Stock code：000488 200488 Stock abbreviation：晨鸣纸业 晨鸣 B Announcement No.:2014-037
SHANGDONG CHENMING PAPER HOLDINGS LIMITED *
2014 Interim Report Summary
1. IMPORTANT NOTICE
This interim report summary is extracted from the text of the interim report. For
details, investors should carefully read the text of the interim report published,
at the same time, on the designated websites such as the website of CNINFO or
Shenzhen Stock Exchange as approved by China Securities Regulatory
Commission or the website of the Stock Exchange of Hong Kong Limited.
Company profile
Stock abbreviation 晨鸣纸业 Stock Code 000488
Stock abbreviation 晨鸣 B Stock Code 200488
Stock exchange on Shenzhen Stock Exchange
which the shares
are listed
Stock abbreviation Chenming Paper Stock Code 01812
Stock exchange on The Stock Exchange of Hong Kong
which the shares
are listed
Contact persons and Secretary to the Board Securities Affairs Hong Kong Company
contact methods Representative Secretary
Name Wang Chunfang Xiao Peng Poon Shiu Cheong
Telephone (86)-0536-2158008 (86)-0536-2158008 (852)-2501 0088
Facsimile (86)-0536-2158977 (86)-0536-2158977 (852)-2501 0028
Email address chenmmingpaper@163.com chenmmingpaper@163.com kentpoon_1009@yahoo.com.hk
— 1—
2. MAJOR FINANCIAL DATA AND CHANGE OF SHAREHOLDERS
(1) Major accounting data and financial indicators
Retrospective adjustment to or restatement of the accounting data for prior years
by the Company due to change of accounting policies and correction of
accounting errors
√ Yes □ No
In accordance with the requirements of “Notice on the issuance of ‘Accounting
Standard for Business Enterprises No. 2 — Long-term equity investments’” (Cai
Kuai [2014] No. 14) and “Notice on the issuance of ‘Accounting Standard for
Business Enterprises No. 41 — Disclosure of interests in other entities’” (Cai
Kuai [2014] No. 16), entities listed overseas are encouraged to early adopt the
above two accounting standards issued or amended in 2014.As a listed company
in the PRC and Hong Kong, the Company implemented the above two
accounting standards in preparation of the financial statements for the first half
of 2014 as a listed company in the PRC and Hong Kong, and made
retrospective adjustments to the data as at the end of 2013. The retrospective
adjustments affected available-for-sale financial assets and long-term equity
investments in the balance sheet but had no effect on the income statement.
Please see Note 4. (1) “Reason for changes in accounting policies, accounting
estimates and accounting methods as compared to the financial report for the
prior year” as set out in this Report for the details of the affected amounts.
Increase/
decrease for the
reporting period
compared to the
corresponding
The corresponding period of the period of the
prior year prior year (%)
The reporting Before After adjustment After adjustment
period adjustment
Revenue (RMB) 9,082,020,579.01 10,027,901,358.43 10,027,901,358.43 -9.43%
Net profit
attributable to
shareholders of the 242,461,095.02 333,409,511.73 333,409,511.73 -27.28%
Company
(RMB)
Net profit after
extraordinary
gains or losses
attributable to 57,813,473.27 134,539,548.74 134,539,548.74 -57.03%
shareholders of the
Company
(RMB)
— 2—
Increase/
decrease for the
reporting period
compared to the
corresponding
The corresponding period of the period of the
prior year prior year (%)
The reporting Before After adjustment After adjustment
period adjustment
Net cash flows
from operating
1,285,696,261.13 906,935,242.95 906,935,242.95 41.76%
activities
(RMB)
Basic earnings per
share (RMB per 0.12 0.16 0.16 -25.00%
share)
Diluted earnings
per share (RMB per 0.12 0.16 0.16 -25.00%
share)
Rate of return on net
assets on weighted
1.72% 2.40% 2.40% -0.68%
average basis
Increase/decrease
as at the end of
the reporting
period compared
to the end of the
As at the end of As at the end of the prior year prior year (%)
the reporting Before
period adjustment After adjustment After adjustment
Total assets
50,465,774,693.92 47,521,883,569.18 47,521,883,569.18 6.19%
(RMB)
Net assets
attributable to
shareholders of the 13,635,437,678.10 14,039,888,226.11 14,039,888,226.11 -2.88%
Company
(RMB)
Share capital
(shares) Note 1 1,936,405,467 1,975,471,967 1,975,471,967 -1.98%
Note 1: The Company repurchased and cancelled 39,066,500 H shares during the reporting
period and, therefore, the total number of the shares of the Company was reduced by
39,066,500 shares.
— 3—
(2) Table setting out shareholding of top ten shareholders of ordinary shares
Unit: share
Total number of shareholders of ordinary 132,524, of which 103,446 were holders of A shares, 28,523
shares as at the end of the reporting holders of B shares and 555 holders of H shares.
period
Shareholdings of top ten shareholders of ordinary shares
Number of Share pledged or
Percentage Number of Restricted locked-up
Nature of of shares shares Status of
Name of shareholders shareholders shareholding held held shares Number
HKSCC NOMINEES Overseas legal
LIMITED 18.11% 350,691,500 0 0
person
SHOUGUANG CHENMING
HOLDINGS COMPANY State-owned
15.13% 293,003,657 0 0
LIMITED legal person
ZHONGRONG
INTERNATIONAL TRUST
CO., LTD. -
HAITONG UMBRELLA
BAO NO. 1 SECURITIES Others 1.74% 33,696,131 0 0
INVESTMENT
ASSEMBLED FUNDS
TRUST
Overseas legal
PLATINUM ASIA FUND 1.67% 32,341,052 0 0
person
CAITONG FUND -
EVERBRIGHT BANK -
CAITONG FUND -
YUAN MEI NO. 2 Others 1.43% 27,706,556 0 0
ASSETS MANAGEMENT
PROGRAMME
CAITONG FUND -
EVERBRIGHT BANK -
YUAN MEI NO. 1 Others 1.40% 27,198,049 0 0
ASSETS MANAGEMENT
PROGRAMME
YUNNAN
INTERNATIONAL TRUST
CO., LTD. - YUNNAN
TRUST Others 0.70% 13,547,397 0 0
GROWTH 2013 - NO. 2
ASSEMBLED FUNDS
TRUST PROGRAMME
BBH A/C VANGUARD
EMERGING MARKETS Overseas legal
0.62% 12,036,985 0 0
STOCK INDEX FUND person
BILL & MELINDA GATES Overseas legal
FOUNDATION TRUST 0.52% 10,033,077 0 0
person
Domestic nature
JIN Xing 0.42% 8,109,300 0 0
person
— 4—
Shareholdings of top ten shareholders of ordinary shares
Number of Share pledged or
Percentage Number of Restricted locked-up
Nature of of shares shares Status of
Name of shareholders shareholders shareholding held held shares Number
Connected relationship or Shouguang Chenming Holdings Company Limited, a state-owned legal person
connected-party shareholder, is not connected with any of the shareholders above. They are not
relationship among the persons acting in concert under Administration of Disclosure of Information on the
above shareholders Change of Shareholdings in Listed Companies Procedures. Both Caitong Fund -
Everbright Bank - Caitong Fund - Yuan Mei No. 2 Assets Management Programme
and Caitong Fund - Everbright Bank - Yuan Mei No. 1 Assets Management
Programme are funds managed by Caitong Fund Management Co., Ltd. Save for
the above, it is not aware that any other shareholders of tradable shares are persons
acting in concert and is also not aware that any other shareholders of tradable shares
are connected with each others.
(3) Table setting out shareholding of top ten shareholders of preference
shares
□ Applicable √ Not applicable
There was no shareholding of shareholder of preference share during the
reporting period.
(4) 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.
— 5—
3. MANAGEMENT DISCUSSION AND ANALYSIS
2014 marked an important year of reform and innovation for paper making
industry. The paper making industry in China has been entering into a new stage
of transformation and upgrade in 2014. Some paper types are in a phase of
overcapacity due to slowdown in economic growth and weakness i n market
demand, thus resulting in fierce competition in the paper making industry. In the
first half of 2014, the domestic pulp and paper market was sluggish due to
the macro environment. The overall market development was weak.
On one hand, some small and medium-sized enterprises left the market as a
result of elimination of outdated production capacity and stricter environmental
protection policy. This lowered the pressure of the new production capacity on
the supply in the industry to a certain extent, which was conductive to a
proactive increase in price proposed by enterprises. Meanwhile, the continued
low level of raw material prices relieved the pressure on the operating costs of
enterprises. On the other hand, the slow recovery of market demand prevented
the price from rising. Enterprises therefore underwent more production and
operation difficulties.
During the reporting period, the Company specified the working principles of
“team building, strict management, outstanding business performance, achieving
good results” for the year and strengthened their implementation and putting
them into practice. It sorted out the existing management system, enhanced team
building, strengthened strict management, improved incentive schemes and
further mobilised the enthusiasm of the cadres and staff. The Company increased
investment in high-efficiency areas by optimising product structure and increase.
It improved performance appraisal systems to fully arouse the enthusiasm of
sales staff. It reduced inventories to proactively respond to the market through
measures including market research and timely developed marketing strategies.
The Company also stepped up efforts to promote new products, the result of
innovation and research and development and established professional sales
teams for high value-added products including the “Forest Love” household
paper, thermal paper and glassine paper to increase the revenue of the Company.
During the reporting period, Jilin Chenming’s environmental protection
relocation project, Wuhan Chenming’s household paper project and Shouguang
Meilun’s paper additives project commenced operation and were reclassified as
fixed assets, which played an important role in the Company’s restructuring, cost
reduction and efficiency enhancement. Jiangxi Chenming’s 350,000 tonne
— 6—
high-end packaging paper project, Zhanjiang Chenming’s 180,000 tonne paper
cup sheets and 190,000 tonne culture paper projects, Huanggang Chenming’s
integrated forestry, pulp and paper project, Shouguang City’s 400,000 tonne
chemical pulp project, Haicheng Haiming’s magnesite mining project,
Guangdong Huirui’s waterfront comprehensive regulation works, and Wuhan
Wan Xing’s real estate , and other projects in the pipeline commenced orderly in
accordance with our plans, which accelerated the transformation, upgrade and
restructuring of the Company, thus further enhancing the Company’s overall
competitiveness.
During the reporting period, a finance company was approved to commence
operation. Meanwhile, the financial leasing company also commenced
operation. Therefore, the Company became the first enterprise in the paper
making industry to own a finance company and a financial leasing company. The
operation of the finance company enables the temporarily idle capital within
the Group to be under the central management of the finance company for the
operation in the interbank lending market and provision of various financial
services, thus realising the transformation of capital management from a
‘custody mode’ to an ‘operation mode’ to effectively enhance the efficiency of
the use of capital and achieve capital appreciation, andpave the way for new
diversification in the development of the Company.
During the reporting period, the Company’s revenue amounted to
RMB9,082.0206 million, down by 9.43% from the corresponding period of the
prior year. The operating costs were RMB7,378.9986 million, down by 10.57%
from the corresponding period of the prior year. Operating profit and net profit
attributable to equity holders of the Company were RMB22.0533 million and
RMB242.4611 million respectively, down by 77.34% and 27.28% respectively
from the corresponding period of the prior year. During the reporting period, the
expenses for the period were RMB1,651.3395 million, down by 0.48% from
the corresponding period of the prior year. Investment in research and
development amounted to RMB186.0690 million, up by 20.80% from the
corresponding period of the prior year. Net cash flows from operating
activities were RMB1,285.6963 million, up by 41.76% from the
corresponding period of the prior year.
— 7—
(1) Year on year changes in major financial information
Unit: RMB
During the
corresponding
During the period of the Increase/ Reason for the
Item reporting period prior year decrease (%) change
Revenue 9,082,020,579.01 10,027,901,358.43 -9.43% —
Operating costs 7,378,998,628.31 8,251,349,814.35 -10.57% —
Selling and distribution
expenses 524,593,811.50 570,398,742.45 -8.03% —
Administrative expenses 500,133,881.63 602,523,953.98 -16.99% —
Finance expenses 626,611,788.47 486,409,117.79 28.82% —
Income tax expenses 34,033,045.12 82,871,206.26 -58.93% ①
Investments in research
and development 186,069,011.16 154,034,416.74 20.80% —
Net cash flows from
1,285,696,261.13 906,935,242.95 41.76% ②
operating activities
Net cash flows from
-1,797,453,118.70 -885,800,802.95 -102.92% ③
investing activities
Net cash flows from
709,490,179.43 -772,501,665.99 191.84% ④
financing activities
Net increase in cash and
184,819,902.18 -744,802,455.71 124.81%
cash equivalents
Explanation on major changes:
① The profitability of the Company decreased as compared to the corresponding period of the
prior year due to the factors such as market and exchange rate changes.
② The Company increased the proportion of payment for goods by bills.
③ The Company made new external entrusted loans.
④ The borrowings for the period increased due to the projects.
The change was primarily due to changes in cash flow from operating activities, investing
activities and financing activities.
— 8—
(2) Analysis of asset and liability
Unit: RMB
31 December Increase/ Reason for the
Item 30 June 2014 2013 decrease change
Monetary funds 3,357,075,224.97 2,547,729,794.24 31.77% ①
Construction in progress 3,383,652,916.06 5,266,031,817.60 -35.75% ②
Construction materials 23,245,677.92 63,968,067.62 -63.66% ③
Other non-current assets 900,000,000.00 — 100.00% ④
Interest payable 246,392,305.53 153,189,860.42 60.84%
Dividend payable 580,921,640.10 — 100.00% ⑥
Long-term payable 128,000,000.00 60,000,000.00 113.33% ⑦
Explanation on major changes:
① The establishment of Shandong Chenming Group Finance Co., Ltd. was approved. Its
registered capital was RMB1 billion. Registration has not been made with the industrial and
commercial administration as at the end of the reporting period.
② Jilin Chenming’s environmental protection relocation project, Wuhan Chenming’s
household paper project and Shouguang Meilun’s paper additives project were reclassified
as fixed assets.
③ Jilin Chenming’s environmental protection relocation project was reclassified as fixed
assets.
④ The Company made new external entrusted loans due after one year.
The interest of “11 Chenming Bond”, “12 Chenming Bond” and 2012 medium-term notes
was payable by the Company.
⑥ Dividend on ordinary shares for 2013 was payable by the Company.
⑦ During the period, the Management Committee of Nanchang Economic and Technological
Development Zone provided borrowings of RMB68.00 million for the phase II project of
Jiangxi Chenming.
(3) Future Development
The industry to which the Company belongs is the paper making industry, which
is a light industry. The paper making industry is an important basic raw materials
industry which is closely related to the national economy and social
development. The paper making industry features capital and skills intensive
characteristics with prominent economy of scale. Its growth rate is strongly and
positively correlated to that of GDP. In respect of the industry, since 2013, some
paper types are in a phase of overcapacity due to slowdown in economic growth
— 9—
and weak market demand, resulting in fierce competition in the paper making
industry. The outlook of the domestic paper and pulp market is not promising due
to the macro environment. The overall market development is weak with
sluggish market condition. However, the development conditions for the paper
making industry are gradually improving in the long run. The National
Development and Reform Commission, Ministry of Industry and Communication
and State Forestry Administration have jointly issued the Twelfth Five-Year Plan
for the Development of the Paper Making Industry, which clearly states the
general direction of “controlling total volume, promoting concentration,
optimising raw materials and reducing energy consumption and emission”, from
which the Company is expected to benefit in the long run. Elimination of
outdated production capacity and the stricter environmental protection policy
will force some small and medium-sized enterprises to leave the industry,
thereby lowering the pressure of the new production capacity on the supply in
the industry to a certain extent, which is conducive to a proactive increase in
price proposed by enterprises. Meanwhile, the continued low level of raw
material prices relieved the pressure on the operating costs of enterprises.
In recent years, the Company is committed to the integrated development of
forestry, pulp and paper with a longer industry chain and more comprehensive
paper types. The Company has carried out capacity expansion on paper types
with better prospects. The Company’s direction of development is in line with
the requirements of the development plan of the entire paper making industry.
Meanwhile, the operation of the finance company and the financial leasing
company signifies that the Company has officially stepped into the financial
sector. Moreover, the Company has engaged in various operations such as
waterfront regulation, magnesite mining, and real estate development, thereby
expanding its industry chain with a more rationalised industry positioning, which
further strengthen the Company’s competitiveness and development potential. As
the industry gradually recovers with the economic turnaround, the results of the
Company will make great strides.
In 2014, the Company will focus on an overall strengthening of management and
improving operational quality to ensure a sustainable development. In view of
this, the Company has adopted the guidelines of “team building, strict
management, outstanding business performance, achieving good results” as the
working principles of the year. The Company will continue to focus on the
following areas in the second half of 2014 in line with its strategic objectives:
Corporate Management: firstly, the Company will firmly establish and strictly
implement the working principles of “team building, strict management,
outstanding business performance, achieving good results”; and secondly, the
— 10 —
Company will adopt four measures in corporate management, as follows: ①
revise the existing management system by making it simple, effective, and easy
to implement in order to create the basic conditions for strict management; ②
enhance team building by employment of qualified employees and dismissal of
unqualified employees; ③ strengthen strict and careful management, with special
emphasis on “strict” and “careful”; and ④ improve incentive schemes by
innovative incentives and adoption of appointment through competition to
further mobilise the enthusiasm of the cadres and staff.
Operation and management: the Company will increase efficiency by optimising
product structure and increase investment in high-efficiency areas. It will make
reference to advanced corporate marketing incentives, improve performance
appraisal systems to fully arouse the enthusiasm of sales staff. It will implement
system optimisation and strictly control risk. The Company aims to reduce
inventories and capital appropriations to proactively respond to the market
through measures including market research and timely developed marketing
strategies. The Company will also enhance new product promotion and establish
professional sales teams for high value-added products to increase the revenue
of the Company.
Production management: firstly, the Company places great emphasis on the
operation of production upgrade projects and new production projects. It focuses
on the management of its 800,000 tonnes coated paper project, 600,000 tonnes
bleached kraft liner board project, Jilin Chenming’s environmental protection
relocation project, Meilun’s paper additives projects and Wuhan’s specialty
paper upgrade and household paper projects to accelerate growth in efficiency.
Secondly, it will speed up product restructuring and new product development,
strengthen new product development, enrich product structure, improve the
ability to respond to the market, and increase sales of new products and high
value-added products. Thirdly, special emphasis will be placed on technology
development and application to improve the Company’s core competitiveness.
Research on the use of fibre reinforced and filler modification technology as
well as new alternative adhesives technology will be conducted to reduce costs
and increase efficiency. Fourthly, it will implement strict equipment
management to eliminate serious accidents involving equipment. Fifthly, the
Company will continue to implement post setting and staffing and reduce labour
costs through post consolidation and improvement in automation.
Project management: firstly, the Company will revise and improve its original
project management system to make the system fully reflect the principle for
project construction of “careful planning, casting quality products, striving for
progress and effectiveness verification”. Secondly, the Company will enhance
— 11 —
the professional skills of project personnel by encouraging them to learn outside
the Company and engage them to learn in the Company. Thirdly, it will adopt
strict requirements from the pre-feasibility studies to process control, and from
construction company tenders to selection of equipment suppliers to ensure the
overall quality of the project. Fourthly, it will specific clear project details and
quality objectives, highlight project staff ’s accountability and implement a strict
reward and punishment system. The Company will focus on implementing the
following tasks: ① for projects under construction including Jiangxi Chenming’s
350,000 tonne high-end packaging paper, Zhanjiang Chenming’s 180,000 tonne
paper cup sheets and 190,000 tonne culture paper projects, the Company will
ensure comprehensive control and assessment, as well as strict quality and cost
control to ensure timely commencement of production; ② planned and approved
projects including Huanggang Chenming’s integrated forestry, pulp and paper
project and Shouguang City’s 400,000 tonne chemical pulp project will undergo
repeated verification and optimisation to ensure that these projects will become
world-class quality products.
Other aspects: firstly, the Company will make full use of offshore funds and
reduce finance costs through the finance company and financial leasing
company. Secondly, it will reduce finance costs by increasing use of offshore
funds, expanding financing channels and improving capital use efficiency.
Thirdly, it aims to achieve economic efficiency by increasing trade volume
through import and export companies, developing new customer sources,
establishing strategic partnerships and controlling quality supplies. Fourthly, it
will reduce inventories and improve contract compliance rate to reduce capital
appropriations and financing costs.
4. EVENTS RELATING TO THE FINANCIAL REPORT
(1) Reason for changes in accounting policies, accounting estimates and
accounting methods as compared to the financial report for the prior year
√ Applicable □Not applicable
During the reporting period, in accordance with the requirements of “Notice on
the issuance of ‘Accounting Standard for Business Enterprises No. 2 — Long-
term equity investments’” (Cai Kuai [2014] No. 14) and “Notice on the
issuance of ‘Accounting Standard for Business Enterprises No. 41 — Disclosure
of interests in other entities’” (Cai Kuai [2014] No. 16), entities listed overseas
are encouraged to early adopt the above two accounting standards issued or
— 12 —
amended in 2014. The Company implemented the above two accounting
standards in preparation of the financial statements for the first half of 2014 as
a listed company in the PRC and Hong Kong, and made adjustments in
accordance with the requirements therein.
Unit: RMB
Items set out in Effect on
relevant Effect on the the am ounts
Details and reason of changes in statements am ounts as at 31 as at 30
accounting policies affected December 2013 June 2014
In accordance with “Accounting Long-term equity
Standard for Business Enterprises 83,260,425.53 83,000,000.00
investments
No. 2 — Long-term equity
investments”, for any long-term
equity investment unable to
exercise common control or
significant influence over the
investee, and not quoted in an Available-for-sale
active market so that its fair value 83,260,425.53 83,000,000.00
financial assets
cannot be reliably measured, it is
reported as an available-for-sale
financial asset instead of a
long-term equity investment by the
Company.
(2) Reason for retrospective restatement to correct major accounting errors
during the reporting period
□ Applicable √ Not applicable
During the reporting period, there was no retrospective restatement to correct
major accounting errors.
(3) Reason for changes in scope of the consolidated financial statements as
compared to the financial report for the prior year
√ Applicable □ Not applicable
① During the reporting period, the Company established two companies
through investments, namely Shandong Chenming Financial Leasing Co.,
Ltd. and Shandong Chenming Investment Limited.
In order to promote diversified development of the Company, further expand its
business scope, enhance its overall strength and comprehensive competitiveness,
develop new sources of profit growth, the Company convened the fourth
extraordinary meeting of the seventh session of the Board on 17 January 2014,
at which the Resolution on Establishing a Financial Leasing Company was
considered and approved. On 21 February 2014, the Company invested
— 13 —
RMB300.00 million, through Chenming (HK) Limited, a wholly-owned
subsidiary of the Company, to establish Shandong Chenming Financial Leasing
Co., Ltd., which was consolidated into the financial statements of the Company
since February 2014.
In order to promote diversified development of the Company, further expand its
business scope, enhance its overall strength and comprehensive competitiveness,
develop new sources of profit growth, the Company convened the fourth meeting
of the seventh session of the Board on 20 March 2014, at which the Resolution
on Establishing Shandong Chenming Investment Co., Ltd. was considered and
approved. On 26 March 2014, the Company invested RMB200.00 million,
through Chenming (HK) Limited, a wholly-owned subsidiary of the Company, to
establish Shandong Chenming Investment Co., Ltd., which was consolidated into
the financial statements of the Company since March 2014.
② During the reporting period, the control over Shandong Chenming Xinli Power Co.,
Ltd. was lost due to disposal of equity interest, and therefore the company ceased to
be included in the scope of consolidation; and the registration of Shouguang
Chenming Tianyuan Arboriculture Co., Ltd. and Shouguang Hengfeng Storage
Co., Ltd. were cancelled according to actual needs of operations. Therefore, the
above two companies ceased to be included in the scope of consolidation.
On 15 November 2013, the Company convened the third extraordinary meeting
of the seventh session of the Board and approved the Resolution on Disposal of
Equity Interest in Xinli Power”. On 4 March 2014, the Company entered into an
equity interest contract with Guangdong Dejun Investment Co., Ltd. to transfer
its 51% equity interest in Shandong Chenming Xinli Power Co., Ltd. at a
consideration of RMB76.1940 million. The Company lost its control over Xinli
Power, which ceased to be included in the scope of consolidation with effect
from 4 March 2014.
Shouguang Chenming Tianyuan Arboriculture Co., Ltd. and Shouguang
Hengfeng Storage Co., Ltd. had not engaged in any business activity for years.
The Company cancelled their registration to save the related expenses. The
related assets and liabilities were consolidated into the financial statements of
the Company. The above two companies ceased to be included in the scope of
consolidation with effect from May 2014.
— 14 —
(4) Opinions of the Board of Directors and the Supervisory Committee
regarding the “m odified auditor’s report” for the reporting period issued
by the accountants
□ Applicable √ Not applicable
SHANDONG CHENMING PAPER HOLDINGS LIMITED
27 August 2013
— 15 —
