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 (the “Report”), guarantee that there are no false representations,
misleading statements or material omissions contained in this Report, and are jointly and severally responsible for the liabilities of
the Company.
All Directors were present in person at the Board meeting to consider and approve this Report.
The Company does not propose distribution of cash dividends or bonus shares, and there will be no increase of share capital from
reserves.
Chen Hongguo, head of the Company, Dong Lianming, head in charge of accounting and Liang Tingkun, head of the accounting
department (Accounting Officer), declare that they warrant the truthfulness, accuracy and completeness of the financial statements
in the interim report.
The Company is exposed to various risk factors such as macro-economic fluctuation, adjustment of state policy, intensified
competition in the industry, as well as change in exchange rate. Investor should be aware of investment risks. For further details,
please refer to the risk factors likely to be faced and the measures to be taken as set out in the outlook on the future development of
the Company in the Directors’ Report.
15
INTERIM
REPORT
SHANDONG CHENMING PAPER HOLDINGS LIMITED 1
I Important Notice, Table of Contents and Definitions
Table of contents
I Important Notice, Table of Contents and Definitions 3
II Company Profile 4
III Summary of Accounting Data and Financial Indicators 5
IV Directors’ Report 7
V Material Matters 23
VI Changes in Share Capital and Shareholders 34
VII Preference Shares 38
VIII Directors, Supervisors and Senior Management 39
IX Financial Report 41
X Documents Available for Inspection 144
15
INTERIM
REPORT
2 SHANDONG CHENMING PAPER HOLDINGS LIMITED
I Important Notice, Table of Contents and Definitions
Definitions
Item means Definition
Company or Chenming Paper means Shandong Chenming Paper Holdings Limited
Group means Shandong Chenming Paper Holdings Limited and its subsidiaries
Chenming Holdings means Shouguang 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.
Chenming (HK) means Chenming (HK) Limited
Jilin Chenming means Jilin Chenming Paper Co., Ltd.
Shouguang Meilun means Shouguang Meilun Paper Co., Ltd. 15
INTERIM
Chenming Sales Company means Shandong Chenming Paper Sales Company Limited REPORT
Finance Company means Shandong Chenming Group Finance Co., Ltd.
Financial Leasing Company means Shandong Chenming Financial Leasing Co., Ltd.
Investment Company means Shandong Chenming Investment Limited
New Third Board Investment Fund means Zhuhai Dechen New Third Board Equity Investment Fund Company (Limited
Partnership)
reporting period means The period from 1 January 2015 to 30 June 2015
SHANDONG CHENMING PAPER HOLDINGS LIMITED 3
II Company Profile
I. Company profile
Stock abbreviation Stock Code 000488
Stock abbreviation B Stock Code 200488
Stock abbreviation Chenming Paper Stock Code 1812
Stock exchanges on which the shares are listed Shenzhen Stock Exchange and The Stock Exchange of Hong Kong
Limited
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
Securities Affairs
Secretary to the Board Representative Hong Kong Company Secretary
Name Wang Chunfang Xiao Peng Poon Shiu Cheong
Correspondence No. 2199 East Nongsheng Road, No. 2199 East Nongsheng Road, 22nd Floor, World Wide House,
Address Shouguang City, Shouguang City, Central, Hong Kong
Shandong Province Shandong Province
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
15
INTERIM III. Other information
REPORT
1. Contact methods of the Company
Whether the registered address, office address, postal code, website, email of the Company changed during the
reporting period
Applicable √ Not applicable
There was no change of the registered address, office address, postal code, website and email of the Company during
the reporting period. Please refer to 2014 Annual Report for details.
2. Information disclosure and places for inspection
Whether the information disclosure and places for inspection changed during the reporting period
Applicable √ Not applicable
There was no change of the newspapers designated by the Company for information disclosure, designated websites
for the publication of the Interim Report as approved by CSRC and places for inspection of the Company’s Interim
Report during the reporting period. Please refer to 2014 Annual Report for details.
3. Change of registration information
Whether the registration information changed during the reporting period
Applicable √ Not applicable
There was no change of the registration information of the Company, such as date and address of registration, legal
person business license registration number, taxation registration number and organisation code, during the reporting
period. Please refer to 2014 Annual Report for details.
4 SHANDONG CHENMING PAPER HOLDINGS LIMITED
III Summary of Accounting Data and Financial Indicators
I. 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
Increase/decrease
for the reporting
period as
compared to the
The corresponding corresponding
The reporting period of period of
period the prior year the prior year
Revenue (RMB) 9,718,697,677.76 9,082,020,579.01 7.01%
Net profit attributable to shareholders
of the Company (RMB) 276,388,070.51 242,461,095.02 13.99%
Net profit after extraordinary gains or losses attributable
to shareholders of the Company (RMB) 174,462,219.94 57,813,473.27 201.77%
Net cash flows from operating activities (RMB) -2,222,755,634.73 1,285,696,261.13 -272.88%
Basic earnings per share (RMB per share) 0.14 0.12 16.67%
Diluted earnings per share (RMB per share) 0.14 0.12 16.67%
Rate of return on net assets on weighted average basis 1.97% 1.72% 0.25%
Increase/decrease
as at the end 15
of the reporting INTERIM
REPORT
As at the end period as compared
of the As at the end of to the end
reporting period the prior year of the prior year
Total assets (RMB) 63,749,809,197.37 56,822,026,545.21 12.19%
Net assets attributable to shareholders
of the Company (RMB) 13,938,653,299.56 13,917,343,301.15 0.15%
SHANDONG CHENMING PAPER HOLDINGS LIMITED 5
III Summary of Accounting Data and Financial Indicators
II. 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.
III. Items and amounts of extraordinary gains or losses
√ Applicable Not applicable
Unit: RMB
Item Amount Explanation
15 Profit or loss from disposal of non-current assets
Government grants (except for the government grants
4,358,929.60
INTERIM
REPORT 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 58,824,671.63
Profit or loss from debt restructuring 23,308.47
Profit or loss arising from external entrusted loans 48,777,777.77
Gain or loss from changes in fair value of consumable
biological assets subsequently measured at fair value -2,177,906.88
Non-operating gains and losses other than the above items 8,552,098.95
Less: Effect of income tax 16,531,107.30
Effect of minority interests -98,078.33
Total 101,925,850.57
Notes for the Company‘s extraordinary gain or loss items as defined in the Explanatory Announcement on Information
Disclosure for Companies Offering Their Securities to the Public No.1 - Extraordinary Gains or Losses and 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 defined or 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 during the reporting period.
6 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IV Directors’ Report
I. Overview
In the first half of 2015, there had been downward pressure in China’s macro-economy with a slowdown in growth rate.
However, there was steady progress in new directions amid the sluggishness and the overall economy was maintained
at a stable upward trend. The paper making industry remained in the stage of eliminating outdated production capacity
and adjusting the product mix, and prices of paper products hovered at a low level facing the imbalanced supply and
demand during the first half of the year. However, the supply and demand fundamentals was improving with prices of raw
materials stabilising, which, in addition to the more stringent environmental protection policies and moderating outdated
capacity elimination and new capacity, will likely bring a turnaround to the performance of the industry on the back of further
concentration and new growth points resulting from business transformation in the long run.
In 2015, the Company has been actively adjusting to the “new normal” economic development by accelerating transformation
and upgrade and enhancing operation quality. During the reporting period, the Company consistently implemented the
working principles of “Team Building, Strict Management, Outstanding Business Performance, Achieving Good Results” with
focus on basic and team building and reorganising systems to enhance execution. It elevated its human resources structure
and thus its teams through work report and performance assessment. It also strengthened risk control and overseas sales
management and reduced outstanding receivables to enhance management over key operations areas.
During the reporting period, the Company implemented good progress control over projects. Jiangxi Chenming’s 350,000
tonne high end packaging paper project would come into trial operation. These projects coming in stream speeded up the
Company’s restructuring and transformation. Shouguang Chenming railroad extension formally opened, enabling further
reduction of procurement costs by allowing upstream bulk procurement. Zhanjiang Chenming’s Biomass vaporisation project,
which significantly lowered production costs as well as pollutant emission through the advanced circulating fluidised bed
boiler technology, was completed. Those projects under construction, namely Huanggang Chenming’s integrated forestry,
pulp and paper project, Shouguang’s 400,000 tonne chemical pulp project, Haicheng Haiming’s magnesite mining project,
Guangdong Huirui’s Haidong New District Waterfront comprehensive regulation works and property development project
15
INTERIM
of Wan Xing Real Estate in Wuhan, are steadily carried out according to plan and have made substantial progress, further REPORT
enhancing the overall competitiveness of the Company.
During the reporting period, the Company also diversified into the financial segment. By virtue of strong capital support of
the Group, the Financial Leasing Company made good use of the international and market-oriented edge inherent in a listed
company and spread its coverage nationwide. It not only achieved higher financing efficiency in internal services, but also had
higher profitability in external business and brought a new source of profit growth to the Company. After a capital increase,
it is expected that the Financial Leasing Company’s performance is definitely worth looking forward to. For the management
of the Finance Company, with the approval for operation of the new business, the Finance Company will make progress in
external equity investments and quoted securities investments, thus providing new impetus for our growth in earnings.
Based on the above, as the industry is bottoming out with elimination of outdated production capacity and improvement
in supply and demand fundamentals, it is expected that the Company will turn around with the industrial recovery. While
strengthening its principal businesses, the Company proactively strives to diversify by positioning itself in the financial sector
with initial success. The financial segment will become a major driving force for the future results of the Company and further
boost the profitability of the Company.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 7
IV Directors’ Report
II. Analysis of principal operations
Year on year changes in major financial information
Unit: RMB
During the
corresponding
During the period of Increase/
reporting period the prior year decrease Reason for the change
Revenue 9,718,697,677.76 9,082,020,579.01 7.01% Sales of paper products increased
and the Financial Leasing Company
newly established external business
Operating costs 7,370,384,661.31 7,378,998,628.31 -0.12%
Selling and distribution 551,073,823.71 524,593,811.50 5.05%
expenses
Administrative 654,253,969.26 500,133,881.63 30.82% Increase in research and development
expenses expenditure due to greater investment
in research and development made
by the Company.
Finance expenses 745,472,279.11 626,611,788.47 18.97% Increase in interest expenses.
Income tax expenses 173,411,302.61 34,033,045.12 409.54% A year-on-year increase in profitability
of the Company.
Investments in research 278,819,214.56 186,069,011.06 49.85% The Company made greater investment
15 and development in research and development so as to
INTERIM increase its competitiveness.
REPORT
Net cash flows from -2,222,755,634.73 1,285,696,261.13 -272.88% The Financial Leasing Company came
operating activities into operation with growth in business
volume.
Net cash flows from -1,201,478,950.29 -1,797,453,118.70 33.16% Commencement of external entrusted
investing activities loan operation by the Company in the
prior year.
Net cash flows from 3,152,446,052.60 709,490,179.43 344.33% Issue of RMB3.6 billion short-term
financing activities commercial paper.
Net increase in cash -250,918,819.93 184,819,902.18 -235.76%
and cash equivalents
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.
Disclosure of future development and continued planning during the reporting period in public documents
such as IPO prospectus, offering documents and asset reconstruction report
Applicable √ Not Applicable
There was no disclosure of future development and continued planning during the reporting period in public documents such
as IPO prospectus, offering documents and asset reconstruction report.
Progress of operating plans disclosed in corporate review during the reporting period
For details, please refer to “I. Overview” of this section.
8 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IV Directors’ Report
III. Analysis of liquidity, financial resources and capital structure disclosed in accordance with the
listing rules of the Hong Kong Stock Exchange
As at 30 June 2015, the Group’s current ratio was 74.38%. The quick ratio was 58.35%. The gearing ratio was 77.50%. The
accounts receivable turnover ratio was 331.17% (Accounts receivable turnover ratio = turnover/weighted average accounts
receivable and net bills*100%). The inventory turnover ratio was 353.70% (Inventory turnover ratio = cost of sales of the
products/weighted average net inventory*100%).
There was no significant seasonal trend for capital requirements of the Group.
The Group’s sources of capital primarily came from cash generated from operating activities, borrowings from financial
institutions, open issuance of corporate bonds in the capital market, as well as issuance of privately placed bonds, medium-
term notes and short-term commercial paper in the interbank market.
As at 30 June 2015, the total bank borrowings, corporate bonds, medium-term notes and privately placed bonds of the Group
were RMB28,051 million, RMB5,782 million, RMB2,589 million and RMB3,632 million (As at the end of the prior year: the total
bank borrowings, corporate bonds, and medium-term notes and privately placed bonds of the Group were RMB25,949 million,
RMB5,777 million and RMB2,585 million, respectively). As at 30 June 2015, the Group had monetary funds of RMB6,993
million (As at the end of the prior year: RMB5,476 million) in total (For the breakdown of monetary funds, please refer to “Section
IX. VII.1 Note on Monetary Funds” in this report).
To strengthen our 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 2015, the Group
had 12,571 employees. The total staff remuneration for the first half of 2015 amounted to RMB316.4808 million (as at the end
of the prior year, the Group had 12,833 employees. The total staff remuneration for 2014 amounted to RMB625.2310 million).
Major investment projects of the Company during the second half of 2015 will include Jiangxi Chenming’s 350,000 tonne high-
15
INTERIM
end packaging paper project, Huanggang Chenming’s integrated forestry, pulp and paper project, Shouguang City’s 400,000 REPORT
tonne chemical pulp project, Haicheng Haiming’s magnesite mining project, Guangdong Huirui’s waterfront comprehensive
regulation works project, Wuhan Wan Xing’s real estate development project and other projects.
Our 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 2015, please refer to “Section IX. VII. 55. Details
of assets with restricted ownership or right of use” in this report.
As at 30 June 2015, no contingent event was required to be disclosed by the Group.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 9
IV Directors’ Report
IV. Components of principal operations
Unit: RMB
Increase/decrease
Increase/decrease Increase/decrease of gross profit
of revenue as of operating costs margin as
compared to the as compared to compared to the
corresponding the corresponding corresponding
period of the period of the period of the
Revenue Operating costs Gross profit margin prior year prior year prior year
By industry
Machine-made paper 8,868,460,907.69 6,966,238,393.81 21.45% 3.78% -0.55% 3.41%
Electricity and steam 180,357,434.35 123,066,649.13 31.77% -9.22% -14.96% 4.60%
Construction materials 49,824,616.83 37,848,419.37 24.04% 17.54% 35.33% -9.98%
Chemical products 102,073,407.08 83,247,439.35 18.44% 7.87% 8.22% -0.27%
Hotel 13,576,184.58 3,305,692.10 75.65% -8.89% -2.73% -1.54%
Others 323,945,609.51 40,854,357.51 87.39% 397.01% -35.73% 84.91%
By products
Light weight coated paper 326,115,470.96 279,821,845.40 14.20% -6.31% -11.54% 5.08%
Duplex press paper 2,180,961,187.95 1,657,673,349.40 23.99% 51.34% 46.11% 2.72%
Writing paper 107,445,824.99 86,557,656.08 19.44% 30.43% 38.88% -4.90%
Coated paper 2,096,633,394.41 1,599,511,246.83 23.71% -4.06% -12.12% 7.00%
News press paper 478,061,938.68 373,295,620.43 21.91% -7.96% -3.07% -3.94%
15 Paperboard
White paper board
134,207,618.47
874,197,258.30
133,491,068.66
680,079,684.48
0.53%
22.21%
-64.22%
-7.03%
-62.57%
-10.33%
-4.39%
2.86%
INTERIM Electrostatic paper 730,621,568.87 500,585,318.42 31.49% -13.07% -21.65% 7.51%
REPORT Household paper 325,165,670.13 276,075,027.57 15.10% 28.06% 19.70% 5.93%
Other machine-made paper 1,615,050,974.95 1,379,147,576.53 14.61% 3.54% 5.96% -1.95%
Electricity and steam 180,357,434.35 123,066,649.13 31.77% -9.22% -14.96% 4.60%
Construction materials 49,824,616.83 37,848,419.37 24.04% 17.54% 35.33% -9.98%
Chemical products 102,073,407.08 83,247,439.35 18.44% 7.87% 8.22% -0.27%
Hotel 13,576,184.58 3,305,692.10 75.65% -8.89% -2.73% -1.54%
Others 323,945,609.51 40,854,357.51 87.39% 397.01% -35.73% 84.91%
By geographical segment
Mainland China 7,791,146,285.63 5,690,144,127.24 26.97% 8.66% 1.75% 4.96%
Other countries and regions 1,747,091,874.41 1,564,416,824.03 10.46% -2.47% -9.50% 6.95%
10 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IV Directors’ Report
V. Analysis of asset and liability
Unit: RMB
Increase/ Reason for
Item 30 June 2015 31 December 2014 decrease the change
Other receivables 2,480,908,390.56 1,776,467,886.07 39.65% (1)
Available-for-sale financial assets 409,000,000.00 73,000,000.00 460.27% (2)
Long-term payables 5,035,760,955.94 1,420,598,667.99 254.48% (3)
Long-term equity investments 83,942,816.67 36,087,848.12 132.61% (4)
Bills payable 2,495,752,255.20 1,598,110,792.85 56.17% (5)
Interest payable 246,392,305.46 150,047,305.50 64.21% (6)
Other payables 1,145,101,448.59 783,790,884.61 46.10% (7)
Explanation on major changes:
(1) Mainly due to leaseback arrangements and other activities within one year were classified under other receivables by
the Financial Leasing Company.
(2) Mainly due to new equity investments made by the Company into Shanghai Leadbank Asset Management Co., Ltd. and
Shanghai Zhongneng Enterprise Development (Group) Co., Ltd. during the current period.
(3) Mainly due to the Financial Leasing Company commencing new business.
(4) Mainly due to a new equity investment made by the Company into Zhuhai Dechen New Third Board Equity Investment
Fund Company (Limited Partnership) during the current period. 15
INTERIM
(5) Mainly due to stepping up efforts to settle external payment by bills by the Company. REPORT
(6) Mainly due to the interests on corporate bonds not due for payment.
(7) Mainly due to the Financial Leasing Company commencing operation and receiving deposits.
VI. Analysis of Core Competitiveness
The Company is a large enterprise primarily engaged in forestry, pulping and paper-making operations with diversified
operations. It is also the only listed company with three types of listed shares (i.e. A shares, B shares and H shares) in China.
Compared with other enterprises in the industry, the Company has the following advantages:
1. Scale advantages
After years of development, the Company has achieved annual pulp and paper production capacity of 8.00 million
tonnes and is capable to compete with international paper making enterprises in scale. Large-scale centralised
production has provided the Company with obvious economic benefits, which are reflected not only in the
manufacturing costs of products, but also in its strong market influence in raw material procurement, product pricing
and industry policymaking.
2. Product advantages
While the production scale of the Company was expanding rapidly, its product mix also continued to optimise. In
recent years, the Company has built production lines for cultural paper such as high-end coated paper, high-end light
weight coated paper and high-end white paper board, and achieved higher technological content of products and
added values as well as a higher gross profit margin. The product mix of the Company gradually diversified into five
major paper types, namely printing paper, packaging paper, office paper, industrial paper and household paper, as well
as the nine major product series which focused on high and middle end products, including high-end coated paper,
white paper board, coated linerboard, news press paper, light weight coated paper, duplex press paper, light weight
paper, electrostatic paper and household paper. Thus, the Company has become the enterprise that offers the widest
product range in China’s paper making industry. Diversification and gentrification of the product mix has not only greatly
enhanced the Company’s ability to withstand market risks, but also enabled the Company to maintain a relatively high
profitability.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 11
IV Directors’ Report
VI. Analysis of Core Competitiveness
3. Advantages in technical equipment
The Company’s overall technical equipment has reached the advanced international level. The main production
equipment have been imported from internationally renowned manufacturers, including Valmet, Ahlstrom and Metso of
Finland, Voith of Germany and TBC of the United States. In particular, Shouguang Meilun’s production lines for high-
end white coated linerboard project of production capacity of 600,000 tonnes and high-end low weight coated paper
project of production capacity of 800,000 tonnes, as well as Zhanjiang Chenming’s production line for high-end cultural
paper project of production capacity of 650,000 tonnes were leading production lines with greatest production capacity,
widest length of paper produced and highest equipment standard among similar production line worldwide. In addition,
various technical indicators of products had reached the international leading level.
4. Research and innovation and new product development advantages
Leveraging its research strengths and relied on state-level enterprise technical centres and post-doctoral research
stations, the Company has established a comprehensive intellectual property rights system, and has continuously
enlarged its technological innovation capacity and research and development efforts to actively develop new products
and proprietary technology with high technology content and added values. The Company has undertook 7 national
new product trial production projects, 2 national torch programs, 3 national scientific research projects and 28
provincial innovative projects. In addition, the Company won 9 provincial or above technology advanced awards. Our
major product, high-end coated paper, won the First Class Prize for advanced technology in Shandong Province. The
Company has been granted 157 national patents, of which 12 were invention patents. Our “Chenming” trademark has
been recognised as a well-known trademark in China.
15 5. Funding advantages
INTERIM
REPORT
The paper making industry is a capital-intensive industry, and funding is one of the most important factors influencing
the development of the industry. The Company has high profitability and credit status, and has maintained long-term
stable cooperative relations with its bankers, which provide the Company with an unobstructed indirect financing
capacity. Since its listing, the Company has maintained good operating results and a sound corporate governance
structure. It has conducted several financing activities in domestic and foreign capital markets. As the funds obtained
have been applied effectively with good market image, the Company has stronger abilities in direct financing in the
capital market.
6. Advantages in environmental regulation capacity
Over the years, the Company has firmly established “environmental protection first, scale expansion second” as
the concept of development. The Company has ensured the enhancement of economic and environmental benefits
simultaneously by giving equal importance to environmental protection and production. In recent years, the Company
and its subsidiaries have constructed the pollution treatment facilities including the alkali recovery system, middle
water treatment system, white water recovery system and black liquor comprehensive utilisation system, as well as the
sewage treatment plants, which guarantee that the environmental protection facilities can meet the demand of the rapid
expansion of the Company. The environmental emission indicators of the Company are in the top rank among industry
peers.
7. Advantages in diversified development
The Company has established a financial segment, which comprises of the Financial Leasing Company, the Finance
Company, the Investment Company and the New Third Board Investment Fund. Currently, both the Financial Leasing
Company and the Finance Company have generated profits. Those companies have huge potential for development. In
addition, profitability of the financial industry is higher than that of the traditional papermaking industry, thus providing
new sources of profit growth for the Company. Apart from entering into the financial industry, the Company has
also entered into the fields of energy exploration and waterfront regulation works. It proactively facilitates diversified
development, thereby further enhancing its competiveness and strength.
12 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IV Directors’ Report
VII. Analysis of Investments
1. External equity investments
(1) External investments
√ Applicable Not applicable
External investments
Investments during
Investments during the the corresponding period
reporting period (RMB) of prior year (RMB) Change
2,134,143,400.00 1,609,917,592.00 24.56%
Investees
The Company’s
share of interest
Names of the companies Principal activities in investees
Shandong Chenming Financial Financial leasing business, operating leasing 100.00%
Leasing Co., Ltd. business, domestic and overseas leased assets
acquisition, disposal of residual value and
maintenance of leased assets, and consultation on
leasing transactions.
Shanghai Leadbank Asset Financial consultation, corporate management 3% 15
Management Co., Ltd. consultation, marketing planning, and convention INTERIM
services etc. REPORT
Jinan Chenming Investment Investment with self-owned assets, investment 100.00%
Management Co., Ltd. management, investment consultation, corporate
management consultation, commercial information
consultation, and financial consultation etc.
Zhuhai Dechen New Third Equity investment in unlisted enterprises, equity 33.33%
Board Equity Investment Fund investment, and listing consultation for enterprises.
Company (Limited Partnership)
Shanghai Zhongneng Enterprise Industrial investment, construction works, 30.00%
Development (Group) Co., Ltd. commercial consultation, and sales of electricity,
power station equipment sets, automated devices,
electromechanical equipment, engineering
equipment, environmentally friendly equipment and
construction materials.
Chenming Paper Korea Co., Ltd. Trading of paper products. 100.00%
SHANDONG CHENMING PAPER HOLDINGS LIMITED 13
IV Directors’ Report
VII. Analysis of Investments (Cont’d)
1. External equity investments (Cont’d)
(2) Shareholding in financial companies
√ Applicable Not applicable
Initial Shareholding as Number of shares Shareholding Carrying amount Gain or loss for
investment Initial number of at the beginning held as at the end as at the end of as at the end of the reporting
Name of company Type (RMB) shares held (share) of the period of the period (share) the period the period (RMB) period (RMB) Accounting treatment Source of shares
Shandong Chenming Group Other 1,000,000,000.00 100.00% 100.00% 1,030,619,728.00 23,906,081.64 Long-term Capital contribution
Finance Co., Ltd. equity investment
(3) Security investments
Applicable √ Not applicable
The Company did not have any security investments during the reporting period.
(4) Equity interest in other listed companies
Applicable √ Not applicable
The Company did not have any equity interest in other listed companies during the reporting period.
15 2. Entrusted wealth management, derivative investments and entrusted loans
INTERIM
REPORT (1) Entrusted wealth management
Applicable √ Not applicable
The Company did not have any entrusted wealth management during the reporting period.
(2) Derivatives investments
Applicable √ Not applicable
The Company did not have any derivative investments during the reporting period.
(3) Entrusted loans
√ Applicable Not applicable
Unit: RMB’0,000
Interest rate
Borrower Related parties Loan amount of loans Guarantor or Collateral Use of proceeds by borrowers
Shouguang Jin Cai No 90,000 10.00% S h o u g u a n g I n f r a s t r u c t u r e F u n d Construction, investment and
Public Assets Management Centre shall pledge 20% of o p e r a t i o n o f u r b a n a n d r u r a l
Management Co., Ltd. the equity interest of the Shouguang Jin infrastructure.
Cai Public Assets Management Co., Ltd.
held by it.
Total 90,000
Disclosure date of approval of entrusted loans in board meeting 18 January 2014
14 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IV Directors’ Report
VII. Analysis of Investments (Cont’d)
3. Utilisation of proceeds raised
Applicable √ Not applicable
The Company did not utilise any proceed raised during the reporting period.
4. Analysis of major subsidiaries and investees
√ Applicable Not applicable
Information on major subsidiaries and investees
Unit: RMB’0,000
Type of Principal products Registered Revenue from
Name of companies companies Industry or services capital Total assets Net assets operations Operating profit Net profit
Zhanjiang Chenming Pulp & Limited liability Paper making Pulp, duplex press RMB3,000.00 million 1,397,524.45 330,539.13 210,191.28 29,433.95 21,812.59
Paper Co., Ltd. company and electrostatic paper
Shandong Chenming Group Limited liability Financial Financial services RMB100.00 million 243,696.49 103,061.97 5,206.13 3,182.61 2,390.61
Finance Co., Ltd. company industry
Chenming (HK) Limited Limited liability Trading of paper Sales of paper products, US$29.90 million 1,417,635.19 57,684.56 294,976.74 22,324.97 16,787.97
company products import of raw materials
and processing
Shouguang Meilun Limited liability Paper making Coated paper, white RMB3,000.00 million 1,345,687.38 400,801.71 243,453.57 30,904.70 23,388.59
Paper Co., Ltd. company coated linerboard and
Wuhan Chenming Hanyang Limited liability Paper making
household paper
Writing paper, news RMB211.3670 million 331,210.90 31,786.87 50,460.19 -4,090.26 -3,114.35
15
Paper Holdings Co., Ltd. company press paper and INTERIM
REPORT
household paper
Particulars of major subsidiaries and investees:
(1) Zhanjiang Chenming’s major products, including commercial pulp and high-end duplex press paper, had lower
costs, high gross profit margin and better returns. Due to the fluctuation in foreign exchange rate, Chenming (HK)
recorded decrease in profit as compared to the corresponding period of the prior year. However, its subsidiary,
Shandong Chenming Financial Leasing Co., Ltd., had good profitability. With the higher gross profit margin from
coated paper and the gains from sale of electricity, the profitability of Meilun Paper had gradually improved.
(2) the Finance Company was primarily engaged in provision of financial services for internal entities of the Group,
and maintained profit while lowering the overall financial costs of the Group.
(3) The major product of Wuhan Chenming, writing paper, had relatively low gross profit. The profitability of new
specialty paper and household paper had lower profitability as their market was in the development stage.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 15
IV Directors’ Report
VII. Analysis of Investments (Cont’d)
5. Highlights of major investments not financed by the proceeds
√ Applicable Not applicable
Unit: RMB’0,000
Accumulated
actual
Investment investment
made during made as of the
Total planned the reporting end of the Progression Revenue Date of
Name of project investment period reporting period of projects from projects disclosure (if any) Disclosure index (if any)
350,000 tonne high-end packaging 124,800 18,934.70 110,899.91 89% Not completed 28 June 2013 http://www.cninfo.com.cn/
paper project of Jiangxi Chenming
190,000 tonne high-end 309,700 71,603.73 166,618.07 54% Trial production 30 September 2013 http://www.cninfo.com.cn/
cultural paper project
Integrated forestry and paper project 348,510 259.96 32,214.94 9% Not completed 2 August 2013 http://www.cninfo.com.cn/
of Huanggang Chenming
VIII. Estimate of the operating results from January to September 2015
Warning of cumulative net profit for the period between the beginning of the year to the end of the next reporting period being
projected to be at a loss or expected to have material changes as compared to the corresponding period of prior year and its
explanation
15 Applicable √ Not applicable
INTERIM
REPORT
16 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IV Directors’ Report
IX. Outlook on the future development of the Company
(I) Competition overview and development trend of the industry
The Company is engaged in the paper making industry, which is a light industry. The business sentiments of the industry
are highly related to the macroeconomic growth. In recent years, on the one hand, with the impact of macroeconomic
slowdown, demand was continuously weak in the paper making industry. On the other hand, new production capacity of
the paper making industry had been released together over the past few years, resulting in the transitional overcapacity
of some paper types. Due to fierce competition, product prices continued to decline, narrowing profit margins of
papermaking enterprises.
In the long run, the development conditions of the paper making industry are gradually improving. Currently, with
basically stable production capacity, excess capacity has become the primary problem to be resolved in the industry.
As 2015 is the last year of the “Twelfth Five-Year” Plan, elimination of outdated production capacity and increasingly
stringent environmental policies are forcing some small and medium-sized enterprises out of the market. To some
extent, this eases the pressure of new capacity on the supply of the industry, which is conducive for enterprises to
initiate a price rise. For major paper making enterprises, fully utilising advantages of capital, technology and scale to
achieve a change in the growth pattern may help them gain new market share. Meanwhile, with the impact of a weak
demand, raw material prices have been hovering at a low level, easing the pressure of operating costs on paper making
enterprises. Eliminating outdated production capacity will remove obstacles for the industry’s development, while
replenishment of and substitution of advanced production capacity will bring fresh blood and drive to the industry,
conductive to a higher concentration ratio to creating a favourable industry lifecycle.
Faced with increasingly fierce competition in the industry, the Company gains competitive edge by leveraging on our
strong corporate strength to improve equipment and technologies, enrich product mix, upgrade product quality, and
focus on research and development of high-end products. The adjustment of product mix has injected new driving 15
force for our corporate restructuring and development, while continuous management refinement has opened up our INTERIM
REPORT
growth bottleneck, releasing vigour to the Company. Our diversified development brings new sources of profit growth
to the Company, accelerating the process of the Company to becoming a world-class paper making enterprise. As the
industry is bottoming out with elimination of outdated production capacity and improvement in supply and demand
fundamentals, and the benefits from the Company’s integrated forestry, pulp and paper project begin to be realised, it
is expected that the Company will turn around with the industrial recovery. While strengthening its principal businesses,
the Company strives to diversify by positioning itself in the financial sector. Initial success has been achieved, which
will become a major driving force for the future results of the Company. As the economic situation improves and the
industry is gradually recovering, the Company’s performance will have a steady growth.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 17
IV Directors’ Report
IX. Outlook on the future development of the Company (Cont’d)
(II) Development strategy of the Company
Adhering to our development philosophy of “creating innovative ideas, maintaining our leading position and becoming
an international enterprise”, the Company strives to become a leading international paper maker which focuses on
environmental protection and sustainable development. The Company accelerates our transformation and upgrade
process, and implements our new round of strategic planning. Hence, a development trend focusing on principal
operations as well as diversification, and environmental protection and standardised management takes shape. We
also promote detailed management. Being market-oriented, the Company has been optimising our product mix with
an increasing proportion of high value-added and high-end products. The Company strives to become a world-class
paper making enterprise with rapid growth based on the philosophy of “High-end Positioning, Production of First-class
Products”.
(III) Operating plan for the second half of 2015
In 2015, the Company will proactively adapt to the “new normal” of economic development, accelerate transformation
and upgrade process, as well as enhance operation efficiency. During the second half of the year, the Company
will consistently implement our working direction of “Team Building, Strict Management, Outstanding Business
Performance, Achieving Good Results”. To achieve our operating goals, the Company will pay special attention to the
following aspects:
1. Basic management and team building. The Company will ensure comprehensive optimisation and implementation
on the system establishment and improvement. We will step up efforts in system inspection and appraisal in
order to strengthen policy implementation. In addition, the Company will optimise our human resources allocation
15 mechanism through various means such as management work reporting, management assessment, and training
INTERIM and examination, thus making our team building move on to a new stage.
REPORT
2. Operating focus and procurement efficiency. The Company will focus on solving major issues on, among other
things, efficiency management, risk control, capital utilisation and foreign operations management, aiming to
achieve great improvement. Leveraging the commencement of operation of the railroad of Shouguang Chenming,
the Company will also enhance the procurement at source of materials in bulk in order to lower procurement
costs. With sufficient capital reserved, the Company aims to lower procurement price through advance payment
and other means, thereby maximising our return. We will increase trade volume through import and export
companies, and establish strategic partnerships with quality customers, thus securing quality supplies. In addition,
the Company will enhance logistics management and optimise operating mode, thereby optimising logistics
efficiency.
3. Production management. The Company will strengthen our system optimisation and execution: In respect of trial
operation of new systems, the Company will conduct verification and make conclusion. We will identify areas
for further improvement under the system and make rectification as soon as possible, and strictly implement
such rectification. The Company will also standardise equipment operating parameters: With reference to the
operation of similar advanced equipment in local and overseas markets, the Company will conduct comparison
and adjustment in order to ensure the best operation of the equipment. The Company will accelerate adjustment
on product portfolio: In order to complete the development of new products such as high-bulk white paper
board, food paper and liquid packaging paper, the Company will introduce offshore high quality technical talents.
In accordance with the human resources allocation standard in leading local enterprises, the Company will
continue to work on position establishment and appointment through position consolidation, automation and
other measures. The Company will highly focus on our environmental protection, safety and fire prevention works.
We will learn from the past experience of overseas leading enterprises or our peers, aiming to reach the highest
standard in the industry.
18 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IV Directors’ Report
IX. Outlook on the future development of the Company (Cont’d)
(III) Operating plan for the second half of 2015 (Cont’d)
4. Project progress. For projects under construction such as Jiangxi Chenming’s 350,000 tonnes high-end packaging
paper, the Company will have control at key points to ensure timely commencement of operation. For Huanggang
Chenming’s integrated forestry, pulp and paper project, the Company will improve its preparation works and
it is going to commence construction during the year. The Company will also proactively facilitate Shouguang
Chenming’s 400,000 tonnes chemical pulp project, aiming to achieve substantive progress in a short period of
time.
5. Financial benefits. The Financial Leasing Company will strictly control its risk exposures, aiming to achieve growth
amid stability. The Finance Company will strengthen its management to provide impetus for our results growth.
The Company will expand our financing channels through various means including issue of preference shares,
thus lowering the finance expenses and improve our liabilities structure.
(IV) Future capital requirements, source of funds and plan for use
With the extension of the Company’s industry chain and expansion of business scale, some of the new projects are
unable to make profit contribution in a timely manner due to market reasons, and therefore the Company has greater
demand for working capital. To this end, the Company has identified the following measures:
Firstly, the Company will raise fund through non-public offering of preference shares. This will help the Company meet
our financing needs together with our business development. Issue of preference shares which may be accounted for in
equity will also help reduce the Company’s gearing ratio, improving the Company’s capital structure and enhancing the
Company’s risk aversion capability.
15
Secondly, the Company will establish diversified financing channels. Various financing methods, such as increasing INTERIM
REPORT
direct financing and issuing super and short term commercial paper and perpetual notes, will be used to reduce the
Company’s finance expenses, improve the Company’s liabilities structure and ensure funding for the Company’s
sustainable and healthy development.
Thirdly, the Company will make progress in cross-border financing. Leveraging the financing platform of the Hong Kong
market, the Company will make effort to increase the credit line of Hong Kong Chenming, avert exchange rate risks
through multi-currency financing and improve the efficiency of capital use so as to reduce finance expenses.
Fourthly, the Company will capitalise on the financial advantages of our Finance Company and the Financial Leasing
Company to expand the Group’s financing channels. They will grow amid stability and provide new impetus for the
Company’s earnings growth, opening up new sources of profit growth for the Company.
Fifthly, the Company will further improve our international and domestic sales and marketing network, expand our export
sales and increase our investment in products of high profit so as to increase economic benefits. The Company will take
strict control measures to reduce inventories and improve contract compliance rate in order to reduce use of funds,
further reducing the finance expenses. The Company will strengthen our management in household paper products,
making it the Company’s new source of profit growth as soon as possible.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 19
IV Directors’ Report
IX. Outlook on the future development of the Company (Cont’d)
(V) Risk factors likely to be faced and the measures to be taken
Industry risk
As a basic raw materials industry of the national economy, the paper making industry’s overall efficiency has a strong
correlation with economic cycles, and is therefore a cyclical industry fluctuating with the national macroeconomic
performance, which will further affect the profitability of paper making enterprises. With the rapid growth of the national
economy, economic globalisation and China’s accession to the WTO, China’s paper making industry has been facing
increasingly fierce competition, and overcapacity and lower demand will have certain impact on the operating results of
the Company in the future.
In light of the above, the Company will enhance the level of its equipment and technology, enrich its product portfolio,
raise its product quality and put emphasis on developing high-end products to increase its competitiveness.
Policy risk
At present, the industry has entered into an important transitional period, and the mode which supported the rapid
development of the paper making industry in the past has currently faced the dual pressures of resources and
environment. From the point of view of China’s policy, China will change the mode of growth through optimizing the
layout of the paper making industry and the raw material structure and product structure, in order to promote a modern
paper making industry based on recycling by integrating the forestry and paper making industry, and adjust the industry
through entry requirements, environmental standards and energy saving. The development of the Company will be
affected by the direction of such policies.
15 Elimination of outdated production capacity and stricter environment protection policy has forced some of the SMEs
INTERIM exited the industry. Hence, the Company is expected to record long-term revenue.
REPORT
Operational risk
The major raw materials used by the Company are wood pulp and waste paper. The Company’s products are mainly
comprised of high-end paper, and as the State encourages the increase of the proportion of wood pulp used by the
industry, wood pulp, thus, has accounted for a higher proportion of the production cost. The market price fluctuations
of raw material have significantly affected the production cost of the Company. In addition to intensified market
competition resulting from surging capacity in the industry in recent years, the market price fluctuation of raw materials
will have an impact on the performance of the Company.
Hence, the Company will remain steadfast in the “forestry-pulp-paper integration” development path and focus on the
construction of Zhanjiang Chenming pulp project, Huanggang Chenming pulp project and Shouguang chemical pulp
project, thereby eliminating the limitations of upper-stream resources on the Company’s development and enhancing
Company’s sustainable development.
Environmental protection risk
The new Environmental Protection Law took effect on 1 January 2015. More stringent environmental protection policies
of the industry have been implemented. A multi-pronged approach has been adopted to promote industrial restructuring,
and the paper making industry has entered into an important transitional period of development. The higher emission
standard is bound to increase the Company’s environmental protection cost and high entry standards may result in the
slowing down of scale expansion, thus affecting its production and operation.
The Company always strives to achieve harmonious development with energy consumption and emission reduction. The
Company will endeavour to develop the recycle economy through waste exchange and recycling and strive to maximise
its resource utilisation. Meanwhile, the Company will make greater efforts to construct environmental friendly projects
and strive to achieve its waste emission target.
20 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IV Directors’ Report
IX. Outlook on the future development of the Company (Cont’d)
(V) Risk factors likely to be faced and the measures to be taken (Cont’d)
Exchange rate risk
The value of Renminbi is affected by the domestic and international economic and political environment, and the supply
and demand for Renminbi. As an import and export enterprise, the exchange rate of Renminbi against other currencies
in future will affect the Company’s operating results. The foreign currency transactions of the Company are mainly
denominated in US dollar. The operations of raw material imports, product exports and US dollar borrowings of the
Company will face the risk of exchange rate changes.
The Company lowers the proportion of imported goods procurement denominated in foreign currency. The Company
uses more domestic raw materials and spare parts in its production, and increases its Renminbi settlement while
decreasing its foreign exchange settlement. Meanwhile, the Company expands its overseas sales, increases repatriation
on exports and repays its domestic US dollar loans in order to mitigate its exchange rate risk exposure.
X. Opinions of the Board of Directors and the Supervisory Committee regarding the “modified
auditor’s report” for the reporting period issued by the accountants
Applicable √ Not applicable
XI. Opinions of the Board regarding the “modified auditor’s report” for the prior year
Applicable √ Not applicable
XII. Particulars of profit distribution by the Company during the reporting period
15
INTERIM
REPORT
Implementation and adjustment of profit distribution proposals, especially the cash dividend proposal and proposal on
conversion of capital reserves into share capital during the reporting period
√ Applicable Not applicable
The 2014 profit distribution plan was considered and approved in the 2014 annual general meeting convened by the Company
on 15 May 2015. Based on the number of the shares as at the dividend distribution registration date of 1,936,405,467 shares,
a cash dividend of RMB1.40 (tax inclusive) was to be paid to all shareholders for every 10 shares held. The total cash dividend
to be distributed amounted to RMB271,096,765.38 (tax inclusive). The dividend distribution was implemented and completed
on 14 July 2015. For details, please refer to the announcement on payment of final dividend and withholding and payment
of enterprise income tax for non-resident enterprise shareholders published on the Hong Kong Stock Exchange on 23 June
2015, and the announcement on the implementation of the 2014 profit distribution plan for A share and B share published on
http://www.cninfo.com.cn on 4 July 2015.
Particulars of Cash Dividend Policy
Was it in compliance with the requirements of the Articles of
Association and the resolutions of the general meeting? Yes
Were the dividend distribution criteria and proportion well-defined and clear? Yes
Were the related decision making process and mechanism in place? Yes
Did independent Directors fulfil their duties and play their role? Yes
Were the minority shareholders given opportunities to sufficiently voice
their opinion and make requests and were the legal interests
of the minority shareholders fully protected? Yes
Were conditions and procedures legal and transparent in respect of
cash dividend policy with adjustments and changes? Yes
SHANDONG CHENMING PAPER HOLDINGS LIMITED 21
IV Directors’ Report
XIII. Proposals on profit distribution and conversion of capital reserves into share capital during
this reporting period
Applicable √ Not applicable
The Company does not intend to distribute cash dividend and bonus share, and conduct conversion of capital reserves into
share capital for the interim period.
XIV. Registration report on reception of research investigations, communications and interviews
during the reporting period
√ Applicable Not applicable
Class of parties Main topics of discussion
Date of reception Place ofreception Manner ofreception accommodated Parties accommodated and information provided
13 January 2015 The Company’s On-site research Institution Guotai Junan Securities Co. Ltd. Recent production and operation of
conference room investigation the Company and development of the
industry
13 January 2015 The Company’s On-site research Institution 27 fund companies including Shenyin Wanguo, BOC Recent production and operation of
conference room investigation Schroder Fund, HuaAn Funds, GTJA Allianz Funds, the Company and development of the
Fullgoal Fund, Zhong Ou AMC, Lion Fund, CPIC, industry
Harfor Fund, Caitong Securities, Franklin Templeton
Sealand Fund, Baoying Fund, Caitong Fund, First-
Trust Fund, Tongben Investment, Oriental Capital,
Minsheng Royal Fund, HFT Investment, China Life
15 Asset Management, Yongjin Asset Management,
CICC, ICBCCS, CITIC PE, China AMC, Minsen
INTERIM Investment etc
REPORT
28 January 2015 The Company’s On-site research Institution Brilliance Asset Management Limited Recent production and operation of
conference room investigation the Company and development of the
industry
22 SHANDONG CHENMING PAPER HOLDINGS LIMITED
V Material Matters
I. Overview of corporate governance
1. Corporate Governance in practice
The Company operated in compliance with the requirement of Companies Law, Securities Law, Code of Corporate
Governance for Listed Companies, Rules Governing Listing of Stocks on Shenzhen Stock Exchange, Rules Governing
the Listing of Securities on the Stock Exchange of Hong Kong Limited (the “Listing Rules”) and the related requirements
as required by the CSRC. The Company further improved and optimised its legal person governance structure in
practice during the reporting period. The Board considered the state of the Company’s corporate governance was
substantially in compliance with the requirements and requests of the regulatory documents such as Code of Corporate
Governance for Listed Companies.
2. Corporate governance activities
During the reporting period, the Board strived to regulate the operation of the Company by improving corporate
governance based on relevant special activities carried out in 2014. Pursuant to the requirements of the CSRC, the
Shenzhen Stock Exchange and the Shandong Securities Regulatory Bureau, it made the following efforts to continuously
improve the corporate governance level:
According to relevant provisions of the Company Law of the People’s Republic of China, the State Council Guidance
Opinion on the launch of the preference shares pilot scheme and the Experimental Administrative Measures on
Preference Shares, and based on the non-public issue of preference shares by the Company, the Board amended its
Articles of Association.
The Company strictly implemented its related system of internal control to facilitate its regulated operation and healthy
development, thereby protecting the legal interests of investors. The corporate governance of the Company was exactly
the same as what was required by the CSRC. The regulated operations and the internal control standards would
15
INTERIM
enhance with the development of the Company. REPORT
3. Corporate Governance Code
The Company is committed to attaining good standard of corporate governance practices in order to enhance
shareholders’ value. Saved as disclosed below, none of the Directors is aware of any information that would reasonably
indicate that the Company is not, or was not for any part of the reporting period, in compliance with the Corporate
Governance Code and Corporate Governance Report, as set out in Appendix 14 of the Listing Rules.
(1) The chairman and general manager of the Company is Mr. Chen Hongguo. Mr. Chen Hongguo performs the
roles of the chairman and the general manager for the overall management of the Company. This constitutes
a deviation from the principles and code provisions of A2 - Directors and Chief Executive Office in Corporate
Governance Code and Corporate Governance Report under Appendix 14 to Listing Rules. However, the Directors
of the Company believe that Mr. Chen Hongguo acting as the chairman and the general manager will enable the
Company to more effectively plan and implement the business strategies so that the Group can effectively and
rapidly seize business opportunities. As all major decisions will be made after consultation with other members of
the Board, the Company believes that the supervision of the Board and independent non-executive Directors will
strike a sufficient balance of power and authority.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 23
V Material Matters
I. Overview of corporate governance (Cont’d)
3. Corporate Governance Code (Cont’d)
(2) Communication with shareholders
The Company’s annual general meeting provides a useful platform for direct communication between the Board
and Shareholders. Various resolutions are proposed on each substantially separate issue at the general meetings.
Save for the annual general meeting held on 15 May 2015 by the Company, an extraordinary general meeting
was convened during the reporting period. Pursuant to section E1.2 of Appendix 14 to the Corporate Governance
Code and Corporate Governance Report, the chairman of the board should attend the annual general meeting. He
should also invite the chairmen of the audit, remuneration, nomination and any other committees (as appropriate)
to attend. In their absence, he should invite another member of the committee or failing this his duly appointed
delegate, to attend.
The attendance record of Directors at each general meeting is set out below:
Name Attendance of general meetings
Annual General Meeting for 2014 Chen Hongguo, Yin Tongyuan, Wang Xiaoqun,
Wang Aiguo and Yang Guihua
First extraordinary general meeting for 2015 Yin Tongyuan and Wang Xiaoqun
Ms. Zhang Hong, the chairman of the audit committee, and Mr. Zhang Zhiyuan, the chairman of the nomination
committee, were absent from the annual general meeting due to business commitments. The Company’s external
auditor also attended the annual general meeting as the scrutineer.
15
INTERIM 4. Securities transactions by Directors and Supervisors
REPORT
The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model
Code”) as set out in Appendix 10 of the Listing Rules as the code of conduct for Directors’ securities transactions. The
Company had made specific enquiry of all Directors and Supervisors and all Directors and Supervisors confirmed that
they had complied with the requirements as set out in the Model Code for the six months ended 30 June 2015.
5. Audit Committee
The audit committee of the Company now comprises two independent non-executive Directors and one non-executive
Director. The members of the audit committee are Ms. Zhang Hong, Mr. Wang Aiguo and Ms. Yang Guihua. The audit
committee reviewed the accounting standards and practices adopted by the Group with the management of the
Company and discussed and reviewed the interim results and interim report for the six months ended 30 June 2015
prepared in accordance with the accounting standards.
24 SHANDONG CHENMING PAPER HOLDINGS LIMITED
V Material Matters
II. Litigation
Material litigation and arbitration
Applicable √ Not applicable
The Company was not involved in any material litigation and arbitration during the reporting period.
Other litigations
Applicable √ Not applicable
III. Questioning from the Media
Applicable √ Not applicable
There was no questioning from the media during the reporting period.
IV. Matter related to bankruptcy and reorganisation
Applicable √ Not applicable
There was no matter related to bankruptcy and reorganisation during the reporting period.
V. Asset transactions
1. Acquisition of assets 15
Applicable √ Not applicable INTERIM
REPORT
There was no acquisition of assets during the reporting period.
2. Disposal of assets
Applicable √ Not applicable
There was no disposal of assets during the reporting period.
3. Business combination
Applicable √ Not applicable
There was no business combination during the reporting period.
VI. Implementation of the equity incentive plan of the Company and its effect
Applicable √ Not applicable
There was no implementation of the equity incentive plan of the Company during the reporting period.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 25
V Material Matters
VII. Significant related party transactions
1. Related party transactions associated with day-to-day operation
√ Applicable Not applicable
Percentage
Subject as the
matter of Pricing basis Amount of amount Amount of
Types of the the related of the Price of related party of similar transactions Whether Market price of
Related related party party related party related party transactions transactions approved exceeding Settlement of related available similar
Related party party relationship transactions transactions transactions transactions (RMB’0000) (%) (RMB’0000) approved cap party transactions transaction Disclosure date Disclosure index
Anhui Time Associate Sale Machine-made paper Market price Market price 20,036.56 2.73% Not applicable Not applicable Bank acceptance and Not applicable Not applicable Not applicable
Source Corporation telegraphic transfer
Jiangxi Jiangbao Media Associate Sale Machine-made paper Market price Market price 12.31 0.00% Not applicable Not applicable Bank acceptance and Not applicable Not applicable Not applicable
Colour Printing Co., Ltd. telegraphic transfer
Jiangxi Chenming Under indirect control Procurement Energy such as Market price Market price 7,538.98 1.02% 32,000 No Bank acceptance and Not applicable 27 March 2015 http://www.cninfo.com.cn
Natural Gas Co., Ltd. of directors, natural gas telegraphic transfer
supervisors or senior and heavy oil
management of
the Company
2. Related party transaction connected to purchase or sale of assets
Applicable √ Not applicable
There was no related party transaction of the Company connected to purchase or sale of assets during the reporting
15 period.
INTERIM
REPORT 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
Whether non-operating related creditors’ rights and debts transactions existed
Yes √ No
There was no non-operating related creditors’ rights and debts transaction of the Company during the reporting period.
5. Other related party transactions
Applicable √ Not applicable
There was no other related party transaction of the Company during the reporting period.
26 SHANDONG CHENMING PAPER HOLDINGS LIMITED
V Material Matters
VIII. Appropriation of funds of the Company by the controlling shareholder and its related parties
for non-operating purposes
Applicable √ Not applicable
There was no appropriation of funds of the Company by the controlling shareholder and its related parties for non-operating
purposes during the reporting period.
IX. Material contracts and implementation
1. Custody, contracting and leasing
(1) Custody
Applicable √ Not applicable
There was no custody of the Company during the reporting period.
(2) Contracting
Applicable √ Not applicable
There was no contracting of the Company during the reporting period.
(3) Leasing
Applicable √ Not applicable
There was no leasing of the Company during the reporting period.
15
2. Guarantees INTERIM
REPORT
√ Applicable Not applicable
During the reporting period, the Company did not provide any guarantee to external parties (excluding those provided to
its subsidiaries) and did not provide any guarantees against the rules and regulations.
During the reporting period, the Company provided guarantee to its subsidiaries with respect to application of bank
loans. The guarantee amount incurred was RMB7,047.1989 million. As at 30 June 2015, the balance of the guarantee
provided by the Company to its subsidiaries amounted to RMB9,745.1122 million, representing 69.91% of the equity
attributable to owners of the parent company as at 30 June 2015.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 27
V Material Matters
IX. Material contracts and implementation (Cont’d)
2. Guarantees (Cont’d)
Unit: RMB’0,000
External guarantees provided by the Company (excluding guarantees provided for subsidiaries)
Date of
the related Guarantee
announcement to related
disclosing the Amount Guarantee date Guarantee Type of Fulfilled parties
Name of obligee guarantee amount of guarantee (agreement date) provided guarantee Term or not or not
Total amount of external guarantee approved during the 0 Total amount of external guarantee provided during the 0
reporting period (A1) reporting period (A2)
Total amount of external guarantee approved as at the end 0 Total balance of external guarantee provided as at the end of 0
of the reporting period (A3) the reporting period (A4)
Guarantees between the Company and its subsidiaries
Date of
the related Guarantee
announcement to related
disclosing the Amount Guarantee date Guarantee Type of Fulfilled parties
Name of obligee guarantee amount of guarantee (agreement date) provided guarantee Term or not or not
Zhanjiang Chenming 28 March 2012 270,000 13 November 2013 13,449.92 General 3 years No No
Pulp & Paper Co., Ltd. guarantee
15 Zhanjiang Chenming 27 October 2014 650,000 27 October 2014 157,120.90 General 3 years No No
INTERIM Pulp & Paper Co., Ltd. guarantee
REPORT Jiangxi Chenming Paper Co., Ltd. 27 October 2014 200,000 06 January 2015 36,577.65 General 3 years No No
guarantee
Huanggang Chenming 27 October 2014 10,000 18 December 2014 3,500 General 3 years No No
Arboriculture Co., Ltd. guarantee
Jilin Chenming Paper Co., Ltd. 27 October 2014 150,000 16 April 2015 General 3 years No No
guarantee
Chenming (HK) Limited 28 March 2012 500,000 21 August 2014 98,514.55 General 3 years No No
guarantee
Chenming (HK) Limited 27 October 2014 500,000 01 December 2014 306,188.10 General 3 years No No
guarantee
Shandong Chenming Paper 27 October 2014 400,000 09 January 2015 258,132.22 General 3 years No No
Sales Company Limited guarantee
Shouguang Chenming Import 27 October 2014 200,000 General 3 years No No
and Export Trade Co., Ltd. guarantee
Shandong Chenming 26 March 2015 500,000 22 May 2015 45,821.25 General 7 years No No
Financial Leasing Co., Ltd. guarantee
Haicheng Haiming Mining 27 August 2014 60,000 General 3 years No No
Company Limited guarantee
Shandong Chenming Group 29 December 2014 400,000 General 3 years No No
Finance Co., Ltd. guarantee
Shouguang Meilun Paper Co., Ltd. 16 December 2010 600,000 13 April 2015 51,206.63 General 10 years No No
guarantee
Huanggang Chenming 26 March 2015 400,000 General 7 years No No
Pulp & Paper Co., Ltd guarantee
Total amount of guarantee provided for subsidiaries 900,000 Total amount of guarantee provided for subsidiaries during the 704,719.89
approved during the reporting period (B1) reporting period (B2)
Total amount of guarantee provided for subsidiaries 4,070,000 Total balance of guarantee provided for subsidiaries as at the 970,511.22
approved as at the end of the reporting period (B3) end of the reporting period (B4)
28 SHANDONG CHENMING PAPER HOLDINGS LIMITED
V Material Matters
IX. Material contracts and implementation (Cont’d)
2. Guarantees (Cont’d)
Guarantees provided by subsidiaries for subsidiaries
Date of
the related Guarantee
announcement to related
disclosing the Amount Guarantee date Guarantee Type of Fulfilled parties
Name of obligee guarantee amount of guarantee (agreement date) provided guarantee Term or not or not
Guangdong Huirui Investment 16 November 2013 4,000 28 November 2013 4,000
General 2 years No No
Co., Ltd. guarantee
Total amount of guarantee provided for subsidiaries 0 Total amount of guarantee provided for subsidiaries during the 0
approved during the reporting period (C1) reporting period (C2)
Total amount of guarantee provided for subsidiaries 4,000 Total balance of guarantee provided for subsidiaries as at the 4,000
approved as at the end of the reporting period (C3) end of the reporting period (C4)
Total amount of guarantee provided by the Company (the sum of the above three main categories)
Total amount of guarantee approved during the reporting 900,000 Total amount of guarantee provided during the reporting period 704,719.89
period (A1+B1+C1) (A2+B2+C2)
Total amount of guarantee approved as at the end of the 4,074,000 Total balance of guarantee provided as at the end of the 974,511.22
reporting period (A3+B3+C3) reporting period (A4+B4+C4)
The percentage of total amount of guarantee provided (A4+B4+C4) to the net assets of the Company 69.91%
Of which:
Amount of guarantee provided for shareholders, beneficial controllers and its related parties (D)
15
0
Amount of guarantee directly or indirectly provided for obligors with gearing ratio over 70% (E) 888,112.32
Total amount of guarantee provided in excess of 50% of net assets (F) 277,578.56 INTERIM
REPORT
Sum of the above three amount of guarantee (D+E+F) 1,165,690.88
(1) 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.
3. Other material contracts
√ Applicable Not applicable
Appraised
Book value value of
of subject the subject Progress
asset of asset of the Name of Related as at
Name of party Date of the contract contract appraisal Transaction party Related the end of
Name of the company involved in the contract (if any) (if any) institute Appraisal price transaction party the reporting
entering into contract the contract Subject matter entered into (RMB’0,000) (RMB ’0,000) (if any) date (if any) Pricing basis (RMB’0,000) or not relationship period
Shandong Chenming Paper Jinan Hi-Tech Holding Construction project 9 May 2014 Not applicable Not applicable Not applicable Not applicable Market price 36,000 No Not applicable In progress
Holdings Limited Group Co., Ltd of A7-2 plot of
the Han Yu Jin Gu
4. Other material transactions
Applicable √ Not applicable
There was no other material transaction of the Company during the reporting period.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 29
V Material Matters
X. Undertakings made by the Company and shareholders interested in 5% or more of the shares
of the Company made during the reporting period or prior periods but subsisting to the
reporting period
√ Applicable Not applicable
Party involved Particulars on
Undertaking in undertaking Details of undertaking Undertaking date Term the performance
Undertaking on shareholding
structure reformation
Undertaking made in offering
documents or shareholding
alternation documents
Undertaking made during
asset reconstruction
Undertaking made on initial Shouguang Chenming (1) Shouguang Chenming Holdings Co., Ltd. (“Shouguang 22 May 2008 During the period Strictly implemented
public offering or refinancing Holdings Co., Ltd. Chenming Holdings”) shall not engage, whether solely, jointly, when Chenming
or by representing itself or any other persons or companies, and Holdings was the
shall not procure its associates (as defined in The Listing Rules major shareholder
of Hong Kong Stock Exchange) to engage, in any business which of the Company
competes with the business of the Company and its subsidiaries
15 (“Chenming Group” or “we”) directly or indirectly, in any country
INTERIM
and region which our business exists (or any part of the world if in
REPORT 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 Shouguang 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 Shouguang 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 Shouguang Chenming Holdings, which directly or indirectly
compete with the businesses of our Group, at market price or cost
price (whichever price is lower); (4) Shouguang 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.
30 SHANDONG CHENMING PAPER HOLDINGS LIMITED
V Material Matters
X. Undertakings made by the Company and shareholders interested in 5% or more of the shares
of the Company made during the reporting period or prior periods but subsisting to the
reporting period (Cont’d)
Party involved Particulars on
Undertaking in undertaking Details of undertaking Undertaking date Term the performance
Shouguang Chenming (1) According to the plan on defective properties of the Company, 16 January 2008 During the period Strictly implemented
Holdings Co., Ltd. Shouguang Chenming Holdings Co., Ltd. (“Shouguang Chenming when Chenming
Holdings”) has guaranteed and undertaken that: according to the Holdings was the
application of the Company, for defective property(ies) owned major shareholder
by the Company and its holding subsidiary company which of the Company
situated in the administrative area of Shouguang city, Shouguang
Chenming Holdings will purchase it(them) and have it(them) being
transferred to itself 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), Shouguang
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 15
areas (outside the administrative area of Shouguang city), the INTERIM
REPORT
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 Shouguang Chenming
Holdings after verification.
Other undertakings made to minority
shareholders of the Company
Does the undertaking Yes
performed timely?
XI. Engagement or dismissal of accounting firms
Has the interim financial report been audited?
Yes √ No
The interim financial report is unaudited.
XII. Punishment and rectification
Applicable √ Not applicable
There was no punishment and rectification of the Company during the reporting period.
XIII. Risk of delisting due to non-compliance
Applicable √ Not applicable
The Company was not exposed to the risk of delisting due to non-compliance during the reporting period.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 31
V Material Matters
XIV. Purchase, sale and redemption of shares
The Company did not purchase, sell or redeem any listed outstanding securities of the Company during the reporting period.
XV. Other matters of significance
√ Applicable Not applicable
1. Approval of Registration on Medium-term Notes and Super & Short-term Commercial Papers
Under the Notice of Acceptance of Registration (Zhong Shi Zhu Xie [2015] No. MTN141) issued by the National
Association of Financial Market Institutional Investors, the issue of medium-term notes by the Company has been
approved and registered with an amount of RMB2.6 billion, which shall be valid for a period of two years from the date
of such notice. The issue may be made in tranches during the validity period.
Under the Notice of Acceptance of Registration (Zhong Shi Zhu Xie [2015] No. SCP104) issued by the National
Association of Financial Market Institutional Investors, the issue of super & short-term commercial papers by the
Company has been approved and registered with an amount of RMB13.8 billion, which shall be valid for a period of two
years from the date of such notice. The issue may be made in tranches during the validity period.
2. Capital injection to Shandong Chenming Financial Leasing Co., Ltd.
In order to facilitate the Financial Leasing Company to engage in project financing and leasing business, and increase
the Company’s overall strength, comprehensive competitiveness and profit, Chenming (HK) intended to increase the
capital of the Financial Leasing Company by RMB5.0 billion by instalments with its own funds. After the completion
15 of the capital increase, the registered capital of the Financial Leasing Company will change to RMB9.072 billion from
RMB4.072 billion. As at the end of the reporting period, the registered capital of the Financial Leasing Company
INTERIM
REPORT amounted to RMB5.872 billion.
3. Information disclosure index for the first half of 2015
Announcement Date of Publication website
No. Subject matter publication and index
2015-001 Announcement on Additional Resolutions Proposed 29 January 2015 http://www.cninfo.com.cn
at the 2015 First Extraordinary General Meeting
2015-002 Supplemental Notice of 2015 First Extraordinary 29 January 2015 http://www.cninfo.com.cn
General Meeting
2015-003 Second supplementary notice of the 2015 First 29 January 2015 http://www.cninfo.com.cn
Domestic Listed Share Class Meeting and 2015
First Overseas Listed Share Class Meeting
2015-004 Announcement on Resolutions of the 2015 14 February 2015 http://www.cninfo.com.cn
First Extraordinary General Meeting
2015-005 Announcement on Resolutions of the 2015 14 February 2015 http://www.cninfo.com.cn
First Class Meeting for Holders of Domestic
Listed Shares (A shares and B shares) and
Resolutions of the 2015 First Class Meeting for
Holders of Overseas Listed Shares (H shares)
2015-006 Announcement on Receipt of CSRC Notice of 03 March 2015 http://www.cninfo.com.cn
Acceptance of Application for
Administrative Approval
2015-007 Results of the Eighth Extraordinary Meeting of 27 March 2015 http://www.cninfo.com.cn
the Seventh Session of the Board
32 SHANDONG CHENMING PAPER HOLDINGS LIMITED
V Material Matters
XIV. Other matters of significance (Cont’d) (Cont’d)
3. Information disclosure index for the first half of 2015 (Cont’d)
Announcement Date of Publication website
No. Subject matter publication and index
2015-008 Announcement of Annual Results for the Year 27 March 2015 http://www.cninfo.com.cn
Ended 31 December 2014
2015-009 Announcement on Investment in a Subsidiary 27 March 2015 http://www.cninfo.com.cn
2015-010 Announcement on Provision of Guarantee for 27 March 2015 http://www.cninfo.com.cn
Comprehensive Credit Line of
Wholly-Owned Subsidiaries
2015-011 Announcement on Expected Ordinary Connected 27 March 2015 http://www.cninfo.com.cn
Transactions in 2015
2015-012 Notice of 2014 Annual General Meeting 27 March 2015 http://www.cninfo.com.cn
2015-013 Results of the Ninth Extraordinary Meeting of the 27 March 2015 http://www.cninfo.com.cn
Seventh Session of the Supervisory Committee
2015-014 Announcement in relation to External Investment 02 April 2015 http://www.cninfo.com.cn
2015-015 Announcement in relation to External Investment 02 April 2015 http://www.cninfo.com.cn
2015-016 Shandong Chenming Paper Holdings Limited: 24 April 2015 http://www.cninfo.com.cn
Announcement on Result of the Issue of 2015
First Tranche of Short-term Commercial Paper
2015-017 Results of the Ninth Extraordinary Meeting of 28 April 2015 http://www.cninfo.com.cn
the Seventh Session of the Board 15
2015-018 2015 First Quarter Report 28 April 2015 http://www.cninfo.com.cn INTERIM
REPORT
2015-019 Announcement on Equity Transfer at Nil Consideration 28 April 2015 http://www.cninfo.com.cn
between Wholly-owned Subsidiaries
2015-020 Announcement in Respect of Resignation 28 April 2015 http://www.cninfo.com.cn
of Senior Management
2015-021 Result of the Issue of 2015 Second Tranche of 28 April 2015 http://www.cninfo.com.cn
Short-term Commercial Paper
2015-022 Supplementary notice of 2014 Annual General 29 April 2015 http://www.cninfo.com.cn
Meeting
2015-023 Warning on reduction of shareholding by shareholders 08 May 2015 http://www.cninfo.com.cn
2015-024 Results of the 2014 Annual General Meeting 16 May 2015 http://www.cninfo.com.cn
2015-025 Results of the Sixth Extraordinary Meeting of 06 June 2015 http://www.cninfo.com.cn
the Seventh Session of the Board
2015-026 Amendments to the Proposed Issue of Non-Public 06 June 2015 http://www.cninfo.com.cn
Preference Shares
2015-027 Notice of 2015 Second Extraordinary General Meeting 06 June 2015 http://www.cninfo.com.cn
2015-028 Announcement in Respect of Reply on Application 09 June 2015 http://www.cninfo.com.cn
for Non-Public Issue of Preference Shares
2015-029 Announcement in Respect of Supplementary 09 June 2015 http://www.cninfo.com.cn
Disclosure Required under the Reply from CSRC
on Application for Non-Public Issue
of Preference Shares
2015-030 Announcement on Approval of Registration on 20 June 2015 http://www.cninfo.com.cn
Medium-term Notes and Super & Short-term
Commercial Papers
2015-031 Announcement on 2015 Dividend Payment in 30 June 2015 http://www.cninfo.com.cn
respect of “11 Chenming Bond”
SHANDONG CHENMING PAPER HOLDINGS LIMITED 33
VI Changes in Share Capital and Shareholders
I. Changes in shares
Unit: Share
Opening balance Change during the reporting period (+/-) Closing balance
Shares
converted
Amounts Percentage New issue Bonus issue from reserve Others Sub-total Amounts Percentage
I. Restricted shares 8,241,219 0.42% 0 0 0 0 0 8,241,219 0.42%
Shares held by other domestic investors 8,241,219 0.42% 0 0 0 0 0 8,241,219 0.42%
Shares held by domestic natural persons 8,241,219 0.42% 0 0 0 0 0 8,241,219 0.42%
II. Non-restricted shares 1,928,164,248 99.58% 0 0 0 0 0 1,928,164,248 99.58%
1. RMB ordinary shares 1,105,037,237 57.07% 0 0 0 0 0 1,105,037,237 57.07%
2. Domestic listed foreign shares 470,923,511 24.32% 0 0 0 0 0 470,923,511 24.32%
3. Overseas listed foreign shares 352,203,500 18.19% 0 0 0 0 0 352,203,500 18.19%
III. Total number of shares 1,936,405,467 100.00% 0 0 0 0 0 1,936,405,467 100.00%
The reasons for such changes
Applicable √ Not applicable
Approval of changes in shareholding
Applicable √ Not applicable
Transfer of shares arising from changes in shareholding
15 Applicable √ Not applicable
INTERIM
REPORT 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 shareholders of ordinary shares 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
Changes in the total number of shares and structure of shareholders and the structure of the assets and
liabilities of the Company
Applicable √ Not applicable
34 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VI Changes in Share Capital and Shareholders
II. Total number of shareholders and shareholdings
Unit: share
Total number of shareholders of ordinary shares as at 110,656, of which 82,801 were holders of A shares, 27,342 holders Total number of shareholders of preference shares with restored voting right as at 0
the end of the reporting period of B shares and 513 holders of H shares. the end of the reporting period (if any)
Shareholdings of shareholders of ordinary shares interested in more than 5% of the shares of the Company or top ten shareholders of ordinary shares
Share pledged or locked-up
Number of Changes
shares held (increase or Number of Number of
at the end of decrease) restricted non-restricted
Nature of Percentage of the reporting during the ordinary ordinary shares Status of
Name of shareholders shareholders shareholding period reporting period shares held held shares Number
HKSCC NOMINEES LIMITED Overseas legal person 18.11% 350,705,450 70,950 0 350,705,450 0
SHOUGUANG CHENMING HOLDINGS COMPANY LIMITED State-owned legal 15.13% 293,003,657 0 0
person 293,003,657 Pledged 146,500,000
INDUSTRIAL AND COMMERCIAL BANK OF CHINA LIMITED – Others 1.19% 23,000,010 23,000,010 0
DONG FANG HONG CHINA ADVANTAGE FLEXIBLE ALLOCATION
HYBRID SECURITIES INVESTMENT FUND 23,000,010 0
AGRICULTURAL BANK OF CHINA LIMITED – BAOYING TRANSITIONAL Others 1.08% 20,846,115 20,846,115 0
MOMENTUM FLEXIBLE ALLOCATION HYBRID SECURITIE
INVESTMENT FUND 20,846,115 0
CHINA CONSTRUCTION BANK CORPORATION – ZHONG OU NEW BLUE Others 0.89% 17,261,756 17,261,756 0
CHIP FLEXBLE ALLOCATION HYBRID SECURITIES INVESTMENT FUND 17,261,756 0
INDUSTRIAL BANK CO., LTD. – ZHONG OU NEW TREND EQUITY Others 0.79% 15,369,990 15,369,990 0
SECURITIES INVESTMENT FUND (LOF) 15,369,990 0
RONGTONG NEW BLUE CHIP SECURITIES INVESTMENT FUND
VALUE PARTNERS CLASSIC FUND
Others
Overseas legal person
0.72%
0.70%
14,000,000
13,643,695
5,999,988
13,643,695
0
0
14,000,000
13,643,695
0
0 15
JIN Xing Domestic nature person 0.47% 9,018,200 161,800 0 9,018,200 0 INTERIM
BBH A/C VANGUARD EMERGING MARKETS STOCK INDEX FUND Overseas legal person 0.44% 8,608,238 -3,338,747 0 8,608,238 0 REPORT
Connected relationship or connected party relationship Shouguang Chenming Holdings Company Limited, a state-owned legal person shareholder, is not connected with any of the shareholders above. They are
among the above shareholders not persons acting in concert under Administration of Disclosure of Information on the Change of Shareholdings in Listed Companies Procedures. 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.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 35
VI Changes in Share Capital and Shareholders
II. Total number of shareholders and shareholdings
Shareholdings of the top ten shareholders of ordinary shares of non-restricted shares
Number of
non-restricted
shares held as
at the end of
the reporting
Name of shareholders period Class of shares
Class of shares Number
HKSCC NOMINEES LIMITED 350,705,450 Overseas listed 350,705,450
foreign shares
SHOUGUANG CHENMING HOLDINGS COMPANY LIMITED 293,003,657 RMB ordinary shares 293,003,657
INDUSTRIAL AND COMMERCIAL BANK OF CHINA LIMITED 23,000,010 RMB ordinary shares 23,000,010
– DONG FANG HONG CHINA ADVANTAGE FLEXIBLE
ALLOCATION HYBRID SECURITIES INVESTMENT FUND
AGRICULTURAL BANK OF CHINA LIMITED – BAOYING 20,846,115 RMB ordinary shares 20,846,115
TRANSITIONAL MOMENTUM FLEXIBLE ALLOCATION
HYBRID SECURITIES INVESTMENT FUND
CHINA CONSTRUCTION BANK CORPORATION – ZHONG OU 17,261,756 RMB ordinary shares 17,261,756
NEW BLUE CHIP FLEXBLE ALLOCATION HYBRID
SECURITIES INVESTMENT FUND
15 INDUSTRIAL BANK CO., LTD. – ZHONG OU NEW TREND
EQUITY SECURITIES INVESTMENT FUND (LOF)
15,369,990 RMB ordinary shares 15,369,990
INTERIM
REPORT RONGTONG NEW BLUE CHIP SECURITIES INVESTMENT FUND 14,000,000 RMB ordinary shares 14,000,000
VALUE PARTNERS CLASSIC FUND 13,643,695 Domestic listed 13,643,695
foreign shares
JIN Xing 9,018,200 RMB ordinary shares 1,555,600
Domestic listed 7,462,600
foreign shares
BBH A/C VANGUARD EMERGING MARKETS STOCK 8,608,238 Domestic listed 8,608,238
INDEX FUND foreign shares
Connected relationship or connected party Shouguang Chenming Holdings Company Limited, a state-owned legal
relationship among the top ten shareholders of person shareholder, is not connected with any of the shareholders above.
ordinary shares of non-restricted shares, and They are not persons acting in concert under Administration of Disclosure
between the top ten shareholders of ordinary of Information on the Change of Shareholdings in Listed Companies
shares of non-restricted shares and the top ten Procedures. Save for the above, it is not aware that any other shareholders
shareholders of ordinary shares 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.
Whether an agreed repurchase transaction was entered into during the reporting period by the top 10 shareholders of ordinary
shares and top 10 shareholders of non-restricted shares of the Company
Yes √ No
The top 10 shareholders of ordinary shares and top 10 shareholders of non-restricted shares of the Company did not enter
any agreed repurchase transaction during the reporting period.
36 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VI Changes in Share Capital and Shareholders
III. Change of controlling shareholders or beneficial controllers
The 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 owner during the reporting period
Applicable √ Not applicable
There was no change of beneficial owner of the Company during the reporting period.
IV. Plan on increase of shareholding proposed or implemented by shareholders of the Company
and their persons acting in concert during the reporting period
Applicable √ Not applicable
As far as the Company is aware, there was no plan on increase of shareholding proposed or implemented by shareholders of
the Company and their persons acting in concert during the reporting period.
V. The Company’s shareholders’ and other persons’ interest in shares or debentures
As at 30 June 2015, the following shareholders (other than the Directors, Supervisors or chief executives of the Company) had
interests or short positions in the Company’s shares and underlying shares as shown in the share register maintained by the
Company in accordance with Section 336 of the SFO (Chapter 571 of the Laws of Hong Kong):
15
INTERIM
REPORT
Approximate shareholding
as a percentage of
Number of
shares held Total share capital Class of shares
Name (shares) (%) (%)
SHOUGUANG CHENMING HOLDINGS CO., LTD 293,003,657 15.13 26.32
A shares (L)
THE NATIONAL SOCIAL SECURITY FUND 35,270,000 1.82 10.01
H shares (L)
Deutsche Bank Aktiengesellschaft 21,796,000 1.13 6.19
H shares (L)
480,000 0.02 0.14
H shares (S)
8,248,500 0.43 2.34
H shares (P)
(L) – Long position (S) – Short position (P) – Lending pool
Save as disclosed above, as at 30 June 2015, no other person had interests or short positions in the Company’s shares or
underlying shares as recorded in the register maintained under section 336 of the SFO.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 37
VII. Preference Shares
On 29 December 2014, the resolution on the proposal on non-public offer of preference shares and related resolutions were
considered and approved at the fifth extraordinary general meeting of the seventh session of the Board of the Company.
On 11 February 2015, the Company received the Reply on Issues Regarding the Non-public Offer of Preference Shares by
Shandong Chenming Paper Holdings Limited (Lu Quo Zi Chan Quan Zi [2015] No. 4) issued by Stated-owned Assets Supervision
and Administration Commission of Shandong Province, which agreed the non-public offer of not more than 45.00 million preference
shares by the Company.
On 13 February 2015, the Company convened the 2015 First Extraordinary General Meeting, the 2015 First Class Meeting for
Holders of Domestic Listed Shares (A shares and B shares) and the 2015 First Class Meeting for Holders of Overseas Listed Shares
(H shares), at which the resolution on the non-public offer of preference share proposal and related resolutions were considered and
approved respectively.
On 2 March 2015, the Company received CSRC Notice of acceptance of application for administrative approval (No. 150373) from
China Securities Regulatory Commission (hereinafter referred to as “CSRC”). Having examined the information submitted by the
Company in support of its application for administrative approval for Confirmation of Issue of Preference Shares by Listed Company,
CSRC was of the opinion that the information in support of application was complete and complied with legal requirements, and
decided to accept the said application for administrative approval.
On 15 May 2015, the Company and its sponsor for the non-public issue of the preference shares received Reply on Application for
Non-Public Issue of Preference Shares by Shandong Chenming Paper Holdings Limited (CSRC Notice of Reply on Administrative
Approval-requiring Projects (No. 150373) (the “Reply”) from CSRC. Explanation and analysis had been made by the Company on
relevant issues in accordance therewith.
On 5 June 2015, the Company convened the sixth meeting of the seventh Board, at which the resolution on the amendments to the
15 non-public offer of preference share proposal and disclosed the proposal as amended on the same date.
INTERIM On 9 June 2015, the Company published the Announcement in Respect of Reply on Application for Non-Public Issue of Preference
REPORT
Shares and the Announcement in Respect of Supplementary Disclosure Required under the Reply from CSRC on Application for
Issue of Non-Public Preference Shares. Materials for the supplementary disclosure required were sent to the CSRC within two
business days.
On 21 August 2015, the application for non-public issue of preference shares of the Company was reviewed and approved by the
Public Offering Review Committee of the CSRC.
38 SHANDONG CHENMING PAPER HOLDINGS LIMITED
VIII Directors, Supervisors and Senior Management
I. Changes in shareholdings of Directors, Supervisors and Senior Management
There was no change in shareholdings of Directors, Supervisors and senior management of the Company during the reporting
period. Please see the annual report for 2014 for details.
II. Changes of Directors, Supervisors and Senior Management of the Company
Name Position Type Date Reason
Shao Zhenzhong Deputy general manager Resignation 27 April 2015 For personal reasons.
Chang Liting Deputy general manager Expiry of term of office 27 April 2015 Retirement.
III. Equity interests held by Directors, Supervisors and Senior Management filed in compliance
with SFO of Hong Kong
As at 30 June 2015, the interests held by each of the Directors, Supervisors and Chief Executives of the Company in the
Company and its associated corporations (within the meaning of Part XV of the SFO) as recorded in the register required to be
kept under section 352 of the SFO, are set out as follows:
Number of shares
(A shares) held as
at the end of the
reporting period
Name Position (shares)
15
Chen Hongguo (Note 1) Chairman and Executive Director 6,863,875 INTERIM
Yin Tongyuan Executive Director 2,423,640 REPORT
Li Feng Executive Director 471,818
Geng Guanglin Executive Director 437,433
Hou Huancai Executive Director 628,915
Zhou Shaohua Executive Director 123,007
Gao Junjie Chairman of Supervisory Committee 39,606
Associated corporations
Number of
shares held Number of
as at the Change shares held as
beginning of during the at the end of the
Name of the reporting reporting reporting
Name Position associated corporation period (shares) period (+/-) period (shares)
Chen Hongguo (Note 2) Chairman Shouguang Chenming 231,000,000 231,000,000
Holdings Company
Limited
Note 1: Save as the 6,434,527 A Shares personally held, Chen Hongguo was also deemed to be interested in the 429,348 A Shares held by Li Xueqin,
his spouse.
Note 2: Chen Hongguo and his spouse, Li Xueqin, collectively held 43% equity interests in Shouguang Henglian Enterprise Investment Co. Ltd. As
a result, Shouguang Henglian was deemed to be controlled by Chen Hongguo. As such, the 231,000,000 shares of Chenming Holdings
(approximately 13.71% of the total share capital of Chenming Holdings) held by Shouguang Henglian were also deemed to be held by Chen
Hongguo.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 39
VIII Directors, Supervisors and Senior Management
Save as disclosed in the above, as at 30 June 2015, none of the Directors, Supervisors or chief executives of the Company had any
interests or short positions in the shares, underlying shares or debentures of the Company or any of its associated corporations
which were required to be filed in the register of the Company required to be maintained pursuant to section 352 of the SFO or
which were required to be notified to the Company and the Hong Kong Stock Exchange pursuant to the Model Code as contained
in Appendix 10 to the Listing Rules.
As at 30 June 2015, none of each 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.
15
INTERIM
REPORT
40 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX 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 financial statements of the financial report is: RMB
1. Consolidated Balance Sheet
Prepared by: Shandong Chenming Paper Holdings Limited
30 June 2015
Unit: RMB
Item Closing balance Opening balance
CURRENT ASSETS:
Monetary funds 6,992,524,403.46 5,475,658,186.10
Bills receivable 3,235,015,656.47 3,047,541,556.15
Accounts receivable 3,950,725,119.36 3,489,409,369.20 15
Prepayments 1,586,665,921.49 1,838,017,454.90 INTERIM
Other receivables 2,480,908,390.56 1,776,467,886.07 REPORT
Inventories 5,251,609,376.93 5,420,740,468.60
Non-current assets due within one year 625,936,558.28 865,738,333.65
Other current assets 1,515,951,658.64 1,656,602,232.09
Total current assets 25,639,337,085.19 23,570,175,486.76
NON-CURRENT ASSETS:
Available-for-sale financial assets 409,000,000.00 73,000,000.00
Long-term receivables 5,035,760,955.94 1,420,598,667.99
Long-term equity investments 83,942,816.67 36,087,848.12
Investment property 16,866,059.89 17,735,187.91
Fixed assets 24,698,413,796.75 24,744,731,705.04
Construction in progress 4,345,421,714.36 3,709,270,828.53
Construction materials 16,661,915.35 22,955,982.38
Intangible assets 1,478,885,698.10 1,319,104,425.04
Goodwill 20,283,787.17 20,283,787.17
Long-term prepaid expenses 170,188,608.23 173,690,747.83
Deferred income tax assets 640,922,517.72 620,267,636.44
Other non-current assets 1,194,124,242.00 1,094,124,242.00
Total non-current assets 38,110,472,112.18 33,251,851,058.45
Total assets 63,749,809,197.37 56,822,026,545.21
SHANDONG CHENMING PAPER HOLDINGS LIMITED 41
IX Financial Report
II. Financial Statements (Cont’d)
1. Consolidated Balance Sheet (Cont’d)
Item Closing balance Opening balance
CURRENT LIABILITIES:
Short-term borrowings 22,353,701,292.50 20,470,296,592.92
Bills payable 2,495,752,255.20 1,598,110,792.85
Accounts payable 2,911,506,069.22 3,408,366,113.93
Advance receipts 286,878,004.93 270,056,726.88
Staff remuneration payables 180,874,418.61 153,926,042.30
Taxes payable 187,093,051.84 161,100,088.94
Interest payable 246,392,305.46 150,047,305.50
Dividend payable 271,096,765.38
Other payables 1,145,101,448.59 783,790,884.61
Non-current liabilities due within one year 1,229,998,100.00 1,099,968,900.00
Other current liabilities 3,632,120,000.00
Total current liabilities 34,940,513,711.73 28,095,663,447.93
NON-CURRENT LIABILITIES:
Long-term borrowings 4,467,061,483.45 4,378,290,245.19
Bonds payable 5,781,747,447.67 5,777,131,308.01
Special payables 161,983,516.66 161,983,516.66
15 Deferred income 1,463,023,929.34 1,476,121,434.78
INTERIM Other non-current liabilities 2,588,775,681.58 2,584,768,359.64
REPORT
Total non-current liabilities 14,462,592,058.70 14,378,294,864.28
TOTAL LIABILITIES 49,403,105,770.43 42,473,958,312.21
OWNERS’ EQUITY:
Share capital 1,936,405,467.00 1,936,405,467.00
Capital reserves 6,149,138,276.81 6,149,136,873.41
Other comprehensive income 49,780,458.01 33,763,168.13
Surplus reserves 1,132,116,106.40 1,132,116,106.40
Retained profit 4,671,212,991.34 4,665,921,686.21
Total equity attributable to equity holders of the company 13,938,653,299.56 13,917,343,301.15
Minority interest 408,050,127.38 430,724,931.85
Total owners’ equity 14,346,703,426.94 14,348,068,233.00
TOTAL LIABILITIES AND OWNERS’ EQUITY 63,749,809,197.37 56,822,026,545.21
Legal Representative: Chen Hongguo Financial controller: Dong Lianming Head of the financial department: Liang Tingkun
42 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
II. Financial Statements (Cont’d)
2. Balance sheet of the Company
Unit: RMB
Item Closing balance Opening balance
CURRENT ASSETS:
Monetary funds 3,267,417,680.15 2,345,637,944.73
Bills receivable 1,328,129,615.72 3,516,397,335.06
Accounts receivable 2,771,397,234.19 3,503,819,172.94
Prepayments 1,882,683,149.20 1,734,892,571.69
Other receivables 10,917,955,044.33 9,312,981,273.16
Inventories 846,562,208.45 824,854,551.21
Non-current assets due within one year 300,000,000.00
Other current assets 68,209,049.61 114,216,338.90
Total current assets 21,082,353,981.65 21,652,799,187.69
NON-CURRENT ASSETS:
Available-for-sale financial assets 373,000,000.00 73,000,000.00
Long-term equity investments 12,526,731,131.61 12,370,935,132.02
Investment property 16,866,059.89 17,735,187.91
15
Fixed assets 3,498,268,158.05 3,350,685,307.94
Construction in progress 82,672,707.11 323,543,539.92
Construction materials 1,541,694.94 1,564,277.42 INTERIM
REPORT
Intangible assets 313,017,487.23 246,581,452.71
Deferred income tax assets 115,013,108.94 41,033,875.05
Other non-current assets 900,000,000.00 900,000,000.00
Total non-current assets 17,827,110,347.77 17,325,078,772.97
TOTAL ASSETS 38,909,464,329.42 38,977,877,960.66
CURRENT LIABILITIES:
Short-term borrowings 5,646,708,970.65 9,143,654,360.01
Bills payable 2,098,817,187.81 680,548,319.01
Accounts payable 622,982,789.95 693,506,846.35
Advance receipts 1,408,055.14 1,724,744.50
Staff remuneration payables 95,030,839.83 75,683,362.25
Taxes payable 31,008,200.55 30,908,886.06
Interest payable 246,392,305.46 150,047,305.50
Dividend payable 271,096,765.38
Other payables 2,586,008,948.24 4,141,133,979.84
Non-current liabilities due within one year 866,816,000.00 494,760,000.00
Other current liabilities 3,632,120,000.00
Total current liabilities 16,098,390,063.01 15,411,967,803.52
SHANDONG CHENMING PAPER HOLDINGS LIMITED 43
IX Financial Report
II. Financial Statements (Cont’d)
2. Balance sheet of the Company (Cont’d)
Item Closing balance Opening balance
NON-CURRENT LIABILITIES:
Long-term borrowings 350,692,035.94 867,832,035.94
Bonds payable 5,781,747,447.67 5,777,131,308.01
Deferred income 63,085,753.49 44,507,433.25
Other non-current liabilities 2,588,775,681.58 2,584,768,359.64
Total non-current liabilities 8,784,300,918.68 9,274,239,136.84
Total liabilities 24,882,690,981.69 24,686,206,940.36
OWNERS’ EQUITY:
Share capital 1,936,405,467.00 1,936,405,467.00
Capital reserves 5,938,840,660.10 5,938,839,256.70
Surplus reserves 1,119,926,524.49 1,119,926,524.49
Retained profit 5,031,600,696.14 5,296,499,772.11
Total owners’ equity 14,026,773,347.73 14,291,671,020.30
TOTAL LIABILITIES AND OWNERS’ EQUITY 38,909,464,329.42 38,977,877,960.66
15
INTERIM Legal Representative: Chen Hongguo Financial controller: Dong Lianming Head of the financial department: Liang Tingkun
REPORT
44 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
II. Financial Statements (Cont’d)
3. Consolidated Income Statement
Unit: RMB
Amounts for Amounts for
Item the reporting period the prior period
I. Total revenue 9,718,697,677.76 9,082,020,579.01
Including: Revenue 9,718,697,677.76 9,082,020,579.01
II. Total operating costs 9,407,786,957.20 9,082,153,213.06
Including: Operating costs 7,370,384,661.31 7,378,998,628.31
Business taxes and surcharges 51,233,976.66 35,500,467.78
Sales expenses 551,073,823.71 524,593,811.50
Administrative expenses 654,253,969.26 500,133,881.63
Finance expenses 745,472,279.11 626,611,788.47
Loss on impairment of assets 35,368,247.15 16,314,635.37
Plus: Gain on change in fair value (“-” denotes loss) -2,177,906.88 967,670.22
Investment income (“-” denotes loss) 46,632,746.32 21,218,247.82
Including: Investment income from associates
and joint ventures -2,145,031.45 -1,890,171.00
III. Operating profit (“-” denotes loss) 355,365,560.00 22,053,283.99
Plus: Non-operating income 75,090,038.49 253,711,372.78
Including: Gain on disposal of non-current assets 7,042,678.94 82,529,609.62 15
Less: Non-operating expenses 3,331,029.84 14,028,105.87 INTERIM
Including: Loss on disposal of non-current assets 2,683,749.34 8,764,674.26 REPORT
IV. Total profit (“-” denotes total loss) 427,124,568.65 261,736,550.90
Less: Income tax expenses 173,411,302.61 34,033,045.12
V. Net profit (“-” denotes net loss) 253,713,266.04 227,703,505.78
Net profit attributable to owners of the Company 276,388,070.51 242,461,095.02
Minority interest -22,674,804.47 -14,757,589.24
VI. Other comprehensive income after tax, net 16,017,289.88 -2,305,777.92
Other comprehensive income after tax attributable to
owners of the Company, net 16,017,289.88 -2,305,777.92
(II) Other comprehensive income that will not be reclassified to
profit and loss in subsequent periods 16,017,289.88 -2,305,777.92
Translation difference of financial statements
denominated in foreign currency 16,017,289.88 -2,305,777.92
VII. Total comprehensive income 269,730,555.92 225,397,727.86
Total comprehensive income attributable to owners of the Company 292,405,360.39 240,155,317.10
Total comprehensive income attributable to minority interest -22,674,804.47 -14,757,589.24
VIII. Earnings per share:
(I) Basic earnings per share 0.14 0.12
(II) Diluted earnings per share 0.14 0.12
Legal Representative: Chen Hongguo Financial controller: Dong Lianming Head of the financial department: Liang Tingkun
SHANDONG CHENMING PAPER HOLDINGS LIMITED 45
IX Financial Report
II. Financial Statements (Cont’d)
4. Income statement of the Company
Unit: RMB
Amounts for Amounts for
Item the reporting period the prior period
I. Revenue 3,168,439,943.39 3,996,792,004.38
Less: Operating costs 2,599,359,718.51 3,157,273,029.32
Business taxes and surcharges 13,228,944.39 16,249,023.49
Selling expenses 132,390,470.24 141,537,803.94
Administrative expenses 247,053,467.37 263,404,356.79
Finance expenses 655,455,057.16 419,085,682.08
Loss on impairment of assets 613,708.24 531,463.30
Investment income (“-” denotes loss) 409,332,599.58 228,032,037.93
Including: Investment income from associates and joint ventures -347,400.41 -74,651.88
II. Operating profit (“-” denotes loss) -70,328,822.94 226,742,683.39
Plus: Non-operating income 4,623,094.90 52,625,942.79
Including: Gain on disposal of non-current assets 2,762,502.62 1,152,350.23
Less: Non-operating expenses 2,075,816.44 2,636,144.44
Including: Loss on disposal of non-current assets 1,922,928.98 207,851.60
15 III. Total profit (“-” denotes total loss) -67,781,544.48 276,732,481.74
INTERIM
Less: Income tax expenses -73,979,233.89 885,932.82
REPORT IV. Net profit (“-” denotes net loss) 6,197,689.41 275,846,548.92
V. Other comprehensive income after tax, net
VI. Total comprehensive income 6,197,689.41 275,846,548.92
Legal Representative: Chen Hongguo Financial controller: Dong Lianming Head of the financial department: Liang Tingkun
46 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
II. Financial Statements (Cont’d)
5. Consolidated cash flow statement
Unit: RMB
Amounts for Amounts for
Item the reporting period the prior period
I. Cash flows from operating activities:
Cash received from sales of goods and rendering of services 9,898,058,035.83 9,887,593,678.02
Tax rebates received 509,758.13
Cash received relating to other operating activities 571,126,879.30 236,297,041.43
Subtotal of cash inflows from operating activities 10,469,184,915.13 10,124,400,477.58
Cash paid for goods and services 7,576,299,500.64 7,174,237,200.77
Cash paid to and for employees 440,902,131.38 438,554,968.19
Payments of taxes 479,492,280.63 453,797,498.68
Cash paid relating to other operating activities 4,195,246,637.21 772,114,548.81
Subtotal of cash outflows from operating activities 12,691,940,549.86 8,838,704,216.45
Net cash flows from operating activities -2,222,755,634.73 1,285,696,261.13
II. Cash flows from investing activities:
Cash received from investments 100,000,000.00
15
INTERIM
Net cash received from disposal of fixed assets, REPORT
intangible assets and other long-term assets 111,852.36 114,959,960.80
Net cash received from disposal of subsidiaries
and other business units 75,035,211.41
Cash received relating to other investing activities 31,438,021.33 230,000,000.00
Subtotal of cash inflows from investing activities 131,549,873.69 419,995,172.21
Cash paid for purchase of fixed assets, intangible assets
and other long-term assets 947,028,823.98 1,214,448,290.91
Cash paid on investments 386,000,000.00 3,000,000.00
Cash paid relating to other investing activities 1,000,000,000.00
Subtotal of cash outflows from investing activities 1,333,028,823.98 2,217,448,290.91
Net cash flows from investing activities -1,201,478,950.29 -1,797,453,118.70
SHANDONG CHENMING PAPER HOLDINGS LIMITED 47
IX Financial Report
II. Financial Statements (Cont’d)
5. Consolidated cash flow statement (Cont’d)
Amounts for Amounts for
Item the reporting period the prior period
III. Cash flows from financing activities:
Cash received from borrowings 17,281,871,535.62 10,114,432,956.75
Cash received from bond issue 3,585,600,000.00
Cash received relating to other financing activities 68,000,000.00
Subtotal of cash inflows from financing activities 20,867,471,535.62 10,182,432,956.75
Cash repayments of amounts borrowed 15,175,740,399.14 8,173,866,573.80
Cash paid for dividend and profit distribution or interest payment 771,500,046.59 653,495,183.98
Including: dividend and profit paid to minority interest by subsidiaries 2,091,495.75
Cash paid relating to other financing activities 1,767,785,037.29 645,581,019.54
Subtotal of cash outflows from financing activities 17,715,025,483.02 9,472,942,777.32
Net cash flows from financing activities 3,152,446,052.60 709,490,179.43
IV. Effect of foreign exchange rate changes on
cash and cash equivalents 20,869,712.49 -12,913,419.68
15 V. Net increase in cash and cash equivalents
Plus: Balance of cash and cash equivalents
-250,918,819.93 184,819,902.18
INTERIM
REPORT as at the beginning of the period 976,096,861.30 726,532,928.96
VI. Balance of cash and cash equivalents as at the end of the period 725,178,041.37 911,352,831.14
Legal Representative: Chen Hongguo Financial controller: Dong Lianming Head of the financial department: Liang Tingkun
48 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
II. Financial Statements (Cont’d)
6. Cash flow statement of the Company
Unit: RMB
Amounts for Amounts for
Item the reporting period the prior period
I. Cash flows from operating activities:
Cash received from sales of goods and rendering of services 3,565,908,328.69 3,549,147,836.05
Cash received relating to other operating activities 81,122,254.98 82,491,417.97
Subtotal of cash inflows from operating activities 3,647,030,583.67 3,631,639,254.02
Cash paid for goods and services 1,806,037,967.56 1,533,483,679.27
Cash paid to and for employees 190,552,619.28 217,060,276.98
Payments of taxes 61,089,661.71 182,972,526.03
Cash paid relating to other operating activities 73,119,210.01 127,363,732.10
Subtotal of cash outflows from operating activities 2,130,799,458.56 2,060,880,214.38
Net cash flows from operating activities 1,516,231,125.11 1,570,759,039.64
II. Cash flows from investing activities:
Cash received from investments
Cash received from investment income
300,000,000.00
903,625.62
800,000,000.00
13,613,768.88
15
INTERIM
Net cash received from disposal of fixed assets, REPORT
intangible assets and other long-term assets 140.00 17,069.00
Cash received relating to other investing activities 21,611,333.23
Subtotal of cash inflows from investing activities 322,515,098.85 813,630,837.88
Cash paid for purchase of fixed assets,
intangible assets and other long-term assets 50,797,899.17 80,853,295.53
Cash paid on investments 459,143,400.00 1,703,929,592.00
Cash paid relating to other investing activities 1,000,000,000.00
Subtotal of cash outflows from investing activities 509,941,299.17 2,784,782,887.53
Net cash flows from investing activities -187,426,200.32 -1,971,152,049.65
SHANDONG CHENMING PAPER HOLDINGS LIMITED 49
IX Financial Report
II. Financial Statements (Cont’d)
6. Cash flow statement of the Company (Cont’d)
Amounts for Amounts for
Item the reporting period the prior period
III. Cash flows from financing activities:
Cash received from borrowings 5,161,426,356.80 5,861,716,631.35
Cash received from bond issue 3,585,600,000.00
Subtotal of cash inflows from financing activities 8,747,026,356.80 5,861,716,631.35
Cash repayments of amounts borrowed 8,803,455,745.75 4,734,961,076.26
Cash paid for dividend and profit distribution or interest payment 370,381,029.51 288,024,703.93
Cash paid relating to other financing activities 883,402,412.60 379,346,431.66
Subtotal of cash outflows from financing activities 10,057,239,187.86 5,402,332,211.85
Net cash flows from financing activities -1,310,212,831.06 459,384,419.50
IV. Effect of foreign exchange rate changes on
cash and cash equivalents 19,785,229.09 -6,379,154.41
V. Net increase in cash and cash equivalents 38,377,322.82 52,612,255.08
Plus: Balance of cash and cash equivalents
15 as at the beginning of the period 40,590,357.33 64,392,029.09
INTERIM
REPORT VI. Balance of cash and cash equivalents as at the end of the period 78,967,680.15 117,004,284.17
Legal Representative: Chen Hongguo Financial controller: Dong Lianming Head of the financial department: Liang Tingkun
50 SHANDONG CHENMING PAPER HOLDINGS LIMITED
II. Financial Statements (Cont’d)
7. Consolidated statement of changes in owners’ equity
Amounts for the reporting period
Unit: RMB
Item For the reporting period
Equity attributable to owners of the Company
Other equity instruments
Other
Less: comprehensive General Total
IX Financial Report
Share capital Preference shares Perpetual bonds Others Capital reserves treasury shares income Special reserves Surplus reserves risk provisions Retained profit Minority interest owners’ equity
I. Balance as at the end of the prior period 1,936,405,467.00 6,149,136,873.41 33,763,168.13 1,132,116,106.40 4,665,921,686.21 430,724,931.85 14,348,068,233.00
II. Balance as at the beginning of the period 1,936,405,467.00 6,149,136,873.41 33,763,168.13 1,132,116,106.40 4,665,921,686.21 430,724,931.85 14,348,068,233.00
III. Changes in the period (“-” denotes decrease) 1,403.40 16,017,289.88 5,291,305.13 -22,674,804.47 -1,364,806.06
(I) Total comprehensive income 16,017,289.88 276,388,070.51 -22,674,804.47 269,730,555.92
(II) Capital paid in and reduced by owners 1,403.40 1,403.40
1. Ordinary shares paid by shareholders 1,403.40 1,403.40
(III) Profit distribution -271,096,765.38 -271,096,765.38
1. Transfer to surplus reserves
Transfer to general risk provision
3. Distribution to owners (or shareholders) -271,096,765.38 -271,096,765.38
IV. Balance as at the end of the period 1,936,405,467.00 6,149,138,276.81 49,780,458.01 1,132,116,106.40 4,671,212,991.34 408,050,127.38 14,346,703,426.94
SHANDONG CHENMING PAPER HOLDINGS LIMITED
51
15
REPORT
INTERIM
52
15
REPORT
INTERIM
II. Financial Statements (Cont’d)
7. Consolidated statement of changes in owners’ equity (Cont’d)
Amounts for the prior period
Unit: RMB
Item For the prior period
Equity attributable to owners of the Company
Other equity instruments
Other
Less: comprehensive General Total
IX Financial Report
Share capital Preference shares Perpetual bonds Others Capital reserves treasury shares income Special reserves Surplus reserves risk provisions Retained profit Minority interest owners’ equity
I. Balance as at the end of the prior period 1,975,471,967.00 6,204,682,028.94 30,954,891.40 16,934,073.59 1,132,116,106.40 4,741,638,941.58 598,465,306.78 14,638,353,532.89
II. Balance as at the beginning of the period 1,975,471,967.00 6,204,682,028.94 30,954,891.40 16,934,073.59 1,132,116,106.40 4,741,638,941.58 598,465,306.78 14,638,353,532.89
III. Changes in the period (“-” denotes decrease) -39,066,500.00 -55,599,816.41 -30,954,891.40 -2,278,577.92 -338,460,545.08 -130,602,452.09 -535,053,000.10
(I) Total comprehensive income -2,278,577.92 242,461,095.02 -14,757,589.24 225,424,927.86
(II) Capital paid in and reduced by owners -39,066,500.00 -55,599,816.41 -30,954,891.40 -61,913,669.40 -125,625,094.41
1. Ordinary shares paid by shareholders -39,066,500.00 -55,572,616.41 -30,954,891.40 -61,913,669.40 -125,597,894.41
SHANDONG CHENMING PAPER HOLDINGS LIMITED
4. Others -27,200.00 -27,200.00
(III) Profit distribution -580,921,640.10 -53,931,193.45 -634,852,833.55
1. Transfer to surplus reserves
Transfer to general risk provision
3. Distribution to owners (or shareholders) -580,921,640.10 -53,931,193.45 -634,852,833.55
4. Others
IV. Balance as at the end of the period 1,936,405,467.00 6,149,082,212.53 14,655,495.67 1,132,116,106.40 4,403,178,396.50 467,862,854.69 14,103,300,532.79
Legal Representative: Chen Hongguo Financial controller: Dong Lianming Head of the financial department: Liang Tingkun
II. Financial Statements (Cont’d)
8. Statement of changes in owners’ equity of the Company
Amounts for the reporting period
Unit: RMB
Item For the reporting period
Other equity instruments
Other
Less: comprehensive Total
IX Financial Report
Share capital Preference shares Perpetual bonds Others Capital reserves treasury shares income Special reserves Surplus reserves Retained profit owners’ equity
I. Balance as at the end of the prior period 1,936,405,467.00 5,938,839,256.70 1,119,926,524.49 5,296,499,772.11 14,291,671,020.30
II. Balance as at the beginning of the period 1,936,405,467.00 5,938,839,256.70 1,119,926,524.49 5,296,499,772.11 14,291,671,020.30
III. Changes in the period (“-” denotes decrease) 1,403.40 -264,899,075.97 -264,897,672.57
(I) Total comprehensive income 6,197,689.41 6,197,689.41
(II) Capital paid in and reduced by owners 1,403.40 1,403.40
1. Ordinary shares paid by shareholders 1,403.40 1,403.40
(III) Profit distribution -271,096,765.38 -271,096,765.38
1. Transfer to surplus reserves
2. Distribution to owners (or shareholders) -271,096,765.38 -271,096,765.38
3. Others
IV. Balance as at the end of the period 1,936,405,467.00 5,938,840,660.10 1,119,926,524.49 5,031,600,696.14 14,026,773,347.73
SHANDONG CHENMING PAPER HOLDINGS LIMITED
53
15
REPORT
INTERIM
54
15
REPORT
INTERIM
II. Financial Statements (Cont’d)
8. Statement of changes in owners’ equity of the Company (Cont’d)
Amounts for the prior period
Unit: RMB
Item For the prior period
Other equity instruments
Other
Less: comprehensive Total
Share capital Preference shares Perpetual bonds Others Capital reserves treasury shares income Special reserves Surplus reserves Retained profit owners’ equity
IX Financial Report
I. Balance as at the end of the prior period 1,975,471,967.00 6,005,426,779.17 30,954,891.40 1,119,926,524.49 4,798,391,156.43 13,868,261,535.69
II. Balance as at the beginning of the period 1,975,471,967.00 6,005,426,779.17 30,954,891.40 1,119,926,524.49 4,798,391,156.43 13,868,261,535.69
III. Changes in the period (“-” denotes decrease) -39,066,500.00 -66,614,983.35 -30,954,891.40 -305,075,091.18 -379,801,683.13
(I) Total comprehensive income -39,066,500.00 -66,614,983.35 -30,954,891.40 275,846,548.92 201,119,956.97
(II) Capital paid in and reduced by owners
1. Ordinary shares paid by shareholders
2. Capital paid by holders of
SHANDONG CHENMING PAPER HOLDINGS LIMITED
other equity instruments
3. Amounts of share-based payments
recognised in owners’ equity
4. Others
(III) Profit distribution -580,921,640.10 -580,921,640.10
1. Transfer to surplus reserves
2. Distribution to owners (or shareholders) -580,921,640.10 -580,921,640.10
3. Others
IV. Balance as at the end of the period 1,936,405,467.00 5,938,811,795.82 1,119,926,524.49 4,493,316,065.25 13,488,459,852.56
Legal Representative: Chen Hongguo Financial controller: Dong Lianming Head of the financial department: Liang Tingkun
IX Financial Report
III. General Information of the Company
Shandong Chenming Paper Holdings Limited (hereinafter referred to as the “Company”) was incorporated in May 1993 in
Shouguang City, Shandong Province, with its headquarters at No. 2199 Nongsheng Road East, Shouguang City, Shandong
Province.
Its predecessor, Shandong Shouguang Paper Mill Corporation, was reformed as Shandong Shouguang Paper Making,
Printing and Packaging Group Company Limited through “offering to specific investors” in May 1993, with registered capital
of RMB66,647,400 and total share capital of 66,647,400 shares. Its shareholding structure is as follows: 46,497,400 sponsor’s
state-owned shares accounting for 69.76% of total share capital, 1,558,500 domestic legal person shares accounting for 2.34%
of total share capital and 18,591,500 staff shares, accounting for 27.90% of total share capital.
On 21 August 1993, replied by the Reply on Changing Shandong Shouguang Papermaking, Printing and Packaging (Group)
Incorporated Company as Shandong Shouguang Papermaking (Group) Incorporated Company (Shou Gai Fa [1993] No.
23) verified and issued by the Shandong Shouguang Office for Restructuring Economic System, Shandong Shouguang
Papermaking, Printing and Packaging (Group) Incorporated Company was changed as Shandong Shouguang Papermaking
(Group) Incorporated Company, with the relevant industrial and commercial alteration registration procedures completed on
8 October 1993. On 4 December 1996, according to the Letter on Agreeing to Determine Shandong Shouguang Papermaking
Group Incorporated Company (Lu Ti Gai Han Zi [1996] No. 123) verified and issued by the Shandong Commission for
Restructuring Economic System and the Shandong Incorporated Company Approval Certificate (Lu Zheng Gu Zi [1996] No.
98) verified and issued by the People’s Government of Shandong Province, it was agreed to change Shandong Shouguang
Papermaking Group Incorporated Company as Shandong Chenming Paper Holdings Limited (present name of the Company).
On 27 October 1996, at the third general meeting of the Company, the Company passed the profit distribution plan to deliver 3.5
bonus shares per 10 shares for the year of 1995, and the proposal of converting such above shares into state-owned shares
as well. After such bonus share issue and conversion into capital, the Company’s share capital was changed from 66,647,400 15
shares into 99,840,990 shares. INTERIM
REPORT
In December 1996, with approval by the Letter on Recommending Shandong Shouguang Papermaking Group Incorporated
Company to Issue B Shares (Lu Zheng Zi [1996] No. 270) verified and 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 the
incorporated company established by share offer.
On 4 February 1997, the Company held the fourth general meeting, which passed the proposal that the Company absorbed
and merged Shouguang Yongli Paper Co., Ltd. and the profit distribution plan to deliver 4 bonus shares per 10 shares for
1996. After bonus shares distribution, the Company’s share capital was changed from 99,840,990 shares into 158,855,665
shares.
On 30 April 1997, according to approval by the Letter on Recommending Shandong Shouguang Papermaking Group
Incorporated Company to Issue B Shares (Lu Zheng Zi [1996] No. 270) verified and issued by the People’s Government of
Shandong Province, the Reply on Shandong Chenming Paper Co., Ltd. to Issue Foreign Shares Listed in China (Zheng Wei
Fa [1997] No. 26) verified and issued by the Securities Committee of the State Council, and Shen Zheng Fa [1997] No. 188
of the Shenzhen Stock Exchange, the Company issued 115,000,000 domestic listed foreign shares (B shares), which were
listed on Shenzhen Stock Exchange on 26 May 1997. After issuance, the Company’s total share capital was increased from
158,855,665 shares to 273,855,665 shares. The Company was changed as the foreign-invested incorporated company by the
Reply on Changing Shandong Chenming Paper Group Incorporated Company as the Foreign-invested Incorporated Company
([1997] Wai Jing Mao Zi Er Han Zi No. 415) verified and issued by the original Ministry of Foreign Trade and Economic
Cooperation.
On 22 November 1997, the Company held the extraordinary general meeting in 1997 and passed the Proposal of Converting
Capital Reserve into Share Capital by discussion, to convert capital reserve into share capital of 109,542,266 shares at
the ratio of 10:4 according to the Company’s share capital of 273,855,665 shares on 30 June 1997. Upon conversion, the
Company’s total share capital was changed to 383,397,931 shares.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 55
IX Financial Report
III. General Information of the Company (Cont’d)
With approval by the Notice about Approving Application of Shandong Chenming Paper Group Incorporated Company to
Issue Shares (Zheng Jian Gong Si Zi [2000] No. 151) verified and issued by the China Securities Regulatory Commission on
30 September 2000 and the Notice of Listing (Sheng Zheng Shang [2000] No. 151) verified and issued by the Shenzhen Stock
Exchange on 15 November 2000, the Company issued 70 million RMB ordinary shares (A shares), which were listed and
traded on Shenzhen Stock Exchange on 20 November 2000. After issuance, the Company’s total share capital was increased
from 383,397,931 shares to 453,397,931 shares.
In May 2001, with approval by the Notice on Approving Non-listed Foreign Shares of Shandong Chenming Paper Group
Incorporated Company for Circulation (Zheng Jian Gong Si Zi [2001] No. 44) verified and issued by the China Securities
Regulatory Commission on 19 April 2001, 26,709,591 original non-tradable foreign legal person shares held by Guanghua
Company were converted into B shares and listed on Shenzhen Stock Exchange. Listed tradable B shares of the Company
were increased to 187,709,591 shares.
On 28 June 2001, the Company held 2000 general meeting and passed the year 2000 profit distribution plan by discussion. It
presented 1 bonus share per 10 shares to all shareholders based on the total share capital of 453,397,931 shares at the end
of 2000, to increase 45,339,793 shares in total. After the bonus shares distribution, the Company’s total share capital was
increased to 498,737,724 shares.
In May 2003, the Company implemented the 2002 profit distribution to present 2 bonus shares per 10 shares, and converted
into 6 share capitals per 10 capital reserves to increase 398,990,179 shares in total. After the bonus shares distribution and
conversion, the Company’s total share capital was increased from 498,737,724 shares to 897,727,903 shares.
On 15 September 2004, with approval by the Notice on Approving Shandong Chenming Paper Group Incorporated Company
15 to Publicly Issue Convertible Bonds ([2004] No. 147) verified and issued by the China Securities Regulatory Commission, the
Company publicly issued 20 million convertible bonds with face value of RMB100, total issuance of RMB2 billion and term of
INTERIM
REPORT five years, and listed and traded on Shenzhen Stock Exchange on 30 September 2004. The conversion period lasted from 15
March 2005 to 15 September 2009. The bond was called Chenming Convertible Bond as its short name, with the convertible
bond code of 125488.
On 29 April 2005, the Company held 2004 general meeting and passed the 2004 profit distribution plan by discussion. It
converted into 3 share capitals per 10 capital reserves based on the total share capital of 897,727,903 shares at the end of
2004. The Company’s change of share capital was replied by the Reply on Agreeing Capital Increase of Shandong Chenming
Paper Group Incorporated Company (Shang Zi Pi [2005] No. 1364) verified and issued by the Ministry of Commerce of the
People’s Republic of China. According to the above resolution and reply, the Company implemented the distribution plan to
deliver 2 bonus shares per 10 shares to all shareholders and converting into 3 capital shares per 10 capital reserves based on
the total share capital of 897,728,913 shares on 19 May 2005, the date of record (as of 19 May 2005, the Company converted
into share capital of 1,010 shares from convertible bonds). After the bonus shares distribution and conversion, the Company’s
total share capital was increased to 1,346,593,369 shares.
On 6 April 2007, the Company’s 21st meeting of the fourth session of the board of directors discussed to pass the Proposal
on Exercising Redemption Right for Convertible Bonds under Redemptive Condition but Not Converted. It decided that the
Company could redeem the Chenming convertible bonds which were not converted before the date of redemption according
to procedures agreed in the Prospectuses and 105% of face value (including the current interests) after actually meeting
relevant redemptive condition of the Prospectuses of convertible bonds. On 14 May 2007, the Company converted the
Chenming Convertible Bonds and total shares were increased to 1,706,345,941 shares.
Replied by Zheng Jian Xu Ke [2008] No. 290 document of the Reply on Approving Shandong Chenming Paper Group
Incorporated Company to Issue Foreign Shares by the China Securities Regulatory Commission, and with reply by the Stock
Exchange of Hong Kong Ltd. (hereinafter referred to as the Stock Exchange of Hong Kong), the Company was approved
to publicly issue the overseas listed foreign shares (H shares). The Company publicly offered 355,700,000 H shares all over
the world and listed for trading on the main board of Stock Exchange of Hong Kong on 18 June 2008. The share was called
Chenming Paper as its short name with the stock code of HK1812. After offering, the Company’s total shares were increased
to 2,062,045,941 shares.
56 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
III. General Information of the Company (Cont’d)
Pursuant to resolutions of the 2012 Third Extraordinary General Meeting, resolutions of the 2012 First Class Meeting for
Holders of Domestic Listed Share (A shares and B shares), resolutions of the 2012 First Class Meeting for Holders of Overseas
Listed Share (H shares) and the Articles of Association (as amended), the Company applied for the reduction of share capital
of RMB86,573,974, including a decrease of 86,573,974 domestic listed foreign shares (B shares) at RMB1 per share. From 7
March 2013 to 11 December 2013, the Company repurchased 86,573,974 domestic listed foreign shares (B shares), and the
repurchased shares were cancelled on 24 December 2013. The share capital of the Company was RMB1,975,471,967 upon
such change.
Pursuant to resolutions of the 2013 First Extraordinary General Meeting, resolutions of the 2013 First Class Meeting for
Holders of Domestic Listed Share (A shares and B shares), resolutions of the 2013 First Class Meeting for Holders of Overseas
Listed Share (H shares) and the Articles of Association (as amended), the Company applied for the reduction of share capital
of RMB39,066,500, including a decrease of 39,066,500 overseas listed foreign shares (H shares) at RMB1 per share. From
11 December 2013 to 9 May 2014, the Company repurchased 39,066,500 overseas listed foreign shares (H shares), and the
repurchased shares were cancelled on 14 May 2014. The share capital of the Company was RMB1,936,405,467 upon such
change.
The Registration No. of the Business License for Enterprise Legal Person is 370000400001170.
The Company has a long business period. In the opinion of the Board of the Company, the Company is capable of operating
subsidiaries of a limited business period as a going concern upon expiry of their business period.
The financial statements were considered and approved by the board of directors of the Company on 27 August 2015.
The Company and its subsidiaries (hereinafter referred to as the (“Group”) are principally engaged in processing and sale of
paper products (including machine made paper and paper board), paper making raw materials and machinery; generation 15
and sale of electric power and thermal power; forestry, saplings growing, processing and sale of timber; manufacturing, INTERIM
REPORT
processing and sale of wood products; and manufacturing and sale of laminated boards and fortified wooden floorboards,
equipment financial and operating leasing, etc.
Subsidiaries of the Company included in the scope of consolidation for the first half of 2015 totalled 51. For details, please
refer to this Note IX “Equity in other entities”. The scope of consolidation of the Company during the year had 2 additional
companies included compared to the prior year. For details, please refer to this Note VIII “Changes in the scope of
consolidation”.
IV. Basis of Preparation of the Financial Statements
1. Basis of preparation
The Group’s financial statements are prepared on a going concern basis and based on actual transactions and events,
in accordance with the accounting standards for business enterprises promulgated by the Ministry of Finance of
PRC ((Order of Ministry of Finance No. 33 Issue and Order of Ministry of Finance No. 76 Amendment) and 41 specific
accounting standards as promulgated and amended on and after February 15 2006, the application guidelines of the
Accounting Standards for Business Enterprises, interpretations and other related rules of the Accounting Standards for
Business Enterprises (hereinafter referred to as “ASBEs”), and the disclosure requirements of the “Regulation on the
Preparation of Information Disclosures of Companies Issuing Public Shares, No. 15: General Requirements for Financial
Reports” (revised in 2014) of China Securities Regulatory Commission.
The Group’s financial statements have been prepared on an accrual basis in accordance with the ASBEs. Except
for certain financial instruments and consumable biological assets, the financial statements are prepared under
the historical cost convention. In the event that depreciation of assets occurs, a provision for impairment is made
accordingly in accordance with the relevant regulations.
2. Going concern
No facts or circumstances comprise a material uncertainty about the Company’s going concern basis within 12 months
since the end of the reporting period.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 57
IX Financial Report
V. Significant Accounting Policies and Accounting Estimates
1. Statement of Compliance with the Accounting Standards for Business Enterprises
The financial statements have been prepared by the Company in conformity with the ASBEs, which truly and fully
reflect the financial position of the consolidated entity and the Company as at 30 June 2015 and relevant information
such as the operating results and cash flows of the consolidated entity and the Company for the first half of 2015. In
addition, the financial statements of the Company also comply with, in all material respects, the disclosure requirements
of the “Regulation on the Preparation of Information Disclosures of Companies Issuing Public Shares, No. 15: General
Requirements for Financial Reports” revised by the China Securities Regulatory Commission in 2014 and the notes
thereto.
2. Accounting period
The accounting periods of the Group are divided into annual periods and interim periods. Interim periods refer to
reporting periods that are shorter than a full accounting year. The accounting year of the Group is from 1 January to 31
December of each calendar year.
3. Operating cycle
Ordinary operating cycle refers to the period from acquisition of assets used for processing by the Group until their
realisation in cash or cash equivalents. The operating cycle of the Group lasts for 12 months, and acts as an indicator
for classification of liquidity of assets and liabilities.
Our subsidiaries, including Zhanjiang Chenming Arboriculture Co., Ltd., Yangjiang Chenming Arboriculture Co., Ltd.,
15 Nanchang Chenming Arboriculture Co., Ltd., Huanggang Chenming Arboriculture Co., Ltd. and Chenming Arboriculture
Co., Ltd., were engaged in arboriculture cultivating, plantation and sale. Their ordinary operating cycle lasts for over 1
INTERIM
REPORT year.
4. Reporting currency
The Company and its domestic subsidiaries recognise RMB as their reporting currency according to the primary
economic environment in which they operate. The reporting 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”)
and Euro (“EUR”) as their respective reporting currency according to the general economic environment in which these
subsidiaries operate. The Company prepares its financial statements in RMB.
58 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
5. Accounting treatment(s) of business combination under common control and not under common control
Business combinations refer to the transactions or events in which two or more separate enterprises merged as a single
reporting entity. Business combinations are divided into business combination under common control and not under
common control.
(1) Business combination under common control
A business combination involving enterprises under common control is a business combination in which all of the
combining enterprises are ultimately controlled by the same party or parties before and after the combination,
and that control is not transitory. The party that, on the combination date, obtains control of another enterprise
participating in the combination is the absorbing party, while that other enterprise participating in the combination
is a party being absorbed. The combination date is the date on which one combining enterprise effectively obtains
control of the other combining enterprises.
Assets and liabilities obtained by the absorbing party are measured at their carrying amount at the combination
date as recorded by the party being merged. The difference between the carrying amount of the net assets
obtained and the carrying amount of the consideration paid for the combination (or the aggregate nominal value
of shares issued as consideration) is charged to the capital reserve (share capital premium). If the capital reserve
(share capital premium) is not sufficient to absorb the difference, any excess shall be adjusted against retained
earnings.
Cost incurred by the absorbing party that is directly attributable to the business combination shall be charged to
profit or loss in the period in which they are incurred.
15
INTERIM
(2) Business combination not under common control REPORT
A business combination not involving enterprises under common control is a business combination in which
all of the combining enterprises are not ultimately controlled by the same party or parties before and after the
combination. For a business combination not involving enterprises under common control, the party that, on the
acquisition date, obtains control of another enterprise participating in the combination is the acquirer, while that
other enterprise participating in the combination is the acquiree. The acquisition date is the date on which the
acquirer effectively obtains control of the acquiree.
For business combination involving entities not under common control, the cost of a business combination is
the aggregate of the fair values, on the date of acquisition, of assets given, liabilities incurred or assumed, and
equity instruments issued by the acquirer to be paid by the acquirer, in exchange for control of the acquire plus
agency fee such as audit, legal service and evaluation consultation and other management fees charged to the
profit or loss for the period when incurred. As equity or debt securities are issued by the acquirer as consideration,
any attributable transaction cost is included their initial costs. Involved contingent consideration charged to the
combination cost according to its fair value on the acquisition date, the combined goodwill be will be adjusted
if new or addition evidence existed about the condition in the acquisition date within twelve months after the
acquisition date, which is required to adjust the contingent consideration. The combination cost incurred by the
acquirer and the identifiable net assets acquired from the combination are measured at their fair values. Where the
cost of a business combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable net
assets on the acquisition date, the difference is recognised as goodwill. Where the cost of a business combination
is less than the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the acquirer shall first
reassess the measurement of the fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities
and the measurement of the cost of combination. If after such reassessment the cost of combination is still less
than the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the difference is charged to
profit or loss for the period.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 59
IX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
5. Accounting treatment(s) of business combination under common control and not under common control
(Cont’d)
(2) Business combination not under common control (Cont’d)
In relation to the deductible temporary difference acquired from the acquiree, which was not recognised as
deferred tax assets due to non-fulfilment of the recognition criteria at the date of the acquisition, if new or
further information that is obtained within 12 months after the acquisition date indicates that related conditions
at the acquisition date already existed, and that the implementation of the economic benefits brought by the
deductible temporary difference of the acquiree can be expected, the relevant deferred tax assets shall be
recognised and goodwill shall be deducted. When the amount of goodwill is less than the deferred tax assets that
shall be recognised, the difference shall be recognised in the profit or loss of the period. Except for the above
circumstances, deferred tax assets in relation to business combination are recognised in the profit or loss of the
period.
For a business combination not under common control is finished by a stage-up approach with several
transactions, these several transactions will be judged whether they belong to “transactions in a basket” in
accordance with the judgement standards on “transactions in a basket” as set out in the Notice of the Ministry of
Finance on Issuing Accounting Standards for Business Enterprises Interpretation No. 5 (Cai Kuai [2012] No. 19)
and “Accounting Standard for Business Enterprises No. 33 – Consolidated Financial Statements”(see Note V. 6 (2)).
If they belong to “transactions in a basket”, they are accounted for with reference to the descriptions as set out in
the previous paragraphs of this section and Note V. 13 “Long-term equity investments”, and if they do not belong
to “transactions in a basket”, they are accounted for in separate financial statements and consolidated financial
15 reports:
INTERIM
REPORT In separate financial statements, the initial equity investment cost is the aggregate of the carrying amount of the
equity investment in the acquiree held prior to the acquisition date and the investment cost newly added as at the
acquisition date. In respect of any other comprehensive income attributable to the equity interest in the acquiree
prior to the acquisition date, other comprehensive income is accounted for on the same accounting treatment
as direct disposal of relevant asset or liability by the acquiree at the time of disposal (i.e. to be transferred to
investment income for the period, except for the changes arising from re-measuring net assets or net liabilities of
defined benefit plan using the equity method attributable to the acquiree).
In consolidated financial statements, the equity interest in the acquiree held prior to the acquisition date is
remeasured at fair value as at the acquisition date, and the difference between the fair value and the carrying
amount is recognised as investment income for the current period. In respect of any other comprehensive income
attributable to the equity interest in the acquiree held prior to the acquisition date, other comprehensive income
is accounted for on the same accounting treatment as direct disposal of relevant asset or liability by the acquiree
(i.e. to be transferred to investment income at the acquisition date, except for the changes arising from re-
measuring net assets or net liabilities of defined benefit plan using the equity method attributable to the acquiree)
is transferred to investment income in the period of the acquisition date.
60 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
6. Preparation of consolidated financial statements
(1) Basis for principle of determining the scope of consolidated financial statements
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. The scope of consolidation includes the Company and all of its subsidiaries. A subsidiary is an
entity controlled by the Company.
The Company will conduct reassessment in the event there are changes in actual condition and situation causing
changes in relevant elements involved in the definition of control above.
(2) Basis for preparation of the consolidated financial statements
Subsidiaries are consolidated from the date on which the Company obtains net assets and the effective control of
decision making of production and operation and are deconsolidated from the date that such control ceases. For
disposal of subsidiaries, the operating results and cash flows of such subsidiaries before the date of disposal are
properly included into the consolidated income statement and consolidated cash flow statements; for disposal of
subsidiaries during the reporting period, no adjustment shall be made to the opening balance of the consolidated
balance sheet. For those subsidiaries acquired through business combination not under common control, the
operating results and cash flows after the acquisition date have been properly included in the consolidated income
statements and consolidated cash flow statements. No adjustments shall be made to the opening balance of the
consolidated balance sheet and the comparative consolidated financial statements amount. For those subsidiaries
acquired through business combination under common control, the operating results and cash flows from the
15
INTERIM
beginning of the consolidation period to the consolidation date are also presented in the consolidated income REPORT
statement and the consolidated cash flow statements. The comparative amounts presented in the consolidated
financial statements are also adjusted accordingly.
The financial statements of the subsidiaries are adjusted in accordance with the accounting policies and
accounting period of the Company in the preparation of the consolidated financial statements, where the
accounting policies and the accounting periods are inconsistent between the Company and the subsidiaries. For
acquisition of subsidiaries arising from merger of entities not under same control, the financial statements of the
subsidiaries will be adjusted according to the fair value of the identifiable net assets.
All intra-company significant balances, transactions and unrealised profit are eliminated in the consolidated
financial statements.
The shareholders’ equity and the portion of the profit or loss for the period that is not attributable to the Company
are presented separately under shareholders’ equity and net profit in the consolidated financial statements.
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”“net profit” line item as “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.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 61
IX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
6. Preparation of consolidated financial statements (Cont’d)
(2) Basis for preparation of the consolidated financial statements (Cont’d)
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 share of net assets of the former subsidiary calculated continuously since the purchase date based on the
shareholding percentage before disposal are recognised as investment income in the period when the control is
lost. Other comprehensive income related to equity investment in the subsidiary is accounted for on the same
accounting treatment as direct disposal of relevant asset or liability by the acquiree at the time when the control
is lost (i.e. to be transferred to investment income, except for the changes arising from re-measuring net assets
or net liabilities of defined benefit plan of the subsidiary using the equity method). The remaining equity interests
are measured subsequently according to “Accounting Standard for Business Enterprises No. 2 – Long-term
Equity Investments” or “Accounting Standard for Business Enterprises No. 22 – Recognition and Measurement of
Financial Instruments”. See Note V. 13 “Long-term equity investments” or Note V. 10 “Financial instruments” for
details.
When the Company disposes of equity investment in a subsidiary by a stage-up approach with several
transactions until the control over the subsidiary is lost, it shall determine whether these several transactions
related to the disposal of equity investment in a subsidiary until the control over the subsidiary is lost belong to
“transactions in a basket”. Usually, these several transactions related to the disposal of equity investment in a
subsidiary are accounted for as transactions in a basket when the terms, conditions and economic impacts of
15 these several transactions meet the following one or more conditions: (i) these transactions are entered into at the
INTERIM same time or after considering their impacts on each other; (ii) these transactions as a whole can reach complete
REPORT
business results; (iii) the occurrence of a transaction depends on at least the occurrence of an other transaction;
(iv) an individual transaction is not deemed as economic, but is deemed as economic when considered with
other transactions. If they are not transactions in a basket, each of which are accounted for in accordance with
applicable rules in “partial disposal of long-term equity investment of a subsidiary without losing control over a
subsidiary” (see Note V. 13 (2) ) separately, and “the control over a subsidiary is lost due to partial disposal
of equity investment or other reasons” (see the preceding paragraph). When several transactions related to the
disposal of equity investment in a subsidiary until the control over the subsidiary is lost belong to transactions
in a basket, each of which is accounted for as disposal of a subsidiary with a transaction until the control over a
subsidiary is lost; however, the different between the amount of disposal prior to the loss of control and the net
assets of a subsidiary attributable to the disposal investment shall be recognised as other comprehensive income
in consolidated financial statements and transferred to profit or loss at the time when the control is lost.
62 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
7. Classification of joint arrangements and accounting treatment for joint ventures
A joint arrangement refers to an arrangement of two or more parties have joint control. In accordance with the Group’s
rights and obligations under a joint arrangement, the Group classifies joint arrangements into: joint ventures and joint
operations. Joint operations refer to a joint arrangement during which the Company is entitled to relevant assets and
obligations of this arrangement. Joint ventures refer to a joint arrangement during which the Group only is entitled to net
assets of this arrangement.
The Group treats investments in joint ventures by using the equity method of accounting in accordance with accounting
policies as set out in Note V.13. (2) “long-term equity investments by using equity method of accounting”.
The Group shall, as a joint venture, recognise the assets held and obligations assumed solely by the Group, and
recognise assets held and obligations assumed jointly by the Group in appropriation to the share of the Company;
recognise revenue from disposal of the share of joint operations of the Group; recognise fees solely occurred by Group
and recognise fees from joint operations in appropriation to the share of the Group.
When the Group, as a joint venture, invests or sells assets (the assets dose not constitute a business, the same below)
to or purchase assets from joint operations, the Group shall only recognise the part of profit or lost from this transaction
attributable to other parties of joint operations before these assets are sold to the third party. If the occurrence of these
assets meet the impairment loss of asset as set our in “Accounting Standard for Business Enterprises No. 8 – Asset
Impairment”, the Company shall recognise the full amount of this loss in relation to the Group invests in or sells assets
to joint operations; the Group recognise the loss according to the Group’s share of commitment in relation to the Group
purchase assets from joint operations.
8. Standards for recognising cash and cash equivalents
15
INTERIM
REPORT
Cash and cash equivalents of the Group include cash on hand, deposits readily available for payment purpose and
short-term (normally fall due within three months from the date of acquisition) and highly liquid investments held the
Company which are readily convertible into known amounts of cash and which are subject to insignificant risk of value
change.
9. Foreign currency operations and translation of statements denominated in foreign currency
(1) Basis for translation of foreign currency transactions
The foreign currency transactions of the Group, when initially recognised, are translated into functional currency at
the prevailing spot exchange rate on the date of exchange, i.e. the middle price of RMB exchange rate published
by the People’s Bank of China on that date in general and the same hereinafter, while the foreign currency
exchange operations and transactions in connection with foreign currency exchange shall be translated into
functional currency at the exchange rate actually adopted.
(2) Basis for translation of foreign currency financial statements
Basis for translation of foreign currency monetary items and foreign currency non-monetary items On the balance
sheet date, foreign currency monetary items shall be translated at the spot exchange rate (generally, a spot
exchange rate is the middle price quoted by the People’s Bank of China on the day of transaction) on the balance
sheet date. All differences are included in the consolidated income statement, except for: (i) the differences arising
from foreign currency borrowings related to the acquisition or construction of fixed assets which are qualified for
capitalisation; and (ii) other carrying amounts of the amortisation costs, the differences arising from changes of the
foreign currency items available for sale.
Exchange differences arising from change in exchange rate where the preparation of consolidated financial
statements relates to foreign operations and foreign currency monetary items materially constitute net investment
in foreign operations shall be recorded into “other comprehensive income”; disposal of foreign operations shall be
included into profits and losses on disposal in the current period.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 63
IX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
9. Foreign currency operations and translation of statements denominated in foreign currency (Cont’d)
(2) Basis for translation of foreign currency financial statements (Cont’d)
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 reporting currency before and after the translation will be treated as
changes in fair value (including changes in foreign exchange rates) and recognised in profit or loss for the period
or recognised as other comprehensive income.
(3) Basis for translation of foreign currency financial statements
Exchange differences arising from change in exchange rate where the preparation of consolidated financial
statements relates to foreign operations and foreign currency monetary items materially constitute net investment
in foreign operations shall be recorded into “other comprehensive income” under “translation reserve”; disposal of
foreign operations shall be included into profits and losses on disposal in the current period.
The financial statements denominated in foreign currency of a foreign operation are translated to RMB in
compliance with the following requirements: 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 spot exchange rate at the date of transaction. The retained profit brought
15 forward are reported at the prior year’s closing balance; the retained profit as at the end of the year are presented
after translated the profit appropriation items; differences between the aggregate of asset and liability items and
INTERIM
REPORT owners’ equity items are recognised as “translation differences arising on the translation of financial statements
denominated in foreign currencies” in other comprehensive income. On disposal of foreign operations and loss
of control, exchange differences arising from the translation of financial statements denominated in foreign
currencies related to the disposed foreign operations which has been included in owners’ equity in the balance
sheet, shall be transferred to profit or loss in whole or in proportionate share in the period in which the disposal
took place.
Cash flow dominated in foreign currency or from foreign subsidiaries shall be translated at the spot exchange rate
when it incurs. Effects arising from changes of exchange rate of cash shall be presented separately in the cash
flow statements.
The opening balance and the prior year’s figures are presented according to the translated amounts of the prior
year.
On disposal of the entire owners’ equity in a foreign operation of the Company, or upon a loss of control over
a foreign operation due to disposal of certain equity investment or other reasons, the Company transfers the
exchange differences arising on translation of financial statements of this foreign operation attributable to owners’
equity of parent company presented under owners’ equity in the balance sheet, to profit or loss in the period in
which the disposal took place.
In case of partial disposal of equity investment or other reason that result in reduction in shareholding in a
foreign operation without losing control over it, the proportionate share of exchange differences arising from the
translation of financial statements will attributable to minority interests and will not recognised in profit or loss. For
partial disposals of equity interests in foreign operations which are associates or joint ventures, the proportionate
share of the exchange differences arising from the translation of financial statements of foreign operations is
reclassified to profit or loss.
64 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments
Financial asset or financial liability will be recognised when the Group became one of the parties under a financial
instrument contract. Financial assets and financial liabilities are initially recognised at fair value, except for equity
instruments that are not quoted in an active market, the fair value of which cannot be reliably measured and over
relevant investees of which the Company does not have control, joint control or significant influence, and debt financing
instruments subsequently measured at amortised cost using the effective interest method. For financial assets and
financial liabilities measured at fair value and whose changes are carried through profit or loss, relevant transaction
costs are directly recognised in profit or loss for the period. For financial assets and financial liabilities classified as other
categories, relevant transaction costs are included in the amount initially recognised.
(1) Determination of fair values for financial assets and financial liabilities
The fair value refers to the price that will be received when selling an asset or the price to be paid to transfer a
liability in an orderly transaction between market participants on the date of measurement. Financial instruments
exist in an active market. Fair value is determined based on the quoted price in such market. An active market
refers to where pricing is easily and regularly obtained from exchanges, brokers, industrial organisations and
price fixing service organisations, representing the actual price of a market transaction that takes place in a fair
deal. While financial instruments do not exist in an active market, the fair value is determined using valuation
techniques. Valuation technologies include reference to be familiar with situation and prices reached in recent
market transactions entered into by both willing parties, reference to present fair values of similar other financial
instruments, cash flow discounting method and option pricing models.
(2) Classification, recognition and measurement of financial assets
15
INTERIM
REPORT
Conventionally traded financial assets shall be recognised and derecognised at the trading date. Financial assets
shall be classified into loans and accounts receivable, available-for-sale financial assets and others for initial
recognition.
Loans and receivables
They are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. Financial assets, including bills receivable, accounts receivable, interest receivable, dividends
receivable and other receivables are classified as loans and receivables by the Company.
Loans and receivables are measured subsequently at the amortised cost by using the effective interest rate
method. Gains or losses incurred at the time of derecognition, impairment or amortisation are charged to
profit or loss in the current period.
Available-for-sale financial assets
Available-for-sale financial assets represent equity instruments of relevant investees over which the
Company does not have control, joint control or significant influence.
Available-for-sale financial assets are subsequently measured at fair value. The gain or loss on change
in fair value are recognised as other comprehensive income, except for impairment loss and exchange
differences arising from foreign monetary financial assets and amortised cost which are accounted for
through profit or loss for the current period. The financial assets will be transferred out of the financial assets
on derecognition and accounted for through profit or loss for the current period. However, equity investment
that is not quoted in an active market and the fair value of which cannot be measured reliably are subsequently
measured at cost.
Interests received from available-for-sale financial assets held and the cash dividends declared by the
investee are recognised as investment income.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 65
IX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(3) Impairment of financial assets
In addition to financial assets at fair value through profit or loss for the current period, the Group reviews the book
value of other financial assets at each balance sheet date and provide for impairment where there is objective
evidence that financial assets are impaired.
For a financial asset that is individually significant, the Group assesses the asset individually for impairment.
For a financial asset that is not individually significant, the Group assess the asset individually for impairment or
include the asset in a group of financial assets with similar credit risk characteristics and collectively assess them
for impairment. If it is determined that no objective evidence of impairment exists for an individually assessed
financial asset, whether the financial asset is individually significant or not, the financial asset is included in a
group of financial assets with similar credit risk characteristics and collectively assessed for impairment. Financial
assets for which an impairment loss is individually recognised are not included in the collective assessment for
impairment.
Impairment of loans and receivables
The carrying amount of financial assets measured as costs or amortised costs are subsequently reduced
to the present value discounted from its projected future cash flow. The reduced amount is recognised as
impairment loss and recorded as profit or loss for the period. After recognition of the impairment loss from
financial assets, if there is objective evidence showing recovery in value of such financial assets impaired
and which is related to any event occurring after such recognition, the impairment loss originally recognised
15 shall be reversed to the extent that the carrying value of the financial assets upon reversal will not exceed
INTERIM the amortised cost as at the reversal date assuming there is no provision for impairment.
REPORT
Impairment of available-for-sale financial assets
In the event that decline in fair value of the available-for-sale equity instrument is regarded as “severe
decline” or “non-temporary decline” on the basis of comprehensive related factors, it indicates that
there is impairment loss of the available-for-sale equity instrument. In particular, “severe decline” refers
to accumulative decline in fair value is more than 20%. “Non-temporary decline” refers to the fair value
decreased continuously for more than 12 months. The continuous decreasing period is determined on the
basis of the drop of fair value accumulated over 10%.
When the available-for-sale financial assets impair, the accumulated loss originally included in the other
comprehensive income arising from the decrease in fair value was transferred out from the capital reserve
and included in the profit or loss for the period. The accumulated loss that transferred out from the capital
reserve is the balance of the acquired initial cost of asset, after deduction of the principal recovered,
amortised amounts, current fair value and the impairment loss originally included in the profit or loss.
After recognition of the impairment loss, if there is objective evidence showing recovery in value of such
financial assets impaired and which is related to any event occurring after such recognition in subsequent
periods, the impairment loss originally recognised shall be reversed. The impairment loss reversal of the
available-for-sale equity instrument will be recognised as other comprehensive income, and the impairment
loss reversal of the available-for-sale debt instrument will be included in the profit or loss for the period.
When an equity investment that is not quoted in an active market and the fair value of which cannot be
measured reliably, or the impairment loss of a derivative financial asset linked to the equity instrument that
shall be settled by delivery of that equity instrument, then it will not be reversed.
66 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(4) Recognition and measurement of transfers of financial asset
Financial asset that satisfied any of the following criteria shall be derecognised: the contract right to recover
the cash flows of the financial asset has terminated; the financial asset, along with substantially all the risk and
return arising from the ownership of the financial asset, has been transferred to the transferee; and the financial
asset has been transferred to the transferee, and the transferor has given up the control on such financial asset,
though it does not assign maintain substantially all the risk and return arising from the ownership of the financial
asset.
When the entity does not either assign or maintain substantially all the risk and return arising from the ownership
of the financial asset and does not give up the control on such financial asset, to the extent of its continuous
involvement in the financial asset, the entity recognises it as a related financial asset and recognises the relevant
liability accordingly. The extent of the continuous involvement is the extent to which the entity exposes to changes
in the value of such financial assets.
On derecognition of a financial asset, the difference between the following amounts is recognised in profit or loss
for the current period: the carrying amount and the sum of the consideration received and any accumulated gain
or loss that had been recognised directly in equity.
If a part of the financial assets qualifies for derecognition, the carrying amount of the financial asset is allocated
between the part that continues to be recognised and the part that qualifies for derecognition, based on the fair
values of the respective parts. The difference between the following amounts is recognised in profit or loss for the
period: the sum of the consideration received and the carrying amount of the part that qualifies for derecognition 15
and the aforementioned carrying amount. INTERIM
REPORT
For financial assets that are sold or transferred with recourse or endorsement, the Company need to determine
whether the risk and rewards of ownership of the financial asset have been substantially transferred. If the risk
and rewards of ownership of the financial asset have been substantially transferred, the financial assets shall be
derecognised. If the risk and rewards of ownership of the financial asset have been retained, the financial assets
shall not be derecognised. If the Company neither transfers nor retains substantially all the risks and rewards of
ownership of the financial asset, the Company shall assess whether the control over the financial asset is retained,
and the financial assets shall be accounting for according to the above paragraphs.
(5) Classification and measurement of financial liabilities
Financial liabilities are classified at initial recognition: at fair value and changes are carried through profit or loss as
financial liabilities and other financial liabilities. For financial liabilities measured at fair value and whose changes
are carried through profit or loss, relevant transaction costs are directly recognised in profit or loss for the period.
For financial liabilities classified as other categories, relevant transaction costs are included in the amount initially
recognised and subsequently measured at amortised cost using the effective interest method, and relevant gain
or loss arising from derecognition or amortisation are included in current profit or loss.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 67
IX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(6) Derecognition of financial liabilities
Financial liabilities are derecognised in full or in part only when the present obligation is discharged in full or in
part. An agreement is entered between the Group (debtor) and a creditor to replace the original financial liabilities
with new financial liabilities with substantially different terms, derecognise the original financial liabilities as well as
recognise the new financial liabilities.
When financial liabilities is derecognised in full or in part, the difference between the carrying amount of the
financial liabilities derecognised and the consideration paid (including transferred non-cash assets or new financial
liability) is recognised in profit or loss for the current period.
(7) Offset of Financial Assets and Financial Liabilities
If the Group 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 by net amount method, the amount of the offsetting financial assets and financial liabilities shall be
reported in the balance sheep. Otherwise, financial assets and financial liabilities are presented separately in the
balance sheet without offsetting.
(8) Equity instruments
Equity instruments are any contract that evidences a residual interest in the assets of an entity after deducting
15 all of its liabilities. The issuance (including refinancing), repurchase, sale or cancellation of equity instruments by
INTERIM the Company is accounted for movement in equity. The Group does not recognise the movement in fair value of
REPORT
equity instruments. Transaction costs related to equity transactions are deducted from equity.
Various distributions (excluding dividends) made by the Group to holders of equity instruments reduces owners’
equity. The Group does not recognise the movement in fair value of equity instruments.
68 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
11. Accounts receivable
(1) Accounts receivable individually significant and provided for bad debts separately
Basis of determination or criterion Accounts receivable of more than RMB1 million is recognised as individually
of amount for individually significant accounts receivable by the Group.
significant items
Method for making bad debt For accounts receivable that is individually significant, the Group assesses
provision individually for such accounts receivable individually for impairment. If it is determined
individually significant items that no objective evidence of impairment exists for an individually assessed
financial asset, the financial asset is included in a group of financial
assets with similar credit risk characteristics and collectively assessed for
impairment. Accounts receivable for which an impairment loss is individually
recognised are not included in a group of accounts receivable with similar
credit risk characteristics and collectively assessed for impairment.
(2) Accounts receivable provided for bad debts on credit risk features portfolio basis
Name of portfolio Method for making bad debt provision
Specific fund portfolio Other method
Ageing portfolio Ageing analysis
Use of ageing analysis for making bad debt provision in the portfolio
15
INTERIM
REPORT
√ Applicable Not applicable
Ratio of Ratio of
accounts other accounts
receivable receivable
Ageing provision provision
Within 1 year (including 1 year) 5.00% 5.00%
1-2 years 10.00% 10.00%
2-3 years 20.00% 20.00%
Over 3 years 100.00% 100.00%
Use of percentage of amount outstanding for making bad debt provision in the portfolio
Applicable √ Not applicable
Use of other methods for making bad debt provision in the portfolio
√ Applicable Not applicable
Ratio of Ratio of
accounts other accounts
receivable receivable
Name of portfolio provision provision
Specific fund portfolio 0.00% 0.00%
SHANDONG CHENMING PAPER HOLDINGS LIMITED 69
IX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
11. Accounts receivable (Cont’d)
(3) Accounts receivable individually insignificant but provided for bad debt separately
R e a s o n s f o r m a k i n g b a d d e b tAccounts receivable which are individually insignificant but have the
provisions separately following features are subject to impairment tests separately by the Group.
If there is objective evidence indicating that the accounts receivable are
impaired, then impairment loss will be recognised and bad debts will be
provided according to the difference when the present value of future cash
flow is lower than its carrying amounts, such as: accounts receivable with
dispute against counterparties or involved in litigation or arbitration; there
is obvious objective of the accounts receivable indicated that the debtor is
likely to fail to comply with the repayment obligation, etc.
Provision for bad debts Impairment loss will be recognised and bad debts will be provided
according to the difference when the present value of future cash flow is
lower than its carrying amounts
(4) Reversal of provision for bad debts
If there are evidences indicating that the value of the account receivable is recovered and that recovery is
connected to the event subsequent to the recognition of the loss, the impairment loss previously recognised will
be revered and recorded into profit or loss for the period. However, the carrying amount so reversed shall not
15 exceed the amortised cost of the account receivable on the date of reversal on the assumption that no impairment
INTERIM loss has been made.
REPORT
12. Inventories
(1) Classification of inventories
Inventories mainly include raw materials, work in progress, goods in stock, development products and
consumable biological assets etc.
(2) Pricing of inventories received and dispatched
Inventories are measured at their actual cost when obtained. Cost of an inventory consists of purchase costs,
processing costs and other costs. When used and dispatched, inventories will be calculated with weighted
average method.
The inventories of land development companies under the Company are initially measured at cost. The costs of
developing products include preconstruction costs, expenditures for auxiliary facilities, expenses on construction
and installation, borrowing costs incurred before the completion of the subject project and other related expenses
during the course of the development. Once the inventories are delivered, the actual costs will be determined
using specific measurement methods.
Consumable biological assets refer to biological assets held for sale which include growing timber. Consumable
biological assets without a stock are stated at 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 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
value using the batch averaging method.
70 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
12. Inventories (Cont’d)
(3) Recognition of net realisable value of inventory and provision for inventory impairment
Net realisable value refers to the amount of the estimated price of inventories less the estimated cost incurred
upon completion, estimated sales expenses and other amounts after tax and levies in daily operation. 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, inventories are calculated at the lower of cost and net realisable value. Usually,
provision for inventory impairment is made when the net realisable value is lower than the cost. Provisions for
impairment of inventory shall be made according to the amount by which the cost of a single item exceeds its net
realisable value. For large quantity and low value items of inventories, provision may be made based on categories
of inventories. For items of inventories relating to a product line that is produced and marketed in the same
geographical area and with the same or similar end uses or purposes, which cannot be practicable evaluated
separately from other items in that product line, provision for decline in value of inventories may be determined on
an aggregate basis.
After making the provision for inventory impairment, in case the factors causing inventory impairment no longer
exists, and the net realisable value of an inventory is higher than its book-value, the original provision for inventory
impairment shall be transferred back and incorporated into the profit or loss for the current period.
(4) We implement permanent inventory system as our inventory stock taking system.
15
13. Long-term equity investments INTERIM
REPORT
Long-term equity investments under this section refer to long-term equity investments in which the Company has
control, joint control or significant influence over the investee. Long-term equity investment without control or joint
control or significant influence of the Group is accounted for as available-for-sale financial assets or financial assets
measured at fair value with any change in fair value charged to profit or loss. Details on its accounting policy please refer
to Note 5. 10. “Financial instruments”.
Joint control is the Company’s 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. Significant influence
is the power of the Company 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.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 71
IX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
13. Long-term equity investments (Cont’d)
(1) Determination of investment cost
For a long-term equity investment acquired through a business combination involving enterprises under common
control, the initial investment cost of the long-term equity investment shall be the absorbing party’s share of the
carrying amount of the owner’s equity under the consolidated financial statements of the ultimate controlling
party on the date of combination. The difference between the initial cost of the long-term equity investment and
the cash paid, non-cash assets transferred as well as the book value of the debts borne by the absorbing party
shall offset against the capital reserve. If the capital reserve is insufficient to offset, the retained earnings shall be
adjusted. If the consideration of the merger is satisfied by issue of equity securities, the initial investment cost of
the long-term equity investment shall be the absorbing party’s share of the carrying amount of the owner’s equity
under the consolidated financial statements of the ultimate controlling party on the date of combination. With the
total face value of the shares issued as share capital, the difference between the initial cost of the long-term equity
investment and total face value of the shares issued shall be used to offset against the capital reserve. If the
capital reserve is insufficient to offset, the retained earnings shall be adjusted. For business combination resulted
in an enterprise under common control by acquiring equity of the absorbing party under common control through
a stage-up approach with several transactions, these transactions will be judged whether they shall be treat as
“transactions in a basket”. If they belong to “transactions in a basket”, these transactions will be accounted for a
transaction in obtaining control. If they are not belong to “transactions in a basket”, the initial investment cost of
the long-term equity investment shall be the absorbing party’s share of the carrying amount of the owner’s equity
under the consolidated financial statements of the ultimate controlling party on the date of combination. The
15 difference between the initial cost of the long-term equity investment and the aggregate of the carrying amount
of the long-term equity investment before merging and the carrying amount the additional consideration paid for
INTERIM
REPORT further share acquisition on the date of combination shall offset against the capital reserve. If the capital reserve
is insufficient to offset, the retained earnings shall be adjusted. Other comprehensive income recognised as a
result of the previously held equity investment accounted for using equity method on the date of combination or
recognised for available-for-sale financial assets will not be accounted for.
For a long-term equity investment acquired through a business combination involving enterprises not under
common control, the initial investment cost of the long-term equity investment shall be the cost of combination
on the date of acquisition. Cost of combination includes the aggregate fair value of assets paid by the acquirer,
liabilities incurred or borne and equity securities issued. For business combination resulted in an enterprise not
under common control by acquiring equity of the acquiree under common control through a stage-up approach
with several transactions, these transactions will be judged whether they shall be treat as “transactions in a
basket”. If they belong to “transactions in a basket”, these transactions will be accounted for a transaction in
obtaining control. If they are not belong to “transactions in a basket”, the initial investment cost of the long-
term equity investment accounted for using cost method shall be the aggregate of the carrying amount of
equity investment previously held by the acquiree and the additional investment cost. For previously held
equity accounted for using equity method, relevant other comprehensive income will not be accounted for. For
previously held equity investment classified as available-for-sale financial asset, the difference between its fair
value and carrying amount, as well as the accumulated movement in fair value previously included in the other
comprehensive income shall be transferred to profit or loss for the current period.
Agent fees incurred by the absorbing party or acquirer for the acquisition such as audit, legal service, and
valuation and consultation fees, and other related administration expenses are charged to profit or loss in the
current period at the time such expenses incurred.
72 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
13. Long-term equity investments (Cont’d)
(1) Determination of investment cost (Cont’d)
The long-term equity investment acquired through means other than a business combination shall be initially
measured at its cost. Such cost is depended upon the acquired means of long-term equity investments, which is
recognised based on the purchase cost actually paid by the Company in cash, the fair value of equity securities
issued by the Group, the agreed value of investment contract or agreement, the fair value or original carrying
amounts of the non-monetary asset exchange transaction which the asset will be transferred out of the Company,
and the fair value of long-term equity investment itself. The costs, taxes and other necessary expenses that are
directly attributable to the acquisition of the long-term equity investments are also included in the investment cost.
For additional equity investment made in order to obtain significant influence or common control over investee
without resulted in control, the relevant cost for long-term equity investment shall be the aggregate of fair value of
previously held equity investment and additional investment cost determined according to “Accounting Standard
for Business Enterprises No. 22 – Recognition and measurement of Financial Instruments”.
(2) Subsequent measurement and method for profit or loss recognition
Long-term equity investments with joint control (excluding those constitute joint ventures) or significant influence
on the investee are accounted for using equity method. In addition, long-term equity investments with control on
the investee are accounted for using cost method and record in the Company’s financial statements.
Long-term equity investments accounted for using the cost method
Under the cost method, a long-term equity investment is measured at its initial investment cost. The cost for 15
long-term equity investment is adjusted in the event of additional investment or investment recovery. Except INTERIM
REPORT
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, investment gains for the period is recognised as
the cash dividends or profits declared by the investee.
Long-term equity investments accounted for using the equity method
Under the equity method, where the initial investment cost of a long-term equity investment 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 initial investment cost. 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, the
difference shall be charged to profit or loss for the current period, and the cost of the long term equity
investment shall be adjusted accordingly.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 73
IX 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)
Long-term equity investments accounted for using the equity method (Cont’d)
Under the equity method, investment gain and other comprehensive income shall be recognised based
on the Group’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 value of long-term equity investment
shall be adjusted and included in the 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. In the event of inconformity between
the accounting policies and accounting periods of the investee and the Company, the financial statements
of the investee shall be adjusted in conformity with the accounting policies and accounting periods of the
Company. Investment gain and other comprehensive income shall be recognised accordingly. In respect of
the transactions between the Group and its associates and joint ventures in which the assets disposed of or
sold are not classified as operation, the share of unrealised gain or loss arising from inter-group transactions
shall be eliminated by the portion attributable to the Company. Investment gain shall be recognised
accordingly. However, any unrealised loss arising from inter-group transactions between the Group and an
15 investee is not eliminated to the extent that the loss is impairment loss of the transferred assets. In the event
that the Group disposed of an asset classified as operation to its joint ventures or associates, which resulted
INTERIM
REPORT in acquisition of long-term equity investment by the investor without obtaining control, the initial investment
cost of additional long-term equity investment shall be the fair value of disposed operation. The difference
between initial investment cost and the carrying value of disposed operation will be fully included in profit or
loss for the current period. In the event that the Group sold an asset classified as operation to its associates
or joint ventures, the difference between the carrying value of consideration received and operation shall be
fully included in profit or loss for the current period. In the event that the Company acquired an asset which
formed an operation from its associates or joint ventures, relevant transaction shall be accounted for in
accordance with “Accounting Standards for Business Enterprises No. 20 “Business combination”. All profit
or loss related to the transaction shall be accounted for.
The Group’s share of net losses of the investee shall be recognised to the extent that the carrying amount
of the long-term equity investment together with any long-term interests that in substance form part of
the investor’s net investment in the investee are reduced to zero. If the Group has to assume additional
obligations, the estimated obligation assumed shall be provided for and charged to the profit or loss as
investment loss for the period. Where the investee is making profits in subsequent periods, the Group shall
resume recognising its share of profits after setting off against the share of unrecognised losses.
If there is debit variation in relation to the long-term equity investments in associates and joint venture held
prior to first adoption of the Accounting Standards for Business Enterprises by the Group on 1 January
2007, the amounts amortised over the original residual term using the straight-line method is included in the
profit or loss for the period.
74 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX 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)
Acquisition of minority interest
Upon the preparation of the consolidated financial statements, since acquisition of minority interest
increased of long-term equity investment which was compared to fair value of identifiable net assets
recognised which are measured based on the continuous measurement since the acquisition date (or
combination date) of subsidiaries attributable to the Group calculated according to the proportion of newly
acquired shares, the difference of which recognised as adjusted capital surplus, capital surplus insufficient
to set off impairment and adjusted retained earnings.
Disposal of long-term equity investments
In these consolidated financial statements, for disposal of a portion of the long-term equity investments in
a subsidiary without loss of control, the difference between disposal cost and disposal of long-term equity
investments relative to the net assets of the subsidiary is charged to the owners’ equity. If disposal of a
portion of the long-term equity investments in a subsidiary by the parent company results in a change in
control, it shall be accounted for in accordance with the relevant accounting policies as described in Note V.
6. (2) “Preparation Method of the Consolidated Financial Statements”.
On disposal of a long-term equity investment otherwise, the difference between the carrying amount of the
investment and the actual consideration paid is recognised through profit or loss in the current period.
15
In respect of long-term equity investment accounted for using equity method with the remaining equity INTERIM
REPORT
interest after disposal also accounted for using equity method, other comprehensive income previously
under owners’ equity shall be accounted for in accordance with the same accounting treatment for direct
disposal of relevant asset or liability by investee on pro rata basis at the time of disposal. The owners’ equity
recognised for the movement of other owners’ equity (excluding net profit or loss, other comprehensive
income and profit distribution of investee) shall be transferred to profit or loss for the current period on pro
rata basis.
In respect of long-term equity investment accounted for using cost method with the remaining equity
interest after disposal also accounted for using cost method, other comprehensive income recognised
using equity method or the recognition and measurement standard of financial instruments before obtaining
control over the investee shall be accounted for in accordance with the same accounting treatment for direct
disposal of relevant asset or liability by investee, and transferred to profit or loss for the current period on
pro rata basis. Movement of other owners’ equity (excluding net profit or loss, other comprehensive income
and profit distribution under net asset of investee accounted for and recognised using equity method) shall
be transferred to profit or loss for the current period on pro rata basis.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 75
IX 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)
Disposal of long-term equity investments (Cont’d)
In the event of loss of control over investee due to partial disposal of equity investment by the Group, in
preparing separate financial statements, 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 remaining equity interest which cannot apply common control or
impose significant influence over the investee after disposal, it shall be accounted for using the recognition
and measurement standard 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. In respect of
other comprehensive income recognised using equity method or the recognition and measurement standard
of financial instruments before the Group obtained control over the investee, 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 the control over investee is lost. Movement of other owners’ equity (excluding net profit
or loss, other comprehensive income and profit distribution under net asset of investee accounted for and
recognised using equity method) shall be transferred to profit or loss for the current period at the time when
the control over investee is lost. Of which, for the remaining equity interest after disposal accounted for
using equity method, other comprehensive income and other owners’ equity shall be transferred on pro rata
15 basis. For the remaining equity interest after disposal accounted for using the recognition and measurement
standard of financial instruments, other comprehensive income and other owners’ equity shall be fully
INTERIM
REPORT transferred.
In the event of loss of common control or significant influence over investee due to partial disposal of equity
investment by the Group, the remaining equity interest after disposal shall be accounted for using the
recognition and measurement standard of financial instruments. The difference between its fair value and
carrying amount as at the date of losing common control or significant influence 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 (excluding net profit or loss, other comprehensive income and
profit distribution under net asset of investee accounted for and recognised using equity method) shall be
transferred to profit or loss for the current period at the time when equity method was ceased to be used.
The Group disposes its equity investment in subsidiary by a stage-up approach with several transactions
until the control over the subsidiary is lost. If the said transactions belong to “transactions in a basket”, each
transaction shall be accounted for as a single transaction of disposing equity investment of subsidiary and
loss of control. The difference between the disposal consideration for each transaction and the carrying
amount of the corresponding long-term equity investment of disposed equity interest before loss of control
shall initially recognised as other comprehensive income, and subsequently transferred to profit or loss
arising from loss of control for the current period upon loss of control.
76 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
14. Investment Property
Investment property is measured at cost.
Investment property refer to real estate held to earn rentals or for capital appreciation, or both.
Investment property is initially measured at cost. Subsequent expenditures related to an investment property shall be
included in cost of investment property only when the economic benefits associated with the asset will likely flow to the
Group and its cost can be measured reliably. All other expenditures on investment property shall be included in profit or
loss for the current period when incurred.
The Group adopts cost method for subsequent measurement of investment property, which is depreciated using the
same policy as that for buildings and land use rights.
The method for impaired test of investment property and measurement of impairment provision are detailed in Note V.20
“Impairment of long-term assets”.
In the event that an owner-occupied property or inventories is converted to an investment property (or vice versa), upon
the conversion, the property shall be stated at the carrying amount prior to the conversion.
In the event that an investment property is converted to an owner-occupied property, such property shall become fixed
assets or intangible assets since the date of its conversion. In the event that an owner-occupied property is converted
to real estate held to earn rentals or for capital appreciation, such fixed assets or intangible assets shall become an
investment property since the date of its conversion. Investment property is measured at cost during its conversion.
Upon the conversion, the property shall be stated at the carrying amount prior to the conversion.
15
If an investment property is disposed of or if it withdraws permanently from use and no economic benefit will be INTERIM
obtained from the disposal, the recognition of it as an investment property shall be terminated. When an investment REPORT
property is sold, transferred, retired or damaged, the amount of proceeds on disposal of the property net of the carrying
amount and related tax and surcharges is recognised in profit or loss for the current period.
15. Fixed assets
(1) Conditions for recognition
Fixed assets are tangible assets that are held for use in the production or supply of goods or services, for rental to
others, or for administrative purposes; and have a useful life of more than one accounting year. Fixed assets are
recognised only if the Company is very likely to receive economic benefits from the asset and its cost can be measured
reliably. A fixed asset shall be initially measured at cost and the effect of any expected costs of abandoning the asset at
the end of its use.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 77
IX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
15. Fixed assets (Cont’d)
(2) Method for depreciation
Method for Useful lives of Estimated Annual
Category depreciation depreciation (Year) residual value depreciation rate
Housing and building structure Straight-line method 20-40 5.00%-10.00% 2.25%-4.75%
Machinery and equipment Straight-line method 8-20 5.00%-10.00% 4.5%-11.88%
Transportation equipment Straight-line method 5-8 5.00%-10.00% 11.25%-19.00%
Electronic equipment
and others Straight-line method 5 5.00%-10.00% 18.00%-19.00%
Estimated net residual value of a fixed asset is the estimated amount that the Group would currently obtain from
disposal of the asset, after deducting the estimated costs of disposal, if the asset were already of the stage and in
the condition expected at the end of its useful life.
(3) Methods of impairment test and provision of fixed assets
The method for impaired test of fixed assets and measurement of impairment provision are detailed in Note V.20
“Impairment of long-term assets”.
(4) Recognition, accounting and depreciation method of fixed assets acquired under finance leases
15 Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and
INTERIM rewards of asset ownership to the lessee and titles to the assets may or may not eventually be transferred. For
REPORT fixed assets acquired under finance leases, the basis for provision of leased assets depreciation is the same as
that of self-owned fixed assets. When it can be reasonably determined that the ownership of a leased asset will
be transferred at the end of the lease term, it is depreciated over the period of expected use; otherwise, the lease
asset is depreciated over the shorter period of the lease term and the period of expected use.
(5) Explanation on other matters
Subsequent expenditures incurred for a fixed asset shall be included in the cost of the fixed asset, only if it is
probable that economic benefits associated with the asset will flow to Chenming Paper and the relevant cost
can be measured reliably; meanwhile the carrying amount of the replaced part shall be derecognised. Other
subsequent expenditures shall be charged to profit or loss when incurred.
Fixed assets are derecognised when there is no economic benefit arising from disposal or expected use or
disposal of fixed assets. When a fixed asset is sold, transferred, retired or damaged, the Group shall recognise the
amount of any proceeds on disposal of the asset net of the carrying amount and related taxes in profit or loss for
the current period.
The Group reviews the useful life and estimated net residual value of a fixed 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.
16. Construction in progress
Construction in progress is recognised based on the actual construction cost, including all 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 impaired test of construction in progress and measurement of impairment provision are detailed in Note V.
20 “Impairment of long-term asset”.
78 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
17. Borrowing costs
Borrowing costs include interest, amortisation of discounts or premiums related to borrowings, ancillary costs incurred in
connection with the arrangement of borrowings, and exchange differences arising from foreign currency borrowings. For
borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset, when
expenditures for the asset and borrowing costs are being incurred, activities relating to the acquisition, construction
or production of the asset that are necessary to prepare the asset for its intended use or sale have commenced, such
borrowing costs shall be capitalised as part of the cost of that asset; and capitalisation shall discontinue when the
qualifying asset is ready for its intended use or sale. Other borrowing costs shall be recognised as expense in the period
in which they are incurred.
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 Group 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.
Qualifying assets are assets (fixed assets, investment property, inventories, etc.) that necessarily take a substantial
period of time for acquisition, construction or production to get ready for their intended use or sale.
15
INTERIM
REPORT
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,
until the acquisition, construction or production of the qualifying asset is resumed.
18. Intangible assets
(1) Intangible assets
An intangible asset is an identifiable non-monetary asset without physical substance owned or controlled by the
Company.
An intangible asset shall be initially measured at cost. The expenditures incurred on an intangible asset shall be
recognised as cost of the intangible asset only if it is probable that economic benefits associated with the asset
will flow to the Company and the cost of the asset can be measured reliably. Other expenditures on an item asset
shall be charged to profit or loss when incurred.
Land use right acquired shall normally be recognised as an intangible asset. Self-constructed buildings (e.g.
plants), related land use right and the buildings shall be separately accounted for as an intangible asset and fixed
asset. For buildings and structures purchased, the purchase consideration shall be allocated among the land
use right and the buildings on a reasonable basis. In case there is difficulty in making a reasonable allocation, the
consideration shall be recognised in full as fixed assets.
An intangible asset with a finite useful life shall be stated at cost less estimated net residual value and any
accumulated impairment loss provision and amortised using the straight-line method over its useful life when the
asset is available for use. Intangible assets with indefinite life are not amortised.
The Group shall review the useful life of intangible asset with a finite useful life and the amortisation method
applied at least at each financial year-tend. A change in the useful life or amortisation method used shall be
accounted for as a change in accounting estimate. For an intangible asset with an indefinite useful life, the Group
shall review the useful life of the asset in each accounting period. If there is evidence indicating that the useful
life of that intangible asset is finite, Chenming Paper shall estimate the useful life of that asset and apply the
accounting policies accordingly.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 79
IX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
18. Intangible assets (Cont’d)
(2) Research and expenditure
Research and development expenditure of the Group was divided into expenses incurred during the research
phase and expenses incurred during the development phase.
Expenses incurred during the research phase are recognised as profit or loss in the current period.
Expenses incurred during the development phase that satisfy the following conditions are recognised as intangible
assets, while those that do not satisfy the following conditions are accounted for in the profit or loss for the current
period:
it is technically feasible that the intangible asset can be used or sold upon completion;
there is intention to complete the intangible asset for use or sale;
the intangible asset can produce economic benefits, including there is evidence that the products produced
using the intangible asset has a market or the intangible asset itself has a market; if the intangible asset is
for internal use, there is evidence that there exists usage for the intangible asset;
there is sufficient support in terms of technology, financial resources and other resources in order to
complete the development of the intangible asset, and there is capability to use or sell the intangible asset;
the expenses attributable to the development phase of the intangible asset can be measured reliably.
15 If the expenses incurred during the research phase and the development phase cannot be distinguished
INTERIM separately, all development expenses incurred are accounted for in the profit or loss for the current period.
REPORT
(3) Methods of impairment test and provision of intangible assets
The method for impaired test of intangible assets and measurement of impairment provision are detailed in Note
V.20 “Impairment of long-term assets”.
19. Long-term prepaid expenses
Long-term prepaid expenses are expenditures and other expenses which have incurred but that shall be amortised over
the current period and subsequent periods of more than one year. Long-term prepaid expenses of the Company mainly
include expenses on improvement of fixed assets and woodland rent. Long-term prepaid expenses are amortised over
the estimated benefit period using the straight-line method.
20. Impairment of long-term assets
The Company will judge if there is any indication of impairment as at the balance sheet date in respect of non-current
non-financial assets such as fixed assets, construction in progress, intangible assets with a finite useful life, investment
property measured at cost, and long-term equity investments in subsidiaries, joint controlled entities and associates. If
there is any evidence indicating that an asset may be impaired, recoverable amount shall be estimated for impairment
test. Goodwill, intangible assets with an indefinite useful life and intangible assets beyond working conditions will be
tested for impairment annually, regardless of whether there is any indication of impairment.
80 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
20. Impairment of long-term assets (Cont’d)
If the impairment test result shows that the recoverable amount of an asset is less than its carrying amount, the
impairment provision will be made according to the difference and recognised as an impairment loss. 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. An asset’s fair value is the price in a sale agreement in an arm’s length
transaction. If there is no sale agreement but the asset is traded in an active market, fair value shall be determined
based on the bid price. If there is neither sale agreement nor active market for an asset, fair value shall be based on
the best available information. Costs of disposal are expenses attributable to disposal of the asset, including legal fee,
relevant tax and surcharges, transportation fee and direct expenses incurred to prepare the asset for its intended sale.
The present value of the future cash flows expected to be derived from the asset over the course of continued use and
final disposal is determined as the amount discounted using an appropriately selected discount rate. Provisions for
assets impairment shall be made and recognised for the individual asset. If it is not possible to estimate the recoverable
amount of the individual asset, the Group shall determine the recoverable amount of the asset group to which the asset
belongs. The asset group is the smallest group of assets capable of generating cash flows independently.
For the purpose of impairment testing, the carrying amount of goodwill presented separately in the financial statements
shall be allocated to the asset groups or group of assets benefiting from synergy of business combination. If the
recoverable amount is less than the carrying amount, the Group shall recognise an impairment loss. The amount of
impairment loss shall first reduce the carrying amount of any goodwill allocated to the asset group or set of asset
groups, and then reduce the carrying amount of other assets (other than goodwill) within the asset group or set of asset
groups, pro rata on the basis of the carrying amount of each asset.
An impairment loss recognised on the aforesaid assets shall not be reversed in a subsequent period in respect of the 15
restorable value. INTERIM
REPORT
21. Employee benefits
Staff remuneration of the Group mainly includes short-term staff remuneration, post-employment benefits and
termination benefits, in which:
Short-term remuneration mainly includes salaries, bonuses, allowance and subsides, staff welfare, medical insurance
premium, maternity insurance premium, work-related injury insurance premium, housing provident funds, union
operation costs and employee education costs and non-monetary welfare etc. Short-term remuneration incurred during
the accounting period in which the Company’s staff provided services for the Company is recognised as liability and
included in profit or loss for the current period or related asset costs. Of which, non-monetary welfare is measured at fair
value.
Post-employment benefits mainly include defined contribution plan. Defined contribution plan mainly includes pension
insurance premium and unemployment insurance premium. Relevant contribution amount is included in related asset
costs or profit or loss for the current period during the period in which the expenses incurred.
When the Company terminates the employment relationship with employees before the end of the employment
contracts or provides compensation as an offer to encourage employees to accept voluntary redundancy, the Company
shall recognise employee compensation liabilities arising from compensation for staff dismissal and included in profit
or loss for the current period, when the Company cannot revoke unilaterally compensation for dismissal due to the
cancellation of labour relationship plans and employee redundant proposals; and the Company recognise cost and
expenses related to payment of compensation for dismissal and restructuring, whichever is earlier. However, if the
compensation for termination of employment is not expected to be fully paid within 12 months from the reporting period,
it shall be accounted for other long-term staff remuneration.
The early retirement plan shall be accounted for in accordance with the accounting principles for compensation for
termination of employment. The salaries or wages and the social contributions to be paid for the employees who retire
before schedule from the date on which the employees stop rendering services to the scheduled retirement date,
shall be recognised (as compensation for termination of employment) in the current profit or loss by the Group if the
recognition principles for provisions are satisfied.
The Group does not provide any other long-term employee benefit for its staff.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 81
IX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
22. Accrued liabilities
Obligations pertinent to the contingencies which satisfy the following conditions are recognised as accrued liabilities: (1)
The obligation is a current obligation borne by the Company; (2) it is likely that an outflow of economic benefits will be
resulted from the performance of the obligation; and (3) the amount of the obligation can be reliably measured.
At the balance sheet date, accrued liabilities shall be measured at the best estimate of the necessary expenses required
for the performance of existing obligations, after taking into account relevant risks, uncertainties, time value of money
and other factors pertinent to the contingencies.
If all or some expenses incurred for settlement of accrued liabilities 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 accrued liabilities.
23. Revenue
(1) Revenue from sales of goods
Revenue is recognised when Chenming Paper has transferred to the buyer the significant risks and rewards of
ownership of the goods, retains neither continuing managerial involvement to the degree usually associated
with ownership nor effective control over the goods sold, will receive the economic benefits associated with the
transaction, and can reliably measure the relevant amount of revenue and costs. Confirmation time for sales
revenue: In terms of domestic sales, confirmation will be made on the day when goods are delivered to the clients.
While in terms of overseas sales, confirmation will be made on the day when goods are loaded on board and
15 declared.
INTERIM
REPORT
(2) Revenue from the rendering of services
When the outcome of a transaction involving the rendering of services can be reliably estimated, it shall, on the
balance sheet date, recognise the revenue from the rendering of services employing the percentage-of-completion
method. The completion schedule of transaction concerning the rendering of services shall be ascertained
according to the proportion of service costs incurred to the estimated total costs.
The outcome of a transaction concerning the rendering of services can be reliably estimated, which shall
concurrently satisfy: The relevant amount of revenue can be reliably measured; it is probable that the
economic benefits will flow into the enterprise; the completion schedule of the transaction can be reliably
ascertained; and transaction costs incurred and to be incurred can be reliably measured.
When the outcome of a transaction involving the rendering of services cannot be reliably estimated, it shall
recognise the revenue from the rendering of services based on the cost of rendering services already incurred and
expected to be compensated, and the cost of rendering services incurred shall be recognised as an expense for
the current period. If the cost of rendering services is expected not to be compensated, it shall be recognised as
an expense.
When a contract or agreement signed by the Group includes sales of goods and rendering of services, if sales
of goods and rendering of services can be differentiated and separately measured, they will be recognised
respectively. If sales of goods and rendering of services cannot be differentiated or cannot be separately
measured, they will be recognised as sales of goods in full.
(3) Revenue from rendering of services
Revenue from rendering of services is recognised as income on the accrual basis in accordance with the
underlying contracts or agreements.
(4) Interest income
Interest income is calculated based on the time during which the Group’s monetary fund, and the effective interest
rates.
82 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
24. Government grants
Government grants are transfer of monetary assets or non-monetary assets from the government to the Group at no
consideration, excluding capital considerations from the government as an owner of the Group. Government grants
are classified into government grants related to assets and government grants related to income. Government grants
obtained for acquisition or construction of long-term assets or other forms of long-term asset formation are classified
as related to assets. Other government grants are classified as related to revenue. If related government documents
do not specify the objective of the grants, the grants are classified as related to assets or income as follows: (1) In
case a project for which the grants are granted is specified in such documents, the grants are classified as related to
assets and income based on the budgeted ratio of the expenditure on asset formation and the expenditure recorded as
expenses, where such ratio should be reviewed and, if necessary, changed on each balance sheet date; and (2) in case
of general description without specifying any project in such documents, the grants are classified as related to income.
If a government grant is in the form of a transfer of monetary asset, the item shall be measured at the amount received
or receivable. If a government grant is in the form of a transfer of non-monetary asset, the item shall be measured at
fair value. If fair value is not reliably determinable, the item shall be measured at a nominal amount and recognised
immediately in profit or loss for the current period. Government grants are generally recognised when received
and measured at the amount actually received, but are measured at the amount likely to be received when there is
conclusive evidence at the end of the accounting period that the Group will meet related requirements of such grants
and will be able to receive the grants. The government grants so measured should also satisfy the following conditions:
(1) the amount of the grants be confirmed with competent authorities in written form or reasonably deduced from related
requirements under financial fund management measures officially released without material uncertainties; (2) the grants
be given based on financial support projects and fund management policies officially published and voluntarily disclosed
by local financial authorities in accordance with the requirements under disclosure of government information, where
15
INTERIM
such policies should be open to any company satisfying conditions required and not specifically for certain companies; REPORT
and (3) the date of payment be specified in related documents and the payment thereof be covered by corresponding
budget to ensure such grants will be paid on time as specified.
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. For a government grant related to income, if the grant is a compensation for related
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 are recognised; if the grant is a compensation for
related expenses or losses already incurred, the grant shall be recognised immediately in profit or loss for the current
period.
For the repayment of a government grant already recognised, if there is any related deferred income, the repayment
shall be off set against the carrying amount of the deferred income, and any excess shall be recognised in profit or loss
for the current period; if there is no related deferred income, the repayment shall be recognised immediately in profit or
loss for the current period.
25. Deferred income tax assets/deferred income tax liabilities
(1) Current income tax
At the balance sheet date, current income tax liabilities (or assets) for the current and prior periods shall be
measured at the amount expected to be paid (or recovered) according to the requirements of tax laws. Taxable
profits, which are the basis for calculating the current income tax expense, are determined after adjusting the
accounting profits before tax for the year in accordance with relevant requirements of tax laws.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 83
IX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
25. Deferred income tax assets/deferred income tax liabilities (Cont’d)
(2) Deferred income tax assets and deferred income tax liabilities
Temporary differences arising from the difference between the carrying amount of an asset or liability and its tax
base, and the difference between the tax base and the carrying amount of those items that are not recognised
as assets or liabilities but have a tax base that can be determined according to tax laws, shall be recognised as
deferred income tax assets and deferred income tax liabilities using the balance sheet liability method.
Deferred income tax liabilities are not recognised for taxable temporary differences related to: 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) at the time of the transaction. In
addition, the Group recognises the corresponding deferred income tax liability for taxable temporary differences
associated with investments in subsidiaries, associates and joint ventures, except when both of the following
conditions are satisfied: the Company 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.
Deferred income tax assets are not recognised for deductible temporary differences related to 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) at the time of the transaction. In addition, the Group recognises the
corresponding deferred income tax asset for deductible temporary differences associated with investments in
subsidiaries, associates and joint ventures to the extent that it is probable that taxable profits will be available
against which the deductible temporary differences can be utilised, except when both of the following conditions
15 are satisfied: it is not probable that the temporary difference will reverse in the foreseeable future; and it is not
probable that taxable profits will be available in the future, against which the temporary difference can be utilised.
INTERIM
REPORT
Chenming Paper recognises a deferred income tax asset for the carry forward of 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 losses and tax credits 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, according to the
requirements of tax laws.
At the balance sheet date, Chenming Paper shall review 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
income tax asset to be utilised, the carrying amount of the deferred income tax asset shall be reduced. Any such
reduction in amount shall be reversed when it becomes probable that sufficient taxable profits will be available.
(3) Income tax expense
Income tax expense comprises current income tax expense and deferred income tax expense.
Current income tax expense (current income tax income) and deferred income tax expense (deferred income tax
income) are included in profit or loss for the current period, except for: recognised as other comprehensive income
or current income tax and deferred income tax related to transactions or events that are directly recognised in
other comprehensive income or owners’ equity, which are recognised directly in owners’ equity, and deferred
income tax arising from a business combination, which is adjusted against the carrying amount of goodwill.
84 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
25. Deferred income tax assets/deferred income tax liabilities (Cont’d)
(4) Offset of income tax
After granted the legal rights of net settlement and with the intention to use net settlement or obtain assets, repay
debt, the Group, at the same time, records the net amount after offsetting its current income tax assets and
current income tax liabilities.
The Group was granted the legal rights of net settlement of current income tax assets and current income tax
liabilities. Deferred income tax assets and deferred income tax liabilities are related to income tax to be paid by the
same entity liable to pay tax to the same tax collection and management authority or related to different entities
liable to pay tax, but the relevant entity liable to pay tax is intended to apply net settlement of current income tax
assets and liabilities or, at the same time, obtain assets, repay debt whenever every deferred income tax assets
and liabilities with importance would be reversed in the future, the Group records the net amount after offsetting
its current income tax assets and current income tax liabilities.
26. Lease
(1) Accounting method for operating lease
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and
rewards of asset ownership to the lessee and titles to the assets may or may not eventually be transferred. All
other leases are classified as operating leases.
(1) Operating lease business with the Group recorded as lessee 15
INTERIM
Lease payment for operating lease is recognised as related asset cost or profits and losses for the current REPORT
period using the straight-line method over the lease term. The initial direct cost is directly accounted in profit
or loss for the current period. Contingent rent is recognised as profit or loss for the current period upon
occurrence.
(2) Operating lease business with the Group recorded as lessor
Rental income is recognised in profit or loss for the current period using the straight-line method over the
lease term. The initial direct cost where the amount is larger is capitalised when incurred, and accounted for
as profit or loss for the current period on the same basis as recognition of rental income over the entire lease
period; the initial direct cost where the amount is fewer is included in the profit or loss for the period when
incurred. Contingent rental is accounted for as profit or loss for the period in which it is incurred.
(2) Accounting method for financing lease
(1) Financing lease business with the Group recorded as lessee
On the beginning date of the lease, the entry value of leased asset shall be at the lower of the fair value
of the leased asset and the present value of minimum lease payment at the beginning date of the lease.
Minimum lease payment shall be the entry value of long-term accounts payable, with difference recognised
as unrecognised financing expenses. In addition, initial direct costs attributable to leased items incurred
during the process of lease negotiation and signing of lease agreement shall be included in the value of
leased assets. The balance of minimum lease payment after deducting unrecognised financing expenses
shall be accounted for long-term liability and long-term liability due within one year.
Unrecognised financing expenses shall be recognised as financing expenses for the current period using
effective interest method during the leasing period. Contingent rent shall be included in profit or loss for the
current period at the time it incurred.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 85
IX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
26. Lease (Cont’d)
(2) Accounting method for financing lease
(2) Financing lease business with the Group recorded as lessor (Cont’d)
On the beginning date of the lease, the entry value of lease receivable shall be the aggregate of minimum
lease receivable and initial direct costs at the beginning date of the lease. The unsecured balance shall be
recorded. The aggregate of minimum lease receivable, initial direct costs and unsecured balance and the
different between their present values shall be recognised as unrealised financing income. The balance of
lease receivable after deducting unrecognised financing income shall be accounted for long-term debt and
long-term debt due within one year.
Unrecognised financing income shall be recognised as financing income for the current period using
effective interest method during the leasing period. Contingent rent shall be included in profit or loss for the
current period at the time it incurred.
27. Discontinued operation
Discontinued operation refers to the operation disposed or classified as held-for-sale by the Company and presented
separately under operation segments and financial statements, which has fulfilled one of the following criteria: it
represents an independent key operation or key operating region; it is part of the proposed disposal plan on an
independent key operation or proposed disposal in key operating region; or it only establishes for acquisition of
15 subsidiary through disposal.
INTERIM
REPORT 28. Repurchase of shares
Share repurchase consideration paid and transaction costs to reduce the owner’s equity, repurchase, transfer or
cancellation of Chenming Paper’s shares, the gains or losses are not recognised.
In respect of transfer of treasury shares, the difference between the actual amount received and the carrying amount of
treasury shares shall be included in capital reserve. When insufficient to dilute, capital reserve will be offset against the
surplus reserve and retained profits. Treasury shares are cancelled at par value and by the number of shares cancelled
to reduce the share capital. The difference between the book balance and the nominal value of the treasury shares shall
be offset against the capital reserve. When insufficient to dilute, capital reserve will be offset against the surplus reserve
and retained profits.
29. Changes in Significant Accounting Policies and Estimates
(1) Changes in Accounting Policies
Applicable √ Not applicable
(2) Changes in significant accounting estimates
Applicable √ Not applicable
86 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
30. Critical accounting judgments and estimates
The Group needs to make judgments, estimates and assumptions as to the carrying amount of statement items which
cannot be accurately calculated during the application of the Group’s accounting policies. Such judgments, estimates
and assumptions are made based on the historical experiences of the Company’s management and taking into account
other relevant factors, which may affect the reported amount of revenue, expenses, assets and liabilities and disclosure
of contingent liabilities at the balance sheet date. However, the outcome from such estimate uncertainties may different
from the current estimation of the Company’s management, which may cause critical adjustment to the carrying amount
of assets or liabilities which may be affected in the future.
The Group regularly reviews the aforesaid judgments, estimates and assumptions on the basis of continued operation. A
revision to accounting estimates is recognised in the period in which the estimate is revised if it only affects that period.
A revision is recognised in the period of the revision and future periods if it affects both current and future periods.
At the balance sheet date, the critical areas where Group needs to make judgments, estimates and assumptions as to
the items amount of financial statements are set out below:
(1) Classification of leases
The Group classifies its leases as operating lease and financing lease in accordance with “Accounting Standard
for Business Enterprises No. 21 – Leases”. When classifying leases, the management needs to analyse and judge
whether all risks and returns relating to the ownership of leased out assets have transferred to the leasee, or
whether the Company has obliged to all risks and returns relating to the ownership of leased assets.
(2) Provision for bad debts
15
INTERIM
REPORT
The Group adopts the allowance method to account for bad debt loss under the accounting policies of accounts
receivable. Impairment of accounts receivable is based on the recoverability of assessed accounts receivable.
Given the management’s judgment and estimate required for impairment of accounts receivable, the difference
between the actual outcome and original estimate will affect the carrying amount of accounts receivable and
provision and reversal of bad debts of accounts receivable during the estimate revision period.
(3) Allowance for inventories
Under the accounting policies of inventories and by measuring at the lower of cost and net realisable value, the
Group makes allowance for inventories which have costs higher than net realisable value or become obsolete and
slow-moving. Write-down of inventories to their net realisable values is based on the sale ability of the evaluated
inventory and their net realisable values. Given the management’s judgments and estimates required for inventory
impairment on the basis of definite evidence, purpose of holding the inventories and other factors, the difference
between the actual outcome and original estimate will affect the carrying amount of inventories and provision and
reversal of bad debts of inventories allowance during the estimate revision period.
(4) Fair value of consumable biological assets
A consumable biological asset is measured at fair value when there is a stock. A stock is judged to be formed
when the consumable biological asset - timber survives well after a growth period and the merchantable timber
exceeds 0.8 cubic metres.
The fair value of a consumable biological asset is discounted using expected cash flow and estimated and
measured using income approach.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 87
IX Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
30. Critical accounting judgments and estimates (Cont’d)
(5) Impairment of available-for-sale financial assets
In respect of impairment of available-for-sale financial assets, whether impairment loss shall be recognised in
income statement significantly depends on the judgments and assumptions of the management. While making
judgments and assumptions, the Company shall assess the excess of cost of the investee’s identifiable net assets
attributable to the investment over fair value and the duration.
(6) Provision for impairment of non-financial non-current assets
At the balance sheet date, the Group makes its judgment as to whether there is any evidence indicating potential
impairment of non-current assets other than financial assets. Intangible assets with indefinite useful life shall be
tested for impairment when there is any indication of impairment in addition to the annual impairment testing.
Other non-current assets other than financial assets shall be tested for impairment if there is any evidence
indicating that their carrying amount cannot be recovered.
When the carrying amount of an asset or asset groups is higher than the recoverable amount, being 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, it indicates impairment.
The net amount of the fair value less costs of disposal is determined by making reference to the price in a sale
agreement in an arm’s length transaction or the observable market price less the incremental costs directly
attributable to such assets disposal.
15
INTERIM In projecting the present value of the future cash flows, critical judgments shall be made to the output, selling
REPORT price and relevant operating costs of such assets (or asset groups) and the discount rate applied in calculating
the discount. In estimating the recoverable amount, the Company may adopt all relevant materials including
the projections as to the output, selling price and relevant operating costs based on reasonable and supportive
assumptions.
The test shall be performed at least once a year as to whether there is any impairment. This requires an estimate
for the present value of the future cash flows of the asset groups or sets of asset groups to which goodwill is
allocated. In estimating the present value of the future cash flows, the Group needs to estimate the cash flows
generated from the future asset groups or sets of asset groups. Meanwhile, the present value of future cash flows
is determined using an appropriately selected discount rate.
(7) Depreciation and amortisation
The Group shall provide depreciation and amortisation for investment property, fixed assets and intangible assets
over their useful lives and after taking into account of their residual value, using straight-line method. The Group
shall regularly review the useful lives to determine the amount depreciated and amortised to be accounted for in
each reporting period. The useful life is determined by the Group according to its previous experiences on the
similar assets and estimated technical innovation. If there is any material change in the previously made estimate,
the depreciation and amortisation will be adjusted over the future period.
(8) Deferred income tax assets
It is probable that all unused tax loss will be recognised as the deferred income tax assets to the extent there
will be sufficient taxable profits against which the deducible loss is available. This requires the Company’s
management to apply numerous judgments to estimate the time and amount generated from the future taxable
profits so as to determine the amount of deferred income tax assets with reference to the tax planning strategy.
(9) Income tax
There are some uncertainties in tax treatment and calculation for some transactions of the Group during its
ordinary course of business. The approval from the tax authority is required for pre-tax expending of some items.
Any difference between the final recognition outcome of such tax matters and the initially estimated amount will
exert an effect on the current income tax and deferred income tax during their final recognition period.
88 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
VI. Taxation
1. Main Tax Types and Tax Rates
Tax type Basis of taxation Tax rate
Value added tax Taxable income 17% for general and 13% for sales of gas and water.
Value-added tax is computed on the difference
after deduction of input value-added tax
Business tax Taxable revenue 3%-5% of taxable revenue
Urban maintenance and Actual payment of 7% of actual payment of turnover tax
construction tax turnover tax
Enterprise income tax Actual payment of 25%of taxable income, 15% for high-tech enterprises and
turnover tax 20% for small-size enterprises
Educational surcharges Actual payment of 3% of actual payment of turnover tax
turnover tax
Local educational surcharges Actual payment of 2% of actual payment of turnover tax
turnover tax
Disclosure on the different enterprise income tax rate for entity subject to taxation
Entity subject to taxation Income tax rate
Shandong Chenming Paper Holdings Limited 15%
Jiangxi Chenming Paper Co., Ltd. 15%
Chenming (HK) Limited
Huanggang Chenming Arboriculture Co., Ltd.
16.5%
Exempted
15
INTERIM
Zhanjiang Chenming Arboriculture Co., Ltd. Exempted REPORT
Yangjiang Chenming Arboriculture Co., Ltd. Exempted
Nanchang Chenming Arboriculture Co., Ltd. Exempted
2. Tax Incentives
(1) Enterprise Income Tax
Pursuant to the requirements of Law of the People’s Republic of China on Enterprise Income Tax (
) dated 16 March 2007, the Company is recognised as a high and new technology enterprise
which needs the major support of the state as approved by State Taxation Administration of Shouguang,
Shandong. An enterprise income tax rate of 15% is applicable to the Company from 1 January 2012 to 31
December 2014.
Pursuant to the requirements of Law of the People’s Republic of China on Enterprise Income Tax (
) dated 16 March 2007, Jiangxi Chenming Paper Co., Ltd., a subsidiary of the Company,
is recognised as a high and new technology enterprise which needs the major support of the state as approved
by State Taxation Administration of Nanchang Economic and Technological Development Zone, Jiangxi.
An enterprise income tax rate of 15% is applicable to Jiangxi Chenming Paper Co., Ltd., a subsidiary of the
Company, from 1 January 2013 to 31 December 2015.
Pursuant to the requirements of Rule 27 of Law of the People’s Republic of China on Enterprise Income Tax (
) and Rule 86 of Regulations for the Implementation of Law of the People’s Republic
of China on Enterprise Income Tax ( ), subsidiaries of Chenming Paper,
namely, Zhanjiang Chenming Arboriculture Co., Ltd., Yangjiang Chenming Arboriculture Co., Ltd., Nanchang
Chenming Arboriculture Co., Ltd., Huanggang Chenming Arboriculture Co., Ltd. and Chenming Arboriculture Co.,
Ltd. are engaged in arboriculture cultivating and thus exempt from corporate income tax.
Pursuant to the”Revenue Bill 2008” passed by The Legislative Council of the Hong Kong Special Administrative
Region on 26 June 2008, Chenming (HK) Limited, a subsidiary of Chenming Paper, has been subject to a
corporate income tax rate of 16.5% commencing 2008, and the applicable tax rate for 2015 was 16.5%.
Except for the above preferential policies, Chenming Paper and its remaining subsidiaries are subject to enterprise
income tax rate of 25%.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 89
IX Financial Report
VI. Taxation (Cont’d)
2. Tax Incentives (Cont’d)
(2) Value-added Tax (“VAT”) incentives
Pursuant to Cai Shui [1995] No. 44 “Circular on VAT Exemption for Certain Products Applying Integrated Use of
Resources” issued by the State Administration of Taxation”, enterprises engaged in utilisation of raw materials
containing not less than 30% of coal gangue, stone coal, coal ash, bottom ash of coal boiler (excluding blast
furnace water quenching residue) in the production of building material products shall be exempted from VAT.
Zhanjiang Chenming New-style Wall Materials Co., Ltd., a subsidiary of the Company, utilises raw materials
containing above 30% of coal ash in its production. It is thus qualified as an enterprise engaged in the utilisation
of waste in production and is exempted from VAT in 2015.
Pursuant to the related requirements of the “Notice of the Ministry of Finance and the State Administration of
Taxation on Issue Regarding Exemption from VAT for Certain Products that Comprehensively Utilise Resources”
(No. Cai Shui [1995] No. 44) as issued by and the State Administration of Taxation and the document No. Cai Shui
[2001] No. 72, Shandong Chenming Panels Co., Ltd., a subsidiary of the Company, produces products that apply
integrated use of resources and is subject to an immediate VAT refund policy.
VII. Notes to items of the Consolidated Financial Statements
1. Monetary funds
Unit: RMB
15 Item Closing balance Opening balance
INTERIM
REPORT
Treasury cash 2,674,558.52 1,437,037.09
Bank deposit 722,503,482.85 974,659,824.21
Other monetary funds 6,267,346,362.09 4,499,561,324.80
Total 6,992,524,403.46 5,475,658,186.10
Of which: Total deposits in overseas banks 1,367,769,714.96 853,450,001.81
Others:
Other monetary funds of RMB2,586,193,038.47 (31 December 2014: RMB1,592,569,467.98) were the guarantee
deposit for the application for bank acceptance with the banks by the Group.
Other monetary funds of RMB1,702,534,395.77 (31 December 2014: RMB710,024,934.09) were the guarantee
deposit for the application for letter of credit with the banks by the Group.
Other monetary funds of RMB1,834,118,927.85 (31 December 2014: RMB1,685,461,808.73) were the guarantee
deposit for the application for guarantees with the banks by the Group.
Other monetary funds of RMB40,000,000.00 (31 December 2014: RMB473,405,114.01) were the guarantee
deposit for the application for loans with the banks by the Group.
Other monetary funds of RMB104,500,000.00 (31 December 2014: RMB38,100,000) were the statutory reserve
deposit at the bank of China by the Group.
90 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
VII. Notes to items of the Consolidated Financial Statements (Cont’d)
2. Bills receivable
(1) Classification of bills receivable
Unit: RMB
Item Closing balance Opening balance
Bank acceptance bills 3,234,933,632.95 2,990,068,579.33
Commercial acceptance bills 82,023.52 57,472,976.82
Total 3,235,015,656.47 3,047,541,556.15
(2) Bills receivable of the Company pledged at the end of the period
Unit: RMB
Pledged amount
at the end of
Item the period
Bank acceptance bills 757,983,993.12
Total 757,983,993.12
15
INTERIM
(3) Outstanding bills receivable endorsed or discounted by the Company as at the end of the period REPORT
Unit: RMB
Derecognised
amount as at the
Item end of the period
Bank acceptance bills 8,764,631,578.49
Total 8,764,631,578.49
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
Category Amount Percentage Amount Percentage Book value Amount Percentage Amount Percentage Book value
Accounts receivable that are
individually significant and
provided for bad debts separately 41,818,754.94 0.99% 41,818,754.94 100.00% 0.00 48,363,962.78 1.29% 48,363,962.78 100.00% 0.00
Accounts receivable that are
provided for bad debts on
credit risk features portfolio basis 4,199,971,263.72 99.01% 249,246,144.36 5.93% 3,950,725,119.36 3,705,668,686.18 98.71% 216,259,316.98 5.84% 3,489,409,369.20
Total 4,241,790,018.66 100.00% 291,064,899.30 6.86% 3,950,725,119.36 3,754,032,648.96 100.00% 264,623,279.76 7.05% 3,489,409,369.20
SHANDONG CHENMING PAPER HOLDINGS LIMITED 91
IX Financial Report
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)
Accounts receivable that are individually significant and are provided for bad debts separately as at the end of the
period:
√ Applicable Not applicable
Unit: RMB
Closing balance
Accounts Bad debt
Receivable (by entity) receivable provision Percentage Reason for provision
FOSHAN SHUNDE XINGCHEN 26,754,065.23 26,754,065.23 100.00% Most of them are payment for
PAPER CO., LTD. goods overdue for over three years
and are unlikely to be recovered.
BEIJING HUAXIA CULTURE 11,644,496.00 11,644,496.00 100.00% Most of them are payment for
MEDIA CO., LTD. goods overdue for over three years
and are unlikely to be recovered.
JIANGXI LONGMING ENTERPRISE 1,763,987.74 1,763,987.74 100.00% Most of them are payment for
CO., LTD. goods overdue for over three years
and are unlikely to be recovered.
15 NANCHANG XINGBO PAPER 1,656,205.97 1,656,205.97 100.00% Most of them are payment for
INTERIM CO., LTD. goods overdue for over three years
REPORT and are unlikely to be recovered.
Total 41,818,754.94 41,818,754.94
Use of ageing analysis for making bad debt provision in the portfolio:
√ Applicable Not applicable
Unit: RMB
Closing balance
Accounts Bad debt
Ageing receivable provision Percentage
Within 1 year 3,770,149,075.16 188,591,311.76 5.00%
1-2 years 89,349,057.87 8,784,329.03 10.00%
2-3 years 44,712,258.88 8,942,451.77 20.00%
Over 3 years 42,928,051.80 42,928,051.80 100.00%
Total 3,947,138,443.71 249,246,144.36 6.31%
Explanation on the basis of recognition of the portfolio:
Accounts receivable using percentage of balance for making bad debt provision in the portfolio:
Applicable √ Not applicable
92 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
VII. Notes to items of the Consolidated Financial Statements (Cont’d)
3. Accounts receivable (Cont’d)
(2) Top five accounts receivable according to closing balance of debtors
As a percentage
of the total of
Relationship with accounts
Name of entity the Company Amount Term receivable
SHANXI PRINTING Non-related party 75,777,277.52 Within 1 year 1.79%
MATERIALS COMPANY
ANHUI TIME SOURCE Related party 56,493,413.75 Within 1 year 1.33%
CORPORATION
YUNNAN PRINTING Non-related party 47,150,337.49 Within 1 year 1.11%
MATERIALS CO., LTD.
ZHEJIANG XINHUA PRINTING Non-related party 45,196,935.34 Within 1 year 1.07%
MATERIALS CO., LTD.
SHANGHAI CHANGYI Non-related party 44,659,694.15 Within 1 year 1.05%
ADHESIVE PRODUCTS
CO., LTD.
Total 269,277,658.25 6.35%
4. Prepayments
15
INTERIM
REPORT
(1) Presentation of prepayments according to ageing analysis
Unit: RMB
Closing balance Opening balance
Ageing Amount Percentage Amount Percentage
Within 1 year 931,099,642.10 58.68% 858,757,969.24 46.72%
1-2 years 655,566,279.39 41.32% 979,259,485.66 53.28%
Total 1,586,665,921.49 1,838,017,454.90
SHANDONG CHENMING PAPER HOLDINGS LIMITED 93
IX Financial Report
VII. Notes to items of the Consolidated Financial Statements (Cont’d)
4. Prepayments (Cont’d)
(2) Top five prepayment according to closing balance of prepaid parties
Relationship
with the
Name of entity Company Amount Term Reason for being unsettled
JIANGSU XINHAI PORT Non-related 533,320,000.00 1-2 years Prepayments for
ENGINEERING CO., LTD. party construction fee according
to the agreed contract
GUANGDONG LEPENG Non-related 75,857,027.88 Within 1 year Prepayments for goods
TRADING CO., LTD. party according to the agreed
contract
ZHANJIANG MINGLI Non-related 54,091,348.41 Within 1 year Prepayments for goods
TRADING CO., LTD. party according to the agreed
contract
ZHANJIANG XINCHEN Non-related 20,886,639.66 Within 1 year Prepayments for goods
TRADING CO., LTD party according to the agreed
contract
GUANGZHOU DINGSHENG Non-related 14,099,402.84 Within 1 year Prepayments for goods
INDUSTRY & TRADE party according to the agreed
CO., LTD. contract
15
INTERIM Total -- 698,254,418.79
REPORT
5. Other receivables
(1) Disclosure of other receivables according to category
Unit: RMB
Closing balance Opening balance
Book balance Bad debt provision Book balance Bad debt provision
Category Amount Percentage Amount Percentage Book value Amount Percentage Amount Percentage Book value
Other receivables that are individually
significant and are provided for
bad debts separately 8,837,136.79 0.35% 8,837,136.79 100.00% 0.00 8,755,053.51 0.47% 8,755,053.51 100.00% 0.00
Other receivables that are provided
for bad debts on portfolio basis
based on credit risk features 2,543,590,181.23 99.54% 62,681,790.67 2.46% 2,480,908,390.56 1,830,724,220.90 98.87% 54,256,334.83 2.96% 1,776,467,886.07
Other receivables that are individually
insignificant and are provided for
bad debts separately 2,942,648.45 0.12% 2,942,648.45 100.00% 0.00 12,150,098.81 0.66% 12,150,098.81 100.00% 0.00
Total 2,555,369,966.47 100.00% 74,461,575.91 2.91% 2,480,908,390.56 1,851,629,373.22 100.00% 75,161,487.15 4.06% 1,776,467,886.07
94 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
VII. Notes to items of the Consolidated Financial Statements (Cont’d)
5. Other receivables (Cont’d)
(1) Disclosure of other receivables according to category (Cont’d)
Other receivables that are individually significant and are provided for bad debts separately as at the end of the
period:
√ Applicable Not applicable
Unit: RMB
Closing balance
Other receivables (by entity) Other receivables Bad debt provision Percentage
AHLSTROM FINLAND 2,820,742.72 2,820,742.72 100.00%
QUANHUA PRECISION CORP. LTD. 2,253,993.04 2,253,993.04 100.00%
ELOF HANSSON GROUP OF SWEDEN 1,495,105.87 1,495,105.87 100.00%
QINGDAO SECOND AUTOMOTIVE AND
TRANSPORTATION LOGISTICS
BRANCH COMPANY 1,137,295.16 1,137,295.16 100.00%
ZIBO KAIHONG ENERGY CO., LTD. 1,130,000.00 1,130,000.00 100.00%
Total 8,837,136.79 8,837,136.79
Other receivables using ageing analysis for making bad debt provision in the portfolio: 15
INTERIM
√ Applicable Not applicable REPORT
Unit: RMB
Closing balance
Ageing Other receivables Bad debt provision Percentage
Within 1 year 102,751,347.44 5,784,161.08 5.00%
1-2 years 13,079,241.96 1,307,924.18 10.00%
2-3 years 10,999,780.85 2,199,956.18 20.00%
Over 3 years 53,389,749.23 53,389,749.23 100.00%
Total 180,220,119.49 62,681,790.67 34.78%
Notes for the basic of determining such portfolio:
Other receivables using percentage of balance for making bad debt provision in the portfolio:
Applicable √ Not applicable
Other receivables using other methods for making bad debt provision in the portfolio:
Applicable √ Not applicable
SHANDONG CHENMING PAPER HOLDINGS LIMITED 95
IX Financial Report
VII. Notes to items of the Consolidated Financial Statements (Cont’d)
5. Other receivables (Cont’d)
(2) Top five other receivables according to closing balance of debtors
Unit: RMB
Percentage of
closing balance
of total other
Name of entity Nature Closing balance Ageing receivables
Wuhan Chenming Wan Xing Borrowings and 1,253,967,971.74 Within 1 year and 49.07%
Real Estate Co., Ltd. interests 1-2 years
Shandong Jianghe Paper Open credit 293,371,945.91 1-2 years 11.48%
Co. Ltd.
Weifang Water Investment 1 year financial 251,079,773.06 Within 1 year 9.83%
Co., Ltd leasing payment
Zibo Evergrande Pan-China 1 year financial 200,000,000.00 Within 1 year 7.83%
Real Estate Co., Ltd. leasing payment
Shandong Weineng Green 1 year financial 100,000,000.00 Within 1 year 3.91%
Energy Co., Ltd. leasing payment
Total 2,098,419,690.71 82.12%
15
INTERIM 6. Inventories
REPORT
(1) Categories of inventories
Unit: RMB
Closing balance Opening balance
Impairment Impairment
Item Book balance provision Book value Book balance provision Book value
Raw materials 1,788,903,290.32 1,788,903,290.32 2,117,477,615.09 2,117,477,615.09
Work-in-process products 69,788,649.18 69,788,649.18 53,378,096.76 53,378,096.76
Goods in stock 1,609,715,492.28 1,609,715,492.28 1,539,604,250.80 5,319,730.37 1,534,284,520.43
Consumable biological assets 1,475,189,938.29 1,475,189,938.29 1,407,588,229.46 1,407,588,229.46
Developing products 308,012,006.86 308,012,006.86 308,012,006.86 308,012,006.86
Total 5,251,609,376.93 5,251,609,376.93 5,426,060,198.97 5,319,730.37 5,420,740,468.60
(2) Impairment provision for inventories
Unit: RMB
Item Opening balance Increase during the period Decrease during the period
Reversal
Provision Others or transfer Others Closing balance
Goods in stock 5,319,730.37 5,319,730.37
Total 5,319,730.37 5,319,730.37
96 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
VII. Notes to items of the Consolidated Financial Statements (Cont’d)
7. Non-current assets due within one year
Unit: RMB
Item Closing balance Opening balance
Long-term receivables due within one year 625,936,558.28 765,738,333.65
Entrusted loans due within one year 100,000,000.00
Total 625,936,558.28 865,738,333.65
8. Other current assets
Unit: RMB
Item Closing balance Opening balance
Non-credited VAT 1,441,427,346.87 1,545,685,356.01
Prepaid income tax 74,524,311.77 110,916,876.08
Total 1,515,951,658.64 1,656,602,232.09
9. Available-for-sale financial assets
(1) Particulars of available-for-sale financial assets
15
INTERIM
REPORT
Unit: RMB
Closing balance Opening balance
Provision for Provision for
Item Book balance impairment Book value Book balance impairment Book value
Available-for-sale equity instruments: 410,450,000.00 1,450,000.00 409,000,000.00 74,450,000.00 1,450,000.00 73,000,000.00
At cost 410,450,000.00 1,450,000.00 409,000,000.00 74,450,000.00 1,450,000.00 73,000,000.00
Total 410,450,000.00 1,450,000.00 409,000,000.00 74,450,000.00 1,450,000.00 73,000,000.00
SHANDONG CHENMING PAPER HOLDINGS LIMITED 97
IX Financial Report
VII. Notes to items of the Consolidated Financial Statements (Cont’d)
9. Available-for-sale financial assets (Cont’d)
(2) Available-for-sale financial assets measured at cost as at the end of the period
Unit: RMB
Book balance Provision for impairment
Equity interest in
the investee held Cash
Increase for Decrease for Increase for Decrease for by the Company dividends for
Investee Opening balance the period the period Closing balance Opening balance the period the period Closing balance (%) the period
Qingzhou Chenming Denaturation
Amylum Co., Ltd. 900,000.00 900,000.00 900,000.00 900,000.00 30.00%
Shandong Paper Making & Printing
Enterprises Corporation 200,000.00 200,000.00 200,000.00 200,000.00 2.00%
Jinan Shangyou Commercial Co., Ltd. 350,000.00 350,000.00 350,000.00 350,000.00 5.00%
Zhejiang Province Guangyu Media
Printing Co., Ltd. 2,000,000.00 2,000,000.00 9.96%
Shouguang Mihe Water Co., Ltd. 20,000,000.00 20,000,000.00 19.46%
Anhui Time Source Corporation 1,000,000.00 1,000,000.00 10.00%
Shandong Hongqiao Venture Capital
Co., Ltd. 50,000,000.00 50,000,000.00 16.67%
Shanghai Zhongneng Enterprise
Development (Group) Co., Ltd 300,000,000.00 300,000,000.00 30.00%
Shanghai Leadbank Asset
15 Management Co., Ltd. 36,000,000.00 36,000,000.00 3.00%
INTERIM Total 74,450,000.00 336,000,000.00 410,450,000.00 1,450,000.00 1,450,000.00
REPORT
(3) Changes in impairment of available-for-sale assets during the reporting period
Unit: RMB
Available-for- Available-for-
sale equity sale debt
Type of available-for-sale assets instruments instruments Total
Opening balance of provision for impairment 1,450,000.00 1,450,000.00
Closing balance of provision for impairment 1,450,000.00 1,450,000.00
10. Long-term receivables
(1) Particulars of long-term receivables
Unit: RMB
Closing balance Opening balance Range of
Item Book balance Bad debt provision Book value Book balance Bad debt provision Book value discount rate
Finance leasing payments 5,566,341,664.00 5,566,341,664.00 1,653,634,718.65 1,653,634,718.65 6.15%-8.00%
Less: unrealised finance income 530,580,708.06 530,580,708.06 233,036,050.66 233,036,050.66
Total 5,035,760,955.94 5,035,760,955.94 1,420,598,667.99 1,420,598,667.99
98 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
VII. Notes to items of the Consolidated Financial Statements (Cont’d)
11. Long-term equity investments
Unit: RMB
Increase/decrease for the period
Profit/loss of
investment Adjustment of
recognised other Distribution of Closing
Investment Investment under comprehensive Changes in cash dividends Provision for balance of
Investee Opening balance addition reduction equity method income other equity or profit declared impairment Others Closing balance provision
I. Joint venture
Shouguang Chenming Huisen New
Building Materials Co., Ltd. 2,999,787.98 -4,925.72 2,994,862.26
Subtotal 2,999,787.98 -4,925.72 2,994,862.26
II. Associate
Arjo Wiggins Chenming Specialty Paper Co., Ltd.
Jiangxi Jiangbao Media Colour Printing Co., Ltd. 4,662,786.59 -342,474.69 4,320,311.90
Zhuhai Dechen New Third Board
Equity Investment Fund Company
(Limited Partnership) 50,000,000.00 50,000,000.00
Wuhan Chenming Wan Xing Real Estate Co., Ltd. 22,610,293.87 -2,533,440.72 20,076,853.15
Jiangxi Chenming Port Co., Ltd. 5,814,979.68 735,809.68 6,550,789.36
Subtotal 33,088,060.14 50,000,000.00 -2,140,105.73 80,947,954.41
15
Total 36,087,848.12 50,000,000.00 -2,145,031.45 83,942,816.67 INTERIM
REPORT
12. Investment property
(1) Investment property measured at cost
Unit: RMB
Housing and
Item building structure Total
I. Original carrying amount 38,291,395.70 38,291,395.70
1. Opening balance 38,291,395.70 38,291,395.70
2. Increase for the period
3. Decrease for the period
4. Closing balance 38,291,395.70 38,291,395.70
II. Accumulated depreciation and accumulated amortisation
1. Opening balance 20,556,207.79 20,556,207.79
2. Increase for the period 869,128.02 869,128.02
Provision or amortisation 869,128.02 869,128.02
3. Decrease for the period
4. Closing balance 21,425,335.81 21,425,335.81
IV. Book value
1. Closing book value 16,866,059.89 16,866,059.89
2. Opening book value 17,735,187.91 17,735,187.91
SHANDONG CHENMING PAPER HOLDINGS LIMITED 99
IX Financial Report
VII. Notes to items of the Consolidated Financial Statements (Cont’d)
13. Fixed assets
(1) Particulars of fixed assets
Unit: RMB
Electronic
housing and Machinery equipment
Item building structure and equipment and others Vehicles Total
I. Original carrying amount
1. Opening balance 5,423,155,935.77 28,939,108,616.14 438,322,796.07 274,029,373.55 35,074,616,721.53
2. Increase for the period 341,189,437.36 422,277,405.59 11,312,386.38 4,030,286.99 778,809,516.32
(1) Acquisition 205,259,909.19 11,312,386.38 4,030,286.99 220,602,582.56
(2) Transferred from
construction in
progress 341,189,437.36 217,017,496.40 558,206,933.76
3. Decrease for the period 52,831,179.54 111,301,805.98 4,237,308.30 19,254,454.05 187,624,747.87
(1) Disposal or
retirement 52,831,179.54 111,301,805.98 4,237,308.30 19,254,454.05 187,624,747.87
4. Closing balance 5,711,514,193.59 29,250,084,215.75 445,397,874.15 258,805,206.49 35,665,801,489.98
II. Accumulated depreciation
15 1.
2.
Opening balance
Increase for the period
929,355,284.32
79,052,689.44
9,040,169,521.06
606,953,008.71
222,581,317.26
14,234,049.36
111,558,893.85
10,163,115.08
10,303,665,016.49
710,402,862.59
INTERIM
REPORT (1) Provision 79,052,689.44 606,953,008.71 14,234,049.36 10,163,115.08 710,402,862.59
3. Decrease for the period 5,364,346.75 58,213,500.14 2,989,496.23 6,332,842.73 72,900,185.85
(1) Disposal or
retirement 5,364,346.75 58,213,500.14 2,989,496.23 6,332,842.73 72,900,185.85
4. Closing balance 1,003,043,627.01 9,588,909,029.63 233,825,870.39 115,389,166.20 10,941,167,693.23
III. Provision for impairment
1. Opening balance 26,220,000.00 26,220,000.00
2. Increase for the period
3. Decrease for the period
4. Closing balance 26,220,000.00 26,220,000.00
IV. Book value
1. Closing book value 4,682,250,566.58 19,661,175,186.12 211,572,003.76 143,416,040.29 24,698,413,796.75
2. Opening book value 4,467,580,651.45 19,898,939,095.08 215,741,478.81 162,470,479.70 24,744,731,705.04
Note: Fixed assets originally valued at RMB68,566,564.48 were internally classified under construction-in-progress by the Company.
(2) Particulars of temporarily idle fixed assets
Unit: RMB
Original
carrying Accumulated Provision
Item amount depreciation for impairment Book value
Machinery equipment 59,287,663.46 5,006,141.71 54,281,521.75
Housing and building structure 17,543,318.35 2,049,140.24 15,494,178.11
Total 76,830,981.81 7,055,281.95 69,775,699.86
100 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
VII. Notes to items of the Consolidated Financial Statements (Cont’d)
13. Fixed assets
(3) Particulars of fixed assets without obtaining property right certificates
Unit: RMB
Reason for not yet
obtaining property
Item Book value right certificates
Shandong Chenming Paper Holdings Limited 194,357,963.84 Processing
Shouguang Meilun Paper Co., Ltd. 731,548,529.04 Processing
Jiangxi Chenming Paper Co., Ltd. 15,494,178.11 Processing
Fuyu Chenming Paper Co., Ltd. 42,373,077.78 Processing
Zhanjiang Chenming Pulp & Paper Co., Ltd. 1,017,773,284.89 Processing
Jilin Chenming Paper Co., Ltd. 457,321,153.37 Processing
Total 2,458,868,187.03
14. Construction in progress
(1) Particulars of construction in progress
Unit: RMB
Closing balance
Provision
Opening balance
Provision
15
Item Book balance for impairment Book value Book balance for impairment Book value INTERIM
REPORT
Railway project (parent company) 54,611,317.68 54,611,317.68 223,918,721.46 223,918,721.46
Desulphurisation, denitrification and
de-dusted project of power plant
(parent company and Meilun) 140,526,292.16 140,526,292.16
Biomass vaporisation upgrade
project (Zhanjiang Chenming) 152,428,899.32 152,428,899.32 113,499,021.38 113,499,021.38
New small-sized paper cutting
workshop (Zhanjiang Chenming) 19,072,406.97 19,072,406.97 94,353,419.69 94,353,419.69
700,000 tonne pulp equipment
upgrade (Zhanjiang Chenming) 63,998,482.95 63,998,482.95 142,846,027.30 142,846,027.30
190,000 tonne high-end cultural paper
project (Zhanjiang Chenming) 1,666,180,701.67 1,666,180,701.67 950,143,385.07 950,143,385.07
MVR+ multi-effect evaporation plant
project (Zhanjiang Chenming) 53,642,719.82 53,642,719.82 29,259,003.60 29,259,003.60
450 tonnes/day mechanical pulp project
(Zhanjiang Chenming) 132,531,359.91 132,531,359.91 28,937,113.23 28,937,113.23
Brick plant project (Jilin Chenming) 958,941.60 958,941.60 33,526,397.51 33,526,397.51
7800 paper machine press section
upgrade (Jiangxi Chenming) 13,990,230.09 13,990,230.09 13,990,230.09 13,990,230.09
Food packaging paper project
(Jiangxi Chenming) 1,108,899,127.45 1,108,899,127.45 919,552,099.41 919,552,099.41
BTMP upgrade (Jiangxi Chenming) 79,604,688.80 79,604,688.80 41,214,162.60 41,214,162.60
Mid-water renovation project
(Jiangxi Chenming) 34,852,600.86 34,852,600.86 16,903,145.03 16,903,145.03
Denitrification project
(Qianneng Electric Power) 41,968,651.72 41,968,651.72
Magnesite mining (Haicheng Haiming) 403,032,824.11 403,032,824.11 474,178,142.31 474,178,142.31
Forestry pulp integration project
(Huanggang Chenming) 322,149,429.52 322,149,429.52 319,549,872.05 319,549,872.05
Others 239,467,983.61 239,467,983.61 124,905,143.92 124,905,143.92
Total 4,345,421,714.36 4,345,421,714.36 3,709,270,828.53 3,709,270,828.53
SHANDONG CHENMING PAPER HOLDINGS LIMITED 101
15
102
REPORT
INTERIM
VII. Notes to items of the Consolidated Financial Statements (Cont’d)
14. Construction in progress
(2) Changes in material construction in progress projects for the period
Unit: RMB
Accumulated Of which: capitalised Capitalisation rate
Increase for Transfer to fixed Other deductions investment Construction Accumulated interest amount of the interest amount
Item name Budge Opening balance the period asset for the period for the period Closing balance to budget in progress capitalised interest for the period for the period Source of fund
Railway project (parent company) 240,000,000.00 223,918,721.46 51,264,042.81 220,571,446.59 54,611,317.68 93% 93% 12,381,635.90 459,400.16 6.00% Self-raised and borrowings
IX Financial Report
Desulphurisation, denitrification and de-dusted project 143,000,000.00 140,526,292.16 2,275,084.90 142,801,377.06 Completed Completed 5,668,663.46 1,715,828.80 6.00% Self-raised and borrowings
of power plant (parent company and Meilun)
Biomass vaporisation project (Zhanjiang Chenming) 263,000,000.00 113,499,021.38 38,929,877.94 152,428,899.32 43% 43% 3,761,157.37 2,517,446.12 6.00% Self-raised and borrowings
New small-sized paper cutting workshop 111,000,000.00 94,353,419.69 9,454,650.07 84,735,662.79 19,072,406.97 85% 85% 841,027.89 435,668.48 6.00% Self-raised and borrowings
(Zhanjiang Chenming)
700,000 tonne pulp equipment upgrade 226,000,000.00 142,846,027.30 78,847,544.35 63,998,482.95 63% 63% 9,939,148.74 Self-raised and borrowings
(Zhanjiang Chenming)
190,000 tonne high-end cultural paper project 3,097,000,000.00 950,143,385.07 716,037,316.60 1,666,180,701.67 54% 54% 10,852,330.74 10,852,330.74 6.00% Self-raised and borrowings
SHANDONG CHENMING PAPER HOLDINGS LIMITED
(Zhanjiang Chenming)
MVR+ multi-effect evaporation plant project 230,000,000.00 29,259,003.60 24,383,716.22 53,642,719.82 13% 13% 1,045,055.32 1,045,055.32 6.00% Self-raised and borrowings
(Zhanjiang Chenming)
450 tonnes/day mechanical pulp project 80,000,000.00 28,937,113.23 103,594,246.68 132,531,359.91 36% 36% 1,172,324.03 1,172,324.03 6.00% Self-raised and borrowings
(Zhanjiang Chenming)
Brick plant project (Jilin Chenming) 36,000,000.00 33,526,397.51 1,609,557.18 34,177,013.09 958,941.60 93% 93% Self-raised
7800 paper machine press section 16,000,000.00 13,990,230.09 13,990,230.09 87% 87% Self-raised
upgrade (Jiangxi Chenming)
Food packaging paper project (Jiangxi Chenming) 1,248,000,000.00 919,552,099.41 189,347,028.04 1,108,899,127.45 89% 89% 60,850,434.95 38,843,768.21 6.00% Borrowings
BTMP renovation project (Jiangxi Chenming) 97,000,000.00 41,214,162.60 38,390,526.20 79,604,688.80 42% 42% 3,559,517.23 1,939,140.92 6.00% Borrowings
Mid-water renovation project (Jiangxi Chenming) 39,000,000.00 16,903,145.03 17,949,455.83 34,852,600.86 43% 43% 680,390.02 540,280.42 6.00% Borrowings
Denitrification project (Qianneng Electric Power) 42,000,000.00 41,968,651.72 41,968,651.72 Completed Completed Self-raised
Magnesite mining (Haicheng Haiming) 500,000,000.00 474,178,142.31 31,079,572.60 102,224,890.80 403,032,824.11 95% 95% 21,519,250.50 Self-raised and borrowings
Forestry pulp integration project (Huanggang Chenming) 3,485,000,000.00 319,549,872.05 2,599,557.47 322,149,429.52 9% 9% Self-raised
Others 124,905,143.92 148,515,622.20 33,952,782.51 239,467,983.61 917,184.95 581,489.71 Self-raised and borrowings
Total 3,709,270,828.53 1,375,430,254.74 558,206,933.76 181,072,435.15 4,345,421,714.36 133,188,121.10 60,102,732.91
IX Financial Report
VII. Notes to items of the Consolidated Financial Statements (Cont’d)
15. Materials for project
Unit: RMB
Item Closing balance Opening balance
Special materials 16,506,506.35 22,810,138.46
Special equipment 155,409.00 145,843.92
Total 16,661,915.35 22,955,982.38
16. Intangible assets
Unit: RMB
Item Land use rights Software Total
I. Original carrying amount
1. Opening balance 1,521,545,407.58 21,645,247.47 1,543,190,655.05
2. Increase for the period 175,948,913.16 391,034.48 176,339,947.64
(1) Acquisition 175,948,913.16 391,034.48 176,339,947.64
3. Decrease for the period
4. Closing balance 1,697,494,320.74 22,036,281.95 1,719,530,602.69
II. Accumulated amortisation
1. Opening balance 207,729,903.04 16,356,326.97 224,086,230.01
15
INTERIM
2. Increase for the period 15,866,111.54 692,563.04 16,558,674.58 REPORT
(1) Provision 15,866,111.54 692,563.04 16,558,674.58
3. Decrease for the period
4. Closing balance 223,596,014.58 17,048,890.01 240,644,904.59
IV. Book value
1. Closing book value 1,473,898,306.16 4,987,391.93 1,478,885,698.10
2. Opening book value 1,313,815,504.54 5,288,920.50 1,319,104,425.04
17. Goodwill
(1) Original carrying amount of goodwill
Unit: RMB
Name of investee or Opening Increase for Decrease for
item generating goodwill balance the period the period Closing balance
Jilin Chenming Paper Co., Ltd. 14,314,160.60 14,314,160.60
Shandong Chenming Panels
Co., Ltd. 5,969,626.57 5,969,626.57
Total 20,283,787.17 20,283,787.17
(2) Provision for impairment of goodwill
Goodwill arose from business combination not under common control during prior years.
On the balance sheet date, the management of the Company assessed the recoverable amount of cash-
generating unit which results in goodwill, in order to determine whether to make provision for impairment loss
accordingly. The recoverable amount of cash-generating unit was determined based on the estimated cash flow
in the financial budget for the next five years by the management, and the time value of currency was estimated
using the discount rate of 8.32% (2014: 8.32%). Results of impairment test showed that no provision for
impairment loss was necessary to be made for goodwill.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 103
IX Financial Report
VII. Notes to items of the Consolidated Financial Statements (Cont’d)
18. Long-term prepaid expenses
Unit: RMB
Opening Increase for Amortisation for Other
Item balance the period the period deductions Closing balance
Woodland expenses 161,793,438.27 248,312.00 3,374,802.28 158,666,947.99
Others 11,897,309.56 375,649.32 11,521,660.24
Total 173,690,747.83 248,312.00 3,750,451.60 170,188,608.23
19. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets before offsetting
Unit: RMB
Closing balance Opening balance
Deductible Deferred Deductible Deferred
temporary income tax temporary income tax
Item differences assets differences assets
15 Provision for
impairment of assets 370,069,879.65 86,863,890.57 340,772,888.98 79,501,792.10
INTERIM
REPORT Unrealised profit arising from
intra-group transactions 119,365,269.04 29,841,317.26 110,493,658.36 27,623,414.59
Deductible loss 2,152,727,006.05 479,052,642.49 1,858,290,693.47 451,519,833.69
Outstanding payables 120,278,937.99 23,324,851.69 106,430,519.52 20,362,747.08
Deferred income 114,613,170.77 21,839,815.71 184,861,975.76 41,259,848.98
Total 2,877,054,263.50 640,922,517.72 2,600,849,736.09 620,267,636.44
(2) The breakdown of unrecognised deferred income tax assets
Unit: RMB
Item Closing balance Opening balance
Deductible temporary differences 31,138,506.70 31,495,183.10
Deductible loss 448,088,199.65 457,830,039.77
Total 479,226,706.35 489,325,222.87
104 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
VII. Notes to items of the Consolidated Financial Statements (Cont’d)
19. Deferred income tax assets/deferred income tax liabilities (Cont’d)
(3) Expiry of deductible loss of unrecognised deferred income tax assets falls in the periods as follows
Unit: RMB
Year Closing amount Opening amount Remark
2015 37,886,444.37
2016 59,767,165.56 59,767,165.56
2017 116,596,801.25 116,596,801.25
2018 140,521,936.04 140,521,936.04
2019 103,066,581.34 103,057,692.55
2020 28,135,715.46
Total 448,088,199.65 457,830,039.77
20. Other non-current assets
Unit: RMB
Item Closing balance Opening balance
Entrusted loans 900,000,000.00 900,000,000.00
Payments for real estate 262,000,000.00 162,000,000.00 15
Payments for land 32,124,242.00 32,124,242.00 INTERIM
REPORT
Total 1,194,124,242.00 1,094,124,242.00
21. Short-term borrowings
Unit: RMB
Item Closing balance Opening balance
Pledged borrowings 521,292,800.00 584,082,701.72
Guarantee borrowings 8,753,350,934.25 9,628,636,791.99
Credit borrowings 13,079,057,558.25 10,257,577,099.21
Total 22,353,701,292.50 20,470,296,592.92
Notes on types of short-term borrowings:
Guarantee borrowings were the borrowings obtained by subsidiaries of the Group from financial institutions when
the Company acted as their guarantor.
The Group had no short-term borrowings due and outstanding.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 105
IX Financial Report
VII. Notes to items of the Consolidated Financial Statements (Cont’d)
22. Bills payable
Unit: RMB
Category Closing balance Opening balance
Bank acceptance bills 2,495,752,255.20 1,598,110,792.85
Total 2,495,752,255.20 1,598,110,792.85
Unpaid bills payable due as at the end of the period amounted to nil.
23. Accounts payable
(1) Particulars of accounts payable
Unit: RMB
Item Closing balance Opening balance
Within 1 year 2,345,811,085.05 2,965,990,209.36
1-2 years 341,297,068.70 228,866,967.30
2-3 years 118,166,058.24 112,980,731.55
Over 3 years 106,231,857.23 100,528,205.72
15
INTERIM Total 2,911,506,069.22 3,408,366,113.93
REPORT
(2) Significant accounts payable for over 1 year
Unit: RMB
Item Closing balance Opening balance
SHANDONG HEXIN CHEMICAL GROUP CO., LTD. 38,832,143.38 Temporarily
outstanding
QINGDAO XUHUI HYDROGEN PEROXIDE CO., LTD. 15,511,475.73 Temporarily
outstanding
TIANJIN GREEN-ANGEL RENEWABLE RESOURCE 12,918,968.18 Temporarily
RECOVERY CO., LTD. outstanding
SHANDONG XINLI POWER CO., LTD. 10,803,703.06 Temporarily
outstanding
Total 78,066,290.35
106 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
VII. Notes to items of the Consolidated Financial Statements (Cont’d)
24. Advance receipts
(1) Particulars of advance receipts
Unit: RMB
Item Closing balance Opening balance
Within 1 year 264,252,877.17 255,718,680.43
1-2 years 22,625,127.76 14,338,046.45
Total 286,878,004.93 270,056,726.88
(2) Significant advance receipts for over 1 year
Unit: RMB
Reason for being
outstanding or
not being
Item Closing balance carried forward
MOTAMED TEJART SEKONJ CO. 20,797,493.77 No delivery
requirement from
the counterparty 15
AVA CELLULOSE COMPANY 7,502,713.92 No delivery INTERIM
REPORT
requirement from
the counterparty
JUANCHENG HUAAO RENEWABLE ENERGY TECHNOLOGY CO., 1,550,000.00 No delivery
LTD. requirement from
the counterparty
WEIFANG LEHUI STARCH TRADING CO., LTD. 1,052,427.59 No delivery
requirement from
the counterparty
Total 30,902,635.28
25. Staff remuneration payables
(1) Particulars of Staff remuneration payables
Unit: RMB
Increase for Decrease for
Item Opening balance the period the period Closing balance
I. Short-term remuneration 152,531,447.83 409,344,287.81 381,493,460.83 180,382,274.81
II. Retirement benefit plan -
defined contribution scheme 1,382,519.32 56,541,207.89 57,443,658.56 480,068.65
III. Lay off welfare 12,075.15 564,419.60 564,419.60 12,075.15
Total 153,926,042.30 466,449,915.30 439,501,538.99 180,874,418.61
SHANDONG CHENMING PAPER HOLDINGS LIMITED 107
IX Financial Report
VII. Notes to items of the Consolidated Financial Statements (Cont’d)
25. Staff remuneration payables (Cont’d)
(2) Particulars of short-term remuneration
Unit: RMB
Increase for Decrease for
Item Opening balance the period the period Closing balance
I. Salaries, bonuses, allowance and
subsidies 96,539,011.57 335,998,682.19 310,256,845.87 122,280,847.89
II. Staff welfare 17,471,228.28 17,471,228.28
III. Social insurance premium 8,257,271.23 21,829,711.81 24,555,990.04 5,530,993.00
Of which: Medical insurance
premium 7,283,773.84 16,729,449.93 19,462,436.80 4,550,786.97
Work-related injury
insurance premium 5,552.06 3,174,029.94 3,171,186.37 8,395.63
Maternity insurance
premium 967,945.33 1,926,231.94 1,922,366.87 971,810.40
IV. Housing provident funds 7,688,871.47 27,519,381.70 26,353,098.53 8,855,154.64
V. Union funds and workers
education 21,241,698.02 6,525,283.83 2,856,298.11 24,910,683.74
VI. Other 18,804,595.54 18,804,595.54
15 Total 152,531,447.83 409,344,287.81 381,493,460.83 180,382,274.81
INTERIM
REPORT
(3) Particulars of defined contribution scheme
Unit: RMB
Increase for Decrease for
Item Opening balance the period the period Closing balance
1. Pension insurance 1,303,789.76 52,935,308.16 53,823,695.15 415,402.75
2. Unemployment insurance 78,729.56 3,605,899.74 3,619,963.40 64,665.90
Total 1,382,519.32 56,541,207.89 57,443,658.56 480,068.65
26. Taxes payable
Unit: RMB
Item Closing balance Opening balance
Value added tax 44,500,489.85 27,861,717.80
Business tax 3,210,165.89 5,993,146.04
Enterprise income tax 115,792,001.91 88,084,906.73
Individual income tax 713,362.03 14,783,877.45
Urban maintenance and construction tax 3,571,908.95 2,479,631.43
Educational surcharges and others 3,667,947.20 2,397,509.16
Land use tax 8,950,192.60 11,103,517.24
Property tax 5,373,963.50 6,146,726.60
Stamp duty 1,313,019.91 2,249,056.49
Total 187,093,051.84 161,100,088.94
108 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
VII. Notes to items of the Consolidated Financial Statements (Cont’d)
27. Interest payable
Unit: RMB
Item Closing balance Opening balance
Interest on corporate bonds 229,597,777.74 62,417,222.24
Interest on medium-term notes 119,527.72 27,455,083.26
Interest on privately placed bonds 16,675,000.00 60,175,000.00
Total 246,392,305.46 150,047,305.50
28. Dividend payable
Unit: RMB
Item Closing balance Opening balance
Dividend on ordinary shares 271,096,765.38
Total 271,096,765.38
29. Other payables
(1) Other payables by nature
15
INTERIM
REPORT
Unit: RMB
Item Closing balance Opening balance
Within 1 year 776,793,883.38 578,321,880.79
1-2 years 240,965,864.80 149,759,077.76
2-3 years 77,725,163.59 20,710,865.78
Over 3 years 49,616,536.82 34,999,060.28
Total 1,145,101,448.59 783,790,884.61
SHANDONG CHENMING PAPER HOLDINGS LIMITED 109
IX Financial Report
VII. Notes to items of the Consolidated Financial Statements (Cont’d)
29. Other payables (Cont’d)
(2) Significant other payables for over 1 year
Unit: RMB
Reason for being
outstanding or
not being
Item Closing balance carried forward
LIAONING BEIHAI INDUSTRIES GROUP CO., LTD. 33,070,700.00 Debt investments
as agreed by
shareholders of
subsidiaries
SHOUGUANG HENGTAI ENTERPRISE INVESTMENT 19,831,479.17 Debt investments
COMPANY LIMITED as agreed by
shareholders of
subsidiaries
STATE-OWNED SHOUGUANG QINGSHUIPO FARM 8,800,000.00 Temporarily
outstanding
CHINA RAILWAY NO. 10 ENGINEERING GROUP CO., LTD. 3,500,000.00 Temporarily
outstanding
15
INTERIM Total 65,202,179.17
REPORT
30. Non-current liabilities due within 1 year
Unit: RMB
Item Closing balance Opening balance
Long-term borrowings due within 1 year 1,229,998,100.00 1,099,968,900.00
Total 1,229,998,100.00 1,099,968,900.00
31. Other current liabilities
Unit: RMB
Item Closing balance Opening balance
Short-term commercial paper 3,632,120,000.00
Total 3,632,120,000.00
110 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
VII. Notes to items of the Consolidated Financial Statements (Cont’d)
32. Long-term borrowings
Unit: RMB
Item Closing balance Opening balance
Secured borrowings 2,655,265,709.91 2,790,688,300.00
Guarantee borrowings 1,181,832,068.00 1,274,978,809.25
Credit borrowings 1,859,961,805.54 1,412,592,035.94
Less: Long-term borrowings due within 1 year 1,229,998,100.00 1,099,968,900.00
Total 4,467,061,483.45 4,378,290,245.19
33. Bonds payable
(1) Bonds payable
Unit: RMB
Item Closing balance Opening balance
11 Chenming debt 1,995,862,156.18 1,993,899,974.62
12 Chenming debt 3,785,885,291.49 3,783,231,333.39
Total 5,781,747,447.67 5,777,131,308.01 15
INTERIM
REPORT
(2) Increase/decrease in bonds payable (excluding other financial instruments such as preference shares and
perpetual bonds classified as financial liabilities)
Unit: RMB
Amortisation of Redemption
Issue during Interest at premium/ during
Name of bond Par value Date of issue Term Amount Opening balance the period par value discount the period Others Closing balance
11 Chenming debt 2,000,000,000.00 2011/07/06 5 years 1,982,000,000.00 1,993,899,974.62 59,500,000.00 1,962,181.56 1,995,862,156.18
12 Chenming debt 3,800,000,000.00 2012/02/26 5 years 3,773,400,000.00 3,783,231,333.39 107,350,000.00 2,653,958.10 3,785,885,291.49
Total 5,755,400,000.00 5,777,131,308.01 166,850,000.00 4,616,139.66 5,781,747,447.67
SHANDONG CHENMING PAPER HOLDINGS LIMITED 111
IX Financial Report
VII. Notes to items of the Consolidated Financial Statements (Cont’d)
34. Special accounts payable
Unit: RMB
Increase for Decrease for
Item Opening balance the period the period Closing balance Reason
Huanggang Chenming integrated forestry, 161,983,516.66 161,983,516.66 Special government grant for
pulp and paper project the integrated forestry, pulp
and paper project
Total 161,983,516.66 161,983,516.66
35. Deferred income
Unit: RMB
Increase for Decrease for
Item Opening balance the period the period Closing balance Reason
Government grant 1,476,121,434.78 27,188,466.07 40,285,971.51 1,463,023,929.34
15 Total 1,476,121,434.78 27,188,466.07 40,285,971.51 1,463,023,929.34
INTERIM
REPORT Items in respect of government grant:
Unit: RMB
Amount
included in
New grants for non-operating Asset-related/
Liabilities item Opening balance the period income Closing balance income-related
Special subsidy funds for 1,001,623,109.60 28,148,226.98 973,474,882.62
environmental protection Asset-related
Project fund for National technological 5,832,271.70 246,226.65 5,586,045.05
support scheme Asset-related
Special subsidy fund for Songhuajiang 25,883,079.72 515,000.04 25,368,079.68
environmental protection project Asset-related
Modification of alkaline recycling system 4,700,609.23 4,700,609.23 Asset-related
Sewage treatment and water conservation 10,918,732.67 2,000,000.00 519,599.54 12,399,133.13
reconfiguration project Asset-related
Financial grants for technological 114,303,225.21 114,303,225.21
modification project Asset-related
Zhanjiang integrated forestry, pulp 266,329,668.36 6,145,803.05 260,183,865.31
and paper project Asset-related
Interest subsidy 30,907,617.74 792,408.33 30,115,209.41 Asset-related
Railway line change compensation 14,250,000.00 18,278,000.00 32,528,000.00 Asset-related
Others 1,373,120.55 6,910,466.07 3,918,706.92 4,364,879.7 Asset-related
Total 1,476,121,434.78 27,188,466.07 40,285,971.51 1,463,023,929.34
112 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
VII. Notes to items of the Consolidated Financial Statements (Cont’d)
36. Other Non-current liabilities
Unit: RMB
Item Closing balance Opening balance
Medium-term notes 1,092,946,061.11 1,091,270,700.55
Privately placed bonds 1,495,829,620.47 1,493,497,659.09
Total 2,588,775,681.58 2,584,768,359.64
37. Share capital
Increase/decrease for the period (+, -)
Issue of Shares converted
Item Opening balance new shares Bonus shares from reserve Others Subtotal Closing balance
RMB ordinary shares
(A shares) 1,113,278,456.00 1,113,278,456.00
Domestic listed foreign
shares (B shares) 470,923,511.00 470,923,511.00
Overseas listed foreign
shares (H shares) 352,203,500.00 352,203,500.00
Total number of shares 1,936,405,467.00 1,936,405,467.00
15
INTERIM
38. Capital reserves REPORT
Unit: RMB
Increase for Decrease for
Item Opening balance the period the period Closing balance
Capital premium (share premium) 5,478,814,366.20 1,403.40 5,478,815,769.60
Other capital reserves 670,322,507.21 670,322,507.21
Total 6,149,136,873.41 1,403.40 6,149,138,276.81
Note on the increase/decrease for the period: the Company received income arising from disposal of 463 odd lots for
equity distributions by China Securities Depository and Clearing Co., Ltd, with capital premium under capital reserves
up by RMB1,403.40.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 113
IX Financial Report
VII. Notes to items of the Consolidated Financial Statements (Cont’d)
39. Other comprehensive income
Unit: RMB
Amount for the period
Less: Transferred
from Other
Comprehensive
Income in prior Attributable
Incurred before periods to profit Attributable to minority
Income tax or loss during Less: income to parent shareholders
Item Opening balance for the period the period tax expenses company after tax after tax Closing balance
II. Other comprehensive
income to be
reclassified to profit
or loss in subsequent
periods 33,763,168.13 16,017,289.88 16,017,289.88 49,780,458.01
Exchange differences
on translation
of foreign operations 33,763,168.13 16,017,289.88 16,017,289.88 49,780,458.01
Total other
comprehensive
income 33,763,168.13 16,017,289.88 16,017,289.88 49,780,458.01
15 40. Surplus reserve
INTERIM
REPORT Unit: RMB
Increase for Decrease for
Item Opening balance the period the period Closing balance
Statutory surplus reserve 1,132,116,106.40 1,132,116,106.40
Total 1,132,116,106.40 1,132,116,106.40
Notes: Pursuant to the Companies Law and the Articles of Association, the Company transferred 10% of the net profit to the statutory surplus
reserves. There was no need to transfer if the accumulated amounts of the statutory reserves exceeded 50% of the Company’s registered
capital.
The Company can transfer the discretionary surplus reserve upon the transfer of statutory surplus reserve. Once approved, the
discretionary surplus reserve can be used to offset loss for prior years or increase the share capital.
41. Retained profit
Unit: RMB
Item The period The prior period
Retained profit as at the end of the prior year before adjustment 4,665,921,686.21 4,741,638,941.58
Retained profit as at the beginning of the year after adjustment 4,665,921,686.21 4,741,638,941.58
Plus: Net profit for year attributable to shareholders of the parent company 276,388,070.51 242,379,341.87
Dividend on ordinary shares payable 271,096,765.38 580,921,640.10
Retained profit as at the end of the period 4,671,212,991.34 4,403,096,643.35
114 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
VII. Notes to items of the Consolidated Financial Statements (Cont’d)
42. Revenue and operating costs
(1) Revenue and operating costs
Unit: RMB
Amount for the period Amount for the prior period
Item Revenue Costs Revenue
Principal activities 9,538,238,160.04 7,254,560,951.27 8,961,621,363.25 7,321,078,465.88
Other activities 180,459,517.72 115,823,710.04 120,399,215.76 57,920,162.43
Total 9,718,697,677.76 7,370,384,661.31 9,082,020,579.01 7,378,998,628.31
(2) Principal activities (by industry)
Unit: RMB
Amount for the period Amount for the prior period
Industry name Revenue Operating costs Revenue Operating costs
I. Machine-made paper 8,868,460,907.69 6,966,238,393.81 8,545,843,565.79 7,004,509,499.62
II. Electricity and steam 180,357,434.35 123,066,649.13 198,681,459.85 144,716,153.44
III. Construction materials 102,073,407.08 83,247,439.35 94,627,856.04 76,921,331.07
IV. Paper chemicals
V. Hotel
49,824,616.83
13,576,184.58
37,848,419.37
3,305,692.10
42,387,862.87
14,901,686.03
27,967,694.33
3,398,372.51
15
INTERIM
VI. Others 323,945,609.51 40,854,357.51 65,178,932.67 63,565,414.91 REPORT
Total 9,538,238,160.04 7,254,560,951.27 8,961,621,363.25 7,321,078,465.88
(3) Principal activities (by products)
Unit: RMB
Amount for the period Amount for the prior period
Product name Revenue Operating costs Revenue Operating costs
Light weight coated paper 326,115,470.96 279,821,845.40 348,081,994.57 316,335,859.11
Duplex press paper 2,180,961,187.95 1,657,673,349.40 1,441,112,796.55 1,134,551,552.38
Writing paper 107,445,824.99 86,557,656.08 82,378,061.06 62,326,659.34
Coated paper 2,096,633,394.41 1,599,511,246.83 2,185,259,143.15 1,820,063,708.25
Newsprint paper 478,061,938.68 373,295,620.43 519,433,041.74 385,119,601.80
Paperboard 134,207,618.47 133,491,068.66 375,085,910.27 356,635,077.75
White paper board 874,197,258.30 680,079,684.48 940,339,733.70 758,413,648.95
Other machine-made paper 2,670,838,213.93 2,155,807,922.53 2,654,152,884.75 2,171,063,392.04
Electricity and steam 180,357,434.35 123,066,649.13 198,681,459.85 144,716,153.44
Construction materials 102,073,407.08 83,247,439.35 94,627,856.04 76,921,331.07
Paper chemicals 49,824,616.83 37,848,419.37 42,387,862.87 27,967,694.33
Hotel 13,576,184.58 3,305,692.10 14,901,686.03 3,398,372.51
Others 323,945,609.51 40,854,357.51 65,178,932.67 63,565,414.91
Total 9,538,238,160.04 7,254,560,951.27 8,961,621,363.25 7,321,078,465.88
SHANDONG CHENMING PAPER HOLDINGS LIMITED 115
IX Financial Report
VII. Notes to items of the Consolidated Financial Statements (Cont’d)
42. Revenue and operating costs (Cont’d)
(4) Principal activities (by geographical areas)
Unit: RMB
Amount for the period Amount for the prior period
Region Revenue Operating costs Revenue Operating costs
Mainland China 7,791,146,285.63 5,690,144,127.24 7,170,230,465.09 5,592,480,772.13
Other countries and regions 1,747,091,874.41 1,564,416,824.03 1,791,390,898.16 1,728,597,693.75
Total 9,538,238,160.04 7,254,560,951.27 8,961,621,363.25 7,321,078,465.88
(5) Revenue from top 5 customers of the Company
Unit: RMB
Percentage of
Revenue from the total revenue
Name of customers principal activities of the Company
ANHUI TIME SOURCE CORPORATION 171,252,662.89 1.76%
GUANGZHOU QIRUN PAPER CO., LTD. 153,089,835.94 1.58%
SUN HING PAPER COMPANY LIMITED 128,615,773.07 1.32%
15 QINGZHOU BODA PAPER INDUSTRY TRADE CO., LTD. 93,684,212.54 0.96%
INTERIM SHANXI PRINTING MATERIALS COMPANY 92,748,188.10 0.95%
REPORT
Total 639,390,672.54 6.57%
43. Business taxes and surcharges
Unit: RMB
Amount for Amount for the
Item the period prior period
Business tax 19,400,227.56 7,697,521.89
Urban maintenance and construction tax 16,740,456.80 15,024,834.72
Educational surcharges 12,358,128.23 10,916,129.06
Water engineering fund 1,783,828.10 1,762,616.71
Others 951,335.97 99,365.40
Total 51,233,976.66 35,500,467.78
116 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
VII. Notes to items of the Consolidated Financial Statements (Cont’d)
44. Selling and distribution expenses
Unit: RMB
Amount for Amount for the
Item the period prior period
Wages and surcharges 66,708,475.58 57,340,886.65
Depreciation expenses 7,557,306.43 6,550,079.09
Office expenses 2,654,553.22 2,862,634.37
Utilities expenses 731,477.06 2,966,516.84
Transportation expenses 385,939,578.36 362,833,373.61
Cargo handling charges 8,831,019.32 10,095,500.94
Travel expenses 11,318,593.17 18,572,630.54
Business hospitality expenses 30,516,524.35 26,772,603.81
Warehouse expenses 1,237,873.64 2,282,782.55
Rental expenses 3,696,435.77 3,481,975.81
Others 31,881,986.81 30,834,827.29
Total 551,073,823.71 524,593,811.50
45. General and administrative expenses
Unit: RMB
15
Amount for Amount for the INTERIM
REPORT
Item the period prior period
Wages and surcharges 105,419,008.08 106,906,249.56
Labour insurance premium 16,700,430.65 14,862,809.78
Insurance premium 12,324,495.70 8,827,642.09
Depreciation expenses 28,262,329.34 26,501,576.92
Waste disposal expenses 9,665,816.77 12,254,789.79
Hospitality expenses 11,185,607.21 9,912,486.52
Amortisation of intangible assets 15,314,635.35 16,447,714.13
Technological development expenses 278,819,214.56 186,069,011.06
Tax 53,206,906.69 45,082,265.72
Production interruption loss 27,688,971.32 12,826,530.73
Others 95,666,553.59 60,442,805.33
Total 654,253,969.26 500,133,881.63
46. Finance expenses
Unit: RMB
Amount for Amount for the
Item the period prior period
Interest expenses 859,956,368.86 738,288,648.90
Less: interest income 135,953,439.72 110,234,151.75
Less: capitalised interest amount 65,915,001.73 108,362,453.17
Foreign exchange gains and losses 11,682,749.13 67,827,125.18
Others 75,701,602.57 39,092,619.31
Total 745,472,279.11 626,611,788.47
SHANDONG CHENMING PAPER HOLDINGS LIMITED 117
IX Financial Report
VII. Notes to items of the Consolidated Financial Statements (Cont’d)
47. Loss on impairment of assets
Unit: RMB
Amount for Amount for the
Item the period prior period
Loss on bad debts 35,368,247.15 16,314,635.37
Total 35,368,247.15 16,314,635.37
48. Gain on change in fair value
Unit: RMB
Amount for Amount for the
Source of gain on change in fair value the period prior period
Consumable biological assets measured at fair value -2,177,906.88 967,670.22
Total -2,177,906.88 967,670.22
15 49. Investment income
INTERIM Unit: RMB
REPORT
Amount for Amount for the
Item the period prior period
Income from long-term equity investments accounted for using the equity
method -2,145,031.45 -1,890,171.00
Investment gain on disposal of long-term equity investments -8,613,803.41
Income on external entrusted loans 48,777,777.77 31,722,222.23
Total 46,632,746.32 21,218,247.82
50. Non-operating income
Unit: RMB
Amounts included
in extraordinary
Amount for Amount for the gains and losses
Item the period prior period for the period
Total gain on disposal of non-current assets 7,042,678.94 82,529,609.62 7,042,678.94
Of which: Gain on disposal of fixed assets 7,042,678.94 2,063,679.26 7,042,678.94
Gain on disposal of intangible assets 80,465,930.36
Gain on debt restructuring 23,308.47 3,061,355.81 23,308.47
Government grants 58,824,671.63 101,272,967.41 58,824,671.63
Income from Wuhan relocation 35,817,460.19
Special payables for Jilin 23,895,319.77
Others 9,199,379.45 7,134,759.98 9,199,379.45
Total 75,090,038.49 253,711,372.78 75,090,038.49
118 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
VII. Notes to items of the Consolidated Financial Statements (Cont’d)
50. Non-operating income (Cont’d)
Government grants included in profit or loss for the period:
Unit: RMB
Amount for Amount for the
Grants item the period prior period Asset-related/income-related
Amortised deferred income 40,285,971.51 12,511,278.48 Asset-related
Grants income 18,538,700.12 88,251,830.80 Income-related
Value-added tax refund 509,758.13 Income-related
Total 58,824,671.63 101,272,867.41
51. Non-operating expenses
Unit: RMB
Amounts included
in extraordinary
Amount for Amount for the gains and losses
Item the period prior period for the period
Total loss on disposal of non-current assets 2,683,749.34 8,764,674.26 2,683,749.34 15
Of which: loss on disposal of fixed assets 2,683,749.34 8,764,674.26 2,683,749.34 INTERIM
REPORT
Loss on debt restructuring 2,437,729.14
Others 647,280.50 2,825,702.47 647,280.50
Total 3,331,029.84 14,028,105.87 3,331,029.84
52. Income tax expenses
(1) Particulars of income tax expenses
Unit: RMB
Amount for Amount for the
Item the period prior period
Income tax expenses for the period 191,848,281.24 89,458,831.33
Deferred income tax expenses -18,436,978.63 -55,425,786.21
Total 173,411,302.61 34,033,045.12
53. Other comprehensive income
For details, please see Note VII. 38.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 119
IX Financial Report
VII. Notes to items of the Consolidated Financial Statements (Cont’d)
54. Items on statements of cash flow
(1) Cash received relating to other operating activities
Unit: RMB
Amount for Amount for the
Item the period prior period
Finance support fund 18,538,700.12 88,938,673.30
Interest income 135,953,439.72 110,234,151.75
External security deposit of financial leasing companies 401,299,619.20
Open credit, and income from default penalty and fine 15,335,120.26 37,124,216.38
Total 571,126,879.30 236,297,041.43
(2) Cash paid relating to other operating activities
Unit: RMB
Amount for Amount for the
Item the period prior period
Expense and open credit 840,721,979.08 772,114,548.81
15 Net increase in principal receivables relating to finance lease business 3,354,524,658.13
INTERIM Total 4,195,246,637.21 772,114,548.81
REPORT
(3) Cash received relating to other investing activities
Unit: RMB
Amount for Amount for the
Item the period prior period
Compensation for demolition in Jilin 100,000,000.00
Government grants 30,104,688.00 30,000,000.00
Special subsidy funds 100,000,000.00
Interest income on entrusted loans 1,333,333.33
Total 31,438,021.33 230,000,000.00
(4) Cash paid relating to other investing activities
Unit: RMB
Amount for Amount for the
Item the period prior period
Entrusted loans to external entities 1,000,000,000.00
Total 1,000,000,000.00
120 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
VII. Notes to items of the Consolidated Financial Statements (Cont’d)
54. Items on statements of cash flow (Cont’d)
(5) Cash paid relating to other financing activities
Unit: RMB
Amount for Amount for the
Item the period prior period
Interest-free loan received by Jiangxi Chenming from the government 68,000,000.00
Total 68,000,000.00
(6) Cash paid relating to other financing activities
Unit: RMB
Amount for Amount for the
Item the period prior period
Acquisition of personal equity interest by Chenming Power 21,055,491.00
Increase in restricted bank deposits 1,767,785,037.29 624,525,528.54
Total 1,767,785,037.29 645,581,019.54
55. Supplementary information on cash flow statement
15
INTERIM
(1) Supplementary information on cash flow statement REPORT
Unit: RMB
Amount for Amount for the
Supplementary information the period prior period
1.Reconciliation of net profit as cash flows from operating activities:
Net profit 253,713,266.04 227,703,505.78
Plus: Provision for impairment of assets 35,368,247.15 16,314,635.37
Depreciation of fixed assets, consumption of oil and gas assets,
depreciation of productive biological assets 711,271,990.61 690,604,514.36
Amortisation of intangible assets 16,558,674.58 27,243,687.93
Amortisation of long-term prepaid expenses 3,502,139.60 2,788,501.58
Loss on disposal of fixed assets, intangible assets and other
long-term assets (“-” denotes gain) -4,358,929.60 -73,764,935.36
Loss on changes in fair value (“-” denotes gain) 2,177,906.88 -967,670.22
Finance expenses (“-” denotes gain) 859,956,368.86 738,288,648.90
Investment loss (“-” denotes gain) -46,632,746.32 -21,218,247.82
Decrease in deferred income tax assets (“-” denotes increase) -20,654,881.28 -55,636,757.52
Decrease in inventories (“-” denotes increase) 169,131,091.67 -422,542,327.27
Decrease in operating receivables (“-” denotes increase) -4,362,330,469.00 -27,817,205.10
Increase in operating payables (“-” denotes decrease) 159,541,706.08 184,699,910.50
Net cash flows from operating activities -2,222,755,634.73 1,285,696,261.13
2.Major investing and financing activities not involving
cash settlements:
3.Net change in cash and cash equivalents:
Closing balance of cash 725,178,041.37 911,352,831.14
Less: Opening balance of cash 976,096,861.30 726,532,928.96
Net increase in cash and cash equivalents -250,918,819.93 184,819,902.18
SHANDONG CHENMING PAPER HOLDINGS LIMITED 121
IX Financial Report
VII. Notes to items of the Consolidated Financial Statements (Cont’d)
55. Supplementary information on cash flow statement (Cont’d)
(2) Cash and cash equivalents composition
Unit: RMB
Item Closing balance Opening balance
I. Cash 725,178,041.37 976,096,861.30
Of which: Treasury cash 2,674,558.52 1,437,037.09
Bank deposit that can be used for payment at any time 722,503,482.85 974,659,821.21
II. Balance of cash and cash equivalent as at end of period 725,178,041.37 976,096,861.30
Notes: As at 30 June 2015, restricted monetary funds amounted to RMB6,267,346,362.09 (31 December 2014:
RMB4,499,561,324.80).
Restricted cash and cash equivalents is not included in cash.
56. Assets with restricted ownerships or right to use
Unit: RMB
Closing
Item carrying amount Reason for such restrictions
15 Monetary funds 6,267,346,362.09 As pledges for bank borrowings, guarantee
deposits for bank acceptance bills and letter of
INTERIM
REPORT credit deposits, and deposit reserves
Bills receivable 757,983,993.12 As collaterals for short-term borrowings, and bills
payable
Fixed assets 4,630,422,015.73 As collaterals for bank borrowings
Intangible assets 312,678,357.56 As collaterals for bank borrowings
Total 11,968,430,728.50
122 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
VII. Notes to items of the Consolidated Financial Statements (Cont’d)
57. 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 54,429,818.79 6.1136 332,762,140.15
EUR 2,163,428.35 6.8699 14,862,536.45
HKD 334,441.61 0.7886 263,744.00
JPY 233,385,826.00 0.050052 11,681,427.36
GBP 68,921.84 9.6422 664,558.17
Accounts receivable
Of which: USD 39,866,132.99 6.1136 243,725,590.63
EUR 2,080,726.47 6.8699 14,294,382.78
JPY 161,737,447.00 0.050052 8,095,282.70
Long-term borrowings
Of which:USD 384,466,000.00 6.1136 2,350,471,337.60
EUR 67,000,000.00 6.8699 460,283,300.00
Accounts payable
Of which: USD 47,050,786.30 6.1136 287,649,687.10
EUR 3,606,626.07 6.8699 24,777,160.46 15
Short-term borrowings INTERIM
REPORT
Of which: USD 977,890,454.76 6.1136 5,978,431,084.22
EUR 379,489,903.27 6.8699 2,607,057,686.47
JPY 1,218,680,000.00 0.050052 60,997,371.36
(2) Explanation on overseas operating entities (including major overseas operating entities), shall disclose their
overseas principal places of business, reporting currency and basis. Reasons shall be disclosed if there is any
change in the reporting currency.
√ Applicable Not applicable
Principal place Place of
Name of subsidiary of business incorporation Reporting currency
Chenming (HK) Limited Hong Kong, China Hong Kong, China USD
Chenming International Co., Ltd. Los Angeles, USA Los Angeles, USA USD
Chenming Paper Japan Co., Ltd. Tokyo, Japan Tokyo, Japan JPY
Chenming GmbH Hamburg, Germany Hamburg, Germany EUR
Chenming Paper Korea Co., Ltd. Seoul, Korea Seoul, Korea Korean Won
SHANDONG CHENMING PAPER HOLDINGS LIMITED 123
IX Financial Report
VIII. Change in scope of consolidation
1. Change in scope of consolidation due to other reasons
During the reporting period, the Company invested and established two companies namely Jinan Chenming Investment
Management Co., Ltd. and Chenming Paper Korea Co., Ltd.
In order to expand the customer base of the Finance Company, fully utilise the investment and financing functions of
Finance Company and enhance its profitability, the Company established a wholly-owned subsidiary, namely Jinan
Chenming Investment Management Co., Ltd., in Jinan. The registered capital of Jinan Chenming is RMB100.00 million,
and Jinan Chenming has been consolidated into the financial statements of the Company since January 2015.
In order to strengthen the overseas sales of the Company, further increase the market share of the Company’s products
in Korea and establish a wider and more comprehensive sales network, the Company established a wholly-owned
subsidiary, namely Chenming Paper Korea Co., Ltd., in Korea. The registered capital of Chenming Korea is US$1.00
million, and Chenming Korea has been consolidated into the financial statements of the Company since April 2015.
IX. Interest in other entities
1. Interest in subsidiaries
(1) Constitution of the Group
Principle place Place of Nature of
Name of subsidiary of business incorporation business Shareholding Acquisition
Direct Indirect
15 Wuhan Chenming Hanyang Paper Wuhan, China Wuhan, China Paper 50.93% Establishment
Holdings Co., Ltd. manufacturing
INTERIM
REPORT Shandong Chenming Power Supply Shouguang, China Shouguang, China Power 100.00% Establishment
Holdings Co., Ltd.
Hailaer Chenming Paper Co., Ltd. Hailaer, China Hailaer, China Paper 75.00% Establishment
manufacture
Haicheng Haiming Mining Co., Ltd. Haicheng, China Haicheng, China Mining 60.00% Establishment
Jiangxi Chenming Paper Co., Ltd. Nanchang, China Nanchang, China Paper 51.00% 49.00% Establishment
manufacture
Jilin Chenming Paper Co., Ltd. Jilin, China Jilin, China Paper 100.00% Merger and
manufacture acquisition
Shandong Grand View Hotel Co., Ltd. Shouguang, China Shouguang, China Catering 70.00% Establishment
Zhanjiang Chenming Pulp & Paper Co., Ltd. Zhanjiang, China Zhanjiang, China Paper 100.00% Establishment
manufacture
Chenming (HK) Limited Hong Kong, China Hong Kong, China Trade of paper 100.00% Establishment
Shouguang Chenming Modern Logistic Co., Ltd. Shouguang, China Shouguang, China Transportation 100.00% Establishment
Shouguang Chenming Art Paper Co., Ltd. Shouguang, China Shouguang, China Paper 75.00% Establishment
manufacture
Fuyu Chenming Paper Co., Ltd. Fuyu, China Fuyu, China Paper 100.00% Establishment
manufacture
Huanggang Chenming Pulp & Paper Co., Ltd. Huanggang, China Huanggang, China Pulp 100.00% Establishment
Huanggang Chenming Arboriculture Co., Ltd. Huanggang, China Huanggang, China Arboriculture 100.00% Establishment
Shouguang Meilun Paper Co., Ltd. Shouguang, China Shouguang, China Paper 100.00% Establishment
manufacture
Shouguang Shun Da Customs Declaration Co, Ltd. Shouguang, China Shouguang, China Customs 100.00% Establishment
declaration
Shandong Chenming Paper Sales Co., Ltd. Shouguang, China Shouguang, China Sales of paper 100.00% Establishment
Chenming International Co., Ltd. Los Angeles, the Los Angeles, the Trade of paper 100.00% Establishment
United States United States
Shouguang Chenming Hongxin Packaging Co., Ltd. Shouguang, China Shouguang, China Packaging 100.00% Establishment
Shouguang Chenming Industrial Logistics Co., Ltd. Shouguang, China Shouguang, China Logistics 100.00% Establishment
Shouguang Chenming Jiatai Property Shouguang, China Shouguang, China Property 100.00% Establishment
Management Co., Ltd. management
124 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
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
Name of subsidiary of business incorporation business Shareholding Acquisition
Direct Indirect
Shouguang Chenming Import and Shouguang, China Shouguang, China Import and 100.00% Establishment
Export Trade Co., Ltd. export trade
Shouguang Chenming Papermaking Shouguang, China Shouguang, China Machinery 100.00% Establishment
Machine Co., Ltd. manufacturing
Chenming Paper Japan Co., Ltd. Tokyo, Japan Tokyo, Japan Trade of paper 100.00% Establishment
Chenming GmbH Hamburg, Germany Hamburg, Germany Trade of paper 100.00% Establishment
Shouguang Hongxiang Printing and Shouguang, China Shouguang, China Printing and 100.00% Merger and
Packaging Co., Ltd. packaging acquisition
Shandong Chenming Paper Group (Fuyu) Fuyu, China Fuyu, China Sales of paper 100.00% Establishment
Sales Co., Ltd.
Shandong Chenming Group Finance Co., Ltd. Jinan, China Jinan, China Finance 80.00% 20.00% Establishment
Chenming Arboriculture Co., Ltd. Wuhan, China Wuhan, China Arboriculture 100.00% Establishment
Qingdao Chenming International Logistics Co., Ltd. Qingdao, China Qingdao, China Logistics 30.00% 70.00% Establishment
Zhanjiang Chenming Arboriculture Co., Ltd. Zhanjiang, China Zhanjiang, China Arboriculture 100.00% Establishment
Yangjiang Chenming Arboriculture Co., Ltd. Yangjiang, China Yangjiang, China Arboriculture 100.00% Establishment
Guangdong Huirui Investment Co., Ltd. Zhanjiang, China Zhanjiang, China Investment 51.00% Merger and
acquisition
Zhanjiang Meilun Pulp & Paper Co., Ltd. Zhanjiang, China Zhanjiang, China Pulp 100.00% Establishment
Zhanjiang Chenming New-style
Wall Materials Co., Ltd.
Zhanjiang, China Zhanjiang, China Wall materials 100.00% Establishment
15
Wuhan Chenming Qianneng Electric Power Co., Ltd. Wuhan, China Wuhan, China Electric Power 51.00% Establishment INTERIM
REPORT
Jilin Chenming Machinery Manufacturing Jilin, China Jilin, China Machinery 100.00% Establishment
Co., Limited manufacturing
Jilin Chenming New-style Wall Materials Co., Ltd. Jilin, China Jilin, China Wall Materials 100.00% Establishment
Shouguang Chenming Cement Co., Limited Shouguang, China Shouguang, China Cement 100.00% Establishment
Shandong Chenming Panels Co., Ltd. Shouguang, China Shouguang, China Panel 100.00% Merger and
acquisition
Shandong Chenming Floor Board Co., Ltd. Shouguang, China Shouguang, China Floor board 100.00% Merger and
acquisition
Nanchang Chenming Arboriculture Co., Ltd. Nanchang, China Nanchang, China Arboriculture 100.00% Establishment
Shouguang Hongyi Decorative Packaging Co., Ltd. Shouguang, China Shouguang, China Packaging 100.00% Merger and
acquisition
Shouguang Xinyuan Coal Co., Ltd. Shouguang, China Shouguang, China Coal 100.00% Merger and
acquisition
Shouguang City Run Sheng Wasted Shouguang, China Shouguang, China Purchase and 100.00% Merger and
Paper Recycle Co., Ltd. sales of waste acquisition
and obsolete
materials
Shouguang Wei Yuan Logistics Company Limited Shouguang, China Shouguang, China Logistics 100.00% Merger and
acquisition
Wuxi Song Ling Paper Co., Ltd. Wuxi, China Wuxi, China Paper 100.00% Merger and
manufacture acquisition
Shandong Chenming Investment Limited Jinan, China Jinan, China Investment 100.00% Establishment
Shandong Chenming Financial Leasing Co., Ltd. Jinan, China Jinan, China Financial leasing 100.00% Establishment
Jinan Chenming Investment Management Co., Ltd. Jinan, China Jinan, China Investment 100.00% Establishment
Chenming Paper Korea Co., Ltd. Seoul, Korea Seoul, Korea Export of paper 100.00% Establishment
SHANDONG CHENMING PAPER HOLDINGS LIMITED 125
IX Financial Report
IX. Interest in other entities (Cont’d)
1. Interest in subsidiaries (Cont’d)
(2) Major non-wholly owned subsidiaries
Unit: RMB
Gain or loss Dividend to
attributable to minority interests Closing balance
minority interests declared during of minority
Name of subsidiary Minority interests during the period the period interests
Wuhan Chenming Hanyang
Paper Holdings Co., Ltd. 49.07% -14,837,216.23 177,157,936.71
Shouguang Chenming
Art Paper Co., Ltd. 25.00% -1,949,570.64 30,018,349.08
Shandong Grand View
Hotel Co., Ltd. 30.00% -3,288,047.54 -26,280,915.72
Hailaer Chenming Paper
Co., Ltd. 25.00% -30,092.25 15,016,364.47
Haicheng Haiming
Mining Co., Ltd. 40.00% 96,000,000.00
Guangdong Huirui
Investment Co., Ltd. 49.00% -2,569,877.81 116,138,392.85
15
INTERIM
REPORT
126 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX. Interest in other entities (Cont’d)
1. Interest in subsidiaries (Cont’d)
(3) Key financial information of major non-wholly owned subsidiaries
Unit: RMB
Closing balance Opening balance
Non-current Non-current Non-current
Name of subsidiary Current assets assets Total assets Current liabilities liabilities Total liabilities Current assets Non-current assets Total assets Current liabilities liabilities Total liabilities
Wuhan Chenming Hanyang Paper
IX Financial Report
Holdings Co., Ltd. 1,897,937,549.37 1,414,171,464.27 3,312,109,013.64 2,718,187,881.19 276,052,413.57 2,994,240,294.76 1,559,637,606.19 1,419,006,574.94 2,978,644,181.13 2,621,126,071.09 8,505,849.24 2,629,631,920.33
Shouguang Chenming Art Paper Co., Ltd. 381,493,710.03 799,785,536.60 1,181,279,246.63 1,061,205,850.35 1,061,205,850.35 294,635,745.00 819,868,366.27 1,114,504,111.27 986,632,432.45 986,632,432.45
Shandong Grand View Hotel Co., Ltd. 17,091,070.57 231,050,604.10 248,141,674.67 335,744,727.08 335,744,727.08 11,107,146.29 229,688,471.01 240,795,617.30 317,438,511.24 317,438,511.24
Hailaer Chenming Paper Co., Ltd. 22,858,239.35 41,823,416.58 64,681,655.93 4,616,198.05 4,616,198.05 22,878,608.35 41,823,416.58 64,702,024.93 4,516,198.05 4,516,198.05
Haicheng Haiming Mining Co., Ltd. 10,289,303.69 519,681,543.45 529,970,847.14 289,970,847.14 289,970,847.14 7,833,989.36 486,500,236.27 494,334,225.63 254,334,225.63 254,334,225.63
Guangdong Huirui Investment Co., Ltd. 869,293,595.08 514,343.63 869,807,938.71 88,140,810.45 544,650,000.00 632,790,810.45 1,170,292,476.52 626,555.39 1,170,919,031.91 10,657,255.05 918,000,000.00 928,657,255.05
SHANDONG CHENMING PAPER HOLDINGS LIMITED
15
127
REPORT
INTERIM
IX Financial Report
IX. Interest in other entities (Cont’d)
1. Interest in subsidiaries (Cont’d)
(3) Key financial information of major non-wholly owned subsidiaries (Cont’d)
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
Wuhan Chenming Hanyang Paper
Holdings Co., Ltd. 504,601,887.41 -31,143,541.92 -31,143,541.92 -268,479,365.20 388,107,042.65 -43,072,801.22 -43,072,801.22 151,322,621.93
Shouguang Chenming Art
Paper Co., Ltd. 295,354,809.85 -7,798,282.54 -7,798,282.54 193,199,052.24 230,288,213.32 -588,613.87 -588,613.87 85,739,220.13
Shandong Grand View Hotel Co., Ltd. 16,833,253.63 -10,960,158.47 -10,960,158.47 89,407,600.37 17,937,917.48 -12,201,527.81 -12,201,527.81 3,917,533.83
Hailaer Chenming Paper Co., Ltd. -120,369.00 -120,369.00 -20,369.00 -473,111.30 -473,111.30 -23,111.30
Haicheng Haiming Mining Co., Ltd. 107,237,545.29 -3,663,018.96
Guangdong Huirui Investment Co., Ltd. -5,244,648.60 -5,244,648.60 6,427.64 -1,466,366.56 -1,466,366.56 -99,741,192.83
2. Interest in joint arrangements or associates
(1) Major joint ventures or associates
Accounting
15 method for
investments of
INTERIM Principle place Place of Nature of joint ventures
REPORT Name of joint venture or associate of business incorporation business Shareholding or associates
Direct Indirect
Shouguang Chenming Huisen New-style Shouguang, China Shouguang, China Construction 50.00% Equity method
Construction Materials Co., Ltd. materials
Arjo Wiggins Chenming Specialty Shouguang, China Shouguang, China Paper manufacture 30.00% Equity method
Paper Co., Ltd.
Jiangxi Jiangbao Media Colour Nanchang, China Nanchang, China Printing 21.16% Equity method
Printing Co. Ltd.
Wuhan Chenming Wan Xing Real Wuhan, China Wuhan, China Real estate 40.00% Equity method
Estate Co., Ltd. development
Nanchang, China Nanchang, China Handling and 40.00% Equity method
transportation of
Jiangxi Chenming Port Co., Ltd. goods and storage
Zhuhai Dechen New Third Board Zhuhai, China Zhuhai, China Investments 33.33% Equity method
Equity Investment Fund Company
(Limited Partnership)
128 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
IX. Interest in other entities (Cont’d)
2. Interest in joint arrangements or associates (Cont’d)
(2) Key financial information of major joint ventures
Unit: RMB
Closing balance/ Opening balance/
Amount for Amount for
the period the prior period
Shouguang Shouguang
Chenming Chenming
Huisen New-style Huisen New-style
Construction Construction
Materials Co., Ltd. Materials Co., Ltd.
Current assets 6,623,320.13 4,493,895.83
Of which: Cash and cash equivalents 822,875.37 2,450,044.70
Non-current assets 2,119,960.67 1,613,798.14
Total assets 8,743,280.80 6,107,693.97
Current liabilities 2,753,556.28 108,118.00
Total liabilities 2,753,556.28 108,118.00
Equity interest attributable to shareholders of the parent company 5,989,724.52 5,999,575.97
Share of net assets based on shareholding 2,994,862.26 2,999,787.99
Carrying amount of investment in joint ventures 2,994,862.26 2,999,787.99 15
Finance expenses -395.35 -7,037.86 INTERIM
Net profit -9,851.45 -424.03 REPORT
Total comprehensive income -9,851.45 -424.03
SHANDONG CHENMING PAPER HOLDINGS LIMITED 129
IX Financial Report
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/Amount for the period Opening balance/Amount for the prior period
Jiangxi Jiangbao Wuhan Chenming Jiangxi Jiangxi Jiangbao Wuhan Chenming
Media Colour Wan Xing Real Chenming Port Media Colour Wan Xing Real Jiangxi Chenming
Printing Co. Ltd. Estate Co., Ltd. Co., Ltd. Printing Co. Ltd. Estate Co., Ltd. Port Co., Ltd.
Current assets 35,686,323.18 1,542,869,553.88 25,765,613.78 34,431,533.02 1,157,970,131.09 8,473,980.97
Non-current assets 15,801,814.20 14,252,021.85 46,898,670.85 17,470,498.79 11,277,947.09 47,257,698.90
Total assets 51,488,137.38 1,557,121,575.73 72,664,284.63 51,902,031.81 1,169,248,078.18 55,731,679.87
Current liabilities 31,070,784.31 582,922,589.71 56,287,311.23 29,866,178.33 593,911,543.51 41,194,230.66
Non-current liabilities 924,006,853.14 518,810,800.00
Total liabilities 31,070,784.31 1,506,929,442.85 56,287,311.23 29,866,178.33 1,112,722,343.51 41,194,230.66
Equity interest attributable
to shareholders of the
parent company 20,417,353.07 50,192,132.88 16,376,973.40 22,035,853.48 56,525,734.67 14,537,449.21
Share of net assets based
on shareholding 4,320,311.90 20,076,853.15 6,550,789.36 4,662,786.59 22,610,293.87 5,814,979.68
Carrying amount of investment
in associates 4,320,311.90 20,076,853.15 6,550,789.36 4,662,786.59 22,610,293.87 5,814,979.68
Revenue 10,680,633.81 35,462,629.99 22,626,028.80 2,786,061.08
Net profit -1,540,788.41 -6,333,601.79 1,839,524.19 -389,395.82 -12,153,281.78 -532,550.79
15 Total comprehensive income -1,540,788.41 -6,333,601.79 1,839,524.19 -389,395.82 -12,153,281.78 -532,550.79
INTERIM
REPORT
(4) Excess loss of joint ventures or associates
Unit: RMB
Accumulated Unrecognised loss Accumulated
unrecognised loss (or share of unrecognised loss
incurred for net profit) as at the end
Name of joint venture or associate prior periods for the period of the period
Arjo Wiggins Chenming Specialty
Paper Co., Ltd. 7,308,869.16 7,308,869.16
130 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
X. Related parties and related party transactions
1. Parent company of the Company
Shareholding Voting right
of the parent of the parent
Place of Registered company in company in
Name of parent company incorporation Nature of business capital the Company the Company
Shouguang City Investment in paper manufacture, RMB 15.13% 15.13%
Shouguang Chenming electricity and steam, etc. with its 1,685.42 million
Holdings Co., Ltd self-owned funds
The ultimate controller of the Company is Shouguang State-owned Assets Supervision and Administration Office.
2. Subsidiaries of the Company
Please refer to Note IX. 1. Interest in subsidiaries for details of subsidiaries of the Company.
3. Joint ventures and associates of the Company
Please refer to Note IX. 2. Interest in joint ventures or associates for details of joint ventures and associates of the
Company.
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 venture or associate Relation with the Company 15
INTERIM
REPORT
Anhui Time Source Corporation An associate of the Company
Jiangxi Jiangbao Media Colour Printing Co. Ltd. An associate of the Company
4. Other related parties
Name of other related party Relation with the Company
Shouguang Hengtai Enterprise A company invested by the senior management
Investment Company Limited of the Company
Jiangxi Chenming Natural Gas Co., Ltd. A company indirectly controlled by the senior
management of the Company
Shouguang Hengtai Enterprise Investment Company Limited (“Hengtai Enterprise”) was a company under the joint
control of certain Directors, Supervisors and senior management of the Company held by Mr. Chen Hongguo, the
chairman and general manager of the Company, as to 60.36% and by Mr. Yin Tongyuan, the vice chairman, Mr. Gao
Junjie, the chairman of the Supervisory Committee, Ms. Li Xueqin, a deputy general manager, and other Directors,
Supervisors and members of the senior management as to 37.28%.
Jiangxi Chenming Natural Gas Co., Ltd. is a controlling subsidiary of Hengtai Enterprise.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 131
IX Financial Report
X. Related parties and related party transactions (Cont’d)
5. Related party transactions
(1) Purchase and sales of goods and rendering and receiving services
Table on purchase of goods and receipt of services
Unit: RMB
Whether the
Details of related Amount for Transaction transaction facility Amount for
Related party party transactions the period facility approved is exceeded the prior period
Jiangxi Chenming Natural Purchase of energy 75,389,778.88 320,000,000.00 No 0.00
Gas Co., Ltd.
Table on sales of goods and provision of services
Unit: RMB
Details of related Amount for Amount for
Related party party transactions the period the prior period
Anhui Time Source Corporation Sales of paper 200,365,615.54 148,237,093.34
Jiangxi Jiangbao Media Colour Sales of paper 123,096.60 0.00
Printing Co. Ltd.
15 (2) Guarantee
INTERIM
REPORT
The Company as guarantor
Unit: RMB
Amounts Starting date Expiry date Whether performance of
Party being guaranteed under guarantee of guarantee of guarantee guarantee is completed
Zhanjiang Chenming Pulp & Paper Co., Ltd. 73,363,200.00 13 November 2013 12 November 2015 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 61,136,000.00 16 June 2014 15 June 2016 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 50,000,000.00 27 October 2014 26 October 2015 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 183,408,000.00 28 October 2014 27 October 2015 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 25,911,461.98 28 October 2014 19 October 2015 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 50,000,000.00 11 November 2014 6 November 2015 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 30,568,000.00 21 November 2014 20 November 2015 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 75,000,000.00 19 December 2014 18 December 2015 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 122,272,000.00 30 December 2014 29 December 2015 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 55,000,000.00 6 January 2015 5 July 2015 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 50,000,000.00 15 January 2015 14 July 2015 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 80,000,000.00 15 January 2015 14 January 2016 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 10,000,000.00 27 January 2015 8 January 2016 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 10,000,000.00 28 January 2015 8 January 2016 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 80,000,000.00 31 January 2015 8 January 2016 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 30,000,000.00 17 February 2015 14 August 2015 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 40,000,000.00 10 March 2015 3 September 2015 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 150,000,000.00 26 March 2015 25 March 2016 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 50,000,000.00 30 March 2015 29 March 20116 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 50,000,000.00 13 April 2015 12 April 2015 No
132 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
X. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont’d)
(2) Guarantee (Cont’d)
Amounts Starting date Expiry date Whether performance of
Party being guaranteed under guarantee of guarantee of guarantee guarantee is completed
Zhanjiang Chenming Pulp & Paper Co., Ltd. 90,000,000.00 15 May 2015 14 May 2016 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 90,000,000.00 3 June 2015 27 October 2017 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 89,747,648.00 5 June 2015 27 October 2017 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 29 June 2015 28 June 2017 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 59,301,920.00 29 June 2015 28 June 2017 No
Jiangxi Chenming Paper Co., Ltd. 100,000,000.00 6 January 2015 5 January 2016 No
Jiangxi Chenming Paper Co., Ltd. 65,776,479.99 3 February 2015 31 July 2015 No
Jiangxi Chenming Paper Co., Ltd. 200,000,000.00 21 April 2015 20 April 2016 No
Huanggang Chenming Arboriculture Co., Ltd. 20,000,000.00 18 December 2014 17 December 2017 No
Huanggang Chenming Arboriculture Co., Ltd. 15,000,000.00 20 April 2015 20 April 2018 No
Shandong Chenming Paper Sales Co., Ltd. 1,693,256,388.06 9 January 2015 18 December 2015 No
Shandong Chenming Paper Sales Co., Ltd. 218,065,768.59 12 May 2015 11 November 2015 No
Shandong Chenming Paper Sales Co., Ltd. 670,000,000.00 6 March 2015 20 November 2015 No
Chenming (HK) Limited 219,783,920.00 2 April 2014 27 March 2016 No
Chenming (HK) Limited 185,792,304.00 21 August 2014 19 August 2015 No
Chenming (HK) Limited 212,753,280.00 22 August 2014 19 August 2015 No
Chenming (HK) Limited 183,408,000.00 16 September 2014 4 September 2015 No 15
Chenming (HK) Limited 183,408,000.00 24 October 2014 14 October 2015 No INTERIM
REPORT
Chenming (HK) Limited 282,876,272.00 1 December 2014 29 November 2015 No
Chenming (HK) Limited 275,112,000.00 3 December 2014 28 November 2015 No
Chenming (HK) Limited 182,674,368.00 17 December 2014 14 December 2015 No
Chenming (HK) Limited 79,904,752.00 7 January 2015 6 July 2015 No
Chenming (HK) Limited 97,206,240.00 14 January 2015 21 December 2015 No
Chenming (HK) Limited 54,250,875.40 23 January 2015 17 July 2015 No
Chenming (HK) Limited 893,087,000.00 13 February 2015 3 February 2016 No
Chenming (HK) Limited 90,481,280.00 10 February 2015 9 February 2016 No
Chenming (HK) Limited 116,769,760.00 3 February 2015 1 February 2016 No
Chenming (HK) Limited 186,174,290.00 10 March 2015 19 February 2016 No
Chenming (HK) Limited 170,365,643.38 26 March 2015 6 December 2015 No
Chenming (HK) Limited 96,594,880.00 26 March 2015 6 March 2015 No
Chenming (HK) Limited 240,446,500.00 23 April 2015 18 April 2016 No
Chenming (HK) Limited 103,048,500.00 27 April 2015 20 April 20116 No
Chenming (HK) Limited 192,888,682.56 7 May 2015 29 February 2016 No
Shandong Chenming Financial Leasing Co., Ltd. 458,212,500.00 22 May 2015 26 March 20118 No
Shouguang Meilun Paper Co., Ltd. 107,758,216.00 13 April 2015 10 October 2015 No
Shouguang Meilun Paper Co., Ltd. 119,308,072.28 12 May 2015 11 November 2015 No
Shouguang Meilun Paper Co., Ltd. 285,000,000.00 9 February 2015 8 August 2015 No
Guangdong Huirui Investment Co., Ltd. 40,000,000.00 28 November 2013 27 November 2015 No
SHANDONG CHENMING PAPER HOLDINGS LIMITED 133
IX Financial Report
X. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont’d)
(3) Related parties loans
Unit: RMB
Related party Loan amount Starting date Expiry date Explanation
Loan to
Wuhan Chenming Wan Xing 350,000,000.00 5 January 2014 5 January 2017 Expenditure for real estate
Real Estate Co., Ltd development to be undertaken by
the Company under agreement
6. Related party accounts receivable and accounts payable
(1) Accounts receivables
Unit: RMB
Closing balance Opening balance
Item Related party Book balance Bad debt provision Book balance Bad debt provision
Accounts receivable Anhui Time Source Corporation 56,493,413.75 2,824,670.69 53,968,115.20 2,698,405.76
Other receivables Arjo Wiggins Chenming Specialty 1,290,901.12 1,290,901.12 1,290,901.12 1,290,901.12
Paper Co., Ltd.
15 Wuhan Chenming Wan Xing 1,253,967,971.74 959,825,877.41
INTERIM Real Estate Co., Ltd.
REPORT
(2) Accounts payable
Unit: RMB
Closing book Opening book
Item Related party balance balance
Accounts payable Jiangxi Chenming Natural Gas 5,299,520.52
Co., Ltd.
Other payables Shouguang Hengtai Enterprise 24,478,614.71 23,572,279.17
Investment Company Limited
Shouguang Chenming Holdings 209,980,923.16
Co., Ltd
134 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
XI. Undertaking and contingency
1. Capital commitment
Item Closing balance Opening balance
Contracted but not yet recognised in the financial statements
Commitments in relation to acquisition and construction
of long-term assets 1,850,084,703.32 1,862,762,913.64
Huirui BT Project 2,600,000,000.00 3,000,000,000.00
Total 4,450,084,703.32 4,862,762,913.64
2. Operating lease commitments
As at the balance sheet date, the Company had entered into irrevocable operating lease contracts with external parties
as follows:
Item Closing balance Opening balance
Minimum lease payments under irrevocable operating leases:
The first year after the balance sheet date 11,459,656.80 16,835,729.16
The second year after the balance sheet date 14,226,725.64 14,161,003.48
The third year after the balance sheet date 13,959,231.66 14,443,483.94
In the years thereafter 552,996,957.89 560,010,105.37
Total 592,642,572.00 605,450,321.95
15
INTERIM
REPORT
SHANDONG CHENMING PAPER HOLDINGS LIMITED 135
IX Financial Report
XII. Notes to major financial statement items of the parent company
1. Accounts receivable
(1) Accounts receivable by category
Unit: RMB
Closing balance Opening balance
Book balance Bad debt provision Book balance Bad debt provision
Percentage Percentage
Type Amounts Percentage Amounts of provision Carrying amount Amounts Percentage Amounts of provision Carrying amount
Accounts receivable that are provided
for bad debts on portfolio basis
based on credit risk features 2,775,305,524.60 100.00% 3,908,290.41 0.14% 2,771,397,234.19 3,507,799,132.77 100.00% 3,979,959.83 0.11% 3,503,819,172.94
Total 2,775,305,524.60 100.00% 3,908,290.41 0.14% 2,771,397,234.19 3,507,799,132.77 100.00% 3,979,959.83 0.11% 3,503,819,172.94
Accounts receivable that are individually significant and are provided for bad debt separately as at the end of the
period:
Applicable √ Not applicable
Accounts receivable using ageing analysis for making bad debt provision in the portfolio:
Applicable √ Not applicable
15 Accounts receivable using percentage of amount outstanding for making bad debt provision in the portfolio:
INTERIM
REPORT
Applicable √ Not applicable
Accounts receivable using other methods for making bad debt provision in the portfolio:
(2) Top five accounts receivable based on closing balance by debtor
Unit: RMB
Name of entity Relation with the Company Amount Term Percentage of
total accounts
receivable
Shouguang Meilun Paper Co., Ltd. Related party within the 1,805,152,373.18 Within 1 year 65.04%
scope of consolidation
Shandong Chenming Paper Sales Co., Ltd. Related party within the 472,919,341.62 Within 1 year 17.04%
scope of consolidation
Shandong Chenming Paper Group Related party within the 239,319,704.07 Within 1 year 8.62%
(Fuyu) Sales Co., Ltd. scope of consolidation
Shouguang Chenming Art Paper Co., Ltd. Related party within the 236,535,172.70 Within 1 year 8.52%
scope of consolidation
Shandong Chenming Panels Co., Ltd. Related party within the 17,203,039.06 Within 1 year 0.62%
scope of consolidation
Total 2,771,129,630.63 99.85%
136 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
XII. Notes to major financial statement items of the parent company (Cont’d)
2. Other receivables
(1) Other receivables by types
Unit: RMB
Closing balance Opening balance
Book balance Bad debt provisions Book balance Bad debt provisions
Percentage Percentage
Type Amounts Percentage Amounts of provision Carrying amount Amounts Percentage Amounts of provision Carrying amount
`
Other receivables that are individually
significant and are provided for bad
debts separately 8,837,136.79 0.08% 8,837,136.79 100.00% 0.00 8,755,053.51 0.09% 8,755,053.51 100.00% 0.00
Other receivables that are provided
for bad debts on portfolio basis based
on credit risk features 10,959,686,408.38 99.89% 41,731,364.05 0.38% 10,917,955,044.33 9,344,901,892.47 99.78% 31,920,619.31 0.34% 9,312,981,273.16
Other receivables that are individually
insignificant but are provided for bad
debts separately 2,942,648.45 0.03% 2,942,648.45 100.00% 0.00 12,150,098.81 0.13% 12,150,098.81 100.00% 0.00
`
Total 10,971,466,193.62 100.00% 53,511,149.29 100.00% 10,917,955,044.33 9,365,807,044.79 100.00% 52,825,771.63 100.00% 9,312,981,273.16
`
Other receivables that are individually significant and are provided for bad debts separately as at the end of the
period:
Applicable √ Not applicable 15
INTERIM
Other receivables using ageing analysis for making bad debt provision in the portfolio: REPORT
√ Applicable Not applicable
Closing balance
Other Bad debt Percentage
Age receivables provision of provision
Items under within 1 year
Within 1 year 27,075,867.58 1,353,793.38 5.00%
Sub-total of within 1 year 27,075,867.58 1,353,793.38 5.00%
1 to 2 years 9,372,745.84 937,274.58 10.00%
2 to 3 years 8,628,205.57 1,725,641.11 20.00%
Over 3 years 49,494,440.21 49,494,440.21 100.00%
Total 94,571,259.20 53,511,149.28
Other receivables using percentage of balance for making bad debt provision in the portfolio:
Applicable √ Not applicable
Other receivables using other methods for making bad debt provision in the portfolio:
Applicable √ Not applicable
SHANDONG CHENMING PAPER HOLDINGS LIMITED 137
IX Financial Report
XII. Notes to major financial statement items of the parent company (Cont’d)
2. Other receivables (Cont’d)
(2) Top five other receivables based on closing balance by debtor
Unit: RMB
Percentage of
total closing Closing
balance of other balance of bad
Name of entity Nature Closing balance Age receivables debt provision
Shouguang Meilun Paper
Co., Ltd. Borrowings 6,090,273,078.55 Within 1 year 55.51%
Zhanjiang Meilun Pulp &
Paper Co., Ltd. Borrowings 1,007,015,000.00 Within 1 year 9.18%
Jilin Chenming Paper Co., Ltd. Borrowings 632,884,430.53 Within 1 year 5.77%
Zhanjiang Chenming Pulp
& Paper Co., Ltd. Borrowings 609,656,454.63 Within 1 year 5.56%
Shandong Grand View Hotel
Co., Ltd. Borrowings 316,131,279.22 1 to 2 years 2.88%
Total 8,655,960,242.93 78.90%
3. Long-term equity investments
15 Unit: RMB
INTERIM Closing balance Opening balance
REPORT Provision Provision
Item Book balance for impairment Book value Book balance for impairment Book value
Interest in subsidiaries 12,469,415,957.45 12,469,415,957.45 12,363,272,557.45 12,363,272,557.45
Interest in associates and 57,315,174.16 57,315,174.16 7,662,574.57 7,662,574.57
joint ventures
Total 12,526,731,131.61 12,526,731,131.61 12,370,935,132.02 12,370,935,132.02
138 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
XII. Notes to major financial statement items of the parent company (Cont’d)
3. Long-term equity investments (Cont’d)
(1) Interest in subsidiaries
Unit: RMB
Provision Closing balance
Increase for Decrease for for impairment of provision
Investee Opening balance the period the period Closing balance for the period for impairment
Shandong Chenming Power
Supply Holdings Co., Ltd. 157,810,117.43 157,810,117.43
Wuhan Chenming Hanyang
Paper Holdings Co., Ltd. 202,824,716.34 202,824,716.34
Hailaer Chenming Paper Co., Ltd. 12,000,000.00 12,000,000.00
Jiangxi Chenming Paper Co., Ltd. 822,867,646.40 822,867,646.40
Shandong Grand View Hotel Co., Ltd. 80,500,000.00 80,500,000.00
Jilin Chenming Paper Co., Ltd. 1,501,350,000.00 1,501,350,000.00
Zhanjiang Chenming Pulp & Paper
Co., Ltd. 3,000,000,000.00 3,000,000,000.00
Chenming (HK) Limited 183,472,902.00 183,472,902.00
Shouguang Chenming Modern
Logistic Co., Ltd. 10,000,000.00 10,000,000.00
Fuyu Chenming Paper Co., Ltd. 208,000,000.00 208,000,000.00
Shouguang Chenming Art Paper
Co., Ltd. 113,616,063.80 113,616,063.80
Huanggang Chenming Arboriculture
Co., Ltd. 70,000,000.00 70,000,000.00 15
Huanggang Chenming Pulp & INTERIM
Paper Co., Ltd. 200,000,000.00 200,000,000.00 REPORT
Shouguang Meilun Paper Co., Ltd. 4,646,349,570.28 4,646,349,570.28
Chenming International Co., Ltd. 19,861,955.00 19,861,955.00
Shouguang Shun Da Customs
Declaration Co, Ltd. 1,500,000.00 1,500,000.00
Shandong Chenming Paper Sales
Co., Ltd. 100,000,000.00 100,000,000.00
Shouguang Chenming Import
and Export Trade Co., Ltd. 10,000,000.00 10,000,000.00
Shouguang Chenming Jiatai Property
Management Co., Ltd. 1,000,000.00 1,000,000.00
Shouguang Chenming Papermaking
Machine Co., Ltd. 2,000,000.00 2,000,000.00
Shouguang Chenming Industrial
Logistics Co., Ltd. 10,000,000.00 10,000,000.00
Shouguang Chenming Hongxin
Packaging Co., Ltd. 1,000,000.00 1,000,000.00
Chenming Paper Japan Co., Ltd. 9,306,351.20 9,306,351.20
Haicheng Haiming Mining Co., Ltd. 144,000,000.00 144,000,000.00
Chenming GmbH 4,083,235.00 4,083,235.00
Shouguang Hongxiang Printing
and Packaging Co., Ltd. 2,730,000.00 2,730,000.00
Shandong Chenming Paper Group
(Fuyu) Sales Co., Ltd. 1,000,000.00 1,000,000.00
Shandong Chenming Group
Finance Co., Ltd. 800,000,000.00 800,000,000.00
Chenming Arboriculture Co., Ltd. 45,000,000.00 45,000,000.00
Qingdao Chenming International
Logistics Co., Ltd. 3,000,000.00 3,000,000.00
Chenming Paper Korea Co., Ltd. 6,143,400.00 6,143,400.00
Jinan Chenming Investment
Management Co., Ltd. 100,000,000.00 100,000,000.00
Total 12,363,272,557.45 106,143,400.00 12,469,415,957.45
SHANDONG CHENMING PAPER HOLDINGS LIMITED 139
IX Financial Report
XII. Notes to major financial statement items of the parent company (Cont’d)
3. Long-term equity investments (Cont’d)
(2) Interest in associates and joint ventures
Unit: RMB
Increase/decrease for the period
Investment
gain or loss Adjustment Distribution
recognised of other of Cash Closing balance
Additional Withdrawn under comprehensive Other change dividend or Provision for of provision
Investee Opening balance contribution contribution equity method income in interest profit declared impairment Others Closing balance for impairment
I. Joint venture
Shouguang Chenming Huisen
New-style Construction Materials 2,999,787.98 -4,925.72 2,994,862.26
Sub-total 2,999,787.98 -4,925.72 2,994,862.26
II. Associate
Arjo Wiggins Chenming Specialty
Paper Co., Ltd.
Jiangxi Jiangbao Media Colour
Printing Co. Ltd. 4,662,786.59 -342,474.69 4,320,311.90
Zhuhai Dechen New Third
Board Equity Investment Fund
15 Company (Limited Partnership) 50,000,000.00 50,000,000.00
INTERIM Sub-total 4,662,786.59 50,000,000.00 -342,474.69 54,320,311.90
REPORT
Total 7,662,574.57 50,000,000.00 -347,400.41 57,315,174.16
4. Revenue and operating costs
(1) Revenue and operating costs
Unit: RMB
Amount for the period Amount for the prior period
Item Revenue Costs Revenue Costs
Principal activities 2,871,789,573.21 2,315,085,299.99 3,488,961,465.88 2,677,166,590.01
Other activities 296,650,370.18 284,274,418.52 507,830,538.50 480,106,439.31
Total 3,168,439,943.39 2,599,359,718.51 3,996,792,004.38 3,157,273,029.32
(2) Principal activities (by industry)
Unit: RMB
Amount for the period Amount for the prior period
Industry Revenue Operating costs Revenue Operating costs
I. Machine-made paper 2,773,609,113.81 2,245,083,148.71 2,931,751,670.76 2,300,909,667.23
II. Electricity and steam 98,180,459.40 70,002,151.28 557,209,795.12 376,256,922.78
Total 2,871,789,573.21 2,315,085,299.99 3,488,961,465.88 2,677,166,590.01
140 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
XII. Notes to major financial statement items of the parent company (Cont’d)
4. Revenue and operating costs (Cont’d)
(3) Principal activities (by product)
Unit: RMB
Amount for the period Amount for the prior period
Product Revenue Operating costs Revenue Operating costs
Light weight coated paper 11,929,853.01 9,959,366.90 28,588,773.05 19,975,143.06
Duplex press paper 301,230,183.10 233,106,630.09 317,395,227.67 225,512,679.96
Writing paper 102,998,797.41 93,948,155.28 82,325,335.75 62,789,027.43
Coated paper 656,014,655.68 469,853,934.27 766,731,773.60 564,880,378.39
Newsprint paper 463,135,826.67 412,865,164.73 519,417,229.77 385,076,471.84
White paper board 592,872,630.70 501,798,298.12 940,339,733.70 758,413,648.95
Other machine-made paper 645,427,167.24 523,551,599.32 276,953,597.22 284,262,317.60
Electricity and steam 98,180,459.40 70,002,151.28 557,209,795.12 376,256,922.78
Total 2,871,789,573.21 2,315,085,299.99 3,488,961,465.88 2,677,166,590.01
(4) Principal activities (by region)
Unit: RMB
Amount for the period Amount for the prior period
15
INTERIM
Region Revenue Operating costs Revenue Operating costs REPORT
Mainland China 2,713,683,945.98 2,191,128,238.89 3,279,258,404.74 2,512,407,235.92
Other countries and regions 158,105,627.23 123,957,061.10 209,703,061.14 164,759,354.09
Total 2,871,789,573.21 2,315,085,299.99 3,488,961,465.88 2,677,166,590.01
(5) Revenue from top 5 customers of the Company
Unit: RMB
Percentage of
total revenue of
Name of customer Total revenue the Company
Shandong Chenming Paper Sales Company Limited 2,330,107,002.46 73.54
Shandong Chenming Paper Group (Fuyu) Sales Co., Ltd. 194,976,583.50 6.15
Chenming (HK) Limited 156,869,927.25 4.95
Shouguang Meilun Paper Co., Ltd. 64,299,294.04 2.03
Shouguang Chenming Art Paper Co., Ltd. 26,120,606.58 0.82
Total 2,772,373,413.83 87.49
SHANDONG CHENMING PAPER HOLDINGS LIMITED 141
IX Financial Report
XII. Notes to major financial statement items of the parent company (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 360,000,000.00 200,000,000.00
Income from long-term equity investments
accounted for using the equity method -347,400.41 -74,651.88
Investment gain on disposal of long-term equity investments -7,366,532.42
Others 49,679,999.99 35,473,222.23
Total 409,332,599.58 228,032,037.93
6. Others
XIII. Supplementary information
1. Breakdown of extraordinary gains and losses for the current period
15 √ Applicable Not applicable
INTERIM Unit: RMB
REPORT
Item Amount Remark
Profit from disposal of non-current assets 4,358,929.60
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 58,824,671.63
Gain and loss on debt restructuring 23,308.47
Gain or loss on external entrusted loans 48,777,777.77
Non-operating gains and losses other than the above items 8,552,098.95
Gain or loss on change in fair value of
consumable biological assets adopting fair
value method for follow-up measurements -2,177,906.88
Less: Effect of income tax 16,531,107.30
Effect of minority interest -98,078.33
Total 101,925,850.57
Notes for the Company‘s extraordinary gain or loss items as defined in the Explanatory Announcement on Information
Disclosure for Companies Offering Their Securities to the Public No.1 - Extraordinary Gains or Losses and 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
142 SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report
XIII. Supplementary information (Cont’d)
2. Returns on net assets and earnings per share
Earnings per share
Rate of return
on net assets
on weighted
average Basic Diluted
Profit for the reporting period basis (RMB per share) (RMB per share)
Net profit attributable to ordinary
shareholders of the Company 1.97% 0.14 0.14
Net profit after extraordinary gains and
losses attributable to ordinary shareholders
of the Company 1.24% 0.09 0.09
3. Difference in accounting data under domestic and overseas accounting standards
(1) Differences between the net profit and net assets disclosed in accordance with international accounting
standards and China accounting standards in the financial report
Applicable √ Not applicable
(2) Differences between the net profit and net assets disclosed in accordance with overseas accounting
standards and China accounting standards in the financial report 15
Applicable √ Not applicable INTERIM
REPORT
SHANDONG CHENMING PAPER HOLDINGS LIMITED 143
X Documents Available for Inspection
I. The financial statements signed and sealed by the legal representative, financial representative and head of the financial
department of the Company;
II. The interim report signed by the legal representative;
III. The original copies of all of the documents and announcements of the Company disclosed in the designated newspaper as
approved by China Securities Regulatory Commission during the reporting period;
IV. The interim report disclosed on the Stock Exchange of Hong Kong Limited;
V. Other related information.
Shandong Chenming Paper Holdings Limited
27 August 2015
15
INTERIM
REPORT
144 SHANDONG CHENMING PAPER HOLDINGS LIMITED
