SHANDONG CHENMING PAPER HOLDINGS LIMITED Interim Report 2023
SHANDONG CHENMING PAPER HOLDINGS LIMITED
Interim Report 2023
August 2023
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 2023
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 27
VI Material Matters 36
VII Changes in Share Capital and Shareholders 60
VIII Preference Shares 67
IX Bonds 68
X Financial Report 71
2 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
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 2023
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 Investment means Shandong Chenming Investment Limited
Chenming Leasing means Shandong Chenming Financial Leasing Co., Ltd. and its subsidiaries
Chenrong Fund means Weifang Chenrong Growth Driver Replacement Equity Investment Fund Partnership
(Limited Partnership)
Corporate Bonds means 18 Chenming Bond 01
Perpetual Bonds means 17 Lu Chenming MTN001
reporting period means the period from 1 January 2023 to 30 June 2023
the beginning of the year or the means 1 January 2023
period
the end of the interim period or the means 30 June 2023
period
4 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
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 and others of the Company changed during
the reporting period
Applicable √ Not applicable
There was no change of the registered address, office address, postal code, website, email and others of the Company
during the reporting period. Please refer to the 2022 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 websites of the stock exchanges and the names and websites of the media where the
Company discloses its interim report, and places for inspection of the Company’s interim report during the reporting
period. Please refer to the 2022 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 2023
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) 12,564,962,781.31 16,676,428,365.83 -24.65%
Net profit attributable to shareholders of the Company (RMB) -688,080,164.10 230,141,463.76 -398.98%
Net profit after extraordinary gains or losses attributable to
shareholders of the Company (RMB) -811,839,217.49 173,407,927.13 -568.17%
Net cash flows from operating activities (RMB) 1,783,087,747.59 998,264,209.45 78.62%
Basic earnings per share (RMB per share) -0.250 0.064 -490.63%
Diluted earnings per share (RMB per share) -0.250 0.064 -490.63%
Decrease by 5.17
Rate of return on weighted average net assets -4.15% 1.02% 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) 82,652,860,756.58 84,301,017,409.62 -1.96%
Net assets attributable to shareholders of the Company (RMB) 18,287,406,923.90 19,084,565,494.92 -4.18%
Data specification: The net profit attributable to shareholders of the Company does not exclude the effect of the interest
payment deferred and accumulated to subsequent periods for Perpetual Bonds. 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
during the reporting period is deducted.
6 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
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) 9,118,027.05
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 108,155,697.19
Profit or loss from debt restructuring -145,995.36
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 -25,565,577.25
Reversal of provision for impairment of receivables individually tested for
impairment 68,586,443.66
Profit or loss from changes in the fair value of consumable biological assets
subsequently measured at fair value 5,749,779.42
Other non-operating income and expenses other than the above items 443,855.10
Less: Effect of income tax 39,664,063.42
Effect of minority interests (after tax) 2,919,113.00
Total 123,759,053.39
SHANDONG CHENMING PAPER HOLDINGS LIMITED 7
INTERIM REPORT 2023
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 2023
III Management Discussion and Analysis
I. Principal activities of the Company during the Reporting Period
(I) Industry overview
According to the Guidelines for the Industry Classification of Listed Companies (2012 Revision) issued by the CSRC, the
industry in which the Company operates is “C22 paper making and paper products industry”.
The paper making industry is an important basic raw material industry closely related to the national economy and social
development with sustainable development characteristics. With strong industrial relevance and large market capacity,
paper products are widely used in various fields such as cultural communication, people’s life, industry, agriculture,
and national defence, involving forestry, agriculture, machinery manufacturing, chemicals, cogeneration, environmental
protection and other industries, and having an important pulling effect on the economic activities of upstream and
downstream sectors. As a typical midstream manufacturing industry, the paper making industry is characterised
as “asset heavy” with “long industrial chain and diverse demand”. The upstream raw material price fluctuation will
directly affect the production and operation costs of companies, and leading players have laid out their pulp and paper
integration strategies to seize the commanding heights in raw materials and grasp the market initiative. In recent years,
with the implementation of policies such as “waste ban” and “dual control of energy intensity and total consumption”,
environmental pressure and fierce market competition have resulted in a higher barrier to entry. Paper making
companies with economies of scale, forest resources, and capital and technological strength have gradually gained
a dominant position in the market, and backward production capacity has been continuously phased out. According
to the survey data of China Paper Association, the number of paper and paperboard production enterprises in China
decreased to about 2,500 in 2022 from about 3,500 in 2012, and the number of production enterprises with output
exceeding 1.00 million tonnes increased to 27 from 14, further raising the industry concentration ratio.
In the first half of 2023, the paper making industry suffered from a weak global economic recovery, great downward
pressure on the macroeconomy, and insufficient end user consumption demand resulting from factors such as the
Russia-Ukraine conflict and the persistent high inflation pressure in Europe and the United States on the one hand. On
the other hand, the paper making industry encountered a trough as pulp and paper production capacity continued to
increase, the industry supply pressure remained high, and the supply-demand imbalance suppressed the prices and
sales of machine-made paper. According to the data of the National Bureau of Statistics, the total profit of industrial
enterprises above designated size in the paper making and paper products industry for the period from January to June
2023 was RMB12.04 billion, down by 44.6% year on year. As the macroeconomic order returned to normal, a series of
policies to expand domestic demand and boost consumption took effect, and the downstream demand was going to
gradually pick up, the profitability and prosperity of the paper making industry are expected to be restored.
(II) Business overview
The Company has firmly adhered to the general keynote of green, low-carbon, recycling and sustainable development,
focused on the pulp and paper making industry development, vigorously implemented the innovation-driven strategy,
persisted in the pulp and paper integration strategy, and built three production bases with Shouguang in northern China,
Huanggang in central China and Zhanjiang in southern China. At present, the Company has established production
bases in Shandong, Guangdong, Hubei, Jiangxi, Jilin and other places, with annual pulp and paper production capacity
of 11.00 million tonnes, and is the first paper making enterprise in China to realise the capacity balance between pulp
production and paper making. During the reporting period, the machine-made paper business was the major income
and profit source of the Company, and there were no major changes in its principal activity and business model in terms
of procurement, production, marketing and R&D.
In the first half of 2023, affected by the macroeconomic environment, the downstream demand was weak, which led to
a significant year-on-year decline in machine-made paper sales and prices. In particular, the continuous decline in the
white cardboard prices had a great impact on the Company’s profit. Although the prices of raw and auxiliary materials
such as wood pulp, wood chips and energy showed an obvious downward trend during the reporting period, the costs
of machine-made paper were still higher than that of the corresponding period of the prior year and the profit margin
was squeezed due to the lagging effect of cost improvement. Next, the Company will improve its operation quality and
efficiency by adjusting its pulp-paper structure, advancing high value-added product development, improving asset
utilisation rate, and consolidating overseas market channels. Meanwhile, with an improving macroeconomic environment
and gradually improving downstream demand, the Company will effectively restore its profitability.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 9
INTERIM REPORT 2023
III Management Discussion and Analysis
I. Principal activities of the Company during the Reporting Period (Cont’d)
(III) Products
As a leading enterprise in the domestic paper industry, the Company attaches great importance to technology research
and development and brand benefits, and has the largest and most advanced pulping and papermaking production
lines in the world, with machine-made paper products covering more than 200 types in seven series, including culture
paper, coated paper, white cardboard, copy paper, industrial paper, special paper and household paper. The Company
owns “CHENMING CLOUDY MIRROR”, “CHENMING CLOUDLY LION”, “CHENMING SNOW SHARK”, “CHENMING
EAGLE”, “CHENMING GONGHAO”, “XINGZHILIAN” and other famous brands. During the reporting period, “CLOUDY
MIRROR” 70g and 80g, and “CLOUDY LEOPARD” electrostatic copy paper of the Company were successfully selected
into the 2023 “Made in Shandong Qilu Quality Goods”, and the brand reputation continued to improve.
Major
production
Category Major brands and types companies Range of application
Culture 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 Shouguang Meilun teaching materials, reference books, etc.
2. “CLOUDY LION” and “CLOUDY CRANE” original Zhanjiang Chenming
white offset paper Jiangxi Chenming
3. “CLOUDY PINE” and “GREEN PINE” light weight Jilin Chenming
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 2023
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 cardboard 1. White cardboard of “LIYA” series, white cardboard Shouguang High-end gift boxes, cosmetics boxes, tags,
series and ivory cardboard of “LIPIN” and “POPLAR” Headquarters shopping bags, publicity pamphlets, high-
series, high bulk cardboard and ivory cardboard of Jiangxi Chenming end postcards; cigarette package printing
“LIZZY” and “BAIYU” series, and super high bulk Zhanjiang Chenming of medium and high quality; milk package,
cardboard of “LIYING” and “BAIYU” series beverage package, disposable paper cups,
2. Food package board of “LIYA” and “LIZZY” series milk tea cups, and noodle bowls.
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 Printing and copying business documents,
copy paper, “BOYA” and “BIYUNTIAN” copy paper, Headquarters training materials, and writing.
“MINGYANG”, “LUCKY CLOUDS”, “BOYANG” and Shouguang Meilun
“SHANYIN” copy paper, and “GONGHAO” and Zhanjiang Chenming
“TIANJIAN” copy paper
Industrial paper series High-grade yellow anti-sticking base paper, ordinary Shouguang Anti-stick base paper is mainly used for
yellow/white anti-sticking base paper and PE paper Headquarters producing the paper base of stripping paper
Jiangxi Chenming or anti-sticking base paper;
Zhanjiang Chenming
Cast coated base paper is suitable for
producing adhesive paper or playcard
compound paper after coating.
Special paper series Thermal paper and glassine paper Shouguang Art Paper High-grade adhesive backing paper for
electronics, medicine, food, 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” 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 2023
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 2023, the Group’s current ratio was 62.61%. The quick ratio was 49.20%. The gearing ratio (i.e. total liabilities
divided by total assets) was 72.28%.
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, and borrowings from
financial institutions.
As at 30 June 2023, the total bank borrowings of the Group were RMB41,483 million (as at the end of the prior year: the total
bank borrowings and Corporate Bonds of the Group were RMB42,288 million and RMB350 million, respectively). As at 30
June 2023, the Group had monetary funds of RMB13,756 million (as at the end of the prior year: RMB14,000 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 2023, the Group
had 10,364 employees. The total staff remuneration for the first half of 2023 amounted to RMB545.9545 million (The Group
had 10,855 employees in 2022. The total staff remuneration for 2022 amounted to RMB1,225.2395 million).
There was no major investment project of the Company during the second half of 2023.
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 2023, please refer to X. VII. 63. Details of assets
with restricted ownership or right to use in this report.
III. Analysis of Core Competitiveness
After innovation and development for more than 60 years, the Company has created a strong brand influence and cultivated
a solid comprehensive competitiveness. It promotes product upgrades, enhances R&D strength and improves core
competitiveness by building a supply chain. The core competitiveness of the Company did not underwent major changes
during the reporting period. The details of the core competitiveness of the Company 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 2023
III Management Discussion and Analysis
III. Analysis of Core Competitiveness (Cont’d)
2. Scale advantages
The paper making industry is a typical capital-intensive and technology-intensive industry that follows the laws of
economies of scale. The Company is a leading player in the paper making industry in China. Its large-scale production
bases can be found in the major markets in Southern, Central, Northern, and Northeast China, with annual pulp and
paper production capacity reaching 11 million tonnes, where reasonable production scale creates the marginal cost
advantage. Meanwhile, by leveraging the scale advantages, the Company has built an international logistics centre
and railway dedicated lines and docks, and constructed a comprehensive logistics service platform covering container
shipping, 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 and the most complete product range in the paper making industry.
The product series include culture paper, white cardboard, coated paper, copy paper, household paper, thermal paper,
etc., with each major product ranking among the best in terms of market share. The Company has attached great
importance to technology research and development. By introducing the most advanced pulping and paper making
technology and equipment in the world, it persists in technological innovation and work process optimisation, so as to
help improve product quality and structure upgrade, continuously improve the brand value of Chenming, and enhance
brand benefits.
4. Industry layout advantages
Closely centring on the pulp and paper integration strategy, the Company has integrated resources and established
its production bases in the core target market to promote the coordinated development of all regions. Currently, the
Company adopts the market-oriented approach and has production bases in Shandong, Guangdong, Hubei, Jiangxi,
Jilin and other places. With all products sold at close distances, the Company substantially reduces transportation costs
while improving service efficiency, achieving a “win-win” between the Company and its users.
5. Advantages in technical equipment
The Company highly values the introduction and upgrades of technical equipment, actively push equipment and
technology upgrade forward 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, thus ensuring production efficiency and product quality.
6. Advantages in research and innovation
The Company has scientific research institutions including the national enterprise technology centre, the post-doctoral
working station, the state certified CNAS pulp and paper testing centre. At the same time, the Company actively carries
out in-depth industry-university-research cooperation with prestigious domestic universities and research institutes,
continuously improves technical innovation capabilities and scientific research and development levels, and develops
a series of new products with high technology contents and high added value as well as proprietary technologies.
The Company and its subsidiaries Zhanjiang Chenming, Shouguang Meilun, Jiangxi Chenming, Jilin Chenming and
Huanggang Chenming are high and new technology enterprises. As at the end of the reporting period, the Company
had obtained over 400 national patents, including 39 invention patents, 7 national new products, 16 scientific and
technological progress awards above the provincial level, 5 national scientific and technological projects, and 70
provincial technological innovation projects. The Company took the lead in obtaining the ISO9001 quality system
certification, the ISO14001 environmental protection system certification and the FSC-COC international forest system
certification among domestic peers.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 13
INTERIM REPORT 2023
III Management Discussion and Analysis
III. Analysis of Core Competitiveness (Cont’d)
7. Team management advantages
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 a corporate culture that ties in with the Company’s development, summarised
management experience with industry characteristics, and formed a team advantage integrating management and
culture, allowing it to accurately grasp the industry development trend. At the same time, the Company has paid
attention to the construction of a talent reserve and 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 human capital construction, 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, reclaimed water treatment system,
reclaimed water reuse system, white water recovery system and black liquor comprehensive utilisation system. The
environmental protection indicators 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 reclaimed water reuse project in the domestic paper industry.
The reclaimed water recycle rate attains the industry-leading level. The reclaimed water quality meets drinking water
standards, which can save hundreds of thousands cubic metres of fresh water 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 2023
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 12,564,962,781.31 16,676,428,365.83 -24.65% Mainly due to a year-on-year decrease of the
sales volumes and selling prices of machine-
made paper during the reporting period.
Selling and distribution expenses 106,666,717.54 138,055,763.65 -22.74% Mainly due to a decrease in sales volume and
strict control of expenses by the Company at
the same time during the reporting period.
Finance expenses 849,526,920.05 1,021,034,604.66 -16.80% Mainly due to a year-on-year decrease of the
interest-bearing liability size and financing rates
during the reporting period.
Investment income -42,756,726.88 -24,138,176.90 -77.13% Mainly due to a year-on-year increase of
discounted interest on bills included in
investment income during the reporting period.
Gains on changes in fair value -19,815,797.83 -58,813,415.49 66.31% Mainly due to the change of the shares of China
Bohai Bank during the reporting period.
Credit impairment loss -43,081,750.88 -25,363,341.17 69.86% Mainly due to a year-on-year increase of
provision for bad debts of accounts receivable
during the reporting period.
Loss on impairment of assets -43,314,485.76 1,936,644.09 2336.57% Mainly due to a year-on-year increase of
provision for impairment of finished products
during the reporting period.
Income tax expenses -211,491,182.14 1,378,726.69 -15439.60% Mainly due to a year-on-year decrease of the
total profit realised by the Company during the
reporting period.
Net cash flows from operating 1,783,087,747.59 998,264,209.45 78.62% Mainly due to a year-on-year decrease of cash
activities paid by the Company for purchasing goods and
accepting labour services during the reporting
period.
Net cash flows from investing 46,500,863.35 -806,624,723.83 105.76% Mainly due to a year-on-year decrease of
activities project investments of the Company during the
reporting period.
Net cash flows from financing -2,088,182,807.81 -242,119,047.65 -762.46% Mainly due to the reduction of debts by the
activities Company 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 2023
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 12,564,962,781.31 100% 16,676,428,365.83 100% -24.65%
By industry
Machine-made paper 11,300,765,054.86 89.94% 14,440,493,130.31 86.59% -21.74%
Chemical pulp 240,438,232.65 1.91% 239,810,290.10 1.44% 0.26%
Power and steam 120,561,393.77 0.96% 195,203,273.89 1.17% -38.24%
Hotel and property rents 109,744,705.55 0.87% 104,267,757.09 0.63% 5.25%
Construction materials 106,371,211.95 0.85% 128,912,692.24 0.77% -17.49%
Processing of moulds 100,217,749.88 0.80% 147,804,749.38 0.89% -32.20%
Chemicals 60,607,594.98 0.48% 70,973,693.13 0.43% -14.61%
Others 526,256,837.67 4.19% 1,348,962,779.69 8.09% -60.99%
By product
Duplex press paper 3,668,277,002.07 29.19% 3,784,089,225.00 22.69% -3.06%
White paper board 2,540,842,151.66 20.22% 5,228,447,295.27 31.35% -51.40%
Electrostatic paper 1,910,330,360.89 15.20% 1,913,990,734.51 11.48% -0.19%
Coated paper 1,808,743,574.23 14.40% 2,191,460,241.65 13.14% -17.46%
Anti-sticking raw paper 572,047,556.98 4.55% 512,600,898.29 3.07% 11.60%
Thermal paper 262,227,271.15 2.09% 280,590,566.03 1.68% -6.54%
Other machine-made paper 538,297,137.88 4.28% 529,314,169.56 3.17% 1.70%
Chemical pulp 240,438,232.65 1.91% 239,810,290.10 1.44% 0.26%
Power and steam 120,561,393.77 0.96% 195,203,273.89 1.17% -38.24%
Hotel and property rents 109,744,705.55 0.87% 104,267,757.09 0.63% 5.25%
Construction materials 106,371,211.95 0.85% 128,912,692.24 0.77% -17.49%
Processing of moulds 100,217,749.88 0.80% 147,804,749.38 0.89% -32.20%
Chemicals 60,607,594.98 0.48% 70,973,693.13 0.43% -14.61%
Others 526,256,837.67 4.19% 1,348,962,779.69 8.09% -60.99%
By geographical segment
Mainland China 9,191,090,980.52 73.15% 12,792,521,541.65 76.71% -28.15%
Other countries and regions 3,373,871,800.79 26.85% 3,883,906,824.18 23.29% -13.13%
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 2023
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 11,300,765,054.86 10,388,243,784.40 8.07% -21.74% -14.73% -7.57%
By product
Duplex press paper 3,668,277,002.07 3,241,144,568.69 11.64% -3.06% -4.02% 0.88%
White paper board 2,540,842,151.66 2,617,159,371.91 -3.00% -51.40% -39.04% -20.88%
Electrostatic paper 1,910,330,360.89 1,628,885,600.03 14.73% -0.19% 4.21% -3.60%
Coated paper 1,808,743,574.23 1,623,032,059.93 10.27% -17.46% -9.38% -8.00%
By geographical segment
Mainland China 9,191,090,980.52 8,383,226,340.70 8.79% -28.15% -22.65% -6.49%
Other countries and regions 3,373,871,800.79 3,113,505,321.88 7.72% -13.13% -3.21% -9.45%
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
The revenue from white paper board decreased by 51.40% as compared to the corresponding period of the prior year, and
the cost decreased by 39.04% as compared to the corresponding period of the prior year. The main reason was that the sales
volume of white paper board decreased and the selling price decreased during the reporting period.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 17
INTERIM REPORT 2023
III Management Discussion and Analysis
V. Analysis of non-principal operations
√ Applicable Not applicable
Unit: RMB
As a percentage
Amount of total profit Reason Is it sustainable?
Other income 108,155,697.19 -11.94% Receipt of government grants Including RMB82 million which is
related to daily business activities the annual amortisation amount of
government grants received in prior
periods, which is sustainable.
Gain or loss arising from the change -19,815,797.83 2.19% Fluctuations of fair values of the No
in fair value shares of China Bohai Bank as well
as forestry assets
Credit impairment loss -43,081,750.88 4.75% Bad debt provisions for receivables No
Loss on impairment of assets -43,314,485.76 4.78% Provisions for impairment of No
finished products
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
Accounts receivable 2,946,153,971.11 3.56% 3,212,260,445.96 3.81% -0.25% Mainly due to a decrease of the
Company’s receivables from sales
customers as at the end of the reporting
period.
Accounts receivable 614,794,433.04 0.74% 924,960,384.16 1.10% -0.36% Mainly due to a decrease of bills held
financing as at the end of the reporting period.
Short-term borrowings 34,946,527,126.28 42.28% 36,385,048,295.02 43.16% -0.88% Mainly due to a decrease of short-
term borrowings as at the end of
the reporting period as a result of a
reduction of the liability size by the
Company during the reporting period.
Bills payable 3,530,803,793.61 4.27% 3,128,595,835.04 3.71% 0.56% Mainly due to an increase of payment
for goods with bills by the Company
during the reporting period.
Contract liabilities 1,629,061,591.45 1.97% 1,306,029,389.80 1.55% 0.42% Mainly due to an increase in advance
receipts from sales customers as at the
end of the reporting period.
Non-current liabilities due 4,152,676,912.29 5.02% 4,673,505,241.86 5.54% -0.52% Mainly due to the repayment of
within one year Corporate Bonds and long-term
borrowings due within one year during
the reporting period.
Long-term borrowings 4,895,546,304.36 5.92% 3,982,236,251.08 4.72% 1.20% Mainly due to the new long-term
operating property mortgage loans
during the reporting period.
Long-term payables 2,840,065,362.58 3.44% 3,160,771,126.31 3.75% -0.31% Mainly due to the transfer of part of
equipment financing funds to non-
current liabilities due within one year
during the reporting period.
18 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
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
Financial assets
1. Held-for-trading financial assets
(excluding derivative financial
assets) 74,708,444.88 -24,274,574.29 -145,250,946.56 50,433,870.59
2. Other non-current financial assets 786,750,761.62 62,860,000.00 1,376,301.89 785,374,459.73
3. Consumable biological assets
measured at fair value 1,496,607,818.84 5,749,779.42 35,734,776.07 11,591,593.63 21,795,664.43 1,492,153,527.46
Total 2,358,067,025.34 -18,524,794.87 -46,656,170.49 11,591,593.63 23,171,966.32 2,327,961,857.78
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 11,912,761,370.57 As deposits for bank acceptance bills and letters of credit,
security deposits for loans, deposit reserves, interest receivable,
etc.
Fixed assets 5,380,577,035.38 As collateral for bank borrowings and long-term payables
Investment property 4,754,893,839.15 As collateral for bank borrowings
Intangible assets 550,003,479.41 As collateral for bank borrowings and long-term payables
Accounts receivables 188,497,651.34 As collateral for borrowings
Total 22,786,733,375.85
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
5,400,000.00 10,000,000.00 -46.00%
SHANDONG CHENMING PAPER HOLDINGS LIMITED 19
INTERIM REPORT 2023
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 Profit or
at the date loss from Date of
Form of Investment Source Period of of balance Estimated investment Involvement disclosure Disclosure
Name of investee Principal activities investment amount Shareholding of fund Partner(s) investment Product type sheet return for the period in lawsuit (if any) index (if any)
Jiangxi Chenming Port Road transport, Acquisition 5,400,000.00 100.00% Self-owned Subsidiary Long term Transportation, Completed N/A 899,011.43 No N/A N/A
Co., Ltd. cargo handling funds loading and
unloading services
Total 5,400,000.00 – 899,011.43
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 loss Accumulated
Accounting Book value at the from changes in changes in fair Purchased Sold amount Profit or loss Book value
Stock Abbreviation of Initial measurement beginning of the fair value in the value included amount in the in the during the at the end of the Classification Source
Type of security code stock name investment cost model reporting period current period in equity current period current period reporting period reporting period in accounts of fund
Domestic and foreign 09668 China Bohai Bank 195,684,817.15 Measured at fair value 74,708,444.88 -24,274,574.29 -145,250,946.56 0.00 0.00 -24,274,574.29 50,433,870.59 Held-for-trading Self-owned
shares financial assets funds
Total 195,684,817.15 74,708,444.88 -24,274,574.29 -145,250,946.56 0.00 0.00 -24,274,574.29 50,433,870.59
Disclosure date of announcement in relation to the consideration and approval of securities 20 June 2020
investments by the Board
Disclosure date of announcement in relation to the consideration and approval of securities N/A
investments by the shareholders’ general meeting
(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 2023
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
Name of company company Principal activities Registered capital Total assets Net assets Revenue Operating profit Net profit
Zhanjiang Chenming Pulp & Paper Subsidiary Production and sale 6,713,808,892.00 26,445,170,266.51 8,772,254,750.00 5,372,507,782.65 -37,455,384.15 -40,134,946.90
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 17,655,736,949.20 8,516,407,225.73 4,453,614,876.18 7,590,470.92 33,639,568.69
coated paper, cultural
paper, household paper
and chemical pulp
Huanggang Chenming Pulp & Subsidiary Production and sale of 3,245,000,000.00 9,911,645,261.14 3,397,703,353.46 2,111,536,459.36 -206,502,600.19 -160,294,517.80
Paper Co., Ltd. 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 Port Co., Ltd. Acquisition Net profit increased by RMB900,000.
Particulars of major subsidiaries and investees
1. During the reporting period, the price of white paper board declined due to an increase in supply and insufficient
demand, and profit margins of Zhanjiang Chenming were squeezed.
2. The demand for cultural paper and coated paper, the major products of Shouguang Meilun, was rigid, and they are less
affected by the macroeconomic environment during the reporting period.
3. The price of chemical pulp, the major product of Huanggang Chenming, declined due to an increase in supply, and
Huanggang Chenming’s profitability decreased year on year.
The company enjoys the advantages of pulp and paper integration, large scale, comprehensive products, reasonable
industrial layout, and advanced technical equipment. With the gradual rise in the selling prices of machine-made paper and
the continuous optimisation of the cost side, the company’s profitability will be effectively restored.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 21
INTERIM REPORT 2023
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 policy risk
As a basic raw material industry, the papermaking industry is supported by the national industrial policy. In recent years,
in order to optimise the industrial structure, improve the level of product technology, save energy and reduce emissions
and eliminate backward production capacity, the relevant competent authorities have issued a series of relevant policies
and regulations such as the Paper Industry Development Policy ( ). With the continuous development
of China’s economy, the paper industry policy in the future may be also further adjusted. In addition, fiscal and financial
policies, bank interest rates, and import and export policies may also be adjusted. The adjustment of the above
industrial policies and the related policies will affect the operation and development of the Company.
In response to the aforesaid risks, the Company will pay close attention to national industrial policies and focus on the
development of pulp and paper industry. Sticking to its innovation-driven strategy, the Company will comprehensively
optimise industrial structure and regional layout, and establish coordinated, efficient industry system, thus realising
steady growth in operating results. At the same time, the Company will continue to strengthen lean management,
broaden financing channels, and control costs, in order to improve its operating quality to cope with risks arising from
macroeconomic policy adjustments.
2. Environmental protection risk
Establishing a green paper industry is the strategic direction of industry development. In recent years, environmental
protection requirements have become increasingly stringent. Relevant authorities have successively issued the White
Paper on Sustainable Development of Papermaking Industry in China, the Guiding Opinions on Accelerating the
Establishment and Improvement of a Green, Low-Carbon and Cyclical Economic System, the Opinions on Accelerating
the High-Quality Development of the Manufacturing Services Industry, the “14th Five-Year Plan” and Medium and Long-
term High-quality Development Outline of the Papermaking Industry and other policies, which advocate cyclical, low-
carbon, green economy to achieve high-quality development. Such higher national environmental protection standards
will further increase the investment in pollution control by enterprises in the industry and increase the operating costs of
the Company in the short term.
In response to the aforesaid risks, the Company actively responds to the call of the national “double carbon” policy.
The Company adheres to the development idea of “placing green development and environmental protection as its
priority” and conducts clean production. The Company widely adopts new technologies for energy saving and emission
reduction and strives to achieve its waste emission target. At present, the Company adopts the world’s most advanced
“ultrafiltration membrane+reverse osmosis membrane” technology to complete the reclaimed water recycling membrane
treatment project. The reclaimed water recycle rate reaches more than 75%. The reclaimed water quality meets drinking
water standards, which can save fresh water of 170,000 cubic metres every day. At the same time, the Company
actively explores the comprehensive utilisation of innovative resources and industrial recycling development models,
and built three major circular economy ecological chains of “resources-products-renewable resources”.
22 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
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
The major raw materials of the papermaking industry are wood pulp and wood chips. China’s wood resources are
relatively limited, and the dependence on wood pulp and wood chips is high, which makes the development of the
papermaking industry subject to fluctuations in the international price of wood pulp and wood chips. If the price of raw
materials fluctuates sharply, it will bring uncertainty to the control of production costs of papermaking enterprises, which
will affect the operating performance of enterprises.
In response to the aforesaid risks, the Company adheres to the strategic layout of the whole pulp and paper integrated
industry chain, and has wood pulp production lines in Shouguang, Zhanjiang, Huanggang and other production bases,
ensuring the stability of upstream raw materials. At the same time, the Company has established a more comprehensive
supply chain management mechanism, practiced source procurement, closely followed the price trends of the raw
materials market, and improved its market research and judgment ability, in order to minimise the impact of fluctuations
in raw material prices on the Company.
4. Risk of intensifying market competition
Although the papermaking industry has accelerated the elimination of outdated production capacity after several rounds
of environmental protection policies, the industry structure has been optimised with a further improved concentration.
However, there remains the phenomena of a large number of enterprises, structural and staged overcapacity of some
products, a large number of mid- and low-end products, and product homogeneity. In the first half of 2023, affected
by the macroeconomic environment, the market demand for machine-made paper weakened, and market competition
further intensified.
In response to the aforesaid risks, the Company continues to promote technological innovation and transformation,
and continuously improves its production equipment, processing design and process levels, in order to realise lean
production, improve product quality, and create brand benefits. At the same time, based on the market conditions, the
Company produces marketable products to meet the diverse needs, striving to form a high-quality, refined, special,
differentiated and personalised product structure, increase the added value of products, and improve the level of
corporate profitability.
5. Risk of the 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.
To this end, 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, the Company focuses on the development of
its principal activities, i.e. pulp production and paper making, and continues to reduce the size of the financial leasing
business. As at the end of the reporting period, the balance of financial leases of Chenming Leasing decreased to
RMB5.501 billion. Some financial lease receivables of Chenming Leasing were overdue due to factors such as the
weak macroeconomic environment with the overdue principals amounting to RMB1,781 million, for which provisions
of RMB689 million were made, and a provision coverage rate of 38.69%. Certain assets have been seized through
litigation. The Company had resorted to various collection measures such as control of the underlying assets, litigation
for seizure, recovery for guarantors and debt reconstruction with the overall risks under control.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 23
INTERIM REPORT 2023
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
2023 first extraordinary general Extraordinary general meeting 21.96% 27 February 2023 28 February 2023 http://www.cninfo.com.cn
meeting (announcement no.: 2023-010)
28 February 2023 http://www.hkex.com.hk
2023 first class meeting for holders Class general meeting 24.14% 27 February 2023 28 February 2023 http://www.cninfo.com.cn
of domestic-listed shares (announcement no.: 2023-010)
28 February 2023 http://www.hkex.com.hk
2023 first class meeting for holders Class general meeting 11.72% 27 February 2023 28 February 2023 http://www.cninfo.com.cn
of overseas-listed shares (announcement no.: 2023-010)
28 February 2023 http://www.hkex.com.hk
2023 second extraordinary general Extraordinary general meeting 20.53% 8 May 2023 9 May 2023 http://www.cninfo.com.cn
meeting (announcement no.: 2023-043)
8 May 2023 http://www.hkex.com.hk
2022 annual general meeting Annual general meeting 21.60% 12 May 2023 13 May 2023 http://www.cninfo.com.cn
(announcement no.: 2023-044)
12 May 2023 http://www.hkex.com.hk
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
There was no change of Directors, Supervisors and Senior Management of the Company during the reporting period. Please
see the 2022 annual report for details.
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.
IV. Implementation of the equity incentive plan, employee shareholding plan or other employee
incentive measure of the Company
√ Applicable Not applicable
1. Equity incentive
1. On 30 March 2020, the Company convened the ninth extraordinary meeting of the ninth session of the Board, at
which 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.
24 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
IV Corporate Governance
IV. Implementation of the equity incentive plan, employee shareholding plan or other employee
incentive measure of the Company (Cont’d)
1. Equity incentive (Cont’d)
2. On 3 April 2020, the Company announced the list of participants through the Company’s internal website for a
period from 3 April 2020 to 12 April 2020. During the period, the Supervisory Committee of the Company and
relevant departments did not receive any objection against the proposed participants. The Supervisory Committee
verified the list of participants under the grant of the incentive scheme.
3. On 15 May 2020, the Company convened 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, at which 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 16 May 2020, the Company disclosed the Self-Examination Report for the Trading of Shares of the Company
by Insiders and Participants of the 2020 Restricted A Share Incentive Scheme.
4. On 29 May 2020, the Company convened the tenth extraordinary meeting of ninth session of the Board and the
fifth extraordinary meeting of the ninth session of the Supervisory Committee, at which the Company considered
and approved 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,
approving the issue of 79,600,000 restricted A shares to 111 participants at the price of RMB2.85 per share on 29
May 2020.
5. On 15 July 2020, the 79,600,000 restricted A shares granted to the participants were listed.
6. On 18 July 2022, the Company convened the second extraordinary meeting of the tenth session of the Board
and the first extraordinary meeting of the tenth session of the Supervisory Committee, at which the Company
considered and approved the Resolution on the Fulfilment of the Unlocking Conditions of the Restricted Shares
Granted under the 2020 Restricted A Share Incentive Scheme during the First Unlocking Period and the Resolution
on the Adjustment to the Repurchase Price of the 2020 Restricted A Share Incentive Scheme and Repurchase
and Cancellation of Certain Restricted Shares. The independent Directors of the Company issued independent
opinions to agree with such resolutions.
96 participants fulfilled the unlocking conditions for the first unlocking period under the 2020 Restricted A Share
Incentive Scheme with 29,948,000 restricted shares being eligible for unlocking. 15 participants had resigned,
had changed duty, and had removed from office, which failed to comply with the unlocking conditions. The
total number of restricted shares that have been granted to and held by the participants and have not yet been
unlocked is 4,466,000, representing 5.61% of the total number of restricted shares granted under the 2020
Restricted A Share Incentive Scheme.
7. On 27 July 2022, 29,948,000 restricted A shares that were unlocked were listed for trading.
8. On 9 October 2022, Grant Thornton (Special General Partnership) issued a Capital Verification Report (Zhi Tong
Yan Zi (2022) No. 371C000576), in which they verified the change in the registered capital and paid-in capital (share
capital) of the Company as of 30 September 2022. Verification result: As of 30 September 2022, the registered
capital and paid-in capital (share capital) of the Company upon the change amounted to RMB2,979,742,200.00
and RMB2,979,742,200.00, respectively.
9. On 18 October 2022, the Company completed the procedures for the repurchase and cancellation of 4,466,000
restricted A shares with the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 25
INTERIM REPORT 2023
IV Corporate Governance
IV. Implementation of the equity incentive plan, employee shareholding plan or other employee
incentive measure of the Company (Cont’d)
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.
26 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
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
Environmental protection related policies and industry standards
1. The Company, during its own production and operation process, strictly abides by relevant environmental protection
laws and regulations as follows:
The Environmental Protection Law of the People’s Republic of China, the Law on the Prevention and Control of Air
Pollution of the People’s Republic of China, the Law on the Prevention and Control of Water Pollution of the People’s
Republic of China, the Law on the Prevention and Control of Environmental Pollution by Solid Waste of the People’s
Republic of China, the Law on Noise Pollution Prevention and Control of the People’s Republic of China, Regulations on
the Administration of Pollutant Discharge Permit, Regulations on Groundwater Management, and the Measures for the
Emergency Administration of Environmental Contingencies.
2. The Company strictly implements national, industry and local standards for pollutant discharge as follows:
Exhaust gas: Integrated Emission Standard of Air Pollutants (GB16297-1996), Emission Standard of Air Pollutants for
Thermal Power Plants (GB13223-2011), Emission Standard for Odor Pollutants (GB14554-93), Emission Standard of Air
Pollutants for Boilers (DB44/765-2019), Emission Standard of Air Pollutants for Thermal Power Plants (DB37/664-2019),
Regional and Integrated Emission Standard of Air Pollutants (DB37/2376-2019), and Emission Standard of Air Pollutants
for Building Materials Industry (DB37/2373-2018).
Wastewater: Integrated Wastewater Discharge Standard (GB8978-1996), Wastewater Quality Standards for Discharge
to Municipal Sewers (GB/T31962-2015), Discharge Standard of Water Pollutants for the Pulp and Paper Industry
(GB3544-2008) and Discharge Limits of Water Pollutants (DB44/26-2001), and the wastewater influent standard of local
wastewater treatment plants.
Noise: Emission Standard for Industrial Enterprises Noise at Boundary (GB 12348-2008).
Environmental protection administrative licensing
Shandong Chenming Paper Holdings Limited: Issued on 2 March 2023 and valid up to 1 March 2028.
Shouguang Meilun Paper Co., Ltd.: Issued on 2 March 2023 and valid up to 1 March 2028.
Zhanjiang Chenming Pulp & Paper Co., Ltd.: Issued on 30 May 2022 and valid up to 29 May 2027.
Jiangxi Chenming Paper Co., Ltd.: Issued on 11 June 2020 and valid up to 27 June 2025.
Huanggang Chenming Pulp & Paper Co., Ltd.: Issued on 14 September 2021 and valid up to 13 September 2026.
Jilin Chenming Paper Co., Ltd.: Issued on 10 December 2021 and valid up to 9 December 2026.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 27
INTERIM REPORT 2023
V Environmental and Social Responsibility
I. Major environmental protection matters (Cont’d)
Industry emission standards and the status of pollutant emissions involved in production and operation
activities
Category
of major Name of major Pollutant
pollutants pollutants and Number of Emission emission Approved
Name of company and specific specific Way of emission Distribution of concentration/ standards total Excessive
or subsidiary pollutants pollutants emission outlets emission outlets intensity implemented Total emissions emissions emissions
Shandong Chenming Exhaust gas SO2 Organised 2 Chenming Industrial Power plant no. 1: 35mg/m3 Power plant no. 1: 160.32t/year No
Paper Holdings emission Park 17.4mg/m3 15.4t
Limited Power plant no. 2: Power plant no. 2:
16.7mg/m3 15.4t
NOx Organised 2 Chenming Industrial Power plant no. 1: 50mg/m3 Power plant no. 1: 233.91t/year No
emission Park 38.9mg/m3 34.9t
Power plant no. 2: Power plant no. 2:
38.5mg/m3 35.9t
Particulates Organised 2 Chenming Industrial Power plant no. 1: 5mg/m3 Power plant no. 1: 23.39t/year No
emission Park 0.811mg/m3 0.724t
Power plant no. 2: Power plant no. 2:
0.770mg/m3 0.731t
Wastewater COD Indirect emission 2 Chenming Industrial Sewage outlet no. 1: 300mg/L Sewage outlet no. 1: 6,510.74t/year No
Park 152mg/L 553t
Sewage outlet no. 2: Sewage outlet no. 2:
180mg/L 1,240t
Ammonia Indirect emission 2 Chenming Industrial Sewage outlet no. 1: 30mg/L Sewage outlet no. 1: 650.7t/year No
nitrogen Park 2.77mg/L 10.3t
Sewage outlet no. 2: Sewage outlet no. 2:
0.832mg/L 6.00t
Total nitrogen Indirect emission 2 Chenming Industrial Sewage outlet no. 1: 70mg/L Sewage outlet no. 1: 1,519.1t/year No
Park 17.7 mg/L 63.2t
Sewage outlet no. 2: Sewage outlet no. 2:
14.5 mg/L 103t
Shouguang Meilun Exhaust gas SO2 Organised 4 Chenming Industrial Power plant no. 1: 35mg/m3 Power plant no. 1: 342.89t/year No
Paper Co., Ltd. emission Park 18.8mg/m3 (self-owned 18.8t
Power plant no. 2: power plant), Power plant no. 2:
13.4mg/m3 50mg/m3 11.6t
Alkali recovery: (chemical Alkali recovery: 20.5t
3.87mg/m3 pulp mill) Lime kiln: 2.95t
Lime kiln:
4.24mg/m3
NOx Organised 4 Chenming Industrial Power plant no. 1: 50mg/m3 Power plant no. 1: 1,202.75t/year No
emission Park 32.4mg/m3 (self-owned 31.8t
Power plant no. 2: power plant), Power plant no. 2:
29.7mg/m3 100mg/m3 24t
Alkali recovery: (chemical Alkali recovery:
73.9mg/m3 pulp mill) 355t
Lime kiln: Lime kiln:
17.8mg/m3 14.0t
Particulates Organised 4 Chenming Industrial Power plant no. 1: 5mg/m3 Power plant no. 1: 121.979t/year No
emission Park 0.677mg/m3 (self-owned 0.647t
Power plant no. 2: power plant), Power plant no. 2:
1.53mg/m3 10mg/m3 1.17t
Alkali recovery: (chemical Alkali recovery:
1.03mg/m3 pulp mill) 5.17t
Lime kiln: Lime kiln:
1.24mg/m3 0.71t
28 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
V Environmental and Social Responsibility
I. Major environmental protection matters (Cont’d)
Industry emission standards and the status of pollutant emissions involved in production and operation
activities (Cont’d)
Category
of major Name of major Pollutant
pollutants pollutants and Number of Emission emission Approved
Name of company and specific specific Way of emission Distribution of concentration/ standards total Excessive
or subsidiary pollutants pollutants emission outlets emission outlets intensity implemented Total emissions emissions emissions
Jiangxi Chenming Exhaust gas SO2 Organised 1 Thermal power plant 240T/h furnace: 200mg/m3 16.4243t 806t/year No
Paper Co., Ltd. emission 9.17mg/m3
NOx Organised 1 Thermal power plant 240T/h furnace: 200mg/m3 32.1654t 806t/year No
emission 25.83mg/m3
Particulates Organised 1 Thermal power plant 240T/h furnace: 30mg/m3 3.2623t 135t/year No
emission 2.45mg/m3
Wastewater COD Direct emission 1 Total wastewater 32.58mg/L 90mg/L 192.74t 1,260t/year No
discharge
Ammonia Direct emission 1 Total wastewater 2.11mg/L 8mg/L 7.6t 112t/year No
nitrogen discharge
Total nitrogen Direct emission 1 Total wastewater 7.07mg/L 12mg/L 17.52t / No
discharge
Jilin Chenming Paper Exhaust gas SO2 Organised 3 (2 in use, Within factory area 12.83mg/m3 100mg/m3 4.37t 97t/year No
Co., Ltd. emission 1 spare)
NOx Organised 3 (2 in use, Within factory area 55.92mg/m3 100mg/m3 24.61t 213t/year No
emission 1 spare)
Particulates Organised 3 (2 in use, Within factory area 16.53mg/m3 30mg/m3 7.26t 51.66t/year No
emission 1 spare)
Wastewater COD Indirect emission 1 Total wastewater 121.86mg/L 120mg/L 304.31t 6,000t/year No
discharge
Ammonia Indirect emission 1 Total wastewater 1.39mg/L 45mg/L 3.52t 500t/year No
nitrogen discharge
Total nitrogen Indirect emission 1 Total wastewater 7.77mg/L 50mg/L 19.47t / No
discharge
Zhanjiang Chenming Exhaust gas SO2 Organised 5 Within factory area Power plant no. 1: 1#2#3#4# 26.305t 620t/year No
Pulp & Paper Co., emission 6.4mg/m3 circulating
Ltd. Power plant no. 2: fluidised bed
9.28mg/m3 boilers:
Power plant no. 3: 35mg/m3
5.28mg/m3
Power plant no. 4:
8.35mg/m3
SHANDONG CHENMING PAPER HOLDINGS LIMITED 29
INTERIM REPORT 2023
V Environmental and Social Responsibility
I. Major environmental protection matters (Cont’d)
Industry emission standards and the status of pollutant emissions involved in production and operation
activities (Cont’d)
Category
of major Name of major Pollutant
pollutants pollutants and Number of Emission emission Approved
Name of company and specific specific Way of emission Distribution of concentration/ standards total Excessive
or subsidiary pollutants pollutants emission outlets emission outlets intensity implemented Total emissions emissions emissions
NOx Organised 5 Within factory area Alkali recovery: Alkali recovery: 529.521t 1,800t/year No
emission 98.43mg/m3 200mg/m3
Power plant no. 1: 1#2#3#4#
10.79mg/m3 circulating
Power plant no. 2: fluidised bed
10.58mg/m3 boilers:
Power plant no. 3: 50mg/m3
7.38mg/m3
Power plant no. 4:
9.29mg/m3
Particulates Organised 5 Within factory area Power plant no. 1: 1#2#3#4# 3.515t 195.06t/year No
emission 2.01mg/m3 circulating
Power plant no. 2: fluidised bed
0.96mg/m3 boilers:
Power plant no. 3: 10mg/m3
0.38mg/m3
Power plant no. 4:
0.57mg/m3
Wastewater COD Direct emission 1 Within factory area 42.66mg/L 90mg/L 457.734t 1,943t/year No
Ammonia Direct emission 1 Within factory area 0.7mg/L 8mg/L 7.661t 43.9t/year No
nitrogen
Total nitrogen Direct emission 1 Within factory area 4.35mg/L 12mg/L 47.058t 320.4t/year No
Huanggang Chenming Exhaust gas SO2 Organised 1 Lime kiln chimney 24.954 mg/m3 80mg/m3 9.61t 142.872t/year No
Pulp & Paper Co., emission
Ltd.
SO2 Organised 1 Alkali furnace chimney 18.336mg/m3 200mg/m3 11.96t 328.417t/year No
emission
NOx Organised 1 Lime kiln chimney 111.662mg/m3 180mg/m3 67.63t 181.887t/year No
emission
NOx Organised 1 Alkali furnace chimney 158.182 mg/m3 200mg/m3 273.26t 950.829t/year No
emission
Particulates Organised 1 Lime kiln chimney 44.772 mg/m3 200mg/m3 10.35t 45.311t/year No
emission
Particulates Organised 1 Alkali furnace chimney 39.449mg/m3 30mg/m3 24.88t 83.759t/year No
emission
Wastewater COD Indirect emission 1 Total wastewater 19.40 mg/L 150mg/L 83.44t 398.911t/year No
discharge
Ammonia Indirect emission 1 Total wastewater 0.15 mg/L 14mg/L 0.63t 39.891t/year No
nitrogen discharge
Total nitrogen Indirect emission 1 Total wastewater 1.57mg/L 29mg/L 6.83t / No
discharge
30 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
V Environmental and Social Responsibility
I. Major environmental protection matters (Cont’d)
Treatment of pollutants
1. Shandong Chenming Paper Holdings Limited
Its own power plant uses the exhaust gas treatment process of limestone-gypsum desulfurisation+SNCR selective non-
catalytic reduction denitration+electric and bag composite dust removal+wet type electric dust removal. In the first
half of 2023, the environmental protection exhaust gas treatment facilities operated well, and were overhauled in time
according to the overhaul plan. The daily average exhaust gas indicator did not exceed the standard, and the exhaust
gas was discharged up to the standard after treatment.
Its sewage treatment plant uses the traditional activated sludge wastewater treatment process+membrane treatment
and recycle process, and the wastewater which is treated up to the standard is partially discharged into the sewage
treatment plant of Shouguang Zhongye Water Co., Ltd., and partially reused in production lines. In the first half of 2023,
the wastewater treatment facilities operated well, and were overhauled in time according to the overhaul plan. The daily
average wastewater indicator did not exceed the standard, and the wastewater was discharged up to the standard after
treatment.
2. Shouguang Meilun Paper Co., Ltd.
Its own power plant uses the exhaust gas treatment process of limestone-gypsum desulfurisation+SNCR selective
non-catalytic reduction denitration+electric and bag composite dust removal+wet type electric dust removal. The
chemical pulp alkali recovery furnace uses the exhaust gas treatment process of PSCR denitration+electrostatic dust
removal, and the chemical pulp lime kiln uses the exhaust gas treatment process of ozone denitration+electrostatic dust
removal+wet type electric dust removal. In the first half of 2023, the environmental protection exhaust gas treatment
facilities operated well, and were overhauled in time according to the overhaul plan. The daily average exhaust gas
indicator did not exceed the standard, and the exhaust gas was discharged up to the standard after treatment.
3. Jiangxi Chenming Paper Co., Ltd.
Its own power plant uses the exhaust gas treatment process of ammonia desulfurisation+SNCR catalytic reduction
denitrification+ electric and bag composite dust removal+90-metre desulfurisation and denitrification tower. The aerobic
section of the sewage treatment plant is equipped with a negative pressure exhaust device to recover and treat the
exhaust gas from anaerobic and aerobic sections, and uses the process of alkali spraying+biofiltration+water washing.
In the first half of 2023, the environmental protection exhaust gas treatment facilities operated well, and were overhauled
in time according to the overhaul plan. The daily average exhaust gas indicator did not exceed the standard, and the
exhaust gas was discharged up to the standard after treatment.
Industrial wastewater is collected by a catchment well with large particles removed by grids and fibres in the wastewater
recovered by inclined mesh, and then flow into the settling tank for preliminary settling and cooling in free-flowing.
When the water temperature reaches 38°C, the water is pumped into a high-concentration primary settling tank and
a low-concentration primary settling tank. After the pre-acidification treatment, organic matter which can be easily
decomposed from the polymer decomposed through a hydrolysis acidification tank. In the biochemical process, the
biogas produced is recovered for power generation, and the biochemical water enters into the anaerobic section, and
gets into aeration and other aerobic systems with cooled low-concentration water. A stable COD value is achieved
through the aerobic system. In order to better treat the water, the aerobic water enters into the in-depth treatment
system, and is treated up to the standard through the processes such as Fenton treatment, settling tank treatment,
inclined plate settling, and flocculation settling. In the process of wastewater treatment, the suspended matter in the
water body is removed from the sludge produced which is treated by the processes such as plate and frame filtering
and belt machine desliming, which meets the requirements of Table II of GB3544. A reclaimed water recycling device is
in place to recycle some water which meets the requirements.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 31
INTERIM REPORT 2023
V Environmental and Social Responsibility
I. Major environmental protection matters (Cont’d)
Treatment of pollutants (Cont’d)
4. Jilin Chenming Paper Co., Ltd.
Its own power plant uses low-temperature combustion, staged combustion and SCR denitrification outside the
furnace, and uses bag filter for flue gas dust removal, and uses wet desulfurisation process of limestone inside the
furnace+limestone-gypsum outside the furnace, and the discharge is up to the standard.
The sewage station uses the treatment process of anaerobic (IC reactor)+aerobic (jet aeration)+in-depth treatment (Fenton
advanced oxidation), and the discharge is up to the standard.
5. Zhanjiang Chenming Pulp and Paper Co., Ltd.
Atmospheric pollutant treatment: bag filter dust removal+wet limestone-gypsum desulfurisation+SCR denitration
system. Atmospheric pollutant treatment facilities operate normally. In 2023, the average emissions were lower than the
emission standards, and the total pollutant emissions were lower than the approved total emissions. In 2023, the total
particulate emissions were 3.515 tonnes, which were lower than the standard of 195.06 tonnes/year, the nitrogen oxides
were 529.521 tonnes, which were lower than the total 1,800 tonnes/year, and the sulphur dioxide was 26.305 tonnes,
which was lower than the total 620 tonnes/year. The discharge was up to the standard.
Water pollutants are treated by physicochemical+biochemical+Fenton treatment methods, and the 86,000-tonne
treatment process is: catchment well-conditioning-primary settling-cooling tower-aeration tank-secondary settling tank-
Fenton-re-conditioning tank-clarifier. The 30,000-tonne treatment process is: catchment well-primary settling tower –
hydrolysis tank-IC tower – aeration tank-secondary settling tank-Fenton-oxidation callback tank-final settling tank. The
water treatment process has operated normally. In 2023, the average discharge was: COD at 42.66mg/L, as compared
with the discharge standard at 90mg/L, ammonia nitrogen at 0.7mg/L, as compared with the discharge standard at
8mg/L and total nitrogen at 4.35mg/L, as compared with the discharge standard at 12mg/L. All the pollutants were
discharged up to the standard.
6. Huanggang Chenming Pulp & Paper Co., Ltd.
The alkali furnace uses polymer denitration outside the furnace+electrostatic dust removal and alkaline melt from the
process able to absorb sulphur dioxide. The discharge is up to the standard. The lime kiln uses limestone to fix sulphur
and five electrostatic precipitators to remove dust. The discharge is up to the standard.
The sewage treatment uses physical settling+aerobic biochemical treatment+Fenton in-depth treatment process. The
discharge is up to the standard.
The lime kiln scrubbing tower which was constructed with an investment of RMB4.2 million came into use on 1 May
2022. It can effectively reduce the emission concentration of sulphur dioxide and hydrogen sulphide to below 10 mg/m3.
32 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
V Environmental and Social Responsibility
I. Major environmental protection matters (Cont’d)
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.
Investment in environmental governance and protection and payment of environmental protection tax
The Company has always adhered to the concept of “green development, ecological Chenming”, and clung to the
development model of “clean production” and resource recycling. A green ecology is incorporated in the whole process of
production and operation. The Company has invested more than RMB8 billion in total to construct the pollution treatment
facilities including the alkali recovery system, reclaimed water treatment system, reclaimed water reuse system, white water
recovery system and black liquor comprehensive utilisation system. The environmental protection indicators rank high in China.
During the reporting period, the Company paid environmental protection tax according to law. The Company’s environmental
protection tax mainly results from atmospheric pollutants. According to the Environmental Protection Tax Law of People’s
Republic of China and its implementation rules, the pollutants shall be calculated according to the automatic monitoring data
of pollutants if automatic pollutant monitoring equipment which complies with national provisions and monitoring standards
is installed and used. Taxable atmospheric pollutants are determined according to the pollution equivalent quantity converted
from the amount of pollutant discharge. The taxable atmospheric pollutants discharged from each outlet, or where there is no
outlet, are to be ranked in decreasing order of pollution equivalent quantity, and environmental taxes are to be levied on the
top three pollutants. From January to June 2023, the Company paid environmental protection tax amounting to RMB6.3164
million.
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 penalties for environmental problems during the reporting period
The Company was not subject to any administrative penalty for environmental problems during the reporting period.
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.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 33
INTERIM REPORT 2023
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
√ Applicable Not applicable
1. The Group strengthened energy management, and compared and analysed the consumption of coal, electricity, on a
daily basis with strict control.
2. The Group implemented the conversion of old and new energy sources, eliminated high energy-consuming equipment,
replaced high-efficiency inverter and energy-saving motors, and reduced energy consumption.
3. According to the zero position of the air cover of the paper machine dryer, the Group reduced the frequency of the fan
appropriately to improve the drying efficiency by raising the zero position and save electricity consumption.
4. For moisture content of screening unit and squeezing unit of paper machine, the Group reduced out of the press
moisture and the amount of steam used of drying unit by adjusting the lip plate flow rate, retention rate and line pressure
and other measures.
5. The Group strengthened daily energy-saving management by developing a system for temperature of air conditioning
and switching on and off of various power supplies, with tracking and inspection.
6. The Group vigorously developed clean energy and energy recycling projects to reduce carbon emissions. The
Shouguang Chenming 33 MW and Zhanjiang Chenming 24 MW photovoltaic power generation projects was underway.
7. 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.
34 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
V Environmental and Social Responsibility
II. Social responsibility
During the reporting period, adhering to the philosophy of “Creating high-quality paper products and sincerely repaying the
society”, the Company paid attention to the creation of social value while pursuing economic benefits, and took the initiative
to assume its social responsibilities to shareholders, employees, customers, suppliers and other stakeholders. The Company
strived to practice the concept of green development, so as to promote the high-quality sustainable development of economy,
environment and society.
1. Regulate corporate governance and safeguard shareholders’ rights and interests
During the reporting period, the Company regulated its corporate governance in strict accordance with the Company
Law, the Securities Law, the Rules Governing the Listing of Shares on Shenzhen Stock Exchange, the Rules
Governing the Listing of Securities on the Main Board of The Stock Exchange of Hong Kong Limited and the Articles
of Association. The Company adopted a combination of on-site and online voting to convene general meetings, and
some Directors, Supervisors and senior management members attended (or were present at) general meetings in a
serious and responsible manner to ensure the shareholders of the Company to know, participate in and vote on major
issues. The Company held the 2022 annual results briefing and strengthened communication with investors through
Shenzhen Stock Exchange’s irm.cninfo.com.cn platform and investor hotline. At the same time, the Company strictly
fulfilled its information disclosure obligations. As of the end of the reporting period, the Company disclosed over 110
announcements on Shenzhen Stock Exchange and the Stock Exchange, and ensured the truthfulness, accuracy,
completeness, timeliness and fairness of the disclosures, effectively improving the Company’s transparency and
safeguarding shareholders’ rights and interests.
2. Insist on people-orientation and focus on employee development
The Company always adheres to the “people-orientation” concept, respects employees’ rights and interests, and
actively empowers employees to help their career growth and enhance employees’ satisfaction. During the reporting
period, the Company continuously improved its human resources management system. Guided by the employment
concept of “eliminating backwardness, rejecting mediocrity and motivating advancement”, the Company gathered
innovation strength with talents, optimised its remuneration system and assessment and incentive mechanism, created
a clear employee promotion path, built a diversified and personalised training platform, and further improved their
post responsibility performance capability. Meanwhile, the Company enhanced employees’ sense of happiness and
belonging by actively holding table tennis and badminton competitions, organising summer cooling and other activities,
presenting birthday cakes, helping employees in need and improving the dining environment. The Company was
recognised as one of the first Weifang Youth Development-friendly Enterprises.
3. Optimise supply management and improve customer service
During the reporting period, the Company adhered to the core values of “honesty win-win and sharing”, constantly
improved the supply chain management system, strengthened source procurement, and established long-term
cooperation with suppliers to reduce procurement costs while ensuring a stable raw material supply. The Company
strengthened the refined customer management, improved the sales management system, optimised the customer
complaint handling process, and enhanced customer satisfaction. Meanwhile, guided by market demand, the Company
continued to carry out new product development and technical iteration to provide customers with high-standard and
high-quality products and services, fully protecting customers’ rights and interests.
4. Adhere to green production to help ecological construction
During the reporting period, the Company adhered to the concept of “green development and ecological Chenming”,
intensified its environmental protection work, actively promoted clean production, promoted the equipment and
technology upgrading, vigorously implemented energy conservation and emission reduction, constantly explored
the mode of innovative resources comprehensive utilisation and industrial recycling development, promoted the
construction of photovoltaic power generation projects, and gained new momentum for green development. The
Company constantly improved risk management and control measures and hidden danger governance solutions,
actively carried out potential safety hazards investigation and rectification, conducted special inspections in confined
spaces, ensured dual prevention mechanism normalisation, and effectively built a safety defence. Furthermore, the
Company adhered to technological innovation, strengthened Industry-University-Research cooperation to provide
the society with “environment-friendly” green products, built an ecological chain of “resources-products-recycled
resources” circular economy, and helped construct ecological civilisation.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 35
INTERIM REPORT 2023
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
Party involved Particulars on the
Undertaking in undertaking Type of undertaking Details of undertaking Undertaking date Term performance
Undertaking made Shandong Chenming Paper Undertaking to provide 1. I/The Company has provided information and documents related to the transaction 21 November 2022 Until the During the reporting
during asset Holdings Limited and its true, accurate and (including but not limited to original written materials, duplicate materials or oral testimony). implementation of the period, the parties
restructuring Directors, Supervisors and complete information I/The Company guarantees that the copies or photocopies of the documents and materials restructuring plan is involved in undertaking
Senior Management (Chen provided are the same as the originals, and the signatures and seals of these documents completed did not violate the
Hongguo, Hu Changqing, Li and materials are true, ensures that the relevant information and documents provided for undertaking, the asset
Xingchun, Li Feng, Li Weixian, the transaction are true, accurate and complete, and there are no false records, misleading restructuring ended,
Han Tingde, Li Chuanxuan, Li statements or major omissions, and bears individual and joint legal responsibilities and the undertaking
Zhihui, Sun Jianfei, Yin Meiqun, for the authenticity, accuracy and completeness of the information provided. 2. The was fulfilled.
Yang Biao, Li Kang, Qiu Lanju, Company/I guarantee that there are no false records, misleading statements or major
Sang Ailing, Pan Ailing, Zhang omissions in the information disclosure and application documents of the transaction.
Hong, Li Xueqin, Li Zhenzhong, If the information provided or disclosed in the transaction is suspected to contain false
Li Mingtang, Ge Guangming, records, misleading statements or major omissions, thus causing losses to investors,
Dong Lianming, Yuan Xikun and the Company/I will be jointly and severally liable for compensation. 3. If the transaction
Chu Hon Leung) is placed on file for investigation by the judicial authorities or by the CSRC because of
the false records, misleading statements or major omissions in the information provided
or disclosed, the Directors, Supervisors and Senior Management members who hold the
shares of the Company will suspend the transfer of the shares (if any) before the case
investigation conclusion is clear, and submit the written application for transfer suspension
and the stock account to the Board within two trading days after receiving the notice of
filing the investigation. The Board shall apply to the stock exchange and the depository
and clearing corporation for locking up on their behalf. If the lock-up application is not
submitted within two trading days, the Board is authorised to directly submit the identity
and account information of the Directors, Supervisors and Senior Management members
of the Company to the stock exchange and the depository and clearing corporation for
lock-up after verification. If the Board fails to submit the identity and account information
of the directors, supervisors and Senior Management members to the stock exchange
and the depository and clearing corporation, the stock exchange and the depository
and clearing corporation shall be authorised to directly lock up the relevant shares. If
the investigation concludes that there are violations of laws and regulations, the relevant
Directors, Supervisors and Senior Management members promise to lock up the shares
and voluntarily use them for compensation to relevant investors.
Chenming Holdings Company Undertaking on the 1. This reorganisation is conducive to improving the Company’s profitability, enhancing 21 November 2022 Until the During the reporting
Limited, Chenming Holdings principle transaction the sustainable operation ability, and protecting the interests of investors and minority implementation of the period, the parties
(Hong Kong) Limited opinions and share shareholders. We agree to this reorganisation in principle. 2. During the period from the restructuring plan is involved in undertaking
changes during the first disclosure of the reorganisation plan to its completion, the company will not reduce its completed did not violate the
reorganisation period shareholding in the Company. This commitment letter is legally binding on the company undertaking, the asset
from the date of signing, and the company is willing to bear all the legal responsibility of restructuring ended,
the economic losses, claims and extra expenses caused to Chenming Paper for violating and the undertaking
the above commitments. was fulfilled.
36 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
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 (Cont’d)
Party involved Particulars on the
Undertaking in undertaking Type of undertaking Details of undertaking Undertaking date Term performance
Chen Hongguo, Hu Changqing, Undertaking on the On 12 August 2022, the Company published an announcement on the preliminary 21 November 2022 Until the completion During the reporting
Li Xingchun, Li Feng, Li Weixian, shareholding reduction disclosure of disposal of shares by certain Directors and Senior Management members, date of the period, the parties
Han Tingde, Li Chuanxuan, Li plan during the asset namely Hu Changqing, Li Feng, Li Weixian, Li Zhenzhong, Li Mingtang, Dong Lianming implementation of the involved in undertaking
Zhihui, Sun Jianfei, Yin Meiqun, restructuring and Yuan Xikun. Due to personal capital needs, the Directors and Senior Management restructuring plan did not violate the
Yang Biao, Li Kang, Qiu Lanju, members mentioned above intended to dispose of no more than 3,753,100 shares in total undertaking, the asset
Sang Ailing, Pan Ailing, Zhang by centralised bidding or bulk transaction within 6 months after 15 trading days from the restructuring ended,
Hong, Li Xueqin, Li Zhenzhong, date of the announcement of disposal of shares. For details, please refer to the relevant and the undertaking
Li Mingtang, Ge Guangming, announcement of CNINFO (www.cninfo.com.cn). Apart from the plan of disposal of shares was fulfilled.
Dong Lianming, Yuan Xikun and by certain Directors and Senior Management members as disclosed above, I have no other
Chu Hon Leung plan to dispose of shares from the date of the first disclosure of the reorganisation plan to
its completion. This commitment letter is legally binding on me from the date of signing,
and I am willing to bear all legal responsibilities for all economic losses, claims and extra
expenses caused to Chenming Paper by violating the above commitments.
Chenming Holdings Company Commitment letter on 1. The company, and its all directors, supervisors and senior management members, as 21 November 2022 Until the completion During the reporting
Limited, Chenming Holdings no insider trading well as the entities controlled by the above-mentioned subjects, have not been placed on date of the period, the parties
(Hong Kong) Limited, Shandong file for investigation on suspicion of insider trading related to the transaction. In the last implementation of the involved in undertaking
Chenming Paper Holdings 36 months, there is no case that the CSRC had imposed administrative punishment or the restructuring plan did not violate the
Limited and their directors, judicial organs had lawfully investigated criminal responsibility for participating in insider undertaking, the asset
supervisors and senior trading related to major asset reorganisation, and there has been no case that the above restructuring ended,
management (Chen Hongguo, personnel are not allowed to participate in the transaction according to Article 13 of the and the undertaking
Hu Changqing, Li Xingchun, Li Guidelines for Supervision of Listed Companies No.7 – Supervision of Abnormal Stock was fulfilled.
Feng, Li Weixian, Han Tingde, Trading Related to Major Asset Restructuring of Listed Companies. 2. The company and
Li Chuanxuan, Li Zhihui, Sun its directors, supervisors and senior management members guarantee to take necessary
Jianfei, Yin Meiqun, Yang measures to keep the information and materials involved in the transaction strictly
Biao, Li Kang, Qiu Lanju, Sang confidential.
Ailing, Pan Ailing, Zhang Hong,
Li Xueqin, Li Zhenzhong, Li
Mingtang, Ge Guangming, Dong
Lianming, Yuan Xikun and Chu
Hon Leung)
SHANDONG CHENMING PAPER HOLDINGS LIMITED 37
INTERIM REPORT 2023
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 (Cont’d)
Party involved Particulars on the
Undertaking in undertaking Type of undertaking Details of undertaking Undertaking date Term performance
Chenming Holdings Company Undertaking to take 1. The company undertakes that it will not interfere the ordinary operation of the Company, 19 January 2023 Until the completion During the reporting
Limited remedial measures on nor encroach on the interests of the Company, nor compromise the interests of the date of the period, the parties
effects of dilution on the Company in any other manner; 2. The company undertakes that it will act to restrain duty- implementation of the involved in undertaking
current earnings as a related spending by directors and senior management of the Company; 3. The company restructuring plan did not violate the
result of the transaction will ensure the remuneration system formulated by the Board or the Remuneration and undertaking, the asset
Assessment Committee is in line with implementation of the remedial measures for the restructuring ended,
returns by the Company; 4. The company undertakes that the vesting conditions of share and the undertaking
incentives to be formulated by the Company will be in line with the implementation of was fulfilled.
the remedial measures for returns if the Company intends to make such share incentive
plans in the future; 5. During the period from the date of this undertaking until the date of
completion of the transaction, supplementary undertakings will be given in accordance
with other new regulations of CSRC concerning remedial measures for returns and
related undertakings, if such regulations are announced by CSRC and the foregoing
undertakings fall short of meeting such new regulations; 6. The company undertakes that
it will practically perform the remedial measures for returns formulated by the Company as
well as any undertaking made by the company for such remedial measures. The company
will be liable for indemnifying the Company or the investors for their losses in the event of
failure to perform the undertakings. The company will be liable for relevant legal liabilities
to the Company or the investors for their losses in the event of failure to perform the
undertakings.
Chen Hongguo, Hu Changqing, 1. Not to transfer interests to other entities or individuals without consideration or with 19 January 2023 Until the completion During the reporting
Li Xingchun, Li Feng, Li Weixian, unfair consideration nor otherwise damage the Company’s interests in any other ways; date of the period, the parties
Han Tingde, Li Chuanxuan, Li 2. Restrain his/her own duty-related spending; 3. not to use the Company’s assets for implementation of the involved in undertaking
Zhihui, Sun Jianfei, Yin Meiqun, investments and consumption activities unrelated to the performance of their duties; 4. restructuring plan did not violate the
Yang Biao, Li Kang, Qiu Lanju, the remuneration system formulated by the Board or the Remuneration and Assessment undertaking, the asset
Sang Ailing, Pan Ailing, Zhang Committee is in line with implementation of the remedial measures for the returns by the restructuring ended,
Hong, Li Xueqin, Li Zhenzhong, Company; 5. the vesting conditions of share incentives to be formulated by the Company and the undertaking
Li Mingtang, Ge Guangming, will be in line with the implementation of the remedial measures for returns if the Company was fulfilled.
Dong Lianming, Yuan Xikun and intends to make such share incentive plans in the future; 6. during the period from the
Chu Hon Leung date of this undertaking until the date of completion of the transaction, supplementary
undertakings will be given in accordance with other new regulations of CSRC concerning
remedial measures for returns and related undertakings, if such regulations are announced
by CSRC and the foregoing undertakings fall short of meeting such new regulations; 7. I
will practically perform the remedial measures for returns formulated by the Company as
well as any undertaking made by the company for such remedial measures. I will be liable
for indemnifying the Company or the investors for their losses in the event of failure to
perform the undertakings.
38 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
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 (Cont’d)
Party involved Particulars on the
Undertaking in undertaking Type of undertaking Details of undertaking Undertaking date Term performance
Chenming Holdings Company Undertaking to regulate Regarding the reduction and avoidance of related party transactions, the following 19 January 2023 Until the completion During the reporting
Limited and reduce related unconditional and irrevocable undertaking are hereby made: 1. The company and the date of the period, the parties
party transactions companies controlled by the company will minimise and regulate potential related party implementation of the involved in undertaking
transactions with the Company and the companies controlled by the Company; Regarding restructuring plan did not violate the
the related party transactions between the company and other companies controlled by undertaking, the asset
the company and the Company and the companies controlled by the Company that cannot restructuring ended,
be reduced or have reasonable reasons in the future, the company and other companies and the undertaking
controlled by the company will follow the principle of fairness and justice in market was fulfilled.
transactions, conduct transactions at fair and reasonable market prices, perform related
party transaction decision-making procedures in accordance with relevant laws, regulations
and normative documents, and perform information disclosure obligations according to
law. 2. The company guarantees that the company and other companies controlled by the
company will not obtain any illegitimate benefits through related party transactions with
the Company and the companies controlled by the Company or make the Company and
the companies controlled by the Company bear any improper obligations. 3. The company
will urge the company and other companies controlled by the company not to seek special
interests through the related relationship with the Company, and not to conduct related
party transactions that damage the interests of the Company and its minority shareholders.
Shouguang Meilun, Chenrong Undertaking to provide 1. The company has provided the Company and the intermediaries serving for the 21 November 2022 Until the completion During the reporting
Fund true, accurate and transaction with relevant information and documents of the company (including but not date of the period, the parties
complete information limited to original written materials, duplicate materials or oral testimony). The company implementation of the involved in undertaking
guarantees that the copies or photocopies of the documents and materials provided restructuring plan did not violate the
are consistent with the originals, and the signatures and seals of these documents and undertaking, the asset
materials are true, ensures that the relevant information and documents provided for the restructuring ended,
transaction are true, accurate and complete, and there are no false records, misleading and the undertaking
statements or major omissions, and bears individual and joint legal responsibilities for the was fulfilled.
authenticity, accuracy and completeness of the information provided. 2. During the period
of the transaction, the company will disclose the information about the transaction to the
Company in a timely manner in accordance with relevant laws, regulations and rules, and
the relevant provisions of the CSRC and Shenzhen Stock Exchange, so as to ensure the
authenticity, accuracy and completeness of such information and guarantee that there
are no false records, misleading statements or major omissions in such information. If the
relevant information provided by the company for the transaction does not meet the above
requirements and causes losses to the Company and investors, the company will bear
individual and joint liability for compensation.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 39
INTERIM REPORT 2023
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 (Cont’d)
Party involved Particulars on the
Undertaking in undertaking Type of undertaking Details of undertaking Undertaking date Term performance
Undertaking on 1. The company, its controlling shareholder, all directors, supervisors and senior 21 November 2022 Until the completion During the reporting
absence of insider management members, and the entities controlled by the abovementioned subjects date of the period, the parties
trading have not been placed on file for investigation for suspected insider trading related to implementation of the involved in undertaking
this transaction. In the last 36 months, there is no case that the CSRC has imposed restructuring plan did not violate the
administrative punishment or the judicial organs have lawfully investigated criminal undertaking, the asset
responsibility for participating in insider trading related to major asset reorganisation, and restructuring ended,
there is no case that the above personnel are not allowed to participate in the transaction and the undertaking
according to Article 13 of the Guidelines for Supervision of Listed Companies No.7 – was fulfilled.
Supervision of Abnormal Stock Trading Related to Major Asset Restructuring of Listed
Companies. 2. The company, its controlling shareholder and its all directors, supervisors
and senior management members guarantee to take necessary measures to keep the
confidential materials and information involved in the transaction strictly confidential in
accordance with the requirements of applicable laws and regulations.
Undertaking on 1. As of the date of this letter of undertaking, the party involved in undertaking and the 19 January 2023 Until the completion During the reporting
compliance and directors and key management personnel of the party involved in undertaking are not date of the period, the parties
integrity being investigated by the judicial authority for suspected crimes or being investigated implementation of the involved in undertaking
by the CSRC for suspected violations of laws and regulations; 2. The party involved restructuring plan did not violate the
in undertaking and the directors and key management personnel of party involved in undertaking, the asset
undertaking have been in good faith in the past five years, and there has been no failure restructuring ended,
to repay large debts on schedule, fail to fulfil undertakings, or be subject to administrative and the undertaking
supervision measures by the CSRC or disciplinary action by the stock exchange; 3. The was fulfilled.
party involved in undertaking and the directors and key management personnel of the
party involved in undertaking have not been subject to administrative punishment (except
those obviously irrelevant to the securities market), criminal punishment, or involved in
major civil lawsuits or arbitrations related to economic disputes in the past five years. As at
the date of this letter of undertaking, there are no pending or foreseeable major lawsuits,
arbitrations or administrative punishment cases of the party involved in undertaking and
the directors and key management personnel of the party involved in undertaking; 4. The
party involved in undertaking has not had any untrustworthy circumstances such as failure
to repay large debts on schedule, fail to fulfil undertakings, or be subject to administrative
supervision measures by the CSRC or disciplinary action by the stock exchange in the past
five years. None of the above situation is currently in the stage of investigation and has not
yet formed a conclusion; 5. Directors and key management personnel of the party involved
in undertaking were not subject to the circumstances listed in Article 146 of the Company
Law. The content of the above undertaking is true, complete and accurate, and there are
no false or misleading statements or major omissions. The party involved in undertaking
is fully aware of the possible consequences of making a false statement, and is willing to
bear all legal consequences arising therefrom.
40 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
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 (Cont’d)
Party involved Particulars on the
Undertaking in undertaking Type of undertaking Details of undertaking Undertaking date Term performance
Dongxing Securities Investment Undertaking to provide 1. The company has provided the Company and the intermediaries serving for the 21 November 2022 Until the completion During the reporting
Co., Ltd., Chongqing true, accurate and transaction with relevant information and documents of the company (including but not date of the period, the parties
International Trust Inc., complete information limited to original written materials, duplicate materials or oral testimony). The company implementation of the involved in undertaking
Chenming (Qingdao) Asset guarantees that the copies or photocopies of the documents and materials provided restructuring plan did not violate the
Management Co., Ltd. are consistent with the originals, and the signatures and seals of these documents and undertaking, the asset
materials are true, ensures that the relevant information and documents provided for the restructuring ended,
transaction are true, accurate and complete, and there are no false records, misleading and the undertaking
statements or major omissions, and bears individual and joint legal responsibilities for the was fulfilled.
authenticity, accuracy and completeness of the information provided. 2. During the period
of the transaction, the company will disclose the information about the transaction to the
Company in a timely manner in accordance with relevant laws, regulations and rules, and
the relevant provisions of the CSRC and Shenzhen Stock Exchange, so as to ensure the
authenticity, accuracy and completeness of such information and guarantee that there
are no false records, misleading statements or major omissions in such information. If the
relevant information provided by the company for the transaction does not meet the above
requirements and causes losses to the Company and investors, the company will bear
individual and joint liability for compensation. 3. If the information provided or disclosed for
the transaction is suspected of false records, misleading statements or major omissions,
and is put on file for investigation by the judicial authorities or by the CSRC, the shares of
Chenming Paper will not be transferred before the investigation conclusion is formed, and
the written application for transfer suspension and the securities account will be submitted
to the Board of Chenming Paper within two trading days after receiving the notice of filing
for investigation, and the Board will apply to the stock exchange and the depository and
clearing corporation for locking up on behalf of the company. If the locking up application
is not submitted within two trading days, the company authorises the Board to directly
submit the identity and account information of the company to the stock exchange and
the depository and clearing corporation for locking up after verification. If the Board fails
to submit the identity and account information of the company to the stock exchange
and the depository and clearing corporation, the company authorises the stock exchange
and the depository and clearing corporation to directly lock up the relevant shares. If the
investigation concludes that there is a violation of laws and regulations, the company
promises to lock up the shares and voluntarily use them for compensation to relevant
investors.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 41
INTERIM REPORT 2023
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 (Cont’d)
Party involved Particulars on the
Undertaking in undertaking Type of undertaking Details of undertaking Undertaking date Term performance
Dongxing Securities Investment Undertaking on share 1. The company will not transfer the shares acquired from the transaction within 12 months 21 November 2022 Twelve months from The asset restructuring
Co., Ltd. lock-up from the date when the shares acquired in the transaction are issued. However, if the the date of completion ended, and the
CSRC requests to adjust the lock-up period of the subject shares, it shall be adjusted of share issuance undertaking was
according to relevant requirements. 2. The above-mentioned “shares acquired in the fulfilled.
transaction” include the shares acquired during the lock-up period due to the distribution
of stock dividends and the increase of capital reserves. 3. After the shares of Chenming
Paper acquired in the transaction are unlocked, the company’s disposal of shares must
comply with the Company Law of the People’s Republic of China, the Securities Law of
the People’s Republic of China, the Rules Governing Listing of Stocks on Shenzhen Stock
Exchange, Shenzhen Stock Exchange Implementation Rules on the Share Lessening by
the Shareholders, Directors, Supervisors and Senior Management of Listed Companies,
and the Articles of Association of Shandong Chenming Paper Holdings Limited, and other
provisions of laws, regulations, rules and normative documents.
Chongqing International Trust Chongqing Trust (the “company”), as the trustee of Chongqing Trust Huiyu No. 6 21 November 2022 Twelve months from The asset restructuring
Inc. Collective Fund Trust Plan (“Huiyu No. 6” or the “Plan”), represents Huiyu No. 6 as the the date of completion ended, and the
counterparty of the Company in the transaction, and will hold shares of the Company after of share issuance undertaking was
the transaction is completed. The company has made the following commitments on the fulfilled.
lock-up period of the shares of the Company acquired in the transaction (the “subject
shares”): 1. The shares of the Company acquired by the company (representing Huiyu No.
6) in the transaction will not be transferred within 12 months from the date when the shares
acquired in the transaction are issued, but if the CSRC requests to adjust the lock-up
period of the subject shares, it shall be adjusted according to relevant requirements. 2. “The
shares of the Company acquired in the transaction” as mentioned above include shares of
the Company acquired during the lock-up period due to the distribution of stock dividends
by the Company and the increase of capital reserves. 3. The company (representing Huiyu
No. 6) shall abide by the Company Law of the People’s Republic of China, the Securities
Law of the People’s Republic of China, the Rules Governing Listing of Stocks on Shenzhen
Stock Exchange, Shenzhen Stock Exchange Implementation Rules on the Share Lessening
by the Shareholders, Directors, Supervisors and Senior Management of Listed Companies,
and the Articles of Association of Shandong Chenming Paper Holdings Limited, and other
provisions of laws, regulations, rules and normative documents.
Dongxing Securities Investment Explanation and 1. The company has a clear ownership of the subject assets, which can be legally disposed 21 November 2022 Until the completion During the reporting
Co., Ltd., Chenming (Qingdao) commitment letter of of, and there are no rights restrictions or defects such as pledge, guarantee, freezing and date of the period, the parties
Asset Management Co., Ltd. the counterparty on seizure, nor major legal disputes such as litigation and arbitration. 2. During the period implementation of the involved in undertaking
the ownership of the from the valuation benchmark date of the subject assets of the transaction to the asset restructuring plan did not violate the
underlying assets delivery date, the company will not set any third-party rights such as mortgage and pledge undertaking, the asset
on the subject assets. 3. The company waives the pre-emptive right to buy the shares restructuring ended,
transferred by other shareholders of the target company. 4. There are no legal obstacles and the undertaking
to the target asset transfer by the company, nor other relevant investment agreements or was fulfilled.
other arrangements that restrict transactions.
42 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
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 (Cont’d)
Party involved Particulars on the
Undertaking in undertaking Type of undertaking Details of undertaking Undertaking date Term performance
Chongqing International Trust Chongqing Trust (the “company”), as the trustee of Chongqing Trust Huiyu No. 6 Collective 21 November 2022 Until the completion During the reporting
Inc. Fund Trust Plan (“Huiyu No. 6” or the “Plan”), represents Huiyu No. 6 as the transaction date of the period, the parties
counterparty of the Company, and hereby promises as follows: 1. The company implementation of the involved in undertaking
(representing Huiyu No. 6) has a clear ownership of the subject assets and can make legal restructuring plan did not violate the
disposal. There are no rights restrictions or defects such as pledge, guarantee, freezing and undertaking, the asset
seizure, nor major legal disputes such as litigation and arbitration. 2. During the period from restructuring ended,
the asset valuation benchmark date to the asset delivery date, the company (representing and the undertaking
Huiyu No. 6) will not set any third-party rights such as mortgage and pledge on the subject was fulfilled.
assets. 3. The company (representing Huiyu No. 6) waives the pre-emptive right to buy the
shares transferred by other shareholders of the target company. 4. In addition, there are no
legal obstacles to the target asset transfer by the company (representing Huiyu No. 6), nor
other investment agreements or other arrangements that restrict transactions.
Dongxing Securities Investment Undertaking on 1. The company, its controlling shareholder, all directors, supervisors and senior 21 November 2022 Until the completion During the reporting
Co., Ltd., Chongqing absence of insider management members, and the entities controlled by the abovementioned subjects date of the period, the parties
International Trust Inc., trading have not been placed on file for investigation for suspected insider trading related to implementation of the involved in undertaking
Chenming (Qingdao) Asset this transaction. In the last 36 months, there is no case that the CSRC has imposed restructuring plan did not violate the
Management Co., Ltd. administrative punishment or the judicial organs have lawfully investigated criminal undertaking, the asset
responsibility for participating in insider trading related to major asset reorganisation, and restructuring ended,
there is no case that the above personnel are not allowed to participate in the transaction and the undertaking
according to Article 13 of the Guidelines for Supervision of Listed Companies No.7 – was fulfilled.
Supervision of Abnormal Stock Trading Related to Major Asset Restructuring of Listed
Companies. 2. The company, its controlling shareholder and its all directors, supervisors
and senior management members guarantee to take necessary measures to keep the
confidential materials and information involved in the transaction strictly confidential in
accordance with the requirements of applicable laws and regulations.
Dongxing Securities Investment Commitment on no 1. The company and its major management personnel did not receive any criminal 21 November 2022 Until the completion During the reporting
Co., Ltd., Chenming (Qingdao) illegal matters in the punishment or administrative punishment related to the securities market in the last five date of the period, the parties
Asset Management Co., Ltd. past five years years, and there was no major civil litigation or arbitration related to economic disputes; implementation of the involved in undertaking
2. The company and its major management personnel did not fail to repay large debts on restructuring plan did not violate the
schedule or fulfil their commitments, were not taken administrative supervision measures undertaking, the asset
by the CSRC, or were not disciplined by stock exchanges; 3. The company had no other restructuring ended,
major illegal acts that damaged the investors’ legitimate rights and interests and social and the undertaking
public interests, nor other bad records. was fulfilled.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 43
INTERIM REPORT 2023
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 (Cont’d)
Party involved Particulars on the
Undertaking in undertaking Type of undertaking Details of undertaking Undertaking date Term performance
Chongqing International Trust Chongqing Trust (the “company”), as the trustee of Chongqing Trust Huiyu No. 6 Collective 19 January 2023 Until the completion During the reporting
Inc. Fund Trust Plan (“Huiyu No. 6” or the “plan”), represents Huiyu No. 6 as the counterparty date of the period, the parties
of the transaction, and makes the following commitments on the plan and the relevant implementation of the involved in undertaking
information of the company: (1) Commitments of the plan: 1. Since its establishment, the restructuring plan did not violate the
plan has not been subject to administrative punishment or criminal punishment related undertaking, the asset
to the securities market, and there are no major civil lawsuits or arbitrations related to restructuring ended,
economic disputes; 2. There is no failure to repay large debts, fulfil commitments, take and the undertaking
administrative supervision measures by the CSRC or be disciplined by stock exchanges was fulfilled.
on the plan; 3. There are no other major illegal acts that damage the investors’ legitimate
rights and interests and social public interests in the plan, nor other bad records. (2)
Commitments of the company: 1. The company and its major management personnel did
not receive any criminal punishment or administrative punishment related to the securities
market in the last five years, and there were no major civil lawsuits or arbitrations related
to economic disputes (except for other products managed by the company as litigants);
2. On 3 January 2023, the Beijing Supervision Bureau of the CSRC issued the Decision on
the Administrative Supervisory Measures Against Chongqing International Trust Inc. for
Correction ([2023] No. 10), pursuant to which, due to the existing issues as a shareholder
of Guodu Securities Co., Ltd., the company was subject to administrative supervisory
measures for correction by the Beijing Regulatory Bureau of the CSRC, which required the
company to “take practical and effective corrective measures to rectify the illegal pledges,
and exercise its rights and fulfil its obligations as a shareholder in compliance with the law,
and not to become a major shareholder and a de facto controller of a securities company
without approval”. In addition to the above, the company and its major management
personnel did not fail to repay large debts on schedule or fulfil their commitments, were not
taken administrative supervision measures by the CSRC, or were not disciplined by stock
exchanges; 3. The company had no other major illegal acts that damage the investors’
legitimate rights and interests and social public interests, nor other bad records.
44 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
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 (Cont’d)
Party involved Particulars on the
Undertaking in undertaking Type of undertaking Details of undertaking Undertaking date Term performance
Undertaking Chenming Holdings Company Non-competitive (1) Chenming Holdings Co., Ltd. (“Chenming Holdings”) shall not engage, whether solely, 22 May 2008 During the period Implementing as normal
made on initial Limited undertaking jointly, or by representing itself or any other persons or companies, and shall not procure when Chenming
public offering its associates (as defined in The Listing Rules of Hong Kong Stock Exchange) to engage, Holdings was the
or refinancing in any business which competes with the business of the Company and its subsidiaries major shareholder of
(“Chenming Group” or “we”) directly or indirectly, in any country and region which our the Company
business exists (or any part of the world if in any form of electronics business), or in any
business that directly or indirectly competes with Chenming Group’s business which we
operate from time to time (including but not limited to any business in the form of sole
proprietorship, joint ventures or acquisitions, or holding interests directly or indirectly
in such enterprises, or by any other means); (2) in the event that Chenming Holdings is
required by its business to, whether solely, jointly, or by representing itself or any other
persons or companies, engage in business which directly or indirectly competes against
the business of Chenming Group, or obtain any business opportunity which directly
or indirectly competes against the business of Chenming Group, it shall endeavour to
procure that Chenming Group shall have priority to obtain the right to operate such
business or to obtain such business opportunity; (3) if Chenming Holdings is in breach of
the abovementioned undertakings, it shall indemnify the Company for any loss caused by
such breach and the Company shall have the right to acquire all businesses of Chenming
Holdings, which directly or indirectly compete with the businesses of our Group, at market
price or cost price (whichever price is lower); (4) Chenming Holdings shall not make use of
its position as the controlling shareholder (as defined in The Listing Rules of Hong Kong
Stock Exchange) of our Group to jeopardise the legal interests of Chenming Group and its
shareholders with other persons or companies or on their behalf.
Chenming Holdings Company Defective properties (1) According to the plan on defective properties of the Company, Chenming Holdings 16 January 2008 During the period Implementing as normal
Limited Co., Ltd. (“Chenming Holdings”) has guaranteed and undertaken that: according to the when Chenming
application of the Company, for defective property(ies) owned by the Company and its Holdings was the
holding subsidiary company which situated in the administrative area of Shouguang city, major shareholder of
Chenming Holdings will purchase it (them) and have it(them) being transferred to itself the Company
pursuant to the law in accordance with the result of the related asset valuation if the
Company decides to transfer and dispose of it(them) and there is no other transferee; (2)
before the Company transfers and disposes of the defective properties pursuant to the
law, if the Company suffers any economic losses due to the defects of the title (including
but not limited to damages, penalties and relocation costs), Chenming Holdings will bear
such economic losses; (3) during the regulatory process taken to the defective properties
of buildings and land of subsidiaries of the Company situated outside the local areas
(outside the administrative area of Shouguang city), the economic losses such as penalties
or relocation costs imposed by competent administrative authorities to be borne by the
subsidiaries arising from defects of insufficient title documents shall be paid pursuant to
the law by Chenming Holdings after verification.
Whether undertakings performed on time Yes
If the undertakings are not performed within specified period, details of the specific reasons for the incomplete performance and the next steps should be provided N/A
SHANDONG CHENMING PAPER HOLDINGS LIMITED 45
INTERIM REPORT 2023
VI Material Matters
II. Appropriation of funds of the Company by the controlling shareholder and other related
parties for non-operating purposes
Applicable √ Not applicable
There was no appropriation of funds of the Company by the controlling shareholder and other related parties for non-operating
purposes during the reporting period.
III. External guarantees against the rules and regulations
Applicable √ Not applicable
There was no external guarantee provided by the Company which was against the rules and regulations during the reporting
period.
IV. 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.
46 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
VI Material Matters
VIII. Litigation
Material litigation and arbitration
Applicable √ Not applicable
VIII. Litigation (Cont’d)
During the reporting period, the Company had no material litigation and arbitration.
Other litigations
√ Applicable Not applicable
Amount Whether
General information on the involved provisions Date of Disclosure
litigation (arbitration) (RMB’0,000) are made Progress Trial results and impact Enforcement of judgment disclosure index
Summary of matters not 123,098.64 No The amount involved in ongoing For resolved cases, the court All the resolved cases are in N/A N/A
subject to disclosure as cases was RMB233.0244 million; ordered relevant defendant and the progress of execution.
material litigation the amount involved in resolved guarantor to settle outstanding
(arbitration) in which cases was RMB997.9620 million. loans to the Company, in line with
Chenming Leasing is the request of the Company and
the plaintiff would not have any significant
impact on the operation and
financial condition of the
Company.
Summary of matters not 30,598.66 No The amount involved in ongoing Did not have any significant impact The amount involved in N/A N/A
subject to disclosure as cases was RMB216.7849 million; on the operation and financial the resolved and executed
material litigation the amount involved in resolved condition of the Company. cases was RMB2.7266
(arbitration) in which cases was RMB89.2017 million. million, and other cases are
the Company and other in the progress of execution.
subsidiaries of the
Company are the plaintiff
Summary of matters not 8,813.75 No The amount involved in ongoing Did not have any significant impact All the resolved cases have N/A N/A
subject to disclosure as cases was RMB57.0221 million; on the operation and financial been executed.
material litigation the amount involved in resolved condition of the Company.
(arbitration) in which cases was RMB31.1154 million.
the Company and other
subsidiaries of the
Company are the defendant
IX. Punishment and rectification
Applicable √ Not applicable
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
SHANDONG CHENMING PAPER HOLDINGS LIMITED 47
INTERIM REPORT 2023
VI Material Matters
XI. Significant related party transactions (Cont’d)
1. Related party transactions associated with day-to-day operation (Cont’d)
Pricing Related Amount of r Percentage Amount of Whether Market price
Relationship Types of the Subject matter of basis of the party elated 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 Disclosure
Related party transactions Company transactions transactions transaction price (RMB’0,000) transactions (RMB’0,000) cap transactions transaction date index
Weifang Port Wood Chip Joint venture Labour Port Market price Market price 2,031.77 4.57% N/A N/A Bank N/A N/A N/A
Terminal Co., Ltd. service miscellaneous fees acceptance
and telegraphic
transfer
Total 2,031.77
Particulars on refund of bulk sale Nil
Estimated total amount for day-to-day related party transactions to be conducted during the period (by types of transactions) and Nil
their actual implementing during the reporting period (if any)
Reasons for large differences between transaction price and market reference price (if applicable) N/A
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 and its subsidiaries 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
48 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
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
Co., Ltd. A joint venture Financial support No 1,829.12 0.00 198.40 6.00% 49.19 1,679.91
Weifang Port Area Wood Chip Port Co., Ltd A joint venture Financial support No 7,167.93 0.00 0.00 6.00% 190.05 7,357.98
The above financial support, which was the financial support provided proportionally by shareholders of the joint venture, did not affect
Effect of related creditors’ rights on the operating results and the ordinary operation of the Company. Moreover, they catered to the needs for development of existing businesses of Shouguang Meite
financial position of the Company Environmental and Weifang Port Area Wood Chip 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 4,000.00 4,000.00 Market 10.11 0.00
shareholder interest rate
Guangdong Nanyue Bank Co., Ltd. An associate Borrowing 190,910.00 84,260.00 69,260.00 Market 862.54 205,910.00
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.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 49
INTERIM REPORT 2023
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
Leasing description:
As a lessee
The Company has simplified the treatment of short-term leases and leases of low-value assets by not recognising
right-of-use assets and lease liabilities. The charges to expense for short-term leases, low-value assets and
variable lease payments not included in the measurement of lease liabilities during the current period are as
follows:
Unit: RMB
Item First half of 2023
Low-value leases 3,592,557.81
Total 3,592,557.81
50 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
VI Material Matters
XII. Material contracts and implementation (Cont’d)
1. Custody, contracting and leasing (Cont’d)
(3) Leasing (Cont’d)
As a lessor
Where an operating lease is formed:
According to paragraph 58 of the new lease standard, the lessor shall disclose in the notes the following
information related to operating leases:
Lease income, and make separate disclosure of income related to variable lease payments not included in
lease receipts;
Unit: RMB
Item First half of 2023
Lease income 101,409,816.53
The amount of undiscounted lease receipts to be received in each of the five consecutive fiscal years after
the balance sheet date and the total amount of undiscounted lease receipts to be received in the remaining
years.
Unit: RMB
Year 30 June 2023
Within 1 year after the balance sheet date 186,273,239.51
1 to 2 years after the balance sheet date 177,448,128.92
2 to 3 years after the balance sheet date 148,642,096.01
3 to 4 years after the balance sheet date 137,410,651.95
4 to 5 years after the balance sheet date 123,958,223.57
More than 5 years after the balance sheet date 119,369,469.15
Total 893,101,809.11
Items that bring profit or loss of more than 10% of the total profit of the Company during the reporting
period
Applicable √ Not applicable
The Company did not have any leasing project that brought profit or loss to the Company amounting to
more than 10% of the total profit of the Company during the reporting period.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 51
INTERIM REPORT 2023
VI Material Matters
XII. Material contracts and implementation (Cont’d)
2. Significant guarantees
√ Applicable Not applicable
(1) Guarantees
During the reporting period, the Company provided guarantee to subsidiaries and the guarantee amount incurred
was RMB7,535.0569 million. As at 30 June 2023, 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 RMB12,446.6527 million, representing 68.06% of the equity attributable to shareholders
of the Company as at the end of June 2023.
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 guarantee Fulfilled parties
Name of obligee guarantee amount guarantee Guarantee date provided guarantee Collateral (if any) Term or not or not
Weifang Port Area Wood Chip Port 24 July 2017 17,500.00 20 December 2017 10,520.00 General Credit guarantee No 10 years No Yes
Co., Ltd guarantee
Zhanjiang Runbao Trading Co., Ltd. 30 March 2022 16,000.00 25 April 2022 16,000.00 Pledge 34.64% Remaining equity 2 years No No
equity interest transfer payment
in Wuhan of RMB160
Chenming million
Zhanjiang Dingjin Trading Co., Ltd. 7 December 2022 13,558.19 7 December 2022 13,558.19 Pledge Properties Remaining equity 3 years No No
transfer payment
of RMB136
million
Shanghai Shuilan Trading Co., Ltd. 7 December 2022 45,700.00 7 December 2022 45,000.00 Pledge 100% equity 80% equity 3 years No No
interest in interest in
Shanghai Taixing Port held
Chongmin by Shanghai
Huahao
Total external guarantees approved during the reporting period (A1) 0.00 Total actual external guarantees during the reporting period (A2) 0.00
Total external guarantees approved at the end of the reporting period (A3) 92,758.19 Balance of total actual guarantees at the end of the reporting period (A4) 85,078.19
52 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
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 to related
disclosing the Amount of Guarantee Type of Counter- Fulfilled parties
Name of obligee guarantee amount guarantee Guarantee date provided guarantee Collateral guarantee Term or not or not
Zhanjiang Chenming Pulp & Paper Co., Ltd. 30 March 2019 57,590.00 16 October 2020 57,590.00 General guarantee No No 5 years No No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 30 March 2022 273,501.53 31 May 2022 273,501.53 General guarantee No No 1 year No No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 30 March 2023 1,070,000.00 25 May 2023 98,030.00 General guarantee No No 1 year No No
Shouguang Meilun Paper Co., Ltd. 30 March 2022 77,759.84 29 July 2022 77,759.84 General guarantee No No 1 year No No
Shouguang Meilun Paper Co., Ltd. 30 March 2023 500,000.00 19 June 2023 92,777.57 General guarantee No No 1 year No No
Jiangxi Chenming Paper Co., Ltd. 30 March 2022 53,023.40 1 July 2022 53,023.40 General guarantee No No 1 year No No
Jiangxi Chenming Paper Co., Ltd. 30 March 2023 430,000.00 24 May 2023 97,752.63 General guarantee No No 1 year No No
Huanggang Chenming Pulp & 30 March 2022 78,500.00 27 July 2022 78,500.00 General guarantee No No 1 year No No
Paper Co., Ltd.
Huanggang Chenming Pulp & 30 March 2023 380,000.00 23 May 2023 2,000.00 General guarantee No No 1 year No No
Paper Co., Ltd.
Huanggang Chenming Paper Technology 30 March 2023 470,000.00 General guarantee No No 1 year No No
Co., Ltd.
Chenming (HK) Limited 30 March 2023 200,000.00 18 May 2023 7,729.86 General guarantee No No 1 year No No
Zhanjiang Chenming Arboriculture 30 March 2023 10,000.00 General guarantee No No 1 year No No
Development Co., Ltd.
Jilin Chenming Paper Co., Ltd. 30 March 2023 30,000.00 31 May 2023 2,600.00 General guarantee No No 1 year No No
Shouguang Chenming Art Paper Co., Ltd. 30 March 2023 20,000.00 General guarantee No No 1 year No No
Shandong Chenming Group Finance 30 March 2023 20,000.00 General guarantee No No 1 year No No
Co., Ltd.
Kunshan Tuoan Plastic Products Co., Ltd. 30 March 2022 3,000.00 27 February 2023 3,000.00 General guarantee No No 1 year No No
Kunshan Tuoan Plastic Products Co., Ltd. 30 March 2023 10,000.00 General guarantee No No 1 year No No
Chenming (Singapore) Co., Ltd. 30 March 2023 50,000.00 General guarantee No No 1 year No No
Shandong Chenming Paper Sales 30 March 2022 214,612.70 19 August 2022 214,612.70 General guarantee No No 5 years No No
Co., Ltd.
Shandong Chenming Paper Sales 30 March 2023 350,000.00 General guarantee No No 1 year No No
Co., Ltd.
Shanghai Chenming Pulp & Paper Sales 30 March 2022 6,500.00 26 October 2022 6,500.00 General guarantee No No 1 year No No
Co., Ltd.
Shanghai Chenming Pulp & Paper Sales 30 March 2023 150,000.00 29 May 2023 1,000.00 General guarantee No No 1 year No No
Co., Ltd.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 53
INTERIM REPORT 2023
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 to related
disclosing the Amount of Guarantee Type of Counter- Fulfilled parties
Name of obligee guarantee amount guarantee Guarantee date provided guarantee Collateral guarantee Term or not or not
Huanggang Chenming Pulp & 30 March 2023 30,000.00 General guarantee No No 1 year No No
Fiber Trading Co., Ltd.
Shouguang Chenming Import and 30 March 2023 100,000.00 27 June 2023 14,999.55 General guarantee No No 1 year No No
Export Trade Co., Ltd.
Hainan Chenming Technology Co., Ltd. 30 March 2022 55,570.00 20 September 2022 55,570.00 General guarantee No No 1 year No No
Hainan Chenming Technology Co., Ltd. 30 March 2023 100,000.00 25 May 2023 22,640.00 General guarantee No No 1 year No No
Chenming (Overseas) Co., Ltd. 30 March 2023 30,000.00 General guarantee No No 1 year No No
Nanchang Chenming Arboriculture 30 March 2023 10,000.00 General guarantee No No 1 year No No
Development Co., Ltd.
Shouguang Chenming Papermaking 30 March 2023 5,000.00 General guarantee No No 1 year No No
Machine Co., Ltd.
Shouguang Hongxiang Printing and 30 March 2023 5,000.00 General guarantee No No 1 year No No
Packaging Co., Ltd.
Shouguang Hongyi Decorative Packaging 30 March 2023 5,000.00 General guarantee No No 1 year No No
Co., Ltd.
Shouguang Chenming Modern Logistic 30 March 2023 5,000.00 General guarantee No No 1 year No No
Co., Ltd.
Shandong Grand View Hotel Co., Ltd. 30 March 2023 5,000.00 General guarantee No No 1 year No No
Foshan Chenming Import and 30 March 2023 50,000.00 General guarantee No No 1 year No No
Export Trade Co., Ltd.
Total amount of guarantee provided for subsidiaries approved during the reporting period (B1) 4,035,000.00 Total amount of guarantee provided for subsidiaries during the 753,505.69
reporting period (B2)
Total amount of guarantee provided for subsidiaries approved as at the end of the reporting period (B3) 4,855,057.47 Total balance of guarantee provided for subsidiaries as at the end 1,159,587.08
of the reporting period (B4)
Guarantees between subsidiaries
Total amount of guarantee provided for subsidiaries approved during the reporting period (C1) 0.00 Total amount of guarantee provided for subsidiaries during the 0.00
reporting period (C2)
Total amount of guarantee provided for subsidiaries approved as at the end of the reporting period (C3) 0.00 Total balance of guarantee provided for subsidiaries as at the end 0.00
of the 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) 4,035,000.00 Total amount of guarantee during the reporting period (A2+B2+C2) 753,505.69
Total amount of guarantee approved as at the end of the reporting period (A3+B3+C3) 4,947,815.66 Total balance of guarantee as at the end of the reporting period 1,244,665.27
(A4+B4+C4)
The percentage of total amount of guarantee provided (i.e. A4+B4+C4) to the net assets of the Company 68.06%
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) 370,842.25
Total amount of guarantee provided in excess of 50% of net assets (F) 330,294.92
Sum of the above three amount of guarantee (D+E+F) 701,137.17
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
54 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
VI Material Matters
XII. Material contracts and implementation (Cont’d)
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.
XIII. Other matters of significance
√ Applicable Not applicable
1. Entering into the Strategic Cooperation Agreement with China Construction Bank Shandong Branch
On 24 April 2023, the Company entered into the Strategic Cooperation Agreement with China Construction Bank
Co., Ltd. Shandong Branch (hereinafter referred to as “CCB Shandong”), in which both parties agreed to conduct
comprehensive cooperation in the commercial banking and investment banking business, provided that laws and
regulations, regulatory requirements, internal risk management system and relevant business operation procedures of
CCB Shandong are complied, internal approval from CCB Shandong is obtained and credit conditions are met. After
entering into the Agreement, CCB Shandong will be able to fully utilise its service resources to prioritise providing
comprehensive financial services to the Company and its subsidiaries, which will help the Company further broaden
financing channels, optimise capital structure, enhance capital strength and achieve sound development by relying on
the high-quality resources and platforms of large state-owned commercial banks.
For details, please refer to the relevant announcement disclosed by the Company on Cninfo on 26 April 2023
(announcement number: 2023-036) and the overseas regulatory announcement disclosed by the Company on the
website of Hong Kong Stock Exchange on 25 April 2023.
2. Repayment of the“18 Chenming Bond 01”of RMB350 million on schedule and completion of delisting
On 3 April 2023, the Company entrusted the Shenzhen Branch of China Securities Depository & Clearing Co., Ltd. to
complete the payment of principal and interest of “18 Chenming Bond 01” of RMB350 million in accordance with the “First
Tranche of Corporate Bonds Publicly Issued to Qualified Investors in 2018”. The bond was delisted from the Shenzhen
Stock Exchange on the same day.
For details, please refer to the relevant announcement disclosed by the Company on Cninfo on 30 March 2023
(announcement number: 2023-015) and the overseas regulatory announcement disclosed by the Company on the
website of Hong Kong Stock Exchange on 30 March 2023.
3. Proposed full redemption of perpetual bonds of RMB1 billion
On 11 July 2017, the Company issued “17 Lu Chenming MTN001” amounting to RMB1 billion with a term of 3+N.
According to the “Prospectus of the Company’s 2017 First Tranche of Medium-term Notes”, “17 Lu Chenming MTN001”
is subject to the issuer’s redemption option. The Company proposed to redeem the RMB1 billion perpetual bonds in
full. The principal and interest payment on 12 July 2023 amounted to RMB1,089.70 million. To date, all the bonds of the
Company have been redeemed.
For details, please refer to the relevant announcement disclosed by the Company on Shanghai Clearing (www.
shclearing.com) and China Money (www.chinamoney.com.cn) on 11 May 2023.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 55
INTERIM REPORT 2023
VI Material Matters
XIII. Other matters of significance (Cont’d)
4. Termination of asset purchase through the issuance of shares and cash payments
On 27 February 2023, the Company convened the 2023 first extraordinary general meeting, the 2023 first class meeting
for holders of domestic-listed shares and the 2023 first class meeting for holders of overseas-listed shares, at which
the Company considered and approved relevant resolutions including the Report on the Agreement on Asset Purchase
through Issuance of Shares and Cash Payments and Connected Transactions (Draft) of the Company. The Company
intended to acquire 1.19% equity interests in Shouguang Meilun held by Dongxing Securities Investment Co., Ltd.,
44.44% limited partnership share in Chenrong Fund held by Chongqing International Trust Inc. through issuance of
shares. The Company’s wholly-owned subsidiary, Chenming Investment, intended to acquire 0.22% general partnership
interest in Chenrong Fund held by Chenming (Qingdao) Asset Management Co., Ltd. through cash payment. The type
of shares to be issued by the Company is A shares, the price of the shares to be issued is RMB4.42 per share, and the
number of shares to be issued is 71,841,345 shares.
On 14 March 2023, the Company received the Notice on the Acceptance of Application Documents for Asset Purchase
through the Issuance of Shares of Shandong Chenming Paper Holdings Limited (Shen Zheng Shang Shen [2023] No.
259) ( ( [2023]259 )) from the
Shenzhen Stock Exchange.
On 29 June 2023, the Company convened the eighth extraordinary general meeting of the tenth session of the Board
and the fourth extraordinary general meeting of the tenth session of the Supervisory Committee, at which the Company
considered and approved the Resolution on the Termination of the Asset Purchase through Issuance of Shares and
Cash Payments and Connected Transactions and Withdrawal of the Application Documents and agreed to terminate the
transaction, sign the relevant termination agreement with the counterparty if needed and apply to the Shenzhen Stock
Exchange for relevant application documents for the withdrawal of the transaction.
For details, please refer to the relevant announcements disclosed by the Company on Cninfo on 28 February
2023, 16 March 2023 and 30 June 2023 (announcement number: 2023-010, 2023-014, 2023-048) and the relevant
announcements disclosed by the Company on the website of Hong Kong Stock Exchange on 27 February 2023, 15
March 2023 and 29 June 2023.
5. Information disclosure index for 2023 Interim Report
Announcement Date of
no. Subject matter publication Publication website and index
2023-001 Announcement on Receipt of Government 3 January 2023 http://www.cninfo.com.cn
Subsidies
2023-002 Announcement on Pledge of Shares and Partial 19 January 2023 http://www.cninfo.com.cn
Release of Pledge of Shares by Shareholders
2023-003 Announcement on Resolutions of the Sixth 20 January 2023 http://www.cninfo.com.cn
Extraordinary Meeting of the Tenth Session of
the Board of Directors
2023-004 Announcement on Resolutions of the Third 20 January 2023 http://www.cninfo.com.cn
Extraordinary Meeting of the Tenth Session of
the Supervisory Committee
2023-005 Notice of the 2023 First Extraordinary General 20 January 2023 http://www.cninfo.com.cn
Meeting, 2023 First Class Meeting for Holders
of Domestic-listed Shares, and 2023 First Class
Meeting for Holders of Overseas-listed Shares
56 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
VI Material Matters
XIII. Other matters of significance (Cont’d)
5. Information disclosure index for 2023 Interim Report (Cont’d)
Announcement Date of
no. Subject matter publication Publication website and index
2023-006 Announcement on Effects of Dilution on the 20 January 2023 http://www.cninfo.com.cn
Current Earnings Per Share As a Result of the
Transaction and Relevant Remedial Arrangement
of the Company
2023-007 2022 Annual Results Forecast 31 January 2023 http://www.cninfo.com.cn
2023-008 Announcement on the Continued Pledge of 11 February 2023 http://www.cninfo.com.cn
Shares held by Shareholders
2023-009 Reply to the Inquiry Letter on Restructuring from 16 February 2023 http://www.cninfo.com.cn
the Shenzhen Stock Exchange
2023-010 Announcement on Resolutions of the 2023 First 28 February 2023 http://www.cninfo.com.cn
Extraordinary General Meeting, 2023 First Class
Meeting for Holders of Domestic-listed Shares,
and 2023 First Class Meeting for Holders of
Overseas-listed Shares
2023-011 Shandong Chenming Paper Holdings Limited 28 February 2023 http://www.cninfo.com.cn
Self-inspection Report on the Trading of Shares
by Insiders on Asset Purchase Through Issuance
of Shares and Cash Payments and Related Party
Transaction
2023-012 Supplementary Announcement on the Self- 7 March 2023 http://www.cninfo.com.cn
inspection Report on the Trading of Shares by
Insiders on Asset Purchase Through Issuance of
Shares and Cash Payments and Related Party
Transaction
2023-013 Announcement on the Continued Pledge of 11 March 2023 http://www.cninfo.com.cn
Shares held by Shareholders
2023-014 Announcement on the Acceptance of Asset 16 March 2023 http://www.cninfo.com.cn
Purchase Through Issuance of Shares and Cash
Payments and Related Party Transaction by the
Shenzhen Stock Exchange
2023-015 Shandong Chenming Paper Holdings Limited 30 March 2023 http://www.cninfo.com.cn
Announcement on Payment of 2023 Interest
and Delisting with Respect to the First Tranche
of Corporate Bonds Publicly Issued to Qualified
Investors in 2018
2023-016 Announcement on Resolutions of the Fourth 31 March 2023 http://www.cninfo.com.cn
Meeting of the Tenth Session of the Board of
Directors
2023-017 Announcement on Resolutions of the Fourth 31 March 2023 http://www.cninfo.com.cn
Extraordinary Meeting of the Tenth Session of
the Supervisory Committee
2023-018 2022 Annual Report Summary 31 March 2023 http://www.cninfo.com.cn
2023-019 Notice of 2022 Annual General Meeting 31 March 2023 http://www.cninfo.com.cn
2023-020 Special Statement on Securities Investment in 31 March 2023 http://www.cninfo.com.cn
2022
2023-021 Announcement on Appointment of Auditor for 31 March 2023 http://www.cninfo.com.cn
2023
SHANDONG CHENMING PAPER HOLDINGS LIMITED 57
INTERIM REPORT 2023
VI Material Matters
XIII. Other matters of significance (Cont’d)
5. Information disclosure index for 2023 Interim Report (Cont’d)
Announcement Date of
no. Subject matter publication Publication website and index
2023-022 Announcement on the Development of 31 March 2023 http://www.cninfo.com.cn
Equipment Financing Business
2023-023 Announcement on Carrying out Factoring 31 March 2023 http://www.cninfo.com.cn
Business of Accounts Receivable
2023-024 Announcement on Expected Provision of 31 March 2023 http://www.cninfo.com.cn
Guarantees to Subsidiaries for 2023
2023-025 Special Statement on the Proposed Non- 31 March 2023 http://www.cninfo.com.cn
Distribution of Profit for 2022
2023-026 Announcement on Changes in Accounting 31 March 2023 http://www.cninfo.com.cn
Policies
2023-027 Announcement on the 2022 Annual Online 31 March 2023 http://www.cninfo.com.cn
Performance Briefing
2023-028 Announcement on Receiving the Notice on 1 April 2023 http://www.cninfo.com.cn
Suspending the Review of Asset Purchase
Through Issuance of Shares and Cash Payments
and Related Party Transaction from the
Shenzhen Stock Exchange
2023-029 Supplementary Notice of 2022 Annual General 1 April 2023 http://www.cninfo.com.cn
Meeting
2023-030 Announcement on Resolutions of the Seventh 20 April 2023 http://www.cninfo.com.cn
Extraordinary Meeting of the Tenth Session of
the Board of Directors
2023-031 Announcement on the Operational Property- 20 April 2023 http://www.cninfo.com.cn
secured Loan by a Subsidiary and Provision of
Guarantee therefor
2023-032 Notice of the 2023 Second Extraordinary General 20 April 2023 http://www.cninfo.com.cn
Meeting
2023-033 Announcement on the Continued Pledge of 22 April 2023 http://www.cninfo.com.cn
Shares held by Shareholders
2023-034 Announcement on Application for Resumption of 25 April 2023 http://www.cninfo.com.cn
Review of Asset Purchase Through Issuance of
Shares and Cash Payments and Related Party
Transaction
2023-035 Announcement on Receiving the Notice of 26 April 2023 http://www.cninfo.com.cn
Resumption of Review from the Shenzhen Stock
Exchange
2023-036 Announcement on Signing a Strategic 26 April 2023 http://www.cninfo.com.cn
Cooperation Agreement with China Construction
Bank Shandong Branch
2023-037 Announcement on the Meeting Arrangements for 26 April 2023 http://www.cninfo.com.cn
the Review of Asset Purchase Through Issuance
of Shares and Cash Payments and Related Party
Transaction by the Listing Review Center of the
Shenzhen Stock Exchange
2023-038 Announcement on Receiving the Opinion 28 April 2023 http://www.cninfo.com.cn
Implementation Letter from the Listing Review
Center of the Shenzhen Stock Exchange
58 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
VI Material Matters
XIII. Other matters of significance (Cont’d)
5. Information disclosure index for 2023 Interim Report (Cont’d)
Announcement Date of
no. Subject matter publication Publication website and index
2023-039 Announcement on Resolutions of the Fifth 29 April 2023 http://www.cninfo.com.cn
Meeting of the Tenth Session of the Board of
Directors
2023-040 Announcement on Resolutions of the Fifth 29 April 2023 http://www.cninfo.com.cn
Meeting of the Tenth Session of the Supervisory
Committee
2023-041 2023 First Quarterly Report 29 April 2023 http://www.cninfo.com.cn
2023-042 Announcement on Signing of the Agreement on 29 April 2023 http://www.cninfo.com.cn
the Recovery of State-owned Construction Land
Use Right signed by Wuhan Chenming
2023-043 Announcement on Resolutions of the 2023 09 May 2023 http://www.cninfo.com.cn
Second Extraordinary General Meeting
2023-044 Announcement on Resolutions of 2022 Annual 13 May 2023 http://www.cninfo.com.cn
General Meeting
2023-045 Announcement on Safety Accidents Occurred 25 May 2023 http://www.cninfo.com.cn
by the Slurry Residue Outsourcing Entity of a
Subsidiary
2023-046 Announcement on Resolutions of the Eighth 30 June 2023 http://www.cninfo.com.cn
Extraordinary Meeting of the Tenth Session of
the Board of Directors
2023-047 Announcement on Resolutions of the Fourth 30 June 2023 http://www.cninfo.com.cn
Extraordinary Meeting of the Tenth Session of
the Supervisory Committee
2023-048 Announcement on Termination and Withdrawal 30 June 2023 http://www.cninfo.com.cn
of Application Documents for Asset Purchase
Through Issuance of Shares and Cash Payments
XIV. Matters of significant of subsidiaries of the Company
√ Applicable Not applicable
1. Agreement on the Recovery of State-owned Construction Land Use Right signed by Wuhan Chenming
On 28 April 2023, the Company convened the fifth meeting of the tenth session of the Board to consider and approve
the Proposal on Signing the Agreement on the Recovery of State-owned Construction Land Use Right by Wuhan
Chenming. In order to further optimise resource allocation and promote industrial upgrading, the major equipment of
Wuhan Chenming’s household paper production line and special paper production line were relocated to Shouguang
production base and Zhanjiang production base respectively. Wuhan Chenming reached an agreement with the Wuhan
Economic & Technological Development Zone Branch of the Wuhan Land Arranging Storage Centre on land recovery
and storage, and signed the Agreement on the Recovery of State-owned Construction Land Use Right. The Wuhan Land
Arranging Storage Centre proposed to recover the land parcel with an area of 368,624.21 and the buildings (structures)
and ancillary facilities erected thereon from Wuhan Chenming, and pay Wuhan Chenming a total of RMB732.0776
million as compensation for the recovery and storage.
For details, please refer to the announcement disclosed by the Company on Cninfo on 29 April 2023 (announcement
number: 2023-042) and the relevant announcement disclosed by the Company on the website of Hong Kong Stock
Exchange on 28 April 2023.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 59
INTERIM REPORT 2023
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 61,489,837 2.06% -1,982,250 -1,982,250 59,507,587 2.00%
1. Shares held by other domestic investors 61,489,837 2.06% -1,982,250 -1,982,250 59,507,587 2.00%
Including: Shares held by domestic natural persons 61,489,837 2.06% -1,982,250 -1,982,250 59,507,587 2.00%
II. Non-restricted shares 2,918,252,363 97.94% 1,982,250 1,982,250 2,920,234,613 98.00%
1. RMB ordinary shares 1,683,561,847 56.50% 1,982,250 1,982,250 1,685,544,097 56.57%
2. Domestic listed foreign shares 706,385,266 23.71% 706,385,266 23.71%
3. Overseas listed foreign shares 528,305,250 17.73% 528,305,250 17.73%
III.Total number of shares 2,979,742,200 100.00% 2,979,742,200 100.00%
The reasons for such changes
√ Applicable Not applicable
The Shenzhen Branch of China Securities Depository and Clearing Corporation Limited recalculated the statutory
quota of transferable shares for the Directors, Supervisors and Senior Management of the Company this year at 25%
on the first trading day of this year based on the shares of the Company registered under the names of its Directors,
Supervisors and Senior Management on the last trading day of the previous year, resulting in a reduction of 1,982,250
RMB ordinary shares in the locked shares of Senior Management.
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
60 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
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 Restricted
shares at the Restricted Restricted shares at the
Name of beginning shares released shares increased end of Date of release
shareholders of the period during the period during the period the period Reason for restriction from restriction
Hu Changqing 3,782,143 750,000 0 3,032,143 Restricted shares of the participants of 3 January 2023
the Share Incentive Scheme; locked-up
shares of Directors, Supervisors and Senior
Management
Li Feng 2,929,520 450,000 0 2,479,520 Restricted shares of the participants of 3 January 2023
the Share Incentive Scheme; locked-up
shares of Directors, Supervisors and Senior
Management
Li Weixian 1,560,900 357,300 0 1,203,600 Restricted shares of the participants of 3 January 2023
the Share Incentive Scheme; locked-up
shares of Directors, Supervisors and Senior
Management
Li Mingtang 750,000 150,000 0 600,000 Restricted shares of the participants of 3 January 2023
the Share Incentive Scheme; locked-up
shares of Directors, Supervisors and Senior
Management
Li Zhenzhong 1,584,750 124,950 0 1,459,800 Restricted shares of the participants of 3 January 2023
the Share Incentive Scheme; locked-up
shares of Directors, Supervisors and Senior
Management
Dong Lianming 750,000 150,000 0 600,000 Restricted shares of the participants of 3 January 2023
the Share Incentive Scheme; locked-up
shares of Directors, Supervisors and Senior
Management
Total 11,357,313 1,982,250 0 9,375,063
II. Issuance and listing of securities
Applicable √ Not applicable
SHANDONG CHENMING PAPER HOLDINGS LIMITED 61
INTERIM REPORT 2023
VII Changes in Share Capital and Shareholders
III. Total number of shareholders and shareholdings
Unit: share
146,991, of which 125,210 were holders of A shares, Total number of holders of preference shares with
Total number of ordinary shareholders as at 21,454 were holders of B shares and 327 were restored voting right as at the end of the reporting
the end of the reporting period holders of H shares period 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 shareholders shareholding period period shares held shares held shares Number
CHENMING HOLDINGS COMPANY LIMITED State-owned legal person 15.35% 457,322,919 0 0 457,322,919 Pledged 247,040,000
HKSCC NOMINEES LIMITED Overseas legal person 12.53% 373,440,375 51,750 0 373,440,375
CHENMING HOLDINGS (HONG KONG) LIMITED Overseas legal person 12.22% 364,131,563 0 0 364,131,563
(Note 1)
Hong Zejun Domestic natural person 3.02% 90,000,000 13,300,000 0 90,000,000
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- 0.84% 24,987,117 0 0 24,987,117
Owned legal person
CHINA MERCHANTS SECURITIES (HK) CO., Overseas legal person 0.58% 17,378,201 6,837,967 0 17,378,201
LIMITED
HONG KONG SECURITIES CLEARING Overseas legal person 0.54% 15,968,039 -1,744,042 0 15,968,039
COMPANY LIMITED
Du Haibin Domestic natural person 0.53% 15,766,502 15,766,502 0 15,766,502
VANGUARD EMERGING MARKETS STOCK Overseas legal person 0.50% 14,852,146 163,800 0 14,852,146
INDEX FUND
Strategic investors or general legal persons who Nil
become the top ten shareholders due to the
placement of new shares
Related party relationship or acting in concert A shareholder, Chenming Holdings (Hong Kong) Limited, which is an overseas legal person, is a wholly-owned subsidiary of a shareholder,
among the above shareholders Chenming Holdings Company Limited, which is a state-owned legal person; A shareholder, Chen Hongguo, is the legal representative and
chairman of Chenming Holdings Company Limited. Save for the above, it is not aware that any other shareholders of tradable shares are
persons acting in concert. It is also not aware that any other shareholders of tradable shares are related to each other.
Explanation of the aforementioned shareholders’ Nil
entrusted/entrusted voting rights and waiver of
voting rights
Special explanation for designated repurchase Nil
accounts among the top ten shareholders
62 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
VII Changes in Share Capital and Shareholders
III. Total number of shareholders and shareholdings (Cont’d)
Shareholdings of the top ten non-restricted shareholders
Number of
non-restricted
shares held as
at the end of the Class of shares
Name of shareholder reporting period Class of shares Number
CHENMING HOLDINGS COMPANY LIMITED 457,322,919 RMB ordinary shares 457,322,919
HKSCC NOMINEES LIMITED 373,440,375 Overseas listed foreign shares 373,440,375
CHENMING HOLDINGS (HONG KONG) LIMITED (Note 1) 364,131,563 Domestic listed foreign shares 210,717,563
Overseas listed foreign shares 153,414,000
Hong Zejun 90,000,000 RMB ordinary shares 90,000,000
SHANDONG SUN HOLDINGS GROUP CO., LTD. 24,987,117 RMB ordinary shares 24,987,117
CHINA MERCHANTS SECURITIES (HK) CO., LIMITED 17,378,201 Domestic listed foreign shares 17,378,201
HONG KONG SECURITIES CLEARING COMPANY LIMITED 15,968,039 RMB ordinary shares 15,968,039
Du Haibin 15,766,502 RMB ordinary shares 15,766,502
VANGUARD EMERGING MARKETS STOCK INDEX FUND 14,852,146 Domestic listed foreign shares 14,852,146
VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND 14,771,945 Domestic listed foreign shares 14,771,945
Related party relationship or acting in concert among the top A shareholder, Chenming Holdings (Hong Kong) Limited, which is an
ten non-restricted ordinary shareholders, and between the overseas legal person, is a wholly-owned subsidiary of a shareholder,
top ten non-restricted ordinary shareholders and the top ten Chenming Holdings Company Limited, which is a state-owned legal
ordinary shareholders person. Save for the above, it is not aware that any other shareholders of
tradable shares are persons acting in concert. It is also not aware that any
other shareholders of tradable shares are related to each other.
Securities margin trading of top 10 ordinary shareholders Chenming Holdings Company Limited held 457,322,919 RMB ordinary
shares, of which 326,322,919 shares were held through ordinary account
and 131,000,000 shares were held through credit guarantee security
account;
Hong Zejun held 90,000,000 RMB ordinary shares, of which 5,800,000
shares was held through ordinary account and 84,200,000 shares were
held through credit guarantee security account;
Shandong Sun Holdings Group Co., Ltd. held 24,987,117 RMB ordinary
shares, of which no share was held through ordinary account and
24,987,117 shares were held through credit guarantee security account.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 63
INTERIM REPORT 2023
VII Changes in Share Capital and Shareholders
III. Total number of shareholders and shareholdings (Cont’d)
Note 1: In order to meet its own capital needs, Chenming Holdings (Hong Kong) Limited conducted share financing business
with overseas institutions, entrusting 210,717,563 B shares and 153,414,000 H shares of the Company held by
it to the custody brokerage designated by overseas institutions. The aforesaid shares were subject to the risk of
not to be recovered, which may lead to a reduction in the Company’s shareholding, but does not affect Chenming
Holdings’ position as the largest shareholder, and does not affect the Company’s control. For details, please refer to
the announcement disclosed by the Company on CNINFO on 18 July 2023 (announcement no.: 2023-058) and the
insider information disclosed by the Company on the website of Hong Kong Stock Exchange on 18 July 2023.
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
Increase in Decrease in
Shares the number the number Restricted Restricted Restricted
held as at the of shares of shares Shares held shares granted shares granted shares granted
beginning of held during held during as at the end at the beginning at the beginning at the end of
the period the period the period of the period of the period of the period the period
Name Position Status (shares) (shares) (shares) (shares) (shares) (shares) (shares)
Dong Lianming Financial controller In office 859,600 0 40,000 819,600 600,000 0 600,000
Yuan Xikun Secretary to the Board In office 344,700 0 75,000 269,700 180,000 0 180,000
Total 1,204,300 0 115,000 1,089,300 780,000 0 780,000
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.
64 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
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
As at 30 June 2023, 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 (A shares) held as at
Name Position the end of the reporting period (shares)
Directors
Chen Hongguo (Note 2) Chairman and general manager 31,080,044
Hu Changqing Executive Director and vice chairman 3,792,857
Li Xingchun Executive Director and vice chairman 5,000,000
Li Feng Executive Director and deputy general manager 3,156,027
Li Weixian Executive Director and deputy general manager 1,562,100
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
Pan Ailing Supervisor –
Zhang Hong Supervisor –
Sang Ailing Supervisor –
Qiu Lanju Supervisor –
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 Enterprise 231,000,000 – 231,000,000
General Manager Investment Co. Ltd. (Note 3)
Note 2: 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 3: 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.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 65
INTERIM REPORT 2023
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)
Save as disclosed above, as at 30 June 2023, 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 2023, 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 2023, 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 Company Limited 457,322,919 A shares (L) 15.35 26.21
Chenming Holdings (Hong Kong) Limited 210,717,563 B shares (L) 7.07 29.83
Chenming Holdings (Hong Kong) Limited 153,414,000 H shares (L) 5.15 29.04
(L) – Long position (S) – Short position (P) – Lending pool
Save as disclosed above, as at 30 June 2023, 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.
66 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
VIII Preference Shares
Applicable √ Not applicable
The Company had no preference shares during the reporting period.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 67
INTERIM REPORT 2023
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
The Company had no corporate bonds during the reporting period.
III. Non-financial corporate debt financing instruments
√ Applicable Not applicable
1. Basic information of non-financial corporate debt financing instruments
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
2017 first tranche of 17 Lu Chenming 101779001 11 July 12 July 12 July 2023 1,000,000,000.00 8.97% Perpetual mid-term notes. Inter-bank bond market
medium-term notes MTN001 2017 2017 Interest is paid annually
of Shandong and the principal is
Chenming Paper repaid upon maturity
Holdings Limited
Investor eligibility arrangement (if any) No
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
68 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
IX Bonds
III. Non-financial corporate debt financing instruments (Cont’d)
2. Triggering and execution of issuer’s or investor’s option clause or investor protection clause
√ Applicable Not applicable
According to the “Prospectus of the 2017 First Tranche of Medium-term Notes of Shandong Chenming Paper Holdings
Limited”, “17 Lu Chenming MTN001” is subject to the issuer’s redemption option. On 11 May 2023, the Company
published the Announcement on the Exercise of the Redemption Option of the 2017 First Tranche of Medium-term
Notes and the Announcement on the Redemption of the 2017 First Tranche of Medium-term Notes on Shanghai
Clearing House (www.shclearing.com) and Chinamoney (www.chinamoney.com.cn). The Company chose to redeem “17
Lu Chenming MTN001” in full, and completed the payment of the principal and interest on 12 July 2023. To date, all the
bonds of the Company have been redeemed.
3. Adjustment of credit rating results during the reporting period
Applicable √ Not applicable
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” was not guaranteed. 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, which were consistent with the relevant commitments in
the prospectus.
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
SHANDONG CHENMING PAPER HOLDINGS LIMITED 69
INTERIM REPORT 2023
IX Bonds
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 62.61% 63.04% -0.43%
Gearing ratio 72.28% 71.85% 0.43%
Quick ratio 49.20% 49.90% -0.70%
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 -81,183.92 17,340.79 -568.17%
Proportion of EBITDA to total debts 2.24% 4.25% -2.01%
Interest coverage ratio -0.09 1.33 -106.77%
Cash interest coverage ratio 2.98 2.11 41.23%
EBITDA interest coverage ratio 1.36 2.72 -50.00%
Loans payment ratio 100.00% 100.00% 0.00%
Interest payment ratio 100.00% 100.00% 0.00%
70 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
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 2023
Unit: RMB
Item 30 June 2023 31 December 2022
CURRENT ASSETS:
Monetary funds 13,755,530,864.83 14,000,434,986.08
Financial assets held for trading 50,433,870.59 74,708,444.88
Accounts receivable 2,946,153,971.11 3,212,260,445.96
Accounts receivable financing 614,794,433.04 924,960,384.16
Prepayments 846,920,981.37 788,191,626.82
Other receivables 1,645,909,354.44 1,717,445,443.44
Including: Interest receivable – –
Dividend receivable – –
Inventories 6,777,881,649.68 6,821,916,159.95
Non-current assets due within one year 3,852,470,167.90 3,998,724,415.85
Other current assets 1,160,886,486.81 1,180,807,801.62
Total current assets 31,650,981,779.77 32,719,449,708.76
NON-CURRENT ASSETS:
Long-term receivables 1,372,560,959.21 1,486,807,783.47
Long-term equity investments 4,354,672,770.24 4,277,013,369.56
Other non-current financial assets 785,374,459.73 786,750,761.62
Investment property 6,154,324,519.02 6,256,723,113.15
Fixed assets 32,975,722,557.54 33,797,738,695.30
Construction in progress 674,425,091.26 558,866,880.36
Bearer biological assets 16,780,814.36 13,697,336.80
Right-of-use assets 175,084,081.35 181,614,699.25
Intangible assets 1,837,906,882.94 1,831,338,830.92
Goodwill 35,220,543.80 26,946,905.38
Long-term prepaid expenses 41,879,965.99 44,462,851.45
Deferred income tax assets 1,562,270,625.95 1,335,700,565.60
Other non-current assets 1,015,655,705.42 983,905,908.00
Total non-current assets 51,001,878,976.81 51,581,567,700.86
Total assets 82,652,860,756.58 84,301,017,409.62
SHANDONG CHENMING PAPER HOLDINGS LIMITED 71
INTERIM REPORT 2023
X Financial Report
II. Financial Statements (Cont’d)
1. Consolidated balance sheet (Cont’d)
Item 30 June 2023 31 December 2022
CURRENT LIABILITIES:
Short-term borrowings 34,946,527,126.28 36,385,048,295.02
Bills payable 3,530,803,793.61 3,128,595,835.04
Accounts payable 3,972,082,627.54 4,114,966,767.76
Receipts in advance 12,959,619.33 14,261,436.67
Contract liabilities 1,629,061,591.45 1,306,029,389.80
Employee benefits payable 114,802,027.95 144,925,887.00
Taxes payable 134,129,746.74 261,011,669.09
Other payables 2,059,334,576.71 1,870,403,909.17
Including: Interest payable – 15,895,930.51
Dividend payable – –
Non-current liabilities due within one year 4,152,676,912.29 4,673,505,241.86
Total current liabilities 50,552,378,021.90 51,898,748,431.41
NON-CURRENT LIABILITIES:
Long-term borrowings 4,895,546,304.36 3,982,236,251.08
Lease liabilities 49,288,793.84 53,596,047.46
Long-term payables 2,840,065,362.58 3,160,771,126.31
Deferred income 1,386,819,506.16 1,469,230,468.46
Deferred income tax liabilities 13,647,914.79 8,181,264.29
Total non-current liabilities 9,185,367,881.73 8,674,015,157.60
Total liabilities 59,737,745,903.63 60,572,763,589.01
OWNERS’ EQUITY:
Share capital 2,979,742,200.00 2,979,742,200.00
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 5,333,733,000.37 5,361,200,522.29
Less: Treasury shares 128,780,100.00 128,780,100.00
Other comprehensive income -907,674,603.11 -821,940,694.57
Special reserves 19,914,734.49 15,791,710.95
Surplus reserves 1,212,009,109.97 1,212,009,109.97
General risk provisions 79,900,268.71 79,900,268.71
Retained profit 8,702,562,313.47 9,390,642,477.57
Total equity attributable to owners of the Company 18,287,406,923.90 19,084,565,494.92
Minority interest 4,627,707,929.05 4,643,688,325.69
Total owners’ equity 22,915,114,852.95 23,728,253,820.61
Total liabilities and owners’ equity 82,652,860,756.58 84,301,017,409.62
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
72 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
X Financial Report
II. Financial Statements (Cont’d)
2. Balance sheet of the Company
Unit: RMB
Item 30 June 2023 31 December 2022
CURRENT ASSETS:
Monetary funds 4,842,652,489.67 5,661,807,164.72
Bills receivable 2,665,209,020.76 3,482,822,426.80
Accounts receivable 2,520,259,119.61 134,755,527.73
Prepayments 1,131,421,810.91 375,206,833.58
Other receivables 8,352,806,067.27 9,337,019,470.13
Inventories 638,303,459.00 692,338,698.67
Non-current assets due within one year 3,190,542.30 13,434,710.01
Other current assets 76,616,158.33 86,159,558.49
Total current assets 20,230,458,667.85 19,783,544,390.13
NON-CURRENT ASSETS:
Long-term receivables 12,069,279.21 15,914,404.25
Long-term equity investments 18,885,983,088.94 18,826,163,036.33
Other non-current financial assets 122,374,459.73 123,750,761.62
Fixed assets 3,547,645,657.47 3,654,340,361.49
Construction in progress 29,630,298.21 24,865,009.58
Intangible assets 483,415,378.84 490,533,559.72
Deferred income tax assets 559,868,680.69 518,171,288.92
Other non-current assets 13,217,145.67 986,260.70
Total non-current assets 23,654,203,988.76 23,654,724,682.61
Total assets 43,884,662,656.61 43,438,269,072.74
CURRENT LIABILITIES:
Short-term borrowings 12,547,491,670.15 12,885,183,530.81
Bills payable 9,351,434,692.20 9,455,780,407.30
Accounts payable 825,592,347.73 1,288,578,359.05
Contract liabilities 4,188,916,529.77 1,503,256,921.15
Staff remuneration payables 47,516,337.34 65,349,838.50
Tax payables 9,573,634.48 11,729,028.39
Other payables 875,210,000.44 1,856,098,294.14
Including: Interest payable – 15,895,930.51
Dividend payable – –
Non-current liabilities due within one year 1,026,488,877.77 1,171,869,377.78
Total current liabilities 28,872,224,089.88 28,237,845,757.12
SHANDONG CHENMING PAPER HOLDINGS LIMITED 73
INTERIM REPORT 2023
X Financial Report
II. Financial Statements (Cont’d)
2. Balance sheet of the Company (Cont’d)
Item 30 June 2023 31 December 2022
NON-CURRENT LIABILITIES:
Long-term borrowings 1,460,844,500.00 1,698,253,561.10
Long-term payables 293,382,733.53 150,911,348.00
Deferred income 32,391,082.12 33,251,328.04
Total non-current liabilities 1,786,618,315.65 1,882,416,237.14
Total liabilities 30,658,842,405.53 30,120,261,994.26
OWNERS’ EQUITY
Share capital 2,979,742,200.00 2,979,742,200.00
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 5,119,757,519.19 5,147,225,041.11
Less: Treasury shares 128,780,100.00 128,780,100.00
Special reserves 3,327,739.59 2,066,138.15
Surplus reserves 1,199,819,528.06 1,199,819,528.06
Retained profit 3,055,953,364.24 3,121,934,271.16
Total owners’ equity 13,225,820,251.08 13,318,007,078.48
Total liabilities and owners’ equity 43,884,662,656.61 43,438,269,072.74
74 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
X Financial Report
II. Financial Statements (Cont’d)
3. Consolidated income statement
Unit: RMB
Item First half of 2023 First half of 2022
I. Total revenue 12,564,962,781.31 16,676,428,365.83
Including: Revenue 12,564,962,781.31 16,676,428,365.83
II. Total operating costs 13,439,844,164.10 16,436,429,464.84
Including: Operating costs 11,496,731,662.58 14,124,548,249.51
Taxes and surcharges 105,817,810.49 116,108,890.55
Sales and distribution expenses 106,666,717.54 138,055,763.65
General and administrative expenses 328,296,224.86 353,167,395.54
Research and development expense 552,804,828.58 683,514,560.93
Finance expenses 849,526,920.05 1,021,034,604.66
Including: Interest expenses 856,872,614.18 991,475,816.56
Interest income 94,532,686.92 150,582,370.85
Plus: Other income 108,155,697.19 149,264,611.68
Investment income (“-” denotes loss) -42,756,726.88 -24,138,176.90
Including: Investment income from associates and joint
ventures 23,934,269.81 26,616,556.58
Gains on derecognition of financial assets
measured at amortised cost
(“-” denotes loss) -67,175,214.10 -56,307,959.46
Gain on change in fair value (“-” denotes loss) -19,815,797.83 -58,813,415.49
Credit impairment loss (“-” denotes loss) -43,081,750.88 -25,363,341.17
Loss on impairment of assets
(“-” denotes loss) -43,314,485.76 1,936,644.09
Gain on disposal of assets (“-” denotes loss) 11,759,266.91 1,605,314.49
III. Operating profit (“-” denotes loss) -903,935,180.04 284,490,537.69
Plus: Non-operating income 940,805.30 1,093,429.33
Less: Non-operating expenses 3,138,190.06 10,202,739.60
IV. Total profit (“-” denotes total loss) -906,132,564.80 275,381,227.42
Less: Income tax expenses -211,491,182.14 1,378,726.69
V. Net profit (“-” denotes net loss) -694,641,382.66 274,002,500.73
(I) Classification according to the continuity of operation: – –
1. Net profit from continuing operations (“-” denotes
net loss) -694,641,382.66 274,002,500.73
2. Net profit from discontinued operations (“-”
denotes net loss) – –
(II) Classification according to ownership: – –
1. Net profit attributable to shareholders of the
Company -688,080,164.10 230,141,463.76
2. Profit or loss of minority interest -6,561,218.56 43,861,036.97
VI. Net other comprehensive income after tax -85,733,908.54 -150,576,277.41
Net other comprehensive income after tax attributable to
shareholders of the Company -85,733,908.54 -150,576,277.41
(1) Other comprehensive income that cannot be reclassified
to profit and loss – –
(2) Other comprehensive income that will be reclassified to
profit and loss -85,733,908.54 -150,576,277.41
1. Exchange differences arising from translation
of financial statements denominated in foreign
currencies -88,339,013.66 -155,319,427.95
2. Other comprehensive income that may be
reclassified to profit and loss under the equity
method 2,605,105.12 4,743,150.54
Other comprehensive income, net of tax attributable to
minority interest
SHANDONG CHENMING PAPER HOLDINGS LIMITED 75
INTERIM REPORT 2023
X Financial Report
II. Financial Statements (Cont’d)
3. Consolidated income statement (Cont’d)
Item First half of 2023 First half of 2022
VII. Total comprehensive income -780,375,291.20 123,426,223.32
Total comprehensive income attributable to shareholders of
the Company -773,814,072.64 79,565,186.35
Total comprehensive income attributable to minority interest -6,561,218.56 43,861,036.97
VIII. Earnings per share: – –
(I) Basic earnings per share -0.250 0.064
(II) Diluted earnings per share -0.250 0.064
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
76 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
X Financial Report
II. Financial Statements (Cont’d)
4. Income statement of the Company
Unit: RMB
Item First half of 2023 First half of 2022
I. Revenue 3,904,584,964.10 3,746,662,856.50
Less: Operating costs 3,746,877,337.08 3,381,230,045.73
Taxes and surcharges 19,988,361.19 14,470,073.85
Sales and distribution expenses 4,148,207.41 3,847,240.05
General and administrative expenses 51,547,136.68 89,156,653.40
Research and development expense 117,941,892.00 165,518,080.69
Finance expenses 125,869,235.74 210,696,803.24
Including: Interest expenses 245,995,158.97 333,394,473.97
Interest income 212,850,374.32 230,217,851.40
Plus: Other income 13,833,015.46 24,145,213.86
Investment income (“-” denotes loss) 55,178,952.64 237,259,432.75
Including: Investment income from associates and joint
ventures -2,829,947.39 -5,337,689.31
Gains on derecognition of financial assets measured at
amortised cost (“-” denotes loss) -22,621,312.74 -30,954,557.50
Gain on change in fair value (“-” denotes loss) – –
Credit impairment loss (“-” denotes loss) -6,264,582.46 -722,675.75
Loss on impairment of assets (“-” denotes loss) – –
Gain on disposal of assets (“-” denotes loss) 9,745,045.43 172,652.98
II. Operating profit (“-” denotes loss) -89,294,774.93 142,598,583.38
Plus: Non-operating income 451,184.77 61,000.00
Less: Non-operating expenses 1,912,008.53 3,003,746.82
III. Total profit (“-” denotes total loss) -90,755,598.69 139,655,836.56
Less: Income tax expenses -41,697,391.77 -15,843,567.25
IV. Net profit (“-” denotes net loss) -49,058,206.92 155,499,403.81
(I) Net profit from continuing operations
(“-” denotes net loss) -49,058,206.92 155,499,403.81
(II) Net profit from discontinued operations
(“-” denotes net loss) – –
V. Total comprehensive income -49,058,206.92 155,499,403.81
SHANDONG CHENMING PAPER HOLDINGS LIMITED 77
INTERIM REPORT 2023
X Financial Report
II. Financial Statements (Cont’d)
5. Consolidated cash flow statement
Unit: RMB
Item First half of 2023 First half of 2022
I. Cash flows from operating activities:
Cash received from sales of goods and rendering of services 12,654,981,362.62 16,841,914,152.37
Tax rebates received 109,519,774.17 697,745,590.84
Cash received relating to other operating activities 880,312,282.56 833,956,367.80
Subtotal of cash inflows from operating activities 13,644,813,419.35 18,373,616,111.01
Cash paid for goods and services 9,962,778,364.17 15,019,129,399.82
Cash paid to and for employees 667,506,780.80 721,958,063.20
Payments of taxes and surcharges 428,775,626.59 635,688,016.57
Cash paid relating to other operating activities 802,664,900.20 998,576,421.97
Subtotal of cash outflows from operating activities 11,861,725,671.76 17,375,351,901.56
Net cash flows from operating activities 1,783,087,747.59 998,264,209.45
II. Cash flows from investing activities:
Cash received from investments 6,376,301.89 –
Cash received from investment income 1,730,212.77 4,740,000.00
Net cash received from disposal of fixed assets, intangible
assets and other long-term assets 147,784,119.60 3,921,115.56
Subtotal of cash inflows from investing activities 155,890,634.26 8,661,115.56
Cash paid for purchase of fixed assets, intangible assets and
other long-term assets 104,455,019.88 815,285,839.39
Net cash paid for acquisition of subsidiaries and other
business units 4,934,751.03 –
Subtotal of cash outflows from investing activities 109,389,770.91 815,285,839.39
Net cash flows from investing activities 46,500,863.35 -806,624,723.83
78 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
X Financial Report
II. Financial Statements (Cont’d)
5. Consolidated cash flow statement (Cont’d)
Item First half of 2023 First half of 2022
III. Cash flows from financing activities:
Cash received from investments – 400,000,000.00
Including: Cash received from subsidiaries from minority
investment – 400,000,000.00
Cash received from borrowings 17,765,551,073.77 17,740,613,294.18
Cash received relating to other financing activities 1,128,264,589.15 2,078,910,644.82
Subtotal of cash inflows from financing activities 18,893,815,662.92 20,219,523,939.00
Cash repayments of amounts borrowed 18,186,471,433.20 16,096,915,969.19
Cash paid for dividend and profit distribution or interest
payment 853,357,265.46 1,053,952,956.06
Including: Dividend and profit paid by subsidiaries to minority
shareholders 9,419,178.08 –
Cash paid relating to other financing activities 1,942,169,772.07 3,310,774,061.40
Subtotal of cash outflows from financing activities 20,981,998,470.73 20,461,642,986.65
Net cash flows from financing activities -2,088,182,807.81 -242,119,047.65
IV. Effect of foreign exchange rate changes on cash and cash
equivalents -58,096,458.38 24,169,806.97
V. Net increase in cash and cash equivalents -316,690,655.25 -26,309,755.06
Plus: Balance of cash and cash equivalents as at the
beginning of the period 2,159,460,149.51 3,168,915,847.02
VI. Balance of cash and cash equivalents as at the end of the
period 1,842,769,494.26 3,142,606,091.96
SHANDONG CHENMING PAPER HOLDINGS LIMITED 79
INTERIM REPORT 2023
X Financial Report
II. Financial Statements (Cont’d)
6. Cash flow statement of the Company
Unit: RMB
Item First half of 2023 First half of 2022
I. Cash flows from operating activities:
Cash received from sales of goods and rendering of services 3,929,585,126.95 3,937,092,906.31
Tax rebates received 10,186,261.55 9,335,732.78
Cash received relating to other operating activities 244,461,863.48 268,488,989.46
Subtotal of cash inflows from operating activities 4,184,233,251.98 4,214,917,628.55
Cash paid for goods and services 3,646,421,670.77 3,559,003,036.92
Cash paid to and for employees 159,974,284.62 168,707,495.45
Payments of taxes and surcharges 23,767,270.65 146,897,297.11
Cash paid relating to other operating activities 222,463,991.65 255,001,227.95
Subtotal of cash outflows from operating activities 4,052,627,217.69 4,129,609,057.43
Net cash flows from operating activities 131,606,034.29 85,308,571.12
II. Cash flows from investing activities:
Cash received from investments 6,376,301.89 –
Cash received from investment income 81,730,212.77 401,816,698.06
Net cash received from disposal of fixed assets, intangible
assets and other long-term assets 40,443,619.60 3,527,572.65
Subtotal of cash inflows from investing activities 128,550,134.26 405,344,270.71
Cash paid for purchase of fixed assets, intangible assets and
other long-term assets 19,406,565.34 12,870,064.02
Subtotal of cash outflows used in investing activities 19,406,565.34 12,870,064.02
Net cash flows from investing activities 109,143,568.92 392,474,206.69
80 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
X Financial Report
II. Financial Statements (Cont’d)
6. Cash flow statement of the Company (Cont’d)
Item First half of 2023 First half of 2022
III. Cash flows from financing activities:
Cash received from borrowings 10,014,688,564.21 10,531,501,508.20
Cash received relating to other financing activities 1,362,715,891.06 247,000,000.00
Subtotal of cash inflows from financing activities 11,377,404,455.27 10,778,501,508.20
Cash repayments of amounts borrowed 10,389,789,485.97 10,584,544,305.53
Cash paid for dividend and profit distribution or interest
payment 242,860,355.63 320,363,139.80
Cash paid relating to other financing activities 438,804,497.05 307,022,816.27
Subtotal of cash outflows from financing activities 11,071,454,338.65 11,211,930,261.60
Net cash flows from financing activities 305,950,116.62 -433,428,753.40
IV. Effect of foreign exchange rate changes on cash and cash
equivalents -3,138,503.82 6,179,448.15
V. Net increase in cash and cash equivalents 543,561,216.01 50,533,472.56
Plus: Balance of cash and cash equivalents as at the
beginning of the period 233,971,948.99 893,454,314.56
VI. Balance of cash and cash equivalents as at the end of the
period 777,533,165.00 943,987,787.12
SHANDONG CHENMING PAPER HOLDINGS LIMITED 81
INTERIM REPORT 2023
82
II. Financial Statements (Cont’d)
7. Consolidated statement of changes in owners’ equity
Amount for the period
Unit: RMB
First half of 2023
Equity attributable to owners of the Company
INTERIM REPORT 2023
Other equity instruments Other
X Financial Report
Preference Perpetual Capital Less: comprehensive Special Surplus General risk Minority Total
Item Share capital shares Bonds Others reserves treasury shares income reserves reserves provisions Retained profit Others Subtotal interest owners’ equity
I. Balance as at the end of the prior year 2,979,742,200.00 – 996,000,000.00 – 5,361,200,522.29 128,780,100.00 -821,940,694.57 15,791,710.95 1,212,009,109.97 79,900,268.71 9,390,642,477.57 – 19,084,565,494.92 4,643,688,325.69 23,728,253,820.61
II. Balance as at the beginning of the year 2,979,742,200.00 – 996,000,000.00 – 5,361,200,522.29 128,780,100.00 -821,940,694.57 15,791,710.95 1,212,009,109.97 79,900,268.71 9,390,642,477.57 – 19,084,565,494.92 4,643,688,325.69 23,728,253,820.61
III. Changes in the period (“-” denotes decrease) – – – – -27,467,521.92 – -85,733,908.54 4,123,023.54 – – -688,080,164.10 – -797,158,571.02 -15,980,396.64 -813,138,967.66
SHANDONG CHENMING PAPER HOLDINGS LIMITED
(I) Total comprehensive income – – – – – – -85,733,908.54 – – – -688,080,164.10 – -773,814,072.64 -6,561,218.56 -780,375,291.20
(II) Capital paid in and reduced by owners – – – – -27,467,521.92 – – – – – – – -27,467,521.92 – -27,467,521.92
1. Amount of share-based payments
recognised in owners’ equity – – – – -27,467,521.92 – – – – – – – -27,467,521.92 – -27,467,521.92
(III) Profit distribution – – – – – – – – – – – – – -9,419,178.08 -9,419,178.08
1. Distribution to shareholders (or owners) – – – – – – – – – – – – – -9,419,178.08 -9,419,178.08
(IV) Transfer within owners’ equity – – – – – – – – – – – – – – –
(V) Special reserves – – – – – – – 4,123,023.54 – – – – 4,123,023.54 – 4,123,023.54
1. Withdrew in the period – – – – – – – 13,373,517.00 – – – – 13,373,517.00 – 13,373,517.00
2. Used in the period (denotes in “-”) – – – – – – – -9,250,493.46 – – – – -9,250,493.46 – -9,250,493.46
IV. Balance as at the end of the period 2,979,742,200.00 – 996,000,000.00 – 5,333,733,000.37 128,780,100.00 -907,674,603.11 19,914,734.49 1,212,009,109.97 79,900,268.71 8,702,562,313.47 – 18,287,406,923.90 4,627,707,929.05 22,915,114,852.95
II. Financial Statements (Cont’d)
7. Consolidated statement of changes in owners’ equity (Cont’d)
Amounts for the prior year
Unit: RMB
First half of 2022
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
Item 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
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
INTERIM REPORT 2023
SHANDONG CHENMING PAPER HOLDINGS LIMITED
83
84
II. Financial Statements (Cont’d)
8. Statement of changes in owners’ equity of the Company
Amounts for the period
Unit: RMB
First half of 2023
Other equity instruments Other
INTERIM REPORT 2023
Preference Perpetual Less: comprehensive Special Surplus Total
X Financial Report
Item Share capital shares Bonds Others Capital reserves treasury shares income reserves reserves Retained profit Others owners’ equity
I. Balance as at the end of the prior year 2,979,742,200.00 – 996,000,000.00 – 5,147,225,041.11 128,780,100.00 – 2,066,138.15 1,199,819,528.06 3,121,934,271.16 – 13,318,007,078.48
II. Balance as at the beginning of the year 2,979,742,200.00 – 996,000,000.00 – 5,147,225,041.11 128,780,100.00 – 2,066,138.15 1,199,819,528.06 3,121,934,271.16 – 13,318,007,078.48
III. Changes in the period (“-” denotes decrease) – – – – -27,467,521.92 – – 1,261,601.44 – -65,980,906.92 – -92,186,827.40
(I) Total comprehensive income – – – – – – – – – -65,980,906.92 – -65,980,906.92
SHANDONG CHENMING PAPER HOLDINGS LIMITED
(II) Capital paid in and reduced by owners – – – – -27,467,521.92 – – – – – – -27,467,521.92
1. Amount of share-based payments
recognised in owners’ equity – – – – -27,467,521.92 – – – – – – -27,467,521.92
(III) Profit distribution – – – – – – – – – – – –
(IV) Transfer within owners’ equity – – – – – – – – – – – –
(V) Special reserves – – – – – – – 1,261,601.44 – – – 1,261,601.44
1. Withdrew in the period – – – – – – – 1,284,902.41 – – – 1,284,902.41
2. Used in the period – – – – – – – -23,300.97 – – – -23,300.97
IV. Balance as at the end of the period 2,979,742,200.00 – 996,000,000.00 – 5,119,757,519.19 128,780,100.00 – 3,327,739.59 1,199,819,528.06 3,055,953,364.24 – 13,225,820,251.08
II. Financial Statements (Cont’d)
8. Statement of changes in owners’ equity of the Company (Cont’d)
Amounts for the prior year
Unit: RMB
First half of 2022
Other equity instruments Other
Preference Perpetual Less: comprehensive Special Surplus Total
X Financial Report
Item Share capital shares Bonds Others Capital reserves 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
(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
INTERIM REPORT 2023
SHANDONG CHENMING PAPER HOLDINGS LIMITED
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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 2023, the total share capital of the Company was 2,979,742,200 shares. For details, please refer to Note
VII. 37.
The Company established a corporate governance structure comprising the general meeting, the board of directors
and the supervisory committee, and has human resources department, information technology department, corporate
management department, legal affairs department, financial management department, capital management department,
securities investment department, procurement department, audit department, and other departments.
The Company and its subsidiaries (the “Company”) are principally engaged in, among other things, processing and
sale of paper products (including machine-made paper and paper board), paper making raw materials and machinery;
generation and sale of electric power and thermal power; forestry, saplings growing, processing and sale of timber;
manufacturing, processing and sale of wood products; and hotel service, and equipment financial and operating leasing,
investment properties and property service etc.
The financial statements and notes thereto were approved at the sixth meeting of the tenth session of the board of
directors of the Company (the “Board”) on 30 August 2023.
2. Scope of consolidation
Subsidiaries of the Company included in the scope of consolidation in 2023 totalled 79. For details, please refer to
Note IX “Interest in other entities”. The scope of consolidation of the Company during the year had one more company
included compared to the prior year. For details, please refer to Note VIII “Change in scope of consolidation”.
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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 (collectively 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 impairment 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, processing of moulds, 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 ASBEs. For details, please refer to this Note V. 29
“Revenue”. For the critical accounting judgments and estimates made by the management, please refer to Note V. 38 “Changes
in 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 2023 and relevant information such as the operating
results and cash flows of the consolidated entity and the Company for the first half of 2023.
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.
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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. 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. 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.
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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, and 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 other owners’ 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.
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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 intra-
company 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 income 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 income
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. 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 sum 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.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
7. Classification of joint arrangements and accounting treatment for joint operations
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 income 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 shareholders’ 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.
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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 profit or loss:
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.
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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 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 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.
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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. 11.
(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).
96 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
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 97
INTERIM REPORT 2023
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(5) Impairment of financial assets (Cont’d)
Bills receivable, accounts receivable and contract assets
For bills receivable, accounts receivable and contract assets, 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: Due from non-related party customers
Accounts receivable portfolio 3: Factoring receivables
For bills 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 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.
98 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
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.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 99
INTERIM REPORT 2023
X Financial Report
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.
100 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
X Financial Report
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.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 101
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
11. Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
The Company measures the relevant asset and liability at fair value, based on the presumption that the orderly
transaction to sell the asset or transfer the liability takes place either in the principal market for the relevant asset or
liability, or in the absence of a principal market, in the most advantageous market for relevant the asset or liability. The
principal or the most advantageous market must be a trading market accessible by the Company at the measurement
date. The Company adopts the presumption that market participants would use when pricing the asset or liability in their
best economic interest.
If there exists an active market for a financial asset or financial liability, the Company uses the quotation on the active
market as its fair value. If the market for a financial instrument is inactive, the Company uses valuation technique to
recognise its fair value.
Fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic
benefits by using the asset in its best use or by selling it to another market participant that would use the asset in its
best use.
The Company adopts valuation techniques that are appropriate in the current circumstance and for which sufficient data
and other information are available, prioritises the use of relevant observable inputs and uses unobservable inputs only
under the circumstances where such relevant observable inputs cannot be obtained or practicably obtained.
Assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the
fair value hierarchy based on the lowest level input that is significant to the fair value measurement as a whole. Level 1:
based on quoted prices (unadjusted) in active markets for identical assets or liabilities obtainable at the measurement
date. Level 2: observable inputs for the relevant asset or liability, either directly or indirectly, except for Level 1 input.
Level 3: unobservable inputs for the relevant assets or liability.
At each balance sheet date, the Company reassesses assets and liabilities measured at fair value that are recognised
in the financial statements on a recurring basis to determine whether transfers have occurred between fair value
measurement hierarchy levels.
12. 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.
102 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
12. 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 Company are amortised when issued for use.
Packaging materials for turnover are amortised when issued for use.
13. Long-term equity investments
Long-term equity investments include the equity investments in subsidiaries, joint ventures and associates. Associates
of the Company are those investees that the Company imposes significant influence over.
(1) Determination of initial investment cost
Long-term equity investments acquired through business combinations: for a long-term equity investment
acquired through a business combination involving enterprises under common control, the investment cost shall
be the absorbing party’s share of the carrying amount of the owners’ equity under the consolidated financial
statements of the ultimate controlling party on the date of combination. For a long-term equity investment
acquired through a business combination involving enterprises not under common control, the investment cost of
the long-term equity investment shall be the cost of combination.
Long-term equity investments acquired through other means: for a long-term equity investment acquired by cash
payment, the initial investment cost shall be the purchase cost actually paid; for a long-term equity investment
acquired by issuing equity securities, the initial investment cost shall be the fair value of equity securities issued.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 103
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
13. Long-term equity investments (Cont’d)
(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 Group’s share of profit or cash dividend distributed by
the investee. In respect of the other movement of net profit or loss, other comprehensive income and profit
distribution of investee, the carrying amount of long-term equity investment shall be adjusted and included in
the capital reserves (other capital reserves). The Group shall recognise its share of the investee’s net profits or
losses based on the fair values of the investee’s individual separately identifiable assets at the time of acquisition,
after making appropriate adjustments thereto according to the accounting policies and accounting periods of the
Company.
For additional equity investment made in order to obtain significant influence or common control over investee
without resulted in control, the initial investment cost under the equity method shall be the aggregate of fair value
of previously held equity investment and additional investment cost on the date of transfer. For investments in non-
trading equity instruments that were previously classified as at fair value through other comprehensive income, the
cumulative fair value changes associated with them that were previously included in other comprehensive income
are transferred to retained earnings upon the change to the equity method of accounting.
In the event of loss of common control or significant influence over investee due to partial disposal of equity
investment, the remaining equity interest after disposal shall be accounted for according to the Accounting
Standard for Business Enterprises No. 22 – Recognition and measurement of Financial Instruments. The difference
between its fair value and carrying amount shall be included in profit or loss for the current period. In respect
of other comprehensive income recognised under previous equity investment using equity method, it shall be
accounted for in accordance with the same accounting treatment for direct disposal of relevant asset or liability by
investee at the time when equity method was ceased to be used. Movement of other owners’ equity related to the
previous equity investment shall be transferred to profit or loss for the current period.
In the event of loss of control over investee due to partial disposal of equity investment, the remaining equity
interest which can apply common control or impose significant influence over the investee after disposal shall be
accounted for using equity method. Such remaining equity interest shall be treated as accounting for using equity
method since it is obtained and adjustment was made accordingly. For the remaining equity interest which cannot
apply common control or impose significant influence over the investee after disposal, it shall be accounted for
using the Accounting Standard for Business Enterprises No. 22 – Recognition and measurement of Financial
Instruments. The difference between its fair value and carrying amount as at the date of losing control shall be
included in profit or loss for the current period.
104 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
13. Long-term equity investments (Cont’d)
(2) Subsequent measurement and method for profit or loss recognition (Cont’d)
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.
(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 can impose significant influence in this situation.
(4) 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. 22.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
14. Investment property
Investment property refers to real estate held to earn rentals or for capital appreciation, or both. The investment property
of the Company includes leased land use rights, land use rights held for sale after appreciation, and leased buildings.
The investment property of the Company is measured initially at cost upon acquisition, and subject to depreciation or
amortisation in the relevant periods according to the relevant provisions on fixed assets or intangible assets.
For the method for making impairment provision for the investment property adopted cost method for subsequent
measurement, please refer to Note V. 22.
When an investment property is sold, transferred, retired or damaged, the amount of proceeds on disposal of the
property net of the carrying amount and related tax and surcharges is recognised in profit or loss for the current period.
15. Fixed assets
(1) Conditions for recognition of fixed assets
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 by category of fixed assets
The Company adopts the straight-line method for depreciation. Provision for depreciation will be started when the
fixed asset reaches its expected usable state, and stopped when the fixed asset is derecognised or classified as a
non-current asset held for sale. Without regard to the depreciation provision, the Company determines the annual
depreciation rate by category, estimated useful lives and estimated residual value of the fixed assets as below:
Useful lives of Estimated residual Annual depreciation
Category depreciation (Year) value (%) rate (%)
Housing and building structure 20-40 5-10 2.25-4.75
Machinery and equipment 8-20 5-10 4.50-11.88
Transportation equipment 5-8 5-10 11.25-19.00
Electronic equipment and others 5 5-10 18.00-19.00
Where, for the fixed assets for which impairment provision is made, to determine the depreciation rate, the
accumulated amount of the fixed asset impairment provision that has been made shall be deducted.
106 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
15. Fixed assets (Cont’d)
(3) The impairment test method and impairment provision method of the fixed assets are set out in Note V. 22.
(4) The Company will review 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.
16. Construction in progress
Construction in progress of the Company is recognised based on the actual construction cost, including all necessary
expenditures incurred for construction projects, capitalised borrowing costs for the construction in progress before it
has reached the working condition for its intended use, and other related expenses during the construction period.
A construction in progress is reclassified to fixed assets when it has reached the working condition for its intended use.
The method for impairment provision of construction in progress is set out in Note V. 22.
17. Materials for project
The materials for project of the Group refer to various materials prepared for construction in progress, including
construction materials, equipment not yet installed and tools for production.
The purchased materials for project are measured at cost, and the planning materials for project are transferred to
construction in progress. After the completion of the project, the remaining materials for project are transferred to
inventory.
The method for impairment provision of materials for project is set out in Note V. 22.
The closing balance of materials for project is presented as “construction in progress” item in the balance sheet.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 107
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
18. 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.
108 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
19. 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. The
Company’s bearer biological assets are mainly tea trees. 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 as follows:
Estimated residual Annual depreciation
Type of bearer biological assets Useful life (year) value rate
Tea tree 10 5% 9.50%
The Company reviews the useful life and estimated net residual value of a bearer biological asset and the depreciation
method applied at least at each financial year-end. A change in the useful life or estimated net residual value of a fixed
asset or the depreciation method used shall be accounted for as a change in accounting estimate.
The difference between the disposal income of the sale, loss, death or damage of a bearer biological asset, net of its
carrying amount and related taxes, is recognised in profit or loss for the current period.
The method for impairment provision of bearer biological assets is set out in Note V. 22.
20. Right-of-use assets
(1) 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.
(2) 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.
(3) For the methods of impairment test and impairment provision of right-of-use assets, please refer to Note V. 22.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
21. Intangible assets
The intangible assets of the Company include land use rights, software, patents 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 Method of amortisation Remark
Land use rights 50-70 Straight-line method
Software 5-10 Straight-line method
Patents 5-20 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. 22.
22. Long-term asset impairment
Impairment of long-term equity investments in subsidiaries, associates and joint ventures, asset impairment on
investment property, fixed assets, construction in progress, bearer biological assets measured at cost, right-of-use
assets, intangible assets, goodwill and others (excluding inventories, investment property measured at fair value,
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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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
22. Long-term 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 Company 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.
23. 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.
24. 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.
25. 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, family members of
deceased employees and other beneficiaries.
Employee benefits are presented as “employee benefits payable” and “long-term employee benefits payable” in
the balance sheet, respectively, according to liquidity.
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25. Employee benefits (Cont’d)
(2) Short-term staff remuneration
Employee wages or salaries actually incurred, bonuses, and social insurance contributions such as medical
insurance, work injury insurance, maternity insurance, and housing fund, contributed at the applicable benchmarks
and rates, are recognised as a liability as the employees provide services, with a corresponding charge to profit or
loss or included in the cost of assets where appropriate.
(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 Company pays fixed contributions into
a separate fund and the Company has no further obligations for payment. A defined benefit plan is a post-
employment benefit plan other than a defined contribution plan.
Defined contribution plans
Defined contribution plans include basic pension insurance and unemployment insurance.
During the accounting period in which an employee provides service, the amount payable calculated according to
the defined contribution plan is recognised as a liability and included in the profit or loss for the current period or
the cost of relevant assets.
Defined benefit plans
For defined benefit plans, the actuarial valuation is carried out by an independent actuary on the annual balance
sheet date, and the cost of providing benefits is determined by the expected cumulative benefit unit method. The
cost of staff remuneration arising from the Company’s defined benefit plans includes the following components:
Service cost, including current service cost, past service cost, and settlement gain or loss. In particular,
the current service cost refers to the increase in the present value of obligations of defined benefit plans
arising from the service provided by staff in the current period; the past service cost refers to the increase or
decrease in the present value of obligations of defined benefit plans related to the service of the staff in the
previous period arising from the revision of defined benefit plans.
Net interest on net liabilities or net assets of defined benefit plans, including interest income from the assets
under the plans, interest expense arising from the obligations of defined benefit plans, and interest affected
by asset caps.
Changes arising from the remeasurement of net liabilities or net assets of defined benefit plans.
Unless other accounting standards require or allow costs of staff welfare to be included in costs of assets,
the Company will include the above items and in the current profit and loss; and include item in other
comprehensive income which will not be transferred back to profit or loss in subsequent accounting periods.
When the original defined benefit plan is terminated, all the part originally included in other comprehensive income
shall be transferred to retained profit within the scope of equity.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
25. Employee benefits (Cont’d)
(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.
(5) Other long-term benefits
Other long-term employee benefits provided by the Group to employees that meet the conditions for defined
contribution plans are accounted for in accordance with the relevant provisions relating to defined contribution
plans as stated above. If the conditions for defined benefit plans are met, the benefits shall accounted for in
accordance with the relevant provisions relating to defined benefit plans, but the “changes arising from the
remeasurement of net liabilities or net assets of defined benefit plans” in the relevant employee benefits shall be
included in the current profit and loss or the relevant costs of assets.
26. 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.
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27. Share-based payments and equity instruments
(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.
(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, on each balance sheet date 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, on each balance sheet date 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 the 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.
An increase in the fair value of equity instruments refers 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.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
28. Perpetual Bonds
(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 Perpetual Bonds
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.
29. 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)
29. 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 or services.
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(5)). 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 property rental income on a straight-line basis over the lease term.
The specific method for the Company to recognise revenue from electricity and steam: the sales of steam and
electricity by the Company are performance obligations performed at a point of time. For sales of electricity, the
Company recognises revenue from sales of electricity based on the quantity of electricity delivered to customers
every month at a price agreed in the contract. For sales of steam, the Company recognises revenue from sales of
steam based on the amount of steam delivered to customers every month at a price agreed in the contract.
The specific method for the Company to recognise revenue from construction materials, moulds and paper
chemicals: revenue is recognised when goods are delivered to the customers and such deliveries are confirmed.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
30. 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. sales commission. The Company recognises
the incremental costs of obtaining a contract with a customer as an asset 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 ASBEs, 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 Company 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.
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.
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.
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31. 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 or used to offset related costs; 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 or used to offset related costs relying on the
essence of economic business; otherwise, recognised in non-operating income.
For the repayment of a government grant already recognised, if the carrying amount of relevant assets was written off
at initial recognition, the carrying amount of the assets shall be adjusted; if there is any related deferred income, the
repayment shall be offset 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.
32. 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.
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32. Deferred income tax assets/deferred income tax liabilities (Cont’d)
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.
33. 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. 20.
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 recognised in profit or loss for the period in which they actually
arise.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
33. Lease (Continued)
(2) The Company as lessee (Continued)
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
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, reassesses 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)
33. Lease (Continued)
(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)
33. Lease (Continued)
(4) Sublease
When the Company is an intermediate lessor, the sublease is classified with reference to the right-of-use assets
arising from the head lease. If the head lease is a short-term lease for which the Company adopts a simplified
approach, then the Company classifies the sublease as an operating lease.
(5) Sale and leaseback
The lessee and the lessor shall assess and determine whether the transfer of assets in a sale and leaseback
transaction is a sale in accordance with the requirements of the Accounting Standard for Business Enterprises No.
14 – Revenue.
Where asset transfer under the sale and leaseback transactions is a sale, the lessee shall measure the right-
of-use assets created by the sale and leaseback based on the portion of carrying amount of the original assets
related to right of use obtained upon leaseback, and only recognise relevant profit or loss for the right transferred
to the lessor. The lessor shall account for the purchase of assets in accordance with other applicable ASBEs and
account for the lease of assets in accordance with this standard.
Where asset transfer under the sale and leaseback transactions is not a sale, the lessee shall continue to
recognise the transferred assets while recognising a financial liability equal to the transfer income and account
for such liability according to the Accounting Standard for Business Enterprises No. 22 – Recognition and
Measurement of Financial Instruments; or not to recognise the transferred assets but recognise a financial asset
equal to the transfer income and account for such asset according to the Accounting Standard for Business
Enterprises No. 22 – Recognition and Measurement of Financial Instruments.
34. Production safety expenses
According to relevant provisions, the Company makes provisions for production safety expenses based on the revenue
of the power plant in the previous year and the prescribed percentages. The specific provisions are as follows: if
the revenue of the previous year did not exceed RMB10 million, provisions would be made at 3%; if the revenue of
the previous year exceeded RMB10 million but did not exceed RMB100 million, provisions would be made at 1.5%;
if the revenue of the previous year exceeded RMB100 million but did not exceed RMB1,000 million, provisions would
be made at 1%; if the revenue of the previous year exceeded RMB1,000 million but did not exceed RMB5,000
million, provisions would be made at 0.8%; if the revenue of the previous year exceeded RMB5,000 million but did
not exceed RMB10,000 million, provisions would be made at 0.6%; if the revenue of the previous year exceeded
RMB10,000 million, provisions would be made at 0.2%.
Provisions for production safety expenses are included in the cost of related products or profit or loss of the current
period and included in “special reserves” correspondingly.
When the provisions for production safety expenses and maintenance costs are utilised within the prescribed scope,
if such production safety expenses are applied and related to revenue expenditures, specific reserve is directly offset.
When fixed assets are incurred, they are included in the “construction in progress” item and transferred to fixed assets
when the status of the assets is ready for intended use. They are then offset against specific reserve based on the
amount included in fixed assets while corresponding amount is recognised in accumulated depreciation. Such fixed
assets are no longer depreciated in subsequent periods.
122 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
35. Repurchase of shares
Prior to cancellation or transfer of shares repurchased, the Company recognises all expenditures arising from share
repurchase as cost of treasury shares in the treasury share account. Considerations and transaction fee incurred from
the repurchase of shares shall lead to the elimination of owners’ equity and does not recognise profit or loss when
shares of the Company are repurchased, transferred or cancelled.
The difference between the actual amount received and the carrying amount of the treasury shares are recognised as
capital reserve when the treasury shares are transferred, if the capital reserve is not sufficient to be offset, the excess
amount shall be recognised to offset surplus reserve and retained profit. When the treasury shares are cancelled,
the capital shall be eliminated according to the number of shares and par value of cancelled shares, the difference
between the actual amount received and the carrying amount of the treasury shares are recognised as capital reserve,
if the capital reserve is not sufficient to be offset, the excess amount shall be recognised to offset surplus reserve and
retained profit.
36. Restricted shares
If the Company grants the restricted shares to incentive participants under an equity incentive plan, the incentive
participants shall subscribe for the shares first. If the unlocking conditions stipulated in the equity incentive plan cannot
be fulfilled subsequently, the Company repurchase the shares at the predetermined price. If the registration and other
capital increase procedures for the restricted shares issued to employees are completed in accordance with relevant
regulations, the Company recognises share capital and capital reserve (or capital premium) based on the subscription
money received from the employees on the grant date; and recognises treasury shares and other payables for
repurchase obligation.
37. Critical accounting judgments and estimates
The Company gives continuous assessment on, among other things, the reasonable expectations of future events and
the critical accounting estimates and key assumptions adopted according to its historical experience and other factors.
The critical accounting estimates and key assumptions that are likely to lead to significant adjustment risks of the
carrying amount of assets and liabilities for the next financial year are listed as follows:
Classification of financial assets
Significant judgements involved in determining the classification of financial assets include the analysis of business
models and contractual cash flow characteristics.
Factors considered by the Company in determining the business model for a group of financial assets include how the
asset’s performance is evaluated and reported to key management personnel, how risks are assessed and managed
and how the relevant management personnel are compensated.
When the Company assesses whether the contractual cash flows of the financial assets are consistent with basic
lending arrangements, the main judgements are described as below: whether the principal amount may change over
the life of the financial asset (for example, if there are repayments of principal); whether the interest includes only
consideration for the time value of money, credit risk, other basic lending risks and a profit margin and cost. For
example, whether the amount repaid in advance reflects only the outstanding principal and interest thereon, as well as
reasonable compensation paid for early termination of the contract.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
37. Critical accounting judgments and estimates (Continued)
Measurement of the ECLs of accounts receivable
The Company calculates the ECLs of accounts receivable using the exposure to default risk and ECL rate of accounts
receivable, and determines the ECL rate based on default probability and default loss rate. When determining the ECL
rate, the Company adjusts its historical data by referring to information such as historical credit loss experience as well
as current situation and forward-looking information. When considering the forward-looking information, indicators used
by the Company include the risk of economic downturn, external market environment, technology environment and
changes in customers. The assumptions relating to the ECL calculation are monitored and reviewed by the Company on
a regularly basis.
Impairment of goodwill
The Company assesses the impairment of goodwill at least annually, which requires estimates on the use value of asset
groups allocated with goodwill. When estimating use value, the Company is required to estimate the future cash flow
from such asset groups while selecting the appropriate discount rate to calculate the present value of future cash flow.
Deferred income tax assets
Deferred income tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit
will be available against which the losses can be utilised. Significant management judgement is required to determine
the amount of deferred income tax assets that can be recognised, based upon the likely timing and level of future
taxable profits together with future tax planning strategies.
Share-based payments
When calculating the liabilities and expenses related to the equity incentive plan, the management of the Company is
required to make judgments and estimates on issues such as the turnover rate and vesting conditions. Differences in
the judgments and estimates will have a material effect on the financial statements.
38. Changes in significant accounting policies and accounting estimates
(1) Changes in significant accounting policies
The Company did not have any change in significant accounting policies during the year.
(2) Changes in significant accounting estimates
The Company did not have any change in significant accounting estimates during the year.
124 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VI. Taxation
1. Main tax types and tax rates
Tax type Tax Base Tax rate
Value added tax (VAT) VAT payable (VAT payable is calculated 13/9/6
by multiplying taxable sales amount
by the applicable tax rate less current
deductible input VAT)
Property tax Rental income and property price 1.2/12
Urban maintenance and construction tax Turnover tax payable 7
Enterprise income tax (EIT) Taxable income 25
Disclosure of taxable entities subject to different EIT tax rates
Name of taxable entity EIT tax rate
Shandong Chenming Paper Holdings Limited 15
Shouguang Meilun Paper Co., Ltd. 15
Jilin Chenming Paper Co., Ltd. 15
Jiangxi Chenming Paper Co., Ltd. 15
Zhanjiang Chenming Pulp & Paper Co., Ltd. 15
Huanggang Chenming Pulp & Paper Co., Ltd. 15
Kunshan Tuoan Plastic Products Co., Ltd. 15
Shouguang Xinyuan Coal Co., Ltd. 20
Shouguang Chenming Papermaking Machine Co., Ltd. 20
Shouguang Wei Yuan Logistics Company Limited 20
Shouguang Shun Da Customs Declaration 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
SHANDONG CHENMING PAPER HOLDINGS LIMITED 125
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VI. Taxation (Continued)
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 GR202222000414 on 29 November 2022. 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 2022 to 2024.
Jiangxi Chenming Paper Co., Ltd., a subsidiary of the Company, received a high and new technology enterprise
certificate with a certification number of GR202236000018 on 4 November 2022. 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 2022 to 2024.
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.
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.
126 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VI. Taxation (Continued)
2. Tax incentives (Continued)
(1) Enterprise income tax (Continued)
Shouguang Xinyuan Coal Co., Ltd., Shouguang Chenming Papermaking Machine Co., Ltd., Shouguang Wei Yuan
Logistics Company Limited and Shouguang Shun Da Customs Declaration Co, Ltd., which are subsidiaries of
the Company, are small and micro enterprises. Pursuant to the Announcement of the Ministry of Finance and the
State Administration of Taxation on the Implementation of Preferential Income Tax Policies for Small and Micro
Enterprises and Individual Industrial and Commercial Business (Cai Shui [2021] No. 12) and the Announcement of
the Ministry of Finance and the State Administration of Taxation on Further Implementation of Preferential Income
Tax Policies for Small and Micro Enterprises (Cai Shui [2022] 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 25%, with the applicable enterprise income tax rate of 20%.
Guangdong Chenming Panels Co., Ltd., a subsidiary of the Company, meets the requirements of Rule 99 of the
Regulations for the Implementation of Law of the People’s Republic of China on Enterprise Income Tax (Decree
No. 512 of the State Council of the People’s Republic of China) and the Announcement of the Ministry of Finance
and the State Administration of Taxation on Improvement of the Value-added Tax Policy for the Comprehensive
Utilisation of Resources (Cai Shui [2021] No. 40): 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. 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.
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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 3,577,158.84 3,491,219.08
Bank deposit 1,839,192,335.42 2,155,968,930.43
Other monetary funds 11,912,761,370.57 11,840,974,836.57
Total 13,755,530,864.83 14,000,434,986.08
Of which: Total deposits in overseas banks 334,092,239.78 593,378,097.70
Total restricted amount due to mortgages, pledges or freezes 11,853,449,355.40 11,756,140,645.56
Other explanations:
Other monetary funds of RMB8,797,013,971.15 were the guarantee deposit for the application for bank
acceptance with the banks by the Company;
Other monetary funds of RMB2,657,225,384.25 were the guarantee deposit for the application for letter of credit
with the banks by the Company;
Other monetary funds of RMB322,500,000.00 were the guarantee deposit for the application for guarantees with
the banks by the Company;
Other monetary funds of RMB76,710,000.00 were the Company’s statutory reserve deposits at the People’s Bank
of China;
Other monetary funds included accrued interest of RMB59,312,015.17.
2. Financial assets held for trading
Unit: RMB
Item Closing balance Opening balance
Financial assets measured at fair value through profit or loss 50,433,870.59 74,708,444.88
Of which:
Investment in equity instruments 50,433,870.59 74,708,444.88
Total 50,433,870.59 74,708,444.88
Explanation: Financial assets held for trading were shares of China Bohai Bank subscribed by the Company.
128 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
3. Accounts receivable
(1) Disclosure of accounts receivable by category
Unit: RMB
Closing balance Opening balance
Book balance Bad debt provision Book balance Bad debt provision
Percentage Percentage Percentage Percentage
Category Amount (%) Amount (%) Carrying amount Amount (%) Amount (%) Carrying amount
Accounts receivable assessed
individually for bad debt provision 221,531,626.66 6.49 221,531,626.66 100.00 226,667,597.47 6.13 226,667,597.47 100.00
Accounts receivable assessed
collectively for bad debt provision 3,193,714,088.42 93.51 247,560,117.31 7.75 2,946,153,971.11 3,473,893,247.32 93.87 261,632,801.36 7.53 3,212,260,445.96
Of which:
Due from related party customers 6,494,662.96 0.19 6,756.49 0.10 6,487,906.47 8,639,295.98 0.23 1,775,510.01 20.55 6,863,785.97
Due from non-related party
customers 1,852,451,198.85 54.24 49,073,801.39 2.65 1,803,377,397.46 2,081,296,530.28 56.24 52,357,160.25 2.52 2,028,939,370.03
Factoring receivables 1,334,768,226.61 39.08 198,479,559.43 14.87 1,136,288,667.18 1,383,957,421.06 37.40 207,500,131.10 14.99 1,176,457,289.96
Total 3,415,245,715.08 100.00 469,091,743.97 13.74 2,946,153,971.11 3,700,560,844.79 100.00 488,300,398.83 13.20 3,212,260,445.96
Items assessed individually for bad debt provision:
Unit: RMB
Closing balance
Provision
Bad debts percentage
Name Book balance provision (%) 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. 14,933,432.93 14,933,432.93 100.00 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
90 companies including Shandong Yiming New
Material Technology Corp Co., Ltd. 79,057,883.14 79,057,883.14 100.00 Long outstanding
Total 221,531,626.66 221,531,626.66 100.00
SHANDONG CHENMING PAPER HOLDINGS LIMITED 129
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VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
3. Accounts receivable (Cont’d)
(1) Disclosure of accounts receivable by category (Cont’d)
Items assessed collectively for bad debt provision: Due from related party customers
Unit: RMB
Closing balance
Bad debts Provision
Name Book balance provision percentage (%)
Within 1 year 6,494,662.96 6,756.49 0.10
Total 6,494,662.96 6,756.49 0.10
Items assessed collectively for bad debt provision: Receivables from non-related party customer
Unit: RMB
Closing balance
Bad debts Provision
Name Book balance provision percentage (%)
Within 1 year 1,742,600,457.64 8,196,561.59 0.47
1 to 2 years 49,846,903.41 8,433,176.68 16.92
2 to 3 years 2,788,682.14 1,217,451.72 43.66
Over 3 years 57,215,155.66 31,226,611.40 54.58
Total 1,852,451,198.85 49,073,801.39 2.65
Items assessed collectively for bad debt provision: Factoring receivables
Unit: RMB
Closing balance
Bad debts Provision
Name Book balance provision percentage (%)
Within 1 year 279,980,044.46 15,564,778.33 5.56
1 to 2 years 904,649,222.15 130,814,781.10 14.46
2 to 3 years
Over 3 years 150,138,960.00 52,100,000.00 34.70
Total 1,334,768,226.61 198,479,559.43 14.87
130 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
3. Accounts receivable (Cont’d)
(1) Disclosure of accounts receivable by category (Cont’d)
If the bad debt provision of accounts receivable is made in accordance with the general model of ECLs, please
disclose the information about bad debt provision with reference to the way of disclosure of other receivables:
√ Applicable Not applicable
Disclosure by ageing
Unit: RMB
Ageing Closing balance
Within 1 year (including 1 year) 2,029,075,165.06
1 to 2 years 1,024,496,125.56
2 to 3 years 2,788,682.14
Over 3 years 358,885,742.32
Subtotal 3,415,245,715.08
Bad debts provision 469,091,743.97
Total 2,946,153,971.11
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
Recovery
Category Opening balance Provision or reversal Written-off Others Closing balance
Bad debts provision 488,300,398.83 21,928,911.71 13,618,485.47 27,600,041.68 80,960.58 469,091,743.97
Total 488,300,398.83 21,928,911.71 13,618,485.47 27,600,041.68 80,960.58 469,091,743.97
Explanation: Others represent the accounts receivable with provision for bad debts transferred from the merger of
Jiangxi Chenming Port Co., Ltd.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 131
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VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
3. Accounts receivable (Cont’d)
(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 RMB1,128,033,226.63 in total, accounting for 33.03% of the total closing balance of accounts receivable. The
closing balance of the corresponding bad debt provision amounted to RMB116,908,685.72 in total.
Unit: RMB
As a percentage
of the closing
Closing balance balance of the Closing balance
of accounts total accounts of bad debt
Name of entity receivable receivable (%) provision
Customer I 481,810,233.33 14.11 40,333,075.30
Customer II 222,656,666.64 6.52 24,596,930.88
Customer III 198,805,660.00 5.82 27,024,669.68
Customer IV 121,908,333.33 3.57 14,629,000.00
Customer V 102,852,333.33 3.01 10,325,009.86
Total 1,128,033,226.63 33.03 116,908,685.72
4. Accounts receivable financing
Unit: RMB
Item Closing balance Opening balance
Bills receivable 614,794,433.04 924,960,384.16
Total 614,794,433.04 924,960,384.16
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
132 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
5. Prepayments
(1) Presentation of prepayments according to ageing analysis
Unit: RMB
Closing balance Opening balance
Ageing Amount Percentage Amount Percentage
Within 1 year 805,903,097.64 95.16% 749,904,460.45 95.14%
1 to 2 years 41,017,883.73 4.84% 38,287,166.37 4.86%
Total 846,920,981.37 100.00% 788,191,626.82 100.00%
(2) Top five prepayments based on closing balance of prepaid parties
The total amount of top five prepayments based on closing balance of prepaid parties for the period amounted to
RMB379,724,428.05, accounting for 44.84% of the closing balance of the total prepayments.
Unit: RMB
As a percentage
of the closing
Closing balance balance of the
Name of entity of prepayments total prepayments
Customer I 131,294,630.13 15.50%
Customer II 71,725,703.12 8.47%
Customer III 63,062,594.80 7.45%
Customer IV 60,929,500.00 7.19%
Customer V 52,712,000.00 6.22%
Total 379,724,428.05 44.84%
SHANDONG CHENMING PAPER HOLDINGS LIMITED 133
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VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
6. Other receivables
Unit: RMB
Item Closing balance Opening balance
Other receivables 1,645,909,354.44 1,717,445,443.44
Total 1,645,909,354.44 1,717,445,443.44
(1) Other receivables by nature
Unit: RMB
Closing book Opening book
Nature balance balance
Open credit 2,022,161,667.40 2,108,991,172.35
Reserve and borrowings 32,813,868.97 26,270,269.00
Guarantee deposit and deposit 12,109,761.41 12,230,367.80
Others 46,303,026.70 52,332,819.95
Total 2,113,388,324.48 2,199,824,629.10
(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 debts provision next 12 months impaired) impaired) Total
Balance as at 1 January 2023 73,559,281.09 408,819,904.57 482,379,185.66
Balance as at 1 January 2023
for the period
– Transferred to stage 2
– Transferred to stage 3
– Reversed to stage 2
– Reversed to stage 1
Provision for the period 13,193,201.53 421,349.71 13,614,551.24
Reversal for the period 1,298,753.94 27,264,570.68 28,563,324.62
Transfer for the period
Write-off for the period
Other changes 48,557.76 48,557.76
Balance as at 30 June 2023 85,502,286.44 381,976,683.60 467,478,970.04
134 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
6. Other receivables (Cont’d)
(2) Particulars of bad debt provision (Cont’d)
Changes in carrying book balances with significant changes in loss provision for the period
Applicable √ Not applicable
Explanation: In 2023, the Company obtained control over Jiangxi Chenming Port Co., Ltd. Other changes in bad
debt provision as described in the table above represent the balance of bad debt provision of such company at
the acquisition date.
Disclosure by ageing
Unit: RMB
Ageing Closing balance
Within 1 year (including 1 year) 496,853,852.10
1 to 2 years 310,379,496.32
2 to 3 years 643,164,143.67
Over 3 years 662,990,832.39
Total 2,113,388,324.48
(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
Category balance Provision or reversal Write-off Others Closing balance
Bad debts provision 482,379,185.66 13,614,551.24 28,563,324.62 48,557.76 467,478,970.04
Total 482,379,185.66 13,614,551.24 28,563,324.62 48,557.76 467,478,970.04
SHANDONG CHENMING PAPER HOLDINGS LIMITED 135
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VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
6. Other receivables (Cont’d)
(4) 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 RMB1,258,260,155.89 in total, accounting for 59.52% of the total closing balance of accounts receivable. The
closing balance of the corresponding bad debt provision amounted to RMB266,924,822.62 in total.
Unit: RMB
Percentage
to total closing Closing balance
balance of other of bad debt
Name of entity Nature Closing balance Ageing receivables provision
Customer I Consideration for equity 472,854,783.56 2 to 3 years, 22.37% 48,950,000.00
transfer 3 to 4 years
Customer II Consideration for equity 453,002,316.85 3 to 4 years 21.43% 140,010,695.06
transfer
Customer III Consideration for equity 143,940,305.63 1 to 2 years, 6.81% 64,773,137.54
transfer 2 to 3 years
Customer IV Consideration for equity 114,840,000.00 Within 1 year 5.43% 5,742,000.00
transfer
Customer V Financial support and 73,622,749.85 Within 1 year, 3.48% 7,448,990.02
interest 1 to 2 years
Total 1,258,260,155.89 59.52% 266,924,822.62
7. Inventories
Whether the Company needs to comply with the disclosure requirements for real estate industries
No
(1) Categories of inventories
Unit: RMB
Closing balance Opening balance
Impairment Impairment
provision for provision for
inventories or inventories or
performance performance
Item Book balance costs Carrying amount Book balance costs Carrying amount
Raw materials 1,894,223,179.82 18,068,973.64 1,876,154,206.18 2,488,652,200.15 18,096,641.64 2,470,555,558.51
Work-in-process products 133,398,598.07 133,398,598.07 111,248,779.69 111,248,779.69
Goods in stock 2,163,112,731.64 43,314,485.76 2,119,798,245.88 1,622,062,893.55 16,737,849.96 1,605,325,043.59
Developing costs 1,156,377,072.09 1,156,377,072.09 1,138,178,959.32 1,138,178,959.32
Consumable biological assets 1,492,153,527.46 1,492,153,527.46 1,496,607,818.84 1,496,607,818.84
Total 6,839,265,109.08 61,383,459.40 6,777,881,649.68 6,856,750,651.55 34,834,491.60 6,821,916,159.95
Note: Consumable biological assets are forestry assets.
136 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
7. Inventories (Cont’d)
(2) Impairment provision for inventories or performance costs
Unit: RMB
Increase during the period Decrease during the period
Opening Reversal or Closing
Item balance Provision Others transfer Others balance
Raw materials 18,096,641.64 27,668.00 18,068,973.64
Goods in stock 16,737,849.96 43,314,485.76 16,737,849.96 43,314,485.76
Total 34,834,491.60 43,314,485.76 16,765,517.96 61,383,459.40
Basis for recognition of net realisable value: Net realisable value of goods in stock is recognised on the basis of
the estimated selling price, net of related taxes and selling expenses. Basis for recognition of net realisable value:
the estimated selling price of the target product, net of related taxes, selling expenses and costs to be incurred
until completion.
Reversal or transfer of impairment provision for inventories during the period was due to: Impairment provision for
inventories during the period due to the purchase of raw materials for which impairment provision had been made,
and the sale of inventories for which impairment provision had been made.
8. Non-current assets due within one year
Unit: RMB
Item Closing balance Opening balance
Long-term receivables due within one year 3,852,470,167.90 3,998,724,415.85
Total 3,852,470,167.90 3,998,724,415.85
Explanations:
Long-term receivables due within one year amounting to RMB3,736,417,788.05 (amount for the prior year: RMB3,920,915,510.01) were
financial lease receivables;
Long-term receivables due within one year amounting to RMB116,052,379.85 (amount for the prior year: RMB77,808,905.84) were
deposits receivable.
9. Other current assets
Unit: RMB
Item Closing balance Opening balance
Prepaid expenses 332,730,125.13 241,313,507.50
Receivables under financial lease due within one year 328,065,332.45 340,546,803.50
Factoring receivables due within one year 274,708,276.63 298,446,276.63
Input tax amount to be deducted 90,137,290.97 141,038,575.79
Prepaid tax 70,252,896.53 92,806,690.76
Other payments 64,992,565.10 66,655,947.44
Total 1,160,886,486.81 1,180,807,801.62
SHANDONG CHENMING PAPER HOLDINGS LIMITED 137
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VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
10. Long-term receivables
Unit: RMB
Closing balance Opening balance Discount
Item Book balance Bad debts provision Carrying amount Book balance Bad debts provision Carrying amount rate range
Finance lease payments 6,349,305,959.96 1,305,082,476.71 5,044,223,483.25 6,739,718,184.27 1,302,116,713.90 5,437,601,470.37 4%-12%
Less: Unrealised financing income 173,784,123.48 173,784,123.48 271,455,622.37 271,455,622.37
Equipment lease financing 382,214,607.49 382,214,607.49 351,446,696.64 351,446,696.64
Less: Unrealised financing income 27,622,840.15 27,622,840.15 32,060,345.32 32,060,345.32
Subtotal 6,530,113,603.82 1,305,082,476.71 5,225,031,127.11 6,787,648,913.22 1,302,116,713.90 5,485,532,199.32
Less: Long-term receivables due within one year 4,910,948,881.99 1,058,478,714.09 3,852,470,167.90 5,075,152,713.36 1,076,428,297.51 3,998,724,415.85
Total 1,619,164,721.83 246,603,762.62 1,372,560,959.21 1,712,496,199.86 225,688,416.39 1,486,807,783.47
Particulars of bad debt provision impairment
Unit: RMB
Stage 1 Stage 2 Stage 3
Lifetime ECLs
ECLs for the (not credit- Lifetime ECLs
Bad debts provision next 12 months impaired) (credit-impaired) Total
Balance as at 1 January 2023 3,237,410.85 222,451,005.54 225,688,416.39
Balance as at 1 January 2023 for the period 3,237,410.85 222,451,005.54 225,688,416.39
– Transferred to stage 2
– Transferred to stage 3
– Reversed to stage 2
– Reversed to stage 1
Provision for the period 21,450,269.72 21,450,269.72
Reversal for the period 98,613.99 98,613.99
Transfer for the period
Write-off for the period
Other changes -436,309.50 -436,309.50
Balance as at 30 June 2023 2,702,487.36 243,901,275.26 246,603,762.62
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
138 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
11. Long-term equity investments
Unit: RMB
Change for the period
Investment
Opening gain or loss Adjustment Distribution Closing Closing
balance recognised of other Other change of cash balance balance of
(carrying Additional Withdrawn under equity comprehensive in equity dividend or Impairment (carrying impairment
Investee amount) contribution contribution method income interest profit declared provision Others amount) provision
I. Joint ventures
Shouguang Chenming Huisen
New-style Construction
Materials Co., Ltd. 7,892,659.42 1,025,474.67 1,100,000.00 7,818,134.09
Weifang Port Wood Chip
Terminal Co., Ltd. 74,848,570.73 -3,915,613.06 70,932,957.67
Shouguang Meite
Environmental Technology
Co., Ltd. 8,921,843.88 9,656,629.58 18,578,473.46
Shouguang Jintou Industrial
Investment Partnership
(Limited Partnership) 2,359,998,661.67 -803,127.31 2,359,195,534.36
Weifang Xingxing United
Chemical Co., Ltd. 91,874,385.12 91,874,385.12
Subtotal 2,543,536,120.82 5,963,363.88 1,100,000.00 2,548,399,484.70
II. Associates
Zhuhai Dechen New Third
Board Equity Investment
Fund Company (Limited
Partnership) 36,776,710.91 5,000,000.00 35,769.93 31,812,480.84
Ningbo Kaichen Huamei Equity
Investment Fund Partnership
(Limited Partnership) 197,218,318.77 -3,089.85 197,215,228.92
Nanchang Tianchen Port Co.,
Ltd. 59,345,429.05 3,760,608.16 2,125,403.30 60,980,633.91
Goldtrust Futures Co., Ltd. 178,389,182.83 -177,137.24 178,212,045.59
Chenming (Qingdao) Asset
Management Co., Ltd. 6,482,035.69 27,510.92 6,509,546.61
Guangdong Nanyue Bank
Co., Ltd. 1,314,611,000.54 14,327,244.01 2,605,105.12 1,331,543,349.67
Subtotal 1,733,477,248.74 59,345,429.05 5,000,000.00 17,970,905.93 2,605,105.12 2,125,403.30 1,806,273,285.54
Total 4,277,013,369.56 59,345,429.05 5,000,000.00 23,934,269.81 2,605,105.12 3,225,403.30 4,354,672,770.24
SHANDONG CHENMING PAPER HOLDINGS LIMITED 139
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VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
12. Other non-current financial assets
Unit: RMB
Item Closing balance Opening balance
Investment in debt instruments 663,000,000.00 663,000,000.00
Investment in equity instruments 122,374,459.73 123,750,761.62
Total 785,374,459.73 786,750,761.62
13. Investment property
(1) Investment property under the cost method
√ Applicable Not applicable
Unit: RMB
Housing and
Item building structure Total
I. Original carrying amount
1. Opening balance 7,160,214,568.83 7,160,214,568.83
2. Increase during the period
(1) Acquisition
3. Decrease during the period 3,155,127.04 3,155,127.04
(1) Disposal 3,155,127.04 3,155,127.04
4. Closing balance 7,157,059,441.79 7,157,059,441.79
II. Accumulated depreciation and accumulated amortisation
1. Opening balance 903,491,455.68 903,491,455.68
2. Increase during the period 99,749,771.43 99,749,771.43
(1) Provision or amortisation 99,749,771.43 99,749,771.43
3. Decrease during the period 506,304.34 506,304.34
(1) Disposal 506,304.34 506,304.34
4. Closing balance 1,002,734,922.77 1,002,734,922.77
III. Impairment provision
1. Opening balance
2. Increase during the period
(1) Provision
3. Decrease during the period
(1) Disposal
(2) Transferred due to debt restructuring
4. Closing balance
IV. Carrying amount
1. Closing carrying amount 6,154,324,519.02 6,154,324,519.02
2. Opening carrying amount 6,256,723,113.15 6,256,723,113.15
140 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
13. Investment property (Cont’d)
(1) Investment property under the cost method (Cont’d)
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 Property Management 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
Property Management Co., Ltd., a subsidiary of the Company, mainly used for external rental purposes.
Shanghai Xizang South Road shop, located at No. 518-528 Xizang South Road, Shanghai, is a long-term store held by Wuhan
Junheng Property Management Co. Ltd., a subsidiary, mainly for external rental purposes.
(2) Investment property under the fair value method
Applicable √ Not applicable
14. Fixed assets
Unit: RMB
Item Closing balance Opening balance
Fixed assets 32,705,962,616.97 33,527,978,754.73
Disposal of fixed assets 269,759,940.57 269,759,940.57
Total 32,975,722,557.54 33,797,738,695.30
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VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
14. Fixed assets (Cont’d)
(1) Particulars of fixed assets
Unit: RMB
Electronic
Housing and Machinery and equipment
Item building structure equipment Vehicles and others Total
I. Original carrying amount:
1. Opening balance 10,286,809,124.89 43,106,182,009.60 288,801,665.32 400,465,471.75 54,082,258,271.56
2. Increase during the period 157,781,537.57 100,275,378.24 3,858,108.56 4,379,990.07 266,295,014.44
(1) Acquisition 6,680,702.78 67,294,320.85 1,865,070.94 3,954,275.14 79,794,369.71
(2) Transferred from construction in
progress 2,816,881.40 30,148,765.87 32,965,647.27
(3) Increase due to business
combination 148,283,953.39 2,832,291.52 1,993,037.62 425,714.93 153,534,997.46
3. Decrease during the period 14,572,261.40 14,975,053.02 496,759.27 2,507,761.56 32,551,835.25
(1) Disposal or retirement 14,572,261.40 14,975,053.02 496,759.27 2,507,761.56 32,551,835.25
4. Closing balance 10,430,018,401.06 43,191,482,334.82 292,163,014.61 402,337,700.26 54,316,001,450.75
II. Accumulated depreciation
1. Opening balance 2,329,752,339.57 17,561,160,193.98 200,474,107.77 258,849,412.20 20,350,236,053.52
2. Increase during the period 173,982,240.84 880,608,831.89 11,092,467.73 5,955,495.73 1,071,639,036.19
(1) Provision 133,108,443.58 879,938,525.21 10,383,519.51 5,750,532.09 1,029,181,020.39
(2) Increase due to business
combination 40,873,797.26 670,306.68 708,948.22 204,963.64 42,458,015.80
3. Decrease during the period 5,639,596.73 7,890,452.65 256,285.18 2,093,384.68 15,879,719.24
(1) Disposal or retirement 5,639,596.73 7,890,452.65 256,285.18 2,093,384.68 15,879,719.24
4. Closing balance 2,498,094,983.68 18,433,878,573.22 211,310,290.32 262,711,523.25 21,405,995,370.47
III. Provision for impairment
1. Opening balance 27,808,852.79 168,785,487.47 13,889.13 7,435,233.92 204,043,463.31
2. Increase during the period
(1) Provision
3. Decrease during the period
(1) Disposal or retirement
4. Closing balance 27,808,852.79 168,785,487.47 13,889.13 7,435,233.92 204,043,463.31
IV. Carrying amount
1. Closing carrying amount 7,904,114,564.59 24,588,818,274.13 80,838,835.16 132,190,943.09 32,705,962,616.97
2. Opening carrying amount 7,929,247,932.53 25,376,236,328.15 88,313,668.42 134,180,825.63 33,527,978,754.73
142 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
14. Fixed assets (Cont’d)
(2) Particulars of temporarily idle fixed assets
Unit: RMB
Original carrying Accumulated Provision for
Item amount depreciation impairment Carrying amount Remark
Housing and building structure 72,585,434.37 24,639,785.75 3,093,008.64 44,852,639.98
Machinery and equipment 893,374,015.71 563,977,620.65 147,863,071.36 181,533,323.70
Electronic equipment and others 478,399.18 430,411.06 7,187.27 40,800.85
Total 966,437,849.26 589,047,817.46 150,963,267.27 226,426,764.53
(3) Particulars of fixed assets without obtaining property right certificates
Unit: RMB
Reason for not yet
obtaining property
Item Carrying amount right certificates
Housing and building structure (Zhanjiang Chenming
Pulp & Paper Co., Ltd.) 998,765,824.60 Under application
Housing and building structure (Huanggang Chenming
Pulp & Paper Co., Ltd.) 584,615,688.59 Under application
Housing and building structure (Shouguang Meilun Paper Co., Ltd.) 521,012,901.37 Under application
Housing and building structure (Jilin Chenming Paper Co., Ltd.) 369,108,268.46 Under application
Housing and building structure (Jiangxi Chenming Paper
Co., Ltd.) 197,048,976.25 Under application
Housing and building structure (Shandong Chenming Paper
Holdings Limited) 93,423,000.91 Under application
(4) Disposal of fixed assets
Unit: RMB
Item Closing balance Opening balance
Machinery equipment, electronic and other equipment in production
workshop of Wuhan Chenming 3,457,743.88 3,457,743.88
Housing and office equipment of Wuhan Chenming management
integrated office 168,170,645.13 168,170,645.13
Generator machinery equipment of Qianneng Electric Power factory
area 59,225,154.99 59,225,154.99
Boiler room and other structures of Qianneng Electric Power factory
area 38,801,269.05 38,801,269.05
Transportation and others of Qianneng Electric Power factory area 105,127.52 105,127.52
Total 269,759,940.57 269,759,940.57
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VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
15. Construction in progress
Unit: RMB
Item Closing balance Opening balance
Construction in progress 666,573,576.71 551,020,785.44
Materials for project 7,851,514.55 7,846,094.92
Total 674,425,091.26 558,866,880.36
(1) Particulars of construction in progress
Unit: RMB
Closing balance Opening balance
Impairment Impairment
Item Book balance provision Carrying amount Book balance provision Carrying amount
Relocation of Wuhan 4800 papermaking
machine project (Zhanjiang) 359,821,563.97 359,821,563.97 303,942,703.51 303,942,703.51
Technological transformation project 179,165,773.85 179,165,773.85 121,193,391.56 121,193,391.56
Integrated forestry, pulp and paper project
(Huanggang Pulp & Paper) 45,524,448.90 45,524,448.90 45,538,442.78 45,538,442.78
Others 103,200,461.75 21,138,671.76 82,061,789.99 101,484,919.35 21,138,671.76 80,346,247.59
Total 687,712,248.47 21,138,671.76 666,573,576.71 572,159,457.20 21,138,671.76 551,020,785.44
(2) Changes in material construction in progress projects for the period
Unit: RMB
Of which:
Capitalised Capitalisation
Transfer Other interest rate of the
Increase to fixed asset deductions Accumulated Accumulated amount interest
Opening during the during the during the Closing investment Construction capitalised during the amount for Source
Project name Budget balance period period period balance to budget progress interest period the period of fund
Relocation of Wuhan 4800
papermaking machine
project (Zhanjiang) 800,000,000.00 303,942,703.51 55,878,860.46 359,821,563.97 44.98% 44.98% Self-owned funds
Integrated forestry, pulp and
paper project (Huanggang
Pulp & Paper) 320,000,000.00 45,538,442.78 8,363,873.16 8,377,867.04 45,524,448.90 30.72% 30.72% Self-owned funds
Total 1,120,000,000.00 349,481,146.29 64,242,733.62 8,377,867.04 405,346,012.87
144 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
15. Construction in progress (Cont’d)
(3) Materials for project
Unit: RMB
Closing balance Opening balance
Impairment Impairment
Item Book balance provision Carrying amount Book balance provision Carrying amount
Special materials 7,851,514.55 7,851,514.55 7,846,094.92 7,846,094.92
Total 7,851,514.55 7,851,514.55 7,846,094.92 7,846,094.92
16. Bearer biological assets
(1) Bearer biological assets under the cost method
√ Applicable Not applicable
Unit: RMB
Item Tea trees Total
I. Original carrying amount
1. Opening balance 13,697,336.80 13,697,336.80
2. Increase during the period 3,083,477.56 3,083,477.56
(1) Purchase
(2) Self-cultivation 3,083,477.56 3,083,477.56
3. Decrease during the period
4. Closing balance 16,780,814.36 16,780,814.36
II. Accumulated depreciation
1. Opening balance
2. Increase during the period
3. Decrease during the period
4. Closing balance
III. Impairment provision
1. Opening balance
2. Increase during the period
3. Decrease during the period
4. Closing balance
IV. Carrying amount
1. Closing carrying amount 16,780,814.36 16,780,814.36
2. Opening carrying amount 13,697,336.80 13,697,336.80
SHANDONG CHENMING PAPER HOLDINGS LIMITED 145
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VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
17. Right-of-use assets
Unit: RMB
Housing and
Item Land use rights building structure Total
I. Original carrying amount
1. Opening balance 205,820,222.41 5,546,607.90 211,366,830.31
2. Increase during the period
3. Decrease during the period 3,213,041.31 12,385.32 3,225,426.63
(1) Transfer or held for sale 3,089,188.11 3,089,188.11
(2) Other decreases 123,853.20 12,385.32 136,238.52
4. Closing balance 202,607,181.10 5,534,222.58 208,141,403.68
II. Accumulated depreciation
1. Opening balance 28,702,609.31 1,049,521.75 29,752,131.06
2. Increase during the period 3,434,275.84 137,854.17 3,572,130.01
(1) Provision 3,434,275.84 137,854.17 3,572,130.01
3. Decrease during the period 266,938.74 266,938.74
(1) Transfer or held for sale 266,938.74 266,938.74
4. Closing balance 31,869,946.41 1,187,375.92 33,057,322.33
III. Impairment provision
1. Opening balance
2. Increase during the period
(1) Provision
3. Decrease during the period
(1) Disposal
4. Closing balance
IV. Carrying amount
1. Closing carrying amount 170,737,234.69 4,346,846.66 175,084,081.35
2. Opening carrying amount 177,117,613.10 4,497,086.15 181,614,699.25
Explanation: The reason for other decreases is that the original recognised amount of right-of-use assets was tax-
included, and as the invoices for leasing have been received, the input tax amount offset the original carrying amount of
the right-of-use assets.
146 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
18. Intangible assets
(1) Particulars of intangible assets
Unit: RMB
Unpatented Certificates of
Item Land use rights Patents technology third party right Total
I. Original carrying amount
1. Opening balance 2,317,286,177.57 22,054,431.73 27,493,613.05 15,908,674.87 2,382,742,897.22
2. Increase during the period 35,251,750.67 35,251,750.67
(1) Acquisition 24,205,100.00 24,205,100.00
(2) Increase due to business
combination 11,046,650.67 11,046,650.67
3. Decrease during the period
4. Closing balance 2,352,537,928.24 22,054,431.73 27,493,613.05 15,908,674.87 2,417,994,647.89
II. Accumulated amortisation
1. Opening balance 512,384,814.26 22,054,431.73 1,056,145.44 15,908,674.87 551,404,066.30
2. Increase during the period 28,625,702.85 57,995.83 28,683,698.65
(1) Provision 26,543,505.50 57,995.83 26,601,501.33
(2) Increase due to business
combination 2,082,197.32 2,082,197.32
3. Decrease during the period
4. Closing balance 541,010,517.08 22,054,431.73 1,114,141.27 15,908,674.87 580,087,764.95
III. Impairment provision
1. Opening balance
2. Increase during the period
3. Decrease during the period
4. Closing balance
IV. Carrying amount
1. Closing carrying amount 1,811,527,411.16 26,379,471.78 1,837,906,882.94
2. Opening carrying amount 1,804,901,363.31 26,437,467.61 1,831,338,830.92
Explanation: For details of restricted ownership, please refer to note VII. 63;
Certificates of third party right refer to enterprise emission rights.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 147
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VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
19. Goodwill
(1) Original carrying amount of goodwill
Unit: RMB
Increase during Decrease during
the period the period
Arising from
business
Name of investee or event generating goodwill Opening balance combinations Disposal Closing 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
Jiangxi Chenming Port Co., Ltd. 8,273,638.42 8,273,638.42
Total 41,261,065.98 8,273,638.42 49,534,704.40
(2) Provision for impairment of goodwill
Unit: RMB
Increase during Decrease during
the period the period
Name of investee or event generating goodwill Opening balance Provision Disposal Closing balance
Jilin Chenming Paper Co., Ltd. 14,314,160.60 14,314,160.60
Total 14,314,160.60 14,314,160.60
The Company assessed the recoverable amount of goodwill and determined that the goodwill related to the
Company’s plastic business was not impaired. With the category of the principal activities as the basis for
determining the reporting segments, the Company regarded Kunshan Tuoan Plastic Products Co., Ltd. and
Jiangxi Chenming Port Co., Ltd. as an asset group. The recoverable amount was determined based on the present
value of the estimated future cash flows.
Future cash flows were determined based on the financial budget for 2023 to 2027 as approved by the
management, and adopted 7.28% as the discount rate which was the interest rate of the 5-year bonds issued by
the Company in 2018. The cash flows for more than 5 years are calculated based on the growth rate of 5%. Other
key assumptions used in estimating future cash flows included the estimated sales and gross profit based on the
performance of such asset group in the past and the expectation to market development by the management. The
management believed that any reasonable change in the above assumptions will not result in the total book value
of the asset group Kunshan Tuoan Plastic Products Co., Ltd. exceeding its recoverable amount.
20. Long-term prepaid expenses
Unit: RMB
Opening Increase during Amortisation Other
Item balance the period during the period deductions Closing balance
Woodland expenses 7,233,827.75 347,610.66 1,244,638.45 6,336,799.96
Others 37,229,023.70 40,130.01 1,725,987.68 35,543,166.03
Total 44,462,851.45 387,740.67 2,970,626.13 41,879,965.99
148 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
21. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets before offsetting
Unit: RMB
Closing balance Opening balance
Deductible temporary Deferred income Deductible temporary Deferred income
Item difference tax assets difference tax assets
Provision for impairment of assets 2,689,226,543.47 572,930,085.69 2,344,419,524.10 549,431,097.40
Unrealised profit arising from intra-group
transactions 1,399,629.90 349,907.48 47,231,691.32 11,807,922.83
Outstanding payables 122,792,373.61 18,768,839.94 169,723,942.88 26,380,462.69
Deferred income 160,218,077.69 24,632,987.76 193,822,821.65 29,673,699.36
Deductible loss 5,965,548,854.64 942,938,248.29 4,578,592,243.20 716,030,918.97
Debt restructuring 30,831.05 7,707.76
Special reserves 19,914,734.49 2,650,556.79 15,791,710.95 2,368,756.59
Total 8,959,100,213.80 1,562,270,625.95 7,349,612,765.15 1,335,700,565.60
(2) Deferred income tax liabilities before offsetting
Unit: RMB
Closing balance Opening balance
Taxable temporary Deferred income Taxable temporary Deferred income
Item differences tax liabilities differences tax liabilities
Asset valuation increment from business
combinations involving entities not under
common control 56,746,069.84 10,242,663.26 19,104,051.04 4,776,012.76
Debt restructuring 13,621,006.12 3,405,251.53 13,621,006.12 3,405,251.53
Total 70,367,075.96 13,647,914.79 32,725,057.16 8,181,264.29
SHANDONG CHENMING PAPER HOLDINGS LIMITED 149
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VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
21. Deferred income tax assets/deferred income tax liabilities (Cont’d)
(3) The breakdown of unrecognised deferred income tax assets
Unit: RMB
Item Closing balance Opening balance
Deductible temporary difference 61,132,211.70 10,365,962.12
Deductible loss 680,496,027.54 808,569,643.83
Total 741,628,239.24 818,935,605.95
(4) Expiry of deductible loss of unrecognised deferred income tax assets falls in the years as follows
Unit: RMB
Year Closing balance Opening balance Remark
2023 189,187,446.57
2024 178,453,414.73 178,453,991.84
2025 237,824,072.25 251,671,920.26
2026 117,354,955.05 119,959,990.04
2027 69,296,295.12 69,296,295.12
2028 77,567,290.39
Total 680,496,027.54 808,569,643.83
22. Other non-current assets
Unit: RMB
Closing balance Opening balance
Book Impairment Impairment
Item balance provision Carrying amount Book balance provision Carrying amount
Prepayments for certificates of third party
right 2,612,250.68 2,612,250.68 2,612,250.68 2,612,250.68
Payments for engineering and equipment 1,013,043,454.74 1,013,043,454.74 981,293,657.32 981,293,657.32
Total 1,015,655,705.42 1,015,655,705.42 983,905,908.00 983,905,908.00
150 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
23. Short-term borrowings
(1) Classification of short-term borrowings
Unit: RMB
Item Closing balance Opening balance
Discounted borrowings 14,310,500,000.00 16,207,640,000.00
Credit borrowings 9,770,481,878.49 9,613,884,197.48
Guaranteed borrowings 9,411,256,447.63 9,757,184,167.65
Pledged borrowings 1,389,288,800.16 741,339,929.89
Mortgage borrowings 65,000,000.00 65,000,000.00
Total 34,946,527,126.28 36,385,048,295.02
Explanation of the classification of short-term borrowings:
For classification and amount of pledged borrowings and mortgage assets, please see 1. Monetary funds
and 63. Assets with restricted ownerships or right to use in Note VII.
For classification and amount of mortgage borrowings and mortgage assets, please see 1. Monetary funds
and 63. 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 accrued interest of RMB18,290,191.17.
24. Bills payable
Unit: RMB
Category Closing balance Opening balance
Commercial acceptance bills 2,326,739,583.28 1,922,361,633.83
Bank acceptance bills 1,204,064,210.33 1,206,234,201.21
Total 3,530,803,793.61 3,128,595,835.04
Total outstanding bills payable due as at the end of the period amounted to RMB0.00.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 151
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VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
25. Accounts payable
(1) Particulars of accounts payable
Unit: RMB
Item Closing balance Opening balance
Payment for goods 3,451,530,854.53 3,619,549,023.04
Payment for engineering 183,561,582.14 146,144,102.25
Payment for equipment 105,349,826.86 100,493,461.51
Others 231,640,364.01 248,780,180.96
Total 3,972,082,627.54 4,114,966,767.76
(2) Disclosure by ageing
Unit: RMB
Ageing Closing balance Opening balance
Within 1 year (including 1 year) 3,640,462,482.19 3,746,315,716.20
1 to 2 years 91,931,628.46 98,287,651.12
2 to 3 years 32,304,508.59 52,080,919.33
Over 3 years 207,384,008.30 218,282,481.11
Total 3,972,082,627.54 4,114,966,767.76
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
Item Closing balance or 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
MILLTEXS.P.A 13,788,818.45 Not due for payment
Zhejiang Jndia Pipeline Industry Co., Ltd. 11,477,155.91 Not due for payment
Voith Germany 5,410,815.85 Not due for payment
Total 73,582,284.55
152 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
26. Receipts in advance
(1) Particulars of receipts in advance
Unit: RMB
Item Closing balance Opening balance
Prepaid rents and property fees 12,959,619.33 14,261,436.67
Total 12,959,619.33 14,261,436.67
27. Contract liabilities
Unit: RMB
Item Closing balance Opening balance
Payment for goods in advance 1,629,061,591.45 1,306,029,389.80
Total 1,629,061,591.45 1,306,029,389.80
28. Staff remuneration payables
(1) Particulars of staff remuneration payables
Unit: RMB
Increase Decrease
Opening during during Closing
Item balance the period the period balance
I. Short-term remuneration 99,353,543.41 535,303,722.87 545,954,477.69 88,702,788.59
II. Retirement benefit plan-defined
contribution scheme 45,572,343.59 101,013,727.12 120,486,831.35 26,099,239.36
III. Termination benefits 1,065,471.76 1,065,471.76
IV. Other benefits due within one year
Total 144,925,887.00 637,382,921.75 667,506,780.80 114,802,027.95
SHANDONG CHENMING PAPER HOLDINGS LIMITED 153
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VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
28. Staff remuneration payables (Cont’d)
(2) Particulars of short-term remuneration
Unit: RMB
Decrease
Increase during during
Item Opening balance the period the period Closing balance
1. Salaries, bonuses, allowance and subsidies 84,374,864.77 409,233,898.71 422,708,539.58 70,900,223.90
2. Staff welfare 24,252,540.07 24,252,540.07 331,036.18
3. Social insurance premium 4,072,690.50 53,322,211.30 50,963,905.10 6,430,996.70
Of which: Medical insurance premium 669,598.55 48,618,545.65 47,989,841.92 1,298,302.28
Work-related injury insurance premium 2,514,203.46 3,825,280.09 2,082,524.61 4,256,958.94
Maternity insurance premium 888,888.49 878,385.56 891,538.57 875,735.48
4. Housing provident funds 7,500,937.80 34,025,150.85 35,678,548.44 5,847,540.21
5. Union funds and workers’ education 463,017.47 9,311,206.98 6,993,594.83 2,780,629.62
6. Other short-term remuneration 2,942,032.87 5,158,714.96 5,357,349.67 2,743,398.16
Total 99,353,543.41 535,303,722.87 545,954,477.69 88,702,788.59
(3) Defined contribution plan
Unit: RMB
Increase Decrease
Opening during during Closing
Item balance the period the period balance
1. Basic pension insurance premiums 43,615,129.42 97,229,819.35 117,696,173.02 23,148,775.75
2. Unemployment insurance premiums 1,957,214.17 3,783,907.77 2,790,658.33 2,950,463.61
3. Enterprise annuity payment
Total 45,572,343.59 101,013,727.12 120,486,831.35 26,099,239.36
154 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
29. Tax payables
Unit: RMB
Item Closing balance Opening balance
Value added tax 51,105,204.81 128,305,607.36
Property tax 25,501,429.87 34,531,806.76
Enterprise income tax 21,447,951.95 51,538,384.55
Stamp duty 11,048,346.40 12,987,679.08
Land use tax 8,976,877.20 10,659,878.19
Environmental protection tax 3,898,266.33 3,674,817.23
Resource tax 3,000,000.00 3,500,000.00
Urban maintenance and construction tax 2,798,467.11 5,069,014.46
Educational surcharges and others 2,337,703.88 3,955,412.99
Land appreciation tax 2,024,028.20 2,024,028.20
Individual income tax 1,991,470.99 4,765,040.27
Total 134,129,746.74 261,011,669.09
30. Other payables
Unit: RMB
Item Closing balance Opening balance
Other payables 2,059,334,576.71 1,854,507,978.66
Interest payable 15,895,930.51
Total 2,059,334,576.71 1,870,403,909.17
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VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
30. Other payables (Cont’d)
(1) Other payables
1) Other payables by nature
Unit: RMB
Item Closing balance Opening balance
Deposit 791,373,992.08 788,792,126.26
Open credit 703,492,005.81 490,279,690.52
Accrued expenses 355,747,871.50 355,492,234.45
The obligation to repurchase shares under the share
incentive scheme 129,112,395.74 129,112,395.74
Others 79,608,311.58 90,831,531.69
Total 2,059,334,576.71 1,854,507,978.66
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 136,000,000.00 Not due for payment
Co., Ltd.
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
(2) Interest payable
Unit: RMB
Item Closing balance Opening balance
Interest on corporate bonds 15,895,930.51
Total 15,895,930.51
156 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
31. Non-current liabilities due within one year
Unit: RMB
Item Closing balance Opening balance
Long-term payables due within one year 2,507,044,660.93 2,398,150,298.72
Long-term borrowings due within one year 1,641,025,533.78 1,920,748,225.56
Bonds payable due within one year 350,000,000.00
Lease liabilities due within one year 4,606,717.58 4,606,717.58
Total 4,152,676,912.29 4,673,505,241.86
32. Long-term borrowings
(1) Types of long-term borrowings
Unit: RMB
Item Closing balance Opening balance
Mortgage borrowings 4,262,402,572.55 3,118,508,092.17
Credit borrowings 1,362,804,500.00 1,405,855,117.94
Guaranteed borrowings 911,364,765.59 1,378,621,266.53
Less: Long-term borrowings due within one year 1,641,025,533.78 1,920,748,225.56
Total 4,895,546,304.36 3,982,236,251.08
Explanation of the types of long-term borrowings:
For classification and amount of mortgage assets of mortgage borrowings, please see 63. Assets with
restricted ownerships or right to use in Note VII;
Long-term borrowings included accrued interest of RMB14,309,265.59.
33. Bonds payable
(1) Bonds payable
Unit: RMB
Item Closing balance Opening balance
18 Chenming Bond 01 – Chenming Group
Total
SHANDONG CHENMING PAPER HOLDINGS LIMITED 157
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VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
33. Bonds payable (Cont’d)
(2) Increase/decrease in bonds payable (excluding other financial instruments such as preference shares and
Perpetual Bonds classified as financial liabilities)
Unit: RMB
Issue Amortisation Redemption
Date of during the Interest at of premium/ during the Closing
Bond name Par value issue Term Amount Opening balance period par value discount period balance
18 Chenming Bond 01 –
Chenming Group 350,000,000.00 2018-4-2 5 years 350,000,000.00 350,000,000.00 15,895,930.51 365,895,930.51
Subtotal 350,000,000.00 350,000,000.00 15,895,930.51 365,895,930.51
Less: Bonds payable due within
one year 350,000,000.00
Total 350,000,000.00 15,895,930.51 365,895,930.51
34. Lease liabilities
Unit: RMB
Item Closing balance Opening balance
Lease payments payable 72,538,903.11 76,929,509.38
Less: Unrecognised financing expenses 18,643,391.69 18,726,744.34
Subtotal 53,895,511.42 58,202,765.04
Less: Lease liabilities due within one year 4,606,717.58 4,606,717.58
Total 49,288,793.84 53,596,047.46
158 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
35. Long-term payables
Unit: RMB
Item Closing balance Opening balance
Long-term payables 2,840,065,362.58 3,160,771,126.31
Total 2,840,065,362.58 3,160,771,126.31
(1) By nature
Unit: RMB
Item Closing balance Opening balance
Financial leasing 4,785,829,789.29 4,928,891,190.81
China Development Bank Special Fund 343,750,000.00 412,500,000.00
Contributions by other partners 211,530,234.22 211,530,234.22
Retention for the financial leasing operations 6,000,000.00 6,000,000.00
Subtotal 5,347,110,023.51 5,558,921,425.03
Less: Long-term payables due within one year 2,507,044,660.93 2,398,150,298.72
Total 2,840,065,362.58 3,160,771,126.31
36. Deferred income
Unit: RMB
Increase during Decrease during
Item Opening balance the period the period Closing balance Reason
Government grants 1,469,230,468.46 82,410,962.30 1,386,819,506.16 Financial provision
Total 1,469,230,468.46 82,410,962.30 1,386,819,506.16
SHANDONG CHENMING PAPER HOLDINGS LIMITED 159
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VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
36. Deferred income (Cont’d)
Items in respect of government grants:
Unit: RMB
New grants Include in
Opening during the other income Other Closing Asset-related/
Liability item balance period for the period changes balance income-related
Funding for environmental protection 576,455,283.80 26,522,207.20 549,933,076.60 Asset-related government
grants
Huanggang forestry-pulp-paper project 470,994,523.05 12,513,108.90 458,481,414.15 Asset-related government
grants
Infrastructure and environmental protection 208,320,966.69 5,758,794.72 202,562,171.97 Asset-related government
engineering grants
Financial subsidies for technological 132,614,525.64 34,821,957.48 97,792,568.16 Asset-related government
transformation project grants
Zhanjiang forestry-pulp-paper project 46,711,964.27 2,047,316.46 44,664,647.81 Asset-related government
grants
Project fund for National Key Technology 958,425.00 82,350.00 876,075.00 Asset-related government
Research and Development Program grants
Others 33,174,780.01 665,227.54 32,509,552.47 Asset-related government
grants
Total 1,469,230,468.46 82,410,962.30 1,386,819,506.16
37. Share capital
Unit: RMB
Increase/decrease during the year (+/-)
Shares
converted from
Opening balance New issue Bonus issue reserves Others Subtotal Closing balance
Total number of shares 2,979,742,200.00 2,979,742,200.00
38. Other equity instruments
(1) Perpetual Bonds outstanding at the end of the period
Unit: RMB
Maturity date
Outstanding financial Year of Accounting Dividend or or renewal Condition for
instruments issuance classification interest rate Issue price Issue size Amount status conversion Conversion
17 Lu Chenming MTN001 2017 Equity 8.97% 100.00 10,000,000.00 1,000,000,000.00 No defined Nil Non-convertible
instrument maturity date
Total 10,000,000.00 1,000,000,000.00
160 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
38. Other equity instruments (Continued)
(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 – Perpetual Bonds.
39. Capital reserves
Unit: RMB
Increase during Decrease during
Item Opening balance the period the period Closing balance
Capital premium (share premium) 4,604,712,413.16 4,604,712,413.16
Other capital reserves 756,488,109.13 27,467,521.92 729,020,587.21
Total 5,361,200,522.29 27,467,521.92 5,333,733,000.37
Other explanations, including changes (increase or decrease) during the period and reasons for such changes:
Based on the performance in the first half of 2023, the management of the Company estimated that the performance
indicators for 2023 cannot be fulfilled, and the corresponding third batch of the 30% Restricted Shares cannot be
unlocked. Accordingly, the capital reserve of RMB27,467,521.92 recognised in previous years was written off according
to the cancellation treatment.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 161
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VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
40. Treasury shares
Unit: RMB
Increase during Decrease during
Item Opening balance the period the period Closing balance
Share incentive 128,780,100.00 128,780,100.00
Total 128,780,100.00 128,780,100.00
41. 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
to profit and loss in subsequent periods -821,940,694.57 -85,733,908.54 -907,674,603.11
Of which: Other comprehensive income that may be
reclassified to profit or loss under the
equity method -9,916,102.69 2,605,105.12 -7,310,997.57
Translation differences of financial statements
denominated in foreign currency -812,024,591.88 -88,339,013.66 -900,363,605.54
Total other comprehensive income -821,940,694.57 -85,733,908.54 -907,674,603.11
42. General risk reserves
Unit: RMB
Increase during Decrease during
Item Opening balance the period the period Closing balance
General risk reserves 79,900,268.71 79,900,268.71
Total 79,900,268.71 79,900,268.71
43. Special reserves
Unit: RMB
Increase during Decrease during
Item Opening balance the period the period Closing balance
Production safety expenses 15,791,710.95 13,373,517.00 9,250,493.46 19,914,734.49
Total 15,791,710.95 13,373,517.00 9,250,493.46 19,914,734.49
162 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
44. Surplus reserves
Unit: RMB
Increase during Decrease during
Item Opening balance the period the period Closing balance
Statutory surplus reserves 1,212,009,109.97 1,212,009,109.97
Total 1,212,009,109.97 1,212,009,109.97
45. Retained profit
Unit: RMB
Item The period The prior period
Retained profit as at the end of the prior year before adjustment 9,390,642,477.57 9,294,126,706.86
Adjustment to opening balance of retained earnings (increase +, decrease -)
Opening balance of retained profit after adjustment 9,390,642,477.57 9,294,126,706.86
Plus: Net profit for the period attributable to shareholders of the parent
company -688,080,164.10 189,290,120.82
Less: Transfer of statutory surplus reserves
Transfer of discretionary surplus reserves
Transfer of general risk reserves 3,074,350.11
Perpetual Bonds interest payable 89,700,000.00
Retained profit as at the end of the period 8,702,562,313.47 9,390,642,477.57
46. Revenue and operating costs
Unit: RMB
Amount for the period Amount for the prior period
Item Revenue Costs Revenue Costs
Principal activities 12,420,935,712.78 11,377,205,194.89 16,170,535,559.24 13,692,044,445.11
Other activities 144,027,068.53 119,526,467.69 505,892,806.59 432,503,804.40
Total 12,564,962,781.31 11,496,731,662.58 16,676,428,365.83 14,124,548,249.51
SHANDONG CHENMING PAPER HOLDINGS LIMITED 163
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VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
46. Revenue and operating costs (Cont’d)
Information related to revenue:
Unit: RMB
Machine-made Hotel and
Category of contract paper Financial services property rentals Others Total
Type of goods 12,065,096,786.14 90,836,358.97 118,740,344.32 290,289,291.88 12,564,962,781.31
Including:
Machine-made paper 11,300,765,054.86 11,300,765,054.86
Chemical pulp 240,438,232.65 240,438,232.65
Processing of moulds 100,217,749.88 100,217,749.88
Electricity and steam 120,561,393.77 120,561,393.77
Construction materials 106,371,211.95 106,371,211.95
Paper chemicals 60,607,594.98 60,607,594.98
Hotel and property rentals 109,744,705.55 109,744,705.55
Others 342,724,509.88 90,836,358.97 8,995,638.77 83,700,330.05 526,256,837.67
By geographical area 12,065,096,786.14 90,836,358.97 118,740,344.32 290,289,291.88 12,564,962,781.31
Including:
Mainland China 8,691,224,985.35 90,836,358.97 118,740,344.32 290,289,291.88 9,191,090,980.52
Other countries and regions 3,373,871,800.79 3,373,871,800.79
By the timing of delivery 12,065,096,786.14 90,836,358.97 118,740,344.32 290,289,291.88 12,564,962,781.31
Including:
Goods (at a point in time) 11,932,557,803.64 6,317,579.78 290,105,088.62 12,228,980,472.04
Services (within a certain period) 120,561,393.77 90,836,358.97 107,856,141.55 319,253,894.29
Leasing income 11,977,588.73 4,566,622.99 184,203.26 16,728,414.98
Information related to the transaction price allocated to residual performance obligations:
At the end of the reporting period, the amount of revenue with signed contracts but unfulfilled or uncompleted
performance obligation was RMB2, 675,475,342.05, which was expected to be recognised in 2023.
164 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
47. Taxes and surcharges
Unit: RMB
Amount for Amount for
Item the period the prior period
Property tax 43,867,342.48 41,715,466.80
Stamp duty 20,624,364.19 24,637,949.80
Land use tax 17,689,934.66 4,547,575.80
Water resource tax 7,866,553.80 5,678,351.10
Environmental protection tax 6,474,664.23 6,793,722.79
Urban maintenance and construction tax 5,065,031.72 17,218,814.49
Educational surcharges and local education surcharge 3,832,275.95 11,612,306.79
Water conservation funds 375,223.40 350,123.53
Vehicle and vessel tax 22,420.06 1,998,845.57
Cultural undertaking development tax 1,528,301.88
Land appreciation tax 27,432.00
Total 105,817,810.49 116,108,890.55
48. Selling and distribution expenses
Unit: RMB
Amount for Amount for
Item the period the prior period
Wages and surcharges 50,366,970.26 72,692,606.41
Business hospitality expenses 23,235,804.11 22,786,567.81
Travel expenses 12,003,217.19 8,535,839.64
Selling commissions 3,387,483.92 6,883,405.06
Rental expenses 3,238,179.10 2,478,458.25
Depreciation expenses 2,820,127.76 5,541,590.42
Office expenses 1,137,272.19 1,108,123.52
Warehouse expenses 429,220.85 503,789.82
Others 10,048,442.16 17,525,382.72
Total 106,666,717.54 138,055,763.65
SHANDONG CHENMING PAPER HOLDINGS LIMITED 165
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VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
49. General and administrative expenses
Unit: RMB
Amount for Amount for
Item the period the prior period
Wages and surcharges 118,217,373.00 113,861,878.26
Depreciation expenses 44,973,785.82 47,710,740.44
Hospitality expenses 44,140,876.01 38,886,989.85
Welfare expenses 31,454,087.17 35,507,840.57
Amortisation of intangible assets 23,286,773.73 25,828,580.24
Insurance premium 9,440,871.93 9,449,472.17
Repair fees 9,337,357.64 9,615,210.77
Others 47,445,099.56 72,306,683.24
Total 328,296,224.86 353,167,395.54
50. R&D expenses
Unit: RMB
Amount for Amount for
Item the period the prior period
Consumption of raw materials 366,319,485.67 453,243,553.84
Utilities 75,235,547.39 105,357,973.18
Wages and surcharges 66,209,728.31 76,633,329.10
Depreciation expenses 23,682,873.40 23,781,607.53
Insurance premium 13,868,772.48 15,220,882.81
Welfare expenses 3,443,387.62 4,712,671.38
Housing provident funds 2,384,161.81 2,698,047.92
Other expenses 1,660,871.90 1,866,495.17
Total 552,804,828.58 683,514,560.93
51. Finance expenses
Unit: RMB
Amount for Amount for
Item the period the prior period
Interest expenses 856,872,614.18 991,475,816.56
Less: capitalised interest amount
Interest income 94,532,686.92 150,582,370.85
Foreign exchange gains and losses -34,863,785.35 -21,746,160.65
Less: Capitalisation of foreign exchange gains and losses
Bank charges and others 122,050,778.14 201,887,319.60
Total 849,526,920.05 1,021,034,604.66
166 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
52. 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 82,410,962.30 52,355,943.37
Government grants – directly included in profit or loss 25,744,734.89 96,908,668.31
Total 108,155,697.19 149,264,611.68
53. 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 23,934,269.81 26,616,556.58
Investment gain on disposal of long-term equity investments 6,812.52
Investment income on holding financial assets held for trading and
other non-current financial assets 630,212.77 6,301,220.33
Investment gain on derecognition of financial assets -67,175,214.10 -56,307,959.46
Gain on debt restructuring -145,995.36 -754,806.87
Total -42,756,726.88 -24,138,176.90
54. 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 -25,565,577.25 -62,122,863.58
Gain on change in fair value of consumable biological assets measured
at fair value 5,749,779.42 3,309,448.09
Total -19,815,797.83 -58,813,415.49
55. Credit impairment loss
Unit: RMB
Amount for Amount for
Item the period the prior period
Bad debt loss of accounts receivable -43,081,750.88 -25,363,341.17
Total -43,081,750.88 -25,363,341.17
SHANDONG CHENMING PAPER HOLDINGS LIMITED 167
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VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
56. 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 -43,314,485.76 1,936,644.09
Total -43,314,485.76 1,936,644.09
57. Asset disposal income
Unit: RMB
Amount for Amount for
Source of asset disposal income the period the prior period
Gain on disposal of fixed assets (“-” denotes loss) 11,759,266.91 1,605,314.49
Total 11,759,266.91 1,605,314.49
58. 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
Gain on damage and retirement of non-current
assets 433,184.77 23,874.29 433,184.77
Fine income 323,305.00 215,595.32 318,305.00
Exempted debts 12,888.00 11,345.80 12,888.00
Others 171,427.53 842,613.92 176,427.53
Total 940,805.30 1,093,429.33 940,805.30
59. Non-operating expenses
Unit: RMB
Amount included in
extraordinary gains
Amount for Amount for or losses for
Item the period the prior period the period
Loss on damage and retirement of non-current
assets 3,074,424.63 5,557,464.33 3,074,424.63
Default penalty 4,626,610.27
Donation 5,000.00
Others 63,765.43 13,665.00 63,765.43
Total 3,138,190.06 10,202,739.60 3,138,190.06
168 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
60. 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 22,508,021.82 51,225,155.03
Deferred income tax expenses -233,999,203.96 -49,846,428.34
Total -211,491,182.14 1,378,726.69
(2) Reconciliation between accounting profit and income tax expenses
Unit: RMB
Amount for
Item the period
Total profit -906,132,564.80
Income tax expenses calculated at statutory/applicable tax rates -135,919,884.72
Effect of different tax rates applicable to subsidiaries 27,248,703.09
Effect of adjustments for income tax for prior periods 9,207,371.67
Profit and loss of joint ventures and associates accounted for using the equity method -3,590,140.47
Effect of income not subject to tax -4,055,086.68
Non-deductible costs, expenses and losses 7,486,299.55
Effect of utilisation of previously unrecognised deductible loss on deferred income
tax assets -44,216,260.65
Effect of current unrecognised deductible temporary difference or deductible loss
arising from deferred tax income assets 23,986,101.00
Tax effect of R&D fee deduction (listed with“-”) -79,940,345.85
Tax incentives such as equipment credits -11,697,939.08
Income tax expense -211,491,182.14
61. Items on statements of cash flow
(1) Cash received relating to other operating activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Net proceedings from the financial leasing business 638,037,439.53 125,816,344.91
Interest income 96,517,182.23 147,503,480.13
Government support fund 16,978,364.27 94,023,387.98
Open credit and other income 128,779,296.53 466,613,154.78
Total 880,312,282.56 833,956,367.80
SHANDONG CHENMING PAPER HOLDINGS LIMITED 169
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VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
61. Items on statements of cash flow (Cont’d)
(2) Cash paid relating to other operating activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Expenses and open credit 802,664,900.20 998,576,421.97
Total 802,664,900.20 998,576,421.97
(3) Cash received relating to other financing activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Equipment sale and leaseback 1,122,264,589.15 2,068,410,644.82
Recovery of deposit for financial leasing 6,000,000.00 10,500,000.00
Total 1,128,264,589.15 2,078,910,644.82
(4) Cash paid relating to other financing activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Repayment of equipment sale and leaseback 1,376,861,062.23 961,427,794.77
Repayment of bonds 350,000,000.00 1,078,685,100.00
Increase of restricted bank deposits 97,308,709.84 992,161,166.63
Payment for equity in China Development Bank funds 68,750,000.00 27,500,000.00
Payment for finance lease deposits 49,250,000.00 51,000,000.00
Purchase or repayment of short-term commercial paper and MTNs 200,000,000.00
Total 1,942,169,772.07 3,310,774,061.40
170 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
62. 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 -694,641,382.66 274,002,500.73
Plus: Provision for impairment of assets 86,396,236.64 23,426,697.08
Depreciation of fixed assets, depletion of oil and gas
assets, and depreciation of bearer biological assets and
investment property 1,128,930,791.82 1,138,180,403.64
Depreciation of right-of-use assets 3,572,130.01 3,916,179.79
Amortisation of intangible assets 26,601,501.33 28,127,606.73
Amortisation of long-term prepaid expenses 2,970,626.13 2,055,896.23
Loss on disposal of fixed assets, intangible assets and
other long-term assets (“-” denotes gain) -11,759,266.91 -1,605,314.49
Loss on retirement of fixed assets (“-” denotes gain) 2,641,239.86 5,533,590.04
Loss on changes in fair value (“-” denotes gain) 19,815,797.83 58,813,415.49
Finance expenses (“-” denotes gain) 856,872,614.18 991,475,816.56
Investment loss (“-” denotes gain) 42,756,726.88 24,138,176.90
Decrease in deferred income tax assets
(“-” denotes increase) -226,570,060.35 -49,397,297.55
Increase in deferred income tax liabilities
(“-” denotes decrease) 5,466,650.50 -449,130.79
Decrease in inventories (“-” denotes increase) 35,683,655.24 -105,936,523.16
Decrease in operating receivables (“-” denotes increase) 643,109,345.71 -1,497,590,484.79
Increase in operating payables (“-” denotes decrease) -138,758,858.62 103,572,677.04
Others
Net cash flows from operating activities 1,783,087,747.59 998,264,209.45
2. Major investing and financing activities not involving cash
settlements:
Capital converted from debts
Convertible corporate bonds due within one year
Finance leases of fixed assets
3. Net change in cash and cash equivalents:
Closing balance of cash 1,842,769,494.26 3,142,606,091.96
Less: Opening balance of cash 2,159,460,149.51 3,168,915,847.02
Plus: Closing balance of cash equivalents
Less: Opening balance of cash equivalents
Net increase in cash and cash equivalents -316,690,655.25 -26,309,755.06
SHANDONG CHENMING PAPER HOLDINGS LIMITED 171
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VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
62. Supplementary information on cash flow statement (Cont’d)
(2) Net cash of acquisition subsidiaries paid in current period
Unit: RMB
Amount
Cash or cash equivalents paid in the current period for business combinations that
occurred during the period 5,400,000.00
Of which:
Less: Cash and cash equivalents held by the subsidiary on the acquisition date 465,248.97
Of which:
Plus: Cash or cash equivalents paid in the current period for business combinations that
occurred during previous periods
Of which:
Net cash paid for acquisition of subsidiaries 4,934,751.03
(3) Cash and cash equivalents composition
Unit: RMB
Item Closing balance Opening balance
I. Cash 1,842,769,494.26 2,159,460,149.51
Of which: Treasury cash 3,577,158.84 3,491,219.08
Bank deposit that can be used for payment at any time 1,839,192,335.42 2,155,968,930.43
II. Cash equivalents
Of which: Bond investment with maturity within 3 months
III. Balance of cash and cash equivalent at end of period 1,842,769,494.26 2,159,460,149.51
63. Assets with restricted ownerships or right to use
Unit: RMB
Closing
Item carrying amount Reasons for such restriction
Monetary funds 11,912,761,370.57 As deposits for bank acceptance bills and letters of credit,
security deposits for loans, deposit reserves, interest
receivable, etc. (Note VII. 1)
Fixed assets 5,380,577,035.38 As collateral for bank borrowings and long-term payables
(Note VII. 14)
Investment property 4,754,893,839.15 As collateral for bank borrowings (Note VII. 13)
Intangible assets 550,003,479.41 As collateral for bank borrowings and long-term payables
(Note VII. 18)
Accounts receivable 188,497,651.34 As collateral for borrowings (Note VII. 3)
Total 22,786,733,375.85
172 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
64. 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 50,971,917.74 7.2258 368,312,883.21
EUR 2,777,106.44 7.8771 21,875,545.14
HKD 1,026,323.52 0.9220 946,270.29
GBP 1,648.02 9.1432 15,068.18
JPY 1,197.00 0.0501 59.97
Accounts receivables
Of which: USD 18,584,628.34 7.2258 134,288,807.46
EUR 8,855,976.60 7.8771 69,759,413.28
JPY 146,734,998.00 0.0501 7,351,423.40
Accounts payable
Of which: USD 95,242,773.80 7.2258 688,205,234.92
EUR 1,196,397.65 7.8771 9,424,143.93
JPY 187,909.00 0.0501 9,414.24
Other receivables
Of which: USD 8,727.39 7.2258 63,062.37
EUR 69,241.34 7.8771 545,420.96
Other payables
Of which: USD 1,377,668.71 7.2258 9,954,758.56
EUR 1,488,642.25 7.8771 11,726,183.87
JPY 8,800.00 0.0501 440.88
Short-term borrowings
Of which: USD 12,697,585.99 7.2258 91,750,216.85
EUR 382,900.00 7.8771 3,016,141.59
(2) Explanation on overseas operating entities (including major overseas operating entities), which shall disclose
their overseas principal places of business, functional currency and basis. Reasons shall be disclosed if there
is any change in the functional currency.
√ Applicable Not applicable
Principal place of Place of Functional
No. Name of subsidiary business incorporation currency
1 Chenming GmbH Hamburg, Germany Hamburg, Germany EUR
2 Chenming Paper Korea Co., Ltd. Seoul, Korea Seoul, Korea KRW
3 Chenming International Co., Ltd. Los Angeles, USA Los Angeles, USA USD
4 Chenming Paper Japan Co., Ltd. Tokyo, Japan Tokyo, Japan JPY
5 Chenming Paper United States Co., Ltd. Los Angeles, USA Los Angeles, USA USD
6 Chenming (Overseas) Limited Hong Kong, China Hong Kong, China USD
7 Chenming (Singapore) Limited Singapore Singapore USD
8 Chenming (HK) Limited Hong Kong, China Hong Kong, China USD
SHANDONG CHENMING PAPER HOLDINGS LIMITED 173
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VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
65. Government grants
(1) General information of government grants
Unit: RMB
Amount included in
the current profit
Type Amount Reporting item and loss
Funding for environmental protection 549,933,076.60 Deferred income 26,522,207.20
Huanggang forestry-pulp-paper project 458,481,414.15 Deferred income 12,513,108.90
Infrastructure and environmental protection
engineering 202,562,171.97 Deferred income 5,758,794.72
Financial subsidies for technological
transformation project 97,792,568.16 Deferred income 34,821,957.48
Zhanjiang forestry-pulp-paper project 44,664,647.81 Deferred income 2,047,316.46
Project Funding for National Key Technology
Research and Development Program 876,075.00 Deferred income 82,350.00
Others 32,509,552.47 Deferred income 665,227.54
Subsidies for foreign trade projects 10,833,800.00 Other income 10,833,800.00
Government rewards 7,220,880.00 Other income 7,220,880.00
Immediate VAT refund 3,186,241.18 Other income 3,186,241.18
Refund of tax 2,877,613.59 Other income 2,877,613.59
Enterprise reform and development subsidies 612,000.00 Other income 612,000.00
Afforestation subsidy 459,000.12 Other income 459,000.12
Financial subsidies for technological
transformation project 370,000.00 Other income 370,000.00
Funding for environmental protection 72,000.00 Other income 72,000.00
Employment expansion subsidies 52,000.00 Other income 52,000.00
Employment stabilisation subsidies 9,500.00 Other income 9,500.00
Others 51,700.00 Other income 51,700.00
Total 1,412,564,241.05 108,155,697.19
174 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VIII. Change in Scope of Consolidation
1. Business combination not under common control
(1) Business combination not under common control during the current period
Unit: RMB
The income of The net profit
acquiree from of acquiree
The basis for the date of from the date
Date of Consideration The way of determining acquisition to of acquisition
acquiring the for acquiring Shareholding acquiring the Acquisition the date of the end of the to the end of
Acquiree shareholding the shareholding ratio acquired shareholding date acquisition period the period
Jiangxi Chenming Port Co., Ltd. 2023.3.31 5,400,000.00 100.00% Acquisition 2023.3.31 Control 2,501,184.09 899,011.43
(2) Cost of combination and goodwill
Unit: RMB
Jiangxi Chenming
Cost of combination Port Co., Ltd.
– Cash 5,400,000.00
– Fair value of non-cash assets
– Fair value of debt issued or assumed
– Fair value of equity securities issued
– Fair value of contingent consideration
– Fair value of the equity held before the acquisition date on the acquisition date
– Others
Total cost of combination 5,400,000.00
Less: the interest in the fair value of the identifiable net assets acquired -2,873,638.42
Amount of goodwill/cost of combination being less than the interest in the fair
value of the identifiable net assets acquired 8,273,638.42
SHANDONG CHENMING PAPER HOLDINGS LIMITED 175
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VIII. Change in Scope of Consolidation (Cont’d)
1. Business combination not under common control (Cont’d)
(3) Acquiree’s identifiable assets or liabilities as at the acquisition date
Unit: RMB
Jiangxi Chenming Port Co., Ltd.
Fair value as at Carrying amount as at
the acquisition date the acquisition date
Assets: 183,176,943.51 85,831,727.82
Monetary funds 465,248.97 465,248.97
Accounts receivable 3,537,419.24 3,537,419.24
Long-term equity investment 59,345,429.05 2,450,000.00
Fixed assets 111,076,981.66 74,175,345.69
Intangible assets 8,486,760.00 4,938,609.33
Liabilities: 186,050,581.93 186,050,581.93
Borrowings
Accounts payable 179,009,234.83 179,009,234.83
Deferred income tax liabilities 6,067,468.00 6,067,468.00
Net assets -2,873,638.42 -100,218,854.11
Less: minority interest
Net assets acquired -2,873,638.42 -100,218,854.11
IX. Interest in Other Entities
1. Interest in subsidiaries
(1) Constitution of the Group
Principle place Place of Nature of Type of legal Shareholding Issued debt Issued share
Name of subsidiary of business incorporation business person Direct Indirect Acquisition securities capital
Shouguang Meilun Paper Co., Ltd. Shouguang Shouguang Paper making For-profit corporation 62.49% Establishment 0 0
Shouguang Meichen Energy Shouguang Shouguang Electricity For-profit corporation 100% Establishment 0 0
Technology Co., Ltd.
Shouguang Chenming Art Paper Shouguang Shouguang Paper making For-profit corporation 75% Establishment 0 0
Co., Ltd.
Shandong Chenming Paper Sales Shouguang Shouguang Sales of paper For-profit corporation 100% Establishment 0 0
Co., Ltd. product
Shanghai Chenming Pulp & Paper Shanghai Shanghai Paper product For-profit corporation 100% Establishment 0 0
Sales Co., Ltd. trading
Shouguang Chenming Import and Shouguang Shouguang Trading For-profit corporation 100% Establishment 0 0
Export Trade Co., Ltd.
Jiangxi Chenming Supply Chain Jiangxi Jiangxi Trading For-profit corporation 70% Establishment 0 0
Management Co., Ltd.
Zhanjiang Chenming Pulp & Paper Zhanjiang Zhanjiang Paper making For-profit corporation 82.67% Establishment 0 0
Co., Ltd.
Zhanjiang Chenming Arboriculture Zhanjiang Zhanjiang Arboriculture For-profit corporation 100% Establishment 0 0
Development Co., Ltd.
176 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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IX. Interest in other entities (Cont’d)
1. Interest in subsidiaries (Cont’d)
(1) Constitution of the Group (Cont’d)
Principle place Place of Nature of Type of legal Shareholding Issued debt Issued share
Name of subsidiary of business incorporation business person Direct Indirect Acquisition securities capital
Yangjiang Chenming Arboriculture Yangjiang Yangjiang Arboriculture For-profit corporation 100% Establishment 0 0
Development Co., Ltd.
Guangdong Huirui Investment Co., Zhanjiang Zhanjiang Investment For-profit corporation 100% Establishment 0 0
Ltd.
Hubei Changjiang Chenming Huanggang Huanggang Fund For-profit corporation 59.97% Establishment 0 0
Huanggang Equity Investment
Fund Partnership (Limited
Partnership)
Hainan Chenming Technology Co., Haikou Haikou Wholesale and retail For-profit corporation 100% Establishment 0 0
Ltd.
Foshan Chenming Import and Foshan Foshan Trading For-profit corporation 100% Establishment 0 0
Export Trade Co., Ltd.
Shanghai Herui Investment Co., Ltd. Shanghai Shanghai Business services For-profit corporation 100% Merger and 0 0
acquisition
Zhanjiang Chenming Port Co., Ltd. Zhanjiang Zhanjiang Port services For-profit corporation 100% Establishment 0 0
Zhanjiang Meilun Pulp & Paper Co., Zhanjiang Zhanjiang Paper making For-profit corporation 100% Establishment 0 0
Ltd.
Guangdong Chenming Panels Co., Guangdong Guangdong Panels For-profit corporation 100% Establishment 0 0
Ltd.
Jiangxi Chenming Tea Co., Ltd. Jiangxi Jiangxi Tea business For-profit corporation 100% Establishment 0 0
Jiangxi Chenming Paper Co., Ltd. Nanchang Nanchang Paper making For-profit corporation 100% Establishment 0 0
Jiangxi Chenming Logistics Co., Ltd. Nanchang Nanchang Logistics For-profit corporation 100% Establishment 0 0
Nanchang Shengheng Trading Co., Nanchang Nanchang Trading For-profit corporation 100% Establishment 0 0
Ltd.
Nanchang Kunheng Trading Co., Nanchang Nanchang Trading For-profit corporation 100% Establishment 0 0
Ltd.
Nanchang Chenming Arboriculture Nanchang Nanchang Arboriculture For-profit corporation 100% Establishment 0 0
Development Co., Ltd.
Jiangxi Chenming Port Co., Ltd. Jiangxi Jiangxi Cargo transportation For-profit corporation 100% Acquisition 0 0
Wuhan Chenming Hanyang Paper Wuhan Wuhan Paper making For-profit corporation 65.21% 34.64% Establishment 0 0
Holdings Co., Ltd.
Wuhan Chenming Qianneng Electric Wuhan Wuhan Thermal power For-profit corporation 51% Establishment 0 0
Power Co., Ltd.
Shandong Dingkun Asset Shouguang Shouguang Business services For-profit corporation 100% Establishment 0 0
Management Partnership (Limited
Partnership)
Jilin Chenming Paper Co., Ltd. Jilin Jilin Paper making For-profit corporation 100% Acquisition 0 0
Fuyu Chenming Paper Co., Ltd. Fuyu Fuyu Paper making For-profit corporation 100% Establishment 0 0
Jilin Chenming New-style Wall Jilin Jilin Wall materials For-profit corporation 100% Establishment 0 0
Materials Co., Ltd
Jilin Chenming Logistics Co., Ltd. Jilin Jilin Logistics For-profit corporation 100% Establishment 0 0
Huanggang Chenming Pulp & Paper Huanggang Huanggang Pulp production For-profit corporation 70.15% 29.85% Establishment 0 0
Co., Ltd.
Huanggang Chenming Paper Huanggang Huanggang Paper making For-profit corporation 100% Establishment 0 0
Technology Co., Ltd.
Huanggang Chenming Port Service Huanggang Huanggang Port services For-profit corporation 100% Establishment 0 0
Co., Ltd.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 177
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IX. Interest in other entities (Cont’d)
1. Interest in subsidiaries (Cont’d)
(1) Constitution of the Group (Cont’d)
Principle place Place of Nature of Type of legal Shareholding Issued debt Issued share
Name of subsidiary of business incorporation business person Direct Indirect Acquisition securities capital
Huanggang Chenming Pulp & Fiber Huanggang Huanggang Trading For-profit corporation 100% Establishment 0 0
Trading Co., Ltd.
Hubei Huanggang Chenming Equity Huanggang Huanggang Capital market For-profit corporation 60% Establishment 0 0
Investment Fund Management services
Co., Ltd.
Shandong Chenming Group Finance Jinan Jinan Finance For-profit corporation 80% 20% Establishment 0 0
Co., Ltd.
Chenming (HK) Limited Hong Kong Hong Kong Paper product For-profit corporation 100% Establishment 0 0
trading
Shandong Chenming Financial Jinan Jinan Financial leasing For-profit corporation 100% Establishment 0 0
Leasing Co., Ltd.
Qingdao Chenming Nonghai Qingdao Qingdao Financial leasing For-profit corporation 100% Establishment 0 0
Financial Leasing Co., Ltd
Shanghai Chenming Financial Shanghai Shanghai Financial leasing For-profit corporation 100% Establishment 0 0
Leasing Co., Ltd.
Wuhan Junheng Property Wuhan Wuhan Property For-profit corporation 100% Merger and 0 0
Management Co. Ltd. acquisition
Guangzhou Chenming Property Guangzhou Guangzhou Property For-profit corporation 100% Establishment 0 0
Management Co., Ltd.
Shandong Chenming Investment Jinan Jinan Investment For-profit corporation 100% Establishment 0 0
Limited
Beijing Chenming Financial Leasing Beijing Beijing Financial leasing For-profit corporation 100% Establishment 0 0
Co., Ltd.
Shanxi Fuyin Industrial Trading Co., Taiyuan Taiyuan Wholesale and retail For-profit corporation 100% Acquisition 0 0
Ltd.
Chongmin Culture Development Shanghai Shanghai Leasing and business For-profit corporation 100% Acquisition 0 0
(Shanghai) Co., Ltd. services
Jinan Chenming Paper Sales Co., Jinan Jinan Investment For-profit corporation 100% Establishment 0 0
Ltd. management/
Paper product
trading
Shandong Chenming Commercial Jinan Jinan Business factoring For-profit corporation 100% Establishment 0 0
Factoring Co., Ltd.
Guangzhou Chenming Commercial Guangzhou Guangzhou Business factoring For-profit corporation 51% Establishment 0 0
Factoring Co., Ltd.
Chenming GmbH Germany Germany Paper product For-profit corporation 100% Establishment 0 0
trading
Chenming Paper Japan Co., Ltd. Japan Japan Paper product For-profit corporation 100% Establishment 0 0
trading
Chenming International Co., Ltd. the United States the United States Paper product For-profit corporation 100% Establishment 0 0
trading
Chenming Paper United States Co., the United States the United States Paper product For-profit corporation 100% Establishment 0 0
Ltd. trading
Chenming Paper Korea Co., Ltd. Korea Korea Paper product For-profit corporation 100% Establishment 0 0
trading
Chenming (Overseas) Limited Hong Kong Hong Kong Paper product For-profit corporation 100% Establishment 0 0
trading
Chenming (Singapore) Limited Singapore Singapore Paper product For-profit corporation 100% Establishment 0 0
trading
Meilun (BVI) Limited Cayman Cayman Commerce For-profit corporation 100% Establishment 0 0
Shanghai Chenming Industry Co., Shanghai Shanghai Property investment For-profit corporation 100% Establishment 0 0
Ltd. and management
Shanghai Chenyin Trading Co., Ltd. Shanghai Shanghai Trading For-profit corporation 51% Establishment 0 0
178 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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IX. Interest in other entities (Cont’d)
1. Interest in subsidiaries (Cont’d)
(1) Constitution of the Group (Cont’d)
Principle place Place of Nature of Type of legal Shareholding Issued debt Issued share
Name of subsidiary of business incorporation business person Direct Indirect Acquisition securities capital
Shanghai Hongtai Real Estate Co., Shanghai Shanghai Real estate For-profit corporation 100% Merger and 0 0
Ltd. acquisition
Shanghai Hongtai Property Shanghai Shanghai Property For-profit corporation 100% Merger and 0 0
Management Co., Ltd. acquisition
Shandong Grand View Hotel Co., Shouguang Shouguang Catering For-profit corporation 70% Establishment 0 0
Ltd.
Shouguang Chenming Papermaking Shouguang Shouguang Machinery For-profit corporation 100% Establishment 0 0
Machine Co., Ltd. manufacturing
Shouguang Hongxiang Printing and Shouguang Shouguang Printing and For-profit corporation 100% Acquisition 0 0
Packaging Co., Ltd. packaging
Shouguang Chenming Modern Shouguang Shouguang Transportation For-profit corporation 100% Establishment 0 0
Logistic Co., Ltd.
Shouguang Hongyi Decorative Shouguang Shouguang Packaging For-profit corporation 100% Merger and 0 0
Packaging Co., Ltd. acquisition
Kunshan Tuoan Plastic Products Kunshan Kunshan Rubber and plastic For-profit corporation 100% Merger and 0 0
Co., Ltd. acquisition
Shouguang Xinyuan Coal Co., Ltd. Shouguang Shouguang Coal For-profit corporation 100% Merger and 0 0
acquisition
Shouguang Wei Yuan Logistics Shouguang Shouguang Logistics For-profit corporation 100% Merger and 0 0
Company Limited acquisition
Shouguang City Run Sheng Wasted Shouguang Shouguang Purchase and sale of For-profit corporation 100% Merger and 0 0
Paper Recycle Co., Ltd. waste acquisition
Shouguang Shun Da Customs Shouguang Shouguang Customs declaration For-profit corporation 100% Establishment 0 0
Declaration Co, Ltd.
Huanggang Chenming Arboriculture Huanggang Huanggang Arboriculture For-profit corporation 100% Establishment 0 0
Development Co., Ltd.
Chenming Arboriculture Co., Ltd. Wuhan Wuhan Arboriculture For-profit corporation 100% Establishment 0 0
Hailaer Chenming Paper Co., Ltd. Hailaer Hailaer Paper making For-profit corporation 75% Establishment 0 0
Weifang Chenming Growth Driver Weifang Weifang Fund For-profit corporation 79% Establishment 0 0
Replacement Equity Investment
Fund Partnership (Limited
Partnership)
Weifang Chendu Equity Investment Shouguang Shouguang Capital market For-profit corporation 79.75% Establishment 0 0
Partnership (Limited Partnership) services
Nanjing Chenming Culture Nanjing Nanjing Marketing For-profit corporation 100% Establishment 0 0
Communication Co., Ltd.
(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% 396,368.16 98,249,523.36
Shouguang Meilun Paper Co., Ltd. 37.51% 12,619,413.24 9,419,178.08 2,499,723,544.78
Zhanjiang Chenming Pulp & Paper Co., Ltd. 17.33% -17,281,674.12 1,496,781,680.24
SHANDONG CHENMING PAPER HOLDINGS LIMITED 179
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IX. Interest in Other Entities (Cont’d)
180
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
INTERIM REPORT 2023
X Financial Report
Shouguang Chenming
Art Paper Co., Ltd. 758,835,938.53 439,827,453.86 1,198,663,392.39 800,665,298.98 5,000,000.00 805,665,298.98 592,821,595.68 455,020,296.41 1,047,841,892.09 656,429,271.34 656,429,271.34
Shouguang Meilun
Paper Co., Ltd. 7,406,998,021.31 10,248,738,927.89 17,655,736,949.20 7,928,361,439.11 1,210,968,284.36 9,139,329,723.47 5,271,560,197.74 10,517,781,981.22 15,789,342,178.96 5,706,873,517.18 1,592,276,073.16 7,299,149,590.34
Zhanjiang Chenming
Pulp & Paper Co.,
SHANDONG CHENMING PAPER HOLDINGS LIMITED
Ltd. 13,311,726,510.58 13,133,443,755.93 26,445,170,266.51 15,538,216,860.30 1,736,060,722.95 17,274,277,583.25 12,177,003,083.15 13,209,726,474.81 25,386,729,557.96 14,522,121,479.88 1,696,026,289.09 16,218,147,768.97
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. 307,683,134.58 1,585,472.66 1,585,472.66 98,313,422.22 322,720,534.36 -1,342,438.95 -1,342,438.95 133,667,925.23
Shouguang Meilun Paper Co., Ltd. 4,453,614,876.18 33,639,568.69 33,639,568.69 883,836,062.48 3,956,822,454.56 114,261,960.45 114,261,960.45 1,167,059,642.56
Zhanjiang Chenming Pulp & Paper Co., Ltd. 5,372,507,782.65 -40,134,946.90 -37,529,841.78 813,258,132.16 5,841,511,419.81 181,827,121.84 181,827,121.84 1,308,835,701.84
X Financial Report
IX. Interest in Other Entities (Cont’d)
2. Interest in joint arrangements or associates
(1) Major joint ventures and associates
Accounting
method for
investment in
Principle place Place of Shareholding joint ventures
Name of joint venture and associate of business incorporation Nature of business Direct Indirect or associates
Weifang Port Wood Chip Terminal Co., Ltd. Weifang Weifang Port construction 50.00% Equity method
Shouguang Jintou Industrial Investment
Partnership (Limited Partnership) Shouguang Shouguang Investment 49.57% Equity method
Ningbo Kaichen Huamei Equity Investment
Fund Partnership (Limited Partnership) Ningbo Ningbo Investment management 40.00% Equity method
Zhuhai Dechen New Third Board Equity
Investment Fund Company (Limited
Partnership) Zhuhai Zhuhai Investment management 50.00% Equity method
Goldtrust Futures Co., Ltd. Changsha Changsha Futures 35.43% Equity method
Guangdong Nanyue Bank Co., Ltd. Guangdong Guangdong Banking 6.76% Equity method
(2) Key financial information of major joint ventures
Unit: RMB
Closing balance/ Opening balance/
amount for ‘amount for the
Weifang Port Wood Chip Terminal Co., Ltd. the period prior period
Current assets 13,917,909.50 27,197,876.06
Of which: Cash and cash equivalents 5,343,639.64 4,280,737.42
Non-current assets 480,210,142.19 489,392,605.54
Total assets 494,128,051.69 516,590,481.60
Current liabilities 29,483,896.67 24,865,100.48
Non-current liabilities 338,050,969.91 357,300,969.89
Total liabilities 367,534,866.58 382,166,070.37
Minority interest
Equity interest attributable to shareholders of the parent company 126,593,185.11 134,424,411.23
Share of net assets based on shareholding 63,296,592.56 67,212,205.62
Adjustments
– Goodwill
– Unrealised profit arising from intra-group transactions
– Others 7,636,365.12 7,636,365.12
Carrying amount of equity investment in joint ventures 70,932,957.67 74,848,570.73
Fair value of equity investment in joint ventures where publicly
quoted prices exist
Revenue 26,129,240.43 31,433,562.91
Finance expenses 9,778,624.54 10,778,949.56
Income tax expenses
Net profit -8,041,206.50 -6,013,863.17
Net profit from discontinued operations
Other comprehensive income
Total comprehensive income -8,041,206.50 -6,013,863.17
Dividends received from joint ventures during the year
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IX. Interest in Other Entities (Cont’d)
2. Interest in joint arrangements or associates (Cont’d)
(2) Key financial information of major joint ventures (Cont’d)
Closing balance/ Opening balance/
Shouguang Jintou Industrial Investment Partnership amount for amount for
(Limited Partnership) the period the prior period
Current assets 1,366,378,092.22 1,373,114,822.27
Of which: Cash and cash equivalents 98,092.22 98,300.08
Non-current assets 992,000,000.00 992,000,000.00
Total assets 2,358,378,092.22 2,365,114,822.27
Current liabilities 1,000.00 1,000.00
Non-current liabilities
Total liabilities 1,000.00 1,000.00
Minority interest
Equity interest attributable to shareholders of the parent company 2,358,377,092.22 2,365,113,822.27
Share of net assets based on shareholding 1,169,033,374.35 1,172,372,731.02
Adjustments
– Goodwill
– Unrealised profit arising from intra-group transactions
– Others 1,190,162,160.01 1,187,625,930.65
Carrying amount of equity investment in joint ventures 2,359,195,534.36 2,359,998,661.67
Fair value of equity investment in joint ventures where publicly
quoted prices exist
Revenue
Finance expenses 1,620,207.86
Income tax expenses
Net profit -1,620,207.86
Net profit from discontinued operations
Other comprehensive income
Total comprehensive income
Dividends received from joint ventures during the year
182 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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IX. Interest in Other Entities (Cont’d)
2. Interest in joint arrangements or associates (Cont’d)
(3) Key financial information of major associates
Unit: RMB
Closing balance/ Opening balance/
Ningbo Kaichen Huamei Equity Investment Fund Partnership amount for amount for
(Limited Partnership) the period the prior period
Current assets 4,322,919.99 4,330,644.90
Non-current assets 189,276,814.94 189,276,814.94
Total assets 193,599,734.93 193,607,459.84
Current liabilities 149,740.00 149,740.00
Non-current liabilities
Total liabilities 149,740.00 149,740.00
Minority interest
Equity interest attributable to shareholders of the parent company 193,449,994.93 193,457,719.84
Share of net assets based on shareholding 77,376,902.77 77,379,992.61
Adjustments
– Goodwill
– Unrealised profit arising from intra-group transactions
– Others 119,838,326.15 119,838,326.16
Carrying amount of equity investment in associates 197,215,228.92 197,218,318.77
Fair value of equity investment in associates where publicly
quoted prices exist
Revenue
Net profit -7,724.91 -8,044.64
Net profit from discontinued operations
Other comprehensive income
Total comprehensive income -7,724.91 -8,044.64
Dividends received from associates during the year
SHANDONG CHENMING PAPER HOLDINGS LIMITED 183
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IX. Interest in Other Entities (Cont’d)
2. 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
(Limited Partnership) the period the prior period
Current assets 32,423,116.82 42,352,069.89
Non-current assets 31,213,708.00 31,213,708.00
Total assets 63,636,824.82 73,565,777.89
Current liabilities 5,500.00 5,000.00
Non-current liabilities
Total liabilities 5,500.00 5,000.00
Minority interest
Equity interest attributable to shareholders of the parent company 63,631,324.82 73,560,777.89
Share of net assets based on shareholding 31,812,480.84 36,776,710.91
Adjustments
– Goodwill
– Unrealised profit arising from intra-group transactions
– Others
Carrying amount of equity investment in associates 31,812,480.84 36,776,710.91
Fair value of equity investment in associates where publicly
quoted prices exist
Revenue
Net profit 71,546.93 -4,006,504.95
Net profit from discontinued operations
Other comprehensive income
Total comprehensive income 71,546.93 -4,006,504.95
Dividends received from associates during the year
184 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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IX. Interest in Other Entities (Cont’d)
2. 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
Goldtrust Futures Co., Ltd. the period the prior period
Current assets 821,662,429.67 577,035,187.04
Non-current assets 480,166,319.83 297,668,426.77
Total assets 1,301,828,749.50 874,703,613.81
Current liabilities 1,082,672,661.98 665,847,237.87
Non-current liabilities 42,878,877.79 33,761,891.27
Total liabilities 1,125,551,539.77 699,609,129.14
Minority interest
Equity interest attributable to shareholders of the parent company 176,277,209.73 175,094,484.67
Share of net assets based on shareholding 62,455,015.41 62,035,975.92
Adjustments
– Goodwill 104,073,292.25 104,073,292.25
– Unrealised profit arising from intra-group transactions
– Others 11,683,737.93 12,279,914.66
Carrying amount of equity investment in associates 178,212,045.59 178,389,182.83
Fair value of equity investment in associates where publicly
quoted prices exist
Revenue 29,661,817.38 27,108,619.25
Net profit -2,222,578.59 -7,109,291.31
Net profit from discontinued operations
Other comprehensive income
Total comprehensive income -2,222,578.59 -7,109,291.31
Dividends received from associates during the year
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IX. Interest in Other Entities (Cont’d)
2. 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
Guangdong Nanyue Bank Co., Ltd. the period the prior period
Current assets 170,787,680,642.25 153,109,778,598.66
Non-current assets 82,849,851,268.13 74,753,438,649.12
Total assets 253,637,531,910.38 227,863,217,247.78
Current liabilities 207,280,787,023.03 181,929,537,932.08
Non-current liabilities 26,578,782,100.09 26,407,317,751.35
Total liabilities 233,859,569,123.12 208,336,855,683.43
Minority interest 65,996,100.75 65,058,817.68
Equity interest attributable to shareholders of the parent company 19,711,966,686.51 19,461,302,746.67
Share of net assets based on shareholding 1,331,543,349.67 1,314,611,000.54
Adjustments
– Goodwill
– Unrealised profit arising from intra-group transactions
– Others
Carrying amount of equity investment in associates 1,331,543,349.67 1,314,611,000.54
Fair value of equity investment in associates where publicly
quoted prices exist
Revenue 1,048,426,151.95 1,372,177,865.46
Net profit 222,221,106.76 365,449,485.74
Net profit from discontinued operations
Other comprehensive income 38,565,582.88 70,787,018.40
Total comprehensive income 260,786,689.64 436,236,504.14
Dividends received from associates during the year
(4) Summary financial information of non-major joint ventures and associates
Unit: RMB
Closing balance/ Opening balance/
amount for amount for
the period the prior period
Joint ventures:
Total carrying amount of investment 118,270,992.67 108,688,888.42
Total amount of the following items based on shareholding
– Net profit 10,682,104.25 -3,056,784.45
– Other comprehensive income
– Total comprehensive income 10,682,104.25 -3,056,784.45
Associates:
Total carrying amount of investment 67,490,180.52 6,482,035.69
Total amount of the following items based on shareholding
– Net profit 3,788,119.08 -168,899.05
– Other comprehensive income
– Total comprehensive income 3,788,119.08 -168,899.05
186 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X. Risk Relating to Financial Instruments
Main financial instruments of the Group include monetary funds, accounts receivable, accounts receivable financing, other
receivables, non-current assets due within one year, other current assets, long-term receivables, bills payable, accounts
payable, other payables, short-term borrowings, non-current liabilities due within one year, long-term borrowings, bonds
payable, lease liabilities and long-term payables. Details of financial instruments refer to related notes. The risks associated
with these financial instruments and the risk management policies adopted by the Company to mitigate these risks are
described below. The management of the Company manages and monitors these exposures to ensure that the above risks
are controlled in a limited extent.
1. Risk management goals and policies
The Company aims to seek the appropriate balance between the risks and benefits in order to mitigate the adverse
effects on the Company’s financial performance from financial risk. Based on such objectives, the Company’s risk
management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk
limits and devise corresponding internal control procedures, and to monitor risks faced by the Company. Such risk
management policies and internal control systems are reviewed regularly to adapt to changes in market conditions and
the Company’s activities. The internal audit department of the Company undertakes both regular and ad-hoc reviews of
risk management controls and procedures.
Risks associated with the financial instrument of the Company mainly include credit risk, liquidity risk, market risk
(including exchange rate risk, interest rate risk and commodity price risk).
The board of directors is responsible to plan and establish the Company’s risk management structure, make risk
management policies and related guidelines, and supervise the implementation of risk management. The Company has
already made risk management risks to identify and analyse risks that the Company face. These policies mentioned
specific risks, covering market, credit risk and liquidity risk etc. The Company regularly assesses market environment
and the operation of the Company changes to determine if to make alteration to risk management policy and systems.
The Company’s risk management is implemented by Risk Management Committee according to the approval of the
board of directors. The Risk Management Committee works closely with other business department of the Company to
identify, evaluating and avoiding certain risks. The Company’s internal audit department will audit the risk management
control and procedures regularly and report the result to audit committee of the Company.
The Company spreads risks through diverse investment and business lines, and through making risk management
policy to reduce risks of single industry, specific area and counterpart.
(1) Credit risk
Credit risk refers to risk associated with the default of contract obligation of a transaction counterparty resulting in
financial losses to the Company.
The Company manages credit risk based category. Credit risks mainly arose from bank deposit, bills receivable,
accounts receivable, other receivables and long-term receivables etc.
The Company’s bank deposit mainly deposits in state-owned banks and other large and medium-sized listed
banks. The Company anticipated that the bank deposit does not have significant credit risk.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 187
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X. Risk Relating to Financial Instruments (Cont’d)
1. Risk management goals and policies (Cont’d)
(1) Credit risk (Cont’d)
For accounts receivables, other receivables and long-term receivables, the Company set related policies to control
exposure of credit risks. The Company evaluates client’s credit quality and set related credit period based on the
client’s financial status, credit records and other factors such as current market situation etc. The Company keeps
monitor the client’s credit record and for client with deteriorate credit records, the Company will ensure the credit
risk is under control in whole by means of written notice of payment collection, shorten or cancel credit period.
The Company’s debtor spread over different industry and area. The Company continued to assess the credit
evaluation to receivables and purchase credit guarantee insurance if necessary.
The biggest credit risk exposure of the Company is the carrying amount of each financial asset in the balance
sheet. The Company did not provide financial guarantee which resulted in credit risks.
The amount of top 5 accounts receivable of the Company accounted for 33.03% (2022: 30.43%) of the
Company’s total accounts receivables. The amount of top 5 other receivable of the Company accounted for
59.52% (2022: 64.05%) of the Company’s total other receivables.
(2) Liquidity risk
Liquidity risk refers to the risks that the Company will not be able to meet its obligations associated with its
financial liabilities that are settled by delivering cash or other financial assets.
To manage the liquidity risk, the Company monitors and maintains a level of cash and cash equivalents to finance
the Company’s operations and mitigate the effects of fluctuations in cash flows. The management of the Company
monitors the usage of bank borrowings and ensures compliance with the borrowing agreements. In the meantime,
we obtain commitments from major financial institutions to provide sufficient standby funds to meet short-term
and long-term funding needs.
Operating cash of the Company was generated from capital and bank and other borrowings. As at 30 June 2023,
the Company’s unused bank loan credit was RMB43,059.3568 million (31 December 2022: RMB42,790.5456
million).
188 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X. Risk Relating to Financial Instruments (Cont’d)
1. Risk management goals and policies (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
RMB’0,000):
Closing balance
Within 1 1 to 2 2 to 5 over 5
Item year years years years Total
Financial assets:
Monetary funds 1,375,553.09 1,375,553.09
Accounts receivable 341,524.57 341,524.57
Accounts receivable financing 61,479.44 61,479.44
Other receivables 211,338.83 211,338.83
Long-term receivables 30,774.14 134,798.60 165,572.74
Other current assets 116,088.65 116,088.65
Non-current assets due within one year 395,340.31 395,340.31
Total financial assets 2,501,324.89 30,774.14 134,798.60 2,666,897.63
Financial liabilities:
Short-term borrowings 3,494,652.71 3,494,652.71
Bills payable 353,080.38 353,080.38
Accounts payable 397,208.26 397,208.26
Other payables 205,933.46 205,933.46
Non-current liabilities due within one year 435,000.57 435,000.57
Long-term borrowings 95,041.95 258,081.07 136,431.61 489,554.63
Lease liabilities 446.64 1,418.27 4,928.31 6,793.22
Long-term payables 157,089.70 94,238.35 48,653.02 299,981.07
Total financial liabilities and contingent liabilities 4,885,875.38 252,578.29 353,737.69 190,012.94 5,682,204.30
SHANDONG CHENMING PAPER HOLDINGS LIMITED 189
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X. Risk Relating to Financial Instruments (Cont’d)
1. Risk management goals and policies (Cont’d)
(2) Liquidity risk (Cont’d)
As at the end of the prior year, 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
RMB’0,000):
Closing balance of the prior year
Item Within 1 year 1 to 2 years 2 to 5 years Over 5 years Total
Financial assets:
Monetary funds 1,400,043.50 1,400,043.50
Accounts receivable 370,056.08 370,056.08
Accounts receivable financing 92,496.04 92,496.04
Other receivables 219,982.47 219,982.47
Long-term receivables 139,749.85 34,634.23 174,384.08
Other current assets 79,590.39 79,590.39
Non-current assets due within one year 492,071.00 492,071.00
Total financial assets 2,654,239.48 139,749.85 34,634.23 2,828,623.56
Financial liabilities:
Short-term borrowings 3,638,504.83 3,638,504.83
Bills payable 312,859.58 312,859.58
Accounts payable 411,496.68 411,496.68
Other payables 185,450.80 185,450.80
Non-current liabilities due within one year 487,609.74 487,609.74
Long-term borrowings 102,329.00 181,247.82 114,646.81 398,223.63
Lease liabilities 408.73 1,338.55 5,485.00 7,232.28
Long-term payables 169,345.00 105,959.87 59,653.02 334,957.89
Total financial liabilities and contingent liabilities 5,035,921.63 272,082.73 288,546.24 179,784.83 5,776,335.43
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.
190 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X. Risk Relating to Financial Instruments (Cont’d)
1. Risk management goals and policies (Cont’d)
(3) Market risk
Market risk includes interest rate risk and currency risk, refers to the risk that the fair value or future cash flow of a
financial instrument will be fluctuated due to the changes in market price.
Interest rate risk
Interest rate risk refers to the risk that the fair value or future cash flow of a financial instrument will be fluctuated
due to the floating rate. Interest rate risk arises from recognised interest-bearing financial instrument and
unrecognised financial instrument (e.g. loan commitments).
The Company’s interest rate risk arises from long-term interest-bearing liabilities including long-term borrowing
and bonds payable. Financial liabilities issued at floating rate expose the Company to cash flow interest rate
risk. Financial liabilities issued at fixed rate expose the Company to fair value interest rate risk. The Company
determines the relative proportions of its fixed rate and floating rate contracts depending on the prevailing market
conditions and to maintain an appropriate combination of financial instruments at fixed rate and floating rate
through regular reviews and monitors.
The Company continuously monitors the interest rate position of the Company. The Company did not enter
into any interest rate hedging arrangements. But the management is responsible to monitor the risks of interest
rate and consider to hedge significant interest risk if necessary. Increase in interest rates will increase the cost
of new borrowing and the interest expenses with respect to the Company’s outstanding floating rate interest-
bearing borrowings, and therefore could have a material adverse effect on the Company’s financial result. The
management will make adjustments with reference to the latest market conditions. These adjustments may
include enter into interest swap agreement to mitigate its exposure to the interest rate risk.
Interest bearing financial instrument held by the Company are as follows (in RMB’0,000):
Balance for Balance for
Item the period the prior period
Financial instrument with fixed interest rate
Financial liabilities
Of which: Short-term borrowings 3,494,652.71 3,638,504.83
Long-term borrowings 489,554.63 398,223.63
Long-term borrowings due within one year 164,102.55 192,074.82
Bonds payable due within one year 35,000.00
Total 4,148,309.89 4,263,803.28
Financial instrument with floating interest rate
Financial assets
Of which: Monetary funds 183,919.23 215,596.89
Total 183,919.23 215,596.89
SHANDONG CHENMING PAPER HOLDINGS LIMITED 191
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X. Risk Relating to Financial Instruments (Cont’d)
1. Risk management goals and policies (Cont’d)
(3) Market risk (Cont’d)
Interest rate risk (Cont’d)
As at 30 June 2023, if the interest rates of borrowings at floating interest rates increase or decrease by 25 basis
points with all other factors remain unchanged, the Company’s net profit and shareholders’ equity will increase or
decrease by RMB103,707,700 (31 December 2022: RMB105,720,100).
The financial instruments held by the Company at the reporting date expose the Company to fair value interest
rate risk. This sensitivity analysis as above has been determined assuming that the change in interest rates had
occurred at the reporting date and arisen from the recalculation of the above financial instrument issued at new
interest rates. The non-derivative tools issued at floating interest rate held by the Company at the reporting date
expose the Company to cash flow interest rate risk. The effect to the net profit and shareholder’s equity illustrated
in the sensitivity analysis as above is arisen from the effect to the annual estimate amount of interest expenses or
revenue at the floating interest rate. The analysis is performed on the same basis for prior year.
Exchange rate risk
Exchange risk refers to the risk that the fair value or future cash flows of a financial instrument will be fluctuated
due to the changes in foreign currency rates. Foreign currency risk arises on financial instruments that are
denominated in a currency other than the functional currency in which they are measured.
The principal business of the Company is situated within the PRC and is denominated in RMB. However, foreign
exchange risks still exist for the assets and liabilities in foreign currencies and future foreign currency transactions
as recognised by the Company (assets and liabilities in foreign currencies and foreign currency transactions are
mainly denominated in US dollar, Japanese yen, South Korean Won, Euro, Hong Kong dollar and British pound).
The following table details the financial assets and liabilities held by the Company which denominated in foreign
currencies and amounted to RMB as at 30 June 2023 are as follows (in RMB’0,000):
Liabilities denominated in foreign currency Asset denominated in foreign currency
Closing Closing balance Closing balance
Item balance of the prior year Closing balance of the prior year
USD 78,991.02 130,604.70 50,266.48 88,289.61
EUR 2,416.65 20,033.37 9,218.04 14,744.91
HKD 94.63 100.71
JPY 735.15 768.90
GBP 1.51 1.37
Total 81,407.67 150,638.07 60,315.81 103,905.5
The Group continuously monitors the size of the Group’s foreign currency transactions and foreign currency
assets and liabilities to minimise the foreign exchange risks it faces, and for this reason the Group may aim to
avoid foreign exchange risk by signing forward foreign exchange contracts or currency swap contracts.
192 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X. Risk Relating to Financial Instruments (Cont’d)
1. Risk management goals and policies (Cont’d)
(3) Market risk (Cont’d)
Exchange rate risk (Cont’d)
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’0,000):
Increase (decrease) in after-tax profits Balance for the period Balance for the prior period
Increase in exchange rate of USD 5% -1,436.23 5% -2,115.75
Decrease in exchange rate of USD -5% 1,436.23 -5% 2,115.75
Increase in exchange rate of EUR 5% -340.07 5% -264.42
Decrease in exchange rate of EUR -5% 340.07 -5% 264.42
Other price risks
Other price risks refer to the risk of fluctuations caused by changes in market prices other than exchange rate
risks and interest rate risks, whether arising from factors related to a single financial instrument or its issuer, or
from factors related to all similar financial instruments traded on the market. Other price risks can stem from
changes in commodity prices, stock market indexes, equity instrument prices, and other risk variables.
Listed equity instrument investments held by the Company classified as financial assets held for trading, other
non-current financial assets and other equity instrument investments are measured at fair value on the balance
sheet date. Therefore, the Company is subject to the risk of changes in the securities market.
The Company monitors closely the impact of price changes on the price risk of the Company’s investment in
equity securities. The Company has not taken any measures to avoid other price risks. However, the management
is responsible for monitoring other price risks, and will consider holding multiple equity securities portfolios to
reduce the price risk of equity securities investment when necessary.
With other variables unchanged, the after-tax effect of the change of -32.49% (last year: -32.63%) in equity
securities investment prices on the Company’s current profit and loss and other comprehensive income is as
follows (unit: RMB’0,000):
Increase (decrease) in Increase (decrease) in other
after-tax profits comprehensive income
Balance for Balance for Balance for Balance for
Item the period the prior period the period the prior period
Due to the rise in the price of equity securities
investment
Due to the decline in the price of equity securities
investment -2,427.46 -3,617.77
SHANDONG CHENMING PAPER HOLDINGS LIMITED 193
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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 2023, the Company’s gearing ratio is 72.28% (31 December 2022: 71.85%).
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
Unit: RMB
Fair value as at the end of the period
Level 1 fair value Level 2 fair value Level 3 fair value
Item measurement measurement measurement Total
I. Continuous measurement of fair value
(I) Financial assets held for trading 50,433,870.59 50,433,870.59
(1) Equity instrument investments 50,433,870.59 50,433,870.59
(II) Accounts receivable financing 614,794,433.04 614,794,433.04
(III) Other non-current financial assets 785,374,459.73 785,374,459.73
(IV) Biological assets 1,492,153,527.46 1,492,153,527.46
1. Consumable biological assets 1,492,153,527.46 1,492,153,527.46
Total assets continuously measured at fair value 50,433,870.59 2,892,322,420.23 2,942,756,290.82
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.
194 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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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 77,860,000.00 Cost method
Capital Co., Ltd.
Consumable biological assets:
Forestry 1,492,153,527.46 Replacement cost Cost per mu for the first 854.36
method year of Eucalyptus (RMB/tonne)
Cost per mu for the first 627.52
year of Pines (RMB/tonne)
Roll back method of Unit price per tonne of 575.00
market price Eucalyptus wood (RMB/tonne)
Unit price per tonne of 572.00
wet pine (RMB/tonne)
Unit price per tonne of 695.00
Chinese 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 27.57% 27.57%
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.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 195
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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 of the Company, please refer to Note IX. 2.
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
Shouguang Chenming Huisen New-style Construction Materials Co., Ltd. A joint venture of the Company
Weifang Port Wood Chip Terminal 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
Chenming (Qingdao) Asset Management Co., Ltd. An associate of the Company
Guangdong Nanyue Bank Co., Ltd. An associate of the Company
Lide Technology Co., Ltd. An associate of the Company
Other explanation: The former name of Weifang Port Wood Chip Terminal Co., Ltd. was Weifang Sime Darby West Port
Co., Ltd.
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,
Dong Lianming, etc.
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 Amount for facility facility is Amount for the
Related party party transaction the period approved exceeded prior period
Weifang Port Wood
Chip Terminal Co., Ltd. Port miscellaneous expenses 20,317,747.45 N/A N/A 32,355,133.76
196 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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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 7,876,218.22 8,581,891.97
Shouguang Huixin Construction Materials
Co., Ltd. Sales of cement, coal, oil, etc. 55,815.97 26,377.86
(2) Related party leasing
The Company as lessor:
Unit: RMB
Lease income Lease income
recognised for recognised for
Name of lessee Type of leased asset the current period the previous period
Shouguang Meite Environmental
Technology Co., Ltd. Investment property 733,944.95 733,944.95
Chenming (Qingdao) Asset Management
Co., Ltd. Housing and building structure 431,707.46 337,346.26
Lide Technology Co., Ltd. Housing and building structure 949,010.43 872,208.34
(3) 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
Hainan Chenming Technology Co., Ltd. 30,000,000.00 2022-9-20 2023-9-20 No
Hainan Chenming Technology Co., Ltd. 50,000,000.00 2023-3-30 2024-3-30 No
Hainan Chenming Technology Co., Ltd. 30,000,000.00 2022-9-20 2023-9-19 No
Hainan Chenming Technology Co., Ltd. 50,000,000.00 2023-3-30 2024-3-29 No
Hainan Chenming Technology Co., Ltd. 20,100,000.00 2022-9-20 2023-9-20 No
Hainan Chenming Technology Co., Ltd. 100,000,000.00 2023-3-30 2023-9-28 No
Hainan Chenming Technology Co., Ltd. 186,000,000.00 2023-3-29 2023-9-28 No
Hainan Chenming Technology Co., Ltd. 39,600,000.00 2023-4-6 2023-10-6 No
Hainan Chenming Technology Co., Ltd. 100,000,000.00 2023-5-31 2023-11-30 No
Hainan Chenming Technology Co., Ltd. 56,400,000.00 2023-6-29 2023-12-29 No
SHANDONG CHENMING PAPER HOLDINGS LIMITED 197
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XII. Related Parties and Related Party Transactions (Cont’d)
5. Related party transactions (Cont’d)
(3) 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
Hainan Chenming Technology Co., Ltd. 30,000,000.00 2023-2-10 2023-8-10 No
Hainan Chenming Technology Co., Ltd. 20,000,000.00 2023-3-16 2023-8-16 No
Hainan Chenming Technology Co., Ltd. 50,050,000.00 2023-5-25 2023-11-25 No
Hainan Chenming Technology Co., Ltd. 19,950,000.00 2023-5-30 2023-11-30 No
Huanggang Chenming Pulp & Paper Co., Ltd. 90,000,000.00 2023-4-27 2024/4/26 No
Huanggang Chenming Pulp & Paper Co., Ltd. 20,000,000.00 2023-5-23 2024/5/22 No
Huanggang Chenming Pulp & Paper Co., Ltd. 30,000,000.00 2022-7-27 2023/7/26 No
Huanggang Chenming Pulp & Paper Co., Ltd. 45,000,000.00 2022-8-19 2023/8/18 No
Huanggang Chenming Pulp & Paper Co., Ltd. 200,000,000.00 2022-8-24 2023/8/23 No
Huanggang Chenming Pulp & Paper Co., Ltd. 200,000,000.00 2022-12-23 2023/12/22 No
Huanggang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2023-1-3 2023/12/22 No
Huanggang Chenming Pulp & Paper Co., Ltd. 20,000,000.00 2022-8-17 2023/8/17 No
Huanggang Chenming Pulp & Paper Co., Ltd. 50,000,000.00 2022-9-27 2023/9/26 No
Huanggang Chenming Pulp & Paper Co., Ltd. 50,000,000.00 2022-10-13 2023/10/13 No
Jilin Chenming Paper Co., Ltd. 8,000,000.00 2023-5-31 2023-11-27 No
Jilin Chenming Paper Co., Ltd. 18,000,000.00 2023-6-27 2024-5-10 No
Jiangxi Chenming Paper Co., Ltd. 10,000,000.00 2022-8-10 2023-8-7 No
Jiangxi Chenming Paper Co., Ltd. 10,000,000.00 2022-8-30 2023-8-28 No
Jiangxi Chenming Paper Co., Ltd. 10,000,000.00 2023-1-19 2024-1-18 No
Jiangxi Chenming Paper Co., Ltd. 10,000,000.00 2022-9-9 2023-9-4 No
Jiangxi Chenming Paper Co., Ltd. 30,000,000.00 2023-1-12 2023-7-9 No
Jiangxi Chenming Paper Co., Ltd. 20,000,000.00 2023-1-12 2023-7-9 No
Jiangxi Chenming Paper Co., Ltd. 94,000,000.00 2023-3-18 2023-9-13 No
Jiangxi Chenming Paper Co., Ltd. 99,450,000.00 2023-3-18 2023-9-13 No
Jiangxi Chenming Paper Co., Ltd. 800,000.00 2023-3-15 2023-9-15 No
Jiangxi Chenming Paper Co., Ltd. 12,100,000.00 2023-3-22 2023-9-18 No
Jiangxi Chenming Paper Co., Ltd. 13,867,900.00 2023-2-16 2023-8-16 No
Jiangxi Chenming Paper Co., Ltd. 3,016,141.59 2023-3-10 2023-9-4 No
Jiangxi Chenming Paper Co., Ltd. 31,000,000.00 2023-3-31 2024-9-30 No
Jiangxi Chenming Paper Co., Ltd. 2,000,000.00 2023-4-12 2023-10-12 No
Jiangxi Chenming Paper Co., Ltd. 70,000,000.00 2023-4-20 2024-4-19 No
Jiangxi Chenming Paper Co., Ltd. 1,000,000.00 2023-5-4 2023-11-4 No
Jiangxi Chenming Paper Co., Ltd. 33,000,000.00 2023-5-9 2024-9-30 No
Jiangxi Chenming Paper Co., Ltd. 160,000,000.00 2023-5-24 2024-5-22 No
Jiangxi Chenming Paper Co., Ltd. 60,000,000.00 2023-5-25 2024-5-22 No
Jiangxi Chenming Paper Co., Ltd. 1,400,000.00 2023-6-8 2023-12-8 No
Jiangxi Chenming Paper Co., Ltd. 1,650,000.00 2023-6-9 2023-9-9 No
Jiangxi Chenming Paper Co., Ltd. 10,000,000.00 2023-6-12 2024-6-7 No
Jiangxi Chenming Paper Co., Ltd. 30,000,000.00 2023-6-13 2024-6-11 No
Jiangxi Chenming Paper Co., Ltd. 80,000,000.00 2023-6-16 2024-6-15 No
198 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
X Financial Report
XII. Related Parties and Related Party Transactions (Cont’d)
5. Related party transactions (Cont’d)
(3) 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
Jiangxi Chenming Paper Co., Ltd. 50,000,000.00 2023-6-19 2024-5-22 No
Jiangxi Chenming Paper Co., Ltd. 250,000,000.00 2023-6-19 2024-6-13 No
Jiangxi Chenming Paper Co., Ltd. 14,002,000.00 2023-6-19 2023-12-15 No
Jiangxi Chenming Paper Co., Ltd. 20,000,000.00 2023-6-20 2024-6-17 No
Jiangxi Chenming Paper Co., Ltd. 20,000,000.00 2023-6-21 2024-6-17 No
Jiangxi Chenming Paper Co., Ltd. 17,924,293.14 2023-6-25 2024-6-20 No
Jiangxi Chenming Paper Co., Ltd. 2,550,000.00 2023-6-27 2024-9-30 No
Jiangxi Chenming Paper Co., Ltd. 10,000,000.00 2023-6-29 2024-6-24 No
Jiangxi Chenming Paper Co., Ltd. 250,000,000.00 2023-6-30 2024-6-28 No
Jiangxi Chenming Paper Co., Ltd. 80,000,000.00 2022-7-1 2024-7-1 No
Shouguang Chenming Import and Export Trade
Co., Ltd. 149,995,461.94 2023-6-27 2023-12-25 No
Shandong Chenming Paper Sales Co., Ltd. 150,000,000.00 2022-8-19 2023-8-22 No
Shandong Chenming Paper Sales Co., Ltd. 100,000,000.00 2022-9-16 2023-9-19 No
Shandong Chenming Paper Sales Co., Ltd. 80,000,000.00 2022-9-16 2023-9-19 No
Shandong Chenming Paper Sales Co., Ltd. 165,854,444.58 2022-10-9 2023-10-8 No
Shandong Chenming Paper Sales Co., Ltd. 379,780,113.16 2022-10-9 2023-10-8 No
Shandong Chenming Paper Sales Co., Ltd. 160,000,000.00 2022-12-23 2023-12-18 No
Shandong Chenming Paper Sales Co., Ltd. 260,000,000.00 2022-12-23 2023-12-18 No
Shandong Chenming Paper Sales Co., Ltd. 50,000,000.00 2023-1-5 2024-1-2 No
Shandong Chenming Paper Sales Co., Ltd. 50,000,000.00 2023-1-12 2024-1-8 No
Shandong Chenming Paper Sales Co., Ltd. 290,525,401.17 2023-2-13 2023-8-11 No
Shandong Chenming Paper Sales Co., Ltd. 330,033,668.83 2023-4-6 2024-4-8 No
Shandong Chenming Paper Sales Co., Ltd. 129,933,410.35 2023-4-6 2024-4-8 No
Shanghai Chenming Pulp & Paper Sales Co., Ltd. 5,000,000.00 2022-10-26 2023-10-25 No
Shanghai Chenming Pulp & Paper Sales Co., Ltd. 50,000,000.00 2023-2-23 2023-8-23 No
Shanghai Chenming Pulp & Paper Sales Co., Ltd. 10,000,000.00 2023-5-29 2024-5-25 No
Shanghai Chenming Pulp & Paper Sales Co., Ltd. 10,000,000.00 2023-2-13 2026-2-12 No
Kunshan Tuoan Plastic Products Co., Ltd. 10,000,000.00 2023/2/27 2023/8/26 No
Kunshan Tuoan Plastic Products Co., Ltd. 20,000,000.00 2023/2/27 2024/2/26 No
Chenming (HK) Limited 77,298,616.85 2023-5-18 2023-11-14 No
Shouguang Meilun Paper Co., Ltd. 364,394,014.75 2023-6-19 2024-6-19 No
Shouguang Meilun Paper Co., Ltd. 88,180,874.40 2023-6-27 2024-6-27 No
Shouguang Meilun Paper Co., Ltd. 44,000,000.00 2022-7-31 2023-7-30 No
Shouguang Meilun Paper Co., Ltd. 205,308,929.42 2023-1-11 2023-7-10 No
Shouguang Meilun Paper Co., Ltd. 38,551,963.36 2023-2-8 2023-8-7 No
Shouguang Meilun Paper Co., Ltd. 10,000,000.00 2023-2-28 2024-2-27 No
Shouguang Meilun Paper Co., Ltd. 190,200,798.22 2023-6-19 2023-12-15 No
Shouguang Meilun Paper Co., Ltd. 34,000,000.00 2023-4-28 2023-7-27 No
SHANDONG CHENMING PAPER HOLDINGS LIMITED 199
INTERIM REPORT 2023
X Financial Report
XII. Related Parties and Related Party Transactions (Cont’d)
5. Related party transactions (Cont’d)
(3) 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. 285,000,000.00 2023-6-29 2023/12/26 No
Shouguang Meilun Paper Co., Ltd. 125,573,440.23 2023-1-29 2023-7-31 No
Shouguang Meilun Paper Co., Ltd. 100,164,057.08 2022-7-29 2023-7-24 No
Shouguang Meilun Paper Co., Ltd. 20,000,000.00 2022-8-31 2023-8-31 No
Shouguang Meilun Paper Co., Ltd. 200,000,000.00 2023-4-25 2024-4-24 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2022-8-9 2023-8-8 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2022-8-12 2023-8-11 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2022-8-17 2023-8-16 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 67,000,000.00 2022-8-18 2023-8-17 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 59,000,000.00 2022-8-19 2023-8-18 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 50,000,000.00 2022-9-14 2023-9-13 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2022-10-9 2023-10-8 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 57,500,000.00 2022-10-18 2023-10-17 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 50,000,000.00 2022-11-16 2023-11-15 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 50,000,000.00 2022-11-29 2023-11-28 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 47,382,000.00 2022-12-21 2023-12-8 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 200,000,000.00 2023-1-12 2023-8-8 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 65,000,000.00 2023-1-18 2023-7-17 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 21,000,000.00 2023-1-16 2024-1-15 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 50,000,000.00 2023-1-18 2023-7-17 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 15,000,000.00 2023-1-20 2024-1-19 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 14,000,000.00 2023-1-30 2024-1-29 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 200,000,000.00 2023-2-15 2023-8-14 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 125,000,000.00 2023-2-23 2024-3-20 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 80,000,000.00 2023-2-23 2024-3-20 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 50,000,000.00 2023-3-23 2024-3-21 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 45,000,000.00 2023-3-28 2023-9-22 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 50,000,000.00 2023-3-29 2023-9-29 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 4,000,000.00 2023-4-3 2024-4-2 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 200,000,000.00 2023-4-25 2023-10-20 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 68,000,000.00 2023-4-24 2024-4-20 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 120,000,000.00 2023-4-21 2024-4-19 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 50,000,000.00 2023-5-6 2023-10-25 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 74,500,000.00 2023-5-25 2024-5-24 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 99,600,000.00 2023-5-30 2023-11-27 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 50,000,000.00 2023-5-9 2023-11-9 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 40,000,000.00 2023-6-9 2023-12-8 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 220,000,000.00 2023-6-8 2024-5-26 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 65,000,000.00 2023-6-21 2023-12-18 No
200 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
X Financial Report
XII. Related Parties and Related Party Transactions (Cont’d)
5. Related party transactions (Cont’d)
(3) 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. 50,000,000.00 2023-6-25 2024-6-24 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 81,200,000.00 2023-6-19 2024-6-19 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 70,000,000.00 2023-6-21 2024-6-20 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 77,450,000.00 2020-10-16 2023-10-15 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 112,450,000.00 2020-11-11 2023-11-10 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 98,000,000.00 2020-12-10 2023-12-9 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 98,000,000.00 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. 90,000,000.00 2022-6-17 2025-6-16 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 90,000,000.00 2022-6-17 2025-6-16 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 90,000,000.00 2022-5-31 2024-5-30 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 50,000,000.00 2022-1-26 2023-12-22 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 47,000,000.00 2022-10-25 2024-10-19 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 137,133,300.00 2022-6-29 2025-6-29 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 93,000,000.00 2023-3-31 2026-3-29 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2023-6-20 2026-6-20 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 180,000,000.00 2023-6-2 2026-6-20 No
Weifang Port Wood Chip Terminal Co., Ltd. 105,200,000.00 2017-12-20 2027-12-20 No
Total 11,701,070,829.07
(4) Related party lending and borrowing
Unit: RMB
Borrowing Commencement
Related party amount date Expiry date Description
Borrowing
Chenming Holdings Co., Ltd. 40,000,000.00 2023-1-1 2023-6-30 Controlling
shareholder
Guangdong Nanyue Bank Co., Ltd. 842,600,000.00 2023-1-1 2023-6-30 Associate
SHANDONG CHENMING PAPER HOLDINGS LIMITED 201
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X Financial Report
XII. Related Parties and Related Party Transactions (Cont’d)
6. Related party accounts receivable and accounts payable
(1) Receivables
Unit: RMB
Closing balance Opening balance
Item Related party Book balance Bad debts provision Book balance Bad debts provision
Accounts receivable Shouguang Chenming Huisen 6,467,589.17 6,692.83 1,856,833.50 1,392.06
New-style Construction Materials
Co., Ltd.
Accounts receivable Shouguang Huixin Construction 27,073.79 63.66
Materials Co., Ltd.
Other receivables Weifang Port Wood Chip Terminal 73,622,749.85 7,448,990.02 71,722,249.85 3,755,227.15
Co., Ltd.
Accounts receivable Shouguang Meite Environmental 6,782,462.48 1,774,117.95
Technology Co., Ltd.
Payments in advance Shouguang Meite Environmental 6,370,726.99
Technology Co., Ltd.
Other receivables Shouguang Meite Environmental 16,799,133.87 3,286,036.69 18,291,242.68 1,779,523.20
Technology Co., Ltd.
Other receivables Xuchang Chenming Paper Co., Ltd. 327,400.00 6,791.28 327,400.00 6,791.28
(2) Payable
Unit: RMB
Closing book Opening book
Item Related party balance balance
Accounts payable Weifang Port Wood Chip Terminal Co., Ltd. 7,367,747.45 19,479,518.82
Accounts payable Shouguang Meite Environmental Technology Co., Ltd. 8,382,468.95
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
Other payables Lide Technology Co., Ltd. 559,897.05 508,619.46
Other payables Chenming (Qingdao) Asset Management Co., Ltd. 115,583.42 116,656.55
Receipts in advance Chenming (Qingdao) Asset Management Co., Ltd. 2,000.00
Contract liabilities Shouguang Huixin Construction Materials Co., Ltd. 20,000.00
(3) Deposits with related parties
Unit: RMB
Closing book Opening book
Item Related party balance balance
Bank deposit Guangdong Nanyue Bank Co., Ltd. 50,022,794.15 10,069,515.51
Other monetary funds Guangdong Nanyue Bank Co., Ltd. 1,027,400,000.00 927,400,000.00
(4) Loans from related parties
Unit: RMB
Closing book Opening book
Item Related party balance balance
Short-term borrowings Guangdong Nanyue Bank Co., Ltd. 2,059,100,000.00 1,909,100,000.00
202 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
X Financial Report
XIII. Share-based Payment
1. General information of share-based payment
√ Applicable Not applicable
Unit: RMB
Total equity instruments of the Company granted during the period 0
Total exercised equity instruments of the Company during the period 0
Total lapsed equity instruments of the Company during the period 22,645,800.00
Range of exercise prices and contractual remaining period for share options issued by the See explanation
Company 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 2023 cannot be fulfilled, and the corresponding third batch of the 30% Restricted Shares cannot be unlocked. In
addition, 49,652,000 shares lapsed due to the resignation of some Senior Management members.
2. Equity-settled share-based payment
√ Applicable Not applicable
Unit: RMB
Ex-right price of
The method of determining the fair value of equity instrument on the grant date grant of share
See explanation
Basis for determining the quantity of exercisable equity instruments for details
Reasons for significant difference between the current estimate and previous estimate Nil
Accumulated amount of equity-settled share-based payment included in the capital reserve 58,698,080.00
Total amount of equity-settled share-based payment recognised in the current period -27,467,521.92
Other explanation: At each balance sheet date during the vesting period, the Company, based on the latest information
such as the latest update on the change in the number of entitled employees, will make best estimates to adjust the
expected number of equity instruments that can be vested. As at the exercise date, the final estimated number of
exercisable equity instruments should equal the actual number of exercisable equity instruments.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 203
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X Financial Report
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 394,868,914.72 184,833,000.27
2. Contingency
As at 30 June 2023, the Company had no contingent items such as outstanding litigation and external guarantees that
should be disclosed.
XV. Post-balance Sheet Event
1. On 11 May 2023, Shandong Chenming Paper Holdings Limited published the Announcement on the Exercise of the
Redemption Option of the 2017 First Tranche of Medium-term Notes and the Announcement on the Redemption of the
2017 First Tranche of Medium-term Notes on Shanghai Clearing House (www.shclearing.com) and Chinamoney (www.
chinamoney.com.cn). The Company intended to redeem “17 Lu Chenming MTN001” in full. The date of principal and
interest payment was 12 July 2023, and the amount of principal and interest payment was RMB1,089.7 million. On 12
July 2023, the Company completed the payment of the principal and interest of “17 Lu Chenming MTN001” (bond code:
101779001), with a total of RMB1,089.7 million in principal and interest paid.
2. On 17 July 2023, Shandong Chenming Paper Holdings Limited convened the ninth extraordinary meeting of the tenth
session of the Board and the fifth extraordinary meeting of the tenth session of the Supervisory Committee, at which,
the Resolution on Failing to Fulfil the Unlocking Conditions for the Second Unlocking Period under the 2020 Restricted A
Share Incentive Scheme and Repurchase and Cancellation of Certain Restricted Shares was considered and approved.
The resolution allowed the repurchase and cancellation of 22,929,000 restricted A shares of the participants that have
been granted but not yet unlocked, including 22,593,000 restricted shares granted to 98 participants for the second
unlocking period, and 336,000 restricted shares granted to five departed staff for the third unlocking period. All the
related Directors and related Supervisors have abstained from voting. The changes in the share capital structure of the
Company after the repurchase and cancellation are as follows:
Before the change Change After the change
Nature of shares Number (shares) Percentage Number (shares) Number (shares) Percentage
Restricted shares 59,507,587 2.00% -22,929,000 36,578,587 1.24%
Non-restricted shares 2,920,234,613 98.00% 2,920,234,613 98.76%
Total number of shares 2,979,742,200 100.00% -22,929,000 2,956,813,200 100.00%
XVI. Other Material Matters
1. Segment information
(1) Basis for determination and accounting policies
According to the Company’s internal organisational structure, management requirements and internal reporting
system, the Company’s operating business is divided into 4 reporting segments. These report segments are
determined based on the financial information required by the company’s daily internal management. The
management of the Group regularly evaluates the operating results of these reporting segments to determine the
allocation of resources to them and evaluate their performance.
204 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
X Financial Report
XVI. Other Material Matters (Cont’d)
1. Segment information (Cont’d)
(1) Basis for determination and accounting policies (Cont’d)
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.
(2) Financial information of reporting segment
Unit: RMB
Machine-made Hotels and
Item paper and pulp Financial services property rentals Others Elimination Total
Revenue 39,476,912,657.97 177,268,060.87 131,290,586.44 572,304,835.43 27,792,813,359.40 12,564,962,781.31
Of which: revenue from
external transactions 12,065,096,786.14 90,836,358.97 118,740,344.32 290,289,291.88 – 12,564,962,781.31
Revenue from inter-segment
transactions 27,411,815,871.83 86,431,701.90 12,550,242.12 282,015,543.55 27,792,813,359.40 –
Of which: Revenue from
principal activities 31,384,239,458.66 177,173,721.25 60,933,019.69 413,380,818.93 19,614,791,305.75 12,420,935,712.78
Operating costs 38,520,939,069.72 126,482,676.26 68,582,448.16 542,328,134.83 27,761,600,666.39 11,496,731,662.58
Of which: Costs of principal
activities 30,859,129,272.33 126,482,676.26 37,016,668.91 393,758,731.55 20,039,182,154.16 11,377,205,194.89
Operating expenses 91,452,287.47 145,808.06 11,116,898.90 3,953,215.77 1,492.66 106,666,717.54
Of which: Salaries 45,098,380.67 72,901.73 3,574,025.74 1,621,662.12 – 50,366,970.26
Depreciation expenses 924,400.19 – 1,889,865.39 5,862.18 – 2,820,127.76
Office expenses 1,128,584.76 – 6,629.23 2,058.20 – 1,137,272.19
Travel expenses 11,756,448.37 12,886.33 1,223.13 232,659.36 – 12,003,217.19
Selling commissions 790,986.61 – 2,425,469.11 171,028.20 – 3,387,483.92
Rental expenses 3,195,914.93 – – 42,264.17 – 3,238,179.10
Hospitality expenses 22,702,904.49 60,020.00 8,206.24 466,166.04 1,492.66 23,235,804.11
Warehouse expenses 93,953.41 – – 335,267.44 – 429,220.85
Others 5,760,714.04 – 3,211,480.06 1,076,248.06 – 10,048,442.16
Operating profit/(loss) -623,546,726.55 39,091,841.23 -61,163,817.15 56,633,428.35 314,949,905.92 -903,935,180.04
Total cost of construction in
progress incurred during
the period 146,009,004.57 – – 2,509,433.97 – 148,518,438.54
Fixed assets acquired in the
current period 79,181,364.03 – 157,609.55 455,396.13 – 79,794,369.71
Intangible assets acquired
during the period 24,205,100.00 – – – – 24,205,100.00
Total assets 152,006,775,904.45 22,919,601,699.02 8,438,207,685.88 10,515,826,833.53 111,227,551,366.30 82,652,860,756.58
Total liabilities 107,344,765,983.53 5,073,124,221.75 3,855,939,230.82 3,905,173,097.84 60,441,256,630.31 59,737,745,903.63
Basis of accounting: The transfer prices between the Company’s segments are based on market prices.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 205
INTERIM REPORT 2023
X Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements
1. Accounts receivable
(1) Disclosure of accounts receivable by category
Unit: RMB
Closing balance Opening balance
Book balance Bad debts provision Book balance Bad debts provision
Provision Provision
Percentage percentage Percentage percentage
Category Amount (%) Amount (%) Carrying amount Amount (%) Amount (%) Carrying amount
Accounts receivable assessed
individually for bad debt provision
Accounts receivable assessed
collectively for bad debt provision 2,524,824,903.83 100.00 4,565,784.22 0.18 2,520,259,119.61 139,392,924.13 100.00 4,637,396.40 3.33 134,755,527.73
Of which:
Due from related party customers 2,512,278,523.26 99.50 6,658.13 0.00 2,512,271,865.13 101,246,295.74 72.63 101,246,295.74
Due from non-related party customers 12,546,380.57 0.50 4,559,126.09 36.34 7,987,254.48 38,146,628.39 27.37 4,637,396.40 12.16 33,509,231.99
Total 2,524,824,903.83 100.00 4,565,784.22 0.18 2,520,259,119.61 139,392,924.13 100.00 4,637,396.40 3.33 134,755,527.73
206 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
X Financial Report
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 bad debt provision: Due from related party customers
Unit: RMB
Closing balance
Bad debts Provision
Name Book balance provision percentage (%)
Within 1 year 2,512,278,523.26 6,658.13 0.00
Total 2,512,278,523.26 6,658.13 0.00
Items assessed collectively for bad debt provision: Receivables from non-related party customer
Unit: RMB
Closing balance
Bad debts Provision
Name Book balance provision percentage (%)
Within 1 year 8,043,559.40 56,304.92 0.70
1 to 2 years
2 to 3 years
Over 3 years 4,502,821.17 4,502,821.17 100.00
Total 12,546,380.57 4,559,126.09 36.34
Disclosure by ageing
Unit: RMB
Ageing Closing balance
Within 1 year (including 1 year) 2,520,322,082.66
1 to 2 years
2 to 3 years
Over 3 years 4,502,821.17
Subtotal 2,524,824,903.83
Less: Bad debt provision 4,565,784.22
Total 2,520,259,119.61
SHANDONG CHENMING PAPER HOLDINGS LIMITED 207
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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
Bad debt provision 4,637,396.40 71,612.18 4,565,784.22
Total 4,637,396.40 71,612.18 4,565,784.22
(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 RMB2,511,327,361.34 in total, accounting for 99.47% of the total closing balance of accounts receivable. The
closing balance of the corresponding bad debt provision amounted to RMB0.00 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 1,417,896,807.62 56.16
Customer II 1,000,000,000.00 39.61
Customer III 72,800,000.00 2.88
Customer IV 10,630,553.72 0.42
Customer V 10,000,000.00 0.40
Total 2,511,327,361.34 99.47
208 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
Other receivables 8,352,806,067.27 9,337,019,470.13
Total 8,352,806,067.27 9,337,019,470.13
(1) Other receivables by nature
Unit: RMB
Closing book Opening book
Nature balance balance
Open credit 8,415,914,078.75 9,391,199,670.38
Reserve and borrowings 20,758,876.60 15,112,113.60
Guarantee deposit and deposit 730,500.00 850,000.00
Others 4,908,983.57 13,027,863.16
Total 8,442,312,438.92 9,420,189,647.14
(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 debts provision next 12 months impaired) impaired) Total
Balance as at 1 January 2023 34,208,745.73 48,961,431.28 83,170,177.01
Balance as at 1 January 2023 for the period
– Transferred to stage 2
– Transferred to stage 3
– Reversed to stage 2
– Reversed to stage 1
Provision for the period 5,914,844.93 421,349.71 6,336,194.64
Reversal for the period
Transfer for the period
Write-off for the period
Other changes
Balance as at 30 June 2023 40,123,590.66 49,382,780.99 89,506,371.65
SHANDONG CHENMING PAPER HOLDINGS LIMITED 209
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XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
2. Other receivables (Cont’d)
(2) Particulars of bad debt provision (Cont’d)
Changes in carrying book balances with significant changes in loss provision for the period
Applicable √ Not applicable
Disclosure by ageing
Unit: RMB
Ageing Closing balance
Within 1 year (including 1 year) 8,290,851,749.53
1 to 2 years 68,570,416.65
2 to 3 years 3,547,424.94
Over 3 years 79,342,847.80
Total 8,442,312,438.92
(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
Category balance Provision or reversal Write-off Others Closing balance
Other receivables 83,170,177.01 6,336,194.64 89,506,371.65
Total 83,170,177.01 6,336,194.64 89,506,371.65
210 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)
(4) Top five accounts receivable based on closing balance of debtors
The total amount of top five other receivables based on closing balance of debtors for the period amounted
to RMB4,443,181,018.88 in total, accounting for 52.64% 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 total closing Closing balance
balance of other of bad debt
Name of entity Nature Closing balance Ageing receivables provision
Customer I Open credit 1,277,000,000.00 Within 1 year 15.13%
Customer II Open credit 1,047,280,075.00 Within 1 year 12.41%
Customer III Open credit 921,800,000.00 Within 1 year 10.92%
Customer IV Open credit 709,692,418.87 Within 1 year 8.41%
Customer V Open credit 487,408,525.01 Within 1 year 5.77%
Total 4,443,181,018.88 52.64%
3. Long-term equity investments
Unit: RMB
Closing balance Opening balance
Impairment Impairment
Item Book balance provision Book value Book balance provision Book value
Investment in subsidiaries 18,571,694,740.81 18,571,694,740.81 18,502,944,740.81 18,502,944,740.81
Investment in associates and joint ventures 320,282,894.09 5,994,545.96 314,288,348.13 329,212,841.48 5,994,545.96 323,218,295.52
Total 18,891,977,634.90 5,994,545.96 18,885,983,088.94 18,832,157,582.29 5,994,545.96 18,826,163,036.33
SHANDONG CHENMING PAPER HOLDINGS LIMITED 211
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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
Closing
Opening Change for the period Closing balance of
balance Additional Withdrawn Impairment balance impairment
Investee (Book value) contribution contribution provision Others (book value) provision
Chenming Paper Korea Co., Ltd. 6,143,400.00 6,143,400.00
Chenming GmbH 4,083,235.00 4,083,235.00
Hailaer Chenming Paper Co., Ltd. 12,000,000.00 12,000,000.00
Huanggang Chenming Pulp & Paper
Co., Ltd. 2,350,000,000.00 2,350,000,000.00
Huanggang Chenming Arboriculture
Development Co., Ltd. 70,000,000.00 70,000,000.00
Jinan Chenming Investment and
Management 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. 5,137,500,000.00 68,750,000.00 5,206,250,000.00
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 Hongxiang 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 United States Co., Ltd. 6,407,800.00 6,407,800.00
Weifang Chenming Growth Driver
Replacement Equity Investment Fund
Partnership (Limited Partnership) 592,500,340.53 592,500,340.53
Weifang Chendu Equity Investment
Partnership (Limited Partnership) 241,387,503.76 241,387,503.76
Total 18,502,944,740.81 68,750,000.00 18,571,694,740.81
212 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
gain or loss Adjustment of cash Closing
Opening recognised of other Other change dividend or Closing balance of
balance Additional Withdrawn under equity comprehensive in equity profit Impairment balance impairment
Investee (book value) contribution contribution method income interest declared provision Others (book value) provision
I. Associates
Zhuhai Dechen New Third Board Equity
Investment Fund Company (Limited
Partnership) 36,776,710.91 5,000,000.00 35,769.93 31,812,480.84
Ningbo Kaichen Huamei Equity Investment
Fund Partnership (Limited Partnership) 197,218,318.77 -3,089.85 197,215,228.92
Chenming (Qingdao) Asset Management
Co., Ltd. 6,482,035.69 27,510.92 6,509,546.61
Xuchang Chenming Paper Co., Ltd. 0.00 5,994,545.96
Subtotal 240,477,065.37 5,000,000.00 60,191.00 235,537,256.37 5,994,545.96
II. Joint ventures
Shouguang Chenming Huisen New-style
Construction Materials Co., Ltd. 7,892,659.42 1,025,474.67 1,100,000.00 7,818,134.09
Weifang Port Wood Chip Terminal Co., Ltd. 74,848,570.73 -3,915,613.06 70,932,957.67
Subtotal 82,741,230.15 -2,890,138.39 1,100,000.00 78,751,091.76
Total 323,218,295.52 5,000,000.00 -2,829,947.39 1,100,000.00 314,288,348.13 5,994,545.96
SHANDONG CHENMING PAPER HOLDINGS LIMITED 213
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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 2,588,800,023.67 2,692,576,337.91 3,140,980,202.71 2,884,740,920.89
Other activities 1,315,784,940.43 1,054,300,999.17 605,682,653.79 496,489,124.84
Total 3,904,584,964.10 3,746,877,337.08 3,746,662,856.50 3,381,230,045.73
Information related to revenue:
Unit: RMB
Category of contract Machine-made paper Others Total
Type of goods 2,588,800,023.67 1,315,784,940.43 3,904,584,964.10
Including:
Machine-made paper 2,228,816,873.67 2,228,816,873.67
Material sales 1,038,125,689.11 1,038,125,689.11
Leasing 8,728,934.62 8,728,934.62
Others 359,983,150.00 268,930,316.70 628,913,466.70
By geographical area 2,588,800,023.67 1,315,784,940.43 3,904,584,964.10
Including:
Mainland China 2,588,800,023.67 1,315,784,940.43 3,904,584,964.10
Other countries and regions
By the timing of delivery 2,588,800,023.67 1,315,784,940.43 3,904,584,964.10
Including:
Goods (at a point in time) 2,588,800,023.67 1,307,056,005.81 3,895,856,029.48
Services (within a certain period)
Leasing income 8,728,934.62 8,728,934.62
Information related to the transaction price allocated to the remaining performance obligations:
As at the end of the reporting period, the amount of income corresponding to the agreements that have been entered
into but have not yet fulfilled or not fully fulfilled their performance obligations amounted to RMB4,188,916,529.77,
which is expected to be recognised in 2023.
214 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
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 80,000,000.00 270,000,000.00
Income from long-term equity investments accounted for using the
equity method -2,829,947.39 -5,337,689.31
Investment gain on disposal of long-term equity investments 630,212.77 751,679.56
Investment gain on holding other non-current financial assets 2,800,000.00
Investment gain on derecognition of financial assets -22,621,312.74 -30,954,557.50
Total 55,178,952.64 237,259,432.75
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 assets impairment) 9,118,027.05
Government grants (except for the government grants closely related to
the normal operation of the Company and granted constantly at a fixed
amount or quantity in accordance with a certain standard based on
state policies) accounted for in profit or loss for the current period 108,155,697.19
Profit or loss from debt restructuring -145,995.36
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 -25,565,577.25
Reversal of provision for impairment of receivables individually tested for
impairment 68,586,443.66
Gain or loss arising from fair value change of consumable biological
assets subsequently measured at fair value 5,749,779.42
Other gain or loss items within the definition of extraordinary gain or loss 443,855.10
Less: Effect of income tax 39,664,063.42
Effect of minority interest (after tax) 2,919,113.00
Total 123,759,053.39
SHANDONG CHENMING PAPER HOLDINGS LIMITED 215
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XVIII. Supplementary information (Cont’d)
1. Breakdown of extraordinary gains or losses for the current period (Cont’d)
Other profit or loss items consistent with the definition of extraordinary items:
Applicable √ Not applicable
The Company does not have other profit or loss items consistent with the definition of extraordinary items.
Explanation on classification of non-recurring profit and loss listed in Explanatory Announcement No. 1 on Information
Disclosure of Companies Offering Their Securities to the Public – Non-recurring Profit and Loss as non-recurring profit
and loss
Applicable √ Not applicable
2. Return on net assets and earnings per share
Rate of return
on net assets Earnings per share
on weighted Basic Diluted
Profit for the reporting period average basis (RMB per share) (RMB per share)
Net profit attributable to ordinary shareholders of
the Company -4.15% -0.250 -0.250
Net profit after extraordinary gains or losses
attributable to ordinary shareholders of the
Company -4.85% -0.292 -0.292
Data specification: The net profit attributable to shareholders of the Company does not exclude the effect of the interest
payment deferred and accumulated to subsequent periods for Perpetual Bonds. 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 during the reporting period is deducted.
3. Accounting data difference under accounting standard at home and abroad
(1) Differences of net profit and net assets disclosed in financial reports prepared under IAS and Chinese
accounting standards
Applicable √ Not applicable
(2) Differences of net profit and net assets disclosed in financial reports prepared under oversea and Chinese
accounting standards
Applicable √ Not applicable
The Board of Shandong Chenming Paper Holdings Limited
30 August 2023
216 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2023
