SHANDONG CHENMING PAPER HOLDINGS LIMITED 2019 Financial Report
SHANDONG CHENMING PAPER HOLDINGS LIMITED*
2019 Financial Report
August 2019
1
X Financial Report
I. Auditors’ Report
Is the interim report audited
Yes √ No
The interim financial report is unaudited.
II. Financial Statements
The unit in the notes to the financial statements is: RMB
1. Consolidated Balance Sheet
Prepared by: Shandong Chenming Paper Holdings Limited
30 June 2019
Unit: RMB
Item 30 June 2019 31 December 2018
CURRENT ASSETS:
Monetary funds 20,727,891,187.25 19,292,774,747.79
Bills receivable 750,842,498.89 1,213,116,491.46
Accounts receivable 3,505,805,716.79 3,404,487,004.59
Prepayments 512,812,462.07 863,739,020.74
Other receivables 1,610,458,353.55 2,133,089,983.39
Including: Interest receivable 210,003,430.11 198,577,632.43
Inventories 6,100,360,068.05 6,771,488,433.74
Assets held-for-sale 50,717,915.24
Non-current assets due within one year 5,565,858,326.78 4,007,503,281.86
Other current assets 9,952,044,144.85 10,281,312,825.13
Total current assets 48,776,790,673.47 47,967,511,788.70
NON-CURRENT ASSETS:
Long-term receivables 5,279,451,578.15 7,926,610,770.86
Long-term equity investments 474,707,109.80 484,674,282.77
Other non-current financial assets 765,160,000.00 103,000,000.00
Investment property 4,731,461,433.14 4,844,993,039.62
Fixed assets 30,774,255,749.34 27,913,986,152.68
Construction in progress 10,152,057,869.08 11,871,350,821.55
Intangible assets 2,024,361,567.03 1,939,355,274.98
Goodwill 5,969,626.57 5,969,626.57
Long-term prepaid expenses 129,568,658.12 134,916,241.81
Deferred income tax assets 758,929,929.02 603,873,698.62
Other non-current assets 2,686,036,767.70 1,522,493,129.66
Total non-current assets 57,781,960,287.95 57,351,223,039.12
Total assets 106,558,750,961.42 105,318,734,827.82
SHANDONG CHENMING PAPER HOLDINGS LIMITED 1
INTERIM REPORT 2019
X Financial Report
II. Financial Statements (Cont’d)
1. Consolidated Balance Sheet (Cont’d)
Item 30 June 2019 31 December 2018
CURRENT LIABILITIES:
Short-term borrowings 44,665,330,086.95 40,227,945,361.89
Bills payable 2,219,908,433.85 4,218,969,554.93
Accounts payable 4,612,151,878.32 4,150,228,644.66
Employee benefits payable 108,165,972.80 135,373,407.70
Taxes payable 314,284,022.19 451,651,198.64
Other payables 3,228,659,821.69 1,777,718,017.48
Including: Interest payable 163,355,268.55 226,788,777.59
Dividend payable 976,175,735.52
Contract liabilities 639,444,833.26 419,540,133.74
Non-current liabilities due within one year 5,243,485,176.41 7,216,305,771.01
Other current liabilities 1,853,868,055.56 2,816,956,481.68
Total current liabilities 62,885,298,281.03 61,414,688,571.73
NON-CURRENT LIABILITIES:
Long-term borrowings 8,449,738,255.44 7,798,934,484.94
Bonds payable 2,097,877,500.00 2,097,562,500.00
Long-term payables 3,630,523,501.35 3,900,255,693.44
Provisions 329,230,107.88 325,259,082.28
Deferred income 1,805,521,960.25 1,862,395,197.61
Deferred income tax liabilities
Other non-current liabilities 2,051,031,576.50 2,047,948,069.73
Total non-current liabilities 18,363,922,901.42 18,032,355,028.00
TOTAL LIABILITIES 81,249,221,182.45 79,447,043,599.73
2 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2019
X Financial Report
II. Financial Statements (Cont’d)
1. Consolidated Balance Sheet (Cont’d)
Item 30 June 2019 31 December 2018
OWNERS’ EQUITY:
Share capital 2,904,608,200.00 2,904,608,200.00
Other equity instruments 7,465,500,000.00 7,465,500,000.00
Including: Preference shares 4,477,500,000.00 4,477,500,000.00
Perpetual bonds 2,988,000,000.00 2,988,000,000.00
Capital reserves 5,091,449,915.14 5,091,449,915.14
Less: Treasury shares
Other comprehensive income -752,536,869.21 -736,520,181.01
Special reserves 4,001,427.12 3,257,998.47
Surplus reserves 1,148,888,912.11 1,148,888,912.11
General risk provisions 64,123,919.23 64,123,919.23
Retained profit 8,542,942,527.62 9,107,422,690.85
Total equity attributable to owners of the Company 24,468,978,032.01 25,048,731,454.79
Minority interest 840,551,746.96 822,959,773.30
Total owners’ equity 25,309,529,778.97 25,871,691,228.09
TOTAL LIABILITIES AND OWNERS’ EQUITY 106,558,750,961.42 105,318,734,827.82
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
SHANDONG CHENMING PAPER HOLDINGS LIMITED 3
INTERIM REPORT 2019
X Financial Report
II. Financial Statements (Cont’d)
2. Balance sheet of the Company
Unit: RMB
Item 30 June 2019 31 December 2018
CURRENT ASSETS:
Monetary funds 8,975,954,132.48 8,160,234,434.15
Bills receivable 610,733,820.49 436,662,187.80
Accounts receivable 106,218,916.73 1,349,276,965.04
Prepayments 1,992,149,171.76 1,584,388,551.00
Other receivables 17,730,598,151.93 19,405,314,961.24
Including: Interest receivable 69,171,162.65 77,257,506.25
Dividends receivable 1,023,353,000.00
Inventories 695,649,440.79 1,133,888,230.37
Other current assets 130,445,337.51 140,126,157.18
Total current assets 30,241,748,971.69 32,209,891,486.78
NON-CURRENT ASSETS:
Long-term receivables 516,925,607.06 516,925,607.06
Long-term equity investments 23,621,617,586.81 22,487,417,443.24
Investments in other equity instrument 3,000,000.00 3,000,000.00
Other non-current financial assets 103,000,000.00 103,000,000.00
Fixed assets 3,803,368,878.72 2,103,164,588.93
Construction in progress 523,108,866.98 2,014,493,138.68
Intangible assets 452,398,009.26 458,365,862.52
Deferred income tax assets 400,436,726.68 303,861,021.95
Other non-current assets 49,300,000.00 9,800,000.00
Total non-current assets 29,473,155,675.51 28,000,027,662.38
Total assets 59,714,904,647.20 60,209,919,149.16
CURRENT LIABILITIES:
Short-term borrowings 8,545,244,718.34 7,668,689,104.31
Bills payable 11,685,733,442.58 10,595,836,030.46
Accounts payable 806,871,182.64 722,999,244.33
Contract liabilities 3,709,236,079.57 3,299,778,982.47
Employee benefits payable 56,431,633.89 53,899,651.15
Taxes payable 61,706,479.96 59,595,083.56
Other payables 5,315,116,231.34 5,465,488,890.52
Including: Interest payable 131,416,333.34 139,444,333.34
Dividend payable 976,175,735.52
Non-current liabilities due within one year 3,238,789,335.72 3,256,715,148.39
Other current liabilities 2,673,868,055.56 3,527,956,481.68
Total current liabilities 36,092,997,159.60 34,650,958,616.87
4 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2019
X Financial Report
II. Financial Statements (Cont’d)
2. Balance sheet of the Company (Cont’d)
Item 30 June 2019 31 December 2018
NON-CURRENT LIABILITIES:
Long-term borrowings 763,242,631.96 1,335,482,969.43
Bonds payable 2,097,877,500.00 2,097,562,500.00
Long-term payables 1,237,291,100.52 2,072,502,840.48
Provisions 325,259,082.28 325,259,082.28
Deferred income 44,241,427.63 46,412,014.99
Deferred income tax liabilities
Other non-current liabilities 1,593,766,672.00 1,592,166,670.00
Total non-current liabilities 6,061,678,414.39 7,469,386,077.18
TOTAL LIABILITIES 42,154,675,573.99 42,120,344,694.05
OWNERS’ EQUITY:
Share capital 2,904,608,200.00 2,904,608,200.00
Other equity instruments 7,465,500,000.00 7,465,500,000.00
Including: Preference shares 4,477,500,000.00 4,477,500,000.00
Perpetual bonds 2,988,000,000.00 2,988,000,000.00
Capital reserves 4,953,557,435.19 4,953,557,435.19
Less: Treasury shares
Surplus reserves 1,136,699,330.20 1,136,699,330.20
Retained profit 1,099,864,107.82 1,629,209,489.72
Total owners’ equity 17,560,229,073.21 18,089,574,455.11
TOTAL LIABILITIES AND OWNERS’ EQUITY 59,714,904,647.20 60,209,919,149.16
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
SHANDONG CHENMING PAPER HOLDINGS LIMITED 5
INTERIM REPORT 2019
X Financial Report
II. Financial Statements (Cont’d)
3. Consolidated Income Statement
Unit: RMB
Amount for the Amount for the
Item first half of 2019 first half of 2018
I. Total revenue 13,348,648,113.70 15,551,334,039.89
Including: Revenue 13,348,648,113.70 15,551,334,039.89
II. Total operating costs 12,968,897,317.21 13,616,998,093.86
Including: Operating costs 9,754,097,799.82 10,259,884,918.86
Taxes and surcharges 134,488,545.06 129,509,211.98
Sales and distribution expenses 590,584,957.47 605,463,325.71
General and administrative expenses 562,417,399.25 494,841,668.55
Research and development expense 431,483,716.06 478,014,854.10
Finance expenses 1,516,848,723.80 1,498,828,444.69
Including: Interest expenses 1,650,075,404.49 1,720,741,207.21
Interest income 213,994,280.22 159,096,591.34
Loss on impairment of assets -83,464,107.59 150,455,669.97
Credit impairment loss 62,440,283.34
Plus: Other income 38,831,290.64 59,672,276.88
Investment income (“-” denotes loss) -9,467,172.97 152,314,068.88
Including: Investment income from
associates and joint ventures -9,467,172.97 -17,153,503.00
Gain on change in fair value (“-” denotes loss) -1,883,064.80 -117,973,841.55
Gain on disposal of assets (“-” denotes loss) 22,823,551.43 -2,210,048.63
III. Operating profit (“-” denotes loss) 430,055,400.79 2,026,138,401.61
Plus: Non-operating income 237,472,592.97 191,632,557.35
Less: Non-operating expenses 5,050,128.19 446,221.32
IV. Total profit (“-” denotes total loss) 662,477,865.57 2,217,324,737.64
Less: Income tax expenses 125,877,819.62 434,202,112.50
V. Net profit (“-” denotes net loss) 536,600,045.95 1,783,122,625.14
(I) Classification according to the continuity of operation
1. Net profit from continuing operations
(“-” denotes net loss) 536,600,045.95 1,783,122,625.14
(II) Classification according to ownership
1. Net profit attributable to shareholders
of the Company 509,795,572.29 1,784,631,025.31
2. Profit or loss of minority interest 26,804,473.66 -1,508,400.17
VI. Net other comprehensive income after tax -16,016,688.20 -103,234,110.38
Net other comprehensive income after tax attributable
to shareholders of the Company -16,016,688.20 -103,234,110.38
(I) Other comprehensive income that cannot be reclassified
to profit and loss in subsequent periods
(II) Other comprehensive income that will be reclassified
to profit and loss in subsequent periods -16,016,688.20 -103,234,110.38
1. Exchange differences on translation
of foreign operations -16,016,688.20 -103,234,110.38
2. Others
6 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2019
X Financial Report
II. Financial Statements (Cont’d)
3. Consolidated Income Statement (Cont’d)
Amount for the Amount for the
Item first half of 2019 first half of 2018
VII. Total comprehensive income 520,583,357.75 1,679,888,514.76
Total comprehensive income attributable to shareholders
of the Company 493,778,884.09 1,681,396,914.93
Total comprehensive income attributable to minority interest 26,804,473.66 -1,508,400.17
IIX. Earnings per share:
(I) Basic earnings per share 0.013 0.36
(II) Diluted earnings per share 0.013 0.36
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
SHANDONG CHENMING PAPER HOLDINGS LIMITED 7
INTERIM REPORT 2019
X Financial Report
II. Financial Statements (Cont’d)
4. Income statement of the Company
Unit: RMB
Amount for the Amount for the
Item first half of 2019 first half of 2018
I. Revenue 2,696,012,416.10 2,816,294,485.82
Less: Operating costs 2,103,287,151.64 1,974,361,613.08
Taxes and surcharges 22,384,520.78 44,570,024.17
Sales and distribution expenses 95,933,113.16 90,052,325.82
General and administrative expenses 160,401,795.91 140,442,801.05
Research and development expense 122,265,471.50 112,935,318.57
Finance expenses 851,438,574.25 450,292,646.56
Including: Interest expenses 1,297,180,410.46 1,213,666,209.80
Interest income 524,005,473.68 838,254,501.87
Loss on impairment of assets
Credit impairment loss 844,738.21 -3,263,078.84
Plus: Other income 2,180,872.36 2,170,587.30
Investment income (“-” denotes loss) 1,010,553,143.57 151,671,872.91
Including: Investment income from associates
and joint ventures -12,799,856.43 -4,078,127.09
Gain on change in fair value (“-” denotes loss) -94,000,000.00
Gain on disposal of assets (“-” denotes loss) 22,416,169.42 -1,404,490.25
II. Operating profit (“-” denotes loss) 374,607,236.00 65,340,805.37
Plus: Non-operating income 77,943,339.00 159,134,238.55
Less: Non-operating expenses 4,195,926.11
III. Total profit (“-” denotes total loss) 448,354,648.89 224,475,043.92
Less: Income tax expenses -96,575,704.73 26,570,945.21
IV. Net profit (“-” denotes net loss) 544,930,353.62 197,904,098.71
(1) Net profit from continuing operations
(“-” denotes net loss) 544,930,353.62 197,904,098.71
(2) Net profit from discontinued operations
(“-” denotes net loss)
V. Net other comprehensive income after tax
VI. Total comprehensive income 544,930,353.62 197,904,098.71
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
8 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2019
X Financial Report
II. Financial Statements (Cont’d)
5. Consolidated cash flow statement
Unit: RMB
Amount for the Amount for the
Item first half of 2019 first half of 2018
I. Cash flows from operating activities:
Cash received from sales of goods and rendering of services 14,748,713,123.70 14,209,807,106.29
Tax rebates received 660,483.85 4,906,195.67
Cash received relating to other operating activities 2,298,196,240.97 2,560,132,218.85
Subtotal of cash inflows from operating activities 17,047,569,848.52 16,774,845,520.81
Cash paid for goods and services 11,576,281,103.39 9,303,280,725.88
Cash paid to and for employees 674,527,204.40 578,298,920.80
Payments of taxes and surcharges 1,096,901,907.86 876,814,512.36
Cash paid relating to other operating activities 1,000,088,741.18 1,271,413,440.86
Subtotal of cash outflows from operating activities 14,347,798,956.83 12,029,807,599.90
Net cash flows from operating activities 2,699,770,891.69 4,745,037,920.91
II. Cash flows from investing activities:
Cash received from investments 2,350,000,000.00
Cash received from investment income 171,500,000.00
Net cash received from disposal of fixed assets, intangible
assets and other long-term assets 111,235,000.00 150,077.55
Net cash received from disposal of subsidiaries and other
business units 19,610,260.70
Cash received relating to other investing activities 11,194,100.00
Subtotal of cash inflows from investing activities 111,235,000.00 2,552,454,438.25
Cash paid for purchase of fixed assets, intangible assets
and other long-term assets 376,939,086.06 1,609,046,327.99
Cash paid on investments 1,639,194,479.24 1,311,172,596.96
Net increase in pledged loans
Net cash paid for acquiring subsidiaries and
other business units
Cash paid relating to other investing activities 189,628,400.00 103,042,210.54
Subtotal of cash outflows from investing activities 2,205,761,965.30 3,023,261,135.49
Net cash flows from investing activities -2,094,526,965.30 -470,806,697.24
SHANDONG CHENMING PAPER HOLDINGS LIMITED 9
INTERIM REPORT 2019
X Financial Report
II. Financial Statements (Cont’d)
5. Consolidated cash flow statement (Cont’d)
Amount for the Amount for the
Item first half of 2019 first half of 2018
III. Cash flows from financing activities:
Cash received from investments
Including: Cash received from by subsidiaries
from minority investment
Cash received from borrowings 22,550,704,467.77 23,960,924,414.55
Cash received from issuance of bonds
Cash received relating to other financing activities 3,479,693,527.06 8,940,587,508.90
Subtotal of cash inflows from financing activities 26,030,397,994.83 32,901,511,923.45
Cash repayments of amounts borrowed 18,763,676,782.15 19,647,186,258.44
Cash paid for dividend and profit distribution
or interest payment 1,591,133,614.29 1,331,735,531.11
Including: Dividend and profit paid by subsidiaries
to minority shareholders
Cash paid relating to other financing activities 6,456,564,308.43 15,500,213,039.33
Subtotal of cash outflows from financing activities 26,811,374,704.87 36,479,134,828.88
Net cash flows from financing activities -780,976,710.04 -3,577,622,905.43
IV. Effect of foreign exchange rate changes on cash
and cash equivalents -196,762,227.50 29,968,597.03
V. Net increase in cash and cash equivalents -372,495,011.15 726,576,915.27
Plus: Balance of cash and cash equivalents
as at the beginning of the period 2,381,558,242.52 2,804,408,374.46
VII. Balance of cash and cash equivalents as
at the end of the period 2,009,063,231.37 3,530,985,289.73
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
10 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2019
X Financial Report
II. Financial Statements (Cont’d)
6. Cash flow statement of the Company
Unit: RMB
Amount for the Amount for the
Item first half of 2019 first half of 2018
1. Cash flows from operating activities:
Cash received from sales of goods and rendering of services 4,975,401,290.02 2,262,576,453.26
Tax rebates received –
Cash received relating to other operating activities 974,266,183.30 997,388,740.42
Subtotal of cash inflows from operating activities 5,949,667,473.32 3,259,965,193.68
Cash paid for goods and services 949,039,632.39 1,005,422,983.37
Cash paid to and for employees 232,441,602.15 203,769,186.38
Payments of taxes and surcharges 85,040,472.23 298,790,554.29
Cash paid relating to other operating activities 643,575,724.57 778,975,073.31
Subtotal of cash outflows from operating activities 1,910,097,431.34 2,286,957,797.35
Net cash flows from operating activities 4,039,570,041.98 973,007,396.33
II. Cash flows from investing activities:
Cash received from investments 2,380,000,000.00
Cash received from investment income 171,500,000.00
Net cash received from disposal of fixed assets,
intangible assets and other long-term assets 55,735,000.00
Net cash received from disposal of subsidiaries and
other business units
Cash received relating to other investing activities
Subtotal of cash inflows from investing activities 55,735,000.00 2,551,500,000.00
Cash paid for purchase of fixed assets, intangible assets
and other long-term assets 17,933,778.78 26,375,996.36
Cash paid on investments 1,147,500,000.00 1,361,714,807.50
Net cash paid for acquiring subsidiaries and
other business units
Cash paid relating to other investing activities 39,500,000.00
Subtotal of cash outflows from investing activities 1,204,933,778.78 1,388,090,803.86
Net cash flows from investing activities -1,149,198,778.78 1,163,409,196.14
SHANDONG CHENMING PAPER HOLDINGS LIMITED 11
INTERIM REPORT 2019
X Financial Report
II. Financial Statements (Cont’d)
6. Cash flow statement of the Company (Cont’d)
Amount for the Amount for the
Item first half of 2019 first half of 2018
III. Cash flows from financing activities:
Cash received from investments
Cash received from borrowings 6,360,366,283.77 7,562,143,316.17
Cash received from issuance of bonds
Cash received relating to other financing activities 1,997,263,889.00 8,204,965,097.95
Subtotal of cash inflows from financing activities 8,357,630,172.77 15,767,108,414.12
Cash repayments of amounts borrowed 5,237,801,785.71 6,735,658,936.22
Cash paid for dividend and profit distribution
or interest payment 774,396,836.69 716,590,206.19
Cash paid relating to other financing activities 5,593,391,883.99 10,373,957,627.23
Subtotal of cash outflows from financing activities 11,605,590,506.39 17,826,206,769.64
Net cash flows from financing activities -3,247,960,333.62 -2,059,098,355.52
IV. Effect of foreign exchange rate changes on cash
and cash equivalents 14,127.62 6,160,731.67
V. Net increase in cash and cash equivalents -357,574,942.80 83,478,968.62
Plus: Balance of cash and cash equivalents as at the
beginning of the period 607,805,063.02 1,020,262,069.85
VI. Balance of cash and cash equivalents as
at the end of the period 250,230,120.22 1,103,741,038.47
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
12 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2019
II. Financial Statements (Cont’d)
7. Consolidated statement of changes in owners’ equity
Amount for the period
Unit: RMB
Item Amount for the first half of 2019
Equity attributable to owners of the Company
Other equity instruments
Other
X Financial Report
Preference Capital Less: comprehensive Surplus General risk Total
Share capital shares Perpetual bonds Others reserves Treasury shares income Special reserves reserves provisions Retained profit Others Subtotal Minority interest owners’ equity
I. Balance as at the end of the prior year 2,904,608,200.00 4,477,500,000.00 2,988,000,000.00 5,091,449,915.14 -736,520,181.01 3,257,998.47 1,148,888,912.11 64,123,919.23 9,107,422,690.85 25,048,731,454.79 822,959,773.30 25,871,691,228.09
Plus: Changes in accounting policies
Corrections of previous errors
Business combination under
common control
Others
II. Balance as at the beginning of the year 2,904,608,200.00 4,477,500,000.00 2,988,000,000.00 5,091,449,915.14 -736,520,181.01 3,257,998.47 1,148,888,912.11 64,123,919.23 9,107,422,690.85 25,048,731,454.79 822,959,773.30 25,871,691,228.09
III. Changes in the period
(“-” denotes decrease) -16,016,688.20 743,428.65 -564,480,163.23 -579,753,422.78 17,591,973.66 -562,161,449.12
(I) Total comprehensive income -16,016,688.20 509,795,572.29 493,778,884.09 26,804,473.66 520,583,357.75
(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 -1,074,275,735.52 -1,074,275,735.52 -9,212,500.00 -1,083,488,235.52
1. Transfer to surplus reserves
2. Transfer to general risk provision
3. Distribution to owners (or shareholders) -1,074,275,735.52 -1,074,275,735.52 -9,212,500.00 -1,083,488,235.52
4. Others
(IV) Transfer of owners’ equity
1. Capital (or share capital) created
on capital reserve
(V) Special reserves 743,428.65 743,428.65 743,428.65
1. Withdrawal 1,039,765.05 1,039,765.05 1,039,765.05
2. Used 296,336.40 296,336.40 296,336.40
(VI) Others
INTERIM REPORT 2019
SHANDONG CHENMING PAPER HOLDINGS LIMITED
IV. Balance as at the end of the period 2,904,608,200.00 4,477,500,000.00 2,988,000,000.00 5,091,449,915.14 -752,536,869.21 4,001,427.12 1,148,888,912.11 64,123,919.23 8,542,942,527.62 24,468,978,032.01 840,551,746.96 25,309,529,778.97
13
14
II. Financial Statements (Cont’d)
7. Consolidated statement of changes in owners’ equity (Cont’d)
Amounts for the prior period
Unit: RMB
Item Amount for the first half of 2018
Equity attributable to owners of the Company
Other equity instruments
INTERIM REPORT 2019
Other
Preference Less: comprehensive General risk Total
X Financial Report
Share capital shares Perpetual bonds Others Capital reserves Treasury shares income Special reserves Surplus reserves provisions Retained profit Others Subtotal Minority interest 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 6,149,257,784.90 -354,165,127.80 1,132,116,106.40 8,866,614,844.40 27,778,529,074.90 2,495,649,464.04 30,274,178,538.94
Plus: Changes in accounting policies
Corrections of previous errors
Business combination under
common control
SHANDONG CHENMING PAPER HOLDINGS LIMITED
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 6,149,257,784.90 -354,165,127.80 1,132,116,106.40 8,866,614,844.40 27,778,529,074.90 2,495,649,464.04 30,274,178,538.94
III. Changes in the period (“-” denotes decrease) 968,202,733.00 -1,026,305,329.81 -103,234,110.38 59,971,738.31 -101,364,968.88 -1,204,921,889.24 -1,306,286,858.12
(I) Total comprehensive income -103,234,110.38 1,784,631,025.31 1,681,396,914.93 -1,508,400.17 1,679,888,514.76
(II) Capital paid in and reduced by owners -58,102,596.81 -58,102,596.81 -1,203,413,489.07 -1,261,516,085.88
1. Ordinary shares paid by shareholders -58,102,596.81 -58,102,596.81 -1,203,413,489.07 -1,261,516,085.88
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 -1,724,659,287.00
1. Transfer to surplus reserves
2. Transfer to general risk provision
3. Distribution to owners (or shareholders)
4. Others -1,724,659,287.00 -1,724,659,287.00 -1,724,659,287.00
(IV) Transfer of owners’ equity 968,202,733.00 -968,202,733.00
1. Capital (or share capital) created
on capital reserve 968,202,733.00 – -968,202,733.00 –
(V) Special reserves
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 5,122,952,455.09 -457,399,238.18 1,132,116,106.40 8,926,586,582.71 27,677,164,106.02 1,290,727,574.80 28,967,891,680.82
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
II. Financial Statements (Cont’d)
8. Statement of changes in owners’ equity of the Company
Amounts for the period
Unit: RMB
Item Amount for the first half of 2019
Other equity instruments
Other
Preference Perpetual Capital Less: comprehensive Total
X Financial Report
Share capital shares bonds Others reserves Treasury shares income Special reserves Surplus reserves Retained profit Others owners’ equity
I. Balance as at the end of the prior year 2,904,608,200.00 4,477,500,000.00 2,988,000,000.00 4,953,557,435.19 1,136,699,330.20 1,629,209,489.72 18,089,574,455.11
Plus: Changes in accounting policies
Corrections of previous errors
Others
II. Balance as at the beginning of the year 2,904,608,200.00 4,477,500,000.00 2,988,000,000.00 4,953,557,435.19 1,136,699,330.20 1,629,209,489.72 18,089,574,455.11
III. Changes in the period
(“-” denotes decrease) -529,345,381.90 -529,345,381.90
(I) Total comprehensive income 544,930,353.62 544,930,353.62
(II) Capital paid in and reduced
by owners
(III) Profit distribution -1,074,275,735.52 -1,074,275,735.52
1. Transfer to surplus reserves
2. Distribution to owners
(or shareholders) -1,074,275,735.52 -1,074,275,735.52
3. Others
(IV) Transfer of owners’ equity
1. Capital (or share capital)
created on capital reserve
(V) Special reserves
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 2,988,000,000.00 4,953,557,435.19 1,136,699,330.20 1,099,864,107.82 17,560,229,073.21
INTERIM REPORT 2019
SHANDONG CHENMING PAPER HOLDINGS LIMITED
15
16
II. Financial Statements (Cont’d)
8. Statement of changes in owners’ equity of the Company (Cont’d)
Amounts for the prior period
Unit: RMB
Item Amount for the first half of 2018
Other equity instruments
Less: Other
INTERIM REPORT 2019
Preference Perpetual Capital Treasury comprehensive Special Surplus Total
X Financial Report
Share capital shares bonds Others reserves shares income reserves reserves Retained profit Others 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
Plus: Changes in accounting policies
Corrections of previous errors
Others -8,503,727.68 -8,503,727.68
SHANDONG CHENMING PAPER HOLDINGS LIMITED
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 decrease) 968,202,733.00 -968,202,733.00 -1,526,755,188.29 -1,526,755,188.29
(I) Total comprehensive income 197,904,098.71 197,904,098.71
(II) Capital paid in and reduced
by owners
(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 capital reserve 968,202,733.00 -968,202,733.00
(V) Special reserves
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
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
X Financial Report
III. General Information of the Company
Shandong Chenming Paper Holdings Limited (hereinafter referred to as the “Company”) was incorporated in May 1993 in
Shouguang City, Shandong Province, with its headquarters at No. 2199 Nongsheng Road East, Shouguang City, Shandong
Province.
The Company and its subsidiaries are principally engaged in, among other things, processing and sale of paper products
(including machine-made paper and paper board), paper making raw materials and machinery; generation and sale of electric
power and thermal power; forestry, saplings growing, processing and sale of timber; manufacturing, processing and sale of
wood products; and manufacturing and sale of laminated boards and fortified wooden floorboards, hotel service, equipment
financial and operating leasing, magnesite mining, processing and sales of talc.
The financial statements were considered and approved by the board of directors of the Company (the “Board”) on 15 August
2019.
Subsidiaries of the Company included in the scope of consolidation for the reporting period totalled 67. 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 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, the financial statements are prepared under the historical cost convention. Held-for-
sale non-current assets are measured at the lower of the difference of fair value less expected expenses or the original
carrying amount when meeting the conditions of holding for sale. In the event that depreciation of assets occurs, a
provision for impairment is made accordingly in accordance with the relevant regulations.
2. Going concern
No facts or circumstances comprise a material uncertainty about the Company’s going concern basis within 12 months
since the end of the reporting period.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 17
INTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates
Specific accounting policies and accounting estimates are indicated as follows:
The Company and its subsidiaries are principally engaged in machine-made paper, electricity and heat, construction materials,
paper making chemical products, financial leasing, hotel management and other operations. The Company and its subsidiaries
formulated certain specific accounting policies and accounting estimates for the transactions and matters such as revenue
recognition, determination of performance progress and R&D expenses based on their actual production and operation
characteristics pursuant to the requirements under the relevant accounting standards for business enterprises. For details,
please refer “Revenue” under this Note. For the critical accounting judgments and estimates made by the management,
please refer to “Change of Significant accounting policies and accounting estimates” under this Note.
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 2018 and relevant information such as the operating
results and cash flows for 2018. 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.
18 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
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 combination under common control
A business combination involving enterprises under common control is a business combination in which all of the
combining enterprises are ultimately controlled by the same party or parties before and after the combination,
and that control is not transitory. The party that, on the combination date, obtains control of another enterprise
participating in the combination is the absorbing party, while that other enterprise participating in the combination
is a party being absorbed. The combination date is the date on which 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 identifiable assets, liabilities and contingent liabilities and the measurement of the cost of
combination. If after such reassessment the cost of combination is still less than the acquirer’s interest in the fair
value of the acquiree’s identifiable net assets, the difference is charged to profit or loss for the period.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 19
INTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
5. Accounting treatment of business combinations under common control and not under common control
(Cont’d)
(2) Business combination not under common control (Cont’d)
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”. 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. 16 “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 remeasuring 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 remeasuring
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.
20 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
6. Preparation of consolidated financial statements (Cont’d)
(2) Basis for preparation of the consolidated financial statements
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 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 remeasuring 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. 16 “Long-term equity investments” or Note V. 10 “Financial instruments” for
details.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 21
INTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
6. Preparation of consolidated financial statements (Cont’d)
(2) Basis for preparation of the consolidated financial statements (Cont’d)
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: these transactions are entered
into at the same time or after considering their impacts on each other; these transactions as a whole can
reach complete business results; the occurrence of a transaction depends on at least the occurrence of
another transaction; 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” 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. 16 (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.
22 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
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. usually 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 of the Company 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: 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 exchange difference
arising from change in balance of carrying amount other 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 average exchange rate for the period in which the transaction occurred. 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.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 23
INTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
9. Foreign currency operations and translation of statements denominated in foreign currency (Cont’d)
(3) Basis for translation of foreign currency financial statements (Cont’d)
Cash flow dominated in foreign currency or from foreign subsidiaries shall be translated at the average exchange
rate for the period in which the transaction occurred. 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.
(1) Classification, recognition and measurement of financial assets
The Company classifies the financial assets according to the business model for managing the financial assets
and characteristics of the contractual cash flows as follows: financial assets measured at amortised cost, financial
assets measured at fair value through other comprehensive income, and financial assets measured at fair value
through profit or loss.
Financial assets are measured at fair value upon initial recognition. For financial assets measured at fair value
through profit or loss, relevant transaction costs are directly recognised in profit or loss for the period. For other
categories of financial assets, relevant transaction costs are included in the amount initially recognised. Accounts
receivable or bills receivable arising from sales of goods or rendering services or without significant financing
component, are initially recognised based on the transaction price expected to be entitled by the Company.
Financial assets measured at amortised cost
The Company’s business model for managing the financial assets measured at amortised cost is to
collect the contractual cash flows, and the contractual cash flow characteristics of such financial assets
are consistent with the basic lending arrangements. That is, the cash flows generated on a specific date,
represent solely payment of the principal and interest on the outstanding principal amount. The Company
subsequently measures such financial assets at amortised cost using effective interest method, and the
gains or losses from amortisation or impairment is recognised in profit or loss for the current period.
24 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(1) Classification, recognition and measurement of financial assets (Cont’d)
Financial assets measured at fair value through other comprehensive income
The Company’s business model for managing such financial assets is achieved both by collecting
contractual cash flows and selling of these assets. The contractual cash flow characteristics of such financial
assets are consistent with the basic lending arrangements. Such financial assets are measured by the
Company at fair value through other comprehensive income, but the impairment losses or gains, exchange
gains or losses, and interest income calculated by effective interest method are recognised in profit or loss
for the current period.
In addition, the Company designates certain equity instruments not held for trading as financial assets
measured at fair value through other comprehensive income. The Company recognises the dividends related
to such financial assets in profit or loss for the current period. Upon derecognition of such financial assets,
the accumulated gains or losses previously included in other comprehensive income will be transferred from
other comprehensive income to retained earnings, and will not be included in profit or loss for the current
period.
Financial assets measured at fair value through profit or loss
The Company classifies the financial assets other than those measured at amortised cost and measured
at fair value through other comprehensive as financial assets measured at fair value through profit or
loss. In addition, upon initial recognition, the Company designates some financial assets as financial
assets measured at fair value through profit or loss in order to eliminate or significantly reduce accounting
mismatch. The Company subsequently measures such financial assets at fair value, and the changes in fair
value are recognised in profit or loss for the current period.
(2) Classification, recognition and measurement of financial liabilities
Financial liabilities are classified as financial liabilities measured at fair value through profit or loss and other
financial liabilities at initial recognition. For financial liabilities measured at fair value through profit or loss, relevant
transaction costs are directly recognised in profit or loss for the period. For other financial liabilities, relevant
transaction costs are included in the amount initially recognised.
Financial liabilities measured at fair value through profit or loss
Financial liabilities measured at fair value through profit or loss comprise held-for-trading financial liabilities
(including derivatives under financial liabilities) and financial liabilities designated as measured at fair value
through profit or loss upon initial recognition.
Held-for-trading financial liabilities (including derivatives under financial liabilities) are subsequently
measured at fair value, and the changes in fair value are recognised in profit or loss for the current period,
except for those related to hedging accounting.
The changes in fair value attributable to the changes in the Company’s own credit risk of the financial
liabilities designated as measured at fair value through profit or loss are recognised in other comprehensive
income, and the accumulated changes in fair value attributable to the changes in the Company’s own
credit risk which were recognised in other comprehensive income are transferred to retained earnings upon
derecognition of such liabilities. The remaining changes in fair value are recognised in profit or loss for
the current period. In case that the above accounting treatment for the effect of changes in such financial
liabilities’ own credit risk would create, or enlarge, an accounting mismatch, the Company will recognise
all gains or losses (including the amount affected by the changes in the Company’s own credit risk) of such
financial liabilities in profit or loss for the current period.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 25
INTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(2) Classification, recognition and measurement of financial liabilities (Cont’d)
Other financial liabilities
Other financial liabilities, except for financial liabilities arising from transfer of financial assets not satisfying
derecognition criteria or continue involvement of transferred financial assets and financial guarantee
contracts liability, are classified as financial liabilities measured at amortised cost and are subsequently
measured at amortised cost, and the gains or losses arising from derecognition or amortisation are
recognised in profit or loss for the current period.
(3) Recognition and measurement of transfers of financial asset
Financial asset that satisfied any of the following criteria shall be derecognised: the contract right to receive
the cash flows of the financial asset has terminated; the financial asset, along with substantially all the risk and
return arising from the ownership of the financial asset, has been transferred to the transferee; and the financial
asset has been transferred to the transferee, and the transferor has given up the control on such financial asset,
though it does not assign maintain substantially all the risk and return arising from the ownership of the financial
asset.
When the entity does not either assign or maintain substantially all the risk and return arising from the ownership
of the financial asset and does not give up the control on such financial asset, to the extent of its continuous
involvement in the financial asset, the entity recognises 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 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.
26 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(4) Derecognition of financial liabilities
Financial liabilities (or a part thereof) are derecognised 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. In case that the Company makes substantial changes
to the contractual terms of the original financial liabilities (or a part thereof), the original financial liabilities are
derecognised, and the new financial liabilities are recognised in accordance with the revised terms.
When financial liabilities (or a part thereof) are derecognised, the difference between the carrying amount of the
financial liabilities derecognised and the consideration paid (including transferred non-cash assets or assumed
financial liability) is recognised in profit or loss for the current period.
(5) Offset of financial assets and financial liabilities
If the Company owns the legitimate rights of offsetting the recognised financial assets and financial liabilities,
which are enforceable currently, and the Company plans to realise the financial assets or to clear off the financial
liabilities on a net amount basis or simultaneously, the net amount of financial assets and financial liabilities shall
be reported in the balance sheet upon offsetting. Otherwise, financial assets and financial liabilities are presented
separately in the balance sheet without offsetting.
(6) 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. During the valuation process, the Company
uses valuation techniques appropriate to the prevailing circumstances with the support of sufficient data and other
information available, selects inputs consistent with the characteristics of the assets or liabilities considered in the
transactions of relevant assets or liabilities by market participants, and gives priority to relevant observable inputs.
Unobservable inputs are used only when relevant observable inputs are not accessible or the access to which is
impracticable.
(7) 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. Transaction costs related to equity transactions are deducted
from equity. The Company does not recognise the movement in fair value of equity instruments.
The dividends distributed by the Company for its equity instruments (including the “interest” arising from the
instruments classified as equity instruments) during the existence period are accounted for as profit distribution.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 27
INTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
11. Bills receivable
Method for determining the expected credit loss of bills receivable
The Company measures the loss provisions for bills receivable in accordance with the expected credit loss amount for
the entire period. Based on the credit risk characteristics of bills receivable, bills receivable are divided into different
groups:
Item Basis for determining the groups
Bank acceptance bills The acceptance party is a bank with less credit risk
Commercial acceptance bills The acceptance party is a company with higher credit risk
12. Accounts receivable
Method for determining the expected credit loss of accounts receivable
For receivables and contract assets that do not contain significant financing components, the Company measures loss
provisions based on the expected credit loss amount for the entire period.
For receivables, contract assets and lease receivables that contain significant financing components, the Company
chooses to always measure the loss provision based on the expected credit loss amount for the entire period.
In addition to accounts receivable and contract assets which are individually assessed for credit risk, they are also
classified into different groups based on their credit risk characteristics:
Item Basis for determining the groups
Amount due from related parties This group comprises amounts due from related parties with lower risks.
Factoring receivables This group comprises factoring receivables with special risks.
Amount due from distributor This group comprises receivables with their ageing as credit risk characteristics.
customers
28 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
13. Other receivables
Determination and accounting treatment of expected credit loss of other receivables
The Company measures impairment losses using the expected credit losses amount in the next 12 months or the entire
duration, based on whether the credit risk of other receivables has increased significantly upon initial recognition. In
addition to other receivables which are individually assessed for credit risk, they are also classified into different groups
based on their credit risk characteristics:
Item Basis for determining the groups
Dividends receivable This group comprises dividends receivable.
Interest receivable This group comprises interest due from financial institutions.
Amount due from government This group comprises amount due from government agencies with less risks.
agencies
Amount due from related parties This group comprises amount due from related parties with less risks.
Other receivables This group comprises for all types of deposits, advances and premiums receivable
during daily and recurring activities.
14. 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 and semi-finished products, turnover materials, finished
products and goods etc.
(2) Pricing of inventories received and dispatched
Inventories are measured at their planned cost when obtained. Cost of an inventory consists of purchase costs,
processing costs and other costs. The difference between the planned cost and the actual cost is calculated by
cost variance account, and the cost difference assumed for the inventories will be pay by instalment, so as to
adjust the planned cost to the actual cost.
Consumable biological assets refer to biological assets held-for-sale which include growing timber. Consumable
biological assets without a stock are stated at historical cost at initial recognition, and subsequently measured
at fair value when there is a stock. Changes in fair values shall be recognised as profit or loss in the current
period. The cost of self-planting, self-cultivating consumable biological assets is the necessary expenses
directly attributable to such assets prior to canopy closure, including borrowing costs eligible for capitalisation.
Subsequent expenses such as maintenance cost incurred after canopy closure shall be included in profit or loss
for the current period.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 29
INTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
14. Inventories (Cont’d)
(3) Recognition of net realisable value of inventory and provision for inventory impairment
Net realisable value refers to the amount of the estimated price of inventories less the estimated cost incurred
upon completion, estimated sales expenses and 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) Amortisation of low-value consumables and packaging materials
Low-value consumables and packaging materials are amortised when issued for use.
15. Assets held-for-sale
Assets held-for-sale measures non-current assets held for sale and assets within the disposal groups held for sale.
When classifying such non-current assets or disposal groups as held-for-sale, assets held-for-sale shall be debited;
items such as “accumulated depreciation” and “accumulated amortisation” are debited based on their respective
accrued amounts; items such as “fixed assets”, “intangible assets”, “long-term equity investments” and “goodwill” are
credited according their respective balances. For items for which provision for impairment is made, such provision shall
be carried forward at the same time. The closing balance of debit for assets held-for-sale reflects the book balance of
the Company’s non-current assets held for sale and assets within the disposal groups held for sale.
16. Long-term receivables
The Company measures the impairment loss of long-term receivables at an amount equal to the expected credit loss
in the next 12 months or the lifetime expected credit loss ECL, depending on whether its credit risk has significantly
increased upon initial recognition. Other than the long-term receivables assessed individually for credit risks, long-term
receivables are classified into different groups based on their credit risk characteristics:
Item Basis for determining the groups
Long-term receivables This group is comprised of long-term receivables not yet past due with normal
not yet past due exposures.
Long-term receivables overdue This group is comprised of long-term receivables with higher past due exposures.
30 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
17. 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 financial assets measured at fair value through profit
or loss. In case such equity investment is not held for sale, then the Company may choose to designate such equity
investment as financial assets measured at fair value through other comprehensive income. Details on its accounting
policy please refer to Note V. “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 shareholders’ 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
shareholders’ 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 shareholders’ 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 financial assets measured at fair value through other comprehensive income 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.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 31
INTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
17. Long-term equity investments (Cont’d)
(1) Determination of investment cost (Cont’d)
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 in cash, 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.
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.
32 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
17. Long-term equity investments (Cont’d)
(2) Subsequent measurement and method for profit or loss recognition (Cont’d)
Long-term equity investments accounted for using the equity method
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.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 33
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
17. Long-term equity investments (Cont’d)
(2) Subsequent measurement and method for profit or loss recognition (Cont’d)
Long-term equity investments accounted for using the equity method (Cont’d)
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.
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.
Disposal of long-term equity investments
In these consolidated financial statements, for disposal of a portion of the long-term equity investments
in a subsidiary without loss of control, the difference between disposal cost and disposal of long-term
equity investments relative to the net assets of the subsidiary is charged to the owners’ equity. If disposal
of a portion of the long-term equity investments in a subsidiary by the parent company results in a 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.
34 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
17. Long-term equity investments (Cont’d)
(2) Subsequent measurement and method for profit or loss recognition (Cont’d)
Disposal of long-term equity investments (Cont’d)
In the event of loss of control over investee due to partial disposal of equity investment by the 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.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 35
INTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
18. 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, which include leased
land use rights, land use rights held for sale after appreciation, leased buildings, etc. In addition, for the vacant buildings
that the Company holds for operating leases, if the Board (or similar bodies) makes a written decision that it is explicitly
used for operating leases and that the holdings do not change in the short term, they are also presented as investment
property.
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 or
amortised using the same policy as that for buildings or land use rights.
The method for impaired test of investment property and measurement of impairment provision are detailed in Note V.
23 “Impairment of long-term assets”.
In the event that an owner-occupied property or inventories is converted to an investment property (or vice versa), upon
the conversion, the property shall be stated at the carrying amount prior to the conversion.
In the event that an investment property is converted to an owner-occupied property, such property shall become fixed
assets or intangible assets since the date of its conversion. In the event that an owner-occupied property is converted
to real estate held to earn rentals or for capital appreciation, such fixed assets or intangible assets shall become an
investment property since the date of its conversion. For investment property measured at cost during its conversion,
upon the conversion, the property shall be stated at the carrying amount prior to the conversion. For investment
property measured at fair value during its conversion, upon the conversion, the property shall be stated at the fair value
on the date of 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.
36 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
19. 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 Annual
depreciation residual value depreciation
Category Depreciation method (Year) (%) rate (%)
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
(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.
20. Construction in progress
Construction in progress is recognised based on the actual construction cost, including all expenditures incurred for
construction projects, capitalised borrowing costs for the construction in progress before it has reached the working
condition for its intended use, and other related expenses during the construction period. A construction in progress is
reclassified to fixed assets when it has reached the working condition for its intended use.
The method for impaired test of construction in progress and measurement of impairment provision are detailed in Note V.
25 “Impairment of long-term asset”.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 37
INTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
21. 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 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.
22. Biological assets
Consumable biological assets refer to biological assets held-not-for-sale, which include forest trees being grown.
Consumable biological assets are stated at cost at initial recognition. The cost of self-planting, self-cultivating, self-
breeding or self-farming 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
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.
On the balance sheet date, consumable biological assets are measured at the lower of cost and net realisable value,
and the impairment provision for consumable biological assets is made using the same approach as that used for the
recognition of impairment provision for inventories. In case the factors causing impairment no longer exists, the reduced
amount shall be recovered and reversed in the provision amount originally provided for impairment. The reversed
amount shall be recognised in profit or loss for the current period.
38 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
23. Right-of-use assets
(1) Conditions for recognition
Right-of-use assets refer to the rights of using the assets over the lease term. Right-of-use assets are initially
measured at cost, including the amount of initial measurement under
(I) lease liabilities;
(II) for lease payment on or before the date of commencement of the lease period, where there was lease
incentive, such incentives shall be deducted;
(III) initial direct expenses incurred by the lessee;
(IV) costs expected to be incurred by the lessee for demolition and removal of leased assets, restoration of the
premises where the leased assets are located, or restoration of the leased assets to the conditions of the
lease terms.
(2) Depreciation method
Right-of-use assets are depreciated using the straight-line method over its useful life.
The Company adopts cost method for subsequent measurement of right-of-use assets. Where ownership of the
lease assets during the lease term can be reasonably determined, right-of-use assets are depreciated over the
remainder of useful lives of the lease assets; where ownership of the lease assets during the lease term cannot be
reasonably determined, right-of-use assets are depreciated over the lease term or the remainder of useful lives of
the lease assets, whichever is shorter.
24. Intangible assets
(1) Measurement method, useful life and impairment testing
For details of the method of impairment testing and impairment provision of intangible assets, please see Note V.
25 “Impairment of long-term assets”.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 39
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
24. Intangible assets (Cont’d)
(2) Accounting policy of 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:
it is technically feasible that the intangible asset can be used or sold upon completion;
there is intention to complete the intangible asset for use or sale;
the intangible asset can produce economic benefits, including there is evidence that the products produced
using the intangible asset has a market or the intangible asset itself has a market; and if the intangible asset
is for internal use, there is evidence that there exists usage for the intangible asset;
there is sufficient support in terms of technology, financial resources and other resources in order to
complete the development of the intangible asset, and there is capability to use or sell the intangible asset;
the expenses attributable to the development phase of the intangible asset can be measured reliably.
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.
25. 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 noncurrent
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 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.
40 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
25. Impairment of long-term asset (Cont’d)
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.
26. Long-term prepaid expenses
Long-term prepaid expenses measures the Company’s incurred expenses with amortisation period of over one year,
including repair expenditure of fixed assets, improvement expenditure of fixed assets under lease and other prepaid
expenses with amortisation period of over one year.
27. Contract liabilities
A contract liability represents the Company’s obligation to transfer goods to a customer for which the Company has
received consideration (or an amount of consideration is due) from the customer. If the customer has already paid
the contract consideration before the Company transfers goods to the customer or the Company has obtained the
unconditional collection right, the Company will recognise such amount received or receivable as contract liabilities
at earlier of the actual payment by the customer or the amount payable becoming due. Contract assets and contract
liabilities under the same contract are presented on a net basis, and contract assets and contract liabilities under
different contracts are not offset.
28. Employee benefits
(1) Accounting treatment for short-term staff remuneration
Staff remuneration of the Company mainly includes short-term staff remuneration, post-employment benefits and
termination benefits, in which:
Short-term remuneration mainly includes salaries, bonuses, allowance and subsides, staff welfare, medical
insurance premium, maternity insurance premium, work-related injury insurance premium, housing provident
funds, union operation costs and employee education costs and non-monetary welfare etc. Short-term
remuneration incurred during the accounting period in which the Company’s staff provided services for the
Company is recognised as liability and included in profit or loss for the current period or related asset costs. Of
which, non-monetary welfare is measured at fair value.
(2) Accounting treatment for post-employment benefits
Post-employment benefits mainly include pension insurance premium and unemployment insurance premium.
Postemployment benefits include defined contribution plan. For those adopted 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.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 41
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
28. Employee benefits (Cont’d)
(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.
The early retirement plan shall be accounted for in accordance with the accounting principles for compensation for
termination of employment. The salaries or wages and the social contributions to be paid for the employees who
retire before schedule from the date on which the employees stop rendering services to the scheduled retirement
date, shall be recognised (as compensation for termination of employment) in the current profit or loss by the
Company if the recognition principles for provisions are satisfied.
(4) Accounting treatment for other long-term employee benefit
For other long-term employee benefit provided by the Company for employees which meets the criteria of defined
contribution plan, accounting treatment for defined contribution plan will be adopted; otherwise accounting
treatment for defined benefit plan will be adopted.
29. 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 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.
42 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
30. 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:
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;
If 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. 21 “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.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 43
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
31. Revenue
Accounting policies adopted for revenue recognition and measurement
Revenue is recognised when the customer obtains control of the relevant goods, subject to the fulfilment of the following
conditions under the contract entered into between the Company and customers: the parties has approved the contract
and undertaken to fulfil their respective obligations; the contract clearly states the parties to the contract and their rights
and obligations relating to the transferred goods and rendered services; the contract clearly stated the payment terms
relating to the transferred goods; the contract has commercial substance that the fulfilment of the contract will result in
changes in the risk, time frame or amount of the future cash flow risk of the Company; the collection of the consideration
that the Company is entitled to for transferring the goods is probable.
On the effective date of the contract, the Company identifies each performance obligation under such contracts and
allocate the transaction price to each performance obligation based on the percentage of respective unit price of a
good guaranteed by each performance obligation. The determination of the transaction price has taken into account the
impact of factors such as variable consideration, the significant financing component existed in the contract, non-cash
consideration, and consideration payable to the customers.
For each of the performance obligations under the contract, if one of the following conditions is fulfilled, the Company
shall recognise the transaction price which was allocated to each of the performance obligations as revenue based on
the progress of performance within a certain period: when the customer simultaneously receives and consumes the
benefits provided by the Company when the Company performs its obligations under the contract; when the customer
is able to control the good in progress in the course of performance by the Company under the contract; when the
product produced by the Company under the contract is irreplaceable and the Company has the right to payment for
performance completed to date during the whole contract term. The progress of performance is determined based
on the nature of the transferred goods with the adoption of input method or output method. When the progress of
performance cannot be reasonably determined, if the costs incurred by the Company are expected to be recoverable,
the revenue will be recognised to the extent of the costs incurred until the progress of performance can be reasonably
determined.
If one of the above conditions is not fulfilled, the Company shall recognise the transaction price which was allocated
to each of the performance obligations as revenue when the customer is able to control the relevant goods. When
determining whether the customer has obtained control of the goods, the Company will consider the following
indications: the enterprise has the current right to receive payment for the goods, which is when the customers has the
current payment obligations for the goods; the enterprise has transferred the legal title of the goods to the customer,
which is when the client possesses the legal title of the goods; the enterprise has transferred the physical possession
of goods to the customer, which is when the customer obtain physical possession of the goods; the enterprise has
transferred all of the substantial risks and rewards of ownership of the goods to the customer, which is when the client
obtain all of the substantial risks and rewards of ownership of the goods to the customer; when the customer has
accepted the goods, which is when other information indicates that the customer has obtained control of the goods.
The point of time of recognition of revenue for sales of goods: the date when the goods are delivered to the customers
with signature confirmation for the domestic sales business, and the date when the goods are loaded onto a vessel and
declared at customs for the overseas sales business.
44 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
32. Government grants
Government grants are transfer of monetary assets or non-monetary assets from the government to the Company at no
consideration, excluding capital considerations from the government as an investor entitling to corresponding owners’
equity. Government grants are classified into government grants related to assets and government grants related to
income. Government grants obtained for acquisition or construction of long-term assets or other forms of long-term
asset formation are classified as related to assets. Other government grants are classified as related to revenue. If
related government documents do not specify the objective of the grants, the grants are classified as related to assets
or income as follows: (1) In case a project for which the grants are granted is specified in such documents, the grants
are classified as related to assets and income based on the budgeted ratio of the expenditure on asset formation
and the expenditure recorded as expenses, where such ratio should be reviewed and, if necessary, changed on each
balance sheet date; and (2) in case of general description without specifying any project in such documents, the grants
are classified as related to income. If a government grant is in the form of a transfer of monetary asset, the item shall be
measured at the amount received or receivable. If a government grant is in the form of a transfer of non-monetary asset,
the item shall be measured at fair value. If fair value is not reliably determinable, the item shall be measured at a nominal
amount and recognised immediately in profit or loss for the current period.
Government grants are generally recognised when received and measured at the amount actually received, but are
measured at the amount likely to be received when there is conclusive evidence at the end of the accounting period that
the Company will meet related requirements of such grants and will be able to receive the grants. The government grants
so measured should also satisfy the following conditions: (1) the amount of the grants be confirmed with competent
authorities in written form or reasonably deduced from related requirements under financial fund management measures
officially released without material uncertainties; (2) the grants be given based on financial support projects and fund
management policies officially published and voluntarily disclosed by local financial authorities in accordance with
the requirements under disclosure of government information, where such policies should be open to any company
satisfying conditions required and not specifically for certain companies; (3) the date of payment be specified in related
documents and the payment thereof be covered by corresponding budget to ensure such grants will be paid on time as
specified; and (4) other relevant conditions (if any) which should be satisfied according to the specific conditions of the
Company and the matters relating to such grants.
A government grant related to an asset shall be recognised as deferred income, and evenly amortised to profit or loss
for the current period over the useful life of the asset in a reasonable and systematic manner. For a government grant
related to income, if the grant is a compensation for related costs, expenses or losses to be incurred in subsequent
periods, the grant shall be recognised as deferred income, and recognised in profit or loss over the periods in which the
related costs or losses are recognised, or off set against the relevant costs or expenses; if the grant is a compensation
for related costs, expenses or losses already incurred, the grant shall be recognised immediately in profit or loss for the
current period.
If a government grant contains both assets related and income related component at the same time, the accounting
treatment will depend on the different parts of the government grant; if it is difficult to distinguish, the entire government
grant is classified as a government grant related to income.
A government grant related to daily activities of the Company is recognised in other gains or off set relevant costs
or expenses relying on the essence of economic business; otherwise, recognised in non-operating income or non-
operating expenses.
For the repayment of a government grant already recognised, if there is any related deferred income, the repayment
shall be off set against the carrying amount of the deferred income, and any excess shall be recognised in profit or loss
for the current period; otherwise, the repayment shall be recognised immediately in profit or loss for the current period.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 45
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
33. 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.
46 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
33. Deferred income tax assets/deferred income tax liabilities (Cont’d)
(3) Income tax expenses
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 net amount
after offsetting its current income tax assets and current income tax liabilities.
34. Lease
(1) Accounting treatment with the Company recorded as lessor
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.
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.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 47
INTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
34. Lease (Cont’d)
(2) Accounting treatment with the Company recorded as lessee
On the beginning date of the lease, the Company recognises right-of-use assets and lease liabilities for leases,
except for short-term lease and low-value asset lease with simplified treatment.
The beginning date of the lease refers to the date since which the Company may use the lease assets provided
by the lessor. The lease term refers to the period during which the Company has the right to use the lease assets
which is irrevocable.
Right-of-use assets refer to the rights of using the assets over the lease term. Right-of-use assets are initially
measured at cost. For lease payment on or before the beginning date of the lease period, where there was lease
incentive, such incentives shall be deducted, as well as the initial direct expenses incurred by the lessee, costs
expected to be incurred by the lessee for demolition and removal of leased assets, restoration of the premises
where the leased assets are located, or restoration of the leased assets to the conditions of the lease terms. Right-
of-use assets are depreciated using the straight-line method over its useful life.
Lease liabilities are initially measured at the present value of outstanding lease payment at the beginning date
of lease period. The bank lending rate for the same period is used as discount rate when calculating the present
value of the lease payment.
Right-of-use assets and lease liabilities are presented separately on the balance sheet of the Company. Lease
liabilities are usually presented separately as non-current liabilities and non-current liabilities due within one year.
In the income statement, the interest expenses of lease liabilities and depreciation expenses of right-of-use assets
are separately presented. Interest expense of lease liabilities is presented under finance expenses.
35. Others
VI. Taxation
1. Main tax types and tax rates
Tax type Tax base Tax rate
Value added tax (VAT) 16% and 13% for general, 10% and 9% for sales of water 16%, 13%, 10%, 9%, 6%
and gas and 6% for the service industry. VAT is computed
on the difference after deduction of input value-added tax.
Urban maintenance and 7%, 5% and 1% of actual payment of turnover tax. 7%, 5%, 3%, 1%
construction tax
Enterprise income tax (EIT) 25% of taxable income; for the companies which are 25%, 15%, 10%
subject to preferential policies, please refer to the table
below; the overseas companies shall pay taxes at the tax
rate pursuant to the requirements of the countries or regions
where the companies are located.
48 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2019
X Financial Report
VI. Taxation (Cont’d)
2. Tax incentives
(1) Enterprise income tax
On 16 August 2018, the Company received a high and new technology enterprise certificate with a certification
number of GR201837000311. 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 2018 to 2020.
Haicheng Haiming Mining Company Limited, a subsidiary of the Company, received a high and new technology
enterprise certificate with a certification number of GR201821000291 on 12 October 2018. Pursuant to the
requirements under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies,
Haicheng Haiming is subject to an enterprise income tax rate of 15% of taxable income, and is entitled to the
preferential treatment from 2018 to 2020.
Shouguang Meilun Paper Co., Ltd., a subsidiary of the Company, received a high and new technology enterprise
certificate with a certification number of GR201837000455 on 16 August 2018. Pursuant to the requirements
under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies, Shouguang
Meilun is subject to an enterprise income tax rate of 15% of taxable income, and is entitled to the preferential
treatment from 2018 to 2020.
For Jilin Chenming Paper Co., Ltd., a subsidiary of the Company, its high and new technology enterprise
certificate with a certification number of GR201622000039 obtained on 1 November 2016 has expired, and is
making a renewal application.
For Jiangxi Chenming Paper Co., Ltd., a subsidiary of the Company, its high and new technology enterprise
certificate with a certification number of GR201636000018 obtained on 15 November 2016 has expired, and is
making a renewal application.
Zhanjiang Chenming Pulp & Paper Co., Ltd., a subsidiary of the Company, received a high and new technology
enterprise certificate with a certification number of GR201844005747 on 28 November 2018. Pursuant to the
requirements under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies,
it is subject to a corporate income tax rate of 15% of taxable income, and is entitled to the preferential treatment
from 2018 to 2020.
Pursuant to the requirements of Rule 27(1) of Law of the People’s Republic of China on Enterprise Income Tax
and Rule 86(1) of regulations for the Implementation of Law of the People’s Republic of China on Enterprise
Income Tax, Zhanjiang Chenming Arboriculture Development Co., Ltd. and Yangjiang Chenming Arboriculture
Development Co., Ltd., which are the subsidiaries of the Company, have completed the filings for EIT reduction
for exemption from EIT.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 49
INTERIM REPORT 2019
X Financial Report
VI. Taxation (Cont’d)
2. Tax incentives (Cont’d)
(2) Value-added Tax (“VAT”)
Pursuant to Rule 10 of the Interim Regulation of the People’s Republic of China on Value Added Tax, Zhanjiang
Chenming Arboriculture Development Co., Ltd. and Yangjiang Chenming Arboriculture Development Co., Ltd.,
which are the subsidiaries of the Company, are exempt from VAT, and have completed the filings for VAT
reduction for exemption from VAT.
Pursuant to the Value-added Tax Preferential Catalogue on Products and Services Applying Integrated Use of
Resources (Cai Shui [2015] No. 78), taxpayers who sell self-produced products and services applying integrated
use of resources may enjoy the immediate VAT refund policy. Zhanjiang Chenming New-style Wall Materials Co.,
Ltd., a subsidiary of the Company, produced products applying raw materials containing more than 30% of fly
ash. It belongs to a company that uses pollutants for production, and is therefore subject to the immediate VAT
refund policy in 2019.
Pursuant to the Value-added Tax Preferential Catalogue on Products and Services Applying Integrated Use of
Resources (Cai Shui [2015] No. 78), taxpayers who sell self-produced products and services applying integrated
use of resources may enjoy the immediate VAT refund policy. Shandong Chenming Panels Co., Ltd., a subsidiary
of the Company, produced products applying integrated use of resources, and is therefore subject to the
immediate VAT refund policy in 2019.
Pursuant to the Value-added Tax Preferential Catalogue on Products and Services Applying Integrated Use of
Resources (Cai Shui [2015] No. 78), taxpayers who sell self-produced products and services applying integrated
use of resources may enjoy the immediate VAT refund policy. Shouguang Chenming Cement Co., Limited, a
subsidiary of the Company, produced products applying integrated use of resources, and is therefore subject to
the immediate VAT refund policy in 2019.
3. Others
50 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements
1. Monetary funds
Unit: RMB
Item Closing balance Opening balance
Treasury cash 2,316,388.38 2,078,321.66
Bank deposit 2,006,746,843.00 2,379,479,920.86
Other monetary funds 18,718,827,955.87 16,911,216,505.27
Total 20,727,891,187.25 19,292,774,747.79
Of which: Total deposits in overseas banks 386,703,983.47 614,601,451.77
Other explanation
Notes: Other monetary funds of RMB14,388,551,572.15 (31 December 2018: RMB9,329,325,370.71) were the guarantee deposit for the
application for bank acceptance with the banks by the Group;
Other monetary funds of RMB2,001,461,802.43 (31 December 2018: RMB3,703,195,695.22) were the guarantee deposit for the
application for letter of credit with the banks by the Group;
Other monetary funds of RMB1,690,568,603.51 (31 December 2018: RMB2,358,115,439.34) were the guarantee deposit for the
application for guarantees with the banks by the Group;
Other monetary funds of RMB254,045,977.78 (31 December 2018: RMB987,520,000.00) were the guarantee deposit for the
application for loans with the banks by the Group;
Other monetary funds of RMB384,200,000.00 (31 December 2018: RMB533,060,000.00) were the Group’s statutory reserve deposit
at the banks.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 51
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X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
2. Bills receivable
(1) Classification of bills receivable
Unit: RMB
Item Closing balance Opening balance
Bank acceptance bills 750,842,498.89 1,213,116,491.46
Total 750,842,498.89 1,213,116,491.46
Unit: RMB
Closing balance Opening balance
Book balance Bad debts provision Book balance Bad debts provision
Provision Provision
Category Amount Percentage Amount percentage Carrying amount Amount Percentage Amount percentage Carrying amount
Bills receivable assessed
individually for
impairment – – – – – 15,000,000.00 1.23% 1,500,000.00 10.00% 13,500,000.00
Of which:
Bank acceptance bills 15,000,000.00 1.23% 1,500,000.00 10.00% 13,500,000.00
Bills receivable
assessed collectively
for impairment 750,842,498.89 100.00% 750,842,498.89 1,199,616,491.46 98.77% 1,199,616,491.46
Of which:
Bank acceptance bills 750,842,498.89 100.00% 750,842,498.89 1,199,616,491.46 98.77% 1,199,616,491.46
Commercial
acceptance bills
Total 750,842,498.89 100.00% 750,842,498.89 1,214,616,491.46 100.00% 1,500,000.00 0.12% 1,213,116,491.46
52 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
2. Bills receivable (Cont’d)
(2) Provision, recovery or reversal of bad debt provision for the period
Significant recovery or reversal of bad debt provision for the period:
√ Applicable Not applicable
Unit: RMB
Changes in the period
Opening Recovery Closing
Category balance Provision or reversal Written off balance
Accounts receivable with
provision for bad debt 1,500,000.00 1,500,000.00 –
Total 1,500,000.00 1,500,000.00 –
Note: Bills amounting to RMB15,000,000.00 represent payment received from Changjiang (Hubei) Publishing & Print Materials Co., Ltd. in
advance, and the bad debt provision for which is made individually under bills receivable at the beginning of the period, which has
been transferred to bad debt provision individually made under accounts receivable for the current period.
(3) Bills receivable of the Company pledged at the end of the period
Unit: RMB
Pledged amount
Item at the end of the period
Bank acceptance bills 624,106,580.39
Total 624,106,580.39
(4) Outstanding bills receivable endorsed or discounted by the Company as at the end of the period
Unit: RMB
Derecognised Recognised
amount as at the amount as at the
Item end of the period end of the period
Bank acceptance bills 6,072,923,132.61
Total 6,072,923,132.61
SHANDONG CHENMING PAPER HOLDINGS LIMITED 53
INTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
2. Bills receivable (Cont’d)
(5) Bills transferred to accounts receivable due to non-performance of the issuers at the end of the period
Unit: RMB
Amounts transferred
to accounts receivable
Item at the end of the period
Bills receivable 37,600,000.00
Total 37,600,000.00
3. Accounts receivable
(1) Disclosure of accounts receivable by category
Unit: RMB
Closing balance Opening balance
Book balance Bad debts provis on Carrying amount Book balance Bad debts provis on Carrying amount
Provis on Provis on
Category Amount Percentage Amount percentage Amount Percentage Amount percentage
Accounts receivable assessed i div dual y
for i pairment 67,960,343.90 1.73% 55,040,343.90 80.99% 12,920,000.00 71,960,343.90 1.90% 55,240,343.90 76.76% 16,720,000.00
Of which:
Accounts receivable assessed col ectively
for i pairment 3,854,279,812.78 98.27% 361,394,095.99 9.38% 3,492,885,716.79 3,711,403,752.23 98.10% 323,636,747.64 8.72% 3,387,767,004.59
Of which:
Accounts receivable from related parties 7,005,299.94 0.18% 1,716,884.04 24.51% 5,288,415.90 5,838,812.92 0.15% 947,246.64 16.22% 4,891,566.28
Accounts receivable from distributor cl ents 3,637,109,235.06 92.73% 359,046,716.12 9.87% 3,278,062,518.94 3,043,388,184.37 80.44% 320,207,886.86 10.52% 2,723,180,297.51
Factoring receivables 210,165,277.78 5.36% 630,495.83 0.30% 209,534,781.95 662,176,754.94 17.50% 2,481,614.14 0.37% 659,695,140.80
Total 3,922,240,156.68 100.00% 416,434,439.89 10.62% 3,505,805,716.79 3,783,364,096.13 100.00% 378,877,091.54 10.01% 3,404,487,004.59
54 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
3. Accounts receivable (Cont’d)
(1) Disclosure of accounts receivable by category (Cont’d)
Items assessed individually for impairment:
Unit: RMB
Closing balance
Bad debts Provision
Name Book balance provision percentage Reasons for provision
FOSHAN SHUNDE XINGCHEN PAPER CO., LTD. 26,236,528.70 26,236,528.70 100.00% Unlikely to be recovered
BEIJING HUAXIA CULTURE MEDIA CO., LTD. 8,207,950.42 8,207,950.42 100.00% Unlikely to be recovered
JIANGXI LONGMING ENTERPRISE CO., LTD. 1,763,987.74 1,763,987.74 100.00% Unlikely to be recovered
NANCHANG XINGBO PAPER CO., LTD. 1,656,205.97 1,656,205.97 100.00% Unlikely to be recovered
JIANGSU YIHONG PAPER CO., LTD. 3,490,464.47 3,490,464.47 100.00% Unlikely to be recovered
QINGDAO TENGFARUN PACKAGING CO., LTD. 3,239,582.93 3,239,582.93 100.00% Unlikely to be recovered
SIHONG GUANGFA COLOR PRINTING
AND PACKAGING CO., LTD. 934,371.82 934,371.82 100.00% Unlikely to be recovered
PINGYI HUIFENG PAPER CO., LTD. 636,988.62 636,988.62 100.00% Unlikely to be recovered
QINGTAO BAOYUE PAPER CO., LTD. 553,898.05 553,898.05 100.00% Unlikely to be recovered
BAYAN NUR TAILI PACKAGING CO., LTD. 503,562.66 503,562.66 100.00% Unlikely to be recovered
WENXIAN HUARONG PACKAGING MATERIAL CO., LTD. 426,858.60 426,858.60 100.00% Unlikely to be recovered
JILIN SAIWEI TRADING CO., LTD. 6,709,943.92 6,709,943.92 100.00% Unlikely to be recovered
Bills matured but
WUHAN TIANRUI PAPER CO., LTD. 13,600,000.00 680,000.00 5.00% not collected
Total 67,960,343.90 55,040,343.90 – –
Items assessed collectively for impairment:
Accounts receivable with collective provision for bad debts based on receivables from related parties:
Unit: RMB
Closing balance
Provision
Name Book balance Bad debts provision percentage (%)
Within 1 year 4,372,394.16 218,619.71 5%
1-2 years 513,899.40 51,389.94 10%
2-3 years 840,164.98 168,032.99 20%
Over 3 years 1,278,841.40 1,278,841.40 100%
Total 7,005,299.94 1,716,884.04 –
SHANDONG CHENMING PAPER HOLDINGS LIMITED 55
INTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
3. Accounts receivable (Cont’d)
(1) Disclosure of accounts receivable by category (Cont’d)
Accounts receivable with collective provision for bad debts based on receivables from distributor clients:
Unit: RMB
Closing balance
Provision
Name Book balance Bad debts provision percentage (%)
Within 1 year 3,288,959,975.08 145,760,318.07 4.43%
1-2 years 103,718,997.15 10,371,899.72 10.00%
2-3 years 51,894,705.62 10,378,941.12 20.00%
Over 3 years 192,535,557.21 192,535,557.21 100.00%
Total 3,637,109,235.06 359,046,716.12 –
If the provision for bad debts of accounts receivable is made in accordance with the general model of expected
credit losses, please disclose the information about provision for bad debts with reference to the way of disclosure
of other receivables:
Applicable √ Not applicable
By ageing
Unit: RMB
Ageing Closing balance
Within 1 year 3,369,808,213.41
1-2 years 93,809,606.89
2-3 years 42,187,896.49
Total 3,505,805,716.79
56 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
3. Accounts receivable (Cont’d)
(2) Provision, recovery or reversal of bad debt provision for the period
Provision of bad debt provision for the period:
Unit: RMB
Changes in the period
Category Opening balance Provision Recovery or reversal Written off Closing balance
Accounts receivable with provision for bad debt 378,877,091.54 39,608,466.66 2,051,118.31 416,434,439.89
Total 378,877,091.54 39,608,466.66 2,051,118.31 416,434,439.89
(3) Top five accounts receivable based on closing balance of debtors
Unit: RMB
Percentage to
closing balance of Closing balance of
Name of entity Nature Closing amount Ageing other receivables bad debt provision
BEIJING PAPER COMPANY FOR FOREIGN
LANGUAGE PUBLICATIONS Loan 214,005,849.96 Within 1 year 5.46% 10,700,292.50
YUNNAN PRINTING MATERIALS CO. LTD. Loan 86,300,124.14 Within 1 year 2.20% 4,315,006.21
SHENZHEN CENTURY HOPE TRADE CO., LTD. Loan 69,951,518.53 Within 1 year 1.78% 3,497,575.93
DONGGUAN HUAFA PAPER CO., LTD. Loan 66,534,917.30 Within 1 year 1.70% 3,326,745.87
GUANGZHOU JINGUAN FANZHOU PAPER CO., LTD. Loan 61,025,415.53 Within 1 year 1.56% 3,051,270.78
Total – 497,817,825.46 – 12.69% 24,890,891.29
SHANDONG CHENMING PAPER HOLDINGS LIMITED 57
INTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
4. Prepayments
(1) Presentation of prepayments stated according to ageing analysis
Unit: RMB
Closing balance Opening balance
Ageing Amount Percentage Amount Percentage
Within 1 year 486,689,905.11 94.91% 793,395,209.02 91.86%
1-2 years 26,122,556.96 5.09% 70,343,811.72 8.14%
Total 512,812,462.07 –- 863,739,020.74 –-
(2) Top five prepayments according to closing balance of prepaid parties
Percentage
to closing
balance of Reason for
Name of entity Nature Closing amount Ageing prepayments being unsettled
JIANGXI PROVINCE ZHONGLIAN ENERGY Loan 82,871,712.88 Within 1 year 16.16% Prepayments for goods according
DEVELOPMENT CO., LTD. to the agreed contract
SHOUGUANG CHENMING NATURAL GAS CO., LTD. Loan 51,950,255.71 Within 1 year 10.13% Prepayments for goods according
to the agreed contract
SHANDONG HEXIN CHEMICAL GROUP CO., LTD. Loan 36,005,510.81 Within 1 year 7.02% Prepayments for goods according
to the agreed contract
LINYI WANCHENG TRADE CO., LTD. Loan 17,653,234.05 Within 1 year 3.44% Prepayments for goods according
to the agreed contract
JINAN LONGYU PULP & PAPER CO., LTD. Loan 15,275,387.36 Within 1 year 2.98% Prepayments for goods according
to the agreed contract
Total 203,756,100.81 39.73%
58 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
5. Other receivables
Unit: RMB
Item Closing balance Opening balance
Interest receivable 210,003,430.11 198,577,632.43
Other receivables 1,400,454,923.44 1,934,512,350.96
Total 1,610,458,353.55 2,133,089,983.39
(1) Interest receivable
1) Classification of interest receivable
Unit: RMB
Item Closing balance Opening balance
Time deposit 0.00 1,002,811.95
Bond investment 0.00 25,018,561.36
Interest on deposit 210,003,430.11 172,556,259.12
Total 210,003,430.11 198,577,632.43
(2) Other receivables
1 Other receivables by nature
Unit: RMB
Closing Opening
Nature book balance book balance
Open credit 1,406,823,003.01 1,960,044,821.28
Reserve and borrowings 1,123,747.33 1,957,000.00
Guarantee deposit 10,639,508.54 18,064,797.46
Insurance premium 1,224,439.62 2,034,980.18
Advances 4,629,242.14 4,099,146.51
Others 162,375,159.64 162,793,258.20
Total 1,586,815,100.28 2,148,994,003.63
SHANDONG CHENMING PAPER HOLDINGS LIMITED 59
INTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
5. Other receivables (Cont’d)
(2) Other receivables (Cont’d)
2) Particulars of bad debt provision
Unit: RMB
Phase 1 Phase 2 Phase 3
Expected Expected
Expected credit credit loss over credit loss over
loss for the next the entire life (not the entire life
Bad debt provision 12 months credit-impaired) (credit-impaired) Total
Balance as at 1 January 2019 180,706,607.98 33,775,044.69 214,481,652.67
Balance as at 1 January 2019 during the period – – – –
–Transferred into Phase 2 2,115,218,958.94 2,115,218,958.94
–Transferred into Phase 3 33,775,044.69 33,775,044.69
–Reversal to Phase 2
–Reversal to Phase 1
Provision for the year 27,839,538.39 27,839,538.39
Reversal for the year 50,727,406.92 28,350,785.93 79,078,192.85
Transfer for the year
Writing-off for the year
Other changes
Balance as at 30 June 2019 180,935,918.08 5,424,258.76 186,360,176.84
Changes in carrying book balances with significant changes in loss provision for the period
Applicable √ Not applicable
By ageing
Unit: RMB
Ageing Closing balance
Within 1 year 1,059,136,065.35
1-2 years 267,976,828.92
2-3 years 67,201,314.48
3-4 years 277,224.02
4-5 years 2,800,490.00
Over 5 years 3,063,000.67
Total 1,400,454,923.44
60 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
5. Other receivables (Cont’d)
(2) Other receivables (Cont’d)
3) Provision, recovery or reversal of bad debt provision for the period
Bad debt provision for the period:
Unit: RMB
Changes for the period
Recovery
Category Opening balance Provision or reversal Closing balance
Bad debt provision for other receivables 237,598,831.30 27,839,538.39 79,078,192.85 186,360,176.84
Total 237,598,831.30 27,839,538.39 79,078,192.85 186,360,176.84
4) Top five other receivables according to closing balance of debtors
Unit: RMB
Percentage
to closing Closing
balance balance of
Closing of other bad debt
Name of entity Nature balance Maturity receivables provision
SHENZHEN QIANHAI RUILI ASSET MANAGEMENT CO., LTD. Consideration for equity transfer 805,040,747.00 Within 1 year 50.73% 40,252,037.35
XIWANG GROUP FINANCE CO., LTD. Open credit 100,000,000.00 Within 1 year 6.30% 5,000,000.00
WEIFANG SIME DARBY WEST PORT CO., LTD Open credit 62,631,878.08 1-2 years 3.95% 4,086,281.40
HUANGGANG HIGH-TECH DEVELOPMENT ZONE
MANAGEMENT COMMITTEE Land transfer 17,860,367.88 1-2 years 1.13% 1,786,036.79
GUANGDONG ZHONGTUO CONSTRUCTION CO., LTD. Relocation payment 15,200,000.00 3-4 years 0.96% 15,200,000.00
Total – 1,000,732,992.96 – 63.07% 66,324,355.54
SHANDONG CHENMING PAPER HOLDINGS LIMITED 61
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VII. Notes to items of the consolidated financial statements (Cont’d)
5. Other receivables (Cont’d)
(2) Other receivables (Cont’d)
5) Government grants related receivables
Unit: RMB
Estimated time
and amount of
Maturity receiving the
Closing as at the end grants and the
Name of entity Name of project receiving government grants balance of the period basis thereof
Shandong Chenming Other enterprise reform and development grants 73,730,000.00 1 month Received at 5 July
Meilun Paper Other enterprise reform and development grants 27,400,000.00 1 month Received at 5 July
Total 101,130,000.00
6. Inventories
Whether the New Standard for Revenue has been implemented
√ Yes No
(1) Categories of inventories
Unit: RMB
Closing balance Opening balance
Impairment Impairment
provision for provision for
inventories or inventories or
Item Book balance performance costs Carrying amount Book balance performance costs Carrying amount
Raw materials 2,884,649,476.30 2,884,649,476.30 3,275,454,669.27 9,525,360.59 3,265,929,308.68
Work-in-process products 121,882,974.07 121,882,974.07 102,153,808.77 102,153,808.77
Goods in stock 1,246,019,599.62 1,246,019,599.62 1,690,248,067.43 34,943,475.27 1,655,304,592.16
Consumable biological assets 1,532,910,693.20 1,532,910,693.20 1,511,542,610.36 1,511,542,610.36
Developing products 314,897,324.86 314,897,324.86 309,823,656.64 73,265,542.87 236,558,113.77
Total 6,100,360,068.05 6,100,360,068.05 6,889,222,812.47 117,734,378.73 6,771,488,433.74
62 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
6. Inventories (Cont’d)
(2) Impairment provision for inventories or performance costs
Unit: RMB
Increase for the period Decrease for the period
Reversal
Item Opening balance Provision Others or transfer Others Closing balance
Raw materials 9,525,360.59 9,525,360.59 –
Goods in stock 34,943,475.27 34,943,475.27 –
Developing products 73,265,542.87 73,265,542.87 –
Total 117,734,378.73 117,734,378.73 –
Notes: Since March 2019, the prices of various types of machine-made paper have been increasing. In June, we conducted an
impairment test on finished products, and the net realisable value was higher than the cost, and there was no sign of
impairment.
On 25 March, the Company received the “Letter on Terminating the Construction of the BT Project for the Coastal and
Beach Comprehensive Treatment Project of Haidong New District of Zhanjiang City” (Zhan Dai Jian Han [2019] No. 66)
issued by the Zhanjiang City Construction Project Management Bureau. The letter required that all the pre-investment
projects and project costs that have been invested at the early stage should be included in the development cost of the first
zone, which obtained sea area use right certificate. Since the events that caused provision impairment of the developing
products at the early stage disappeared, the impairment provision for inventories was reversed.
7. Assets held-for-sale
Unit: RMB
Closing Impairment Closing Estimated Estimated
Item book balance provision carrying amount Fair value disposal fee disposal time
Kraft paper production line of Fuyu Chenming 224,652,780.55 173,934,865.31 50,717,915.24 50,300,000.00 – 2020-01
8. Non-current assets due within one year
Unit: RMB
Item Closing balance Opening balance
Long-term receivables due within one year 5,565,858,326.78 4,007,503,281.86
Total 5,565,858,326.78 4,007,503,281.86
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VII. Notes to items of the consolidated financial statements (Cont’d)
9. Other current assets
Whether the New Standard for Revenue has been implemented
√ Yes No
Unit: RMB
Item Closing balance Opening balance
VAT recoverable 1,391,709,444.36 1,365,819,497.97
Prepaid tax 46,204,550.66 13,217,451.88
Receivables under financial lease due within one year 8,345,877,080.02 8,234,007,148.70
Prepaid expenses 165,347,939.51 662,919,414.09
Others 2,905,130.30 5,349,312.49
Total 9,952,044,144.85 10,281,312,825.13
10. Long-term receivables
(1) Particulars of long-term receivables
Unit: RMB
Closing balance Opening balance
Bad debt Bad debt Discount
Item Book balance provision Carrying amount Book balance provision Carrying amount rate range
Finance lease payments 12,362,308,287.51 179,024,982.90 12,183,283,304.61 13,581,636,630.17 145,746,721.12 13,435,889,909.05 4-10
Less: Unrealised
financing income 1,183,579,855.68 1,183,579,855.68 1,501,775,856.33 1,501,775,856.33
Less: Non-current assets
due within one year 5,887,079,513.38 166,827,642.60 5,720,251,870.78 4,028,313,053.68 20,809,771.82 4,007,503,281.86
Total 5,291,648,918.45 12,197,340.30 5,279,451,578.15 8,051,547,720.16 124,936,949.30 7,926,610,770.86
64 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
10. Long-term receivables (Cont’d)
(1) Particulars of long-term receivables (Cont’d)
Particulars of bad debt impairment provision
Unit: RMB
Phase 1 Phase 2 Phase 3
Expected credit Expected credit
Expected credit loss over the loss over the
loss for the next entire life (not entire life
Bad debt provision 12 months credit-impaired) (credit-impaired) Total
Balance as at 1 January 2019 145,746,721.12 145,746,721.12
Balance as at 1 January 2019 during the period
–Transferred into Phase 2
–Transferred into Phase 3
–Reversal to Phase 2
–Reversal to Phase 1
Provision for the year 33,278,261.78 33,278,261.78
Reversal for the year
Transfer for the year
Writing-off for the year
Other changes
Balance as at 30 June 2019 179,024,982.90 179,024,982.90
Changes in carrying book balances with significant changes in loss provision for the year
Applicable √ Not Applicable
Other explanation
SHANDONG CHENMING PAPER HOLDINGS LIMITED 65
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VII. Notes to items of the consolidated financial statements (Cont’d)
11. Long-term equity investments
Unit: RMB
Change for the period
Investment
gain or loss Adjustment Distribution Closing
recognised of other Other change of cash balance
Additional Withdrawn under comprehensive in equity dividend or Impairment of impairment
Investee Opening balance contribution contribution equity method income interest profit declared provision Others Closing balance provision
I. Joint ventures
Shouguang Chenming Huisen
New-style Construction Materia s
Co., Ltd. 3,572,834.79 975,461.08 500,000.00 4,048,295.87
Weifang Sime Darby West Port
Co., Ltd 103,159,857.71 -7,969,846.98 95,190,010.73
Weifang Xingxing United Chemical
Co., Ltd. 109,253,237.12 4,099,600.98 113,352,838.10
Sub-total 215,985,929.62 -2,894,784.92 500,000.00 212,591,144.70
II. Associates
Jiangxi Jiangbao Media Colour
Printing Co. Ltd. 811,998.75 -480,747.58 331,251.17
Zhuhai Dechen New Third Board
Equity Investment Fund Company
(Lim ted Partnership) 52,253,817.72 108,497.32 52,362,315.04
Ningbo Kaichen Huamei Equity
Investment Fund Partnership
(Lim ted Partnership) 199,585,216.94 799,460.06 200,384,677.00
Xuchang Chenming Paper Co., Ltd. 5,994,545.96 -5,994,545.96 –
Jiangxi Chenming Port Co., Ltd. 2,156,252.31 -766,917.52 1,389,334.79
Chenming (Qingdao)
Asset Management Co., Ltd. 7,886,521.47 -238,134.37 7,648,387.10
Sub-total 268,688,353.15 -6,572,388.05 262,115,965.10
Total 484,674,282.77 -9,467,172.97 500,000.00 474,707,109.80
66 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
12. Other non-current financial assets
Unit: RMB
Item Closing balance Opening balance
Equity instrument investment 765,160,000.00 103,000,000.00
Total 765,160,000.00 103,000,000.00
13. Investment properties
(1) Investment properties under the cost method
Housing and Construction
Item building structure Land use rights in progress Total
I. Original carrying amount
1. Opening balance 5,021,057,510.73 5,021,057,510.73
2. Increase for the year
3. Decrease for the year 3,090,227.36 3,090,227.36
(1) Disposal 3,090,227.36 3,090,227.36
4. Closing balance 5,017,967,283.37 5,017,967,283.37
II. Accumulated depreciation and
accumulated amortisation
1. Opening balance 176,064,471.11 176,064,471.11
2. Increase for the year 111,282,341.19 111,282,341.19
(1) Provision or amortisation 111,282,341.19 111,282,341.19
3. Decrease for the year 840,962.07 840,962.07
(1) Disposal 840,962.07 840,962.07
4. Closing balance 286,505,850.23 286,505,850.23
IV. Carrying amount
1. Closing carrying amount 4,731,461,433.14 4,731,461,433.14
2. Opening carrying amount 4,844,993,039.62 4,844,993,039.62
14. Fixed assets
Unit: RMB
Item Closing balance Opening balance
Fixed assets 30,774,255,749.34 27,913,986,152.68
Total 30,774,255,749.34 27,913,986,152.68
SHANDONG CHENMING PAPER HOLDINGS LIMITED 67
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VII. Notes to items of the consolidated financial statements (Cont’d)
14. Fixed assets (Cont’d)
(1) Particulars of fixed assets
Unit: RMB
Electronic
Housing and Machinery and equipment
Item building structure equipment Vehicles and others Total
I. Original carrying amount:
1. Opening balance 9,669,605,532.54 32,091,581,325.72 345,066,029.50 440,199,456.27 42,546,452,344.03
2. Increase for the period 199,399,266.20 3,563,165,711.79 16,240,303.34 5,711,396.43 3,784,516,677.76
(1) Acquisition 50,976,885.65 32,624,783.10 3,528,582.53 5,425,353.38 92,555,604.66
(2) Transferred from construction in progress 148,422,380.55 3,530,540,928.69 12,711,720.81 286,043.05 3,691,961,073.10
(3) Increase in business combinations
3. Decrease for the period 171,362,577.70 264,357,625.00 3,043,833.97 6,543,249.48 445,307,286.15
(1) Disposal or retirement 47,658,732.97 19,104,009.29 1,583,087.61 2,266,916.65 70,612,746.52
(2) Transferal 19,261.54 19,261.54
(3) Transferred to assets held-for-sale 123,684,583.19 245,253,615.71 1,460,746.36 4,276,332.83 374,675,278.09
4. Closing balance 9,697,642,221.04 35,390,389,412.51 358,262,498.87 439,367,603.22 45,885,661,735.64
II. Accumulated depreciation
1. Opening balance 1,678,906,121.65 12,326,017,656.16 173,353,238.78 257,772,524.59 14,436,049,541.18
2. Increase for the period 127,158,122.10 676,205,622.57 16,960,307.47 7,379,287.21 827,703,339.35
(1) Provision 127,158,122.10 676,205,622.57 16,960,307.47 7,379,287.21 827,703,339.35
3. Decrease for the period 65,606,218.05 101,491,723.48 2,040,748.21 5,689,989.35 174,828,679.09
(1) Disposal or retirement 15,023,390.75 11,705,555.76 764,605.87 1,632,235.94 29,125,788.32
(2) Transferal 5,184.53 5,184.53
(3) Transferred to assets held-for-sale 50,577,642.77 89,786,167.72 1,276,142.34 4,057,753.41 145,697,706.24
4. Closing balance 1,740,458,025.70 12,900,731,555.25 188,272,798.04 259,461,822.45 15,088,924,201.44
III. Provision for impairment
1. Opening balance 50,958,113.15 145,083,130.77 13,092.92 362,313.33 196,416,650.17
2. Increase for the period
(1) Provision
3. Decrease for the period 50,958,113.15 122,601,345.91 13,092.92 362,313.33 173,934,865.31
(1) Disposal or retirement
(2) Transferred to assets held-for-sale 50,958,113.15 122,601,345.91 13,092.92 362,313.33 173,934,865.31
4. Closing balance 22,481,784.86 22,481,784.86
IV. Carrying amount
1. Closing carrying amount 7,957,184,195.34 22,467,176,072.40 169,989,700.83 179,905,780.77 30,774,255,749.34
2. Opening carrying amount 7,939,741,297.74 19,620,480,538.79 171,699,697.80 182,064,618.35 27,913,986,152.68
68 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
14. Fixed assets (Cont’d)
(2) Particulars of temporarily idle fixed assets
Unit: RMB
Original
carrying Accumulated Provision for Carrying
Item amount depreciation impairment amount Remark
Housing and building structure 52,541,556.53 7,204,288.74 45,337,267.79
Machinery and equipment 461,842,555.02 174,634,921.54 20,501,583.51 266,706,049.97
Total 514,384,111.55 181,839,210.28 20,501,583.51 312,043,317.76
(3) Particulars of fixed assets without obtaining property right certificates
Unit: RMB
Reason for not yet
obtaining property
Item Carrying amount right certificates
Housing and building structure (JIANGXI CHENMING) 219,633,066.69 Scheduled operation
commencement
not imminent
Housing and building structure (SHOUGUANG MEILUN) 276,549,079.27 Scheduled operation
commencement
not imminent
Housing and building structure (HAIMING MINING) 134,823,018.55 Scheduled operation
commencement
not imminent
Housing and building structure (JILIN CHENMING) 422,053,751.94 Scheduled operation
commencement
not imminent
Housing and building structure (Parent company) 73,212,959.15 Scheduled operation
commencement
not imminent
Housing and building structure (ZHANJIANG CHENMING) 1,348,705,580.19 Scheduled operation
commencement
not imminent
Total 2,474,977,455.79
SHANDONG CHENMING PAPER HOLDINGS LIMITED 69
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VII. Notes to items of the consolidated financial statements (Cont’d)
15. Construction in progress
Unit: RMB
Item Closing balance Opening balance
Construction in progress 10,141,701,524.68 11,861,494,351.33
Materials for project 10,356,344.40 9,856,470.22
Total 10,152,057,869.08 11,871,350,821.55
(1) Particulars of construction in progress
Unit: RMB
Closing balance Opening balance
Provision for Provision for
Item Book balance impairment Carrying amount Book balance impairment Carrying amount
400T/d Mechanical pulp project (Headquarters) 190,246,507.11 190,246,507.11
Newsprint machine to cultural paper machine and
related pulp line transformation (Headquarters) 1,426,602,125.57 1,426,602,125.57
Upgrading and renovation of back pressure unit of
captive power plant (Headquarters) 212,587,040.69 212,587,040.69 177,001,786.08 177,001,786.08
Membrane treatment for reclaimed
water recycling (Headquarters) 236,089,709.94 236,089,709.94 145,410,753.42 145,410,753.42
Chemical pulp project (Meilun) 3,602,279,799.06 3,602,279,799.06 3,016,785,495.66 3,016,785,495.66
High-end cultural paper (Meilun) 117,738,632.97 117,738,632.97 1,701,781,479.30 1,701,781,479.30
Haiming mining magnesite deep processing
project (Haiming) 544,449,147.79 544,449,147.79 486,501,551.60 486,501,551.60
200,000-ton magnesia-alumina spinel project (Haiming) 774,397,532.48 774,397,532.48 558,876,283.14 558,876,283.14
Huanggang Chenming integrated forestry,
pulp and paper project 4,052,359,826.41 4,052,359,826.41 3,605,150,078.66 3,605,150,078.66
Membrane treatment project (Zhanjiang Chenming) 88,779,975.16 88,779,975.16 74,505,129.72 74,505,129.72
Back pressure unit project (Zhanjiang Chenming) 51,243,062.13 51,243,062.13 26,452,503.41 26,452,503.41
Others 485,462,893.87 23,686,095.82 461,776,798.05 479,609,593.48 27,428,935.82 452,180,657.66
Total 10,165,387,620.50 23,686,095.82 10,141,701,524.68 11,888,923,287.15 27,428,935.82 11,861,494,351.33
70 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
15. Construction in progress (Cont’d)
(2) Changes in material construction in progress projects for the period
Unit: RMB
Of which: Capitalisation
Transfer to Accumulated Accumulated capitalised rate of the
Budget Opening Increase for fixed asset Other deductions Closing investment Construction capitalised interest amount interest amount
X Financial Report
Project name (RMB’00 million) balance the period for the period for the period balance to budget in progress interest for the period for the period Source of fund
Upgrading and renovation of back pressure unit of 2.13 177,001,786.08 35,585,254.61 212,587,040.69 98.13% 0.17 254,782.94 254,782.94 Self-raised and
captive power plant (Headquarters) borrowings
400T/d Mechanical pulp project (Headquarters) 1.30 190,246,507.11 26,098,726.22 216,345,233.33 0.00 0.00% 0.95 – Self-raised and
borrowings
Membrane treatment for reclaimed water recycling 3.20 145,410,753.42 90,678,956.52 236,089,709.94 73.78% 0.60 2,556,339.75 2,556,339.75 Self-raised and
(Headquarters) borrowings
New annual 200,000 ton of fly ash cement ceramsite 0.57 30,122,443.49 7,334,946.36 37,457,389.85 65.71% 0.60 – Self-raised and
production project borrowings
Newsprint machine to cultural paper machine and 3.72 1,426,602,125.57 167,055,466.90 1,593,657,592.47 – 0.00% 0.96 Self-raised and
related pulp line transformation (Headquarters) borrowings
Chemical pulp project (Meilun) 30.00 3,016,785,495.66 524,249,901.91 3,541,035,397.57 118.03% 0.95 181,512,616.75 44,222,151.40 5.47% Self-raised and
borrowings
High-end cultural paper (Meilun) 37.61 1,701,781,479.30 241,976,824.97 1,868,651,886.52 75,106,417.75 2.00% 0.98 64,161,971.31 22,003,288.79 5.47% Self-raised and
borrowings
Haiming mining magnesite deep processing project 18.50 486,501,551.60 107,044,396.19 593,545,947.79 32.08% 1.00 109,651,007.98 12,031,087.26 7.00% Self-raised and
(Haiming) borrowings
200,000-ton magnesia-alumina spinel project 8.50 558,876,283.14 235,635,002.60 794,511,285.74 93.47% 0.83 19,164,200.52 10,248,703.97 4.35% Self-raised and
borrowings
Huanggang Chenming Forest and Paper Integration 34.85 3,605,150,078.66 447,209,747.75 4,052,359,826.41 116.28% 1.00 184,757,758.91 36,512,651.89 4.90% Self-raised and
Project (Pulping Project) (Huanggang Chenming) borrowings
Biomass power generation project (southern district) 5.13 157,540,365.92 18,628,563.94 176,168,929.86 34.34% 1.00 Self-raised
(Huanggang Chenming)
Membrane treatment project (Zhanjiang Chenming) 1.20 74,505,129.72 74,505,129.72 62.09% 0.80 Self-raised
Back pressure unit project (Zhanjiang Chenming) 0.60 26,452,503.41 26,452,503.41 44.09% Self-raised
Total 147.31 11,596,976,503.08 1,901,497,787.97 3,678,654,712.32 – 9,819,819,578.73 9.84 562,058,678.16 127,829,006.00 41.28% –
INTERIM REPORT 2019
SHANDONG CHENMING PAPER HOLDINGS LIMITED
71
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VII. Notes to items of the consolidated financial statements (Cont’d)
15. Construction in progress (Cont’d)
(3) Materials for project
Unit: RMB
Closing balance Opening balance
Impairment Impairment
Item Book balance provision Carrying amount Book balance provision Carrying amount
Special materials 10,356,344.40 10,356,344.40 9,856,470.22 9,856,470.22
Total 10,356,344.40 10,356,344.40 9,856,470.22 9,856,470.22
72 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
16. Intangible assets
(1) Particulars of intangible assets
Unit: RMB
Unpatented
Item Land use rights Patents technology Software Total
I. Original carrying amount
1. Opening balance 2,298,247,993.53 15,895,213.33 25,993,883.14 2,340,137,090.00
2. Increase for the period 1,768,215.95 110,016,542.11 355,074.82 112,139,832.88
(1) Acquisition 1,768,215.95 110,016,542.11 355,074.82 112,139,832.88
3. Decrease for the period 731,218.52 731,218.52
(1) Disposal 731,218.52 731,218.52
4. Closing balance 2,299,284,990.96 125,911,755.44 26,348,957.96 2,451,545,704.36
II. Accumulated amortisation
1. Opening balance 379,242,063.35 1,705,104.30 19,834,647.37 400,781,815.02
2. Increase for the period 23,817,593.04 2,650,548.42 665,399.37 27,133,540.83
(1) Provision 23,817,593.04 2,650,548.42 665,399.37 27,133,540.83
3. Decrease for the period 731,218.52 731,218.52
(1) Provision 731,218.52 731,218.52
4. Closing balance 402,328,437.87 4,355,652.72 20,500,046.74 427,184,137.33
III. Impairment provision
IV. Carrying amount
1. Closing carrying amount 1,896,956,553.09 121,556,102.72 5,848,911.22 2,024,361,567.03
2. Opening carrying amount 1,919,005,930.18 14,190,109.03 6,159,235.77 1,939,355,274.98
17. Goodwill
(1) Original carrying amount of goodwill
Unit: RMB
Increase Decrease
Name of investee or item generating goodwill Opening balance for the period for the period Closing balance
Shandong Chenming Panels Co., Ltd. 5,969,626.57 5,969,626.57
Jilin Chenming Paper Co., Ltd. 14,314,160.60 14,314,160.60
Total 20,283,787.17 20,283,787.17
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VII. Notes to items of the consolidated financial statements (Cont’d)
17. Goodwill (Cont’d)
(2) Provision for impairment of goodwill
Unit: RMB
Increase Decrease
Name of investee or item generating goodwill Opening balance for the period for the period Closing balance
Machine-made paper sector – Jilin Chenming
Paper Co., Ltd. 14,314,160.60 14,314,160.60
Total 14,314,160.60 14,314,160.60
18. Long-term prepaid expenses
Unit: RMB
Increase Amortisation Other
Item Opening balance for the period for the period deductions Closing balance
Railway expenses 6,969,901.98 352,407.30 6,617,494.68
Rentals 41,096,304.35 1,005,862.08 40,090,442.27
Woodland expenses 86,850,035.48 3,989,314.31 82,860,721.17
Total 134,916,241.81 5,347,583.69 129,568,658.12
19. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets before offsetting
Unit: RMB
Closing balance Opening balance
Deductible Deferred Deductible Deferred
temporary income temporary income
Item difference tax assets difference tax assets
Provision for impairment of assets 1,075,169,307.43 251,697,134.87 1,009,229,761.95 201,814,843.08
Unrealised profit arising from intra-group transactions 86,406,080.32 21,601,520.08 53,691,645.13 13,422,911.28
Deductible loss 2,474,702,128.23 393,326,264.47 1,832,638,038.33 291,277,348.30
Outstanding payables 388,522,635.82 69,970,733.85 464,741,048.85 72,646,157.78
Deferred income 116,027,847.20 22,334,275.75 136,079,842.63 24,712,438.18
Total 4,140,827,999.00 758,929,929.02 3,496,380,336.89 603,873,698.62
74 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
19. Deferred income tax assets/deferred income tax liabilities (Cont’d)
(2) The breakdown of unrecognised deferred income tax assets
Unit: RMB
Item Closing balance Opening balance
Deductible temporary difference 198,361,935.86 293,812,600.65
Deductible loss 746,075,536.84 618,945,325.05
Total 944,437,472.70 912,757,925.70
(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
2019 58,075,279.70
2020 62,162,599.80 68,154,676.89
2021 67,536,762.75 79,493,561.61
2022 80,679,499.21 91,517,702.92
2023 318,817,137.26 321,704,103.93
2024 216,879,537.82
Total 746,075,536.84 618,945,325.05 –
20. Other non-current assets
Whether the New Standard for Revenue has been implemented
√ Yes No
Unit: RMB
Closing balance Opening balance
Impairment Impairment
Item Book balance provision Carrying amount Book balance provision Carrying amount
Prepayments for properties 507,301,567.82 507,301,567.82 458,224,099.89 458,224,099.89
Prepayments for land 45,230,000.00 45,230,000.00
Prepayments for engineering 17,790,680.05 17,790,680.05 22,445,137.18 22,445,137.18
Prepayments for equipment 238,243,937.63 238,243,937.63 223,822,509.86 223,822,509.86
Deposits 36,000,000.00 36,000,000.00
Equity transfer or investment 1,896,662,879.24 1,896,662,879.24 694,000,000.00 694,000,000.00
Pre-paid expenses 26,037,702.96 26,037,702.96 42,771,382.73 42,771,382.73
Total 2,686,036,767.70 2,686,036,767.70 1,522,493,129.66 1,522,493,129.66
Other explanations: Equity transfer payment of RMB1,671,034,479.24 was used for the acquisition of equity interest in Nanyue Bank, and
RMB39.5 million was used for investment in Weifang Chenming Growth Driver Replacement Fund.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 75
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VII. Notes to items of the consolidated financial statements (Cont’d)
21. Short-term borrowings
(1) Classification of short-term borrowings
Unit: RMB
Item Closing balance Opening balance
Pledged borrowings 791,650,262.66 971,604,153.41
Mortgage borrowings 180,000,000.00 180,000,000.00
Guaranteed borrowings 9,444,577,202.39 9,918,242,061.05
Credit borrowings 10,720,238,621.90 7,531,565,147.43
Discounted borrowings 23,528,864,000.00 21,626,534,000.00
Total 44,665,330,086.95 40,227,945,361.89
22. Bills payable
Unit: RMB
Classification Closing balance Opening balance
Commercial acceptance bills 131,972,223.26 49,670,407.62
Bank acceptance bills 2,087,936,210.59 4,169,299,147.31
Total 2,219,908,433.85 4,218,969,554.93
Total outstanding bills payable as at the end of the period amounted to RMB0.00.
23. Accounts payable
(1) Particulars of accounts payable
Unit: RMB
Item Closing balance Opening balance
Within 1 year 4,013,299,860.41 3,566,507,866.14
1-2 years 383,179,342.06 261,760,924.33
2-3 years 56,927,131.28 80,120,125.97
Over 3 years 158,745,544.57 241,839,728.22
Total 4,612,151,878.32 4,150,228,644.66
76 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
23. Accounts payable (Cont’d)
(2) Significant advance receipts for over 1 year
Unit: RMB
Item Closing balance Reasons
Guangxi Construction Engineering Group No. 1 Installation Co., Ltd. 28,486,702.84 Deposit for
engineering
Anhui Transportation Navigation Engineering Co., Ltd. 17,854,000.00 Deposit for
engineering
Institute 704 of China Shipbuilding Industry Corporation 13,217,264.90 Deposit for
engineering
equipment
China Light Industry Nanning Design Engineering Co., Ltd. 12,375,316.24 Deposit for
engineering
equipment
Shandong Shenhua Shanda Energy & Environment Co., Ltd. 11,736,736.36 Payment not
demanded by the
counterparty yet
Total 83,670,020.34
24. Contract liabilities
Unit: RMB
Item Closing balance Opening balance
Advance loans 639,444,833.26 419,540,133.74
Total 639,444,833.26 419,540,133.74
25. Staff remuneration payables
(1) Particulars of staff remuneration payables
Unit: RMB
Increase Decrease
Item Opening balance for the period for the period Closing balance
I. Short-term remuneration 135,108,374.13 640,959,206.39 668,093,665.86 107,973,914.66
II. Retirement benefit plan – defined contribution scheme 265,033.57 95,915,737.03 95,988,712.46 192,058.14
Total 135,373,407.70 736,874,943.42 764,082,378.32 108,165,972.80
SHANDONG CHENMING PAPER HOLDINGS LIMITED 77
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VII. Notes to items of the consolidated financial statements (Cont’d)
25. Staff remuneration payables (Cont’d)
(2) Particulars of short-term remuneration
Unit: RMB
Increase Decrease
Item Opening balance for the period for the period Closing balance
1. Salaries, bonuses, allowance and subsidies 45,776,603.50 510,410,269.53 531,270,016.44 24,916,856.59
2. Staff welfare 9,087,468.82 22,724,599.85 31,485,293.12 326,775.55
3. Social insurance premium 1,453,195.45 42,676,671.30 43,122,682.97 1,007,183.78
Of which: Medical insurance premium 484,700.11 36,927,845.19 37,412,545.30 0.00
Work-related injury insurance premium 2,559.91 2,442,599.94 2,312,567.58 132,592.27
Maternity insurance premium 962,031.66 3,306,226.17 3,393,666.32 874,591.51
Others 3,903.77 0.00 3,903.77 0.00
4. Housing provident funds 8,814,407.42 52,870,502.29 55,334,822.02 6,350,087.69
5. Union funds and workers’ education 26,540,500.67 11,494,802.53 5,907,078.30 32,128,224.90
6. Other short-term remuneration 43,436,198.27 782,360.89 973,773.01 43,244,786.15
Total 135,108,374.13 640,959,206.39 668,093,665.86 107,973,914.66
(3) Defined contribution plan
Unit: RMB
Increase Decrease
Item Opening balance for the period for the period Closing balance
1. Basic pension insurance 13,533.34 92,381,476.43 92,395,009.77 0.00
2. Unemployment insurance 251,500.23 3,534,260.60 3,593,702.69 192,058.14
Total 265,033.57 95,915,737.03 95,988,712.46 192,058.14
78 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
26. Taxes payable
Unit: RMB
Item Closing balance Opening balance
Value added tax 58,166,520.30 101,147,703.11
Enterprise income tax 191,803,093.04 279,044,478.52
Individual income tax 26,292,521.44 21,204,181.79
Urban maintenance and construction tax 3,751,037.26 1,675,884.94
Land use tax 8,684,907.55 16,727,507.78
Property tax 16,180,243.57 26,049,416.88
Educational surcharges and others 3,538,242.36 2,685,191.81
Stamp duty 2,538,931.67 3,116,833.81
Resource tax 1,404,501.92
Environmental tax 1,924,023.08
Total 314,284,022.19 451,651,198.64
27. Other payables
Unit: RMB
Item Closing balance Opening balance
Interest payable 163,355,268.55 226,788,777.59
Dividend payable 976,175,735.52 0.00
Other payables 2,089,128,817.62 1,550,929,239.89
Total 3,228,659,821.69 1,777,718,017.48
(1) Interest payable
Unit: RMB
Item Closing balance Opening balance
Interest on corporate bonds 99,925,579.95 132,103,351.62
Interest payable on short-term borrowings 17,804,688.63 34,393,759.32
Interest on medium-term notes 45,624,999.97 60,291,666.65
Total 163,355,268.55 226,788,777.59
SHANDONG CHENMING PAPER HOLDINGS LIMITED 79
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VII. Notes to items of the consolidated financial statements (Cont’d)
27. Other payables (Cont’d)
(2) Dividend payable
Unit: RMB
Item Closing balance Opening balance
A shares 400,780,244.16 0.00
B shares 169,532,463.84 0.00
H shares 126,793,260.00 0.00
Preference shares 279,069,767.52 0.00
Total 976,175,735.52 0.00
(3) Other payables
1) Other payables by nature
Unit: RMB
Item Closing balance Opening balance
Open credit 627,042,165.66 164,919,560.22
Deposit 663,102,948.69 969,423,011.35
Accrued expenses 530,264,563.26 281,151,124.64
Others 268,719,140.01 135,435,543.68
Total 2,089,128,817.62 1,550,929,239.89
2) Significant advance receipts for over 1 year
Unit: RMB
Item Closing balance Reasons
Liaoning Beihai Industry Group Ltd. 74,643,475.03 Debt investment by
a shareholder of a
subsidiary as agreed
Shouguang Hengtai Enterprise Investment Co., Ltd. 45,977,444.73 Debt investment by
a shareholder of a
subsidiary as agreed
Nine Dragons Dawei Holdings Co., Ltd. 30,000,000.00 Deposit
State-Owned Shouguang Qingshuipo Farm 8,800,000.00 Deposit
Institute 704 of China Shipbuilding Industry Corporation 3,924,720.00 Deposit
Total 163,345,639.76 –
80 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
28. Non-current assets due within one year
Unit: RMB
Item Closing balance Opening balance
Long-term receivables due within one year 2,399,108,063.18 4,234,248,448.36
Long-term payables due within one year 2,594,377,113.23 2,732,057,322.65
Other non-current liabilities due within one year 250,000,000.00 250,000,000.00
Total 5,243,485,176.41 7,216,305,771.01
29. Other current liabilities
Whether the New Standard for Revenue has been implemented
√ Yes No
Unit: RMB
Item Closing balance Opening balance
Short-term bonds payable 1,853,868,055.56 2,816,956,481.68
Total 1,853,868,055.56 2,816,956,481.68
SHANDONG CHENMING PAPER HOLDINGS LIMITED 81
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VII. Notes to items of the consolidated financial statements (Cont’d)
30. Long-term borrowings
(1) Types of long-term borrowings
Unit: RMB
Item Closing balance Opening balance
Pledge borrowings 345,766,543.72 362,064,033.51
Secured borrowings 4,427,537,899.99 4,733,171,900.00
Guarantee borrowings 4,686,849,838.97 6,097,254,963.85
Credit borrowings 923,110,691.19 840,692,035.94
Less: Long-term borrowings due within 1 year 1,933,526,718.43 4,234,248,448.36
Total 8,449,738,255.44 7,798,934,484.94
Details of types long-term borrowings:
Item Closing balance Opening balance
Long-term borrowings due within 1 year
Long-term borrowings due within 1-2 years 2,037,389,007.22 2,032,389,007.22
Long-term borrowings due within 2-5 years 3,367,349,248.22 2,716,545,477.72
Long-term borrowings due over 5 years 3,045,000,000.00 3,050,000,000.00
Total 8,449,738,255.44 7,798,934,484.94
31. Bonds payable
(1) Bonds payable
Unit: RMB
Item Closing balance Opening balance
17 Chenming bond 01- Chenming Paper 1,198,890,000.00 1,198,710,000.00
18 Chenming bond 01- Chenming Paper 898,987,500.00 898,852,500.00
Total 2,097,877,500.00 2,097,562,500.00
82 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
31. Bonds payable (Cont’d)
(2) Increase/decrease in bonds payable (excluding other financial instruments such as preference shares and
perpetual bonds classified as financial liabilities)
Unit: RMB
Name of bond Par value Date of issue Term Amount Opening balance
17 Chenming bond 01- Chenming Paper 1,200,000,000.00 2017/8/22 5 1,198,200,000.00 1,198,710,000.00
18 Chenming bond 01- Chenming Paper 900,000,000.00 2018/4/2 5 898,650,000.00 898,852,500.00
Total 2,100,000,000.00 2,096,850,000.00 2,097,562,500.00
(Cont’d)
Issue Interest at Amortisation of Redemption
Name of bond during the year par value premium/discount during the year Closing balance
17 Chenming bond 01- Chenming Paper 180,000.00 1,198,890,000.00
18 Chenming bond 01- Chenming Paper 135,000.00 898,987,500.00
Total 315,000.00 2,097,877,500.00
32. Long-term payables
Unit: RMB
Item Closing balance Opening balance
Long-term payables 3,630,523,501.35 3,900,255,693.44
Total 3,630,523,501.35 3,900,255,693.44
(1) By nature
Unit: RMB
Item Closing balance Opening balance
Retention for the financial leasing operations 164,190,103.51 167,083,436.84
China Development Bank Special funds 595,000,000.00 622,500,000.00
Financial leasing 5,408,761,794.56 5,842,729,579.25
Exploitation right 56,948,716.51
Less: Due within 1 year 2,594,377,113.23 2,732,057,322.65
Total 3,630,523,501.35 3,900,255,693.44
SHANDONG CHENMING PAPER HOLDINGS LIMITED 83
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VII. Notes to items of the consolidated financial statements (Cont’d)
33. Provision
Unit: RMB
Increase Decrease
Item Closing balance for the period for the period Opening balance Reason
Provision 329,230,107.88 3,971,025.60 325,259,082.28 Losses from Arjo’s
lawsuit and
recognised
abandon costs for
Haiming Mining
Total 329,230,107.88 3,971,025.60 325,259,082.28 –
Note: Haicheng Haiming Mining Co., Ltd., a controlled subsidiary of the Company, is expected to pay magnesite mine abandon costs.
34. Deferred income
Unit: RMB
Increase for Decrease for
Item Opening balance the period the period Closing balance Reason
Government grants 1,862,395,197.61 – 56,873,237.36 1,805,521,960.25
Total 1,862,395,197.61 – 56,873,237.36 1,805,521,960.25 –
84 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
34. Deferred income (Cont’d)
Items in respect of government grants:
Unit: RMB
Include in non- Include in other Amount charged
New grants operating income income for the against cost Asset-related/
Liabilities item Opening balance for the period for the period period expenses Other changes Closing balance income-related
Project fund for National
technological support
scheme 1,617,224.68 82,349.68 1,534,875.00 Asset-related
Sewage treatment and
water conservation
reconfiguration project 64,466,819.64 596,341.49 63,870,478.15 Asset-related
Financial grants
for technological
modification project 181,015,256.91 1,500.00 6,391,904.25 174,621,852.66 Asset-related
Special subsidy funds
for environmental
protection 749,420,276.75 24,595,985.72 724,824,291.03 Asset-related
Railway line change
compensation 13,336,458.29 184,375.02 13,152,083.27 Asset-related
Interest subsidy 17,050,714.30 228,475.03 16,822,239.27 Asset-related
Logistics park project 51,960,000.00 – 51,960,000.00 Asset-related
Zhanjiang integrated
forestry, pulp and
paper project 93,506,446.64 2,047,316.46 22,364,612.22 69,094,517.96 Asset-related
Huanggang pulp-forestry-
paper project 681,039,716.66 – 681,039,716.66 Asset-related
Others 8,982,283.74 380,377.49 8,601,906.25 Asset-related
Total 1,862,395,197.61 1,500.00 34,507,125.14 22,364,612.22 1,805,521,960.25
SHANDONG CHENMING PAPER HOLDINGS LIMITED 85
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VII. Notes to items of the consolidated financial statements (Cont’d)
35. Other non-current liabilities
Whether the New Standard for Revenue has been implemented
√ Yes No
Unit: RMB
Item Closing balance Opening balance
Medium-term notes 2,051,031,576.50 2,047,948,069.73
Wealth management direct financing instruments 250,000,000.00 250,000,000.00
Less: Other non-current liabilities due within one year 250,000,000.00 250,000,000.00
Total 2,051,031,576.50 2,047,948,069.73
36. Share capital
Unit: RMB
Increase/decrease during the year(+/-)
Shares converted
Opening balance New issue Bonus issue from reserves Others Subtotal Closing balance
Total number of shares 2,904,608,200.00 2,904,608,200.00
37. Other equity instruments
(1) Preference shares, perpetual bonds and other financial instruments outstanding at the end of the period
Decrease for the
Item Opening balance Increase for the periodperiod Closing balance
Perpetual bonds 2,988,000,000.00 2,988,000,000.00
Preference shares 4,477,500,000.00 4,477,500,000.00
Total 7,465,500,000.00 7,465,500,000.00
(2) Changes in perpetual bonds outstanding at the end of the period
Unit: RMB
Increase for Decrease for
Outstanding financial instruments Opening balance the period the period Closing balance
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 2,988,000,000.00 2,988,000,000.00
86 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
37. Other equity instruments (Cont’d)
(3) Changes in perpetual bonds outstanding at the end of the period
Increase for Decrease for
Outstanding financial instruments Opening balance the period the period Closing balance
Chenming You 01 2,238,750,000.00 2,238,750,000.00
Chenming You 02 999,000,000.00 999,000,000.00
Chenming You 03 1,239,750,000.00 1,239,750,000.00
Total 4,477,500,000.00 4,477,500,000.00
38. Capital reserves
Unit: RMB
Increase for Decrease for
Item Opening balance the period the period Closing balance
Capital premium (share premium) 4,421,127,407.93 4,421,127,407.93
Other capital reserves 670,322,507.21 670,322,507.21
Total 5,091,449,915.14 5,091,449,915.14
39. Other comprehensive income
Unit: RMB
During the period
Less: Transferred Less: Transferred
from other from other
comprehensive comprehensive
income in prior income in prior Attributable
Incurred before periods to profit periods to Attributable to to minority
income tax for or loss during retained earnings Less: Income parent company Shareholders
Item Opening balance the period the period during the period tax expenses after tax after tax Closing balance
Other comprehensive
income to be reclassified
to profit or loss in
subsequent periods
Exchange differences on
translation of foreign
operations -736,520,181.01 -16,016,688.20 -16,016,688.20 -752,536,869.21
Total other comprehensive
income -736,520,181.01 -16,016,688.20 -16,016,688.20 -752,536,869.21
SHANDONG CHENMING PAPER HOLDINGS LIMITED 87
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VII. Notes to items of the consolidated financial statements (Cont’d)
40. Special reserves
Unit: RMB
Increase for Decrease for
Item Opening balance the period the period Closing balance
Safety production 3,257,998.47 1,039,765.05 296,336.40 4,001,427.12
Total 3,257,998.47 1,039,765.05 296,336.40 4,001,427.12
41. Surplus reserves
Unit: RMB
Increase for Decrease for
Item Opening balance the period the period Closing balance
Statutory surplus reserves 1,148,888,912.11 1,148,888,912.11
Total 1,148,888,912.11 1,148,888,912.11
42. Retained profit
Unit: RMB
The prior period
(the same period
Item The period last year)
Retained profit as at the end of the prior year before adjustment 9,107,422,690.85 8,866,614,844.40
Accumulated adjustments to retained profit as at the beginning of the year
(increase “+”, decrease “-”)
Retained profit as at the beginning of the year after adjustment 9,107,422,690.85 8,866,614,844.40
Plus: Net profit for year attributable to shareholders of the parent company 509,795,572.29 1,784,631,025.31
Less: Transfer of statutory surplus reserves
Ordinary dividend payable 697,105,968.00 1,161,843,280.20
Preferred shares interest payable 377,169,767.52 562,816,006.80
Retained profit as at the end of the year 8,542,942,527.62 8,926,586,582.71
88 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
43. Revenue and operating cost
Unit: RMB
Amount for the period Amount for the prior period
Item Revenue Costs Revenue Costs
Principal activities 13,127,389,053.48 9,644,049,075.24 15,339,402,308.23 10,223,566,613.79
Other activities 221,259,060.22 110,048,724.58 211,931,731.66 36,318,305.07
Total 13,348,648,113.70 9,754,097,799.82 15,551,334,039.89 10,259,884,918.86
Whether the New Standard for Revenue has been implemented
√ Yes No
Information related to revenue:
Unit: RMB
Machine-made Magnesium
Category of contract paper segment Financial segment mining segment Other segment Total
Type of goods
Machine-made paper 11,561,215,578.29 11,561,215,578.29
Financial leasing 947,166,321.20 947,166,321.20
Magnesium mining 195,773,124.76 195,773,124.76
Electricity and steam 88,614,973.37 2,129,527.85 90,744,501.22
Construction materials 126,059,123.60 126,059,123.60
Paper chemicals 56,149,320.48 56,149,320.48
Hotel services 13,771,420.58 13,771,420.58
Others 203,468,152.83 24,521,500.95 724,488.32 129,054,581.47 357,768,723.57
Total 11,909,448,024.97 971,687,822.15 196,497,613.08 271,014,653.50 13,348,648,113.70
SHANDONG CHENMING PAPER HOLDINGS LIMITED 89
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VII. Notes to items of the consolidated financial statements (Cont’d)
44. Taxes and surcharges
Unit: RMB
Amount for
Item Amount for the period the prior period
Urban maintenance and construction tax 33,491,970.50 29,431,549.79
Educational surcharges 30,083,061.41 23,321,557.68
Property tax 25,991,020.83 26,787,098.32
Land use tax 17,485,547.38 25,666,645.17
Vehicle and vessel tax 53,845.71 502,934.38
Stamp duty 10,950,170.18 11,344,290.23
Water engineering funds 1,634,705.86 1,937,359.03
Environmental tax 4,945,936.66 4,354,733.37
Water resource tax 9,852,286.53 6,163,044.01
Total 134,488,545.06 129,509,211.98
45. Selling and distribution expenses
Unit: RMB
Amount for
Item Amount for the period the prior period
Wages and surcharges 61,585,417.90 66,498,765.40
Depreciation expenses 6,288,587.94 6,739,186.02
Office expenses 1,758,975.11 2,024,990.87
Transportation expenses 425,245,830.59 438,096,633.12
Selling commissions 5,725,354.65 9,527,198.46
Cargo handling charges 7,716,321.23 6,447,682.56
Travel expenses 14,946,381.33 14,287,350.75
Business hospitality expenses 28,199,788.34 27,355,797.58
Warehouse expenses 1,080,149.47 1,622,562.73
Rental expenses 4,019,981.96 4,783,613.45
Others 34,018,168.95 28,079,544.77
Total 590,584,957.47 605,463,325.71
90 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
46. General and administrative expenses
Unit: RMB
Amount for
Item Amount for the period the prior period
Wages and surcharges 80,866,566.50 135,226,780.34
Welfare expenses 27,556,239.75 21,985,234.28
Labour insurance premium 37,651,636.41 22,172,367.80
Insurance premium 14,052,377.28 12,675,862.00
Depreciation expenses 114,171,603.76 106,354,515.61
Waste disposal expenses 5,411,881.45 5,684,105.91
Hospitality expenses 38,283,517.05 29,705,889.73
Amortisation of intangible assets 24,242,384.25 16,360,689.72
Production interruption loss 69,899,210.78 372,715.95
Repair fees 15,566,475.96 13,562,056.75
Others 134,715,506.06 130,741,450.46
Total 562,417,399.25 494,841,668.55
47. R&D expenses
Unit: RMB
Amount for
Item Amount for the period the prior period
Installation expenses 8,229,476.80 828,905.32
Depreciation expenses 18,616,150.51 19,938,607.46
Consumption of raw materials 181,729,065.27 227,337,001.14
Consumption of semi-finished products 61,663,204.78 58,506,944.19
Consumption of auxiliary materials 41,870,386.58 55,211,735.49
Travel expenses 1,574.18 143,842.00
Wages and surcharges 52,643,872.99 52,089,007.68
Welfare expenses 3,128,695.00 1,294,197.20
Housing provident funds 3,507,430.88 2,486,485.16
Insurance premium 8,344,818.02 5,502,576.84
Union funds 165,815.82 199,798.57
Utilities 50,274,197.98 53,656,094.31
Other expenses 1,309,027.25 819,658.74
Total 431,483,716.06 478,014,854.10
SHANDONG CHENMING PAPER HOLDINGS LIMITED 91
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VII. Notes to items of the consolidated financial statements (Cont’d)
48. Finance expenses
Unit: RMB
Amount for
Item Amount for the period the prior period
Finance expenses 1,650,075,404.49 1,720,741,207.21
Less: interest income 213,994,280.22 159,096,591.34
Less: capitalised interest amount 73,319,125.19 162,960,177.00
Foreign exchange gains and losses -2,644,727.97 -16,373,292.86
Bank charges 156,731,452.69 116,517,298.68
Total 1,516,848,723.80 1,498,828,444.69
49. Other income
Unit: RMB
Amount for
Item Amount for the period the prior period
Government grants – amortised deferred income included in profit or loss 34,507,125.14 43,038,926.19
Government grants – directly included in profit or loss 4,324,165.50 16,633,350.69
Total 38,831,290.64 59,672,276.88
50. Investment income
Unit: RMB
Amount for
Item Amount for the period the prior period
Income from long-term equity investments accounted for using the equity method -9,467,172.97 -17,153,503.00
Investment gain on disposal of long-term equity investments 13,717,571.88
Investment gain on holding of available-for-sale financial assets 41,516,700.00
Investment gain on disposal financial assets measured at fair value through profit or loss 114,233,300.00
Total -9,467,172.97 152,314,068.88
92 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
51. Gain on change in fair value
Unit: RMB
Amount for
Source of gain on change in fair value Amount for the period the prior period
Gain on change in fair value of financial assets measured at fair value through
profit or loss -94,000,000.00
Consumable biological assets measured at fair value -1,883,064.80 -23,973,841.55
Total -1,883,064.80 -117,973,841.55
52. Credit impairment loss
Unit: RMB
Amount for
Item Amount for the period the prior period
Bad debt loss of accounts receivable 62,440,283.34
Total 62,440,283.34
53. Loss on impairment of assets
Whether the New Standard for Revenue has been implemented
√ Yes No
Unit: RMB
Amount for
Item Amount for the period the prior period
Loss on inventory impairment and impairment loss of performance costs of contracts -83,464,107.59 150,455,669.97
Total -83,464,107.59 150,455,669.97
54. Asset disposal income
Unit: RMB
Amount for the
Source of asset disposal income Amount for the period prior period
Net income from disposal of non-current assets 22,823,551.43 -2,210,048.63
Total 22,823,551.43 -2,210,048.63
SHANDONG CHENMING PAPER HOLDINGS LIMITED 93
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VII. Notes to items of the consolidated financial statements (Cont’d)
55. Non-operating income
Unit: RMB
Amounts included in
extraordinary gains
Amount for and losses
Item Amount for the period the prior period for the period
Government grants 227,700,148.23 184,555,864.82 227,700,148.23
Others 9,772,444.74 7,076,692.53 9,772,444.74
Total 237,472,592.97 191,632,557.35 237,472,592.97
56. Non-operating expenses
Unit: RMB
Amounts included in
extraordinary gains
Amount for and losses
Item Amount for the period the prior period for the period
Donation 3,041,000.00 5,000.00 3,041,000.00
Loss on destroyed and scrapped non-current assets 1,207,252.11 1,207,252.11
Others 801,876.08 441,221.32 801,876.08
Total 5,050,128.19 446,221.32 5,050,128.19
57. Income tax expenses
(1) Particulars of income tax expenses
Unit: RMB
Amount for
Item Amount for the period the prior period
Income tax expenses for the period 264,288,265.75 443,275,831.48
Deferred income tax expenses -138,410,446.13 -9,073,718.98
Total 125,877,819.62 434,202,112.50
58. Other comprehensive income
Please refer to Note VII. 39 for details.
94 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
59. Items on statements of cash flow
(1) Cash received relating to other operating activities
Unit: RMB
Amount for
Item Amount for the period the prior period
Finance support fund 184,083,293.99 196,283,019.84
Interest income 213,994,280.22 216,272,935.89
Open credit, and income from default penalty and fine 199,443,495.78 90,523,468.41
Net return of principal receivables relating to finance lease business 1,700,675,170.98 2,057,052,794.71
Total 2,298,196,240.97 2,560,132,218.85
(2) Cash paid relating to other operating activities
Unit: RMB
Amount for
Item Amount for the period the prior period
Expense and open credit 1,000,088,741.18 1,261,413,440.86
External security deposit of the Leasing Company 10,000,000.00
Total 1,000,088,741.18 1,271,413,440.86
(3) Cash received relating to other investing activities
Unit: RMB
Amount for
Item Amount for the period the prior period
Asset-related government grants 11,194,100.00
Total 11,194,100.00
SHANDONG CHENMING PAPER HOLDINGS LIMITED 95
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VII. Notes to items of the consolidated financial statements (Cont’d)
59. Items on statements of cash flow (Cont’d)
(4) Cash paid relating to other investing activities
Unit: RMB
Amount for
Item Amount for the period the prior period
Compensation liability 103,042,210.54
Purchase of Goldtrust Futures equity interest 144,248,400.00
Investment in Growth Driver Replacement 39,500,000.00
Investment in Meite Environment 5,880,000.00
Total 189,628,400.00 103,042,210.54
(5) Cash received relating to other financing activities
Unit: RMB
Amount for
Item Amount for the period the prior period
Short-term commercial paper 1,887,185,904.00 8,204,965,097.95
Equipment financing 831,099,242.78 500,000,000.00
Debt financing receivable 400,071,077.96 135,622,410.95
Loan from the Finance Company 200,000,000.00 100,000,000.00
Shandong Financial Assets Exchange borrowings 161,337,302.32
Total 3,479,693,527.06 8,940,587,508.90
(6) Cash paid relating to other financing activities
Unit: RMB
Amount for
Item Amount for the period the prior period
Repayment of short-term commercial paper 2,820,000,000.00 7,911,542,642.29
Repayment of matured bonds 579,511,229.15
Repayment of interest on preference shares 98,100,000.00
Repayment of equipment leaseback 1,400,052,857.83 1,086,203,289.95
Increase in restricted bank deposits for the period 1,807,611,450.60 5,922,955,877.94
Repayment of borrowings from Chenming Holdings 330,800,000.00
Total 6,456,564,308.43 15,500,213,039.33
96 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
60. Supplementary information on cash flow statement
(1) Supplementary information on cash flow statement
Unit: RMB
Amount for Amount for
Supplementary information the period the prior period
1. Reconciliation of net profit as cash flows from operating activities: – –
Net profit 536,600,045.95 1,783,122,625.14
Plus: Provision for impairment of assets -83,464,107.59 150,455,669.97
Depreciation of fixed assets, consumption of oil and gas assets,
depreciation of bearer biological assets 763,316,039.38 784,191,510.41
Amortisation of intangible assets 26,402,322.31 24,059,444.29
Amortisation of long-term prepaid expenses 5,347,583.69 16,218,441.95
Loss on disposal of fixed assets, intangible assets and
other long-term assets (“-” denotes gain) 22,823,551.43 2,210,048.63
Loss on changes in fair value (“-” denotes gain) -1,883,064.80 117,973,841.55
Finance expenses (“-” denotes gain) 1,516,848,723.80 1,584,988,775.97
Investment loss (“-” denotes gain) -9,467,172.97 -152,438,125.48
Decrease in deferred income tax assets (“-” denotes increase) -155,056,230.40 3,621,648.17
Decrease in inventories (“-” denotes increase) -678,542,881.70 -385,938,273.77
Decrease in operating receivables (“-” denotes increase) -282,017,217.78 -3,833,188,190.12
Increase in operating payables (“-” denotes decrease) 1,038,863,300.37 4,649,760,504.20
Net cash flows from operating activities 2,699,770,891.69 4,745,037,920.91
2. Major investing and financing activities not involving cash
settlements: – –
3. Net change in cash and cash equivalents: – –
Closing balance of cash 2,009,063,231.38 3,530,985,289.73
Less: Opening balance of cash 2,381,558,242.53 2,804,408,374.46
Plus: Closing balance of cash equivalents
Less: Opening balance of cash equivalents
Net increase in cash and cash equivalents -372,495,011.15 726,576,915.27
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VII. Notes to items of the consolidated financial statements (Cont’d)
60. Supplementary information on cash flow statement (Cont’d)
(2) Cash and cash equivalents composition
Unit: RMB
Item Closing balance Opening balance
I. Cash 2,009,063,231.38 2,381,558,242.52
Of which: Treasury cash 2,316,388.38 2,078,321.66
Bank deposit that can be used for payment at any time 2,006,747,121.50 2,379,479,920.86
III. Balance of cash and cash equivalent as at end of period 2,009,063,231.38 2,381,558,242.52
Other explanation:
Cash and cash equivalents did not include the restricted cash and cash equivalents used by the Company or
subsidiaries within the Group.
61. Assets with restricted ownerships or right to use
Unit: RMB
Closing carrying
Item amount Reason for such restrictions
Monetary funds 18,718,827,955.87 As guarantee deposits for bank acceptance bills, letter
of credit, and bank borrowings deposits, and deposit
reserves
Bills receivable collateral 624,106,580.39 As collateral for short-term borrowings, letters of guarantee
and letters of credit
Fixed assets 9,433,004,439.14 As collateral for bank borrowings and long-term payables
Intangible assets 855,039,400.00 As collateral for bank borrowings and long-term payables
Investment properties 4,581,606,847.89 As collateral for bank borrowings
Total 34,212,585,223.29 –
98 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
62. Foreign currency items
(1) Foreign currency items
Unit: RMB
Closing foreign Closing balance
Item currency balance Exchange rate in RMB
Monetary funds – –
Of which: USD 53,951,809.15 6.87 370,902,496.61
EUR 1,370,658.67 7.81 5,273,015.00
HKD 125,418.66 0.88 110,325.78
JPY 101,532.00 0.06 6,479.37
Accounts receivables – –
Of which: USD 57,294,935.90 6.87 404,634,355.39
EUR 4,797,586.69 7.81 37,506,151.76
HKD – 0.88 –
JPY 146,734,998.00 0.06 9,364,040.63
Accounts payable – –
Of which: USD 134,390,132.53 6.87 923,891,844.10
EUR 9,937,315.49 7.81 77,655,636.32
Other payables – –
Of which: USD 5,870,562.01 6.87 40,358,352.65
EUR 407,344.91 7.81 3,184,215.16
HKD 655,647.38 0.88 574,820.89
JPY 31,428.00 0.06 2,005.61
Short-term borrowings – –
Of which: USD 237,634,727.44 6.87 1,633,667,460.73
HKD 35,000,000.00 0.88 30,788,100.00
Long-term borrowings – –
Of which: USD 471,864,591.76 6.87 3,243,927,508.97
EUR 26,820,000.00 7.81 209,651,940.00
Non-current liabilities due within one year
Of which: USD 166,488,425.60 6.87 1,144,557,979.47
EUR 26,820,000.00 7.81 209,651,940.00
SHANDONG CHENMING PAPER HOLDINGS LIMITED 99
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VII. Notes to items of the consolidated financial statements (Cont’d)
62. Foreign currency items (Cont’d)
(2) Explanation on overseas operating entities (including major overseas operating entities), which shall disclose
their overseas principal places of business, functional currency and basis. Reasons shall be disclosed if there
is any change in the functional currency.
√ Applicable Not applicable
Principal place Place of Functional
No. Name of subsidiary 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
6 Chenming Paper United States Co., Ltd. Los Angeles, USA Los Angeles, USA USD
63. Government grants
(1) General information of government grants
Unit: RMB
Amount
accounted for
Type Amount Reporting item in profit or loss
Government incentives 10,000.00 Non-operating income 10,000.00
Immediate VAT refund 275,104.76 Other income 275,104.76
Forestation subsidies 588,512.58 Non-operating income, 588,512.58
other income
R&D subsidies 392,300.00 Non-operating income 392,300.00
Tax refund 33,984,039.89 Non-operating income, 33,984,039.89
other income
Social security subsidies and 135,853.85 Non-operating income 135,853.85
post subsidies
Enterprise reform development 160,161,518.76 Non-operating income, 160,161,518.76
subsidies other income
Others 46,886.89 Other income 46,886.89
Environmental protection 36,428,597.00 Non-operating income, 36,428,597.00
special subsidies other income
100 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VIII. Change in scope of consolidation
1. Change in scope of consolidation due to other reasons
During the reporting period, the scope of consolidation included 1 newly established subsidiary, namely Shanghai Pulp
& Paper Sales Co., Ltd.
IX. Interest in other entities
1. Interest in subsidiaries
(1) Constitution of the Group
Principle place Nature of Shareholding (%)
Name of subsidiary of business Place of incorporation business Acquisition 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
Jilin Chenming Paper Co., Ltd. Jilin, China Jilin, China Paper making 100.00 Merger and
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 Co., Ltd. Shouguang, China Shouguang, China Import and export trade 100.00 Establishment
Jiangxi Chenming Supply Chain Management Co., Ltd Jiangxi, China Jiangxi, China Trading 70.00 Establishment
Chenming GmbH Hamburg, Germany Hamburg, Germany Paper product trading 100.00 Establishment
Shouguang Chenming Papermaking Machine Co., Ltd. Shouguang, China Shouguang, China Machinery manufacturing 100.00 Establishment
Shouguang Hongxiang Printing and Packaging Co., Ltd. Shouguang, China Shouguang, China Printing and packaging 100.00 Merger and
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 Co., Ltd. Huanggang, China Huanggang, China Arboriculture 100.00 Establishment
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., Ltd. Shouguang, China Shouguang, China Power Supply 100.00 Establishment
Shouguang Shun Da Customs Declaration Co, Ltd. Shouguang, China Shouguang, China Customs declaration 100.00 Establishment
Shanghai Chenming Industrial Co., Ltd. Shanghai, China Shanghai, China Property investment and 100.00 Establishment
management
Wuxi Song Ling Paper Co., Ltd. Wuxi, China Wuxi, China Paper making 100.00 Merger and
acquisition
Shandong Chenming Paper Group (Fuyu) Sales Co., Ltd. Fuyu, China Fuyu, China Sales of paper 100.00 Establishment
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 42.46 40.79 Establishment
Qingdao Chenming International Logistics Co., Ltd. Qingdao, China Qingdao, China Logistics 30.00 70.00 Establishment
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., Ltd. Wuhan, China Wuhan, China Paper making 65.205 Establishment
Chengdu Chenming Culture Communication Co., Ltd. Chengdu, China Chengdu, China Marketing 100.00 Establishment
Shandong Chenming Financial Leasing Co., Ltd. Jinan, China Jinan, China Financial leasing 100.00 Establishment
Qingdao Chenming Nonghai Financial Leasing Co., Ltd. Qingdao, China Qingdao, China Financial leasing 100.00 Establishment
Chenming (HK) Limited Hong Kong, China Hong Kong, China Paper product trading 100.00 Establishment
Shouguang Hongyi Decorative Packaging Co., Ltd. Shouguang, China Shouguang, China Packaging 100.00 Merger and
acquisition
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IX. Interest in other entities (Cont’d)
1. Interest in subsidiaries (Cont’d)
(1) Constitution of the Group (Cont’d)
Principle place Nature of Shareholding (%)
Name of subsidiary of business Place of incorporation business Acquisition Direct Indirect
Shouguang Xinyuan Coal Co., Ltd. Shouguang, China Shouguang, China Coal 100.00 Merger and
acquisition
Shouguang City Run Sheng Wasted Paper Recycle Co., Ltd. Shouguang, China Shouguang, China Purchase and sale of 100.00 Merger and
waste acquisition
Shouguang Wei Yuan Logistics Company Limited Shouguang, China Shouguang, China Logistics 100.00 Merger and
acquisition
Shandong Chenming Panels Co., Ltd. Shouguang, China Shouguang, China Panels 100.00 Merger and
acquisition
Shouguang Chenming Floor Board Co., Ltd. Shouguang, China Shouguang, China Floor board 100.00 Merger and
acquisition
Shouguang Chenming Cement Co., Limited Shouguang, China Shouguang, China Cement 100.00 Establishment
Wuhan Chenming Qianneng Electric Power Co., Ltd. Wuhan, China Wuhan, China Electric power 51.00 Establishment
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
Chenming International Co., Ltd. Los Angeles, USA Los Angeles, USA Paper product trading 100.00 Establishment
Zhanjiang Chenming Arboriculture
Development Co., Ltd. Zhanjiang, China Zhanjiang, China Arboriculture 100.00 Establishment
Yangjiang Chenming Arboriculture
Development Co., Ltd. Yangjiang, China Yangjiang, China Arboriculture 100.00 Establishment
Nanchang Chenming Arboriculture
Development Co., Ltd. Nanchang, China Nanchang, China Arboriculture 100.00 Establishment
Guangdong Huirui Investment Co., Ltd. Zhanjiang, China Zhanjiang, China Investment 100.00 Merger and
acquisition
Zhanjiang Chenming New-style Wall Materials Co., Ltd Zhanjiang, China Zhanjiang, China Wall materials 100.00 Establishment
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
Shanghai Hongtai Real Estate Co., Ltd. Shanghai, China Shanghai, China Real estate 100.00 Merger and
acquisition
Shanghai Hongtai Property Management Co., Ltd. Shanghai, China Shanghai, China Property Management 100.00 Merger and
acquisition
Shandong Chenming Commercial Factoring Co., Ltd. Jinan, China Jinan, China Business factoring 100.00 Establishment
Guangzhou Chenming Commercial Factoring Co., Ltd. Guangzhou, China Guangzhou, China Business factoring 51.00 Establishment
Qingdao Chenming Pulp & Paper Electronic Commodity Spot Qingdao, China Qingdao, China Trading 30.00 70.00 Establishment
Trading Center Co., Ltd.
Beijing Chenming Meilun Technology Co., Ltd. Beijing, China Beijing, China Marketing 100.00 Establishment
Shandong Chenming Paper Coated Paper Sales Co., Ltd. Shouguang, China Shouguang, China Sales 100.00 Establishment
Zhanjiang Chenming Port Co., Ltd. Zhanjiang, China Zhanjiang, China Loading and unloading 100.00 Establishment
Beijing Chenming Financial Leasing Co., Ltd. Beijing, China Beijing, China Finance 100.00 Establishment
Chenming Paper United States Co., Ltd. USA 3200 EL CAMINO REAL, Paper trading 100.00 Establishment
SUITE130, IRVINE,CA
Shanghai Pulp & Paper Sales Co., Ltd. Shanghai, China Shanghai, China Sales of pulp and paper 100.00 Establishment
102 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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IX. Interest in other entities (Cont’d)
1. Interest in subsidiaries (Cont’d)
(2) Major non-wholly owned subsidiaries
Unit: RMB
Gain or loss Dividend to Closing
attributable to minority interests balance
minority interests declared during of minority
Name of subsidiary Minority interests during the period the period interests
Wuhan Chenming Hanyang Paper Holdings Co., Ltd. 34.80% 2,917,703.06 87,394,258.81
Shouguang Chenming Art Paper Co., Ltd. 25.00% 8,114,816.70 89,392,132.13
Haicheng Haiming Mining Co., Ltd. 40.00% 18,062,982.75 162,380,423.51
Jiangxi Chenming Paper Co., Ltd. 16.75% 5,048,268.31 9,212,500.00 500,428,230.77
SHANDONG CHENMING PAPER HOLDINGS LIMITED 103
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IX. Interest in other entities (Cont’d)
104
1. Interest in subsidiaries (Cont’d)
(3) Key financial information of major non-wholly owned subsidiaries
Unit: RMB
Closing balance Opening balance
Name of subsidiary Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities
INTERIM REPORT 2019
X Financial Report
Wuhan Chenming Hanyang Paper Holdings
Co., Ltd. 387,400,422.25 1,094,721,392.19 1,482,121,814.44 1,001,920,257.31 201,594,737.56 1,203,514,994.87 304,800,513.20 1,128,834,779.70 1,433,635,292.90 1,116,394,677.03 43,004,618.52 1,159,399,295.55
Shouguang Chenming Art Paper Co., Ltd. 1,043,419,868.14 595,221,272.36 1,638,641,140.50 1,281,072,612.00 1,281,072,612.00 874,366,187.24 618,223,904.52 1,492,590,091.76 1,167,480,830.07 1,167,480,830.07
Haicheng Haiming Mining Co., Ltd. 279,819,237.98 2,098,715,774.26 2,378,535,012.24 1,912,377,238.49 56,948,716.51 1,969,325,955.00 175,097,261.05 1,711,242,454.23 1,886,339,715.28 1,522,288,114.91 1,522,288,114.91
Jiangxi Chenming Paper Co., Ltd. 4,104,817,765.53 3,995,671,168.77 8,100,488,934.30 3,857,924,731.21 1,254,923,887.82 5,112,848,619.03 3,477,455,680.85 4,098,279,287.44 7,575,734,968.29 3,767,706,818.38 795,535,836.72 4,563,242,655.10
SHANDONG CHENMING PAPER HOLDINGS LIMITED
X Financial Report
IX. Interest in other entities (Cont’d)
1. Interest in subsidiaries (Cont’d)
(3) Key financial information of major non-wholly owned subsidiaries (Cont’d)
Unit: RMB
Amount for the reporting period Amount for the prior period
Total Cash flows from Total Cash flows from
comprehensive operating comprehensive operating
Name of subsidiary Revenue Net profit income activities Revenue Net profit income activities
Wuhan Chenming Hanyang Paper Holdings 596,359,764.41 4,370,822.22 4,370,822.22 -151,581,823.28 1,364,181,429.19 35,042,380.33 35,042,380.33 316,577,834.65
Co., Ltd.
Shouguang Chenming Art Paper Co., Ltd. 373,470,955.30 32,459,266.81 32,459,266.81 4,414,114.47 909,260,241.77 118,652,095.44 118,652,095.44 -99,931,648.76
Haicheng Haiming Mining Co., Ltd. 208,675,941.50 45,157,456.87 45,157,456.87 32,185,353.30 421,599,693.66 126,380,989.01 126,380,989.01 75,115,059.89
Jiangxi Chenming Paper Co., Ltd. 1,450,118,569.52 30,148,002.08 30,148,002.08 331,918,952.83 1,611,920,231.56 69,140,492.85 69,140,492.85 659,823,787.57
3. Interest in joint arrangements or associates
(1) Major joint ventures and associates
Principle place Place of Shareholding Accounting
Name of joint ventures and associates of business incorporation Nature of business Direct Indirect method
Weifang Sime Darby West Port Co., Ltd. Weifang, China Weifang, China Port construction 50.00 Equity method
Ningbo Qichen Huamei Equity Investment Fund Partnership Investment
(Limited Partnership) Ningbo, China Ningbo, China management 40.00 Equity method
Weifang Xingxing United Chemical Co., Ltd Weifang, China Weifang, China Chemical engineering 50.00 Equity method
Zhuhai Dechen New Third Board Equity Investment Fund Investment
Company (Limited Partnership) Zhuhai, China Zhuhai, China management 50.00 Equity method
SHANDONG CHENMING PAPER HOLDINGS LIMITED 105
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IX. Interest in other entities (Cont’d)
3. Interest in joint arrangements or associates (Cont’d)
(2) Key financial information of major joint ventures
Unit: RMB
Closing balance/Amount for Opening balance/Amount
the reporting period for the prior period
Weifang Xingxing Weifang Xingxing
Weifang Sime Darby United Chemical Weifang Sime Darby United Chemical
Item West Port Co., Ltd. Co., Ltd West Port Co., Ltd. Co., Ltd
Current assets 30,816,393.13 114,409,623.25 55,386,175.28 97,755,183.56
Of which: Cash and cash equivalents 21,180,173.81 33,305,428.50 53,489,910.53 35,030,150.70
Non-current assets 550,319,128.35 32,702,466.79 528,403,804.86 38,098,361.81
Total assets 581,135,521.48 147,112,090.04 583,789,980.14 135,853,545.37
Current liabilities 14,456,779.54 35,381,769.82 1,236,372.30 32,584,182.76
Non-current liabilities 391,067,611.12 389,620,042.41
Total liabilities 405,524,390.66 35,381,769.82 390,856,414.71 32,584,182.76
Minority interests
Equity interest attributable to shareholders of the parent company 175,611,130.82 111,730,320.22 192,933,565.43 103,269,362.61
Share of net assets based on shareholding 87,805,565.41 55,865,160.11 96,466,782.72 51,634,681.31
Adjustments
– Goodwill
– Unrealised profit arising from intra-group transactions
– Others 6,693,074.99 57,618,555.81
Carrying amount of investment in joint ventures 95,190,010.73 113,352,838.10 103,159,857.71 109,253,237.12
Fair value of investments in joint ventures with public quoted prices
Revenue 7,744,022.16 78,509,386.24 166,613,896.54
Finance expenses 10,159,513.72 -261,143.08 -346,852.57 -8,403.59
Income tax expenses 2,733,067.31
Net profit -15,939,693.96 8,199,201.95 -3,214,369.59 26,370,424.95
Net profit from discontinued operations
Other comprehensive income
Total comprehensive income -15,939,693.96 8,199,201.95 -3,214,369.59 26,370,424.95
Dividend received from joint ventures during the period
106 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
IX. Interest in other entities (Cont’d)
3. Interest in joint arrangements or associates (Cont’d)
(3) Key financial information of major associates
Unit: RMB
Closing balance/Amount for Opening balance/Amount for
the reporting period the reporting period
Ningbo Qichen Zhuhai Dechen Ningbo Qichen Zhuhai Dechen
Huamei Equity New Third Board Huamei Equity New Third Board
Investment Fund Equity Investment Investment Fund Equity Investment
Partnership Fund Company Partnership Fund Company
Item (Limited Partnership) (Limited Partnership) (Limited Partnership) (Limited Partnership)
Current assets 59,343,061.91 5,709,651.76 79,292,150.81 5,492,635.42
Non-current assets 140,950,006.00 99,020,000.00 119,000,000.00 99,020,000.00
Total assets 200,293,067.91 104,729,651.76 198,292,150.81 104,512,635.42
Current liabilities 14,232.41 5,000.00 13,135.40 5,000.00
Non-current liabilities
Total liabilities 14,232.41 5,000.00 13,135.40 5,000.00
Minority interests
Equity interest attributable to shareholders of
the parent company 200,278,835.50 104,724,651.76 198,279,015.41 104,507,635.42
Share of net assets based on shareholding 80,111,534.20 52,362,325.89 79,311,606.16 52,253,817.72
Carrying amount of investment in associates 200,384,677.01 52,362,315.04 199,585,216.93 52,253,817.72
Revenue
Net profit 1,998,750.11 217,016.34 1,510,109.81 670,768.61
Net profit from discontinued operations
Other comprehensive income
Total comprehensive income 1,998,750.11 217,016.34 1,510,109.81 670,768.61
(4) Summary financial information of non-major joint ventures and associates
Unit: RMB
Closing balance/ Opening balance/
Amount for Amount for the
Item the year prior year
Joint ventures:
Total carrying amount of investment 4,048,295.87 3,572,834.79
Total amount of the following items based on shareholding 975,461.08 485,538.07
– Net profit 975,461.08 485,538.07
Associates:
Total carrying amount of investment 9,368,973.06 18,761,580.99
Total amount of the following items based on shareholding -18,325,737.46 -11,838,692.59
– Net profit -18,325,737.46 -11,838,692.59
SHANDONG CHENMING PAPER HOLDINGS LIMITED 107
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X Financial Report
IX. Interest in other entities (Cont’d)
3. Interest in joint arrangements or associates (Cont’d)
(5) Excess loss of joint ventures or associates
Unit: RMB
Accumulated
unrecognised loss Unrecognised loss Unrecognised loss
incurred for (or share of net (or share of net
Name of joint ventures or associates prior periods profit) for the period profit) for the period
Arjo Wiggins Chenming Specialty Paper Co.,
Ltd. 7,308,869.16 7,308,869.16
Xuchang Chenming Paper Co., Ltd. 4,091,767.83 4,091,767.83
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 – – – –
1. Other non-current financial assets – – 765,160,000.00 765,160,000.00
2. Biological assets
Consumable biological assets 1,532,910,693.20 1,532,910,693.20
Total assets continuously measured at fair value 2,298,070,693.20 2,298,070,693.20
Note: as the Company’s shareholding in the investee is low without significant influence, it is not practicable to adopt the income approach or
the market approach for the valuation of the shareholding in the investee. Moreover, there was no recent introduction of external investor
or equity transfer among the shareholders to serve as a reference for the determination of fair value, which may be classified as “limited
circumstances” for the best estimate of fair value at cost. Thus, the fair value of other non-current financial assets was measured at cost at
the end of the year.
2. Level 3 continuous measurement, adjustment between opening and closing value and sensitivity of
unobservable inputs
The Company adopts sensitivity analysis techniques to analyse the possible effects of rational and probable changes
in risk variables to profit or loss for the period or to the interests of shareholders. Since risk variables seldom change on
a stand-alone basis, while the correlation between variables may have significant influence to the ultimate amount of
change effected by the change in a single risk variable, the analysis below is based on the assumption that the changes
in each variable occurred separately.
Change in For the year For the prior year
investment yield or Impact on Impact on
Item discount rate Impact on profit shareholders’ equity Impact on profit shareholders’ equity
Consumable biological assets Increases by 1% -33,202,809.15 -33,202,809.15 -39,808,078.34 -39,808,078.34
Consumable biological assets Decreases by 1% 36,397,424.88 36,397,424.88 43,368,412.26 43,368,412.26
Note: In the prior period, the income method was used to evaluate the impact of the change in the discount rate on the fair value. In the current
period, the harvest present value method is used to assess the impact of the change in investment yield on fair value.
108 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
X. Fair value (Cont’d)
3. Fair value of financial assets and financial liabilities not measured at fair value
The Company’s 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.
XI. Related parties and related party transactions
1. Parent company of the Company
Shareholding Voting right of
of the parent the parent
Name of parent Place of Business Registered company in the company in the
company incorporation nature capital Company Company
Chenming Holdings Shouguang Investment in 123,878.77 27.87% 27.87%
Co., Ltd. manufacture of paper,
electricity, steam,
arboriculture
Note: The ultimate controller of the Company is Shouguang State-owned Assets Supervision and Administration Office.
2. Subsidiaries of the Company
Please refer to Note IX. 1. Interest in subsidiaries for details.
3. Joint ventures and associates of the Company
Please refer to Note IX. 3. 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
Shouguang Chenming Huisen New-style A joint venture of the Company
Construction Materials Co., Ltd.
Xuchang Chenming Paper Co., Ltd. An associate of the Company
Weifang Sime Darby West Port Co., Ltd. A joint venture of the Company
Jiangxi Jiangbao Media Colour Printing Co., Ltd. An associate of the Company
Zhuhai Dechen New Third Board Equity Investment An associate of the Company
Zhuhai Dechen New Third Board Equity Investment
Ningbo Kaichen Huamei Equity Investment An associate of the Company
Fund Partnership (Limited Partnership)
Chenming (Qingdao) Asset Management Co., Ltd. An associate of the Company
Jiangxi Chenming Port Co., Ltd. An associate of the Company
Weifang Xingxing United Chemical Co., Ltd. A joint venture of the Company
SHANDONG CHENMING PAPER HOLDINGS LIMITED 109
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X Financial Report
XI. Related parties and related party transactions (Cont’d)
4. Other related parties
Name of other related parties Relation
Shandong Shouguang Jinxin Investment Development Shareholder of the Company’s largest shareholder
Holdings Group Co., Ltd.
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
Shouguang Hengtai Enterprise Investment Co., Ltd. A company invested by the Directors and senior
management of the Company
Shouguang Huixin Construction Materials Co., Ltd. A company invested by the Directors and senior
management of the Company
Shouguang Chenming Guangyuan Real Property Co., Ltd. A company invested by the Directors and senior
and its subsidiaries management of the Company
Qingdao Chenming Nonghai Investment Co., Ltd. A company invested by the Directors and senior
and its subsidiaries management of the Company
Nanchang Chenjian New-style Wall Materials Co., Ltd. A company invested by the Directors and senior
management of the Company
Shouguang Hengde Enterprises Investment Co., Ltd. A company invested by the Directors and senior
management of the Company
Zhejiang Huaming Investment Management Co., Ltd. Directors and senior management served
and its subsidiaries by the Company’s Directors
Hebei Chenming Zhongjin Real Estate Directors and senior management served
Development Co., Ltd. and its subsidiaries by the Company’s Directors
Wuhan Chenming Zhongjin Real Estate Co., Ltd. Directors and senior management served
and its subsidiaries by the Company’s Directors
Wuhan Rongsheng Zhongjin Development Directors and senior management served
and Investment Co., Ltd. and its subsidiaries by the Company’s Directors
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
Shanghai Hengzheng Venture Investment Center Share participating company of the Company
(Limited Partnership)
Lide Technology Co., Ltd. Share participating company of the Company
Jiangxi Chenming Natural Gas Co., Ltd. Directors and senior management served
and its subsidiaries by the Company’s Directors in the past twelve months
110 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
XI. Related parties and related party transactions (Cont’d)
5. Related party transactions
(1) Purchase and sales of goods and rendering and receiving services
Table on purchase of goods/receiving of services
Unit: RMB
Transaction Whether the
Amount for the facility transaction facility Amount for
Related party Details of related party transaction reporting period approved is exceeded the prior period
Jiangxi Chenming Natural Procurement of natural gas
Gas Co., Ltd. and heavy oil, etc. 112,367,700.00 600,000,000.00 No 170,147,411.87
Weifang Xingxing United Procurement of hydrogen peroxide etc.
Chemical Co., Ltd. 45,877,683.03
Table on sales of goods/providing of services
Unit: RMB
Details of related Amount for the Amount for
Related party party transaction reporting period the prior period
Shouguang Chenming Huisen New-style Construction Materials Co., Ltd. Sales of electricity and gas 3,980,581.15 2,669,745.03
Shouguang Huixin Construction Materials Co., Ltd. Machinery materials 34,785.90 49,464.70
SHANDONG CHENMING PAPER HOLDINGS LIMITED 111
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X Financial Report
XI. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont’d)
(2) Guarantee
The Company as guarantor
Unit: RMB
Whether performance
Starting date Expiry date of guarantee
Party being guaranteed Amount under guarantee of guarantee of guarantee is completed
Weifang Sime Darby West Port Co., Ltd. 135,000,000.00 2017/12/20 2027/12/20 No
Shandong Chenming Paper Sales Co., Ltd. 130,000,000.00 2018/7/4 2019/7/5 No
Shandong Chenming Paper Sales Co., Ltd. 420,000,000.00 2018/7/23 2019/7/24 No
Shandong Chenming Paper Sales Co., Ltd. 300,000,000.00 2018/10/26 2019/10/26 No
Shandong Chenming Paper Sales Co., Ltd. 450,000,000.00 2018/11/14 2019/11/14 No
Shandong Chenming Paper Sales Co., Ltd. 100,000,000.00 2019/1/24 2020/1/16 No
Shandong Chenming Paper Sales Co., Ltd. 254,291,455.72 2019/3/13 2019/9/10 No
Shandong Chenming Paper Sales Co., Ltd. 50,000,000.00 2019/3/19 2020/3/13 No
Shandong Chenming Paper Sales Co., Ltd. 200,000,000.00 2019/4/2 2019/9/30 No
Shandong Chenming Paper Sales Co., Ltd. 100,000,000.00 2019/5/17 2019/11/17 No
Shandong Chenming Paper Sales Co., Ltd. 420,118,552.64 2019/5/21 2019/11/18 No
Shandong Chenming Paper Sales Co., Ltd. 100,000,000.00 2019/5/23 2019/11/23 No
Shandong Chenming Paper Sales Co., Ltd. 150,000,000.00 2019/5/29 2020/5/28 No
Shouguang Meilun Paper Co., Ltd. 23,812,304.93 2019/1/3 2019/7/2 No
Shouguang Meilun Paper Co., Ltd. 96,352,478.17 2019/4/17 2019/10/15 No
Shouguang Meilun Paper Co., Ltd. 106,211,387.85 2019/6/13 2019/12/10 No
Shouguang Meilun Paper Co., Ltd. 27,867,187.19 2019/6/25 2019/12/23 No
Shouguang Meilun Paper Co., Ltd. 170,000,000.00 2018/12/11 2019/12/6 No
Shouguang Meilun Paper Co., Ltd. 249,348,278.62 2019/2/19 2019/8/19 No
Chenming (HK) Limited 57,060,010.00 2018/8/8 2019/7/15 No
Chenming (HK) Limited 96,933,270.00 2018/8/10 2019/7/15 No
Chenming (HK) Limited 226,383,871.00 2018/11/19 2019/11/8 No
Chenming (HK) Limited 65,309,650.00 2018/12/7 2019/12/6 No
Chenming (HK) Limited 200,000,000.00 2018/12/5 2019/12/5 No
Chenming (HK) Limited 97,139,511.00 2019/3/26 2020/3/16 No
Chenming (HK) Limited 278,837,832.00 2019/6/19 2020/6/10 No
Chenming (HK) Limited 30,788,100.00 2019/1/12 2020/1/10 No
Chenming (HK) Limited 150,968,412.00 2018/4/23 2021/4/7 No
Chenming (HK) Limited 86,621,220.00 2018/5/4 2021/4/6 No
Chenming (HK) Limited 54,447,624.00 2018/5/17 2021/5/5 No
Chenming (HK) Limited 254,939,000.28 2018/8/8 2021/5/25 No
Chenming (HK) Limited 254,939,000.28 2018/8/8 2021/5/25 No
Chenming (HK) Limited 290,627,942.50 2018/9/4 2021/6/21 No
Chenming (HK) Limited 290,627,942.50 2018/9/6 2021/6/21 No
Chenming (HK) Limited 193,179,070.00 2018/11/30 2020/10/30 No
112 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
XI. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont’d)
(2) Guarantee (Cont’d)
Whether performance
Starting date Expiry date of guarantee
Party being guaranteed Amount under guarantee of guarantee of guarantee is completed
Chenming (HK) Limited 163,274,125.00 2019/1/25 2021/5/21 No
Chenming (HK) Limited 103,120,500.00 2019/3/28 2022/1/7 No
Chenming (HK) Limited 103,120,500.00 2019/3/28 2021/6/16 No
Chenming (HK) Limited 202,356,794.50 2019/4/2 2022/1/6 No
Chenming (HK) Limited 202,356,794.50 2019/4/2 2021/6/10 No
Chenming (HK) Limited 138,181,470.00 2019/4/30 2022/4/22 No
Chenming (HK) Limited 288,737,400.00 2016/11/2 2019/9/10 No
Chenming (HK) Limited 281,862,700.00 2017/11/7 2019/9/30 No
Chenming (HK) Limited 96,245,800.00 2018/5/11 2020/4/11 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 99,730,254.39 2018/7/27 2019/7/21 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 50,000,000.00 2018/8/31 2019/8/16 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2018/9/13 2019/9/12 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 110,000,000.00 2018/10/17 2019/10/17 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 200,000,000.00 2018/10/12 2019/10/11 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2018/10/17 2019/9/27 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 99,903,967.00 2018/10/17 2019/10/17 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 76,000,000.00 2018/10/19 2019/10/19 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 115,000,000.00 2018/11/6 2019/11/4 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 90,000,000.00 2018/11/12 2019/11/12 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 166,670,000.00 2018/11/9 2019/11/8 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 97,116,354.19 2018/12/3 2019/11/25 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2018/12/20 2019/12/19 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2018/12/26 2019/12/25 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 154,898,103.49 2019/1/10 2019/6/29 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 60,000,000.00 2019/1/28 2019/7/28 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 450,000,000.00 2019/1/30 2020/1/29 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 30,600,977.22 2019/2/2 2020/1/31 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2019/1/8 2019/12/31 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 87,552,473.94 2019/1/18 2019/7/16 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2019/1/14 2020/1/13 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 125,000,000.00 2019/1/22 2020/1/21 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2019/2/15 2020/2/14 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 70,000,000.00 2019/3/22 2020/3/22 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 42,400,000.00 2019/4/12 2019/10/9 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 99,600,000.00 2019/4/23 2019/10/23 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 82,000,000.00 2019/4/28 2019/10/28 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 89,000,000.00 2019/6/3 2020/6/2 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 120,000,000.00 2019/6/27 2020/6/26 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 343,735,000.00 2019/2/14 2020/2/2 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 92,324,988.00 2019/1/22 2019/12/20 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 95,180,400.00 2019/2/15 2019/8/14 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 34,877,540.01 2019/5/30 2019/11/20 No
SHANDONG CHENMING PAPER HOLDINGS LIMITED 113
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X Financial Report
XI. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont’d)
(2) Guarantee (Cont’d)
Whether performance
Starting date Expiry date of guarantee
Party being guaranteed Amount under guarantee of guarantee of guarantee is completed
Zhanjiang Chenming Pulp & Paper Co., Ltd. 19,439,919.66 2019/6/10 2019/8/2 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 22,500,000.00 2015/6/3 2020/5/21 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 25,436,390.00 2015/6/5 2020/5/21 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 137,494,000.00 2017/12/21 2019/12/20 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 49,000,000.00 2018/2/13 2020/2/11 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 10,000,000.00 2018/2/23 2020/2/11 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 10,000,000.00 2018/2/26 2020/2/11 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 30,000,000.00 2018/2/28 2020/2/11 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 330,000,000.00 2018/10/31 2020/10/30 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 70,000,000.00 2018/10/31 2020/10/30 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2018/12/18 2020/10/31 No
Jiangxi Chenming Paper Co., Ltd. 99,000,000.00 2018/7/10 2019/7/8 No
Jiangxi Chenming Paper Co., Ltd. 51,000,000.00 2018/8/16 2019/8/14 No
Jiangxi Chenming Paper Co., Ltd. 28,000,000.00 2018/8/24 2019/8/24 No
Jiangxi Chenming Paper Co., Ltd. 64,285,135.36 2019/1/7 2020/1/7 No
Jiangxi Chenming Paper Co., Ltd. 100,000,000.00 2019/1/18 2020/1/15 No
Jiangxi Chenming Paper Co., Ltd. 46,800,000.00 2019/2/28 2020/2/28 No
Jiangxi Chenming Paper Co., Ltd. 100,000,000.00 2019/3/15 2020/3/14 No
Jiangxi Chenming Paper Co., Ltd. 150,000,000.00 2019/3/21 2020/3/21 No
Jiangxi Chenming Paper Co., Ltd. 90,000,000.00 2019/3/29 2020/3/29 No
Jiangxi Chenming Paper Co., Ltd. 70,000,000.00 2019/3/29 2020/3/29 No
Shandong Chenming Financial Leasing Co., Ltd. 72,000,000.00 2018/11/7 2019/11/7 No
Shandong Chenming Financial Leasing Co., Ltd. 60,000,000.00 2018/10/17 2019/10/17 No
Guangzhou Chenming Financial Leasing Co., Ltd. 180,000,000.00 2018/9/13 2018/9/9 No
Jilin Chenming Paper Co., Ltd. 40,000,000.00 2019/3/15 2020/1/17 No
Jilin Chenming Paper Co., Ltd. 20,010,000.00 2019/2/26 2019/8/26 No
Jilin Chenming Paper Co., Ltd. 23,398,200.00 2019/5/7 2020/5/8 No
Jilin Chenming Paper Co., Ltd. 48,600,000.00 2019/5/7 2020/5/8 No
Huanggang Chenming Pulp & Paper Co., Ltd. 32,770,000.00 2015/12/14 2019/9/26 No
Huanggang Chenming Pulp & Paper Co., Ltd. 27,070,000.00 2015/12/14 2019/12/26 No
Huanggang Chenming Pulp & Paper Co., Ltd. 5,700,000.00 2016/6/24 2019/12/26 No
114 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
XI. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont’d)
(2) Guarantee (Cont’d)
Whether performance
Starting date Expiry date of guarantee
Party being guaranteed Amount under guarantee of guarantee of guarantee is completed
Huanggang Chenming Pulp & Paper Co., Ltd. 32,770,000.00 2016/6/24 2020/3/26 No
Huanggang Chenming Pulp & Paper Co., Ltd. 530,000.00 2016/6/24 2020/6/26 No
Huanggang Chenming Pulp & Paper Co., Ltd. 32,240,000.00 2017/1/5 2020/6/26 No
Huanggang Chenming Pulp & Paper Co., Ltd. 38,240,000.00 2017/1/5 2020/9/26 No
Huanggang Chenming Pulp & Paper Co., Ltd. 38,240,000.00 2017/1/5 2020/12/26 No
Huanggang Chenming Pulp & Paper Co., Ltd. 43,690,000.00 2017/1/5 2021/3/26 No
Huanggang Chenming Pulp & Paper Co., Ltd. 43,690,000.00 2017/1/5 2021/6/26 No
Huanggang Chenming Pulp & Paper Co., Ltd. 3,900,000.00 2017/1/5 2021/9/26 No
Huanggang Chenming Pulp & Paper Co., Ltd. 36,260,000.00 2017/2/3 2021/9/26 No
Huanggang Chenming Pulp & Paper Co., Ltd. 40,160,000.00 2017/2/3 2021/12/26 No
Huanggang Chenming Pulp & Paper Co., Ltd. 40,160,000.00 2017/2/3 2022/3/26 No
Huanggang Chenming Pulp & Paper Co., Ltd. 33,420,000.00 2017/2/3 2022/6/26 No
Huanggang Chenming Pulp & Paper Co., Ltd. 44,531,362.58 2018/9/19 2020/6/26 No
Huanggang Chenming Pulp & Paper Co., Ltd. 43,642,107.09 2018/11/14 2020/11/14 No
Huanggang Chenming Pulp & Paper Co., Ltd. 66,702,050.00 2016/12/5 2019/9/26 No
Huanggang Chenming Pulp & Paper Co., Ltd. 41,747,636.00 2016/12/5 2019/12/26 No
Huanggang Chenming Pulp & Paper Co., Ltd. 24,954,414.00 2017/4/12 2019/12/26 No
Huanggang Chenming Pulp & Paper Co., Ltd. 66,702,050.00 2017/4/12 2020/3/26 No
Huanggang Chenming Pulp & Paper Co., Ltd. 9,693,533.74 2017/4/12 2020/6/26 No
Total 14,266,427,041.35
SHANDONG CHENMING PAPER HOLDINGS LIMITED 115
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XI. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont’d)
(3) Related party lending and borrowing (Cont’d)
Unit: RMB
Related party Borrowing amount Starting date Expiry date Description
Borrowing
Chenming Holdings Co., Ltd. 162,000,000.00 2018/8/28 2019/7/17
Lending
Weifang Sime Darby West Port Co., Ltd. 59,500,000.00 2018/7/9 2022/7/8
6. Related party accounts receivable and accounts payable
(1) Accounts receivables
Unit: RMB
Closing balance Opening balance
Item Book balance Bad debt Book balance Bad debt
Accounts receivable:
Shouguang Huixin Construction Materials Co., Ltd. 18,892,073.10 944,603.66 12,960,322.42 648,016.12
Shouguang Chenming Huisen New-style
Construction Materials Co., Ltd. 979,382.80 48,969.14 774,832.20 38,741.61
Total 19,666,905.30 1,719,435.86 13,735,154.62 1,422,848.32
Prepayments:
Jiangxi Chenming Natural Gas Co., Ltd. 25,391,023.96 33,567,041.92
Shouguang Chenming Natural Gas Co., Ltd. 33,144,533.81 25,586,691.33
Total 58,535,557.77 59,153,733.25
Other receivables:
Arjo Wiggins Chenming Specialty Paper Co., Ltd. 1,191,705.08 1,191,705.08 1,191,705.08 1,191,705.08
Weifang Sime Darby West Port Co., Ltd. 62,631,878.08 313,159.38 60,836,961.43 304,184.80
Total 63,823,583.16 1,504,864.46 62,028,666.51 1,495,889.88
116 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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XI. Related parties and related party transactions (Cont’d)
6. Related party accounts receivable and accounts payable (Cont’d)
(2) Accounts payable
Unit: RMB
Closing book Opening book
Item Related party balance balance
Accounts payable: Weifang Xingxing United
Chemical Co., Ltd. 15,861,358.40 18,544,025.96
Total 15,861,358.40 18,544,025.96
Other payables Chenming Holdings Co., Ltd. 45,200,000.00 376,000,000.00
Other payables Shouguang Hengtai Enterprise
Investment Company Limited 45,977,444.73 44,392,007.69
Total 111,177,444.73 420,392,007.69
XII. Undertaking and contingency
1. Undertaking
(1) Capital commitment
Item Closing balance Opening balance
Commitments in relation to acquisition and
construction of long-term assets 1,930,608,190.17 1,463,816,242.90
Total 1,930,608,190.17 1,463,816,242.90
(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 4,579,873.34 5,315,217.18
The second year after balance sheet date 4,543,786.76 4,929,546.64
The third year after balance sheet date 4,406,104.83 4,406,104.83
In the years thereafter 86,588,438.29 86,672,608.29
Total 100,118,203.22 101,323,476.94
SHANDONG CHENMING PAPER HOLDINGS LIMITED 117
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XII. Undertaking and contingency (Cont’d)
2. Contingency
Contingent liabilities arising from pending litigation and its financial impacts
In October 2005, the Company and Hong Kong ArjowigginsHKK2Limited (“HKK2”) jointly established Arjo Wiggins
Chenming Specialty Paper Co., Ltd. in Shouguang, Shandong Province, which is engaged in the production of special
paper, decoration paper and draft paper. However, such company experienced poor management due to financial
crisis. Hence, such company was forced to dissolve in October 2008.
In October 2012, HKK2 submitted for arbitration application to Hong Kong International Arbitration Centre, Hong Kong
Special Administration of PRC, on the ground of default of the joint venture agreement by the Company. In November
2015, Hong Kong International Arbitration Centre announced arbitration result, stating that the Company should
compensate HKK2 with economic loss of RMB167 million, arbitration fee of HK$3.30 million and legal fee of USD3.54
million, together with interest thereon calculated at 8% per annum. In October 2016, the Company received a statutory
demand, stating that if the Company fails to perform the arbitration results within 21 days, the liquidation application
on H shares of the Company will be submitted. Subsequently, HKK2 submitted H shares liquidation application to the
arbitration centre.
In November 2016, the Company submitted application to the Court of First Instance of the High Court of the HKSAR
and received an injunction, stating that “the applicant is prohibited from applying for liquidation on the Company”.
In February 2017, HKK2 submitted an appeal to the court. In June 2017, the court dismissed the injunction received by
the Company. In the same month, the Company received the liquidation application submitted by the defendant to the
High Court of Hong Kong, which alleged that the Company should compensate the defendant with economic loss of
RMB167 million, legal fee of USD3.54 million and arbitration fee of HK$3.30 million, together with interest thereon due to
failure in compliance of the arbitration results.
In September 2017, the Company procured a deposit of HK$389 million to the High Court of Hong Kong, and appealed
against the injunction to the court. In May 2018, the court session of the case commenced. At present, the injunction
case is still in progress.
In 2017, the Company made provision of RMB325,259,082.28 for the expected liability arising from this litigation.
However, as at 30 June 2019, judgment of the court of Hong Kong is yet to be made, and the expected loss is uncertain.
Hence, such expected liability is still stated under the balance sheet.
XIII. Post-balance sheet event
The 2018 profit distribution plan was approved at the 2018 annual general meeting, based on the total ordinary share capital
of 2,904,608,200 shares, a cash dividend of RMB2.4 (tax inclusive) per 10 shares was distributed to ordinary shareholders and
the 1,162,790,698 simulated ordinary shares converted from the preference shares using a conversion ratio of 1 share valued
at RMB3.87 as at the end of 2018; a cash dividend of RMB2.4 (tax inclusive) per 10 simulated ordinary shares converted from
the preference shares was distributed to holders of preference shares. No bonus shares were issued and no capitalisation
issue was made out of the reserves. A cash dividend of RMB697,105,968 was distributed to ordinary shareholders and a
variable cash dividend of RMB279,069,767.52 was distributed to holders of preference shares. On 9 August, the above
distribution plan was implemented.
On 7 August 2019, Meilun (BVI) Limited, an overseas wholly-owned subsidiary of the Company, issued a total of USD163
million USD bond on Hong Kong Stock Exchange with an interest rate of 9% and a term of less than 3 years.
118 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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XIV. Other material matters
1. Segment information
Unit: RMB0,000
Machine-made Financial Magnesium Inter-segment
Item paper services ore Others elimination Total
Income from principal activities 1,160,238.19 125,508.31 19,577.31 44,544.25 37,129.15 1,312,738.91
Cost for principal activities 913,857.99 48,814.34 9,642.65 34,516.92 42,426.99 964,404.91
Total assets 10,023,910.58 3,860,864.11 238,537.54 962,885.92 4,430,323.05 10,655,875.10
Total liabilities 7,773,740.88 2,171,651.27 200,544.39 475,448.24 2,496,462.66 8,124,922.12
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
Book balance Bad debt provision Carrying Book balance Bad debt provision
Category Amount Percentage Amount Percentage amount Amount Percentage Amount Percentage Carrying amount
Accounts receivable
assessed individually
for impairment
Accounts receivable 108,478,376.23 100.00% 2,259,459.50 2.08% 106,218,916.73 1,349,962,797.42 100% 685,832.38 0.05% 1,349,276,965.04
assessed collectively
for impairment
Of which:
Accounts receivable from 78,081,188.56 71.98% 78,081,188.56 1,342,192,951.98 99.42% 1,342,192,951.98
related parties
Accounts receivable from 30,397,187.67 28.02% 2,259,459.50 7.43% 28,137,728.17 7,769,845.44 0.58% 685,832.38 8.83% 7,084,013.06
distributor clients
Total 108,478,376.23 100.00% 2,259,459.50 2.08% 106,218,916.73 1,349,962,797.42 100% 685,832.38 0.05% 1,349,276,965.04
SHANDONG CHENMING PAPER HOLDINGS LIMITED 119
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XV. Notes to major financial statement items of the parent company (Cont’d)
1. Accounts receivable (Cont’d)
(1) Accounts receivable by category (Cont’d)
Items assessed individually for impairment:
Accounts receivable with collective provision for bad debts based on receivables from distributor clients:
Unit: RMB
Closing balance
Bad debts Provision
Ageing Book balance provision Percentage
Within 1 year 25,894,366.50 1,294,718.33 5.00%
1-2 years – –
2-3 years 4,422,600.00 884,520.00 20.00%
Over 3 years 80,221.17 80,221.17 100.00%
Total 30,397,187.67 2,259,459.50 7.43%
Disclosed by ageing:
Unit: RMB
Ageing Closing balance
Within 1 year 101,045,250.65
1-2 years –
2-3 years 5,173,666.08
Over 3 years –
Total 106,218,916.73
(2) Provision, recovery or reversal of bad debt provision for the period
Provision of bad debt provision for the period:
Unit: RMB
Changes in the period
Opening Recovery Closing
Category balance Provision or reversal Written off balance
Accounts receivable with provision
for bad debt 685,832.38 1,573,627.12 2,259,459.50
Total 685,832.38 1,573,627.12 2,259,459.50
120 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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XV. Notes to major financial statement items of the parent company (Cont’d)
1. Accounts receivable (Cont’d)
(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 RMB71,592,434.10, which accounted for 66.00% of the closing balance of the total accounts receivable. The
closing balance of corresponding bad debt provision amounted to RMB1,152,813.34.
2. Other receivables
Unit: RMB
Item Closing balance Opening balance
Interest receivables 69,171,162.65 77,257,506.25
Dividend receivables 1,023,353,000.00 –
Other receivables 16,638,073,989.28 19,328,057,454.99
Total 17,730,598,151.93 19,405,314,961.24
(1) Interest receivable
1) Classification of interest receivable
Unit: RMB
Item Closing balance Opening balance
Guarantee deposit 69,171,162.65 77,257,506.25
Total 69,171,162.65 77,257,506.25
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XV. Notes to major financial statement items of the parent company (Cont’d)
2. Other receivables (Cont’d)
(2) Dividend receivables
1) Classification of dividend receivable
Unit: RMB
Item Closing balance Opening balance
Dividend from subsidiaries 1,023,353,000.00 0.00
Total 1,023,353,000.00 0.00
(3) Other receivables
1) Other receivables by nature
Unit: RMB
Item Closing balance Opening balance
Open credit 16,661,132,245.22 19,342,458,869.77
Reserve and borrowings 8,808,936.90 7,681,197.42
Guarantee deposit 3,089,997.00 9,958,377.28
Insurance premium 584,881.11 466,935.72
Others 35,412,417.30 39,175,451.96
Total 16,709,028,477.53 19,399,740,832.15
122 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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XV. Notes to major financial statement items of the parent company (Cont’d)
2. Other receivables (Cont’d)
(3) Other receivables (Cont’d)
2) Particulars of bad debt provision
Unit: RMB
Phase 1 Phase 2 Phase 3
Expected credit Expected credit Expected credit
loss in the next loss over the entire life loss over the entire
Bad debt provision 12 months (not credit-impaired) life (credit-impaired) Total
Balance as at 1 January
2019 during the period – – – –
– Transferred into Phase 2 19,368,599,145.10 19,368,599,145.10
– Transferred into Phase 3 31,141,687.05 31,141,687.05
– Reversal to Phase 2
– Reversal to Phase 1
Provision for the year 27,621,897.02 27,621,897.02
Reversal for the year 28,350,785.93 28,350,785.93
Transfer for the year
Writing-off for the year
Other changes
Balance as at 30 June 2019 68,163,587.13 2,790,901.12 70,954,488.25
Changes in carrying book balances with significant changes in loss provision for the year
Applicable √ Not Applicable
By ageing
Unit: RMB
Ageing Closing balance
Items within 1 year 16,610,734,001.40
1-2 years 19,685,064.18
2-3 years 7,654,923.70
Total 16,638,073,989.28
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XV. Notes to major financial statement items of the parent company (Cont’d)
2. Other receivables (Cont’d)
(3) Other receivables (Cont’d)
3) Provision, recovery or reversal of bad debt provision for the year
Bad debt provision for the year:
Unit: RMB
Changes for the period
Recovery
Category Opening balance Provision or reversal Closing balance
Bad debt provision for other receivables 71,683,377.16 27,621,897.02 28,350,785.93 70,954,488.25
Total 71,683,377.16 27,621,897.02 28,350,785.93 70,954,488.25
4) Top five other receivables according to closing balance of debtors
Unit: RMB
Percentage to Closing balance
closing balance of of bad debt
Name of entity Nature Closing balance Maturity other receivables provision
Shandong Chenming Financial Leasing Co.,
Ltd. Open credit 5,614,741,821.77 Within 1 year 33.60 280,737,091.09
Shanghai Chenming Financial Leasing Co., Ltd. Open credit 3,284,100,000.00 Within 1 year 19.66 164,205,000.00
Haicheng Haiming Mining Co., Ltd. Open credit 1,549,545,947.16 Within 1 year 9.28 77,477,297.36
Huanggang Chenming Pulp & Paper Co., Ltd. Open credit 1,529,415,162.57 Within 1 year 9.15 76,470,758.13
Shanghai Chenming Industrial Co., Ltd. Open credit 1,440,416,829.83 Within 1 year 8.62 72,020,841.49
Total – 13,418,219,761.33 – 80.31 670,910,988.07
124 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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XV. Notes to major financial statement items of the parent company (Cont’d)
2. Other receivables (Cont’d)
(3) Other receivables (Cont’d)
5) Receivables in respect of government grant
Unit: RMB
Estimated time of
receiving the grant
and the amount
Name of entity Name of government grant Closing balance Closing age and basis thereof
Shandong Chenming Paper Holdings Limited Other corporate reformation
and development grant 73,730,000.00 Within 1 month Received on 5 July
3. Long-term equity investments
Unit: RMB
Closing balance Opening balance
Item Book balance Impairment provision Carrying amount Book balance Impairment provision Carrying amount
Investment in subsidiaries 23,261,652,649.90 23,261,652,649.90 22,114,152,649.90 22,114,152,649.90
Investment in associates and joint ventures 359,964,936.91 359,964,936.91 373,264,793.34 373,264,793.34
Total 23,621,617,586.81 23,621,617,586.81 22,487,417,443.24 22,487,417,443.24
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XV. Notes to major financial statement items of the parent company (Cont’d)
3. Long-term equity investments (Cont’d)
(1) Investment in subsidiaries
Unit: RMB
Impairment Closing balance
Decrease for provision for provision of
Investee Opening balance Increase for the year the year Closing balance the year impairment
Chenming Paper Korea Co., Ltd. 6,143,400.00 6,143,400.00
Chenming GmbH 4,083,235.00 4,083,235.00
Shandong Chenming Paper Group
(Fuyu) Sales Co., Ltd. 1,000,000.00 1,000,000.00
Haicheng Haiming Mining Co., Ltd. 144,000,000.00 144,000,000.00
Hailaer Chenming Paper Co., Ltd. 12,000,000.00 12,000,000.00
Huanggang Chenming Pulp & Paper
Co., Ltd. 1,250,000,000.00 1,000,000,000.00 2,250,000,000.00
Huanggang Chenming Arboriculture
Development Co., Ltd. 70,000,000.00 70,000,000.00
Jilin Chenming Paper Co., Ltd. 1,501,350,000.00 1,501,350,000.00
Jinan Chenming Investment
Management Co., Ltd. 100,000,000.00 100,000,000.00
Jiangxi Chenming Paper Co., Ltd. 822,867,646.40 822,867,646.40
Shandong Chenming Power Supply
Holdings Co., Ltd. 157,810,117.43 157,810,117.43
Wuhan Chenming Hanyang Paper
Holdings Co., Ltd. 264,493,210.21 264,493,210.21
Shandong Grand View Hotel Co., Ltd. 80,500,000.00 80,500,000.00
Zhanjiang Chenming Pulp & Paper
Co., Ltd. 5,027,500,000.00 27,500,000.00 5,055,000,000.00
Shouguang Chenming Modern Logistic
Co., Ltd. 10,000,000.00 10,000,000.00
Shouguang Chenming Art Paper
Co., Ltd. 113,616,063.80 113,616,063.80
Shouguang Meilun Paper Co., Ltd. 4,449,441,979.31 4,449,441,979.31
Shouguang Shun Da Customs
Declaration Co, Ltd. 1,500,000.00 1,500,000.00
Shandong Chenming Paper Sales
Co., Ltd. 662,641,208.20 662,641,208.20
Shouguang Chenming Import
and Export Trade Co., Ltd. 250,000,000.00 250,000,000.00
Shouguang Chenming Papermaking
Machine Co., Ltd. 2,000,000.00 2,000,000.00
Shouguang Chenming Industrial
Logistics Co., Ltd. 10,000,000.00 10,000,000.00
Shouguang Chenming Hongxin
Packaging Co., Ltd. 3,730,000.00 3,730,000.00
Shandong Chenming Group Finance
Co., Ltd. 4,000,000,000.00 4,000,000,000.00
Chenming Arboriculture Co., Ltd. 45,000,000.00 45,000,000.00
Shanghai Chenming Industry Co., Ltd. 3,000,000,000.00 3,000,000,000.00
Chenming (HK) Limited 118,067,989.55 118,067,989.55
Chenming Paper USA Co., Ltd. 6,407,800.00 6,407,800.00
Shandong Chenming Coated Paper
Sales Co. Ltd. 20,000,000.00 20,000,000.00
Shanghai Pulp & Paper Sales Co., Ltd. 100,000,000.00 100,000,000.00
Total 22,114,152,649.90 1,147,500,000.00 23,261,652,649.90
126 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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XV. Notes to major financial statement items of the parent company (Cont’d)
3. Long-term equity investments (Cont’d)
(2) Investment in associates and joint ventures
Unit: RMB
Change for the period
Adjustment Distribution Closing
Investment gain or of other Other change of cash balance of
Additional Withdrawn loss recogniser comprehensive in equity dividend or Impairment impairment
Investee Opening balance contribution contribution under equity method income interest profit declared provision Others Closing balance provision
I.Joint ventures
Shouguang Chenming Huisen New-style
Construction Materia s Co., Ltd. 3,572,834.79 975,461.08 500,000.00 4,048,295.87
Weifang Sime Darby West Port Co., Ltd. 103,159,857.71 -7,969,846.98 95,190,010.73
Subtotal 106,732,692.50 -6,994,385.90 500,000.00 99,238,306.60
II.Associates
Jiangxi Jiangbao Media Colour
Printing Co., Ltd. 811,998.75 -480,747.58 331,251.17
Zhuhai Dechen New Third Board Equity
Investment Fund Company (Lim ted
Partnership) 52,253,817.72 108,497.32 52,362,315.04
Ningbo Kaichen Huamei Equity
Investment Fund Partnership
(Lim ted Partnership) 199,585,216.94 799,460.06 200,384,677.00
Xuchang Chenming Paper Co., Ltd. 5,994,545.96 -5,994,545.96
Chenming (Qingdao) Asset
Management Co., Ltd. 7,886,521.47 -238,134.37 7,648,387.10
Subtotal 266,532,100.84 -5,805,470.53 260,726,630.31
Total 373,264,793.34 -12,799,856.43 500,000.00 359,964,936.91
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XV. Notes to major financial statement items of the parent company (Cont’d)
4. Other payables
Unit: RMB
Item Closing balance Opening balance
Interest payable 131,416,333.34 139,444,333.34
Dividend payable 976,175,735.52
Other payables 4,207,524,162.48 5,326,044,557.18
Total 5,315,116,231.34 5,465,488,890.52
Other payables of the top five closing balances collected by the payee
Unit: RMB
Name of company Closing balance
Zhanjiang Chenming Pulp & Paper Co., Ltd. 2,206,451,191.57
Shandong Chenming Financial Leasing Co., Ltd. 985,621,153.02
Jiangxi Chenming Paper Co., Ltd. 408,822,164.21
Shouguang Chenming Import and Export Trade Co., Ltd. 258,234,638.23
Shandong Chenming Power Supply Holdings Co., Ltd. 136,387,007.68
Total 3,995,516,156.71
5. Revenue and operating costs
Unit: RMB
Amount for the year Amount for the prior year
Category Revenue Costs Revenue Costs
Principal activities 2,237,163,494.68 1,674,925,035.20 2,300,997,002.45 1,522,148,043.23
Other activities 458,848,921.42 428,362,116.44 515,297,483.37 452,213,569.85
Total 2,696,012,416.10 2,103,287,151.64 2,816,294,485.82 1,974,361,613.08
128 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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XV. Notes to major financial statement items of the parent company (Cont’d)
5. Revenue and operating costs (Cont’d)
Distribution of revenue
Unit: RMB
Machine-made
Type of contracts paper sectors Materials Utilities Other sectors Total
Machine-made paper sectors 2,237,163,494.68 2,237,163,494.68
Materials 367,750,475.36 367,750,475.36
Utilities 53,730,932.70 53,730,932.70
Other sectors 37,367,513.36 37,367,513.36
Total 2,237,163,494.68 367,750,475.36 53,730,932.70 37,367,513.36 2,696,012,416.10
6. Investment income
Unit: RMB
Item Amount for the period Amount for the prior period
Income from long-term equity investments accounted for using the equity method -12,799,856.43 -4,078,127.09
Income from long-term equity investments accounted for using the cost method 1,023,353,000.00
Investment income on holding of available-for-sale financial assets 41,516,700.00
Investment gain on disposal financial assets measured at fair value through profit or loss 114,233,300.00
Total 1,010,553,143.57 151,671,872.91
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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 23,358,777.37
Government grants (except for the government grants closely related to
the normal operation of the Company and granted constantly at
a fixed amount or quantity in accordance with a certain standard
based on state policies) accounted for in profit or loss for the current period 227,698,648.23
Non-operating gains and losses other than the above items 4,188,590.61
Gain or loss from change in fair value of consumable biological
assets adopting fair value method for follow-up measurements -1,883,064.80
Less: Effect of income tax 46,750,425.02
Effect of minority interest -38,049.69
Total 206,650,576.08 –
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 on net Earnings per share
assets on Basic Diluted
weighted (RMB per (RMB per
Profit for the reporting period average basis share) share)
Net profit attributable to ordinary shareholders of the Company 0.21% 0.013 0.013
Net profit after extraordinary gains and losses attributable
to ordinary shareholders of the Company -0.97% -0.059 -0.059
Note: The net profit attributable to shareholders of the listed company has not deducted perpetual debt incurred interest and impact of dividends
issued and declared by preference shares. When calculating the financial indicators of earnings per share and weighted average return
on equity, the interest on perpetual bonds of RMB96,202,739.73 from January 1, 2019 to June 30, 2019 and the dividends issued and
declared by preference shares of RMB377,169,767.52 in 2019 are deducted.
130 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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XVI. Supplementary information (Cont’d)
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
(3) Reasons for differences in accounting data under domestic and overseas accounting standards. If the
data audited by overseas audit institutions have been adjusted for differences, the name of the foreign
institution shall be indicated.
4. Other
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