2018 Interim Report Summary of Shandong Chenming Paper Holdings Limited
Stock code：000488, 200488 Stock abbreviation: Chenming Paper, Chenming B Announcement No.: 2018-120
2018 Interim Report Summary of
Shandong Chenming Paper Holdings Limited
I. IMPORTANT NOTICE
This interim report summary is extracted from the text of the interim report. For the full understanding of the operating results,
financial position and plan for further development, investors should carefully read the text of the interim report published on the
media as designated by the CSRC and the website of The Stock Exchange of Hong Kong Limited.
Non-standard auditor’s opinion
□ Applicable √ Not applicable
Plans for profit distribution on ordinary shares or conversion of capital reserves into share capital proposed to the Board during the
reporting period
□ Applicable √ Not applicable
The Company does not propose distribution of cash dividends or bonus shares, and there will be no increase of share capital from
reserves.
Plans for profit distribution on preference shares for the reporting period approved by the Board
√ Applicable □ Not applicable
Distributed Whether it is in compliance Whether it
Way of Whether it was an
Date of Dividend amount with the conditions and the participates in
dividend accumulated
Distribution Ratio relevant procedures of distribution of
(tax inclusive) payment dividend
distribution remaining profit
19 March 2018 4.36% 98,100,000.00 Yes Cash No Yes
II. BASIC INFORMATION ABOUT THE COMPANY
1. Company profile
Stock abbreviation 晨鸣纸业, 晨鸣 B Stock code 000488, 200488
Stock abbreviation 晨鸣优 01, 晨鸣优 02 and 晨鸣优 03 Stock code 140003, 140004, 140005
Stock exchanges on which
Shenzhen Stock Exchange
the shares are listed
Stock abbreviation Chenming Paper Stock code 01812
Stock exchanges on which
The Stock Exchange of Hong Kong Limited
the shares are listed
Legal name in Chinese of
山东晨鸣纸业集团股份有限公司
the Company
Legal short name in Chinese
晨鸣纸业
of the Company (if any)
Legal name in English of
SHANDONG CHENMING PAPER HOLDINGS LIMITED
the Company (if any)
Legal short name in English
SCPH
of the Company (if any)
Legal representative of the
Chen Hongguo
Company
2. Major financial 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
The corresponding
reporting period as compared
The reporting period period of the prior
to the corresponding period of
year
the prior year
Revenue (RMB) 15,551,334,039.89 13,749,235,007.24 13.11%
Net profit attributable to shareholders of
1,784,631,025.31 1,745,514,838.23 2.24%
the Company (RMB)
Net profit after extraordinary gains or 1,537,896,765.44 1,623,294,558.21 -5.26%
losses attributable to shareholders of the
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2018 Interim Report Summary of Shandong Chenming Paper Holdings Limited
Company (RMB)
Net cash flows from operating activities
4,745,037,920.91 -4,112,941,768.39 215.37%
(RMB)
Basic earnings per share (RMB per share) 0.36 0.50 -28.00%
Diluted earnings per share (RMB per
0.36 0.50 -28.00%
share)
Rate of return on net assets on weighted
5.77% 7.24% -1.47%
average basis
Increase/decrease for the
As at the end of the reporting As at the end of the reporting period as compared
period prior year to the corresponding period 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
27,677,164,106.02 27,778,529,074.90 -0.36%
the Company (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.
3. Total number of shareholders and shareholdings
Unit: share
111,039, of which 91,323 were holders of A shares, Total number of shareholders of preference shares
Total number of shareholders of ordinary
19,346 were holders of B shares and 370 were holders with restored voting right as at the end of the 0
shares as at the end of the reporting period
of H shares reporting period (if any)
Shareholdings of top ten shareholders
Percentage of Number of Number of restricted Share pledged or locked-up
Name of shareholders Nature of shareholders
shareholding shares held shares held Status of shares Number
State-owned legal
CHENMING HOLDINGS COMPANY LIMITED 15.13% 293,003,657 0 Pledged 225,717,161
person
HKSCC NOMINEES LIMITED Overseas legal person 12.84% 248,678,750 0
CHENMING HOLDINGS (HONG KONG) LIMITED Overseas legal person 12.54% 242,754,375 0
State-owned legal
CENTRAL HUIJIN ASSET MANAGEMENT LTD. 2.07% 40,137,900 0
person
CHINA UNIVERSAL FUND - CHINA
CONSTRUCTION BANK - CHINA LIFE INSURANCE
Others 0.47% 9,134,240 0
- CHINA LIFE INSURANCE’S EQUITY PORTFOLIO
ENTRUSTED TO CHINA UNIVERSAL FUND
VANGUARD EMERGING MARKETS STOCK INDEX
Overseas legal person 0.44% 8,608,238 0
FUND
Domestic nature
JIN Xing 0.44% 8,510,117 0
person
AGRICULTURAL BANK OF CHINA LIMITED –
ESSENCE COMPARATIVE ADVANTAGE FLEXIBLE
Others 0.39% 7,646,407 0
ALLOCATION OF HYBRID SECURITIES
INVESTMENT FUND
INDUSTRIAL AND COMMERCIAL BANK OF CHINA
Others 0.39% 7,500,009 0
- CHINA UNIVERSAL FOCUSED GROWTH FUND
CHINA CONSTRUCTION BANK CORPORATION -
CHINA UNIVERSAL ENVIRONMENT PROTECTION Others 0.36% 7,000,026 0
INDUSTRY FUND
A shareholder, Chenming Holdings (Hong Kong) Limited, which is an overseas legal person, is a wholly-owned
subsidiary of a shareholder, Chenming Holdings Company Limited, which is a state-owned legal person. Hence, they are
Connected relationship or connected party relationship
persons acting in concert under Administration of Disclosure of Information on the Change of Shareholdings in Listed
among the above shareholders
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.
4. Change of controlling shareholders or beneficial controllers
The change of controlling shareholders during the reporting period
□ Applicable √ Not applicable
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2018 Interim Report Summary of Shandong Chenming Paper Holdings Limited
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.
5. Total number of shareholders of preference shares and the top ten holders of preference shares
√ Applicable □ Not applicable
Unit: share
Total number of shareholders of preference
7
shares as at the end of the reporting period
Top ten holders of preference shares
Preference Number of preference Share pledged or locked-up
Name of shareholders Nature of shareholders
shareholding shares held Status of shares Number
BEIJING YIBEN ZHONGXING INVESTMENT
Domestic non-state-owned legal person 27.78% 12,500,000 Pledged 12,500,000
MANAGEMENT CO., LTD.
BANK OF COMMUNICATIONS INTERNATIONAL
TRUST CO., LTD. - HUILI NO.167 SINGLE CAPITAL Others 22.44% 10,100,000
TRUST
BANK OF COMMUNICATIONS INTERNATIONAL
TRUST CO., LTD. - HUILI NO.136 SINGLE CAPITAL Others 14.22% 6,400,000
TRUST
QILU BANK CO., LTD. - QILU BANK QUANXIN
Others 13.33% 6,000,000
WEALTH MANAGEMENT PRODUCT SERIES
HENGFENG BANK CO., LTD. Domestic non-state-owned legal person 11.11% 5,000,000
SHANGHAI STATE-OWNED ASSETS OPERATION CO.,
Domestic non-state-owned legal person 6.67% 3,000,000
LTD.
NCF - MINSHENG BANK - CHINA FORTUNE
INTERNATIONAL TRUST – CHINA FORTUNE Others 4.44% 2,000,000
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 TRUST” and “BANK OF COMMUNICATIONS INTERNATIONAL TRUST
Connected relationship or connected party relationship
CO., LTD. - HUILI NO.136 SINGLE CAPITAL TRUST”, are persons acting in concert. Save for the above, it is not
among the above shareholders
aware that whether there is any connected relationship or connected party relationship among the remaining holders of
preference shares, and between the top ten holders of preference shares and the top ten holders of ordinary shares.
6. 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
(1) Basic information on corporate bonds
Outstanding
Bond amount of the Interest
Name of bond Bond code Maturity date
abbreviation bonds rate
(RMB’0,000)
The public issuance of the corporate bonds of
17 Chenming
Shandong Chenming Paper Holdings Limited 112570 21 August 2022 120,000 6.50%
Bond 01
to qualified investors in 2017 (tranche I)
The public issuance of the corporate bonds of
18 Chenming
Shandong Chenming Paper Holdings Limited 112641 90,000 7.28%
Bond 01 29 March 2023
to qualified investors in 2018 (tranche I)
(2) Major financial indicators of the Company as at the end of the reporting period
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
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2018 Interim Report Summary of Shandong Chenming Paper Holdings Limited
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%
III. Discussion and Analysis of Operations
1. Operation during the reporting period
Whether the Company needs to comply with the disclosure requirements of specific industries
No
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.
Year-on-year changes in major financial information
Unit: RMB
During the reporting During the corresponding
Increase/decrease Reason for the change
period period of the prior year
Mainly due to the year-on-year increase in the prices
Revenue 15,551,334,039.89 13,749,235,007.24 13.11%
of 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 increase in the
Finance expenses 1,498,828,444.69 1,055,396,506.36 42.02%
financing costs of the Company.
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2018 Interim Report Summary of Shandong Chenming Paper Holdings Limited
Mainly due to the year-on-year increase in the
Income tax expenses 434,202,112.50 331,253,327.08 31.08% provision for income tax expenses as some
companies turned around from losses to profits.
Investments in research and development 478,014,854.10 446,835,957.44 6.98%
Mainly due to the net returns of the financial leasing
Net cash flows from operating activities 4,745,037,920.91 -4,112,941,768.39 215.37%
business of the Company.
Mainly due to the year-on-year increase in
Net cash flows from investing activities -470,806,697.24 -363,428,930.29 -29.55%
investment in construction in progress.
Mainly due to the increase in restricted bank
Net cash flows from financing activities -3,577,622,905.43 5,025,392,453.07 -171.19%
deposits.
Net increase in cash and cash equivalents 726,576,915.27 441,630,376.91 64.52%
2. Events relating to the financial report
(1) Reason for changes in accounting policies, accounting estimates and accounting methods as compared to
the financial report for the prior accounting period
□ Applicable √ Not applicable
During the reporting period, no changes were made to accounting policies, accounting estimates and accounting methods.
(2) Reason for retrospective restatement to correct major accounting errors during the reporting period
□ Applicable √ Not applicable
During the reporting period, no major accounting errors needed to be corrected through retrospective restatement.
(3) Reason for changes in scope of the consolidated financial statements as compared to the financial report
for the prior accounting period
√ Applicable □ Not applicable
① Newly established subsidiary
Unit:RMB’0,000
Date of Operating scope Registered Percentage of
Name of companies establishment shareholding
capital
Financial leasing business; operating leasing business;
purchase of leased property in domestic and foreign market;
disposal of and maintenance of residual value of leased
Beijing Chenming
property; leasing transaction consultation; engagement in
Financial Leasing 17 May 2018 100,000.00 100%
commercial factoring business related to its principal
Co., Ltd.
operations. (For projects subject to approval as required by the
law, their operating activities can only commence upon
approval by the relevant authorities)
② Disposal of subsidiary
Unit: RMB
Basis for Difference between disposal
Shareholding Method
Name of Consideration of Time of loss determination consideration and share of net assets of
of equity of equity
subsidiary equity disposal of control of time of the relevant subsidiary as per the
disposal disposal
loss of control consolidated financial statements
Xuchang Equity
Chenming Paper 30,000,000.00 30% Transfer January 2018 Transfer 13,717,571.88
Co. Ltd. Agreement
The Board of Directors of Shandong Chenming Paper Holdings Limited
27 August 2018
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