SHANDONG CHENMING PAPER HOLDINGS LIMITED 2022 Interim Report
SHANDONG CHENMING PAPER HOLDINGS LIMITED
2022 Interim Report
August 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 interim report, guarantee that there are no false representations, misleading
statements or material omissions contained in the interim 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
interim 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, adjustment of state policy and competition in
the industry. Investors should be aware of investment risks. For further details, please refer to the risk exposures of the Company
and the measures to be taken to address them as set out 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.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 1
INTERIM REPORT 2022
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 5
III Management Discussion and Analysis 9
IV Corporate Governance 24
V Environmental and Social Responsibility 26
VI Material Matters 33
VII Changes in Share Capital and Shareholders 46
VIII Preference Shares 52
IX Bonds 53
X Financial Report 57
2 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
I Important Notice, Table of Contents and Definitions
Documents Available for Inspection
(I) The financial statements signed and sealed by the head of the Company, the head in charge of accounting and the
head of the accounting department;
(II) the interim report signed by the legal representative;
(III) the original copies of all of the documents and announcements of the Company disclosed on the designated website
as approved by the China Securities Regulatory Commission during the reporting period;
(VI) the interim report disclosed on The Stock Exchange of Hong Kong Limited: and
(V) other relevant information.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 3
INTERIM REPORT 2022
I Important Notice, Table of Contents and Definitions
Definitions
Item Definition
Company, Group, Chenming Group means Shandong Chenming Paper Holdings Limited and its subsidiaries
or Chenming Paper
Parent Company or Shouguang means Shandong Chenming Paper Holdings Limited
Headquarters
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.
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.
Chenming Leasing means Shandong Chenming Financial Leasing Co., Ltd. and its subsidiaries
Corporate Bonds means 18 Chenming Bond 01
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
reporting period means the period from 1 January 2022 to 30 June 2022
the beginning of the year or the means 1 January 2022
period
the end of the interim period or the means 30 June 2022
period
4 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
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
Stock abbreviation before any changes (if any) None
Legal name in Chinese of the Company
Legal short name in Chinese of the Company (if any)
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
II. Contact persons and contact methods
Secretary to the Board Hong Kong Company Secretary
Name Yuan Xikun Chu Hon Leung
Correspondence No. 2199 Nongsheng East Road, Shouguang City, 22nd Floor, World Wide House, Central, Hong Kong
Address Shandong Province
Telephone 0536-2158008 00852-21629600
Facsimile 0536-2158977 00852-25010028
Email address chenmmingpaper@163.com liamchu@li-partners.com
III. Other information
1. Contact methods of the Company
Whether the registered address, office address, postal code, website, email of the Company changed during the
reporting period
Applicable √ Not applicable
There was no change of the registered address, office address, postal code, website and email of the Company during
the reporting period. Please refer to the 2021 annual report for details.
2. Information disclosure and places for inspection
Whether the information disclosure and places for inspection changed during the reporting period
Applicable √ Not applicable
There was no change of the newspapers designated by the Company for information disclosure, designated websites
for the publication of the interim report as approved by CSRC and places for inspection of the Company’s interim report
during the reporting period. Please refer to the 2021 annual report for details.
3. Other relevant information
Whether other relevant information changed during the reporting period
Applicable √ Not applicable
SHANDONG CHENMING PAPER HOLDINGS LIMITED 5
INTERIM REPORT 2022
II Company Profile and Key Financial Indicators
IV. 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 reporting
period as compared
The corresponding to the corresponding
period of period of
The reporting period the prior year the prior year
Revenue (RMB) 16,676,428,365.83 17,172,816,354.53 -2.89%
Net profit attributable to shareholders of the Company (RMB) 230,141,463.76 2,021,095,417.54 -88.61%
Net profit after extraordinary gains or losses attributable to
shareholders of the Company (RMB) 173,407,927.13 1,964,718,180.70 -91.17%
Net cash flows from operating activities (RMB) 998,264,209.45 4,747,185,521.94 -78.97%
Basic earnings per share (RMB per share) 0.064 0.604 -89.40%
Diluted earnings per share (RMB per share) 0.064 0.604 -89.40%
Decrease by 7.92
Rate of return on weighted average net assets 1.02% 8.94% percentage points
Increase/decrease as
at the end of the
reporting period as
As at the end of As at the end of compared to the
the reporting period the prior year end of the prior year
Total assets (RMB) 85,186,581,045.24 82,841,454,602.24 2.83%
Net assets attributable to shareholders of the Company (RMB) 19,220,377,294.74 19,089,778,227.64 0.68%
Data description of basic earnings per share, diluted earnings per share, and rate of return on weighted average net assets:
Net profit attributable to shareholders of the Company does not exclude the effect of interest of Perpetual Bonds during the
reporting period. When calculating earnings per share and the rate of return on weighted average net assets, the interest on
Perpetual Bonds from 1 January 2022 to 30 June 2022 of RMB44,481,369.86 is deducted.
6 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
II Company Profile and Key Financial Indicators
V. 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.
VI. Items and amounts of extraordinary gains or losses
√ Applicable Not applicable
Unit: RMB
Item Amount Explanation
Profit or loss from disposal of non-current assets (including write-off of provision
for asset impairment) -3,921,463.03
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 149,264,611.68
Profit or loss from debt restructuring -754,806.87
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 -62,122,863.58
Consumable biological assets subsequently measured at fair value 3,309,448.09
Other non-operating income and expenses other than the above items -3,575,720.23
Less: Effect of income tax 24,569,100.79
Effect of minority interests (after tax) 896,568.64
Total 56,733,536.63 –
SHANDONG CHENMING PAPER HOLDINGS LIMITED 7
INTERIM REPORT 2022
II Company Profile and Key Financial Indicators
Details of other gain or loss items falling within the definition of extraordinary gain or loss:
Applicable √ Not applicable
The Company did not have details of other gain or loss items falling 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.
8 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
III Management Discussion and Analysis
I. Principal activities of the Company during the Reporting Period
(I) Industry overview and industry position
The industry in which the Company operates is the paper making and paper product industry. After decades of
development, the Company has developed into a large modern conglomerate principally engaged in pulp production
and paper making. Its key indicators in respect of economic efficiency have been in a leading position in the industry
for more than 20 years in a row. The Company has been on the Fortune 500 China list for 13 consecutive years.
Taking “revitalising the Chinese papermaking industry” as its mission, the Company has been adhering to its green
development philosophy, committing itself to implementing a pulp and paper integration strategy and promoting the
integrated development in the industry chain and the value chain. The Company has established 6 production bases in,
among others, Shandong, Guangdong, Hubei, Jiangxi and Jilin with annual pulp and paper production capacity of more
than 11 million tonnes. It is the first large-scale integrated pulp and paper company in China that achieves a balance
between pulp and paper production.
In the first half of 2022, affected by factors such as the evolution of public health events, the changing international
political landscape and high inflation, commodity prices and international logistics prices surged, resulting in a
significant increase in operating costs of papermaking companies. In the downstream market, the price transmission
mechanism did not work due to weak demand in the domestic market, resulting in lower machine-made paper prices
than the corresponding period of the prior year, and limiting the scope for corporate earnings. According to the National
Bureau of Statistics of China, the total profit of the paper making and paper product industry from January to June 2022
amounted to RMB25.99 billion, representing a year-on-year decrease of 46.2%. Recently, large pulp companies such as
Arauco in Chile had announced their expansion and production plans, which would be expected to mitigate the pressure
on pulp supply. In addition, raw material prices would be expected to fall due to the global tightening of monetary policy
and declining inflation. At the same time, with the epidemic under better control and the implementation of the policies
to stabilise growth in China, domestic demand would improve. It was expected that the papermaking industry would
rebound gradually with recovery in profitability for the industry.
Although the complex and changing external environment increased the difficulty factor of corporate development,
the Company consolidated its profitability by strengthening its internal management, optimising its cost structure,
checking raw material cost hikes and seizing opportunities in overseas markets. During the reporting period, the
Company recorded machine-made paper production of 2.58 million tonnes and sales of 2.69 million tonnes, revenue of
RMB16,676 million and total profit of RMB275 million.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 9
INTERIM REPORT 2022
III Management Discussion and Analysis
I. Principal activities of the Company during the Reporting Period (Cont’d)
(II) Products
During the reporting period, the machine-made paper business was the major source of revenue and profit of the
Company. There was no significant changes in its principal activities and its operation models such as purchase,
production, marketing and R&D. The products of the Company covering more than 200 types in seven series and five
major categories are detailed in the following table.
Major
production
Category Major brands and types companies Range of application
Cultural paper series 1. “BIYUNTIAN”, “CLOUDY MIRROR”, “CLOUDY Shouguang Printing publications, textbooks, magazines,
LEOPARD” and “YUNJIN” all-wood pulp offset Headquarters covers, illustrations, notebooks, test papers,
paper and electrostatic base paper Zhanjiang Chenming teaching materials, reference books, etc.
2. “CLOUDY LION” and “CLOUDY CRANE” original Wuhan Chenming
white offset paper Jilin Chenming
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 Shouguang Double-sided coated paper is suitable for
paper Headquarters high quality printing, such as high-grade
2. “SNOW SHARK”, “EAGLE” and “RABBIT” double- Shouguang Meilun picture albums, picture, magazines and so
sided coated paper on, promotional materials such as interior
3. “EAGLE” and “RABBIT” matte coated paper pages of high-end books, 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.
10 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
III Management Discussion and Analysis
I. Principal activities of the Company during the Reporting Period (Cont’d)
(II) Products (Cont’d)
Major
production
Category Major brands and types companies Range of application
White paper board 1. White paper board of “LIYA” series, white paper Shouguang High-end gift boxes, cosmetics boxes, tags,
series board and ivory cardboard of “LIPIN” and Headquarters shopping bags, publicity pamphlets, high-
“POPLAR” series, high bulk cardboard and ivory Jiangxi Chenming end postcards; cigarette package printing
cardboard of “LIZZY” and “BAIYU” series and Zhanjiang Chenming of medium and high quality; milk package,
super high bulk cardboard of “LIYING” and “BAIYU” beverage package, disposable paper cups,
series milk tea cups and noodle bowls.
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,
copy paper, “BOYA” and “BIYUNTIAN” copy paper, Zhanjiang Chenming training materials, and writing.
“MINGYANG”, “LUCKY CLOUDS”, “BOYANG” and
“SHANYIN” copy paper, and “GONGHAO” and
“TIANJIAN” copy paper
Industrial paper High-grade yellow anti-sticking base paper, ordinary Shouguang Anti-stick base paper is mainly used for
series yellow/white anti-sticking base paper and PE paper Headquarters producing the paper base of stripping paper
Wuhan Chenming or anti-sticking base paper;
Jiangxi Chenming Cast coated base paper is suitable for
Zhanjiang Chenming 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
Wuhan Chenming electronics, medicine, food, washing supplies,
supermarket labels, double-sided tapes, etc.
Household paper Toilet paper, facial tissue, pocket tissue, napkin, paper Shouguang Meilun Daily toilet supplies; used in restaurants and
series towels and “XINGZHILIAN” Wuhan Chenming other catering industries, and used in public
toilets in hotels, guesthouses, and office
buildings, and also suitable for home and
other environment.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 11
INTERIM REPORT 2022
III Management Discussion and Analysis
II. Analysis of liquidity, financial resources and capital structure disclosed in accordance with the
listing rules of Hong Kong Stock Exchange
As at 30 June 2022, the Group’s current ratio was 68.50%. The quick ratio was 58.10%. The gearing ratio was 72.89%.
There was no significant seasonal trend for capital requirements of the Group.
The Group’s sources of capital primarily came from cash inflow generated from operating activities, borrowings from financial
institutions, public issuance of corporate bonds in the capital market, as well as issuance of medium-term notes in the
interbank market.
As at 30 June 2022, the total bank borrowings, Corporate Bonds and medium-term notes of the Group were RMB43,193
million, RMB350 million and RMB1,004 million, respectively (as at the end of the prior year: the total bank borrowings,
Corporate Bonds and medium-term notes of the Group were RMB41,383 million, RMB1,426 million and RMB1,199 million,
respectively). As at 30 June 2022, the Group had monetary funds of RMB14,959 million (as at the end of the prior year:
RMB14,120 million) in total (For the breakdown of monetary funds, please refer to X. VII. 1 Note on Monetary Funds in this
report).
To strengthen its financial management, the Group established and optimised its strict internal control system on cash and
capital management. The liquidity and repayment ability of the Group were in a good condition. As at 30 June 2022, the Group
had 11,736 employees. The total staff remuneration for the first half of 2022 amounted to RMB620.3574 million (The Group
had 12,296 employees in 2021. The total staff remuneration for 2021 amounted to RMB1,311.7337 million).
There was no major investment project of the Company during the second half of 2022.
The Company’s existing bank deposits were primarily used for production and operation, construction projects and
investment in technology research and developments.
For details of the assets with restricted ownership of the Group as at 30 June 2022, please refer to X. VII. 65. Details of assets
with restricted ownership or right to use in this report.
For details of the contingent event required to be disclosed by the Group as at 30 June 2022, please refer to X. VII. 37
Provisions.
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 by building a supply chain, enhances R&D strength and
improves core competitiveness, 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.
12 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
III Management Discussion and Analysis
III. Analysis of Core Competitiveness (Cont’d)
2. Scale advantages
The papermaking industry is a typical capital-intensive and technology-intensive industry that follows the laws of
economies of scale. The Company has established large-scale production bases in the major markets in Southern,
Central, Northern, and Northeast China, with annual pulp and paper production capacity reaching over 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. The Company is committed to fulfilling market demand
and refining its products through technological innovation and process optimisation to continuously enhance the added
value of its products, and brand value and 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 in close proximity, the Company substantially reduces transportation costs
while improving service efficiency, achieving a “win-win” between the Company and its users.
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. Currently, 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 attaches great importance to technology research and development and currently has scientific research
institutions including the national enterprise technology centre, the post-doctoral working station, the state certified
CNAS pulp and paper testing centre. The Company has obtained over 370 national patents, and taken 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. 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.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 13
INTERIM REPORT 2022
III Management Discussion and Analysis
III. Analysis of Core Competitiveness (Cont’d)
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 China 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.
14 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
III Management Discussion and Analysis
IV. Analysis of principal operations
Overview
Please see “I. Principal activities of the Company during the Reporting Period” for relevant information.
Year-on-year changes in major financial information
Unit: RMB
Increase/
The corresponding decrease
The reporting period period of the prior year year on year Reason for the change
Revenue 16,676,428,365.83 17,172,816,354.53 -2.89% Mainly due to a year-on-year decrease of the
selling prices of machine-made paper during the
reporting period.
Operating costs 14,054,949,279.20 11,861,060,977.92 18.50% Mainly due to a year-on-year price rise of raw
materials such as wood chips, raw coal and
chemicals during the reporting period.
Selling and distribution expenses 138,055,763.65 147,622,738.74 -6.48%
General and administrative expenses 422,766,365.85 492,048,555.49 -14.08%
Finance expenses 1,021,034,604.66 1,318,942,156.16 -22.59% Mainly due to a year-on-year decrease of
interest expenses during the reporting period.
Income tax expenses 1,378,726.69 274,057,779.20 -99.50% Mainly due to a year-on-year decrease of total
profit of the Company during the reporting
period.
Investment income -24,138,176.90 98,631,701.79 -124.47% Mainly due to a year-on-year decrease in income
from long-term equity investments accounted
for using the equity method during the reporting
period, and the expenses on derecognition of
financial assets accounted for under investment
income during the current reporting period.
Gains on changes in fair value -58,813,415.49 -99,119,691.89 40.66% Mainly due to the change of the shares of China
Bohai Bank during the reporting period.
Net cash flows from operating 998,264,209.45 4,747,185,521.94 -78.97% Mainly due to a year-on-year price rise of raw
activities materials such as wood chips, raw coal and
chemicals, and a significant increase of the
cash payment for purchase of goods by the
Company.
Net cash flows from investing -806,624,723.83 -905,349,346.97 10.90%
activities
Net cash flows from financing -242,119,047.65 -3,585,858,074.31 93.25% Mainly due to a year-on-year decrease of
activities liabilities falling due for repayment during the
reporting period.
Significant change in structure or source of profit of the Company during the reporting period
Applicable √ Not applicable
There was no significant change in structure or source of profit of the Company during the reporting period.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 15
INTERIM REPORT 2022
III Management Discussion and Analysis
IV. Analysis of principal operations (Cont’d)
Components of revenue
Unit: RMB
The corresponding period Increase/
The reporting period of the prior year decrease
Amount % of revenue Amount % of revenue year on year
Total revenue 16,676,428,365.83 100% 17,172,816,354.53 100% -2.89%
By industry
Machine-made paper 14,440,493,130.31 86.59% 14,822,885,135.39 86.32% -2.58%
Pulp 239,810,290.10 1.44% 75,966,302.86 0.44% 215.68%
Power and steam 195,203,273.89 1.17% 133,159,820.59 0.78% 46.59%
Construction materials 128,912,692.24 0.77% 174,782,023.02 1.02% -26.24%
Hotel and property rents 104,267,757.09 0.63% 75,025,417.15 0.44% 38.98%
Financial leasing 84,916,541.08 0.51% 203,237,206.72 1.18% -58.22%
Chemicals 70,973,693.13 0.43% 71,994,410.87 0.42% -1.42%
Others 1,411,850,987.99 8.47% 1,615,766,037.93 9.41% -12.62%
By product
White paper board 5,228,447,295.27 31.35% 5,031,520,246.65 29.30% 3.91%
Duplex press paper 3,784,089,225.00 22.69% 3,729,414,241.14 21.72% 1.47%
Coated paper 2,191,460,241.65 13.14% 2,407,632,283.00 14.02% -8.98%
Electrostatic paper 1,913,990,734.51 11.48% 1,840,465,965.29 10.72% 3.99%
Anti-sticking raw paper 512,600,898.29 3.07% 572,174,748.36 3.33% -10.41%
Thermal paper 280,590,566.03 1.68% 260,673,220.95 1.52% 7.64%
Other machine-made paper 529,314,169.56 3.17% 981,004,430.00 5.71% -46.04%
Pulp 239,810,290.10 1.44% 75,966,302.86 0.44% 215.68%
Power and steam 195,203,273.89 1.17% 133,159,820.59 0.78% 46.59%
Construction materials 128,912,692.24 0.77% 174,782,023.02 1.02% -26.24%
Hotel and property rents 104,267,757.09 0.63% 75,025,417.15 0.44% 38.98%
Financial leasing 84,916,541.08 0.51% 203,237,206.72 1.18% -58.22%
Chemicals 70,973,693.13 0.43% 71,994,410.87 0.42% -1.42%
Others 1,411,850,987.99 8.47% 1,615,766,037.93 9.41% -12.62%
By geographical segment
Mainland China 12,792,521,541.65 76.71% 15,414,291,096.68 89.76% -17.01%
Other countries and regions 3,883,906,824.18 23.29% 1,758,525,257.85 10.24% 120.86%
By sales model
Distribution 9,791,607,394.33 58.72% 10,769,034,693.31 62.71% -9.08%
Direct sales 6,884,820,971.50 41.28% 6,403,781,661.22 37.29% 7.51%
Industries, products or regions accounting for over 10% of revenue or operating profit of the Company
√ Applicable Not applicable
16 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
III Management Discussion and Analysis
IV. Analysis of principal operations (Cont’d)
Components of revenue (Cont’d)
Unit: RMB
Increase/ Increase/
Increase/ decrease of decrease of
decrease of operating gross profit
revenue as costs as margin as
compared to the compared to the compared to the
corresponding corresponding corresponding
Gross profit period of the period of period of
Revenue Operating costs margin prior year the prior year the prior year
By industry
Machine-made paper 14,440,493,130.31 12,182,198,556.97 15.64% -2.58% 22.87% -17.47%
By product
White paper board 5,228,447,295.27 4,293,503,654.82 17.88% 3.91% 55.33% -27.18%
Duplex press paper 3,784,089,225.00 3,376,791,343.94 10.76% 1.47% 19.86% -13.70%
Coated paper 2,191,460,241.65 1,790,989,074.30 18.27% -8.98% 17.46% -18.40%
Electrostatic paper 1,913,990,734.51 1,563,151,783.71 18.33% 3.99% 11.26% -5.33%
By geographical segment
Mainland China 12,792,521,541.65 10,838,037,361.34 15.28% -17.01% 3.81% -16.99%
Other countries and regions 3,883,906,824.18 3,216,911,917.86 17.17% 120.86% 126.34% -2.00%
By sales model
Distribution 9,791,607,394.33 8,302,552,500.27 15.21% -9.08% 11.99% -15.95%
Direct sales 6,884,820,971.50 5,752,396,778.93 16.45% 7.51% 29.35% -14.10%
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
Explanation on why the related data varied by more than 30%
√ Applicable Not applicable
Revenue from other countries and regions increased by 120.86% as compared to the corresponding period of the prior year
mainly due to a significant year-on-year increase of orders as a result of the improvement of the overseas markets during the
reporting period.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 17
INTERIM REPORT 2022
III Management Discussion and Analysis
V. Analysis of non-principal operations
Applicable √ Not applicable
VI. Analysis of assets and liabilities
1. Material changes of asset items
Unit: RMB
As at the end of the reporting period As at the end of the prior year
As a As a
percentage of percentage of Percentage
Amount total assets Amount total assets change Description
Monetary funds 14,958,681,361.91 17.56% 14,119,782,939.66 17.04% 0.52% Mainly due to a year-on-year
increase of the Company’s existing
financing deposits as at the end of
the reporting period.
Accounts receivable 3,344,874,025.14 3.93% 2,656,517,150.46 3.21% 0.72% Mainly due to an increase
in accounts receivable from
customers as at the end of the
reporting period.
Accounts receivable 912,727,537.75 1.07% 435,459,341.76 0.53% 0.54% Mainly due to an increase in the
financing number of bills held as at the end of
the reporting period as compared
to the beginning of the year.
Fixed assets 34,390,613,468.18 40.37% 35,653,492,676.15 43.04% -2.67% Mainly due to the equipment
relocation of Wuhan Chenming
during the reporting period.
Construction in progress 802,407,685.01 0.94% 197,749,526.05 0.24% 0.70% Mainly due to the equipment
relocation of Wuhan Chenming
and equipment technological
transformation of Meilun during the
reporting period.
Short-term borrowings 36,359,663,944.57 42.68% 33,523,025,186.22 40.47% 2.21% Mainly due to an increase of
guaranteed borrowings and credit
borrowings as at the end of the
reporting period.
Bills payable 4,035,081,278.85 4.74% 3,089,512,327.40 3.73% 1.01% Mainly due to an increase of
payment for goods with bills by
the Company during the reporting
period.
Non-current liabilities due 4,558,351,674.18 5.35% 6,601,311,227.98 7.97% -2.62% Mainly due to the repayment of
within one year long-term borrowings and bonds
payable due within one year by
the Company during the reporting
period.
Long-term payables 3,383,399,934.07 3.97% 2,358,901,022.99 2.85% 1.12% Mainly due to a year-on-year
increase in finance lease payments
as at the end of the reporting
period.
18 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
III Management Discussion and Analysis
VI. Analysis of assets and liabilities (Cont’d)
2. Major Assets Overseas
Applicable √ Not applicable
3. Assets and liabilities measured at fair value
√ Applicable Not applicable
Unit: RMB
Profit or loss Cumulative fair Impairment
from change value change provided Purchases
in fair value charged to during the during the Disposal during Other
Item Opening balance during the period equity period period the period changes Closing balance
1. Held-for-trading financial assets
(excluding derivative financial
assets) 110,886,182.88 -59,853,131.31 -144,651,765.58 51,033,051.57
2. Other non-current financial assets 519,927,003.25 57,510,000.00 519,927,003.25
3. Consumable biological assets
measured at fair value 1,519,305,850.77 3,309,448.09 27,587,382.40 23,333,133.59 45,408,287.98 1,500,540,144.47
Whether there were any material changes on the measurement attributes of major assets of the Company during the
reporting period
Yes √ No
4. Restriction on asset rights as at the end of the reporting period
Unit: RMB
Carrying amount as at
Item the end of the period Reasons for such restriction
Monetary funds 11,749,299,176.80 As, among others, deposits for bank acceptance bills and letter
of credit, and deposit reserves
Accounts receivable 10,925,711.40 As collateral for letters of guarantee and letters of credit
financing
Accounts receivables 250,000,000.00 As deposits to obtain loans
Fixed assets 12,634,559,687.51 As collateral for bank borrowings and long-term payables
Intangible assets 1,184,321,483.40 As collateral for bank borrowings and long-term payables
Investment property 4,964,639,998.32 As collateral for bank borrowings
Total 30,793,746,057.43
VII. Analysis of Investments
1. Overview
√ Applicable Not applicable
Investments during the
corresponding period of
Investments during the reporting period (RMB) the prior year (RMB) Change
10,000,000.00 882,210,000.00 -98.87%
SHANDONG CHENMING PAPER HOLDINGS LIMITED 19
INTERIM REPORT 2022
III Management Discussion and Analysis
VII. Analysis of Investments (Cont’d)
2. Material equity investments during the reporting period
√ Applicable Not applicable
Unit: RMB
Progress as at Profit or l ss Date of
Form of Investment Source of Period of the date of Estimated from i vestment Involvement disclosure
Name of i vestee Principal activ t es i vestment amount Sharehold ng fund Partner(s) i vestment Product type balance sheet return for the period i l wsuit (if any) Disclosure i dex (if any)
Jiangxi Chenming Tea Co., Ltd.* Tea planting and Newly establ shed 10,000,000.00 100% Self-owned Subsid ary Long term Production and Completed N/A -1,468,863.22 No Not appl cable Not appl cable
( ) sales funds sales of agricultural
food
3. Material non-equity investments during the reporting period
Applicable √ Not applicable
4. Financial asset investment
(1) Security investments
√ Applicable Not applicable
Unit: RMB
Profit or l ss Accumulated
Accounting Book value at the from changes i changes i fair Purchased Sold amount Profit or l ss Book value
Stock Abbreviation of Init a measurement beginning of the fair value i the value i cluded amount i the i the during the at the end of the Classif cation
Type of security code stock name i vestment cost model reporting period current period i equity current period current period reporting period reporting period i accounts Source of fund
Domestic and foreign shares 09668 China Bohai Bank 195,684,817.15 Measured at fair value 110,886,182.88 -59,853,131.31 -144,651,765.58 0.00 0.00 -59,853,131.31 51,033,051.57 Held-for-trading Self-owned funds
financia assets
Total 195,684,817.15 – 110,886,182.88 -59,853,131.31 -144,651,765.58 0.00 0.00 -59,853,131.31 51,033,051.57 – –
Disclosure date of announcement i relation to the consideration and approval of securit es i vestments 20 June 2020
by the Board
Disclosure date of announcement i relation to the consideration and approval of securit es i vestments Not appl cable
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.
20 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
III Management Discussion and Analysis
VIII. Disposal of material assets and equity interest
1. Disposal of material assets
Applicable √ Not applicable
2. Disposal of material equity interest
Applicable √ Not applicable
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
Type of Registered
Name of company company Principal activities capital Total assets Net assets Revenue Operating profit Net profit
Zhanjiang Chenming Pulp & Paper Subsidiary Production and sale 5,765,833,333.00 28,464,228,927.79 8,685,900,409.62 5,841,511,419.81 193,779,599.63 181,827,121.84
Co., Ltd. of duplex press paper,
electrostatic paper,
and white paper board
Shouguang Meilun Paper Co., Ltd. Subsidiary Production and sale of 4,801,045,519.00 16,433,184,621.65 8,422,340,984.80 3,956,822,454.56 111,605,218.12 114,261,960.45
coated paper, cultural
paper, household
paper and chemical
pulp
Huanggang Chenming Pulp & Subsidiary Production and sale 2,850,000,000.00 7,599,389,040.76 3,370,012,386.77 1,492,106,761.28 90,133,357.64 86,400,500.60
Paper Co., Ltd. of chemical pulp
Acquisition and disposal of subsidiaries during the reporting period
√ Applicable Not applicable
Methods to acquire and
dispose of subsidiaries Effect on overall production and
Name of company during the reporting period operation and results
Jiangxi Chenming Tea Co., Ltd. * ( ) Newly established Net profit decreased by RMB1.47 million.
Qingdao Chenming Pulp & Paper Electronic Commodity Deregistered Net profit increased by RMB6,800.
Spot Trading Co., Ltd.
Particulars of major subsidiaries and investees
1. As the subsidiaries of the Company with a higher level of complementary pulp and paper production, Zhanjiang
Chenming and Shouguang Meilun enjoyed significant cost advantages due to their pulp and paper integration with
higher profitability.
2. The profitability of Huanggang Chenming became significant as the pulp price remained relatively high during the
reporting period.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 21
INTERIM REPORT 2022
III Management Discussion and Analysis
X. Structured entities controlled by the Company
Applicable √ Not applicable
XI. Risk factors of the Company and the measures to be taken
1. Macroeconomic and policy risk
As a basic raw materials industry, the papermaking industry is supported by national industry policies in many ways. Its
prosperity is closely related to national macroeconomic policies. With a view to improving industry structure, enhancing
product technology standard, energy saving and emission reduction, and eliminating outdated production capacity
relevant departments have issued the Policy on the Development of Papermaking Industry to promote the high-quality
development of the papermaking industry. If the support of relevant national industrial policies is weakened in the future
or the above-mentioned industrial policies, or economic policies such as fiscal, financial, taxation, and import and export
policies are adjusted, the operation and development of the Company will be affected.
The Company pays attention to various policies and regulations of relevant industries in China in a timely manner, and
actively adjusts its business development strategy in a timely manner based on the policy orientation. While focusing
on the development of its principal activities, i.e. pulp production and paper making, the Company adheres to its
innovation-driven strategy and comprehensively optimise its industrial structure and regional layout. thus ensuring
that the development of its principal activities is in compliance with the requirements of the policies of the industries,
and realising steady growth in its operating results. The Company will also strengthen the financial information system
construction, regulate financial management, expand financing channels, lower capital cost and strengthen its aversion
capability against macro-economic risk.
2. Environmental protection risk
The paper making industry is a heavily polluting industry listed by the Ministry of Environmental Protection. As China’s
ecological civilisation construction enters a critical period of focusing on carbon reduction, promoting synergy of
pollution reduction and carbon reduction, promoting comprehensive green transformation of economic and social
development, and realising the improvement of ecological environment quality from quantitative changes to qualitative
changes, relevant departments have successively formulated and issued a series of policies such as Guiding Opinions
on Accelerating the Establishment of a Sound Economic System with Green, Low-carbon and Circular Development, the
Announcement on Adjusting the Catalogue of Prohibited Products in Processing Trade, the 14th Five-Year Plan for the
Implementation of National Clean Production, and the Implementation Plan for Carbon Peaking in the Industrial Sector.
Environmental protection requirements are becoming more and more stringent. With the higher national environmental
protection standards, the Company further increases its investment in pollution governance, which will increase the
Company’s operating costs in the short term.
The Company always adheres to the development idea of “placing green development and environmental protection
as its priority”, widely adopts new technologies for energy saving and emission reduction, fully implements clean
production and strives to achieve its waste emission target. In recent years, the Company has invested RMB8,000
million in total, and actively supported the construction of projects such as alkali recycling, middle water treatment,
and middle water reuse. Relying on technological innovation, the Company comprehensively carries out environmental
protection governance. 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% and the reclaimed water quality meets drinking water standards. 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”, further improving its green level.
22 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
III Management Discussion and Analysis
XI. Risk factors of the Company and the measures to be taken (Cont’d)
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 pulp has reached 4.3 million tonnes, and it has cultivated a strong self-sufficiency of wood pulp. At the same
time, the Company has established a more comprehensive supply chain management mechanism, and practiced source
procurement to reduce procurement costs. The Company continued to improve its production technology, improved the
utilisation rate of raw materials, and optimised operational efficiency to reduce the risk of raw material price fluctuations
to the Company.
4. Risk of intensifying market competition
As a strategic and fundamental industry closely related to the national economy, the papermaking industry continuously
matures 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
and its structure has been optimised, 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. In addition,
technological upgrade in the papermaking industry is relatively rapid, and related products are replaced quite often, thus
causing a fierce market competition.
The Company actively studies the development trend of the industry, correctly grasps the market dynamics in a
timely manner, and reduces its production costs and achieves increased production and efficiency by adjusting and
optimising technological processes. It adheres to being market-oriented, enhances its R&D and innovation capabilities,
produces products that meet market demand, and enriches products types and application fields. It also improves the
professional level of its sales staff, expands sales channels, strengthens business cooperation with customers, provides
comprehensive customer services, and increases its market share.
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 which effectively put risk exposures under control.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 23
INTERIM REPORT 2022
IV Corporate Governance
I. Annual general meeting and extraordinary general meeting convened during the reporting
period
1. General meetings during the reporting period
Attendance
rate of
Meeting Type of meeting investors Convening date Disclosure date Resolutions of meeting
2021 annual general meeting Annual general meeting 20.22% 11 May 2022 12 May 2022 http://www.cninfo.com.cn
2022 first extraordinary general meeting Extraordinary general meeting 19.81% 15 June 2022 16 June 2022 http://www.cninfo.com.cn
2. Extraordinary general meeting requested by holders of preference shares with voting rights restored
Applicable √ Not applicable
II. Changes of Directors, Supervisors and Senior Management of the Company
√ Applicable Not applicable
Name Position Type Date Reason
Chen Hongguo Chairman Appointed 15 June 2022 Appointed as the general manager of the Company at the first
and general meeting of the tenth session of the Board of the Company
manager
Li Weixian Director and Elected 15 June 2022 Election of the new session of the Board of the Company
deputy general
manager
Li Zhihui Independent Elected 15 June 2022 Election of the new session of the Board of the Company
Director
Li Feng Director and Appointed 15 June 2022 Appointed as a deputy general manager of the Company at the
deputy general first meeting of the tenth session of the Board of the Company
manager
Li Mingtang Deputy general Appointed 15 June 2022 Appointed as a deputy general manager of the Company at the
manager first meeting of the tenth session of the Board of the Company
Ge Guangming Deputy general Appointed 15 June 2022 Appointed as a deputy general manager of the Company at the
manager first meeting of the tenth session of the Board of the Company
Chen Gang General Resigned 15 June 2022 Resigned upon expiry of the term
manager upon expiry
of the term
III. 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 and bonus shares, and increase of share capital from reserves
for the interim period.
24 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
IV Corporate Governance
IV. Implementation of the equity incentive plan, employee shareholding plan or other employee
incentive measure of the Company
√ Applicable Not applicable
1. Equity incentive
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.
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.
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.
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 grant of 79,600,000 restricted
A shares to 111 participants at the grant price of RMB2.85 per share on 29 May 2020.
On 15 July 2020, the 79,600,000 restricted A shares granted to the participants were listed.
2. Implementation of the employee shareholding plan
Applicable √ Not applicable
3. Other employee incentive measure
Applicable √ Not applicable
V. 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 practices through various internal controls. The
Board reviews the corporate governance practices of the Company from time to time to enhance the corporate
governance standards of the Company. 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 of the Company, the Company was not aware of any information that reasonably suggested
that the Directors had not complied with the requirements as stipulated in this code during the reporting period.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 25
INTERIM REPORT 2022
V Environmental 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
Pollutant
Name of major Number of emission
Name of company pollutants and Way of emission Distribution of Emission standards Approved total Excessive
or subsidiary specific pollutants emission outlets emission outlets concentration implemented Total emissions emissions emissions
Shandong Chenming Paper SO2 Organised 2 Chenming Industrial Power plant no. 1: 35mg/m3 Power plant no. 1: 160.32t/year No
Holdings Limited emission Park 9.51mg/m3 7.89t
Power plant no. 2: Power plant no. 2:
8.77mg/m3 8.01t
NOx Organised 2 Chenming Industrial Power plant no. 1: 50mg/m3 Power plant no. 1: 233.91t/year No
emission Park 39.1mg/m3 33.2t
Power plant no. 2: Power plant no. 2:
40.3mg/m3 37.3t
Particulates Organised 2 Chenming Industrial Power plant no. 1: 5mg/m3 Power plant no. 1: 23.39t/year No
emission Park 0.344mg/m3 0.283t
Power plant no. 2: Power plant no. 2:
0.707mg/m3 0.657t
COD Indirect emission 2 Chenming Industrial Sewage outlet no. 1: 300mg/L Sewage outlet no. 1: 6,510.74t/year No
Park 182mg/L 794t
Sewage outlet no. 2: Sewage outlet no. 2:
164mg/L 852t
Ammonia nitrogen Indirect emission 2 Chenming Industrial Sewage outlet no. 1: 30mg/L Sewage outlet no. 1: 650.7t/year No
Park 7.26mg/L 31.4t
Sewage outlet no. 2: Sewage outlet no. 2:
1.14mg/L 5.93t
Shouguang Meilun Paper SO2 Organised 4 Chenming Industrial Power plant no. 1: 35mg/m3 Power plant no. 1: 342.89t/year No
Co., Ltd. emission Park 10.2mg/m3 (self-owned 13.9t
Power plant no. 2: power plant), Power plant no. 2:
10.5mg/m3 50mg/m3 10.1t
Alkali recovery: (Chemical Alkali recovery:
2.24mg/m3 pulp mill) 10.6t
Lime kiln: Lime kiln:
5.74mg/m3 4.35t
NOx Organised 4 Chenming Industrial Power plant no. 1: 50mg/m3 Power plant no. 1: 1,202.75t/year No
emission Park 30.6mg/m3 (self-owned 40.1t
Power plant no. 2: power plant), Power plant no. 2:
31.8mg/m3 100mg/m3 30.6t
Alkali recovery: (Chemical Alkali recovery:
77mg/m3 pulp mill) 365t
Lime kiln: Lime kiln:
32.3mg/m3 23.9t
Particulates Organised 4 Chenming Industrial Power plant no. 1: 5mg/m3 Power plant no. 1: 121.979 t/year No
emission Park 0.432mg/m3 (self-owned 0.595t
Power plant no. 2: power plant), Power plant no. 2:
0.989mg/m3 10mg/m3 0.946t
Alkali recovery: (Chemical Alkali recovery:
0.655mg/m3 pulp mill) 3.03t
Lime kiln: Lime kiln:
0.413mg/m3 0.35t
26 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
V Environmental and Social Responsibility
I. Major environmental protection matters (Cont’d)
Pollutant
Name of major Number of emission
Name of company pollutants and Way of emission Distribution of Emission standards Approved total Excessive
or subsidiary specific pollutants emission outlets emission outlets concentration implemented Total emissions emissions emissions
Wuhan Chenming Hanyang SO2 Organised 2 Within Qianneng Electric 130T/h furnace: 50mg/m3 1.44381t 102.58t/year No
Paper Holdings Co., Ltd. emission Power factory area 3.25mg/m3
75T/h furnace:
7.36mg/m3
NOx Organised 2 Within Qianneng Electric 130T/h furnace: 100mg/m3 14.8345t 205.16t/year No
emission Power factory area 55.13mg/m3
75T/h furnace:
46.15mg/m3
Particulates Organised 2 Within Qianneng Electric 130T/h furnace: 20mg/m3 0.89747t 41.032t/year No
emission Power factory area 1.57mg/m3
75T/h furnace:
5.18mg/m3
COD Direct emission 1 Total wastewater 40.16mg/L 80mg/L 28.67t 184.3t/year No
discharge
Ammonia nitrogen Direct emission 1 Total wastewater 1.812mg/L 8mg/L 0.44t 17.3t/year No
discharge
Jiangxi Chenming Paper SO2 Organised 1 Thermal power plant 240T/h furnace: 200mg/m3 23.7425t 806t/year No
Co., Ltd. emission 11.6049mg/m3
NOx Organised 1 Thermal power plant 240T/h furnace: 200mg/m3 33.9278t 806t/year No
emission 57.7725mg/m3
Particulates Organised 1 Thermal power plant 240T/h furnace: 30mg/m3 11.0874t 135t/year No
emission 6.3513mg/m3
COD Direct emission 1 Total sewage discharge 44.75mg/L 90mg/L 83.3817t 1,260t/year No
Ammonia nitrogen Direct emission 1 Total sewage discharge 1.74mg/L 8mg/L 2.118t 112t/year No
Jilin Chenming Paper Co., SO2 Organised 3 Within factory area 4.38mg/m3 100mg/m3 2.10t 97t/year No
Ltd. emission (2 in use,
1 spare)
NOx Organised 3 Within factory area 27.92mg/m3 100mg/m3 12.69t 213t/year No
emission (2 in use,
1 spare)
Particulates Organised 3 Within factory area 7.28mg/m3 30mg/m3 2.77t 51.66t/year No
emission (2 in use,
1 spare)
COD Indirect emission 1 Total sewage discharge 129.45mg/L 500mg/L 279.16t 6,000t/year No
Ammonia nitrogen Indirect emission 1 Total sewage discharge 1.82mg/L 45mg/L 3.99t 500t/year No
Zhanjiang Chenming Pulp & SO2 Organised 5 Within factory area Power plant 1#: 1#2#3#4# 26.435t 620t/year No
Paper Co., Ltd. emission 5.834mg/m3 circulating
Power plant 2#: fluidised bed
6.338mg/m3 boilers:
Power plant 3#: 35mg/m3
3.669mg/m3
Power plant 4#:
8.956mg/m3
SHANDONG CHENMING PAPER HOLDINGS LIMITED 27
INTERIM REPORT 2022
V Environmental and Social Responsibility
I. Major environmental protection matters (Cont’d)
Pollutant
Name of major Number of emission
Name of company pollutants and Way of emission Distribution of Emission standards Approved total Excessive
or subsidiary specific pollutants emission outlets emission outlets concentration implemented Total emissions emissions emissions
NOx Organised 5 Within factory area Alkali recovery: Alkali recovery: 600.254t 2,169.7t/year No
emission 125.546mg/m3 200mg/m3
Power plant 1#: 1#2#3#4#
10.244mg/m3 circulating
Power plant 2#: fluidised
11.74mg/m3 bed boilers:
Power plant 3#: 50mg/m3
9.852mg/m 3
Power plant 4#:
4.206mg/m3
Particulates Organised 5 Within factory area Power plant 1#: 1#2#3#4# 8.117t 195.06t/year No
emission 1.952mg/m3 circulating
Power plant 2#: fluidised
1.461mg/m3 bed boilers:
Power plant 3#: 10mg/m3
1.228mg/m 3
Power plant 4#:
1.471mg/m3
COD Direct emission 1 Within factory area 37.83mg/L 90mg/L 382.492t 1,943t/year No
Ammonia nitrogen Direct emission 1 Within factory area 1.43mg/L 8mg/L 13.575t 43.9t/year No
Total nitrogen Direct emission 1 Within factory area 5.11mg/L 12mg/L 51.318t 320.4t/year No
Huanggang Chenming Pulp SO2 Organised 1 Lime kiln chimney 38.28mg/m3 80mg/m3 9.57t 142.872t/year No
& Paper Co., Ltd. emission
SO2 Organised 1 Alkali furnace chimney 5.52mg/m3 200mg/m3 6.81t 328.417t/year No
emission
NOx Organised 1 Lime kiln chimney 131.73mg/m3 180mg/m3 55.69t 181.887t/year No
emission
NOx Organised 1 Alkali furnace chimney 176.22mg/m3 200mg/m3 337.42t 950.829t/year No
emission
Particulates Organised 1 Lime kiln chimney 37.60mg/m3 200mg/m3 7.49t 45.311t/year No
emission
Particulates Organised 1 Alkali furnace chimney 25.09mg/m3 30mg/m3 24.61t 83.759t/year No
emission
COD Indirect emission 1 Total wastewater 15.03mg/L 150mg/L 64.83t 398.911t/year No
discharge
Ammonia nitrogen Indirect emission 1 Total wastewater 0.09mg/L 14mg/L 0.39t 39.891t/year No
discharge
28 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
V Environmental and Social Responsibility
I. Major environmental protection matters (Cont’d)
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 dedusting, 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). Substantially all of the emissions indicators are below 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.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 29
INTERIM REPORT 2022
V Environmental and Social Responsibility
I. Major environmental protection matters (Cont’d)
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 and
Name of company Reasons for operation of the Corrective measures
or subsidiary penalty Violations Penalty results listed company of the Company
Jiangxi Chenming Paper Excessive On 12 September 2021, On 7 January 2022, Jiangxi Chenming Control at source ensured
Co., Ltd. emission of the Nanchang Municipal the Nanchang had completed that the indicators of each
polluted water Ecological Environment Municipal Ecological rectification, and section reached the required
Bureau conducted an on- Environment Bureau paid the fine on range through strict control
site inspection of Jiangxi issued the Decision time. There was no on the operation of the water
Chenming. After testing, on Administrative significant adverse treatment system. Water
the suspended solids of the Penalty and imposed impact on the listed intake stabilisation avoided
wastewater samples collected a fine of RMB401,000 company. the impact of excessive water
from the wastewater discharge on Jiangxi Chenming. volume to affect the indicator
outlet amounted to 59.33 of suspended solids in the
mg/L, and the chromaticity effluent. The monitoring
amounted to 64, which were of drainage indicators was
0.98 times and 0.28 times strengthened. They were
higher than the standard, adjusted on time to ensure
respectively. Therefore, that the discharge met the
the wastewater discharge standards.
exceeded the standard.
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
30 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
V Environmental and Social Responsibility
I. Major environmental protection matters (Cont’d)
Measures taken to reduce its carbon emissions during the reporting period and their effectiveness (Cont’d)
(1) The Group measured the content of carbon elements in a monthly manner, purchased coal with higher calorific value,
and increased electricity purchases to reduce coal consumption.
(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) 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. 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 zero position and the drying efficiency and save electricity
consumption.
(4) 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.
(5) The Group vigorously developed clean energy and energy recycling projects to reduce carbon emissions. The
Shouguang Chenming 33 MW and Zhanjiang Chenming 30 MW photovoltaic power generation projects were being
implemented.
(6) 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.
Other environmental protection related information
Other environmental protection related information is announced on the Company’s website.
II. Social responsibility
1. Protecting the rights of shareholders
During the reporting period, the Company strictly followed laws and regulations such as the Company Law, the
Securities Law, the Shenzhen Stock Exchange Listing Rules and the relevant provisions of the Articles of Association,
operated efficiently in accordance with laws and regulations, and actively safeguarded the rights and interests of
shareholders. The Company adopted a combination of on-site and online voting to convene 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 held the 2021 Annual Performance Briefing to extensively listen to investors’ opinions and
suggestions, to communicate and answer questions that investors were generally concerned about, so that investors
had a more comprehensive and clear understanding of the Company. The Company strictly fulfilled its information
disclosure obligations, disclosed information to all investors in a true, accurate, complete, timely and fair manner, and
continuously improved the Company’s transparency to effectively protect the rights and interests of shareholders.
2. Protecting the Rights of Employees
During the reporting period, the Company stuck to the people-oriented concept, strictly complied with the Labour Law,
the Labour Contract Law and other relevant laws and regulations, to fully protect the legitimate rights and interests of its
employees. The Company continued to improve its human resources management system. Guided by the employment
concept of “eliminating backwardness, rejecting mediocrity, and motivating advancement”, the Company optimised its
salary system and assessment and incentive mechanism, strengthened personal vocational training, and promoted the
improvement of employees’ comprehensive ability. At the same time, the Company enriched employees’ spare time by
carrying out the 2022 staff table tennis exchange competition, staff basketball competition, badminton competition and
other activities. It also continued to improve the staff dining environment, distributed birthday cakes and greeting cards
and organised activities such as cool summer games to enhance employees’ happiness and sense of belonging and
safeguard their rights and interests.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 31
INTERIM REPORT 2022
V Environmental and Social Responsibility
II. Social responsibility (Cont’d)
3. Protecting the rights of suppliers and customers
The Company always adheres to the core values of “honesty, win-win and sharing”, and pays attention to protecting
the legitimate rights and interests of suppliers and customers. During the reporting period, the Company continuously
established and improved the supply chain management system, optimised the Subsidiary Regional Procurement
Management Measures, selected high-quality suppliers fairly and justly, strengthened source procurement, established
long-term cooperative relations, reduced procurement costs, and ensured the quality of raw materials and stable supply.
The Company continued to be guided by market demand, strived to improve customer satisfaction, continuously
improved the level of scientific and technological research and development, provided customers with the most valuable
products and services, and fully respected and protected the legitimate rights and interests of suppliers and customers.
4. Protecting the environment
The Company has always adhered to the concept of “green development, ecological Chenming”, thoroughly
implemented the national energy conservation and environmental protection policy, actively implemented the “dual
carbon” strategy, and unswervingly followed the road of green, low-carbon and high-quality development. During
the reporting period, the Company further intensified its environmental protection work, strengthened publicity and
education on energy conservation and environmental protection, and carried out a series of activities such as “Energy
Conservation Publicity Week” and Low-Carbon Day to raise the awareness of all employees on energy conservation
and environmental protection. The Company continued to improve risk management and control measures and hidden
danger management plans to strengthen environmental protection, and conducted daily hidden danger investigation
of equipment to ensure the normalisation of “double prevention mechanism”. It continued to integrate environmental
protection concepts into products, and strived to provide customers with more green and healthy products, among
which the Company developed poplar coated white cardboard, Xingzhilian tissue paper and Xingzhilian toilet paper,
which had won the national “Green Design Products” award. The “Technology Development of Super-thick Special
Coated Paper for Children’s Album” was a new technology, new achievement and new model promoted and applied
by the provincial light industry. In line with China’s goal of resources saving, the Company complied with sustainable
development requirements. In 2022, the Company’ products, including double-sided offset printing paper, light paper,
and coated paper series, were selected by China Environmental Labelling Products again. The Company had been
awarded this honour for 10 consecutive years.
5. Participating in social welfare
The Company always sticks to “Creating high-quality paper products and sincerely repaying the society” as its
guiding policy, and pays attention to the creation of social value while pursuing economic benefits. Over the years, the
Company has been supporting education and public welfare for the disabled, participating in charitable activities such
as “Chaoyang Student Assistance” and “Love for the Disabled”, and helping poor students through the Love Education
Foundation. During the reporting period, the Company actively participated in the 32nd “National Day for Helping the
Disabled” charitable donations. In addition, under frequent outbreaks of the COVID-19 epidemic in China, the Company
actively implemented epidemic prevention measures, improved the internal epidemic prevention system, and built a
solid foundation for protecting its own safety. At the same time, the Company donated anti-epidemic materials and daily
necessities to areas that were affected by the epidemic, such as Mazhang District of Zhanjiang City and Longtan District
of Jilin City, to support the local fight against COVID-19.
The Company stays true to itself and shoulders its missions. In the first half of 2022, the Company actively assumed
the responsibility of protecting the rights and interests of stakeholders such as shareholders, customers and suppliers,
practiced the “dual carbon” strategy, supported the fight against the epidemic, alleviated the poor and helped the
disabled, and effectively fulfilled its social responsibilities. In the future, the Company will continue to follow the guidance
of “Creating high-quality paper products and sincerely repaying the society”, focusing on the principal business of pulp
production and paper making, to create social value and achieve organic integration of economic, social and ecological
benefits.
32 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
VI Material Matters
I. 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
During the reporting period, there was no undertaking 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.
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. Engagement or dismissal of accounting firms
Has the interim financial report been audited?
Yes √ No
The interim financial report is unaudited.
V. Opinions of the Board and the Supervisory Committee regarding the “modified auditor’s
report” for the reporting period issued by the accountants
Applicable √ Not applicable
VI. Opinions of the Board regarding the “modified auditor’s report” for the prior year
Applicable √ Not applicable
VII. Matters related to bankruptcy and reorganisation
Applicable √ Not applicable
There was no matter related to bankruptcy and reorganisation during the reporting period.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 33
INTERIM REPORT 2022
VI Material Matters
VIII. Litigation
Material litigation and arbitration
√ Applicable Not applicable
Whether
General information on provisions Enforcement of Date of
the litigation (arbitration) Amount involved are made Progress Trial results and impact judgment disclosure Disclosure index
Statutory demand and HK$389,112,432.44 Yes On 16 February 2022, the On 14 June 2022, the Being executed 21 June 2022 http://www.cninfo.com.cn
winding-up petition Company appealed the Hong Kong Court of
judgment of the Court of Final Appeal made a
Appeal of the High Court of judgment, dismissing
Hong Kong dated 5 August the Company’s appeal
2020. On 17 May 2022, the request, and instructed the
hearing of the appeal took Company to pay a total of
place in the Hong Kong HK$389,112,432.44 to the
Court of Final Appeal. On court previously ordered
14 June 2022, the Hong by the Court of First
Kong Court of Final Appeal Instance Judge Harris as a
made a judgment. condition of adjournment
of the winding-up petition
submitted by HKK2 against
the Company, together
with the accrued interest
therein. The payment shall
be paid to Arjowiggins
HKK2 Limited.
Other litigations
Applicable √ Not applicable
IX. Punishment and rectification
√ Applicable Not applicable
Type of investigation
Name Type Reason punishment Conclusion (if any) Disclosure date Disclosure index
Jiangxi Chenming Paper Subsidiary Excessive emission General administrative On 12 September 2021, the Nanchang Not applicable Not applicable
Co., Ltd. of polluted water penalties Municipal Ecological Environment Bureau
conducted an on-site inspection of Jiangxi
Chenming. After testing, the suspended
solids of the wastewater samples
collected from the wastewater discharge
outlet amounted to 59.33 mg/L, and the
chromaticity amounted to 64, which were
0.98 times and 0.28 times higher than
the standard, respectively. Therefore,
the wastewater discharge exceeded the
standard. On 7 January 2022, the Nanchang
Municipal Ecological Environment Bureau
issued the Decision on Administrative
Penalty and imposed a fine of RMB401,000
on Jiangxi Chenming. As at the disclosure
date of the Report, Jiangxi Chenming had
completed rectification, and paid the fine on
time.
34 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
VI Material Matters
IX. Punishment and rectification (Cont’d)
Rectification
√ Applicable Not applicable
Rectification measures of Jiangxi Chenming
(1) Control at source ensured that the indicators of each section reached the required range through strict control on the
operation of the water treatment system. (2) Water intake stabilisation avoided the impact of excessive water volume to affect
the indicator of suspended solids in the effluent. (3) The monitoring of drainage indicators was strengthened. They were
adjusted on time to ensure that the discharge met the standards.
X. Credibility of the Company, its controlling shareholders and beneficial controllers
Applicable √ Not applicable
XI. Significant related party transactions
1. Related party transactions associated with day-to-day operation
√ Applicable Not applicable
Pricing Related Amount of Percentage Amount of Whether Market price
Relationship Types of the Subject matter of basis of the party related party as the amount transactions exceeding Settlement of of available
with the related party the related party related party transaction transactions of similar approved approved related party similar Disclosure
Related party transactions Company transactions transactions transaction price (RMB’0,000) transactions (RMB’0,000) cap transactions transaction date Disclosure index
Weifang Sime Darby West Port Joint venture Labour Port Market price Market price 3,235.51 7.47% 10,000.00 No Bank Not 31 March http://www.cninfo.com.cn
Co., Ltd. service miscel aneous acceptance appl cable 2022
fees and telegraphic
transfer
Total – – 3,235.51 – 10,000.00 – – – – –
Particulars on refund of bulk sale Ni
Estimated total amount for day-to-day related party transactions to be conducted during the period (by types of transactions) and Ni
their actual i plementing during the reporting period (if any)
Reasons for l rge differences between transaction price and market reference price (if appl cable) Not appl cable
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.
4. Related creditors’ rights and debts transactions
√ Applicable Not applicable
Was there any non-operating related creditors’ rights and debts transaction
√ Yes No
SHANDONG CHENMING PAPER HOLDINGS LIMITED 35
INTERIM REPORT 2022
VI Material Matters
XI. Significant related party transactions (Cont’d)
4. Related creditors’ rights and debts transactions (Cont’d)
Creditor’s rights receivable from any related party
Was there Amount Amount
any non- increased recovered Interest
operating Opening during the during the for the Closing
Relationship with capital balance current period current period current 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 Environmental Technology A joint venture Financial support No 1,729.92 0.00 0.00 6.00% 49.19 1,779.11
Co., Ltd.
Weifang Sime Darby West Port Co., Ltd. A joint venture Financial support No 8,066.80 0.00 1,296.62 6.00% 204.55 6,974.73
Effect of related creditors’ rights on the operating results and The above creditors’ rights did not affect the ordinary operation of the Company. Moreover, they catered to the needs for development of existing
financial position of the Company businesses of Shouguang Meite Environmental and Weifang Sime Darby West Port and lowered the financing costs.
Debts payable to any related party
Amount Amount
increased repaid Interest
Opening during the during the for the Closing
Relationship with balance current period current period current period balance
Related party the Company Reason (RMB’0,000) (RMB’0,000) (RMB’0,000) Interest rate (RMB’0,000) (RMB’0,000)
Chenming Holdings Company Limited The controlling Financial support 0.00 15,500.00 15,500.00 Market 33.21 0.00
shareholder interest rate
Guangdong Nanyue Bank Co., Ltd. An associate Borrowing 220,100.00 42,500.00 70,000.00 Market 6,466.85 192,600.00
interest rate
Effect of related debts on the operating results and Financial support was provided by Chenming Holdings without requiring any pledge or guarantee, which was a testament to
financial position of the Company 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.
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.
36 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
VI Material Matters
XII. 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.
(3) Leasing
Applicable √ Not applicable
There was no leasing of the Company during the reporting period.
2. Significant guarantees
√ Applicable Not applicable
(1) Guarantees
During the reporting period, the Company provided guarantee to subsidiaries and the guarantee amount incurred
was RMB7,289.9312 million. The subsidiaries provided guarantee to their subsidiaries and the guarantee amount
incurred was RMB93.4898 million.
As at 30 June 2022, 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
RMB11,805.5395 million, representing 61.42% of the equity attributable to shareholders of the Company as at the
end of June 2022.
Unit: RMB’0,000
External guarantees of the Company and its subsidiaries (excluding guarantees to subsidiaries)
Date of the related Guarantee
announcement Counter- to related
disclosing the Amount of Guarantee Type of Collateral guarantee Fulfilled parties
Name of obligee guarantee amount guarantee Guarantee date provided guarantee (if any) (if any) Term or not or not
Weifang Sime Darby West Port 24 July 2017 11,740.00 20 December 2017 11,740.00 General Credit Shareholders’ 10 years No Yes
Co., Ltd guarantee guarantee pro rata
guarantee
Zhanjiang Runbao Trading Co., Ltd. 30 March 2022 16,000.00 25 April 2022 16,000.00 Pledge 34.64% Equity transfer 2 years No No
equity interest payment of
in Wuhan RMB160 million
Chenming
Zhanjiang Dingjin Trading Co., Ltd. 4 December 2020 13,558.19 4 December 2020 13,558.19 Pledge Properties Equity transfer 2 years No No
payment of
RMB136 million
Total external guarantees approved during the reporting period (A1) 16,000.00 Total actual external guarantees during the reporting period (A2) 16,000.00
Total external guarantees approved at the end of the reporting period (A3) 41,298.19 Balance of total actual guarantees at the end of the reporting period (A4) 41,298.19
SHANDONG CHENMING PAPER HOLDINGS LIMITED 37
INTERIM REPORT 2022
VI Material Matters
XII. Material contracts and implementation (Cont’d)
2. Significant guarantees (Cont’d)
(1) Guarantees (Cont’d)
Guarantees between the Company and its subsidiaries
Date of the related Guarantee
announcement Counter- to related
disclosing the Amount of Guarantee Type of Collateral guarantee Fulfilled parties
Name of obligee guarantee amount guarantee Guarantee date provided guarantee (if any) (if any) Term or not or not
Zhanjiang Chenming Pulp & 30 March 2019 176,778.70 27 December 2019 176,778.70 General Credit 5 years No No
Paper Co., Ltd. guarantee guarantee
Zhanjiang Chenming Pulp & 27 March 2020 150,000.00 16 October 2020 150,000.00 General Credit 5 years No No
Paper Co., Ltd. guarantee guarantee
Zhanjiang Chenming Pulp & 30 March 2022 1,050,000.00 8 April 2022 142,226.44 General Credit 1 year No No
Paper Co., Ltd. guarantee guarantee
Shandong Chenming Group 30 March 2022 30,000.00 General 1 year No No
Finance Co., Ltd. guarantee
Shandong Chenming Paper Sales 30 March 2019 25,434.99 15 February 2022 25,434.99 General Credit 5 years No No
Co., Ltd. guarantee guarantee
Shandong Chenming Paper Sales 30 March 2022 350,000.00 7 April 2022 100,562.48 General Credit 1 year No No
Co., Ltd. guarantee guarantee
Huanggang Chenming Pulp & 30 March 2016 60,500.00 19 July 2021 60,500.00 General Credit 7 years No No
Paper Co., Ltd. guarantee guarantee
Huanggang Chenming Pulp & 30 March 2022 350,000.00 22 April 2022 11,000.00 General Credit 1 year No No
Paper Co., Ltd. guarantee guarantee
Jiangxi Chenming Paper Co., Ltd. 30 March 2019 62,308.42 31 August 2021 62,308.42 General Credit 5 years No No
guarantee guarantee
Jiangxi Chenming Paper Co., Ltd. 30 March 2022 400,000.00 31 March 2022 98,684.99 General Credit 1 year No No
guarantee guarantee
Shouguang Meilun Paper Co., Ltd. 27 March 2020 93,138.11 7 July 2021 93,138.11 General Credit 5 years No No
guarantee guarantee
Shouguang Meilun Paper Co., Ltd. 30 March 2022 500,000.00 30 April 2022 34,259.14 General Credit 1 year No No
guarantee guarantee
Wuhan Chenming Hanyang Paper 18 October 2019 3,000.00 17 December 2021 3,000.00 General Credit 3 years No No
Holdings Co., Ltd. guarantee guarantee
Wuhan Chenming Hanyang Paper 30 March 2022 50,000.00 General 1 year No No
Holdings Co., Ltd. guarantee
Chenming (HK) Limited 25 March 2021 10,533.09 28 March 2022 10,533.09 General Credit 3 years No No
guarantee guarantee
Chenming (HK) Limited 30 March 2022 200,000.00 1 April 2022 26,338.49 General Credit 1 year No No
guarantee guarantee
Shouguang Chenming Import and 30 March 2019 10,000.00 14 January 2022 10,000.00 General Credit 5 years No No
Export Trade Co., Ltd. guarantee guarantee
Shouguang Chenming Import and 30 March 2022 50,000.00 General 1 year No No
Export Trade Co., Ltd. guarantee
Jilin Chenming Paper Co., Ltd. 30 March 2019 9,858.00 13 January 2022 9,858.00 General Credit 5 years No No
guarantee guarantee
Jilin Chenming Paper Co., Ltd. 30 March 2022 30,000.00 23 May 2022 1,800.00 General Credit 1 year No No
guarantee guarantee
Zhanjiang Chenming Arboriculture 30 March 2022 30,000.00 General 1 year No No
Development Co., Ltd. guarantee
Nanchang Chenming Arboriculture 30 March 2022 10,000.00 General 1 year No No
Development Co., Ltd. guarantee
38 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
VI Material Matters
XII. Material contracts and implementation (Cont’d)
2. Significant guarantees (Cont’d)
(1) Guarantees (Cont’d)
Guarantees between the Company and its subsidiaries
Date of the related Guarantee
announcement Counter- to related
disclosing the Amount of Guarantee Type of Collateral guarantee Fulfilled parties
Name of obligee guarantee amount guarantee Guarantee date provided guarantee (if any) (if any) Term or not or not
Shanghai Chenming Pulp & Paper 30 March 2019 3,000.00 26 January 2022 3,000.00 General Credit 5 years No No
Sales Co., Ltd. guarantee guarantee
Shanghai Chenming Pulp & Paper 30 March 2022 150,000.00 31 May 2022 12,000.00 General Credit 1 year No No
Sales Co., Ltd. guarantee guarantee
Shanghai Hongtai Property 30 March 2022 10,000.00 General 1 year No No
Management Co., Ltd. guarantee
Chenming (Overseas) Co., Ltd. 30 March 2022 40,000.00 General 1 year No No
guarantee
Chenming (Singapore) Co., Ltd. 30 March 2022 40,000.00 14 June 2022 11,061.13 General Credit 1 year No No
guarantee guarantee
Hainan Chenming Technology 30 March 2022 100,000.00 13 May 2022 5,000.00 General Credit 1 year No No
Co., Ltd. guarantee guarantee
Huanggang Chenming Paper 30 March 2022 500,000.00 General 1 year No No
Technology Co., Ltd. guarantee
Huanggang Chenming Pulp & 30 March 2022 30,000.00 General 1 year No No
Fiber Trading Co., Ltd. guarantee
Kunshan Tuoan Plastic Products 30 March 2022 10,000.00 General 1 year No No
Co., Ltd. guarantee
Shouguang Chenming Art Paper 30 March 2022 20,000.00 General 1 year No No
Co., Ltd. guarantee
Jiangxi Chenming Tea Co., Ltd. 30 March 2022 10,000.00 General 1 year No No
guarantee
Shouguang Hongyi Decorative 30 March 2022 5,000.00 General 1 year No No
Packaging Co., Ltd. guarantee
Shouguang Hongxiang Printing and 30 March 2022 5,000.00 General 1 year No No
Packaging Co., Ltd. guarantee
Shouguang Chenming Modern 30 March 2022 5,000.00 General 1 year No No
Logistic Co., Ltd. guarantee
Shandong Grand View Hotel 30 March 2022 5,000.00 General 1 year No No
Co., Ltd. guarantee
Shouguang Chenming Papermaking 30 March 2022 5,000.00 General 1 year No No
Machine Co., Ltd. guarantee
Total amount of guarantee provided for subsidiaries approved during the reporting period (B1) 3,985,000.00 Total amount of guarantee provided for subsidiaries during the reporting 728,993.12
period (B2)
Total amount of guarantee provided for subsidiaries approved as at the end of the reporting period (B3) 4,589,551.31 Total balance of guarantee provided for subsidiaries as at the end of the 1,047,483.98
reporting period (B4)
SHANDONG CHENMING PAPER HOLDINGS LIMITED 39
INTERIM REPORT 2022
VI Material Matters
XII. Material contracts and implementation (Cont’d)
2. Significant guarantees (Cont’d)
(1) Guarantees (Cont’d)
Guarantees between subsidiaries
Date of the related Guarantee
announcement Counter- to related
disclosing the Amount of Guarantee Type of Collateral guarantee Fulfilled parties
Name of obligee guarantee amount guarantee Guarantee date provided guarantee (if any) (if any) Term or not or not
Chenming (HK) Limited 30 March 2019 13,422.80 19 November 2021 13,422.80 General Credit 5 years No No
guarantee guarantee
Chenming (HK) Limited 30 March 2019 9,348.98 17 March 2022 9,348.98 General Credit 5 years No No
guarantee guarantee
Zhanjiang Chenming Pulp & 27 March 2020 12,000.00 16 August 2021 12,000.00 General Credit 1 year No No
Paper Co., Ltd. guarantee guarantee
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 4 December 2020 600.00 4 December 2020 600.00 Pledge Properties 3 years No No
Paper Holdings Co., Ltd
Huanggang Chenming Pulp & 4 December 2020 20,000.00 4 December 2020 20,000.00 Pledge Properties 3 years No No
Paper Co., Ltd.
Total amount of guarantee provided for subsidiaries approved during the reporting period (C1) 0.00 Total amount of guarantee provided for subsidiaries during the reporting 9,348.98
period (C2)
Total amount of guarantee provided for subsidiaries approved as at the end of the reporting period (C3) 91,771.78 Total balance of guarantee provided for subsidiaries as at the end of the 91,771.78
reporting period (C4)
Total amount of guarantee provided (i.e. sum of the above three guarantee amount)
Total amount of guarantee approved during the reporting period (A1+B1+C1) 4,001,000.00 Total amount of guarantee during the reporting period (A2+B2+C2) 754,342.10
Total amount of guarantee approved as at the end of the reporting period (A3+B3+C3) 4,722,621.28 Total balance of guarantee as at the end of the reporting period 1,180,553.95
(A4+B4+C4)
The percentage of total amount of guarantee provided (i.e. A4+B4+C4) to the net assets of the Company 61.42%
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) 152,737.47
Total amount of guarantee provided in excess of 50% of net assets (F) 219,535.09
Sum of the above three amount of guarantee (D+E+F) 372,272.56
For the unexpired guarantee contract, the guarantee liability has occurred during the reporting period or there is evidence showing that it is possible to bear joint liability for repayment (if any) No
Providing external guarantees in violation of prescribed procedures (if any) No
3. Entrusted wealth management
Applicable √ Not applicable
The Company did not have any entrusted wealth management during the reporting period.
4. Other material contracts
Applicable √ Not applicable
The Company did not have any other material contracts during the reporting period.
40 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
VI Material Matters
XIII. Other matters of significance
√ Applicable Not applicable
1. Recognition of the Company and its subsidiaries as high and new technology enterprises
The Company and its subsidiaries Shouguang Meilun and Zhanjiang Chenming have been recognised again as high and
new technology enterprises upon expiry of their original high and new technology enterprise certificates. The certificate
numbers are GR202137005666, GR202137005468 and GR202144001212, respectively, each with a valid term of three
years. According to the Law of the People’s Republic of China on Enterprise Income Tax and the relevant tax policies
of the PRC for high and new technology enterprises, the Company, Shouguang Meilun and Zhanjiang Chenming are
subject to an enterprise income tax rate of 15% under the preferential income tax policy for high and new technology
enterprises for three years (i.e. 2021 to 2023) from the year in which they are recognised as high and new technology
enterprises.
For details, please refer to the relevant announcement (announcement no.: 2022-002) of the Company published on
CNINFO on 11 February 2022.
2. Election of new session of the Board and the Supervisory Committee
At the 2022 first extraordinary general meeting of the Company held on 15 June 2022, the Resolution in Relation to the
Election of Candidates for Non-independent Directors of the Tenth Session of the Board, the Resolution in Relation
to the Election of Candidates for Independent Non-executive Directors of the Tenth session of the Board and the
Resolution in Relation to the Election of Candidates for Shareholder Representative Supervisors of the Tenth Session of
the Supervisory Committee were considered and approved. Mr. Chen Hongguo, Mr. Hu Changqing, Mr. Li Xingchun, Mr.
Li Feng and Mr. Li Weixian were elected as the executive Directors of the tenth session of the Board of the Company;
Mr. Han Tingde and Mr. Li Chuanxuan were elected as the non-executive Directors of the tenth session of the Board of
the Company; Mr. Li Zhihui, Mr. Sun Jianfei, Mr. Yang Biao and Ms. Yin Meiqun were elected as the independent non-
executive Directors of the tenth session of the Board of the Company; and Ms. Li Kang, Ms. Pan Ailing and Ms. Zhang
Hong were elected as the shareholder representative Supervisors of the tenth session of the Supervisory Committee of
the Company. On the same date, the Company held the fourth meeting of the tenth session of the staff representative
meeting, at which Ms. Qiu Lanju and Ms. Sang Ailing were elected as the staff representative Supervisors of the tenth
session of the Supervisory Committee of the Company; the Company held the first meeting of the tenth session of the
Board and the first meeting of the tenth session of the Supervisory Committee, at which Mr. Chen Hongguo was elected
as chairman of the Board, Mr. Hu Changqing and Mr. Li Xingchun were elected as vice chairmen of the Board, and Ms.
Li Kang was elected as chairman of the Supervisory Committee. The election of the new session of the Board and the
Supervisory Committee of the Company was completed.
For details, please refer to the relevant announcements (announcement no.: 2022-049, 2022-050, 2022-051 and 2022-
052) of the Company published on CNINFO on 16 June 2022.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 41
INTERIM REPORT 2022
VI Material Matters
XIII. Other matters of significance (Cont’d)
3. Disclosure index for 2022 interim report
Announcement Date of
No. Subject matter publication Publication website and index
2022-001 Announcement on the Continued Pledge of 15 January 2022 http://www.cninfo.com.cn
Shares held by Shareholders
2022-002 Announcement on the Recognition of the 11 February 2022 http://www.cninfo.com.cn
Company and its Subsidiaries as High and New
Technology Enterprises
2022-003 Announcement on the Development of 24 February 2022 http://www.cninfo.com.cn
Equipment Financing Business by a Subsidiary
2022-004 The First Indicative Announcement on Adjustment 25 February 2022 http://www.cninfo.com.cn
of Coupon Rate of “18 Chenming Bond 01” and
Implementation Measures for Resale by Investors
2022-005 The Second Indicative Announcement on 1 March 2022 http://www.cninfo.com.cn
Adjustment of Coupon Rate of “18 Chenming
Bond 01” and Implementation Measures for
Resale by Investors
2022-006 The Third Indicative Announcement on 3 March 2022 http://www.cninfo.com.cn
Adjustment of Coupon Rate of “18 Chenming
Bond 01” and Implementation Measures for
Resale by Investors
2022-007 Announcement on Pledge of Shares and Partial 12 March 2022 http://www.cninfo.com.cn
Release of Pledge of Shares by Shareholders
2022-008 Announcement on the Development of 14 March 2022 http://www.cninfo.com.cn
Equipment Financing Business by a Subsidiary
2022-009 Announcement on the 2021 Annual Online 28 March 2022 http://www.cninfo.com.cn
Performance Briefing
2022-010 Announcement on the Development of 29 March 2022 http://www.cninfo.com.cn
Equipment Financing Business by a Subsidiary
2022-011 Announcement on Resolutions of the Twelfth 31 March 2022 http://www.cninfo.com.cn
Meeting of the Ninth Session of the Board of
Directors
2022-012 Announcement on Resolutions of the Twelfth 31 March 2022 http://www.cninfo.com.cn
Meeting of the Ninth Session of the Supervisory
Committee
2022-013 Notice of 2021 Annual General Meeting 31 March 2022 http://www.cninfo.com.cn
2022-014 2021 Annual Report Summary 31 March 2022 http://www.cninfo.com.cn
2022-015 Special Statement on Securities Investment in 31 March 2022 http://www.cninfo.com.cn
2021
2022-016 Announcement on Appointment of Auditor for 31 March 2022 http://www.cninfo.com.cn
2022
2022-017 Announcement on the Expected Continuing 31 March 2022 http://www.cninfo.com.cn
Related Party Transaction in 2022
2022-018 Announcement on the Development of 31 March 2022 http://www.cninfo.com.cn
Equipment Financing Business
2022-019 Announcement on Carrying out Factoring 31 March 2022 http://www.cninfo.com.cn
Business of Accounts Receivable
2022-020 Announcement on Expected Provision of 31 March 2022 http://www.cninfo.com.cn
Guarantees to Subsidiaries for 2022
2022-021 Special Statement on the Proposed Non- 31 March 2022 http://www.cninfo.com.cn
Distribution of Profit for 2021
42 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
VI Material Matters
XIII. Other matters of significance (Cont’d)
3. Disclosure index for 2022 interim report (Cont’d)
Announcement Date of
No. Subject matter publication Publication website and index
2022-022 Announcement on the Amendments to the 31 March 2022 http://www.cninfo.com.cn
Company’s Relevant Systems
2022-023 Announcement on the Provision of External 31 March 2022 http://www.cninfo.com.cn
Guarantees
2022-024 Announcement on Loan Transfer and Related 31 March 2022 http://www.cninfo.com.cn
Party Transaction
2022-025 Announcement on Results of Resale by 31 March 2022 http://www.cninfo.com.cn
Bondholders of “18 Chenming Bond 01”
2022-026 Shandong Chenming Paper Holdings Limited 31 March 2022 http://www.cninfo.com.cn
Announcement on Payment of 2022 Interest with
Respect to the First Tranche of Corporate Bonds
Publicly Issued to Qualified Investors in 2018
2022-027 Announcement on Receipt of Government 1 April 2022 http://www.cninfo.com.cn
Subsidies by Subsidiaries
2022-028 Announcement on the Proposed Resale of “18 7 April 2022 http://www.cninfo.com.cn
Chenming Bond 01” Sale-back Bonds
2022-029 Announcement on Pledge of Shares and Partial 21 April 2022 http://www.cninfo.com.cn
Release of Pledge of Shares by Shareholders
2022-030 2022 First Quarterly Report 30 April 2022 http://www.cninfo.com.cn
2022-031 Announcement on the Results of Resale of “18 10 May 2022 http://www.cninfo.com.cn
Chenming Bond 01” Bonds
2022-032 Announcement on Resolutions of 2021 Annual 12 May 2022 http://www.cninfo.com.cn
General Meeting
2022-033 Announcement on Resolutions of the Twenty- 24 May 2022 http://www.cninfo.com.cn
fourth Extraordinary Meeting of the Ninth Session
of the Board of Directors
2022-034 Announcement on Resolutions of the Seventh 24 May 2022 http://www.cninfo.com.cn
Extraordinary Meeting of the Ninth Session of the
Supervisory Committee
2022-035 Declaration by Nominator of Independent 24 May 2022 http://www.cninfo.com.cn
Director (Li Zhihui)
2022-036 Declaration by Nominator of Independent 24 May 2022 http://www.cninfo.com.cn
Director (Sun Jianfei)
2022-037 Declaration by Nominator of Independent 24 May 2022 http://www.cninfo.com.cn
Director (Yang Biao)
2022-038 Declaration by Nominator of Independent 24 May 2022 http://www.cninfo.com.cn
Director (Yin Meiqun)
2022-039 Declaration by Candidate for Independent 24 May 2022 http://www.cninfo.com.cn
Director (Li Zhihui)
SHANDONG CHENMING PAPER HOLDINGS LIMITED 43
INTERIM REPORT 2022
VI Material Matters
XIII. Other matters of significance (Cont’d)
3. Disclosure index for 2022 interim report (Cont’d)
Announcement Date of
No. Subject matter publication Publication website and index
2022-040 Declaration by Candidate for Independent 24 May 2022 http://www.cninfo.com.cn
Director (Sun Jianfei)
2022-041 Declaration by Candidate for Independent 24 May 2022 http://www.cninfo.com.cn
Director (Yang Biao)
2022-042 Declaration by Candidate for Independent 24 May 2022 http://www.cninfo.com.cn
Director (Yin Meiqun)
2022-043 Announcement on the Purchase of Liability 24 May 2022 http://www.cninfo.com.cn
Insurance for Directors, Supervisors and Senior
Management
2022-044 Notice of the First Extraordinary General Meeting 24 May 2022 http://www.cninfo.com.cn
of 2022
2022-045 Announcement on Credit Rating Adjustment 30 May 2022 http://www.cninfo.com.cn
2022-046 Announcement on Resolutions of the Twenty- 31 May 2022 http://www.cninfo.com.cn
fifth Extraordinary Meeting of the Ninth Session
of the Board of Directors
2022-047 Notice on Cancellation of Certain Resolutions of 31 May 2022 http://www.cninfo.com.cn
2022 First Extraordinary General Meeting and
Supplementary Notice of the General Meeting
2022-048 Announcement on Receipt of Government 1 June 2022 http://www.cninfo.com.cn
Subsidies by Subsidiaries
2022-049 Announcement on Resolutions of the First 16 June 2022 http://www.cninfo.com.cn
Extraordinary General Meeting of 2022
2022-050 Announcement on the Election of Employee 16 June 2022 http://www.cninfo.com.cn
Representative Supervisors
2022-051 Announcement on Resolutions of the First 16 June 2022 http://www.cninfo.com.cn
Meeting of the Tenth Session of the Board of
Directors
2022-052 Announcement on Resolutions of the First 16 June 2022 http://www.cninfo.com.cn
Meeting of the Tenth Session of the Supervisory
Committee
2022-053 Announcement on the Progress of Litigation 21 June 2022 http://www.cninfo.com.cn
2022-054 Announcement on the Continued Pledge of 28 June 2022 http://www.cninfo.com.cn
Shares held by Shareholders
2022-055 Announcement on Resolutions of the First 28 June 2022 http://www.cninfo.com.cn
Extraordinary Meeting of the Tenth Session of
the Board
2022-056 Announcement on Capital Increase and 28 June 2022 http://www.cninfo.com.cn
Introduction of Strategic Investors of a Majority-
owned Subsidiary
44 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
VI Material Matters
XIV. Matters of significant of subsidiaries of the Company
√ Applicable Not applicable
1. Introduction of strategic investors by Zhanjiang Chenming
On 27 June 2022, the first extraordinary meeting of the tenth 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.
Given the recognition of Zhanjiang Chenming for its bright development prospect, Xiamen International Trade Industry
Development Equity Investment Fund Partnership (Limited Partnership) made capital contribution to Zhanjiang
Chenming in the amount of RMB400 million, of which RMB266,351,374 was included in the registered capital and the
remaining RMB133,648,626 was included in the capital reserve.
For details, please refer to the relevant announcements (announcement no.: 2022-055 and 2022-056) of the Company
published on CNINFO on 28 June 2022.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 45
INTERIM REPORT 2022
VII 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
Shares
converted
Amount Percentage New issue Bonus issue from reserves Others Subtotal Amount Percentage
I. Restricted shares 84,733,521 2.84% -144,313 -144,313 84,589,208 2.83%
1. Shares held by other domestic investors 84,733,521 2.84% -144,313 -144,313 84,589,208 2.83%
Including: Shares held by domestic natural persons 84,733,521 2.84% -144,313 -144,313 84,589,208 2.83%
II. Non-restricted shares 2,899,474,679 97.16% 144,313 144,313 2,899,618,992 97.17%
1. RMB ordinary shares 1,664,784,163 55.79% 144,313 144,313 1,664,928,476 55.79%
2. Domestic listed foreign shares 706,385,266 23.67% 706,385,266 23.67%
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
During the reporting period, some of the restricted RMB ordinary shares (A shares) held by Mr. Geng Guanglin, a
member of the Senior Management of the ninth session of the Board of the Company, became non-restricted shares
amounting to 179,238 shares due to his resignation for six months. Some of the non-restricted RMB ordinary shares (A
shares) held by Mr. Chen Gang became restricted shares amounting to 34,925 shares due to the expiration of his term
of office.
Approval of changes in shareholding
Applicable √ Not applicable
Transfer of shares arising from changes in shareholding
Applicable √ Not applicable
Progress of share repurchase
Applicable √ Not applicable
Progress of decrease in the holding of repurchased shares by way of bidding
Applicable √ Not applicable
46 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
VII Changes in Share Capital and Shareholders
I. Changes in shares (Cont’d)
1. Changes in shares (Cont’d)
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
shares at the Restricted Restricted Restricted
beginning shares released shares increased shares at the Reason for Date of release
Name of shareholders of period during the period during the period end of period restriction from restriction
Geng Guanglin 2,716,950 179,238 0 2,537,712 Restricted shares of the In accordance with the
participants of the Share equity incentive plan (draft)
Incentive Scheme Locked- and relevant requirements
up shares of Directors, for shares held by Directors,
Supervisors and Senior Supervisors and Senior
Management Management
Chen Gang 1,104,775 0 34,925 1,139,700 Restricted share of the In accordance with the
participants of the Share equity incentive plan (draft)
Incentive Scheme Locked- and relevant requirements
up shares of Directors, for shares held by Directors,
Supervisors and Senior Supervisors and Senior
Management Management
Total 3,821,725 179,238 34,925 3,677,412 – –
II. Issuance and listing of securities
Applicable √ Not applicable
SHANDONG CHENMING PAPER HOLDINGS LIMITED 47
INTERIM REPORT 2022
VII Changes in Share Capital and Shareholders
III. Total number of shareholders and shareholdings
Unit: share
170,976, of which 148,205 were holders of A shares, Total number of holders of preference shares
Total number of ordinary shareholders 22,437 were holders of B shares and 334 were with restored voting right as at the end of the
as at the end of the reporting period holders of H shares reporting period (if any) 0
Shareholdings of ordinary shareholders interested in more than 5% of the shares of the Company or Top 10 ordinary shareholders
Number of Changes
ordinary (increase or
shares held decrease) Number of Number of Share pledged, marked or
at the end of during the restricted non-restricted locked-up
Percentage of the reporting reporting ordinary ordinary Status of
Name of shareholder Nature of shareholder shareholding period period shares held shares held shares Number
CHENMING HOLDINGS COMPANY LIMITED State-owned legal person 15.32% 457,322,919 0 0 457,322,919 Pledged 274,220,000
HKSCC NOMINEES LIMITED Overseas legal person 12.51% 373,381,375 -125,000 0 373,381,375
CHENMING HOLDINGS (HONG KONG) LIMITED Overseas legal person 12.20% 364,131,563 0 0 364,131,563
NINGBO ASIA PAPER TUBE & CARTON Domestic non-state-owned 1.08% 32,120,000 32,120,000 0 32,120,000
CO., LTD. legal person
Chen Hongguo Domestic natural person 1.04% 31,080,044 0 23,310,033 7,770,011
SHANDONG SUN HOLDINGS GROUP CO., LTD. Domestic non-state-owned 0.82% 24,507,117 8,119,300 0 24,507,117
legal person
HONG KONG SECURITIES CLEARING Overseas legal person 0.54% 16,218,780 2,157,809 0 16,218,780
COMPANY LIMITED
VANGUARD EMERGING MARKETS STOCK Overseas legal person 0.50% 14,819,546 805,900 0 14,819,546
INDEX FUND
VANGUARD TOTAL INTERNATIONAL STOCK Overseas legal person 0.50% 14,771,945 0 0 14,771,945
INDEX FUND
GUOTAI JUNAN SECURITIES (HONG KONG) Overseas legal person 0.40% 11,857,746 1,344,583 0 11,857,746
LIMITED
Strategic investors or general legal persons who Nil
become the top ten ordinary shareholders due
to the placement of new shares (if any)
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
mentioned above are persons acting in concert. It is also not aware that any other shareholders mentioned above 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 10 shareholders
48 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
VII Changes in Share Capital and Shareholders
III. Total number of shareholders and shareholdings (Cont’d)
Shareholdings of the top ten non-restricted ordinary shareholders
Number of
non-restricted
ordinary shares
held as at the
Name of shareholder end of the Class of shares
reporting period Class of shares Number
CHENMING HOLDINGS COMPANY LIMITED 457,322,919 RMB ordinary shares 457,322,919
HKSCC NOMINEES LIMITED 373,381,375 Overseas listed foreign shares 373,381,375
CHENMING HOLDINGS (HONG KONG) LIMITED 364,131,563 Domestic listed foreign shares 210,717,563
Overseas listed foreign shares 153,414,000
NINGBO ASIA PAPER TUBE & CARTON CO., LTD. 32,120,000 RMB ordinary shares 32,120,000
SHANDONG SUN HOLDINGS GROUP CO., LTD. 24,507,117 RMB ordinary shares 24,507,117
HONG KONG SECURITIES CLEARING COMPANY 16,218,780 RMB ordinary shares 16,218,780
LIMITED
VANGUARD EMERGING MARKETS STOCK 14,819,546 Domestic listed foreign shares 14,819,546
INDEX FUND
VANGUARD TOTAL INTERNATIONAL STOCK 14,771,945 Domestic listed foreign shares 14,771,945
INDEX FUND
GUOTAI JUNAN SECURITIES (HONG KONG) 11,857,746 Domestic listed foreign shares 11,857,746
LIMITED
Agricultural Bank of China Limited – CSI 500 5,920,500 RMB ordinary shares 5,920,500
Trading Index Securities Investment Open-
ended Fund
Related party relationship or acting in concert A shareholder, Chenming Holdings (Hong Kong) Limited, which is an
among the top ten non-restricted ordinary overseas legal person, is a wholly-owned subsidiary of a shareholder,
shareholders, and between the top ten non- Chenming Holdings Company Limited, which is a state-owned legal
restricted ordinary shareholders and the top ten person. Save for the above, it is not aware that any other shareholders of
ordinary shareholders 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 10 ordinary Chenming Holdings Company Limited held 457,322,919 RMB ordinary
shareholders, if any shares, of which 352,322,919 shares were held through ordinary account
and 105,000,000 shares were held through credit guarantee security
account. Ningbo Asia Paper Tube & Carton Co., Ltd. held 32,120,000
RMB ordinary shares, of which no share was held through ordinary
account and 32,120,000 shares were held through credit guarantee
security account. Shandong Sun Holdings Group Co., Ltd. held
24,507,117 RMB ordinary shares, of which no share was held through
ordinary account and 24,507,117 shares were held through credit
guarantee security account.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 49
INTERIM REPORT 2022
VII Changes in Share Capital and Shareholders
III. Total number of shareholders and shareholdings (Cont’d)
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.
IV. Changes in shareholding of Directors, Supervisors and Senior Management
Applicable √ Not applicable
V. Change of controlling shareholders or beneficial controllers
Change of controlling shareholders during the reporting period
Applicable √ Not applicable
There was no change of controlling shareholders of the Company during the reporting period.
Change of beneficial controllers during the reporting period
Applicable √ Not applicable
There was no change of beneficial controllers of the Company during the reporting period.
VI. Securities interests held by Directors, Supervisors and chief executives disclosed in
accordance with the Listing Rules of Hong Kong Stock Exchange
As at 30 June 2022, the interests and short positions held by each of the Directors, Supervisors and chief executives of the
Company in the shares, underlying shares and debentures of the Company or its associated corporations (within the meaning
of Part XV of the Securities and Futures Ordinance (Chapter 571 of the laws of Hong Kong) (the “SFO”)) as recorded in the
register required to be kept under section 352 of the SFO, are set out as follows:
Company
Number of shares held as at the end
Name Position of the reporting period (shares)
Directors
Chen Hongguo (Note 1) Chairman and general manager 31,080,044 A shares
Hu Changqing Executive Director and vice chairman 5,042,857 A shares
Li Xingchun Executive Director and vice chairman 5,000,000 A shares
Li Feng Executive Director and deputy general manager 3,906,027 A shares
Li Weixian Executive Director and deputy general manager 2,081,200 A shares
159,000 H shares
Han Tingde Non-executive Director –
Li Chuanxuan Non-executive Director –
Li Zhihui Independent non-executive Director –
Sun Jianfei Independent non-executive Director –
Yin Meiqun Independent non-executive Director –
Yang Biao Independent non-executive Director –
Supervisors
Li Kang Chairman of the Supervisory Committee 149,300 A shares
Pan Ailing Supervisor –
Zhang Hong Supervisor –
Sang Ailing Supervisor –
Qiu Lanju Supervisor –
50 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
VII Changes in Share Capital and Shareholders
VI. Securities interests held by Directors, Supervisors and chief executives disclosed in
accordance with the Listing Rules of Hong Kong Stock Exchange (Cont’d)
Associated corporations
Number of Number of
shares held at shares held
the beginning Change at the end of
Name of associated of the reporting during the the reporting
Name Position corporations period (shares) period (+/-) period (shares)
Chen Hongguo Chairman and Shouguang Henglian 231,000,000 – 231,000,000
General Manager Enterprise Investment
Co. Ltd. (Note 2)
Note 1: Save for the 31,080,044 A shares held personally, Chen Hongguo was 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”), and Shouguang Henglian is therefore 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.
Save as disclosed above, as at 30 June 2022, none of the Directors, Supervisors and 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 Listing Rules of Hong Kong
Stock Exchange.
As at 30 June 2022, 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.
VII. Interests and short position of substantial shareholders in shares and underlying shares
disclosed in accordance with the Listing Rules of Hong Kong Stock Exchange
As at 30 June 2022, 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:
Number of shares held Approximate shareholding as a percentage of
Name (shares) Total share capital (%) Class of 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 30 June 2022, no other person had interests or short positions in the Company’s shares and
underlying shares as recorded in the register maintained under section 336 of the SFO.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 51
INTERIM REPORT 2022
VIII Preference Shares
Applicable √ Not applicable
The Company had no preference shares during the reporting period.
52 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
IX 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
Outstanding
amount of
Bond Bond the bonds Interest
Name of bond abbreviation code Issue date Value date Maturity date (RMB) rate Payment method Trading venue
The public issuance of 18 Chenming 112641 29 March 2 April 2 April 350,000,000.00 6.50% Interest is paid annually. Shenzhen Stock Exchange
the Corporate Bonds of Bond 01 2018 2018 2023 The principal amount will
Shandong Chenming be paid on the maturity
Paper Holdings Limited to date.
qualified investors in 2018
(phase I)
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 No
countermeasures
Overdue and outstanding bonds
Applicable √ Not applicable
SHANDONG CHENMING PAPER HOLDINGS LIMITED 53
INTERIM REPORT 2022
IX Bonds
II. Corporate Bonds (Cont’d)
2. Triggering and execution of issuer’s or investor’s option clause or investor protection clause
√ Applicable Not applicable
”18 Chenming Bond 01” is attached with options for the issuer to adjust the coupon rate and for investors to resell.
The issuer of “18 Chenming Bond 01” has the right to determine the adjustment to the coupon rate for the following
3 years at the end of the second year and the adjustment to the coupon rate for the following year as the end of the
fourth year. If the issuer does not exercise the option to adjust the coupon rate, the coupon rate for the subsequent term
will remain unchanged. After issuing the announcement on whether the coupon rate of the relevant tranche of bonds
will be adjusted and the range of adjustment, the investors have the right to register for reselling during the period as
announced to resell all or part of the relevant tranche of bonds held to the issuer at par value.
The Company chose to lower the coupon rate of “18 Chenming Bond 01” to 6.50% at the end of the fourth year as
agreed in the Prospectus on the Public Issuance of the Corporate Bonds of Shandong Chenming Paper Holdings
Limited to Qualified Investors in 2018 (phase I). Bondholders of “18 Chenming Bond 01” could declare resale in whole
or in part for “18 Chenming Bond 01” bonds they held on 28 February, 1 March, 2 March, 3 March and 4 March 2022
at a resale price of RMB100 per bond (interests exclusive). According to the data provided by the Shenzhen Branch of
China Securities Depository and Clearing Corporation Limited, the amount of the “18 Chenming Bond 01” for this resale
was 1,955,000.00, and the total amount of the resale was RMB195,500,000.00 (interests exclusive) with a remaining
custodial amount of 1,545,000.00.
From 8 April 2022 to 30 April 2022, the Company handled the resale of bonds to be resold in accordance with relevant
regulations. The number of resale bonds completed was 1,955,000.00 at an average resale price of RMB100 per bond.
Upon the completion of the resale, there were no bonds that had not been resold, and the remaining custodial amount
of “18 Chenming Bond 01” was 3,500,000.00.
For details, please refer to the relevant announcements (announcement no.: 2022-004, 2022-005, 2022-006, 2022-025,
2022-028 and 2022-031) of the Company published on CNINFO on 25 February, 1 March, 3 March, 31 March, 7 April
and 10 May 2022.
3. Adjustment of credit rating results during the reporting period
√ Applicable Not applicable
On 26 May 2022, China Chengxin International Credit Rating Co., Ltd. (“China Chengxin International”) issued the
Follow-up Rating Report (2022) with Respect to the Public Issuance of the Corporate Bonds of Shandong Chenming
Paper Holdings Limited to Qualified Investors in 2018 (phase I) (Xin Ping Wei Han Zi [2022] Gen Zong No. 0343). China
Chengxin International adjusted the issuer credit rating of the Company at AA+, the credit rating of “18 Chenming Bond
01” at AA+, and the negative rating outlook, to: the issuer credit rating of the Company at AA+ and the credit rating of “18
Chenming Bond 01” at AA+ unchanged, and the issuer and debt credit ratings included in the credit rating watch list.
For further details, please refer to the Follow-up Rating Report (2022) with Respect to the Public Issuance of the
Corporate Bonds of Shandong Chenming Paper Holdings Limited to Qualified Investors in 2018 (phase I) disclosed on
CNINFO on 26 May 2022.
4. 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
”18 Chenming Bond 01” bonds are unsecured bonds. During the reporting period, the Company was able to strictly
implement the debt repayment plan, and paid the interest on time and in full according to the time stipulated in the
prospectus. Its debt repayment plan and other debt repayment guarantee measures remained changed, and were
consistent with the relevant commitments in the prospectus.
54 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
IX Bonds
III. Non-financial corporate debt financing instruments
√ Applicable Not applicable
1. Basic information of non-financial corporate debt financing instruments
Outstanding
amount of
Bond Maturity the bonds
Name of bond abbreviation Bond code Issue date Value date date (RMB) Interest rate Payment method Trading venue
2017 first tranche of 17 Lu 101779001 11 July 12 July N/A 1,000,000,000.00 8.97% Perpetual mid-term Inter-bank bond
medium-term notes of Chenming 2017 2017 notes. Interest is paid market
Shandong Chenming MTN001 annually and the principal
Paper Holdings Limited is repaid upon maturity.
2019 first tranche of 19 Lu 101900930 15 July 17 July 17 July 700,000,000.00 6.5% Interest is paid annually Inter-bank bond
medium-term notes of Chenming 2019 2019 2022 and the principal is market
Shandong Chenming MTN001 repaid upon maturity.
Paper Holdings Limited
2019 second tranche of 19 Lu 101901058 9 August 13 August 13 August 500,000,000.00 6.5% Interest is paid annually Inter-bank bond
medium-term notes of Chenming 2019 2019 2022 and the principal is market
Shandong Chenming MTN002 repaid upon maturity.
Paper 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
3. Adjustment of credit rating results during the reporting period
√ Applicable Not applicable
On 26 May 2022, China Chengxin International issued the Follow-up Rating Report of Shandong Chenming Paper
Holdings Limited 2022 (Xin Ping Wei Han Zi [2022] Gen Zong No. 0345). China Chengxin International adjusted the issuer
credit rating of the Company at AA+, the credit ratings of “17 Lu Chenming MTN001”, “18 Lu Chenming MTN002”, “19
Lu Chenming MTN001” and “19 Lu Chenming MTN002” at AA+, and the negative rating outlook, to: the issuer credit
rating of the Company at AA+ and the credit ratings of “17 Lu Chenming MTN001”, “18 Lu Chenming MTN002”, “19 Lu
Chenming MTN001” and “19 Lu Chenming MTN002” at AA+ unchanged, and the issuer and debt credit ratings included
in the credit rating watch list.
For further details, please refer to the Follow-up Rating Report of Shandong Chenming Paper Holdings Limited 2022
disclosed on Chinamoney on 26 May 2022.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 55
INTERIM REPORT 2022
IX Bonds
III. Non-financial corporate debt financing instruments (Cont’d)
4. 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
“17 Lu Chenming MTN001”, “19 Lu Chenming MTN001” and “19 Lu Chenming MTN002” are not guaranteed. During the
reporting period, the Company was able to strictly implement the debt repayment plans, and paid the interest on time
and in full according to the time stipulated in the prospectuses. Their debt repayment plans and other debt repayment
guarantee measures remained changed, which were consistent with the relevant commitments in the prospectuses.
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. Major accounting data and financial indicators of the Company over the past two years as at
the end of the reporting period
Unit: RMB’0,000
Increase/decrease
as at the end of
the reporting period
as compared to
As at the end of As at the end of the end of the
Item the reporting period the prior year prior year
Current ratio 68.50% 65.05% 3.45%
Gearing ratio 72.89% 72.78% 0.11%
Quick ratio 58.10% 54.59% 3.51%
Increase/decrease
of the reporting
period as
compared to
The corresponding corresponding
period of the period of the
The reporting period prior year prior year
Net profit after extraordinary gains or losses 17,340.79 196,471.82 -91.17%
Proportion of EBITDA to total debts 4.25% 8.97% -4.72%
Interest coverage ratio 1.33 2.99 -55.52%
Cash interest coverage ratio 2.11 4.70 -55.11%
EBITDA interest coverage ratio 2.72 4.00 -32.00%
Loans payment ratio 100.00% 100.00% 0.00%
Interest payment ratio 100.00% 100.00% 0.00%
56 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
X Financial Report
I. Auditors’ Report
Is the interim report audited
Yes √ No
The interim financial report is unaudited.
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
30 June 2022
Unit: RMB
Item 30 June 2022 31 December 2021
CURRENT ASSETS:
Monetary funds 14,958,681,361.91 14,119,782,939.66
Financial assets held for trading 51,033,051.57 110,886,182.88
Bills receivable 742,590,000.00 –
Accounts receivable 3,344,874,025.14 2,656,517,150.46
Accounts receivable financing 912,727,537.75 435,459,341.76
Prepayments 1,029,462,815.63 891,485,078.46
Other receivables 2,211,345,141.22 2,252,864,083.00
Including: Interest receivable – –
Dividend receivable 3,501,220.33 –
Inventories 5,388,568,445.28 5,282,631,922.12
Non-current assets due within one year 5,216,044,182.27 5,216,934,172.61
Other current assets 1,415,587,270.63 1,903,929,492.85
Total current assets 35,270,913,831.40 32,870,490,363.80
NON-CURRENT ASSETS:
Long-term receivables 1,727,573,276.15 1,788,759,975.35
Long-term equity investments 1,924,214,471.31 1,866,587,685.35
Other non-current financial assets 519,927,003.25 519,927,003.25
Investment property 6,357,996,507.32 6,473,538,431.91
Fixed assets 34,390,613,468.18 35,653,492,676.15
Construction in progress 802,407,685.01 197,749,526.05
Bearer biological assets 10,398,523.90 –
Right-of-use assets 188,830,653.76 197,429,176.44
Intangible assets 1,870,500,853.55 1,592,672,934.54
Goodwill 26,946,905.38 26,946,905.38
Long-term prepaid expenses 47,413,231.29 49,141,773.14
Deferred income tax assets 1,164,178,754.33 1,114,781,456.78
Other non-current assets 884,665,880.41 489,936,694.10
Total non-current assets 49,915,667,213.84 49,970,964,238.44
Total assets 85,186,581,045.24 82,841,454,602.24
SHANDONG CHENMING PAPER HOLDINGS LIMITED 57
INTERIM REPORT 2022
X Financial Report
II. Financial Statements (Cont’d)
1. Consolidated Balance Sheet (Cont’d)
Item 30 June 2022 31 December 2021
CURRENT LIABILITIES:
Short term borrowings 36,359,663,944.57 33,523,025,186.22
Bills payable 4,035,081,278.85 3,089,512,327.40
Accounts payable 3,268,986,931.66 3,871,131,345.34
Receipts in advance 26,735,329.19 38,274,028.20
Contract liabilities 1,334,133,746.95 1,382,289,597.54
Employee benefits payable 130,627,751.53 169,899,008.01
Taxes payable 176,062,048.68 321,495,480.67
Other payables 1,544,415,534.74 1,538,013,585.93
Including: Interest payable 65,975,461.61 55,437,777.80
Dividend payable – –
Non-current liabilities due within one year 4,558,351,674.18 6,601,311,227.98
Other current liabilities – –
Total current liabilities 51,434,058,240.35 50,534,951,787.29
NON-CURRENT LIABILITIES:
Long-term borrowings 5,363,235,057.03 5,276,340,154.98
Bonds payable – 155,000,000.00
Including: Preference shares – –
Perpetual Bonds – –
Lease liabilities 54,751,617.05 57,281,205.81
Long-term payables 3,383,399,934.07 2,358,901,022.99
Provisions 325,259,082.28 325,259,082.28
Deferred income 1,521,325,740.88 1,573,681,684.25
Deferred income tax liabilities 12,761,398.95 13,210,529.74
Other non-current liabilities – –
Total non-current liabilities 10,660,732,830.26 9,759,673,680.05
Total liabilities 62,094,791,070.61 60,294,625,467.34
OWNERS’ EQUITY:
Share capital 2,984,208,200.00 2,984,208,200.00
Other equity instruments 996,000,000.00 996,000,000.00
Including: Preference shares – –
Perpetual Bonds 996,000,000.00 996,000,000.00
Capital reserves 5,250,084,902.32 5,282,805,114.62
Less: Treasury shares 226,860,000.00 226,860,000.00
Other comprehensive income -596,159,006.77 -445,582,729.36
Surplus reserves 1,212,009,109.97 1,212,009,109.97
General risk provisions 76,825,918.60 76,825,918.60
Retained profit 9,524,268,170.62 9,210,372,613.81
Total equity attributable to owners of the Company 19,220,377,294.74 19,089,778,227.64
Minority interest 3,871,412,679.89 3,457,050,907.26
Total owners’ equity 23,091,789,974.63 22,546,829,134.90
Total liabilities and owners’ equity 85,186,581,045.24 82,841,454,602.24
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
58 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
X Financial Report
II. Financial Statements (Cont’d)
2. Balance sheet of the Company
Unit: RMB
Item 30 June 2022 31 December 2021
CURRENT ASSETS:
Monetary funds 7,063,348,459.37 6,827,656,382.37
Bills receivable 3,955,040,000.00 3,625,270,000.00
Accounts receivable 1,214,929,356.15 141,601,245.51
Accounts receivable financing 343,168,472.49 7,923,732.09
Prepayments 452,913,807.74 239,461,509.15
Other receivables 8,021,857,221.76 8,900,179,262.54
Including: Interest receivable – –
Dividend receivable – 126,325,018.50
Inventories 691,539,694.58 639,423,803.30
Non-current assets due within one year 13,795,169.59 –
Other current assets 142,455,846.78 44,894,366.29
Total current assets 21,899,048,028.46 20,426,410,301.25
NON-CURRENT ASSETS:
Long-term receivables 14,401,926.55 13,612,038.99
Long-term equity investments 18,826,252,125.87 18,806,029,815.18
Other non-current financial assets 119,927,003.25 119,927,003.25
Fixed assets 3,638,101,674.93 3,753,927,591.49
Construction in progress 120,165,950.03 94,436,880.66
Intangible assets 512,652,321.51 520,068,337.11
Deferred income tax assets 409,761,599.79 393,918,032.54
Other non-current assets 48,375,235.23 7,000,000.00
Total non-current assets 23,689,637,837.16 23,708,919,699.22
Total assets 45,588,685,865.62 44,135,330,000.47
CURRENT LIABILITIES:
Short-term borrowings 14,903,735,390.93 13,761,223,259.09
Bills payable 9,210,957,194.28 9,725,713,524.15
Accounts payable 1,824,630,352.59 1,129,675,956.85
Receipts in advance – –
Contract liabilities 1,338,045,087.62 888,114,906.08
Staff remuneration payables 59,016,682.93 57,487,223.39
Tax payables 10,423,309.95 115,257,929.68
Other payables 670,688,794.45 970,585,670.47
Including: Interest payable 77,790,375.01 55,437,777.80
Dividend receivable – –
Non-current liabilities due within one year 1,901,997,326.57 2,111,092,964.34
Other current liabilities – –
Total current liabilities 29,919,494,139.32 28,759,151,434.05
SHANDONG CHENMING PAPER HOLDINGS LIMITED 59
INTERIM REPORT 2022
X Financial Report
II. Financial Statements (Cont’d)
2. Balance sheet of the Company (Cont’d)
Item 30 June 2022 31 December 2021
NON-CURRENT LIABILITIES:
Long-term borrowings 1,838,330,770.83 1,779,135,700.00
Bonds payable – 155,000,000.00
Long-term payables 293,666,383.24 52,376,768.35
Provisions 325,259,082.28 325,259,082.28
Deferred income 34,111,573.96 35,232,490.83
Deferred income tax liabilities – –
Other non-current liabilities – –
Total non-current liabilities 2,491,367,810.31 2,347,004,041.46
Total liabilities 32,410,861,949.63 31,106,155,475.51
OWNERS’ EQUITY:
Share capital 2,984,208,200.00 2,984,208,200.00
Other equity instruments 996,000,000.00 996,000,000.00
Including: Preference shares – –
Perpetual Bonds 996,000,000.00 996,000,000.00
Capital reserves 5,147,515,323.53 5,154,365,336.31
Less: Treasury shares 226,860,000.00 226,860,000.00
Other comprehensive income – –
Surplus reserves 1,199,819,528.06 1,199,819,528.06
Retained profit 3,077,140,864.40 2,921,641,460.59
Total owners’ equity 13,177,823,915.99 13,029,174,524.96
Total liabilities and owners’ equity 45,588,685,865.62 44,135,330,000.47
60 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
X Financial Report
II. Financial Statements (Cont’d)
3. Consolidated Income Statement
Unit: RMB
Item First half of 2022 First half of 2021
I. Total revenue 16,676,428,365.83 17,172,816,354.53
Including: Revenue 16,676,428,365.83 17,172,816,354.53
II. Total operating costs 16,436,429,464.84 14,740,489,809.82
Including: Operating costs 14,054,949,279.20 11,861,060,977.92
Taxes and surcharges 116,108,890.55 163,794,026.94
Sales and distribution expenses 138,055,763.65 147,622,738.74
General and administrative expenses 422,766,365.85 492,048,555.49
Research and development expense 683,514,560.93 757,021,354.57
Finance expenses 1,021,034,604.66 1,318,942,156.16
Including: Interest expenses 991,475,816.56 1,399,107,777.11
Interest income 150,582,370.85 221,507,514.16
Plus: Other income 149,264,611.68 123,098,748.58
Investment income (“-” denotes loss) -24,138,176.90 98,631,701.79
Including: Investment income from associates and
joint ventures 26,616,556.58 82,955,115.52
Gain on change in fair value
(“-” denotes loss) -58,813,415.49 -99,119,691.89
Credit impairment loss (“-” denotes loss) -25,363,341.17 -279,757,983.46
Loss on impairment of assets
(“-” denotes loss) 1,936,644.09 –
Gain on disposal of assets
(“-” denotes loss) 1,605,314.49 48,920,358.12
III. Operating profit (“-” denotes loss) 284,490,537.69 2,324,099,677.85
Plus: Non-operating income 1,093,429.33 18,721,283.64
Less: Non-operating expenses 10,202,739.60 2,332,530.96
IV. Total profit (“-” denotes loss) 275,381,227.42 2,340,488,430.53
Less: Income tax expenses 1,378,726.69 274,057,779.20
V. Net profit (“-” denotes loss) 274,002,500.73 2,066,430,651.33
(I) Classification according to the continuity of operation
1. Net profit from continuing operations
(“-” denotes loss) 274,002,500.73 2,066,430,651.33
2. Net profit from discontinued operations
(“-” denotes loss) – –
(II) Classification according to ownership
1. Net profit attributable to shareholders of
the Company 230,141,463.76 2,021,095,417.54
2. Profit or loss of minority interest 43,861,036.97 45,335,233.79
VI. Net other comprehensive income after tax -150,576,277.41 50,956,682.73
Net other comprehensive income after tax attributable to
shareholders of the Company -150,576,277.41 50,956,682.73
(I) Other comprehensive income that cannot be
reclassified to profit and loss in subsequent periods – –
(II) Other comprehensive income that will be reclassified
to profit and loss in subsequent periods -150,576,277.41 50,956,682.73
1. Other comprehensive income that may be
reclassified to profit or loss under the equity
method 4,743,150.54 –
2. Exchange differences arising from translation
of financial statements denominated in
foreign currencies -155,319,427.95 50,956,682.73
Other comprehensive income, net of tax attributable to
non-controlling interests – –
SHANDONG CHENMING PAPER HOLDINGS LIMITED 61
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II. Financial Statements (Cont’d)
3. Consolidated income statement (Cont’d)
Item First half of 2022 First half of 2021
VII. Total comprehensive income 123,426,223.32 2,117,387,334.06
Total comprehensive income attributable to shareholders of
the Company 79,565,186.35 2,072,052,100.27
Total comprehensive income attributable to minority interest 43,861,036.97 45,335,233.79
VIII. Earnings per share:
(I) Basic earnings per share 0.064 0.604
(II) Diluted earnings per share 0.064 0.604
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
62 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
II. Financial Statements (Cont’d)
4. Income statement of the Company
Unit: RMB
Item First half of 2022 First half of 2021
I. Revenue 3,746,662,856.50 4,683,453,465.64
Less: Operating costs 3,381,230,045.73 3,511,074,075.94
Taxes and surcharges 14,470,073.85 42,172,707.76
Sales and distribution expenses 3,847,240.05 6,054,328.93
General and administrative expenses 89,156,653.40 133,937,050.37
Research and development expense 165,518,080.69 183,256,544.45
Finance expenses 210,696,803.24 206,076,531.65
Including: Interest expenses 333,394,473.97 442,271,605.59
Interest income 230,217,851.40 304,371,806.49
Plus: Other income 24,145,213.86 2,494,987.66
Investment income (“-” denotes loss) 237,259,432.75 2,679,672,292.80
Including: Investment income from associates and joint
ventures -5,337,689.31 -4,587,981.17
Gains on changes in fair value (“-” denotes loss) – –
Credit impairment loss (“-” denotes loss) -722,675.75 29,056,014.19
Loss on impairment of assets (“-” denotes loss) – –
Gain on disposal of assets (“-” denotes loss) 172,652.98 4,656,034.96
II. Operating profit (“-” denotes loss) 142,598,583.38 3,316,761,556.15
Plus: Non-operating income 61,000.00 486,916.50
Less: Non-operating expenses 3,003,746.82 389,511.26
III. Total profit (“-” denotes total loss) 139,655,836.56 3,316,858,961.39
Less: Income tax expenses -15,843,567.25 74,345,014.02
IV. Net profit (“-” denotes net loss) 155,499,403.81 3,242,513,947.37
(I) Net profit from continuing operations
(“-” denotes net loss) 155,499,403.81 3,242,513,947.37
V. Net other comprehensive income after tax – –
(I) Other comprehensive income that cannot be
reclassified to profit and loss in subsequent periods – –
(II) Other comprehensive income that will be
reclassified to profit and loss in subsequent periods – –
VI. Total comprehensive income 155,499,403.81 3,242,513,947.37
VII. Earnings per share:
(I) Basic earnings per share – –
(II) Diluted earnings per share – –
SHANDONG CHENMING PAPER HOLDINGS LIMITED 63
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II. Financial Statements (Cont’d)
5. Consolidated cash flow statement
Unit: RMB
Item First half of 2022 First half of 2021
I. Cash flows from operating activities:
Cash received from sales of goods and rendering of services 16,841,914,152.37 19,245,544,236.25
Tax rebates received 697,745,590.84 1,118,668.30
Cash received relating to other operating activities 833,956,367.80 1,036,500,713.48
Subtotal of cash inflows from operating activities 18,373,616,111.01 20,283,163,618.03
Cash paid for goods and services 15,019,129,399.82 12,689,406,657.79
Cash paid to and for employees 721,958,063.20 639,736,604.16
Payments of taxes and surcharges 635,688,016.57 1,207,344,439.05
Cash paid relating to other operating activities 998,576,421.97 999,490,395.09
Subtotal of cash outflows from operating activities 17,375,351,901.56 15,535,978,096.09
Net cash flows from operating activities 998,264,209.45 4,747,185,521.94
II. Cash flows from investing activities:
Cash received from investments – 20,000,000.00
Cash received from investment income 4,740,000.00 36,500,000.00
Net cash received from disposal of fixed assets, intangible
assets and other long-term assets 3,921,115.56 104,108,628.71
Net cash received from disposal of subsidiaries and
other business units – 4,503,417.80
Cash received relating to other investing activities – 251,414,794.52
Subtotal of cash inflows from investing activities 8,661,115.56 416,526,841.03
Cash paid for purchase of fixed assets, intangible assets
and other long-term assets 815,285,839.39 221,876,188.00
Cash paid on investments – 1,100,000,000.00
Subtotal of cash outflows from investing activities 815,285,839.39 1,321,876,188.00
Net cash flows from investing activities -806,624,723.83 -905,349,346.97
64 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
II. Financial Statements (Cont’d)
5. Consolidated cash flow statement (Cont’d)
Item First half of 2022 First half of 2021
III. Cash flows from financing activities:
Cash received from investments 400,000,000.00 2,500,000,000.00
Including: Cash received from subsidiaries from minority
investment 400,000,000.00 2,500,000,000.00
Cash received from borrowings 17,740,613,294.18 15,114,516,924.13
Cash received relating to other financing activities 2,078,910,644.82 2,734,332,351.51
Subtotal of cash inflows from financing activities 20,219,523,939.00 20,348,849,275.64
Cash repayments of amounts borrowed 16,096,915,969.19 16,987,908,936.87
Cash paid for dividend and profit distribution or interest
payment 1,053,952,956.06 1,427,506,125.27
Including: Dividend and profit paid by subsidiaries to
minority shareholders – 48,309,125.87
Cash paid relating to other financing activities 3,310,774,061.40 5,519,292,287.81
Subtotal of cash outflows from financing activities 20,461,642,986.65 23,934,707,349.95
Net cash flows from financing activities -242,119,047.65 -3,585,858,074.31
IV. Effect of foreign exchange rate changes on cash and
cash equivalents 24,169,806.97 -19,367,887.88
V. Net increase in cash and cash equivalents -26,309,755.06 236,610,212.78
Plus: Balance of cash and cash equivalents as at the
beginning of the period 3,168,915,847.02 4,389,169,963.79
VI. Balance of cash and cash equivalents as at the end of
the period 3,142,606,091.96 4,625,780,176.57
SHANDONG CHENMING PAPER HOLDINGS LIMITED 65
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X Financial Report
II. Financial Statements (Cont’d)
6. Cash flow statement of the Company
Unit: RMB
Item First half of 2022 First half of 2021
1. Cash flows from operating activities:
Cash received from sales of goods and rendering of services 3,937,092,906.31 5,570,459,385.98
Tax rebates received 9,335,732.78 90,900.00
Cash received relating to other operating activities 268,488,989.46 163,966,043.41
Subtotal of cash inflows from operating activities 4,214,917,628.55 5,734,516,329.39
Cash paid for goods and services 3,559,003,036.92 3,201,957,139.47
Cash paid to and for employees 168,707,495.45 175,948,976.35
Payments of taxes and surcharges 146,897,297.11 176,576,815.11
Cash paid relating to other operating activities 255,001,227.95 301,406,268.10
Subtotal of cash outflows from operating activities 4,129,609,057.43 3,855,889,199.03
Net cash flows from operating activities 85,308,571.12 1,878,627,130.36
II. Cash flows from investing activities:
Cash received from investments – 20,000,000.00
Cash received from investment income 401,816,698.06 2,284,760,273.97
Net cash received from disposal of fixed assets, intangible
assets and other long-term assets 3,527,572.65 847,248.68
Cash received relating to other investing activities – 251,414,794.52
Subtotal of cash inflows from investing activities 405,344,270.71 2,557,022,317.17
Cash paid for purchase of fixed assets, intangible assets
and other long-term assets 12,870,064.02 –
Cash paid on investments – 882,210,000.00
Cash paid relating to other investing activities – –
Subtotal of cash outflows used in investing activities 12,870,064.02 882,210,000.00
Net cash flows from investing activities 392,474,206.69 1,674,812,317.17
66 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
II. Financial Statements (Cont’d)
6. Cash flow statement of the Company (Cont’d)
Item First half of 2022 First half of 2021
III. Cash flows from financing activities:
Cash received from borrowings 10,531,501,508.20 10,020,478,661.27
Cash received relating to other financing activities 247,000,000.00 156,665,920.24
Subtotal of cash inflows from financing activities 10,778,501,508.20 10,177,144,581.51
Cash repayments of amounts borrowed 10,584,544,305.53 8,736,105,095.52
Cash paid for dividend and profit distribution or
interest payment 320,363,139.80 219,435,214.79
Cash paid relating to other financing activities 307,022,816.27 4,871,112,670.18
Subtotal of cash outflows from financing activities 11,211,930,261.60 13,826,652,980.49
Net cash flows from financing activities -433,428,753.40 -3,649,508,398.98
IV. Effect of foreign exchange rate changes on cash and cash
equivalents 6,179,448.15 2,460,284.82
V. Net increase in cash and cash equivalents 50,533,472.56 -93,608,666.63
Plus: Balance of cash and cash equivalents as at the
beginning of the period 893,454,314.56 301,284,723.52
VI. Balance of cash and cash equivalents as at the end of the
period 943,987,787.12 207,676,056.89
SHANDONG CHENMING PAPER HOLDINGS LIMITED 67
INTERIM REPORT 2022
68
II. Financial Statements (Cont’d)
7. Consolidated statement of changes in owners’ equity
Amounts for the period
Unit: RMB
Item First half of 2022
Equity attributable to owners of the Company
INTERIM REPORT 2022
Other equity instruments Other
X Financial Report
Preference Perpetual Capital Less: comprehensive Special Surplus General risk Retained Minority Total
Share capital shares Bonds Others reserves treasury shares income reserves reserves provisions profit Others Subtotal interest owners’ equity
I. Balance as at the end of the prior year 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
Plus: Others – – – – -55,547,014.21 – – – – – 83,754,093.05 – 28,207,078.84 – 28,207,078.84
II. Balance as at the beginning of the year 2,984,208,200.00 – 996,000,000.00 – 5,227,258,100.41 226,860,000.00 -445,582,729.36 – 1,212,009,109.97 76,825,918.60 9,294,126,706.86 – 19,117,985,306.48 3,457,050,907.26 22,575,036,213.74
SHANDONG CHENMING PAPER HOLDINGS LIMITED
III. Changes in the period (“-” denotes decrease) – – – – 22,826,801.91 – -150,576,277.41 – – – 230,141,463.76 – 102,391,988.26 414,361,772.63 516,753,760.89
(I) Total comprehensive income – – – – – – -150,576,277.41 – – – 230,141,463.76 – 79,565,186.35 44,038,587.32 123,603,773.67
(II) Capital paid in and reduced by owners – – – – 22,826,801.91 – – – – – – – 22,826,801.91 370,323,185.31 393,149,987.22
1. Ordinary shares paid by owners – – – – – – – – – – – – – 370,323,185.31 370,323,185.31
2. Capital paid by holders of other equity
instruments – – – – – – – – – – – – – – –
3. Amount of share-based payments
recognised in owners’ equity – – – – -6,850,012.78 – – – – – – – -6,850,012.78 – -6,850,012.78
4. Others – – – – 29,676,814.69 – – – – – – – 29,676,814.69 – 29,676,814.69
(III) Profit distribution – – – – – – – – – – – – – – –
(IV) Transfer within owners’ equity – – – – – – – – – – – – – – –
IV. Balance as at the end of the period 2,984,208,200.00 – 996,000,000.00 – 5,250,084,902.32 226,860,000.00 -596,159,006.77 – 1,212,009,109.97 76,825,918.60 9,524,268,170.62 – 19,220,377,294.74 3,871,412,679.89 23,091,789,974.63
II. Financial Statements (Cont’d)
7. Consolidated statement of changes in owners’ equity (Cont’d)
Amounts for the prior year
Unit: RMB
Item First half of 2021
Equity attributable to owners of the Company
Other equity instruments Other
X Financial Report
Preference Perpetual Capital Less: comprehensive Special Surplus General risk Retained Minority Total
Share capital shares Bonds Others reserves treasury shares income reserves reserves provisions profit Others Subtotal 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
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 9,999,764,028.74 – 24,276,968,789.00 1,523,294,926.24 25,800,263,715.24
III. Changes in the period (“-” denotes decrease) – -2,238,750,000.00 – – -62,515,691.49 – 57,905,699.87 – – – 1,261,950,931.88 – -981,409,059.74 2,414,621,834.30 1,433,212,774.56
(I) Total comprehensive income – – – – – – 57,905,699.87 – – – 2,021,095,417.54 – 2,079,001,117.41 45,335,233.79 2,124,336,351.20
(II) Capital paid in and reduced by owners – -2,238,750,000.00 – – -62,515,691.49 – – – – – – – -2,301,265,691.49 2,417,595,726.38 116,330,034.89
1. Ordinary shares paid by owners – – – – – – – – – – – – – 2,417,595,726.38 2,417,595,726.38
2. Capital paid by holders of other equity
instruments – -2,238,750,000.00 – – -11,250,000.00 – – – – – – – -2,250,000,000.00 – -2,250,000,000.00
3. Amount of share-based payments
recognised in owners’ equity – – – – 26,330,034.89 – – – – – – – 26,330,034.89 – 26,330,034.89
4. Others – – – – -77,595,726.38 – – – – – – – -77,595,726.38 – -77,595,726.38
(III) Profit distribution – – – – – – – – – – -759,144,485.66 – -759,144,485.66 -48,309,125.87 -807,453,611.53
1. Distribution to owners (or shareholders) – – – – – – – – – – -759,144,485.66 – -759,144,485.66 -48,309,125.87 -807,453,611.53
IV. Balance as at the end of the period 2,984,208,200.00 2,238,750,000.00 996,000,000.00 – 5,259,395,722.26 226,860,000.00 -503,780,907.79 – 1,212,009,109.97 74,122,644.20 11,261,714,960.62 – 23,295,559,729.26 3,937,916,760.54 27,233,476,489.80
INTERIM REPORT 2022
SHANDONG CHENMING PAPER HOLDINGS LIMITED
69
70
II. Financial Statements (Cont’d)
8. Statement of changes in owners’ equity of the Company
Amounts for the period
Unit: RMB
Item First half of 2022
Other equity instruments Other
INTERIM REPORT 2022
Preference Perpetual Less: comprehensive Special Surplus Total
X Financial Report
Share capital shares Bonds Others Share capital Treasury shares income reserves reserves Retained profit Others owners’ equity
I. Balance as at the end of the prior year 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
II. Balance as at the beginning of the year 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
III. Changes in the period
(“-” denotes decrease) – – – – -6,850,012.78 – – – – 155,499,403.81 – 148,649,391.03
SHANDONG CHENMING PAPER HOLDINGS LIMITED
(I) Total comprehensive income – – – – – – – – – 155,499,403.81 – 155,499,403.81
(II) Capital paid in and reduced by owners – – – – -6,850,012.78 – – – – – – -6,850,012.78
1. Amount of share-based payments
recognised in owners’ equity – – – – -6,850,012.78 – – – – – – –6,850,012.78
(III) Profit distribution – – – – – – – – – – – –
(IV) Transfer within owners’ equity – – – – – – – – – – – –
IV. Balance as at the end of the period 2,984,208,200.00 – 996,000,000.00 – 5,147,515,323.53 226,860,000.00 – – 1,199,819,528.06 3,077,140,864.40 – 13,177,823,915.99
II. Financial Statements (Cont’d)
8. Statement of changes in owners’ equity of the Company (Cont’d)
Amounts for the prior year
Unit: RMB
Item First half of 2021
Other equity instruments Other
Preference Perpetual Less: comprehensive Special Surplus Total
X Financial Report
Share capital shares Bonds Others Share capital Treasury shares income reserves reserves Retained profit Others 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 – 5,124,308,464.42 226,860,000.00 – – 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) – -2,238,750,000.00 – – 15,080,034.89 – – – – 2,483,369,461.71 – 259,699,496.60
(I) Total comprehensive income – – – – – – – – – 3,242,513,947.37 – 3,242,513,947.37
(II) Capital paid in and reduced by owners – -2,238,750,000.00 – – 15,080,034.89 – – – – – – -2,223,669,965.11
1. Capital paid by holders of other
equity instruments – -2,238,750,000.00 – – -11,250,000.00 – – – – – – -2,250,000,000.00
2. Amount of share-based payments
recognised in owners’ equity – – – – 26,330,034.89 – – – – – – 26,330,034.89
(III) Profit distribution – – – – – – – – – -759,144,485.66 – -759,144,485.66
1. Distribution to owners (or
shareholders) – – – – – – – – – -759,144,485.66 – -759,144,485.66
IV. Balance as at the end of the period 2,984,208,200.00 2,238,750,000.00 996,000,000.00 – 5,139,388,499.31 226,860,000.00 – – 1,199,819,528.06 3,201,615,409.43 – 15,532,921,636.80
INTERIM REPORT 2022
SHANDONG CHENMING PAPER HOLDINGS LIMITED
71
X 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 30 June 2022, 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 centre, supply chain management centre, business
department, marketing department, financial capital management centre, enterprise management centre, public utilities
centre, 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.
The financial statements and notes thereto were approved at the second meeting of the tenth session of the board of
directors of the Company (the “Board”) on 30 August 2022.
2. Scope of consolidation
Subsidiaries of the Company included in the scope of consolidation in 2022 totalled 75. For details, please refer to
Note IX “Equity in other entities”. The scope of consolidation of the Company during the year had one more company
included and one company less compared to the prior year. For details, please refer to Note VIII “Changes in the scope
of consolidation”.
72 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X 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. 36 “Revenue”. For the critical accounting judgments and estimates made by the management,
please refer to Note V. 40 “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 30 June 2022 and relevant information such as the operating
results and cash flows of the consolidated entity and the Company for the first half of 2022.
2. Accounting period
The accounting period of the Company is from 1 January to 31 December of each calendar year.
3. Operating cycle
The operating cycle of the Company lasts for 12 months.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 73
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
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.
(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.
74 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
5. Accounting treatment of business combinations under common control and not under common control
(Cont’d)
(2) Business combination not under common control (Cont’d)
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.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 75
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
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.
(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.
76 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
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.
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.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
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.
78 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
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.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(2) Classification and measurement of financial assets (Cont’d)
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.
80 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(2) Classification and measurement of financial assets (Cont’d)
Financial assets measured at fair value through profit or loss (Cont’d)
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.
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.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 81
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(3) Classification and measurement of financial liabilities (Cont’d)
Classification between financial liabilities and equity instruments (Cont’d)
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. 41.
(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).
82 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(5) Impairment of financial assets (Cont’d)
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.
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.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 83
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(5) Impairment of financial assets (Cont’d)
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
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.
84 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(5) Impairment of financial assets (Cont’d)
Long-term receivables
The Company’s long-term receivables include finance lease receivables and deposits receivable.
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.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(5) Impairment of financial assets (Cont’d)
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;
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.
86 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(5) Impairment of financial assets (Cont’d)
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.
(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.
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11. Bills receivable
Method for determining the ECLs of bills receivable
The Company measures the loss provisions for bills receivable in accordance with the ECLs amount for the entire
period. Based on the credit risk characteristics of bills receivable, bills receivable are divided into different groups:
Item Basis for determining the groups
Bank acceptance bills The acceptance party is a bank with less credit risk
Commercial acceptance bills The acceptance party is a company with higher credit risk
12. Accounts receivable
Method for determining the ECLs of accounts receivable
For receivables and contract assets that do not contain significant financing components, the Company measures loss
provisions based on the ECL amount for the entire period.
For receivables, contract assets and lease receivables that contain significant financing components, the Company
chooses to always measure the loss provision based on the ECL amount for the entire period.
In addition to accounts receivable and contract assets which are individually assessed for credit risk, they are also
classified into different groups based on their credit risk characteristics:
Item Basis for determining the groups
Amount due from related parties This group comprises amounts due from related parties with lower risks.
Factoring receivables This group comprises factoring receivables with special risks.
Amount due from distributor customers This group comprises receivables with their ageing as credit risk
characteristics.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
13. Accounts receivable financing
As for notes receivable and Accounts receivable that classified as measured at fair value through other comprehensive
income, the portion within one year (inclusive) from the date of acquisition is presented as financing receivables. For
relevant accounting policies, please refer to note V. 10. Financial instruments.
14. Other receivables
Determination and accounting treatment of ECLs of other receivables
The Company measures impairment losses using the ECL amount in the next 12 months or the entire duration, based
on whether the credit risk of other receivables has increased significantly upon initial recognition. In addition to other
receivables which are individually assessed for credit risk, they are also classified into different groups based on their
credit risk characteristics:
Item Basis for determining the groups
Dividends receivable This group comprises dividends receivable.
Interest receivable This group comprises interest due from financial institutions.
Amount due from government agencies This group comprises amount due from government agencies with less
risks.
Amount due from related parties This group comprises amount due from related parties with less risks.
Other receivables This group comprises for all types of deposits, advances and premiums
receivable during daily and recurring activities.
15. Inventories
(1) Classification of inventories
Inventories of the Company mainly include raw materials, work in progress, goods in stock, development products
and 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.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
15. Inventories (Cont’d)
(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 after-balance-
sheet-date events.
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 Group are amortised when issued for use.
Packaging materials for turnover are amortised when issued for use.
16. Contract assets
Contract assets are the Company’s right to consideration in exchange for goods that the Company has transferred to
customers when that right is conditioned on something other than the passage of time. The Company’s unconditional
right to receive consideration from customers (only the passage of time is required) is accounted for as accounts
receivable.
The methods for determination and accounting treatment of the ECLs on contract assets are detailed in Note V. 10
Financial instruments.
17. Contract costs
Contract costs are either the incremental costs of obtaining a contract with a customer or the costs to fulfil a contract
with a customer.
Incremental costs of obtaining a contract are those costs that the Company incurs to obtain a contract with a customer
that it would not have incurred if the contract had not been obtained e.g. an incremental sales commission. The
Company recognises as an asset the incremental costs of obtaining a contract with a customer if it expects to recover
those costs. Other costs of obtaining a contract are expensed when incurred.
If the costs to fulfil a contract with a customer are not within the scope of inventories or other accounting standards,
the Company recognises an asset from the costs incurred to fulfil a contract only if those costs meet all of the following
criteria:
the costs relate directly to an existing contract or to a specifically identifiable anticipated contract, including direct
labour, direct materials, allocations of overheads (or similar costs), costs that are explicitly chargeable to the
customer and other costs that are incurred only because the Group entered into the contract;
the costs generate or enhance resources of the Company that will be used in satisfying (or in continuing to satisfy)
performance obligations in the future;
the costs are expected to be recovered.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
17. Contract costs (Cont’d)
Assets recognised for the incremental costs of obtaining a contract and assets recognised for the costs to fulfil a
contract (the “assets related to contract costs”) are amortised on a systematic basis that is consistent with the transfer
to the customer of the goods or services to which the assets relate and recognised in profit or loss for the current
period. An expense is recognised when incurred if the amortisation period is less than one year.
The Company recognises an impairment loss in profit or loss to the extent that the carrying amount of an asset related
to contract costs exceeds:
remaining amount of consideration that the Company expects to receive in exchange for the goods or services to
which the asset relates;
the cost estimated to be happened for the transfer of related goods or services.
The costs of contract performance recognised as assets, if the amortisation period is less than one year or a normal
operating cycle upon the initial recognition, are presented as “Inventories” item, and if the amortisation period is more
than one year or a normal operating cycle upon the initial recognition, are presented as “Other non-current assets” item.
The contract obtaining costs recognised as assets, if the amortisation period is less than one year or a normal operating
cycle upon the initial recognition, are presented as “Other current assets” item, and if the amortisation period is more
than one year or a normal operating cycle upon the initial recognition, are presented as “Other non-current assets” item.
18. Assets held for sale
A non-current asset or disposal group is classified as held for sale if its carrying amount will be recovered principally
through a sale transaction (including a non-monetary asset exchange with commercial substance) rather than through
continuing use.
The aforesaid non-current asset does not include the investment property subsequently measured at fair value, the
biological assets measured at the net amount of the fair value deducting the sales expense, the assets generated from
remuneration, financial assets, deferred income tax assets and rights from insurance contract.
A disposal group is a group of assets to be disposed of together as a whole by sale or other means in a transaction, and
liabilities directly associated with those assets that will be transferred in the transaction. In certain circumstances, the
disposal group includes the goodwill acquired in the business combination.
A non-current asset or a disposal group is classified as held for sale if it meets all of the following conditions: the
noncurrent asset or disposal group is available for immediate sale in its present condition subject only to terms that
are usual and customary for sales of such asset or disposal group; the sale is highly probable, i.e. a sale plan has been
resolved and a firm purchase commitment has been obtained, and the sale is expected to be completed within one year.
When the Group loses control of a subsidiary due to reasons such as disposal of investment in a subsidiary, regardless
of whether the Group retains part of the equity investment after the disposal, when the investment in a subsidiary
intended to be disposed of meets the conditions for classification as held for sale, the investment in a subsidiary is
classified as held for sale as a whole in the separate financial statements, and all assets and liabilities of the subsidiary
are classified as held for sale in the consolidated financial statements.
When the non-current assets or disposal groups held for sale are initially measured or remeasured at the balance sheet
date, the excess of the carrying amount over the net amount of the fair value less selling expenses is recognised as
asset impairment loss. For the amount of impairment loss recognised on disposal groups held for sale, the carrying
amount of the goodwill of the disposal group shall be offset against first, and then be offset against the carrying amount
of non-current assets according to the proportion of the carrying amount of non-current assets.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
18. Assets held for sale (Cont’d)
If the net amount of the fair value of the non-current assets or disposal groups held for sale less the selling expenses
increases on the subsequent balance sheet date, the amount previously written down shall be recovered and reversed
in the amount of asset impairment loss recognised after be classified as held for sale, and the reversed amount shall be
included in the current profit and loss. The carrying amount of goodwill written off shall not be reversed.
Non-current assets held for sale and assets in disposal group held for sale are not depreciated or amortised. Interest
and other expenses of a disposal group classified as held for sale continue to be recognised. For all or part of an
investment in an associate or a joint venture that is classified as held for sale, the part of being classified as held for sale
shall cease to be accounted for using the equity method, while any retained portion (not classified as held for sale) shall
continue to be accounted for using the equity method; The Group ceases to use the equity method from the date when
the Group ceases to have significant influence over an associate or a joint venture.
If a non-current asset or disposal group is classified as held for sale but subsequently no longer meets the criteria for
being classified as held for sale, the Group shall cease to classify it as held for sale and measure it at the lower of:
(1) the carrying amount of the asset or disposal group before being classified as held for sale is adjusted by the
depreciation, amortisation or impairment that would have been recognised if the asset or disposal group had not
been classified as held for sale;
(2) recoverable amount.
19. Long-term receivables
The Company measures the impairment loss of long-term receivables at an amount equal to the ECLs in the next 12
months or the lifetime ECLs, depending on whether its credit risk has significantly increased upon initial recognition.
Other than the long-term receivables assessed individually for credit risks, long-term receivables are classified into
different groups based on their credit risk characteristics:
Item Basis for determining the groups
Long-term receivables not yet past due The group is comprised of long-term receivables not yet past due with
normal exposures.
Long-term receivables overdue This group is comprised of long-term receivables with higher past due
exposures.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
20. 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.
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 Company’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 Company 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.
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20. Long-term equity investments (Cont’d)
(2) Subsequent measurement and method for profit or loss recognition (Cont’d)
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.
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.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
20. Long-term equity investments (Cont’d)
(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.
(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. 28.
21. 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. 28.
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.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
22. 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.
(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 Estimated Annual
Depreciation of depreciation residual depreciation
Category method (Year) value (%) rate (%)
Housing and building structure Straight-line 20-40 5-10 2.25-4.75
method
Machinery and equipment Straight-line 8-20 5-10 4.50-11.88
method
Transportation equipment Straight-line 5-8 5-10 11.25-19.00
method
Electronic equipment and others Straight-line 5 5-10 18.00-19.00
method
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. 28.
(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.
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23. 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. 28.
24. 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.
(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.
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25. Biological assets
Bearer biological assets refer to biological assets held for the purpose of producing agricultural products, providing
labour services or renting, including economic forests, firewood forests, productive livestock and draught animals.
Bearer biological assets are initially measured at cost. The cost of a planted or propagated bearer biological asset
includes the expenses directly attributable to the asset and necessarily incurred before the asset is ready for its intended
production and operation, including the borrowing costs that are eligible for capitalisation.
The management, protection and feeding costs of a biological asset subsequent to crown closure or after the asset is
ready for its intended production and operation are expensed and recognised in profit or loss as incurred.
Depreciation of bearer biological assets is calculated using the straight-line method over the estimated useful life of
each biological asset less its residual value.
26. 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. 28.
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27. 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:
Type Useful life (year) Method of 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. 28.
28. 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.
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.
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28. Asset impairment (Cont’d)
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.
29. 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.
30. Contract liabilities
A contract liability represents the Company’s obligation to transfer goods to a customer for which the Company has
received consideration (or an amount of consideration is due) from the customer. If the customer has already paid
the contract consideration before the Company transfers goods to the customer or the Company has obtained the
unconditional collection right, the Company will recognise such amount received or receivable as contract liabilities
at earlier of the actual payment by the customer or the amount payable becoming due. Contract assets and contract
liabilities under the same contract are presented on a net basis, and contract assets and contract liabilities under
different contracts are not offset.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
31. 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 or to other beneficiaries.
Employee benefits are presented as “employee benefits payable” and “long-term employee benefits payable” in
the balance sheet, respectively, according to liquidity.
(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 by the Company as a liability during the accounting period when the employees render
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 postemployment
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 when an employee renders services, 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 (Cont’d)
32. Lease liabilities
(1) Initial measurement
At the commencement date of a lease term, the Company shall initially measure the lease liabilities at the present
value of the lease payments that are not paid at that date.
1) Lease payments
The lease payments mean the payments made by the Company to a lessor for the right to use the leased
assets during the lease term, including: fixed payments and in-substance fixed payments, less any lease
incentives receivable; variable lease payments that depend on an index or a rate, initially measured using
the index or rate as at the commencement date of the lease term; the exercise price of a purchase option
if the Company is reasonably certain to exercise that option; payments for terminating the lease, if the
lease term reflects the Company exercising an option to terminate the lease; amounts expected to be
payable by the Company under residual value guarantees.
2) Discount rate
The present value of the lease payments shall be calculated using the Company’s incremental borrowing
rate.
(2) Subsequent measurement
After the commencement date of a lease term, the Company shall subsequently measure the lease liabilities by:
increasing the carrying amount to reflect interest on the lease liabilities; reducing the carrying amount to reflect
the lease payments made; remeasuring the carrying amount to reflect the change in the lease payments due to
any reassessment or lease modifications.
The interest expense on the lease liabilities in 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, except for the interest expense to
be capitalised. The periodic rate of interest is the discount rate used by the Company in the initial measurement of
lease liabilities, or the revised discount rate used by the Company when the Company has to remeasure the lease
liabilities based on a revised discount rate due to a change in the lease payments or lease modifications.
(3) Remeasurement
After the commencement date of a lease term, the Company shall remeasure the lease liabilities using the
changes to the lease payments and the revised discount rate, and adjust the carrying amount of the right-of-use
assets accordingly in the circumstances set out below. If the carrying amount of the right-of-use assets is reduced
to zero and there is a further reduction in the measurement of the lease liabilities, the Company shall recognise
any remaining amount of the remeasurement in profit or loss: there is any change in the amount of in-substance
fixed payments; there is any change in the amounts expected to be payable under a residual value guarantee;
there is any change in the index or rate used to determine the lease payments; there is any change in the
assessment results in the purchase option; and there is any change in the assessment results or the exercise of
the extension option or termination option.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
33. Provisions
Obligations pertinent to the contingencies which satisfy the following conditions are recognised by the Company 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.
34. 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.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
34. Share-based payments (Cont’d)
(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.
104 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
35. 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.
(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.
36. 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.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
36. Revenue (Cont’d)
(1) General principles (Cont’d)
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 V. 10). 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.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
37. 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.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
38. 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.
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.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
39. 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.
(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. 26.
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
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
39. Lease (Cont’d)
(2) The Company as lessee (Cont’d)
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, re-determines 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.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
39. Lease (Cont’d)
(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.
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.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
39. Lease (Cont’d)
(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.
40. Changes in significant accounting policies and accounting estimates
(1) Changes in significant accounting policies
Applicable √ Not Applicable
(2) Changes in significant accounting estimates
Applicable √ Not Applicable
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
41. Others
The fair value refers to the price that will be received when selling an asset or the price to be paid to transfer a liability in
an orderly transaction between market participants on the date of measurement.
The Group measures the relevant assets or liabilities at fair value, assuming that the orderly transaction of selling the
assets or transferring the liabilities is conducted in the main market of the relevant assets or liabilities; in the absence of
the main market, the Group assumes that the transaction is conducted in the most advantageous market for the relevant
asset or liability. The main (or the most advantageous) market must be accessible to by the Group on the measurement
date. The Group uses assumptions that market participants would use when pricing the asset or liability, assuming that
market participants act in their economic best interest.
For financial assets or financial liabilities exist in an active market, fair value is determined based on the quoted price
in such market. While financial instruments do not exist in an active market, the fair value is determined using valuation
techniques.
Fair value measurement for 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 Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value, and gives priority to relevant observable inputs. Unobservable inputs are used only when
relevant observable inputs are not accessible or the access to which is impracticable.
All assets and liabilities measured at fair value or disclosed in the financial statements are categorised within the fair
value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement
as a whole: Level 1 inputs are available quoted prices (unadjusted) in active markets for identical assets or liabilities at
the measurement date; Level 2 inputs are inputs, other than Level 1 inputs, that are observable for the asset or liability,
either directly or indirectly; Level 3 inputs are unobservable inputs for the asset or liability.
For assets and liabilities that are recognised in the financial statements at fair value on a recurring basis, the Group
reassess them at each balance sheet date to determine whether transfers have occurred between levels in the hierarchy.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 113
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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 12/1.2
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
Shouguang Chenming Papermaking Machine Co., Ltd. 20
Shouguang Wei Yuan Logistics Company Limited 20
Jiangxi Chenming Tea 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.
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VI. Taxation (Cont’d)
2. Tax incentives (Cont’d)
(1) Enterprise income tax (Cont’d)
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.
Shouguang Shun Da Customs Declaration Co., Ltd., Shouguang Chenming Papermaking Machine Co., Ltd.,
Shouguang Wei Yuan Logistics Company Limited, and Jiangxi Chenming Tea Co., Ltd., subsidiaries of the
Company, is a small and micro enterprise. 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%.
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VI. Taxation (Cont’d)
2. Tax incentives (Cont’d)
(1) Enterprise income tax (Cont’d)
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 2022.
116 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements
1. Monetary funds
Unit: RMB
Item Closing balance Opening balance
Treasury cash 3,313,516.53 2,926,080.68
Bank deposit 3,139,292,575.43 3,166,431,843.70
Other monetary funds 11,816,075,269.95 10,950,425,015.28
Total 14,958,681,361.91 14,119,782,939.66
Of which: Total deposits in overseas banks 505,963,325.58 462,952,909.20
Total restricted amount due to mortgages, pledges or freezes 11,749,299,176.80 10,756,936,714.59
Other explanations:
Other monetary funds of RMB8,944,327,842.85 were the guarantee deposit for the application for bank
acceptance bills with the banks by the Company.
Other monetary funds of RMB2,240,431,110.52 were the guarantee deposit for the application for letter of credit
with the banks by the Company.
Other monetary funds of RMB219,580,223.43 were the guarantee deposit for the application for bank guarantees
with the banks by the Company.
Other monetary funds of RMB184,100,000.00 were the guarantee deposit for the application for bank loans with
the banks by the Company.
Other monetary funds of RMB160,860,000.00 were the Company’s statutory reserve deposits at the banks.
Other monetary funds included interest receivable of RMB66,776,093.15.
2. Financial assets held for trading
Unit: RMB
Item Closing balance Opening balance
Financial assets measured at fair value through profit or loss 51,033,051.57 110,886,182.88
Of which:
Equity instrument investments 51,033,051.57 110,886,182.88
Total 51,033,051.57 110,886,182.88
Other explanation: Financial assets held for trading were shares of China Bohai Bank subscribed by the Group.
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VII. Notes to items of the consolidated financial statements (Cont’d)
3. Bill receivable
Unit: RMB
Closing balance Opening balance
Bad debt Bad debt
Bill type Book balance provision Book value Book balance provision Book value
Commercial acceptance bills 742,590,000.00 742,590,000.00
Total 742,590,000.00 742,590,000.00
4. Accounts receivable
(1) Disclosure of accounts receivable by category
Unit: RMB
Closing balance
Book balance Bad debt provision
Percentage ECL rate Carrying
Category Amount (%) Amount (%) amount
Accounts receivable assessed
individually for impairment 208,785,301.74 5.53 208,785,301.74 100.00 0.00
Accounts receivable assessed
collectively for impairment 3,565,457,344.06 94.47 220,583,318.92 6.19 3,344,874,025.14
Of which:
Accounts receivable from related
party customers 7,158,599.98 0.19 49,344.50 0.69 7,109,255.48
Accounts receivable from non-related
party customers 2,344,160,892.81 62.11 82,782,886.75 3.53 2,261,378,006.06
Factoring receivables 1,214,137,851.27 32.17 137,751,087.67 11.35 1,076,386,763.60
Total 3,774,242,645.80 100.00 429,368,620.66 11.38 3,344,874,025.14
118 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
4. Accounts receivable (Cont’d)
(1) Disclosure of accounts receivable by category (Cont’d)
Continued:
Unit: RMB
Opening balance
Book balance Bad debt provision
Percentage ECL rate
Category Amount (%) Amount (%) Carrying amount
Accounts receivable assessed
individually for impairment 224,831,742.24 7.24 224,831,742.24 100.00 0.00
Accounts receivable assessed
collectively for impairment 2,880,986,860.24 92.76 224,469,709.78 7.79 2,656,517,150.46
Of which:
Accounts receivable from related
party customers 109,385.42 0.004 109,385.42
Accounts receivable from non-related
party customers 1,855,021,764.82 59.73 84,870,622.11 4.58 1,770,151,142.71
Factoring receivables 1,025,855,710.00 33.03 139,599,087.67 13.61 886,256,622.33
Total 3,105,818,602.48 100.00 449,301,452.02 14.47 2,656,517,150.46
Items assessed individually for bad debt provision:
Unit: RMB
Closing balance
Bad debt 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
Zhengzhou Hongyang Paper Products
Co., Ltd. 15,293,432.93 15,293,432.93 100.00% Long outstanding
Shandong Bisheng Printing Materials Co.,
Ltd. 14,813,369.27 14,813,369.27 100.00% Long outstanding
Henan Yibang Technology Trading Co.,
Ltd. 13,396,601.22 13,396,601.22 100.00% Long outstanding
92 companies including Shandong Yiming
New Material Technology Corp Co., Ltd. 65,951,558.22 65,951,558.22 100.00% Long outstanding
Total 208,785,301.74 208,785,301.74
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VII. Notes to items of the consolidated financial statements (Cont’d)
4. Accounts receivable (Cont’d)
(1) Disclosure of accounts receivable by category (Cont’d)
Items assessed collectively for impairment:
Accounts receivable with collective provision for bad debts based on receivables from related parties
Unit: RMB
Closing balance
Bad debt Provision
Name Book balance provision percentage (%)
Within 1 year 7,158,599.98 49,344.50 0.69
Total 7,158,599.98 49,344.50
Accounts receivable with collective provision for bad debts based on receivables from non-related party
customers
Unit: RMB
Closing balance
Accounts Bad debt Provision
Type receivable provision percentage (%)
Within 1 year 2,148,202,427.14 14,981,402.81 0.70
1 to 2 years 92,569,331.04 12,882,446.17 13.92
2 to 3 years 6,643,408.49 1,634,371.19 24.60
Over 3 years 96,745,726.14 53,284,666.58 55.08
Total 2,344,160,892.81 82,782,886.75 3.53
Accounts receivable with collective provision for bad debts based on factoring receivables
Unit: RMB
Closing balance
Name Book balance Bad debt provision Book balance
Within 1 year 1,008,798,807.91 98,200,166.66 9.73%
1 to 2 years 148,138,960.00 23,565,896.00 15.91%
2 to 3 years 33,486,237.90 8,748,229.36 26.12%
Over 3 years 23,713,845.46 7,236,795.65 30.52%
Total 1,214,137,851.27 137,751,087.67 11.35%
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VII. Notes to items of the consolidated financial statements (Cont’d)
4. Accounts receivable (Cont’d)
(1) Disclosure of accounts receivable by category (Cont’d)
Disclosure by ageing
Unit: RMB
Ageing Closing balance
Within 1 year (including 1 year) 3,164,159,835.03
1 to 2 years 240,708,291.04
2 to 3 years 40,129,646.39
Over 3 years 329,244,873.34
Subtotal 3,774,242,645.80
Bad debt provision 429,368,620.66
Total 3,344,874,025.14
The basis used by the ageing analysis of the accounts receivable of the Company: the ageing of accounts
receivable is the length of time of the Company’s outstanding accounts receivable based on invoice date. The
closing balance is recognised one by one from the end of the period onwards until the amounts add up to the
balance. It is also broken up by intervals of within 1 year, 1-2 years, 2-3 years, 3-4 years, 4-5 years and over 5
years.
(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 Closing
Category balance Provision or reversal Write-off Others balance
Accounts receivable with provision for
bad debts 449,301,452.02 24,272,047.17 44,204,878.53 429,368,620.66
Total 449,301,452.02 24,272,047.17 44,204,878.53 429,368,620.66
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VII. Notes to items of the consolidated financial statements (Cont’d)
4. Accounts receivable (Cont’d)
(3) Top five accounts receivable based on 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 RMB993,954,677.24, which accounted for 26.34% of the closing balance of the total accounts
receivable. The closing balance of corresponding bad debt provision amounted to RMB84,278,220.02.
Unit: RMB
Closing balance Percentage to Closing
of accounts closing balance of balance of bad
Name of entity receivable other receivables debt provision
Customer I 362,603,555.55 9.61 36,260,355.56
Customer II 216,616,666.63 5.74 21,661,666.66
Customer III 162,551,050.61 4.31 1,137,857.35
Customer IV 148,138,960.00 3.92 14,813,896.00
Customer V 104,044,444.45 2.76 10,404,444.45
Total 993,954,677.24 26.34 84,278,220.02
5. Accounts receivable financing
Unit: RMB
Item Closing balance Opening balance
Bills receivable 912,727,537.75 435,459,341.76
Total 912,727,537.75 435,459,341.76
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
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VII. Notes to items of the consolidated financial statements (Cont’d)
6. Prepayments
(1) Disclosure of prepayments stated according to ageing analysis
Unit: RMB
Closing balance Opening balance
Ageing Amount Percentage Amount Percentage
Within 1 year 930,868,811.43 90.42% 803,771,958.81 90.16%
1 to 2 years 98,594,004.20 9.58% 87,713,119.65 9.84%
Total 1,029,462,815.63 100.00% 891,485,078.46 100.00%
(2) Top five prepayments according to closing balance of prepaid units
The total amount of the Company’s top five prepayments according to closing balance of prepaid units for
the period amounted to RMB414,189,015.01, which accounted for 40.24% of the closing balance of the total
accounts payable.
Unit: RMB
Percentage to
the closing
Closing balance balance of the
Name of entity of prepayments total prepayments
Customer I 135,575,807.48 13.17%
Customer II 81,192,939.57 7.89%
Customer III 69,416,290.74 6.74%
Customer IV 66,168,628.32 6.43%
Customer V 61,835,348.90 6.01%
Total 414,189,015.01 40.24%
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VII. Notes to items of the consolidated financial statements (Cont’d)
7. Other receivables
Unit: RMB
Item Closing balance Opening balance
Dividend receivables 3,501,220.33
Other receivables 2,207,843,920.89 2,252,864,083.00
Total 2,211,345,141.22 2,252,864,083.00
(1) Dividends receivable
1) Classification of dividends receivable
Unit: RMB
Item (or investee) Closing balance Opening balance
China Bohai Bank 3,501,220.33
Total 3,501,220.33
(2) Other receivables
1) Other receivables by nature
Unit: RMB
Closing Opening
Nature book balance book balance
Open credit 2,705,407,288.82 2,692,253,554.58
Guarantee deposit 11,961,247.35 5,125,826.96
Reserve and borrowings 16,402,849.49 11,980,522.29
Others 15,821,988.16 80,560,739.46
Total 2,749,593,373.82 2,789,920,643.29
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VII. Notes to items of the consolidated financial statements (Cont’d)
7. Other receivables (Cont’d)
(2) Other receivables (Cont’d)
2) Particulars of bad debt provision
Unit: RMB
Stage 1 Stage 2 Stage 3
ECLs for Lifetime ECLs Lifetime
the next (not credit- ECLs (credit-
Bad debt provision 12 months impaired) impaired) Total
Balance as at 1 January 2022 65,083,288.44 471,973,271.85 537,056,560.29
Balance as at 1 January 2022 for
the period
Provision during the period 10,373,371.22 4,214,604.41 14,587,975.63
Reversal during the period 7,277,542.09 2,244,712.90 9,522,254.99
Transfer during the period
Write-off during the period 372,828.00 372,828.00
Other changes
Balance as at 30 June 2022 68,179,117.57 473,570,335.36 541,749,452.93
Disclosed by ageing
Unit: RMB
Ageing Closing balance Opening balance
Within 1 year (including 1 year) 367,852,664.64 797,531,460.41
1 to 2 years 1,375,315,037.38 1,344,225,352.93
2 to 3 years 840,340,601.74 484,647,394.76
Over 3 years 166,085,070.06 163,516,435.19
Total 2,749,593,373.82 2,789,920,643.29
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VII. Notes to items of the consolidated financial statements (Cont’d)
7. Other receivables (Cont’d)
(2) Other receivables (Cont’d)
3) 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 Closing
Category balance Provision or reversal Write-off Others balance
Bad debt provision for other
receivables 537,056,560.29 14,587,975.63 9,522,254.99 372,828.00 541,749,452.93
Total 537,056,560.29 14,587,975.63 9,522,254.99 372,828.00 541,749,452.93
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 period amounted to RMB2,048,197,406.04 in total, accounting for 74.49% of the total closing
balance of other receivables. The closing balance of the corresponding bad debt provision amounted to
RMB349,073,379.24 in total.
Unit: RMB
Percentage to Closing
closing balance balance
of other of bad debt
Name of entity Nature Closing balance Maturity receivables provision
Customer I Open credit 684,000,000.00 1-2 years 24.88% 102,600,000.00
Customer II Open credit 533,800,000.00 1-2 years and 2-3 19.41% 53,380,000.00
years
Customer III Open credit 467,402,316.85 2-3 years 17.00% 121,524,602.38
Customer IV Open credit 219,054,783.56 2-3 years 7.97% 21,905,478.36
Customer V Open credit 143,940,305.63 Within 1 year and 5.23% 49,663,298.50
1-2 years
Total 2,048,197,406.04 74.49% 349,073,379.24
126 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
8. 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
performance Carrying performance
Item Book balance costs amount Book balance costs Carrying amount
Raw materials 2,230,492,487.71 22,724,323.23 2,207,768,164.48 1,734,387,984.21 24,660,967.32 1,709,727,016.89
Work-in-process products 256,923,076.05 256,923,076.05 148,489,098.95 148,489,098.95
Goods in stock 1,428,278,746.93 4,941,686.65 1,423,337,060.28 1,910,051,642.16 4,941,686.65 1,905,109,955.51
Consumable biological assets 1,500,540,144.47 1,500,540,144.47 1,519,305,850.77 1,519,305,850.77
Total 5,416,234,455.16 27,666,009.88 5,388,568,445.28 5,312,234,576.09 29,602,653.97 5,282,631,922.12
(2) Impairment provision for inventories or performance costs
Unit: RMB
Increase during the period Decrease during the period
Reversal or
Item Opening balance Provision Others transfer Others Closing balance
Raw materials 24,660,967.32 1,936,644.09 22,724,323.23
Goods in stock 4,941,686.65 4,941,686.65
Total 29,602,653.97 1,936,644.09 27,666,009.88
Basis for recognition of net realisable value: Ageing spare part inventories were provided for full impairment, and
household paper with negative gross profit and ageing household paper inventories were provided for partial
impairment.
Reversal or transfer of impairment provision for inventories during the period was due to: Transfer of impaired
spare parts sold to impairment provision for inventories during the period.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 127
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VII. Notes to items of the consolidated financial statements (Cont’d)
9. Non-current assets due within one year
Unit: RMB
Item Closing balance Opening balance
Long-term receivables due within one year 5,216,044,182.27 5,216,934,172.61
Total 5,216,044,182.27 5,216,934,172.61
Notes: Long-term receivables due within one year amounting to RMB5,190,934,992.72 (amount for the prior year:
RMB5,188,103,553.61) were financial lease receivables;
Long-term receivables due within one year amounting to RMB25,109,189.55 (amount for the prior year: RMB28,830,619.00)
were deposits receivable.
10. Other current assets
Unit: RMB
Item Closing balance Opening balance
Prepaid expenses 560,638,082.42 195,453,994.69
Factoring receivables due within one year 319,166,361.74 303,281,361.74
Receivables under financial lease due within one year 301,173,453.77 388,156,667.35
Prepaid tax 131,125,749.80 132,297,740.90
Input tax amount to be deducted 36,815,815.92 807,004,437.68
Other payments 66,667,806.98 77,735,290.49
Total 1,415,587,270.63 1,903,929,492.85
128 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
11. Long-term receivables
(1) Particulars of long-term receivables
Unit: RMB
Closing balance Opening balance
Carrying Bad debt Carrying Carrying Bad debt Carrying Discount
Item balance provision amount balance provision amount rate range
Finance lease payments 8,305,095,187.79 1,277,639,823.58 7,027,455,364.21 8,344,107,765.88 1,211,551,549.72 7,132,556,216.16 4%-12%
Less: Unrealised financing income 386,924,782.60 386,924,782.60 366,945,292.53 366,945,292.53
Deposit for equipment lease
financing 339,646,696.64 339,646,696.64 272,996,696.64 272,996,696.64
Less: Unrealised financing income 36,559,819.83 36,559,819.83 32,913,472.31 32,913,472.31
Subtotal 8,221,257,282.00 1,277,639,823.58 6,943,617,458.42 8,217,245,697.68 1,211,551,549.72 7,005,694,147.96
Less: long-term receivables due
within one year 6,322,849,988.47 1,106,805,806.20 5,216,044,182.27 6,244,230,790.74 1,027,296,618.13 5,216,934,172.61
Total 1,898,407,293.53 170,834,017.38 1,727,573,276.15 1,973,014,906.94 184,254,931.59 1,788,759,975.35
Particulars of bad debt impairment provision
Unit: RMB
Stage 1 Stage 2 Stage 3
ECLs for Lifetime ECLs Lifetime ECLs
the next (not credit- (credit-
Bad debt provision 12 months impaired) impaired) Total
Balance as at 1 January 2022 453,675.00 183,801,256.59 184,254,931.59
Balance as at 1 January 2022 during the period
Provisions during the period
Other changes -13,420,914.21 -13,420,914.21
Balance as at 30 June 2022 453,675.00 170,380,342.38 170,834,017.38
Note: Other changes represented the transfer of the bad debt provision for long-term financing lease payments
due within one year from long-term receivables to non-current assets due within one year during the period.
Changes in carrying book balances with significant changes in loss provision for the period
Applicable √ Not applicable
SHANDONG CHENMING PAPER HOLDINGS LIMITED 129
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VII. Notes to items of the consolidated financial statements (Cont’d)
12. Long-term equity investments
Unit: RMB
Change for the period
Investment Adjustment of Closing
gain or loss other Other changes Distribution of balance of
Opening balance Additional Withdrawn recognised under comprehensive in equity cash dividend or Impairment Closing balance impairment
Investee (carrying amount) contribution contribution equity method income interest profit declared provision Others (carrying amount) provision
I. Joint ventures
Shouguang Chenming Huisen New-
style Construction Materials Co.,
Ltd. 6,902,869.87 -215,525.03 1,000,000.00 5,687,344.84
Weifang Sime Darby West Port
Co., Ltd. 77,370,998.75 -3,008,474.82 74,362,523.93
Shouguang Meite Environmental
Technology Co., Ltd. 14,616,124.71 -2,841,259.42 11,774,865.29
Weifang Xingxing United Chemical
Co., Ltd. 84,623,787.74 7,250,597.38 91,874,385.12
Subtotal 183,513,781.07 1,185,338.11 1,000,000.00 183,699,119.18
II. Associates
Zhuhai Dechen New Third Board
Equity Investment Fund Company
(Limited Partnership) 36,967,896.31 -2,003,052.15 34,964,844.16
Ningbo Kaichen Huamei Equity
Investment Fund Partnership
(Limited Partnership) 197,297,485.59 -3,217.73 197,294,267.86
Jiangxi Chenming Port Co., Ltd. 554,582.45 -61,479.47 493,102.98
Goldtrust Futures Co., Ltd. 185,452,462.50 -2,317,934.80 183,134,527.70
Chenming (Qingdao) Asset
Management Co., Ltd. 6,933,668.14 -107,419.58 940,000.00 5,886,248.56
Guangdong Nanyue Bank Co., Ltd. 1,255,867,809.29 29,924,322.20 4,743,150.54 -55,547,014.21 83,754,093.05 1,318,742,360.87
Subtotal 1,683,073,904.28 25,431,218.47 4,743,150.54 -55,547,014.21 940,000.00 83,754,093.05 1,740,515,352.13
Total 1,866,587,685.35 26,616,556.58 4,743,150.54 -55,547,014.21 1,940,000.00 83,754,093.05 1,924,214,471.31
Explanation: For other changes of Guangdong Nanyue Bank Co., Ltd., please refer to VII. 46. Retained profit.
130 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
13. Other non-current financial assets
Unit: RMB
Item Closing balance Opening balance
Investment in debt instruments 400,000,000.00 400,000,000.00
Investment in equity instruments 119,927,003.25 119,927,003.25
Total 519,927,003.25 519,927,003.25
14. Investment property
(1) Investment property under the cost method
√ Applicable Not applicable
Unit: RMB
Buildings and
Item structures Total
I. Original carrying value
1. Opening balance 7,196,809,856.62 7,196,809,856.62
2. Increase during the period
3. Decrease during the period 34,204,125.58 34,204,125.58
(1) Disposal 34,204,125.58 34,204,125.58
4. Closing balance 7,162,605,731.04 7,162,605,731.04
II. Accumulated depreciation and accumulated amortisation
1. Opening balance 723,271,424.71 723,271,424.71
2. Increase during the period 97,852,182.59 97,852,182.59
(1) Provision or amortisation 97,852,182.59 97,852,182.59
3. Decrease during the period 16,514,383.58 16,514,383.58
(1) Disposal 16,514,383.58 16,514,383.58
4. Closing balance 804,609,223.72 804,609,223.72
III. Impairment provision
IV. Carrying amount
1. Closing carrying amount 6,357,996,507.32 6,357,996,507.32
2. Opening carrying amount 6,473,538,431.91 6,473,538,431.91
Note: Investment properties under the Company primarily include:
Pujiang International Finance Plaza, 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.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 131
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VII. Notes to items of the consolidated financial statements (Cont’d)
14. Investment property (Cont’d)
(2) Investment property under the fair value method
Applicable √ Not applicable
15. Fixed assets
Unit: RMB
Item Closing balance Opening balance
Fixed assets 34,234,454,423.74 35,653,492,676.15
Disposal of fixed assets 156,159,044.44
Total 34,390,613,468.18 35,653,492,676.15
(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. Opening balance 10,673,297,551.11 43,798,170,683.63 296,201,440.65 457,044,021.47 55,224,713,696.86
2. Increase during the period 13,020,952.59 199,719,424.32 4,390,603.45 2,238,220.64 219,369,201.00
(1) Acquisition 10,631,731.64 182,387,984.58 4,390,603.45 2,238,220.64 199,648,540.31
(2) Transferred from construction in
progress 2,389,220.95 17,331,439.74 19,720,660.69
3. Decrease during the period 285,863,638.92 976,732,568.64 13,779,612.55 59,767,224.05 1,336,143,044.16
(1) Disposal or retirement 285,863,638.92 103,807,390.96 6,949,954.65 5,394,800.07 402,015,784.60
(2) Transfer to construction in progress 872,925,177.68 6,829,657.90 54,372,423.98 934,127,259.56
4. Closing balance 10,400,454,864.78 43,021,157,539.31 286,812,431.55 399,515,018.06 54,107,939,853.70
II. Accumulated depreciation
1. Opening balance 2,302,130,749.09 16,572,843,548.56 190,913,517.71 300,377,759.61 19,366,265,574.97
2. Increase during the period 139,516,595.65 882,260,896.51 12,239,386.69 6,311,342.20 1,040,328,221.05
(1) Provision 139,516,595.65 882,260,896.51 12,239,386.69 6,311,342.20 1,040,328,221.05
3. Decrease during the period 127,122,561.19 546,256,740.86 12,042,168.41 52,642,341.34 738,063,811.80
(1) Disposal or retirement 127,122,561.19 56,609,567.13 6,206,488.67 4,937,781.19 194,876,398.18
(2) Transfer to construction in progress 489,647,173.73 5,835,679.74 47,704,560.15 543,187,413.62
4. Closing balance 2,314,524,783.55 16,908,847,704.21 191,110,735.99 254,046,760.47 19,668,529,984.22
III. Impairment provision
1. Opening balance 27,808,852.79 169,697,469.90 13,889.13 7,435,233.92 204,955,445.74
2. Increase during the period
3. Decrease during the period
4. Closing balance 27,808,852.79 169,697,469.90 13,889.13 7,435,233.92 204,955,445.74
IV. Carrying amount
1. Closing carrying amount 8,058,121,228.44 25,942,612,365.20 95,687,806.43 138,033,023.67 34,234,454,423.74
2. Opening carrying amount 8,343,357,949.23 27,055,629,665.17 105,274,033.81 149,231,027.94 35,653,492,676.15
Other explanation: The fixed assets transferred to construction in progress during the period were mainly the
equipment relocation of Wuhan Chenming.
132 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
15. Fixed assets (Cont’d)
(2) Particulars of temporarily idle fixed assets
Unit: RMB
Original Accumulated Impairment Carrying
Item carrying value depreciation provision amount Remark
Housing and building structure 72,585,434.37 23,096,137.95 3,093,008.64 46,396,287.78
Machinery and equipment 913,076,851.75 545,378,538.71 150,706,985.59 216,991,327.45
Electronic equipment and others 754,860.94 704,151.45 7,187.27 43,522.22
Total 986,417,147.06 569,178,828.11 153,807,181.50 263,431,137.45
(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 1,053,074,557.83 Under application
Co., Ltd.)
Housing and building structure (Huanggang Chenming Pulp & Paper 644,514,086.42 Under application
Co., Ltd.)
Housing and building structure (Shouguang Meilun Paper Co., Ltd.) 470,055,885.46 Under application
Housing and building structure (Jilin Chenming Paper Co., Ltd.) 380,384,086.36 Under application
Housing and building structure (Jiangxi Chenming Paper Co., Ltd.) 202,694,998.89 Under application
Housing and building structure (Shandong Chenming Paper Holdings 109,652,457.94 Under application
Limited)
(4) Disposal of fixed assets
Unit: RMB
Item Closing balance Opening balance
Housing and building structure 156,159,044.44
Total 156,159,044.44
SHANDONG CHENMING PAPER HOLDINGS LIMITED 133
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VII. Notes to items of the consolidated financial statements (Cont’d)
16. Construction in progress
Unit: RMB
Item Closing balance Opening balance
Construction in progress 794,536,482.04 189,818,292.48
Materials for project 7,871,202.97 7,931,233.57
Total 802,407,685.01 197,749,526.05
(1) Particulars of construction in progress
Unit: RMB
Closing balance Opening balance
Carrying Impairment Carrying Carrying Impairment Carrying
Item balance provision amount balance provision amount
Wuhan relocation project 331,878,795.25 331,878,795.25
Technological transformation project 247,802,083.62 247,802,083.62 50,534,096.04 50,534,096.04
Fly ash cement ceramsite production
project (Shandong Chenming) 54,246,139.19 54,246,139.19 54,246,139.19 54,246,139.19
Relocation of Wuhan household
paper project (Phase II) (Meilun) 74,442,135.96 74,442,135.96 28,705,483.25 28,705,483.25
Integrated forestry, pulp and paper
project (Huanggang Pulp & Paper) 27,288,850.20 27,288,850.20 16,687,683.29 16,687,683.29
Others 80,017,149.58 21,138,671.76 58,878,477.82 60,783,562.47 21,138,671.76 39,644,890.71
Total 815,675,153.80 21,138,671.76 794,536,482.04 210,956,964.24 21,138,671.76 189,818,292.48
(2) Changes in material construction in progress projects for the period
Unit: RMB
Of which:
Transfer to Capitalised Capitalisation
fixed Others Project Interest rate of the
Increase assets deductions accumulated Accumulated amount interest
Opening during during during Closing investment Project capitalised during the amount for Sources
Project name Budget balance the period the period the period balance to budget progress interest period the period of fund
Relocation of Wuhan 109,000,000.00 28,705,483.25 45,736,652.71 74,442,135.96 68.30% 90.00% Self-owned funds
household paper and borrowings
project (Phase II)
(Meilun)
Integrated forestry, pulp 70,000,000.00 16,687,683.29 10,601,166.91 27,288,850.20 95.00% 99.00% Self-owned funds
and paper project
(Huanggang Pulp
and Paper)
Total 179,000,000.00 45,393,166.54 56,337,819.62 101,730,986.16
134 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
16. Construction in progress (Cont’d)
(3) Project materials
Unit: RMB
Closing balance Opening balance
Carrying Impairment Carrying Carrying Impairment Carrying
Item balance provision amount balance provision amount
Special materials 7,871,202.97 7,871,202.97 7,931,233.57 7,931,233.57
Total 7,871,202.97 7,871,202.97 7,931,233.57 7,931,233.57
17. Bearer biological assets
(1) Bearer biological assets under the cost method
√ Applicable Not applicable
Unit: RMB
Item Tea industries Total
I. Original carrying amount:
1. Opening balance
2. Increase during the period 10,398,523.90 10,398,523.90
(1) Purchase 10,398,523.90 10,398,523.90
3. Decrease during the period
4. Closing balance 10,398,523.90 10,398,523.90
II. Accumulated depreciation
III. Impairment provision
IV. Carrying amount
1. Closing carrying amount 10,398,523.90 10,398,523.90
2. Opening carrying amount
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VII. Notes to items of the consolidated financial statements (Cont’d)
18. Right-of-use assets
Unit: RMB
Land Buildings and
Item use rights structures Total
I. Original carrying value
1. Opening balance 218,097,859.06 5,571,378.54 223,669,237.60
2. Increase during the period
3. Decrease during the period 7,855,845.81 12,385.32 7,868,231.13
(1) Sublease to finance lease
(2) Transfer or held for sale
(3) Other deductions 7,855,845.81 12,385.32 7,868,231.13
4. Closing balance 210,242,013.25 5,558,993.22 215,801,006.47
II. Accumulated depreciation
1. Opening balance 25,467,932.29 772,128.87 26,240,061.16
2. Increase during the period 3,777,115.05 139,064.74 3,916,179.79
(1) Provision 3,777,115.05 139,064.74 3,916,179.79
3. Decrease during the period 3,185,888.24 3,185,888.24
(1) Sublease to finance lease
(2) Transfer or held for sale
(3) Other deductions 3,185,888.24 3,185,888.24
4. Closing balance 26,059,159.10 911,193.61 26,970,352.71
III. Impairment provision
IV. Carrying amount
1. Closing carrying amount 184,182,854.15 4,647,799.61 188,830,653.76
2. Opening carrying amount 192,629,926.77 4,799,249.67 197,429,176.44
Other explanation: Other deductions during the period were mainly the termination of certain lease contracts of
Zhanjiang Arboriculture and Yangjiang Arboriculture.
136 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
19. Intangible assets
(1) Particulars of intangible assets
Unit: RMB
Certificates of
Item Land use rights Software Patents third party right Total
I. Original carrying value
1. Opening balance 2,040,126,983.35 21,946,825.64 27,358,613.05 15,908,674.87 2,105,341,096.91
2. Increase during the period 305,847,919.65 107,606.09 305,955,525.74
(1) Acquisition 305,847,919.65 107,606.09 305,955,525.74
3. Decrease during the period
4. Closing balance 2,345,974,903.00 22,054,431.73 27,358,613.05 15,908,674.87 2,411,296,622.65
II. Accumulated amortisation
1. Opening balance 474,004,742.76 21,814,590.97 940,153.77 15,908,674.87 512,668,162.37
2. Increase during the period 22,827,920.24 239,840.76 5,059,845.73 28,127,606.73
(1) Provision 22,827,920.24 239,840.76 5,059,845.73 28,127,606.73
3. Decrease during the period
4. Closing balance 496,832,663.00 22,054,431.73 5,999,999.50 15,908,674.87 540,795,769.10
III. Impairment provision
IV. Carrying amount
1. Closing carrying amount 1,849,142,240.00 21,358,613.55 1,870,500,853.55
2. Opening carrying amount 1,566,122,240.59 132,234.67 26,418,459.28 1,592,672,934.54
20. Goodwill
(1) Original carrying amount of goodwill
Unit: RMB
Additions Deductions
Opening during during Closing
Name of investee or event generating goodwill balance the period the period balance
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 41,261,065.98 41,261,065.98
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VII. Notes to items of the consolidated financial statements (Cont’d)
20. Goodwill (Cont’d)
(2) Provision for impairment of goodwill
Unit: RMB
Additions Deductions
Opening during during Closing
Name of investee or event generating goodwill balance the period the period balance
Jilin Chenming Paper Co., Ltd. 14,314,160.60 14,314,160.60
Total 14,314,160.60 14,314,160.60
Note: The Company assessed the recoverable amount of goodwill and determined that the goodwill related to the Company’s plastic
business was not impaired. The Company determines the reporting segments based on the category of the principal activities
and categorises Kunshan Tuoan Plastic Products Co., Ltd. as an asset group. The recoverable amount is determined based on
the current value of the estimated future cash flows. Future cash flows are determined based on the financial budget for 2022 to
2026 as approved by the management, and adopts a discount rate of 7.28%, 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 include 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 carrying value of the asset group Kunshan Tuoan Plastic Products Co., Ltd.
exceeding its recoverable amount.
21. Long-term prepaid expenses
Unit: RMB
Increase Amortisation
Opening during during Others Closing
Item balance the period the period deductions balance
Woodland expenses 8,387,048.73 330,907.01 8,056,141.72
Others 40,754,724.41 327,354.38 1,724,989.22 39,357,089.57
Total 49,141,773.14 327,354.38 2,055,896.23 47,413,231.29
138 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
22. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets before offsetting
Unit: RMB
Closing balance Opening balance
Deductible Deductible
temporary Deferred temporary Deferred
Item differences tax assets differences tax assets
Provision for asset impairment 2,455,477,182.77 563,980,277.58 2,323,311,804.03 544,452,793.22
Unrealised profit arising from intra-group
transactions 12,642,619.20 3,160,654.80 110,621,031.60 27,655,257.90
Outstanding payables 538,978,299.84 81,648,513.55 646,596,211.53 97,758,308.63
Deferred income 95,262,644.06 14,289,396.61 202,273,476.76 30,341,021.50
Deductible losses 3,035,129,439.03 496,416,204.06 2,508,683,883.40 409,890,367.80
Debt reconstructing 18,734,830.91 4,683,707.73 18,734,830.91 4,683,707.73
Total 6,156,225,015.81 1,164,178,754.33 5,810,221,238.23 1,114,781,456.78
(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 20,900,574.28 5,225,143.57 22,697,097.44 5,674,274.36
Debt reconstructing 30,145,021.52 7,536,255.38 30,145,021.52 7,536,255.38
Total 51,045,595.80 12,761,398.95 52,842,118.96 13,210,529.74
SHANDONG CHENMING PAPER HOLDINGS LIMITED 139
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VII. Notes to items of the consolidated financial statements (Cont’d)
22. Deferred income tax assets/deferred income tax liabilities (Cont’d)
(3) Breakdown of unrecognised deferred income tax assets
Unit: RMB
Item Closing balance Opening balance
Deductible temporary differences 1,813,440.18 1,671,856.52
Deductible losses 562,971,551.27 730,122,476.10
Total 564,784,991.45 731,794,332.62
(4) Expiry of deductible loss of unrecognised deferred income tax assets falls in the periods as follows
Unit: RMB
Year Closing amount Opening amount Remark
2022 166,532,843.73
2023 129,503,478.05 129,523,478.05
2024 83,139,688.19 90,461,838.25
2025 249,241,618.81 249,242,062.93
2026 91,781,165.80 94,362,253.14
2027 9,305,600.42
Total 562,971,551.27 730,122,476.10
23. Other non-current assets
Unit: RMB
Closing balance Opening balance
Carrying Impairment Carrying Carrying Impairment Carrying
Item balance provision amount balance provision amount
Land transfer fees 2,612,250.68 2,612,250.68 298,072,250.68 298,072,250.68
Consideration for acquisition of
companies 127,500,000.00 127,500,000.00 127,500,000.00 127,500,000.00
Payments for engineering and
equipment 754,553,629.73 754,553,629.73 64,364,443.42 64,364,443.42
Total 884,665,880.41 884,665,880.41 489,936,694.10 489,936,694.10
140 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
24. Short-term borrowings
(1) Classification of short-term borrowings
Unit: RMB
Item Closing balance Opening balance
Discounted borrowings 16,105,340,000.00 16,194,790,000.00
Credit borrowings 10,398,695,390.93 8,847,850,884.15
Guaranteed borrowings 9,290,708,673.83 7,734,756,765.41
Pledged borrowings 494,919,879.81 675,627,536.66
Mortgage borrowings 70,000,000.00 70,000,000.00
Total 36,359,663,944.57 33,523,025,186.22
Explanation of the classification of short-term borrowings: For classification and amount of mortgage
borrowings and mortgage assets, please see 1. Monetary funds and 65. Assets with restricted ownerships or
right to use in Note VII. For classification and amount of pledged borrowings and mortgage assets, please see
1. Monetary funds and 65. Assets with restricted ownerships or right to use in Note VII. Overdue outstanding
short-term borrowings: total outstanding short-term borrowings overdue as at the end of the period amounted to
RMB0.00. Short-term borrowings included interest payable of RMB20,223,803.64.
25. Accounts payable
(1) Particulars of accounts payable
Unit: RMB
Item Closing balance Opening balance
Payment for goods 2,914,753,971.61 3,074,700,464.48
Payment for engineering 157,856,765.00 307,195,168.83
Payment for equipment 149,196,495.80 249,371,719.69
Others 47,179,699.25 239,863,992.34
Total 3,268,986,931.66 3,871,131,345.34
SHANDONG CHENMING PAPER HOLDINGS LIMITED 141
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VII. Notes to items of the consolidated financial statements (Cont’d)
25. Accounts payable (Cont’d)
(2) Disclosure by ageing
Unit: RMB
Ageing Closing balance Opening balance
Within 1 year (including 1 year) 2,758,073,611.38 3,282,236,529.52
1-2 years 209,075,559.49 229,465,372.73
2-3 years 99,325,225.63 164,915,158.41
Over 3 years 202,512,535.16 194,514,284.68
Total 3,268,986,931.66 3,871,131,345.34
The basis used by the ageing analysis of the accounts payable of the Company: the ageing of accounts payable
is the length of time of the Company’s outstanding accounts payable based on invoice date. The closing balance
is recognised one by one from the end of the period onwards until the amounts add up to the balance. It is also
broken up by intervals of within 1 year, 1-2 years, 2-3 years, 3-4 years, 4-5 years and over 5 years.
(3) Significant accounts payable aged over 1 year
Unit: RMB
Reason for
outstanding or
Item Closing balance not transfer
Weifang Xingxing United Chemical Co., Ltd. 26,905,494.34 Not due for payment
Omya Haiming (Nanchang) Chemical Co., Ltd. 16,000,000.00 Not due for payment
Fujian Jingyun Development Co., Ltd. 13,939,237.55 Not due for payment
Jiangsu Ronghai International Logistics Co., Ltd. 11,159,904.40 Not due for payment
Zhejiang Jndia Pipeline Industry Co., Ltd. 10,556,896.91 Not due for payment
Total 78,561,533.20
142 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
26. Bills payable
Unit: RMB
Category Closing balance Opening balance
Commercial acceptance bills 2,201,811,787.06 1,398,922,636.21
Bank acceptance bills 1,833,269,491.79 1,690,589,691.19
Total 4,035,081,278.85 3,089,512,327.40
27. Receipts in advance
(1) Particulars of receipts in advance
Unit: RMB
Item Closing balance Opening balance
Prepaid property rents 26,735,329.19 38,274,028.20
Total 26,735,329.19 38,274,028.20
28. Contract liabilities
Unit: RMB
Item Closing balance Opening balance
Payment for goods in advance 1,334,133,746.95 1,382,289,597.54
Total 1,334,133,746.95 1,382,289,597.54
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VII. Notes to items of the consolidated financial statements (Cont’d)
29. Staff remuneration payables
(1) Particulars of staff remuneration payables
Unit: RMB
Additions Deductions
Opening during during Closing
Item balance the period the period balance
I. Short-term remuneration 169,854,249.70 576,356,055.71 620,357,407.71 125,852,897.70
II. Retirement benefit plan-defined
contribution scheme 44,758.31 103,813,852.43 99,083,756.91 4,774,853.83
III. Termination benefits 266,898.58 266,898.58
Total 169,899,008.01 680,436,806.72 719,708,063.20 130,627,751.53
(2) Particulars of short-term remuneration
Unit: RMB
Additions Deductions
Opening during during Closing
Item balance the period the period balance
1. Salaries, bonuses, allowances and
subsidies 160,186,039.82 460,654,365.60 509,443,300.19 111,397,105.23
2. Staff welfare 22,624,020.73 22,624,020.73
3. Social insurance premiums 346,948.68 47,034,549.71 47,123,115.79 258,382.60
Of which: Medical insurance
premium 344,352.16 42,514,565.07 42,648,640.07 210,277.16
Work-related injury
insurance premium 98.44 2,814,757.90 2,766,750.90 48,105.44
Maternity insurance 2,498.08 1,705,226.74 1,707,724.82
4. Housing provident funds 5,094,807.67 36,592,873.38 35,777,051.48 5,910,629.57
5. Union funds and staff education
expenses 1,488,335.51 7,402,901.61 3,130,084.56 5,761,152.56
6. Short-term paid holiday 2,738,118.02 2,047,344.68 2,259,834.96 2,525,627.74
Total 169,854,249.70 576,356,055.71 620,357,407.71 125,852,897.70
144 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
29. Staff remuneration payables (Cont’d)
(3) Defined contribution plan
Unit: RMB
Additions Deductions
Opening during during Closing
Item balance the period the period balance
1. Basic pension insurance 43,609.94 99,150,737.46 94,576,886.30 4,617,461.10
2. Unemployment insurance 1,148.37 4,663,114.97 4,506,870.61 157,392.73
Total 44,758.31 103,813,852.43 99,083,756.91 4,774,853.83
30. Taxes payable
Unit: RMB
Item Closing balance Opening balance
Value added tax 84,803,146.51 125,522,336.03
Enterprise income tax 33,920,551.32 89,597,918.41
Property tax 24,095,481.04 13,083,934.41
Land use tax 9,411,113.14 9,240,921.98
Urban maintenance and construction tax 4,251,472.39 3,748,576.77
Resource tax 4,000,000.00 4,500,000.00
Environmental protection tax 3,906,160.20 3,959,856.45
Stamp duty 3,890,115.11 3,456,472.38
Educational surcharges and others 3,761,962.18 2,931,140.78
Land appreciation tax 2,024,028.20 4,076,160.22
Individual income tax 1,998,018.59 61,378,163.24
Total 176,062,048.68 321,495,480.67
31. Other payables
Unit: RMB
Item Closing balance Opening balance
Interest payable 65,975,461.61 55,437,777.80
Other payables 1,478,440,073.13 1,482,575,808.13
Total 1,544,415,534.74 1,538,013,585.93
Note: Other payables in the above table refer to other payables net of interest payable and dividends payable.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 145
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VII. Notes to items of the consolidated financial statements (Cont’d)
31. Other payables (Cont’d)
(1) Interest payable
Unit: RMB
Item Closing balance Opening balance
Interest on Corporate Bonds 4,268,152.77 21,132,222.24
Interest on medium-term notes 61,707,308.84 34,305,555.56
Total 65,975,461.61 55,437,777.80
(2) Other payables
1) Other payables by nature
Unit: RMB
Item Closing balance Opening balance
Payments 389,694,955.91 550,223,956.81
Deposit 351,639,653.97 261,990,665.03
Accrued expenses 386,192,674.26 341,923,505.85
The obligation to repurchase shares under the share incentive
scheme 226,860,000.00 226,860,000.00
Others 124,052,788.99 101,577,680.44
Total 1,478,440,073.13 1,482,575,808.13
2) Significant other payables aged over 1 year
Unit: RMB
Reason for outstanding
Item Closing balance or not transfer
Zhanjiang Runbao Trading Co., Ltd. 160,000,000.00 Not due for payment
Shanghai Shuilan Property Management Co., Ltd. 136,000,000.00 Not due for payment
Nine Dragons Dawei Holdings Co., Ltd. 30,000,000.00 Not due for payment
Weifang Xingxing United Chemical Co., Ltd. 16,860,000.00 Not due for payment
Wuhan Tianrui Paper Co., Ltd. 7,941,708.00 Not due for payment
Total 350,801,708.00
146 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
32. Non-current liabilities due within one year
Unit: RMB
Item Closing balance Opening balance
Long-term payables due within one year 1,729,422,560.82 1,543,620,543.60
Long-term borrowings due within one year 1,469,717,511.11 2,583,730,366.67
Other non-current liabilities due within one year 1,004,483,257.04 1,198,716,666.67
Bonds payable due within one year 350,000,000.00 1,270,636,933.46
Lease liabilities due within one year 4,728,345.21 4,606,717.58
Total 4,558,351,674.18 6,601,311,227.98
33. Long-term borrowings
(1) Types of long-term borrowings
Unit: RMB
Item Closing balance Opening balance
Mortgage borrowings 3,571,078,975.82 3,921,048,883.74
Guaranteed borrowings 2,187,641,710.38 2,028,979,800.00
Credit borrowings 1,074,231,881.94 1,910,041,837.91
Less: Long-term borrowings due within one year 1,469,717,511.11 2,583,730,366.67
Total 5,363,235,057.03 5,276,340,154.98
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 RMB15,766,964.86.
34. Bonds payable
Unit: RMB
Item Closing balance Opening balance
18 Chenming Bond 01 – Chenming Group 155,000,000.00
Chenming USD Bonds
Total 155,000,000.00
SHANDONG CHENMING PAPER HOLDINGS LIMITED 147
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VII. Notes to items of the consolidated financial statements (Cont’d)
34. Bonds payable (Cont’d)
(1) Increase/decrease in bonds payable
Unit: RMB
Bond name Par value Date of issue Term Issue amount
18 Chenming Bond 01 – Chenming Group 350,000,000.00 2 April 2018 5 years 350,000,000.00
Chenming USD Bonds 1,137,120,600.00 6 August 2019 2.6 years 1,125,276,863.46
Total 1,487,120,600.00 1,475,276,863.46
Unit: RMB
Issuance Amortisation of Repayment Changes in gains
during Interest at premium/ during and losses from
Bond name Opening balance the period par value discount the period foreign exchange Closing balance
18 Chenming Bond 01 – Chenming Group 350,000,000.00 8,627,597.22 8,627,597.22 350,000,000.00
Chenming USD Bonds 1,075,636,933.46 30,847,102.56 1,019,717.03 1,109,532,202.56 4,067,883.57
Subtotal 1,425,636,933.46 39,474,699.78 1,019,717.03 1,118,159,799.78 4,067,883.57 350,000,000.00
Less: Bonds payable due within one year 1,270,636,933.46 350,000,000.00
Total 155,000,000.00 39,474,699.78 1,019,717.03 1,118,159,799.78 4,067,883.57
35. Lease liabilities
Unit: RMB
Item Closing balance Opening balance
Lease payments payable 77,669,999.53 81,362,458.45
Less: Unrecognised financing expenses 18,190,037.27 19,474,535.06
Subtotal 59,479,962.26 61,887,923.39
Less: Lease liabilities due within one year 4,728,345.21 4,606,717.58
Total 54,751,617.05 57,281,205.81
148 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
36. Long-term payables
Unit: RMB
Item Closing balance Opening balance
Long-term payables 3,383,399,934.07 2,358,901,022.99
Total 3,383,399,934.07 2,358,901,022.99
(1) Long-term payables by nature
Unit: RMB
Item Closing balance Opening balance
Financial leasing 4,426,322,494.89 3,188,521,566.59
China Development Bank Special Funds 460,500,000.00 488,000,000.00
Contributions by other partners 225,000,000.00 225,000,000.00
Retention for the financial leasing operations 1,000,000.00 1,000,000.00
Subtotal 5,172,822,494.89 3,902,521,566.59
Less: Long-term payables due within one year 1,729,422,560.82 1,543,620,543.60
Total 3,383,399,934.07 2,358,901,022.99
37. Provisions
Unit: RMB
Item Closing balance Opening balance Reason
Pending litigation 325,259,082.28 325,259,082.28 Losses from Arjo’s lawsuit
Total 325,259,082.28 325,259,082.28
Explanation: 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 14 June 2022, Hong Kong Court
of Final Appeal rejected the Company’s appeal, and directed that the sum of HK$389,112,432.44, together with interest
accrued thereon, previously deposited with the Court as a stay of the conditions of the winding up petition filed by HKK2
against the Company pursuant to the order of the Judge of the Court of First Instance, Mr. HARRIS Jonathan Russell,
shall be paid to HKK2.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 149
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VII. Notes to items of the consolidated financial statements (Cont’d)
38. Deferred income
Unit: RMB
Opening Increase during Decrease during Closing
Item balance the period the period balance Reason
Government grants 1,573,681,684.25 52,355,943.37 1,521,325,740.88 Financial provision
Total 1,573,681,684.25 52,355,943.37 1,521,325,740.88
Items in respect of government grants:
Unit: RMB
Include in other
Opening New grants for income for Closing Asset-related/
Liabilities item balance the period the period Other changes balance income-related
Project fund for National technological 1,123,125.00 82,350.00 1,040,775.00 Asset-related government
support scheme grants
Infrastructure and environmental 219,273,225.52 6,019,465.67 213,253,759.85 Asset-related government
protection projects grants
Huanggang forestry-pulp paper project 496,846,742.41 12,513,108.90 484,333,633.51 Asset-related government
grants
Zhanjiang forestry-pulp paper project 50,806,597.19 2,047,316.46 48,759,280.73 Asset-related government
grants
Financial subsidies for technological 144,150,333.36 5,767,903.86 138,382,429.50 Asset-related government
transformation project grants
Funding for environmental protection 627,047,425.68 25,296,070.94 601,751,354.74 Asset-related government
grants
Others 34,434,235.09 629,727.54 33,804,507.55 Asset-related government
grants
Total 1,573,681,684.25 52,355,943.37 1,521,325,740.88
39. Share capital
Unit: RMB
Increase/decrease during the year (+/-)
Shares
converted from Closing
Opening balance New issue Bonus issue reserves Others Subtotal balance
Total number of shares 2,984,208,200.00 2,984,208,200.00
150 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
40. Other equity instruments
(1) Perpetual Bonds outstanding at the end of the period
Unit: RMB
Dividend Maturity date Condition
Outstanding financial Year of Accounting or interest Issue Amount or renewal for
instruments issuance classification rate price Issue size (RMB) status conversion Conversion
17 Lu Chenming MTN001 2017 Equity 8.97% 100.00 10,000,000.00 1,000,000,000.00 No defined None Non-convertible
instrument maturity date
Total 10,000,000.00 1,000,000,000.00
(2) Changes in Perpetual Bonds 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 Carrying Carrying Carrying Carrying
instruments Number amount Number amount Number amount Number amount
17 Lu Chenming MTN001 10,000,000.00 996,000,000.00 10,000,000.00 996,000,000.00
Total 10,000,000.00 996,000,000.00 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 – Perpetual Bonds.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 151
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VII. Notes to items of the consolidated financial statements (Cont’d)
41. Capital reserves
Unit: RMB
Increase during Decrease during
Item Opening balance the period the period Closing balance
Capital premium (share premium) 4,471,891,796.08 29,676,814.69 4,501,568,610.77
Other capital reserves 755,366,304.33 6,850,012.78 748,516,291.55
Total 5,227,258,100.41 29,676,814.69 6,850,012.78 5,250,084,902.32
Other explanations, including changes (increase or decrease) during the period and reasons for such changes:
The Company estimated that due to the second batch of 30% restricted shares, the capital surplus recognised in
previous years was eliminated in the current period, and the final share-based payment was recognised as a reduction
of capital surplus of RMB6,850,012.78; a capital increase of Zhanjiang Chenming Pulp & Paper Co., Ltd., a subsidiary
of the Company, was contributed on the part of other investors, causing a decrease in the Company’s shareholding
without loss of control, and an increase of capital reserves of RMB29,676,814.69; in 2021, 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 as the 2021 annual report of Guangdong Nanyue Bank Co., Ltd. was disclosed later
than the Company, the Company reduced the capital reserves by RMB55,547,014.21 based on the audited amount in
the 2021 annual report of Guangdong Nanyue Bank Co., Ltd.
42. Treasury shares
Unit: RMB
Increase during Decrease during
Item Opening balance the period the period Closing balance
Share incentive 226,860,000.00 226,860,000.00
Total 226,860,000.00 226,860,000.00
152 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
43. Other comprehensive income
Unit: RMB
During the period
Less: Less:
Transferred Transferred
from other from other
comprehensive comprehensive
income in prior income in prior
Incurred periods to periods to Attributable to Attributable
before income profit or loss retained parent to minority
tax for during earnings during Less: Income company shareholders
Item Opening balance the period the period the period tax 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 -445,582,729.36 -150,398,727.06 -150,576,277.41 177,550.35 -596,159,006.77
to profit and loss in subsequent periods
Of which: Other comprehensive income that may be
reclassified to profit or loss under the
equity method -10,512,532.56 4,743,150.54 4,565,600.19 177,550.35 -5,946,932.37
Translation differences of financial statements
denominated in foreign currency -435,070,196.80 -155,141,877.60 -155,141,877.60 -590,212,074.40
Total other comprehensive income -445,582,729.36 -150,398,727.06 -150,576,277.41 177,550.35 -596,159,006.77
44. General risk reserves
Unit: RMB
Opening Increase during Decrease during Closing
Item balance the period the period balance
General risk reserves 76,825,918.60 76,825,918.60
Total 76,825,918.60 76,825,918.60
45. Surplus reserves
Unit: RMB
Opening Increase during Decrease during Closing
Item balance the period the period 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
SHANDONG CHENMING PAPER HOLDINGS LIMITED 153
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VII. Notes to items of the consolidated financial statements (Cont’d)
46. Retained profit
Unit: RMB
Item The period The prior period
Retained profit as at the end of the prior year before adjustment 9,210,372,613.81 9,999,764,028.74
Adjustment to opening balance of retained earnings (increase +, decrease -) 83,754,093.05 -1,887,031,763.57
Opening balance of retained profit after adjustment 9,294,126,706.86 8,112,732,265.17
Plus: Net profit for the period attributable to shareholders of the parent
company 230,141,463.76 2,065,513,108.71
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
Perpetual Bonds interest payable 89,700,000.00
Preference shares interest payable 323,390,968.66
Retained profit as at the end of the period 9,524,268,170.62 9,210,372,613.81
Breakdown of adjustments to opening balance of retained earnings:
The Company implemented the new financial instrument standard earlier than the Company’s 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. The associate adjusted the opening
balances of the financial statements in accordance with the convergence requirements of the new standard since
1 January 2021, and 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, the Company should adjust the opening balances
of its 2021 financial statements accordingly when adopting the equity method of accounting. As the Company’s 2021
annual report was disclosed earlier than that of Guangdong Nanyue Bank Co., Ltd., the Company adjusted the opening
balance of retained earnings based on the unaudited data of Guangdong Nanyue Bank Co., Ltd. in its 2021 annual
report, and adjust the opening balance for the period based on the difference in the opening net assets after Guangdong
Nanyue Bank Co., Ltd. had issued the official auditors’ report.
154 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
47. Revenue and operating costs
Unit: RMB
Item Amount for the period Amount for the prior period
Revenue Costs Revenue Costs
Principal activities 16,170,535,559.24 13,622,445,474.80 16,368,937,751.59 11,107,531,244.57
Other activities 505,892,806.59 432,503,804.40 803,878,602.94 753,529,733.35
Total 16,676,428,365.83 14,054,949,279.20 17,172,816,354.53 11,861,060,977.92
Information related to revenue:
Unit: RMB
Machine-made Hotel and
Category of contract paper Financial services property rentals Others Total
Type of goods 16,091,824,702.93 125,629,976.14 108,076,112.11 350,897,574.65 16,676,428,365.83
Including:
Machine-made paper 14,440,493,130.31 14,440,493,130.31
Pulp 239,810,290.10 239,810,290.10
Financial leasing 84,916,541.08 84,916,541.08
Electricity and steam 195,203,273.89 195,203,273.89
Construction materials 128,912,692.24 128,912,692.24
Paper chemicals 70,973,693.13 70,973,693.13
Hotel and property rentals 104,267,757.09 104,267,757.09
Others 1,145,344,315.50 40,713,435.06 3,808,355.02 221,984,882.41 1,411,850,987.99
By geographical area 16,091,824,702.93 125,629,976.14 108,076,112.11 350,897,574.65 16,676,428,365.83
Including:
Mainland China 12,207,917,878.75 125,629,976.14 108,076,112.11 350,897,574.65 12,792,521,541.65
Other countries and regions 3,883,906,824.18 3,883,906,824.18
By the timing of delivery 16,091,824,702.93 125,629,976.14 108,076,112.11 350,897,574.65 16,676,428,365.83
Including:
Goods (at a point in time) 15,885,198,027.99 5,870,305.78 350,897,574.65 16,241,965,908.42
Services (within a certain period) 195,203,273.89 125,481,352.28 24,330,678.09 345,015,304.26
Leasing income 11,423,401.05 148,623.86 77,875,128.24 89,447,153.15
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VII. Notes to items of the consolidated financial statements (Cont’d)
48. Taxes and surcharges
Unit: RMB
Amount for Amount for
Item the period the prior period
Property tax 41,715,466.80 37,450,589.35
Stamp duty 24,637,949.80 18,130,742.66
Urban maintenance and construction tax 17,218,814.49 27,858,367.33
Educational surcharges and local education surcharge 11,612,306.79 19,989,461.94
Environmental protection Tax 6,793,722.79 10,751,303.03
Water resource tax 5,678,351.10 15,486,250.50
Land use tax 4,547,575.80 24,349,448.93
Vehicle and vessel tax 1,998,845.57 85,669.29
Cultural undertaking development tax 1,528,301.88
Water conservation funds 350,123.53 516,687.03
Land appreciation tax 27,432.00 9,175,506.88
Total 116,108,890.55 163,794,026.94
49. Selling and distribution expenses
Unit: RMB
Amount for Amount for
Item the period the prior period
Wages and surcharges 72,692,606.41 70,949,714.14
Business hospitality expenses 22,786,567.81 25,673,227.63
Travel expenses 8,535,839.64 9,694,437.71
Selling commissions 6,883,405.06 7,029,390.00
Depreciation expenses 5,541,590.42 5,712,298.99
Rental expenses 2,478,458.25 5,295,433.81
Office expenses 1,108,123.52 1,299,490.73
Warehouse expenses 503,789.82 252,549.57
Others 17,525,382.72 21,716,196.16
Total 138,055,763.65 147,622,738.74
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VII. Notes to items of the consolidated financial statements (Cont’d)
50. General and administrative expenses
Unit: RMB
Amount for Amount for
Item the period the prior period
Wages and surcharges 113,861,878.26 169,081,336.44
Production interruption loss 69,598,970.31 48,338,437.27
Depreciation expenses 47,710,740.44 51,326,963.11
Hospitality expenses 38,886,989.85 27,155,232.97
Welfare expenses 35,507,840.57 34,628,571.86
Amortisation of intangible assets 25,828,580.24 25,323,097.56
Repair fees 9,615,210.77 13,610,506.54
Insurance premium 9,449,472.17 14,955,132.42
Others 72,306,683.24 107,629,277.32
Total 422,766,365.85 492,048,555.49
51. R&D expenses
Unit: RMB
Amount for Amount for
Item the period the prior period
Consumption of raw materials 264,700,948.65 366,439,019.85
Utilities 105,357,973.18 86,755,891.97
Consumption of semi-finished products 98,638,775.67 66,656,701.37
Consumption of auxiliary materials 89,924,013.81 100,156,151.93
Wages and surcharges 76,633,329.10 83,767,837.01
Depreciation expenses 23,781,607.53 27,969,754.45
Insurance premium 15,220,882.81 15,104,675.76
Welfare expenses 4,712,671.38 5,060,144.67
Housing provident funds 2,698,047.92 2,786,507.56
Union funds 625,136.54 815,212.59
Installation expenses 513,779.36 372,517.00
Other expenses 707,394.98 1,136,940.41
Total 683,514,560.93 757,021,354.57
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VII. Notes to items of the consolidated financial statements (Cont’d)
52. Finance expenses
Unit: RMB
Amount for Amount for
Item the period the prior period
Interest expenses 991,475,816.56 1,399,107,777.11
Less: capitalised interest amount
Interest income 150,582,370.85 221,507,514.16
Foreign exchange gains and losses -21,746,160.65 -35,419,357.17
Bank charges and others 201,887,319.60 176,761,250.38
Total 1,021,034,604.66 1,318,942,156.16
53. Other income
Unit: RMB
Amount for Amount for
Source of other income the period the prior period
Government grants – amortised deferred income included in profit or loss 52,355,943.37 52,913,447.76
Government grants – directly included in profit or loss 96,908,668.31 70,185,300.82
Total 149,264,611.68 123,098,748.58
54. Investment income
Unit: RMB
Amount for Amount for
Item the period the prior period
Income from long-term equity investments accounted for using
the equity method 26,616,556.58 82,955,115.52
Investment income on holding financial assets held for trading and
other non-current financial assets 6,301,220.33 15,000,000.00
Investment gain on disposal of long-term equity investments 6,812.52 676,586.27
Gain on debt restructuring -754,806.87
Investment gain on derecognition of financial assets -56,307,959.46
Total -24,138,176.90 98,631,701.79
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VII. Notes to items of the consolidated financial statements (Cont’d)
55. Gain on change in fair value
Unit: RMB
Amount for Amount for
Source of gain on change in fair value the period the prior period
Financial assets held for trading -62,122,863.58 -89,980,570.69
Of which: Gain on change in fair value from derivative financial instruments
Gain on change in fair value of consumable biological assets measured
at fair value 3,309,448.09 -9,139,121.20
Total -58,813,415.49 -99,119,691.89
56. Credit impairment loss
Unit: RMB
Amount for Amount for
Item the period the prior period
Bad debt loss of accounts receivable -25,363,341.17 -279,757,983.46
Total -25,363,341.17 -279,757,983.46
57. Loss on impairment of assets
Unit: RMB
Amount for Amount for
Item the period the prior period
Loss on inventory impairment and loss on impairment of costs of
contract performance 1,936,644.09
Total 1,936,644.09
58. Asset disposal income
Unit: RMB
Amount for Amount for
Source of asset disposal income the period the prior period
Gain on disposal of non-current assets 1,605,314.49 6,731,452.88
Gain on disposal of intangible assets 42,188,905.24
Total 1,605,314.49 48,920,358.12
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VII. Notes to items of the consolidated financial statements (Cont’d)
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
Fine income 215,595.32 215,595.32
Gain on damage and retirement of non-current
assets 23,874.29 1,255,005.76 23,874.29
Exempted debts 11,345.80 4,275,104.92 11,345.80
Government grants 2,045,973.21
Others 842,613.92 11,145,199.75 842,613.92
Total 1,093,429.33 18,721,283.64 1,093,429.33
60. Non-operating expenses
Unit: RMB
Included in
non-recurring
Amount for Amount for profit or loss
Item the period the prior period in the period
Loss on damage and retirement of non-current
assets 5,557,464.33 2,177,197.00 5,557,464.33
Default penalty 4,626,610.27 – 4,626,610.27
Donation 5,000.00 80,000.00 5,000.00
Others 13,665.00 75,333.96 13,665.00
Total 10,202,739.60 2,332,530.96 10,202,739.60
61. Income tax expenses
(1) Particulars of income tax expenses
Unit: RMB
Amount for Amount for
Item the period the prior period
Income tax expenses for the period 51,225,155.03 283,824,021.53
Deferred income tax expenses -49,846,428.34 -9,766,242.33
Total 1,378,726.69 274,057,779.20
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VII. Notes to items of the consolidated financial statements (Cont’d)
61. Income tax expenses (Cont’d)
(2) Reconciliation between accounting profit and income tax expenses
Unit: RMB
Amount for
Item the period
Total profit 275,381,227.42
Income tax expenses calculated at statutory/applicable tax rates 41,307,184.11
Effect of different tax rates applicable to subsidiaries 57,264,569.19
Effect of adjustments for income tax for prior periods -15,518,260.26
Profit and loss of joint ventures and associates accounted for using the equity method -3,992,483.50
Effect of income not subject to tax -25,462,500.00
Non-deductible costs, expenses and losses 4,592,825.70
Effect of utilisation of previously unrecognised deductible loss on deferred income
tax assets -12,954,253.46
Effect of current unrecognised deductible temporary difference or deductible loss
arising from deferred tax income assets 24,390,555.43
Tax effect of R & D fee deduction -68,248,910.52
Income tax expense 1,378,726.69
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
Interest income 147,503,480.13 208,877,644.50
Net proceedings from the financial leasing business 125,816,344.91 616,398,096.59
Government support fund 94,023,387.98 111,501,713.53
Open credit and other income 466,613,154.78 99,723,258.86
Total 833,956,367.80 1,036,500,713.48
(2) Cash paid relating to other operating activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Expenses and open credit 998,576,421.97 999,490,395.09
Total 998,576,421.97 999,490,395.09
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VII. Notes to items of the consolidated financial statements (Cont’d)
62. Items on statements of cash flow (Cont’d)
(3) Cash received relating to other investing activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Receipt of consideration for equity transfer 251,414,794.52
Total 251,414,794.52
(4) Cash received relating to other financing activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Equipment financing 2,068,410,644.82 574,665,920.24
Recovery of deposit for financial leasing 10,500,000.00
Decrease in restricted bank deposits during the period 1,526,876,431.27
Resale of medium-term notes 400,000,000.00
Contribution from government platforms to GDR Fund and
Chendu Fund 232,790,000.00
Total 2,078,910,644.82 2,734,332,351.51
(5) Cash paid relating to other financing activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Purchase or repayment of short-term commercial paper and MTNs 200,000,000.00 2,145,000,000.00
Repayment of equipment sale and leaseback 961,427,794.77 996,692,287.81
Redemption of Preference shares 2,250,000,000.00
Payment of Preference shares dividend 98,100,000.00
Payment for equity in China Development Bank funds 27,500,000.00 29,500,000.00
Repayment of USD Bonds 1,078,685,100.00
Increase of restricted bank deposits 992,161,166.63
Payment for finance lease deposits 51,000,000.00
Total 3,310,774,061.40 5,519,292,287.81
162 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
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 274,002,500.73 2,066,430,651.33
Plus: Provision for impairment of assets 23,426,697.08 279,757,983.46
Depreciation of fixed assets, depletion of oil and gas
assets, and depreciation of bearer biological assets and
investment property 1,138,180,403.64 1,164,573,912.37
Depreciation of right-of-use assets 3,916,179.79 3,959,539.44
Amortisation of intangible assets 28,127,606.73 27,645,672.10
Amortisation of long-term prepaid expenses 2,055,896.23 1,793,632.06
Loss on disposal of fixed assets, intangible assets and
other long-term assets (“-” denotes gain) -1,605,314.49 -47,998,166.88
Loss on retirement of fixed assets (“-” denotes gain) 5,533,590.04
Loss on changes in fair value (“-” denotes gain) 58,813,415.49 99,119,691.89
Finance expenses (“-” denotes gain) 991,475,816.56 1,399,107,777.11
Investment loss (“-” denotes gain) 24,138,176.90 -98,631,701.79
Decrease in deferred income tax assets
(“-” denotes increase) -49,397,297.55 9,766,242.33
Increase in deferred income tax liabilities
(“-” denotes decrease) -449,130.79 -449,130.80
Decrease in inventories (“-” denotes increase) -105,936,523.16 -1,766,629,170.47
Decrease in operating receivables (“-” denotes increase) -1,497,590,484.79 1,272,002,689.91
Increase in operating payables (“-” denotes decrease) 103,572,677.04 336,735,899.88
Others
Net cash flows from operating activities 998,264,209.45 4,747,185,521.94
2. Major investing and financing activities not involving cash
settlements:
3. Net change in cash and cash equivalents:
Closing balance of cash 3,142,606,091.96 4,625,780,176.57
Less: Opening balance of cash 3,168,915,847.02 4,389,169,963.79
Plus: Closing balance of cash equivalents
Less: Opening balance of cash equivalents
Net increase in cash and cash equivalents -26,309,755.06 236,610,212.78
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VII. Notes to items of the consolidated financial statements (Cont’d)
63. Supplementary information on cash flow statement (Cont’d)
(2) Cash and cash equivalents composition
Unit: RMB
Item Closing balance Opening balance
I. Cash 3,142,606,091.96 4,625,780,176.57
Of which: Treasury cash 3,313,516.53 2,903,620.96
Bank deposit that can be used for payment at any time 3,139,292,575.43 4,622,876,555.61
II. Cash equivalents
Of which: Bond investment with maturity within 3 months
III. Balance of cash and cash equivalent at end of period 3,142,606,091.96 4,625,780,176.57
64. Notes to items of statements of changes in owners’ equity
The Company implemented the new financial instrument standard earlier than the Company’s 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. The associate adjusted the opening
balances of the financial statements in accordance with the convergence requirements of the new standard since
1 January 2021, and 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, the Company should adjust the opening balances
of its 2021 financial statements accordingly when adopting the equity method of accounting. As the Company’s
2021 annual report was disclosed earlier than that of Guangdong Nanyue Bank Co., Ltd., the Company adjusted the
opening balance of retained earnings based on the unaudited data of Guangdong Nanyue Bank Co., Ltd. in its 2021
annual report, and adjusted the opening balance for the period based on the difference in the opening net assets after
Guangdong Nanyue Bank Co., Ltd. had issued the official auditors’ report.
65. Assets with restricted ownerships or right to use
Unit: RMB
Closing
Item carrying amount Reasons for such restriction
Monetary funds 11,749,299,176.80 As deposits for bank acceptance bills and letters of credit,
deposit reserves, etc. (Note VII. 1)
Accounts receivable financing 10,925,711.40 As collateral for letters of guarantee and letters of credit (Note
VII. 5)
Accounts receivable 250,000,000.00 As collateral for borrowings (Note VII. 4)
Fixed assets 12,634,559,687.51 As collateral for bank borrowings and long-term payables
(Note VII. 15)
Intangible assets 1,184,321,483.40 As collateral for bank borrowings and long-term payables
(Note VII. 19)
Investment property 4,964,639,998.32 As collateral for bank borrowings (Note VII. 14)
Total 30,793,746,057.43
164 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
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 60,330,919.53 6.7114 404,904,933.33
EUR 7,227,874.60 7.0084 50,655,836.35
HKD 191,298.30 0.8552 163,598.31
GBP 8,886.64 8.1365 72,306.15
JPY 1,197.00 0.0491 58.77
Accounts receivables
Of which: USD 47,107,957.83 6.7114 316,160,348.18
EUR 11,881,530.35 7.0084 83,270,517.30
JPY 146,734,998.00 0.0491 7,204,688.40
Other receivables
Of which: USD 2,144,521.60 6.7114 14,392,742.27
EUR 45,880.07 7.0084 321,545.88
Accounts payable
Of which: USD 54,043,508.06 6.7114 362,707,599.99
EUR 398,021.67 7.0084 2,789,495.07
JPY 187,909.00 0.0491 9,226.33
Other payables
Of which: USD 489,888.04 6.7114 3,287,834.59
EUR 1,695,629.89 7.0084 11,883,652.52
JPY 8,800.00 0.0491 432.08
Short-term borrowings
Of which: USD 142,725,968.19 6.7114 957,891,062.91
Non-current liabilities due within one year
Of which: USD 119,000,000.00 6.7114 798,656,600.00
(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
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VII. Notes to items of the consolidated financial statements (Cont’d)
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 1,040,775.00 Deferred income 82,350.00
Research and Development Program
Infrastructure and environmental protection 213,253,759.85 Deferred income 6,019,465.67
projects
Huanggang forestry-pulp-paper project 484,333,633.51 Deferred income 12,513,108.90
Zhanjiang forestry-pulp-paper project 48,759,280.73 Deferred income 2,047,316.46
Financial subsidies for technological transformation 138,382,429.50 Deferred income 5,767,903.86
project
Funding for environmental protection 601,751,354.74 Deferred income 25,296,070.94
Others 33,804,507.55 Deferred income 629,727.54
Enterprise reform and development subsidies 35,694,431.07 Other income 35,694,431.07
Financial subsidies for technological transformation 39,864,749.67 Other income 39,864,749.67
project
Refund of VAT upon assessment 2,882,861.67 Other income 2,882,861.67
Employment stabilisation subsidies 1,139,637.40 Other income 1,139,637.40
Subsidies for social insurance 320.34 Other income 320.34
Refund of tax 3,786,175.32 Other income 3,786,175.32
Government rewards 1,070,000.00 Other income 1,070,000.00
Subsidies for the pandemic 1,500.00 Other income 1,500.00
Subsidies for forestation 1,651,396.64 Other income 1,651,396.64
Others 10,817,596.20 Other income 10,817,596.20
Total 1,618,234,409.19 149,264,611.68
166 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VIII. Change in scope of consolidation
During the period, the scope of consolidation had 1 newly established subsidiary, namely Jiangxi Chenming Tea Co., Ltd. (
), and 1 deregistered subsidiary, namely Qingdao Chenming Pulp & Paper Electronic Commodity Spot
Trading Co., Ltd.
IX. Interest in other entities
1. Interest in subsidiaries
(1) Constitution of the Group
Shareholding
Principle place Place of Nature of Type of legal Issued debt Issued share
Name of subsidiary of business incorporation business person Direct Indirect Acquisition securities capital
Zhanjiang Chenming Pulp & Zhanjiang Zhanjiang Paper making For-profit 91.77% Establishment 0
Paper Co., Ltd. corporation
Shouguang Meilun Paper Shouguang Shouguang Paper making For-profit 62.4864% Establishment 0 0
Co., Ltd. corporation
Jilin Chenming Paper Co., Jilin Jilin Paper making For-profit 100.00% Acquisition 0 0
Ltd. corporation
Huanggang Chenming Pulp Huanggang Huanggang Paper making For-profit 70.15% 29.85% Establishment 0 0
& Paper Co., Ltd. corporation
Shandong Chenming Paper Shouguang Shouguang Sales of paper For-profit 100.00% Establishment 0 0
Sales Co., Ltd. product corporation
Shouguang Chenming Shouguang Shouguang Trading For-profit 100.00% Establishment 0 0
Import and Export Trade corporation
Co., Ltd
Jiangxi Chenming Supply Jiangxi Jiangxi Trading For-profit 70.00% Establishment 0 0
Chain Management Co., corporation
Ltd
Chenming GmbH Germany Germany Trading For-profit 100.00% Establishment 0 0
corporation
Shouguang Chenming Shouguang Shouguang Machinery For-profit 100.00% Establishment 0 0
Papermaking Machine manufacturing corporation
Co., Ltd.
Shouguang Hongxin Printing Shouguang Shouguang Printing and For-profit 100.00% Acquisition 0 0
and Packaging Co., Ltd packaging corporation
Shouguang Chenming Shouguang Shouguang Logistics For-profit 100.00% Establishment 0 0
Modern Logistic Co., Ltd. corporation
Jinan Chenming Paper Sales Jinan Jinan Investment For-profit 100.00% Establishment 0 0
Co., Ltd. management/ corporation
Paper product
trading
Huanggang Chenming Huanggang Huanggang Arboriculture For-profit 100.00% Establishment 0 0
Arboriculture corporation
Development Co., Ltd.
Chenming Arboriculture Co., Wuhan Wuhan Arboriculture For-profit 100.00% Establishment 0 0
Ltd. corporation
Chenming Paper Korea Co., Korea Korea Paper product For-profit 100.00% Establishment 0 0
Ltd. trading corporation
Shouguang Shun Da Shouguang Shouguang Customs For-profit 100.00% Establishment 0 0
Customs Declaration Co., declaration corporation
Ltd.
Shanghai Chenming Industry Shanghai Shanghai Property For-profit 100.00% Establishment 0 0
Co., Ltd. investment and corporation
management
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IX. Interest in other entities (Cont’d)
1. Interest in subsidiaries (Cont’d)
(1) Constitution of the Group (Cont’d)
Shareholding
Principle place Place of Nature of Type of legal Issued debt Issued share
Name of subsidiary of business incorporation business person Direct Indirect Acquisition securities capital
Shanghai Chenyin Trading Shanghai Shanghai Trading For-profit 51.00% Establishment 0 0
Co., Ltd. corporation
Shandong Chenming Group Jinan Jinan Finance For-profit 80.00% 20.00% Establishment 0 0
Finance Co., Ltd. corporation
Jiangxi Chenming Paper Nanchang Nanchang Paper making For-profit 100.00% Establishment 0 0
Co., Ltd. corporation
Nanchang Shengheng Nanchang Nanchang Trading For-profit 100.00% Establishment 0 0
Trading Co. Ltd. corporation
Nanchang Kunheng Trading Nanchang Nanchang Trading For-profit 100.00% Establishment 0 0
Co. Ltd. corporation
Shouguang Chenming Art Shouguang Shouguang Paper making For-profit 75.00% Establishment 0 0
Paper Co., Ltd. corporation
Hailaer Chenming Paper Hailaer Hailaer Paper making For-profit 75.00% Establishment 0 0
Co., Ltd. corporation
Shandong Grand View Hotel Shouguang Shouguang Catering For-profit 70.00% Establishment 0 0
Co., Ltd. corporation
Wuhan Chenming Hanyang Wuhan Wuhan Paper making For-profit 65.21% 34.64% Establishment 0 0
Paper Holdings Co., Ltd. corporation
Shanghai Chenming Jinan Jinan Financial leasing For-profit 100.00% Establishment 0 0
Financial Leasing Co., corporation
Ltd.
Qingdao Chenming Nonghai Qingdao Qingdao Financial leasing For-profit 100.00% Establishment 0 0
Financial Leasing Co., Ltd corporation
Chenming (HK) Limited Hong Kong Hong Kong Paper product For-profit 100.00% Establishment 0 0
trading corporation
Shouguang Hongyi Shouguang Shouguang Packaging For-profit 100.00% Merger and 0 0
Decorative Packaging corporation acquisition
Co., Ltd.
Shouguang Xinyuan Coal Shouguang Shouguang Coal For-profit 100.00% Merger and 0 0
Co., Ltd. corporation acquisition
Shouguang City Run Sheng Shouguang Shouguang Purchase and sale For-profit 100.00% Merger and 0 0
Wasted Paper Recycle of waste corporation acquisition
Co., Ltd.
Shouguang Wei Yuan Shouguang Shouguang Logistics For-profit 100.00% Merger and 0 0
Logistics Company corporation acquisition
Limited
Wuhan Chenming Qianneng Wuhan Wuhan Thermal power For-profit 51.00% Establishment 0 0
Electric Power Co., Ltd corporation
Shandong Chenming Jinan Jinan Investment For-profit 100.00% Establishment 0 0
Investment Limited corporation
Japan Chenming Paper Co., Japan Japan Paper product For-profit 100.00% Establishment 0 0
Ltd. trading corporation
Chenming International Co., the United States the United States Paper product For-profit 100.00% Establishment 0 0
Ltd. trading corporation
Zhanjiang Chenming Zhanjiang Zhanjiang Forestry For-profit 100.00% Establishment 0 0
Arboriculture corporation
Development Co., Ltd.
Yangjiang Chenming Yangjiang Yangjiang Arboriculture For-profit 100.00% Establishment 0 0
Arboriculture corporation
Development Co., Ltd.
168 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
IX. Interest in other entities (Cont’d)
1. Interest in subsidiaries (Cont’d)
(1) Constitution of the Group (Cont’d)
Shareholding
Principle place Place of Nature of Type of legal Issued debt Issued share
Name of subsidiary of business incorporation business person Direct Indirect Acquisition securities capital
Nanchang Chenming Nanchang Nanchang Arboriculture For-profit 100.00% Establishment 0 0
Arboriculture corporation
Development Co., Ltd.
Guangdong Huirui Zhanjiang Zhanjiang Investment For-profit 100.00% Establishment 0 0
Investment Co., Ltd corporation
Jilin Chenming New-style Jilin Jilin Wall materials For-profit 100.00% Establishment 0 0
Wall Materials Co., Ltd corporation
Jilin Chenming Logistics Jilin Jilin Logistics For-profit 100.00% Establishment 0 0
Co., Ltd. corporation
Jiangxi Chenming Logistics Nanchang Nanchang Logistics For-profit 100.00% Establishment 0 0
Co., Ltd. corporation
Fuyu Chenming Paper Co., Fuyu Fuyu Paper making For-profit 100.00% Establishment 0 0
Ltd. corporation
Zhanjiang Meilun Pulp & Zhanjiang Zhanjiang Paper making For-profit 100.00% Establishment 0 0
Paper Co., Ltd. corporation
Shandong Chenming Shanghai Shanghai Financial leasing For-profit 100.00% Establishment 0 0
Financial Leasing Co., corporation
Ltd.
Wuhan Junheng Property Wuhan Wuhan Property For-profit 100.00% Merger and 0 0
Management Co. Ltd. corporation acquisition
Guangzhou Chenming Guangzhou Guangzhou Financial leasing For-profit 100.00% Establishment 0 0
Financial Leasing Co., corporation
Ltd.
Shanghai Hongtai Real Shanghai Shanghai Real estate For-profit 100.00% Merger and 0 0
Estate Co., Ltd. corporation acquisition
Shanghai Hongtai Property Shanghai Shanghai Property For-profit 100.00% Merger and 0 0
Management Co., Ltd. corporation acquisition
Shandong Chenming Jinan Jinan Business factoring For-profit 100.00% Establishment 0 0
Commercial Factoring corporation
Co., Ltd.
Guangzhou Chenming Guangzhou Guangzhou Business factoring For-profit 51.00% Establishment 0 0
Commercial Factoring corporation
Co., Ltd
Jiangxi Chenming Tea Co., Jiangxi Jiangxi Tea For-profit 100.00% Establishment 0 0
Ltd. corporation
Zhanjiang Chenming Port Zhanjiang Zhanjiang Port For-profit 100.00% Establishment 0 0
Co., Ltd. corporation
Beijing Chenming Financial Beijing Beijing Financial leasing For-profit 100.00% Establishment 0 0
Leasing Co., Ltd. corporation
Chenming Paper USA Inc. the United States the United States Paper product For-profit 100.00% Establishment 0 0
trading corporation
Guangdong Chenming Guangdong Guangdong Panels For-profit 100.00% Establishment 0 0
Panels Co., Ltd. corporation
Shanghai Chenming Pulp & Shanghai Shanghai Paper product For-profit 100.00% Establishment 0 0
Paper Sales Co., Ltd. trading corporation
Meilun (BVI) Limited Cayman Cayman Commerce For-profit 100.00% Establishment 0 0
corporation
Weifang Chenming Growth Weifang Weifang Fund For-profit 79.00% Establishment 0 0
Driver Replacement corporation
Equity Investment Fund
Partnership (Limited
Partnership)
SHANDONG CHENMING PAPER HOLDINGS LIMITED 169
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X Financial Report
IX. Interest in other entities (Cont’d)
1. Interest in subsidiaries (Cont’d)
(1) Constitution of the Group (Cont’d)
Shareholding
Principle place Place of Nature of Type of legal Issued debt Issued share
Name of subsidiary of business incorporation business person Direct Indirect Acquisition securities capital
Nanjing Chenming Culture Nanjing Nanjing Marketing For-profit 100.00% Establishment 0 0
Communication Co., Ltd. corporation
Chenming (Overseas) Co., Hong Kong Hong Kong Paper product For-profit 100.00% Establishment 0 0
Ltd. trading corporation
Chenming (Singapore) Co., Singapore Singapore Paper product For-profit 100.00% Establishment 0 0
Ltd. trading corporation
Kunshan Tuoan Plastic Kunshan Kunshan Rubber and For-profit 100.00% Merger and 0 0
Products Co., Ltd. plastic corporation acquisition
Hubei Changjiang Huanggang Huanggang Fund For-profit 59.97% Establishment 0 0
Chenming Huanggang corporation
Equity Investment Fund
Partnership (Limited
Partnership)
Hainan Chenming Haikou Haikou Wholesale and For-profit 100.00% Establishment 0 0
Technology Co., Ltd. retail corporation
Qingdao Chenming Import Qingdao Qingdao Trading For-profit 100.00% Establishment 0 0
and Export Trade Co., corporation
Ltd.
Shanghai Herui Investment Shanghai Shanghai Business services For-profit 100.00% Merger and 0 0
Co., Ltd. corporation acquisition
Hubei Huanggang Chenming Huanggang Huanggang Capital market For-profit 60.00% Establishment 0 0
Equity Investment Fund services corporation
Management Co., Ltd.
Shandong Dingkun Asset Shouguang Shouguang Business services For-profit 99.90% Establishment 0 0
Management Partnership corporation
(Limited Partnership)
Huanggang Chenming Huanggang Huanggang Paper making For-profit 100.00% Establishment 0 0
Paper Technology Co., corporation
Ltd.
Huanggang Chenming Port Huanggang Huanggang Port services For-profit 51.00% Establishment 0 0
Co., Ltd. corporation
Weifang Chendu Equity Shouguang Shouguang Capital market For-profit 79.75% Establishment 0 0
Investment Partnership services corporation
(Limited Partnership)
Huanggang Chenming Pulp Huanggang Huanggang Trading For-profit 100.00% Establishment 0 0
& Fiber Trading Co., Ltd. corporation
(2) Major non-wholly owned subsidiaries
Unit: RMB
Gain or loss Dividend to
attributable to minority interest Closing
Minority minority interest declared during balance of
Name of subsidiary interest during the period the period minority interest
Shouguang Chenming Art Paper Co., Ltd. 25.00% -335,609.74 94,958,580.73
Shouguang Meilun Paper Co., Ltd. 37.5136% 49,134,340.15 2,608,632,811.11
Zhanjiang Chenming Pulp & Paper Co., Ltd. 8.23% 6,806,334.65 660,942,447.96
170 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
IX. Interest in other entities (Cont’d)
1. Interest in subsidiaries (Cont’d)
(3) Key financial information of major non-wholly owned subsidiaries
Unit: RMB
Closing balance Opening balance
Non-current Non-current Non-current Non-current
Name of subsidiary Current assets assets Total assets Current liabilities liabilities Total liabilities Current assets assets Total assets Current liabilities liabilities Total liabilities
X Financial Report
Shouguang Chenming
Art Paper Co., Ltd. 483,938,164.98 480,442,349.41 964,380,514.39 584,546,191.52 584,546,191.52 664,927,705.80 499,632,230.38 1,164,559,936.18 783,383,174.36 783,383,174.36
Shouguang Meilun
Paper Co., Ltd. 5,728,525,683.04 10,704,658,938.61 16,433,184,621.65 6,260,233,659.44 1,750,609,977.41 8,010,843,636.85 7,009,260,465.11 10,720,308,671.13 17,729,569,136.24 7,685,982,114.28 1,735,507,997.61 9,421,490,111.89
Zhanjiang Chenming
Pulp & Paper Co., Ltd. 15,287,252,786.92 13,176,976,140.87 28,464,228,927.79 17,406,654,158.30 2,371,674,359.87 19,778,328,518.17 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
Unit: RMB
Amount for the period Amount for the prior period
Total Cash flows Total Cash flows
comprehensive from operating comprehensive from operating
Name of subsidiary Revenue Net profit income activities Revenue Net profit income activities
Shouguang Chenming Art Paper Co., Ltd. 322,720,534.36 -1,342,438.95 -1,342,438.95 133,667,925.23 344,898,772.34 12,205,171.20 12,205,171.20 3,726,791.43
Shouguang Meilun Paper Co., Ltd. 3,956,822,454.56 114,261,960.45 114,261,960.45 1,167,059,642.56 4,447,905,629.92 232,335,249.64 232,335,249.64 542,602,634.96
Zhanjiang Chenming Pulp & Paper Co., Ltd. 5,841,511,419.81 181,827,121.84 181,827,121.84 1,308,835,701.84 6,537,009,866.50 1,063,189,798.93 1,063,189,798.93 1,751,078,279.88
INTERIM REPORT 2022
SHANDONG CHENMING PAPER HOLDINGS LIMITED
171
X Financial Report
IX. Interest in other entities (Cont’d)
2. Transaction changing shareholding in but not causing to loss of control over subsidiaries
(1) Changing in shareholding in subsidiaries
The Company previously held 96.26% equity interest in Zhanjiang Chenming Pulp & Paper Co., Ltd. In June 2022,
Xiamen International Trade Industry Development Equity Investment Fund Partnership (Limited Partnership) 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 4.40%, 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 RMB29.6768 million.
(2) Effect of transactions on minority interest and equity attributable to the owners of the parent company
Unit: RMB
Unilateral capital contribution into
Zhanjiang Chenming Pulp & Paper
Co., Ltd. by Xiamen International
Trade Industry Development
Equity Investment Fund Partnership
(Limited Partnership)
Amount of capital increase 400,000,000.00
Share of net assets of the Company after the capital increase 7,262,988,678.16
Share of net assets of the Company before the capital increase 7,233,311,863.47
Difference 29,676,814.69
Of which: capital reserve adjustment 29,676,814.69
3. Interest in joint arrangements or associates
(1) Major joint ventures and associates
Accounting method
for investment in
Principle place Place of Nature of Shareholding joint ventures or
Name of joint venture and associate of business incorporation business Direct Indirect associates
Weifang Sime Darby West Port Co., Ltd. Weifang Weifang Port construction 50.00% Equity method
Ningbo Kaichen Huamei Equity Investment Fund Ningbo Ningbo Investment 40.00% Equity method
Partnership (Limited Partnership) management
Weifang Xingxing United Chemical Co., Ltd. Weifang Weifang Chemical 50.00% Equity method
Zhuhai Dechen New Third Board Equity Zhuhai Zhuhai Investment 50.00% Equity method
Investment Fund Company (Limited Partnership) management
Goldtrust Futures Co., Ltd. Changsha Changsha Futures 35.43% Equity method
Guangdong Nanyue Bank Co., Ltd. Guangdong Guangdong Bank 6.76% Equity method
172 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
IX. Interest in other entities (Cont’d)
3. Interest in joint arrangements or associates (Cont’d)
(2) Key financial information of major joint ventures
Unit: RMB
Closing balance/ Opening balance/
amount for amount for the
Weifang Sime Darby West Port Co., Ltd. the period prior period
Current assets 25,297,253.82 21,774,345.85
Of which: Cash and cash equivalents 5,881,297.45 7,054,019.11
Non-current assets 499,047,444.00 507,959,459.20
Total assets 524,344,697.82 529,733,805.05
Current liabilities 28,199,178.16 12,094,403.33
Non-current liabilities 362,562,252.51 377,812,252.49
Total liabilities 390,761,430.67 389,906,655.82
Equity interest attributable to shareholders of the parent company 133,583,267.15 139,827,149.23
Share of net assets based on shareholding 66,791,633.58 69,913,574.62
Adjustments
– Unrealised profit arising from intra-group transactions 7,570,890.35 7,457,424.14
Carrying amount of equity investment in joint ventures 74,362,523.93 77,370,998.75
Fair value of equity investment in joint ventures where publicly
quoted prices exist
Revenue 31,433,562.91 37,344,708.25
Finance expenses 10,778,949.56 10,648,523.23
Income tax expenses
Net profit -6,013,863.17 -181,542.45
Net profit from discontinued operations
Other comprehensive income
Total comprehensive income -6,013,863.17 -181,542.45
Dividends received from joint ventures during the year
SHANDONG CHENMING PAPER HOLDINGS LIMITED 173
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X Financial Report
IX. Interest in other entities (Cont’d)
3. Interest in joint arrangements or associates (Cont’d)
(2) Key financial information of major joint ventures (Cont’d)
Closing balance/ Opening balance/
amount for amount for the
Weifang Xingxing United Chemical Co., Ltd. the period prior period
Current assets 114,838,677.84 100,024,598.36
Of which: Cash and cash equivalents 47,230,710.07 10,187,071.60
Non-current assets 15,936,927.61 20,299,403.19
Total assets 130,775,605.45 120,324,001.55
Current liabilities 29,133,526.39 27,883,399.22
Non-current liabilities 7,272,868.96 12,417,862.06
Total liabilities 36,406,395.35 40,301,261.28
Minority interest
Equity interest attributable to shareholders of the parent company 94,369,210.10 80,022,740.27
Share of net assets based on shareholding 47,184,605.05 40,011,370.14
Adjustments
– Others 44,689,780.07 44,612,417.61
Carrying amount of equity investment in joint ventures 91,874,385.12 84,623,787.74
Fair value of equity investment in joint ventures where publicly
quoted prices exist
Revenue 9,070,496.70 404,300.88
Finance expenses -374,801.93 -121,109.94
Income tax expenses
Net profit 7,126,354.85 -1,450,118.81
Net profit from discontinued operations
Other comprehensive income
Total comprehensive income 7,126,354.85 -1,450,118.81
Dividends received from joint ventures during the year
(3) Key financial information of major associates
Unit: RMB
Closing balance/ Opening balance/
Ningbo Kaichen Huamei Equity Investment Fund Partnership amount for amount for the
(Limited Partnership) the period prior period
Current assets 4,370,525.23 4,378,938.81
Non-current assets 189,276,814.94 189,276,706.00
Total assets 193,647,340.17 193,655,644.81
Current liabilities
Total liabilities
Equity interest attributable to shareholders of the parent company 193,647,600.17 193,655,644.81
Share of net assets based on shareholding 77,455,941.70 77,459,159.43
Adjustments
– Others 119,838,326.16 119,838,326.16
Carrying amount of equity investment in associates 197,294,267.86 197,297,485.59
Net profit -8,044.64 858,903.93
Total comprehensive income -8,044.64 858,903.93
174 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
IX. Interest in other entities (Cont’d)
3. Interest in joint arrangements or associates (Cont’d)
(3) Key financial information of major associates (Cont’d)
Closing balance/ Opening balance/
Zhuhai Dechen New Third Board Equity Investment Fund Company amount for amount for the
(Limited Partnership) the period prior period
Current assets 9,149,573.99 7,991,295.94
Non-current assets 60,792,108.00 65,956,891.00
Total assets 69,941,681.99 73,948,186.94
Current liabilities 5,000.00 5,000.00
Total liabilities
Equity interest attributable to shareholders of the parent company 69,936,681.99 73,943,186.94
Share of net assets based on shareholding 34,964,844.16 36,967,896.31
Carrying amount of equity investment in associates 34,964,844.16 36,967,896.31
Net profit -4,006,504.95 -12,211,392.16
Total comprehensive income -4,006,504.95 -12,211,392.16
Closing balance/ Opening balance/
amount for amount for the
Goldtrust Futures Co., Ltd. the period prior period
Current assets 737,682,309.63 764,880,728.01
Non-current assets 21,605,294.08 20,791,974.11
Total assets 759,287,603.71 785,672,702.12
Current liabilities 532,162,303.07 556,373,303.71
Non-current liabilities 39,771,231.87 34,269,041.10
Total liabilities 571,933,534.94 590,642,344.81
Equity interest attributable to shareholders of the parent company 187,354,068.77 195,030,357.31
Share of net assets based on shareholding 66,379,546.57 69,099,255.59
Adjustments
– Goodwill 104,073,292.25 104,073,292.25
– Others 12,681,688.88 12,279,914.66
Carrying amount of equity investment in associates 183,134,527.70 185,452,462.50
Revenue 27,108,619.25 9,407,419.49
Net profit -7,109,291.31 -17,089,018.40
Total comprehensive income -7,109,291.31 -17,089,018.40
SHANDONG CHENMING PAPER HOLDINGS LIMITED 175
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X Financial Report
IX. Interest in other entities (Cont’d)
3. Interest in joint arrangements or associates (Cont’d)
(3) Key financial information of major associates (Cont’d)
Closing balance/ Opening balance/
amount for amount for the
Guangdong Nanyue Bank Co., Ltd. the period prior period
Current assets 198,800,828,582.08 146,917,546,535.28
Non-current assets 9,025,487,530.37 58,633,124,899.89
Total assets 207,826,316,112.45 205,550,671,435.17
Current liabilities 159,787,424,749.38 163,449,937,524.03
Non-current liabilities 28,880,840,271.32 23,509,056,497.47
Total liabilities 188,668,265,020.70 186,958,994,021.50
Equity interest attributable to shareholders of the parent company 19,158,051,091.75 18,591,677,413.67
Share of net assets based on shareholding 1,294,126,351.25 1,255,867,809.29
Adjustments
Others 24,616,009.62
Carrying amount of equity investment in associates 1,318,742,360.87 1,255,867,809.29
Revenue 13,809,608,464.83 2,009,057,538.56
Net profit 365,449,485.74 734,646,824.76
Other comprehensive income 70,787,018.40
Total comprehensive income 436,236,504.14
Dividends received from associates during the year 21,000,000.00
(4) Summary financial information of non-major joint ventures and associates
Unit: RMB
Closing balance/ Opening balance/
amount for amount for the
the period prior period
Joint ventures:
Total carrying amount of investment 17,462,210.13 21,518,994.58
Total amount of the following items based on shareholding
– Net profit -3,056,784.45 791,377.16
Associates:
Total carrying amount of investment 6,379,351.54 7,488,250.59
Total amount of the following items based on shareholding
– Net profit -168,899.05 -223,836.86
(5) Excess loss of joint ventures or associates
Unit: RMB
Accumulated Unrecognised Accumulated
unrecognised loss (or share of unrecognised
loss incurred net profit) for loss as at the
Name of joint ventures or associates for prior periods the period end of the period
Arjo Wiggins Chenming Specialty Paper Co., Ltd. 7,308,869.16 7,308,869.16
Xuchang Chenming Paper Co., Ltd. 79,793,370.43 31,161,297.89 110,954,668.32
176 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
X. Risk relating to financial instruments
The main financial instruments of the Company 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 each
financial instrument have been disclosed in the relevant notes to the financial statements. 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. Goal and policies of risk management
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 also undertakes both regular and ad-hoc
reviews of the implementation of internal control systems in compliance with risk management policies.
Risks associated with the financial instruments of the Company mainly include credit risk, liquidity risk and market risk
(including exchange rate risk, interest rate risk and commodity price risk).
The Board is responsible for planning and establishing the risk management structure of the Company, formulating risk
management policies and related guidelines, and supervising the implementation of risk management. The Company
has already formulated risk management policies to identify and analyse risks that the Company face. These policies
mentioned specific risks, covering market risk, credit risk, liquidity risk, etc. The Company regularly assesses the market
environment and the changes of the operating activities of the Company to determine as to making alteration to the
risk management policies and systems. The Company’s risk management is implemented by the Risk Management
Committee according to the policies approved by the Board. The Risk Management Committee works closely with other
business department of the Company to identify, assessing and avoiding certain risks. The internal audit department of
the Company undertakes regular reviews of risk management controls and procedures, and report the audit results to
the audit committee of the Company.
The Company spreads the risks from financial instruments by diversified investment and business portfolio, and
develops risk management policies accordingly to mitigate the risk of over-concentration on any single industry,
particular region or particular counterparties
(1) Credit risk
Credit risk is the risk that a counterparty will cause a financial loss for the Company by failing to discharge a
contractual obligation.
The Company manages credit risk by collective classification. Credit risks are mainly attributable to bank deposit,
bills receivable, accounts receivable, other receivables and long-term receivables etc.
The Company’s bank deposit is mainly held with state-owned banks and other large and medium-sized listed
banks. The Company anticipates that the bank deposit does not have significant credit risk.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 177
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X Financial Report
X. Risk relating to financial instruments (Cont’d)
1. Goal and policies of risk management (Cont’d)
(1) Credit risk (Cont’d)
For bill receivable, accounts receivables, other receivables and long-term receivables, the Company sets related
policies to control exposure of credit risks. The Company assesses its clients’ credit quality and sets the related
credit periods based on its clients’ financial position, credit records and other factors such as the current market
conditions. The Company monitors the credit record of its clients. For the clients with poor credit record, the
Company ensure the credit risk of the Company in general is under control by means of written notice of payment
collection, reducing credit periods or cancelling credit periods.
The Company’s debtors of accounts receivable are the customers across different industries and regions.
The Company continuously conducts credit assessment on the financial position of accounts receivable and
purchases credit guarantee insurance if necessary.
The maximum credit risk exposure of the Company is the carrying amount of each financial asset in the balance
sheet. The Company do not provide any other financial guarantee which may result in credit risks.
Among the accounts receivable of the Company, the accounts receivable attributable to the top five customers
accounted for 26.34% (2021: 24.95%) of the Company’s total accounts receivables. Among the other receivables
of the Company, the other receivables attributable to the top five customers accounted for 74.49% (2021: 72.71%)
of the Company’s total other receivables.
(2) Liquidity risk
Liquidity risk is the risk that the Company may encounter deficiency of funds in meeting obligations settled with
cash or other financial assets delivery.
In managing liquidity risk, the Company ensures to monitor the cash and cash equivalent the management
considered as sufficient, in order to meet the Company’s needs for operation, and lower the effects from
fluctuation of cash flow. The management of the Company monitors the usage of bank borrowings and ensures
compliance with the borrowing agreements. In the meantime, the Company obtains commitments from major
financial institutions to provide sufficient standby funds to meet short-term and long-term funding needs.
The Company finances its working capital with capital generated from operating activities and bank and other
borrowings. As at 30 June 2022, the Company’s unutilised bank loan facility was RMB40,650.0 million (31
December 2021: RMB42,832.1880 million).
178 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
X. Risk relating to financial instruments (Cont’d)
1. Goal and policies of risk management (Cont’d)
(2) Liquidity risk (Cont’d)
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):
2022.06.30
Item Within 1 year 1-2 years 2-3 years 3-4 years Over 4 years Total
Financial assets:
Monetary funds 1,489,190.53 1,489,190.53
Accounts receivable 377,424.26 377,424.26
Accounts receivable financing 91,272.75 91,272.75
Other receivables 274,959.34 274,959.34
Long-term receivables 175,087.96 8,519.67 7,000.00 1,500.00 192,107.63
Other current assets 141,558.73 141,558.73
Non-current assets due within one year 521,604.42 521,604.42
Total financial assets 2,896,010.03 175,087.96 8,519.67 7,000.00 1,500.00 3,088,117.66
Financial liabilities:
Short-term borrowings 3,635,966.39 3,635,966.39
Bills payable 403,508.13 403,508.13
Accounts payable 326,898.69 326,898.69
Other payables 147,844.01 147,844.01
Non-current liabilities due within one year 455,835.17 455,835.17
Long-term borrowings 206,515.51 30,929.00 20,675.00 278,204.00 536,323.51
Lease liabilities 623.41 659.67 659.67 5,351.41 7,294.16
Long-term payables 184,070.43 127,498.73 42,560.18 15,207.33 369,336.68
Total financial liabilities and contingent
liabilities 4,970,052.39 391,209.35 159,087.40 63,894.85 298,762.74 5,883,006.74
SHANDONG CHENMING PAPER HOLDINGS LIMITED 179
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X Financial Report
X. Risk relating to financial instruments (Cont’d)
1. Goal and policies of risk management (Cont’d)
(2) Liquidity risk (Cont’d)
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):
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 2,854,433.12 201,047.51 8,329.67 5,600.00 3,069,410.30
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 119,406.55 89,244.16 18,273.94 22,500.00 249,424.65
Total financial liabilities and contingent
liabilities 4,891,601.42 259,904.40 179,486.15 30,515.93 330,345.13 5,691,853.03
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.
(3) Market risk
Market risk of financial instruments is the risk of fluctuation in the fair value of financial instruments or future cash
flow arising from changes in market price. Market risk includes interest rate risk, exchange risk and other price
risk.
Interest rate risk
Interest rate risk is the risk of fluctuation in the fair value of financial asset or future cash flow arising from changes
in market interest rate. Interest rate risk may arise in the recognised interest-bearing financial instruments and
unrecognised financial instruments (e.g. some loan commitments).
180 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
X. Risk relating to financial instruments (Cont’d)
1. Goal and policies of risk management (Cont’d)
(3) Market risk (Cont’d)
Interest rate risk (Cont’d)
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 closely monitors the interest rate risk due to changes in interest rate. At present, the Company does
not adopt any interest rate hedging policies. However, the management is responsible for monitoring interest rate
risk, and considers hedging significant interest rate risk as necessary. Interest rate hikes will increase the cost of
new interest-bearing borrowings, 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 interest swap arrangements to mitigate its exposure to the interest rate risk.
Interest-bearing financial instruments 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 3,633,944.01 3,350,170.45
Long-term borrowings 534,746.81 526,438.53
Bonds payable 15,500.00
Long-term borrowings due within one year 146,971.75 258,373.04
Bonds payable due within one year 35,000.00 127,063.69
Total 4,350,662.57 4,277,545.71
Financial instrument with float interest rate
Financial assets
Of which: Monetary funds 313,929.26 316,598.98
Total 313,929.26 316,598.98
The sensitivity analysis above indicates the instantaneous change in the net profit and equity that would arise
assuming that the change in interest rates had occurred at the balance sheet date and had been applied to
remeasure those financial instruments held by the Company which expose the Company to fair value interest
rate risk at the balance sheet date. In respect of the exposure to cash flow interest rate risk arising from floating
rate non-derivative instruments held by the Company at the balance sheet date, the impact on the net profit and
equity is estimated as an annualised impact on interest expense or income of such a change in interest rates. The
analysis is performed on the same basis for the previous year.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 181
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X Financial Report
X. Risk relating to financial instruments (Cont’d)
1. Goal and policies of risk management (Cont’d)
(3) Market risk (Cont’d)
Exchange rate risk
Exchange rate risk refers to the risk that the fair value or future cash flow of a financial instrument will fluctuate
due to changes in foreign exchange rates. Exchange rate risk may arise from financial instruments denominated in
foreign currencies other than the functional currency.
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 30 June 2022 are as follows (in RMB ten thousands):
Liabilities denominated in Assets denominated in
foreign currency foreign currency
As at As at the As at As at the
the end of beginning of the end of beginning of
Item the period the period the period the period
USD 212,254.31 361,192.84 73,545.80 67,590.57
EUR 1,467.31 1,910.41 13,424.79 3,929.49
HKD 4,055.52 16.36 69.89
KRW 7.04
YEN 0.97 720.47 812.91
GBP 7.23
Total 213,722.59 367,158.77 87,714.65 72,409.90
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.
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% -14,290.01 5% -14,680.11
Decrease in exchange rate of USD -5% 14,290.01 -5% 14,680.11
Increase in exchange rate of Euro 5% 744.61 5% 100.95
Decrease in exchange rate of Euro -5% -744.61 -5% -100.95
182 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
X. Risk relating to financial instruments (Cont’d)
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 30 June 2022, the Company’s gearing ratio is 72.89% (31 December 2021: 72.78%).
XI. Fair value disclosure
Based on the inputs of the lowest level that are of great significance to the measurement as a whole in the fair value
measurement, the fair value can be categorised as:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Observable inputs other than the quoted market price of assets or liabilities in Level 1, either directly (the prices) or
indirectly (derived from prices).
Level 3: Any input that is not based on observable market data (unobservable inputs) is used for assets or liabilities.
1. Fair value of assets and liabilities measured at fair value as at the end of the period
As at 30 June 2022, assets and liabilities measured at fair value are listed as follows based on the three hierarchies as
set out above:
Unit: RMB
Fair value measurements categorised into
Item Level 1 Level 2 Level 3 Total
I. Continuous measurement of fair value
(i) Financial assets held for trading 51,033,051.57 51,033,051.57
1. Equity instrument investments 51,033,051.57 51,033,051.57
(ii) Accounts receivable financing 912,727,537.75 912,727,537.75
(iii) Other non-current financial assets 519,927,003.25 519,927,003.25
(iv) Biological assets 1,500,540,144.47 1,500,540,144.47
1. Consumable biological assets 1,500,540,144.47 1,500,540,144.47
Total assets continuously measured at fair value 51,033,051.57 2,933,194,685.47 2,984,227,737.04
In the current year, there were no transfers between Level 1 and Level 2 or transfers into or out of Level 3 for the fair
value measurements of the Company’s financial assets and financial liabilities.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 183
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X Financial Report
XI. Fair value disclosure (Cont’d)
2. Quantitative information about significant unobservable inputs used in the level 3 fair value
measurement that are significant
Unit: RMB
Fair value as at
the end of Valuation
Item the period techniques Unobservable inputs Range
Equity instrument investments:
Shandong Hongqiao Venture 72,510,000.00 Cost method
Capital Co., Ltd.
Consumable biological assets:
Forestry 1,500,540,144.47 Replacement cost Cost per mu for the first 806.00
method year of Eucalyptus (RMB/tonne)
Cost per mu for the first 590.00
year of Pines (RMB/tonne)
Roll back method of Unit price per tonne of 590.00
market price Eucalyptus wood (RMB/tonne)
Unit price per tonne of 525.00
wet pine (RMB/tonne)
Unit price per tonne of 800.00
China fir (RMB/tonne)
XII. Related parties and related party transactions
1. Parent company of the Company
Shareholding Voting right
Registered of the parent of the parent
Place of capital company in company in
Name of parent company incorporation Business nature (RMB’0,000) the Company the Company
Chenming Holdings Co., Ltd. Shouguang Investment in manufacture of 123,878.77 27.53% 27.53%
paper, electricity, 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 the Company’s subsidiaries, please refer to Note IX. 1.
184 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
X Financial Report
XII. Related parties and related party transactions (Cont’d)
3. Joint ventures and associates of the Company
For details of material 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 Company
Shouguang Meite Environmental Technology Co., Ltd. A joint venture of the Company
Weifang Xingxing United Chemical Co., Ltd. A joint venture of the Company
Shouguang Chenming Huisen New-style Construction Materials Co., Ltd. A joint venture of the Company
Anhui Time Source Corporation An associate of the Company
Lide Technology Co., Ltd. An associate of the Company
Chenming (Qingdao) Asset Management Co., Ltd. An associate of the Company
Jiangxi Chenming Port Co., Ltd. An associate of the Company
Guangdong Nanyue Bank Co., Ltd. An associate of the Company
4. Other related parties
Name of other related parties Relation
Shouguang Huixin Construction Materials Co., Ltd. A subsidiary of a company invested by the Directors
and senior management of the Company
Chen Hongguo, Hu Changqing, Li Xingchun, Li Feng, Li Key management personnel of the Company
Chuanxuan, Yuan Xikun, Li Xueqin, Li Zhenzhong, Li Weixian
and Dong Lianming
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 Transaction
Details of related party Amount for facility facility is Amount for the
Related party transaction the period approved exceeded prior period
Weifang Sime Darby
West Port Co., Ltd. Port miscellaneous expenses 32,355,133.76 100,000,000.00 No 38,373,133.21
SHANDONG CHENMING PAPER HOLDINGS LIMITED 185
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X Financial Report
XII. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont’d)
(1) Purchase and sales of goods and rendering and receiving services (Cont’d)
Table on sales of goods/providing of services
Unit: RMB
Details of related Amount for Amount for
Related party party transaction the period the prior period
Shouguang Chenming Huisen New-style
Construction Materials Co., Ltd. Sales of electricity and steam 8,581,891.97 4,489,589.98
Shouguang Huixin Construction Materials
Co., Ltd. Sales of cement, coal, oil, etc. 26,377.86 1,183,941.17
(2) Related party guarantee
The Company as guarantor
Unit: RMB
Whether
Commencement performance
Amount date of Expiry date of guarantee
Party being guaranteed under guarantee guarantee of guarantee is completed
Weifang Sime Darby West Port Co., Ltd. 117,400,000.00 2017-12-20 2027-12-20 No
Chenming (HK) Limited 105,330,858.44 2022-3-28 2022-9-23 No
Chenming (HK) Limited 19,043,008.17 2022-5-6 2022-8-31 No
Chenming (HK) Limited 21,876,110.04 2022-4-1 2022-9-28 No
Chenming (HK) Limited 8,339,395.51 2022-4-3 2022-9-30 No
Chenming (HK) Limited 22,083,177.27 2022-4-6 2022-10-3 No
Chenming (HK) Limited 10,155,458.74 2022-4-12 2022-10-9 No
Chenming (HK) Limited 24,836,747.91 2022-4-25 2022-7-20 No
Chenming (HK) Limited 23,392,524.43 2022-4-22 2022-10-19 No
Chenming (HK) Limited 23,114,885.89 2022-5-30 2022-8-19 No
Chenming (HK) Limited 22,023,296.55 2022-5-27 2022-11-23 No
Chenming (HK) Limited 5,625,130.92 2022-5-31 2022-8-29 No
Chenming (HK) Limited 8,513,110.77 2022-5-31 2022-8-29 No
Chenming (HK) Limited 5,887,724.91 2022-5-31 2022-8-29 No
Chenming (HK) Limited 19,702,993.69 2022-6-10 2022-7-29 No
Chenming (HK) Limited 24,598,900.86 2022-6-13 2022-8-5 No
Chenming (HK) Limited 5,699,846.92 2022-6-6 2022-9-6 No
Chenming (HK) Limited 8,685,381.80 2022-6-6 2022-9-6 No
Chenming (HK) Limited 9,807,185.20 2022-6-8 2022-9-6 No
Wuhan Chenming Hanyang Paper Holdings 30,000,000.00 2021/12/17 2022/10/16 No
Co., Ltd.
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. 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. 90,000,000.00 2022-5-19 2023-5-18 No
Huanggang Chenming Pulp & Paper Co., Ltd. 20,000,000.00 2022-4-22 2023-4-21 No
186 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
X Financial Report
XII. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont’d)
(2) Related party guarantee (Cont’d)
Whether
Commencement performance
Amount date of Expiry date of guarantee
Party being guaranteed under guarantee guarantee of guarantee is completed
Huanggang Chenming Pulp & Paper Co., Ltd. 30,000,000.00 2021/7/28 2022/7/27 No
Jilin Chenming Paper Co., Ltd. 98,580,000.00 2022-1-13 2022-7-11 No
Jilin Chenming Paper Co., Ltd. 18,000,000.00 2022-5-23 2023-5-8 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
Jiangxi Chenming Paper Co., Ltd. 150,000,000.00 2021-12-16 2022-12-15 No
Jiangxi Chenming Paper Co., Ltd. 27,000,000.00 2021-12-31 2022-12-23 No
Jiangxi Chenming Paper Co., Ltd. 2,000,000.00 2022-1-19 2023-1-18 No
Jiangxi Chenming Paper Co., Ltd. 28,000,000.00 2022-2-14 2023-1-18 No
Jiangxi Chenming Paper Co., Ltd. 150,000,000.00 2022-2-22 2023-2-21 No
Jiangxi Chenming Paper Co., Ltd. 94,450,000.00 2022-3-16 2023-3-15 No
Jiangxi Chenming Paper Co., Ltd. 99,000,000.00 2022-3-19 2023-3-18 No
Jiangxi Chenming Paper Co., Ltd. 12,500,000.00 2022-3-30 2022-9-26 No
Jiangxi Chenming Paper Co., Ltd. 10,000,000.00 2022-3-31 2023-3-31 No
Jiangxi Chenming Paper Co., Ltd. 20,134,200.00 2022-1-12 2022-7-11 No
Jiangxi Chenming Paper Co., Ltd. 70,000,000.00 2022/4/25 2023/4/24 No
Jiangxi Chenming Paper Co., Ltd. 49,000,000.00 2022/4/25 2023/4/24 No
Jiangxi Chenming Paper Co., Ltd. 270,000,000.00 2022/5/19 2023/5/17 No
Jiangxi Chenming Paper Co., Ltd. 73,000,000.00 2022/5/27 2023/5/26 No
Jiangxi Chenming Paper Co., Ltd. 80,000,000.00 2022/6/17 2023/6/16 No
Jiangxi Chenming Paper Co., Ltd. 10,000,000.00 2022/6/14 2023/6/12 No
Jiangxi Chenming Paper Co., Ltd. 20,000,000.00 2022/6/21 2023/6/16 No
Jiangxi Chenming Paper Co., Ltd. 28,317,695.39 2022/6/24 2023/6/20 No
Jiangxi Chenming Paper Co., Ltd. 12,000,000.00 2022/6/24 2022/12/20 No
Jiangxi Chenming Paper Co., Ltd. 250,000,000.00 2022/6/27 2023/6/24 No
Jiangxi Chenming Paper Co., Ltd. 13,000,000.00 2022/6/29 2022/12/26 No
Jiangxi Chenming Paper Co., Ltd. 100,000,000.00 2022/6/30 2023/6/30 No
Jiangxi Chenming Paper Co., Ltd. 1,532,212.62 2022-6-24 2022-12-21 No
Shandong Chenming Paper Sales Co., Ltd. 254,349,948.22 2022-2-15 2022-8-15 No
Shandong Chenming Paper Sales Co., Ltd. 459,968,037.61 2022-4-7 2023-4-3 No
Shandong Chenming Paper Sales Co., Ltd. 419,643,848.45 2022-4-21 2022-10-19 No
Shandong Chenming Paper Sales Co., Ltd. 126,012,917.62 2022-4-21 2022-10-19 No
Shanghai Chenming Pulp & Paper Sales Co., Ltd. 30,000,000.00 2022-1-26 2022-7-27 No
Shanghai Chenming Pulp & Paper Sales Co., Ltd. 10,000,000.00 2022-5-31 2023-5-31 No
Shanghai Chenming Pulp & Paper Sales Co., Ltd. 80,000,000.00 2022-6-1 2023-5-22 No
Shanghai Chenming Pulp & Paper Sales Co., Ltd. 10,000,000.00 2022-6-2 2023-5-22 No
Shanghai Chenming Pulp & Paper Sales Co., Ltd. 20,000,000.00 2022-6-21 2022-12-24 No
Shouguang Meilun Paper Co., Ltd. 124,867,323.20 2021-7-7 2022-7-4 No
Shouguang Meilun Paper Co., Ltd. 125,175,008.56 2022-1-25 2022-7-25 No
Shouguang Meilun Paper Co., Ltd. 131,454,694.19 2022-6-10 2022-12-7 No
Shouguang Meilun Paper Co., Ltd. 197,262,262.31 2022-1-7 2022-7-6 No
Shouguang Meilun Paper Co., Ltd. 69,076,521.58 2022-1-18 2022-7-18 No
Shouguang Meilun Paper Co., Ltd. 49,000,000.00 2022-4-30 2023-4-18 No
SHANDONG CHENMING PAPER HOLDINGS LIMITED 187
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X Financial Report
XII. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont’d)
(2) Related party guarantee (Cont’d)
Whether
Commencement performance
Amount date of Expiry date of guarantee
Party being guaranteed under guarantee guarantee of guarantee is completed
Shouguang Meilun Paper Co., Ltd. 162,136,733.49 2022-6-16 2022-12-13 No
Shouguang Meilun Paper Co., Ltd. 285,000,000.00 2022-1-29 2022-7-28 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
Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2021-7-13 2022-7-12 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 49,500,000.00 2021-8-12 2022-8-8 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 67,000,000.00 2021-9-15 2022-9-14 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 50,000,000.00 2021-9-26 2022-9-25 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 60,000,000.00 2021-10-18 2022-10-17 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 2021-11-16 2022-11-15 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 60,000,000.00 2021-11-17 2022-11-16 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 90,000,000.00 2021-11-23 2022-11-22 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 30,000,000.00 2021-11-24 2022-11-23 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. 81,200,000.00 2021-12-22 2022-7-17 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 36,912,700.00 2021-11-16 2022-11-15 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 90,000,000.00 2022-1-6 2022-7-6 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 89,900,100.00 2022-1-6 2022-7-6 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 80,000,000.00 2022-1-13 2023-1-12 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 63,000,000.00 2022-1-20 2023-1-20 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 125,000,000.00 2022-1-21 2023-1-20 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 50,000,000.00 2022-1-26 2023-12-22 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 5,000,000.00 2022-1-27 2023-1-26 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 40,000,000.00 2022-1-30 2023-1-26 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 200,000,000.00 2022-2-18 2022-8-18 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 200,000,000.00 2022-2-15 2023-2-14 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 70,000,000.00 2022-2-22 2023-2-21 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 20,000,000.00 2022-3-3 2023-3-2 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 30,000,000.00 2022-3-22 2023-3-10 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 50,000,000.00 2022-3-16 2023-3-15 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 50,000,000.00 2022-3-7 2023-3-2 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 26,845,600.00 2022-3-21 2023-3-3 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2022-4-8 2022-10-7 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 20,000,000.00 2022-4-21 2023-4-11 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 43,000,000.00 2022-4-27 2023-4-21 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 50,000,000.00 2022-5-7 2023-4-28 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 26,000,000.00 2022-5-13 2023-5-10 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 80,000,000.00 2022-5-13 2022-11-18 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 167,000,000.00 2022-5-12 2023-5-12 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2022-5-31 2024-5-30 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 47,000,000.00 2022-6-22 2022-12-16 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 70,000,000.00 2022-6-24 2023-6-23 No
188 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2022
X Financial Report
XII. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont’d)
(2) Related party guarantee (Cont’d)
Whether
Commencement performance
Amount date of Expiry date of guarantee
Party being guaranteed under guarantee guarantee of guarantee is completed
Zhanjiang Chenming Pulp & Paper Co., Ltd. 48,500,000.00 2022-6-28 2023-6-10 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 41,403,000.00 2022-6-29 2022-12-23 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 67,000,000.00 2022-6-24 2023-6-23 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 200,000,000.00 2022-6-28 2022-12-23 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 31,543,580.00 2022-4-28 2023-4-21 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 22,818,760.00 2022-5-13 2023-5-10 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 49,664,360.00 2022-4-29 2022-7-28 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 58,334,709.41 2022-5-10 2022-9-9 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 664,428,600.00 2019-12-27 2022-12-27 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 78,500,000.00 2020-10-16 2023-10-15 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 113,500,000.00 2020-11-11 2023-11-10 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 98,500,000.00 2020-12-10 2023-12-9 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 99,500,000.00 2021-1-5 2024-1-4 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 140,000,000.00 2021-12-23 2023-12-23 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2022-6-17 2025-6-16 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2022-6-17 2025-6-16 No
Hainan Chenming Technology Co., Ltd. 50,000,000.00 2022-5-13 2022-11-14 No
Shouguang Chenming Import and Export Trade 100,000,000.00 2022-1-14 2023-1-13 No
Co., Ltd
Chenming (Singapore) Limited 26,861,649.64 2022-6-17 2022-9-15 No
Chenming (Singapore) Limited 25,820,502.58 2022-6-24 2022-9-24 No
Chenming (Singapore) Limited 26,043,881.19 2022-6-29 2022-9-27 No
Chenming (Singapore) Limited 31,885,261.33 2022-6-14 2022-9-8 No
Chenming (HK) Limited 134,228,000.00 2021-11-19 2022-11-4 No
Chenming (HK) Limited 93,489,802.00 2022-3-17 2023-3-7 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 120,000,000.00 2021-8-16 2022-8-15 No
Shouguang Meilun Paper Co., Ltd. 364,000,000.00 2020-12-4 2023-10-30 No
Wuhan Chenming Hanyang Paper Holdings Co., 6,000,000.00 2020-12-4 2023-10-30 No
Ltd.
Huanggang Chenming Pulp & Paper Co., Ltd. 200,000,000.00 2020-12-4 2023-10-30 No
Zhanjiang Runbao Trading Co., Ltd. 160,000,000.00 2022-4-25 2024-4-25 No
Zhanjiang Dingjin Trading Co., Ltd. 135,581,900.00 2020-12-4 2022-11-22 No
(3) Related party lending and borrowing
Unit: RMB
Borrowing
Related party amount Starting date Expiry date Description
Borrowing from
Chenming Holdings Co., Ltd. 155,000,000.00 2022-1-6 2022-4-26 Controlling
shareholder
Guangdong Nanyue Bank Co., Ltd. 425,000,000.00 2022-1-20 2023-1-20 Associate
SHANDONG CHENMING PAPER HOLDINGS LIMITED 189
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XII. Related parties and related party transactions (Cont’d)
6. Related party accounts receivable and accounts payable
(1) Accounts receivables
Unit: RMB
Closing balance Opening balance
Item Related party Book balance Bad debt provision Book balance Bad debt provision
Accounts receivable Shouguang Chenming Huisen
New-style Construction Materials
Co., Ltd. 2,047,252.00 14,330.76
Accounts receivable Shouguang Meite Environmental
Technology Co., Ltd. 5,001,962.56 35,013.74
Accounts receivable Jiangxi Chenming Port Co., Ltd 109,385.42 109,385.42
Other receivables Weifang Sime Darby West Port
Co., Ltd. 69,747,294.59 3,785,041.96 80,667,961.32 7,423,984.26
Other receivables Shouguang Meite Environmental
Technology Co., Ltd. 19,025,633.68 1,803,768.91 22,740,159.32 21,348.69
Payments in advance Shouguang Meite Environmental
Technology Co., Ltd. 5,370,726.99
(2) Accounts payable
Unit: RMB
Closing book Opening book
Item Related party balance balance
Accounts payable Weifang Xingxing United Chemical Co., Ltd. 26,905,494.34 26,905,494.34
Other payables Weifang Xingxing United Chemical Co., Ltd. 16,860,000.00 16,860,000.00
Accounts payable Weifang Sime Darby West Port Co., Ltd. 11,378,405.32 7,609,782.51
Accounts payable Jiangxi Chenming Port Co., Ltd. 2,324,708.87
Other payables Jiangxi Chenming Port Co., Ltd. 6,630,800.00
Contract liabilities Anhui Time Source Corporation 1,570.10 1,570.10
Other payables Lide Technology Co., Ltd. 508,619.46 508,619.46
Other payables Chenming (Qingdao) Asset Management Co., Ltd. 116,656.55 115,633.42
Receipts in advance Chenming (Qingdao) Asset Management Co., Ltd. 49,539.63
190 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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XIII. Share-based payment
1. General information of share-based payment
√ Applicable Not applicable
Unit: RMB
Total exercised equity instruments of the Company during the period 0.00
Total invalid equity instruments of the Company during the period 24,176,200.00
Range of strike price and remaining periods of contracts of stock options excluding of which the See explanation
Company issues at the end of the period for details
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). The Company estimated that the performance indicators
for 2022 cannot be fulfilled, and the corresponding second batch of the 30% Restricted Shares cannot be unlocked. In
addition, 27,006,200 shares lapsed due to the resignation of some Senior Management members.
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 shares
Basis for determining the quantity of exercisable equity instruments See explanation
for details
Reasons for significant difference between the current estimate and previous estimate See explanation
for details
Accumulated amount of equity-settled share-based payment included in the capital reserve 78,193,784.34
Total amount of equity-settled share-based payment recognised in the current period -6,850,012.78
SHANDONG CHENMING PAPER HOLDINGS LIMITED 191
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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 285,099,655.45 181,254,971.61
2. Contingency
(1) Significant contingency as at the balance sheet date
The Company had no material contingency as at the balance sheet date.
(2) To state that the company has no material contingency that needs to be disclosed
The Company had no material contingency that needs to be disclosed.
XV. Post-balance sheet event
As of 30 June 2022, the Company 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 Group’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-made paper and pulp segment, which is responsible for production and sales of machine-made
paper and pulp;
(2) Financial services segment, which provides financial services;
(3) Hotels and property rentals segment, which engages in property leasing;
(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.
192 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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XVI. Other material matters (Cont’d)
1. Segment information (Cont’d)
(2) Financial Information of Reporting Segment
Unit: RMB
Current period or end Machine-made Hotels and
of current period paper and pulp Financial services property rentals Others Elimination Total
Revenue 33,293,149,611.73 313,686,272.81 236,294,775.54 2,283,741,250.50 19,450,443,544.75 16,676,428,365.83
Of which: revenue from
external transactions 16,091,824,702.93 125,629,976.14 108,076,112.11 350,897,574.65 16,676,428,365.83
Revenue from inter-segment
transactions 17,201,324,908.80 188,056,296.67 128,218,663.43 1,932,843,675.85 19,450,443,544.75
Of which: Revenue from
principal activities 32,655,617,824.79 313,686,272.81 125,577,301.79 1,020,944,232.40 17,945,290,072.55 16,170,535,559.24
Operating costs 32,033,269,370.91 133,101,515.13 117,317,417.16 701,400,250.00 18,930,139,274.00 14,054,949,279.20
Of which: Costs of principal
activities 31,805,102,552.96 133,101,515.13 86,078,159.49 542,878,138.76 18,944,714,891.54 13,622,445,474.80
Operating expenses 224,701,509.79 1,147,736.39 10,424,163.11 3,838,184.36 102,055,830.00 138,055,763.65
Of which: salaries 68,341,155.74 594,088.97 2,360,658.64 1,396,703.06 72,692,606.41
Depreciation expenses 3,658,064.86 20,589.15 1,854,394.08 8,542.33 5,541,590.42
Office expenses 1,105,011.63 3,111.89 1,108,123.52
Travel expenses 8,263,434.15 133,127.96 139,277.53 8,535,839.64
Selling commissions 3,043,011.69 3,521,573.18 318,820.19 6,883,405.06
Rental expenses 2,433,614.84 44,843.41 2,478,458.25
Hospitality expenses 22,109,421.79 399,930.31 18,718.00 427,535.26 169,037.55 22,786,567.81
Warehouse expenses 297,908.54 205,881.28 503,789.82
Others 115,449,886.55 2,665,707.32 1,296,581.30 101,886,792.45 17,525,382.72
Operating profit/(loss) 393,913,359.61 120,593,852.35 6,604,072.62 16,318,802.39 252,939,549.28 284,490,537.69
Total cost of construction in
progress incurred during
the period 618,300,337.33 20,617.48 618,320,954.81
Fixed assets acquired in the
current period 196,803,355.58 711,110.44 410,171.64 1,723,902.65 199,648,540.31
Intangible assets acquired
during the period 305,955,525.74 305,955,525.74
Total assets 131,047,372,405.39 21,036,519,263.19 8,008,176,271.16 7,256,995,196.55 82,162,482,091.05 85,186,581,045.24
Total liabilities 86,963,296,560.71 8,872,476,560.12 3,728,407,230.32 2,036,422,737.56 39,505,812,018.10 62,094,791,070.61
Basis of accounting: The transfer prices between the Company's segments are based on market prices.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 193
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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
Provision Provision
Type Amount Percentage Amount proportion Carrying value Amount Percentage Amount proportion Carrying value
Accounts receivable assessed
individually for bad debt
provision
Of which:
Accounts receivable assessed
collectively for bad debt
provision 1,219,841,113.33 100.00% 4,911,757.18 0.40% 1,214,929,356.15 146,213,282.74 100.00% 4,612,037.23 3.15% 141,601,245.51
Of which:
Receivables from related party
customers 1,156,918,862.10 94.84% 1,156,918,862.10 126,108,166.75 86.25% 126,108,166.75
Receivables from non-related
party customers 62,922,251.23 5.16% 4,911,757.18 7.81% 58,010,494.05 20,105,115.99 13.75% 4,612,037.23 22.94% 15,493,078.76
Total 1,219,841,113.33 100.00% 4,911,757.18 0.40% 1,214,929,356.15 146,213,282.74 100.00% 4,612,037.23 3.15% 141,601,245.51
194 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
1. Accounts receivable (Cont’d)
(1) Disclosure of accounts receivable by category (Cont’d)
Items assessed collectively for impairment:
Accounts receivable with collective provision for bad debts based on receivables from related parties
Unit: RMB
Closing balance
Bad debt Provision
Name Book balance provision percentage
Within 1 year 1,156,918,862.10
Total 1,156,918,862.10
Accounts receivable with collective provision for bad debts based on receivables from non-related parties
Unit: RMB
Closing balance
Bad debt Provision
Name Book balance provision percentage
Within 1 year 58,419,430.06 408,936.01 0.70%
1 to 2 years
2 to 3 years
Over 3 years 4,502,821.17 4,502,821.17 100.00%
Total 62,922,251.23 4,911,757.18 7.81%
Disclosure by ageing
Unit: RMB
Ageing Closing balance
Within 1 year (including 1 year) 1,215,338,292.16
1 to 2 years
2 to 3 years
Over 3 years 4,502,821.17
Subtotal 1,219,841,113.33
Bad debt provision 4,911,757.18
Total 1,214,929,356.15
SHANDONG CHENMING PAPER HOLDINGS LIMITED 195
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XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
1. Accounts receivable (Cont’d)
(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 Closing
Category balance Provision or reversal Write-off Others balance
Accounts receivable with
provision for bad debts 4,612,037.23 2,047,859.77 1,748,139.82 4,911,757.18
Total 4,612,037.23 2,047,859.77 1,748,139.82 4,911,757.18
(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 RMB1,219,357,493.76 in total, accounting for 99.96% of the total closing balance of accounts receivable. The
closing balance of the corresponding bad debt provision amounted to RMB4,828,712.22 in total.
Unit: RMB
Percentage to
total closing
Closing balance balance of Closing balance
of accounts accounts of bad debt
Name of entity receivable receivable provision
Customer I 960,997,446.28 78.78%
Customer II 190,921,415.82 15.65%
Customer III 58,016,031.66 4.76% 406,112.22
Customer IV 5,000,000.00 0.41%
Customer V 4,422,600.00 0.36% 4,422,600.00
Total 1,219,357,493.76 99.96% 4,828,712.22
196 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
2. Other receivables
Unit: RMB
Item Closing balance Opening balance
Interest receivable
Dividends receivable 126,325,018.50
Other receivables 8,021,857,221.76 8,773,854,244.04
Total 8,021,857,221.76 8,900,179,262.54
(1) Dividends receivable
1) Classification of dividends receivable
Unit: RMB
Item (or investee) Closing balance Opening balance
Jiangxi Chenming Paper Co., Ltd. 72,896,218.50
Zhanjiang Chenming Pulp & Paper Co., Ltd. 53,428,800.00
Total 126,325,018.50
(2) Other receivables
1) Classification of other receivables by nature
Unit: RMB
Closing book Opening book
Nature balance balance
Open credit 8,100,301,136.29 8,849,264,265.13
Guarantee deposit 1,467,526.34 240,000.00
Reserve and borrowings 8,738,534.42 6,103,279.46
Others 5,487,933.49 11,961,652.43
Total 8,115,995,130.54 8,867,569,197.02
SHANDONG CHENMING PAPER HOLDINGS LIMITED 197
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XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
2. Other receivables (Cont’d)
(2) Other receivables (Cont’d)
2) Particulars of bad debt provision
Unit: RMB
Stage 1 Stage 2 Stage 3
Lifetime ECLs Lifetime ECLs
ECLs for the (not credit- (credit-
Bad debt provision next 12 months impaired) impaired) Total
Balance as at 1 January 2022 41,288,305.23 52,426,647.75 93,714,952.98
Balance as at 1 January 2022 for the period
– Transferred to stage 2
– Transferred to stage 3
– Reversed to stage 2
– Reversed to stage 1
Provision for the period 4,214,604.81 4,214,604.81
Reversal for the period 3,791,649.01 3,791,649.01
Transfer for the period
Write-off for the period
Other changes
Balance as at 30 June 2022 37,496,656.22 56,641,252.56 94,137,908.78
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
Within 1 year (including 1 year) 8,016,966,084.12
1 to 2 years 6,278,479.37
2 to 3 years 10,499,017.28
Over 3 years 82,251,549.77
Total 8,115,995,130.54
198 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
2. Other receivables (Cont’d)
(2) Other receivables (Cont’d)
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 Closing
Category balance Provision or reversal Write-off Others balance
Bad debt provision for other
receivables 93,714,952.98 4,214,604.81 3,791,649.01 94,137,908.78
Total 93,714,952.98 4,214,604.81 3,791,649.01 94,137,908.78
4) Top five other receivables according to closing balance of debtors
The top five other receivables based on closing balance of debtors for the period amounted to
RMB5,329,828,506.01 in total, accounting for 65.67% of the total closing balance of other receivables. The
closing balance of the corresponding bad debt provision amounted to RMB0.00 in total.
Unit: RMB
Percentage to Closing
total closing balance
balance of other of bad debt
Name of entity Nature Closing balance Maturity receivables provision
Customer I Open credit 2,005,200,000.00 Within 1 year 24.71% 0.00
Customer II Open credit 1,223,803,000.00 Within 1 year 15.08% 0.00
Customer III Open credit 865,510,075.00 Within 1 year 10.66% 0.00
Customer IV Open credit 857,550,893.00 Within 1 year 10.57% 0.00
Customer V Open credit 377,764,538.01 Within 1 year 4.65% 0.00
Total 5,329,828,506.01 65.67% 0.00
3. Long-term equity investments
Unit: RMB
Closing balance Opening balance
Impairment Impairment
Item Book balance provision Carrying amount Book balance provision Carrying amount
Investment in subsidiaries 18,508,056,896.52 18,508,056,896.52 18,480,556,896.52 18,480,556,896.52
Investment in associates and joint ventures 324,189,775.31 5,994,545.96 318,195,229.35 331,467,464.62 5,994,545.96 325,472,918.66
Total 18,832,246,671.83 5,994,545.96 18,826,252,125.87 18,812,024,361.14 5,994,545.96 18,806,029,815.18
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XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
3. Long-term equity investments (Cont’d)
(1) Investment in subsidiaries
Unit: RMB
Change for the period
Closing balance
Opening balance Additional Withdrawn Impairment Closing balance of impairment
Investee (Carrying amount) contribution contribution provision Others (Carrying amount) 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. 2,302,000,000.00 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
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. 5,110,000,000.00 27,500,000.00 5,137,500,000.00
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
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 Hongxin Printing and 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
Chenming Paper USA Inc. 6,407,800.00 6,407,800.00
Weifang Chenming Growth Driver Replacement Equity
Investment Fund Partnership (Limited Partnership) 632,000,000.00 632,000,000.00
Weifang Chendu Equity Investment Partnership (Limited
Partnership) 255,000,000.00 255,000,000.00
Total 18,480,556,896.52 27,500,000.00 18,508,056,896.52
200 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
3. Long-term equity investments (Cont’d)
(2) Investment in associates and joint ventures
Unit: RMB
Change for the period
Investment Distribution
Opening gain or loss Adjustment Other of cash Closing Closing
balance recognised of other change dividend balance balance of
(Carrying Additional Withdrawn under equity comprehensive in equity or profit Impairment (Carrying impairment
Investee amount) contribution contribution method income interest declared provision Others amount) provision
I. Associates
Shouguang Chenming Huisen
New-style Construction
Materials Co., Ltd. 6,902,869.87 -215,525.03 1,000,000.00 5,687,344.84
Weifang Sime Darby West
Port Co., Ltd. 77,370,998.75 -3,008,474.82 74,362,523.93
Subtotal 84,273,868.62 -3,223,999.85 1,000,000.00 80,049,868.77
II. Joint ventures
Zhuhai Dechen New Third
Board Equity Investment
Fund Company (Limited
Partnership) 36,967,896.31 -2,003,052.15 34,964,844.16
Ningbo Kaichen Huamei
Equity Investment Fund
Partnership (Limited
Partnership) 197,297,485.59 -3,217.73 197,294,267.86
Chenming (Qingdao) Asset
Management Co., Ltd. 6,933,668.14 -107,419.58 940,000.00 5,886,248.56
Xuchang Chenming Paper
Co., Ltd. 5,994,545.96
Subtotal 241,199,050.04 -2,113,689.46 940,000.00 238,145,360.58 5,994,545.96
Total 325,472,918.66 -5,337,689.31 1,940,000.00 318,195,229.35 5,994,545.96
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XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
4. Revenue and operating costs
Unit: RMB
Amount for the period Amount for the prior period
Item Revenue Costs Revenue Costs
Principal activities 3,140,980,202.71 2,884,740,920.89 4,032,722,509.28 2,973,878,062.69
Other activities 605,682,653.79 496,489,124.84 650,730,956.36 537,196,013.25
Total 3,746,662,856.50 3,381,230,045.73 4,683,453,465.64 3,511,074,075.94
Information related to revenue:
Unit: RMB
Category of contract Machine-made paper Others Total
Type of goods 3,140,980,202.71 605,682,653.79 3,746,662,856.50
Including:
Machine-made paper 2,740,277,450.49 2,740,277,450.49
Material sales 364,976,994.36 364,976,994.36
Leasing 8,724,715.35 8,724,715.35
Others 400,702,752.22 231,980,944.08 632,683,696.30
By geographical area
Including:
Mainland China 3,140,980,202.71 605,682,653.79 3,746,662,856.50
Other countries and regions
By the timing of delivery
Including:
Goods (at a point in time) 3,140,980,202.71 596,957,938.44 3,737,938,141.15
Services (within a certain period)
Leasing income 8,724,715.35 8,724,715.35
5. 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 270,000,000.00 2,669,260,273.97
Income from long-term equity investments accounted for using the
equity method -5,337,689.31 -4,587,981.17
Investment gain on disposal of long-term equity investments 751,679.56
Investment gain on holding other non-current financial assets 2,800,000.00 15,000,000.00
Investment gain on derecognition of financial assets -30,954,557.50
Total 237,259,432.75 2,679,672,292.80
202 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X 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 (including write-off of
provision for asset impairment) -3,921,463.03
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 149,264,611.68
Profit or loss from debt restructuring -754,806.87
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 -62,122,863.58
Consumable biological assets measured at fair value 3,309,448.09
Other gain or loss items within the definition of extraordinary gain or loss -3,575,720.23
Less: Effect of income tax 24,569,100.79
Effect of minority interest (after tax) 896,568.64
Total 56,733,536.63
Details of other gain or loss items falling within the definition of extraordinary gain or loss:
Applicable √ Not applicable
The Company did not have details of other gain or loss items falling 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
SHANDONG CHENMING PAPER HOLDINGS LIMITED 203
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XVIII. Supplementary information (Cont’d)
2. Return on net assets and earnings per share
Earnings per share
Rate of return
on net assets Basic Diluted
on weighted (RMB (RMB
Profit for the reporting period average basis per share) per share)
Net profit attributable to ordinary shareholders of the Company 1.02% 0.064 0.064
Net profit after extraordinary gains or losses attributable to
ordinary shareholders of the Company 0.71% 0.044 0.044
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 RMB44,481,369.86 from 1 January 2022 to 30 June 2022 are
deducted.
3. 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
(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
The Board of Shandong Chenming Paper Holdings Limited
30 August 2022
204 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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