山东晨鸣纸业集团股份有限公司 SHANDONG CHENMING PAPER HOLDINGS LIMITED* (a joint stock company incorporated in the People’s Republic of China with limited liability) Three Quarter Report 2011 §1 Important 1.1 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 Shandong Chenming Paper Holdings Limited (the “Company”, “us”, and “we”) hereby warrant that there are no false representations, misleading statements or material omissions contained in this report (the “Report”), and jointly and severally accept full responsibility for the truthfulness, accuracy and completeness of its contents. This Report has been prepared in both Chinese and English. For any discrepancies, the Chinese version shall prevail. 1.2 None of the Directors, Supervisors and Senior Management is unable to warrant the truthfulness, accuracy and completeness of the contents of this report or holds any dissenting views. 1.3 This quarterly report was considered and approved by the eighth meeting of the sixth session of the Board of the Company with all directors present by means of communication. 1.4 The third quarter financial statements of the Company and its subsidiaries (collectively referred to as the “Group”) prepared in accordance with Accounting Standards for Business Enterprises issued by the Ministry of Finance of PRC have not been audited. 1.5 Chen Hongguo, the person in charge of the Company, Wang Chunfang, the financial controller of the Company, and Li Dong, head of accounting department (the person in charge of accounting) hereby declare their assurance of the truthfulness and completeness of the financial report contained in the quarterly report. §2 Company Information 2.1 Major financial data and indicators Unit: RMB 1 2011.9.30 2010.12.31 Change (%) Total assets (RMB) 42,839,764,456.93 35,077,132,129.98 22.13% Equity attributable to shareholders of the Company 13,554,181,720.13 13,535,785,794.54 0.14% (RMB) Share capital (share) 2,062,045,941.00 2,062,045,941.00 0.00% Net assets per share attributable to shareholders of the Company 6.57 6.56 0.15% (RMB/share) Comparison with the Comparison with the January - September July - September 2011 corresponding period of corresponding period of 2011 last year (%) last year (%) Total operating revenue 4,427,243,847.48 1.93% 13,344,699,202.62 6.59% (RMB) Net profit attributable to shareholders of the 149,251,843.22 - 35.58% 632,801,534.62 - 24.63% Company (RMB) Net cash flows from operating activities — — 688,041,679.45 - 44.84% (RMB) Net cash flows per share from operating activities — — 0.33 - 45.00% (RMB/share) Basic earnings per share 0.08 - 33.33% 0.31 - 24.39% (RMB/share) Diluted earnings per N/A N/A N/A N/A share (RMB/share) Weighted average return 1.11% -0.66% 4.53% -1.86% on net assets (%) Weighted average return on net assets after 0.76% -0.86% 3.56% -2.42% extraordinary gains or losses (%) 2 Extraordinary gain or loss items √ Applicable Not Applicable Unit: RMB Note (if Extraordinary gain or loss items Amounts applicable) Gain or loss on disposal of non-current assets 1,082,564.38 Government grants recognised in profit or loss during the current period, except for government grants closely related to the course 129,987,899.80 of ordinary operation of the Company that were given constantly at a fixed standard amount or quantity as stipulated by the State Gain or loss on debt restructuring -19,889,572.60 Other gain or loss items within the definition of extraordinary 13,309,163.37 gain or loss Profit arising from investment costs for acquisition of a subsidiary, an associate and a joint venture by the corporation 44,188,866.15 being less than its share of fair value of identifiable net assets of the investee on acquisition Other non-operating income and expenses other than the above 3,922,684.36 items Effect of minority interests -9,374,132.08 Effect of income tax -14,139,197.89 Total 149,088,275.49 — Note: Other gain or loss items within the definition of extraordinary gain or loss refer to the gain or loss on disposal of subsidiaries. 3 2.2 Total number of shareholders and the shareholding of the top ten shareholders of non-restricted shares as at the end of the reporting period Unit: share Total number of shareholders as at The total number of shareholders was the end of the reporting period 168,448, of which 137,314 were holders of A shares, 30,522 were holders of B shares and 612 were holders of H shares Shareholding of the top ten shareholders of non-restricted tradable shares Number of non-restricted tradable Name of shareholders (Full Name) shares held as at the Class end of the reporting period Overseas listed HKSCC NOMINEES LIMITED 389,641,000 foreign shares (H Shares) Domestic listed PLATINUM ASIA FUND 43,480,377 foreign shares (B Shares) BBH BOS S/A FIDELITY FD - Domestic listed CHINA FOCUS FD 25,319,602 foreign shares (B Shares) BILL & MELINDA GATES 24,036,202 RMB ordinary shares FOUNDATION TRUST (A Shares) HTHK-MANULIFE CHINA Domestic listed VALUE FUND 22,892,182 foreign shares (B Shares) Domestic listed MANULIFE GLOBAL FUND 20,324,321 foreign shares (B Shares) China Life Insurance Company RMB ordinary shares Limtied-Dividend-Individual 18,819,737 (A Shares) Dividend-005L-FH002 Shenzhen VALUE PARTNERS CLASSIC Domestic listed FUND 8,143,633 foreign shares (B Shares) DRAGON BILLION CHINA Domestic listed MASTER FUND 7,078,618 foreign shares (B Shares) LSV EMERGING MARKETS Domestic listed EQUITY FUND,L.P. 6,102,800 foreign shares (B Shares) 4 §3 Material matters 3.1 Details of and reasons for significant changes in major accounting statement items and financial indicators of the Company √ Applicable Not Applicable 1. Analysis of the assets and liabilities of the Company Unit: RMB Item 30 September 2011 31 December 2010 Change (%) Reason for change Other receivables 294,160,701.79 117,634,380.52 150.06% (1) Inventory 5,305,879,711.46 3,047,078,215.01 74.13% (2) Other current assets 1,503,751,621.26 658,572,125.34 128.34% (3) Long-term equity 46,606,279.25 67,201,931.89 -30.65% (4) investments Construction in 11,482,374,854.56 7,871,512,563.84 45.87% (5) progress Short-term 7,396,818,293.32 3,594,157,220.47 105.80% (6) borrowings Bills payable 1,031,424,755.69 218,757,186.75 371.49% (7) Accounts payable 4,548,937,740.17 2,708,064,676.44 67.98% (8) Other payables 1,058,287,800.61 582,052,511.43 81.82% (9) Other current 124,134,189.27 3,412,493,915.88 -96.36% (10) liabilities Deferred income tax - 1,340,281.66 -100.00% (11) liabilities Explanation on the main reasons leading to the changes: (1) Other receivables increased by 150.06% primarily due to the increase in guarantee deposits for land amounting to RMB108 million by Wuhan Chenming Wan Xing Real Estate Co., Ltd., a subsidiary of the Company. (2) Inventory increased by 74.13% as compared to the beginning of the year primarily due to changes in market conditions and stocks for commencement of operation of the Company’s projects. Raw materials increased by RMB1.5 billion, and commodity stocks increased by RMB 0.8 billion. (3) Other current assets increased by 128.34% as compared to the beginning of the year primarily due to an increase of the value-added tax to be deducted during the period. 5 (4) Long-term equity investments decreased by 30.65% primarily due to Shouguang Liben Paper Making Co., Ltd., an associate, being incorporated into the scope of the consolidation. (5) Construction in progress increased by 45.87% as compared to the beginning of the year primarily due to the investments made in the Zhanjiang pulp project, and the project of copperplate paper of production capacity of 800,000 tonnes. (6) Short-term borrowings increased by 105.8% primarily due to increase in short-term borrowings for the repayment of expired short-term debentures in the current period. (7) Bills payable increased by 371.49% as compared to the beginning of the year primarily due to more bills made by the Company during the period. (8) Accounts payable increased by 67.98% as compared to the beginning of the year primarily due an increase in the purchase of raw materials and expansion of the Company. (9) Other payables increased by 81.82% primarily due to an increase in bank balances with the holding company resulting from the raising of some project funds through the holding company by the Company. (10) Other current liabilities decreased by 96.36% as compared to the beginning of the year primarily due to expiry the Company’s short-term debentures . (11) Deferred income tax liabilities decreased by 100% as compared to the beginning of the year primarily due to disposal of subsidiaries during the year with deferred income tax liabilities incurred on acquisition of subsidiaries during prior years reversed. 2. Explanation on significant change of income statement compared with the corresponding period of last year Unit: RMB Reason for Item 30 September 2011 30 September 2010 Change (%) change Business taxes and surcharges 53,921,873.74 15,563,122.29 246.47% (1) Finance expenses 256,102,491.65 188,855,201.11 35.61% (2) Loss on impairment of -53,783,332.39 49,427,434.69 -208.81% (3) assets 6 Gain on change 3,715,429.62 8,488,094.03 -56.23% (4) in fair value Investment 8,722,923.82 -3,985,835.17 318.85% (5) income Non-operating 207,761,300.22 106,355,284.49 95.35% (6) income Non-operating 36,418,089.15 9,006,476.98 304.35% (7) expenses Total profit 767,630,385.29 1,153,135,395.89 -33.43% (8) Income tax 129,064,975.60 204,613,818.00 -36.92% (8) expenses Net profit attributable to 632,801,534.62 839,568,874.95 -24.63% (8) equity holders of the Company Minority 5,763,875.07 108,952,702.94 -94.71% (8) interests Explanation on the main reasons leading to the changes: (1) Business taxes and surcharges increased by 246.47% as compared to the corresponding period of the prior year mainly due to the payment of the urban maintenance and construction tax and education surcharges by foreign-invested enterprises since December 2010. (2) Finance expenses increased by 35.61% as compared to the corresponding period of the prior year mainly due to an increase in lending interest rate and an increase of loans. (3) Loss on impairment of assets decreased by 208.81% as compared to the corresponding period of the prior year mainly because the Company made greater efforts to clear open account receivables outstanding for a long period and eliminated bad debt provisions during the period. (4) Gain on change in fair value decreased by 56.23% as compared to the corresponding period of the prior year mainly due to change in fair value of timber assets. (5) Investment income increased by 318.85% as compared to the corresponding period of the prior year mainly due to investment income on disposal of subsidiaries, namely Heze Chenming Panels Co., Ltd. and Shandong Lin Dun Wood Industry Co., Ltd., during the period. (6) Non-operating income increased by 95.35% mainly due to an increase of government grants received and an increase in non-operating income through acquisition of the equity interests of Shouguang Liben Paper Making Co., Ltd., an 7 associate, at nil consideration during the period. (7) Non-operating expenses increased by 304.35% as compared to the corresponding period of the prior year mainly due to loss from credit assignment arising from disposal of Heze Chenming Panels Co., Ltd., a subsidiary, during the period. (8) Total profit, income tax, net profit attributable to the Company and minority interests decreased as compared to the corresponding period of the prior year by 33.43%, 36.92%, 24.63% and 94.71% respectively mainly due to factors such as a rise in the price of raw materials, with a decrease in the gross profit margin as compared to the corresponding period of the prior year, and a decrease in minority interests arising from acquisition of the minority interests of a subsidiary, namely Yanbian Chenming Paper Co., Ltd. 3. Cash flows during the reporting period The reporting The corresponding period Change Item period of last (%) year Net cash flows from operating activities 688,041,679.45 1,247,283,449.67 -44.84 Net cash flows from investing activities -3,371,371,938.68 -3,565,098,861.83 5.43 Net cash flows from financing activities 2,757,199,394.35 1,541,312,029.27 78.89 Explanation on the main reasons leading to the changes: (1) Net cash flows from operating activities decreased by 44.84% as compared to the corresponding period of the prior year primarily due to an increase in outstanding bills during the period, and an increase in the cash payment for purchasing commodities arising from an increase in the price of raw materials and expansion of the Company. (2) Net cash flows from investing activities increased by 5.43% as compared to the corresponding period of the prior year primarily due to the changes in the investments made in the Zhanjiang pulp project, the high-end culture paper project of production capacity of 450,000 tonnes, the tissue paper project of Meilun Paper of production capacity of 98,000 tonnes, the copperplate paper project of production capacity of 800,000 tonnes and the white coated linerboard project of production capacity of 600,000 tonnes. (3) Net cash flows from financing activities increased by 78.89% as compared to the corresponding period of the prior year primarily due to an increase of banking loans made by the Company. 8 3.2 The progress of significant events and analysis of their impact and solutions 3.2.1 Non-standard opinion Applicable √ Not Applicable 3.2.2 Provision of capital to the controlling shareholder or its related parties or provision of guarantee in favour of any external party in violation of the prescribed procedures by the Company Applicable √ Not Applicable 3.2.3 Execution of material contracts in the ordinary course of business and their performance Applicable √ Not Applicable 3.2.4 Others Applicable √ Not Applicable 3.3 Performance of undertakings by the Company, shareholders and beneficial controllers The following undertakings by the Company, and its related parties such as its directors, supervisors and senior management, shareholders interested in 5% or more of the shares of the Company and its beneficial controllers made in the reporting period or subsisting to the reporting period Applicable √ Not Applicable 3.4 Warning of cumulative net profit for the period between the beginning of the year to end of next reporting period being projected to be losses or expected material change as compared to the same period last year and its explanation Applicable √ Not Applicable 3.5 Other significant events that require explanation 3.5.1 Securities investment Applicable √ Not Applicable 3.5.2 Reception of research investigations, communications and interviews during the reporting period 9 Main topics of Place of Manner of Parties discussion and Date of reception reception reception accommodated information provided Matters including recent development of the industry and Shouguang, Telephone development trend in 30 August 2011 Comaurum Capital Shandong communication the future, production and operation of the Company, as well as strategic development Matters including recent development of the industry and Shouguang, On-site research and development trend in 1 September 2011 Haitong Securities Shandong investigation the future, production and operation of the Company, as well as strategic development Matters including recent development of the industry and Shouguang, Telephone development trend in 14 September 2011 Fidelity Investments Shandong communication the future, production and operation of the Company, as well as strategic development Matters including recent development of the industry and Shouguang, On-site research and Fubon Securities, development trend in 21 September 2011 Shandong investigation 香港高觀基 the future, production and operation of the Company, as well as strategic development 3.6 Investment in derivatives □Applicable √Not Applicable 3.6.1 Positions in investment in derivatives as at the end of the reporting period □Applicable √Not Applicable §4 Appendices 4.1 Balance sheet Prepared by: Shandong Chenming Paper Holdings Limited 10 As at 30 September 2011 Unit: RMB Closing balance Opening balance Items Consolidated Parent company Consolidated Parent company CURRENT ASSETS: Monetary funds 2,118,585,548.54 522,602,208.97 1,951,854,940.72 704,109,173.25 Balances with clearing companies Loans to banks and other financial institutions Held-for-trading financial assets Bills receivable 3,002,711,188.46 1,065,748,317.64 2,762,389,909.89 1,527,349,378.06 Accounts receivable 2,328,088,982.42 776,602,318.93 2,122,578,824.27 1,621,939,553.18 Prepayments 849,904,848.20 830,204,603.10 924,354,545.55 919,638,465.71 Premium receivable Receivables from reinsurers Reinsurance contract reserves receivable Interest receivable Dividend receivable 16,530,024.40 25,500,000.00 Other receivables 294,160,701.79 5,340,911,879.34 117,634,380.52 4,773,074,610.91 Financial assets purchased under agreements to resell Inventory 5,305,879,711.46 1,111,407,894.34 3,047,078,215.01 798,447,611.57 Non-current assets due within one year Entrusted loans due within one year 1,362,690,971.94 1,799,625,759.18 Other current assets 1,503,751,621.26 7,737,307.56 658,572,125.34 Total current assets 15,403,082,602.13 11,034,435,526.22 11,584,462,941.30 12,169,684,551.86 NON-CURRENT ASSETS: Entrusted loans and advances to customers Available-for-sale financial assets Entrusted loans 500,000,000.00 500,000,000.00 Held-to-maturity investments Long-term receivables Long-term equity investments 46,606,279.25 7,929,709,996.29 67,201,931.89 5,957,887,739.77 Investment properties 23,384,520.04 23,384,520.04 24,688,212.07 24,688,212.07 Fixed assets 13,090,846,859.38 5,288,576,999.38 12,882,358,381.56 5,162,505,904.23 Construction in progress 11,482,374,854.56 500,254,198.69 7,871,512,563.84 377,881,973.00 Construction materials 102,217,341.40 2,246,511.01 116,481,086.12 18,789,838.50 Disposal of fixed assets Productive biological assets Oil and gas assets Consumable biological assets 913,181,844.67 726,742,568.44 Intangible assets 1,410,190,135.88 323,571,975.44 1,459,453,227.94 329,934,823.01 Development expenditure Goodwill 20,283,787.17 20,283,787.17 Long-term prepaid expenses 191,929,045.65 176,436,950.42 Deferred income tax assets 155,667,186.80 41,715,935.99 147,510,479.23 60,305,230.74 Other non-current assets Total non-current assets 27,436,681,854.80 14,609,460,136.84 23,492,669,188.68 12,431,993,721.32 TOTAL ASSETS 42,839,764,456.93 25,643,895,663.06 35,077,132,129.98 24,601,678,273.18 CURRENT LIABILITIES: Short-term borrowings 7,396,818,293.32 3,724,402,574.92 3,594,157,220.47 2,177,183,475.78 11 Borrowings from the central bank Customer bank deposits and due to banks and other financial institutions Placements from banks and other financial institutions Held-for-trading financial liabilities Bills payable 1,031,424,755.69 871,365,868.11 218,757,186.75 124,145,654.66 Accounts payable 4,548,937,740.17 1,182,557,275.68 2,708,064,676.44 995,425,830.59 Advance receipts 328,274,008.20 253,063,610.68 410,243,554.75 284,808,123.90 Assets sold under agreements to repurchase Handling charges and commission payable Staff remuneration payables 148,131,811.87 88,546,285.00 169,426,660.41 106,040,498.15 Taxes payable 110,842,456.40 19,597,996.08 134,029,387.82 36,899,207.08 Interest payable Dividend payable Other payables 1,058,287,800.61 217,977,125.95 582,052,511.43 248,170,250.32 Due to reinsurers Insurance contract reserves Customer brokerage deposits Securities underwriting brokerage deposits Non-current liabilities due within one 1,605,091,887.64 1,488,392,000.00 1,432,841,463.15 1,360,951,000.00 year Other current liabilities 124,134,189.27 109,972,205.02 3,412,493,915.88 3,405,958,538.39 Total current liabilities 16,351,942,943.17 7,955,874,941.44 12,662,066,577.10 8,739,582,578.87 NON-CURRENT LIABILITIES: Long-term borrowings 5,733,936,935.79 651,889,935.94 4,725,628,719.05 852,222,735.94 Bonds payable 2,464,645,357.64 1,982,663,053.79 Long-term payables Special payables Estimated liabilities Deferred income tax liabilities 1,340,281.66 Other non-current liabilities 3,091,300,710.94 2,313,209,429.95 2,427,897,545.67 2,309,355,287.42 Total non-current liabilities 11,289,883,004.37 4,947,762,419.68 7,154,866,546.38 3,161,578,023.36 TOTAL LIABILITIES 27,641,825,947.54 12,903,637,361.12 19,816,933,123.48 11,901,160,602.23 OWNERS’ EQUITY (OR SHAREHOLDERS’ EQUITY): Paid-up capital(or share capital) 2,062,045,941.00 2,062,045,941.00 2,062,045,941.00 2,062,045,941.00 Capital reserves 6,098,201,035.99 6,184,215,988.77 6,093,493,004.71 6,184,215,988.77 Less: Treasury shares Special reserves Surplus reserves 1,046,510,680.99 1,034,321,099.08 1,046,510,680.99 1,034,321,099.08 General risk provisions Retained profit 4,347,919,700.28 3,459,675,273.09 4,333,731,947.96 3,419,934,642.10 Foreign currency translation differences -495,638.13 4,219.88 Total equity attributable to equity holders 13,554,181,720.13 12,740,258,301.94 13,535,785,794.54 12,700,517,670.95 of the company Minority interests 1,643,756,789.26 1,724,413,211.96 Total owners’ equity 15,197,938,509.39 12,740,258,301.94 15,260,199,006.50 12,700,517,670.95 TOTAL LIABILITIES AND OWNERS’ 42,839,764,456.93 25,643,895,663.06 35,077,132,129.98 24,601,678,273.18 EQUITY 12 4.2 Income statement for the reporting period Prepared by: Shandong Chenming Paper Holdings Limited July to September 2011 Unit: RMB Amounts for the current period Amounts for the prior period Items Consolidated Parent company Consolidated Parent company I. Total operating revenue 4,427,243,847.48 2,308,083,129.44 4,343,250,079.02 3,823,699,983.39 Including:Operating revenue 4,427,243,847.48 2,308,083,129.44 4,343,250,079.02 3,823,699,983.39 Interest income Earned premium Handling charges and commission income II. Total operating costs 4,304,054,582.51 2,181,884,929.86 4,056,636,234.66 3,563,528,799.15 Including:Operating costs 3,749,052,925.15 1,976,030,855.76 3,527,120,440.28 3,282,867,167.75 Interest expenses Handling charges and commission expenses Surrenders Net claims paid Net change in insurance contract reserves Policyholder dividend expenses Expenses for reinsurance accepted Business taxes and surcharges 21,808,604.16 10,393,419.11 5,165,394.55 489,447.02 Selling and distribution expenses 232,687,936.82 74,958,425.18 204,837,721.64 90,558,199.13 General and administrative expenses 230,352,669.46 99,158,139.57 227,766,185.51 111,421,335.35 Finance expenses 102,510,313.15 49,330,991.09 63,115,545.25 51,732,917.83 Loss on impairment of assets -32,357,866.23 -27,986,900.85 28,630,947.43 26,459,732.07 Add:Gain on change in fair value (“-” 0.00 0.00 130,000.00 11,230,000.00 denotes loss) Investment income (“-” denotes loss) -830,738.16 62,017,948.38 -8,310,329.95 189,528,925.13 Including: Investment income from -989,797.08 -989,797.08 -8,410,715.79 -8,410,715.79 associates and joint ventures Foreign exchange gains (“-” denotes loss) III. Operating profit (“-” denotes loss) 122,358,526.81 188,216,147.96 278,433,514.41 460,930,109.37 Add:Non-operating income 61,813,937.33 1,612,798.83 38,941,481.91 17,830,024.15 Less:Non-operating expenses 10,080,971.90 3,549,889.06 2,798,010.19 1,855,891.37 Including: Loss on disposal of 4,500,203.40 3,549,889.06 2,018,551.34 1,412,237.62 non-current assets IV. Total profit (“-” denotes total loss) 174,091,492.24 186,279,057.73 314,576,986.13 476,904,242.15 Less:Income tax expenses 32,341,077.28 25,263,910.13 62,134,495.70 48,107,616.55 V. Net profit (“-” denotes net loss) 141,750,414.96 161,015,147.60 252,442,490.43 428,796,625.60 Net profit attributable to equity holders 149,251,843.22 161,015,147.60 231,699,904.71 428,796,625.60 of the Company Minority interests -7,501,428.26 20,742,585.72 VI. Earnings per share: (I) Basic earnings per share 0.08 0.08 0.12 0.21 (II) Diluted earnings per share N/A N/A N/A N/A 13 VII. Other comprehensive income -221,981.71 -22,991.41 VIII. Total comprehensive income 141,528,433.25 161,015,147.60 252,419,499.02 428,796,625.60 Total comprehensive income attributable 149,029,861.51 161,015,147.60 231,676,913.30 428,796,625.60 to equity holders of the Company Total comprehensive income attributable -7,501,428.26 20,742,585.72 to minority interests For the business combination under common control for the current period, the acquiree realised net profit of RMB nil before the combination. 4.3 Income statement for the period from the beginning of the year to the end of the reporting period Prepared by: Shandong Chenming Paper Holdings Limited January to September 2011 Unit: RMB Amounts for the current period Amounts for the prior period Items Consolidated Parent company Consolidated Parent company I. Total operating revenue 13,344,699,202.62 6,418,942,841.59 12,519,891,756.01 10,927,142,027.44 Including:Operating revenue 13,344,699,202.62 6,418,942,841.59 12,519,891,756.01 10,927,142,027.44 Interest income Earned premium Handling charges and commission income II. Total operating costs 12,760,850,381.84 5,955,481,527.63 11,468,607,426.49 10,169,276,727.38 Including:Operating costs 11,131,812,049.64 5,301,705,953.22 9,923,520,620.42 9,300,013,302.72 Interest expenses Handling charges and commission expenses Surrenders Net claims paid Net change in insurance contract reserves Policyholder dividend expenses Expenses for reinsurance accepted Business taxes and surcharges 53,921,873.74 24,305,510.12 15,563,122.29 2,235,915.36 Selling and distribution expenses 671,206,065.44 210,487,833.62 646,339,601.61 320,066,219.93 General and administrative expenses 701,591,233.76 310,690,627.65 644,901,446.37 321,848,082.91 Finance expenses 256,102,491.65 174,744,007.91 188,855,201.11 163,703,865.64 Loss on impairment of assets -53,783,332.39 -66,452,404.89 49,427,434.69 61,409,340.82 Add:Gain on change in fair value 3,715,429.62 8,488,094.03 15,100,000.00 (“-” denotes loss) Investment income (“-” denotes loss) 8,722,923.82 202,425,925.53 -3,985,835.17 439,226,306.03 Including: Investment income from -4,745,298.47 -4,745,298.47 -4,086,221.01 -4,086,221.01 associates and joint ventures Foreign exchange gains (“-” denotes loss) III. Operating profit (“-” denotes loss) 596,287,174.22 665,887,239.49 1,055,786,588.38 1,212,191,606.09 Add:Non-operating income 207,761,300.22 102,461,065.93 106,355,284.49 50,088,706.80 Less:Non-operating expenses 36,418,089.15 26,277,619.53 9,006,476.98 5,849,645.04 14 Including: Loss on disposal of 5,423,591.19 3,993,160.29 5,149,136.56 3,316,386.29 non-current assets IV. Total profit (“-” denotes total loss) 767,630,385.29 742,070,685.89 1,153,135,395.89 1,256,430,667.85 Less:Income tax expenses 129,064,975.60 83,716,272.60 204,613,818.00 144,439,629.04 V. Net profit (“-” denotes net loss) 638,565,409.69 658,354,413.29 948,521,577.89 1,111,991,038.81 Net profit attributable to equity holders 632,801,534.62 658,354,413.29 839,568,874.95 1,111,991,038.81 of the Company Minority interests 5,763,875.07 108,952,702.94 VI. Earnings per share: (I) Basic earnings per share 0.31 0.32 0.41 0.54 (II) Diluted earnings per share N/A. N/A N/A. N/A VII. Other comprehensive income -499,858.01 -147,058.73 VIII. Total comprehensive income 638,065,551.68 658,354,413.29 948,374,519.16 1,111,991,038.81 Total comprehensive income attributable 632,301,676.61 658,354,413.29 839,421,816.22 1,111,991,038.81 to equity holders of the Company Total comprehensive income attributable 5,763,875.07 108,952,702.94 to minority interests For the business combination under common control from the beginning of the year to the end of the reporting period, the acquiree realised net profit of RMB nil before the combination. 4.4 Cash flow statements for the period from the beginning of the year to the end of the reporting period Prepared by: Shandong Chenming Paper Holdings Limited January to September 2011 Unit: RMB Amounts for the current period Amounts for the prior period Items Consolidated Parent company Consolidated Parent company I.Cash flows from operating activities: Cash received from sales of goods and 13,633,847,368.78 7,484,468,241.21 11,145,975,371.06 8,767,983,457.44 rendering of services Net increase in customer bank deposits and due to banks and other financial institutions Net increase in borrowings from the central bank Net increase in placements from other financial institutions Cash received from premiums under original insurance contracts Net cash received from reinsurance business Net increase in deposits from policyholders Net increase from disposal of held-for-trading financial assets Cash received from interest, handling 15 charges and commissions Net increase in placements from banks and other financial institutions Net capital increase of repurchase business Tax rebates received 20,277,735.18 28,905,078.65 Cash received relating to other operating 1,365,688,962.58 156,272,009.26 246,712,641.49 53,297,994.69 activities Subtotal of cash inflows from operating 15,019,814,066.54 7,640,740,250.47 11,421,593,091.20 8,821,281,452.13 activities Cash paid for goods and services 11,987,614,159.94 5,139,166,584.95 8,023,925,874.22 6,554,179,930.27 Net increase in loans and advances to customers Net increase in deposits with the central bank and other financial institutions Cash paid for claims under original insurance contracts Cash paid for interest, handling charges and commission Cash paid for policyholder dividend Cash paid to and for employees 633,462,833.10 221,240,444.53 618,691,882.22 213,708,684.24 Payments of taxes and surcharges 1,076,812,938.70 498,987,569.27 1,014,459,093.46 600,782,601.18 Cash paid relating to other operating 633,882,455.35 -502,872,485.56 517,232,791.63 1,296,466,795.61 activities Subtotal of cash outflows from operating 14,331,772,387.09 5,356,522,113.19 10,174,309,641.53 8,665,138,011.30 activities Net cash flows from operating activities 688,041,679.45 2,284,218,137.28 1,247,283,449.67 156,143,440.83 II.Cash flows from investing activities: Cash received from investments 381,522,705.39 1,020,000.00 352,020,000.00 Cash received from investment income 204,893,213.11 475,992,163.36 Net cash received from disposal of fixed 61,320,247.70 507,487.28 20,164,036.66 19,004,765.80 assets, intangible assets and other long-term assets Net cash received from disposal of 3,467,152.31 subsidiaries and other business units Cash received relating to other investing 5,754,188.06 13,001,000.00 activities Subtotal of cash inflows from investing 70,541,588.07 586,923,405.78 34,185,036.66 847,016,929.16 activities Cash paid for purchase of fixed assets, 3,385,207,926.75 309,575,411.78 3,598,273,898.49 111,217,430.65 intangible assets and other long-term assets Cash paid on investments 56,705,600.00 1,976,239,025.00 1,010,000.00 2,251,000,000.00 Net increase in pledged loans Net cash paid for acquisition of subsidiaries and other business units Cash paid relating to other investing activities Subtotal of cash outflows from investing 3,441,913,526.75 2,285,814,436.78 3,599,283,898.49 2,362,217,430.65 activities Net cash flows from investing activities -3,371,371,938.68 -1,698,891,031.00 -3,565,098,861.83 -1,515,200,501.49 III.Cash flows from financing activities: Cash received from capital contribution 16 Including:Cash received from minority interest contribution to subsidiaries Cash received from borrowings 11,456,606,231.94 5,615,596,650.32 3,428,816,218.11 1,718,533,919.48 Cash received from bond issue Cash received relating to other financing 2,473,756,944.44 1,982,006,944.44 4,796,892,009.11 4,738,673,645.04 activities Subtotal of cash inflows from financing 13,930,363,176.38 7,597,603,594.76 8,225,708,227.22 6,457,207,564.52 activities Cash repayments of amounts borrowed 6,617,449,196.47 4,138,935,958.83 5,805,887,581.27 5,107,736,193.29 Cash paid for dividend and profit 1,036,114,508.24 817,822,372.38 878,508,616.68 721,925,905.78 distribution or interest payment Including:Dividend and profit paid 28,219,978.44 89,984,050.90 to minority interests by subsidiaries Cash paid relating to other financing 3,519,600,077.32 3,506,636,496.04 activities Subtotal of cash outflows from financing 11,173,163,782.03 8,463,394,827.25 6,684,396,197.95 5,829,662,099.07 activities Net cash flows from financing activities 2,757,199,394.35 -865,791,232.49 1,541,312,029.27 627,545,465.45 IV.Effect of foreign exchange rate -21,288,604.62 -2,229,334.11 -11,435,599.15 -11,265,864.81 changes on cash and cash equivalents V.Net increase in cash and cash 52,580,530.50 -282,693,460.32 -787,938,982.04 -742,777,460.02 equivalents Add: Balance of cash and cash 1,855,235,979.80 662,209,607.29 2,367,334,202.50 1,586,045,998.83 equivalents as at the beginning of the period VI.Balance of cash and cash 1,907,816,510.30 379,516,146.97 1,579,395,220.46 843,268,538.81 equivalents as at the end of the period 17 4.5 Audit report Audit opinion: unaudited By Order of the Board CHEN HONGGUO Chairman Shandong, the PRC, 27 October 2011 As at the date of this announcement, the executive Directors are Mr. Chen Hongguo, Mr. Yin Tongyuan, Mr. Li Feng, Mr. Geng Guanglin, Mr. Tan Daocheng, Mr. Hou Huancai and Mr. Zhou Shaohua, the non-executive Directors are Mr. Cui Youping, Ms. Wang Fengrong and Mr. Wang Xiaoqun and the independent non-executive Directors are Mr. Wang Aiguo, Mr. Zhang Zhiyuan, Mr. Wang Xiangfei, Ms. Wang Yumei and Ms. Zhang Hong. * For identification purposes only 18