Shandong Chenming Paper Holdings Limited 2018 Interim Report
Shandong Chenming Paper Holdings Limited
2018 Interim Report
August 2018
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
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”), the supervisors
(the “Supervisors”) and the 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 the
Report, and are jointly and severally responsible for the liabilities associated
with the Report.
Chen Hongguo, head of the Company, Hu Jinbao, head in charge of
accounting, and Zhang Bo, head of the accounting department (Accounting
Officer), declare that they warrant the truthfulness, accuracy and completeness
of the financial statements in the interim report.
All Directors were present at the Board meeting to consider and approve
this Report.
The Company is exposed to various risk factors such as macro-economic
fluctuation, adjustment of state policy and competition in the industry. Investor
should be aware of investment risks. For further details, please refer to the risk
exposures and the measures to be taken to address them as set out in Discussion
and Analysis of Operations.
The Company does not propose distribution of cash dividends or bonus
shares, and there will be no increase of share capital from reserves.
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
Table of Contents
2018 Interim Report............................................................................................错误!未定义书签。
I Important Notice, Table of Contents and Definitions ...................................错误!未定义书签。
II Company Profile and Key Financial Indicators ..........................................错误!未定义书签。
III Business Overview .........................................................................................错误!未定义书签。
IV Discussion and Analysis of Operations ........................................................错误!未定义书签。
V Material Matters .......................................................................................................................... 41
VI Changes in Share Capital and Shareholders ..............................................错误!未定义书签。
VII Preference Shares .........................................................................................错误!未定义书签。
VIII Directors, Supervisors and Senior Management .....................................错误!未定义书签。
IX Corporate Bonds ............................................................................................错误!未定义书签。
X Financial Report ..............................................................................................错误!未定义书签。
XI Documents Available for Inspection.............................................................错误!未定义书签。
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
Definitions
Item means Definition
Company, Group, Chenming Group or
means Shandong Chenming Paper Holdings Limited and its subsidiaries
Chenming Paper
Parent Company or Shouguang Headquarters means Shandong Chenming Paper Holdings Limited
Chenming Holdings means Chenming Holdings Company Limited
Shenzhen Stock Exchange means Shenzhen Stock Exchange
Stock Exchange means The Stock Exchange of Hong Kong
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.
Huanggang Chenming means Huanggang Chenming Pulp & Paper Co., Ltd.
Wuhan Chenming means Wuhan Chenming Hanyang Paper Holdings Co., Ltd.
Chenming (HK) means Chenming (HK) Limited
Haiming Mining means Haicheng Haiming Mining Company Limited
Jilin Chenming means Jilin Chenming Paper Co., Ltd.
Shouguang Meilun means Shouguang Meilun Paper Co., Ltd.
Chenming Sales Company means Shandong Chenming Paper Sales Company Limited
Finance Company means Shandong Chenming Group Finance Co., Ltd.
Financial Leasing Company means Shandong Chenming Financial Leasing Co., Ltd.
Shanghai Chenming means Shanghai Chenming Industry Co., Ltd.
the reporting period means The period from 1 January 2018 to 30 June 2018
the beginning of the year or the period means 1 January 2018
the end of the interim period or the period means 30 June 2018
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
II Company Profile and Key Financial Indicators
I. Company profile
Stock abbreviation 晨鳴紙業, 晨鳴 B Stock code 000488、200488
Stock abbreviation 晨鳴優 01, 晨鳴優 02 and 晨鳴優 03 Stock code 140003、140004、140005
Stock exchanges on which the
Shenzhen Stock Exchange
shares are listed
Stock abbreviation Chenming Paper Stock code 01812
Stock exchanges on which the
The Stock Exchange of Hong Kong Limited
shares are listed
Legal name in Chinese of the
山東晨鳴紙業集團股份有限公司
Company
Legal short name in Chinese
晨鳴紙業
of the Company (if any)
Legal name in English of the
SHANDONG CHENMING PAPER HOLDINGS LIMITED
Company (if any)
Legal short name in English of
SCPH
the Company (if any)
Legal representative of the
Chen Hongguo
Company
II. Contact persons and contact methods
Secretary to the Board Securities Affairs Representative Hong Kong Company Secretary
Name Yuan Xikun Zhao Xiaotong Poon Shiu Cheong
Correspondence No. 2199 East Nongsheng Road, No. 2199 East Nongsheng Road, 22nd Floor, World Wide House,
Address Shouguang City, Shandong Province Shouguang City, Shandong Province Central, Hong Kong
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
III. Other information
1. Contact methods of the Company
Whether the registered address, office address, postal code, website, email of the Company changed during the reporting period
□ Applicable √ Not applicable
There was no change of the registered address, office address, postal code, website and email of the Company during the reporting
period. Please refer to 2017 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
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
reporting period. Please refer to 2017 Annual Report for details.
IV. Major accounting data and financial indicators
Retrospective adjustment to or restatement of the accounting data for prior years by the Company
□ Yes √ No
Increase/decrease for the reporting
The corresponding period as compared to the
The reporting period
period of the prior year corresponding period of the prior
year
Revenue (RMB) 15,551,334,039.89 13,749,235,007.24 13.11%
Net profit attributable to shareholders of the Company
1,784,631,025.31 1,745,514,838.23 2.24%
(RMB)
Net profit after extraordinary gains or losses attributable
1,537,896,765.44 1,623,294,558.21 -5.26%
to shareholders of the Company (RMB)
Net cash flows from operating activities (RMB) 4,745,037,920.91 -4,112,941,768.39 215.37%
Basic earnings per share (RMB per share) 0.36 0.50 -28.00%
Diluted earnings per share (RMB per share) 0.36 0.50 -28.00%
Rate of return on net assets on weighted average basis 5.77% 7.24% -1.47%
Increase/decrease as at the end of
As at the end of the As at the end of the prior
the reporting period as compared to
reporting period year
the end of the prior year
Total assets (RMB) 107,076,479,252.92 105,625,096,076.92 1.37%
Net assets attributable to shareholders of the Company
27,677,164,106.02 27,778,529,074.90 -0.36%
(RMB)
Explanation:
① Net profit attributable to shareholders of the Company does not exclude the effect of interest of perpetual bonds and the
dividends of preference shares paid and declared to be paid. When calculating financial indicators such as earnings per share and the
rate of return on net assets on weighted average basis, the interest for perpetual bonds from 1 January 2018 to 30 June 2018 of
RMB172,143,397.26 and the dividend on preference shares paid and declared to be paid in 2018 of RMB562,816,006.80 are
deducted.
② Pursuant to the profit distribution plan of the Company for 2017 approved at the 2017 annual general meeting, based on the
total ordinary share capital of 1,936,405,467 shares as at the end of 2017, a cash dividend of RMB6 (tax inclusive) per 10 shares was
distributed to ordinary shareholders and a capitalisation issue to ordinary shareholders was made out of the capital reserves of 5
shares for every 10 shares held. The share capital of the Company increased by 968,202,733 shares. Corresponding adjustments were
also made to the earnings per share for the same period last year.
V. Differences in accounting data under domestic and overseas accounting standards
1. Differences between the net profit and net assets disclosed in accordance with international accounting
standards and China accounting standards in the financial report
□ Applicable √ Not applicable
There was no difference between the net profit and net assets disclosed in accordance with international accounting standards and
China accounting standards in the financial report during the reporting period.
2. Differences between the net profit and net assets disclosed in accordance with overseas accounting
standards and China accounting standards in the financial report
□ Applicable √ Not applicable
There was no difference between the net profit and net assets disclosed in accordance with overseas accounting standards and China
accounting standards in the financial report during the reporting period.
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
VI. Items and amounts of extraordinary gains or losses
√ Applicable □ Not applicable
Unit: RMB
Item Amount Explanation
Profit or loss from disposal of non-current assets (including write-off of asset
11,507,523.25
impairment provision)
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
239,364,403.83
accordance with a certain standard based on state policies) accounted for in profit or
loss for the current period
Except for effective hedging business conducted in the ordinary course of business of
the Company, gain or loss arising from the change in fair value of financial assets
held for trading and financial liabilities held for trading, as well as investment gains 61,750,000.00
from disposal of financial assets held for trading and financial liabilities held for
trading and available-for-sale financial assets
Non-operating gains and losses other than the above items 6,630,471.21
Gain or loss from changes in fair value of consumable biological assets subsequently
-23,973,841.55
measured at fair value
Less: Effect of income tax 48,149,545.22
Effect of minority interests (after tax) 394,751.65
Total 246,734,259.87 --
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.
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
III Business Overview
I. Principal operations of the Company during the Reporting Period
Whether the Company needs to comply with the disclosure requirements of specific industries
No
(I) Principal operations of the Company during the reporting Period
The Company is a large conglomerate principally engaged in pulp production, paper making, finance and fibre while also developing
forestry, mining and logistics. The Company is the only listed company with A shares, B shares, H shares and preference shares in issue in
the PRC, the first industrial and financing company in the industry having a finance company and a financial leasing company and among the
top 100 listed companies of the PRC, having maintained a leading position among its industry peers for over 20 consecutive years in terms of
its main indicators of corporate economic efficiency. The machine-made paper business is the principal business of the Company while the
machine-made paper business and financial leasing business are the main sources of revenue and profit of the Company. During the reporting
period, there was no significant change in the principal operations of the Company.
The Company is a leading player in the paper making industry in China. Since its establishment, the Company has abided by the
corporate mission of “revitalizing the national paper-making industry” and the corporate vision of building "a RMB100 billion company
with a history of 100 years". Deepening in its principal business of paper making, the Company has established production bases in
Shandong, Guangdong, Hubei, Jiangxi and Jilin with annual pulp and paper production capacity of over 10 million tonnes. It has the largest
integrated forestry, pulp and paper project with the most advanced technology in the world and dozens of pulp and paper production lines of
international advanced standards. The product mix of the Company has gradually diversified into eight major product series which focus on
high and middle end products, including high-end offset paper, coated paper, white paper board, light weight coated paper, household paper,
electrostatic copy paper, thermal paper and glassine paper, with each major product ranking among the best in terms of market share. The
Company has the most diversified and complete set of product offering among the paper-making companies of the PRC, with considerable
market competitiveness, bargaining power and risk resistance capacity.
The Company has scientific research institutions including the national enterprise technology centre, the postdoctoral working station as
well as state certified CNAS pulp and paper testing centre and has obtained over 150 national patents including 12 patents for invention, with
7 products selected as national new products and 35 products filling the gap in China. The Company has obtained 21 Science and
Technology Progress Awards above the provincial level and undertaken five national science and technology projects and 26 provincial
technological innovation projects. The Company has obtained the ISO9001 quality certification, ISO14001 environmental protection
certification and FSC-COC certification, leading among its industry peers.
Relying on strong capital strength of the Company and leveraging its excellent business project design ability, strong ability in credit
integration and outstanding risk control capability while giving full play to the advantages of internationalisation and market-oriented
operations, Chenming Leasing has been seeking the organic combination between industrial capital and financial capital and, on the basis of
serving the upper- and lower-stream of the paper making industry, actively provides financing and value-added service solutions to large
state-owned enterprises, listed companies, government financing platforms, quality private enterprises, new and high-tech enterprises,
schools and hospitals, thus greatly promoting the healthy and rapid development of the real economy.
(II) General information of the industries where the Company operated in during the reporting period
The paper making industry is an important basic raw materials industry which is closely related to the national economy and social
development. In recent years, the supply and demand of the paper making industry grew at a steady pace, creating a relatively stable
production and marketing environment. According to the 2017 Annual Report of the Paper Making Industry of China (《中國造紙業2017年
年度報告》), in 2017, there were approximately 2,800 companies engaged in the production and paper and paper board in the PRC, with a
nationwide paper and paper board production volume of 111,300,000 tonnes, representing a year-on-year increase of 2.53%; and a
consumption volume of 108,970,000 tonnes, representing a year-on-year increase of 4.59%.
Since the implementation of the “Thirteenth Five Year Plan”, the paper making industry has been subject to stricter environmental
requirements with elevated government focus on “clear water and green hills”. The successive implementation of environmental
protection inspections, licensing system for pollutant discharge and others reflected that more stringent environmental protection measures
will become a prolonged trend in the industry. Certain provinces and cities promulgated, among others, air pollution prevention programs
and major pollutant emission reduction programs, signalling enhanced supervision of local governments over the pollution discharge of
paper making companies. Driven by the supply-side reform and under the overlapping effect of stricter environment protection policies,
more severe limit on import quota of waste paper and closer inspection, cost pressure will force certain small and medium-sized enterprises
to exit the market, thereby further increasing the industry concentration ratio. On the other hand, leading enterprises, with obvious cost
advantages and high cost transferability, will enjoy further increase in profitability and gradual growth in market share. In particular, the
large leading enterprises having comprehensive environmental facilities with significant economies of scale will become the actual
beneficiaries under these environmental protection policies.
Since initiating the forestry, pulp and paper integration strategic layout since 2001, the Company has enjoyed relatively high wood pulp
self-sufficiency rate in the domestic paper making industry. On one hand, self-produced pulp enjoys significant cost advantage over
purchased wood pulp, which enables the gross profit of the Company’s paper products to consistently rank among the top of the industry;
on the other hand, the price of wood chips, the raw material for pulp making, is relatively stable, therefore, the procurement advantage of
bulk supplies and the application of ancillary logistics services have significantly reduced the logistics and transportation costs of raw
material and finished products, considerably increasing the Company’s cost advantage and quality stability.
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
II. Material Changes of Major Assets
1. Material Changes of Major Assets
Major assets Description
During the reporting period, the Company acquired 14.2742% equity interest in Wuhan Chenming and 30% equity interest in
Equity Shanghai Hongtai from minority shareholders, and disposed of equity investment of 50% in Guangdong Dejun and 30% in
Xuchang Chenming.
During the reporting period, the phase I of Haiming mining project of a subsidiary was reclassified as assets so fixed assets
Fixed assets increased by RMB582 million. As the shareholding in Xuchang Chenming decreased from 60% to 30%, Xuchang Chenming
was excluded from scope of consolidation, and fixed assets decreased accordingly.
During the reporting period, as the shareholding in Xuchang Chenming decreased from 60% to 30%, Xuchang Chenming was
Intangible assets
excluded from scope of consolidation, and intangible assets decreased accordingly.
During the reporting period, the phase I of Haiming mining project of a subsidiary was reclassified as assets so construction in
Construction in progress decreased by RMB582 million. Continued investment was made in the Huanggang integrated forestry, pulp and
progress paper project, the Meilun new cultural paper project and the newsprint machinery-to-cultural paper machinery transformation
project.
2. Major Assets Overseas
□ Applicable √ Not applicable
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 2018, the Group’s current ratio was 86.70%. The quick ratio was 75.88%. The gearing ratio was 72.95%. The
accounts receivable turnover ratio was 461.44% (Accounts receivable turnover ratio = turnover/weighted average accounts receivable
and net bills*100%). The inventory turnover ratio was 413.94% (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 2018, the total bank borrowings, corporate bonds, short-term commercial paper and medium-term notes and
financial management of the Group were RMB46,351 million, RMB2,097 million, RMB10,161 million and RMB1,920 million,
respectively (As at the end of the prior year: the total bank borrowings, corporate bonds, financial management and short-term
commercial paper of the Group were RMB46,368 million, RMB2,196 million, RMB250 million and RMB10,797 million,
respectively). As at 30 June 2018, the Group had monetary funds of RMB18,221 million (As at the end of the prior year:
RMB14,443 million) in total (For the breakdown of monetary funds, please refer to “Section X. 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 2018, the Group had
15,009 employees. The total staff remuneration for the first half of 2018 amounted to RMB636.7962 million (The Group had 13,579
employees in 2017. The total staff remuneration for 2017 amounted to RMB1,129.1552 million).
Major investment projects of the Company during the second half of 2018 will include Huanggang Chenming’s integrated
forestry, pulp and paper project, Shouguang City’s 400,000 tonne chemical pulp project, Haicheng Haiming’s magnesite mining
project, Shouguang’s 510,000 tonne high-end culture paper 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 2018, please refer to “Section X. VII. 62. Details of
assets with restricted ownership or right of use” in this report.
As at 30 June 2018, no contingent event was required to be disclosed by the Group.
IV. Analysis of Core Competitiveness
Whether the Company needs to comply with the disclosure requirements of specific industries
No
The Company is a leading player in the paper making industry of China. After innovation and development for more than half a
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
century, it has developed into a large conglomerate principally engaged in paper making, finance, pulp and fibre and mining
businesses while also involved in forestry, logistics, construction materials, and others. It is also the only listed company with A
shares, B shares and H shares and preference shares in issue in China and the first company in the paper making industry having a
finance company and a financial leasing company integrated with its industrial activities in China. Compared with other enterprises
in the industry, the Company has the following advantages:
1. Scale advantages
After years of development, the Company, being a leading player in the paper making industry in China, has achieved annual pulp
and paper production capacity of over 10 million tonnes and is capable to compete with international paper making enterprises in
scale. The large-scale centralised production and operation model has provided the Company with obvious economic benefits. The
Company also has strong market influence over raw material procurement, product pricing and industry policymaking.
2. Product advantages
While the production scale of the Company is expanding rapidly, its product mix also continues to optimise. In recent years, the
Company has built production lines for cultural paper such as high-end coated paper, high-end food packaging paper and high-end
white paper board. The product mix of the Company has gradually diversified into eight major product series which focus on high
and middle end products, including high-end offset paper, coated paper, white paper board, light weight coated paper, household
paper, electrostatic copy paper, thermal paper and glassine 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.
3. Advantages in technical equipment
Currently, the Company has the largest integrated forestry, pulp and paper project with the most advanced technology in the world
and dozens of pulp and paper production lines of international advanced standards. The Company’s overall technical equipment has
reached the advanced international level. The major production equipment has been imported from internationally renowned
manufacturers, including Valmet and Metso of Finland, Voith of Germany and TBC of the United States.
The technical equipment used by the Company generally reflects the characteristics of being technology-intensive and the integration
of mechanical and electrical in the paper making industry nowadays. The degassing technology, wet end chemical technology,
intelligent sheet lateral control technology, coating preparation technology, free-jet coating technology, multi-nip pressure balanced
calender technology and the technical processes independently developed by the Company of the pulp systems have all reached the
international advanced level.
4. Advantages in research and innovation and new product development
The Company is a high and new-technology enterprise and gives full play to its strong research capability. Supported by the national
enterprise technology centre and the post-doctoral working station, the Company has established a comprehensive intellectual
property system and put more and more efforts in technical innovation and scientific research and development to develop new
products with high technology contents and high added value as well as proprietary technologies. Meanwhile, the technology centre
of the Company has actively engaged in technical cooperation with schools, research institutions and international advanced
enterprises. The Company has obtained over 150 national patents including 12 patents for invention, with 7 products selected as
national new products and 35 products filling the gap in China. The Company participated in the formulation of 4 national standards
and was awarded honours including “China Patent Shandong Star Enterprise”, becoming the “green engine” of the transformation
and upgrading in the paper making industry and leading the direction of the latest and most advanced technology in the paper making
industry in China.
5. Funding advantages
The paper making industry is a capital-intensive industry, and funding is one of the most important factors in 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. Team advantages
The key management members and the core personnel of the Company remain stable. In the process of innovation and development
of the Company, an internal corporate culture developed by the stable core staff team favourable to the growth of the Company
consolidates the management experience specific to the industry, thus resulting in a team advantage blended with management and
culture. Meanwhile, the Company has attracted experienced professionals with financial, legal and financial management
backgrounds through its advanced management philosophy and ample room for development. The high quality and professional team
secures the sustainable development of the Company with a solid supply of talents.
7. Advantages in environmental governance capacity
In recent years, the Company and its subsidiaries have constructed the pollution treatment facilities including the alkali recovery
system, middle water treatment system, reclaimed water recovery system and black liquor comprehensive utilisation system. Relying
on scientific and technological progress and innovation, the Company comprehensively promoted clean production and resource
recycling. At the same time, the tightening of national environmental protection policies and supply-side structural reforms, as well
as new and old kinetic energy conversion and upgrading policies will clear the obstacles for the development of the paper making
industry while the replenishment and replacement of advanced production capacity will bring new blood and momentum into the
paper making industry, favouring industry concentration to establish a sound industry cycle.
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
IV Discussion and Analysis of Operations
I. Overview
During the reporting period, the Company established and implemented new management concept by adhering to the main theme of
“achieving growth amid stability” and committed itself to “team building, management enhancement, outstanding business performance and
good results”. It has completed various works on maintaining stable operation, promoting growth, adjusting structure, preventing risk
exposures and formulating favourable policies for employees.
In the first half of 2018, the Company completed the production of machine-made paper of 2.4051 million tonnes with sales of 2.2738
million tonnes and achieved revenue of RMB15,551 million, a year-on-year increase of 13.11%. The Company recorded operating costs of
RMB10,260 million, a year-on-year increase of 11.87%. Total profit and net profit attributable to equity holders of the Company were
RMB2,217 million and RMB1,785 million respectively, up by 6.65% and 2.24% from the prior year. The Company’s total assets amounted to
RMB107,076 million. The Company experienced stable development across businesses with ever improving management systems, which
were shown in the following aspects:
(I) Sales management
Facing the complex and ever-changing market conditions, the sales system persistently executed the decision and planning made by the
management of the Company, abided by the working theme of “solid foundation, new talents, guaranteed implementation and strict
evaluation” and broke new grounds in terms of price elevation, market construction and new product development. Through increased
business knowledge training and outward bound training, optimization and adjustment to the appraisal and incentive schemes and
market-based personnel integration, the Company enhanced team building and elevated team cohesiveness and strength. By way of
developing direct-sale customers, perfecting the channel building and holding annual customer signing conferences, the Company steadily
enhanced market construction. The Company enhanced management over accounts receivable, heightened prepayment operations,
standardised its customer credit management and improved its prevention against market risks.
(II) Product management
The Company plugged up management loopholes by improving the safety management system, enhancing safety education training,
identifying potential hazards and elevating process safety control; and ensured up-to-standard emission by optimizing operation technique,
enhancing the identification of potential environmental hazards, real-time supervision of pollutant emission and clarifying on the control
targets and standards. The machines were under stable and efficient operation during the year through strengthened management, control and
appraisal. The Company also conducted production capacity enhancement in its own pulp production, adjusted product structure, focused on
the development of products with high efficiency, optimised techniques and promoted the application of new technologies and raw materials
to improve efficiency.
(III) Finance and capital management
The Company constructed a financial business system with a more reasonable structure through active business expansion and strict
risk control. The Company ensured efficient liquidity of the Company’s capital through enhancing the planned management of revenue and
expenditure as well as dispatching and compiled analysis on the capital; increased the application of new types of direct financing
instruments, which boosted bank financing and lowered interest cost; maintained normal operation of the Company by way of, among others,
offshore financing against domestic guarantee and bill of exchange to conduct foreign exchange financing under low interest rate; promoted
the implementation of preferential policies; and stepped up efforts in cooperation with banks by entering into development financial
cooperation agreement with the China Development Bank and a bank-enterprise strategic cooperation framework agreement with
Guangdong Nanyue Bank, obtaining additional credit facilities of over RMB40.0 billion.
(IV) Project construction
The phase I of the magnesite mining project of Haiming Mining commenced operation in January 2018, principally engaged in the
production of high-purity magnesia. Weifang Sime Darby West Port and the newly constructed port in Huanggang have officially
commenced operation, which consistently lowers the logistics and transportation costs of raw materials and finished products. The
400,000-tonne chemical pulp project and 510,000 tonne high-end culture paper project of Shouguang Meilun and the 300,000 tonne wood
pulp project of Huanggang Chenming progressed smoothly according to the schedule, which is scheduled to commence operation before the
end of 2018. Viscose fibre and ancillary production facilities project of Huanggang Chenming and the cogeneration project are still in
nascent stages. The commencement of operation and implementation of the above projects will play a very important role in the
transformation and upgrading during the structural adjustment of the Company in elevating the vertical extension capacity of the Company,
promoting sustainable development and achieving the strategic objectives of the Company.
(V) Corporate management
The Company actively carried out process and information construction, enhanced working efficiency and promoted management
reform and system upgrade. The Company consistently strengthened its supervision and inspection as well as system improvement, enhanced
the management system and hierarchical management and further standardized internal management. Multiple sessions of special training
were organized to learn new concepts and new methods, elevating the management quality and business skills of the staff. The Company
made active efforts to improve its performance appraisal, remuneration incentive and the promotion systems, introduced outstanding talents
and inspired the enthusiasm and creativeness of the staff.
II. Analysis of principal operations
Please see “I. Overview” under “Discussion and Analysis of Operations” for relevant information.
Year-on-year changes in major financial information
11
Shandong Chenming Paper Holdings Limited 2018 Interim Report
Unit: RMB
During the reporting During the corresponding Increase/
Reason for the change
period period of the prior year decrease
Mainly due to the year-on-year
increase in the prices of
Revenue 15,551,334,039.89 13,749,235,007.24 13.11%
machine-made paper of the
Company.
Operating costs 10,259,884,918.86 9,171,066,988.49 11.87%
Selling and distribution expenses 605,463,325.71 641,498,275.35 -5.62%
Administrative expenses 972,856,522.65 856,354,999.17 13.60%
Mainly due to the year-on-year
Finance expenses 1,498,828,444.69 1,055,396,506.36 42.02% increase in the financing costs of
the Company.
Mainly due to the year-on-year
increase in the provision for
Income tax expenses 434,202,112.50 331,253,327.08 31.08% income tax expenses as some
companies turned around from
losses to profits.
Investments in research and
478,014,854.10 446,835,957.44 6.98%
development
Mainly due to the net returns of the
Net cash flows from operating
4,745,037,920.91 -4,112,941,768.39 215.37% financial leasing business of the
activities
Company.
Mainly due to the year-on-year
Net cash flows from investing
-470,806,697.24 -363,428,930.29 -29.55% increase in investment in
activities
construction in progress.
Net cash flows from financing -171.19 Mainly due to the increase in
-3,577,622,905.43 5,025,392,453.07
activities % restricted bank deposits.
Net increase in cash and cash
726,576,915.27 441,630,376.91 64.52%
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.
Components of principal operations
Unit: RMB
Increase/decrease
Increase/decrease Increase/decrease
of gross profit
of revenue as of operating costs
margin as
Gross profit compared to the as compared to
Revenue Operating costs compared to the
margin corresponding the corresponding
corresponding
period of the period of the
period of the
prior year prior year
prior year
By industry
Machine-made
13,160,393,022.74 9,406,171,649.42 28.53% 9.27% 9.00% 0.19%
paper
Financial leasing 1,271,712,904.26 145,937,245.46 88.52% 12.73% -28.09% 6.51%
By products
Duplex press
3,324,864,006.83 2,304,888,627.64 30.68% 23.48% 16.55% 4.12%
paper
Coated paper 2,574,542,786.42 1,785,563,297.08 30.65% -0.53% -2.91% 1.70%
White paper
3,486,996,727.76 2,841,735,861.42 18.50% 18.94% 42.93% -13.68%
board
Electrostatic
1,209,736,132.82 701,453,812.07 42.02% 13.78% -1.99% 9.32%
paper
Anti-sticking raw
681,182,446.30 403,184,572.06 40.81% 16.10% 2.92% 7.58%
paper
Financial leasing 1,271,712,904.26 145,937,245.46 88.52% 12.73% -28.09% 6.51%
By geographical segment
Mainland China 14,019,216,475.40 8,922,766,389.48 36.35% 16.95% 14.43% 1.40%
Other countries
1,531,781,930.08 1,353,506,642.35 11.64% -2.77% -1.45% -1.18%
and regions
12
Shandong Chenming Paper Holdings Limited 2018 Interim Report
III. Analysis of non-principal operations
□ Applicable √ Not applicable
IV. Assets and liabilities
1. Material changes of asset items
Unit: RMB
As at the end of the
As at the end of the reporting
corresponding period of the
period
prior year
Percentage
As a As a Description of major changes
change
percentage percentage
Amount Amount
of total of total
assets assets
Mainly due to the increase in deposits
Monetary funds 18,221,475,254.64 17.02% 12,541,497,475.48 13.67% 3.35% for the issuance of bills and letters of
credit, and borrowings.
Accounts
3,771,972,562.50 3.52% 3,767,714,992.67 4.11% -0.58%
receivable
Inventories 6,429,315,741.47 6.00% 6,057,467,324.08 6.60% -0.60%
Mainly due to the acquisition of 75%
Investment
4,750,494,168.51 4.44% 0.00% 4.44% equity interest in Shanghai Hongtai by
properties
the Company.
Long-term Mainly due to the investment in the
equity 401,425,440.97 0.37% 169,207,699.57 0.18% 0.19% equity interest in Ningbo Kaichen by
investments the Company.
Mainly due to the reclassification as a
Fixed assets 27,822,887,081.68 25.98% 28,536,783,322.01 31.10% -5.12%
result of the newsprint plant upgrade.
Mainly due to the continued
investment made in the Meilun
Construction in chemical pulp project, the 510,000
9,622,048,648.75 8.99% 5,054,138,263.16 5.51% 3.48%
progress tonne cultural paper project and the
Huanggang integrated forestry, pulp
and paper project.
Mainly due to the increase in working
Short-term
34,822,972,619.60 32.52% 31,686,575,360.39 34.53% -2.01% capital required for the production of
borrowings
the Company.
Long-term
7,206,918,851.77 6.73% 7,786,639,310.56 8.49% -1.76%
borrowings
Long-term
9,561,944,402.25 8.93% 9,573,697,226.65 10.43% -1.50%
receivables
2. Assets and liabilities measured at fair value
√ Applicable □ Not applicable
Unit: RMB
Profit or loss
Impairment
from change in Cumulative fair Purchases Disposal
provided
Item Opening balance fair value value change during the during the Closing balance
during the
during the charged to equity period period
period
period
13
Shandong Chenming Paper Holdings Limited 2018 Interim Report
Financial
assets
Consumable
biological 1,756,375,954.07 -23,973,841.55 75,500,956.76 76,793,558.03 293,219,430.75 1,515,976,239.80
assets
Total 1,756,375,954.07 -23,973,841.55 75,500,956.76 76,793,558.03 293,219,430.75 1,515,976,239.80
Financial
0.00 0.00
liabilities
Whether there were any material changes on the measurement attributes of major assets of the Company during the reporting period
□ Yes √ No
3. Restriction on asset rights as at the end of the reporting period
Unit: RMB
Item Carrying amount as at the end Reasons for such restriction
of the period
As deposits for bank acceptance bills, letters of credit and bank
Monetary funds 14,690,489,964.91
borrowings, and deposit reserves
As collateral for short-term borrowings, letters of guarantee and letters
Bills receivable 1,902,685,841.26
of credit
Fixed assets 7,882,378,100.81 As collateral for bank borrowings
Intangible assets 631,997,196.06 As collateral for bank borrowings and long-term payables
Investment property 4,750,494,168.51 As collateral for bank borrowings and long-term payables
Total 29,858,045,271.55
V. Analysis of Investments
1. Overview
√ Applicable □ Not applicable
Investments during the
Investments during the reporting
corresponding period of prior Change
period (RMB)
year (RMB)
8,232,854,389.46 6,933,152,584.60 18.75%
2. Material equity investments during the reporting period
√ Applicable □ Not applicable
Unit: RMB
Progress as Profit or loss
Lawsuit is Date of Disclosure
Name of Principal Form of Investment Source of Period of Product at the date Estimated from
Shareholding Partner(s) involved or disclosure index (if
investees activities investment amount fund investment type of balance return investment for
not (if any) any)
sheet the period
Beijing
Financial
Chenming A 17 May http://www.
leasing and Newly Self-owned Financial Not 30 January
Financial 1,000,000,000.00 100.00% wholly-owne 2018 to 16 No cninfo.com.
operation established funds leasing completed 2018
Leasing d subsidiary May 2048 cn
leasing
Co., Ltd.
Real estate
Shanghai development Shanghai 31 January
http://www.
Hongtai and Self-owned Xinhuangpu 1994 to 30 30 January
Acquisition 1,171,957,789.46 75.00% Real estate Completed No cninfo.com.
Real Estate operation funds Real Estate January -82,830,427.25 2018
cn
Co., Ltd. and property Co., Ltd. 2044
management
Shanghai Industrial 15
A Enterprise http://www.
Chenming investment, Capital Self-owned Not 17 April
4,000,000,000.00 100.00% wholly-owne September investment No cninfo.com.
Industry commercial increase funds completed -16,195,308.47 2018
d subsidiary 2017 to 14 etc. cn
Co., Ltd. consultation September
14
Shandong Chenming Paper Holdings Limited 2018 Interim Report
and property 2037
management
Business as
permitted by
the China
Banking
Regulatory
Shandong
Commission
Chenming A Corporate 27 April http://www.
pursuant to Capital Self-owned Not
Group 2,000,000,000.00 100.00% wholly-owne Long-term financial 102,249,269.8 No cninfo.com.
relevant increase funds completed 2018
Finance d subsidiary business 7 cn
laws,
Co., Ltd.
administrati
ve
regulations
and other
regulations
Aberdeen
Industrial
Limited,
Hong Kong
Dongfang
Huixin
Holdings
Production
Limited,
Wuhan and sales of
Hubei 29 June Machine-m
Chenming machine-ma
Xinhua ade paper 24 May http://www.
Hanyang de paper, Self-owned 2004 to 18
Acquisition 60,896,600.00 65.21% Printing and paper Completed No cninfo.com.
Paper paper board funds November 12,815,547.34 2018
Industry Park making cn
Holdings and paper 2048
Co., Ltd., machinery
Co., Ltd. making
Hubei
machinery
Changjiang
Publishing &
Media Group
Co., Ltd. and
Hubei Zhiyin
Printing Co.,
Ltd.
Total - - 8,232,854,389.46 - - - - - - - 16,039,081.49 - - -
3. Material non-equity investments during the reporting period
√ Applicable □ Not applicable
Unit: RMB
Reasons
Accumul Accum for
Industry Investme ated ulated failure
in which nt actual realised in
Fixed Date of Disclos
Form of the amount amount Estimat return meeting
assets Source Progres disclosu ure
Project name investme investme during invested ed as of schedul
investme of fund s re (if index
nt nt the as of the return the end ed
nt or not any) (if any)
project reporting end of of the progres
operates period reporting reportin s and
period g period estimate
d return
The
expecte
d
Forestry paper
Self-rais average http://w
integration Pulp 751,8 Not yet 2
Self-cons 3,234,80 ed and total ww.cni
project of Yes producti 20,35 92% 0 complet August
tructed 2,612.44 borrowin profit nfo.com
Huanggang on 6.99 ed 2013
gs per .cn
Chenming
annum
of the
project
15
Shandong Chenming Paper Holdings Limited 2018 Interim Report
will
amount
to
RMB35
0
million.
Upon
the
complet
ion of
constru
ction
and
comme
ncemen
510,000 tonne
t of
high-end Self-rais http://w
producti Not yet 18
cultural paper Self-cons Paper 700,746, 1,397,95 ed and ww.cni
Yes 37.17% on of 0 complet Februar
project of tructed making 887.09 7,131.33 borrowin nfo.com
the ed y 2017
Shouguang gs .cn
project,
Meilun
the
expecte
d profit
will
amount
to
RMB30
8
million.
Upon
the
complet
ion of
constru
400,000 tonne ction
Self-rais http://w
chemical pulp Pulp 533,04 and Not yet 21
Self-cons 2,335,01 ed and ww.cni
project of Yes producti 4,387.0 53.35% comme 0 complet March
tructed 5,663.33 borrowin nfo.com
Shouguang on 1 ncemen ed 2014
gs .cn
Meilun t of
producti
on of
the
project,
the
16
Shandong Chenming Paper Holdings Limited 2018 Interim Report
expecte
d total
profit
will
amount
to
RMB41
0
million.
Newsprint
paper
machinery-to-c
Paper
ultural paper Self-rais
making Not yet Not
machinery Self-cons 1,131,23 1,131,23 ed and
Yes and pulp 99% complet applica
transformation tructed 2,128.35 2,128.35 borrowin
producti ed ble
and ancillary gs
on
pulp
production line
transformation
3,116,84 8,099,00
Total -- -- -- -- -- -- -- --
3,759.44 7,535.45
4. Financial asset investment
(1) Security investments
□ Applicable √ Not applicable
The Company did not have any security investments during the reporting period.
(2) Derivatives investments
□ Applicable √ Not applicable
The Company did not have any derivative investments during the reporting period.
VI. Disposal of material assets and equity interest
1. Disposal of material assets
□ Applicable √ Not applicable
The Company did not dispose of any material asset during the reporting period.
2. Disposal of material equity interest
√ Applicable □ Not applicable
17
Shandong Chenming Paper Holdings Limited 2018 Interim Report
Net profit
contribution Ratio of net
Carried out
to the profit Relationship
on schedule
Company contribution with Relevant
Effect of Related or not, if
Transaction from the to the Pricing basis counterparty equity title
Counterpart Equity Disposal disposal on party not, the Disclosure Disclosure
consideration beginning of Company of of disposal (ies) (in case fully
y(ies) disposed of date the transaction reasons and date index
(RMB’0,000) the period up disposal of of equity of related transferred
Company or not measures
to the equity over party or not
taken by the
disposal date total net transaction)
Company
(RMB’0,000 profit (%)
)
The disposal
can
effectively
increase the
Company's
cash flow,
which
enables the
Company to
Shanghai
concentrate
Zhongneng Guangdong
on capital http://www.
Enterprise Dejun 16 April Not related Disposal 17 April
263,404.14 6,175 advantages, 2.94% Fair value No Yes cninfo.com.
Developmen Investment 2018 party completed 2018
better cn
t (Group) Co., Ltd.
support the
Co., Ltd.
development
of
competitive
businesses
and further
enhance
business
performance
.
VII. Analysis of major subsidiaries and investees
√ Applicable □ Not applicable
Major subsidiary and investees accounting for over 10% of the net profit of the Company
Unit: RMB
Name of Type of Principal Registered Operating
Total assets Net assets Revenue Net profit
company company activities capital profit
Production
Zhanjiang and sale of
Chenming pulp, duplex 5,550,000,00 22,116,965,5 8,509,589,25 4,916,442,92 967,797,04
Subsidiary 835,494,862.20
Pulp & Paper press paper, 0 12.62 0.94 7.85 3.54
Co., Ltd. electrostatic
paper
Production
and sale of
Shouguang
coated paper 3,000,000,00 13,434,044,2 4,648,850,05 2,419,640,79 56,923,629
Meilun Paper Subsidiary 52,638,122.17
and 0 46.36 5.13 1.26 .15
Co., Ltd.
household
paper
Shandong
Chenming
Financial 7,700,000,00 34,737,883,6 9,786,973,96 1,372,947,13 599,082,56
Financial Subsidiary 467,623,153.33
leasing 0 85.37 8.68 6.35 9.68
Leasing Co.,
Ltd.
Jiangxi Production 2,038,116,00 6,200,304,56 2,450,235,15 1,612,275,82 69,833,747
Subsidiary 59,566,481.48
Chenming and sale of 0 6.80 6.02 2.43 .64
18
Shandong Chenming Paper Holdings Limited 2018 Interim Report
Paper Co., light weight
Ltd. paper and
white paper
board
Acquisition and disposal of subsidiaries during the reporting period
√ Applicable □ Not applicable
Methods to acquire and dispose of Impact on overall production and
Name of companies
subsidiaries during the reporting period operation and results
Beijing Chenming Financial Leasing Co., Ltd. Newly established No effect
Acquisition of equity interest held by
Shanghai Hongtai Real Estate Co., Ltd. No effect
minority shareholders
Net profit increased by RMB11.66
Xuchang Chenming Paper Co. Ltd. Equity transfer
million.
Wuhan Chenming Hanyang Paper Holdings Acquisition of equity interest held by
No effect
Co., Ltd. minority shareholders
VIII. Structured entities controlled by the Company
□ Applicable √ Not applicable
IX. Estimate of the operating results from January to September 2018
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
□ Applicable √ Not applicable
X. Risk exposures of the Company and the measures to be taken
1. Risk on paper making industry
Policy risk
The paper making industry is a basic raw materials industry and its growth has been faster than the average growth of the
national economy in recent years. However, the paper making industry’s profitability is closely correlated to the economic cycle, and
the industry is therefore a cyclical industry fluctuating with the national macroeconomic performance, which will further affect the
profitability of the Company.
Hence, following the principles of scientific development and quality and efficiency enhancement, the Company will
comprehensively improve its industrial structure and regional layout through the integration between its production and manufacture
segment and financial services segment, and incorporation of smart technology into its industrial activities. The Company will
emphasise on the development of leading businesses including paper making, finance and forestry so as to construct an efficient
industrial system with synergies.
Market fluctuation risk
With the rapid growth of the national economy, economic globalisation and China’s accession to the WTO, China’s paper
19
Shandong Chenming Paper Holdings Limited 2018 Interim Report
making industry has been facing increasingly fierce competition. Leveraging the strength and capital accumulated over the years,
domestic enterprises have further expanded their sizes and improved their technological levels and product quality. Well-known
paper making enterprises overseas have also directly set up production bases in China through sole proprietorship or joint ventures so
as to participate in the domestic market competition by virtue of their advantages in size and technology. Besides, tariff reduction on
China after accession to the WTO has also further intensified the impact on the international market.
Hence, the Company will strive to enhance the quality of paper products and achieve the target of establishing a layout for
high-end paper industry so as to increase the proportion of high-end paper. In recent years, the Company has been expanding its
business size and optimising its product mix and has set up a few production lines for high-end paper. A diversified and high-end
product mix enables the Company to spread market risk and strengthen the resistance towards market volatility. Besides, as high-end
products have better profit margins, the Company can increase the proportion of high-end products through consistent improvement
in product mix, thereby enhancing its profitability and comprehensive competitiveness.
Risk of overcapacity and slowdown in demand
Overcapacity is a prominent problem in the paper making and paper product industry in China such that there has been fierce
competition among enterprises. Since 2013, affected by slowdown in the macroeconomic growth, the demand in paper making
industry has been weak. At the same time, as China has encouraged energy conservation and emission reduction, the backward
production capacity will be phased out, and the new projects will significantly realise economies of scale. By virtue of the economies
of scale in the paper making industry, the production capacity of individual paper making projects under construction and planning
for construction in China is large, which affects the demand and supply relationship in the whole paper making industry.
Hence, the Company will upgrade its equipment and its technological level, expand its product mix, improve its product quality
and focus on the research and development of high-end products so as to improve its competitiveness.
Risk of price fluctuation of raw materials
The major raw materials used by the Company are wood pulp and waste paper. The market prices of wood pulp and waste paper
fluctuate significantly. The market price fluctuation of raw material has significantly affected the production costs of the Company.
In addition to intensified market competition resulting from surging capacity in the industry in recent years, the increases in prices of
a number of paper products were not in line with the increases in prices of raw materials. 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 the Zhanjiang Chenming pulp project, the Huanggang Chenming pulp project and the Shouguang chemical pulp
project, thereby eliminating the limitations of upstream resources on the Company’s development and enhancing the Company’s
sustainable development.
Risk of change in environmental protection policies
China has been raising the standards for environmental protection in recent years. The new Environmental Protection Law took
effect on 1 January 2015. More stringent environmental protection policies have been implemented in the paper making industry. 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. A higher emission standard is bound to increase the Company’s environmental
protection costs and a high entry standard may result in the slowdown of scale expansion.
The Company always strives to achieve harmonious development with energy conservation and emission reduction. The
Company will endeavour to develop the recycling economy through waste exchange and recycling and strive to maximise its
resource utilisation. Meanwhile, the Company will make greater efforts to construct environment friendly projects and strive to
achieve its waste emission target.
2. Risk on financial leasing business
Policy risk
Recently, the financial leasing business is regulated by the commerce departments at different levels instead of being directly
regulated by the People‘s Bank of China or China Banking Regulatory Commission. The financial leasing industry in China is still at
20
Shandong Chenming Paper Holdings Limited 2018 Interim Report
the exploration stage with incomplete laws and regulations. If there is any material adjustment or change in national or local policies
for the financial leasing industry, the Company’s financial leasing business may be adversely affected, in turn harming the
Company’s profitability.
In September 2015, the General Office of the State Council promulgated the Guiding Opinions on Accelerating the Development
of Financial Leasing Industry, which formulated comprehensive systematic planning on accelerating the development of the financial
leasing industry. The financial leasing industry embraced a rare opportunity for leap-forward development. In February 2016, the
General Office of People’s Government of Shandong Province promulgated the Opinions of the General Office of People’s
Government of Shandong Province on Accelerating the Development of Financial Leasing Industry by Implementing Document Guo
Ban Fa [2015] No. 68, formulating specific measures to refine policy measures and ensure the measures being carries out properly,
which provided actual policy support for the development of the financial leasing industry in Shandong Province.
Liquidity risk
In a market economy, the macroeconomic operation tends to be in cycles and the Company is inevitably affected by those
cycles. At the same time, there is fierce competition in the financial industry and the interest margin is a main source of income for
the financial leasing business. The market interest rate is affected by the benchmark interest rate of the People’s Bank of China, the
macroeconomic environment, market demand and supply and other factors, bringing uncertainties to the fluctuation of the market
interest rate, which in turn causes uncertainties in revenue from the financial leasing business.
Hence, following the principles of scientific development and quality and efficiency enhancement, the Company will
comprehensively improve its industrial structure and regional layout through the integration between its production and manufacture
segment and financial services segment, and incorporation of smart technology into its industrial activities. The Company will
emphasise on the development of leading businesses including paper making, finance and forestry so as to construct an efficient
industrial system with synergies.
Credit risk
The Company may suffer from loss if the lessees of its financial leasing business cannot make full rental payment on time due to
any reason and there are abuses on equipment or any other short-term behaviour. Although the risk of such rental being
unrecoverable is minimal, the Company will also make bad debt provision as required under its accounting policy. If such amounts
cannot be recovered on time, the Company may be exposed to risk of bad debts.
The stringent risk management measures of Chenming Leasing provide comprehensive risk prevention and management for the
Company’s projects. Besides, the Company usually cooperates with state-owned enterprises and local governments, so it has strong
risk resistance and low risk of default. Chenming Leasing will strengthen risk management so as to enhance risk resistance and
maintain high quality services.
Operation risk
Recently, there is still a gap between the practitioners working in the financial leasing industry and those working in traditional
financial institutions such as banks in terms of their expertise and experience in financial profession in China. There is also a large
gap in terms of investment in infrastructure. If internal control procedures are not implemented properly and involve operation risk as
a result of operation errors, violations or non-standard execution, the Company may suffer from loss.
Learning from the risk management experience of outstanding financial leasing companies at home and abroad, the leasing
company has formulated and optimised the internal management system of the leasing business and established an effective system
for risk assessment, risk control and risk tracking. The Company has also exercised proper control on business risk by regulating the
key business procedures including quotation, guarantee review, contract signing, leased assets management and archives
management.
21
Shandong Chenming Paper Holdings Limited 2018 Interim Report
V Material Matters
I. Annual general meeting and extraordinary general meeting convened during the reporting
Period
1. General meetings during the reporting period
Attendanc
Meeting Type of meeting e rate of Convening date Disclosure date Disclosure index
investors
2018 first extraordinary general Extraordinary
33.09% 13 February 2018 14 February 2018 http://www.cninfo.com.cn
meeting general meeting
2018 second extraordinary general Extraordinary
33.18% 1 June 2018 2 June 2018 http://www.cninfo.com.cn
meeting general meeting
2018 first domestic listed share Extraordinary
27.93% 1 June 2018 2 June 2018 http://www.cninfo.com.cn
class meeting general meeting
2018 first overseas listed share class Extraordinary
7.43% 1 June 2018 2 June 2018 http://www.cninfo.com.cn
meeting general meeting
Annual general
2017 annual general meeting 33.10% 13 June 2018 14 June 2018 http://www.cninfo.com.cn
meeting
2018 second domestic listed share Extraordinary
25.65% 13 June 2018 14 June 2018 http://www.cninfo.com.cn
class meeting general meeting
2018 second overseas listed share Extraordinary
7.46% 13 June 2018 14 June 2018 http://www.cninfo.com.cn
class meeting general meeting
2. Extraordinary general meeting requested by holders of the preference shares with voting rights restored
□ Applicable √ Not applicable
II. 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.
22
Shandong Chenming Paper Holdings Limited 2018 Interim Report
III. Undertakings made by parties involved in undertakings including the Company’s
beneficial controllers, shareholders, related parties, bidders and the Company during the
reporting period or prior periods but subsisting to the end of the reporting period
□ Applicable √ Not applicable
During the reporting period, there was no undertaking made by parties involved in undertakings including the Company’s beneficial
controllers, shareholders, related parties, bidders and the Company during the reporting period or prior periods but subsisting to the
end of the reporting period.
IV. Engagement or dismissal of accounting firms
Has the interim financial report been audited?
□ Yes √ No
The interim financial report is unaudited.
V. Opinions of the Board and the Supervisory Committee regarding the “modified auditor’s
report” for the reporting period issued by the accountants
□ Applicable √ Not applicable
VI. Opinions of the Board regarding the “modified auditor’s report” for the prior year
□ Applicable √ Not applicable
VII. Matters related to bankruptcy and reorganisation
□ Applicable √ Not applicable
There was no matter related to bankruptcy and reorganisation during the reporting period.
VIII. 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
Will Judgment result of Judgment
Basic information Amount
liability Progress of litigation the litigation execution of Disclosure Disclosur
about litigation (RMB’0,000
be (arbitration) (arbitration) and its the litigation date e index
(arbitration) )
incurred effect (arbitration)
Statutory demand RMB167.86 The Company has appealed At the conclusion of http://ww
15 May
and Winding-up million and Yes against the order of Justice the hearing, the Not applicable w.cninfo.
2018
Petition the interest Harris dated 14 June 2017 court indicated that com.cn
23
Shandong Chenming Paper Holdings Limited 2018 Interim Report
thereon, on 12 July 2017. The a date will be set to
USB3.5489 hearing was completed at hand down the
million and the Court of Appeal of the judgment.
the interest High Court of the HKSAR
thereon, on 11 May 2018. At the
HK$3.3039 conclusion of the hearing,
million and the court indicated that a
the interest date will be set to hand
thereon down the judgment.
IX. Punishment and rectification
√ Applicable □ Not applicable
Investigation and Conclusion, if
Name Type Reason Disclosure date Disclosure index
punishment type any
On 7 August
2018, Jiangxi
Chenming
received the
“Hong Huan Fa
Gao Zi [2018]
No. 24 Advance
(Hearing) Notice
of Administrative
On 8 June 2018, Penalty” from
the law Nanchang
enforcement Environmental
officers of Protection Bureau
Nanchang in relation to a
Environmental proposed
Protection Bureau administrative
conducted on-site penalty on
Jiangxi sampling of the Jiangxi
Chenming Paper Others overflow of the Others Chenming. As the Not applicable Not applicable
Co., Ltd. dosing device of treatment
the deodorisation facilities were not
system of Jiangxi polluted by
Chenming, where improper use of
excessive ph was water as a result
identified at the of improper
overflow of the operation due to
odor treatment human error, or
facilities. equipment being
out of order and
there was a
rectification on
Jiangxi
Chenming’s own
initiative, a
lenient penalty of
RMB300,000 was
imposed.
Rectification
√ Applicable □ Not applicable
24
Shandong Chenming Paper Holdings Limited 2018 Interim Report
When the issue was identified, Jiangxi Chenming replaced the automatic valve immediately, inspected the equipment and facilities
more frequently and enhanced the regular maintenance and repair of the key equipment. The blowdown pipes were repaired to ensure
the alkaline cleaning water in the alkaline cleaning tanks still had access to the wastewater treatment system for effective treatment
through the pipes when the automatic valve did not function. The wastewater was treated and discharged up to standard through the
central wastewater outfall in the plant area. The wastewater outfall was monitor online in real time throughout 24 hours to completely
remove the problem of leakage possibly caused by the alkaline cleaning system. The rectification was completed on 12 June.
X. Credibility of the Company, its controlling shareholders and beneficial controllers
□ Applicable √ Not applicable
XI. Implementation of the equity incentive plan, employee shareholding plan or other
employee incentive measure of the Company
□ Applicable √ Not applicable
There was no implementation of the equity incentive plan, employee shareholding plan or other employee incentive measure of the
Company during the reporting period.
XII. Significant related party transactions
1. Related party transactions associated with day-to-day operation
√ Applicable □ Not applicable
Amount Amount
Types Subject Pricing Percenta
of of Settleme Market
of the matter basis of Price of ge as the Whether
Related related transacti nt of price of
relate of the the related amount exceedi Disclo
Related party party ons related availabl Disclosu
d related related party of ng sure
party relationshi transacti approve party e similar re date
party party party transacti similar approve index
p ons d transacti transacti
transa transacti transacti ons transacti d cap
(RMB’0 (RMB’0 ons on
ctions ons ons ons (%)
,000) ,000)
Pursuant
to the
Jiangxi requireme
Chenmi nt under
Bank
ng Paragraph
Natural acceptan http://
Natural (2) of Not
Procur gas and Market Market 17,014.7 ce and 23 June www.c
Gas Co., Article 1.66% 35,000 No applicab
ement heavy price price 4 telegrap 2018 ninfo.c
Ltd. and 10.1.6 of le
oil etc. hic om.cn
its the Rules
transfer
subsidia Governing
ries the Listing
of Stocks
on
25
Shandong Chenming Paper Holdings Limited 2018 Interim Report
Shenzhen
Stock
Exchange
Particulars on refund of bulk sale Not applicable
2. Related party transaction in connection with purchase or sale of assets or equity interest
√ Applicable □ Not applicable
Carrying
Assessed
Subject Pricing amount of
Types of value of the
Related matter of basis of the the Settlement of Transaction
Related the related transferred Transfer price Disclosure Disclosure
party the related related transferred related party profit and loss
party party asset (RMB’0,000) date index
relationship party party asset transactions (RMB’0,000)
transactions (RMB’0,000)
transactions transactions (RMB’0,00
(if any)
0)
Pursuant to
the Receipt of
requirement 30% equity
under interest in
Paragraph Hongtai
(3) of Real Estate
Guangdong
Article held by
Dejun Equity Valuation 30 January http://www.c
10.1.3 of the Guangdong 21,085.86 123,977.96 127,500 Wire transfer -
Investment acquisition report 2018 ninfo.com.cn
Rules Dejun and
Co., Ltd.
Governing Guangdong
the Listing Dejun’s
of Stocks on debt to
Shenzhen Hongtai
Stock Real Estate
Exchange
3. Related party transaction connected to joint external investment
□ Applicable √ Not applicable
There was no related party transaction of the Company connected to joint external investment during the reporting period.
4. Related creditors’ rights and debts transactions
√ Applicable □ Not applicable
Was there any non-operating related creditors’ rights and debts transaction?
□ Yes √ No
There were no non-operating related creditors’ rights and debts transactions of the Company during the reporting period.
5. Other significant related party transactions
□ Applicable √ Not applicable
There was no other significant related party transaction of the Company during the reporting period.
XIII. 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
26
Shandong Chenming Paper Holdings Limited 2018 Interim Report
during the reporting period.
XIV. Material contracts and implementation
1. Custody, contracting and leasing
(1) Custody
□ Applicable √ Not applicable
There was no custody of the Company during the reporting period.
(2) Contracting
□ Applicable √ Not applicable
There was no contracting of the Company during the reporting period.
(3) Leasing
□ Applicable √ Not applicable
There was no leasing of the Company during the reporting period.
2. Significant guarantees
√ Applicable □ Not applicable
(1) Guarantees
Unit: RMB’0,000
External guarantees of the Company (excluding guarantees to subsidiaries)
Date of the
related
Guarante
announcem
e to
ent Amount of Guarantee date Guarantee Type of Fulfilled
Name of obligee Term related
disclosing guarantee (agreement date) provided guarantee or not
parties or
the
not
guarantee
amount
Weifang Sime
24 July 20 December General
Darby West Port 17,500 13,500 10 years No No
2017 2017 guarantee
Co., Ltd.
Total external guarantees Total actual external
approved during the reporting 0 guarantees during the 8,500
period (A1) reporting period (A2)
27
Shandong Chenming Paper Holdings Limited 2018 Interim Report
Total external guarantees Balance of total actual
approved at the end of the 17,500 guarantees at the end of the 13,500
reporting period (A3) reporting period (A4)
Guarantees between the Company and its subsidiaries
Date of the
related
Guarante
announcem
e to
ent Amount of Guarantee date Guarantee Type of Fulfilled
Name of obligee Term related
disclosing guarantee (agreement date) provided guarantee or not
parties or
the
not
guarantee
amount
Zhanjiang
30 March General
Chenming Pulp & 150,000 3 years No No
2016 guarantee
Paper Co., Ltd.
Zhanjiang 17
General
Chenming Pulp & February 650,000 18 October 2017 498,883.84 3 years No No
guarantee
Paper Co., Ltd. 2017
Zhanjiang
14 June General
Chenming Pulp & 200,000 3 years No No
2018 guarantee
Paper Co., Ltd.
Shandong
Chenming 26 March 17 December General
500,000 202,354.67 7 years No No
Financial Leasing 2015 2015 guarantee
Co., Ltd.
Shandong
Chenming 30 March General
300,000 7 years No No
Financial Leasing 2016 guarantee
Co., Ltd.
Shandong
14
Chenming General
February 150,000 3 years No No
Financial Leasing guarantee
2018
Co., Ltd.
Shanghai
14
Chenming General
February 400,000 3 years No No
Financial Leasing guarantee
2018
Co., Ltd.
Qingdao
14
Chenming General
February 250,000 3 years No No
Nonghai Financial guarantee
2018
Leasing Co., Ltd.
28
Shandong Chenming Paper Holdings Limited 2018 Interim Report
Guangzhou
14
Chenming General
February 200,000 3 years No No
Financial Leasing guarantee
2018
Co., Ltd.
Shandong
14
Chenming General
February 200,000 3 years No No
Commercial guarantee
2018
Factoring Co., Ltd.
Huanggang
Chenming 17
General
Arboriculture February 5,000 3 years No No
guarantee
Development Co., 2017
Ltd.
Huanggang
26 March 23 September General
Chenming Pulp & 400,000 104,563.46 7 years No No
2015 2016 guarantee
Paper Co., Ltd.
Huanggang
30 March General
Chenming Pulp & 550,000 7 years No No
2016 guarantee
Paper Co., Ltd.
Jiangxi Chenming 30 March General
150,000 12 June 2017 85,842.20 3 years No No
Paper Co., Ltd. 2016 guarantee
17
Jiangxi Chenming General
February 200,000 3 years No No
Paper Co., Ltd. guarantee
2017
Jiangxi Chenming 14 June General
50,000 3 years No No
Paper Co., Ltd. 2018 guarantee
16
Shouguang Meilun General
December 600,000 17 January 2018 95,875.68 10 years No No
Paper Co., Ltd. guarantee
2010
17
Shouguang Meilun General
February 100,000 3 years No No
Paper Co., Ltd. guarantee
2017
Shandong
Chenming Paper 30 March General
200,000 3 years No No
Sales Company 2016 guarantee
Limited
Shandong
17
Chenming Paper General
February 400,000 19 July 2017 368,056.98 3 years No No
Sales Company guarantee
2017
Limited
29
Shandong Chenming Paper Holdings Limited 2018 Interim Report
Chenming (HK) 30 March General
100,000 3 years No No
Limited 2016 guarantee
17
Chenming (HK) General
February 500,000 14 July 2017 444,434.94 3 years No No
Limited guarantee
2017
Chenming (HK) 14 June General
250,000 3 years No No
Limited 2018 guarantee
Shouguang
17
Chenming Import 30 September General
February 50,000 18,000.00 3 years No No
and Export Trade 2017 guarantee
2017
Co., Ltd.
17
Jilin Chenming 16 February General
February 150,000 4,000.00 3 years No No
Paper Co., Ltd. 2018 guarantee
2017
Shandong 17
General
Chenming Group February 500,000 3 years No No
guarantee
Finance Co., Ltd. 2017
Zhanjiang
Chenming 17
General
Arboriculture February 5,000 3 years No No
guarantee
Development Co., 2017
Ltd.
Nanchang
Chenming
15 August General
Arboriculture 10,000 3 years No No
2017 guarantee
Development Co.,
Ltd.
Shandong
14 June General
Chenming Panels 3,000 3 years No No
2018 guarantee
Co., Ltd.
Total amount of guarantee provided for subsidiaries Total amount of guarantee provided for subsidiaries
1,703,000 953,478.84
approved during the reporting period (B1) during the reporting period (B2)
Total amount of guarantee provided for subsidiaries Total balance of guarantee provided for subsidiaries
7,223,000 1,822,011.78
approved as at the end of the reporting period (B3) as at the end of the reporting period (B4)
Guarantees between subsidiaries
Guarante
Date of the related Guarantee
Fulfill e to
announcement Amount of date Guarantee
Name of obligee Type of guarantee Term ed or related
disclosing the guarantee (agreement provided
not parties or
guarantee amount date)
not
30
Shandong Chenming Paper Holdings Limited 2018 Interim Report
Chenming (HK) Limited 30 March 2016 100,000 36,627.51 General guarantee 3 years No No
Chenming (HK) Limited 30 March 2016 100,000 General guarantee 3 years No No
Chenming (HK) Limited 30 March 2016 100,000 General guarantee 3 years No No
Total amount of guarantee
Total amount of guarantee provided for subsidiaries approved
0 provided for subsidiaries during 19,876.27
during the reporting period (C1)
the reporting period (C2)
Total balance of guarantee
Total amount of guarantee provided for subsidiaries approved
300,000 provided for subsidiaries s at the 36,627.51
as at the end of the reporting period (C3)
end of the reporting period (C4)
Total amount of guarantee provided (i.e. sum of the above three guarantee amount)
Total amount of guarantee approved during the Total amount of guarantee during the
1,703,000 981,855.11
reporting period (A1+B1+C1) reporting period (A2+B2+C2)
Total amount of guarantee approved as at the Total balance of guarantee as at the end of
7,540,500 1,872,139.29
end of the reporting period (A3+B3+C3) the reporting period (A4+B4+C4)
The percentage of total amount of guarantee provided (i.e.
67.64%
A4+B4+C4) to the net assets of the Company
Of which:
Balance of guarantee provided for shareholders, beneficial controllers and its related parties (D) 0
Balance of guarantee directly or indirectly provided for obligors with gearing ratio over 70% (E) 1,137,410.05
Total amount of guarantee provided in excess of 50% of net assets (F) 488,281.08
Sum of the above three amount of guarantee (D+E+F) 1,625,691.13
(2) 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
The Company did not have any other material contract during the reporting period.
XV. Fulfilment of social responsibility
1. Major environmental protection matters
Name of Number Pollutant
Name of Distribution Approved
major Way of of Emission emission Total Excessive
company or of emission total
pollutants emission emission concentration standards emissions emissions
subsidiary outlets emissions
and specific outlets implemented
31
Shandong Chenming Paper Holdings Limited 2018 Interim Report
pollutants
Within
Organised Chenming
COD 3 200mg/L 300mg/L 1851.10t 7666.64t No
emission Industrial
Park
Within
Ammonia Organised Chenming
3 2mg/L 30mg/L 35.15t 766.66t No
nitrogen emission Industrial
Park
Power plant Power plant
Within
Shandong 4.50mg/m; 35mg/m;
Sulphur Organised Chenming
Chenming 3 Alkali Alkali 3.15t 247.16t No
dioxide emission Industrial
Paper recovered recovered
Park
Holdings 2.13mg/m 200mg/m
Limited Power plant Power plant
Within
37mg/m; 100 mg/m;
Nitrogen Organised Chenming
3 Alkali Alkali 77.39t 1059.41t No
oxide emission Industrial
recovered recovered
Park
142mg/m 300mg/m
Power plant Power plant
Within
0.77mg/m; 10 mg/m;
Organised Chenming
Smoke 3 Alkali Alkali 0.50t 70.62t No
emission Industrial
recovered recovered
Park
10.40mg/m 20mg/m
Within
Sulphur Organised Chenming
2 6.88mg/m 35mg/m 34.50t 348.10t No
dioxide emission Industrial
Park
Shouguang Within
Meilun Nitrogen Organised Chenming
2 49mg/m 100 mg/m 240.60t 709.32t No
Paper Co., oxide emission Industrial
Ltd. Park
Within
Organised Chenming
Smoke 2 0.63mg/m 5mg/m 2.9070t 73.62t No
emission Industrial
Park
Wuhan Organised East of the
COD 1 26mg/l 80mg/L 14.4t 184.30t No
Chenming emission factory area
Hanyang
Paper Ammonia Organised East of the
Holdings 1 1.4mg/l 8 mg/L 0.7t 17.30t No
nitrogen emission factory area
Co., Ltd.
Within
130T furnace
Qianneng
Sulphur Organised 8.64mg/m3;
2 Electric 50mg/m 4.236t 102.58t No
dioxide emission 75T furnace
Power factory 3
1.27mg/m
area
Wuhan
Within
Chenming 130T furnace
Qianneng
Qianneng Nitrogen Organised 38.76mg/m3;
2 Electric 100 mg/m 21.68t 205.16t No
Electric oxide emission 3 75T furnace
Power factory 3
Power Co., 56.9mg/m
area
Ltd.
Within
130T furnace
Qianneng
Organised 5.18mg/m3;
Smoke 2 Electric 20mg/m 2.755t 41.03t No
emission 75T furnace
Power factory 3
4.6mg/m
area
Jiangxi At the
Organised
Chenming COD 1 boundary of 34.97mg/L 90mg/L 148.61t 1260t No
emission
Paper Co., factory area
Ltd. Ammonia Organised 1 At the 2.04mg/L 8mg/L 9.77t 112t No
32
Shandong Chenming Paper Holdings Limited 2018 Interim Report
nitrogen emission boundary of
factory area
Sulphur Organised Within
2 48.78mg/m 200mg/m 104.57t 806t No
dioxide emission factory area
Nitrogen Organised Within
2 113.53mg/m 200 mg/m 254.53t 806t No
oxide emission factory area
Organised Within
Smoke 2 11.63mg/m 30mg/m 25.2t 135t No
emission factory area
At the
Organised
COD 1 boundary of 62.5mg/L 90mg/ L 144.1t 357t No
emission
factory area
At the
Ammonia Organised
1 boundary of 1.61mg/L 8mg/ L 3.72t 34t No
Jilin nitrogen emission
Chenming factory area
Paper Co., Sulphur Organised Within
1 3.64mg/m 100mg/m 3.06t 97t No
Ltd. dioxide emission factory area
Nitrogen Organised Within
1 38.24mg/m 100mg/m 32.15t 213t No
oxide emission factory area
Organised Within
Smoke 1 14.05mg/m 30mg/m 11.81t 51.66t No
emission factory area
Within
Organised Zhanjiang
COD 1 35.57mg/L 90mg/L 425.09t 1943t No
emission Chenming
factory area
Within
Ammonia Organised Zhanjiang
1 1.01mg/L 8mg/L 12.42t 43.90t No
nitrogen emission Chenming
factory area
Lime kiln:
0.26mg/m
Lime kiln:
Alkali 400mg/m
recovered:
Alkali
26.41mg/m recovered:
Power plant
200mg/m
1#:
Within 1#、2#、3#
4.66mg/m
Sulphur Organised Zhanjiang circulating
6 Power plant 201.85t 620t No
dioxide emission Chenming fluidised bed
2#:
Zhanjiang factory area boiler:
2.93mg/m
Chenming 100mg/m
Power plant
Pulp & 4# circulating
3#:
Paper Co., fluidised bed
5.77mg/m
Ltd. boiler:
Power plant
4#: 35mg/m
16.60mg/m
Lime kiln:
231.46mg/m Lime kiln:
Alkali 300mg/m
recovered: Alkali
198.65mg/m recovered:
Power plant 200mg/m
Within 1#: 1#、2#、3#
Nitrogen Organised Zhanjiang 21.55mg/mP circulating
6 909.17t 2169.70t No
oxide emission Chenming ower plant fluidised bed
factory area 2#: boiler:
20.09mg/mP 100mg/m
ower plant 4# circulating
3#” fluidised bed
17.75mg/mP boiler:
ower plant 50mg/m
4#”
33
Shandong Chenming Paper Holdings Limited 2018 Interim Report
28.35mg/m
Lime kiln:
Smoke
14.21mg/m
Alkali Lime kiln:
recovered: 80mg/mAlka
15.30mg/mP li recovered,
ower plant 1#、2#、3#
Within 1#: circulating
Organised Zhanjiang 14.12mg/mP fluidised bed
Smoke 6 90.56t 196t No
emission Chenming ower plant boiler:
factory area 2#: 30mg/m 4#
4.41mg/m circulating
Power plant fluidised bed
3#: boiler:
7.52mg/m 10mg/m
Power plant
4#:
9.75mg/m
Construction and operation of facilities for pollution prevention and control
(1) The Company and its subsidiaries strictly comply with laws, regulations and relevant rules regarding environmental protection of
the central and local government. The construction of projects strictly adheres to the “three simultaneities” on environmental
protection. In order to ensure pollutants are discharged strictly in accordance with the requirements under laws and regulations and
disposed properly, production and operation strictly comply with the national Law on the Prevention and Control of Environmental
Pollution, Law on the Prevention and Control of Water Pollution, Law on the Prevention and Control of Air Pollution, Action Plan
for Prevention and Control of Water Pollution and Law on the Prevention and Control of Environmental Pollution by Solid Waste
and other laws.
(2) Both the Company and its subsidiaries are equipped with comprehensive environmental protection treatment facilities. The
pre-treatment-aerobic-anaerobic-in-depth treatment technology is the major technology for water treatment, which can achieve
standardised discharge of waste water. Moreover, subsidiaries are equipped with recycling system for process effluent, and reuse
treated waste water to the greatest extent in order to minimise pollution. The Company has constructed a total of 8 water treatment
plants, with daily treatment capacity of 350,000 m3. A total of ten online water monitoring facilities were installed in subsidiaries,
which are all operated by entrusted enterprises qualified for running such facilities. In addition, governmental authority will regularly
visit the Company to conduct comparison of online monitoring data every quarter. All data meets the standards.
(3) Each subsidiary’s organized emission outlets are equipped with an online monitoring system for real-time monitoring. All
subsidiaries have their own power plants. Each self-owned plant has its own environmental protection facilities for de-dusting,
desulphurisation and denitrification. Denitrification is conducted through SNCR, while desulphurisation is primarily conducted
through gypsum desulphurisation (ammonia desulphurisation is adopted in the self-owned plant of Jiangxi Chenming). Substantially
all of the emissions indicators are below 50% of the execution standards. Other supporting facilities such as alkali recovery boilers
and lime kilns are also in compliance with the emission standards.
Environmental impact assessment of construction projects and other environmental protection administrative licensing
The Company has strictly complied with the environmental laws and regulations all along to carry out environmental impact
assessment of construction projects. The construction projects are all subject to environmental impact assessment. During the
construction process, a reasonable environmental protection project construction plan is formulated and strictly implemented. The
environmental protection facilities and the main project are designed, constructed and put into operation at the same time. At present,
all construction projects put into production have obtained environmental impact assessment approvals and acceptance approvals.
In June 2017, the Company and its subsidiaries completed the formalities for new discharge permits in accordance with the Measures
for the Administration of Pollutant Discharge Permits of the Ministry of Environmental Protection, and the discharge permits of the
new projects were renewed according to the environmental protection requirements in a timely manner.
Emergency plan for emergency environmental incidents
34
Shandong Chenming Paper Holdings Limited 2018 Interim Report
The Company has strictly implemented emergency regulations for emergency environmental incidents, and formulated various
emergency plans for emergency environmental incidents according to the technical requirements in the “Technical Guidelines for
Emergency Environmental Pollution Accidents”. The plans are reviewed by and filed with the Environmental Protection Bureau, and
regular emergency training and emergency drills are conducted. Emergency measures in relation to dangerous chemicals are
formulated in accordance with the environmental protection requirements. At the same time, necessary emergency supplies are
provided with regular inspections and updates.
Environmental self-monitoring programme
The Company has strictly complied with self-monitoring laws and regulations, and conducted self-monitoring in accordance with the
environmental protection requirements to establish and perfect the corporate environmental management ledgers and materials. At
present, self-monitoring is a combination of manual monitoring and automatic monitoring. At the same time, qualified units are
engaged to conduct regular monitoring. Automatic monitored items include: total wastewater discharge (COD, ammonia nitrogen,
flow rate, total phosphorus, total nitrogen and PH); power plant, alkali recovery boilers and lime kiln exhaust emissions (sulphur
dioxide, nitrogen oxide and smoke). Manually monitored items include: daily monitoring of COD, ammonia nitrogen, SS, chroma,
PH, total phosphorus and total nitrogen indicators. Sewage and other monitoring items, unorganised exhaust emission, solid waste,
and noise at the plant boundary, are monitored on a monthly or quarterly basis by qualified units engaged in accordance with the
local environmental protection requirements in relation to each subsidiary.
The self-monitoring data and environmental monitoring programmes for pollutants discharge of various subsidiaries are published on
the national key pollution source information disclosure website and the provincial key pollution source information disclosure
websites.
Other environmental information to be disclosed
The relevant environmental protection information of the pollutant discharge permit information and the pollutant discharge permit
requirements is announced on the national sewage discharge permit management information platform.
Other environmental protection related information
Other environmental protection related information is announced on the Company’s website.
XVI. Other matters of significance
√ Applicable □ Not applicable
1. Distribution of fixed dividend of Chenming You 01
The dividend was accrued from 17 March 2017 on the basis of the 22.5 million preference shares issued with a nominal value of
RMB100 per share. As calculated according to the dividend rate of 4.36%, a dividend of RMB4.36 (tax inclusive) per preference
share was distributed. The Company distributed dividend amounting to RMB98.10 million in total (tax inclusive).
For details, please refer to relevant announcement (announcement no.: 2018-016) of the Company published on CNINFO on 10
March 2018.
2. Issue of medium-term notes with an amount of RMB1,000 million
The public issue of the 2018 first tranche of medium-term notes in the national inter-bank bond market was launched by the
Company on 16 March 2018. The amount of the issue was RMB1,000 million with a nominal value of RMB100 each at the interest
rate of 7.50%.
For details, please refer to relevant announcement (announcement no.: 2018-017) of the Company published on CNINFO on 22
March 2018.
3. Public issuance of “18 Chenming Bond 01”
On 13 March 2017, the Company was approved by the CSRC for the public issuance of corporate bonds with a nominal value of
not more than RMB4 billion according to the Zheng Jian Xu Ke [2017] No. 342. The bonds were issued in tranches. From 29 March
2018 to 2 April 2018, the Company issued corporate bonds (first tranche) to institutional investors. The original basic offline
35
Shandong Chenming Paper Holdings Limited 2018 Interim Report
issuance size of the bonds was RMB500 million, subject to over-allotment of not more than RMB2.3 billion. The actual offline
issuance size was RMB900 million with a nominal value of RMB100. The bonds were issued at par value with a coupon rate of
7.28%.
For details, please refer to relevant announcements (announcement no.: 2018-019, 2018-026, 2018-030 and 2018-068) of the
Company published on CNINFO on 27 March 2018, 28 March 2018, 2 April 2018 and 31 May 2018 respectively.
4. Entering into the Developmental Financial Cooperation Agreement with China Development Bank
On 29 March 2018, the Company and China Development Bank entered into the Developmental Financial Cooperation
Agreement to establish a new strategic partnership for the all-rounded and in-depth cooperation between an industrial group and a
financial group. Adhering to the principle of “planning first”, both parties will make full use of their respective advantages to carry
out in-depth cooperation in areas such as medium and long-term project cooperation, loans for working capital, intermediary business
and cross-border financing through project cooperation at the early stage and cooperation on financial products.
For details, please refer to relevant announcement (announcement no.: 2018-028) of the Company published on CNINFO on 1
April 2018.
5. 2017 profit distribution plan for ordinary shares
On 13 June 2018, the Company convened the 2017 annual general meeting, at which, the 2017 profit distribution plan was
considered and approved: based on the number of the shares as at the dividend distribution registration date of 1,936,405,467 shares, a
cash dividend of RMB6.00 (tax inclusive) was to be paid to all shareholders for every 10 shares held, and a capitalisation issue made
out of the capital reserves of 5 shares for every 10 shares held will be distributed to ordinary shareholders. The total cash dividend
distributed to the holders of ordinary shares amounted to RMB1,161,843,280.20 (tax inclusive) in 2017.
For details, please refer to relevant announcement (announcement no.: 2018-079) of the Company published on CNINFO on 14
June 2018.
6. Information disclosure index for the first half of 2018
Announce Subject matter Date of Publication website and
ment No. publication index
2018-001 Announcement on Result of the Issue of 2018 First Tranche of Super & 9 January 2018 http://www.cninfo.com.cn
Short-term Commercial Paper
2018-002 Announcement on Resignation of Secretary to the Board 19 January 2018 http://www.cninfo.com.cn
2018-003 Announcement on Estimated Annual Results for 2017 19 January 2018 http://www.cninfo.com.cn
2018-004 Announcement on Result of the Issue of 2018 Second Tranche of Super 19 January 2018 http://www.cninfo.com.cn
& Short-term Commercial Paper
2018-005 Second Supplementary Notice of the 2018 First Extraordinary General 26 January 2018 http://www.cninfo.com.cn
Meeting
2018-006 Announcement in respect of Resolutions of the Twentieth Extraordinary 30 January 2018 http://www.cninfo.com.cn
Meeting of the Eighth Session of the Board of Directors
2018-007 Announcement on the Receipt of 30% equity interest in Hongtai Real 30 January 2018 http://www.cninfo.com.cn
Estate held by Guangdong Dejun and Guangdong Dejun’s Debt to
Hongtai Real Estate and Related Party Transaction
2018-008 Announcement on External Investment 30 January 2018 http://www.cninfo.com.cn
2018-009 Announcement in respect of Guarantee in Favour of Related 30 January 2018 http://www.cninfo.com.cn
Subsidiaries for their Credit Facilities Applications
2018-010 Announcement on Additional Resolutions Proposed at the 2018 First 30 January 2018 http://www.cninfo.com.cn
Extraordinary General Meeting
2018-011 Supplementary Notice of 2018 First Extraordinary General Meeting 30 January 2018 http://www.cninfo.com.cn
36
Shandong Chenming Paper Holdings Limited 2018 Interim Report
2018-012 Announcement on Result of the Issue of 2018 Third Tranche of Super & 8 February 2018 http://www.cninfo.com.cn
Short-term Commercial Paper
2018-013 Poll Results Announcement of the 2018 First Extraordinary General 14 February http://www.cninfo.com.cn
Meeting 2018
2018-014 Indicative Announcement 1 March 2018 http://www.cninfo.com.cn
2018-015 Announcement in respect of Resolutions of the Twenty-first 10 March 2018 http://www.cninfo.com.cn
Extraordinary Meeting of the Eighth Session of the Board of Directors
2018-016 Announcement on the Distribution of Dividend for Preference Share 14 March 2018 http://www.cninfo.com.cn
2018-017 Announcement on Result of the Issue of 2018 First Tranche of 22 March 2018 http://www.cninfo.com.cn
Medium-term Notes
2018-018 Announcement on Pledge of Shares held by Shareholders 22 March 2018 http://www.cninfo.com.cn
2018-019 Announcement on 2018 Public Issue of Corporate Bonds to Qualified 27 March 2018 http://www.cninfo.com.cn
Investors (First Tranche)
2018-020 Announcement in respect of Resolutions of the Eighth Meeting of the 28 March 2018 http://www.cninfo.com.cn
Eighth Session of the Board of Directors
2018-021 2017 Annual Report Summary 28 March 2018 http://www.cninfo.com.cn
2018-022 Announcement on Provision of Guarantee for General Credit Lines of 28 March 2018 http://www.cninfo.com.cn
Relevant Subsidiaries
2018-023 Announcement in respect of Resolutions of the Ninth Meeting of the 28 March 2018 http://www.cninfo.com.cn
Eighth Session of the Supervisory Committee
2018-024 Notice of 2017 Annual General Meeting 28 March 2018 http://www.cninfo.com.cn
2018-025 Announcement on the Appointment of the auditors for 2018 28 March 2018 http://www.cninfo.com.cn
2018-026 Announcement on the Coupon Rate of 2018 Public Issue of Corporate 28 March 2018 http://www.cninfo.com.cn
Bonds to Qualified Investors (First Tranche)
2018-027 Announcement on Result of the Issue of 2018 Fourth Tranche of Super 30 March 2018 http://www.cninfo.com.cn
& Short-term Commercial Paper
2018-028 Announcement on Entering into the Developmental Financial 2 April 2018 http://www.cninfo.com.cn
Cooperation agreement with China Development Bank
2018-029 Announcement on the Receipt of an Arbitral Award by a Subsidiary 2 April 2018 http://www.cninfo.com.cn
2018-030 Announcement on the Result of 2018 Public Issue of Corporate Bonds to 2 April 2018 http://www.cninfo.com.cn
Qualified Investors (First Tranche)
2018-031 Announcement on Pledge of Shares held by Shareholders 12 April 2018 http://www.cninfo.com.cn
2018-032 Announcement in Respect of Resolutions of the Twenty-Second 17 April 2018 http://www.cninfo.com.cn
Extraordinary Meeting of the Eighth Session of the Board of Directors
2018-033 Announcement on the Extension of the Validity Period of the 17 April 2018 http://www.cninfo.com.cn
resolutions in Respect of the Non-public Issue of Shares of the
Company at the General Meeting and the Validity Period of the
Authorisation Granted to the Board to Deal with Related Matters
2018-034 Notice of 2018 Second Extraordinary General Meeting 17 April 2018 http://www.cninfo.com.cn
2018-035 Notice of the 2018 First Domestic Listed Share Class Meeting and 2018 17 April 2018 http://www.cninfo.com.cn
First Overseas Listed Share Class Meeting
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
2018-036 Announcement in respect of Resolutions of the Ninth Extraordinary 17 April 2018 http://www.cninfo.com.cn
Meeting of the Eighth Session of the Supervisory Committee
2018-037 Announcement on External Investment 17 April 2018 http://www.cninfo.com.cn
2018-038 Announcement on the Sale of Available-for-sale Financial Assets 17 April 2018 http://www.cninfo.com.cn
2018-039 Announcement in respect of Resolutions of the Ninth Meeting of the 27 April 2018 http://www.cninfo.com.cn
Eighth Session of the Board of Directors
2018-040 2017 First Quarterly Report 27 April 2018 http://www.cninfo.com.cn
2018-041 Announcement on External Investment (I) 27 April 2018 http://www.cninfo.com.cn
2018-042 Announcement on External Investment (II) 27 April 2018 http://www.cninfo.com.cn
2018-043 Announcement on Result of the Issue of 2018 Fifth Tranche of Super & 27 April 2018 http://www.cninfo.com.cn
Short-term Commercial Paper
2018-044 Announcement on the Cancellation of the General Meeting and 27 April 2018 http://www.cninfo.com.cn
Postponement of the 2017 Annual General Meeting
2018-045 Notice on the Cancellation of the General Meeting and Postponement of 27 April 2018 http://www.cninfo.com.cn
the 2017 Annual General Meeting
2018-046 Notice of the 2018 Second Domestic Listed Share Class Meeting and 27 April 2018 http://www.cninfo.com.cn
2018 Second Overseas Listed Share Class Meeting
2018-047 Announcement in respect of Resolutions of the Tenth Meeting of the 27 April 2018 http://www.cninfo.com.cn
Eighth Session of the Supervisory Committee
2018-048 Announcement on the Change of the Name of the Controlling 3 May 2018 http://www.cninfo.com.cn
Shareholder
2018-049 Announcement in Respect of Resolutions of the Twenty-Third 5 May 2018 http://www.cninfo.com.cn
Extraordinary Meeting of the Eighth Session of the Board of Directors
2018-050 Announcement on External Investment 5 May 2018 http://www.cninfo.com.cn
2018-051 Announcement on Resignation of the Vice Chairman 9 May 2018 http://www.cninfo.com.cn
2018-052 Announcement on Result of the Issue of 2018 Sixth Tranche of Super & 11 May 2018 http://www.cninfo.com.cn
Short-term Commercial Paper
2018-053 Announcement on Entering into the Framework Agreement for Strategic 15 May 2018 http://www.cninfo.com.cn
Cooperation between Banks and Enterprises with Guangdong Nanyue
Bank
2018-054 Indicative Announcement 15 May 2018 http://www.cninfo.com.cn
2018-055 Announcement in respect of Resolutions of the Twenty-fourth 16 May 2018 http://www.cninfo.com.cn
Extraordinary Meeting of the Eighth Session of the Board of Directors
2018-056 Announcement on Appointment of the Secretary of the Board and 16 May 2018 http://www.cninfo.com.cn
Securities Affairs Representative
2018-057 Second Supplementary Notice of the 2018 Second Extraordinary 16 May 2018 http://www.cninfo.com.cn
General Meeting
2018-058 Second Supplementary Notice of the 2018 First Domestic Listed Share 16 May 2018 http://www.cninfo.com.cn
Class Meeting and 2018 First Overseas Listed Share Class Meeting
2018-059 Announcement on Receipt of Government Subsidy 18 May 2018 http://www.cninfo.com.cn
2018-060 Announcement on Acquisition of Minority Interest in Subsidiaries 24 May 2018 http://www.cninfo.com.cn
38
Shandong Chenming Paper Holdings Limited 2018 Interim Report
2018-061 Announcement on Pledge of Shares held by Shareholders and the 29 May 2018 http://www.cninfo.com.cn
Release of Pledge of Part of the Shares
2018-062 Announcement on the Progress of External Investment 29 May 2018 http://www.cninfo.com.cn
2018-063 Announcement on Additional Resolutions Proposed at the 2017 Annual 30 May 2018 http://www.cninfo.com.cn
General Meeting
2018-064 Supplementary Notice of 2017 Annual General Meeting 30 May 2018 http://www.cninfo.com.cn
2018-065 Second Supplementary Notice of the 2018 Second Domestic Listed 30 May 2018 http://www.cninfo.com.cn
Share Class Meeting and 2018 Second Overseas Listed Share Class
Meeting
2018-066 Announcement on Result of the Issue of 2018 Seventh Tranche of Super 30 May 2018 http://www.cninfo.com.cn
& Short-term Commercial Paper
2018-067 Announcement on Pledge of Shares held by Shareholders 31 May 2018 http://www.cninfo.com.cn
2018-068 Announcement on the Listing of 2018 Public Issue of Corporate Bonds to 31 May 2018 http://www.cninfo.com.cn
Qualified Investors (First Tranche)
2018-069 Announcement in Respect of Resolutions of 2018 Second Extraordinary 2 June 2018 http://www.cninfo.com.cn
General Meeting, 2018 First Class Meeting For Domestic Shareholders
and 2018 First Class Meeting For Overseas Shareholders
2018-070 Shandong Chenming Paper Holdings Limited Announcement in respect 5 June 2018 http://www.cninfo.com.cn
of Resolutions of the 25th Extraordinary Meeting of the Eighth Session
of the Board of Directors
2018-071 Announcement in respect of Resolutions of the Tenth Extraordinary 5 June 2018 http://www.cninfo.com.cn
Meeting of the Eighth Session of the Supervisory Committee
2018-072 Announcement on Dilution of Current Returns and Remedial Measures 5 June 2018 http://www.cninfo.com.cn
upon Non-public Offering (Fifth Revision)
2018-073 Announcement on Adjustment to the Price Determination Date for the 5 June 2018 http://www.cninfo.com.cn
Non-public Issue of A Shares
2018-074 Announcement on Entering into Conditional Share Purchase Agreement 5 June 2018 http://www.cninfo.com.cn
and Connected Transactions under the Non-public Offering of A Share
(Third Revision)
2018-075 Notice of 2018 Third Extraordinary General Meeting 5 June 2018 http://www.cninfo.com.cn
2018-076 Notice of the 2018 Third Domestic Listed Share Class Meeting and 5 June 2018 http://www.cninfo.com.cn
2018 Third Overseas Listed Share Class Meeting
2018-077 Announcement on Release of Pledge of Shares held by Shareholders 5 June 2018 http://www.cninfo.com.cn
2018-078 Announcement on Fifth Revision of Non-public Offering for 2016 5 June 2018 http://www.cninfo.com.cn
2018-079 Announcement in Respect of Resolutions of 2017 Annual General 14 June 2018 http://www.cninfo.com.cn
Meeting, 2018 Second Class Meeting For Domestic Shareholders and
2018 Second Class Meeting For Overseas Shareholders
2018-080 Shandong Chenming Paper Holdings Limited Announcement in respect 23 June 2018 http://www.cninfo.com.cn
of Resolutions of the 26th Extraordinary Meeting of the Eighth Session
of the Board of Directors
2018-081 Announcement on New Ordinary Connected Transactions in 2018 23 June 2018 http://www.cninfo.com.cn
2018-082 Announcement on the Disposal of the 40% Equity Interest in Wan Xing 23 June 2018 http://www.cninfo.com.cn
39
Shandong Chenming Paper Holdings Limited 2018 Interim Report
Real Estate by Wuhan Chenming
2018-083 Announcement on Supplemental Pledge of Shares held by Shareholders 26 June 2018 http://www.cninfo.com.cn
XVII. Matters of significant of subsidiaries of the Company
√ Applicable □ Not applicable
1. Disposal of 30% equity interest in Xuchang Chenming
At the eighteenth extraordinary meeting of the eighth session of the Board of the Company held on 27 November 2017, the
Resolution on the disposal of 30% equity interest in Xuchang Chenming was considered and approved, pursuant to which the
Company proposed to dispose of 30% equity interest in its controlling subsidiary Xuchang Chenming Paper Co., Ltd. (“Xuchang
Chenming”) through public tender. For details, please refer to the Announcement on the Disposal of Equity Interest in Xuchang
Chenming published by the Company on 28 November 2017 (announcement no.: 2017-147).
Based on the appraised value, the Company held public tender though the Shandong Weifang Property Right Exchange Center on 8
December 2017, and entered into an equity exchange agreement with Xuchang Chenzhuo Trading Co., Ltd. (許昌市晨卓貿易有限
公司) (“Chenzhuo Trading”), pursuant to which the Company conditionally transferred the 30% equity interest in Xuchang
Chenming at the consideration of RMB30 million. On 19 January 2018, the Company received the Equity Transaction Certificate
issued by the Shandong Weifang Property Right Exchange Center.
2. Receipt of Shanghai Chenming of 30% equity interest in Shanghai Hongtai Real Estate held by Guangdong Dejun
Shanghai Chenming Industry Co., Ltd. and Guangdong Dejun Investment Co., Ltd. entered into the Equity Acquisition Agreement.
Based on the appraised value of the total shareholders’ equity of Shanghai Hongtai Real Estate Co., Ltd. of RMB3,908.397 million,
Shanghai Chenming proposed to acquire 30% equity interest in and the loan due from Hongtai Real Estate held by Guangdong Dejun
at a consideration of RMB1,275,000,000, in which the equity interest amounted to RMB1,171,960,000 and loan amounted to
RMB103,040,000.
For details, please refer to the relevant announcement (announcement no.: 2018-007) of the Company published on CNINFO on 30
January 2018.
3. Transfer of the entire company woodland of Huanggang Arboriculture
In January 2008, the Company established the Huanggang Chenming Arboriculture Development Co., Ltd. (“Huanggang
Arboriculture”) for investment and construction for the raw material forest projects. In aggregate, it constructed woodland of 854,100
mu and incurred expense of RMB368,456,600, including principal and interest. In December 2015, The Notice about Strict
Protection of Natural Forest was issued by the State Forestry Bureau; in October 2016, the Notice about Accelerating in Ceasing the
Commercial Logging of Natural Forest (《關於加快推進停止天然林商業性採伐工作的通知》) was issued by the Department of
Forestry of Hubei; and in January 2017, the Decision on the Vigorous Promotion of Ecological Protection and Green Development in
the Yangtze River Economic Zone ( 關於大力推進長江經濟帶生態保護和綠色發展的決定》 was issued by the Hubei Provincial
People’s Congress, under which the majority of woodland of Huanggang Arboriculture was classified as within the National Natural
Forest Reserve. After arm’s length negotiation with the Huanggang government, Huanggang Arboriculture will return all purchased
proprietary woodland and woodland warrants and will go through all legal processes according to the law. In the future, the
Huanggang pulp and paper project will actively explore overseas resource markets and meet production needs through imported
wood chips. As at 31 March 2018, the accumulated woodland investment costs of Huanggang Arboriculture was RMB371,367,500.
After returning all woodland of Huanggang Arboriculture, the loss is expected to amount to RMB1,710,200 and the loss on changes
in fair value is RMB16,723,700, specific financial data being subject to auditing. Investors should be aware of the investment risks.
40
Shandong Chenming Paper Holdings Limited 2018 Interim Report
For details, please refer to the relevant announcement (announcement no.: 2018-029) of the Company published on CNINFO on 2
April 2018.
4. Disposal of 50% equity interest in Guangdong Dejun
Pursuant to the decision approved at the twenty-second extraordinary meeting of the eighth session of the Board of the Company held
on 16 April 2018, the Company and Shanghai Zhongneng Enterprise Development (Group) Co., Ltd. (“Shanghai Zhongneng”)
entered into the Equity Repurchase Agreement, under which the 50% equity interest in Guangdong Dejun, being the
available-for-sale financial asset, to Shanghai Zhongneng, with the aggregate of premium repurchase and investment income
amounting to RMB2,634,041,400. The Company received the sum on 28 April 2018. Subsequent to the transfer, the Company no
longer held any equity interests in Guangdong Dejun.
For details, please refer to the relevant announcement (announcement no.: 2018-038) of the Company published on CNINFO on 17
April 2018.
5. Acquisition of 14.2742% equity interest held by a minority shareholder of Wuhan Chenming
To better advance the strategic development positioning of the Company, optimize the management structure, streamline business
layout and further elevate the Company’s profitability, the Company intends to acquire 14.2742% equity interest in Wuhan
Chenming, a controlling subsidiary of the Company, held by Hubei Hanyang Paper Mill (“Hanyang Paper Mill”), a minority
shareholder of Wuhan Chenming, by way of transfer through agreement. In accordance with the result of public tender, the Company
received the abovementioned equity interest held by Hanyang Paper Mill at the consideration of RMB60,896,600. Subsequent to the
completion of the equity transfer, the Company will hold 65.205% of the equity interest in Wuhan Chenming.
For details, please refer to the relevant announcement (announcement no.: 2018-060) of the Company published on CNINFO on 24
May 2018.
6. Disposal of 40% equity interest in Wan Xing Real Estate by Wuhan Chenming
To further integrate the Company’s resources, focus its advantages on the principal business and enhance quality and efficiency,
Wuhan Chenming Hanyang Paper Holdings Co., Ltd. intends to dispose of 40% equity interest in Wuhan Chenming Wan Xing Real
Estate Co., Ltd., an investee, through public tender. The transferee will be determined by way of bidding, and the final price will be
determined comprehensively according to the tender and auctioning with reference to the appraisal value.
For details, please refer to the relevant announcement (announcement no.: 2018-082) of the Company published on CNINFO on 23
June 2018.
41
Shandong Chenming Paper Holdings Limited 2018 Interim Report
VI Changes in Share Capital and Shareholders
I. Changes in shares
1. Changes in shares
Unit: share
Opening balance Change during the reporting period (+/-) Closing balance
Shares
Percenta Bonus Percenta
Amounts New issue converted Others Subtotal Amounts
ge issue ge
from reserve
I. Restricted shares 7,935,101 0.41% 634,738 634,738 8,569,839 0.44%
1. Shares held by other
7,935,101 0.41% 634,738 634,738 8,569,839 0.44%
domestic investors
Of which: Shares held by
7,935,101 0.41% 634,738 634,738 8,569,839 0.44%
domestic natural persons
II. Non-restricted shares 1,928,470,366 99.59% -634,738 -634,738 1,927,835,628 99.56%
1. RMB ordinary shares 1,105,389,555 57.08% -619,338 -619,338 1,104,770,217 57.05%
2. Domestic listed foreign
470,877,311 24.32% -15,400 -15,400 470,861,911 24.32%
share
3. Overseas listed foreign
352,203,500 18.19% 352,203,500 18.19%
shares
III. Total number of
1,936,405,467 100.00% 1,936,405,467 100.00%
shares
The reasons for such changes
√ Applicable □ Not applicable
Before and after the change, the number of restricted shares held by domestic natural persons increased by 634,738 from 7,935,101 to
8,569,839, due to the fact that: according to the Practice Guidance for the Company’s Shares Held by the Directors, Supervisors and
Senior Management of the Listed Companies of Shenzhen Stock Exchange, 25% (634,738 shares) of the non-restricted RMB
ordinary shares (A shares) held by directors who have been resigned for less than half a year, senior management and new directors
were converted into restricted shares.
Approval of changes in shareholding
□ Applicable √ Not applicable
Transfer of shares arising from changes in shareholding
□ Applicable √ Not applicable
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
42
Shandong Chenming Paper Holdings Limited 2018 Interim Report
□ Applicable √ Not applicable
2. Changes in restricted shares
□ Applicable √ Not applicable
II. Issuance and listing of securities
□ Applicable √ Not applicable
III. Total number of shareholders and shareholdings
Unit: share
Total number of shareholders 111,039, of which 91,323 were holders Total number of shareholders of preference shares
of ordinary shares as at the of A shares, 19,346 were holders of B with restored voting right as at the end of the 0
end of the reporting period shares and 370 were holders of H shares reporting period (if any) (please refer to note 8)
Shareholdings of shareholders of ordinary shares interested in more than 5% of the shares of the Company or top ten shareholders
of ordinary shares
Changes Number Share pledged or
Number of
(increase of locked-up
Percenta ordinary Number of
or restricte
Nature of ge of shares held non-restricte
Name of shareholders decrease) d
shareholders sharehol at the end of d ordinary Status of
during the ordinary Number
ding the reporting shares held shares
reporting shares
period
period held
CHENMING HOLDINGS State-owned
15.13% 293,003,657 0 0 293,003,657 Pledged 225,717,161
COMPANY LIMITED legal person
Overseas legal
HKSCC NOMINEES LIMITED 12.84% 248,678,750 -188,500 0 248,678,750
person
CHENMING HOLDINGS Overseas legal
12.54% 242,754,375 0 0 242,754,375
(HONG KONG) LIMITED person
CENTRAL HUIJIN ASSET State-owned
2.07% 40,137,900 0 0 40,137,900
MANAGEMENT LTD. legal person
CHINA UNIVERSAL FUND -
CHINA CONSTRUCTION
BANK - CHINA LIFE
INSURANCE - CHINA LIFE Others 0.47% 9,134,240 7,985,840 0 9,134,240
INSURANCE’S EQUITY
PORTFOLIO ENTRUSTED TO
CHINA UNIVERSAL FUND
VANGUARD EMERGING Overseas legal
0.44% 8,608,238 0 0 8,608,238
MARKETS STOCK INDEX person
43
Shandong Chenming Paper Holdings Limited 2018 Interim Report
FUND
Domestic
JIN Xing 0.44% 8,510,117 2,720,917 0 8,510,117
nature person
AGRICULTURAL BANK OF
CHINA LIMITED – ESSENCE
COMPARATIVE ADVANTAGE
Others 0.39% 7,646,407 7,646,407 0 8,280,589
FLEXIBLE ALLOCATION OF
HYBRID SECURITIES
INVESTMENT FUND
INDUSTRIAL AND
COMMERCIAL BANK OF
Others 0.39% 7,500,009 7,500,009 0 7,500,009
CHINA - CHINA UNIVERSAL
FOCUSED GROWTH FUND
CHINA CONSTRUCTION
BANK CORPORATION -
CHINA UNIVERSAL Others 0.36% 7,000,026 1,499,929 0 7,000,026
ENVIRONMENT PROTECTION
INDUSTRY FUND
A shareholder, Chenming Holdings (Hong Kong) Limited, which is an overseas legal
person, is a wholly-owned subsidiary of a shareholder, Shouguang Chenming Holdings
Company Limited, which is a state-owned legal person. Hence, they are persons acting
Connected relationship or connected party
in concert under Administration of Disclosure of Information on the Change of
relationship among the above shareholders
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 other.
Shareholdings of the top ten shareholders of ordinary shares of non-restricted shares
Number of Class of shares
non-restricted
ordinary shares
Name of shareholders
held as at the Class of shares Number
end of the
reporting period
CHENMING HOLDINGS COMPANY LIMITED 293,003,657 RMB ordinary shares 293,003,657
HKSCC NOMINEES LIMITED 248,678,750 Overseas listed foreign shares 248,678,750
CHENMING HOLDINGS (HONG KONG) Domestically listed foreign shares 140,478,375
242,754,375
LIMITED Domestically listed foreign shares 102,276,000
CENTRAL HUIJIN ASSET MANAGEMENT LTD. 40,137,900 RMB ordinary shares 40,137,900
CHINA UNIVERSAL FUND - CHINA
CONSTRUCTION BANK - CHINA LIFE 9,134,240 RMB ordinary shares 9,134,240
INSURANCE - CHINA LIFE INSURANCE’S
44
Shandong Chenming Paper Holdings Limited 2018 Interim Report
EQUITY PORTFOLIO ENTRUSTED TO CHINA
UNIVERSAL FUND
VANGUARD EMERGING MARKETS STOCK
8,608,238 Domestically listed foreign shares 8,608,238
INDEX FUND
JIN Xing 8,510,117 Domestically listed foreign shares 8,510,117
AGRICULTURAL BANK OF CHINA LIMITED –
ESSENCE COMPARATIVE ADVANTAGE
7,646,407 RMB ordinary shares 7,646,407
FLEXIBLE ALLOCATION OF HYBRID
SECURITIES INVESTMENT FUND
INDUSTRIAL AND COMMERCIAL BANK OF
CHINA - CHINA UNIVERSAL FOCUSED 7,500,009 RMB ordinary shares 7,500,009
GROWTH FUND
CHINA CONSTRUCTION BANK CORPORATION
- CHINA UNIVERSAL ENVIRONMENT 7,000,026 RMB ordinary shares 7,000,026
PROTECTION INDUSTRY FUND
A shareholder, Chenming Holdings (Hong Kong) Limited, which is an overseas legal
Connected relationship or connected party
person, is a wholly-owned subsidiary of a shareholder, Shouguang Chenming Holdings
relationship among the top ten shareholders
Company Limited, which is a state-owned legal person. Hence they are persons acting
of ordinary shares of non-restricted shares,
in concert under Administration of Disclosure of Information on the Change of
and between the top ten shareholders of
Shareholdings in Listed Companies Procedures. Save for the above, it is not aware that
ordinary shares of non-restricted shares and
any other shareholders of tradable shares are persons acting in concert and is also not
the top ten shareholders of ordinary shares
aware that any other shareholders of tradable shares are connected with each other.
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.
IV. 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.
45
Shandong Chenming Paper Holdings Limited 2018 Interim Report
VII Preference Shares
√ Applicable □ Not applicable
I. Issue and listing of preference shares during the reporting period
□ Applicable √ Not applicable
There was no issue and listing of preference shares during the reporting period.
II. Holders of preference shares and their shareholdings
Unit: share
Total number of shareholders of preference shares as at the end of the reporting period 7
Holders holdings more than 5% of the preference shares of the Company or top ten holders of preference shares
Number of Changes Share pledged or
Preferen preference (increase or locked-up
Nature of ce shares held at decrease)
Name of shareholders
shareholders sharehol the end of the during the Status of
Number
ding reporting reporting shares
period period
Domestic
BEIJING YIBEN ZHONGXING
non-state-owned 27.78% 12,500,000 0 Pledged 12,500,000
INVESTMENT MANAGEMENT CO., LTD.
legal person
BANK OF COMMUNICATIONS
INTERNATIONAL TRUST CO., LTD. - Others 22.44% 10,100,000 0
HUILI NO.167 SINGLE CAPITAL TRUST
BANK OF COMMUNICATIONS
INTERNATIONAL TRUST CO., LTD. - Others 14.22% 6,400,000 0
HUILI NO.136 SINGLE CAPITAL TRUST
QILU BANK CO., LTD. - QILU BANK
QUANXIN WEALTH MANAGEMENT Others 13.33% 6,000,000 0
PRODUCT SERIES
Domestic
HENGFENG BANK CO., LTD. non-state-owned 11.11% 5,000,000 0
legal person
SHANGHAI STATE-OWNED ASSETS State-owned legal
6.67% 3,000,000 0
OPERATION CO., LTD. person
NCF - MINSHENG BANK - CHINA
Others 4.44% 2,000,000 0
FORTUNE INTERNATIONAL TRUST –
46
Shandong Chenming Paper Holdings Limited 2018 Interim Report
CHINA FORTUNE TRUST MIN XIN NO.
11 SINGLE CAPITAL TRUST
The aforesaid holders of preference shares, “BANK OF COMMUNICATIONS
INTERNATIONAL TRUST CO., LTD. - HUILI NO.167 SINGLE CAPITAL
Connected relationship or connected party
TRUST” and “BANK OF COMMUNICATIONS INTERNATIONAL TRUST CO.,
relationship among the top ten holders of
LTD. - HUILI NO.136 SINGLE CAPITAL TRUST”, are persons acting in concert.
preference shares, and between the top ten
Save for the above, it is not aware that whether there is any connected relationship
holders of preference shares and the top ten
or connected party relationship among the remaining holders of preference shares,
holders of ordinary shares
and between the top ten holders of preference shares and the top ten holders of
ordinary shares.
III. Repurchase or conversion
□ Applicable √ Not applicable
There was no repurchase or conversion during the reporting period.
IV. Resumption and exercise of voting rights
□ Applicable √ Not applicable
There was no resumption and exercise of voting rights conferred by preference shares during the reporting period.
V. Accounting policy and reasons thereof
√ Applicable □ Not applicable
Pursuant to requirements of Accounting Standard for Business Enterprises No. 22 – Recognition and Measurement of Financial
Instruments, Accounting Standard for Business Enterprises No. 37 – Presentation of Financial Instruments and Provisions for
Differentiation between Financial Instruments and Equity Instruments and Relevant Accounting Treatment, the preference shares
were accounted for as equity instruments as their terms satisfied requirements for such treatments.
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
VIII Directors, Supervisors and Senior Management
I. Changes in shareholdings of Directors, Supervisors and Senior Management
□ Applicable √ Not applicable
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 2017 for details.
II. Changes of Directors, Supervisors and Senior Management of the Company
√ Applicable □ Not applicable
Name Position Type Date Reason
Vice Chairman and Elected as the Vice Chairman of the eighth session of the
Hu Changqing Elected 13 June 2018
deputy general manager Board.
Chen Gang Director Elected 13 June 2018 Elected as a director of the eighth session of the Board.
Dismissed as the secretary to the Board due to personal
Xiao Peng Secretary to the Board Dismissed 19 January 2018
work change.
Yuan Xikun Secretary to the Board Appointment 16 May 2018 Appointed by the Board as the Secretary to the Board.
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
IX Corporate Bonds
Are there any corporate bonds offered to the public and listed on stock exchanges which do not become due as at the date of approval
of interim report or overdue but not fully settled?
Yes
I. Basic information on corporate bonds
Outstanding
Bond Bond Maturity Interest Payment
Name of bond Issue date amount of the bonds
abbreviation code date rate method
(RMB’0,000)
The public issuance Interest is paid
of the corporate annually. The
bonds of Shandong principal amount
17 Chenming 21 August
Chenming Paper 112570 21 August 2017 120,000 6.50% and the last interest
Bond 01 2022
Holdings Limited to payment will be
qualified investors paid on the maturity
in 2017 (tranche I) date.
The public issuance Interest is paid
of the corporate annually. The
bonds of Shandong principal amount
18 Chenming 29 March
Chenming Paper 112641 29 March 2018 90,000 7.28% and the last interest
Bond 01 2023
Holdings Limited to payment will be
qualified investors paid on the maturity
in 2018 (tranche I) date.
Stock exchange on which corporate bonds are listed or transferred Shenzhen Stock Exchange
Offline subscription: Institutional investors with A share security account opened
Investor eligibility arrangement
under China Securities Depository and Clearing Co., Ltd.
Interest payment of corporate bonds during the
There was no interest payment during the reporting period.
reporting period
Both 17 Chenming Bond 01 and 18 Chenming Bond 01 attach with options for the issuer to
Performance of relevant terms adjust the coupon rate and for investors to resell. The issuer has the right to determine the
during the reporting period, for adjustment to the coupon rate for the following 3 years at the end of the second year and the
special terms such as issuer or adjustment to the coupon rate for the following year as the end of the fourth year. After issuing
investor option and the announcement on whether the coupon rate of the relevant tranche of bonds will be adjusted
interchangeable for corporate and the range of adjustment, the investors have the right to register for reselling during the
bonds (if any) period as announced to resell all or part of the relevant tranche of bonds held to the issuer at par
value.
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
II. Information on bond custodian and credit rating agency
Bond custodian:
GF Securities Co., Office 38th Floor, Metro Plaza, No.183 Xu Telephone of
Name Contact person 020-87555888
Ltd. address Tianhe North Road, Guangzhou Duwei contact person
Credit rating agency(ies) which conducted rating on corporate bonds during the reporting period:
China Chengxin Securities Valuation 21/F, Anji Building, 760 Xizang South Road,
Name Office address
Company Limited Huangpu District, Shanghai
Reason of change, procedures to be performed and impacts on interests of
investors, etc. in case the bond trustee and credit rating agency engaged by the No change during the reporting period.
Company during the reporting period have changed (if applicable)
III. Use of proceeds from corporate bonds
The use of proceeds from issuance of corporate bonds has strictly completed relevant
Use of proceeds from corporate bonds and
application and approval procedures. As at the end of the reporting period, the proceeds
its implementation
from 17 Chenming Bond 01 and 18 Chenming Bond 01 were fully used.
Balance as at the end of the period
0
(RMB’0,000)
Operation of special account for proceeds Special account for proceeds is used for the deposit of special capital from bonds.
Is the use of proceeds consistent with the
use of proceeds guaranteed under the
Yes
prospectus, proposed use of proceeds and
other agreement?
IV. Credit rating of corporate bonds
The credit rating of 18 Chenming Bond 01 as granted by China Chengxin Securities Valuation Company Limited remained at AA+,
and the credit rating for the Company was AA+ (stable outlook). The 2018 public issuance of the corporate bonds (tranche I) updated
rating report (2018) was published on CNINFO on 14 June 2018.
The credit rating of 17 Chenming Bond 01 as granted by China Chengxin Securities Valuation Company Limited remained at AA+,
and the credit rating for the Company was AA+ (stable outlook). The 2017 public issuance of the corporate bonds (tranche I) updated
rating report (2018) was published on CNINFO on 14 June 2018.
V. Credit enhancement mechanism, repayment plan and other repayment guarantee
measures for corporate bonds
There was no change in credit enhancement mechanism, repayment plan and other repayment guarantee measures, which were
consistent with relevant commitments as set out in the prospectuses, during the reporting period.
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
VI. Convening of meeting for bondholders during the reporting period
Not applicable.
VII. Performance of bond custodian during the reporting period
The bond custodian performed its duties in accordance with the agreement during the reporting period.
VIII. Major accounting data and financial indicators of the Company as at the end of the
reporting period and last year (or for the reporting period and the corresponding period last
year)
Increase/decrease as at the end
As at the end of the reporting of the reporting period as
Item As at the end of the prior year
period compared to the end of the prior
year
Current ratio 86.70% 86.32% 0.38%
Gearing ratio 72.95% 71.34% 1.61%
Quick ratio 75.88% 75.80% 0.08%
Increase/decrease of the
The corresponding period of the reporting period as compared to
The reporting period
prior year corresponding period of the
prior year
EBITDA interest coverage ratio 2.98 4.04 -26.24%
Loans payment ratio 100.00% 100.00% 0.00%
Interest payment ratio 100.00% 100.00% 0.00%
Major reason for more than 30% in year-on-year change for the above accounting data and financial indicators
□ Applicable √ Not applicable
IX. Overdue liabilities
□ Applicable √ Not applicable
The Company did not have any liabilities overdue.
X. Interest payment on other bonds, debt and financing instruments during the reporting
period
Unit: RMB
Item Amount of interest payment
Corporate bonds 1,064,800,000.00
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
Super & short-term commercial papers 7,786,624,109.43
Total 8,851,424,109.43
XI. Bank credit obtained, its use and repayment of bank loans during the reporting period
During the reporting period, the Company obtained bank credit of RMB79,659 million, of which RMB47,806 million was utilised
with RMB31,853 million outstanding. The Company repaid bank loans of RMB26,303 million.
XII. Performance of relevant agreements or commitments under the prospectus of corporate
bonds during the reporting period
Nil
XIII. Matters of significance during the reporting period
Nil
XIV. Is there any guarantor for corporate bonds?
□ Yes √ No
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
X Financial Report
I. Auditors’ Report
Is the interim report audited
□ Yes √ No
The interim financial report is unaudited.
II. Financial Statements
The unit in the financial statements of the financial report is: RMB
1. Consolidated Balance Sheet
Prepared by: Shandong Chenming Paper Holdings Limited
30 June 2018
Unit: RMB
Item Closing balance Opening balance
CURRENT ASSETS:
Monetary funds 18,221,475,254.64 14,443,492,461.43
Financial assets measured at fair
0.00 94,000,000.00
value through profit or loss
Bills receivable 3,414,858,233.25 4,220,231,853.56
Accounts receivable 3,771,972,562.50 3,665,865,577.03
Prepayments 2,052,209,098.34 1,962,151,473.35
Other receivables 594,045,363.59 538,734,656.55
Inventories 6,429,315,741.47 6,022,805,491.17
Non-current assets due within one
5,648,853,164.63 6,901,695,875.94
year
Other current assets 11,391,587,771.93 11,568,757,330.26
Total current assets 51,524,317,190.35 49,417,734,719.29
NON-CURRENT ASSETS:
Available-for-sale financial assets 103,000,000.00 2,453,000,000.00
Long-term receivables 9,561,944,402.25 9,400,862,089.18
Long-term equity investments 401,425,440.97 391,868,827.45
Investment properties 4,750,494,168.51 4,809,535,109.82
Fixed assets 27,822,887,081.68 28,227,509,503.05
Construction in progress 9,622,048,648.75 7,668,669,413.87
Construction materials 10,036,240.51 15,275,630.45
Intangible assets 1,927,411,734.38 2,059,221,379.09
Goodwill 20,283,787.17 20,283,787.17
Long-term prepaid expenses 134,407,595.23 139,122,569.45
Deferred income tax assets 518,667,202.23 522,288,850.40
Other non-current assets 679,555,760.89 499,724,197.70
Total non-current assets 55,552,162,062.57 56,207,361,357.63
Total assets 107,076,479,252.92 105,625,096,076.92
CURRENT LIABILITIES:
Short-term borrowings 34,822,972,619.60 35,096,574,873.03
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
Bills payable 1,577,635,335.58 1,278,395,090.71
Accounts payable 3,781,065,811.13 4,013,936,527.74
Advance receipts 359,821,898.06 243,182,891.22
Staff remuneration payables 144,080,274.09 185,130,892.10
Taxes payable 392,925,658.39 496,626,014.68
Interest payable 119,390,579.91 85,480,380.32
Dividend payable 1,626,559,287.00
Other payables 2,124,709,050.72 1,426,629,545.41
Non-current liabilities due within
4,321,258,031.95 3,625,430,347.40
one year
Other current liabilities 10,160,767,686.35 10,797,248,631.76
Total current liabilities 59,431,186,232.78 57,248,635,194.37
NON-CURRENT LIABILITIES:
Long-term borrowings 7,206,918,851.77 7,646,122,995.91
Bonds payable 2,097,247,500.00 2,196,261,279.57
Long-term payables 5,001,525,052.49 5,550,881,435.64
Special payables 706,039,716.66 681,039,716.66
Provisions 325,259,082.28 325,259,082.28
Deferred income 1,420,873,007.36 1,452,717,833.55
Other non-current liabilities 1,919,538,128.76 250,000,000.00
Total non-current liabilities 18,677,401,339.32 18,102,282,343.61
TOTAL LIABILITIES 78,108,587,572.10 75,350,917,537.98
OWNERS’ EQUITY:
Share capital 2,904,608,200.00 1,936,405,467.00
Other equity instruments 10,048,300,000.00 10,048,300,000.00
Including: Preference shares 4,477,500,000.00 4,477,500,000.00
Perpetual bonds 5,570,800,000.00 5,570,800,000.00
Capital reserves 5,122,952,455.09 6,149,257,784.90
Other comprehensive income -457,399,238.18 -354,165,127.80
Surplus reserves 1,132,116,106.40 1,132,116,106.40
Retained profit 8,926,586,582.71 8,866,614,844.40
Total equity attributable to equity
27,677,164,106.02 27,778,529,074.90
holders of the company
Minority interest 1,290,727,574.80 2,495,649,464.04
Total owners’ equity 28,967,891,680.82 30,274,178,538.94
TOTAL LIABILITIES AND
107,076,479,252.92 105,625,096,076.92
OWNERS’ EQUITY
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Hu Jinbao Zhang Bo
2. Balance sheet of the Company
Unit: RMB
Item Closing balance Opening balance
CURRENT ASSETS:
Monetary funds 10,332,176,520.63 9,580,548,200.88
Financial assets measured at fair
94,000,000.00
value through profit or loss
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
Bills receivable 1,169,806,535.40 787,095,075.51
Accounts receivable 2,203,752,838.45 8,188,750.45
Prepayments 1,645,981,455.73 742,107,273.09
Other receivables 23,381,030,317.17 22,351,203,484.83
Inventories 893,831,632.06 751,426,520.51
Other current assets 2,898,684.56 2,488,977.72
Total current assets 39,629,477,984.00 34,317,058,282.99
NON-CURRENT ASSETS:
Available-for-sale financial assets 103,000,000.00 2,453,000,000.00
Long-term receivables 456,925,607.06 456,925,607.06
Long-term equity investments 20,069,848,988.72 18,674,034,243.49
Fixed assets 2,152,865,137.61 2,364,990,246.94
Construction in progress 1,457,558,768.95 973,375,557.42
Intangible assets 464,333,715.78 470,379,203.58
Deferred income tax assets 160,364,942.47 186,935,887.68
Other non-current assets 54,800,000.00 54,800,000.00
Total non-current assets 24,919,697,160.59 25,634,440,746.17
TOTAL ASSETS 64,549,175,144.59 59,951,499,029.16
CURRENT LIABILITIES:
Short-term borrowings 7,747,708,213.63 7,522,637,247.14
Bills payable 9,393,590,000.00 6,375,070,000.00
Accounts payable 471,669,534.55 570,706,495.21
Advance receipts 1,561,190,481.36 956,040,917.07
Staff remuneration payables 45,432,514.57 47,546,116.66
Taxes payable 55,603,091.43 116,173,781.96
Interest payable 105,256,333.34 28,428,028.58
Dividend payable 1,626,559,287.00
Other payables 2,446,918,910.84 2,162,553,106.46
Non-current liabilities due within
1,224,548,708.44 1,318,429,260.12
one year
Other current liabilities 10,160,767,686.35 10,797,248,631.76
Total current liabilities 34,839,244,761.51 29,894,833,584.96
NON-CURRENT LIABILITIES:
Long-term borrowings 667,124,084.70 908,182,122.65
Bonds payable 2,097,247,500.00 1,198,305,304.75
Long-term payables 4,143,834,948.98 4,605,691,332.13
Provisions 325,259,082.28 325,259,082.28
Deferred income 48,582,602.30 50,753,189.60
Other non-current liabilities 1,244,666,668.00 250,000,000.00
Total non-current liabilities 8,526,714,886.26 7,338,191,031.41
Total liabilities 43,365,959,647.77 37,233,024,616.37
OWNERS’ EQUITY:
Share capital 2,904,608,200.00 1,936,405,467.00
Other equity instruments 10,048,300,000.00 10,048,300,000.00
Including: Preference shares 4,477,500,000.00 4,477,500,000.00
Perpetual bonds 5,570,800,000.00 5,570,800,000.00
Capital reserves 4,970,757,435.19 5,938,960,168.19
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
Surplus reserves 1,119,926,524.49 1,119,926,524.49
Retained profit 2,139,623,337.14 3,674,882,253.11
TOTAL OWNERS’ EQUITY 21,183,215,496.82 22,718,474,412.79
TOTAL LIABILITIES AND
64,549,175,144.59 59,951,499,029.16
OWNERS’ EQUITY
3. Consolidated Income Statement
Unit: RMB
Item Amount for the reporting period Amount for the prior period
I. Total revenue 15,551,334,039.89 13,749,235,007.24
Including: Revenue 15,551,334,039.89 13,749,235,007.24
II. Total operating costs 13,616,998,093.86 11,880,087,434.81
Including: Operating costs 10,259,884,918.86 9,171,066,988.49
Taxes and surcharges 129,509,211.98 105,960,012.36
Sales and distribution
605,463,325.71 641,498,275.35
expenses
General and administrative
972,856,522.65 856,354,999.17
expenses
Finance expenses 1,498,828,444.69 1,055,396,506.36
Loss on impairment of assets 150,455,669.97 49,810,653.08
Plus: Gain on change in fair value (“-”
-117,973,841.55 -11,009,851.10
denotes loss)
Investment income (“-” denotes
152,314,068.88 65,864,672.36
loss)
Including: Investment income
-17,153,503.00 -4,154,293.30
from associates and joint ventures
Gain on disposal of assets (“-”
-2,210,048.63 344,802.99
denotes loss)
Other income 59,672,276.88
III. Operating profit (“-” denotes loss) 2,026,138,401.61 1,924,347,196.68
Plus: Non-operating income 191,632,557.35 156,696,370.73
Less: Non-operating expenses 446,221.32 2,072,581.46
IV. Total profit (“-” denotes total loss) 2,217,324,737.64 2,078,970,985.95
Less: Income tax expenses 434,202,112.50 331,253,327.08
V. Net profit (“-” denotes net loss) 1,783,122,625.14 1,747,717,658.87
(I) Net profit from continuing
1,783,122,625.14 1,747,717,658.87
operations (“-” denotes net loss)
(II) Net profit from discontinued
operations (“-” denotes net loss)
Net profit attributable to
1,784,631,025.31 1,745,514,838.23
shareholders of the Company
Profit or loss of minority interest -1,508,400.17 2,202,820.64
VI. Net other comprehensive income
-103,234,110.38 170,697,419.90
after tax
Net other comprehensive income after
tax attributable to shareholders of the -103,234,110.38 170,697,419.90
Company
(I) Other comprehensive income that
will not be reclassified to profit and loss
in subsequent periods
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
(II) Other comprehensive income
that will be reclassified to profit and loss -103,234,110.38 170,697,419.90
in subsequent periods
5. Exchange differences on
-103,234,110.38 170,697,419.90
translation of foreign operations
Other comprehensive income
attributable to minority interest, net of tax
VII. Total comprehensive income 1,679,888,514.76 1,918,415,078.77
Total comprehensive income
attributable to shareholders of the 1,681,396,914.93 1,916,212,258.13
Company
Total comprehensive income
-1,508,400.17 2,202,820.64
attributable to minority interest
VIII. Earnings per share:
(I) Basic earnings per share 0.36 0.50
(II) Diluted earnings per share 0.36 0.50
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Hu Jinbao Zhang Bo
4. Income statement of the Company
Unit: RMB
Item Amount for the reporting period Amount for the prior period
I. Revenue 2,816,294,485.82 3,682,570,308.92
Less: Operating costs 1,974,361,613.08 2,560,699,253.09
Taxes and surcharges 44,570,024.17 38,197,149.42
Selling and distribution
90,052,325.82 131,699,019.76
expenses
General and administrative
253,378,119.62 306,624,272.42
expenses
Finance expenses 450,292,646.56 302,220,430.04
Loss on impairment of assets -3,263,078.84 13,038,951.61
Plus: Gain on change in fair value
-94,000,000.00
(“-” denotes loss)
Investment income (“-”
151,671,872.91 69,489,948.67
denotes loss)
Including: Investment income
-4,078,127.09 -30,620.30
from associates and joint ventures
Gain on disposal of assets
-1,404,490.25 285,572.22
(“-” denotes loss)
Other income 2,170,587.30
II. Operating profit (“-” denotes loss) 65,340,805.37 399,866,753.47
Plus: Non-operating income 159,134,238.55 12,782,322.74
Less: Non-operating expenses
III. Total profit (“-” denotes total loss) 224,475,043.92 412,649,076.21
Less: Income tax expenses 26,570,945.21 20,154,500.40
IV. Net profit (“-” denotes net loss) 197,904,098.71 392,494,575.81
(I) Net profit from continuing
197,904,098.71 392,494,575.81
operations (“-” denotes net loss)
(II) Net profit from discontinued
operations (“-” denotes net loss)
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
V. Net other comprehensive income
after tax
VI. Total comprehensive income 197,904,098.71 392,494,575.81
5. Consolidated cash flow statement
Unit: RMB
Item Amount for the reporting period Amount for the prior period
I. Cash flows from operating activities:
Cash received from sales of goods
14,209,807,106.29 12,367,242,687.49
and rendering of services
Tax rebates received 4,906,195.67 2,575,753.81
Cash received relating to other
2,560,132,218.85 230,498,726.61
operating activities
Subtotal of cash inflows from operating
16,774,845,520.81 12,600,317,167.91
activities
Cash paid for goods and services 9,303,280,725.88 8,387,824,464.47
Cash paid to and for employees 578,298,920.80 544,347,530.25
Payments of taxes and surcharges 876,814,512.36 793,983,398.34
Cash paid relating to other
1,271,413,440.86 6,987,103,543.24
operating activities
Subtotal of cash outflows from
12,029,807,599.90 16,713,258,936.30
operating activities
Net cash flows from operating activities 4,745,037,920.91 -4,112,941,768.39
II. Cash flows from investing activities:
Cash received from investments 2,350,000,000.00
Cash received from investment
171,500,000.00 16,861,112.27
income
Net cash received from disposal of
fixed assets, intangible assets and other 150,077.55 395,843.67
long-term assets
Net cash received from disposal of
19,610,260.70
subsidiaries and other business units
Cash received relating to other
11,194,100.00 972,391,073.00
investing activities
Subtotal of cash inflows from investing
2,552,454,438.25 989,648,028.94
activities
Cash paid for purchase of fixed
assets, intangible assets and other 1,609,046,327.99 746,966,959.23
long-term assets
Cash paid on investments 1,311,172,596.96 606,110,000.00
Cash paid relating to other
103,042,210.54
investing activities
Subtotal of cash outflows from
3,023,261,135.49 1,353,076,959.23
investing activities
Net cash flows from investing activities -470,806,697.24 -363,428,930.29
III. Cash flows from financing
activities:
Cash received from investments 40,000,000.00
Including: Cash received from by
40,000,000.00
subsidiaries from minority investment
Cash received from borrowings 23,960,924,414.55 23,101,617,576.90
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
Cash received from issuance of
bonds
Cash received relating to other
8,940,587,508.90 7,720,000,594.49
financing activities
Subtotal of cash inflows from financing
32,901,511,923.45 30,861,618,171.39
activities
Cash repayments of amounts
19,647,186,258.44 13,156,774,323.31
borrowed
Cash paid for dividend and profit
1,331,735,531.11 2,483,897,208.01
distribution or interest payment
Including: Dividend and profit
paid by subsidiaries to minority
shareholders
Cash paid relating to other
15,500,213,039.33 10,195,554,187.00
financing activities
Subtotal of cash outflows from
36,479,134,828.88 25,836,225,718.32
financing activities
Net cash flows from financing activities -3,577,622,905.43 5,025,392,453.07
IV. Effect of foreign exchange rate
29,968,597.03 -107,391,377.48
changes on cash and cash equivalents
V. Net increase in cash and cash
726,576,915.27 441,630,376.91
equivalents
Plus: Balance of cash and cash
equivalents as at the beginning of the 2,804,408,374.46 1,979,861,045.62
period
VI. Balance of cash and cash
3,530,985,289.73 2,421,491,422.53
equivalents as at the end of the period
6. Cash flow statement of the Company
Unit: RMB
Item Amount for the reporting period Amount for the prior period
I. Cash flows from operating activities:
Cash received from sales of goods
2,262,576,453.26 2,947,603,434.58
and rendering of services
Tax rebates received
Cash received relating to other
997,388,740.42 697,159,595.97
operating activities
Subtotal of cash inflows from operating
3,259,965,193.68 3,644,763,030.55
activities
Cash paid for goods and services 1,005,422,983.37 1,907,092,137.24
Cash paid to and for employees 203,769,186.38 227,658,831.17
Payments of taxes and surcharges 298,790,554.29 226,985,971.66
Cash paid relating to other
778,975,073.31 610,188,242.33
operating activities
Subtotal of cash outflows from
2,286,957,797.35 2,971,925,182.40
operating activities
Net cash flows from operating activities 973,007,396.33 672,837,848.15
II. Cash flows from investing activities:
Cash received from investments 2,380,000,000.00
Cash received from investment
171,500,000.00 16,861,111.11
income
Net cash received from disposal of 17,628.00
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
fixed assets, intangible assets and other
long-term assets
Net cash received from disposal of
subsidiaries and other business units
Cash received relating to other
900,000,000.00
investing activities
Subtotal of cash inflows from investing
2,551,500,000.00 916,878,739.11
activities
Cash paid for purchase of fixed
assets, intangible assets and other 26,375,996.36 54,575,321.80
long-term assets
Cash paid on investments 1,361,714,807.50 2,665,511,220.00
Subtotal of cash outflows from
1,388,090,803.86 2,720,086,541.80
investing activities
Net cash flows from investing activities 1,163,409,196.14 -1,803,207,802.69
III. Cash flows from financing
activities:
Cash received from investments
Cash received from borrowings 7,562,143,316.17 14,360,451,015.03
Cash received from issuance of
bonds
Cash received relating to other
8,204,965,097.95 7,190,741,096.00
financing activities
Subtotal of cash inflows from financing
15,767,108,414.12 21,551,192,111.03
activities
Cash repayments of amounts
6,735,658,936.22 10,665,502,742.60
borrowed
Cash paid for dividend and profit
716,590,206.19 2,240,461,564.72
distribution or interest payment
Cash paid relating to other
10,373,957,627.23 7,751,076,273.64
financing activities
Subtotal of cash outflows from
17,826,206,769.64 20,657,040,580.96
financing activities
Net cash flows from financing activities -2,059,098,355.52 894,151,530.07
IV. Effect of foreign exchange rate
6,160,731.67 -5,297,986.97
changes on cash and cash equivalents
V. Net increase in cash and cash
83,478,968.62 -241,516,411.44
equivalents
Plus: Balance of cash and cash
equivalents as at the beginning of the 1,020,262,069.85 582,578,426.62
period
VI. Balance of cash and cash
1,103,741,038.47 341,062,015.18
equivalents as at the end of the period
7. Consolidated statement of changes in owners’ equity
Amount for the reporting period
Unit: RMB
For the reporting period
Equity attributable to owners of the Company
Item
Total owner’s
Other equity instruments Other Minority interest
Less: treasury General risk equity
Share capital Capital reserves comprehensive Special reserves Surplus reserves Retained profit
shares provisions
Preference shares Perpetual bonds Others income
I. Balance as at the end of the
1,936,405,467.00 4,477,500,000.00 5,570,800,000.00 6,149,257,784.90 -354,165,127.80 1,132,116,106.40 8,866,614,844.40 2,495,649,464.04 30,274,178,538.94
prior year
Add: changes in accounting
policies
Corrections of previous
errors
60
Shandong Chenming Paper Holdings Limited 2018 Interim Report
Mergers of companies
under common control
Others
II. Balance as at the beginning of
1,936,405,467.00 4,477,500,000.00 5,570,800,000.00 6,149,257,784.90 -354,165,127.80 1,132,116,106.40 8,866,614,844.40 2,495,649,464.04 30,274,178,538.94
the year
III. Changes in the period (“-”
968,202,733.00 -1,026,305,329.81 -103,234,110.38 59,971,738.31 -1,204,921,889.24 -1,306,286,858.12
denotes decrease)
(I) Total comprehensive income -103,234,110.38 1,784,631,025.31 -1,508,400.17 1,679,888,514.76
(II) Capital paid in and reduced
-58,102,596.81 -1,203,413,489.07 -1,261,516,085.88
by owners
1. Ordinary shares paid by
-58,102,596.81 -1,203,413,489.07 -1,261,516,085.88
shareholders
2. Capital paid by holders of
other equity instruments
3. Amount of share-based
payments recognised in owners’
equity
4. Others
(III) Profit distribution -1,724,659,287.00 -1,724,659,287.00
1. Transfer to surplus reserves
2. Transfer to general risk
provision
3. Distribution to owners (or
-1,724,659,287.00 -1,724,659,287.00
shareholders)
4. Others
(IV) Transfer of owners’ equity 968,202,733.00 -968,202,733.00
1. Capital (or share capital)
968,202,733.00 -968,202,733.00
created on capital reserve
2. Capital (or share capital)
created on surplus reserve
3. Surplus reserve making up
losses
4. Others
(V) Special reserve
1. Withdrawal
2. Used
(VI) Others
IV. Balance as at the end of the
2,904,608,200.00 4,477,500,000.00 5,570,800,000.00 5,122,952,455.09 -457,399,238.18 1,132,116,106.40 8,926,586,582.71 1,290,727,574.80 28,967,891,680.82
period
Amounts for the prior period
Unit: RMB
For the prior period
Equity attributable to owners of the Company
Item
Total owner’s
Other equity instruments Other Minority interest
Less: treasury General risk equity
Share capital Capital reserves comprehensive Special reserves Surplus reserves Retained profit
shares provisions
Preference shares Perpetual bonds Others income
I. Balance as at the end of the
1,936,405,467.00 4,477,500,000.00 2,582,800,000.00 6,149,257,784.90 -805,245,771.89 1,132,116,106.40 6,745,974,781.02 346,050,847.76 22,564,859,215.19
prior year
Add: changes in accounting
policies
Corrections of previous
errors
Mergers of companies
under common control
Others
II. Balance as at the beginning of
1,936,405,467.00 4,477,500,000.00 2,582,800,000.00 6,149,257,784.90 -805,245,771.89 1,132,116,106.40 6,745,974,781.02 346,050,847.76 22,564,859,215.19
the year
III. Changes in the period (“-”
170,697,419.90 366,294,450.68 42,202,820.64 579,194,691.22
denotes decrease)
(I) Total comprehensive income 170,697,419.90 1,745,514,838.23 2,202,820.64 1,918,415,078.77
(II) Capital paid in and reduced
40,000,000.00 40,000,000.00
by owners
1. Ordinary shares paid by
40,000,000.00 40,000,000.00
shareholders
2. Capital paid by holders of
other equity instruments
3. Amount of share-based
payments recognised in owners’
equity
4. Others
(III) Profit distribution -1,379,220,387.55 -1,379,220,387.55
1. Transfer to surplus reserves
2. Transfer to general risk
provision
3. Distribution to owners (or
-1,379,220,387.55 -1,379,220,387.55
shareholders)
4. Others
(IV) Transfer of owners’ equity
1. Capital (or share capital)
created on capital reserve
2. Capital (or share capital)
created on surplus reserve
3. Surplus reserve making up
losses
4. Others
(V) Special reserve
1. Withdrawal
2. Used
(VI) Others
IV. Balance as at the end of the
1,936,405,467.00 4,477,500,000.00 2,582,800,000.00 6,149,257,784.90 -634,548,351.99 1,132,116,106.40 7,112,269,231.70 388,253,668.40 23,144,053,906.41
period
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
8. Statement of changes in owners’ equity of the Company
Amounts for the period
Unit: RMB
For the reporting period
Item Other equity instruments Other Total
Share capital Capital reserves Less: treasury shares Special reserves Surplus reserves Retained profit
Preference shares Perpetual bonds Others comprehensive income owners’ equity
I. Balance as at the end of the prior year 1,936,405,467.00 4,477,500,000.00 5,570,800,000.00 5,938,960,168.19 1,119,926,524.49 3,674,882,253.11 22,718,474,412.79
Add: changes in accounting policies -8,503,727.68 -8,503,727.68
Corrections of previous errors
Others
II. Balance as at the beginning of the year 1,936,405,467.00 4,477,500,000.00 5,570,800,000.00 5,938,960,168.19 1,119,926,524.49 3,666,378,525.43 22,709,970,685.11
III. Changes in the period (“-” denotes
968,202,733.00 -968,202,733.00 -1,526,755,188.29 -1,526,755,188.29
decrease)
(I) Total comprehensive income 197,904,098.71 197,904,098.71
(II) Capital paid in and reduced by owners
1. Ordinary shares paid by shareholders
2. Capital paid by holders of other equity
instruments
3. Amount of share-based payments
recognised in owners’ equity
4. Others
(III) Profit distribution -1,724,659,287.00 -1,724,659,287.00
1. Transfer to surplus reserves
2. Distribution to owners (or shareholders) -1,724,659,287.00 -1,724,659,287.00
3. Others
(IV) Transfer of owners’ equity 968,202,733.00 -968,202,733.00
1. Capital (or share capital) created on
968,202,733.00 -968,202,733.00
capital reserve
2. Capital (or share capital) created on
surplus reserve
3. Surplus reserve making up losses
4. Others
(V) Special reserve
1. Withdrawal
2. Used
(VI) Others
IV. Balance as at the end of the period 2,904,608,200.00 4,477,500,000.00 5,570,800,000.00 4,970,757,435.19 1,119,926,524.49 2,139,623,337.14 21,183,215,496.82
Amounts for the prior period
Unit: RMB
For the prior period
Item Other equity instruments Other Total
Share capital Capital reserves Less: treasury shares Special reserves Surplus reserves Retained profit
Preference shares Perpetual bonds Others comprehensive income owners’ equity
I. Balance as at the end of the prior year 1,936,405,467.00 4,477,500,000.00 2,582,800,000.00 5,938,960,168.19 1,119,926,524.49 4,791,486,988.38 20,847,079,148.06
Add: changes in accounting policies
Corrections of previous errors
Others
II. Balance as at the beginning of the year 1,936,405,467.00 4,477,500,000.00 2,582,800,000.00 5,938,960,168.19 1,119,926,524.49 4,791,486,988.38 20,847,079,148.06
III. Changes in the period (“-” denotes
-986,725,811.74 -986,725,811.74
decrease)
(I) Total comprehensive income 392,494,575.81 392,494,575.81
(II) Capital paid in and reduced by owners
1. Ordinary shares paid by shareholders
2. Capital paid by holders of other equity
instruments
3. Amount of share-based payments
recognised in owners’ equity
4. Others
(III) Profit distribution -1,379,220,387.55 -1,379,220,387.55
1. Transfer to surplus reserves
2. Distribution to owners (or shareholders) -1,379,220,387.55 -1,379,220,387.55
3. Others
(IV) Transfer of owners’ equity
1. Capital (or share capital) created on
capital reserve
2. Capital (or share capital) created on
surplus reserve
3. Surplus reserve making up losses
4. Others
(V) Special reserve
1. Withdrawal
2. Used
(VI) Others
IV. Balance as at the end of the period 1,936,405,467.00 4,477,500,000.00 2,582,800,000.00 5,938,960,168.19 1,119,926,524.49 3,804,761,176.64 19,860,353,336.32
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Shandong Chenming Paper Holdings Limited 2018 Interim 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.
The Company and its subsidiaries are principally engaged in processing and sale of paper products (including machine-made
paper and paper board), paper making raw materials and machinery; generation and sale of electric power and thermal power;
forestry, saplings growing, processing and sale of timber; manufacturing, processing and sale of wood products; and manufacturing
and sale of laminated boards and fortified wooden floorboards, marine engineering project investment, hotel service, equipment
financial and operating leasing, etc.
The financial statements were considered and approved by the Board of the Company on 27 August 2018.
Subsidiaries of the Company included in the scope of consolidation for the first half of 2018 totalled 62. For details, please refer
to this Note IX “Equity in other entities”. The scope of consolidation of the Company during the year had one company included and
one company excluded 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 Company’s financial statements are prepared on a going concern and based on actual transactions and events, in accordance
with the Accounting Standards for Business Enterprises-Basic Standards promulgated by the Ministry of Finance (Order of Ministry
of Finance No. 33, as amended by Order of Ministry of Finance No. 76) and 42 specific accounting standards as promulgated and
amended on and after 15 February 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 Company’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.
The Company has been implementing the ASBEs since 1 January 2007.
In addition to preparing and issuing financial statements in accordance with the new accounting standards, the Company, as an
H-share listed company, also has to provide financial statements for the public in accordance with the Hong Kong Financial
Reporting Standards. Pursuant to the relevant requirements under Rule 1 of “Accounting Standards for Business Enterprises
Interpretation No. 1”, with respect to the transactions or matters which do not have any difference in terms of standards between the
new accounting standards and the Hong Kong Financial Reporting Standards, the Company shall make retrospective adjustments in
accordance with Rules 5 to 19 of “Accounting Standards for Business Enterprises No. 38 – First-time Implementation of Accounting
Standards for Business Enterprises” (“Standard No. 38”) and other relevant requirements. The Company shall also make
retrospective adjustments to the financial statements for the comparable years in respect of the changes in accounting policies due to
the implementation of new accounting standards for the transactions and matters other than those attributable to Rules 5 to 19 of
Standard No. 38 with reference to the relevant available information based on the financial statements prepared by the Company
according to the Hong Kong Financial Reporting Standards.
2. Going concern
No facts or circumstances comprise a material uncertainty about the Company’s going concern basis within 12 months since the
end of the reporting period.
V. Significant Accounting Policies and Accounting Estimates
Specific accounting policies and accounting estimates are indicated as follows:
The Company and its subsidiaries are principally engaged in processing and sale of paper products (including machine made
paper and paper board), paper making raw materials and machinery. The Company and its subsidiaries formulated certain specific
accounting policies and accounting estimates for the transactions and matters such as revenue recognition based on their actual
production and operation characteristics pursuant to the requirements under the relevant accounting standards for business enterprises.
For details, please refer to this Note V. 25 “Revenue”. For the critical accounting judgments and estimates made by the management,
please refer to Note V. 30 “Critical accounting judgments and 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 Company as at 31 December 2017 and relevant information such as the operating results and cash flows for
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
2017. 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 Company 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 Company 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 Company until their
realisation in cash or cash equivalents. The operating cycle of the Company lasts for 12 months, and acts as an indicator for
classification of liquidity of assets and liabilities.
Our subsidiaries, including Zhanjiang Chenming Arboriculture Development Co., Ltd., Yangjiang Chenming Arboriculture
Development Co., Ltd., Nanchang Chenming Arboriculture Development Co., Ltd., Huanggang Chenming Arboriculture
Development Co., Ltd. and Chenming Arboriculture Co., Ltd., were engaged in arboriculture cultivating, plantation and sale. Their
ordinary operating cycle lasts for over 1 year.
4. Functional currency
The Company and its domestic subsidiaries recognise RMB as their functional currency according to the primary economic
environment in which they operate. The functional currency of the Company and its domestic subsidiaries is Renminbi (“RMB”).
Overseas subsidiaries of the Company recognise U.S. dollar (“USD” or “US$”), Japanese yen (“JPY”), Euro (“EUR”) and South
Korean Won (“KRW”) as their respective functional currency according to the general economic environment in which these
subsidiaries operate. The Company prepares its financial statements in RMB.
5. Accounting treatment of business combinations 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 combinations under common control and not under common control.
(1) Business combinations 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 the
absorbing party effectively obtains control of the party being absorbed.
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.
(2) Business combination not under common control
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. Transaction cost attributable to
equity or debt securities issued by the acquirer as consideration is included in the initial costs. Contingent consideration involved is
charged to the combination cost at its fair value on the acquisition date, in the event that adjustment on the contingent consideration
is required as a result of new or additional evidence in relation to circumstances existed on the acquisition date emerges within 12
months from the acquisition date, the combination goodwill shall also be adjusted. The combination cost incurred by the acquirer and
the identifiable net assets acquired from the combination are measured at their fair values on the acquisition date. 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
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
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.
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 combination of business not under common control achieved by 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 Rule of 51 to “Accounting Standard for Business Enterprises No. 33 – Consolidated Financial
Statements”(see Note V. 5 (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. 14 “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 reports:
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.
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
combinations under common control, the operating results and cash flows from the beginning of the consolidation period to the
consolidation date are also presented in the consolidated income 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 at the
acquisition date.
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 of the subsidiaries that are not attributable to the
Company are presented under shareholders’ equity and net profit in the consolidated financial statements as minority interests and net
profit of minority interest respectively. The portion of net profit or loss of subsidiaries for the period attributable to minority interest
is presented in the consolidated income statement under the “profit or loss of minority interest”. When the amount of loss attributable
to the minority shareholders of a subsidiary exceeds the minority shareholders’ portion of the opening balance of owners’ equity of
the subsidiary, the excess amount shall be allocated against minority interest.
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
65
Shandong Chenming Paper Holdings Limited 2018 Interim Report
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. 14 “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 these several transactions meet the following one or more conditions: ① these transactions are entered
into at the same time or after considering their impacts on each other; ② these transactions as a whole can reach complete business
results; ③ the occurrence of a transaction depends on at least the occurrence of another transaction; ④ 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. 14 (2) ④) 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.
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 Company’s rights
and obligations under a joint arrangement, the Company 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 Company only is entitled to net assets of this arrangement.
The Company treats investments in joint ventures by using the equity method of accounting in accordance with accounting
policies as set out in Note V. 14 (2) ②“long-term equity investments by using equity method of accounting”.
The Company shall, as a joint venture, recognise the assets held and obligations assumed solely by the Company, and recognise
assets held and obligations assumed jointly by the Company in appropriation to the share of the Company; recognise revenue from
disposal of the share of joint operations of the Company; recognise fees solely occurred by Company and recognise fees from joint
operations in appropriation to the share of the Company.
When the Company, as a joint venture, invests or sells assets (the assets does not constitute a business, the same below) to or
purchase assets from joint operations, the Company 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 out in “Accounting Standard for Business Enterprises No. 8 – Asset Impairment”, the Company shall recognise
the full amount of this loss in relation to the Company invests in or sells assets to joint operations; the Company recognise the loss
according to the Company’s share of commitment in relation to the Company purchase assets from joint operations.
8. Standards for recognising cash and cash equivalents
Cash and cash equivalents of the Company 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 amount 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 Company, when initially recognised, are translated into the 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 the functional currency at the exchange rate actually adopted.
(2) 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 on the balance sheet
date. All differences are included in the profit or loss in the period, except for: ① the differences arising from foreign currency
borrowings related to the acquisition or construction of fixed assets that are qualified for capitalisation will be accounted for
according to the principle of capitalisation; and ② exchange difference arising from change in balance of carrying amount other
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
than amortised cost of available for sale foreign monetary items will be included in other comprehensive income.
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.
The foreign currency non-monetary items measured at historical cost shall still be measured by the functional currency
translated at the spot exchange rate on the date of the transaction. Foreign currency non-monetary items measured at fair value are
translated at the spot exchange rate on the date of determination of the fair value. The difference between the amounts of the
functional currency before and after the translation will be 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 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 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
be 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.
10. Financial instruments
Financial asset or financial liability will be recognised when the Company 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
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.
① 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
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
losses incurred at the time of derecognition, impairment or amortisation are charged to profit or loss in the current period.
② Available-for-sale financial assets
Available-for-sale financial assets represent equity instruments over relevant investees of 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, for
equity investment of which the Company does not have control, joint control or significant influence, not quoted in an active market
and the fair value of which cannot be measured reliably, their fair values 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.
(3) Impairment of financial assets
The Company reviews the carrying amount of financial assets on each balance sheet date and provides for impairment where
there is objective evidence that financial assets are impaired.
For a financial asset that is individually significant, the Company assesses the asset individually for impairment. For a financial
asset that is not individually significant, the Company 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.
① 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 shall be reversed to the extent that the carrying amount of the financial assets upon reversal will not exceed the amortised
cost as at the reversal date assuming there is no provision for impairment.
② Impairment of available-for-sale financial assets
In the event that decline in fair value of the available-for-sale equity instrument or fair value of the interest in the investee’s
identifiable net assets 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 decline of
over 20% in such fair value. “Non-temporary decline” refers to such fair value decreased continuously for more than 12 months. The
continuous decreasing period is determined on the basis of the drop of such 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 and included in the profit or loss for the period. The accumulated loss that
transferred out is the balance of the initial acquisition 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.
(4) Recognition and measurement of transfers of financial asset
Financial asset that satisfied any of the following criteria shall be derecognised: ① the contract right to receive the cash flows
of the financial asset has terminated; ② 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 ③ 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 such financial asset and 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.
If all criteria of recognition of transfer of financial assets are satisfied, the difference between the carrying amount of the
financial assets transferred and the sum of the consideration received from the transfer and the accumulated changes in fair value
originally included in other comprehensive income shall be recognised in the profit or loss for the period.
If a part of the financial assets is qualified 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 and the aforementioned carrying amount.
For financial assets that are sold or transferred with recourse or endorsement, the Company needs 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
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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: financial liabilities recognised at fair value with changes carried through
profit or loss and other financial liabilities. For financial liabilities measured at fair value with changes recognised in profit or loss of
the current period, relevant transaction costs are directly recognised in profit or loss for the period. The amount is recognised initially
at fair value and the subsequent changes in fair value will be recognised in profit or loss for the period. For other financial liabilities,
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.
(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 Company (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 are 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 Company owns the legitimate rights of offsetting the recognised financial assets and financial liabilities, which are
enforceable currently, and the Company plans to realise the financial assets or to clear off the financial liabilities on a net amount
basis or simultaneously, the financial assets and financial liabilities shall be reported in the balance sheet upon offsetting. 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 all of its liabilities.
The issuance (including refinancing), repurchase, sale or cancellation of equity instruments by the Company is accounted for
movement in equity. The Company does not recognise the movement in fair value of equity instruments. Transaction costs related to
equity transactions are deducted from equity.
Various distributions (excluding dividends) made by the Company to holders of equity instruments reduces owners’ equity. The
Company does not recognise the movement in fair value of equity instruments.
11. Accounts receivable
(1) Making bad debt provision individually for individually significant accounts receivable
Judgment basis or amount standard for individually significant Accounts receivable of more than RMB1 million is recognised as
amount individually significant accounts receivable by the Company.
For accounts receivable that is individually significant, the
Company assesses such accounts receivable individually for
impairment. If it is determined that no objective evidence of
impairment exists for an individually assessed financial asset, the
Method for making bad debt provision individually for financial asset is included in a group of financial assets with
individually significant accounts receivable 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) Making bad debt provision for accounts receivable collectively assessed for impairment based on credit
risk characteristics
Name of groups Method for making bad debt provision
Specific fund groups Other methods
Ageing groups Ageing analysis
Use of ageing analysis for making bad debt provision in the portfolio:
√ Applicable □ Not applicable
Ratio of other accounts receivable
Ageing Ratio of accounts receivable provision
provision
Within 1 year (including 1 year) 5.00% 5.00%
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
1-2 years 10.00% 10.00%
2-3 years 20.00% 20.00%
Over 3 years 100.00% 100.00%
Using percentage of balance for making bad debt provision in the portfolio:
□ Applicable √ Not applicable
Using other methods for making bad debt provision in the portfolio:
□ Applicable √ Not applicable
(3) Accounts receivable individually insignificant but assessed individually for impairment
12. Inventories
Whether the Company needs to comply with the disclosure requirements for specific industries
No
(1) Classification of inventories
Inventories mainly include raw materials, work in progress, goods in stock, developing 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 developing products 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 such as maintenance cost incurred after canopy closure shall be included in profit or
loss for the current period.
The cost of consumable biological assets shall, at the time of harvest or disposal, be carried forward at carrying amount using
the batch averaging method.
(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 taxes 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 valued 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.
(5) Low-value consumables and packaging materials are amortised when issued for use.
13. Assets held-for-sale
The Company shall classify a non-current asset or disposal group as held for sale if its carrying amount will be recovered
principally through a sale transaction (including a non-monetary asset exchange of commercial substance, the same below) rather
than through continuous use, and when all of the following conditions are met: according to the practice of disposing of this type of
assets or disposal groups in a similar transaction, a non-current asset or disposal group is available for immediate sale in its present
condition; the Company has made a resolution in respect of a disposal plan and obtained a firm purchase commitment from a buyer;
and the sale is probable to be completed within one year. A disposal group is a group of assets to be disposed of, by sale or otherwise,
together as a group in a single transaction, and liabilities directly associated with those assets that will be transferred in the
transaction. Where goodwill acquired in a business combination has been allocated to the asset group or groups to which a disposal
group belongs in accordance with the Accounting Standard for Business Enterprises No. 8 - Impairment of Assets, the disposal group
shall include the goodwill allocated to it.
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When the Company measures initially or remeasures the non-current assets and disposal group classified as held for sale on the
balance sheet date, its carrying amount is written down to its fair value less selling costs if its carrying amount is higher than its fair
value less costs to sell. The reduced amount is recognised as asset impairment loss and charged to current profit or loss, with
provision made for the impairment of the held-for-sale assets. With regard to the disposal group, the asset impairment loss recognised
is offset by the carrying amount of the goodwill in the disposal group first, and then by the carrying amount of each of the
non-current assets in the disposal group which are applicable to the measure requirements under the Accounting Standard for
Business Enterprises No. 42 - Noncurrent Assets Held For Sale, Disposal Groups and Discontinued Operations (hereinafter referred
to as “Held-For-Sale Standard”) pro rata. If on a subsequent balance sheet date, the net amount of the fair value of a held-for-sale
disposal group less its costs to sell increases, the amount reduced previously shall be recovered, and reversed in the asset impairment
loss recognised on the non-current asset which is applicable to the measurement requirements of the Held-For-Sale Standard after the
non-current asset is classified as held for sale. The reversed amount is credited to current profit or loss, and the carrying amount of
each non-current asset (other than goodwill) which is applicable to the measurement requirements of the Held-For-Sale Standard is
increased pro rata according to the percentage of each non-current asset’s carrying amount. Neither the carrying amount of goodwill
which has been offset nor the asset impairment loss recognised before the non-current asset to which the measurement requirements
of the Held-For-Sale Standard is applicable is classified as held for sale can be reversed.
No depreciation or amortisation is provided for a non-current asset in the non-current assets or disposal groups held for sale.
Interest and other expenses attributable to the liabilities of a disposal group held for sale shall continue to be recognised.
When a non-current asset or a disposal group does not meet the condition to be classified as held for sale, the Company ceases
to classify it as held for sale or removes the non-current asset from the disposal group held for sale, and measures it at the lower of:
(1) the carrying amount before it was classified as held for sale, adjusted for any depreciation (or amortisation) or impairment that
would have been recognised had it not been classified as held for sale, and (2) its recoverable amount.
14. Long-term equity investments
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 Company 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 IV. 9 “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.
(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 carrying
amount 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 do 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 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 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 do 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.
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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.
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, the fair value of equity securities issued by the Company, the agreed value of investment contract
or agreement, the fair value or original carrying amount 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.
① 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 long-term equity
investment is adjusted in the event of additional investment or investment recovery. Except 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.
② 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.
Under the equity method, investment gain and other comprehensive income shall be recognised based on the Company’s share
of the net profits or losses and other comprehensive income made by the investee, respectively. Meanwhile, the carrying amount of
long-term equity investment shall be adjusted. The carrying amount of long-term equity investment shall be reduced based on the
Company’s share of profit or cash dividend distributed by the investee. In respect of the other movement of net profit or loss, other
comprehensive income and profit distribution of investee, the carrying amount of long-term equity investment shall be adjusted and
included in the capital reserves. The Company shall recognise its share of the investee’s net profits or losses based on the fair values
of the investee’s individual separately identifiable assets at the time of acquisition, after making appropriate adjustments thereto. 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
Company 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 internal transactions shall be eliminated by the portion attributable to the Company. Investment
gain shall be recognised accordingly. However, any unrealised loss arising from internal transactions between the Company and an
investee is not eliminated to the extent that the loss is impairment loss of the transferred assets. In the event that the Company
disposed of an asset classified as operation to its joint ventures or associates, which resulted 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 amount of disposed operation will be
fully included in profit or loss for the current period. In the event that the Company sold an asset classified as operation to its
associates or joint ventures, the difference between the carrying amount 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 Company’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 Company 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
Company 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 Company 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.
③ Acquisition of minority interest
Upon the preparation of the consolidated financial statements, capital reserve is adjusted based on the difference between the
additional long term equity investment from acquisition of minority interest and the share of net assets of the subsidiary attributable
to the additional shareholding from the date of acquisition (or date of combination). In the case of insufficient capital surplus to offset
impairment, retained earnings shall be adjusted.
④ 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
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
company results in a loss 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.
In respect of long-term equity investment accounted for using equity method with the remaining equity 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.
In the event of loss of control over investee due to partial disposal of equity investment by the Company, 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 the remaining equity interest which cannot apply
common control or impose significant influence over the investee after disposal, it shall be accounted for using the 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 Company 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 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 transferred.
In the event of loss of common control or significant influence over investee due to partial disposal of equity investment by the
Company, 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 Company 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.
15. Investment property
Measurement of investment property
Measured by using the cost method
Depreciation or amortisation methods
Investment property refers 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 Company 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 Company adopts cost method for subsequent measurement of investment property, which is depreciated using the same
policy as that for buildings.
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
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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.
If an investment property is disposed of or if it withdraws permanently from use and no economic benefit will be obtained from
the disposal, the recognition of it as an investment property shall be terminated. When an investment property is sold, transferred,
retired or damaged, the amount of proceeds on disposal of the property net of the carrying amount and related tax and surcharges is
recognised in profit or loss for the current period.
16. 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.
(2) Depreciation method
Useful lives of Estimated residual value Annual depreciation rate
Category Depreciation method
depreciation (Year) (%) (%)
Housing and building structure Straight-line method 20-40 5-10 2.25-4.75
Machinery and equipment Straight-line method 8-20 5-10 4.50-11.88
Transportation equipment Straight-line method 5-8 5-10 11.25-19.00
Electronic equipment and others Straight-line method 5 5-10 18.00-19.00
Estimated net residual value of a fixed asset is the estimated amount that the Company 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) Recognition, accounting and depreciation method of fixed assets acquired under finance leases
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. For 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.
17. 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 IV. 20
“Impairment of long-term asset”.
18. 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
Company shall determine the amount of interest to be capitalised on such borrowings by applying a capitalisation rate to the
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
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.
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.
19. Intangible assets
(1) Accounting method, useful life and impairment test
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 Company shall review the useful life of intangible asset with a finite useful life and the amortisation method applied at least
at each financial year-end. 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 Company 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, an entity shall estimate the useful
life of that asset and apply the accounting policies accordingly.
(2) Accounting policy for internal research and development expenditure
Research and development expenditure of the Company 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:
① it is technically feasible that the intangible asset can be used or sold upon completion;
② there is intention to complete the intangible asset for use or sale;
③ 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; and if the intangible asset is for internal use, there is evidence that there
exists usage for the intangible asset;
④ 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;
⑤ the expenses attributable to the development phase of the intangible asset can be measured reliably.
If the expenses incurred during the research phase and the development phase cannot be distinguished separately, all
development expenses incurred are accounted for in the profit or loss for the current period.
20. Impairment of long-term asset
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 properties
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.
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
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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
Company 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 Company 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 restorable
value.
21. 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.
22. Employee benefits
(1) Accounting treatment for short-term staff remuneration
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.
(2) Accounting treatment for post-employment benefits
Post-employment benefits mainly include pension insurance premium and unemployment insurance premium. Post-employment
benefits mainly adopt defined contribution plan. 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.
(3) Accounting treatment for termination benefits
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.
(4) Accounting treatment for other long-term employee benefit
The Company does not provide any other long-term employee benefit for its staff.
23. Provisions
Obligations pertinent to the contingencies which satisfy the following conditions are recognised as provisions: (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, provisions 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
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pertinent to the contingencies.
If all or some expenses incurred for settlement of provisions are expected to be borne by the third party, the compensation
amount shall, on a recoverable basis, be recognised as asset separately, and compensation amount recognised shall not be more than
the carrying amount of provisions.
24. Preference shares, perpetual bonds and other financial instruments
(1) Classification of perpetual bonds and preference shares
Perpetual bonds, preference shares and other financial instruments issued by the Company are classified as equity instruments
when all of the following conditions are satisfied:
① The financial instruments have no contractual obligation to pay in cash or other financial assets to other parties nor to
exchange financial assets or financial liabilities under potential adverse condition with other parties;
②If the financial instrument will or may be settled in the entity’s own equity instruments, it is a non-derivative instrument that
includes no contractual obligations to deliver a variable number of its own equity instruments; or a derivative that will be settled only
by the Company exchanging a fixed amount of cash or other financial asset for a fixed number of its own equity instruments.
Other than financial instruments classified as equity instruments according to the above conditions, other financial instruments
issued by the Company shall be classified as financial liabilities.
The financial instruments issued by the Company which are compound financial instruments are recognised as a liability based
on the fair value of the liability component, and the amount net of the fair value of the liability component from the actual amount
received is recognised as “other equity instruments”. Transaction costs that relate to the issue of a compound financial instrument are
allocated to the liability and equity components in proportion to the allocation of gross proceeds.
(2) Accounting treatment of perpetual bonds and preference shares
For financial instruments classified as financial liabilities (such as perpetual bonds and preference shares), except borrowing
costs qualifying for capitalisation (please refer to this Note V. 18 “Borrowing costs”), its related interest, dividends, gains or losses,
and gains or losses arising from redemption or refinancing are credited to profit or loss for the current period.
For financial instruments classified as equity instruments (such as perpetual bonds and preference shares), its issue (including
refinancing), repurchase, sale or cancellation are treated by the Company as changes in equity, with related transaction costs
deducted from equity. The Company’s distribution to holders of equity instruments are treated as a distribution of profits.
Changes in the fair value of equity instruments are not recognised by the Company.
25. Revenue
Whether the Company needs to comply with the disclosure requirements for specific industries
No
(1) Revenue from sales of goods
Revenue is recognised when the Company 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 declared.
(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:
① The relevant amount of revenue can be reliably measured; ② it is probable that the economic benefits will flow into the
Company; ③ the completion schedule of the transaction can be reliably ascertained; and ④ 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 Company 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 Company’s monetary fund, and the effective interest rates.
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26. Government grants
(1) Judgment basis and accounting treatment of government grants related to assets
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. 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.
(2) Judgment basis and accounting treatment of government grants related to income
Other government grants are classified as related to revenue. 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.
27. 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.
(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 Company 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 is able to control the timing of the reversal of the temporary
difference; and it is probable that the temporary difference will not reverse in the foreseeable future.
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 Company 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 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.
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.
(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
Company, at the same time, records the net amount after offsetting its current income tax assets and current income tax liabilities.
The Company 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 Company records the
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
net amount after offsetting its current income tax assets and current income tax liabilities.
28. Lease
(1) Accounting treatment for operating leases
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 Company recorded as lessee
Lease payment for operating lease is recognised as related asset cost or profits and losses for the current 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 Company 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 treatment for finance leases
(1) Financing lease business with the Company 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.
(2) Financing lease business with the Company recorded as lessor
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.
(3) The debts arising from the financing lease business was provided for in the following manners:
① Individual assessment of impairment
When assessing the probability of recovery of lease receivables from a customer, the ability and willingness to pay lease
payments, and the payment record of the customer, profitability of the lease projects, and guarantees for leased assets will be
analysed. If there are evidences indicating that the customer is unable to repay and its willingness to repay is not strong, and the
principal and interest are still not recoverable, or only a very small portion can be recovered, after taking all possible measures or all
necessary legal procedures, the receivables are subject to individual impairment assessment, and the difference between the present
value of the future cash flows expected to be derived from the receivables and the carrying amount shall be accounted for as
provision for bad debts and recognised in profit or loss.
② Collective assessment of impairment based on credit risk characteristics
At the end of the period, each individual leasing contract is classified based on the amount past due and recovery, and the major
basis for classification and provision for impairment are as follows:
Category Basis for classification Proportion of provision (%)
Normal Not yet past due 0.30
90 days past due 5.00
90 days - 1 year past due (inclusive) 10.00
Past due 1-2 years past due (inclusive) 30.00
2- 3 years past due (inclusive) 50.00
Over 3 years past due 100.00
③ No bad debt provision will be made for lease receivables from related parties unless there is objective evidence that the
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
Company is unable to recover the lease receivables from related parties.
If there is objective evidence that the lease receivables from related parties are recovered and can be linked objectively to an
event occurring after the write-down, the impairment losses recognised will be reversed and accounted for in profit or loss. The
carrying amount reversed shall not exceed the assumed amortised costs on the date of reversal of the lease receivables had no
impairment provision been made.
29. Other significant accounting policies and accounting estimates
(1) Discontinued operations
A discontinued operation is a separately identified component of the Group that either has been disposed of or is classified as
held for sale, and meets one of the following conditions: ① represents a separate major line of business or geographical area of
operations; ② is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations;
and ③ is a subsidiary acquired exclusively with a view to resale.
For the accounting treatment of discontinued operations, please refer to the relevant descriptions in Note IV. 12 “Assets and
disposal groups held for sale”.
(2) 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.
30. Changes in significant accounting policies and estimates
(1) Changes in accounting policies
□ Applicable √ Not applicable
(2) Changes in significant accounting estimates
□ Applicable √ Not applicable
31. Others
The Company 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 Company’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 Company 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 Company needs to make judgments, estimates and assumptions as to the items
amount of financial statements are set out below:
(1) Classification of leases
The Company 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
The Company 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 Company makes
allowance for inventories which have costs higher than net realisable value or become obsolete and slow-moving. Write-down of
80
Shandong Chenming Paper Holdings Limited 2018 Interim Report
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.
(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 Company 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.
Where the fair value of an asset or an asset group does not have involved a sale agreement and an active market, the Company shall
engage an expert to determine its fair value in a valuation.
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.
In projecting the present value of the future cash flows, critical judgments shall be made to the output, selling 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 Company 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 Company shall provide depreciation and amortisation for investment properties, fixed assets and intangible assets over their
useful lives and after taking into account of their residual value, using straight-line method. The Company 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 Company according to its previous experience 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 Company 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.
VI. Taxation
1. Main tax types and tax rates
Tax type Tax base Tax rate
17% for general, 11% for sales of gas and water and 6% for the service industry.
Value added tax Value-added tax is computed on the difference after deduction of input value-added 16%、11%、6%
tax.
Urban maintenance
7% of actual payment of turnover tax. 7%
and construction tax
Enterprise income 25% of taxable income; for the companies which are subject to preferential policies,
please refer to Note VI. 2(1); the overseas companies shall pay taxes at the tax rate 25%
tax
pursuant to the requirements of the countries or regions where the companies are
81
Shandong Chenming Paper Holdings Limited 2018 Interim Report
located.
Educational
3% of actual payment of turnover tax. 3%
surcharges
Local educational
2% of actual payment of turnover tax. 2%
surcharges
2. Tax incentives
(1) Enterprise Income Tax
On 10 December 2015, the Company received a high and new technology enterprise certificate with a certification number of
GR201537000611. Pursuant to the requirements under the Law of the People’s Republic of China on Enterprise Income Tax and the
relevant policies, the Company is subject to a corporate income tax rate of 15% of taxable income, and is entitled to the preferential
treatment from 2015 to 2017.
Shouguang Meilun Paper Co., Ltd., a subsidiary of the Company, received a high and new technology enterprise certificate with
a certification number of GR201537000228 on 10 December 2015. Pursuant to the requirements under the Law of the People’s
Republic of China on Enterprise Income Tax and the relevant policies, Shouguang Meilun is subject to a corporate income tax rate of
15% of taxable income, and is entitled to the preferential treatment from 2015 to 2017.
Zhanjiang Chenming Pulp & Paper Co., Ltd., a subsidiary of the Company, received a high and new technology enterprise
certificate with a certification number of GR201544000146 on 30 September 2015. Pursuant to the requirements under the Law of
the People’s Republic of China on Enterprise Income Tax and the relevant policies, Zhanjiang Chenming is subject to a corporate
income tax rate of 15% of taxable income, and is entitled to the preferential treatment from 2015 to 2017.
Jilin Chenming Paper Co., Ltd., a subsidiary of the Company, received a high and new technology enterprise certificate with a
certification number of GR201622000039 on 1 November 2016. Pursuant to the requirements under the Law of the People’s
Republic of China on Enterprise Income Tax and the relevant policies, Jilin Chenming is subject to a corporate income tax rate of 15%
of taxable income, and is entitled to the preferential treatment from 2015 to 2017.
Jiangxi Chenming Paper Co., Ltd., a subsidiary of the Company, received a high and new technology enterprise certificate with
a certification number of GR201636000018 on 15 November 2016. Pursuant to the requirements under the Law of the People’s
Republic of China on Enterprise Income Tax and the relevant policies, Jiangxi Chenming is subject to a corporate income tax rate of
15% of taxable income, and is entitled to the preferential treatment from 2016 to 2018.
Pursuant to the requirements of Rule 27 of Law of the People’s Republic of China on Enterprise Income Tax (《中華人民共和
國企業所得稅法》) and Rule 86 of Regulations for the Implementation of Law of the People’s Republic of China on Enterprise
Income Tax (《中華人民共和國企業所得稅法實施條例》), subsidiaries of Chenming Paper, namely, Zhanjiang Chenming
Arboriculture Development Co., Ltd., Yangjiang Chenming Arboriculture Development Co., Ltd., Nanchang Chenming
Arboriculture Development Co., Ltd., Huanggang Chenming Arboriculture Development 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 2016 was 16.5%.
Except for the above preferential policies, other subsidiaries of the Company are subject to enterprise income tax rate of 25%.
(2) Value-added Tax (“VAT”) incentives
Pursuant to the Notice on Issuing the Value-added Tax Preferential Catalogue on Products and Services Applying Integrated
Use of Resources by the Ministry of Finance and the State Administration of Taxation (Cai Shui [2015] No. 78), Zhanjiang
Chenming New-style Wall Materials Co., Ltd., a subsidiary of the Company, produces bricks and blocks using waste residues and is
therefore subject to a preferential policy of an immediate VAT refund of 70% in 2017.
Pursuant to the Notice on Issuing the Value-added Tax Preferential Catalogue on Products and Services Applying Integrated
Use of Resources by the Ministry of Finance and the State Administration of Taxation (Cai Shui [2015] No. 78), Shandong
Chenming Panels Co., Ltd., a subsidiary of the Company, produces products that apply integrated use of resources and is therefore
subject to a preferential policy of an immediate VAT refund of 70%.
VII. Notes to items of the consolidated financial statements
1. Monetary funds
Unit: RMB
Item Closing balance Opening balance
Treasury cash 2,104,950.30 2,344,438.45
Bank deposit 3,528,880,339.43 2,802,063,936.01
Other monetary funds 14,690,489,964.91 11,639,084,086.97
Total 18,221,475,254.64 14,443,492,461.43
Of which: Total deposits in overseas 639,719,297.65 508,707,081.55
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
banks
Note: ① Other monetary funds of RMB6,690,434,770.82 (31 December 2017: RMB4,822,551,296.94) were the guarantee deposit
for the application for bank acceptance with the banks by the Group.
② Other monetary funds of RMB2,510,468,323.21 (31 December 2017: RMB1,333,152,563.36) were the guarantee deposit
for the application for letter of credit with the banks by the Group.
③ Other monetary funds of RMB3,826,377,119.45 (31 December 2017: RMB4,939,992,248.75) were the guarantee deposit
for the application for guarantees with the banks by the Group.
④ Other monetary funds of RMB1,266,999,751.43 (31 December 2017: RMB90,037,977.92) were the guarantee deposit for
the
application for loans with the banks by the Group.
⑤ Other monetary funds of RMB396,210,000.00 (31 December 2017: RMB453,350,000.00) were the Group’s statutory
reserve deposit at the banks.
2. Financial assets measured at fair value through profit or loss
Unit: RMB
Item Closing balance Opening balance
Financial assets designated at fair value through profit or loss 0.00 94,000,000.00
Total 0.00 94,000,000.00
Other explanation: On 16 April, the Company and Shanghai Zhongneng Enterprise Development (Group) Co., Ltd. (another
shareholder of Guangdong Dejun Investment Co., Ltd.) entered into the Guangdong Dejun Investment Co., Ltd. Equity Repurchase
Agreement, pursuant to which, the Company is entitled to the fixed investment income from the equity investment and received an
amount for premium repurchase at 4% per year.
3. Bills receivable
(1) Classification of bills receivable
Unit: RMB
Item Closing balance Opening balance
Bank acceptance bills 3,414,858,233.25 4,120,231,853.56
Commercial acceptance bills 0.00 100,000,000.00
Total 3,414,858,233.25 4,220,231,853.56
(2) Bills receivable of the Company pledged at the end of the period
Unit: RMB
Item Pledged amount at the end of the period
Bank acceptance bills 1,901,430,321.76
Commercial acceptance bills 0.00
Total 1,901,430,321.76
(3) Outstanding bills receivable endorsed or discounted by the Company as at the end of the period
Unit: RMB
Derecognised amount as at the end of the Recognised amount as at the end of the
Item
period period
Bank acceptance bills 5,330,734,383.89 0.00
Commercial acceptance bills 0.00
Total 5,330,734,383.89 0.00
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
(4) Other explanation
As at 30 June 2018, bills with the carrying amount of RMB1,612,389,759.13 (31 December 2017: RMB972,379,999.17) were
pledged in exchange for short-term borrowings of RMB1,569,382,500.00. As at 30 June 2018, bills with the carrying amount of
RMB257,540,562.63 (31 December 2017: RMB443,772,390.78) were pledged and a letter of guarantee amounting to
RMB295,000,000.00 was issued therefor. As at 30 June 2018, bills with the carrying amount of RMB31,500,000.00 (31 December
2017: RMB692,007,430.76) were pledged and a letter of credit amounting to RMB22,629,484.00 was issued therefor.
As at 30 June 2018, the accumulated bank acceptance bills issued by the Group to banks amounted to RMB2,991,700,361.67
(2017: RMB3,742,679,994.55), with discount expenses incurred of RMB70,915,830.95 (2017: RMB72,693,293.53). As at 30 June
2018, outstanding discounted bills receivable amounted to RMB2,554,764,872.75 (2017: RMB2,169,102,479.25).
4. Accounts receivable
(1) Disclosure of accounts receivable by category
Unit: RMB
Closing balance Opening balance
Book balance Bad debts provision Book balance Bad debts provision
Category
Provision Carrying amount Carrying amount
Amount Percentage Amount Amount Percentage Amount Provision percentage
percentage
Accounts receivable that are
individually significant but assessed 40,852,895.55 0.99% 40,852,895.55 100.00% 37,864,672.83 0.94% 37,864,672.83 100.00% 0.00
individually for impairment
Accounts receivable that are
3,988,541,011.
collectively assessed for impairment 4,096,627,882.60 99.01% 324,655,320.10 7.92% 3,771,972,562.50 99.01% 322,675,434.25 8.61% 3,665,865,577.03
28
based on credit risk characteristics
Receivables that are individually
insignificant but assessed individually 0.00 0.00% 0.00 0.00% 1,994,466.60 0.05% 1,994,466.60 100.00% 0.00
for impairment
4,028,400,150
Total 4,137,480,778.15 100.00% 365,508,215.65 8.83% 3,771,972,562.50 100.00% 362,534,573.68 9.00% 3,665,865,577.03
.71
Accounts receivable that are individually significant but assessed individually for impairment as at the end of the period:
√ Applicable □ Not applicable
Unit: RMB
Closing balance
Receivable (by entity) Accounts Bad debt Provision
Reason for provision
receivable provision percentage
Overdue for a prolonged period
FOSHAN SHUNDE XINGCHEN PAPER CO., LTD. 26,236,528.70 26,236,528.70 100.00%
and unlikely to be recovered
Overdue for a prolonged period
BEIJING HUAXIA CULTURE MEDIA CO., LTD. 8,207,950.42 8,207,950.42 100.00%
and unlikely to be recovered
NO.1 MIDDLE SCHOOL OF WUHAN ECONOMIC Overdue for a prolonged period
1,916,773.20 1,916,773.20 100.00%
AND TECHNOLOGICAL DEVELOPMENT ZONE and unlikely to be recovered
Overdue for a prolonged period
JIANGXI LONGMING ENTERPRISE CO., LTD. 1,763,987.74 1,763,987.74 100.00%
and unlikely to be recovered
Overdue for a prolonged period
NANCHANG XINGBO PAPER CO., LTD. 1,656,205.97 1,656,205.97 100.00%
and unlikely to be recovered
SHANGHAI KANGNUO FLOORING Overdue for a prolonged period
1,071,449.52 1,071,449.52 100.00%
MANUFACTURING CO., LTD. and unlikely to be recovered
Total 40,852,895.55 40,852,895.55 -- --
Use of ageing analysis for making bad debt provision in groups:
√ Applicable □ Not applicable
Unit: RMB
Closing balance
Ageing
Accounts receivable Bad debt provision Provision percentage
Within 1 year
Of which: within 3 months 2,524,113,758.35 118,868,916.30 4.71%
4-6 months 549,224,133.45 27,461,206.69 5.00%
7-12 months 57,217,805.64 2,860,890.26 5.00%
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
Sub-total for within 1 year 3,130,555,697.44 149,191,013.25 4.77%
1-2 years 68,951,648.77 6,895,164.88 10.00%
2-3 years 86,974,725.73 17,394,945.15 20.00%
Over 3 years 151,174,196.83 151,174,196.83 100.00%
Total 3,437,656,268.77 324,655,320.10
(2) Provision, recovery or reversal of bad debt provision for the period
Bad debt provision for the current period amounted to RMB4,563,478.96. The amount for bad debt provision recovered or reversed
during the current period was RMB1,589,836.99.
(3) Particulars of accounts receivable actually written off during the reporting period
Unit: RMB
Item Amount written off
Accounts receivable actually written-off 1,907,616.23
Significant accounts receivable written-off:
Unit: RMB
Written off Arising from
Nature of accounts Amount
Name of entity Reason for written off procedure related party
receivable written off
performed transaction or not
HEBEI PRINTING
Overdue for a prolonged period Approved by the
FACTORY OF PEOPLE'S Payment for goods 534,612.10 No
and unlikely to be recovered general manager
DAILY
JILIN CHANGCHUN Overdue for a prolonged period Approved by the
Payment for goods 1,099,418.13 No
CARD FACTORY and unlikely to be recovered general manager
JINAN HANZHANG Overdue for a prolonged period Approved by the
Payment for goods 273,586.00 No
PRINTING CO., LTD. and unlikely to be recovered general manager
Total -- 1,907,616.23 -- -- --
(4) Top five accounts receivable based on closing balance of debtors
Name of entity Nature Closing Ageing Percentage
balance of closing Closing
balance of balance of
total bad debt
accounts provision
receivable
BEIJING PAPER COMPANY FOR FOREIGN Within 1 year
Payment for 133,549,17 6,677,458
LANGUAGE PUBLICATIONS 3.23%
goods 0.95 .55
YUNNAN PRINTING MATERIALS CORPORATION Within 1 year
Payment for 83,711,747 4,185,587
2.02%
goods .25 .36
GUIZHOU PRINTING MATERIALS CORPORATION Within 1 year
Payment for 81,525,220 4,076,261
1.97%
goods .72 .04
SICHAUN PRINTING MATERIALS CORPORATION. Within 1 year
Payment for 69,428,539 3,471,426
1.68%
goods .67 .98
SHANXI PRINTING MATERIALS CORPORATION Within 1 year
Payment for 63,292,602 7,461,197
or 1 to 2 years 1.53%
goods .60 .66
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
Total -- 431,507,28 -- 12.38% 28,207,93
3.65
1.19
5. Prepayments
(1) Presentation of prepayments stated according to ageing analysis
Unit: RMB
Closing balance Opening balance
Ageing
Amount Percentage Amount Percentage
Within 1 year 1,939,522,004.84 94.51% 1,766,616,133.82 90.03%
1-2 year 112,687,093.50 5.49% 195,535,339.53 9.97%
Total 2,052,209,098.34 -- 1,962,151,473.35 --
(2) Top five prepayments according to closing balance of prepaid parties
Name of entity Amount Percentage (%) Term Reason for being unsettled
JIANGXI PROVINCE ZHONGLIAN ENERGY 191,215,583.6 9.32% Within 1 year Prepayments for goods
DEVELOPMENT CO., LTD. 3 according to the agreed
contract
ZHANJIANG MINGLI TRADING CO., LTD. 91,584,634.70 4.46% Within 1 year Prepayments for goods
according to the agreed
contract
GUANGDONG LEPENG TRADING CO., LTD. 68,352,514.04 3.33% Within 1 year Prepayments for goods
according to the agreed
contract
HENAN XINYU INTERNATIONAL PULP AND 59,841,051.05 2.92% Within 1 year Prepayments for goods
PAPER CO., LTD. according to the agreed
contract
SHANGHAI MUHAO INTERNATIONAL TRADE CO., 51,865,502.43 2.53% Within 1 year Prepayments for goods
LTD. according to the agreed
contract
Total 462,859,285.8 22.55%
5
6. Other receivables
(1) Other receivables by category
Unit: RMB
Closing balance Opening balance
Book balance Bad debt provision Book balance Bad debt provision
Category
Provision Carrying amount Carrying amount
Amount Percentage Amount Amount Percentage Amount Provision percentage
percentage
Other receivables that are individually
significant but assessed individually 28,935,015.66 4.17% 28,935,015.66 100.00% 28,935,015.66 4.52% 28,935,015.66 100.00% 0.00
for impairment
Other receivables that are collectively
604,070,216.3
assessed for impairment based on 658,189,914.56 94.76% 64,144,550.97 9.75% 594,045,363.59 94.32% 65,335,559.83 10.82% 538,734,656.55
8
credit risk characteristics
Other receivables that are individually
insignificant but assessed individually 7,456,768.12 1.07% 7,456,768.12 100.00% 7,456,768.12 1.16% 7,456,768.12 100.00% 0.00
for impairment
640,462,000.1
Total 694,581,698.34 100.00% 100,536,334.75 14.47% 594,045,363.59 100.00% 101,727,343.61 15.88% 538,734,656.55
6
Other receivables that are individually significant but assessed individually for impairment as at the end of the period:
√ Applicable □ Not applicable
Unit: RMB
86
Shandong Chenming Paper Holdings Limited 2018 Interim Report
Closing balance
Other receivables (by entity) Other Bad debt Provision Reasons for
receivables provision percentage provision
Unlikely to be
ANDRITZ AG 3,143,660.15 3,143,660.15 100.00%
recovered
Unlikely to be
VOITH GERMANY 2,615,790.98 2,615,790.98 100.00%
recovered
Unlikely to be
METSO PAPER (CHINA) CO., LTD. 4,725,039.89 4,725,039.89 100.00%
recovered
YIZHIJIA PAPERMAKING DEHYDRATION EQUIPMENT Unlikely to be
1,345,757.83 1,345,757.83 100.00%
TRADING (SHANGHAI) CO., LTD. recovered
Unlikely to be
HONG KONG DANBELL COMPANY 1,699,390.16 1,699,390.16 100.00%
recovered
Unlikely to be
AHLSTROM FINLAND 2,820,742.72 2,820,742.72 100.00%
recovered
Unlikely to be
GUANGDONG PETRO-TRADE DEVELOPMENT CORPORATION 1,396,048.80 1,396,048.80 100.00%
recovered
QINGDAO SECOND AUTOMOTIVE AND TRANSPORTATION Unlikely to be
1,137,295.16 1,137,295.16 100.00%
LOGISTICS BRANCH COMPANY recovered
Unlikely to be
CHUAN HUA PRECISION CORPORATION OF TAIWAN 2,253,993.04 2,253,993.04 100.00%
recovered
Unlikely to be
ZIBO KAIHONG ENERGY CO., LTD. 1,130,000.00 1,130,000.00 100.00%
recovered
Unlikely to be
JIEERGU COMPANY 1,685,806.12 1,685,806.12 100.00%
recovered
Unlikely to be
ZHENGZHOU SHUNFA COAL SALES CO., LTD. 2,871,239.32 2,871,239.32 100.00%
recovered
Unlikely to be
SPECTRIS 2,110,251.49 2,110,251.49 100.00%
recovered
Total 28,935,015.66 28,935,015.66 -- --
In the groups, other receivables with provision for bad debts based on ageing analysis:
√ Applicable □ Not applicable
Unit: RMB
Closing balance
Ageing
Other receivables Bad debt provision Provision percentage
Within 1 year
Sub-total for within 1 year 203,790,887.22 10,189,544.36 5.00%
1 to 2 years 15,064,521.90 1,506,452.19 10.00%
2 to 3 years 34,287,134.25 6,857,426.85 20.00%
Over 3 years 45,591,127.57 45,591,127.57 100.00%
Total 298,733,670.94 64,144,550.97
(2) Provision, recovery or reversal of bad debt provision for the period
Bad debt provision for the period amounted to RMB13,560,742.56. The amount for bad debt provision recovered or reversed during
the period was RMB14,751,751.43.
(3) Top five other receivables according to closing balance of debtors
Unit: RMB
Name of entity Nature Closing balance Ageing Percentage of closing Closing
balance of total other balance of bad
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
receivables debt provision
SHANDONG STEEL GROUP FINANCE
Loans 200,000,000.00 Within 1 year 28.79%
CO., LTD.
SINOTRUK FINANCE CO., LTD. Loans 100,000,000.00 Within 1 year 14.40%
WEIFANG SIME DARBY WEST PORT
Open credit 19,093,750.00 Within 1 year 2.75% 954,687.50
CO., LTD.
GUANGDONG ZHONGTUO
Open credit 15,200,000.00 2-3 years 2.19% 3,040,000.00
CONSTRUCTION CO., LTD
VALMET CORPORATION FINLAND Open credit 5,533,180.79 2-3 years 0.80% 1,106,636.16
Total -- 339,826,930.79 -- 48.93% 5,101,323.66
7. Inventories
(1) Categories of inventories
Unit: RMB
Closing balance Opening balance
Item Impairment Impairment
Book balance Carrying amount Book balance Carrying amount
provision provision
Raw materials 2,468,203,325.14 8,138,005.87 2,460,065,319.27 2,431,905,097.56 8,138,005.87 2,423,767,091.69
Work-in-process
32,553,546.43 1,835,271.09 30,718,275.34 115,619,584.50 1,835,271.09 113,784,313.41
products
Goods in stock 2,112,668,532.20 2,112,668,532.20 1,419,054,457.14 1,419,054,457.14
Consumable
1,515,976,239.80 1,515,976,239.80 1,756,375,954.07 1,756,375,954.07
biological assets
Developing
309,887,374.86 309,887,374.86 309,823,674.86 309,823,674.86
products
Total 6,439,289,018.43 9,973,276.96 6,429,315,741.47 6,032,778,768.13 9,973,276.96 6,022,805,491.17
(2) Impairment provision for inventories
Unit: RMB
Increase for the period Decrease for the period
Item Opening balance Reversal or Closing balance
Provision Others Others
transfer
Raw materials 8,138,005.87 8,138,005.87
Work in progress 1,835,271.09 1,835,271.09
Total 9,973,276.96 9,973,276.96
8. Non-current assets due within one year
Unit: RMB
Item Closing balance Opening balance
Long-term receivables due within one year 5,648,853,164.63 6,901,695,875.94
Total 5,648,853,164.63 6,901,695,875.94
9. Other current assets
Unit: RMB
Item Closing balance Opening balance
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
VAT recoverable 1,143,634,175.09 946,555,831.51
Prepaid tax 45,801,512.78 3,703,141.50
Receivables under financial lease due
10,202,152,084.06 10,618,498,357.25
within one year
Total 11,391,587,771.93 11,568,757,330.26
10. Available-for-sale financial assets
(1) Particulars of available-for-sale financial assets
Unit: RMB
Closing balance Opening balance
Item Provision for Carrying Provision for
Book balance Book balance Carrying amount
impairment amount impairment
Available-for-sale equity
104,450,000.00 1,450,000.00 103,000,000.00 2,454,450,000.00 1,450,000.00 2,453,000,000.00
instruments:
At cost 104,450,000.00 1,450,000.00 103,000,000.00 2,454,450,000.00 1,450,000.00 2,453,000,000.00
Total 104,450,000.00 1,450,000.00 103,000,000.00 2,454,450,000.00 1,450,000.00 2,453,000,000.00
(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
Cash dividends for
Investee Increase for the Decrease for the Increase for the Decrease for the the investee held by
Opening balance Closing balance Opening balance Closing balance the period
period period period period the Company
QINGZHOU
CHENMING
900,000.00 900,000.00 900,000.00 900,000.00 30.00%
DENATURATION
AMYLUM CO., LTD.
SHANDONG PAPER
MAKING &
PRINTING 200,000.00 200,000.00 200,000.00 200,000.00 2.00%
ENTERPRISES
CORPORATION
JINAN SHANGYOU
COMMERCIAL 350,000.00 350,000.00 350,000.00 350,000.00 5.00%
COMPANY LIMITED
ZHEJIANG
GUANGYU IDALL 2,000,000.00 2,000,000.00 9.96%
PRINT CO., LTD.
ANHUI TIME
SOURCE 1,000,000.00 1,000,000.00 10.00%
CORPORATION
SHANDONG
HONGQIAO
50,000,000.00 50,000,000.00 16.67%
VENTURE CAPITAL
CO., LTD.
LIDE TECHNOLOGY
36,000,000.00 36,000,000.00 3.00%
CO., LTD.
SHANGHAI
HENGZHENG
VENTURE
6,000,000.00 8,000,000.00 14,000,000.00 11.43%
INVESTMENT
CENTER (LIMITED
PARTNERSHIP)
GUANGDONG
DEJUN
2,350,000,000.00 2,350,000,000.00 0.00 50.00%
INVESTMENT CO.,
LTD.
Total 2,446,450,000.00 8,000,000.00 2,350,000,000.00 104,450,000.00 1,450,000.00 1,450,000.00 --
(3) Changes in impairment of available-for-sale assets during the reporting period
Unit: RMB
Available-for-sale debt
Type of available-for-sale assets Available-for-sale equity instruments Total
instruments
Opening balance of provision for impairment 1,450,000.00 1,450,000.00
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
Provision made during the current period 0.00 0.00
Decrease for the current period 0.00 0.00
Closing balance of provision for impairment 1,450,000.00 1,450,000.00
11. Long-term receivables
(1) Particulars of long-term receivables
Unit: RMB
Closing balance Opening balance
Item Provision for Provision for
Book balance Carrying amount Book balance Carrying amount
bad debts bad debts
Finance leasing
17,191,992,230.55 176,370,744.60 17,015,621,485.95 17,824,233,394.52 109,695,662.35 17,714,537,732.17
payments
Including:
unrealised financing 1,804,823,919.07 - 1,804,823,919.07 1,411,979,767.05 1,411,979,767.05
income
Less: non-current
assets due within one 5,667,568,816.47 18,715,651.84 5,648,853,164.63 6,921,710,823.32 20,014,947.38 6,901,695,875.94
year
Total 9,719,599,495.01 157,655,092.76 9,561,944,402.25 9,490,542,804.15 89,680,714.97 9,400,862,089.18
12. Long-term equity investments
Unit: RMB
Increase/decrease for the period
Profit/loss of Adjustment of Closing balance
Investee Opening balance Distribution of Closing balance
Investment Investment investment other Changes in other Provision for of provision
cash dividends or Others
addition reduction recognised under comprehensive equity impairment
profit declared
equity method income
I. Joint ventures
SHOUGUANG
CHENMING
HUISEN NEW
3,087,296.72 -152,076.08 2,935,220.64
BUILDING
MATERIALS
CO., LTD.
WEIFANG SIME
DARBY WEST 104,784,922.41 -1,007,659.69 103,777,262.72
PORT CO., LTD.
Subtotal 107,872,219.13 -1,159,735.77 106,712,483.36
II. Associates
JIANGXI
JIANGBAO
MEDIA
1,754,051.46 -480,140.20 1,273,911.26
COLOUR
PRINTING CO.,
LTD.
ZHUHAI
DECHEN NEW
THIRD BOARD
EQUITY
INVESTMENT 51,918,433.41 115,077.17 52,033,510.58
FUND
COMPANY
(LIMITED
PARTNERSHIP)
NINGBO
KAICHEN
HUAMEI
EQUITY
INVESTMENT 198,981,173.01 1,282,985.50 200,264,158.51
FUND
PARTNERSHIP
(LIMITED
PARTNERSHIP)
WUHAN
CHENMING
WAN XING 26,415,056.62 -11,958,315.95 14,456,740.67
REAL ESTATE
CO., LTD.
JIANGXI 4,927,893.82 -1,117,059.96 3,810,833.86
CHENMING
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
PORT CO., LTD.
XUCHANG
CHENMING 26,710,116.52 -3,836,313.79 22,873,802.73
PAPER CO. LTD.
Subtotal 283,996,608.32 26,710,116.52 -15,993,767.23 294,712,957.61
Total 391,868,827.45 26,710,116.52 -17,153,503.00 401,425,440.97
13. Investment properties
(1) Investment properties under the cost method
√ Applicable □ Not applicable
Unit: RMB
Construction in
Item Housing and building structure Land use right Total
progress
I. Original carrying amount
1. Opening balance 4,847,572,022.07 4,847,572,022.07
2. Increase for the period
3. Decrease for the period
4. Closing balance 4,847,572,022.07 4,847,572,022.07
II. Accumulated depreciation and
accumulated amortisation
1. Opening balance 38,036,912.25 38,036,912.25
2. Increase for the period 59,040,941.31 59,040,941.31
(1) Provision or amortisation 59,040,941.31 59,040,941.31
3. Decrease for the period
4. Closing balance 97,077,853.56 97,077,853.56
III. Provision for impairment
1.Opening balance
2. Increase for the period
3. Decrease for the period
4. Closing balance
IV. Carrying amount
1. Closing carrying amount 4,750,494,168.51 4,750,494,168.51
2. Opening carrying amount 4,809,535,109.82 4,809,535,109.82
14. Fixed assets
(1) Particulars of fixed assets
Unit: RMB
Electronic
Housing and building Machinery and
Item Vehicles equipment and Total
structure equipment
others
I. Original carrying amount:
1. Opening balance 8,550,130,664.61 32,357,264,151.18 355,292,830.51 439,890,095.33 41,702,577,741.63
2. Increase for the period 209,041,937.75 431,582,063.33 7,052,516.03 7,923,816.06 655,600,333.17
(1) Acquisition 17,007,522.89 35,982,160.04 5,283,650.18 5,543,114.39 63,816,447.50
(2) Transferred from
192,034,414.86 395,599,903.29 1,768,865.85 2,380,701.67 591,783,885.67
construction in progress
3. Decrease for the period 97,565,930.19 565,657,833.49 1,987,980.43 10,139,232.48 675,350,976.59
(1) Disposal or 97,565,930.19 37,625,101.70 1,987,980.43 10,139,232.48 147,318,244.80
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
retirement
(2) Transferred into
528,032,731.79
construction in progress
4. Closing balance 8,661,606,672.17 32,223,188,381.02 360,357,366.11 437,674,678.91 41,682,827,098.21
II. Accumulated depreciation
1. Opening balance 1,437,843,056.33 11,437,397,169.74 143,458,304.23 264,188,740.27 13,282,887,270.57
2. Increase for the period 116,767,347.28 643,219,732.27 16,793,032.49 7,580,024.77 784,360,136.81
(1) Provision 116,598,720.88 643,219,732.27 16,793,032.49 7,580,024.77 784,191,510.41
(2) Others 168,626.40 168,626.40
3. Decrease for the period 1,199,415.72 390,851,613.58 1,359,587.62 5,135,703.97 398,546,320.89
(1) Disposal or
1,199,415.72 16,521,798.39 1,359,587.62 5,135,703.97 24,216,505.70
retirement
(2) Transferred into
374,329,815.19
construction in progress
4. Closing balance 1,553,410,987.88 11,689,765,288.43 158,891,749.10 266,633,061.07 13,668,701,086.48
III. Provision for impairment
1. Opening balance 51,900,151.11 139,905,410.65 13,092.92 362,313.33 192,180,968.01
2. Increase for the period
(1) Provision
3. Decrease for the period 942,037.96 942,037.96
(1) Disposal or
942,037.96 942,037.96
retirement
4. Closing balance 51,900,151.11 138,963,372.69 13,092.92 362,313.33 191,238,930.05
IV. Carrying amount
1. Closing carrying amount 7,056,295,533.18 20,394,459,719.90 201,452,524.09 170,679,304.51 27,822,887,081.68
2. Opening carrying amount 7,060,387,457.17 20,779,961,570.79 211,821,433.36 175,339,041.73 28,227,509,503.05
(2) Particulars of temporarily idle fixed assets
Unit: RMB
Accumulated Provision for
Item Original carrying amount Carrying amount Remark
depreciation impairment
Housing and building structure 198,634,423.34 62,308,475.97 51,900,151.11 84,425,796.26
Machinery and equipment 480,998,965.75 150,545,416.85 139,160,790.69 191,292,758.21
Vehicles 1,460,746.36 1,236,706.21 28,576.91 195,463.24
Electronic equipment and others 4,233,072.56 3,845,349.03 120,784.43 266,939.10
Total 685,327,208.01 217,935,948.06 191,210,303.14 276,180,956.81
(3) Particulars of fixed assets without obtaining property right certificates
Unit: RMB
Reason for not yet obtaining property
Item Carrying amount
right certificates
Processing with scheduled operation
ZHANJIANG CHENMING PULP & PAPER CO., LTD. 1,228,040,417.40
commencement not imminent
Processing with scheduled operation
JILIN CHENMING PAPER CO., LTD. 469,183,035.93
commencement not imminent
Processing with scheduled operation
SHOUGUANG MEILUN PAPER CO., LTD. 292,308,998.28
commencement not imminent
HAICHENG HAIMING MINING CO., LTD. 249,880,577.86 Processing with scheduled operation
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
commencement not imminent
Processing with scheduled operation
JIANGXI CHENMING PAPER CO., LTD. 196,955,746.88
commencement not imminent
Processing with scheduled operation
SHANDONG CHENMING PAPER HOLDINGS LIMITED 88,030,254.36
commencement not imminent
Processing with scheduled operation
WUHAN CHENMING HANYANG PAPER HOLDINGS CO., LTD. 76,400,732.81
commencement not imminent
Processing with scheduled operation
SHANDONG GRAND VIEW HOTEL CO., LTD. 41,046,490.33
commencement not imminent
Total 2,641,846,253.85
15. Construction in progress
(1) Particulars of construction in progress
Unit: RMB
Closing balance Opening balance
Item Provision for Provision for
Book balance Carrying amount Book balance Carrying amount
impairment impairment
400T/d Mechanical
pulp project 109,726,341.02 109,726,341.02 23,575,818.57 23,575,818.57
(Headquarters)
Newsprint machine to
cultural paper
machine and related
1,131,232,128.35 1,131,232,128.35 902,644,220.48 902,644,220.48
pulp line
transformation
(Headquarters)
Chemical pulp project
2,335,015,663.33 2,335,015,663.33 1,801,971,276.32 1,801,971,276.32
(Meilun)
High-end cultural
1,397,957,131.33 1,397,957,131.33 697,210,244.24 697,210,244.24
paper (Meilun)
Haiming mining
magnesite deep
572,496,001.86 572,496,001.86 1,047,440,597.94 1,047,440,597.94
processing project
(Haiming)
Huanggang Chenming
Forest and Paper
Integration Project
3,282,772,975.06 3,282,772,975.06 2,482,982,255.45 2,482,982,255.45
(Pulping Project)
(Huanggang
Chenming)
Integrated terminal
project (Huanggang 247,339,310.45 247,339,310.45 191,050,346.34 191,050,346.34
Chenming)
100,000-ton paper
machine changing
170,475,982.49 170,475,982.49
project (Xuchang
Chenming)
Others 560,273,323.58 14,764,226.23 545,509,097.35 366,082,898.27 14,764,226.23 351,318,672.04
Total 9,636,812,874.98 14,764,226.23 9,622,048,648.75 7,683,433,640.10 14,764,226.23 7,668,669,413.87
(2) Changes in material construction in progress projects for the period
Unit: RMB
Project name Budget Opening balance Increase for the Transfer to fixed Other Closing balance Accumulated Accumulated Of which: Capitalisation Source of fund
Construction in
(RMB’00 asset for the deductions for Investment to capitalised capitalised rate of the
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
million) period period the period budget progress interest interest amount interest amount
for the period for the period
400T/d
Mechanical pulp Self-raised or
1.30 23,575,818.57 86,083,169.49 109,658,988.06 84.35% 2,966,101.58 2,637,207.67 6.16%
project (Parent borrowings
Company)
Newsprint
machine to
cultural paper
machine and 1,131,232,128.3 Self-raised or
3.72 902,644,220.48 225,858,394.09 99.00% 15,006,123.28 12,782,733.72 6.16%
related pulp line 5 borrowings
transformation
(Parent
Company)
Chemical pulp 1,801,971,276.3 2,335,015,663.3 Self-raised or
43.77 533,044,387.01 53.35% 116,436,399.16 45,659,790.67 6.27%
project (Meilun) 2 3 borrowings
High-end
1,397,957,131.3 Self-raised or
cultural paper 37.61 697,210,244.24 700,746,887.09 37.17% 27,938,917.35 18,964,826.00 6.27%
3 borrowings
(Meilun)
Haiming mining
magnesite deep
1,047,440,597.9 Self-raised or
processing 8.50 85,001,155.23 581,512,641.07 550,929,112.10 34.11% 119,255,543.03 21,635,622.31 4.35%
4 borrowings
project
(Haiming)
Huanggang
Chenming
Forest and Paper
Integration 2,482,982,255.4 3,234,802,612.4 Self-raised or
34.85 751,820,356.99 92.00% 98,977,034.21 26,707,455.51 5.08%
Project (Pulping 5 4 borrowings
Project)
(Huanggang
Chenming)
Integrated
terminal project
3.51 191,050,346.34 56,288,964.11 247,339,310.45 98.00% Self-raised
(Huanggang
Chenming)
100,000-tonne
paper machine
Self-raised or
changing project 1.80 170,475,982.49 170,475,982.49
borrowings
(Xuchang
Chenming)
7,317,350,741.8 2,438,843,314.0 9,006,934,946.0
Total 133.27 581,512,641.07 170,475,982.49 -- -- 380,580,118.61 128,387,635.88 --
3 1 6
16. Materials for project
Unit: RMB
Item Closing balance Opening balance
Special materials 10,036,240.51 11,285,247.52
Special equipment 3,990,382.93
Total 10,036,240.51 15,275,630.45
17. Intangible assets
(1) Particulars of intangible assets
Unit: RMB
Item Land use rights Patents Unpatented technology Software Total
I. Original carrying amount
1. Opening balance 2,385,510,515.67 24,305,385.83 2,409,815,901.50
2. Increase for the period 13,747,888.15 67,378.42 13,815,266.57
(1) Acquisition 67,378.42 67,378.42
(2) Project under construction
13,747,888.15 13,747,888.15
transfer-in
3. Decrease for the period 122,239,326.66 122,239,326.66
(1) Disposal 122,239,326.66 122,239,326.66
4. Closing balance 2,277,019,077.16 24,372,764.25 2,301,391,841.41
II. Accumulated amortisation
1. Opening balance 330,449,712.10 20,144,810.31 350,594,522.41
2. Increase for the period 23,347,159.60 712,284.69 24,059,444.29
(1) Provision 23,347,159.60 712,284.69 24,059,444.29
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
3. Decrease for the period 673,859.67 673,859.67
(1) Disposal 673,859.67 673,859.67
4. Closing balance 353,123,012.03 20,857,095.00 373,980,107.03
III. Impairment provision
IV. Carrying amount
1. Closing carrying amount 1,923,896,065.13 3,515,669.25 1,927,411,734.38
2. Opening carrying amount 2,055,060,803.57 4,160,575.52 2,059,221,379.09
18. Goodwill
(1) Original carrying amount of goodwill
Unit: RMB
Decrease for
Name of investee or item generating goodwill Opening balance Increase for the period Closing balance
the period
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
Description of the test process and parameters for goodwill impairment as well as the recognition method for goodwill
impairment loss:
On the balance sheet date, the management of the Group 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, relying on the expected annual growth rate in GNP and the expected and steady annual growth rate in the industry by
market players to calculate. Management of the Group expects no provision for impairment loss is necessary to be made for goodwill
during the reporting period.
19. Long-term prepaid expenses
Unit: RMB
Increase for the Amortisation for the
Item Opening balance Other deductions Closing balance
period period
Woodland expenses 131,260,068.14 416,539.45 3,230,815.55 1,548,290.82 126,897,501.22
Others 7,862,501.31 352,407.30 7,510,094.01
Total 139,122,569.45 416,539.45 3,583,222.85 1,548,290.82 134,407,595.23
20. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets before offsetting
Unit: RMB
Closing balance Opening balance
Item Deductible temporary Deferred income Deductible temporary Deferred income
difference tax assets difference tax assets
Provision for impairment of assets 871,372,135.12 208,869,026.37 691,231,679.05 173,959,565.59
Unrealised profit arising from intra-group
244,925,616.44 61,231,404.11 273,585,917.96 68,396,479.49
transactions
Deductible loss 821,869,359.29 142,173,437.80 1,006,688,665.35 173,250,557.91
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
Outstanding payables 438,539,008.93 67,560,516.66 512,378,679.91 77,803,599.22
Deferred income 224,517,483.96 38,832,817.29 157,069,341.95 28,878,648.19
Total 2,601,223,603.74 518,667,202.23 2,640,954,284.22 522,288,850.40
(2) The breakdown of unrecognised deferred income tax assets
Unit: RMB
Item Closing balance Opening balance
Deductible temporary difference 145,364,286.32 136,902,031.73
Deductible loss 548,452,368.75 521,429,433.24
Total 693,816,655.07 658,331,464.97
(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
2018 89,165,185.03
2019 88,145,632.65 58,161,318.09
2020 56,452,164.43 69,723,168.31
2021 68,465,205.68 161,307,173.38
2022 161,486,351.42 143,072,588.43
2023 173,903,014.57
Total 548,452,368.75 521,429,433.24 --
21. Other non-current assets
Unit: RMB
Item Closing balance Opening balance
Prepayments for properties 678,454,601.24 451,277,549.54
Prepayments for equipment 1,101,159.65 48,446,648.16
Total 679,555,760.89 499,724,197.70
22. Short-term borrowings
(1) Classification of short-term borrowings
Unit: RMB
Item Closing balance Opening balance
Pledged borrowings 1,470,063,029.29 2,956,876,168.82
Secured borrowings 50,000,000.00
Guaranteed borrowings 11,103,380,038.15 12,100,224,483.51
Credit borrowings 6,892,659,552.16 5,823,854,220.70
Discounted borrowings 15,356,870,000.00 14,165,620,000.00
Total 34,822,972,619.60 35,096,574,873.03
23. Bills payable
Unit: RMB
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
Category Closing balance Opening balance
Commercial acceptance bills 102,000,000.00 283,744,411.80
Bank acceptance bills 1,475,635,335.58 994,650,678.91
Total 1,577,635,335.58 1,278,395,090.71
24. Accounts payable
(1) Particulars of accounts payable
Unit: RMB
Item Closing balance Opening balance
Within 1 year 3,283,404,831.68 3,398,781,721.68
1-2 years 250,774,705.89 415,562,463.45
2-3 years 51,463,080.44 72,014,432.53
Over 3 years 195,423,193.12 127,577,910.08
Total 3,781,065,811.13 4,013,936,527.74
(2) Significant accounts payable for over 1 year
Unit: RMB
Reason for outstanding or not carried
Item Closing balance
forward
ANDRITZ AG 26,340,727.95 Not to be collected yet
LIAONING HUAYE GROUP DEVELOPMENT CO.,LTD. 9,048,000.00 Not to be collected yet
SHANGHAI CLEAR SCIENCE&TECHNOLOGY CO., LTD. 8,642,724.19 Not to be collected yet
SHANDONG SHENHUA SHANDA ENERGY &
6,652,712.36 Not to be collected yet
ENVIRONMENT CO., LTD.
FUJIAN WEIDONG INDUSTRIAL CO., LTD. 5,363,200.00 Not to be collected yet
Total 56,047,364.50 --
25. Advance receipts
(1) Particulars of advance receipts
Unit: RMB
Item Closing balance Opening balance
Within 1 year 348,733,733.59 233,656,725.36
1-2 years 11,088,164.47 9,526,165.86
Total 359,821,898.06 243,182,891.22
(2) Significant advance receipts for over 1 year
Unit: RMB
Item Closing balance Reason for outstanding or not carried forward
HUAI’AN FENGHUANG PAPER CO., LTD. 1,737,276.00 No delivery requirement from the counterparty yet
YONG YI ADHESIVE(ZHONG SHAN) CO., LTD. 1,384,668.41 No delivery requirement from the counterparty yet
JINHUA JIAYI PACKING CO., LTD. 561,684.00 No delivery requirement from the counterparty yet
Total 3,683,628.41 --
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
26. Staff remuneration payables
(1) Particulars of staff remuneration payables
Unit: RMB
Item Opening balance Increase for the period Decrease for the period Closing balance
I. Short-term remuneration 184,868,925.11 636,796,162.27 677,686,673.09 143,978,414.29
II. Retirement benefit plan –
261,966.99 82,491,392.99 82,651,500.18 101,859.80
defined contribution scheme
III. Lay off welfare 370,371.12 370,371.12
Total 185,130,892.10 719,657,926.38 760,708,544.39 144,080,274.09
(2) Particulars of short-term remuneration
Unit: RMB
Item Opening balance Increase for the period Decrease for the period Closing balance
1. Salaries, bonuses, allowance and
133,765,532.39 529,897,988.19 576,352,752.65 87,310,767.93
subsidies
2. Staff welfare 14,396,362.96 14,396,362.96
3. Social insurance premium 1,471,027.85 36,687,928.46 36,867,227.92 1,291,728.39
Of which: Medical insurance
508,362.57 30,282,697.15 30,468,984.55 322,075.17
premium
Work-related injury insurance
146.67 3,619,472.14 3,612,382.95 7,235.86
premium
Maternity insurance premium 962,518.61 2,785,759.17 2,785,860.42 962,417.36
4. Housing provident funds 7,126,858.97 43,389,178.83 42,716,654.72 7,799,383.08
5. Union funds and workers’
23,566,423.65 12,067,800.37 6,818,523.26 28,815,700.76
education
6. Other short-term remuneration 18,939,082.25 356,903.46 535,151.58 18,760,834.13
Total 184,868,925.11 636,796,162.27 677,686,673.09 143,978,414.29
(3) Defined contribution plan
Unit: RMB
Item Opening balance Increase for the period Decrease for the period Closing balance
1. Basic pension insurance 176,970.81 79,538,165.89 79,715,136.70
2. Unemployment insurance 84,996.18 2,953,227.10 2,936,363.48 101,859.80
Total 261,966.99 82,491,392.99 82,651,500.18 101,859.80
27. Taxes payable
Unit: RMB
Item Closing balance Opening balance
Value added tax 83,606,695.96 128,785,997.13
Enterprise income tax 260,063,782.98 304,239,481.46
Individual income tax 5,682,477.79 5,296,935.04
Urban maintenance and construction tax 3,827,212.43 7,324,998.53
Land use tax 14,103,299.10 15,556,098.12
Property tax 17,136,201.06 25,352,235.76
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
Educational surcharges and others 6,611,693.23 5,702,856.39
Stamp duty 1,894,295.84 4,367,412.25
Total 392,925,658.39 496,626,014.68
28. Interest payable
Unit: RMB
Item Closing balance Opening balance
Interest on corporate bonds 83,798,000.01 85,480,380.32
Interest on medium-term notes 35,592,579.90
Total 119,390,579.91 85,480,380.32
29. Dividend payable
Unit: RMB
Item Closing balance Opening balance
Ordinary dividend 1,161,843,280.20
Dividends of preference shares\perpetual
464,716,006.80
bonds classified as equity instruments
Total 1,626,559,287.00
30. Other payables
(1) Other payables by nature
Unit: RMB
Item Closing balance Opening balance
Within 1 year 1,707,405,020.37 1,146,432,000.75
1-2 years 331,107,831.91 222,321,364.69
2-3 years 49,287,570.61 33,093,992.06
Over 3 years 36,908,627.83 24,782,187.91
Total 2,124,709,050.72 1,426,629,545.41
(2) Significant other payables for over 1 year
Unit: RMB
Reason for outstanding or not
Item Closing balance
carried forward
Debt investment by a shareholder
LIAONING BEIHAI INDUSTRY GROUP LTD. 42,905,085.89
of a subsidiary as agreed
Debt investment by a shareholder
SHOUGUANG HENGTAI ENTERPRISE INVESTMENT CO., LTD. 42,189,702.27
of a subsidiary as agreed
STATE-OWNED SHOUGUANG QINGSHUIPO FARM 8,800,000.00 Deposit
SHANDONG YINGLI INDUSTRIAL CO., LTD. (DEPOSIT) 6,000,000.00 Deposit
WENZHOU DONGDA MINE CONSTRUCTION ENGINEERING CO., LTD. 5,450,000.00 Deposit
Total 105,344,788.16 --
31. Non-current liabilities due within 1 year
Unit: RMB
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
Item Closing balance Opening balance
Long-term borrowings due within 1 year 4,321,258,031.95 3,625,430,347.40
Total 4,321,258,031.95 3,625,430,347.40
32. Other current liabilities
Unit: RMB
Item Closing balance Opening balance
Short-term bonds payable 10,160,767,686.35 10,797,248,631.76
Total 10,160,767,686.35 10,797,248,631.76
33. Long-term borrowings
(1) Types of long-term borrowings
Unit: RMB
Item Closing balance Opening balance
Pledged borrowings 275,000,000.00
Secured borrowings 3,393,472,000.00 3,592,342,000.00
Guaranteed borrowings 7,711,012,847.78 6,530,519,307.37
Credit borrowings 423,692,035.94 873,692,035.94
Less: long-term borrowings due within 1
4,321,258,031.95 3,625,430,347.40
year
Total 7,206,918,851.77 7,646,122,995.91
Including:
Item Closing balance Opening balance
Long-term borrowings due within 1 year 4,321,258,031.95 3,625,430,347.40
Long-term borrowings due within 1-2 years 2,086,132,311.50 1,833,951,514.00
Long-term borrowings due within 2-5 years 2,260,094,504.33 2,577,564,445.97
Long-term borrowings due over 5 years 2,860,692,035.94 3,234,607,035.94
Total 11,528,176,883.72 11,271,553,343.31
34. Bonds payable
(1) Bonds payable
Unit: RMB
Item Closing balance Opening balance
17 Chenming Bond 01- Chenming Paper 1,198,530,000.00 1,198,305,304.75
17 Chenming Bond 01- Financial Leasing
997,955,974.82
Company
18 Chenming Bond 01 898,717,500.00
Total 2,097,247,500.00 2,196,261,279.57
(2) Increase/decrease in bonds payable (excluding other financial instruments such as preference shares
and perpetual bonds classified as financial liabilities)
Unit: RMB
Issue during the Interest at par Amortisation of Redemption Amortisation of
Name of bond Par value Date of issue Term Amount Opening balance Closing balance
period value premium/discount during the period issuance fees
17 Chenming 1,200,000,000.00 2017/8/22 5 years 1,198,200,000.00 1,198,305,304.75 39,000,000.00 224,695.25 1,198,530,000.00
Bond 01-
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
Chenming Paper
17 Chenming
Bond 01-
1,000,000,000.00 2017/3/21 3 years 997,000,000.00 997,955,974.82 1,000,000,000.00 2,044,025.18
Financial Leasing
Company
18 Chenming
900,000,000.00 2018/3/29 5 years 898,650,000.00 898,650,000.00 16,414,666.68 67,500.00 898,717,500.00
Bond 01
Total -- -- -- 3,093,850,000.00 2,196,261,279.57 898,650,000.00 55,414,666.68 1,000,000,000.00 2,336,220.43 2,097,247,500.00
35. Long-term payables
(1) Long-term payables by nature
Unit: RMB
Item Closing balance Opening balance
Retention for the financial leasing
235,190,103.51 245,190,103.51
operations
Specific capital for China Development 622,500,000.00 700,000,000.00
Equipment leaseback 4,143,834,948.98 4,605,691,332.13
Total 5,001,525,052.49 5,550,881,435.64
36. Special accounts payable
Unit: RMB
Increase for the Decrease for the
Item Opening balance Closing balance Reason
period period
Huanggang
Chenming integrated
681,039,716.66 25,000,000.00 706,039,716.66
forestry, pulp and
paper project
Total 681,039,716.66 25,000,000.00 706,039,716.66 --
37. Provision
Unit: RMB
Item Closing balance Opening balance Reason
Pending litigation 325,259,082.28 325,259,082.28 Losses from Arjo’s lawsuit
Total 325,259,082.28 325,259,082.28 --
38. Deferred income
Unit: RMB
Increase for the Decrease for the
Item Opening balance Closing balance Reason
period period
Government grants 1,452,717,833.55 11,194,100.00 43,038,926.19 1,420,873,007.36
Total 1,452,717,833.55 11,194,100.00 43,038,926.19 1,420,873,007.36 --
Items in respect of government grants:
Unit: RMB
Include in
Include in other Amount charged
New grants for non-operating Asset-related/inc
Liabilities item Opening balance income for the against cost Other changes Closing balance
the period income for the ome-related
period expenses
period
Special subsidy
funds for
816,090,223.99 24,800,367.35 791,289,856.64 Asset-related
environmental
protection
Project fund for 1,781,924.68 82,350.00 1,699,574.68 Asset-related
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
National
technological
support scheme
Sewage treatment
and water
conservation 6,131,402.52 596,341.43 5,535,061.09 Asset-related
reconfiguration
project
Financial grants
for technological
192,900,814.51 7,199,237.13 185,701,577.38 Asset-related
modification
project
Zhanjiang
integrated
271,889,991.56 8,615,100.00 7,281,506.19 273,223,585.37 Asset-related
forestry, pulp and
paper project
Interest subsidy 95,580,066.97 2,729,749.09 92,850,317.88 Asset-related
Railway line
change 13,705,208.33 184,375.00 13,520,833.33 Asset-related
compensation
Logistics park
53,626,701.00 2,579,000.00 56,205,701.00 Asset-related
project
Others 1,011,499.99 165,000.00 846,499.99 Asset-related
Total 1,452,717,833.55 11,194,100.00 43,038,926.19 1,420,873,007.36 --
39. Other non-current liabilities
Unit: RMB
Item Closing balance Opening balance
The first phase of financial management 250,000,000.00 250,000,000.00
Medium-term notes 1,680,000,000.00
Unamortised issue expenses -10,461,871.24
Total 1,919,538,128.76 250,000,000.00
40. Share capital
Unit: RMB
Increase/decrease during the period (+/-)
Opening balance Shares converted Closing balance
New issue Bonus issue Others Subtotal
from reserves
Total number of
1,936,405,467.00 968,202,733.00 968,202,733.00 2,904,608,200.00
shares
Other explanation:
Pursuant to the profit distribution plan of the Company for 2017 approved at the 2017 annual general meeting convened on 13
June 2018, based on the total ordinary share capital of 1,936,405,467 shares as at the end of 2017, a cash dividend of RMB6 (tax
inclusive) per 10 shares was distributed to ordinary shareholders and a capitalisation issue to ordinary shareholders was made out of
the capital reserves of 5 shares for every 10 shares held.
41. Other equity instruments
(1) Preference shares, perpetual bonds and other financial instruments outstanding at the end of the period
Item Opening balance Increase during the Decrease during the Closing balance
year year
Perpetual bonds 5,570,800,000.00 5,570,800,000.00
Preference shares 4,477,500,000.00 4,477,500,000.00
Total 10,048,300,000.00 10,048,300,000.00
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
2) Changes in perpetual bonds outstanding at the end of the period
Unit: RMB
Outstanding financial instruments Opening balance Increase during the Decrease during the Closing balance
year year
15 Lu Chenming MMTN001 1,291,900,000.00 1,291,900,000.00
15 Lu Chenming MMTN001 1,290,900,000.00 1,290,900,000.00
17 Lu Chenming MTN001 996,000,000.00 996,000,000.00
17 Lu Chenming MTN002 1,992,000,000.00 1,992,000,000.00
Total 5,570,800,000.00 5,570,800,000.00
Note: ① Particulars of issue: The Company issued medium-term notes amounting to RMB2.6 billion on 6 July and 8
September 2015 at a coupon rate of 6.00% and 5.78%. The proceeds net of issue costs amounted to RMB2,582.80 million.
② Particulars of the notes as perpetual bonds
The notes are debts without a defined maturity date and will continue indefinitely until the exercise of the right of redemption by
the Company.
The Company has the right to defer any payment of interest.
The right of redemption of the notes is vested with the Company so that it is up to the Company to decide whether to redeem or
not.
Based on the above, the notes do not contain any term giving rise to any contractual obligation to deliver cash or other financial
assets to any other entity, or to exchange any financial asset or financial liability with any other entity under potential adverse
circumstances. Consequently, they were eligible to be recognised and accounted for as equity instruments and included under other
equity instruments.
(3) Changes in preference shares outstanding at the end of the period
Outstanding financial instruments Opening balance Increase during Decrease during Closing balance
the year the year
Chenming You 01 2,238,750,000.00 2,238,750,000.00
Chenming You 02 995,000,000.00 995,000,000.00
Chenming You 03 1,243,750,000.00 1,243,750,000.00
Total 4,477,500,000.00 4,477,500,000.00
Notes ① Particulars of issue: The Company non-publicly issued preference shares amounting to RMB4.5 billion on 17 March,
17 August and 22 September 2016. The proceeds net of issue costs amounted to RMB4,477.50 million.
② Particulars of the preference shares as equity instruments
Shareholders of preference shares participate in profit distribution in two portions, namely the fixed dividend distributed based
on a fixed dividend rate and the distribution of retained earnings realised for the year.
A. Distribution of fixed dividend
According to the Articles of Association, the Company shall distribute fixed dividends to holders of the preference shares at
fixed dividend rate if there are distributable profits after making good losses and the contribution to reserve fund according to law.
The Board is authorised by the general meeting to declare and pay all dividends on the preference shares in accordance with the
issuance plan under the framework and principles considered and approved in the general meeting in respect of the preference shares.
The general meeting of the Company has the right to cancel part of or all of the current dividends on the preference shares. However,
when the general meeting of the Company considers the cancellation of part of or all of the current dividends on the preference
shares, the Company shall inform the shareholders of preference shares at least 10 working days before the date of dividend payment
in accordance with the requirements of the related authorities.
B. Participation in the distribution of retained earnings realised for the year
Holders of preference shares participate in the distribution of the retained earnings through receipt of cash which is
non-cumulative and non-deferrable. In the event of making good losses and the contribution to reserve fund according to law, after
receiving fixed dividends at fixed dividend rate as agreed, holders of preference shares can also participate in the distribution of the
retained earnings for the year in proportion. Specific terms are as follows: the retained earnings for the year arises from net profit
attributable to owners of the parent company on a consolidated basis upon distribution of relevant fixed income to holders of
financial instruments such as the preference shares which may be classified under equity. 50% of the retained earnings shall be
distributed to holders of preference shares and ordinary shareholders. Holders of preference shares shall participate in the distribution
of the retained earnings by receiving cash dividends, and the ordinary shareholders shall participate in the distribution of the retained
earnings by receiving cash dividends or dividends on ordinary shares.
Based on the above, the preference shares do not contain any term giving rise to any contractual obligation to deliver cash or
other financial assets to any other entity, or to exchange any financial asset or financial liability with any other entity under potential
adverse circumstances. Consequently, they were eligible to be recognised and accounted for as equity instruments and included under
other equity instruments - preference shares.
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
42. Capital reserves
Unit: RMB
Item Opening balance Increase for the period Decrease for the period Closing balance
Capital premium (share
5,478,935,277.69 1,026,305,329.81 4,452,629,947.88
premium)
Other capital reserves 670,322,507.21 670,322,507.21
Total 6,149,257,784.90 1,026,305,329.81 5,122,952,455.09
Other particulars, including changes (increase or decrease) during the period and reasons for such changes:
① On 30 January 2018, the Company issued the Announcement on the Receipt of 30% equity interest in Hongtai Real Estate
held by Guangdong Dejun and Guangdong Dejun’s Debt to Hongtai Real Estate and Related Party Transaction in relation to the
acquisition of 30% equity interest in Shanghai Hongtai Real Estate Co., Ltd., a subsidiary held by Guangdong Dejun Investment Co.,
Ltd., at a consideration of RMB1,171,960,000.
③ On 23 May 2018, the Company issued the Announcement on Acquisition of Minority Interest in Subsidiaries in relation
to the acquisition of 14.2742% equity interest in Wuhan Chenming, a subsidiary of the Company, held by Hubei Hanyang
Paper Mill, a minority shareholder of Wuhan Chenming, at a consideration of RMB60,896,600.
③ Pursuant to the profit distribution plan of the Company for 2017 approved at the 2017 annual general meeting convened on
13 June 2018, based on the total ordinary share capital of 1,936,405,467 shares as at the end of 2017, a cash dividend of RMB6 (tax
inclusive) per 10 shares was distributed to ordinary shareholders and a capitalisation issue to ordinary shareholders was made out of
the capital reserves of 5 shares for every 10 shares held.
43. Other comprehensive income
Unit: RMB
During the period
Less:
Transferred Attributa
from other ble to
Item Opening balance Incurred before Attributable to
comprehensive Less: income minority Closing balance
income tax for the parent company
income in prior tax expenses sharehold
period after tax
periods to profit ers after
or loss during tax
the period
II. Other comprehensive
income to be reclassified to
-354,165,127.80 -103,234,110.38 -103,234,110.38 -457,399,238.18
profit or loss in subsequent
periods
Exchange
differences on translation -354,165,127.80 -103,234,110.38 -103,234,110.38 -457,399,238.18
of foreign operations
Total other comprehensive
-354,165,127.80 -103,234,110.38 -103,234,110.38 -457,399,238.18
income
44. Surplus reserve
Unit: RMB
Item Opening balance Increase for the period Decrease for 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
45. Retained profit
Unit: RMB
Item The period The prior period
Retained profit as at the end of the prior period
8,866,614,844.40 6,745,974,781.02
before adjustment
Retained profit as at the beginning of the period 8,866,614,844.40 6,745,974,781.02
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
after adjustment
Plus: Net profit for period attributable to
1,784,631,025.31 1,745,514,838.23
shareholders of the parent company
Ordinary dividend payable 1,161,843,280.20 1,161,843,280.20
Preferred shares dividend payable 562,816,006.80 217,377,107.35
Retained profit as at the end of the period 8,926,586,582.71 7,112,269,231.70
46. Revenue and operating costs
Unit: RMB
Amount for the reporting period Amount for the prior period
Item
Revenue Operating costs Revenue Operating costs
Principal activities 15,339,402,308.23 10,223,566,613.79 13,563,143,834.69 9,109,268,921.26
Other activities 211,931,731.66 36,318,305.07 186,091,172.55 61,798,067.23
Total 15,551,334,039.89 10,259,884,918.86 13,749,235,007.24 9,171,066,988.49
47. Taxes and surcharges
Unit: RMB
Item Amount for the reporting period Amount for the prior period
Urban maintenance and construction tax 29,431,549.79 22,398,860.35
Education surcharges 21,947,084.97 14,388,582.42
Property tax 26,787,098.32 26,916,701.19
Land use tax 25,666,645.17 24,234,332.85
Vehicle and vessel tax 502,934.38 34,306.91
Stamp duty 11,344,290.23 13,148,327.87
Water engineering funds 1,937,359.03 3,177,917.53
Environmental tax 4,354,733.37
Water resource tax 6,163,044.01
Others 1,374,472.71 1,660,983.24
Total 129,509,211.98 105,960,012.36
48. Selling and distribution expenses
Unit: RMB
Item Amount for the reporting period Amount for the prior period
Wages and surcharges 66,498,765.40 65,953,852.36
Depreciation expenses 6,739,186.02 6,409,390.78
Office expenses 2,024,990.87 1,835,605.09
Transportation expenses 438,096,633.12 453,538,636.06
Selling commissions 9,527,198.46 6,775,566.23
Cargo handling charges 6,447,682.56 9,619,073.45
Travel expenses 14,287,350.75 10,999,160.71
Business hospitality expenses 27,355,797.58 36,623,061.92
Warehouse expenses 1,622,562.73 714,169.93
Rental expenses 4,783,613.45 4,580,600.56
Others 28,079,544.77 44,449,158.26
Total 605,463,325.71 641,498,275.35
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
49. General and administrative expenses
Unit: RMB
Item Amount for the reporting period Amount for the prior period
Wages and surcharges 135,226,780.34 91,040,324.67
Welfare expenses 21,985,234.28 20,103,576.01
Labour insurance premium 22,172,367.80 6,102,709.36
Insurance premium 12,675,862.00 9,518,602.13
Depreciation expenses 106,354,515.61 33,612,163.11
Waste disposal expenses 5,684,105.91 9,214,959.75
Hospitality expenses 29,705,889.73 23,024,208.87
Amortisation of intangible assets 16,360,689.72 16,315,486.42
Technological development expenses 478,014,854.10 446,835,957.44
Production interruption loss 372,715.95 32,610,068.28
Repair fees 13,562,056.75 25,429,045.13
Others 130,741,450.46 142,547,898.00
Total 972,856,522.65 856,354,999.17
50. Finance expenses
Unit: RMB
Item Amount for the reporting period Amount for the prior period
Interest expenses 1,720,741,207.21 1,072,958,458.60
Less: Interest income 159,096,591.34 117,395,792.54
Capitalised interest amount 162,960,177.00 90,133,011.27
Foreign exchange gains and losses -16,373,292.86 107,381,433.91
Bank charges 116,517,298.68 82,585,417.66
Total 1,498,828,444.69 1,055,396,506.36
51. Loss on impairment of assets
Unit: RMB
Item Amount for the reporting period Amount for the prior period
I. Loss on bad debts 150,455,669.97 50,382,322.12
II. Loss on inventory impairment -571,669.04
Total 150,455,669.97 49,810,653.08
52. Gain on change in fair value
Unit: RMB
Source of gain on change in fair value Amount for the reporting period Amount for the prior period
Gain on change in fair value of financial
assets measured at fair value through profit -94,000,000.00
or loss
Consumable biological assets measured at
-23,973,841.55 -11,009,851.10
fair value
Total -117,973,841.55 -11,009,851.10
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
53. Investment income
Unit: RMB
Item Amount for the reporting period Amount for the prior period
Income from long-term equity investments
-17,153,503.00 -4,154,293.30
accounted for using the equity method
Investment gain on disposal of long-term
13,717,571.88 480,189.88
equity investments
Investment gain on disposal financial assets
114,233,300.00
measured at fair value through profit or loss
Investment gain on holding of
41,516,700.00 56,226,406.81
available-for-sale financial assets
Income on external entrusted loans 13,312,368.97
Total 152,314,068.88 65,864,672.36
54. Asset disposal income
Unit: RMB
Source of asset disposal income Amount for the reporting period Amount for the prior period
Net income from disposal of non-current
-2,210,048.63 344,802.99
assets
Total -2,210,048.63 344,802.99
55. Other income
Unit: RMB
Source of other income Amount for the reporting period Amount for the prior period
Government grants - amortised deferred
43,038,926.19
income included in profit or loss
Government grants - directly included in
16,633,350.69
profit or loss
Total 59,672,276.88
56. Non-operating income
Unit: RMB
Amounts included in
Item Amount for the reporting period Amount for the prior period extraordinary gains and losses
for the period
Government grants 184,555,864.82 140,637,717.90 184,555,864.82
Others 7,076,692.53 16,058,652.83 7,076,692.53
Total 191,632,557.35 156,696,370.73 191,632,557.35
57. Non-operating expenses
Unit: RMB
Amounts included in
Item Amount for the reporting period Amount for the prior period extraordinary gains and losses
for the period
Donation 5,000.00 450,000.00 5,000.00
Others 441,221.32 1,622,581.46 441,221.32
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
Total 446,221.32 3,550,702.42 446,221.32
58. Income tax expenses
(1) Particulars of income tax expenses
Unit: RMB
Item Amount for the reporting period Amount for the prior period
Income tax expenses for the period 443,275,831.48 351,541,417.73
Deferred income tax expenses -9,073,718.98 -20,288,090.65
Total 434,202,112.50 331,253,327.08
59. Other comprehensive income
For details, please see Notes.
60. Items on statements of cash flow
(1) Cash received relating to other operating activities
Unit: RMB
Item Amount for the reporting period Amount for the prior period
Finance support fund 196,283,019.84 93,044,281.20
Interest income 216,272,935.89 117,395,792.54
External security deposit of the Financial
90,523,468.41 4,000,000.00
Leasing Company
Open credit, and income from default
16,058,652.87
penalty and fine
Net return of principal receivables relating
2,057,052,794.71
to finance lease business
Total 2,560,132,218.85 230,498,726.61
(2) Cash paid relating to other operating activities
Unit: RMB
Item Amount for the reporting period Amount for the prior period
Expense and open credit 1,261,413,440.86 1,541,645,097.56
Net increase in principal receivables
5,445,458,445.68
relating to finance lease business
External security deposit of the Leasing
10,000,000.00
Company
Total 1,271,413,440.86 6,987,103,543.24
(3) Cash received relating to other investing activities
Unit: RMB
Item Amount for the reporting period Amount for the prior period
Asset-related government grants 11,194,100.00 72,391,073.00
Entrusted loans 900,000,000.00
Total 11,194,100.00 972,391,073.00
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
(4) Cash paid relating to other financing activities
Unit: RMB
Item Amount for the reporting period Amount for the prior period
Investment compensation liability 103,042,210.54
Total 103,042,210.54
(5) Cash received relating to other financing activities
Unit: RMB
Item Amount for the reporting period Amount for the prior period
MTX and short-term commercial paper,
8,204,965,097.95 6,990,741,096.00
etc.
Equipment financing 500,000,000.00 729,259,498.49
Debt financing receivable 135,622,410.95
Loan from the Finance Company 100,000,000.00
Total 8,940,587,508.90 7,720,000,594.49
(6) Cash paid relating to other financing activities
Unit: RMB
Item Amount for the reporting period Amount for the prior period
Repayment of short-term commercial
7, 911,542,642.29 7,159,436,554.95
paper and MTN, etc.
Repayment of matured bonds 579,511,229.15
Repayment of equipment leaseback 1,086,203,289.95
Increase in restricted bank deposits for the
5,922,955,877.94 3,036,117,632.05
period
Total 15,500,213,039.33 10,195,554,187.00
61. Supplementary information on cash flow statement
(1) Supplementary information on cash flow statement
Unit: RMB
Supplementary information Amount for the period Amount for the prior period
1. Reconciliation of net profit as cash flows
-- --
from operating activities:
Net profit 1,783,122,625.14 1,747,717,658.87
Plus: Provision for impairment of assets 150,455,669.97 199,810,653.08
Depreciation of fixed assets, consumption of
oil and gas assets, depreciation of bearer 784,191,510.41 816,376,614.37
biological assets
Amortisation of intangible assets 24,059,444.29 25,214,975.98
Amortisation of long-term prepaid expenses 16,218,441.95 10,052,618.57
Loss on disposal of fixed assets, intangible
assets and other long-term assets (“-” 2,210,048.63 -344,802.99
denotes gain)
Loss on changes in fair value (“-” denotes
117,973,841.55 11,087,873.76
gain)
Finance expenses (“-” denotes gain) 1,584,988,775.97 1,072,958,458.60
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
Investment loss (“-” denotes gain) -152,438,125.48 -65,864,672.36
Decrease in deferred income tax assets (“-”
3,621,648.17 -20,288,090.65
denotes increase)
Decrease in inventories (“-” denotes
-385,938,273.77 -1,194,720,554.52
increase)
Decrease in operating receivables (“-”
-3,833,188,190.12 -3,414,834,472.92
denotes increase)
Increase in operating payables (“-” denotes
4,649,760,504.20 -3,300,108,028.18
decrease)
Net cash flows from operating activities 4,745,037,920.91 -4,112,941,768.39
2. Major investing and financing activities
-- --
not involving cash settlements:
3. Net change in cash and cash equivalents: -- --
Closing balance of cash 3,530,985,289.73 2,421,491,422.53
Less: Opening balance of cash 2,804,408,374.46 1,979,861,045.62
Net increase in cash and cash equivalents 726,576,915.27 441,630,376.91
(2) Cash and cash equivalents composition
Unit: RMB
Item Closing balance Opening balance
I. Cash 3,530,985,289.73 2,804,408,374.46
Of which: Cash on hand 2,104,950.30 2,344,438.45
Bank deposits readily available for
3,528,880,339.43 2,802,063,936.01
payment
III. Balance of cash and cash equivalent as at
3,530,985,289.73 2,804,408,374.46
end of period
62. Assets with restricted ownerships or right to use
Unit: RMB
Item Closing carrying amount Reason for such restrictions
As guarantee deposits for bank acceptance
Monetary funds 14,690,489,964.91 bills, letter of credit, and bank borrowings
deposits, and deposit reserves.
As collateral for short-term borrowings,
Bills receivable 1,902,685,841.26 bills payable, letters of guarantee and
letters of credit.
As collateral for bank borrowings and
Fixed assets 7,882,378,100.81
long-term payables.
As collateral for bank borrowings and
Intangible assets 631,997,196.06
long-term payables.
Investment properties 4,750,494,168.51 As collateral for bank borrowings.
Total 29,858,045,271.55 --
63. Foreign currency items
(1) Foreign currency items
Unit: RMB
Closing foreign currency
Item Exchange rate Closing balance in RMB
balance
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
Monetary funds
Of which: USD 56,889,559.23 6.6166 376,415,457.62
EUR 1,309,235.94 7.6515 10,017,618.78
HKD 100,012.70 0.8431 84,320.71
GBP 7,121.62 8.6551 61,638.34
KRW 480,926,937.11 0.005903 2,839,001.99
JPY 1,922,880.96 0.059914 115,207.49
Accounts receivable
Of which: USD 49,762,699.96 6.6166 329,259,880.55
EUR 4,823,704.06 7.6515 36,908,571.62
JPY 146,931,581.93 0.059914 8,803,258.80
Accounts payable
Of which: USD 86,705,165.98 6.6166 573,693,401.25
EUR 22,322,987.38 7.6515 170,804,337.97
Short-term borrowings
Of which: USD 699,374,376.26 6.6166 4,627,480,497.94
EUR 151,982,691.53 7.6515 1,162,895,564.23
Long-term borrowings
Of which: USD 297,425,200.00 6.6166 1,967,943,578.32
EUR 57,799,998.62 7.6515 442,256,689.46
Non-current liabilities due within
one year
Of which: USD 161,500,000.00 6.6166 1,068,580,900.00
(2) Explanation on overseas operating entities (including major overseas operating entities), which shall
disclose their overseas principal places of business, functional currency and basis. Reasons shall be
disclosed if there is any change in the functional currency.
√ Applicable □ Not applicable
No. Name of subsidiary Principal place Place of Functional
of business incorporation currency
1 Chenming GmbH Hamburg, Germany Hamburg, Germany EUR
2 Chenming Paper Korea Co., Ltd. Seoul, Korea Seoul, Korea KRW
3 Chenming (HK) Limited Hong Kong, China Hong Kong, China USD
4 Chenming International Co., Ltd. Los Angeles, USA Los Angeles, USA USD
5 Chenming Paper Japan Co., Ltd. Tokyo, Japan Tokyo, Japan JPY
The companies numbered 3 - 5 are companies of the fourth level. Overseas subsidiaries of the Company recognise U.S. dollar
(“USD” or “US$”), Japanese yen (“JPY”) Euro (“EUR”) and Korean Won (“KRW”) as their respective functional currency
according to the general economic environment in which these subsidiaries operate.
VIII. Change in scope of consolidation
1. Others
During the year, the scope of consolidation included a newly established subsidiary, namely Beijing Chenming Financial
Leasing Co., Ltd.. For details, please see Note VIII. 1 “Interest in subsidiaries”.
During the year, the scope of consolidation excluded 1 company: as the shareholding of Shandong Chenming Paper Holdings
Limited in Xuchang Chenming Paper Co. Ltd. decreased from 60% to 30%, Xuchang Chenming Paper Co. Ltd. was changed to an
associate of Shandong Chenming Paper Holdings Limited. For details, please see Note VIII. 2 “Interest in joint ventures or
associates”.
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
IX. Interest in other entities
1. Interest in subsidiaries
(1) Constitution of the Group
Principle place of Place of Shareholding
Name of subsidiary Nature of business Acquisition
business incorporation Direct Indirect
Zhanjiang Chenming Pulp & Paper Co., Ltd. Zhanjiang, China Zhanjiang, China Paper making 100.00% Establishment
Shouguang Meilun Paper Co., Ltd. Shouguang, China Shouguang, China Paper making 100.00% Establishment
Merger and
Jilin Chenming Paper Co., Ltd. Jilin, China Jilin, China Paper making 100.00%
acquisition
Huanggang Chenming Pulp & Paper Co., Ltd. Huanggang, China Huanggang, China Pulp production 100.00% Establishment
Shandong Chenming Paper Sales Co., Ltd. Shouguang, China Shouguang, China Sales of paper 100.00% Establishment
Shouguang Chenming Import and Export Trade
Shouguang, China Shouguang, China Import and export trade 100.00% Establishment
Co., Ltd.
Hamburg,
Chenming GmbH Hamburg, Germany Paper product trading 100.00% Establishment
Germany
Shouguang Chenming Papermaking Machine Co.,
Shouguang, China Shouguang, China Machinery manufacturing 100.00% Establishment
Ltd.
Shouguang Hongxiang Printing and Packaging Co., Merger and
Shouguang, China Shouguang, China Printing and packaging 100.00%
Ltd. acquisition
Shouguang Chenming Modern Logistic Co., Ltd. Shouguang, China Shouguang, China Transportation 100.00% Establishment
Shouguang Chenming Industrial Logistics Co., Ltd. Shouguang, China Shouguang, China Logistics 100.00% Establishment
Jinan Chenming Investment Management Co., Ltd. Jinan, China Jinan, China Investment management 100.00% Establishment
Huanggang Chenming Arboriculture Development
Huanggang, China Huanggang, China Arboriculture 100.00% Establishment
Co., Ltd.
Chenming Arboriculture Co., Ltd. Wuhan, China Wuhan, China Arboriculture 100.00% Establishment
Chenming Paper Korea Co., Ltd. Seoul, Korea Seoul, Korea Sales of paper 100.00% Establishment
Shandong Chenming Power Supply Holdings Co.,
Shouguang, China Shouguang, China Power 100.00% Establishment
Ltd.
Shouguang Shun Da Customs Declaration Co, Ltd. Shouguang, China Shouguang, China Customs declaration 100.00% Establishment
Property investment and
Shanghai Chenming Industrial Co., Ltd. Shanghai, China Shanghai, China 100.00% Establishment
management
Merger and
Wuxi Song Ling Paper Co., Ltd. Wuxi, China Wuxi, China Paper making 100.00%
acquisition
Shandong Chenming Paper Group (Fuyu) Sales
Fuyu, China Fuyu, China Sales of paper 100.00% Establishment
Co., Ltd.
Shandong Chenming Group Finance Co., Ltd. Jinan, China Jinan, China Finance 80.00% 20.00% Establishment
Jiangxi Chenming Paper Co., Ltd. Nanchang, China Nanchang, China Paper making 51.00% 49.00% Establishment
Qingdao Chenming International Logistics Co.,
Qingdao, China Qingdao, China Logistics 30.00% 70.00% Establishment
Ltd.
Shouguang Chenming Art Paper Co., Ltd. Shouguang, China Shouguang, China Paper making 75.00% Establishment
Hailaer Chenming Paper Co., Ltd. Hailaer, China Hailaer, China Paper making 75.00% Establishment
Shandong Grand View Hotel Co., Ltd. Shouguang, China Shouguang, China Catering 70.00% Establishment
Haicheng Haiming Mining Co., Ltd. Haicheng, China Haicheng, China Mining 60.00% Establishment
Wuhan Chenming Hanyang Paper Holdings Co.,
Wuhan, China Wuhan, China Paper making 62.50% Establishment
Ltd.
Chengdu Chenming Culture Communication Co.,
Chengdu, China Chengdu, China Marketing 100.00% Establishment
Ltd.
Shandong Chenming Financial Leasing Co., Ltd. Jinan, China Jinan, China Financial leasing 100.00% Establishment
Qingdao Chenming Nonghai Financial Leasing Co.,
Qingdao, China Qingdao, China Financial leasing 100.00% Establishment
Ltd.
Chenming (HK) Limited Hong Kong, China Hong Kong, China Paper product trading 100.00% Establishment
Merger and
Shouguang Hongyi Decorative Packaging Co., Ltd. Shouguang, China Shouguang, China Packaging 100.00%
acquisition
Merger and
Shouguang Xinyuan Coal Co., Ltd. Shouguang, China Shouguang, China Coal 100.00%
acquisition
Shouguang City Run Sheng Wasted Paper Recycle Merger and
Shouguang, China Shouguang, China Purchase and sale of waste 100.00%
Co., Ltd. acquisition
Shouguang Wei Yuan Logistics Company Limited Shouguang, China Shouguang, China Logistics 100.00% Merger and
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
acquisition
Merger and
Shandong Chenming Panels Co., Ltd. Shouguang, China Shouguang, China Panels 100.00%
acquisition
Merger and
Shouguang Chenming Floor Board Co., Ltd. Shouguang, China Shouguang, China Floor board 100.00%
acquisition
Shouguang Chenming Cement Co., Limited Shouguang, China Shouguang, China Cement 100.00% Establishment
Wuhan Chenming Qianneng Electric Power Co.,
Wuhan, China Wuhan, China Electric power 51.00% Establishment
Ltd.
Shandong Chenming Investment Limited Jinan, China Jinan, China Investment 100.00% Establishment
Japan Chenming Paper Co., Ltd. Tokyo, Japan Tokyo, Japan Paper product trading 100.00% Establishment
Los Angeles, the Los Angeles, the
Chenming International Co., Ltd. Paper product trading 100.00% Establishment
United States United States
Zhanjiang Chenming Arboriculture Development
Zhanjiang, China Zhanjiang, China Arboriculture 100.00% Establishment
Co., Ltd.
Yangjiang Chenming Arboriculture Development
Yangjiang, China Yangjiang, China Arboriculture 100.00% Establishment
Co., Ltd.
Nanchang Chenming Arboriculture Development
Nanchang, China Nanchang, China Arboriculture 100.00% Establishment
Co., Ltd.
Merger and
Guangdong Huirui Investment Co., Ltd. Zhanjiang, China Zhanjiang, China Investment 51.00%
acquisition
Zhanjiang Chenming New-style Wall Materials
Zhanjiang, China Zhanjiang, China Wall materials 100.00% Establishment
Co., Ltd
Jilin Chenming New-style Wall Materials Co., Ltd. Jilin, China Jilin, China Wall materials 100.00% Establishment
Jilin Chenming Logistics Co., Ltd. Jilin, China Jilin, China Logistics 100.00% Establishment
Jiangxi Chenming Logistics Co., Ltd. Nanchang, China Nanchang, China Logistics 100.00% Establishment
Fuyu Chenming Paper Co., Ltd. Fuyu, China Fuyu, China Paper making 100.00% Establishment
Zhanjiang Meilun Pulp & Paper Co., Ltd. Zhanjiang, China Zhanjiang, China Paper making 100.00% Establishment
Shanghai Chenming Financial leasing Co., Ltd. Shanghai, China Shanghai, China Financial leasing 100.00% Establishment
Guangzhou Chenming Financial leasing Co., Ltd. Guangzhou, China Guangzhou, China Financial leasing 100.00% Establishment
Merger and
Shanghai Hongtai Real Estate Co., Ltd. Shanghai, China Shanghai, China Real estate 75.00%
acquisition
Merger and
Shanghai Hongtai Property Management Co., Ltd. Shanghai, China Shanghai, China Property Management 75.00%
acquisition
Shandong Chenming Commercial Factoring Co.,
Jinan, China Jinan, China Business factoring 100.00% Establishment
Ltd.
Guangzhou Chenming Commercial Factoring Co.,
Guangzhou, China Guangzhou, China Business factoring 51.00% Establishment
Ltd.
Qingdao Chenming Pulp & Paper Electronic
Qingdao, China Qingdao, China Trading 100.00% Establishment
Commodity Spot Trading Center Co., Ltd.
Beijing Chenming Culture Communication Co.,
Beijing, China Beijing, China Marketing 100.00% Establishment
Ltd.
Beijing Chenming Financial Leasing Co., Ltd. Beijing, China Beijing, China Financial leasing 100.00% Establishment
(2) Major non-wholly owned subsidiaries
Unit: RMB
Gain or loss attributable Dividend to minority
Closing balance of
Name of subsidiary Minority interests to minority interests interests declared during
minority interests
during the period the period
Wuhan Chenming
Hanyang Paper Holdings 34.80% 4,201,695.95 72,308,687.04
Co., Ltd.
Wuhan Chenming
Qianneng Electric Power 49.00% -3,701,067.99 36,647,300.58
Co., Ltd.
Shouguang Chenming
25.00% 14,350,961.48 65,965,253.05
Art Paper Co., Ltd.
Shandong Grand View
30.00% -3,154,708.98 -40,635,798.66
Hotel Co., Ltd
Haicheng Haiming
40.00% 24,819,683.23 118,584,728.38
Mining Co., Ltd.
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
Guangdong Huirui
49.00% -1,463,010.47 110,879,094.98
Investment Co., Ltd.
Shanghai Hongtai Real
25.00% -36,223,139.89 918,181,377.04
Estate Co., Ltd.
Shandong Chenming
Commercial Factoring 49.00% -338,813.50 -338,425.02
Co., Ltd.
Hailaer Chenming Paper
25.00% 9,135,357.41
Co., Ltd.
Total -1,508,400.17 1,290,727,574.80
(3) Key financial information of major non-wholly owned subsidiaries
Unit: RMB
Closing balance Opening balance
Name of subsidiary
Non-current Non-current
Current assets Non-current assets Total assets Current liabilities Total liabilities Current assets Non-current assets Total assets Current liabilities Total liabilities
liabilities liabilities
Wuhan Chenming
Hanyang Paper 653,704,473.75 1,091,751,428.47 1,745,455,902.22 1,479,238,400.31 51,551,946.89 1,530,790,347.20 489,799,209.30 1,241,278,595.22 1,731,077,804.52 1,438,701,718.23 53,182,469.27 1,491,884,187.50
Holdings Co., Ltd.
Shouguang
Chenming Art Paper 645,529,959.77 638,664,460.17 1,284,194,419.94 1,020,333,407.76 0.00 1,020,333,407.76 371,585,385.81 662,367,808.01 1,033,953,193.82 827,496,027.57 827,496,027.57
Co., Ltd.
Shandong Grand
18,507,208.71 211,791,792.46 230,299,001.17 365,751,663.38 0.00 365,751,663.38 16,747,494.79 214,555,206.74 231,302,701.53 356,239,667.14 356,239,667.14
View Hotel Co., Ltd
Haicheng Haiming
173,535,098.17 1,250,462,354.86 1,423,997,453.03 1,127,535,632.07 0.00 1,127,535,632.07 75,944,768.92 1,181,346,911.13 1,257,291,680.05 1,022,879,067.16 1,022,879,067.16
Mining Co., Ltd.
Guangdong Huirui
309,979,131.51 305,452.41 310,284,583.92 6,020,716.64 77,980,000.00 84,000,716.64 310,035,149.57 356,083.09 310,391,232.66 3,141,629.72 77,980,000.00 81,121,629.72
Investment Co., Ltd.
Shanghai Hongtai
71,353,496.24 2,589,307,292.35 2,660,660,788.59 735,624,861.84 1,620,000,000.00 2,355,624,861.84 13,682,144.58 2,621,645,742.81 2,635,327,887.39 595,911,653.75 1,670,000,000.00 2,265,911,653.75
Real Estate Co., Ltd.
Unit: RMB
Amount for the reporting period Amount for the prior period
Name of Total Cash flows Total Cash flows
subsidiary Revenue Net profit comprehensive from operating Revenue Net profit comprehensive from operating
income activities income activities
Wuhan
Chenming
Hanyang Paper 748,479,359.87 12,815,547.34 12,815,547.34 -1,234,776.51 600,890,033.83 6,940,887.35 6,940,887.35 -6,556,195.80
Holdings Co.,
Ltd.
Shouguang
Chenming Art 469,197,828.15 57,403,845.93 57,403,845.93 16,911,656.33 315,445,237.82 20,062,006.83 20,062,006.84 857,026.40
Paper Co., Ltd.
Shandong
Grand View 17,218,894.98 -10,515,696.60 -10,515,696.60 -5,150,398.08 16,349,994.57 -9,880,170.88 -9,880,170.88 -1,592,519.03
Hotel Co., Ltd
Haicheng
Haiming
194,803,343.16 62,049,208.07 62,049,208.07 -47,931,813.80 -4,206,980.88 20,062,006.84 -19,856,846.14
Mining Co.,
Ltd.
Guangdong
Huirui
0.00 -2,985,735.66 -2,985,735.66 -56,018.06 -811,026.55 -811,026.55 181,814.34
Investment
Co., Ltd.
Shanghai
Hongtai Real 437,721.38 -82,830,427.25 -82,830,427.25 205,540,229.39
Estate Co., Ltd.
2. Interest in joint arrangements or associates
(1) Major joint ventures and associates
Name of joint Shareholding
Principle place of Place of Nature of Accounting
ventures and
business incorporation business Direct Indirect method
associates
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
Shouguang
Chenming Huisen
New-style Shouguang, Shouguang, Construction
50.00% Equity method
Construction China China materials
Materials Co.,
Ltd.
Arjo Wiggins
Chenming Shouguang, Shouguang,
Paper making 30.00% Equity method
Specialty Paper China China
Co., Ltd.
Jiangxi Jiangbao
Media Colour Nanchang, China Nanchang, China Printing 21.15% Equity method
Printing Co. Ltd.
Zhuhai Dechen
New Third Board
Equity
Investment
Investment Fund Zhuhai, China Zhuhai, China 50.00% Equity method
management
Company
(Limited
Partnership)
Wuhan Chenming
Real estate
Wan Xing Real Wuhan, China Wuhan, China 40.00% Equity method
development
Estate Co., Ltd.
Handling and
Jiangxi Chenming
Nanchang, China Nanchang, China transportation of 40.00% Equity method
Port Co., Ltd.
goods and storage
Ningbo Kaichen
Huamei Equity
Investment Fund Investment
Ningbo, China Ningbo, China 40.00% Equity method
Partnership management
(Limited
Partnership)
(2) Key financial information of major joint ventures
Unit: RMB
Closing balance/Amount for the reporting period Opening balance/Amount for the prior period
Shouguang Chenming Shouguang Chenming
Huisen New-style Weifang Senda Meixi Huisen New-style Weifang Senda Meixi
Construction Materials Port Co., Ltd. Construction Materials Port Co., Ltd.
Co., Ltd. Co., Ltd.
Current assets 48,110,251.53 76,446,763.09 873,137.05 104,769,683.99
Of which: Cash and cash
154,968.76 71,926,049.62 357,810.87 20,253,054.23
equivalents
Non-current assets 12,918,942.03 475,915,953.16 12,234,041.68 325,782,379.60
Total assets 61,029,193.56 552,362,716.25 13,107,178.73 430,552,063.59
Current liabilities 58,648,287.69 14,610,058.20 6,932,585.26 32,781,806.73
Non-current liabilities 343,620,042.41 201,622,321.84
Total liabilities 58,648,287.69 358,230,100.61 6,932,585.26 234,404,128.57
Equity interest
attributable to
2,380,905.87 194,132,615.64 6,174,593.47 196,147,935.02
shareholders of the
parent company
Share of net assets based
1,190,452.94 97,066,307.82 3,087,296.74 98,073,967.51
on shareholding
Carrying amount of 2,935,220.64 103,777,262.72 3,087,296.74 104,784,922.41
investment in joint
115
Shandong Chenming Paper Holdings Limited 2018 Interim Report
ventures
Revenue 22,351,679.01 10,319,610.53
Finance expenses -4,791.68 -26,820.55 99,894.57 -308,457.69
Income tax expenses 226,431.31 138,833.84
Income tax expenses -304,152.16 -2,015,319.38 -502,366.61 -2,578,637.02
Total comprehensive
-304,152.16 -2,015,319.38 -502,366.61 -2,578,637.02
income
(3) Key financial information of major associates
Unit: RMB
Closing balance/Amount for the reporting period Opening balance/Amount for the prior period
Zhuhai Dechen Zhuhai Dechen
Ningbo Qichen Ningbo Qichen
New Third Board New Third Board
Huamei Equity Wuhan Huamei Equity Wuhan
Equity Jiangxi Equity Jiangxi
Investment Fund Chenming Wan Investment Fund Chenming Wan
Investment Fund Chenming Port Investment Fund Chenming Port
Partnership Xing Real Estate Partnership Xing Real Estate
Company Co., Ltd. Company Co., Ltd.
(Limited Co., Ltd. (Limited Co., Ltd.
(Limited (Limited
Partnership) Partnership)
Partnership) Partnership)
Current assets 107,992,539.19 12,322,021.15 1,716,557,593.45 13,026,292.85 146,452,805.16 14,081,866.81 1,672,497,092.07 13,757,478.48
Non-current
92,000,000.00 91,750,000.00 33,844,444.17 105,389,783.79 51,000,000.00 89,760,000.00 33,671,226.11 107,795,608.88
assets
Total assets 199,992,539.19 104,072,021.15 1,750,402,037.62 118,416,076.64 197,452,805.16 103,841,866.81 1,706,168,318.18 121,553,087.36
Current liabilities 16,169.83 5,000.00 1,662,041,605.80 108,888,991.99 5,000.00 1,588,523,379.45 109,241,036.37
Total liabilities 16,169.83 5,000.00 1,662,041,605.80 108,888,991.99 5,000.00 1,588,523,379.45 109,241,036.37
Equity interest
attributable to
shareholders of 199,976,369.36 104,067,021.15 88,360,431.82 9,527,084.65 197,452,805.16 103,836,866.81 117,644,938.73 12,312,050.99
the parent
company
Share of net
assets based on 79,990,547.74 52,028,307.22 35,344,172.73 3,810,833.86 78,977,173.01 51,918,433.41 47,057,975.49 4,924,820.40
shareholding
Carrying amount
of investment in 200,264,158.51 52,033,510.58 14,456,740.67 3,810,833.86 198,981,173.01 51,918,433.41 47,057,975.49 4,927,893.82
associates
Revenue 3,714,369.42 7,072,800.51
Net profit 3,207,463.76 230,154.34 -29,895,789.87 -2,784,966.34 -2,547,194.84 1,266,311.79 56,434,545.15 -2,614,181.59
Total
comprehensive 3,207,463.76 230,154.34 -29,895,789.87 -2,784,966.34 -2,547,194.84 1,266,311.79 56,434,545.15 -2,614,181.59
income
(4) Excess loss of joint ventures or associates
Unit: RMB
Accumulated unrecognised loss Unrecognised loss (or share of Unrecognised loss (or share of
Name
incurred for prior periods net profit) for the period net profit) for the period
Arjo Wiggins Chenming
7,308,869.16 7,308,869.16
Specialty Paper Co., Ltd.
X. Fair value
1. Fair value of assets and liabilities measured at fair value as at the end of the period
Unit: RMB
Fair value as at the end of the period
Item
Level 1 Level 2 Level 3 Total
I. Continuous
-- -- -- --
measurement at fair value
116
Shandong Chenming Paper Holdings Limited 2018 Interim Report
1. Consumable biological
1,067,432,724.07 1,067,432,724.07
assets
Total assets continuously
1,067,432,724.07 1,067,432,724.07
measured at fair value
II. Non-continuous
-- -- -- --
measurement at fair value
2. Level 3 continuous and non-continuous measurement, valuation techniques and qualification and
quantification of key inputs
Biological assets
The Company adopts the income method in determining the fair value of its consumable biological assets. Under the income
method, the valuation is arrived at based on the aggregate expected future profit estimates from forest resources discounted to their
present values at an applicable rate which is usually equivalent to yield prevailing in the forestry industry. Key input of the method
includes expected annual income and discount rate.
Expected annual profit = expected annual income - expected total input
Expected annual income = expected output x expected sales price
Expected output = based on normal output of the Company’s logging
Expected sales price = normal sales price of the Company in 2018
Expected total input is based on total historic input of saplings growing of the Company up to logging.
Discount rate is 10.21%, based on the yield prevailing in the industry.
3. Level 3 continuous measurement, adjustment between opening and closing value and sensitivity of
unobservable inputs
Consumable biological assets
Opening carrying amount 1,212,770,435.34
Sapling increase during the year
Sales decrease during the year 121,363,869.72
Change in fair value through profit or loss for the year -23,973,841.55
Closing carrying amount 1,067,432,724.07
4. Fair value of financial assets and financial liabilities not measured at fair value
(1) Financial instruments not measured at fair value
The financial assets and financial liabilities not measured at fair value mainly consist of: accounts receivable, short-term
borrowings, accounts payable, long-term borrowings, bonds payable and long-term payables.
The carrying amount of the above financial assets and financial liabilities deviates from the fair value by a small amount.
(2) As at 30 June 2018, the Company had no financial instruments measured at fair value (30 June 2017: Nil).
XI. Related parties and related party transactions
1. Parent company of the Company
Shareholding Voting right
Name of parent Place of Registered of the parent of the parent
Business nature
company incorporation capital company in company in
the Company the Company
Chenming Investment in manufacture of paper,
Shouguang City 1,238,787,700.00 27.67% 27.67%
Holdings Co., Ltd. electricity, steam, arboriculture
Explanation on the parent company of the Company
The ultimate controller of the Company is Shouguang State-owned Assets Supervision and Administration Office.
117
Shandong Chenming Paper Holdings Limited 2018 Interim Report
2. Subsidiaries of the Company
Please refer to Note IX. 1. Interest in subsidiaries for details.
3. Joint ventures and associates of the Company
Please refer to Note VIII. 2. Interest in joint ventures or associates for details.
Balance of related party transaction between the Company and its joint ventures or associates during the period or prior periods are as
follows:
Name of joint ventures or associates Relation
Wuhan Chenming Wan Xing Real Estate Co., Ltd. An associate of the Company
Jiangxi Jiangbao Media Colour Printing Co. Ltd. An associate of the Company
Arjo Wiggins Chenming Specialty Paper Co., Ltd. An associate of the Company
Shouguang Chenming Huisen New-style
A joint venture of the Company
Construction Materials Co., Ltd.
4. Other related parties
Name of other related parties Relation
Shandong Shouguang Jinxin Investment Development Holdings
Shareholder of the Company’s largest shareholder
Group
Shouguang Henglian Enterprise Investment Limited Shareholder of the Company’s largest shareholder
Shouguang Ruifeng Enterprise Investment Limited Shareholder of the Company’s largest shareholder
Chenming Holdings (Hong Kong) Limited Subsidiary of the Company’s largest shareholder
Zhanjiang Chenming Real Estate Co., Ltd. Subsidiary of the Company’s largest shareholder
Qingdao Hongji Weiye Investment Co., Ltd. Subsidiary of the Company’s largest shareholder
Shouguang Hengying Real Estate Co., Ltd. Subsidiary of the Company’s largest shareholder
A company invested by the Directors and senior management of
Shouguang Hengtai Enterprise Investment Co., Ltd.
the Company
A company invested by the Directors and senior management of
Shouguang Huixin Construction Materials Co., Ltd.
the Company
Shouguang Chenming Guangyuan Real Property Co., Ltd. and its A company invested by the Directors and senior management of
subsidiaries the Company
Qingdao Chenming Nonghai Investment Co., Ltd. and its A company invested by the Directors and senior management of
subsidiaries the Company
A company invested by the Directors and senior management of
Nanchang Chenjian New-style Wall Materials Co., Ltd.
the Company
A company invested by the Directors and senior management of
Shouguang Hengde Enterprises Investment Co., Ltd.
the Company
Zhejiang Huaming Investment Management Co., Ltd. and its Directors and senior management served by the Company’s
subsidiaries Directors
Hebei Chenming Zhongjin Real Estate Development Co., Ltd. Directors and senior management served by the Company’s
and its subsidiaries Supervisors
Wuhan Chenming Zhongjin Real Estate Co., Ltd. and its Directors and senior management served by
subsidiaries
Wuhan Rongsheng Zhongjin Development and Investment Co., Directors and senior management served by
Ltd. and its subsidiaries
Qingzhou Chenming Denaturation Amylum Co., Ltd. Share participating company of the Company
Zhejiang Guangyu Idall Print Co., Ltd Share participating company of the Company
Anhui Time Source Corporation Share participating company of the Company
Shandong Hongqiao Venture Capital Co., Ltd. Share participating company of the Company
118
Shandong Chenming Paper Holdings Limited 2018 Interim Report
Shanghai Hengzheng Venture Investment Center (Limited
Share participating company of the Company
Partnership)
Guangdong Dejun Investment Co., Ltd. Share participating company of the Company
Directors and senior management served by the Company’s
Jiangxi Chenming Natural Gas Co., Ltd. and its subsidiaries
Director in the past twelve months
5. Related party transactions
(1) Purchase and sales of goods and rendering and receiving services
Table on purchase of goods/receiving of services
Unit: RMB
Whether the
Details of related Amount for the Transaction Amount for the
Related party transaction facility is
party transaction reporting period facility approved prior period
exceeded
Procurement of
Jiangxi Chenming Natural
natural gas and heavy 170,147,411.87 350,000,000.00 No 84,339,429.95
Gas Co., Ltd.
oil, etc.
Table on sales of goods/providing of services
Unit: RMB
Details of related party Amount for the reporting
Related party Amount for the prior period
transaction period
Anhui Time Source Corporation Sales of paper 0.00 122,403,067.72
(2) Guarantee
The Company as guarantor
Unit: RMB
Whether
Amount under Starting date of Expiry date of performance of
Party being guaranteed
guarantee guarantee guarantee guarantee is
completed
Weifang Sendamei West Port Co., Ltd. 135,000,000.00 20 December 2017 20 December 2027 No
Shandong Chenming Paper Sales Co., Ltd. 420,000,000.00 19 July 2017 20 July 2018 No
Shandong Chenming Paper Sales Co., Ltd. 450,000,000.00 13 November 2017 13 November 2018 No
Shandong Chenming Paper Sales Co., Ltd. 160,721,218.99 4 January 2018 4 July 2018 No
Shandong Chenming Paper Sales Co., Ltd. 350,000,000.00 24 February 2018 21 February 2019 No
Shandong Chenming Paper Sales Co., Ltd. 254,085,821.34 15 March 2018 12 September 2018 No
Shandong Chenming Paper Sales Co., Ltd. 250,000,000.00 10 April 2018 10 April 2019 No
Shandong Chenming Paper Sales Co., Ltd. 420,045,058.10 10 May 2018 7 November 2018 No
Shandong Chenming Paper Sales Co., Ltd. 575,717,671.60 10 May 2018 7 November 2018 No
Shandong Chenming Paper Sales Co., Ltd. 300,000,000.00 10 May 2018 6 November 2018 No
Shandong Chenming Paper Sales Co., Ltd. 500,000,000.00 29 June 2018 29 June 2019 No
Jiangxi Chenming Paper Co., Ltd. 100,000,000.00 17 October 2017 16 October 2018 No
Jiangxi Chenming Paper Co., Ltd. 45,000,000.00 27 March 2018 23 September 2018 No
Jiangxi Chenming Paper Co., Ltd. 76,500,000.00 29 May 2018 24 May 2019 No
Jiangxi Chenming Paper Co., Ltd. 22,500,000.00 20 June 2018 20 June 2019 No
Jiangxi Chenming Paper Co., Ltd. 16,563,394.57 29 March 2018 25 September 2018 No
Jiangxi Chenming Paper Co., Ltd. 6,539,190.65 20 April 2018 17 October 2018 No
Jiangxi Chenming Paper Co., Ltd. 18,319,448.14 10 May 2018 6 November 2018 No
Jiangxi Chenming Paper Co., Ltd. 200,000,000.00 30 September 2016 29 September 2018 No
119
Shandong Chenming Paper Holdings Limited 2018 Interim Report
Jiangxi Chenming Paper Co., Ltd. 50,000,000.00 16 March 2017 16 March 2019 No
Jiangxi Chenming Paper Co., Ltd. 100,000,000.00 1 April 2017 16 March 2019 No
Jiangxi Chenming Paper Co., Ltd. 73,000,000.00 12 June 2017 12 June 2019 No
Jiangxi Chenming Paper Co., Ltd. 150,000,000.00 29 November 2017 29 November 2019 No
Shouguang Meilun Paper Co., Ltd. 57,450,000.00 19 January 2018 18 January 2019 No
Shouguang Meilun Paper Co., Ltd. 100,000,000.00 17 January 2018 16 July 2018 No
Shouguang Meilun Paper Co., Ltd. 100,000,000.00 1 February 2018 25 July 2018 No
Shouguang Meilun Paper Co., Ltd. 100,000,000.00 23 April 2018 17 October 2018 No
Shouguang Meilun Paper Co., Ltd. 101,306,798.49 22 June 2018 18 December 2018 No
Shouguang Meilun Paper Co., Ltd. 500,000,000.00 30 March 2018 16 July 2018 No
Jilin Chenming Paper Co., Ltd. 40,000,000.00 1 February 2018 25 December 2018 No
Chenming (HK) Limited 91,573,744.00 1 March 2017 18 March 2019 No
Chenming (HK) Limited 218,347,800.00 14 July 2017 26 July 2018 No
Chenming (HK) Limited 158,798,400.00 26 July 2017 10 August 2018 No
Chenming (HK) Limited 83,435,326.00 8 September 2017 2 August 2018 No
Chenming (HK) Limited 86,644,372.10 25 October 2017 24 September 2018 No
Chenming (HK) Limited 234,161,474.00 27 October 2017 11 October 2018 No
Chenming (HK) Limited 96,271,530.00 31 October 2017 8 October 2018 No
Chenming (HK) Limited 99,249,000.00 22 December 2017 10 December 2018 No
Chenming (HK) Limited 70,135,960.00 22 December 2017 10 December 2018 No
Chenming (HK) Limited 281,205,500.00 3 January 2018 13 December 2018 No
Chenming (HK) Limited 238,197,600.00 23 March 2018 20 March 2019 No
Chenming (HK) Limited 178,648,200.00 9 April 2018 8 October 2018 No
Chenming (HK) Limited 310,980,200.00 28 May 2018 15 May 2019 No
Chenming (HK) Limited 165,415,000.00 6 June 2018 6 December 2018 No
Chenming (HK) Limited 33,083,000.00 6 June 2018 6 December 2018 No
Chenming (HK) Limited 30,000,000.00 22 December 2017 22 December 2018 No
Chenming (HK) Limited 72,000,000.00 29 November 2017 29 November 2018 No
Chenming (HK) Limited 130,000,000.00 11 June 2018 11 June 2019 No
Chenming (HK) Limited 37,700,000.00 22 June 2018 20 December 2018 No
Chenming (HK) Limited 188,573,100.00 6 October 2016 30 August 2018 No
Chenming (HK) Limited 277,897,200.00 2 November 2016 10 September 2019 No
Chenming (HK) Limited 350,679,800.00 18 January 2017 8 April 2019 No
Chenming (HK) Limited 271,280,600.00 7 November 2017 30 September 2019 No
Chenming (HK) Limited 197,408,689.46 12 January 2017 14 December 2019 No
Chenming (HK) Limited 137,727,000.00 24 May 2017 27 April 2019 No
Chenming (HK) Limited 161,445,040.00 23 April 2018 7 April 2021 No
Chenming (HK) Limited 92,632,400.00 4 May 2018 6 April 2021 No
Chenming (HK) Limited 92,632,400.00 11 May 2018 11 April 2020 No
Chenming (HK) Limited 58,226,080.00 17 May 2018 5 May 2021 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 110,000,000.00 18 October 2017 17 October 2018 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 90,000,000.00 17 November 2017 16 November 2018 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 6 September 2017 5 September 2018 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 20 December 2017 19 December 2018 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 50,000,000.00 21 December 2017 20 December 2018 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 80,000,000.00 16 October 2017 15 October 2018 No
120
Shandong Chenming Paper Holdings Limited 2018 Interim Report
Zhanjiang Chenming Pulp & Paper Co., Ltd. 115,000,000.00 6 November 2017 5 November 2018 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 450,000,000.00 30 March 2017 29 March 2018 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 75,000,000.00 29 March 2018 28 December 2018 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 80,000,000.00 15 January 2018 14 July 2018 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 50,000,000.00 1 January 2018 31 December 2018 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 300,000,000.00 2 January 2018 1 January 2019 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 18 January 2018 17 January 2019 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 125,000,000.00 9 February 2018 8 February 2019 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 200,000,000.00 1 January 2018 24 October 2018 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 110,000,000.00 14 March 2018 27 July 2018 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 99,969,000.00 9 April 2018 8 July 2018 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 32,000,000.00 25 June 2018 18 June 2019 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 43,000,000.00 2 April 2018 25 September 2018 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 327,031,740.77 7 January 2018 8 January 2019 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 160,397,500.00 30 August 2017 30 August 2018 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 32,500,000.02 3 April 2018 2 July 2018 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 48,999,600.00 27 April 2018 26 April 2019 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 60,872,720.00 28 April 2018 27 October 2018 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 36,738,643.18 2 May 2018 2 August 2018 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 190,000,000.00 26 October 2016 26 October 2018 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 39,500,000.00 3 June 2015 21 May 2020 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 200,000,000.00 20 June 2017 20 June 2019 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 44,331,220.00 5 June 2015 21 May 2020 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 66,166,000.00 26 October 2016 26 October 2018 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 132,332,000.00 21 December 2017 20 December 2019 No
1,240,000,000.0
Zhanjiang Chenming Pulp & Paper Co., Ltd. 26 March 2018 25 March 2029 No
0
Zhanjiang Chenming Pulp & Paper Co., Ltd. 50,000,000.00 13 February 2018 11 February 2020 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 10,000,000.00 23 February 2018 11 February 2020 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 10,000,000.00 26 February 2018 11 February 2020 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 30,000,000.00 28 February 2018 11 February 2020 No
Shouguang Chenming Import and Export Trade Co.,
150,000,000.00 30 September 2017 29 September 2018 No
Ltd.
Shouguang Chenming Import and Export Trade Co.,
30,000,000.00 17 October 2017 16 October 2018 No
Ltd.
Shandong Chenming Financial Leasing Co., Ltd. 535,605,000.00 17 December 2015 16 December 2018 No
Shandong Chenming Financial Leasing Co., Ltd. 303,764,550.00 2 March 2016 17 February 2019 No
Shandong Chenming Financial Leasing Co., Ltd. 303,764,550.00 18 March 2016 2 February 2019 No
Shandong Chenming Financial Leasing Co., Ltd. 155,412,580.00 28 July 2016 12 July 2018 No
Shandong Chenming Financial Leasing Co., Ltd. 225,000,000.00 21 September 2017 21 September 2020 No
Shandong Chenming Financial Leasing Co., Ltd. 500,000,000.00 31 May 2018 29 February 2020 No
Huanggang Chenming Pulp & Paper Co., Ltd. 11,280,000.00 17 August 2015 26 September 2018 No
Huanggang Chenming Pulp & Paper Co., Ltd. 5,100,000.00 14 December 2015 26 September 2018 No
Huanggang Chenming Pulp & Paper Co., Ltd. 16,380,000.00 14 December 2015 26 December 2018 No
Huanggang Chenming Pulp & Paper Co., Ltd. 21,840,000.00 14 December 2015 26 March 2019 No
Huanggang Chenming Pulp & Paper Co., Ltd. 21,840,000.00 14 December 2015 26 June 2019 No
Huanggang Chenming Pulp & Paper Co., Ltd. 32,770,000.00 14 December 2015 26 September 2019 No
121
Shandong Chenming Paper Holdings Limited 2018 Interim Report
Huanggang Chenming Pulp & Paper Co., Ltd. 27,070,000.00 14 December 2015 26 December 2019 No
Huanggang Chenming Pulp & Paper Co., Ltd. 5,700,000.00 24 June 2016 26 December 2019 No
Huanggang Chenming Pulp & Paper Co., Ltd. 32,770,000.00 24 June 2016 26 March 2020 No
Huanggang Chenming Pulp & Paper Co., Ltd. 530,000.00 24 June 2016 26 June 2020 No
Huanggang Chenming Pulp & Paper Co., Ltd. 32,240,000.00 5 January 2017 26 June 2020 No
Huanggang Chenming Pulp & Paper Co., Ltd. 38,240,000.00 5 January 2017 26 September 2020 No
Huanggang Chenming Pulp & Paper Co., Ltd. 38,240,000.00 5 January 2017 26 December 2020 No
Huanggang Chenming Pulp & Paper Co., Ltd. 43,690,000.00 5 January 2017 26 March 2021 No
Huanggang Chenming Pulp & Paper Co., Ltd. 43,690,000.00 5 January 2017 26 June 2021 No
Huanggang Chenming Pulp & Paper Co., Ltd. 3,900,000.00 5 January 2017 26 September 2021 No
Huanggang Chenming Pulp & Paper Co., Ltd. 36,260,000.00 3 February 2017 26 September 2021 No
Huanggang Chenming Pulp & Paper Co., Ltd. 40,160,000.00 3 February 2017 26 December 2021 No
Huanggang Chenming Pulp & Paper Co., Ltd. 40,160,000.00 3 February 2017 26 March 2022 No
Huanggang Chenming Pulp & Paper Co., Ltd. 33,420,000.00 3 February 2017 26 June 2022 No
Huanggang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 30 December 2015 29 December 2018 No
Huanggang Chenming Pulp & Paper Co., Ltd. 52,932,800.00 23 September 2016 26 September 2018 No
Huanggang Chenming Pulp & Paper Co., Ltd. 52,932,800.00 23 September 2016 26 December 2018 No
Huanggang Chenming Pulp & Paper Co., Ltd. 52,932,800.00 23 September 2016 26 March 2019 No
Huanggang Chenming Pulp & Paper Co., Ltd. 16,708,238.32 23 September 2016 26 June 2019 No
Huanggang Chenming Pulp & Paper Co., Ltd. 39,634,770.00 5 December 2016 26 June 2019 No
Huanggang Chenming Pulp & Paper Co., Ltd. 65,037,750.00 5 December 2016 26 September 2019 No
Huanggang Chenming Pulp & Paper Co., Ltd. 40,705,980.00 5 December 2016 26 December 2019 No
Huanggang Chenming Pulp & Paper Co., Ltd. 24,331,770.00 12 April 2017 26 December 2019 No
Huanggang Chenming Pulp & Paper Co., Ltd. 65,037,750.00 12 April 2017 26 March 2020 No
Huanggang Chenming Pulp & Paper Co., Ltd. 10,099,980.00 12 April 2017 26 June 2020 No
6. Related party accounts receivable and accounts payable
(1) Accounts receivables
Unit: RMB
Closing balance Opening balance
Item Related party Bad debt Bad debt
Book balance Book balance
provision provision
Shouguang Chenming Huisen New-style
Accounts 1,196,178.34 60,641.83 2,995,456.40 149,772.82
Construction Materials Co., Ltd.
receivable
Total 1,196,178.34 60,641.83 2,995,456.40 149,772.82
Jiangxi Chenming Natural Gas Co., Ltd. 32,810,399.15 18,519,096.64
Prepayments
Total 32,810,399.15 18,519,096.64
Arjo Wiggins Chenming Specialty Paper Co., Ltd. 1,191,705.08 1,191,705.08 1,191,705.08 1,191,705.08
Other Guangdong Dejun Investment Co., Ltd. 128,291,400.00 6,414,570.00
receivables Weifang Sime Darby West Port Co., Ltd. 19,093,750.00 954,687.50
Total 20,285,455.08 2,146,392.58 129,483,105.08 7,606,275.08
(2) Accounts payable
Unit: RMB
Item Related party Closing book balance Opening book balance
122
Shandong Chenming Paper Holdings Limited 2018 Interim Report
Shouguang Hengtai Enterprise Investment Company Limited 43,120,873.70 42,189,702.27
Other payables Wuhan Chenming Wan Xing Real Estate Co., Ltd. 29,968,574.22
Total 73,089,447.92 42,189,702.27
XII. Undertaking and contingency
1. Significant commitments
(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 3,440,480,605.28 3,826,992,695.73
long-term assets
Huirui BT Project 2,500,000,000.00 2,500,000,000.00
Total 5,940,480,605.28 6,326,992,695.73
(2) Operating lease commitments
As at the balance sheet date, the Company entered into irrevocable operating lease contracts with external companies as follows:
Item Closing balance Opening balance
Minimum lease payments under irrevocable operating leases:
The first year after balance sheet date 10,107,309.66 4,382,201.43
The second year after balance sheet date 10,384,627.74 4,777,714.37
The third year after balance sheet date 10,138,378.13 5,133,887.63
In the years thereafter 201,656,182.21 179,556,362.24
Total 232,286,497.74 193,850,165.67
2. Contingency
(1) Significant contingency as at the balance sheet date
The Company received a statutory demand in respect of alleged claims for the total amount of contractual compensation of
RMB167,860,000 and the interest thereon, legal costs of USD3,548,900 and the interest thereon and arbitration fees of
HKD3,303,900 and the interest thereon made by an alleged creditor pursuant to Companies (Winding up and Miscellaneous
Provisions) Ordinance delivered to the Company on 18 October 2016.
On 5 July 2017, the Company initiated legal proceedings for a civil complaint against Arjowiggins HKK2 Limited (“HKK2”)
and related parties at the Intermediate People’s Court of Weifang City in Shandong Province of the People’s Republic of China
(“Weifang Court”). The Civil Complaint was admitted to be heard by Weifang Court on 8 July 2017. The Company and HKK2
entered into a joint venture agreement to establish a joint venture in 2005. As one of the shareholders of the Joint Venture, the
Company, on behalf of the Joint Venture filed the Civil Complaint against HKK2 and related parties for loss suffered by the Joint
Venture. HKK2 filed a summons (Case Number: HCCT53/2015) at the Court of First Instance of the High Court of the HKSAR on
10 October 2017 to restrain the Company from further proceeding with the Civil Complaint that it had filed on 5 July 2017 against
HKK2 and the related parties before Weifang Court.
Justice Mimmie Chan of the Court of First Instance of the High Court of the HKSAR on 19 January 2018 in chambers (open to
public) ordered that the Company be restrained from further proceeding with the Civil Complaint that it has filed on 5 July 2017
against HKK2 and the related parties before Weifang Court. The Company has withdrawn the Civil Complaint from Weifang Court
on 22 February 2018.
As set out in the announcement of the Company dated 17 July 2017, the Company has appealed against the order of Justice
Harris dated 14 June 2017 on 12 July 2017. The hearing is expected to be for one day, and scheduled to be conducted at the Court of
Appeal of the High Court of the HKSAR at 10:00am on 11 May 2018.
Pursuant to an order made by Judge Harris on 28 August 2017, the Company has procured payment by a third party into the
High Court of the HKSAR in the sum of HK$389,112,432.44 (this being the Hong Kong dollar equivalent of the amount set out in
the Statutory Demand and interest thereon from 19 October 2016 to 27 August 2018).
As of 31 December 2017, the Company made provision of RMB325,259,082.28 for this litigation. As judgment of the Court of
the HKSAR is yet to be made, the provision is uncertain.
The Company issued the Indicative Announcement on 14 August 2018. A hearing for the Garnishee Order is scheduled to be
heard before a Master in Chambers at the High Court of HKSAR at 10:30a.m. on 31 August 2018, among Arjowiggins HKK2 Ltd. as
the Judgment Creditor, the Company as the Judgment Debtor and Bank of Communications Trustee Limited as the Garnishee.
123
Shandong Chenming Paper Holdings Limited 2018 Interim Report
XIII. Post-balance sheet date event
1. Profit distribution
Unit: RMB
Proposed profit or dividend for distribution 0.00
Profit or dividend approved for distribution 1,626,559,287.00
2. Other post-balance sheet date event
On 11 July 2018, the resolution on the debt transfer of portion of the financial leasing business in Financial Leasing Companies
was considered and approved at the 27th extraordinary meeting of the eighth session of the Board of the Company. In order to
facilitate the capital collection in financial leasing business and enhance capital utilisation rate, the Company proposed to transfer the
debt of not more than RMB2,000 million in aggregate in financial leasing business held to Shenzhen Qianhai Ruili Asset
Management Co., Ltd. or other qualified transferee. The specific sale of debt and the transfer expenses will be executed in
accordance with the agreement of both parties.
XIV. Other material matters
1. Segment information
(1) Basis for determination and accounting policies
According to the internal organisation structure, the requirement of management and the internal reporting system of the
Company, the operating businesses of the Company are categorised into 4 reporting segments, such classification is based on the
categories of primary products. The management of the Group evaluates the financial results of such reporting segments on a regular
basis, in order to allocate the resources and evaluate their results. The primary products or services provided by each reporting
segment of the Company include machine-made paper, construction materials, financial services and others.
The information from the reporting segments is disclosed in accordance with the accounting policies and measurement standards
adopted by each of the reporting segment when reporting to the management, which are consistent with the accounting policies and
measurement standards adopted in the preparation of the financial statements.
(2) Financial information of reporting segment
Unit: RMB
Machine-made Construction Inter-segment
Item Financial services Others Total
paper materials elimination
Revenue 13,160,393,022.74 137,513,641.61 1,329,045,532.12 1,086,258,948.17 161,877,104.75 15,551,334,039.89
Costs 9,406,171,649.42 110,291,082.62 126,471,923.24 798,109,948.57 181,159,684.99 10,259,884,918.86
Total
127,127,670,045.32 404,371,534.26 44,700,868,452.68 21,811,619,848.62 86,968,050,627.96 107,076,479,252.92
assets
Total
95,706,290,453.86 163,306,056.31 31,248,668,911.29 15,115,194,407.81 64,124,872,257.17 78,108,587,572.10
liabilities
XV. Notes to major financial statement items of the parent company
1. Accounts receivable
(1) Accounts receivable by category
Unit: RMB
Closing balance Opening balance
Category Book balance Bad debt provision Book balance Bad debt provision
Carrying amount Carrying amount
Amount Percentage Amount Percentage Amount Percentage Amount Percentage
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
Accounts receivable that
are collectively assessed for
2,204,627,636.92 100.00% 874,798.47 0.04% 2,203,752,838.45 8,860,393.90 100.00% 671,643.45 7.58% 8,188,750.45
impairment based on credit
risk characteristics
Total 2,204,627,636.92 100.00% 874,798.47 0.04% 2,203,752,838.45 8,860,393.90 100.00% 671,643.45 7.58% 8,188,750.45
Accounts receivable that are individually significant but assessed individually for impairment as at the end of the period:
□Applicable √ Not applicable
Accounts receivable using ageing analysis for making bad debt provision in groups:
√ Applicable □ Not applicable
Unit: RMB
Closing balance
Age
Accounts receivable Bad debt provision Percentage
Within 1 year
1-90 days 7,046,346.04 352,317.30 5.00%
Subtotal within 1 year 7,046,346.04 352,317.30 5.00%
1 to 2 years 4,422,600.00 442,260.00 10.00%
Over 3 years 80,221.17 80,221.17 100.00%
Total 11,549,167.21 874,798.47
(2) Provision, recovery or reversal of bad debt provision for the period
Bad debt provision for the current period amounted to RMB567,705.25. The amount for bad debt provision recovered or
reversed for during the current period was RMB0.00.
(3) Top five accounts receivable based on closing balance of debtors
The total amount of the Company’s top five accounts receivable based on closing balance of debtors for the year was
RMB2,204,627,302.37, which accounted for 99.99% of the closing balance of the total accounts receivable. The closing balance of
corresponding bad debt provision amounted to RMB767,567.42.
2. Other receivables
(1) Other receivables by category
Unit: RMB
Closing balance Opening balance
Category Book balance Bad debt provision Book balance Bad debt provision
Carrying amount Carrying amount
Amount Percentage Amount Percentage Amount Percentage Amount Percentage
Other receivables that are
individually significant but
26,824,764.17 0.12% 26,824,764.17 100.00% 0.00
assessed individually for
impairment
Other receivables that are
collectively assessed for
23,446,291,278.90 100.00% 65,260,961.73 0.28% 23,381,030,317.17 22,388,938,155.65 99.86% 37,734,670.82 0.17% 22,351,203,484.83
impairment based on credit risk
characteristics
Other receivables that are
individually insignificant but
4,316,922.88 0.02% 4,316,922.88 100.00% 0.00
assessed individually for
impairment
Total 23,446,291,278.90 100.00% 65,260,961.73 0.28% 23,381,030,317.17 22,420,079,842.70 100.00% 68,876,357.87 0.31% 22,351,203,484.83
Other receivables that are individually significant but assessed individually for impairment as at the end of the period:
□ Applicable √ Not applicable
Other receivables using ageing analysis for making bad debt provision in groups:
√ Applicable □ Not applicable
Unit: RMB
Closing balance
Age
Other receivables Bad debt provision Percentage
Within 1 year
Subtotal within 1 year 83,786,457.20 4,189,322.86 5.00%
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
1 to 2 years 13,115,224.13 1,311,522.41 10.00%
2 to 3 years 8,829,671.91 1,765,934.38 20.00%
Over 3 years 57,994,182.08 57,994,182.08 100.00%
Total 163,725,535.32 65,260,961.73
(2) Provision, recovery or reversal of bad debt provision for the period
The amount for bad debt provision provided for during the period was RMB631,054.18. The amount for bad debt provision
recovered or reversed during the period was RMB4,246,450.32.
(3) Top five other receivables according to closing balance of debtors
Unit: RMB
Percentage to closing
Closing balance of
Name of entity Nature Closing balance Maturity balance of other
bad debt provision
receivables
Shandong Chenming
Within 1 year, 1-2
Financial Leasing Open credit 12,329,587,568.32 52.59%
years
Co., Ltd.
Shanghai Chenming
Open credit 2,524,590,908.99 Within 1 year 10.77%
Industry Co., Ltd.
Guangzhou Chenming
Financial Leasing Open credit 1,412,691,908.92 Within 1 year 6.03%
Co., Ltd.
Wuhan Chenming
Hanyang Paper Open credit 1,192,174,755.48 Within 1 year 5.09%
Holdings Co., Ltd.
Shouguang Meilun
Open credit 1,029,765,932.66 Within 1 year 4.39%
Paper Co., Ltd.
Total -- 18,488,811,074.37 -- 78.86%
3. Long-term equity investments
Unit: RMB
Closing balance Opening balance
Item Impairment Impairment
Book balance Carrying amount Book balance Carrying amount
provision provision
Interest in
19,691,904,966.48 19,691,904,966.48 18,313,508,366.48 18,313,508,366.48
subsidiaries
Interest in
associates and 377,944,022.24 377,944,022.24 360,525,877.01 360,525,877.01
joint ventures
Total 20,069,848,988.72 20,069,848,988.72 18,674,034,243.49 18,674,034,243.49
(1) Interest in subsidiaries
Unit: RMB
Closing
Impairment
Increase for the Decrease for balance of
Investee Opening balance Closing balance provision for
period the period impairment
the period
provision
Chenming Paper Korea Co.,
6,143,400.00 6,143,400.00
Ltd.
Chenming GmbH 4,083,235.00 4,083,235.00
126
Shandong Chenming Paper Holdings Limited 2018 Interim Report
Shandong Chenming Paper
1,000,000.00 1,000,000.00
Group (Fuyu) Sales Co., Ltd.
Haicheng Haiming Mining
144,000,000.00 144,000,000.00
Co., Ltd.
Hailaer Chenming Paper Co.,
12,000,000.00 12,000,000.00
Ltd.
Huanggang Chenming Pulp &
1,200,000,000.00 50,000,000.00 1,250,000,000.00
Paper Co., Ltd.
Huanggang Chenming
Arboriculture Development 70,000,000.00 70,000,000.00
Co., Ltd.
Jilin Chenming Paper Co.,
1,501,350,000.00 1,501,350,000.00
Ltd.
Jinan Chenming Investment
100,000,000.00 100,000,000.00
Management Co., Ltd.
Jiangxi Chenming Paper Co.,
822,867,646.40 822,867,646.40
Ltd.
Shandong Chenming Power
157,810,117.43 157,810,117.43
Supply Holdings Co., Ltd.
Wuhan Chenming Hanyang
202,824,716.34 60,896,600.00 263,721,316.34
Paper Holdings Co., Ltd.
Shandong Grand View Hotel
80,500,000.00 80,500,000.00
Co., Ltd.
Zhanjiang Chenming Pulp &
5,000,000,000.00 27,500,000.00 5,027,500,000.00
Paper Co., Ltd.
Shouguang Chenming
10,000,000.00 10,000,000.00
Modern Logistic Co., Ltd.
Shouguang Chenming Art
113,616,063.80 113,616,063.80
Paper Co., Ltd.
Shouguang Meilun Paper Co.,
4,449,441,979.31 4,449,441,979.31
Ltd.
Shouguang Shun Da Customs
1,500,000.00 1,500,000.00
Declaration Co, Ltd.
Shandong Chenming Paper
662,641,208.20 662,641,208.20
Sales Co., Ltd.
Shouguang Chenming Import
250,000,000.00 250,000,000.00
and Export Trade Co., Ltd.
Shouguang Chenming
Papermaking Machine Co., 2,000,000.00 2,000,000.00
Ltd.
Shouguang Chenming
10,000,000.00 10,000,000.00
Industrial Logistics Co., Ltd.
Shouguang Chenming
3,730,000.00 3,730,000.00
Hongxin Packaging Co., Ltd.
Shandong Chenming Group
2,400,000,000.00 2,400,000,000.00
Finance Co., Ltd.
Chenming Arboriculture Co.,
45,000,000.00 45,000,000.00
Ltd.
Qingdao Chenming
International Logistics Co., 3,000,000.00 3,000,000.00
Ltd.
Shanghai Chenming Industry 1,300,000,000.0
1,000,000,000.00 2,300,000,000.00
Co., Ltd. 0
Xuchang Chenming Paper
60,000,000.00 60,000,000.00
Co., Ltd.
127
Shandong Chenming Paper Holdings Limited 2018 Interim Report
1,438,396,600.0
Total 18,313,508,366.48 60,000,000.00 19,691,904,966.48
0
(2) Interest in associates and joint ventures
Unit: RMB
Change for the period
Investment gain Adjustment of Closing balance
Investee Opening balance Distribution of Closing balance of impairment
Additional Withdrawn or loss recognised other Other change in Impairment
cash dividend or Others provision
contribution contribution under equity comprehensive equity interest provision
profit declared
method income
I. Joint ventures
Shouguang
Chenming Huisen
New-style
3,087,296.72 -152,076.08 2,935,220.64
Construction
Materials Co.,
Ltd.
Weifang Sime
Darby West Port 104,784,922.41 -1,007,659.69 103,777,262.72
Co., Ltd
Subtotal 107,872,219.13 -1,159,735.77 106,712,483.36
II. Associates
Jiangxi Jiangbao
Media Colour 1,754,051.46 -480,140.21 1,273,911.25
Printing Co. Ltd.
Zhuhai Dechen
New Third Board
Equity Investment
51,918,433.41 115,077.17 52,033,510.58
Fund Company
(Limited
Partnership)
Ningbo Kaichen
Huamei Equity
Investment Fund
198,981,173.01 1,282,985.50 200,264,158.51
Partnership
(Limited
Partnership)
Xuchang
Chenming Paper 0.00 21,496,272.32 -3,836,313.78 17,659,958.54
Co., Ltd.
Subtotal 252,653,657.88 21,496,272.32 -2,918,391.32 271,231,538.88
Total 360,525,877.01 21,496,272.32 -4,078,127.09 377,944,022.24
4. Revenue and operating costs
Unit: RMB
Amount for the reporting period Amount for the prior period
Item
Revenue Costs Revenue Costs
Principal activities 2,300,997,002.45 1,522,148,043.23 3,098,374,716.53 2,056,980,676.10
Other activities 515,297,483.37 452,213,569.85 584,195,592.39 503,718,576.99
Total 2,816,294,485.82 1,974,361,613.08 3,682,570,308.92 2,560,699,253.09
5. Investment income
Unit: RMB
Item Amount for the reporting period Amount for the prior period
Income from long-term equity investments
-4,078,127.09 -30,620.30
accounted for using the equity method
Investment gain on disposal of financial
assets measured at fair value through profit 114,233,300.00
or loss
Investment return on available-for-sale
41,516,700.00 56,208,200.00
financial assets held
Gain from entrusted loans 13,312,368.97
Total 151,671,872.91 69,489,948.67
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
XVI. Supplementary information
1. Breakdown of extraordinary gains and losses for the current period
√ Applicable □ Not applicable
Unit: RMB
Item Amount Remark
Profit or loss from disposal of non-current assets 11,507,523.25
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
239,364,403.83
accordance with a certain standard based on state policies) accounted for in profit or loss
for the current period
Except for effective hedging business conducted over the course of ordinary operation of
the Company, gain or loss arising from fair value change in held-for-trading financial
assets and held-for-trading financial liabilities, as well as investment gain on disposal of 61,750,000.00
held-for-trading financial assets and held-for-trading financial liabilities and
available-for-sale financial assets
Non-operating gains and losses other than the above items 6,630,471.21
Gain or loss from change in fair value of consumable biological assets adopting fair
-23,973,841.55
value method for follow-up measurements
Less: Effect of income tax 48,149,545.22
Effect of minority interest 394,751.65
Total 246,734,259.87 --
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
2. Returns on net assets and earnings per share
Rate of return on net assets on weighted Earnings per share
Profit for the reporting period
average basis Basic (RMB per share) Diluted (RMB per share)
Net profit attributable to ordinary
5.77% 0.36 0.36
shareholders of the Company
Net profit after extraordinary gains
and losses attributable to ordinary 4.41% 0.28 0.28
shareholders of the Company
3. Differences in accounting data under domestic and overseas accounting standards
(1) Differences between the net profit and net assets disclosed in accordance with international accounting
standards and China accounting standards in the financial report
√ Applicable □ Not applicable
(2) Differences between the net profit and net assets disclosed in accordance with overseas accounting
standards and China accounting standards in the financial report
√ Applicable □ Not applicable
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Shandong Chenming Paper Holdings Limited 2018 Interim Report
XI 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 on the designated website 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 relevant information.
130
