ltd
Jilin Chenming Logistics Co., Ltd. Jilin Jilin Logistics For-profit corporation 100% Establishment 0 0
Jiangxi Chenming Logistics Co., Nanchang Nanchang Logistics For-profit corporation 100% Establishment 0 0
Ltd.
Fuyu Chenming Paper Co., Ltd. Fuyu Fuyu Paper making For-profit corporation 100% Establishment 0 0
Zhanjiang Meilun Pulp & Paper Zhanjiang Zhanjiang Paper making For-profit corporation 100% Establishment 0 0
Co., Ltd.
Shanghai Chenming Financial Shanghai Shanghai Financial leasing For-profit corporation 100% Establishment 0 0
Leasing Co., Ltd.
Wuhan Junheng Property Wuhan Wuhan Property For-profit corporation 100% Merger and 0 0
Management Co. Ltd. acquisition
Guangzhou Chenming Financial Guangzhou Guangzhou Financial For-profit corporation 100% Establishment 0 0
Leasing Co., Ltd. leasing
Shanghai Hongtai Real Estate Co., Shanghai Shanghai Real estate For-profit corporation 100% Merger and 0 0
Ltd. acquisition
Shanghai Hongtai Property Shanghai Shanghai Property For-profit corporation 100% Merger and 0 0
Management Co., Ltd. acquisition
Shandong Chenming Commercial Jinan Jinan Business For-profit corporation 100% Establishment 0 0
Factoring Co., Ltd factoring
Guangzhou Chenming Commercial Guangzhou Guangzhou Business For-profit corporation 51% Establishment 0 0
Factoring Co., Ltd. factoring
280 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
IX. Interest in other entities (Continued)
1. Interest in subsidiaries (Continued)
(1) Constitution of the Group (Continued)
Principle
place Place of Nature of Shareholding Issued debt Issued
Name of subsidiary of business incorporation business Type of legal person Direct Indirect Acquisition securities share capital
Qingdao Chenming Pulp & Paper Qingdao Qingdao Trading For-profit corporation 30% 70% Establishment 0 0
Electronic Commodity Spot
Trading Co., Ltd.
Zhanjiang Chenming Port Co., Ltd. Zhanjiang Zhanjiang Port For-profit corporation 100% Establishment 0 0
Beijing Chenming Financial Beijing Beijing Financial leasing For-profit corporation 100% Establishment 0 0
Leasing Co., Ltd.
Chenming Paper United States the United the United Paper product For-profit corporation 100% Establishment 0 0
Co., Ltd. States States trading
Guangdong Chenming Panels Co., Guangdong Guangdong Panels For-profit corporation 100% Establishment 0 0
Ltd.
Shanghai Chenming Pulp & Paper Shanghai Shanghai Paper product For-profit corporation 100% Establishment 0 0
Sales Co., Ltd. trading
Meilun (BVI) Limited Cayman Cayman Commerce For-profit corporation 100% Establishment 0 0
Weifang Chenming Growth Driver Weifang Weifang Fund For-profit corporation 79% Establishment 0 0
Replacement Equity Investment
Fund Partnership (Limited
Partnership)
Nanjing Chenming Culture Nanjing Nanjing Marketing For-profit corporation 100% Establishment 0 0
Communication Co., Ltd.
Chenming (Overseas) Co., Ltd. Hong Kong Hong Kong Paper product For-profit corporation 100% Establishment 0 0
trading
Chenming (Singapore) Co., Ltd. Singapore Singapore Paper product For-profit corporation 100% Establishment 0 0
trading
Kunshan Tuoan Plastic Products Kunshan Kunshan Rubber and For-profit corporation 100% Merger and 0 0
Co., Ltd. plastic acquisition
2021 ANNUAL REPORT 281
XII Financial Report
IX. Interest in other entities (Continued)
1. Interest in subsidiaries (Continued)
(1) Constitution of the Group (Continued)
Principle
place Place of Nature of Shareholding Issued debt Issued
Name of subsidiary of business incorporation business Type of legal person Direct Indirect Acquisition securities share capital
Hubei Changjiang Chenming Huanggang Huanggang Fund For-profit corporation 59.97% Establishment 0 0
Huanggang Equity Investment
Fund Partnership (Limited
Partnership)
Hainan Chenming Technology Haikou Haikou Wholesale and For-profit corporation 100% Establishment 0 0
Co., Ltd. retail
Qingdao Chenming Import and Qingdao Qingdao Trading For-profit corporation 100% Establishment 0 0
Export Trade Co., Ltd.
Shanghai Herui Investment Shanghai Shanghai Business For-profit corporation 100% Merger and 0 0
Co., Ltd. services acquisition
Hubei Huanggang Chenming Huanggang Huanggang Capital market For-profit corporation 60% Establishment 0 0
Equity Investment Fund services
Management Co., Ltd.
Shandong Dingkun Asset Shouguang Shouguang Business services For-profit corporation 99.9001% Establishment 0 0
Management Partnership
(Limited Partnership)
Huanggang Chenming Paper Huanggang Huanggang Paper making For-profit corporation 100% Establishment 0 0
Technology Co., Ltd.
Huanggang Chenming Port Co., Huanggang Huanggang Port services For-profit corporation 51% Establishment 0 0
Ltd.
Huanggang Chenming Pulp & Huanggang Huanggang Trading For-profit corporation 100% Establishment 0 0
Fiber Trading Co., Ltd.
Weifang Chendu Equity Investment Shouguang Shouguang Capital market For-profit corporation 79.75% Establishment 0 0
Partnership services
(Limited Partnership)
(2) Major non-wholly owned subsidiaries
Unit: RMB
Gain or loss Dividend to
attributable to minority interest
Minority minority interest declared during Closing balance
Name of subsidiary interest during the period the period of minority interest
Shouguang Chenming Art
Paper Co., Ltd. 25.00% -3,455,996.31 95,294,190.47
Shouguang Meilun Paper
Co., Ltd. 37.5136% 34,688,699.68 48,309,125.87 2,559,498,470.96
Zhanjiang Chenming Pulp &
Paper Co., Ltd. 3.74% 2,000,000.00 283,635,377.65
282 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
IX. Interest in other entities (Continued)
1. Interest in subsidiaries (Continued)
(3) Key financial information of major non-wholly owned subsidiaries
Unit: RMB
Closing balance Opening balance
Non-current Current Non-current Non-current Current Non-current Total
Name of subsidiary Current assets assets Total assets liabilities liabilities Total liabilities Current assets assets Total assets liabilities liabilities liabilities
Shouguang Chenming Art
Paper Co., Ltd. 664,927,705.80 499,632,230.38 1,164,559,936.18 783,383,174.36 783,383,174.36 210,008,389.30 531,396,869.27 741,405,258.57 346,404,511.49 346,404,511.49
Shouguang Meilun Paper Co.,
Ltd. 7,009,260,465.11 10,661,260,325.99 17,670,520,791.10 7,674,675,762.57 1,687,766,004.18 9,362,441,766.75 3,954,358,701.82 10,971,104,092.03 14,925,462,793.85 7,816,696,759.19 1,228,430,785.12 9,045,127,544.31
Zhanjiang Chenming Pulp &
Paper Co., Ltd. 11,650,935,934.57 12,965,150,000.41 24,616,085,934.98 14,550,859,440.02 1,994,649,794.03 16,545,509,234.05 9,674,420,109.40 14,008,067,430.74 23,682,487,540.14 10,656,651,818.59 2,827,774,072.22 13,484,425,890.81
Unit: RMB
Amount for the period Amount for the prior period
Total comprehensive Cash flows from Total comprehensive Cash flows from
Name of subsidiary Revenue Net profit income operating activities Revenue Net profit income operating activities
Shouguang Chenming Art
Paper Co., Ltd. 689,339,213.30 -13,823,985.26 -13,823,985.26 -437,908,937.70 642,697,593.98 1,535,786.88 1,535,786.88 -345,949,577.00
Shouguang Meilun Paper
Co., Ltd. 8,705,143,361.05 245,313,174.65 245,313,174.65 1,502,784,779.10 8,070,365,747.22 219,893,721.83 219,893,721.83 1,505,697,902.65
Zhanjiang Chenming Pulp
& Paper Co., Ltd. 13,110,229,643.09 1,093,678,580.62 1,095,525,191.56 2,993,663,137.46 11,870,586,483.29 1,192,007,567.15 1,179,648,423.65 1,603,505,193.56
2021 ANNUAL REPORT 283
XII Financial Report
IX. Interest in other entities (Continued)
2. Transaction changing shareholding in but not causing to loss of control over subsidiaries
(1) Changing in shareholding in subsidiaries
The Company previously held 89.95% of equity interest in Jiangxi Chenming Paper Co., Ltd. In December
2021, the Company entered into the Equity Purchase Agreement with Western Trust Co., Ltd. to purchase an
additional 10.05% equity interest. As of 31 December 2021, the Equity Purchase Agreement was fulfilled and
the consideration for the transaction was RMB300.00 million. The transaction resulted in a decrease in minority
interest of RMB275.8777 million and a decrease in capital reserves of RMB24.1223 million.
The Company previously held 87.40% of equity interest in Shouguang Meilun Paper Co., Ltd. In March 2021,
Weifang Chenchuang Equity Investment Fund Partnership (Limited Partnership) made a unilateral capital
contribution to Shouguang Meilun Paper Co., Ltd. Upon completion of the capital increase, its equity interest
in Shouguang Meilun Paper Co., Ltd. was 13.04%, and the transaction did not result in loss of control over
Shouguang Meilun Paper Co., Ltd. by the Company. The transaction resulted in a decrease in capital reserves
of RMB12.3030 million.
The Company previously held 76.00% of equity interest in Shouguang Meilun Paper Co., Ltd. In June 2021,
the Company, SWSC Innovation Investment Co., Ltd. and CCB Financial Asset Investment Co., Ltd. jointly
made capital contribution to Shouguang Meilun Paper Co., Ltd. Upon completion of the capital increase,
SWSC Innovation Investment Co., Ltd.’s equity interest in Shouguang Meilun Paper Co., Ltd. was 2.22%, and
the transaction did not result in the loss of control over Shouguang Meilun Paper Co., Ltd. by the Company.
CCB Investment-Shandong Development Debt-to-Equity Swap Investment Scheme, which is controlled by the
Company, has acquired 15.56% equity interest in Shouguang Meilun Paper Co., Ltd. The transaction resulted in
a decrease in capital reserves of RMB14.3335 million.
The Company previously held 100.00% of equity interest in Zhanjiang Chenming Pulp & Paper Co., Ltd. In
December 2021, Beijing Chuanfa Investment Management Co. Ltd. made a unilateral capital contribution to
Zhanjiang Chenming Pulp & Paper Co., Ltd. Upon completion of the capital increase, its equity interest in
Zhanjiang Chenming Pulp & Paper Co., Ltd. was 3.74%, and the transaction did not result in the loss of control
over Zhanjiang Chenming Pulp & Paper Co., Ltd. by the Company. The transaction resulted in an increase in
capital reserves of RMB64.3646 million.
(2) Effect of the transactions on minority interest and equity attributable to the owners of the parent company
Unit: RMB
Jiangxi Chenming
Item Paper Co., Ltd.
Acquisition cost/disposal consideration 300,000,000.00
– Cash 300,000,000.00
– Fair value of non-cash assets
Total acquisition cost/disposal consideration 300,000,000.00
Less: share of net assets in subsidiaries based on shares acquired/disposed 275,877,667.67
Difference 24,122,332.33
Of which: capital reserve adjustment -24,122,332.33
284 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
IX. Interest in other entities (Continued)
2. Transaction changing shareholding in but not causing to loss of control over subsidiaries (Continued)
(3) Effect of unilateral capital increase by minority interests on minority interests and equity attributable to the
owners of the parent company
Unit: RMB
Capital contribution of
Weifang Chenchuang
Equity Investment
Partnership (Limited
Partnership) to
Shouguang Meilun
Item Paper Co., Ltd.
Amount of capital increase 900,000,000.00
Share of net assets of the Company after the capital increase 5,325,833,586.12
Share of net assets of the Company before the capital increase 5,338,136,620.06
Difference 12,303,033.94
Of which: capital reserve adjustment -12,303,033.94
(4) Effect of capital increase jointly by the Company and minority interests on minority interests and equity
attributable to the owners of the parent company
Unit: RMB
Capital contribution of
the Company and
SWSC Innovation
Investment Co., Ltd. to
Shouguang Meilun
Item Paper Co., Ltd.
Amount of capital increase by minority interest 200,000,000.00
Share of net assets of the Company after the capital increase 6,476,705,570.96
Share of net assets of the Company before the capital increase 5,091,039,021.20
Difference 1,385,666,549.76
Amount of capital increase by the Debt-to-Investment Swap Investment Scheme
controlled the Company 1,400,000,000.00
Difference -14,333,450.24
Of which: capital reserve adjustment -14,333,450.24
2021 ANNUAL REPORT 285
XII Financial Report
IX. Interest in other entities (Continued)
2. Transaction changing shareholding in but not causing to loss of control over subsidiaries (Continued)
(5) Effect of unilateral capital increase by minority interests on minority interests and equity attributable to the
owners of the parent company
Unit: RMB
Capital contribution
of Beijing Chuanfa
Investment
Management Co. Ltd.
to Zhanjiang Chenming
Item Pulp & Paper Co., Ltd.
Amount of capital increase 350,000,000.00
Share of net assets of the Company after the capital increase 7,344,941,323.28
Share of net assets of the Company before the capital increase 7,280,576,700.93
Difference 64,364,622.35
Of which: capital reserve adjustment 64,364,622.35
3. Interest in joint arrangements or associates
(1) Major joint ventures or associates
Accounting method
Name of joint venture or Principal place Place of Shareholding for investment in joint
associate of business incorporation Nature of business Direct Indirect ventures or associates
I. Joint venture
Weifang Sime Darby West Port Weifang Weifang Port construction 50% Equity method
Co., Ltd.
Weifang Xingxing United Weifang Weifang Chemical 50% Equity method
Chemical Co., Ltd.
II. Associate
Ningbo Kaichen Huamei Equity Ningbo Ningbo Investment management 40% Equity method
Investment Fund Partnership
(Limited Partnership)
Zhuhai Dechen New Third Zhuhai Zhuhai Investment management 50% Equity method
Board Equity Investment
Fund Company (Limited
Partnership)
Goldtrust Futures Co., Ltd. Changsha Changsha Futures 35.43% Equity method
Guangdong Nanyue Bank Guangdong Guangdong Bank 6.76% Equity method
Co., Ltd.
286 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
IX. Interest in other entities (Continued)
3. Interest in joint arrangements or associates (Continued)
(2) Key financial information of major joint ventures
Unit: RMB
Closing balance/ Opening balance/
amount for the period amount for the prior period
Weifang Sime Darby Weifang Sime Darby
West Port Co., Ltd. West Port Co., Ltd.
Current assets 21,774,345.85 11,717,494.06
Of which: Cash and cash equivalents 7,054,019.11 5,739,139.97
Non-current assets 507,959,459.20 526,006,172.67
Total assets 529,733,805.05 537,723,666.73
Current liabilities 12,094,403.33 17,876,446.30
Non-current liabilities 377,812,252.49 370,515,018.03
Total liabilities 389,906,655.82 388,391,464.33
Minority interest
Equity interest attributable to shareholders of
the parent company 139,827,149.23 149,332,202.40
Share of net assets based on shareholding 69,913,574.62 74,666,101.20
Adjustments
– Goodwill
– Unrealised profit arising from intra-group
transactions 7,457,424.13 7,277,405.72
– Others
Carrying amount of equity investment in
joint ventures 77,370,998.75 81,943,506.92
Fair value of equity investment in joint ventures
where publicly quoted prices exist
Revenue 62,902,209.91 56,243,755.61
Finance expenses 21,543,430.57 21,875,452.03
Income tax expenses
Net profit -9,145,016.34 -15,604,782.40
Net profit from discontinued operations
Other comprehensive income
Total comprehensive income -9,145,016.34 -15,604,782.40
Dividends received from joint ventures
during the year
2021 ANNUAL REPORT 287
XII Financial Report
IX. Interest in other entities (Continued)
3. Interest in joint arrangements or associates (Continued)
(2) Key financial information of major joint ventures (Continued)
Closing balance/ Opening balance/
amount for the period amount for the prior period
Weifang Xingxing United Weifang Xingxing United
Chemical Co., Ltd. Chemical Co., Ltd.
Current assets 100,024,598.36 118,868,385.80
Of which: Cash and cash equivalents 10,187,071.60 37,588,664.71
Non-current assets 20,299,403.19 24,644,081.09
Total assets 120,324,001.55 143,512,466.89
Current liabilities 27,883,399.22 26,318,294.93
Non-current liabilities 12,417,862.06 22,662,556.59
Total liabilities 40,301,261.28 48,980,851.52
Minority interest
Equity interest attributable to shareholders of
the parent company 80,022,740.27 94,531,615.37
Share of net assets based on shareholding 40,011,370.14 47,265,807.69
Adjustments
– Goodwill
– Unrealised profit arising from intra-group
transactions 44,612,417.61 44,608,577.43
– Others
Carrying amount of equity investment in
joint ventures 84,623,787.74 91,874,385.12
Fair value of equity investment in joint ventures
where publicly quoted prices exist
Revenue 12,677,764.43 1,596,938.76
Finance expenses -338,798.67 -733,877.86
Income tax expenses
Net profit -14,501,194.76 -3,183,622.90
Net profit from discontinued operations
Other comprehensive income
Total comprehensive income -14,501,194.76 -3,183,622.90
Dividends received from joint ventures
during the year
288 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
IX. Interest in other entities (Continued)
3. Interest in joint arrangements or associates (Continued)
(3) Key financial information of major associates
Unit: RMB
Closing balance/ Opening balance/
amount for the period amount for the prior period
Ningbo Kaichen Huamei Ningbo Kaichen Huamei
Equity Investment Fund Equity Investment Fund
Partnership (Limited Partnership (Limited
Partnership) Partnership)
Current assets 4,378,938.81 24,928,544.79
Non-current assets 189,276,706.00 171,877,206.00
Total assets 193,655,644.81 196,805,750.79
Current liabilities 19,749.95
Non-current liabilities
Total liabilities 19,749.95
Net assets 193,655,644.81 196,786,000.84
Minority interest
Equity interest attributable to shareholders of
the parent company 193,655,644.81 196,786,000.84
Share of net assets based on shareholding 77,459,159.43 78,714,400.34
Adjustments
– Goodwill
– Unrealised profit arising from intra-group
transactions
– Others 119,838,326.16 119,835,525.93
Carrying amount of equity investment in associates 197,297,485.59 198,549,926.27
Fair value of equity investment in associate where
publicly quoted prices exist
Revenue
Net profit -3,131,226.94 -2,447,303.13
Net profit from discontinued operations
Other comprehensive income
Total comprehensive income -3,131,226.94 -2,447,303.13
Dividends received from associates
during the year
2021 ANNUAL REPORT 289
XII Financial Report
IX. Interest in other entities (Continued)
3. Interest in joint arrangements or associates (Continued)
(3) Key financial information of major associates (Continued)
Closing balance/ Opening balance/
amount for the period amount for the prior period
Zhuhai Dechen New Third Zhuhai Dechen New Third
Board Equity Investment Board Equity Investment
Fund Company (Limited Fund Company (Limited
Partnership) Partnership)
Current assets 7,991,295.94 5,788,211.20
Non-current assets 65,956,891.00 99,020,108.00
Total assets 73,948,186.94 104,808,319.20
Current liabilities 5,000.00 5,000.00
Non-current liabilities
Total liabilities 5,000.00 5,000.00
Net assets 73,943,186.94 104,803,319.20
Minority interest
Equity interest attributable to shareholders of
the parent company 73,943,186.94 104,803,319.20
Share of net assets based on shareholding 36,967,896.31 52,401,659.62
Adjustments
– Goodwill
– Unrealised profit arising from intra-group
transactions
– Others
Carrying amount of equity investment in associates 36,967,896.31 52,401,659.62
Fair value of equity investment in associate where
publicly quoted prices exist
Revenue
Net profit -857,132.26 -22,660.59
Net profit from discontinued operations
Other comprehensive income
Total comprehensive income -857,132.26 -22,660.59
Dividends received from associates
during the year 15,000,000.00
290 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
IX. Interest in other entities (Continued)
3. Interest in joint arrangements or associates (Continued)
(3) Key financial information of major associates (Continued)
Closing balance/ Opening balance/
amount for the period amount for the prior period
Goldtrust Futures Co., Ltd. Goldtrust Futures Co., Ltd.
Current assets 764,880,728.01 764,236,547.83
Non-current assets 20,791,974.11 18,545,737.98
Total assets 785,672,702.12 782,782,285.81
Current liabilities 556,373,303.71 544,534,428.24
Non-current liabilities 34,269,041.10 32,169,041.10
Total liabilities 590,642,344.81 576,703,469.34
Net assets 195,030,357.31 206,078,816.47
Minority interest
Equity interest attributable to shareholders of
the parent company 195,030,357.31 206,078,816.47
Share of net assets based on shareholding 69,099,255.59 73,013,724.68
Adjustments
– Goodwill 104,073,292.25 104,073,292.25
– Unrealised profit arising from intra-group
transactions
– Others 12,279,914.66 12,279,914.66
Carrying amount of equity investment in associates 185,452,462.50 189,366,931.59
Fair value of equity investment in associate where
publicly quoted prices exist
Revenue 103,690,500.67 49,996,217.01
Net profit -9,202,201.83 -9,500,497.09
Net profit from discontinued operations
Other comprehensive income
Total comprehensive income -9,202,201.83 -9,500,497.09
Dividends received from associates
during the year
2021 ANNUAL REPORT 291
XII Financial Report
IX. Interest in other entities (Continued)
3. Interest in joint arrangements or associates (Continued)
(3) Key financial information of major associates (Continued)
Closing balance/ Opening balance/
amount for the period amount for the prior period
Guangdong Nanyue Guangdong Nanyue
Bank Co., Ltd. Bank Co., Ltd.
Current assets 146,917,546,535.28 180,617,874,651.18
Non-current assets 58,633,124,899.89 47,461,533,497.99
Total assets 205,550,671,435.17 228,079,408,149.17
Current liabilities 163,449,937,524.03 196,409,034,455.53
Non-current liabilities 23,509,056,497.47 25,010,828,827.69
Total liabilities 186,958,994,021.50 221,419,863,283.22
Net assets 18,591,677,413.67 6,659,544,865.95
Minority interest
Equity interest attributable to shareholders of
the parent company 18,591,677,413.67 6,659,544,865.95
Share of net assets based on shareholding 1,255,867,809.29 1,173,266,521.78
Adjustments
– Goodwill
– Unrealised profit arising from intra-group
transactions
– Others -1,887,031,763.57
Carrying amount of equity investment in associates 1,255,867,809.29 3,060,298,285.35
Fair value of equity investment in associate where
publicly quoted prices exist
Revenue 3,251,913,154.26 4,849,150,132.82
Net profit 422,983,523.89 1,539,105,400.52
Net profit from discontinued operations
Other comprehensive income 27,336,949.46
Total comprehensive income 450,320,473.35 1,539,105,400.52
Dividends received from associates
during the year 28,000,000.00 12,560,712.33
292 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
IX. Interest in other entities (Continued)
3. Interest in joint arrangements or associates (Continued)
(4) Summary financial information of non-major joint ventures and associates
Unit: RMB
Closing balance/ Opening balance/
Amount for the period Amount for the prior period
Joint ventures: – –
Total carrying amount of investment 21,518,994.58 22,032,934.47
Total amount of the following items based on
shareholding 486,060.11 1,646,466.86
– Net profit 486,060.11 1,646,466.86
– Other comprehensive income
– Total comprehensive income 486,060.11 1,646,466.86
Associates:
Total carrying amount of investment 7,488,250.59 9,985,136.83
Total amount of the following items based on
shareholding -610,886.24 -374,714.00
– Net profit -610,886.24 -374,714.00
– Other comprehensive income
– Total comprehensive income -610,886.24 -374,714.00
X. Risk relating to financial instruments
Main financial instruments of the Group include monetary funds, accounts receivable, accounts receivable financing, other
receivables, non-current assets due within one year, other current assets, financial assets held for trading, other non-current
financial assets, long-term receivables, bills payable, accounts payable, other payables, short-term borrowings, non-current
liabilities due within one year, long-term borrowings, lease liabilities and long-term payables. Details of financial instruments
refer to related notes. The risks associated with these financial instruments and the risk management policies adopted by
the Company to mitigate these risks are described below. The management of the Company manages and monitors these
exposures to ensure that the above risks are controlled in a limited extent.
1. Risk management goals and policies
The Company aims to seek the appropriate balance between the risks and benefits in order to mitigate the adverse
effects on the Company’s financial performance from financial risk. Based on such objectives, the Company’s risk
management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk
limits and devise corresponding internal control procedures, and to monitor risks faced by the Company. Such risk
management policies and internal control systems are reviewed regularly to adapt to changes in market conditions
and the Company’s activities. The internal audit department of the Company undertakes both regular and ad-hoc
reviews of risk management controls and procedures.
2021 ANNUAL REPORT 293
XII Financial Report
X. Risk relating to financial instruments (Continued)
1. Risk management goals and policies (Continued)
Risks associated with the financial instrument of the Company mainly include credit risk, liquidity risk, market risk
(including exchange rate risk, interest rate risk and commodity price risk).
The board of directors is responsible to plan and establish the Company’s risk management structure, make risk
management policies and related guidelines, and supervise the implementation of risk management. The Company
has already made risk management risks to identify and analyse risks that the Company face. These policies
mentioned specific risks, covering market, credit risk and liquidity risk etc. The Company regularly assesses market
environment and the operation of the Company changes to determine if to make alteration to risk management policy
and systems. The Company’s risk management is implemented by Risk Management Committee according to the
approval of the board of directors. The Risk Management Committee works closely with other business department of
the Company to identify, evaluating and avoiding certain risks. The Company’s internal audit department will audit the
risk management control and procedures regularly and report the result to audit committee of the Company.
The Company spreads risks through diverse investment and business lines, and through making risk management
policy to reduce risks of single industry, specific area and counterpart.
(1) Credit risk
Credit risk refers to risk associated with the default of contract obligation of a transaction counterparty resulting
in financial losses to the Company.
The Company manages credit risk based category. Credit risks mainly arose from bank deposit, bills receivable,
accounts receivable, other receivables and long-term receivables etc.
The Company’s bank deposit mainly deposits in state-owned banks and other large and medium-sized listed
banks. The Company anticipated that the bank deposit does not have significant credit risk.
For bill receivable, accounts receivables, other receivables and long-term receivables, the Company set related
policies to control exposure of credit risks. The Company evaluates client’s credit quality and set related credit
period based on the client’s financial status, credit records and other factors such as current market situation
etc. The Company keeps monitor the client’s credit record and for client with deteriorate credit records, the
Company will ensure the credit risk is under control in whole by means of written notice of payment collection,
shorten or cancel credit period.
The Company’s debtor spread over different industry and area. The Company continued to assess the credit
evaluation to receivables and purchase credit guarantee insurance if necessary.
The biggest credit risk exposure of the Company is the carrying amount of each financial asset in the balance
sheet. The Company did not provide financial guarantee which resulted in credit risks.
The amount of top 5 accounts receivable of the Company accounted for 24.95% (2020: 21.47%) of the
Company’s total accounts receivables. The amount of top 5 other receivable of the Company accounted for
72.71% (2020: 81.22%) of the Company’s total other receivables.
294 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
X. Risk relating to financial instruments (Continued)
1. Risk management goals and policies (Continued)
(2) Liquidity risk
Liquidity risk refers to the risks that the Company will not be able to meet its obligations associated with its
financial liabilities that are settled by delivering cash or other financial assets.
To manage the liquidity risk, the Company monitors and maintains a level of cash and cash equivalents to
finance the Company’s operations and mitigate the effects of fluctuations in cash flows. The management of
the Company monitors the usage of bank borrowings and ensures compliance with the borrowing agreements.
In the meantime, we obtain commitments from major financial institutions to provide sufficient standby funds to
meet short-term and long-term funding needs.
Operating cash of the Company was generated from capital and bank and other borrowings. As at 31
December 2021, the Company’s unused bank loan credit was RMB42,832.1880 million (31 December 2020:
RMB38,894.7823 million).
As at the end of the period, the financial assets, financial liabilities and off balance sheet guarantee held by the
Company are analysed by their maturity date as below at their remaining undiscounted contractual cash flows (in
ten thousand RMB):
2021.12.31
Item Within 1 year 1-2 years 2-3 years 3-4 years Over 4 years Total
Financial assets:
Monetary funds 1,411,978.29 1,411,978.29
Accounts receivable 310,581.86 310,581.86
Accounts receivable
financing 43,545.93 43,545.93
Other receivables 278,992.06 278,992.06
Long-term receivables 201,047.51 8,329.67 5,600.00 214,977.18
Other current assets 124,691.54 124,691.54
Non-current assets due
within one year 684,643.44 684,643.44
Total financial assets 2,854,433.13 201,047.51 8,329.67 5,600.00 3,069,410.31
Financial liabilities:
Short-term borrowings 3,352,302.52 3,352,302.52
Bills payable 308,951.23 308,951.23
Accounts payable 387,113.13 387,113.13
Other payables 148,257.58 148,257.58
Non-current liabilities due
within one year 694,976.96 694,976.96
Bonds payable 15,500.00 15,500.00
Long-term borrowings 124,525.02 88,929.00 10,929.00 303,251.00 527,634.02
Lease liabilities 472.83 1,312.99 1,312.99 4,594.13 7,692.94
Long-term payables 135,205.52 47,993.95 18,273.94 201,473.41
Total financial liabilities and
contingent liabilities 4,891,601.42 260,203.37 153,735.94 30,515.93 307,845.13 5,643,901.81
2021 ANNUAL REPORT 295
XII Financial Report
X. Risk relating to financial instruments (Continued)
1. Risk management goals and policies (Continued)
(2) Liquidity risk (Continued)
As at the beginning of the period, the financial assets, financial liabilities and off balance sheet guarantee held
by the Company are analysed by their maturity date as below at their remaining undiscounted contractual cash
flows (in ten thousand RMB):
2020.12.31
Item Within 1 year 1-2 years 2-3 years 3-4 years Over 4 years Total
Financial assets:
Monetary funds 1,775,953.76 1,775,953.76
Accounts receivable 247,416.05 247,416.05
Accounts receivable
financing 48,838.57 48,838.57
Other receivables 296,054.64 296,054.64
Long-term receivables 452,285.93 61,971.92 3,420.00 517,677.85
Other current assets 271,691.87 271,691.87
Non-current assets due
within one year 422,274.42 422,274.42
Total financial assets 3,062,229.31 452,285.93 61,971.92 3,420.00 3,579,907.16
Financial liabilities:
Short-term borrowings 3,279,399.30 3,279,399.30
Bills payable 299,893.67 299,893.67
Accounts payable 404,243.07 404,243.07
Other payables 177,772.24 177,772.24
Non-current liabilities due
within one year 716,094.96 716,094.96
Other current liabilities 15,703.78 15,703.78
Long-term borrowings 258,446.95 203,956.69 10,909.00 334,402.46 807,715.10
Bonds payable 153,687.74 153,687.74
Lease liabilities 443.29 472.83 5,111.06 6,027.18
Long-term payables 148,649.69 64,102.65 16,778.59 229,530.93
Total financial liabilities and
contingent liabilities 4,893,107.02 561,227.67 268,532.17 32,798.65 334,402.46 6,090,067.97
The financial liabilities disclosed above are based on cash flows that are not discounted and may differ from the
carrying amount of the line items of the balance sheet.
Maximum guarantee amount for signed guarantee contracts does not represent the amount to be paid.
296 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
X. Risk relating to financial instruments (Continued)
1. Risk management goals and policies (Continued)
(3) Market risk
Market risk includes interest rate risk and currency risk, refers to the risk that the fair value or future cash flow of
a financial instrument will be fluctuated due to the changes in market price.
Interest rate risk
Interest rate risk refers to the risk that the fair value or future cash flow of a financial instrument will be fluctuated
due to the floating rate. Interest rate risk arises from recognised interest-bearing financial instrument and
unrecognised financial instrument (e.g. loan commitments).
The Company’s interest rate risk arises from long-term interest-bearing liabilities including long-term borrowing
and bonds payable. Financial liabilities issued at floating rate expose the Company to cash flow interest rate
risk. Financial liabilities issued at fixed rate expose the Company to fair value interest rate risk. The Company
determines the relative proportions of its fixed rate and floating rate contracts depending on the prevailing
market conditions and to maintain an appropriate combination of financial instruments at fixed rate and floating
rate through regular reviews and monitors.
The Company’s finance department continuously monitors the interest rate position of the Company. The
Company did not enter into any interest rate hedging arrangements. But the management is responsible
to monitor the risks of interest rate and consider to hedge significant interest risk if necessary. Increase in
interest rates will increase the cost of new borrowing and the interest expenses with respect to the Company’s
outstanding floating rate interest-bearing borrowings, and therefore could have a material adverse effect on
the Company’s financial result. The management will make adjustments with reference to the latest market
conditions. These adjustments may include enter into interest swap agreement to mitigate its exposure to the
interest rate risk.
Interest bearing financial instrument held by the Company are as follows (in ten thousand RMB):
Balance for Balance for
Item the year the prior year
Financial instrument with fixed interest rate
Financial liabilities
Of which: Short-term borrowings 3,350,170.45 3,279,399.30
Long-term borrowings 526,438.53 807,715.10
Bonds payable 15,500.00 153,687.74
Long-term borrowings due within one year 258,373.04
Bonds payable due within one year 127,063.69
Total 4,277,545.71 4,240,802.14
Financial instrument with float interest rate
Financial assets
Of which: Monetary funds 316,598.98 438,700.83
Total 316,598.98 438,700.83
2021 ANNUAL REPORT 297
XII Financial Report
X. Risk relating to financial instruments (Continued)
1. Risk management goals and policies (Continued)
(3) Market risk (Continued)
Interest rate risk (Continued)
The financial instruments held by the Company at the reporting date expose the Company to fair value interest
rate risk. This sensitivity analysis as above has been determined assuming that the change in interest rates had
occurred at the reporting date and arisen from the recalculation of the above financial instrument issued at new
interest rates. The non-derivative tools issued at floating interest rate held by the Company at the reporting
date expose the Company to cash flow interest rate risk. The effect to the net profit and shareholder’s equity
illustrated in the sensitivity analysis as above is arisen from the effect to the annual estimate amount of interest
expenses or revenue at the floating interest rate. The analysis is performed on the same basis for prior year.
Exchange rate risk
Exchange risk refers to the risk that the fair value or future cash flows of a financial instrument will be fluctuated
due to the changes in foreign currency rates. Foreign currency risk arises on financial instruments that are
denominated in a currency other than the functional currency in which they are measured.
The principal business of the Company is situated within the PRC and is denominated in RMB. However,
foreign exchange risks still exist for the assets and liabilities in foreign currencies and future foreign currency
transactions as recognised by the Company (assets and liabilities in foreign currencies and foreign currency
transactions are mainly denominated in US dollar, Japanese yen, South Korean Won, Euro, Hong Kong dollar
and British pound).
The following table details the financial assets and liabilities held by the Company which denominated in foreign
currencies and amounted to RMB as at 31 December 2021 are as follows (in RMB ten thousands):
Liabilities denominated Asset denominated
in foreign currency in foreign currency
As at the As at the As at the As at the
end of beginning of end of beginning of
Item the period the period the period the period
USD 361,192.84 589,167.11 67,590.57 36,393.34
EUR 1,910.41 2,692.09 3,929.49 4,547.15
HKD 4,055.52 9,131.73 69.89 294.97
KRW 7.04
YEN 0.05 812.91 880.88
GBP 4.64
Total 367,158.77 600,990.98 72,409.90 42,120.98
The Company closely monitors the impact of exchange rate changes on the Company’s foreign exchange
risk. The Company has not taken any measures to avoid foreign exchange risks. However, the management is
responsible for monitoring exchange rate risks and will consider hedging significant exchange rate risks when
necessary.
298 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
X. Risk relating to financial instruments (Continued)
1. Risk management goals and policies (Continued)
(3) Market risk (Continued)
Exchange rate risk (Continued)
With other variables unchanged, the after-tax effect of the possible reasonable changes in the exchange rate of
foreign currency to RMB on the current profit and loss of the Company is as follows (in RMB ten thousands):
Increase (decrease) in after-tax profits Balance for the year Balance for the prior year
Increase in exchange rate of USD 5% -14,680.11 5% -27,638.69
Decrease in exchange rate of USD -5% 14,680.11 -5% 27,638.69
Increase in exchange rate of Euro 5% 100.95 5% 92.75
Decrease in exchange rate of Euro -5% -100.95 -5% -92.75
2. Capital management
The objective of the Company’s capital risk management is to safeguard the Company’s ability to continue as a going
concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Company may adjust its financing methods, adjust the number
of dividends paid to shareholders, return capital to shareholders, issue new shares or disposes assets to reduce its
liabilities.
The Company monitors capital on the basis of the gearing ratio. This ratio is calculated as net liabilities divided by
total capital. As at 31 December 2021, the Company’s gearing ratio is 72.78% (31 December 2020: 71.83%).
XI. Fair value disclosure
1. Fair value of assets and liabilities measured at fair value as at the end of the period
Unit: RMB
Fair value as at the end of the period
Item Level 1 Level 2 Level 3 Total
I. Continuous measurement of fair value
(i) Financial liabilities held for trading 110,886,182.88 110,886,182.88
1. Equity instrument investments 110,886,182.88 110,886,182.88
(ii) Accounts receivable financing 435,459,341.76 435,459,341.76
(iii) Other non-current financial assets 519,927,003.25 519,927,003.25
(iv)Biological assets 1,519,305,850.77 1,519,305,850.77
1. Consumable biological assets 1,519,305,850.77 1,519,305,850.77
Total assets continuously measured at fair value 110,886,182.88 2,474,692,195.78 2,585,578,378.66
2021 ANNUAL REPORT 299
XII Financial Report
XI. Fair value disclosure (Continued)
2. Quantitative information about significant unobservable inputs used in the level 3 fair value
measurement that are significant
Fair value as at the
Item end of the period Valuation techniques Unobservable inputs Range
Equity instrument investments:
Shandong Hongqiao Venture Capital Co., Ltd. 72,510,000.00 Cost method
Consumable biological assets:
Forestry 1,519,305,850.77 Replacement cost Cost per mu for the first year of 854.36(ton/RMB)
method Eucalyptus
Cost per mu for the first year of 627.52(ton/RMB)
Pines
Roll back method of Unit price per tonne of Eucalyptus 600.00(ton/RMB)
market price wood
Unit price per tonne of wet pine 532.00(ton/RMB)
Unit price per tonne of Chinese fir 800.00(ton/RMB)
XII. Related parties and related party transactions
1. Parent company of the Company
Shareholding of the Voting right of the
Place of parent company parent company
Name of parent company incorporation Business nature Registered capital in the Company in the Company
Chenming Holdings Co., Ltd. Shouguang Investment in manufacture of paper, electricity, 1,238,787,700 27.53% 27.53%
steam, and arboriculture
The ultimate controller of the Company is Shouguang State-owned Assets Supervision and Administration Office.
2. Subsidiaries of the Company
For details of our subsidiaries, please refer to Note IX. 1.
300 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
XII. Related parties and related party transactions (Continued)
3. Joint ventures and associates of the Company
For details of joint ventures and associates, please refer to Note IX. 3.
Balance of related party transaction between the Company and its joint ventures or associates during the period or
prior periods are as follows:
Name of joint ventures or associates Relation
Weifang Sime Darby West Port Co., Ltd. A joint venture of the Group
Shouguang Meite Environmental Technology Co., Ltd. A joint venture of the Group
Weifang Xingxing United Chemical Co., Ltd. A joint venture of the Group
Shouguang Chenming Huisen New-style Construction
Materials Co., Ltd. A joint venture of the Group
Anhui Time Source Corporation An associate of the Group
Lide Technology Co., Ltd. An associate of the Group
Chenming (Qingdao) Asset Management Co., Ltd. An associate of the Group
Jiangxi Chenming Port Co., Ltd. An associate of the Group
Guangdong Nanyue Bank Co., Ltd. An associate of the Group
4. Other related parties
Name of other related parties Relation
Shouguang Huixin Construction Materials Co., Ltd. A company invested by the Directors and Senior
Management of the Company
Chen Hongguo, Hu Changqing, Li Xingchun, Li Feng, Key management personnel
Li Chuanxuan, Chen Gang, Yuan Xikun, Li Xueqin, Li
Zhenzhong, Li Weixian and Dong Lianming
2021 ANNUAL REPORT 301
XII Financial Report
XII. Related parties and related party transactions (Continued)
5. Related party transactions
(1) Purchase and sales of goods and rendering and receiving services
Table on purchase of goods/receiving of services
Unit: RMB
Whether the
Transaction
Details of related Amount for Transaction facility is Amount for
Related party party transaction the period facility approved exceeded the prior period
Weifang Sime Darby West Port miscellaneous 64,351,915.96 Not applicable
Port Co., Ltd. expenses
Table on sales of goods/providing of services
Unit: RMB
Details of related party Amount for Amount for
Related party transaction the period the prior period
Shouguang Chenming Huisen Sales of electricity and 9,729,537.52 8,668,152.00
New-style Construction Materials steam
Co., Ltd.
Shouguang Huixin Construction Sales of cement, coal, oil, 2,686,019.84 4,662,205.59
Materials Co., Ltd. etc.
Related party transactions regarding purchase and sale of goods and provision and receipt of services.
302 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
XII. Related parties and related party transactions (Continued)
5. Related party transactions (Continued)
(2) Related party guarantee
The Company as guarantor
Unit: RMB
Whether
performance
Amount under Commencement Expiry date of guarantee
Party being guaranteed guarantee date of guarantee of guarantee is completed
Weifang Sime Darby West Port Co., Ltd. 120,000,000.00 2017-12-20 2027-12-20 No
Chenming (HK) Limited 188,083,150.00 2021-3-11 2022-2-25 No
Chenming (HK) Limited 127,514,000.00 2021-11-19 2022-11-4 No
Chenming (HK) Limited 15,301,680.00 2021-9-7 2022-3-7 No
Chenming (HK) Limited 36,458,460.25 2021-9-23 2022-2-7 No
Chenming (HK) Limited 16,781,992.96 2021-10-20 2022-4-19 No
Chenming (HK) Limited 16,636,933.03 2021-11-5 2022-5-4 No
Chenming (HK) Limited 36,023,512.48 2021-12-21 2022-3-28 No
Chenming (HK) Limited 17,534,917.35 2021-12-9 2022-6-7 No
Chenming (HK) Limited 18,592,685.83 2021-10-22 2022-1-18 No
Chenming (HK) Limited 21,080,464.59 2021-10-22 2022-1-18 No
Chenming (HK) Limited 17,174,824.96 2021-12-2 2022-2-28 No
Chenming (HK) Limited 63,757,000.00 2021-5-30 2022-5-30 No
Wuhan Chenming Hanyang Paper Holdings Co., Ltd. 30,000,000.00 2021-12-17 2022-10-16 No
Huanggang Chenming Pulp & Paper Co., Ltd. 200,000,000.00 2021-8-30 2022-8-25 No
Huanggang Chenming Pulp & Paper Co., Ltd. 300,000,000.00 2021-12-23 2022-12-22 No
Huanggang Chenming Pulp & Paper Co., Ltd. 20,000,000.00 2021-4-20 2022-4-19 No
Huanggang Chenming Pulp & Paper Co., Ltd. 30,000,000.00 2021-7-19 2022-7-18 No
Huanggang Chenming Pulp & Paper Co., Ltd. 45,000,000.00 2021-8-9 2022-8-8 No
Huanggang Chenming Pulp & Paper Co., Ltd. 30,000,000.00 2021-7-28 2022-7-27 No
Huanggang Chenming Pulp & Paper Co., Ltd. 90,000,000.00 2021-5-12 2022-5-11 No
Jilin Chenming Paper Co., Ltd. 98,580,000.00 2021-7-21 2022-1-19 No
Jilin Chenming Paper Co., Ltd. 18,000,000.00 2021-3-31 2022-3-8 No
Jiangxi Chenming Paper Co., Ltd. 200,000,000.00 2019-6-28 2022-6-27 No
Jiangxi Chenming Paper Co., Ltd. 300,000,000.00 2019-7-1 2022-6-27 No
Jiangxi Chenming Paper Co., Ltd. 85,000,000.00 2019-10-23 2022-6-27 No
Jiangxi Chenming Paper Co., Ltd. 114,750,000.00 2019-11-22 2022-6-27 No
Jiangxi Chenming Paper Co., Ltd. 150,000,000.00 2021-2-25 2022-2-24 No
Jiangxi Chenming Paper Co., Ltd. 99,000,000.00 2021-3-31 2022-3-30 No
Jiangxi Chenming Paper Co., Ltd. 73,000,000.00 2021-5-28 2022-5-27 No
Jiangxi Chenming Paper Co., Ltd. 150,000,000.00 2021-12-16 2022-12-15 No
Jiangxi Chenming Paper Co., Ltd. 13,450,000.00 2021-12-29 2022-6-27 No
Jiangxi Chenming Paper Co., Ltd. 90,000,000.00 2021-3-19 2022-3-18 No
Jiangxi Chenming Paper Co., Ltd. 100,000,000.00 2021-5-27 2022-5-23 No
Jiangxi Chenming Paper Co., Ltd. 100,000,000.00 2021-7-15 2022-5-23 No
Jiangxi Chenming Paper Co., Ltd. 10,000,000.00 2021-8-31 2022-8-24 No
Jiangxi Chenming Paper Co., Ltd. 10,000,000.00 2021-9-1 2022-8-24 No
Jiangxi Chenming Paper Co., Ltd. 20,000,000.00 2021-10-9 2022-9-28 No
2021 ANNUAL REPORT 303
XII Financial Report
XII. Related parties and related party transactions (Continued)
5. Related party transactions (Continued)
(2) Related party guarantee (Continued)
Whether
performance
Amount under Commencement Expiry date of guarantee
Party being guaranteed guarantee date of guarantee of guarantee is completed
Jiangxi Chenming Paper Co., Ltd. 12,555,519.37 2021-10-28 2022-4-25 No
Jiangxi Chenming Paper Co., Ltd. 27,000,000.00 2021-12-31 2022-12-23 No
Jiangxi Chenming Paper Co., Ltd. 16,550,000.00 2021-9-15 2022-3-14 No
Jiangxi Chenming Paper Co., Ltd. 70,000,000.00 2021-6-10 2022-5-23 No
Jiangxi Chenming Paper Co., Ltd. 10,000,000.00 2021-6-15 2022-6-13 No
Jiangxi Chenming Paper Co., Ltd. 10,000,000.00 2021-6-23 2022-6-17 No
Jiangxi Chenming Paper Co., Ltd. 10,000,000.00 2021-6-24 2022-6-17 No
Jiangxi Chenming Paper Co., Ltd. 80,000,000.00 2021-6-18 2022-6-17 No
Jiangxi Chenming Paper Co., Ltd. 25,000,000.00 2021-12-24 2022-6-22 No
Jiangxi Chenming Paper Co., Ltd. 70,000,000.00 2021-4-16 2022-4-15 No
Jiangxi Chenming Paper Co., Ltd. 49,500,000.00 2021-3-31 2022-3-30 No
Shandong Chenming Paper Sales Co., Ltd. 253,133,148.96 2021-8-16 2022-2-14 No
Shandong Chenming Paper Sales Co., Ltd. 420,452,396.28 2021-5-7 2022-4-29 No
Shanghai Chenming Pulp & Paper Sales Co., Ltd. 20,000,000.00 2021-12-20 2022-6-21 No
Shanghai Chenming Pulp & Paper Sales Co., Ltd. 10,000,000.00 2021-6-21 2022-6-21 No
Shanghai Chenming Pulp & Paper Sales Co., Ltd. 10,000,000.00 2021-6-22 2022-5-30 No
Shanghai Chenming Pulp & Paper Sales Co., Ltd. 80,000,000.00 2021-6-23 2022-5-30 No
Shouguang Meilun Paper Co., Ltd. 124,867,323.20 2021-7-7 2022-7-4 No
Shouguang Meilun Paper Co., Ltd. 123,595,694.49 2021-7-26 2022-1-23 No
Shouguang Meilun Paper Co., Ltd. 98,878,044.29 2021-7-8 2022-1-4 No
Shouguang Meilun Paper Co., Ltd. 98,678,874.12 2021-7-8 2022-1-4 No
Shouguang Meilun Paper Co., Ltd. 69,568,916.52 2021-7-16 2022-1-12 No
Shouguang Meilun Paper Co., Ltd. 285,000,000.00 2021-8-26 2022-2-23 No
Shouguang Meilun Paper Co., Ltd. 100,000,000.00 2021-10-12 2022-10-11 No
Shouguang Meilun Paper Co., Ltd. 30,000,000.00 2021-8-31 2022-8-31 No
Shouguang Meilun Paper Co., Ltd. 131,601,861.13 2021-12-8 2022-6-7 No
Shouguang Meilun Paper Co., Ltd. 163,129,855.27 2021-12-16 2022-6-14 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 49,500,000.00 2021-8-12 2022-8-8 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 140,000,000.00 2021-12-23 2023-12-23 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 631,194,300.00 2019-12-27 2022-12-27 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 123,000,000.00 2021-1-20 2022-1-19 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 44,629,900.00 2021-10-18 2022-9-30 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 80,333,820.00 2021-11-16 2022-11-14 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2021-1-5 2024-1-4 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 40,000,000.00 2021-8-17 2022-2-16 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 50,000,000.00 2021-2-2 2022-2-1 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 70,000,000.00 2021-2-19 2022-2-18 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 25,502,800.00 2021-3-26 2022-2-25 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 50,000,000.00 2021-9-26 2022-9-25 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 50,000,000.00 2021-3-2 2022-2-28 No
304 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
XII. Related parties and related party transactions (Continued)
5. Related party transactions (Continued)
(2) Related party guarantee (Continued)
Whether
performance
Amount under Commencement Expiry date of guarantee
Party being guaranteed guarantee date of guarantee of guarantee is completed
Zhanjiang Chenming Pulp & Paper Co., Ltd. 99,000,000.00 2021-8-10 2022-2-7 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 90,000,000.00 2021-8-10 2022-2-7 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 200,000,000.00 2021-2-20 2022-2-19 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 84,600,000.00 2021-8-26 2022-2-22 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 67,000,000.00 2021-9-15 2022-9-14 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 99,600,000.00 2021-9-16 2022-3-16 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 45,267,470.00 2021-12-17 2022-12-1 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 80,000,000.00 2020-10-16 2023-10-15 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 60,000,000.00 2021-11-12 2022-11-11 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 90,000,000.00 2021-11-23 2022-11-22 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 115,000,000.00 2020-11-11 2023-11-10 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2021-12-15 2022-12-14 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 9,000,000.00 2021-12-20 2022-12-19 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 30,000,000.00 2021-11-24 2022-11-23 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 60,000,000.00 2021-11-17 2022-11-16 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2021-7-13 2022-7-12 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 99,000,000.00 2020-12-10 2023-12-9 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 81,200,000.00 2021-12-22 2022-7-17 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 60,000,000.00 2021-10-18 2022-10-17 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 90,000,000.00 2021-11-16 2022-11-15 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 30,000,000.00 2021-3-10 2022-3-9 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 50,000,000.00 2021-4-8 2022-3-29 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2021-4-19 2022-4-18 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 28,690,650.00 2021-4-30 2022-4-26 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 42,450,000.00 2021-5-1 2022-4-26 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 80,000,000.00 2021-11-9 2022-5-8 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2021-5-28 2022-5-27 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 29,965,790.00 2021-6-16 2022-5-27 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 162,449,860.33 2021-10-8 2022-1-14 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 26,000,000.00 2021-6-18 2022-5-27 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 70,000,000.00 2021-6-18 2022-6-17 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 200,000,000.00 2021-12-22 2022-6-20 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 70,400,000.00 2020-10-19 2022-10-13 No
Chenming (HK) Limited 95,635,500.00 2019-3-28 2022-1-7 No
Chenming (HK) Limited 93,085,220.00 2021-3-17 2022-3-17 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 120,000,000.00 2021-8-16 2022-8-15 No
Shouguang Meilun Paper Co., Ltd. 200,000,000.00 2020-12-4 2022-6-27 No
Shouguang Meilun Paper Co., Ltd. 364,000,000.00 2020-12-4 2023-10-30 No
Wuhan Chenming Hanyang Paper Holdings Co., Ltd. 6,000,000.00 2020-12-4 2023-10-30 No
Huanggang Chenming Pulp & Paper Co., Ltd. 200,000,000.00 2020-12-4 2023-10-30 No
Total 10,653,736,565.41
2021 ANNUAL REPORT 305
XII Financial Report
XII. Related parties and related party transactions (Continued)
5. Related party transactions (Continued)
(3) Related party lending and borrowing
Unit: RMB
Commencement
Related party Borrowing amount date Expiry date Description
Borrowing
Chenming Holdings Co., Ltd. 452,500,000.00 2021-4-20 2021-12-31 Controlling
shareholder
Guangdong Nanyue Bank Co., Ltd. 2,601,000,000.00 2021-1-11 2022-11-26 Associate
Lending
Weifang Sime Darby West Port Co., Ltd. 68,000,000.00 2021-11-11 2024-12-12 Joint venture
(4) Remuneration of key management staff
Unit: RMB’0,000
Amount during Amount during
Item the period the prior period
Remuneration of key management staff 3,051.59 3,067.34
(5) Other related party transactions
Distribution band of remuneration of key management staff
Amount during Amount during
the year the prior year
Band of annual remuneration (RMB’0,000) (RMB’0,000)
Total 3,051.59 3,067.34
Of which: (number of staff in each band of amount)
RMB4.80-5.20 million 2 2
RMB3.60-4.00 million
RMB3.20-3.60 million 1 1
RMB2.80-3.20 million 2 3
RMB2.40-2.80 million
RMB2.00-2.40 million 1
RMB1.60-2.00 million 2 1
RMB1.20-1.60 million 2
RMB0.80-1.20 million 3
Below RMB0.80 million 13 14
306 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
XII. Related parties and related party transactions (Continued)
5. Related party transactions (Continued)
(5) Other related party transactions (Continued)
Breakdown of remuneration of key management staff
Amount during the year (RMB’0,000)
Basic annual Social welfare Payments of Total
Key management staff remuneration contribution housing funds (RMB’0,000)
Yin Meiqun 20.00 20.00
Yang Biao 20.00 20.00
Sun Jianfei 20.00 20.00
Subtotal of independent non-executive
Directors 60.00 60.00
Li Chuanxuan 20.00 20.00
Han Tingde 20.00 20.00
Subtotal of non-executive Directors 40.00 40.00
Chen Hongguo 491.92 5.66 1.42 499.00
Hu Changqing 340.98 7.06 1.96 350.00
Li Xingchun 480.00 480.00
Li Feng 288.90 5.66 1.42 295.98
Subtotal of executive Directors 1,601.80 18.38 4.80 1,624.98
Li Kang 93.42 5.73 1.42 100.57
Pan Ailing 10.00 10.00
Zhang Hong 10.00 10.00
Qiu Lanju 53.25 5.76 0.97 59.98
Sang Ailing 20.71 3.53 0.63 24.87
Li Xinggui 2.43 0.76 0.22 3.41
Total of Supervisor 189.81 15.78 3.24 208.83
Subtotal of other Senior Management
members 1,071.25 38.32 8.21 1,117.78
Total 2,962.86 72.48 16.25 3,051.59
2021 ANNUAL REPORT 307
XII Financial Report
XII. Related parties and related party transactions (Continued)
5. Related party transactions (Continued)
(5) Other related party transactions (Continued)
Breakdown of remuneration of key management staff (Continued)
Amount during the prior year (RMB’0,000)
Basic annual Social welfare Payments of Total
Key management staff remuneration contribution housing funds (RMB’0,000)
Yin Meiqun 20.00 20.00
Yang Biao 20.00 20.00
Sun Jianfei 20.00 20.00
Subtotal of independent non-executive
Directors 60.00 60.00
Li Chuanxuan 20.00 20.00
Han Tingde 20.00 20.00
Subtotal of non-executive Directors 40.00 40.00
Chen Hongguo 492.22 5.43 1.35 499.00
Hu Changqing 294.73 3.06 2.21 300.00
Li Xingchun 480.00 480.00
Li Feng 328.82 5.43 1.35 335.60
Subtotal of executive Directors 1,595.77 13.92 4.91 1,614.60
Li Kang 57.32 5.43 1.35 64.10
Pan Ailing 10.00 10.00
Zhang Hong 10.00 10.00
Li Xinggui 15.58 3.84 0.88 20.30
Qiu Lanju 58.88 4.25 0.97 64.10
Total of Supervisor 151.78 13.52 3.20 168.50
Subtotal of other Senior Management
members 1,142.84 32.88 8.52 1,184.24
Total 2,990.39 60.32 16.63 3,067.34
Note: Social welfare contribution includes basic pension insurance, medical insurance, work-related injury insurance, maternity
insurance, and unemployment insurance.
308 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
XII. Related parties and related party transactions (Continued)
5. Related party transactions (Continued)
(5) Other related party transactions (Continued)
The 5 highest paid individuals of the Company during the year comprised of 4 directors and 1 other Senior
Management member of the Company. The remuneration band of the 1 Senior Management member was
RMB2.80-3.20 million, with basic annual remuneration of RMB3.0227 million, social welfare contribution
of RMB75,500, and payments of housing funds of RMB6,800.
A. Remuneration of the five highest paid individuals
Amounts during Amounts during
the year the prior year
Item (RMB’0,000) (RMB’0,000)
Basic annual remuneration 1,904.07 1,887.99
Provident fund 5.48 6.26
Social welfare contribution 25.93 19.35
Total 1,935.48 1,913.60
B. Distribution band of remuneration of the five highest paid individuals
Number of individuals Number of individuals
Band of annual remuneration during the year during the prior year
RMB4.80-5.20 million 2 2
RMB3.20-3.60 million 1 1
RMB2.80-3.20 million 2 2
RMB2.40-2.80 million
RMB2.00-2.40 million
RMB1.60-2.00 million
RMB1.20-1.60 million
For the financial year ended 31 December 2021, no other bonuses, which are discretionary or are based
on the Company’s, the Company’s or any member of the Company’s performance, were paid to or
receivable by the 5 highest paid individuals, and no other emoluments were paid by the Company to the
Directors of the Company and the 5 highest paid individuals as an inducement to join or upon joining the
Company or as compensation for loss of office. None of the Directors waived any emoluments during the
year.
2021 ANNUAL REPORT 309
XII Financial Report
XII. Related parties and related party transactions (Continued)
6. Related party accounts receivable and accounts payable
(1) Accounts receivables
Unit: RMB
Closing balance Opening balance
Item Related party Book balance Bad debt Book balance Bad debt
Accounts receivable Shouguang Chenming Huisen New- 2,000,017.96 87,306.27
style Construction Materials Co., Ltd.
Other receivables Weifang Sime Darby West Port Co., 80,667,961.32 7,423,984.26 68,476,127.98 19,038,071.06
Ltd.
Other receivables Shouguang Meite Environmental 22,740,159.32 21,348.76 16,307,200.00 70,132.59
Technology Co., Ltd.
Accounts receivable Jiangxi Chenming Port Co., Ltd. 109,385.42 109,385.42
(2) Accounts payable
Unit: RMB
Closing Opening
Item Related party book balance book balance
Accounts payable Weifang Xingxing United Chemical 26,905,494.34 26,905,494.34
Co., Ltd.
Other payables Weifang Xingxing United Chemical 16,860,000.00 16,860,000.00
Co., Ltd.
Other non-current liabilities Guangdong Nanyue Bank Co., Ltd. 400,000,000.00
Accounts payable Weifang Sime Darby West Port 7,609,782.51 2,739,941.79
Co., Ltd.
Other payables Chenming (Qingdao) Asset 115,633.42 50.00
Management Co., Ltd.
Receipts in advance Chenming (Qingdao) Asset 49,539.63
Management Co., Ltd.
Contract liabilities Anhui Time Source Corporation 1,570.10 1,570.10
Other payables Lide Technology Co., Ltd. 508,619.46
(3) Deposits with related parties
Unit: RMB
Item Related party Closing balance Opening balance
Bank deposit Guangdong Nanyue Bank Co., Ltd. 42,791.18 655,073,601.28
Other monetary funds Guangdong Nanyue Bank Co., Ltd. 1,048,000,000.00 724,668,000.00
(4) Loans from related parties
Unit: RMB
Item Related party Closing balance Opening balance
Short-term borrowings Guangdong Nanyue Bank Co., Ltd. 2,201,000,000.00 1,316,664,600.00
310 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
XIII. Share-based payment
1. General information of share-based payment
√ Applicable Not applicable
Unit: RMB
Total equity instruments of the Company granted during the period 0.00
Total exercised equity instruments of the Company during the period 0.00
Total invalid equity instruments of the Company during the period 2,830,000.00
Range of exercise prices and contractual remaining period for share options issued See explanation
by the Company at the end of the period for details
Range of exercise prices and remaining contractual maturity of
other equity instruments issued by the Company at the end of the period
Other explanation
On 29 May 2020, the Resolution on the Matters Relating to Adjustments to the 2020 Restricted A Share Incentive
Scheme of the Company and the Resolution in Relation to the Grant of Restricted Shares to the Participants were
considered and approved at the tenth extraordinary meeting of ninth session of the Board and the fifth extraordinary
meeting of the ninth session of the Supervisory Committee of the Company, by which 79.60 million restricted shares
were granted. The grant date was 29 May 2020, and the fair value of the restricted shares was the ex-rights price
of the shares on the grant date. The Restricted Shares to be granted under the Incentive Scheme were “granted
once and unlocked in batches”. For the period commencing from the first trading day after expiry of the 24-month
period from the date on which the registration of the grant of the Restricted Shares is completed and ending on the
last trading day of the 36-month period from the date on which the registration of the grant of the Restricted Shares
is completed, 40% of the Restricted Shares will be unlocked; for the period commencing from the first trading day
after expiry of the 36-month period from the date on which the registration of the grant of the Restricted Shares
is completed and ending on the last trading day of the 48-month period from the date on which the registration
of the grant of the Restricted Shares is completed, 30% of the Restricted Shares will be unlocked; for the period
commencing from the first trading day after expiry of the 48-month period from the date on which the registration of
the grant of the Restricted Shares is completed and ending on the last trading day of the 60-month period from the
date on which the registration of the grant of the Restricted Shares is completed, 30% of the Restricted Shares will be
unlocked. Meanwhile, during the three accounting years from 2021 to 2023, the Restricted Shares granted under the
Incentive Scheme shall be subject to annual performance appraisal for unlocking (for details of specific performance
evaluation conditions, please refer to the announcement of the Company). At each balance sheet date during the
vesting period, the Company, based on the latest information such as the latest update on the change in the number
of entitled employees, will make best estimates to adjust the expected number of equity instruments that can be
vested. As at the exercise date, the final estimated number of exercisable equity instruments should equal the actual
number of exercisable equity instruments. 2.83 million shares lapsed during the year due to the resignation of some
Senior Management members.
2021 ANNUAL REPORT 311
XII Financial Report
XIII. Share-based payment (Continued)
2. Equity-settled share-based payment
√ Applicable Not applicable
Unit: RMB
The method of determining the fair value of equity instrument on the grant date Ex-right price of
grant of share
Basis for determining the quantity of exercisable equity instruments See explanation
for details
Reasons for significant difference between the current estimate and previous estimate None
Accumulated amount of equity-settled share-based payment included in the capital reserve 85,043,797.12
Total amount of equity-settled share-based payment recognised in the current period 52,556,871.89
Other explanation
At each balance sheet date during the vesting period, the Company, based on the latest information such as the latest
update on the change in the number of entitled employees, will make best estimates to adjust the expected number
of equity instruments that can be vested. As at the exercise date, the final estimated number of exercisable equity
instruments should equal the actual number of exercisable equity instruments.
XIV. Undertaking and contingency
1. Significant commitments
Significant commitments as at the balance sheet date
Unit: RMB
Capital commitments contracted for but not yet necessary to be
recognised on the balance sheet Closing balance Opening balance
Commitments in relation to acquisition and construction of
long-term assets 181,254,971.61 236,106,766.83
2. Contingency
(1) Significant contingency as at the balance sheet date
(1) Contingent liabilities arising from pending litigation and its financial impacts
In October 2005, the Company and Hong Kong ArjowigginsHKK2Limited (“HKK2”) jointly established
ArjoWiggins Chenming Specialty Paper Co., Ltd. in Shouguang, Shandong Province, which was
engaged in the production of special paper, decoration paper and draft paper. However, such company
experienced poor management due to financial crisis. Hence, such company was forced to dissolve in
October 2008.
312 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
XIV. Undertaking and contingency (Continued)
2. Contingency (Continued)
(1) Significant contingency as at the balance sheet date (Continued)
(1) Contingent liabilities arising from pending litigation and its financial impacts (Continued)
In October 2012, HKK2 submitted for arbitration application to Hong Kong International Arbitration Centre,
Hong Kong Special Administration of PRC, on the ground of default of the joint venture agreement by the
Company. In November 2015, Hong Kong International Arbitration Centre announced arbitration result,
stating that the Company should compensate HKK2 with economic loss of RMB167 million, arbitration fee
of HK$3.30 million and legal fee of USD3.54 million, together with interest thereon calculated at 8% per
annum. In October 2016, the Company received a statutory demand, stating that if the Company fails to
perform the arbitration results within 21 days, the liquidation application on H shares of the Company will
be submitted. Subsequently, HKK2 submitted a H shares liquidation application to the arbitration centre.
In November 2016, the Company submitted an application to the Court of First Instance of the High
Court of the HKSAR and received an injunction, stating that “the applicant is prohibited from applying for
liquidation on the Company”.
In February 2017, HKK2 submitted an appeal to the court. In June 2017, the court dismissed the injunction
received by the Company. In the same month, the Company received the liquidation application submitted
by the defendant to the High Court of Hong Kong, which alleged that the Company should compensate
the defendant with economic loss of RMB167 million, legal fee of USD3.54 million and arbitration fee of
HK$3.30 million, together with interest thereon due to failure in compliance of the arbitration results.
In 2017, the Company made provision of RMB325,259,082.28 for the pending litigation.
Relevant appeal hearing of the Company on 12 July 2017 was completed in the Hong Kong High Court
Appeal Court on the morning of 11 May 2018. At the end of the hearing, the court had instructed that
another sentence be adjudicated.
On 5 August 2020, the Court of Appeal of the High Court of Hong Kong made a judgment and rejected
the Company’s appeal request.
On 21 January 2022, Hong Kong Court of Final Appeal accepted the Company’s appeal request. The
Company is seeking ways to re-appeal to protect the legal rights and interests of the Company and
investors. However, as of 31 December 2021, the estimated loss was still uncertain. Therefore, the
provision must still be listed in the balance sheet.
(2) On 14 September 2021, Beijing Guodianfutong Science and Development Co., Ltd. (“Futong Science”),
being the plaintiff, was involved in a construction agreement dispute with Huanggang Chenming Pulp
and Paper Co., Ltd. (“Huanggang Chenming”) and Shandong Chenming Paper Holdings Limited
(“Shandong Chenming”), being the defendants. The case was filed in Huanggang Intermediate People’s
Court Huanggang People’s Court and the first judgement ruled that Huanggang Chenming need to pay
construction fee of RMB54,715,691.40, along with overdue interests, to Futong Science.
Huanggang Chenming has accrued arrears in accounts payable. Meanwhile, appeal against judgment
was submitted by Huanggang Chenming. As of 30 March 2022, the second instance is still in progress.
As of 31 December 2021, the Company had no other contingencies that should be disclosed.
2021 ANNUAL REPORT 313
XII Financial Report
XV. Post-balance sheet event
As of 30 March 2022, the Group has no other events that should be disclosed after the balance sheet date.
XVI. Other material matters
1. Segment information
(1) Basis for determination and accounting policies
According to the Company’s internal organisational structure, management requirements and internal reporting
system, the Company’s operating business is divided into 4 reporting segments. These report segments are
determined based on the financial information required by the company’s daily internal management. The
management of the Group regularly evaluates the operating results of these reporting segments to determine
the allocation of resources to them and evaluate their performance.
The Company’s reporting segments include:
(1) Machine paper segment, which is responsible for production and sales of machine paper;
(2) Financial services segment, which provides financial services;
(3) Hotels and property rentals segment, which is responsible for property rental;
(4) Other segments, which is responsible for the above segments otherwise.
Segment report information is disclosed in accordance with the accounting policies and measurement standards
adopted by each segment when reporting to management. These accounting policies and measurement basis
are consistent with the accounting policies and measurement basis used in preparing the financial statements.
(2) Financial Information of Reporting Segment
Unit: RMB’0,000
Machine-made Financial Hotels and
Current period or end of current period paper services property rentals Others Offset Total
Revenue 3,174,975.00 65,440.39 40,526.16 133,313.93 112,274.25 3,301,981.23
Of which: revenue from external transactions 3,168,198.65 35,210.22 16,635.55 81,936.81 0.00 3,301,981.23
Revenue from inter-segment transactions 6,776.35 30,230.18 23,890.60 51,377.12 112,274.25 0.00
Of which: Revenue from principal activities 3,084,442.22 65,195.11 23,111.51 127,829.53 107,220.05 3,193,358.32
Operating costs 2,566,477.14 24,602.34 12,939.43 123,637.48 205,428.81 2,522,227.58
Of which: Costs of principal activities 2,414,343.74 24,602.34 7,362.71 118,084.03 118,386.09 2,446,006.73
Operating expenses 49,085.83 339.02 2,345.00 903.40 23,322.27 29,350.97
Operating profit/(loss) 330,978.21 11,821.37 468.23 -8,164.59 106,957.32 228,145.90
Total assets 9,069,982.56 2,039,544.30 794,932.41 969,230.15 4,589,543.96 8,284,145.46
Total liabilities 6,622,082.54 791,449.37 411,845.72 297,958.83 2,093,873.91 6,029,462.55
314 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
XVI. Other material matters (Continued)
1. Segment information (Continued)
(2) Financial Information of Reporting Segment (Continued)
Unit: RMB’0,000
Machine-made Financial Hotel and
Prior period or end of prior period paper services property Others Offset Total
Revenue 2,920,631.44 129,212.57 19,619.77 101,144.05 96,956.03 3,073,651.80
Of which: revenue from external transactions 2,902,152.31 95,273.89 13,863.94 62,361.66 0.00 3,073,651.80
Revenue from inter-segment transactions 18,479.13 33,938.68 5,755.83 38,782.39 96,956.03 0.00
Of which: Revenue from principal activities 2,859,475.79 128,228.67 15,074.89 97,954.64 96,008.18 3,004,725.81
Operating costs 2,247,053.49 79,811.95 17,761.55 87,410.55 67,478.12 2,364,559.42
Of which: Costs of principal activities 2,184,452.82 79,811.95 17,115.86 86,891.58 63,601.33 2,304,670.88
Operating expenses 28,400.67 332.36 1,987.97 1,227.10 2,123.46 29,824.64
Operating profit/(loss) 389,249.19 29,513.92 -24,353.54 5,372.98 241,310.40 158,472.15
Total assets 8,512,412.61 2,016,849.03 752,335.96 725,475.06 2,849,526.88 9,157,545.78
Total liabilities 6,110,415.47 1,258,701.14 465,545.60 281,988.12 1,539,130.92 6,577,519.41
2. Government grants
(1) Government subsidies included in deferred income will be subsequently measured using the gross method
Unit: RMB
Amount Presentable items
New subsidy transferred to transferred to
amount for profit or loss Other profit or loss Asset-related/
Item of subsidies Type 2020.12.31 the period for the period movements 2021.12.31 for the period revenue-related
Project Funding for Financial 1,287,825.00 164,700.00 1,123,125.00 Other income Asset-related
National Key Technology appropriation government grants
Research and
Development Program
Infrastructure and Financial 233,097,511.46 12,227,345.28 12,835,606.22 13,216,025.00 219,273,225.52 Other income Asset-related
environmental appropriation government grants
protection engineering
transformation project
Huanggang pulp-forestry- Financial 479,669,171.13 41,377,787.52 24,200,216.24 496,846,742.41 Other income Asset-related
paper project appropriation government grants
Zhanjiang forestry-pulp- Financial 54,901,230.11 4,094,632.92 50,806,597.19 Other income Asset-related
paper project appropriation government grants
Financial subsidies for Financial 155,686,141.08 11,535,807.72 144,150,333.36 Other income Asset-related
technical transformation appropriation government grants
project
Funding for environmental Financial 677,639,567.56 50,592,141.88 627,047,425.68 Other income Asset-related
protection appropriation government grants
Others Financial 35,715,190.17 1,280,955.08 34,434,235.09 Other income Asset-related
appropriation government grants
Total 1,637,996,636.51 53,605,132.80 104,704,060.06 13,216,025.00 1,573,681,684.25
Explanation: Other movements of the infrastructure and environmental construction in 2021 represent
recovery of the government subsidies relating to the land by the government after the government resumed the
land.
2021 ANNUAL REPORT 315
XII Financial Report
XVI. Other material matters (Continued)
2. Government grants (Continued)
(2) Government subsidies calculated into the current profit and loss using the total method
Unit: RMB
Amount credited Amount credited Presentable items
to profit or loss to profit or loss included in Asset-related/
Subsidy Item Type for the prior period for the period profit or loss revenue-related
Project Funding for National Key Technology Financial appropriation 164,700.00 164,700.00 Other income Asset-related
Research and Development Program
Environmental Monitoring and Controlling Financial appropriation 20,000.00 Non-operating income Revenue-related
Capability Improvement Subsidies
Provincial manufacturing individual championship Financial appropriation 800,000.00 Non-operating income Revenue-related
subsidy
Sewage treatment and water conservation Financial appropriation 1,192,682.88 12,835,606.22 Other income Asset-related
transformation project
Zhanjiang forestry-pulp-paper project Financial appropriation 12,145,971.39 4,094,632.92 Other income Asset-related
Enterprise reform and development subsidies Financial appropriation 107,578,937.51 74,297,897.20 Other income and non- Revenue-related
operating income
Financial subsidies for technical transformation Financial appropriation 101,984,107.72 38,603,317.72 Other income and non- Asset-related and
project operating income revenue related
Funding for environmental protection Financial appropriation 72,505,645.88 50,794,311.52 Other income Asset-related and
revenue related
Huanggang pulp-forestry-paper project Financial appropriation 7,543,321.53 24,200,216.24 Other income Asset-related
Research and development grants Financial appropriation 564,000.00 Other income Revenue-related
Enterprise technology innovation subsidies Financial appropriation 100,000.00 Other income Revenue-related
Immediate VAT refund Financial appropriation 1,846,849.03 768,780.56 Other income Revenue-related
Subsidies for foreign trade projects Financial appropriation 211,200.00 Other income Revenue-related
Leading talent subsidy Financial appropriation 400,000.00 660,000.00 Other income Revenue-related
Equipment technology subsidies Financial appropriation 115,400.00 Other income Revenue-related
Investment promotion subsidy Financial appropriation 6,306,806.25 22,921,843.36 Other income Revenue-related
Job stabilisation subsidy Financial appropriation 4,856,411.21 1,626,174.63 Other income and non- Revenue-related
operating income
Social security subsidies Financial appropriation 486,607.82 345,163.82 Other income Revenue-related
R&D subsidy Financial appropriation 2,469,900.00 2,476,800.00 Other income Revenue-related
Financing subsidy Financial appropriation 130,000.00 576,300.00 Other income Revenue-related
Tax return Financial appropriation 71,675,835.40 8,149,743.76 Other income Revenue-related
Government awards Financial appropriation 6,821,907.00 Non-operating income Revenue-related
Financial discount Financial appropriation 3,753,300.60 Finance expenses Revenue-related
Pandemic subsidy Financial appropriation 1,495,150.00 200,000.00 Other income and non- Revenue-related
operating income
Afforestation subsidy Financial appropriation 6,316,370.50 1,404,769.00 Other income Revenue-related
Others Financial appropriation 540,115,190.13 12,144,833.64 Other income and non- Asset-related and
operating income revenue related
Total 944,778,387.85 263,086,997.59
(3) The condition of the refund of government grants
Unit: RMB
Item Amount Reason
Infrastructure and environmental 13,216,025.00 The government repossessed the land
protection engineering
Total 13,216,025.00
316 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements
1. Accounts receivable
(1) Disclosure of accounts receivable by category
Unit: RMB
Closing balance Opening balance
Book balance Bad debt provision Book balance Bad debt provision Carrying value
Provision Provision
Type Amount Percentage Amount proportion Carrying value Amount Percentage Amount proportion
Accounts receivable
assessed individually for
bad debt provision
Accounts receivable
assessed collectively for
bad debt provision 146,213,282.74 100% 4,612,037.23 3.15% 141,601,245.51 698,032,192.53 100.00% 3,195,631.29 0.46% 694,836,561.24
Of which:
Accounts receivable from
related party customers 126,108,166.75 86.25% 126,108,166.75 692,218,139.26 99.17% 692,218,139.26
Accounts receivable
from non-related party
customers 20,105,115.99 13.75% 4,612,037.23 22.94% 15,493,078.76 5,814,053.27 0.83% 3,195,631.29 54.96% 2,618,421.98
Total 146,213,282.74 100.00% 4,612,037.23 3.15% 141,601,245.51 698,032,192.53 100.00% 3,195,631.29 0.46% 694,836,561.24
Accounts receivable assessed collectively for bad debt provision: Accounts receivable from related party
customers
Unit: RMB
Closing balance
Ageing Book balance Bad debt provision Provision proportion
Within 1 year 126,108,166.75
Total 126,108,166.75 –
2021 ANNUAL REPORT 317
XII Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements (Continued)
1. Accounts receivable (Continued)
(1) Disclosure of accounts receivable by category (Continued)
Accounts receivable assessed collectively for bad debt provision: Accounts receivable from non-related party
customers
Unit: RMB
Closing balance
Ageing Book balance Bad debt provision Provision proportion
Within 1 year 17,102,294.82 1,609,216.06 9.41%
1-2 years
2-3 years
Over 3 years 3,002,821.17 3,002,821.17 100.00%
Total 20,105,115.99 4,612,037.23 22.94%
If the bad debt provision of accounts receivable is made in accordance with the general model of ECLs, please
disclose the information about bad debt provision with reference to the way of disclosure of other receivables:
√ Applicable Not applicable
Disclosure by ageing
Unit: RMB
Ageing Closing balance Opening balance
Within 1 year 143,210,461.57 695,029,371.36
1-2 years
2-3 years
Over 3 years 3,002,821.17 3,002,821.17
Subtotal 146,213,282.74 698,032,192.53
(2) Provision, recovery or reversal of bad debt provision for the period
Bad debt provision for the period:
Unit: RMB
Changes in the period
Opening Recovery or Closing
Category balance Provision reversal Write-off Others balance
Bad debt provision 3,195,631.29 4,522,553.53 3,106,147.59 4,612,037.23
Total 3,195,631.29 4,522,553.53 3,106,147.59 4,612,037.23
318 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements (Continued)
1. Accounts receivable (Continued)
(3) Top five other receivables according to closing balance of debtors
The total amount of the Company’s top five accounts receivable based on closing balance of debtors for the
period was RMB146,133,061.57, which accounted for 99.95% of the closing balance of the total accounts
receivable. The closing balance of corresponding bad debt provision amounted to RMB4,531,816.06.
Unit: RMB
Closing balance
Name Book balance Bad debt provision Provision percentage
Customer 1 111,108,166.75
Customer 2 15,602,294.82 109,216.06 0.70%
Customer 3 10,000,000.00
Customer 4 5,000,000.00
Customer 5 4,422,600.00 4,422,600.00 100%
Total 146,133,061.57 4,531,816.06 3.10%
2. Bill receivable
Unit: RMB
Closing balance Opening balance
Bill type Book balance Bad debt provision Book value Book balance Bad debt provision Book value
Bank acceptance bills 3,091,000,000.00 3,091,000,000.00 553,050,000.00 553,050,000.00
Commercial acceptance bills 534,270,000.00 534,270,000.00 917,670,000.00 917,670,000.00
Total 3,625,270,000.00 3,625,270,000.00 1,470,720,000.00 1,470,720,000.00
(1) Bills receivable pledged by the Company at the end of the period
Unit: RMB
Pledged amount
Type at the end of the period
Bank acceptance bills 3,778,108.58
Total 3,778,108.58
(2) Bills receivable endorsed or discounted at the end of the period but not yet due
Unit: RMB
Amount not
Amount derecognised derecognised at the
Type at the end of the period end of the period
Bank acceptance bills 3,091,000,000.00
Commercial bills acceptance 534,270,000.00
Total 3,625,270,000.00
2021 ANNUAL REPORT 319
XII Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements (Continued)
3. Other receivables
Unit: RMB
Item Closing balance Opening balance
Dividend receivables 126,325,018.50 200,000,000.00
Other receivables 8,773,854,244.04 10,437,425,503.02
Total 8,900,179,262.54 10,637,425,503.02
(1) Dividends receivable
1) Classification of dividends receivable
Unit: RMB
Item (or investee) Closing balance Opening balance
Shandong Chenming Group Finance Co., Ltd. 200,000,000.00
Jiangxi Chenming Paper Co., Ltd. 72,896,218.50
Zhanjiang Chenming Pulp & Paper Co., Ltd. 53,428,800.00
Total 126,325,018.50 200,000,000.00
(2) Other receivables
1) Classification of other receivables by nature
Unit: RMB
Closing Opening
Nature book balance book balance
Open credit 8,849,264,265.13 10,482,693,848.05
Guarantee deposit 240,000.00 7,421,297.60
Insurance premium 291,708.31
Reserve and borrowings 6,103,279.46 6,971,976.60
Others 11,961,652.43 95,539,178.66
Total 8,867,569,197.02 10,592,918,009.22
320 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements (Continued)
3. Other receivables (Continued)
(2) Other receivables (Continued)
2) Particulars of bad debt provision
Closing bad debt provision at phase 1:
Unit: RMB
ECL rate (%)
for the next Bad debt
Category Book balance 12 months provision Carrying amount Reason
Bad debt provision assessed
individually
Interests receivable
Dividends receivable
Bad debt provision assessed
collectively 8,815,142,549.27 0.47% 41,288,305.23 8,773,854,244.04
Amount due from government
agencies 15,879,555.87 100.00% 15,879,555.87
Amount due from related parties 8,751,092,442.65 0.08% 7,423,984.27 8,743,668,458.38
Other receivables 48,170,550.75 37.34% 17,984,765.09 30,185,785.66
Total 8,815,142,549.27 0.47% 41,288,305.23 8,773,854,244.04
As at the end of the period, closing bad debt provision at phase 3:
Unit: RMB
Lifetime ECL Bad debt
Category Book balance rate (%) provision Carrying amount Reason
Shouguang Paper Mill No.2 1,500,000.00 100.00% 1,500,000.00 Overdue for a
prolonged
period and
unlikely to be
recovered
Arjo Wiggins Chenming Specialty 1,290,901.12 100.00% 1,290,901.12 Overdue for a
Paper Co., Ltd. prolonged
period and
unlikely to be
recovered
65 entities including Qingdao 49,635,746.63 100.00% 49,635,746.63 Overdue for a
Jieneng Qilunji Group Co., Ltd. prolonged
period and
unlikely to be
recovered
Total 52,426,647.75 100.00% 52,426,647.75
2021 ANNUAL REPORT 321
XII Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements (Continued)
3. Other receivables (Continued)
(2) Other receivables (Continued)
2) Particulars of bad debt provision (Continued)
Changes in carrying book balances with significant changes in loss provision for the period
Applicable √ Not applicable
Disclosed by ageing
Unit: RMB
Ageing Closing balance Opening balance
Within 1 year 7,121,706,162.10 10,315,335,710.07
1-2 years 1,468,300,735.77 190,920,767.76
2-3 years 190,900,767.76 40,248,068.73
Over 3 years 86,661,531.39 46,413,462.66
Total 8,867,569,197.02 10,592,918,009.22
3) Provision, recovery or reversal of bad debt provision for the period
Provision of bad debt provision for the period:
Unit: RMB
Changes in the period
Opening Recovery or Closing
Category balance Provision reversal Written off Others balance
Bad debt provision 155,492,506.20 16,240,877.66 78,018,430.88 93,714,952.98
Total 155,492,506.20 16,240,877.66 78,018,430.88 93,714,952.98
4) Top five other receivables according to closing balance of debtors
The total amount of the Company’s top five other receivables based on closing balance of debtors for the
year was RMB5,259,826,262.78, which accounted for 59.32% of the closing balance of the total other
receivables. The closing balance of corresponding bad debt provision amounted to RMB0.00.
Unit: RMB
Percentage to
closing balance Closing balance of
Name of entity Nature Closing balance Maturity of other receivables bad debt provision
Customer 1 Borrowings 2,183,400,000.00 Within 1 year 24.62% 0.00
Customer 2 Borrowings 1,197,553,000.00 Within 1 year, 1-2 years and 2-3 years 13.50% 0.00
Customer 3 Borrowings 697,940,000.00 Within 1 year 7.87% 0.00
Customer 4 Open credit 597,670,802.71 Within 1 year 6.74% 0.00
Customer 5 Borrowings 583,262,460.07 Within 1 year and 1-2 years 6.58% 0.00
Total – 5,259,826,262.78 – 59.32% 0.00
322 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements (Continued)
4. Long-term equity investments
Unit: RMB
Closing balance Opening balance
Impairment Impairment
Item Book balance provision Book value Book balance provision Book value
Investment in subsidiaries 18,480,556,896.52 18,480,556,896.52 21,845,592,649.90 21,845,592,649.90
Investment in joint ventures and
associates 331,467,464.62 5,994,545.96 325,472,918.66 352,509,931.98 5,994,545.96 346,515,386.02
Total 18,812,024,361.14 5,994,545.96 18,806,029,815.18 22,198,102,581.88 5,994,545.96 22,192,108,035.92
(1) Investment in subsidiaries
Unit: RMB
Change for the period
Opening Closing balance
balance Additional Withdrawn Impairment Closing balance of impairment
Investee (Book value) contribution contribution provision Others (Book value) provision
Chenming Paper Korea Co., Ltd. 6,143,400.00 6,143,400.00
Chenming GmbH 4,083,235.00 4,083,235.00
Hailaer Chenming Paper Co., Ltd. 12,000,000.00 12,000,000.00
Huanggang Chenming Pulp & Paper Co., Ltd. 2,300,000,000.00 2,000,000.00 2,302,000,000.00
Huanggang Chenming Arboriculture
Development Co., Ltd. 70,000,000.00 70,000,000.00
Jinan Chenming Paper Sales Co., Ltd. 100,000,000.00 100,000,000.00
Jiangxi Chenming Paper Co., Ltd. 822,867,646.40 822,867,646.40
Shandong Chenming Power Supply Holdings
Co., Ltd. 157,810,117.43 157,810,117.43
Wuhan Chenming Hanyang Paper Holdings Co.,
Ltd. 264,493,210.21 264,493,210.21
Shandong Grand View Hotel Co., Ltd. 80,500,000.00 80,500,000.00
Zhanjiang Chenming Pulp & Paper Co., Ltd. 5,082,500,000.00 27,500,000.00 5,110,000,000.00
Shouguang Chenming Modern Logistic Co., Ltd. 10,000,000.00 10,000,000.00
Shouguang Chenming Art Paper Co., Ltd. 113,616,063.80 113,616,063.80
Shouguang Meilun Paper Co., Ltd. 4,449,441,979.31 4,449,441,979.31
2021 ANNUAL REPORT 323
XII Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements (Continued)
4. Long-term equity investments (Continued)
(1) Investment in subsidiaries (Continued)
Change for the period
Opening Closing balance
balance Additional Withdrawn Impairment Closing balance of impairment
Investee (Book value) contribution contribution provision Others (Book value) provision
Shouguang Shun Da Customs Declaration
Co, Ltd. 1,500,000.00 1,500,000.00
Shandong Chenming Paper Sales Co., Ltd. 762,641,208.20 762,641,208.20
Shouguang Chenming Import and Export Trade
Co., Ltd. 250,000,000.00 250,000,000.00
Shouguang Chenming Papermaking Machine
Co., Ltd. 2,000,000.00 2,000,000.00
Shouguang Chenming Hongxiang Packaging
Co., Ltd. 3,730,000.00 3,730,000.00
Shandong Chenming Group Finance Co., Ltd. 4,000,000,000.00 4,000,000,000.00
Chenming Arboriculture Co., Ltd. 45,000,000.00 45,000,000.00
Shanghai Chenming Industry Co., Ltd. 3,000,000,000.00 3,000,000,000.00
Chenming (HK) Limited 118,067,989.55 118,067,989.55
Chenming Paper United States Co., Ltd. 6,407,800.00 6,407,800.00
Shandong Coated Paper Sales Co. Ltd. 20,000,000.00 20,000,000.00
Weifang Chenming Growth Driver Replacement
Equity Investment Fund Partnership
(Limited Partnership) 162,790,000.00 469,210,000.00 632,000,000.00
Weifang Chendu Equity Investment Partnership
(Limited Partnership) 255,000,000.00 255,000,000.00
Total 21,845,592,649.90 753,710,000.00 4,118,745,753.38 18,480,556,896.52
324 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements (Continued)
4. Long-term equity investments (Continued)
(2) Investment in associates and joint ventures
Unit: RMB
Change for the period
Investment
gain or loss Adjustment Other Distribution of Closing
Opening recognised of other change cash dividend Closing balance of
balance Additional Withdrawn under equity comprehensive in equity or profit Impairment balance impairment
Investee (book value) contribution contribution method income interest declared provision Others (book value) provision
I. Associates
Zhuhai Dechen New Third
Board Equity Investment
Fund Company (Limited
Partnership) 52,401,659.62 -433,763.31 15,000,000.00 36,967,896.31
Ningbo Kaichen Huamei
Equity Investment Fund
Partnership (Limited
Partnership) 198,549,926.27 -1,252,440.68 197,297,485.59
Chenming (Qingdao) Asset
Management Co., Ltd. 8,674,551.18 145,116.96 1,886,000.00 6,933,668.14
Xuchang Chenming Paper
Co., Ltd. 5,994,545.96
Subtotal 259,626,137.07 -1,541,087.03 16,886,000.00 241,199,050.04 5,994,545.96
II. Joint ventures
Shouguang Chenming Huisen
New-style Construction
Materials Co., Ltd. 4,945,742.03 2,957,127.84 1,000,000.00 6,902,869.87
Weifang Sime Darby West
Port Co., Ltd. 81,943,506.92 -4,572,508.17 77,370,998.75
Subtotal 86,889,248.95 -1,615,380.33 1,000,000.00 84,273,868.62
Total 346,515,386.02 -3,156,467.36 17,886,000.00 325,472,918.66 5,994,545.96
5. Accounts payable
Unit: RMB
Ageing Closing balance Opening balance
Within 1 year 929,767,031.76 691,849,228.91
1-2 years 135,879,646.09 48,012,965.29
2-3 years 15,621,599.15 39,906,363.15
Over 3 years 48,407,679.85 32,342,933.88
Subtotal 1,129,675,956.85 812,111,491.23
2021 ANNUAL REPORT 325
XII Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements (Continued)
6. Revenue and operating costs
Unit: RMB
Amount for the period Amount for the prior period
Item Revenue Operating costs Revenue Operating costs
Principal activities 7,457,655,880.74 6,282,245,216.89 6,881,284,099.00 5,528,211,060.91
Other activities 1,303,835,529.34 1,075,724,228.66 1,628,789,694.88 1,370,949,760.15
Total 8,761,491,410.08 7,357,969,445.55 8,510,073,793.88 6,899,160,821.06
7. Investment income
Unit: RMB
Amount for Amount for
Item the period the prior period
Income from long-term equity investments accounted for
using the cost method 2,552,823,636.61 604,220,123.68
Income from long-term equity investments accounted for
using the equity method -3,156,467.36 -6,412,281.95
Investment gain on disposal of long-term equity investments 379,035,504.15 -249,714,762.64
Investment gain on derecognition of financial assets -13,074,419.85
Investment gain on debt restructuring 472,886.50
Investment gain on holding other non-current financial assets 16,205,276.87
Total 2,932,306,416.92 348,093,079.09
326 SHANDONG CHENMING PAPER HOLDINGS LIMITED
XII Financial Report
XVIII. Supplementary information
1. Breakdown of extraordinary gains or losses for the current period
√ Applicable Not applicable
Unit: RMB
Item Amount Remark
Profit or loss from disposal of non-current assets 162,163,302.50
Government grants (except for the government grants closely related to
the normal operation of the Company and granted constantly at a fixed
amount or quantity in accordance with a certain standard based on
state policies) accounted for in profit or loss for the current period 261,974,874.53
Profit or loss from debt restructuring 24,593,731.72
Except for effective hedging business conducted in the ordinary course
of business of the Company, gain or loss arising from the change in
fair value of financial assets held for trading, derivative financial assets,
financial liabilities held for trading and derivative financial liabilities,
as well as investment gains from disposal of financial assets held for
trading, derivative financial assets, financial liabilities held for trading,
derivative financial liabilities and other debt investments -54,802,461.29
Gain or loss arising from fair value change of consumable biological
assets subsequently measured at fair value -41,899.05
Other gain or loss items within the definition of extraordinary gain or loss -15,461,704.28
Total extraordinary gains or losses 378,425,844.13
Less: Effect of income tax of extraordinary gains or losses 60,135,956.19
Net extraordinary gains or losses 318,289,887.94
Less: Net effect of extraordinary gains or losses attributable to minority
interest (after tax) -3,346,683.65
Extraordinary gains or losses attributable to ordinary shareholders of the
Company 321,636,571.59
Other profit or loss items consistent with the definition of extraordinary items:
Applicable √ Not applicable
The Company does not have other profit or loss items consistent with the definition of extraordinary items.
Explanation on classification of non-recurring profit and loss listed in Explanatory Announcement No. 1 on Information
Disclosure of Companies Offering Their Securities to the Public – Non-recurring Profit and Loss as non-recurring profit
and loss
Applicable √ Not applicable
2021 ANNUAL REPORT 327
XII Financial Report
XVIII. Supplementary information (Continued)
2. Return on net assets and earnings per share
Earnings per share
Rate of return on net assets Basic Diluted
Profit for the reporting period on weighted average basis (RMB per share) (RMB per share)
Net profit attributable to ordinary shareholders
of the Company 9.60% 0.56 0.56
Net profit after extraordinary gains or losses attributable to
ordinary shareholders of the Company 7.72% 0.45 0.45
Data specification: When calculating financial indicators such as earnings per share and rate of return on weighted
average net assets, the interest on Perpetual Bonds of RMB89,700,000.00, the dividends on Preference Shares of
RMB323,390,968.66 declared to be distributed and the cash dividends of RMB14,202,450.00 attributable to the
shareholders of restricted shares expected to be unlocked in the future among the dividends distributed during the
reporting period are deducted.
3. Accounting data difference under accounting standard at home and abroad
(1) Differences of net profit and net assets disclosed in financial reports prepared under IAS and Chinese
accounting standards
Applicable √ Not applicable
(2) Differences of net profit and net assets disclosed in financial reports prepared under oversea and Chinese
accounting standards
Applicable √ Not applicable
The Board of Shandong Chenming Paper Holdings Limited
30 March 2022
328 SHANDONG CHENMING PAPER HOLDINGS LIMITED
