SHANDONG CHENMING PAPER HOLDINGS LIMITED
Interim Financial Report 2020
August 2020
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 2020
Unit: RMB
Item 30 June 2020 31 December 2019
CURRENT ASSETS:
Monetary funds 19,301,761,154.66 19,306,529,473.33
Accounts receivable 2,297,695,446.74 2,525,083,311.03
Accounts receivable financial 1,418,702,732.26 442,915,861.70
Prepayments 731,403,235.76 603,573,549.08
Other receivables 3,129,061,804.47 2,216,654,598.66
Dividend receivable 13,000,000.00 13,000,000.00
Inventories 5,701,570,848.39 4,774,430,110.81
Non-current assets due within one year 6,010,580,174.26 6,974,539,613.30
Other current assets 8,558,407,649.13 8,108,707,394.70
Total current assets 47,149,183,045.67 44,952,433,912.61
Long-term receivables 763,545,520.11 1,200,575,810.95
Long-term equity investments 3,767,254,464.70 3,606,339,023.74
Other non-current financial assets 147,445,653.55 147,445,653.55
Investment property 5,198,377,514.70 5,082,362,293.11
Fixed assets 38,215,983,514.51 34,439,935,032.69
Construction in progress 598,051,166.87 5,476,122,928.95
Right-of-use assets 149,450,409.35 152,141,882.05
Intangible assets 1,659,117,513.78 1,781,061,904.51
Goodwill 5,969,626.57 5,969,626.57
Long-term prepaid expenses 50,949,493.93 48,203,408.71
Deferred income tax assets 960,555,695.05 892,442,631.04
Other non-current assets 368,196,053.27 173,875,826.67
Total non-current assets 51,884,896,626.39 53,006,476,022.54
Total assets 99,034,079,672.06 97,958,909,935.15
SHANDONG CHENMING PAPER HOLDINGS LIMITED 1
INTERIM FINANCIAL REPORT 2020
X Financial Report
II. Financial Statements (Cont’d)
1. Consolidated Balance Sheet (Cont’d)
Item 30 June 2020 31 December 2019
Short-term borrowings 38,554,311,235.00 36,883,156,014.19
Derivative financial liabilities
Bills payable 2,747,606,761.17 1,515,048,206.00
Accounts payable 4,244,906,425.30 4,351,087,581.98
Contract liabilities 1,230,606,297.46 968,082,063.13
Employee benefits payable 231,418,118.45 190,229,883.52
Taxes payable 383,277,519.38 311,554,116.73
Other payables 2,453,998,030.51 2,594,249,626.54
Including: Interest payable 149,518,233.84 208,189,699.15
Dividend payable 610,109,667.16
Non-current liabilities due within one year 6,936,859,454.99 5,662,958,920.03
Other current liabilities 150,686,164.01 222,402,500.00
Total current liabilities 56,933,670,006.27 52,698,768,912.12
Long-term borrowings 7,009,361,701.92 9,140,339,693.56
Bonds payable 1,628,134,192.59 1,258,270,909.49
Lease liabilities 60,271,769.90 59,697,128.65
Long-term payables 2,748,780,858.47 3,321,535,538.94
Provisions 325,259,082.28 325,259,082.28
Deferred income 1,692,501,835.30 1,771,013,335.11
Deferred income tax liabilities 1,411,125.59
Other non-current liabilities 2,384,489,390.18 3,042,841,328.86
Total non-current liabilities 15,848,798,830.64 18,920,368,142.48
TOTAL LIABILITIES 72,782,468,836.91 71,619,137,054.60
2 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
II. Financial Statements (Cont’d)
1. Consolidated Balance Sheet (Cont’d)
Item 30 June 2020 31 December 2019
Share capital 2,984,208,200.00 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 5,264,000,531.30 5,086,686,427.30
Less: Treasury shares 226,860,000.00
Other comprehensive income -979,734,467.41 -879,452,135.10
Surplus reserves 1,212,009,109.97 1,212,009,109.97
General risk provisions 74,122,644.20 74,122,644.20
Retained profit 9,114,386,653.70 9,306,269,617.38
Total equity attributable to owners of the Company 24,907,632,671.76 25,169,743,863.75
Minority interest 1,343,978,163.39 1,170,029,016.80
Total owners’ equity 26,251,610,835.15 26,339,772,880.55
TOTAL LIABILITIES AND OWNERS’ EQUITY 99,034,079,672.06 97,958,909,935.15
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
SHANDONG CHENMING PAPER HOLDINGS LIMITED 3
INTERIM FINANCIAL REPORT 2020
X Financial Report
II. Financial Statements (Cont’d)
2. Balance sheet of the Company
Unit: RMB
Item 30 June 2020 31 December 2019
CURRENT ASSETS:
Monetary funds 7,082,756,804.82 9,001,257,324.52
Bills receivable 1,618,500,000.00 3,254,460,000.00
Accounts receivable 953,020,387.81 39,204,670.00
Accounts receivable financing 245,133,081.69 189,873,567.14
Prepayments 200,265,805.92 722,472,479.01
Other receivables 13,615,203,417.43 13,975,590,537.58
Inventories 1,036,370,683.92 696,487,727.53
Non-current assets due within one year 20,557,909.14 129,546,826.00
Other current assets 78,459,437.08 80,815,659.84
Total current assets 24,850,267,527.81 28,089,708,791.62
NON-CURRENT ASSETS:
Long-term receivables 418,750,862.51 418,750,862.51
Long-term equity investments 23,695,209,348.94 23,629,780,317.87
Investment in other equity instruments 3,000,000.00
Other non-current financial assets 147,445,653.55 147,445,653.55
Fixed assets 3,809,789,595.98 3,901,007,932.88
Construction in progress 336,462,019.25 350,623,821.42
Intangible assets 440,462,302.74 446,430,156.00
Deferred income tax assets 426,746,817.16 426,711,909.98
Other non-current assets 110,930,000.00 110,930,000.00
Total non-current assets 29,385,796,600.13 29,434,680,654.21
Total assets 54,236,064,127.94 57,524,389,445.83
CURRENT LIABILITIES:
Short-term borrowings 12,202,091,264.37 11,601,509,632.09
Bills payable 9,145,715,195.57 9,890,041,170.20
Accounts payable 809,163,079.28 833,526,295.40
Contract liabilities 3,421,108,987.13 2,096,436,345.90
Employee benefits payable 78,493,509.03 71,040,017.13
Taxes payable 71,924,808.22 76,872,851.56
Other payables 4,392,332,152.34 6,426,648,847.95
Including: Interest payable 109,263,749.98 127,278,083.35
Dividend payable 610,109,667.16
Non-current liabilities due within one year 2,709,973,345.32 3,695,934,663.30
Other current liabilities 301,864,166.67 932,402,500.00
Total current liabilities 33,132,666,507.93 35,624,412,323.53
4 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
II. Financial Statements (Cont’d)
2. Balance sheet of the Company (Cont’d)
Item 30 June 2020 31 December 2019
NON-CURRENT LIABILITIES:
Long-term borrowings 350,692,035.94 150,692,035.94
Bonds payable 439,943,750.00 89,070,000.00
Long-term payables 751,402,372.22 1,167,426,124.98
Provisions 325,259,082.28 325,259,082.28
Deferred income 39,900,252.91 42,070,840.27
Other non-current liabilities 1,792,083,342.67 2,789,283,340.67
Total non-current liabilities 3,699,280,836.02 4,563,801,424.14
TOTAL LIABILITIES 36,831,947,343.95 40,188,213,747.67
OWNERS’ EQUITY:
Share capital 2,984,208,200.00 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 5,099,821,539.19 4,953,557,435.19
Less: Treasury shares 226,860,000.00
Surplus reserves 1,199,819,528.06 1,199,819,528.06
Retained profit 881,627,516.74 812,690,534.91
Total owners’ equity 17,404,116,783.99 17,336,175,698.16
TOTAL LIABILITIES AND OWNERS’ EQUITY 54,236,064,127.94 57,524,389,445.83
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
SHANDONG CHENMING PAPER HOLDINGS LIMITED 5
INTERIM FINANCIAL REPORT 2020
X Financial Report
II. Financial Statements (Cont’d)
3. Consolidated Income Statement
Unit: RMB
Item January to June 2020 January to June 2019
I. Total revenue 13,599,805,765.86 13,348,648,113.70
Including: Revenue 13,599,805,765.86 13,348,648,113.70
II. Total operating costs 13,331,852,506.55 12,989,921,141.46
Including: Operating costs 10,185,300,033.31 9,754,097,799.82
Taxes and surcharges 107,048,098.21 134,488,545.06
Sales and distribution expenses 652,742,420.35 590,584,957.47
General and administrative expenses 491,987,245.33 562,417,399.25
Research and development expense 548,557,146.89 431,483,716.06
Finance expenses 1,346,217,562.46 1,516,848,723.80
Including: Interest expenses 1,439,500,160.77 1,576,756,279.30
Interest income 276,115,018.97 213,994,280.22
Plus: Other income 133,433,974.45 38,831,290.64
Investment income (“-” denotes loss) 136,893,482.97 -9,467,172.97
Including: Investment income from
associates and joint ventures 122,749,789.02 -9,467,172.97
Gain on change in fair value (“-” denotes loss) -9,246,743.86 -1,883,064.80
Credit impairment loss (“-” denotes loss) -257,855,903.60 -62,440,283.34
Loss on impairment of assets (“-” denotes loss) -163,717.76 83,464,107.59
Gain on disposal of assets (“-” denotes loss) -4,705,886.89 22,823,551.43
III. Operating profit (“-” denotes loss) 266,308,464.62 430,055,400.79
Plus: Non-operating income 642,400,117.78 237,472,592.97
Less: Non-operating expenses 9,007,544.18 5,050,128.19
IV. Total profit (“-” denotes total loss) 899,701,038.22 662,477,865.57
Less: Income tax expenses 237,960,188.15 125,877,819.62
V. Net profit (“-” denotes net loss) 661,740,850.07 536,600,045.95
(I) Classification according to the continuity of operation
1. Net profit from continuing operations
(“-” denotes net loss) 661,740,850.07 536,600,045.95
2. Net profit from discontinued operations
(“-” denotes net loss)
(II) Classification according to ownership
1. Net profit attributable to shareholders
of the Company 516,326,703.48 509,795,572.29
2. Profit or loss of minority interest 145,414,146.59 26,804,473.66
VI. Net other comprehensive income after tax -108,564,087.60 -16,016,688.20
Net other comprehensive income after tax attributable
to shareholders of the Company -108,564,087.60 -16,016,688.20
(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 -108,564,087.60 -16,016,688.20
Translation differences of financial statements denominated
in foreign currency -108,564,087.60 -16,016,688.20
6 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
II. Financial Statements (Cont’d)
3. Consolidated Income Statement (Cont’d)
Item January to June 2020 January to June 2019
VII. Total comprehensive income 553,176,762.47 520,583,357.75
Total comprehensive income attributable to shareholders
of the Company 407,762,615.88 493,778,884.09
Total comprehensive income attributable to minority interest 145,414,146.59 26,804,473.66
IIX. Earnings per share:
(I) Basic earnings per share 0.051 0.013
(II) Diluted earnings per share 0.051 0.013
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
SHANDONG CHENMING PAPER HOLDINGS LIMITED 7
INTERIM FINANCIAL REPORT 2020
X Financial Report
II. Financial Statements (Cont’d)
4. Income statement of the Company
Unit: RMB
Item January to June 2020 January to June 2019
I. Revenue 3,847,193,657.53 2,696,012,416.10
Less: Operating costs 3,028,473,472.42 2,103,287,151.64
Taxes and surcharges 20,730,087.42 22,384,520.78
Sales and distribution expenses 124,148,775.89 95,933,113.16
General and administrative expenses 159,106,436.16 160,401,795.91
Research and development expense 128,662,995.77 122,265,471.50
Finance expenses 380,567,325.04 851,438,574.25
Including: Interest expenses 803,815,024.42 1,297,180,410.46
Interest income 512,123,486.08 524,005,473.68
Plus: Other income 4,164,682.46 2,180,872.36
Investment income (“-” denotes loss) 682,669,031.07 1,010,553,143.57
Including: Investment income from associates
and joint ventures -1,660,968.93 -12,799,856.43
Impairment loss of credit (“-” denotes loss) 15,237,901.51 -844,738.21
Impairment loss of assets (“-” denotes loss)
Gains from assets disposal (“-” denotes loss) 16,102,859.30 22,416,169.42
II. Operating profit (“-” denotes loss) 723,679,039.17 374,607,236.00
Plus: Non-operating income 54,685,565.61 77,943,339.00
Less: Non-operating expenses 1,252,862.97 4,195,926.11
III. Total profit (“-” denotes total loss) 777,111,741.81 448,354,648.89
Less: Income tax expenses -34,907.18 -96,575,704.73
IV. Net profit (“-” denotes net loss) 777,146,648.99 544,930,353.62
(1) Net profit from continuing operations
(“-” denotes net loss) 777,146,648.99 544,930,353.62
(2) Net profit from discontinued operations
(“-” denotes net loss)
VI. Total comprehensive income 777,146,648.99 544,930,353.62
VII. Earnings per share:
(I) Basic earnings per share
(II) Diluted earnings per share
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
8 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
II. Financial Statements (Cont’d)
5. Consolidated cash flow statement
Unit: RMB
Item January to June 2020 January to June 2019
I. Cash flows from operating activities:
Cash received from sales of goods and rendering of services 14,322,440,708.60 14,748,713,123.70
Tax rebates received 1,619,978.70 660,483.85
Cash received relating to other operating activities 1,563,110,217.95 2,298,196,240.97
Subtotal of cash inflows from operating activities 15,887,170,905.25 17,047,569,848.52
Cash paid for goods and services 11,303,287,012.69 11,576,281,103.39
Cash paid to and for employees 550,988,794.51 674,527,204.40
Payments of taxes and surcharges 622,011,647.05 1,096,901,907.86
Cash paid relating to other operating activities 1,083,849,666.32 1,000,088,741.18
Subtotal of cash outflows from operating activities 13,560,137,120.57 14,347,798,956.83
Net cash flows from operating activities 2,327,033,784.68 2,699,770,891.69
II. Cash flow from investing activities:
Cash received from investment income 1,200,000.00
Net cash received from disposal of fixed assets, intangible
assets and other long-term assets 85,956,320.00 111,235,000.00
Net cash received from disposal of subsidiaries and other
business units 217,547,669.15
Cash received relating to other investing activities 129,197,968.06
Subtotal of cash inflows from investing activities 433,901,957.21 111,235,000.00
Cash paid for purchase of fixed assets, intangible assets
and other long-term assets 143,811,622.89 376,939,086.06
Cash paid on investments 19,266,800.00 1,639,194,479.24
Cash paid relating to other investing activities 176,000,000.00 189,628,400.00
Subtotal of cash outflows from investing activities 339,078,422.89 2,205,761,965.30
Net cash flows from investing activities 94,823,534.32 -2,094,526,965.30
SHANDONG CHENMING PAPER HOLDINGS LIMITED 9
INTERIM FINANCIAL REPORT 2020
X Financial Report
II. Financial Statements (Cont’d)
5. Consolidated cash flow statement (Cont’d)
Item January to June 2020 January to June 2019
III. Cash flows from financing activities:
Cash received from investments 294,820,000.00
Including: Cash received from by subsidiaries
from minority investment 67,960,000.00
Cash received from borrowings 15,228,878,371.99 22,550,704,467.77
Cash received relating to other financing activities 1,356,957,000.00 3,479,693,527.06
Subtotal of cash inflows from financing activities 16,880,655,371.99 26,030,397,994.83
Cash repayments of amounts borrowed 14,282,539,084.68 18,763,676,782.15
Cash paid for dividend and profit distribution
or interest payment 1,710,006,370.47 1,591,133,614.29
Including: Dividend and profit paid by subsidiaries
to minority shareholders 8,375,000.00
Cash paid relating to other financing activities 3,982,494,113.94 6,456,564,308.43
Subtotal of cash outflows from financing activities 19,975,039,569.09 26,811,374,704.87
Net cash flows from financing activities -3,094,384,197.10 -780,976,710.04
IV. Effect of foreign exchange rate changes on cash
and cash equivalents -4,518,518.54 -196,762,227.50
V. Net increase in cash and cash equivalents -677,045,396.64 -372,495,011.15
Plus: Balance of cash and cash equivalents
at the beginning of the period 2,890,328,027.40 2,381,558,242.52
VI. Balance of cash and cash equivalents as
at the end of the period 2,213,282,630.76 2,009,063,231.37
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
10 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
II. Financial Statements (Cont’d)
6. Cash flow statement of the Company
Unit: RMB
Item January to June 2020 January to June 2019
1. Cash flows from operating activities:
Cash received from sales of goods and rendering of services 4,646,172,812.15 4,975,401,290.02
Cash received relating to other operating activities 155,230,403.66 974,266,183.30
Subtotal of cash inflows from operating activities 4,801,403,215.81 5,949,667,473.32
Cash paid for goods and services 2,208,540,497.88 949,039,632.39
Cash paid to and for employees 174,694,134.98 232,441,602.15
Payments of taxes and surcharges 58,848,554.36 85,040,472.23
Cash paid relating to other operating activities 450,670,347.73 643,575,724.57
Subtotal of cash outflows from operating activities 2,892,753,534.95 1,910,097,431.34
Net cash flows from operating activities 1,908,649,680.86 4,039,570,041.98
II. Cash flows from investing activities:
Cash received from investments 217,547,669.15
Cash received from investment income 682,430,000.00
Net cash received from disposal of fixed assets,
intangible assets and other long-term assets 85,956,320.00 55,735,000.00
Cash received relating to other investing activities 129,197,968.06
Subtotal of cash inflows from investing activities 1,115,131,957.21 55,735,000.00
Cash paid for purchase of fixed assets, intangible assets
and other long-term assets 5,310,913.00 17,933,778.78
Cash paid on investments 1,147,500,000.00
Cash paid relating to other investing activities 39,500,000.00
Subtotal of cash outflows from investing activities 5,310,913.00 1,204,933,778.78
Net cash flows from investing activities 1,109,821,044.21 -1,149,198,778.78
SHANDONG CHENMING PAPER HOLDINGS LIMITED 11
INTERIM FINANCIAL REPORT 2020
X Financial Report
II. Financial Statements (Cont’d)
6. Cash flow statement of the Company (Cont’d)
Item January to June 2020 January to June 2019
III. Cash flows from financing activities:
Cash received from investments 226,860,000.00
Cash received from borrowings 9,807,671,284.37 6,360,366,283.77
Cash received relating to other financing activities 794,457,000.00 1,997,263,889.00
Subtotal of cash inflows from financing activities 10,828,988,284.37 8,357,630,172.77
Cash repayments of amounts borrowed 9,591,880,585.58 5,237,801,785.71
Cash paid for dividend and profit distribution
or interest payment 327,204,654.73 774,396,836.69
Cash paid relating to other financing activities 2,963,023,405.21 5,593,391,883.99
Subtotal of cash outflows from financing activities 12,882,108,645.52 11,605,590,506.39
Net cash flows from financing activities -2,053,120,361.15 -3,247,960,333.62
IV. Effect of foreign exchange rate changes on cash
and cash equivalents 86,290.34 14,127.62
V. Net increase in cash and cash equivalents 965,436,654.26 -357,574,942.80
Plus: Balance of cash and cash equivalents as at the
beginning of the period 136,328,721.71 607,805,063.02
VI. Balance of cash and cash equivalents as
at the end of the period 1,101,765,375.97 250,230,120.22
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
12 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
II. Financial Statements (Cont’d)
7. Consolidated statement of changes in owners’ equity
Amount for the reporting period
Unit: RMB
Item January to June 2020
Equity attributable to owners of the Company
Other equity instruments
X Financial Report
Other
Preference Perpetual Capital Less: comprehensive Special Surplus General risk Minority Total
Share capital shares bonds Others reserves Treasury shares income reserves reserves provisions Retained profit Others Subtotal 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 5,086,686,427.30 -879,452,135.10 1,212,009,109.97 74,122,644.20 9,306,269,617.38 25,169,743,863.75 1,170,029,016.80 26,339,772,880.55
II. Balance as at the beginning of the year 2,904,608,200.00 4,477,500,000.00 2,988,000,000.00 – 5,086,686,427.30 – -879,452,135.10 – 1,212,009,109.97 74,122,644.20 9,306,269,617.38 – 25,169,743,863.75 1,170,029,016.80 26,339,772,880.55
III. Changes in the period (“-” denotes decrease) 79,600,000.00 – – – 177,314,104.00 226,860,000.00 -100,282,332.31 – – – -191,882,963.68 – -262,111,191.99 173,949,146.59 -88,162,045.40
(I) Total comprehensive income -100,282,332.31 516,326,703.48 416,044,371.17 145,414,146.59 561,458,517.76
(II) Capital paid in and reduced by owners 79,600,000.00 177,314,104.00 226,860,000.00 – – – – – – 30,054,104.00 36,910,000.00 66,964,104.00
1. Ordinary shares paid by shareholders 79,600,000.00 177,314,104.00 256,914,104.00 36,910,000.00 293,824,104.00
2. Amount of share-based payments
recognised in owners’ equity 226,860,000.00 -226,860,000.00 -226,860,000.00
(III) Profit distribution -708,209,667.16 -708,209,667.16 -8,375,000.00 -716,584,667.16
1. Distribution to owners (or shareholders) -708,209,667.16 -708,209,667.16 -8,375,000.00 -716,584,667.16
IV. Balance as at the end of the period 2,984,208,200.00 4,477,500,000.00 2,988,000,000.00 – 5,264,000,531.30 226,860,000.00 -979,734,467.41 – 1,212,009,109.97 74,122,644.20 9,114,386,653.70 – 24,907,632,671.76 1,343,978,163.39 26,251,610,835.15
INTERIM FINANCIAL REPORT 2020
SHANDONG CHENMING PAPER HOLDINGS LIMITED
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 January to June 2019
Equity attributable to owners of the Company
Other equity instruments
X Financial Report
Other
Preference Perpetual Capital Less: comprehensive Special Surplus General risk Minority Total
INTERIM FINANCIAL REPORT 2020
Share capital shares bonds Others reserves Treasury shares income reserves reserves provisions Retained profit Others Subtotal 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
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
SHANDONG CHENMING PAPER HOLDINGS LIMITED
III. Changes in the period (“-” denotes decrease) – – – – -4,763,487.84 – -142,931,954.09 -3,257,998.47 63,120,197.86 9,998,724.97 198,846,926.53 – 121,012,408.96 347,069,243.50 468,081,652.46
(I) Total comprehensive income -142,931,954.09 1,656,566,584.88 1,513,634,630.79 71,201,958.49 1,584,836,589.28
(II) Capital paid in and reduced by owners – – – – -4,763,487.84 – – – – – – – -4,763,487.84 295,129,785.01 290,366,297.17
1. Ordinary shares paid by shareholders – 439,447,225.77 439,447,225.77
2. Others -4,763,487.84 -4,763,487.84 -144,317,440.76 -149,080,928.60
(III) Profit distribution – – – – – – – – 63,120,197.86 9,998,724.97 -1,457,719,658.35 – -1,384,600,735.52 -19,262,500.00 -1,403,863,235.52
1. Transfer to surplus reserves 63,120,197.86 -63,120,197.86 – –
2. Transfer to general risk provision 9,998,724.97 -9,998,724.97 – –
3. Distribution to owners (or shareholders) -1,384,600,735.52 -1,384,600,735.52 -19,262,500.00 -1,403,863,235.52
(IV) Transfer of owners’ equity -4,881,991.84 -4,881,991.84 -4,881,991.84
1. Others -4,881,991.84 -4,881,991.84 -4,881,991.84
(V) Special reserves 1,623,993.37 1,623,993.37 1,623,993.37
1. Appropriation 1,623,993.37 1,623,993.37 1,623,993.37
IV. Balance as at the end of the period 2,904,608,200.00 4,477,500,000.00 2,988,000,000.00 – 5,086,686,427.30 – -879,452,135.10 – 1,212,009,109.97 74,122,644.20 9,306,269,617.38 – 25,169,743,863.75 1,170,029,016.80 26,339,772,880.55
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 January to June 2020
Other equity instruments
Other
X Financial Report
Preference Perpetual Capital Less: comprehensive Total
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 1,199,819,528.06 812,690,534.91 17,336,175,698.16
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 – – – 1,199,819,528.06 812,690,534.91 – 17,336,175,698.16
III. Changes in the period (“-” denotes decrease) 79,600,000.00 – – – 146,264,104.00 226,860,000.00 – – – 68,936,981.83 – 67,941,085.83
(I) Total comprehensive income 777,146,648.99 777,146,648.99
(II) Capital paid in and reduced by owners 79,600,000.00 – – – 146,264,104.00 226,860,000.00 – – – – – -995,896.00
1. Ordinary shares paid by shareholders 79,600,000.00 146,264,104.00 226,860,000.00 -995,896.00
(III) Profit distribution -708,209,667.16 – -708,209,667.16
1. Distribution to owners (or shareholders) -708,209,667.16 -708,209,667.16
IV. Balance as at the end of the period 2,984,208,200.00 4,477,500,000.00 2,988,000,000.00 5,099,821,539.19 226,860,000.00 1,199,819,528.06 881,627,516.74 17,404,116,783.99
INTERIM FINANCIAL REPORT 2020
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 January to June 2019
Other equity instruments
Other
X Financial Report
Preference Perpetual Capital Less: comprehensive Total
Share capital shares bonds Others reserves Treasury shares income Special reserves Surplus reserves Retained profit Others owners’ equity
INTERIM FINANCIAL REPORT 2020
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
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) 63,120,197.86 -816,518,954.81 -753,398,756.95
SHANDONG CHENMING PAPER HOLDINGS LIMITED
(I) Total comprehensive income 631,201,978.57 631,201,978.57
(III) Profit distribution 63,120,197.86 -1,447,720,933.38 -1,384,600,735.52
1. Transfer to surplus reserves 63,120,197.86 -63,120,197.86
2. Distribution to owners (or shareholders) -1,384,600,735.52 -1,384,600,735.52
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 1,199,819,528.06 812,690,534.91 17,336,175,698.16
Legal Representative: Financial controller: Head of the financial department:
Chen Hongguo Dong Lianming Zhang Bo
X Financial Report
III. General Information of the Company
The predecessor of Shandong Chenming Paper Holdings Limited (hereinafter referred to as the “Company”) was Shandong
Shouguang Paper Mill Corporation, which was changed as a joint stock company with limited liability through offering
to specific investors in May 1993. In December 1996, with approval by Lu Gai Zi [1996] No. 270) issued by the People’s
Government of Shandong Province and Zheng Wei [1996] No. 59 of the Securities Committee of the State Council, the
Company was changed as a joint stock company with limited liability established by share offer.
In May 1997, with approval by Zheng Wei Fa [1997] No. 26 issued by the Securities Committee of the State Council, the
Company issued 115,000,000 domestic listed foreign shares (B shares) under public offering, which were listed and traded on
Shenzhen Stock Exchange from 26 May 1997.
In September 2000, with approval by Zheng Jian Gong Si Zi [2000] No. 151 issued by the China Securities Regulatory
Commission, the Company issued an additional 70,000,000 RMB ordinary shares (A shares), which were listed and traded on
Shenzhen Stock Exchange from 20 November 2000.
In June 2008, with approval by the Stock Exchange of Hong Kong Limited, the Company issued 355,700,000 H shares. At the
same time, 35,570,000 H shares were allocated to the National Council for Social Security Fund by our relevant state-owned
shareholder and converted into overseas listed foreign shares (H shares) for the purpose of reducing the number of
state-owned shares. The additional H shares issued were listed and traded on Hong Kong Stock Exchange on 18 June 2008.
As at 30 June 2020, the total share capital of the Company was 2,984,608,200 shares. For details, please refer to Note VII. 37.
The Company established a corporate governance structure comprising the general meeting, the board of directors and the
supervisory committee, and has human resources department, information technology department, corporate management
department, legal affairs department, financial management department, capital management department, securities
investment department, procurement department, audit department, and other departments.
The Company and its subsidiaries (hereinafter referred to as the “Group”) 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 and notes thereto were approved by the board of directors of the Company (the “Board”) on 10
August 2020.
Subsidiaries of the Company newly included in the scope of consolidation in the reporting period totalled 2. For details,
please refer to Note IX “Equity in other entities”. The scope of consolidation of the Company during the year had 2 companies
included and 2 companies excluded. For details, please refer to 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.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 17
INTERIM FINANCIAL REPORT 2020
X Financial Report
IV. Basis of Preparation of the Financial Statements (Cont’d)
1. Basis of preparation (Cont’d)
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.
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 to this Note V. 32 “Revenue”.
1. Statement of compliance with the Accounting Standards for Business Enterprises
These financial statements have been prepared in conformity with the ASBEs, which truly and fully reflect the financial
position of the consolidated entity and the Company as at 30 June 2020 and relevant information such as the operating
results and cash flows of the consolidated entity and the Company for the first half of 2020.
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.
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 FINANCIAL REPORT 2020
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 FINANCIAL REPORT 2020
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. 17 “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.
20 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
6. Preparation of consolidated financial statements
(1) Scope of consolidation
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. A subsidiary is an entity controlled by the Company (including an enterprise, a separable part of an
investee, a structured entity, etc.).
(2) Basis for preparation of the consolidated financial statements
The consolidated financial statements are prepared by the Company based on the financial statements of the
Company and its subsidiaries and other relevant information. In preparing the consolidated financial statements,
the accounting policies and accounting periods of the Company and its subsidiaries shall be consistent, and
intra-company significant transactions and balances are eliminated.
A subsidiary and its business acquired through a business combination involving entities under common control
during the reporting period shall be included in the scope of the consolidation of the Company from the date
of being controlled by the ultimate controlling party, and its operating results and cash flows from the date of
being controlled by the ultimate controlling party are included in the consolidated income statement and the
consolidated cash flow statement, respectively.
For a subsidiary and its business acquired through a business combination involving entities not under common
control during the reporting period, its income, expenses and profits are included in the consolidated income
statement, and cash flows are included in the consolidated cash flow statement from the acquisition date to the
end of the reporting period.
The shareholders’ equity of the subsidiaries that is not attributable to the Company is presented under
shareholders’ equity in the consolidated balance sheet as minority interest. 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.
(3) Accounting treatment for loss of control over subsidiaries
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 sun of the share of the carrying amount of net assets of the former subsidiary calculated continuously
from the purchase date based on the shareholding percentage before disposal and the goodwill is recognised as
investment income in the period when the control is lost.
Other comprehensive income related to equity investment in the former subsidiary shall be transferred to current
profit or loss at the time when the control is lost, except for other comprehensive income arising from changes in
net assets or net liabilities due to remeasurement of defined benefit plan by the investee.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 21
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
7. Classification of joint arrangements and accounting treatment for joint ventures
A joint arrangement refers to an arrangement of two or more parties have joint control. The joint arrangements of the
Group comprise joint operations and joint ventures.
(1) Joint operations
Joint operations refer to a joint arrangement during which the Group is entitled to relevant assets and obligations
of this arrangement.
The Group recognises the following items in relation to its interest in a joint operation and accounts for them in
accordance with the relevant ASBEs:
A. the assets held solely by it and assets held jointly according to its share;
B. the liabilities assumed solely by it and liabilities assumed jointly according to its share;
C. the revenue from sale of output from joint operations;
D. the revenue from sale of output from joint operations according to its share;
E. the fees solely incurred by it and fees incurred from joint operations according to its share.
(2) Joint ventures
Joint ventures refer to a joint arrangement during which the Company only is entitled to net assets of this
arrangement.
The Group accounts for its investments in joint ventures in accordance with the requirements relating to
accounting treatment using equity method for long-term equity investments.
8. Standards for recognising cash and cash equivalents
Cash refers to cash on hand and deposits readily available for payment purpose. Cash equivalents refer to short-term
and highly liquid investments held by the Group which are readily convertible into known amount of cash and which are
subject to insignificant risk of value change.
9. Foreign currency operations and translation of statements denominated in foreign currency
(1) Foreign currency operations
The foreign currency operations of the Group 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.
On the balance sheet date, foreign currency monetary items shall be translated at the spot exchange rate on
the balance sheet date. The exchange difference arising from the difference between the spot exchange rate
on the balance sheet date and the spot exchange rate upon initial recognition or the last balance sheet date will
be recognised in profit or loss for the 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 recognised in profit or loss for the period.
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 (Cont’d)
(2) Translation of financial statements denominated in foreign currency
When translating the financial statements denominated in foreign currency of overseas subsidiaries, 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.
All items in the cash flow statements shall be translated at the average exchange rate for the period in which
the cash flow transaction occurred. Effects arising from changes of exchange rate on cash shall be presented
separately as the “effect of foreign exchange rate changes on cash and cash equivalents” item in the cash flow
statements.
The differences arising from translation of financial statements shall be included in the “other comprehensive
income” item in owners’ equity in the balance sheet.
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.
10. Financial instruments
A financial instrument is a contract that gives rise to a financial asset of one party and a financial liability or equity
instrument of another party.
(1) Recognition and derecognition of financial instruments
Financial asset or financial liability will be recognised when the Group became one of the parties under a financial
instrument contract.
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 has been transferred and meets the derecognition criteria for the transfer of financial
asset as described below.
A financial liability (or a part thereof) is derecognised only when the present obligation is discharged in full or
in part. If an agreement is entered between the Group (debtor) and a creditor to replace the existing financial
liabilities with new financial liabilities, and the contractual terms of the new financial liabilities are substantially
different from those of the existing financial liabilities, the existing financial liabilities shall be derecognised and the
new financial liabilities shall be recognised.
Conventionally traded financial assets shall be recognised and derecognised at the trading date.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 23
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(2) Classification and measurement of financial assets
The Group 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 measured at amortised cost
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated
at fair value through other comprehensive income:
The Group’s business model for managing such financial assets is to collect contractual cash flows;
The contractual terms of the financial asset stipulate that cash flows generated on specific dates are solely
payments of principal and interest on the principal amount outstanding.
Subsequent to initial recognition, such financial assets are measured at amortised cost using the effective interest
method. A gain or loss on a financial asset that is measured at amortised cost and is not part of a hedging
relationship shall be recognised in profit or loss for the current period when the financial asset is derecognised,
amortised using the effective interest method or with impairment recognised.
Financial assets measured at fair value through other comprehensive income
A financial asset is classified as measured at fair value through other comprehensive income if it meets both of the
following conditions and is not designated at fair value through profit or loss:
The Group’s business model for managing such financial assets is achieved both by collecting collect contractual
cash flows and selling such financial assets;
The contractual terms of the financial asset stipulate that cash flows generated on specific dates are solely
payments of principal and interest on the principal amount outstanding.
Subsequent to initial recognition, such financial assets are subsequently measured at fair value. Interest calculated
using the effective interest method, impairment losses or gains and foreign exchange gains and losses are
recognised in profit or loss for the current period, and other gains or losses are recognised in other comprehensive
income. On derecognition, the cumulative gain or loss previously recognised in other comprehensive income is
reclassified from other comprehensive income to profit or loss.
24 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(2) Classification and measurement of financial assets (Cont’d)
Financial assets measured at fair value through profit or loss
The Group classifies the financial assets other than those measured at amortised cost and measured at fair value
through other comprehensive income as financial assets measured at fair value through profit or loss. Upon
initial recognition, the Group irrevocably designates certain financial assets that are required to be measured at
amortised cost or at fair value through other comprehensive income as financial assets measured at fair value
through profit or loss in order to eliminate or significantly reduce accounting mismatch.
Upon initial recognition, such financial assets are measured at fair value. Except for those held for hedging
purposes, gains or losses (including interests and dividend income) arising from such financial assets are
recognised in the profit or loss for the current period.
The business model for managing financial assets refers to how the Group manages its financial assets in order to
generate cash flows. That is, the Group’s business model determines whether cash flows will result from collecting
contractual cash flows, selling financial assets or both. The Group determines the business model for managing
financial assets on the basis of objective facts and specific business objectives for managing financial assets
determined by key management personnel.
The Group assesses the characteristics of the contractual cash flows of financial assets to determine whether
the contractual cash flows generated by the relevant financial assets on a specific date are solely payments of
principal and interest on the principal amount outstanding. The principal refers to the fair value of the financial
assets at the initial recognition. Interest includes consideration for the time value of money, for the credit risk
associated with the principal amount outstanding during a particular period of time and for other basic lending
risks, costs and profits. In addition, the Group evaluates the contractual terms that may result in a change in the
time distribution or amount of contractual cash flows from a financial asset to determine whether it meets the
requirements of the above contractual cash flow characteristics.
All affected financial assets are reclassified on the first day of the first reporting period following the change in the
business model where the Group changes its business model for managing financial assets; otherwise, financial
assets shall not be reclassified after initial recognition.
Financial assets other than accounts receivable without a significant financing component 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 current period. For other categories of financial assets,
relevant transaction costs are included in the amount initially recognised. Accounts receivable without significant
financing component are initially recognised based on the transaction price expected to be entitled by the Group.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 25
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(3) Classification and measurement of financial liabilities
At initial recognition, financial liabilities of the Group are classified as financial liabilities measured at fair value
through profit or loss and financial liabilities measured at amortised cost. For financial liabilities not classified
as measured at fair value through profit or loss, 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 and
financial liabilities designated at fair value through profit or loss upon initial recognition. Such financial liabilities
are subsequently measured at fair value, and the gains or losses from the change in fair value and the dividend or
interest expenses related to the financial liabilities are included in the profit or loss of the current period.
Financial liabilities measured at amortised cost
Other financial liabilities are subsequently measured at amortised cost using the effective interest rate method,
and the gains or losses arising from derecognition or amortisation are recognised in profit or loss for the current
period.
Classification between financial liabilities and equity instruments
A financial liability is a liability if:
it has a contractual obligation to pay in cash or other financial assets to other parties.
it has a contractual obligation to exchange financial assets or financial liabilities under potential adverse
condition with other parties.
it is a non-derivative instrument contract which will or may be settled with the entity’s own equity
instruments, and the entity will deliver a variable number of its own equity instruments according to such
contract.
it is a derivative instrument contract which will or may be settled with the entity’s own equity instruments,
except for a derivative instrument contract that exchanges a fixed amount of cash or other financial asset
with a fixed number of its own equity instruments.
Equity instruments are any contract that evidences a residual interest in the assets of an entity after deducting all
of its liabilities.
If the Group cannot unconditionally avoid the performance of a contractual obligation by paying cash or delivering
other financial assets, the contractual obligation meets the definition of financial liabilities.
Where a financial instrument must or may be settled with the Group’s own equity instruments, the Group’s own
equity instruments used to settle such instrument should be considered as to whether it is as a substitute for cash
or other financial assets or for the purpose of enabling the holder of the instrument to be entitled to the remaining
interest in the assets of the issuer after deducting all of its liabilities. For the former, it is a financial liability of the
Group; for the latter, it is the Group’s own equity instruments.
26 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(4) Derivative financial instruments
The Group’s derivative financial instruments are mainly forward foreign exchange contracts, which are initially
recognised at fair value on the date a derivative contract is entered into and are subsequently measured at their
fair value. A derivative financial instrument is recognised as an asset when the fair value is positive and as a
liability when the fair value is negative. Any gain or loss arising from changes in fair value and not complying with
the accounting requirements on hedging shall be recognised in profit or loss for current period.
(5) Fair value of financial instruments
The methods for determining the fair value of the financial assets or financial liabilities are set out in Note V. 10.
(6) Impairment of financial assets
The Group makes provision for impairment based on expected credit losses (ECLs) on the following items:
Financial assets measured at amortised cost;
Debt investments measured at fair value through other comprehensive income;
Measurement of ECLs
ECLs are the weighted average of credit losses of financial instruments weighted by the risk of default. Credit
losses refer to the difference between all contractual cash flows receivable according to the contract and
discounted according to the original effective interest rate and all cash flows expected to be received, i.e. the
present value of all cash shortages.
The Group takes into account reasonable and well-founded information such as past events, current conditions
and forecasts of future economic conditions, and calculates the probability-weighted amount of the present value
of the difference between the cash flows receivable from the contract and the cash flows expected to be received
weighted by the risk of default.
The Group measures ECLs of financial instruments at different stages. If the credit risk of the financial instrument
did not increase significantly upon initial recognition, it is at the first stage, and the Group makes provision for
impairment based on the ECLs within the next 12 months; if the credit risk of a financial instrument increased
significantly upon initial recognition but has not yet incurred credit impairment, it is at the second stage, and the
Group makes provision for impairment based on the lifetime ECLs of the instrument; if the financial instrument
incurred credit impairment upon initial recognition, it is at the third stage, and the Group makes provision for
impairment based on the lifetime ECLs of the instrument.
For financial instruments with low credit risk on the balance sheet date, the Group assumes that the credit risk did
not increase significantly upon initial recognition, and makes provision for impairment based on the ECLs within
the next 12 months.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 27
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(6) Impairment of financial assets (Cont’d)
Measurement of ECLs (Cont’d)
Lifetime ECLs represent the ECLs resulting from all possible default events over the expected life of a financial
instrument. The 12-month ECLs are the ECLs resulting from possible default events on a financial instrument
within 12 months (or a shorter period if the expected life of the financial instrument is less than 12 months) after
the balance sheet date, and is a portion of lifetime ECLs.
The maximum period to be considered when estimating ECLs is the maximum contractual period over which the
Group is exposed to credit risk, including renewal options.
For the financial instruments at the first and second stages and with low credit risks, the Group calculates the
interest income based on the book balance and the effective interest rate before deducting the impairment
provisions. For financial instruments at the third stage, interest income is calculated based on the amortised cost
after deducting impairment provisions made from the book balance and the effective interest rate.
For bills receivable, accounts receivable and contract assets, regardless of whether there is a significant financing
component, the Group always makes provision for impairment at an amount equal to lifetime ECLs.
When the Group is unable to assess the information of ECLs for an individual financial asset at a reasonable cost,
it classifies bills receivable and accounts receivable into portfolios based on the credit risk characteristics, and
calculates the ECLs on a portfolio basis. The basis for determining the portfolios is as follows:
A. Bills receivable
Bills receivable portfolio 1: Bank acceptance bills
Bills receivable portfolio 2: Commercial acceptance bills
B. Accounts receivable
Accounts receivable portfolio 1: Factoring receivables
Accounts receivable portfolio 2: Receivables from non-related party customers
Accounts receivable portfolio 3: Due from related party customers
For bills receivable classified as a portfolio, the Group refers to the historical credit loss experience, combined
with the current situation and the forecast of future economic conditions, to calculate the ECLs based on default
risk exposure and lifetime ECL rate.
For accounts receivable classified as a portfolio, the Group refers to the historical credit loss experience,
combined with the current situation and the forecast of future economic conditions, to prepare a comparison table
of the ageing/overdue days of accounts receivable and the lifetime ECL rate to calculate the ECLs.
28 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(6) Impairment of financial assets (Cont’d)
Other receivables
The Group classifies other receivables into portfolios based on credit risk characteristics, and calculates the ECLs
on a portfolio basis. The basis for determining the portfolios is as follows:
Other receivables portfolio 1: Amount due from government authorities
Other receivables portfolio 2: Amount due from related parties
Other receivables portfolio 3: Other receivables
For other receivables classified as a portfolio, the Group calculates the ECLs based on default risk exposure and
the ECL rate over the next 12 months or the entire lifetime.
Long-term receivables
The Group’s long-term receivables include finance lease receivables and deposits receivable.
The Group classifies the finance lease receivables, deposits receivable and other receivables into portfolios based
on the credit risk characteristics, and calculates the ECLs on a portfolio basis. The basis for determining the
portfolios is as follows:
A. Finance lease receivables
Finance lease receivables portfolio 1: Receivables not past due
Finance lease receivables portfolio 2: Overdue receivables
B. Other long-term receivables
Other long-term receivables portfolio 1: Deposits receivable
Other long-term receivables portfolio 2: Other receivables
For deposits receivable and other receivables, the Group refers to the historical credit loss experience, combined
with the current situation and the forecast of future economic conditions, and calculates the ECLs based on
default risk exposure and lifetime ECL rate.
Except for those of finance lease receivables and deposits receivable, the ECLs of other receivables and long-term
receivables classified as a portfolio are measured based on default risk exposure and ECL rate over the next 12
months or the entire lifetime.
Debt investments and other debt investments
For debt investments and other debt investments, the Group measures the ECLs based on the nature of the
investment, the types of counterparty and risk exposure, and default risk exposure and ECL rate within the next
12 months or the entire lifetime.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 29
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(6) Impairment of financial assets (Cont’d)
Assessment of significant increase in credit risk
In assessing whether the credit risk of a financial instrument has increased significantly upon initial recognition,
the Group compares the risk of default of the financial instrument at the balance sheet date with that at the date
of initial recognition to determine the relative change in risk of default within the expected lifetime of the financial
instrument.
In determining whether the credit risk has increased significantly upon initial recognition, the Group considers
reasonable and well-founded information, including forward-looking information, which can be obtained without
unnecessary extra costs or efforts. Information considered by the Group includes:
The debtor’s failure to make payments of principal and interest on their contractually due dates;
An actual or expected significant deterioration in a financial instrument’s external or internal credit rating (if any);
An actual or expected significant deterioration in the operating results of the debtor;
Existing or expected changes in the technological, market, economic or legal environment that have a significant
adverse effect on the debtor’s ability to meet its obligation to the Group.
Depending on the nature of the financial instruments, the Group assesses whether there has been a significant
increase in credit risk on either an individual basis or a collective basis. When the assessment is performed on a
collective basis, the financial instruments are grouped based on their common credit risk characteristics, such as
past due information and credit risk ratings.
The Group determines that the credit risk on a financial asset has increased significantly if it is more than 30 days
past due.
Credit-impaired financial assets
At balance sheet date, the Group assesses whether financial assets measured at amortised cost and debt
investments measured at fair value through other comprehensive income are credit-impaired. A financial asset is
credit-impaired when one or more events that have an adverse effect on the estimated future cash flows of the
financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observable
events:
Significant financial difficulty of the issuer or debtor;
A breach of contract by the debtor, such as a default or delinquency in interest or principal payments;
For economic or contractual reasons relating to the debtor’s financial difficulty, the Group having granted to the
debtor a concession that would not otherwise consider;
It becoming probable that the debtor will enter bankruptcy or other financial reorganisation;
The disappearance of an active market for that financial asset because of financial difficulties of the issuer or
debtor.
30 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont’d)
(6) Impairment of financial assets (Cont’d)
Presentation of provisions for ECLs
ECLs are remeasured at each balance sheet date to reflect changes in the financial instrument’s credit risk upon
initial recognition. Any change in the ECL amount is recognised as an impairment gain or loss in profit or loss for
the current period. For financial assets measured at amortised cost, the provisions of impairment is deducted
from the carrying amount of the financial assets presented in the balance sheet; for debt investments at fair value
through other comprehensive income, the Group makes provisions of impairment in other comprehensive income
without reducing the carrying amount of the financial asset.
Write-offs
The book balance of a financial asset is directly written off to the extent that there is no realistic prospect of
recovery of the contractual cash flows of the financial asset (either partially or in full). Such write-off constitutes
derecognition of such financial asset. This is generally the case when the Group determines that the debtor does
not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to
the write-off. However, financial assets that are written off could still be subject to enforcement activities in order
to comply with the Group’s procedures for recovery of amounts due.
If a write-off of financial assets is later recovered, the recovery is credited to profit or loss in the period in which
the recovery occurs.
(7) Transfer of financial assets
Transfer of financial assets refers to the transfer or delivery of financial assets to another party other than the
issuer of such financial assets (the transferee).
If the Group transfers substantially all the risks and rewards of ownership of the financial asset to the transferee,
the financial asset shall be derecognised. If the Group retains substantially all the risks and rewards of ownership
of a financial asset, the financial asset shall not be derecognised.
If the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset,
it accounts for the transaction as follows: if the Group does not retain control, it derecognises the financial asset
and recognises any resulting assets or liabilities; if the control over the financial asset is not waived, the relevant
financial asset is recognised according to the extent of its continuing involvement in the transferred financial asset
and the relevant liability is recognised accordingly.
(8) Offset of financial assets and financial liabilities
If the Group owns the legitimate rights of offsetting the recognised financial assets and financial liabilities, which
are enforceable currently, and the Group 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
presented in the balance sheet upon offsetting. Otherwise, financial assets and financial liabilities are presented
separately in the balance sheet without offsetting.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 31
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
11. Bills receivable
Method for determining the ECLs of bills receivable
The Company measures the loss provisions for bills receivable in accordance with the ECLs 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 ECLs of accounts receivable
For receivables and contract assets that do not contain significant financing components, the Company measures loss
provisions based on the ECL 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 ECL 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
32 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
13. Other receivables
Determination and accounting treatment of ECLs of other receivables
The Company measures impairment losses using the ECL 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 of the Group mainly include raw materials, work in progress, goods in stock, development products
and consumable biological assets, etc.
(2) Pricing of inventories dispatched
Inventories of the Group are measured at their actual cost when obtained. Cost of raw materials, goods in stock
and others will be calculated with weighted average method when being dispatched.
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 33
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
14. Inventories (Cont’d)
(3) Recognition of net realisable value of inventories and provision for inventory impairment
Net realisable value of inventories refers to the amount of the estimated price of inventories less the estimated
cost incurred upon completion, estimated sales expenses and taxes and levies. 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, provision for inventory impairment is made when the cost is higher than the net
realisable value. The Group usually make provision for inventory impairment based on categories of inventories. At
the balance sheet date, in case the factors causing inventory impairment no longer exists, the original provision for
inventory impairment shall be reversed.
(4) Inventory stock taking system
The Group implements permanent inventory system as its inventory stock taking system.
(5) Amortisation of low-value consumables and packaging materials
The low-value consumables of the Group are amortised when issued for use.
Packaging materials for turnover are amortised when issued for use.
15. Held for sale and discontinued operations
(1) Classification and measurement of non-current assets or disposal groups held for sale
A non-current asset or disposal group is classified as held for sale if its carrying amount will be recovered
principally through a sale transaction (including a non-monetary asset exchange with commercial substance)
rather than through continuing use.
The aforesaid non-current asset does not include the investment property subsequently measured at fair value,
the biological assets measured at the net amount of the fair value deducting the sales expense, the assets
generated from remuneration, financial assets, deferred income tax assets and rights from insurance contract.
A disposal group is a group of assets to be disposed of together as a whole by sale or other means in a
transaction, and liabilities directly associated with those assets that will be transferred in the transaction. In certain
circumstances, the disposal group includes the goodwill acquired in the business combination.
A non-current asset or a disposal group is classified as held for sale if it meets all of the following conditions: the
non-current asset or disposal group is available for immediate sale in its present condition subject only to terms
that are usual and customary for sales of such asset or disposal group; the sale is highly probable, i.e. a sale plan
has been resolved and a firm purchase commitment has been obtained, and the sale is expected to be completed
within one year. When the Group loses control of a subsidiary due to reasons such as disposal of investment in
a subsidiary, regardless of whether the Group retains part of the equity investment after the disposal, when the
investment in a subsidiary intended to be disposed of meets the conditions for classification as held for sale, the
investment in a subsidiary is classified as held for sale as a whole in the separate financial statements, and all
assets and liabilities of the subsidiary are classified as held for sale in the consolidated financial statements.
34 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
15. Held for sale and discontinued operations (Cont’d)
(1) Classification and measurement of non-current assets or disposal groups held for sale (Cont’d)
When the non-current assets or disposal groups held for sale are initially measured or remeasured at the balance
sheet date, the excess of the carrying amount over the net amount of the fair value less selling expenses is
recognised as asset impairment loss. For the amount of impairment loss recognised on disposal groups held
for sale, the carrying amount of the goodwill of the disposal group shall be offset against first, and then be
offset against the carrying amount of non-current assets according to the proportion of the carrying amount of
non-current assets.
If the net amount of the fair value of the non-current assets or disposal groups held for sale less the selling
expenses increases on the subsequent balance sheet date, the amount previously written down shall be
recovered and reversed in the amount of asset impairment loss recognised after be classified as held for sale, and
the reversed amount shall be included in the current profit and loss. The carrying amount of goodwill written off
shall not be reversed.
Non-current assets held for sale and assets in disposal group held for sale are not depreciated or amortised.
Interest and other expenses of a disposal group classified as held for sale continue to be recognised. For all or
part of an investment in an associate or a joint venture that is classified as held for sale, the part of being classified
as held for sale shall cease to be accounted for using the equity method, while any retained portion (not classified
as held for sale) shall continue to be accounted for using the equity method; The Group ceases to use the equity
method from the date when the Group ceases to have significant influence over an associate or a joint venture.
If a non-current asset or disposal group is classified as held for sale but subsequently no longer meets the criteria
for being classified as held for sale, the Group shall cease to classify it as held for sale and measure it at the lower
of:
the carrying amount of the asset or disposal group before being classified as held for sale is adjusted by the
depreciation, amortisation or impairment that would have been recognised if the asset or disposal group
had not been classified as held for sale;
recoverable amount.
(2) Discontinued operations
A discontinued operation is a component of the Group that either has been disposed of or is classified as held for
sale, and can be distinguished separately, and meets one of the following conditions:
The component represents a separate major line of business or geographical area of operations.
The component is part of a related plan to dispose of a separate major line of business or geographical area
of operations.
The component is a subsidiary acquired exclusively with a view to resale.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 35
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
15. Held for sale and discontinued operations (Cont’d)
(3) Presentation
The Group presents the non-current assets held for sale or the assets in the disposal group held for sale as “assets
held-for-sale” and the liabilities in the disposal group held for sale as “liabilities held-for-sale” in the balance sheet.
The Group presents profit or loss from continuing operations and profit or loss from discontinued operations in
the income statement. For non-current assets and disposal groups held for sale that do not meet the definition
of discontinued operation, their impairment losses and reversal amounts and gains or losses are presented as
profit or loss from continuing operations. Operating profit or loss such as impairment loss and reversal amount of
discontinued operation and disposal gain or loss is presented as profit or loss from discontinued operation.
Disposal groups that are intended to be closed for use rather than for sale and meet the conditions for the
components in the definition of discontinued operations are presented as discontinued operations from the date
of cessation of use.
For the discontinued operations presented in the current period, the information originally presented as profit
or loss from continuing operations in the current financial statements is re-presented as profit or loss from
discontinued operations in the comparable accounting period. If the discontinued operations no longer meet
the conditions for being classified of held-for-sale, the information originally presented as profit or loss from
discontinued operations in the current financial statements shall be re-presented as profit or loss from continuing
operations in the comparable accounting period.
16. Long-term receivables
The Company measures the impairment loss of long-term receivables at an amount equal to the ECLs in the next 12
months or the lifetime ECLs, 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.
36 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
17. Long-term equity investments
Long-term equity investments include the equity investments in subsidiaries, joint ventures and associates. Associates
of the Group are those investees that the Group imposes significant influence over.
(1) Determination of initial investment cost
Long-term equity investments acquired through business combinations: for a long-term equity investment
acquired through a business combination involving enterprises under common control, the investment cost shall
be the absorbing party’s share of the carrying amount of the owners’ equity under the consolidated financial
statements of the ultimate controlling party on the date of combination. For a long-term equity investment
acquired through a business combination involving enterprises not under common control, the investment cost of
the long-term equity investment shall be the cost of combination.
Long-term equity investments acquired through other means: for a long-term equity investment acquired by cash
payment, the initial investment cost shall be the purchase cost actually paid; for a long-term equity investment
acquired by issuing equity securities, the initial investment cost shall be the fair value of equity securities issued.
(2) Subsequent measurement and method for profit or loss recognition
Investments in subsidiaries shall be accounted for using the cost method. Except for the investments which meet
the conditions of holding for sale, investments in associates and joint ventures shall be accounted for using the
equity method.
For a long-term equity investment accounted for using the cost method, the cash dividends or profits declared by
the investees for distribution shall be recognised as investment gains and included in profit or loss for the current
period, except the case of 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.
For a long-term equity investment accounted for using the equity method, where the initial investment cost
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 investment cost of the long-term equity investment. 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, adjustment shall be made to the carrying amount of the long-term equity investment, and the difference shall
be charged to profit or loss for the current period.
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 Group’s share of profit or cash dividend distributed
by the investee. In respect of the other movement of net profit or loss, other comprehensive income and profit
distribution of investee, the carrying amount of long-term equity investment shall be adjusted and included in
the capital reserves (other capital reserves). The Group shall recognise its share of the investee’s net profits or
losses based on the fair values of the investee’s individual separately identifiable assets at the time of acquisition,
after making appropriate adjustments thereto according to the accounting policies and accounting periods of the
Group.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 37
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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)
For additional equity investment made in order to obtain significant influence or common control over investee
without resulted in control, the initial investment cost under the equity method shall be the aggregate of fair
value of previously held equity investment and additional investment cost on the date of transfer. The difference
between the fair value and carrying amount of previously held equity investment on the date of transfer and the
accumulated change in fair value originally included in other comprehensive income shall be recognised in the
profit or loss for the current period under the equity method.
In the event of loss of common control or significant influence over investee due to partial disposal of equity
investment, the remaining equity interest after disposal shall be accounted for according to the Accounting
Standard for Business Enterprises No. 22 – Recognition and measurement of Financial Instruments. The difference
between its fair value and carrying amount 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 related to the
previous equity investment shall be transferred to profit or loss for the current period.
In the event of loss of control over investee due to partial disposal of equity investment, 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 Accounting Standard for Business Enterprises No. 22 – Recognition and measurement 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.
If the shareholding ratio of the Company is reduced due to the capital increase of other investors, and as a result,
the Company loses the control of but still can apply common control or impose significant influence over the
investee, the net asset increase due to the capital increase of the investee attributable to the Company shall be
recognised according to the new shareholding ratio, and the difference with the original carrying amount of the
long-term equity investment corresponding to the shareholding ratio reduction part that should be carried forward
shall be recorded in the profit or loss for the current period; and then it shall be adjusted according to the new
shareholding ratio as if equity method is used for accounting when acquiring the investment.
In respect of the transactions between the Group and its associates and joint ventures, the share of unrealised
gain or loss arising from internal transactions shall be eliminated by the portion attributable to the Group.
Investment gain shall be recognised accordingly. However, any unrealised loss arising from internal transactions
between the Group and an investee is not eliminated to the extent that the loss is impairment loss of the
transferred assets.
(In case of using accounting policy options, the following disclosure should be added:
The Group’s long-term equity investments in associates and joint ventures, which are held indirectly by venture
capital institutions, mutual funds, trust companies or similar entities including investment-linked insurance funds,
are measured at fair value and their changes are included in the profit or loss.)
38 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
17. Long-term equity investments (Cont’d)
(3) Basis for determining the common control and significant influence on the investee
Common control is the 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. When determining
if there is any common control, it should first be identified if the arrangement is controlled by all the participants
or the group consisting of the participants, and then determined if the decision on the arranged activity can be
made only with the unanimous consent of the participants sharing the control. If all the participants or a group
of participants can only decide the relevant activities of certain arrangement through concerted action, it can
be considered that all the participants or a group of participants share common control on the arrangement. If
there are two or more participant groups that can collectively control certain arrangement, it does not constitute
common control. When determining if there is any common control, the relevant protection rights will not be taken
into account.
Significant influence is the power of the investor 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. When
determining if there is any significant influence on the investee, the influence of the voting shares of the investee
held by the investor directly and indirectly and the potential voting rights held by the investor and other parties
which are exercisable in the current period and converted to the equity of the investee, including the warrants,
stock options and convertible bonds that are issued by the investee and can be converted in the current period,
shall be taken into account.
When the Company holds directly or indirectly through the subsidiary 20% (inclusive) to 50% of the voting shares
of the investee, it is generally considered to have significant influence on the investee, unless there is concrete
evidence to prove that it cannot participate in the production and operation decision-making of the investee and
cannot pose significant influence in this situation. When the Group owns less than 20% of the voting shares of the
investee, it is generally considered that it has not significantly influenced on the investee, unless there is concrete
evidence to prove that it can participate in the production and operation decision-making of the investee and
cannot pose significant influence in this situation.
(4) Method for impairment test and measurement of impairment provision
For the method for making impairment provision for the investment in subsidiaries, associates and joint ventures,
please refer to Note V. 25.
18. Investment property
Measurement of investment property
Measured by using the cost method
Investment property refers to real estate held to earn rentals or for capital appreciation, or both. The investment property
of the Group includes leased land use rights, land use rights held for sale after appreciation, and leased buildings.
The investment property of the Group is measured initially at cost upon acquisition, and subject to depreciation or
amortisation in the relevant periods according to the relevant provisions on fixed assets or intangible assets.
For the method for making impairment provision for the investment property adopted cost method for subsequent
measurement, please refer to Note V. 25.
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.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 39
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
19. Fixed assets
(1) Conditions for recognition of fixed assets
Fixed assets of the Group 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 of the Group shall be initially measured at actual cost when acquired.
(2) Depreciation method of various types of fixed assets
The Group adopts the straight-line method for depreciation. Provision for depreciation will be started when the
fixed asset reaches its expected usable state, and stopped when the fixed asset is derecognised or classified as
a non-current asset held for sale. Without regard to the depreciation provision, the Group determines the annual
depreciation rate of various types of fixed assets by category, estimated useful lives and estimated residual value
of the fixed assets, as shown below:
Estimated Annual
Useful lives residual value depreciation
Category (Year) (%) rate (%)
Housing and building structure 20-40 5-10 2.25-4.75
Machinery and equipment 8-20 5-10 4.50-11.88
Transportation equipment 5-8 5-10 11.25-19.00
Electronic equipment and others 5 5-10 18.00-19.00
Where, for the fixed assets for which depreciation provision is made, to determine the depreciation rate, the
accumulated amount of the fixed asset depreciation provision that has been made shall be deducted.
(3) The impairment test method and impairment provision method of the fixed assets are set out in Note V. 25.
(4) The Group will recheck the useful lives, estimated net residual value and depreciation method of the fixed assets
at the end of each year.
When there is any difference between the useful lives estimate and the originally estimated value, the useful
lives of the fixed asset shall be adjusted. When there is any difference between the estimated net residual value
estimate and the originally estimated value, the estimated net residual value of the fixed asset shall be adjusted.
(5) Overhaul expense
For the overhaul expense incurred by the Group during the regular inspection on the fixed assets, if there is
concrete evidence to prove that it meets the fixed asset recognition condition, it shall be included in the cost of
fixed asset; if it does not meet the fixed asset recognition condition, it shall be included in the profit or loss for the
current period. The depreciation of fixed assets shall be continued in the intervals of the regular overhaul of the
fixed asset.
40 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
20. Construction in progress
Construction in progress of the Group is recognised based on the actual construction cost, including all necessary
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 impairment provision of construction in progress is set out in Note V. 25.
21. Borrowing costs
(1) Recognition principle for the capitalisation of the borrowing costs
The borrowing costs incurred by the Group directly attributable to the acquisition, construction or production
of a qualifying asset will be capitalised and included in the cost of relevant asset. Other borrowing costs will be
recognised as expenses when incurred according to the incurred amount, and included in the profit or loss for the
current period. When the borrowing costs meet all the following conditions, capitalisation shall be started:
The capital expenditure has been incurred, which includes the expenditure incurred by paying cash,
transferring non-cash assets or undertaking interest-bearing liabilities for acquiring, constructing or
producing the qualifying assets;
The borrowing costs have been incurred;
The acquisition, construction or production activity necessary for the asset to be ready for its intended use
or sale has been started.
(2) Capitalisation period of borrowing costs
When a qualifying asset acquired, constructed or produced by the Group is ready for its intended use or sale,
the capitalisation of the borrowing costs shall discontinue. The borrowing costs incurred after a qualifying asset
is ready for its intended use or sale shall be recognised as expenses when incurred according to the incurred
amount, and included in the profit or loss for the current period.
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. The capitalisation of the borrowing costs shall be continued in the normal interruption period.
(3) Calculation methods for capitalisation rate and capitalisation amount of the borrowing costs
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.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
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.
23. Right-of-use assets
(1) Conditions for recognition of right-of-use assets
Right-of-use assets of the Group are defined as the right of underlying assets in the lease term for the Group as a
lessee.
Right-of-use assets are initially measured at cost at the commencement date of the lease. The cost includes the
amount of the initial measurement of lease liability; lease payments made at or before the inception of the lease
less any lease incentives enjoyed; initial direct costs incurred by the Group as lessee; costs to be incurred in
dismantling and removing the underlying assets, restoring the site on which it is located or restoring the underlying
asset to the condition required by the terms and conditions of the lease incurred by the Group as lessee. As
a lessee, the Group recognises and measures the costs of dismantling and restoration in accordance with the
Accounting Standard for Business Enterprises No. 13 – Contingencies. Subsequently, the lease liability is adjusted
for any remeasurement of the lease liability
(2) Depreciation method of right-of-use assets
The Group uses the straight-line method for depreciation. Where the Group, as a lessee, is reasonably certain to
obtain ownership of the leased asset at the end of the lease term, such asset is depreciated over the remaining
useful life of the leased asset. 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
(3) For the methods of impairment test and impairment provision of right-of-use assets, please refer to Note V. 25.
42 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
24. Intangible assets
The intangible assets of the Group include land use rights, software and certificates of third party right.
The intangible asset is initially measured at cost, and its useful life is determined upon acquisition. If the useful life is
finite, the intangible asset will be amortised over the estimated useful life using the amortisation method that can reflect
the estimated realisation of the economic benefits related to the asset, starting from the time when it is available for use.
If it is unable to reliably determine the estimated realisation, straight-line method shall be adopted for amortisation. The
intangible assets with uncertain useful life will not be amortised.
The amortisation methods for the intangible assets with finite useful life are as follows:
Type Useful life Method of amortisation
Land use rights 50-70 Straight-line method
Software 5-10 Straight-line method
Certificates of third party right 3 Straight-line method
The Group reviews the useful life and amortisation method of the intangible assets with finite useful life at the end of
each year. If it is different from the previous estimates, the original estimates will be adjusted, and will be treated as a
change in accounting estimate.
If it is estimated on the balance sheet date that certain intangible asset can no longer bring future economic benefit to
the company, the carrying amount of the intangible asset will be entirely transferred into the profit or loss for the current
period.
The impairment method for the intangible assets is set out in Note V. 25.
25. Asset impairment
Impairment of long-term equity investments in subsidiaries, associates and joint ventures, investment property, fixed
assets, construction in progress, intangible assets, goodwill and others (excluding inventories, deferred tax assets and
financial assets) subsequently measured at cost is determined as follows:
The Group determines if there is any indication of asset impairment as at the balance sheet date. If there is any evidence
indicating that an asset may be impaired, recoverable amount shall be estimated for impairment test. Goodwill arising
from business combinations, intangible assets with an indefinite useful life and intangible assets not ready for use will be
tested for impairment annually, regardless of whether there is any indication of impairment.
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. The Group estimates the recoverable amount of an individual
asset. If it is not possible to estimate the recoverable amount of the individual asset, the Group shall determine the
recoverable amount of the asset group to which the asset belongs. The determination of an asset group is based on
whether major cash inflows generated by the asset group are independent of the cash inflows from other assets or asset
groups.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
25. Asset impairment (Cont’d)
When the recoverable amount of an asset or an asset group is less than its carrying amount, the carrying amount is
reduced to its recoverable amount. The reduction amount is charged to profit or loss and an impairment provision is
made accordingly.
For the purpose of impairment test of goodwill, the carrying amount of goodwill acquired in a business combination is
allocated to the relevant asset groups on a reasonable basis from the acquisition date; where it is difficult to allocate
to the related asset groups, it is allocated to the combination of related asset groups. The related asset groups or
combination of asset groups are those which can benefit from the synergies of the business combination and are not
larger than the reportable segments identified by the Group.
In the impairment test, if there is any indication that an asset group or a combination of asset groups related to goodwill
may be impaired, the Group first tests the asset group or set of asset groups excluding goodwill for impairment,
calculates the recoverable amount and recognises the corresponding impairment loss. An impairment test is then carried
out on the asset group or combination of asset groups containing goodwill by comparing its carrying amount with its
recoverable amount. If the recoverable amount is lower than the carrying amount, an impairment loss is recognised for
goodwill.
An impairment loss recognised shall not be reversed in a subsequent period.
26. Long-term prepaid expenses
The long-term prepaid expenses incurred by the Group shall be recognised based on the actual cost, and evenly
amortised over the estimated benefit period. For the long-term prepaid expense that cannot benefit the subsequent
accounting periods, its value after amortisation shall be entirely included in the profit or loss for the current period.
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) Scope of employee benefits
Employee benefits are all forms of considerations or compensation given by an entity in exchange for services
rendered by employees or for the termination of employment. Employee benefits include short-term staff
remuneration, post-employment benefits, termination benefits and other long-term employee benefits. Employee
benefits include benefits provided to employees’ spouses, children, other dependants, survivors of the deceased
employees or to other beneficiaries.
Employee benefits are presented as “employee benefits payable” and “long-term employee benefits payable” in
the balance sheet, respectively, according to liquidity.
44 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
28. Employee benefits (Cont’d)
(2) Short-term staff remuneration
Employee wages or salaries actually incurred, bonuses, and social insurance contributions such as medical
insurance, work injury insurance, maternity insurance, and housing fund, contributed at the applicable benchmarks
and rates, are recognised as a liability as the employees provide services, with a corresponding charge to profit or
loss or included in the cost of assets where appropriate. Where the payment of liability is expected not to be fully
settled within 12 months after the end of the annual reporting period in which the employees render the related
services, and the financial impact would be material, these liabilities are measured at their discounted values.
(3) Post-employment benefits
Post-employment benefit plans include defined contribution plans and defined benefit plans. A defined
contribution plan is a post-employment benefit plan under which the Group pays fixed contributions into a
separate fund and the Group has no further obligations for payment. A defined benefit plan is a post-employment
benefit plan other than a defined contribution plan.
Defined contribution plans
Defined contribution plans include basic pension insurance and unemployment insurance.
During the accounting period in which an employee provides service, the amount payable calculated according to
the defined contribution plan is recognised as a liability and included in the profit or loss for the current period or
the cost of relevant assets.
(4) Termination benefits
When the Group provides termination benefits to employees, employee benefits liabilities arising from termination
benefits are recognised in profit or loss for the current period at the earlier of the following dates: when the Group
cannot revoke unilaterally compensation for dismissal due to the cancellation of labour relationship plans and
employee redundant proposals; the Group recognises cost and expenses related to payment of compensation for
dismissal and restructuring.
For the early retirement plans, economic compensations before the actual retirement date were classified as
termination benefits. During the period from the date of cease of render of services to the actual retirement
date, relevant wages and contribution to social insurance for the employees proposed to be paid are recognised
in profit or loss on a one-off basis. Economic compensation after the official retirement date, such as normal
pension, is accounted for as post-employment benefits.
(5) Other long-term benefits
Other long-term employee benefits provided by the Group to employees that meet the conditions for defined
contribution plans are accounted for in accordance with the relevant provisions relating to defined contribution
plans as stated above. If the conditions for defined benefit plans are met, the benefits shall accounted for in
accordance with the relevant provisions relating to defined benefit plans, but the “changes arising from the
remeasurement of the net liabilities or net assets of the defined benefit plans” in the relevant employee benefits
shall be included in the current profit or loss or the relevant asset cost.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
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 Group;
(2) it is likely that an outflow of economic benefits from the Group will be resulted from the performance of the
obligation; and
(3) the amount of the obligation can be reliably measured.
The provisions shall be initially measured based on the best estimate for the expenditure required for the performance
of the current obligation, after taking into account relevant risks, uncertainties, time value of money and other factors
pertinent to the contingencies. If the time value of money has significant influence, the best estimates shall be
determined after discounting the relevant future cash outflow. The Group reviews the carrying amount of the provisions
on the balance sheet date and adjust the carrying amount to reflect the current best estimates.
If all or some expenses incurred for settlement of recognised 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.
30. Share-based payments
(1) Category of share-based payment
The Group’s share-based payment is equity-based.
(2) Fair value of equity instrument
For the existence of an active market for options and other equity instruments granted by the Group, the fair value
is determined at the active market quotations. For options and other equity instruments with no active market,
option pricing model shall be used to estimate the fair value of the equity instruments. The following factors shall
be taken into account using option pricing models: A. the exercise price of the option, B. the validity of the option,
C. the current market price of the share, D. the expected volatility of the share price, E. predicted dividend of the
share, and F. risk-free rate of the option within the validity period.
(3) Recognition of vesting of equity instrument based on the best estimate
During the waiting period at each balance sheet date, the Group shall make the best available estimate of
the number of equity instruments expected to vest and shall revise that estimate, if necessary, if subsequent
information indicates that the number of equity instruments expected to vest differs from previous estimates.
On the vesting date, the entity shall revise the estimate to equal the number of equity instruments that ultimately
vested.
46 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
30. Share-based payments (Cont’d)
(4) Accounting treatment of implementation, modification and termination of share-based payment
Equity-settled share-based payment is measured at the fair value of the equity instruments granted to employees.
For the shares exercise immediately after the grant, the fair value of equity instrument at the grant date included
in the relevant costs or expenses and increase in capital reserve accordingly. Within the vesting period, it will
recognise the received service-related costs or expense and capital reserves for each reporting date based on the
best estimate of the number of vested equity instruments on the grant date of the equity instruments value. After
the vesting period, relevant costs or expenses and total shareholders’ equity has been confirmed and will not be
adjusted.
When there is changes in Group’s share-based payment plans, if the modification increases the fair value of the
equity instruments granted, corresponding recognition of service increase in accordance with the increase in the
fair value of the equity instruments; if the modification increases the number of equity instruments granted, the
increase in fair value of the equity instruments is recognised as a corresponding increase in service achieved.
Increase in the fair value of equity instruments refer to the difference between the fair values of the modified date.
If the modification reduces the total fair value of shares paid or not conductive to the use of other employees
share-based payment plans to modify the terms and conditions of service, it will continue to be accounted for in
the accounting treatment, as if the change had not occurred, unless the Group cancelled some or all of the equity
instruments granted.
During the vesting period, if the cancelled equity instruments (except for failure to meet the conditions of the
non-market vesting conditions, such as length of service performance conditions or market conditions are
cancelled) granted by the Group to cancel the equity instruments granted amount treated as accelerated vesting
of the remaining period should be recognised immediately in profit or loss, while recognizing the capital reserve. If
employees or other parties can choose to meet non-vesting conditions but they are not met in the vesting period,
the Group will treat them as cancelled equity instruments granted.
31. Preference shares, perpetual bonds and other financial instruments
(1) Classification of financial liabilities and equity instruments
Financial instruments issued by the Group are classified into financial assets, financial liabilities or equity
instruments on the basis of the substance of the contractual arrangements and the economic nature not only
its legal form, together with the definition of financial asset, financial liability and equity instruments on initial
recognition.
(2) Accounting treatment of preference shares, perpetual bonds and other financial instruments
Financial instruments issued by the Group are initially recognised and measured in accordance with the financial
instrument standards; thereafter, interest or dividends are accrued on each balance sheet date and accounted for
in accordance with relevant specific ASBEs, i.e. to determine the accounting treatment for interest expenditure
or dividend distribution of the instrument based on the classification of the financial instrument issued. For
financial instruments classified as equity instruments, their interest expenses or dividend distributions are treated
as profit distribution of the Group, and their repurchases and cancellations are treated as changes in equity;
for financial instruments classified as financial liabilities, their interest expenses or dividend distribution are in
principle accounted for with reference to borrowing costs, and the gains or losses arising from their repurchases
or redemption are included in the profit or loss for the current period.
For the transaction costs such as fees and commissions incurred by the Group for issuing financial instruments, if
such financial instruments are classified as debt instruments and measured at amortised cost, they are included
in the initial measured amount of the instruments issued; if such financial instruments are classified as equity
instruments, they are deducted from equity.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 47
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
32. Revenue
(1) General principles
The Group recognises revenue when it satisfies a performance obligation in the contract, i.e. when the customer
obtains control of the relevant goods or services.
Where a contract has two or more performance obligations, the Group allocates the transaction price to each
performance obligation based on the percentage of respective unit price of goods or services guaranteed by
each performance obligation, and recognises as revenue based on the transaction price that is allocated to each
performance obligation.
If one of the following conditions is fulfilled, the Group performs its performance obligation within a certain period;
otherwise, it performs its performance obligation at a point of time:
when the customer simultaneously receives and consumes the benefits provided by the Group when the
Group performs its obligations under the contract;
when the customer is able to control the goods in progress in the course of performance by the Group
under the contract;
when the goods produced by the Group under the contract are irreplaceable and the Group has the right to
payment for performance completed to date during the whole contract term.
For performance obligations performed within a certain period, the Group recognises revenue by measuring
the progress towards complete of that performance obligation within that certain period. When the progress
of performance cannot be reasonably determined, if the costs incurred by the Group are expected to be
compensated, the revenue shall be recognised at the amount of costs incurred until the progress of performance
can be reasonably determined.
For performance obligation performed at a point of time, the Group recognises revenue at the point of time at
which the customer obtains control of relevant goods or services. To determine whether a customer has obtained
control of goods or services, the Group considers the following indications:
the Group has the current right to receive payment for the goods, which is when the customers have the
current payment obligations for the goods;
the Group has transferred the legal title of the goods to the customer, which is when the client possesses
the legal title of the goods;
the Group has transferred the physical possession of goods to the customer, which is when the customer
obtains physical possession of the goods;
the Group has transferred all of the substantial risks and rewards of ownership of the goods to the customer,
which is when the customer obtain all of the substantial risks and rewards of ownership of the goods to the
customer;
the customer has accepted the goods;
other information indicates that the customer has obtained control of the goods.
48 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
32. Revenue (Cont’d)
(1) General principles (Cont’d)
The Group’s right to consideration in exchange for goods or services that the Group has transferred to customers
(and such right depends on factors other than passage of time) is accounted for as contract assets, and contract
assets are subject to impairment based on ECLs (see Note V. 25). The Group’s unconditional right to receive
consideration from customers (only depends on passage of time) is accounted for as accounts receivable. The
Group’s obligation to transfer goods or services to customers for which the Group has received or should receive
consideration from customers is accounted for as contract liabilities.
Contract assets and contract liabilities under the same contract are presented on a net basis. Where the net
amount has a debit balance, it is presented in “contract assets” or “other non-current assets” according to its
liquidity. Where the net amount has a credit balance, it is presented in “contract liabilities” or “other non-current
liabilities” according to its liquidity.
(2) Specific methods
Specific method for revenue recognition of machine-made paper business of the Group: in terms of domestic
sales of machine-made paper, revenue is recognised when goods are delivered to the customers and such
deliveries are confirmed; while in terms of overseas sales of machine-made paper, revenue is recognised on the
day when goods are loaded on board and declared.
Specific method for recognition of finance lease income of the Group: according to the repayment schedule, the
income is recognised by instalments according to the effective interest rate.
Specific method for recognition of revenue from real estate of the Group: revenue is recognised by amortising the
rental income on a straight-line basis over the lease term.
33. Government grants
A government grant is recognised when there is reasonable assurance that the grant will be received and that the Group
will comply with the conditions attaching to the grant.
If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received or
receivable. If a government grant is in the form of a transfer of non-monetary asset, it is measured at fair value; if the fair
value cannot be obtained in a reliable way, it is measured at the nominal amount of RMB1.
Government grants obtained for acquisition or construction of long-term assets or other forms of long-term asset
formation are classified as government grants related to assets, while the remaining government grants are classified as
government grants related to revenue.
Regarding the government grant not clearly defined in the official documents and can form long-term assets, the part
of government grant which can be referred to the value of the assets is classified as government grant related to assets
and the remaining part is government grant related to revenue. For the government grant that is difficult to distinguish,
the entire government grant is classified as government grant related to revenue.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 49
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
33. Government grants (Cont’d)
A government grant related to an asset shall be recognised as deferred income, and evenly amortised to profit or loss
over the useful life of the asset in a reasonable and systematic manner. For a government grant related to revenue, if
the grant is a compensation for related costs, expenses or losses incurred, the grant shall be recognised in profit or loss
for the current period; 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, expenses or losses are recognised. A government grant measured at nominal amount is directly included
in profit or loss for the current period. The Group adopts a consistent approach to the same or similar government
grants.
A government grant related to daily activities is recognised in other gains 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.
For the policy preferential interest subsidy, if it is provided by the financial authority through banks, it is recognised
at the amount of borrowings actually received, and the borrowings costs are calculated based on the principal of the
borrowings and the policy preferential interest rate; if it is provided by the financial authority directly, the corresponding
interest will be used to offset the relevant borrowing expenses.
34. Deferred income tax assets and deferred income tax liabilities
Income tax comprises current income tax expense and deferred income tax expense, which are included in profit or
loss for the current period as income tax expenses, except for deferred tax related to transactions or events that are
directly recognised in owners’ equity which are recognised in owners’ equity, and deferred tax arising from a business
combination, which is adjusted against the carrying amount of goodwill.
Temporary differences arising from the difference between the carrying amount of an asset or liability and its tax base
at the balance sheet date of the Group shall be recognised as deferred income tax using the balance sheet liability
method.
All the taxable temporary differences are recognised as deferred income tax liabilities except for those incurred in the
following transactions:
(1) 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) when the transaction
occurs;
(2) The taxable temporary differences associated with investments in subsidiaries, associates and joint ventures,
and the Group 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.
50 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
34. Deferred income tax assets and deferred income tax liabilities (Cont’d)
The Group recognises a deferred income tax asset for the carry forward of deductible temporary differences, 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 temporary differences, deductible losses and tax credits can be utilised, except for those
incurred in the following transactions:
(1) The transaction is neither a business combination nor affects accounting profit or taxable profit (or deductible loss)
when the transaction occurs;
(2) The deductible temporary differences associated with investments in subsidiaries, associates and joint ventures,
the corresponding deferred income tax asset is recognised when both of the following conditions are satisfied: it is
probable that the temporary difference will reverse in the foreseeable future, and it is probable that taxable profits
will be available in the future, against which the temporary difference 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, and their tax effect is
reflected accordingly.
At the balance sheet date, the Group reviews 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 tax asset to be utilised,
the carrying amount of the deferred tax asset is reduced. Any such reduction in amount is reversed when it becomes
probable that sufficient taxable profits will be available.
35. Lease
(1) Identification of leases
On the beginning date of the contract, the Group (as a lessee or lessor) assesses whether the customer in
the contract has the right to obtain substantially all of the economic benefits from use of the identified asset
throughout the period of use and has the right to direct the use of the identified asset throughout the period of
use. If a contract conveys the right to control the use of an identified asset and multiple identified assets for a
period of time in exchange for consideration, the Group identifies such contract is, or contains, a lease
(2) The Group as lessee
On the beginning date of the lease, the Company recognises right-of-use assets and lease liabilities for all leases,
except for short-term lease and low-value asset lease with simplified approach.
The accounting policy for right-of-use assets is set out in Note V. 23.
The lease liability is initially measured at the present value of the lease payments that are not paid at the beginning
date of the lease using the interest rate implicit in the lease or the incremental borrowing rate. Lease payments
include fixed payments and in-substance fixed payments, less any lease incentives receivable; variable lease
payments that are based on an index or a rate; the exercise price of a purchase option if the lessee is reasonably
certain to exercise that option; payments for terminating the lease, if the lease term reflects the lessee exercising
that option of terminating; and amounts expected to be payable by the lessee under residual value guarantees.
Subsequently, the interest expense on the lease liability for each period during the lease term is calculated using a
constant periodic rate of interest and is recognised in profit or loss for the current period. Variable lease payments
not included in the measurement of lease liabilities are charged to profit or loss in the period in which they actually
arise. The Group calculates the interest expense of the lease liability for each period of the lease term based on
the fixed periodic interest rate and is included in the current profit and loss. The variable lease payments that are
not included in the measurement of the lease liability are recognised in profit or loss when incurred.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 51
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
35. Lease (Cont’d)
(2) The Group as lessee (Cont’d)
Short-term lease
Short-term leases refer to leases with a lease term of less than 12 months from the commencement date, except
for those with a purchase option.
Lease payments on short-term leases are recognised in the cost of related assets or current profit or loss on a
straight-line basis over the lease term.
For short-term leases, the Group chooses to adopt the above simplified approach for the following types of assets
that meet the conditions of short-term lease according to the classification of leased assets.
Low-valve machinery and equipment
Transportation vehicles
Low-value asset lease
A low-value asset lease is a lease that the value of a single leased asset is below RMB2,000,000 when it is a new
asset.
For a low-value asset lease, the Group chooses the above simplified approach based on the specific
circumstances of each lease.
Lease payments on low-value asset leases are recognised on a straight-line basis over the lease term, and either
included in the cost of the related asset or charged to profit or loss for the current period.
(3) The Group as lessor
When the Group is a lessor, a lease is classified as a finance lease whenever the terms of the lease transfer
substantially all the risks and rewards of asset ownership to the lessee. All leases other than financial leases are
classified as operating leases.
Operating lease
Lease payments under operating leases are recognised in profit or loss on a straight-line basis over the lease term.
Initial direct costs incurred in relation to operating leases are capitalised and amortised over the lease term on the
same basis as rental income and recognised in profit or loss for the current period. The variable lease payments
obtained in relation to operating leases that are not included in the lease payments are recognised in profit or loss
in the period in which they actually incurred.
52 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
35. Lease (Cont’d)
(4) Sale and leaseback
The lessee and the lessor shall assess and determine whether the transfer of assets in a sale and leaseback
transaction is a sale in accordance with the requirements of the Accounting Standard for Business Enterprises No.
14 – Revenue.
Where asset transfer under the sale and leaseback transactions is a sale, the lessee shall measure the right-of-use
assets created by the sale and leaseback based on the portion of carrying amount of the original assets related
to right of use obtained upon leaseback, and only recognise relevant profit or loss for the right transferred to
the lessor. The lessor shall account for the purchase of assets in accordance with other applicable ASBEs and
account for the lease of assets in accordance with this standard.
Where asset transfer under the sale and leaseback transactions is not a sale, the lessee shall continue to
recognise the transferred assets while recognising a financial liability equal to the transfer income and account
for such liability according to the Accounting Standard for Business Enterprises No. 22 – Recognition and
Measurement of Financial Instruments; or not to recognise the transferred assets but recognise a financial asset
equal to the transfer income and account for such asset according to the Accounting Standard for Business
Enterprises No. 22 – Recognition and Measurement of Financial Instruments.
36. General risk reserves
General risk reserve is a reserve provided from net profit for the partial offset unidentified possible losses
Adopting the principle of dynamic provisioning, the Finance Company employs the standard method to quantitatively
analyse the risk situation faced by risk assets, to determine the estimated potential risk value. After calculating the
potential risk value, if the potential risk value is higher than the provision for impairment of assets, the accrued provision
for impairment of assets will be deducted and provision for general risk will be made. If the potential risk value is lower
than the provision for impairment of assets, provision for general risk will not be made.
Dynamic provisioning is a counter-cyclical provisioning method adopted by financial companies based on changes
in the macroeconomic situation, as in, in the upward cycle of macro economy and when the risk asset default rate
is relatively low, more provisions are made to enhance financial buffer capacity; and in the downturn cycle of macro
economy and when the risk asset default rate is relatively high, the accumulated provisions are used to absorb asset
losses.
The Finance Company makes general risk provisions for assets bearing risks and losses at the end of each year, the
balance of which, in principle, shall not be lower than 1.5% of the closing balance of risk assets. The risk provision
made by factoring companies shall not be lower than 1% of the closing balance of the financial factoring business.
Based on changes in the macroeconomic situation, and with reference to non-performing corporate loans,
non-performing loan ratio, provision coverage ratio for non-performing loans, loan provision ratio, standard risk factor
and the requirement of general risk provision as a percentage of risk assets, the Ministry of Finance makes adjustments
to the scope of risk assets for general risk provisions, standard risk factor and the requirement of general risk provision
as a percentage of risk assets as appropriate. The Finance Company shall make adjustments accordingly according to
the requirements of the Ministry of Finance.
Provisions for general risk are insufficient, in principle, the company shall not engage in after-tax profit distribution. As
considered and approved by the board of directors and general meeting of the Finance Company, such provisions may
be used to offset losses but not for dividends. For special reasons, as approved by the Board and the general meeting,
general risk reserves may be reclassified into undistributed profits.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 53
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
37. Critical accounting judgments and estimates
The Group gives continuous assessment on, among other things, the reasonable expectations of future events and the
critical accounting estimates and key assumptions adopted according to its historical experience and other factors. The
critical accounting estimates and key assumptions that are likely to lead to significant adjustment risks of the carrying
amount of assets and liabilities for the next financial year are listed as follows:
Classification of financial assets
Significant judgements involved in determining the classification of financial assets include the analysis of business
models and contractual cash flow characteristics.
Factors considered by the Group in determining the business model for a group of financial assets include how the
asset’s performance is evaluated and reported to key management personnel, how risks are assessed and managed
and how the relevant management personnel are compensated.
When the Group assesses whether the contractual cash flows of the financial assets are consistent with basic lending
arrangements, the main judgements are described as below: whether the principal amount may change over the life of
the financial asset (for example, if there are repayments of principal); whether the interest includes only consideration
for the time value of money, credit risk, other basic lending risks and a profit margin and cost. For example, whether
the amount repaid in advance reflects only the outstanding principal and interest thereon, as well as reasonable
compensation paid for early termination of the contract.
Measurement of the ECLs of accounts receivable
The Group calculates the ECLs of accounts receivable using the exposure to default risk and ECL rate of accounts
receivable, and determines the ECL rate based on default probability and default loss rate. When determining the ECL
rate, the Group adjusts its historical data by referring to information such as historical credit loss experience as well as
current situation and forward-looking information. When considering the forward-looking information, indicators used by
the Group include the risk of economic downturn, external market environment, technology environment and changes
in customers. The assumptions relating to the ECL calculation are monitored and reviewed by the Group on a regularly
basis
Deferred income tax assets
Deferred income tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit
will be available against which the losses can be utilised. Significant management judgement is required to determine
the amount of deferred income tax assets that can be recognised, based upon the likely timing and level of future
taxable profits together with future tax planning strategies.
54 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
VI. Taxation
1. Main tax types and tax rates
Tax type Tax base and rate
Value added tax (VAT) 13% for general, 9% for sales of water 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%, 3%, 2% and 0.5% of actual payment of turnover tax.
construction tax
Enterprise income tax (EIT) 25% of taxable income; for the companies which are 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.
Companies subject to different income tax rates are disclosed as follows
Name of taxpayer Income tax rate
Shandong Chenming Paper Holdings Limited 15%
Shouguang Meilun Paper Co., Ltd. 15%
Jilin Chenming Paper Co., Ltd. 15%
Jiangxi Chenming Paper Co., Ltd. 15%
Zhanjiang Chenming Pulp & Paper Co., Ltd. 15%
Shouguang Shun Da Customs Declaration Co, Ltd. 10%
Qingdao Chenming Pulp & Paper Electronic Commodity Spot Trading Co., Ltd. 10%
Zhanjiang Chenming Arboriculture Development Co., Ltd. Exempt from EIT
Nanchang Chenming Arboriculture Development Co., Ltd. Exempt from EIT
Chenming Arboriculture Co., Ltd. Exempt from EIT
Yangjiang Chenming Arboriculture Development Co., Ltd. Exempt from EIT
SHANDONG CHENMING PAPER HOLDINGS LIMITED 55
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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.
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, received a high and new technology enterprise
certificate with a certification number of GR201922000658 on 2 September 2019. 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 2019 to
2021.
For Jiangxi Chenming Paper Co., Ltd., a subsidiary of the Company, received a high and new technology
enterprise certificate with a certification number of GR201936002184 on 3 December 2019. 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 2019 to 2021.
Zhanjiang Chenming Pulp & Paper Co., Ltd., a subsidiary of the Company, received a high and new technology
enterprise certificate with a certification number of GR20184400547 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.
56 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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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 2020.
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 2020.
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 2020.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 57
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VII. Notes to items of the consolidated financial statements
1. Monetary funds
Unit: RMB
Item Closing balance Opening balance
Treasury cash 3,240,007.66 2,418,131.86
Bank deposit 2,210,042,623.10 2,965,127,198.70
Other monetary funds 17,088,478,523.90 16,338,984,142.77
Total 19,301,761,154.66 19,306,529,473.33
Of which: Total deposits in overseas banks 359,705,929.81 405,881,189.78
Notes: Other monetary funds of RMB12,368,983,244.21 (31 December 2019: RMB11,796,498,642.44) were the guarantee deposit for the
application for bank acceptance with the banks by the Group.
Other monetary funds of RMB2,121,287,629.87 (31 December 2019: RMB2,091,467,385.94) were the guarantee deposit for the
application for letter of credit with the banks by the Group.
Other monetary funds of RMB1,921,790,589.38 (31 December 2019: RMB1,846,470,647.92) were the guarantee deposit for the
application for guarantees with the banks by the Group.
Other monetary funds of RMB408,693,277.15 (31 December 2019: RMB440,810,000.00) were the Group’s statutory reserve deposit
at the banks.
Other monetary funds of RMB2,125,345.50 (31 December 2019: RMB995,129.48) were locked-up due to litigations, resulting in
restriction on the use of that account’s balance.
The other monetary funds include interest receivable of RMB265,598,437.79.
58 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
2. Accounts receivable
(1) Disclosure of accounts receivable by category
Unit: RMB
Closing balance Opening balance
Book balance Bad debts provision Book balance Bad debts provision
Provision Carrying Provision Carrying
Category Amount Percentage Amount percentage amount Amount Percentage Amount percentage amount
Accounts receivable assessed
individually for impairment 124,495,140.17 4.30% 124,495,140.17 100.00% 0 117,277,135.48 3.81% 117,277,135.48 100.00% 0
Accounts receivable assessed
collectively for impairment 2,773,270,689.28 95.70% 475,575,242.54 17.15% 2,297,695,446.74 2,960,085,058.36 96.19% 435,001,747.33 14.70% 2,525,083,311.03
Of which:
Accounts receivable from
related parties 25,652,085.29 0.89% 2,380,460.92 9.28% 23,271,624.37 2,008,185.60 0.07% 61,132.76 3.04% 1,947,052.84
Accounts receivable from
distributor clients 1,969,061,227.30 67.95% 326,725,018.95 16.59% 1,642,336,208.35 2,202,548,603.03 71.57% 307,333,600.87 13.95% 1,895,215,002.16
Factoring receivables 778,557,376.69 26.87% 146,469,762.67 18.81% 632,087,614.02 755,528,269.73 24.55% 127,607,013.70 16.89% 627,921,256.03
Total 2,897,765,829.45 100.00% 600,070,382.71 20.71% 2,297,695,446.74 3,077,362,193.84 100.00% 552,278,882.81 17.95% 2,525,083,311.03
SHANDONG CHENMING PAPER HOLDINGS LIMITED 59
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VII. Notes to items of the consolidated financial statements (Cont’d)
2. 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
Hengfeng Hongyuan Real Estate 45,500,000.00 45,500,000.00 100.00% Due to poor management, the financial
Holdings Co., Ltd. indicators of the company deteriorated and
its repayment ability substantially declined
Foshan Shunde Xingchen Paper 26,236,528.70 26,236,528.70 100.00% Due to poor management, the financial
Co., Ltd. indicators of the company deteriorated and
its repayment ability substantially declined
Ningxia Lingwu Baota Dagu Storage 32,600,000.00 32,600,000.00 100.00% Due to poor management, the financial
and Transportation Co., Ltd. indicators of the company deteriorated and
its repayment ability substantially declined
Beijing Huaxia Power Culture Media 8,207,950.42 8,207,950.42 100.00% Due to poor management, the financial
Co., Ltd. indicators of the company deteriorated and
its repayment ability substantially declined
47 companies including Jiangxi 11,950,661.05 11,950,661.05 100.00% Due to poor management, the financial
Longming Enterprise Co., Ltd. indicators of the company deteriorated and
its repayment ability substantially declined
Total 124,495,140.17 124,495,140.17 – –
Items assessed collectively for impairment:
Accounts receivable with collective provision for bad debts based on receivables from related parties
Unit: RMB
Closing balance
Bad debts Provision
Name Book balance provision percentage
Within 1 year 13,453,177.37 814,471.17 6.05%
1 to 2 years 11,393,260.18 1,370,890.31 12.03%
2 to 3 years 805,647.74 195,099.44 24.22%
Total 25,652,085.29 2,380,460.92 –
60 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
2. 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
Bad debts Provision
Name Book balance provision percentage
Within 1 year 1,356,307,954.92 21,065,204.22 1.55%
1 to 2 years 329,934,211.44 72,588,902.22 22.00%
2 to 3 years 55,832,347.15 17,735,625.89 31.77%
Over 3 years 226,986,713.79 215,335,286.62 94.87%
Total 1,969,061,227.30 326,725,018.95 –
Accounts receivable with collective provision for bad debts based on factoring receivables
Unit: RMB
Closing balance
Bad debts Provision
Name Book balance provision percentage
Within 1 year 620,418,416.69 128,655,866.67 20.74%
1 to 2 years 158,138,960.00 17,813,896.00 11.26%
Total 778,557,376.69 146,469,762.67 –
SHANDONG CHENMING PAPER HOLDINGS LIMITED 61
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VII. Notes to items of the consolidated financial statements (Cont’d)
2. Accounts receivable (Cont’d)
(1) Disclosure of accounts receivable by category (Cont’d)
Disclosure by ageing
Unit: RMB
Ageing Closing balance
Within 1 year (including 1 year) 1,975,452,308.32 2,440,760,038.21
1 to 2 years 502,455,831.77 397,312,284.08
2 to 3 years 187,335,446.71 70,484,233.21
Over 3 years 232,522,242.65 168,805,638.34
Subtotal 2,897,765,829.45 3,077,362,193.84
Bad debts provision 600,070,382.71 552,278,882.81
Total 2,297,695,446.74 2,525,083,311.03
(2) Provision, recovery or reversal of bad debt provision for the period
Bad debt provision for the period:
Unit: RMB
Changes in the period
Opening Recovery Closing
Category balance Provision or reversal Write-off Others balance
Accounts receivable with
provision for bad debt 552,278,882.81 50,618,019.25 2,826,519.34 600,070,382.71
Total 552,278,882.81 50,618,019.25 2,826,519.34 600,070,382.71
(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
period was RMB961,602,717.39, which accounted for 33.18% of the closing balance of the total accounts
receivable. The closing balance of corresponding bad debt provision amounted to RMB153,122,029.71.
62 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
3. Accounts receivable financing
Unit: RMB
Item Closing balance Opening balance
Bills receivable 1,418,702,732.26 442,915,861.70
Total 1,418,702,732.26 442,915,861.70
Other explanation:
Bill receivable pledged by the Group at the end of the period:
Item Closing balance
Bank acceptance bill 366,587,869.44
Total 366,587,869.44
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 722,311,037.62 98.76% 528,554,005.66 87.57%
1-2 years 9,092,198.14 1.24% 75,019,543.42 12.43%
Total 731,403,235.76 – 603,573,549.08 –
(2) Top five prepayments according to closing balance of prepaid parties
Top five prepayments according to closing balance of prepaid parties was RMB401,058,608.97, which accounted
for 54.83% of the closing balance of the total accounts payable.
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VII. Notes to items of the consolidated financial statements (Cont’d)
5. Other receivables
Unit: RMB
Item Closing balance Opening balance
Dividends receivable 13,000,000.00 13,000,000.00
Other receivables 3,116,061,804.47 2,203,654,598.66
Total 3,129,061,804.47 2,216,654,598.66
(1) Dividends receivable
1) Classification of dividends receivable
Unit: RMB
Item (or investee) Closing balance Opening balance
Weifang Xingxing United Chemical Co., Ltd 13,000,000.00 13,000,000.00
Total 13,000,000.00 13,000,000.00
(2) Other receivables
1) Other payables by nature
Unit: RMB
Closing Opening
Nature book balance book balance
Open credit 2,971,708,307.75 2,043,396,146.61
Guarantee deposit 60,901,897.21 24,109,727.59
Advances 1,868,651.26 15,799,693.34
Insurance premium 3,700,154.18 17,650.66
Reserve and borrowings 18,148,625.07 17,045,478.09
Others 59,734,169.00 103,285,902.37
Total 3,116,061,804.47 2,203,654,598.66
64 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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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)
2) Particulars of bad debt provision
Unit: RMB
Phase 1 Phase 2 Phase 3
ECLs over the ECLs over the
ECLs for the entire life (not entire life
Bad debt provision next 12 months credit-impaired) (credit-impaired) Total
Balance as at 1 January 2020 169,202,744.32 326,147,132.58 495,349,876.90
Balance as at 1 January 2020 during the period – – – –
–Transferred into Phase 2
–Transferred into Phase 3 326,147,132.58 326,147,132.58
–Reversal to Phase 2
–Reversal to Phase 1 169,202,744.32 169,202,744.32
Provision for the period 7,219,809.98 7,219,809.98
Reversal for the period 18,994,740.83 75,363,658.86 94,358,399.69
Transfer for the period
Write-off for the period
Other changes
Balance as at 30 June 2020 157,427,813.47 250,783,473.72 408,211,287.19
By ageing
Unit: RMB
Ageing Closing balance
Within 1 year (including 1 year) 2,305,069,753.20 1,601,285,972.69
1-2 years 1,017,960,400.03 920,980,164.23
2-3 years 96,790,390.20 82,752,788.66
3-4 years 20,226,080.16 18,199,261.77
4-5 years 17,164,897.91 26,242,336.99
Over 5 years 67,061,570.16 49,543,951.22
Subtotal 3,524,273,091.66 2,699,004,475.56
Less: Bad debt provision 408,211,287.19 495,349,876.90
Total 3,116,061,804.47 2,203,654,598.66
SHANDONG CHENMING PAPER HOLDINGS LIMITED 65
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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)
3) 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 Write-off Others balance
Bad debt provision for
other receivables 495,349,876.90 7,219,809.98 94,358,399.69 408,211,287.19
Total 495,349,876.90 7,219,809.98 94,358,399.69 408,211,287.19
4) Top five other receivables according to closing balance of debtors
The top five other accounts receivable based on closing balance of debtors for the period amounted
to RMB2,537,485,412.78 in total, accounting for 72.00% of the total closing balance of other accounts
receivable. The closing balance of the corresponding bad debt provision amounted to RMB297,887,552.29
in total.
5) Receivables in respect of government grant
Unit: RMB
Time of
Name of entity Name of government grant Closing balance Closing age reception
Wuhan Chenming Hanyang Final payment of relocation 533,390,000.00 Within one year 1 July 2020
Paper Holdings Co., Ltd. compensation
66 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
6. Inventories
Whether the New Revenue Standard 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 1,902,641,983.51 18,670,304.78 1,883,971,678.73 1,972,197,240.93 21,269,429.01 1,950,927,811.92
Work-in-process products 46,382,707.70 46,382,707.70 81,382,693.49 81,382,693.49
Goods in stock 1,899,848,296.97 1,899,848,296.97 886,102,819.24 886,102,819.24
Consumable biological assets 1,556,753,786.65 1,556,753,786.65 1,541,004,633.42 1,541,004,633.42
Developing products 314,614,378.34 314,614,378.34 315,012,152.74 315,012,152.74
Total 5,720,241,153.17 18,670,304.78 5,701,570,848.39 4,795,699,539.82 21,269,429.01 4,774,430,110.81
(2) Impairment provision for inventories or performance costs
Unit: RMB
Increase for the period Decrease for the period
Item Opening balance Provision Others Reversal or transfer Others Closing balance
Raw materials 21,269,429.01 2,599,124.23 18,670,304.78
Total 21,269,429.01 2,599,124.23 18,670,304.78
7. Non-current assets due within one year
Unit: RMB
Item Closing balance Opening balance
Long-term receivables due within one year 6,010,580,174.26 6,974,539,613.30
Total 6,010,580,174.26 6,974,539,613.30
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VII. Notes to items of the consolidated financial statements (Cont’d)
8. Other current assets
Unit: RMB
Item Closing balance Opening balance
VAT recoverable 1,157,984,356.26 1,431,298,632.04
Prepaid tax 46,114,054.50 56,778,563.04
Receivables under financial lease due within one year 5,602,015,240.62 5,229,125,471.51
Factoring receivables due within one year 1,043,959,033.92 1,008,707,988.47
Prepaid expenses 685,359,071.56 366,080,343.71
Others 22,975,892.27 16,716,395.93
Total 8,558,407,649.13 8,108,707,394.70
9. 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 6,908,421,427.84 583,399,494.29 6,325,021,933.55 8,144,589,680.91 182,532,601.30 7,962,057,079.61 4%-20%
Less: Unrealised
financing income 142,692,516.64 – 142,692,516.64 462,276,887.85 462,276,887.85
Less: non-current assets
due within one year 6,551,087,262.04 580,514,958.75 5,970,572,303.29 7,004,375,494.85 159,382,707.55 6,844,992,787.30
Subtotal 214,641,649.16 2,884,535.54 211,757,113.62 677,937,298.21 23,149,893.75 654,787,404.46
Deposit for finance lease 637,879,277.38 - 637,879,277.38 734,530,650.26 734,530,650.26
Less: Unrealised
financing income 46,532,961.75 - 46,532,961.75 59,195,417.77 59,195,417.77
Less: non-current assets
due within one year 39,557,909.14 - 39,557,909.14 129,546,826.00 129,546,826.00
Subtotal 551,788,406.49 - 551,788,406.49 545,788,406.49 545,788,406.49
Total 766,430,055.65 2,884,535.54 763,545,520.11 1,223,725,704.70 23,149,893.75 1,200,575,810.95
68 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
9. 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
ECLs over the ECLs over the
ECLs for the entire life (not entire life
Bad debt provision next 12 months credit-impaired) (credit-impaired) Total
Balance as at 1 January 2020 3,124,322.44 20,025,571.31 23,149,893.75
Balance as at 1 January 2020 during the period
–Transferred into Phase 2
–Transferred into Phase 3 20,025,571.31 20,025,571.31
–Reversal to Phase 2
–Reversal to Phase 1 3,124,322.44 3,124,322.44
Provision for the year
Reversal for the year 2,440,892.95 17,824,465.26 20,265,358.21
Transfer for the year
Write-off for the year
Other changes
Balance as at 30 June 2020 683,429.49 2,201,106.05 2,884,535.54
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VII. Notes to items of the consolidated financial statements (Cont’d)
10. Long-term equity investments
Unit: RMB
Change for the period
Investment
gain or loss Adjustment Distribution
recognised of other Other change of cash Closing balance
Additional under equity comprehensive in equity dividend or Impairment of impairment
Investee Opening balance contribution method income interest profit declared provision Closing balance provision
I. Joint ventures
Shouguang Chenming Huisen New-style
Construction Materials Co., Ltd. 3,789,667.61 740,169.16 1,200,000.00 3,329,836.77
Weifang Sime Darby West Port Co., Ltd 89,726,671.76 -2,880,211.17 86,846,460.59
Shouguang Meite Environmental
Technology Co., Ltd. 5,880,000.00 -257,524.39 5,622,475.61
Weifang Chenrong New and Old Kinetic
Energy Conversion Equity Investment Fund
Partnership (Limited Partnership 158,000,000.00 42,000,000.00 -553,476.37 199,446,523.63
Weifang Xingxing United Chemical Co., Ltd. 93,816,557.39 -1,459,789.79 92,356,767.60
Subtotal 351,212,896.76 42,000,000.00 -4,410,832.56 1,200,000.00 387,602,064.20
II. Associates
Jiangxi Jiangbao Media Colour Printing Co. Ltd. 0.00 0.00
Zhuhai Dechen New Third Board Equity
Investment Fund Company
(Limited Partnership) 52,412,989.91 -30,470.86 52,382,519.05
Ningbo Kaichen Huamei Equity Investment
Fund Partnership (Limited Partnership) 199,528,847.52 516,198.50 200,045,046.02
Xuchang Chenming Paper Co., Ltd. 5,994,545.96
Jiangxi Chenming Port Co., Ltd. 1,690,359.66 -521,745.21 1,168,614.45
Chenming (Qingdao) Asset Management
Co., Ltd. 8,669,491.17 -6,654.56 8,662,836.61
Goldtrust Futures Co., Ltd. 192,732,957.71 509,191.24 193,242,148.95
Guangdong Nanyue Bank Co., Ltd 2,800,091,481.01 124,059,754.41 2,924,151,235.42
Subtotal 3,255,126,126.98 124,526,273.52 3,379,652,400.50 5,994,545.96
Total 3,606,339,023.74 42,000,000.00 120,115,440.96 1,200,000.00 3,767,254,464.70 5,994,545.96
70 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
11. Other non-current financial assets
Unit: RMB
Item Closing balance Opening balance
Equity instrument investments 147,445,653.55 147,445,653.55
Total 147,445,653.55 147,445,653.55
12. Investment properties
(1) Investment properties under the cost method
√ Applicable Not applicable
Unit: RMB
Housing and Construction
Item building structure Land use rights in progress Total
I. Original carrying amount
1 Opening balance 5,433,710,034.39 5,433,710,034.39
2. Increase for the period 188,223,636.73 188,223,636.73
Transferred from fixed assets 188,223,636.73 188,223,636.73
3. Closing balance 5,621,933,671.12 5,621,933,671.12
II. Accumulated depreciation and
accumulated amortisation
1. Opening balance 351,347,741.28 351,347,741.28
2. Increase for the period 72,208,415.14 72,208,415.14
(1) Provision or amortisation 62,862,063.94 62,862,063.94
(2) Transferred from inventories/
fixed assets/construction in
progress 9,346,351.20 9,346,351.20
3. Closing balance 423,556,156.42 423,556,156.42
III. Carrying amount
1. Closing carrying amount 5,198,377,514.70 5,198,377,514.70
2. Opening carrying amount 5,082,362,293.11 5,082,362,293.11
13. Fixed assets
Unit: RMB
Item Closing balance Opening balance
Fixed assets 38,215,983,514.51 34,439,935,032.69
Total 38,215,983,514.51 34,439,935,032.69
SHANDONG CHENMING PAPER HOLDINGS LIMITED 71
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VII. Notes to items of the consolidated financial statements (Cont’d)
13. Fixed assets (Cont’d)
(1) Particulars of fixed assets
Unit: RMB
Electronic
Housing and Machinery and Transportation equipment
Item building structure equipment equipment and others Total
I. Original carrying amount:
1. Opening balance 9,941,580,880.78 39,482,080,460.52 351,029,607.21 398,368,057.18 50,173,059,005.69
2. Increase for the period 1,071,404,086.53 4,039,267,399.98 703,446.29 2,283,209.99 5,113,658,142.79
(1) Acquisition 22,691,006.68 18,937,890.61 418,490.17 1,344,019.11 43,391,406.57
(2) Transferred from construction in progress 1,048,713,079.85 4,020,329,509.37 284,956.12 939,190.88 5,070,266,736.22
3. Decrease for the period 299,507,564.48 12,375,048.76 23,948,959.40 521,394.19 336,352,966.83
(1) Disposal or retirement 111,283,927.75 12,375,048.76 23,948,959.40 521,394.19 148,129,330.10
(2) Transferred into investment properties 188,223,636.73 188,223,636.73
4. Closing balance 10,713,477,402.83 43,508,972,811.74 327,784,094.10 400,129,872.98 54,950,364,181.65
II. Accumulated depreciation
1. Opening balance 1,796,330,000.77 13,297,091,535.53 188,896,834.23 257,770,900.14 15,540,089,270.67
2. Increase for the period 139,085,677.89 878,544,680.41 13,206,342.46 7,587,382.57 1,038,424,083.33
(1) Provision 139,085,677.89 878,544,680.41 13,206,342.46 7,587,382.57 1,038,424,083.33
3. Decrease for the period 15,015,295.16 5,361,980.49 16,525,427.54 264,686.00 37,167,389.19
(1) Disposal or retirement 5,668,943.96 5,361,980.49 16,525,427.54 264,686.00 27,821,037.99
(2) Depreciation for transfer into investment
properties 9,346,351.20 9,346,351.20
4. Closing balance 1,920,400,383.50 14,170,274,235.45 185,577,749.15 265,093,596.71 16,541,345,964.81
III. Provision for impairment
1. Opening balance 27,808,852.79 157,777,407.54 13,889.13 7,434,552.87 193,034,702.33
2. Closing balance 27,808,852.79 157,777,407.54 13,889.13 7,434,552.87 193,034,702.33
IV. Carrying amount
1. Closing carrying amount 8,765,268,166.54 29,180,921,168.75 142,192,455.82 127,601,723.40 38,215,983,514.51
2. Opening carrying amount 8,117,442,027.22 26,027,211,517.45 162,118,883.85 133,162,604.17 34,439,935,032.69
72 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
13. Fixed assets (Cont’d)
(2) Particulars of temporarily idle fixed assets
Unit: RMB
Original Accumulated Provision for Carrying
Item carrying amount depreciation impairment amount Remark
Housing and building structure 95,571,926.29 15,334,914.47 1,420,368.96 78,816,642.86
Machinery and equipment 1,041,587,310.23 504,133,469.38 102,416,418.00 435,037,422.85
Transportation equipment 12,200.00 10,980.00 – 1,220.00
Electronic equipment and others 781,694.91 669,098.40 2,594.47 110,002.04
Total 1,137,953,131.43 520,148,462.25 103,839,381.43 513,965,287.75
(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
(Zhanjiang Chenming Pulp & Paper Co., Ltd.) 1,291,450,246.23 Handling
Housing and building structure
(Huanggang Chenming Pulp & Paper Co., Ltd.) 1,274,008,741.37 Handling
Housing and building structure (Shouguang Meilun Paper Co., Ltd.) 412,535,443.46 Handling
Housing and building structure (Jilin Chenming Paper Co., Ltd.) 396,097,436.98 Handling
Housing and building structure (Jiangxi Chenming Paper Co., Ltd.) 213,987,044.09 Handling
Housing and building structure
(Shandong Chenming Paper Holdings Limited) 108,006,195.95 Handling
Housing and building structure
(Shandong Chenming Investment Limited) 86,519,304.60 Handling
Housing and building structure
(Wuhan Chenming Hanyang Paper Holdings Co., Ltd.) 80,441,254.26 Handling
Total 3,863,045,666.94
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VII. Notes to items of the consolidated financial statements (Cont’d)
14. Construction in progress
Unit: RMB
Item Closing balance Opening balance
Construction in progress 589,320,449.78 5,467,321,406.80
Materials for project 8,730,717.09 8,801,522.15
Total 598,051,166.87 5,476,122,928.95
(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
Upgrading and renovation of back pressure
unit of captive power plant 249,589,135.27 249,589,135.27 263,626,439.57 263,626,439.57
New annual 200,000 tonne of fly ash cement
ceramsite production project 54,186,705.23 54,186,705.23 51,767,628.00 51,767,628.00
High-end cultural paper intelligent warehouse project 61,116,179.15 61,116,179.15 179,056,842.38 179,056,842.38
Meilun modification project 17,026,765.39 17,026,765.39 31,858,373.50 31,858,373.50
Huanggang pulp production project 93,052,147.95 93,052,147.95 4,601,844,646.27 4,601,844,646.27
Huanggang biomass power generation project 193,548,348.79 193,548,348.79
Technological modification project in the headquarter 32,686,178.75 32,686,178.75 35,229,753.85 35,229,753.85
Others 111,351,796.21 29,688,458.17 81,663,338.04 139,914,114.85 29,524,740.41 110,389,374.44
Total 619,008,907.95 29,688,458.17 589,320,449.78 5,496,846,147.21 29,524,740.41 5,467,321,406.80
74 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
VII. Notes to items of the consolidated financial statements (Cont’d)
14. 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
Opening Increase for fixed asset Other deductions Closing investment Construction capitalised interest amount interest amount
X Financial Report
Project name Budget 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 274,000,000 263,626,439.57 1,259,640.56 15,296,944.86 249,589,135.27 91% 92% 822,004.98 Self-raised and
captive power plant (Headquarters) borrowings
New annual 200,000 tonne of fly ash cement 76,000,000 51,767,628.00 2,419,077.23 54,186,705.23 71% 71% Self-raised
ceramsite production project
High-end cultural paper (Meilun) 2,261,000,000 179,056,842.38 14,449,141.54 132,389,804.77 61,116,179.15 91% 99% 64,161,971.31 Self-raised and
borrowings
Huanggang Chenming Forest and Paper Integration 4,785,000,000 4,601,844,646.27 192,849,130.43 4,701,641,628.75 93,052,147.95 101% 99% 241,118,047.00 17,272,974.15 9% Self-raised and
Project (Pulping Project) (Huanggang Chenming) borrowings
Biomass power generation project (southern district) 205,000,000 193,548,348.79 4,419,515.45 197,967,864.24 -0.00 97% 100% Self-raised
(Huanggang Chenming)
Membrane treatment project (Zhanjiang Chenming) 120,000,000 25,833,751.07 23,189,964.24 2,643,786.83 84% 95% Self-raised
Total 7,721,000,000 5,315,677,656.08 215,396,505.21 5,055,189,262.00 15,296,944.86 460,587,954.43 – – 306,102,023.29 17,272,974.15 –
INTERIM FINANCIAL REPORT 2020
SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
14. Construction in progress (Cont’d)
(3) Particulars of provision for construction in progress impairment
Unit: RMB
Amount for the Reason for the
Item period provision
Other projects of Huanggang Chenming 163,717.76 Project modification
Total 163,717.76 –
Other explanation
(4) Materials for project
Unit: RMB
Closing balance Opening balance
Impairment Impairment
Item Book balance provision Carrying amount Book balance provision Carrying amount
Special materials 8,730,717.09 8,730,717.09 8,801,522.15 8,801,522.15
Total 8,730,717.09 – 8,730,717.09 8,801,522.15 – 8,801,522.15
76 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
15. Right-of-use assets
Unit: RMB
Item Total
I. Original carrying amount:
1. Opening balance 163,334,964.90 163,334,964.90
2. Closing balance 163,334,964.90 163,334,964.90
II. Accumulated depreciation
1. Opening balance 11,193,082.85 11,193,082.85
2. Increase for the period 2,691,472.70 2,691,472.70
(1) Provision 2,691,472.70 2,691,472.70
3. Closing balance 13,884,555.55 13,884,555.55
III. Carrying amount
1. Closing carrying amount 149,450,409.35 149,450,409.35
2. Opening carrying amount 152,141,882.05 152,141,882.05
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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
Certificates of
Item Land use rights Software third party right Total
I. Original carrying amount
1. Opening balance 2,176,207,105.75 26,352,090.74 15,895,213.33 2,218,454,409.82
2. Increase for the period 72,000.00 72,000.00
(1) Acquisition 72,000.00 72,000.00
3. Decrease for the period 107,209,008.00 107,209,008.00
(1) Disposal 107,209,008.00 107,209,008.00
4. Closing balance 2,068,998,097.75 26,424,090.74 15,895,213.33 2,111,317,401.82
II. Accumulated amortisation
1. Opening balance 407,497,707.25 22,891,289.24 7,003,508.82 437,392,505.31
2. Increase for the period 21,157,836.48 663,165.08 2,649,202.26 24,470,203.82
(1) Provision 21,157,836.48 663,165.08 2,649,202.26 24,470,203.82
3. Decrease for the period 9,662,821.09 9,662,821.09
(1) Disposal 9,662,821.09 9,662,821.09
4. Closing balance 418,992,722.64 23,554,454.32 9,652,711.08 452,199,888.04
III. Provision for impairment
IV. Carrying amount
1. Closing carrying amount 1,650,005,375.11 2,869,636.42 6,242,502.25 1,659,117,513.78
2. Opening carrying amount 1,768,709,398.50 3,460,801.50 8,891,704.51 1,781,061,904.51
17. Goodwill
(1) Original carrying amount of goodwill
Unit: RMB
Opening Increase for Decrease for Closing
Name of investee or item generating goodwill balance the period the period 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
(2) Provision for impairment of goodwill
Unit: RMB
Opening Increase for Decrease for Closing
Name of investee or item generating goodwill balance the period the period balance
Jilin Chenming Paper Co., Ltd. 14,314,160.60 14,314,160.60
Total 14,314,160.60 14,314,160.60
78 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
18. Long-term prepaid expenses
Unit: RMB
Opening Increase for Amortisation Other Closing
Item balance the period for the period deductions balance
Woodland expenses 9,642,224.60 302,898.00 9,339,326.60
Railway expenses 16,071,459.93 599,814.96 15,471,644.97
Other expenses 22,489,724.18 4,176,000.00 527,201.82 26,138,522.36
Total 48,203,408.71 4,176,000.00 1,429,914.78 50,949,493.93
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 income
temporary income tax taxable temporary tax assets/
Item difference assets difference liabilities
Deferred income tax assets:
Provision for impairment of assets 2,041,447,469.67 482,105,135.45 1,791,356,735.71 417,688,820.31
Unrealised profit arising from intra-group transactions 75,054,127.24 18,763,531.81 164,089,227.26 41,022,306.82
Deductible loss 2,343,752,044.37 366,327,959.09 2,243,481,924.83 344,125,106.67
Outstanding payables 470,036,072.19 72,746,587.79 446,580,396.87 68,163,018.91
Deferred income 111,566,555.62 20,612,480.91 116,165,951.14 21,443,378.33
Subtotal 5,041,856,269.09 960,555,695.05 4,761,674,235.81 892,442,631.04
Debt reconstructing 5,644,502.36 1,411,125.59
Subtotal 5,644,502.36 1,411,125.59
(2) The breakdown of unrecognised deferred income tax assets
Unit: RMB
Item Closing balance Opening balance
Deductible temporary difference 293,607,004.97 352,057,221.14
Deductible loss 661,787,456.93 521,737,724.53
Total 955,394,461.90 873,794,945.67
SHANDONG CHENMING PAPER HOLDINGS LIMITED 79
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VII. Notes to items of the consolidated financial statements (Cont’d)
19. Deferred income tax assets/deferred income tax liabilities (Cont’d)
(3) Expiry of deductible loss of unrecognised deferred income tax assets falls in the periods as follows
Unit: RMB
Year Closing amount Opening amount Remark
2020 – 674,989.71
2021 185,647.61 185,647.61
2022 11,628,813.14 11,628,813.14
2023 163,280,498.87 164,859,774.53
2024 338,716,266.07 344,388,499.54
2025 147,976,231.24 –
Total 661,787,456.93 521,737,724.53 –
20. Other non-current assets
Unit: RMB
Closing balance Opening balance
Book Impairment Carrying Book Impairment Carrying
Item balance provision amount balance provision amount
Prepayments for land-transferring fee 101,130,000.00 101,130,000.00 101,130,000.00 101,130,000.00
Prepayments for engineering 61,915,754.57 61,915,754.57 47,430,952.09 47,430,952.09
Prepayments for properties 9,800,000.00 9,800,000.00 9,800,000.00 9,800,000.00
Prepayments for equipment 19,350,298.70 19,350,298.70 15,514,874.58 15,514,874.58
Prepayments for purchase of equity interest 176,000,000.00 176,000,000.00 –
Total 368,196,053.27 – 368,196,053.27 173,875,826.67 – 173,875,826.67
21. Short-term borrowings
(1) Classification of short-term borrowings
Unit: RMB
Item Closing balance Opening balance
Pledged borrowings 277,536,675.69 859,312,833.51
Mortgage borrowings 180,000,000.00 180,000,000.00
Guaranteed borrowings 8,006,661,333.87 7,082,088,423.98
Credit borrowings 8,441,863,225.44 7,174,060,275.17
Discounted borrowings 21,648,250,000.00 21,587,694,481.53
Total 38,554,311,235.00 36,883,156,014.19
80 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
22. Bills payable
Unit: RMB
Classification Closing balance Opening balance
Commercial acceptance bills 382,897,538.49 625,325,798.18
Bank acceptance bills 2,364,709,222.68 889,722,407.82
Total 2,747,606,761.17 1,515,048,206.00
23. Accounts payable
(1) Particulars of accounts payable
Unit: RMB
Item Closing balance Opening balance
Loans 3,501,525,952.77 3,393,786,063.51
Payment for engineering 151,196,271.94 408,694,349.00
Payment for equipment 357,086,520.95 312,292,221.48
Service expense 165,525,980.81 199,838,288.95
Others 69,571,698.83 36,476,659.04
Total 4,244,906,425.30 4,351,087,581.98
(2) Significant advance receipts for over 1 year
Unit: RMB
Item Closing balance Reasons
Guangxi Construction Engineering Group No. 1 Installation Quality guarantee
Co., Ltd. 31,311,231.15 deposit for engineering
Quality guarantee
Beijing Guodian Futong Science And Development Co., Ltd. 26,630,150.00 deposit for engineering
Quality guarantee
Omya Haiming (Nanchang) Chemical Co. Ltd. 16,000,000.00 deposit for engineering
China Energy Engineering Group Guangzhou Electric Power Quality guarantee
Design 14,128,415.00 deposit for engineering
Fujian Xinze Environmental Protection Equipment and Quality guarantee
Engineering Co., Ltd. 13,001,120.40 deposit for engineering
Total 101,070,916.55 –
24. Contract liabilities
Unit: RMB
Item Closing balance Opening balance
Deposits received 1,230,606,297.46 968,082,063.13
Total 1,230,606,297.46 968,082,063.13
SHANDONG CHENMING PAPER HOLDINGS LIMITED 81
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VII. Notes to items of the consolidated financial statements (Cont’d)
25. Staff remuneration payables
(1) Particulars of staff remuneration payables
Unit: RMB
Opening Increase for Decrease for Closing
Item balance the period the period balance
I. Short-term remuneration 189,006,380.72 632,598,237.29 597,988,645.16 223,615,972.85
II. Retirement benefit plan – defined contribution scheme 1,223,502.80 64,951,329.89 58,372,687.09 7,802,145.60
Total 190,229,883.52 697,549,567.18 656,361,332.25 231,418,118.45
(2) Particulars of short-term remuneration
Unit: RMB
Opening Increase for Decrease for Closing
Item balance the period the period balance
1. Salaries, bonuses, allowance and subsidies 120,634,999.88 509,315,990.09 477,709,438.90 152,241,551.07
2. Staff welfare 14,502,279.87 14,502,279.87
3. Social insurance premium 1,871,932.30 33,348,186.94 33,097,202.50 2,122,916.74
Of which: Medical insurance premium 840,248.82 30,482,685.63 31,165,115.14 157,819.31
Work-related injury insurance premium 23,069.88 1,365,767.12 963,528.54 425,308.46
Maternity insurance premium 1,008,613.60 1,499,734.19 968,558.82 1,539,788.97
4. Housing provident funds 8,856,543.62 48,333,531.86 44,866,200.88 12,323,874.60
5. Union funds and workers’ education 35,831,023.93 16,175,524.42 14,301,359.06 37,705,189.29
6. Other short-term remuneration 21,811,880.99 10,922,724.11 13,512,163.95 19,222,441.15
Total 189,006,380.72 632,598,237.29 597,988,645.16 223,615,972.85
(3) Defined contribution plan
Unit: RMB
Opening Increase for Decrease for Closing
Item balance the period the period balance
1. Basic pension insurance 1,033,762.42 62,119,798.36 55,961,336.45 7,192,224.33
2. Unemployment insurance 189,740.38 2,831,531.53 2,411,350.64 609,921.27
Total 1,223,502.80 64,951,329.89 58,372,687.09 7,802,145.60
82 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
26. Taxes payable
Unit: RMB
Item Closing balance Opening balance
Enterprise income tax 241,770,346.42 166,389,232.03
Value added tax 60,572,555.84 81,745,671.90
Land use tax 10,658,837.91 8,206,677.02
Property tax 24,362,303.63 8,239,300.78
Urban maintenance and construction tax 3,421,307.00 5,844,684.79
Educational surcharges and others 11,151,393.45 6,850,900.34
Individual income tax 28,149,300.07 29,565,363.87
Stamp duty 3,191,475.06 4,712,286.00
Total 383,277,519.38 311,554,116.73
27. Other payables
Unit: RMB
Item Closing balance Opening balance
Interest payable 149,518,233.84 208,189,699.15
Dividend payable 610,109,667.16
Other payables 1,694,370,129.51 2,386,059,927.39
Total 2,453,998,030.51 2,594,249,626.54
(1) Interest payable
Unit: RMB
Item Closing balance Opening balance
Interest on borrowings 26,109,646.67 27,960,930.86
Interest on corporate bonds 7,367,916.67 103,432,934.98
Interest on medium-term notes 116,040,670.50 76,795,833.31
Total 149,518,233.84 208,189,699.15
SHANDONG CHENMING PAPER HOLDINGS LIMITED 83
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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 256,449,200.77
B shares 103,543,930.17
H shares 77,440,462.80
Preference shares 172,676,073.42
Total 610,109,667.16
(3) Other payables
1) Other payables by nature
Unit: RMB
Item Closing balance Opening balance
Open credit 507,890,103.31 1,287,822,732.06
Deposit 417,858,566.67 451,756,402.26
Accrued expenses 427,320,371.12 506,095,837.14
Equity incentive 226,860,000.00
Others 114,441,088.41 140,384,955.93
Total 1,694,370,129.51 2,386,059,927.39
2) Significant other payables for over 1 year
Unit: RMB
Item Closing balance Reasons
NINE DRAGONS DAWEI HOLDINGS CO., LTD. 30,000,000.00 Deposit
SHOUGUANG LONGYUAN PAPER COATING CO., LTD. 9,250,000.00 Deposit
STATE-OWNED SHOUGUANG QINGSHUIPO FARM 8,800,000.00 Open credit
ZHEJIANG TSINGSHAN STEEL PIPE CO., LTD. 5,860,000.00 Deposit
WENZHOU DONGDA MINE CONSTRUCTION
ENGINEERING CO., LTD. 5,450,000.00 Deposit
Total 59,360,000.00 –
84 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 3,963,363,135.83 2,520,582,051.43
Long-term payables due within one year 1,968,889,601.58 2,238,647,651.02
Lease liabilities due within one year 4,606,717.58 4,606,717.58
Bonds payable due within one year 899,122,500.00
Medium-term notes due within one year 1,000,000,000.00
Total 6,936,859,454.99 5,662,958,920.03
29. Other current liabilities
Unit: RMB
Item Closing balance Opening balance
Short-term bonds payable 150,686,164.01 222,402,500.00
Total 150,686,164.01 222,402,500.00
30. Long-term borrowings
(1) Types of long-term borrowings
Unit: RMB
Item Closing balance Opening balance
Pledge borrowings 74,823,068.83
Secured borrowings 4,789,105,773.48 5,110,291,847.19
Guarantee borrowings 5,232,927,028.33 5,695,114,793.03
Credit borrowings 950,692,035.94 780,692,035.94
Less: Long-term borrowings due within 1 year 3,963,363,135.83 2,520,582,051.43
Total 7,009,361,701.92 9,140,339,693.56
SHANDONG CHENMING PAPER HOLDINGS LIMITED 85
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VII. Notes to items of the consolidated financial statements (Cont’d)
31. Bonds payable
(1) Bonds payable
Unit: RMB
Item Closing balance Opening balance
17 Chenming bond 01- Chenming Paper 89,943,750.00 89,070,000.00
18 Chenming bond 01- Chenming Paper 350,000,000.00
Chenming USD Bonds 1,188,190,442.59 1,169,200,909.49
Total 1,628,134,192.59 1,258,270,909.49
(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 years 1,198,200,000.00 89,070,000.00
18 Chenming bond 01 – Chenming Paper 350,000,000.00 2020/6/1 5 years 350,000,000.00
Chenming USD Bonds 1,137,120,600.00 2019/8/6 2.6 years 1,125,276,863.46 1,169,200,909.49
Total 2,687,120,600.00 2,673,476,863.46 1,258,270,909.49
(Cont’d)
Amortisation
Issue during Interest at of premium/ Redemption Closing
Name of bond the year par value discount during the year balance
17 Chenming bond 01 – Chenming Paper 873,750.00 89,943,750.00
18 Chenming bond 01- Chenming Paper 350,000,000.00 350,000,000.00
Chenming USD Bonds 16,768,832.50 2,220,700.60 1,188,190,442.59
Total 350,000,000.00 16,768,832.50 3,094,450.60 1,628,134,192.59
86 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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VII. Notes to items of the consolidated financial statements (Cont’d)
32. Lease liabilities
Unit: RMB
Item Closing balance Opening balance
Lease payments payable 90,539,867.03 90,539,867.03
Less: Unrecognised financing expenses 25,661,379.55 26,236,020.80
Subtotal 64,878,487.48 64,303,846.23
Less: Lease liabilities due within one year 4,606,717.58 4,606,717.58
Total 60,271,769.90 59,697,128.65
33. Long-term payables
Unit: RMB
Item Closing balance Opening balance
Long-term payables 2,748,780,858.47 3,321,535,538.94
Total 2,748,780,858.47 3,321,535,538.94
(1) By nature
Unit: RMB
Item Closing balance Opening balance
Retention for the financial leasing operations 76,000,000.00 160,190,103.51
China Development Bank Special funds 517,500,000.00 595,000,000.00
Financial leasing 4,124,170,460.05 4,804,993,086.45
Subtotal 4,717,670,460.05 5,560,183,189.96
Less: Long-term payables due within 1 year 1,968,889,601.58 2,238,647,651.02
Total 2,748,780,858.47 3,321,535,538.94
SHANDONG CHENMING PAPER HOLDINGS LIMITED 87
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VII. Notes to items of the consolidated financial statements (Cont’d)
34. Provision
Unit: RMB
Closing Increase for Decrease for Opening
Item balance the period the period balance Reason
Losses from
Provision 325,259,082.28 325,259,082.28 Arjo’s lawsuit
Total 325,259,082.28 325,259,082.28 –
35. Deferred income
Unit: RMB
Opening Increase for Decrease for Closing
Item balance the period the period balance Reason
Government grants 1,771,013,335.11 28,360,000.00 106,871,499.81 1,692,501,835.30 Financial provision
Total 1,771,013,335.11 28,360,000.00 106,871,499.81 1,692,501,835.30 –
Items in respect of government grants:
Unit: RMB
Include in Amount Asset-
non-operating Include in charged related/
Opening New grants income for other income against cost Other Closing income-
Liabilities item balance for the period the period for the period expenses changes balance related
Project fund for National
technological support
scheme 1,452,525.00 82,350.00 1,370,175.00 Asset-related
Sewage treatment and water
conservation reconfiguration
project 63,274,136.71 1,588,476.44 61,685,660.27 Asset-related
Financial grants for
technological modification
project 168,182,448.80 28,360,000.00 6,391,903.86 190,150,544.94 Asset-related
Subsidy funds for
environmental protection 700,228,305.19 24,595,985.84 675,632,319.35 Asset-related
Logistics park project 51,960,000.00 51,960,000.00 Asset-related
Zhanjiang integrated forestry,
pulp and paper project 67,047,201.50 10,098,654.93 56,948,546.57 Asset-related
Huanggang pulp-forestry-paper
project 681,564,072.66 11,359,401.20 670,204,671.46 Asset-related
Others 37,304,645.25 794,727.54 36,509,917.71 Asset-related
Total 1,771,013,335.11 28,360,000.00 54,911,499.81 51,960,000.00 1,692,501,835.30
88 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
36. Other non-current liabilities
Unit: RMB
Item Closing balance Opening balance
Medium-term notes 3,384,489,390.18 3,042,841,328.86
Less: Other non-current liabilities due within one year 1,000,000,000.00
Total 2,384,489,390.18 3,042,841,328.86
37. Share capital
Unit: RMB
Increase/decrease during the year (+/-)
Shares
Opening converted from Closing
balance New issue Bonus issue reserves Others Subtotal balance
Total number of shares 2,904,608,200.00 79,600,000.00 79,600,000.00 2,984,208,200.00
38. Other equity instruments
(1) Preference shares, perpetual bonds and other financial instruments outstanding at the end of the period
Opening Increase for Decrease for Closing
Item balance the period the period 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
Opening Increase for Decrease for Closing
Outstanding financial instruments balance the period the period 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
SHANDONG CHENMING PAPER HOLDINGS LIMITED 89
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VII. Notes to items of the consolidated financial statements (Cont’d)
38. Other equity instruments (Cont’d)
(3) Changes in perpetual bonds outstanding at the end of the period
Opening Increase for Decrease for Closing
Outstanding financial instruments balance the period the period 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
39. Capital reserves
Unit: RMB
Opening Increase for Decrease for Closing
Item balance the period the period balance
Capital premium (share premium) 4,416,363,920.09 177,314,104.00 4,593,678,024.09
Other capital reserves 670,322,507.21 670,322,507.21
Total 5,086,686,427.30 177,314,104.00 5,264,000,531.30
40. Treasury shares
Unit: RMB
Opening Increase for Decrease for Closing
Item balance the period the period balance
Restricted treasury shares 226,860,000.00 226,860,000.00
Total 226,860,000.00 226,860,000.00
41. Other comprehensive income
Unit: RMB
During the period
Less: Less:
Transferred 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
Opening income tax or loss during retained earnings Less: Income parent company shareholders Closing
Item balance for the period the period during the period tax expenses after tax after tax balance
Other comprehensive income to be
reclassified to profit or loss in
subsequent periods
Exchange differences on translation of
foreign operations -879,452,135.10 -100,282,332.31 -100,282,332.31 -979,734,467.41
Total other comprehensive income -879,452,135.10 -100,282,332.31 -100,282,332.31 -979,734,467.41
90 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
42. General risk reserves
Opening Increase for Decrease for Closing
Item balance the period the period balance
General risk reserves 74,122,644.20 74,122,644.20
Total 74,122,644.20 74,122,644.20
43. Surplus reserves
Unit: RMB
Opening Increase for Decrease for Closing
Item balance the period the period balance
Statutory surplus reserves 1,212,009,109.97 1,212,009,109.97
Total 1,212,009,109.97 1,212,009,109.97
44. 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 9,306,269,617.38 9,107,422,690.85
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 9,306,269,617.38 9,107,422,690.85
Plus: Net profit for year attributable to shareholders of
the parent company 516,326,703.48 509,795,572.29
Less: Transfer of statutory surplus reserves
Ordinary dividend payable 437,433,593.74 697,105,968.00
Preferred shares interest payable 270,776,073.42 377,169,767.52
Retained profit as at the end of the year 9,114,386,653.70 8,542,942,527.62
SHANDONG CHENMING PAPER HOLDINGS LIMITED 91
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VII. Notes to items of the consolidated financial statements (Cont’d)
45. Revenue and operating cost
Unit: RMB
Amount for the period Amount for the prior period
Item Revenue Costs Revenue Costs
Principal activities 12,956,373,458.78 9,705,685,293.06 13,127,389,053.48 9,644,049,075.24
Other activities 643,432,307.08 479,614,740.25 221,259,060.22 110,048,724.58
Total 13,599,805,765.86 10,185,300,033.31 13,348,648,113.70 9,754,097,799.82
Information related to revenue:
Unit: RMB
Machine-made Financial Other
Category of contract paper segment segment segments Total
Type of goods
Machine-made paper 11,558,358,972.70 11,558,358,972.70
Financial leasing 523,141,507.84 523,141,507.84
Electricity and steam 76,551,167.17 1,284,686.67 77,835,853.84
Construction materials 178,629,808.17 178,629,808.17
Paper chemicals 65,927,709.45 65,927,709.45
Hotel services 7,284,272.63 7,284,272.63
Others 1,080,801,337.95 43,572,514.54 64,253,788.74 1,188,627,641.23
Total 12,781,639,187.27 566,714,022.38 251,452,556.21 13,599,805,765.86
92 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
46. Taxes and surcharges
Unit: RMB
Amount for Amount for
Item the period the prior period
Urban maintenance and construction tax 16,351,064.21 33,491,970.50
Educational surcharges 11,385,806.59 30,083,061.41
Property tax 35,765,283.62 25,991,020.83
Land use tax 15,431,134.06 17,485,547.38
Vehicle and vessel tax 12,010.68 53,845.71
Stamp duty 13,063,555.43 10,950,170.18
Water engineering funds 849,304.03 1,634,705.86
Environmental tax 7,919,659.65 4,945,936.66
Water resource tax 6,270,279.94 9,852,286.53
Total 107,048,098.21 134,488,545.06
47. Selling and distribution expenses
Unit: RMB
Amount for Amount for
Item the period the prior period
Wages and surcharges 58,686,281.82 61,585,417.90
Depreciation expenses 6,122,536.00 6,288,587.94
Office expenses 1,843,778.51 1,758,975.11
Transportation expenses 486,328,202.98 425,245,830.59
Selling commissions 21,030,123.34 5,725,354.65
Cargo handling charges 8,233,465.18 7,716,321.23
Travel expenses 9,122,159.33 14,946,381.33
Business hospitality expenses 21,137,948.35 28,199,788.34
Warehouse expenses 1,116,656.86 1,080,149.47
Rental expenses 3,513,698.23 4,019,981.96
Others 35,607,569.75 34,018,168.95
Total 652,742,420.35 590,584,957.47
SHANDONG CHENMING PAPER HOLDINGS LIMITED 93
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VII. Notes to items of the consolidated financial statements (Cont’d)
48. General and administrative expenses
Unit: RMB
Amount for Amount for
Item the period the prior period
Wages and surcharges 158,698,083.16 118,518,202.91
Welfare expenses 29,416,491.43 27,556,239.75
Insurance premium 13,706,761.09 14,052,377.28
Depreciation expenses 58,348,214.94 114,171,603.76
Waste disposal expenses 6,215,674.32 5,411,881.45
Hospitality expenses 40,625,251.74 38,283,517.05
Amortisation of intangible assets 22,805,226.17 24,242,384.25
Production interruption loss 59,359,808.22 69,899,210.78
Repair fees 16,847,259.15 15,566,475.96
Others 85,964,475.11 134,715,506.06
Total 491,987,245.33 562,417,399.25
49. R&D expenses
Unit: RMB
Amount for Amount for
Item the period the prior period
Installation expenses 609,432.49 8,229,476.80
Depreciation expenses 27,731,869.06 18,616,150.51
Consumption of raw materials 198,168,322.21 181,729,065.27
Consumption of semi-finished products 87,624,595.31 61,663,204.78
Consumption of auxiliary materials 78,527,925.39 41,870,386.58
Travel expenses 1,574.18
Wages and surcharges 69,924,624.21 52,643,872.99
Welfare expenses 3,526,275.77 3,128,695.00
Housing provident funds 3,787,143.40 3,507,430.88
Insurance premium 8,279,960.27 8,344,818.02
Union funds 391,146.46 165,815.82
Utilities 69,857,222.28 50,274,197.98
Other expenses 128,630.04 1,309,027.25
Total 548,557,146.89 431,483,716.06
94 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
50. Finance expenses
Unit: RMB
Amount for Amount for
Item the period the prior period
Finance expenses 1,459,184,970.39 1,650,075,404.49
Less: interest income 276,115,018.97 213,994,280.22
Less: capitalised interest amount 19,684,809.62 73,319,125.19
Foreign exchange gains and losses -1,552,952.90 -2,644,727.97
Bank charges 184,385,373.56 156,731,452.69
Total 1,346,217,562.46 1,516,848,723.80
51. Other income
Unit: RMB
Amount for Amount for
Item the period the prior period
Government grants – amortised deferred income included in profit or loss 54,911,499.81 34,507,125.14
Government grants – directly included in profit or loss 78,522,474.64 4,324,165.50
Total 133,433,974.45 38,831,290.64
52. Investment income
Unit: RMB
Amount for Amount for
Item the period the prior period
Income from long-term equity investments accounted for using
the equity method 120,115,440.96 -9,467,172.97
Investment gain on disposal of long-term equity investments 16,778,042.01
Total 136,893,482.97 -9,467,172.97
SHANDONG CHENMING PAPER HOLDINGS LIMITED 95
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VII. Notes to items of the consolidated financial statements (Cont’d)
53. Gain on change in fair value
Unit: RMB
Amount for Amount for
Source of gain on change in fair value the period the prior period
Consumable biological assets measured at fair value -9,246,743.86 -1,883,064.80
Total -9,246,743.86 -1,883,064.80
54. Credit impairment loss
Unit: RMB
Amount for Amount for
Item the period the prior period
Bad debt loss of accounts receivable -257,855,903.60 -62,440,283.34
Total -257,855,903.60 -62,440,283.34
55. Loss on impairment of assets
Unit: RMB
Amount for Amount for
Item the period the prior period
Loss on inventory impairment and impairment loss of performance
costs of contracts 83,464,107.59
Loss on construction in progress impairment -163,717.76
Total -163,717.76 83,464,107.59
56. Asset disposal income
Unit: RMB
Amount for Amount for
Source of asset disposal income the period the prior period
Net income from disposal of non-current assets -4,705,886.89 22,823,551.43
Total -4,705,886.89 22,823,551.43
96 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
57. Non-operating income
Unit: RMB
Amounts included
in extraordinary
Amount for Amount for gains and losses
Item the period the prior period for the period
Government grants 633,778,881.76 227,700,148.23 633,778,881.76
Others 8,621,236.02 9,772,444.74 8,621,236.02
Total 642,400,117.78 237,472,592.97 642,400,117.78
58. Non-operating expenses
Unit: RMB
Amounts included
in extraordinary
Amount for Amount for gains and losses
Item the period the prior period for the period
Donation 5,144,077.88 3,041,000.00 5,144,077.88
Loss on destroyed and scrapped non-current assets 510,335.35 1,207,252.11 510,335.35
Others 3,353,130.95 801,876.08 3,353,130.95
Total 9,007,544.18 5,050,128.19 9,007,544.18
59. Income tax expenses
(1) Particulars of income tax expenses
Unit: RMB
Amount for Amount for
Item the period the prior period
Income tax expenses for the period 306,073,252.16 264,288,265.75
Deferred income tax expenses -68,113,064.01 -138,410,446.13
Total 237,960,188.15 125,877,819.62
SHANDONG CHENMING PAPER HOLDINGS LIMITED 97
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VII. Notes to items of the consolidated financial statements (Cont’d)
60. Items on statements of cash flow
(1) Cash received relating to other operating activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Finance support fund 207,271,356.40 184,083,293.99
Interest income 202,247,580.26 213,994,280.22
Open credit, and income from default penalty and fine 97,478,845.77 199,443,495.78
Net return of principal receivables relating to finance lease business 1,056,112,435.52 1,700,675,170.98
Total 1,563,110,217.95 2,298,196,240.97
(2) Cash paid relating to other operating activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Expense and open credit 1,083,849,666.32 1,000,088,741.18
Total 1,083,849,666.32 1,000,088,741.18
(3) Cash received relating to other investing activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Sales of right in Haiming 60,436,164.38
Sales of right in Qingdao Logistics 37,399,937.28
Sales of right in Industrial Logistics 31,361,866.40
Total 129,197,968.06
(4) Cash paid relating to other investing activities
Unit: RMB
Amount for Amount for
Item the period the prior period
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
Acquisition of equity in Taan Plastic 176,000,000.00
Total 176,000,000.00 189,628,400.00
98 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
60. Items on statements of cash flow (Cont’d)
(5) Cash received relating to other financing activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Short-term commercial paper 144,457,000.00 1,887,185,904.00
Equipment financing 542,500,000.00 831,099,242.78
Debt financing receivable 320,000,000.00 400,071,077.96
Loan from the Finance Company 200,000,000.00
Shandong Financial Assets Exchange borrowings 161,337,302.32
Issuance of corporate bonds 350,000,000.00
Total 1,356,957,000.00 3,479,693,527.06
(6) Cash paid relating to other financing activities
Unit: RMB
Amount for Amount for
Item the period the prior period
Repayment of short-term commercial paper 190,000,000.00 2,820,000,000.00
Repayment of matured bonds 900,000,000.00
Repayment of interest on preference shares 98,100,000.00 98,100,000.00
Repayment of equipment leaseback 1,304,243,353.95 1,400,052,857.83
Increase in restricted bank deposits for the period 704,209,894.72 1,807,611,450.60
Repayment of borrowings from Chenming Holdings 708,440,865.27 330,800,000.00
Payment of equity in China Development Bank funds 77,500,000.00
Total 3,982,494,113.94 6,456,564,308.43
SHANDONG CHENMING PAPER HOLDINGS LIMITED 99
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VII. Notes to items of the consolidated financial statements (Cont’d)
61. 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 661,740,850.07 536,600,045.95
Plus: Provision for impairment of assets 258,019,621.36 -83,464,107.59
Depreciation of fixed assets, consumption of oil and gas assets,
depreciation of bearer biological assets 1,103,977,619.97 763,316,039.38
Amortisation of intangible assets 24,470,203.82 26,402,322.31
Amortisation of long-term prepaid expenses 1,429,914.78 5,347,583.69
Loss on disposal of fixed assets, intangible assets and other long-
term assets (“-” denotes gain) 2,171,437.21 22,823,551.43
Loss on changes in fair value (“-” denotes gain) -9,246,743.86 -1,883,064.80
Finance expenses (“-” denotes gain) 1,439,500,160.77 1,516,848,723.80
Investment loss (“-” denotes gain) -136,893,482.97 -9,467,172.97
Decrease in deferred income tax assets (“-” denotes increase) -68,113,064.01 -155,056,230.40
Increase in deferred income tax liabilities (“-” denotes increase) -1,411,125.59
Decrease in inventories (“-” denotes increase) -927,140,737.58 -678,542,881.70
Decrease in operating receivables (“-” denotes increase) -1,749,063,323.95 -282,017,217.78
Increase in operating payables (“-” denotes decrease) 1,727,592,454.67 1,038,863,300.37
Net cash flows from operating activities 2,327,033,784.68 2,699,770,891.69
2. Major investing and financing activities not involving cash
settlements: – –
3. Net change in cash and cash equivalents: – –
Closing balance of cash 2,213,282,630.76 2,009,063,231.38
Less: Opening balance of cash 2,890,328,027.40 2,381,558,242.53
Plus: Closing balance of cash equivalents
Less: Opening balance of cash equivalents
Net increase in cash and cash equivalents -677,045,396.64 -372,495,011.15
(2) Cash and cash equivalents composition
Unit: RMB
Item Closing balance Opening balance
I. Cash 2,213,282,630.76 2,890,328,027.40
Of which: Treasury cash 3,240,007.66 2,418,131.86
Bank deposit that can be used for payment at any time 2,210,042,623.10 2,887,909,895.54
III. Balance of cash and cash equivalent as at end of period 2,213,282,630.76 2,890,328,027.40
Other explanation:
Cash and cash equivalents did not include the restricted cash and cash equivalents used by the Company or
subsidiaries within the Group.
100 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
62. Assets with restricted ownerships or right to use
Unit: RMB
Closing
Item carrying 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 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 –
63. 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 63,132,986.23 7.0795 446,949,976.05
EUR 4,399,947.08 7.9610 35,027,978.69
HKD 36,519,300.65 0.9134 33,358,189.99
GBP 5,709.69 9.1501 52,244.22
Accounts receivables – –
Of which: USD 17,402,059.38 7.0795 123,197,879.41
EUR 3,299,963.79 7.9610 26,271,011.73
Accounts payable – –
Of which: USD 95,108,075.11 7.0795 673,317,617.77
EUR 11,053,728.26 7.9610 87,998,730.71
HKD 23,572,925.52 0.9134 21,532,453.09
Other payables – –
Of which: USD 1,406,229.34 7.0795 9,955,400.59
EUR 578,759.35 7.9610 4,607,503.19
Short-term borrowings – –
Of which: USD 129,772,338.60 7.0795 918,723,271.12
Long-term borrowings – –
Of which: USD 223,535,000.00 7.0795 1,582,516,032.50
Non-current liabilities due within one year
Of which: USD 333,362,309.20 7.0795 2,360,038,467.98
SHANDONG CHENMING PAPER HOLDINGS LIMITED 101
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VII. Notes to items of the consolidated financial statements (Cont’d)
63. 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
7 Chenming (Overseas) Limited Hong Kong, China Hong Kong, China USD
8 Chenming (Singapore) Limited Singapore Singapore USD
64. Government grants
(1) General information of government grants
Unit: RMB
Amount accounted
Type Amount Reporting item for in profit or loss
National Science and Technology Support 1,452,525.00 Deferred income 82,350.00
Program Project Funding
Sewage treatment and water saving reconstruction 63,274,136.71 Deferred income 1,588,476.44
Financial subsidies for technical transformation 196,542,448.80 Deferred income 6,391,903.86
items
Funding for environmental protection 700,228,305.19 Deferred income 24,595,985.84
Industrial logistics park reconstruction 51,960,000.00 Deferred income
compensation
Zhanjiang Forest Pulp & Paper Integration Item 67,047,201.50 Deferred income 10,098,654.93
Huanggang Forest Pulp & Paper Integration Item 681,564,072.66 Deferred income 11,359,401.20
Others 37,304,645.25 Deferred income 794,727.54
Interest subsidy 1,087,500.00 Finance expenses 1,087,500.00
Risk subsidy 19,980,000.00 Other income 19,980,000.00
Tax return 62,377,043.64 Non-operating income, 62,377,043.64
and other income
Enterprise reform and development subsidies 80,837,506.25 Non-operating income, 80,837,506.25
and other income
Government awards 5,845,000.00 Non-operating income 5,845,000.00
Afforestation subsidy 3,252,768.00 Other income 3,252,768.00
VAT return 1,380,000.00 Other income 1,380,000.00
Employment stabilization subsidy 3,725,651.13 Non-operating income, 3,725,651.13
and other income
Relocation compensation balance 533,390,000.00 Non-operating income 533,390,000.00
Special subsidy funds for environmental protection 1,000,000.00 Non-operating income 1,000,000.00
Others 513,387.38 Non-operating income, 513,387.38
and other income
Total 2,512,762,191.51 768,300,356.21
102 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
VIII. Change in scope of consolidation
1. Disposal of subsidiaries
Whether there is loss of control over subsidiaries in a single disposal
√ Yes No
Unit: RMB
Difference
X Financial Report
between
consideration
and share of Determination
net assets and key Relevant other
of relevant assumption of comprehensive
subsidiary Carrying amount Fair value of fair value of income of
Basis for as per Remaining of remaining remaining Gain or loss remaining former
Consideration Shareholding of Way of determining the consolidated shareholding shareholding shareholding in fair value of shareholding subsidiary
of disposal of disposal of disposal of Time of time of loss financial as of the date of as of the date of as of the date of remaining as of the date of transferred to
Name of subsidiary equity interest equity interest equity interest loss of control of control statements loss of control loss of control loss of control shareholding loss of control profit or loss
Qingdao Chenming International
Logistics Co., Ltd. 23,000,000.00 100.00% Transfer 2020.2.29 Without control 11,364,811.86 0.00% 0.00 0.00 0.00
Shouguang Chenming Industrial
Logistics Co., Ltd. 7,100,000.00 100.00% Transfer 2020.2.29 Without control 5,413,230.15 0.00% 0.00 0.00 0.00
2. Change in consolidation scope for other reasons
Two new subsidiaries were added to the scope of consolidation during the reporting period, namely Chenming (Overseas) Co., Ltd. and Chenming (Singapore) Co.,
Ltd.
INTERIM FINANCIAL REPORT 2020
SHANDONG CHENMING PAPER HOLDINGS LIMITED
103
X Financial Report
IX. Interest in other entities
1. Interest in subsidiaries
(1) Group composition
Shareholding (%)
Principal place Place of Nature of Method of
Name of subsidiary of business incorporation business Direct Indirect acquisition
Zhanjiang Chenming Pulp & Paper Co., Ltd. Zhanjiang, China Zhanjiang, China Paper making 100 Establishment
Shouguang Meilun Paper Co., Ltd. Shouguang, China Shouguang, China Paper making 92 Establishment
Jilin Chenming Paper Co., Ltd. Jilin, China Jilin, China Paper making 100 Merger and
acquisition
Huanggang Chenming Pulp & Paper Co., Ltd. Huanggang, China Huanggang, China Pulp production 100 Establishment
Shandong Chenming Paper Sales Co., Ltd. Shouguang, China Shouguang, China Sales of paper 100 Establishment
Shouguang Chenming Import and Export Trade Shouguang, China Shouguang, China Import and export trade 100 Establishment
Co., Ltd.
Jiangxi Chenming Supply Chain Management Jiangxi, China Jiangxi, China Trading 70 Establishment
Co., Ltd.
Chenming GmbH Hamburg, Germany Hamburg, Germany Paper product trading 100 Establishment
Shouguang Chenming Papermaking Machine Shouguang, China Shouguang, China Machinery 100 Establishment
Co., Ltd. manufacturing
Shouguang Hongxiang Printing and Packaging Shouguang, China Shouguang, China Printing and packaging 100 Merger and
Co., Ltd. acquisition
Shouguang Chenming Modern Logistic Co., Ltd. Shouguang, China Shouguang, China Transportation 100 Establishment
Jinan Chenming Investment Management Co., Ltd. Jinan, China Jinan, China Investment 100 Establishment
management
Huanggang Chenming Arboriculture Development Huanggang, China Huanggang, China Arboriculture 100 Establishment
Co., Ltd.
Chenming Arboriculture Co., Ltd. Wuhan, China Wuhan, China Arboriculture 100 Establishment
Chenming Paper Korea Co., Ltd. Seoul, Korea Seoul, Korea Sales of paper 100 Establishment
Shandong Chenming Power Supply Holdings Co., Ltd. Shouguang, China Shouguang, China Power Supply 100 Establishment
Shouguang Shun Da Customs Declaration Co, Ltd. Shouguang, China Shouguang, China Customs declaration 100 Establishment
Shanghai Chenming Industrial Co., Ltd. Shanghai, China Shanghai, China Property investment 100 Establishment
and management
Shandong Chenming Paper Group (Fuyu) Sales Co., Ltd. Fuyu, China Fuyu, China Sales of paper 100 Establishment
Shandong Chenming Group Finance Co., Ltd. Jinan, China Jinan, China Finance 80 20 Establishment
Jiangxi Chenming Paper Co., Ltd. Nanchang, China Nanchang, China Paper making 42.46 40.79 Establishment
Shouguang Chenming Art Paper Co., Ltd. Shouguang, China Shouguang, China Paper making 75 Establishment
Hailaer Chenming Paper Co., Ltd. Hailaer, China Hailaer, China Paper making 75 Establishment
Shandong Grand View Hotel Co., Ltd. Shouguang, China Shouguang, China Catering 70 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 Establishment
Shandong Chenming Financial Leasing Co., Ltd. Jinan, China Jinan, China Financial leasing 100 Establishment
Qingdao Chenming Nonghai Financial Leasing Co., Ltd. Qingdao, China Qingdao, China Financial leasing 100 Establishment
Chenming (HK) Limited Hong Kong, China Hong Kong, China Paper product trading 100 Establishment
Chenming (Overseas) Co., Ltd. Hong Kong, China Hong Kong, China Paper product trading 100 Establishment
Chenming (Singapore) Co., Ltd. Singapore Singapore Paper product trading 100 Establishment
Shouguang Hongyi Decorative Packaging Co., Ltd. Shouguang, China Shouguang, China Packaging 100 Merger and
acquisition
Shouguang Xinyuan Coal Co., Ltd. Shouguang, China Shouguang, China Coal 100 Merger and
acquisition
Shouguang City Run Sheng Wasted Paper Recycle Shouguang, China Shouguang, China Purchase and 100 Merger and
Co., Ltd. sale of waste acquisition
104 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
IX. Interest in other entities (Cont’d)
1. Interest in subsidiaries (Cont’d)
(1) Group composition (Cont’d)
Shareholding (%)
Principal place Place of Nature of Method of
Name of subsidiary of business incorporation business Direct Indirect acquisition
Shouguang Wei Yuan Logistics Company Limited Shouguang, China Shouguang, China Logistics 100 Merger and
acquisition
Shandong Chenming Panels Co., Ltd. Shouguang, China Shouguang, China Panels 100 Merger and
acquisition
Shouguang Chenming Floor Board Co., Ltd. Shouguang, China Shouguang, China Floor board 100 Merger and
acquisition
Shouguang Chenming Cement Co., Limited Shouguang, China Shouguang, China Cement 100 Establishment
Wuhan Chenming Qianneng Electric Power Co., Ltd. Wuhan, China Wuhan, China Electric power 51 Establishment
Shandong Chenming Investment Limited Jinan, China Jinan, China Investment 100 Establishment
Japan Chenming Paper Co., Ltd. Tokyo, Japan Tokyo, Japan Paper product trading 100 Establishment
Chenming International Co., Ltd. Los Angeles, USA Los Angeles, USA Paper product trading 100 Establishment
Zhanjiang Chenming Arboriculture Development Co., Ltd. Zhanjiang, China Zhanjiang, China Arboriculture 100 Establishment
Yangjiang Chenming Arboriculture Development Co., Ltd. Yangjiang, China Yangjiang, China Arboriculture 100 Establishment
Nanchang Chenming Arboriculture Development Co., Ltd. Nanchang, China Nanchang, China Arboriculture 100 Establishment
Guangdong Huirui Investment Co., Ltd. Zhanjiang, China Zhanjiang, China Investment 100
Zhanjiang Chenming New-style Wall Materials Co., Ltd. Zhanjiang, China Zhanjiang, China Wall materials 100 Establishment
Jilin Chenming New-style Wall Materials Co., Ltd. Jilin, China Jilin, China Wall materials 100 Establishment
Jilin Chenming Logistics Co., Ltd. Jilin, China Jilin, China Logistics 100 Establishment
Jiangxi Chenming Logistics Co., Ltd. Nanchang, China Nanchang, China Logistics 100 Establishment
Fuyu Chenming Paper Co., Ltd. Fuyu, China Fuyu, China Paper making 100 Establishment
Zhanjiang Meilun Pulp & Paper Co., Ltd. Zhanjiang, China Zhanjiang, China Paper making 100 Establishment
Shanghai Chenming Group Financial Leasing Co., Ltd. Shanghai, China Shanghai, China Financial leasing 100 Establishment
Guangzhou Chenming Financial Leasing Co., Ltd. Guangzhou, China Guangzhou, China Financial leasing 100 Establishment
Shanghai Hongtai Real Estate Co., Ltd. Shanghai, China Shanghai, China Real estate 100 Merger and
acquisition
Shanghai Hongtai Property Management Co., Ltd. Shanghai, China Shanghai, China Property Management 100 Merger and
acquisition
Shandong Chenming Commercial Factoring Co., Ltd. Jinan, China Jinan, China Business factoring 100 Establishment
Guangzhou Chenming Commercial Factoring Co., Ltd. Guangzhou, China Guangzhou, China Business factoring 51 Establishment
Qingdao Chenming Pulp & Paper Electronic Qingdao, China Qingdao, China Trading 30 70 Establishment
Commodity Spot Trading Center Co., Ltd.
Shandong Chenming Paper Coated Paper Sales Shouguang, China Shouguang, China Sales 100 Establishment
Co., Ltd.
Zhanjiang Chenming Port Co., Ltd. Zhanjiang, China Zhanjiang, China Loading and unloading 100 Establishment
Beijing Chenming Financial Leasing Co., Ltd. Beijing, China Beijing, China Finance 100 Establishment
Chenming Paper United States Co., Ltd. USA 3200 EL CAMINO Paper trading 100 Establishment
REAL, SUITE 130,
IRVINE, CA
Guangdong Chenming Panels Co., Ltd. Guangdong Guangdong Panels 100 Establishment
Meilun (BVI) Limited Cayman Cayman 100 Establishment
Weifang Chenming Growth Driver Replacement Equity Weifang Weifang Fund 79 Establishment
Investment Fund Partnership (Limited Partnership)
Nanjing Chenming Culture Communication Co., Ltd. Nanjing Nanjing Marketing 100 Establishment
Shanghai Chenming Pulp & Paper Sales Co., Ltd. Shanghai, China Shanghai, China Sales of pulp and paper 100 Establishment
SHANDONG CHENMING PAPER HOLDINGS LIMITED 105
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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
attributable to minority interest Closing
Minority minority interest declared during balance of
Name of subsidiary interest during the period the period minority interest
Wuhan Chenming Hanyang Paper Holdings Co., Ltd. 34.80% 130,961,346.12 242,658,667.31
Shouguang Chenming Art Paper Co., Ltd. 25.00% 692,249.39 99,058,489.45
Jiangxi Chenming Paper Co., Ltd. 16.75% 16,377,116.11 8,375,000.00 552,551,611.24
Shouguang Meilun Paper Co., Ltd. 8.00% 4,398,120.59 438,545,346.36
106 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
IX. Interest in other entities (Cont’d)
1. Interest in subsidiaries (Cont’d)
(3) Key financial information of major non-wholly owned subsidiaries
Unit: RMB
Closing balance Opening balance
Non-current Non-current
Name of subsidiary Current assets Non-current assets Total assets Current liabilities liabilities Total liabilities Current assets Non-current assets Total assets Current liabilities liabilities Total liabilities
X Financial Report
Wuhan Chenming
Hanyang Paper
Holdings Co., Ltd. 796,365,369.50 1,017,024,289.91 1,813,389,659.41 1,056,108,856.15 38,774,975.64 1,094,883,831.79 242,300,843.28 1,042,530,549.73 1,284,831,393.01 854,628,918.22 84,521,086.72 939,150,004.94
Shouguang Chenming
Art Paper Co., Ltd. 538,720,021.42 552,091,921.51 1,090,811,942.93 694,577,985.19 694,577,985.19 651,004,033.69 573,204,378.67 1,224,208,412.36 830,743,452.16 830,743,452.16
Jiangxi Chenming
Paper Co., Ltd. 4,431,050,327.60 3,749,406,518.06 8,180,456,845.66 3,880,518,059.33 1,068,758,391.60 4,949,276,450.93 5,176,446,285.48 3,845,100,253.80 9,021,546,539.28 4,643,403,573.27 1,194,736,398.81 5,838,139,972.08
Shouguang Meilun
Paper Co., Ltd. 5,188,031,185.59 11,199,941,763.83 16,387,972,949.42 10,039,237,024.74 871,704,604.79 10,910,941,629.53 5,071,137,194.65 11,453,663,652.73 16,524,800,847.38 10,013,297,488.59 1,186,061,831.08 11,199,359,319.67
INTERIM FINANCIAL REPORT 2020
SHANDONG CHENMING PAPER HOLDINGS LIMITED
107
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IX. Interest in other entities (Cont’d)
2. Interest in joint arrangements or associates
(1) Major joint ventures and associates
Shareholding
Principle place Place of Nature of Accounting
Name of joint ventures and associates of business incorporation 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 Ningbo, China Ningbo, China Investment 40.00 Equity method
Fund Partnership (Limited Partnership) management
Weifang Xingxing United Chemical Weifang, China Weifang, China Chemical engineering 50.00 Equity method
Co., Ltd.
Zhuhai Dechen New Third Board Equity Zhuhai, China Zhuhai, China Investment 50.00 Equity method
Investment Fund Company management
(Limited Partnership)
Goldtrust Futures Co., Ltd. Changsha Changsha Futures 35.43 Equity method
Weifang Chenming Growth Driver Weifang Weifang Investment 44.44 Equity method
Replacement Equity Investment Fund management
Partnership (Limited Partnership)
Guangdong Nanyue Bank Co., Ltd. Guangdong Guangdong Bank 16.62 Equity method
108 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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IX. Interest in other entities (Cont’d)
2. Interest in joint arrangements or associates (Cont’d)
(2) Key financial information of major joint ventures
Unit: RMB
Closing balance/ Opening balance/
amount for the period amount for the prior period
Weifang Sime Weifang Xingxing Weifang Sime Weifang Xingxing
Darby West United Chemical Darby West United Chemical
Item Port Co., Ltd. Co., Ltd. Port Co., Ltd. Co., Ltd.
Current assets 21,064,715.93 128,074,700.60 26,890,506.23 94,334,994.14
Of which: Cash and cash equivalents 4,931,553.08 74,028,507.40 8,299,040.10 25,959,739.14
Non-current assets 534,323,243.57 33,973,666.50 543,566,206.60 32,100,379.42
Total assets 555,387,959.50 162,048,367.10 570,456,712.83 126,435,373.56
Current liabilities 14,260,458.22 27,221,822.09 16,216,196.08 27,927,549.31
Non-current liabilities 382,165,018.01 40,000,000.00 389,517,611.14
Total liabilities 396,425,476.23 67,221,822.09 405,733,807.22 27,927,549.31
Equity interest attributable to shareholders of the
parent company 158,962,483.27 94,826,545.01 164,722,905.61 98,507,824.25
Share of net assets based on shareholding 79,481,241.64 47,413,272.51 82,361,452.81 49,253,912.13
– Unrealised profit arising from intra-group transactions 7,365,218.95 44,943,495.09 7,365,218.95 44,562,645.26
Carrying amount of investment in joint ventures 86,846,460.59 92,356,767.60 89,726,671.76 93,816,557.39
Revenue 31,672,998.02 25,838.06 7,744,022.16 78,509,386.24
Finance expenses 10,889,263.03 -289,698.53 10,159,513.72 -261,143.08
Income tax expenses 2,733,067.31
Net profit -5,760,422.34 -2,919,579.59 -15,939,693.96 8,199,201.95
Total comprehensive income -5,760,422.34 -2,919,579.59 -15,939,693.96 8,199,201.95
SHANDONG CHENMING PAPER HOLDINGS LIMITED 109
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IX. Interest in other entities (Cont’d)
2. Interest in joint arrangements or associates (Cont’d)
(3) Key financial information of major associates
Unit: RMB
Closing balance/ Opening balance/
amount for the reporting period amount for the prior 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
(Limited (Limited (Limited (Limited
Item Partnership) Partnership) Partnership) Partnership)
Current assets 27,675,379.91 5,750,038.07 43,709,912.78 5,810,979.79
Non-current assets 171,877,206.00 99,020,000.00 154,450,006.00 99,020,000.00
Total assets 199,552,585.91 104,770,038.07 198,159,918.78 104,830,979.79
Current liabilities 28,721.17 5,000.00 21,826.94 5,000.00
Total liabilities 28,721.17 5,000.00 21,826.94 5,000.00
Equity interest attributable to shareholders of the parent company 199,523,864.74 104,765,038.07 198,138,091.84 104,825,979.79
Share of net assets based on shareholding 79,809,545.90 52,382,519.04 79,255,236.74 52,412,989.90
Carrying amount of investment in associates 200,045,046.02 52,382,519.05 199,528,847.52 52,412,989.91
Net profit 1,290,560.77 -60,941.72 1,998,750.11 217,016.34
Total comprehensive income 1,290,560.77 -60,941.72 1,998,750.11 217,016.34
(4) Excess loss of joint ventures or associates
Unit: RMB
Accumulated Unrecognised Unrecognised
unrecognised loss (or share of loss (or share of
loss incurred net profit) for net profit) for
Name of joint ventures or associates for prior periods the period 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 9,967,855.32 14,059,623.15
110 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X. Risk relating to financial instruments
Main financial instruments of the Group include monetary funds, bills receivable, accounts receivable, other receivables,
non-current assets due within one year, other current assets, other non-current financial assets, long-term receivables,
short-term borrowings, accounts payable, other payables, short-term borrowings, non-current liabilities due within one year,
long-term borrowings, bonds payable and Long-term payables. Details of financial instruments refer to related notes. The risks
associated with these financial instruments and the risk management policies adopted by the Company to mitigate these risks
are described below. The management of the Company manages and monitors these exposures to ensure that the above
risks are controlled in a limited extent.
1. Risk management goals and policies
The Group aims to seek the appropriate balance between the risks and benefits in order to mitigate the adverse effects
on the Group’s financial performance from financial risk. Based on such objectives, the Group’s risk management
policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and devise
corresponding internal control procedures, and to monitor risks faced by the Group. Such risk management policies and
internal control systems are reviewed regularly to adapt to changes in market conditions and the Group’s activities. The
internal audit department of the Group undertakes both regular and ad-hoc reviews of risk management controls and
procedures.
Risks associated with the financial instrument of the Group mainly include credit risk, liquidity risk, market risk (including
exchange rate risk, interest rate risk and commodity price risk).
The board of directors is responsible to plan and establish the Group’s risk management structure, make risk
management policies and related guidelines, and supervise the implementation of risk management. The Group has
already made risk management risks to identify and analyse risks that the Group face. These policies mentioned specific
risks, covering market, credit risk and liquidity risk etc. The Group regularly assesses market environment and the
operation of the Group changes to determine if to make alteration to risk management policy and systems. The Group’s
risk management is implemented by Risk Management Committee according to the approval of the board of directors.
The Risk Management Committee works closely with other business department of the Group to identify, evaluating
and avoiding certain risks. The Group’s internal audit department will audit the risk management control and procedures
regularly and report the result to audit committee of the Group.
The Group spreads risks through diverse investment and business lines, and through making risk management policy to
reduce risks of single industry, specific area and counterpart.
(1) Credit risks
Credit risk refers to risk associated with the default of contract obligation of a transaction counterparty.
The Group manages credit risk based category. Credit risks mainly arose from bank deposit, bills receivable,
accounts receivable, other receivables and long-term receivables etc.
The Group’s bank deposit mainly deposits in state-owned banks and other large and medium-sized listed banks.
The Group anticipated that the bank deposit does not have significant credit risk.
For bill receivable, accounts receivables, other receivables and long-term receivables, the Group set related
policies to control exposure of credit risks. The Group evaluate client’s credit quality and set related credit period
based on the client’s financial status, credit records and other factors such as current market situation etc. The
Group keep monitor the client’s credit record and for client with deteriorate credit records, the Group will ensure
the credit risk is under control in whole by means of written notice of payment collection, shorten or cancel credit
period.
The Group’s debtor spread over different industry and area. The Group continued to assess the credit evaluation
to receivables and purchase credit guarantee insurance if necessary.
The biggest credit risk exposure of the Group is the carrying amount of each financial asset in the balance sheet.
The Group did not provide financial guarantee which resulted in credit risks.
The amount of top 5 accounts receivable of the Group accounted for 31.17% (2019: 29.05%) of the Group’s total
accounts receivables. The amount of top 5 other receivable of the Group accounted for 60.04% (2019: 87.09%) of
the Group’s total other receivables.
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X. Risk relating to financial instruments (Cont’d)
1. Risk management goals and policies (Cont’d)
(2) Liquidity risk
Liquidity risk refers to the risks that the Group will not be able to meet its obligations associated with its financial
liabilities that are settled by delivering cash or other financial assets.
To manage the liquidity risk, the Group monitors and maintains a level of cash and cash equivalents to finance the
Group’s operations and mitigate the effects of fluctuations in cash flows. The management of the Group monitors
the usage of bank borrowings and ensures compliance with the borrowing agreements. In the meantime, we
obtain commitments from major financial institutions to provide sufficient standby funds to meet short-term and
long-term funding needs.
Operating cash was generated from capital and bank and other borrowings. As of 30 June 2020, the Group’s
unused bank loan credit is RMB35,354.9489 million (31 December 2019: 34,072.1416 million).
As at the end of the period, the financial assets and financial liabilities of the Group are analysed by their maturity
date as below at their undiscounted contractual cash flows (in ten thousand RMB):
30 June 2020
Item Within 1 year 1-2 years 2-3 years 3-4 years Over 4 years Total
Financial assets:
Monetary funds 1,930,176.12 1,930,176.12
Accounts receivable 289,776.58 289,776.58
Accounts receivable financial 141,870.27 141,870.27
Other receivables 352,427.31 352,427.31
Long-term receivables 61,373.61 6,484.02 8,785.38 76,643.01
Other current assets 855,840.76 855,840.76
Non-current assets due within one year 601,058.02 601,058.02
Total financial assets 4,171,149.06 61,373.61 6,484.02 8,785.38 - 4,247,792.07
Financial liabilities:
Short-term borrowings 3,855,431.12 3,855,431.12
Bills payable 274,760.68 274,760.68
Accounts payable 424,490.64 424,490.64
Other payables 169,437.01 169,437.01
Non-current liabilities due within one year 693,685.95 693,685.95
Other current liabilities 15,068.62 15,068.62
Long-term borrowings 273,762.32 116,584.06 32,147.50 278,442.29 700,936.17
Bonds payable 127,813.42 35,000.00 162,813.42
Lease liabilities 457.07 443.29 472.83 7,277.58 8,650.78
Long-term payables 117,454.39 73,980.58 26,179.44 57,263.68 274,878.09
Total financial liabilities and contingent
liabilities 5,432,874.02 519,487.20 226,007.93 58,799.77 342,983.55 6,580,152.47
112 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X. Risk relating to financial instruments (Cont’d)
1. Risk management goals and policies (Cont’d)
(2) Liquidity risk (Cont’d)
As at the beginning of the period, the financial assets and financial liabilities of the Group at the reporting date are
analysed by their maturity date as below at their undiscounted contractual cash flows (in ten thousand RMB):
31 December 2019
Item Within 1 year 1-2 years 2-3 years 3-4 years Over 4 years Total
Financial assets:
Monetary funds 1,906,656.98 1,906,656.98
Accounts receivable 307,736.22 307,736.22
Accounts receivable financial 44,291.59 44,291.59
Other receivables 270,183.01 270,183.01
Long-term receivables 17,413.54 23,488.20 81,470.83 122,372.57
Other current assets 808,452.56 808,452.56
Non-current assets due within one year 697,303.80 697,303.80
Total financial assets 4,034,624.16 17,413.54 23,488.20 81,470.83 4,156,996.73
Financial liabilities:
Short-term borrowings 3,688,315.60 3,688,315.60
Bills payable 151,504.82 151,504.82
Accounts payable 435,108.76 435,108.76
Other payables 238,605.99 238,605.99
Non-current liabilities due within one year 566,295.89 566,295.89
Other current liabilities 22,240.25 22,240.25
Long-term borrowings 521,440.85 117,319.88 86,672.98 188,600.26 914,033.97
Bonds payable 116,920.09 8,907.00 125,827.09
Lease liabilities 457.07 443.29 472.83 7,220.12 8,593.31
Long-term payables 64,272.98 96,887.59 83,321.65 87,671.33 332,153.55
Total financial liabilities and contingent
liabilities 5,102,071.31 703,090.99 223,557.76 170,467.46 283,491.71 6,482,679.23
The financial liabilities disclosed above are based on cash flows that are not discounted and may differ from the
carrying amount of the line items of the balance sheet. Financial guarantees issued do not represent the amount
to be paid.
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X. Risk relating to financial instruments (Cont’d)
1. Risk management goals and policies (Cont’d)
(3) Market risk
Market risk includes interest rate risk and currency risk, refers to the risk that the fair value or future cash flow of a
financial instrument will be fluctuated due to the changes in market price.
Interest risk
Interest rate risk refers to the risk that the fair value or future cash flow of a financial instrument will be fluctuated
due to the floating rate. Interest rate risk arises from recognised interest-bearing financial instrument and
unrecognised financial instrument (e.g. loan commitments).
The Group’s interest rate risk arises from long-term interest-bearing liabilities including long-term borrowing and
bonds payable. Financial liabilities issued at floating rate expose the Group to cash flow interest rate risk. Financial
liabilities issued at fixed rate expose the Group to fair value interest rate risk. The Group determines the relative
proportions of its fixed rate and floating rate contracts depending on the prevailing market conditions and to
maintain an appropriate combination of financial instruments at fixed rate and floating rate through regular reviews
and monitors.
The Group’s finance department continuously monitors the interest rate position of the Group. The Group did
not enter into any interest rate hedging arrangements. But the management is responsible to monitor the risks
of interest rate and consider to hedge significant interest risk if necessary. Increase in interest rates will increase
the cost of new borrowing and the interest expenses with respect to the Group’s outstanding floating rate
interest-bearing borrowings, and therefore could have a material adverse effect on the Group’s financial result.
The management will make adjustments with reference to the latest market conditions. These adjustments may
include enter into interest swap agreement to mitigate its exposure to the interest rate risk.
Interest bearing financial instrument held by the Group are as follows (in ten thousand RMB):
Balance for Balance for
Item the period the prior year
Financial instrument with fixed interest rate
Financial liabilities
Of which: Short-term borrowings 3,855,431.12 3,688,315.60
Long-term borrowings 1,163,772.48 914,033.97
Bonds payable 162,813.42 125,827.09
Total 5,182,017.03 4,728,176.66
Financial instrument with float interest rate
Financial assets
Of which: Monetary funds 221,115.73 288,790.99
Total 221,115.73 288,790.99
The financial instruments held by the Group at the reporting date expose the Group to fair value interest rate risk.
This sensitivity analysis as above has been determined assuming that the change in interest rates had occurred at
the reporting date and arisen from the recalculation of the above financial instrument issued at new interest rates.
The non-derivative tools issued at floating interest rate held by the Group at the reporting date expose the Group
to cash flow interest rate risk. The effect to the net profit and shareholder’s equity illustrated in the sensitivity
analysis as above is arisen from the effect to the annual estimate amount of interest expenses or revenue at the
floating interest rate. The analysis is performed on the same basis for prior year.
114 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X. Risk relating to financial instruments (Cont’d)
1. Risk management goals and policies (Cont’d)
(3) Market risk (Cont’d)
Exchange rate risk
Exchange risk refers to the risk that the fair value or future cash flows of a financial instrument will be fluctuated
due to the changes in foreign currency rates. Foreign currency risk arises on financial instruments that are
denominated in a currency other than the functional currency in which they are measured.
The principal business of the Group is situated within the PRC and is denominated in RMB. However, foreign
exchange risks still exist for the assets and liabilities in foreign currencies and future foreign currency transactions
as recognised by the Group (assets and liabilities in foreign currencies and foreign currency transactions are
mainly denominated in US dollar, Japanese yen, Euro and South Korean Won).
The following table details the financial assets and liabilities held by the Group which denominated in foreign
currencies and amounted to RMB as at 30 June 2020 are as follows (in RMB ten thousands):
Liabilities denominated Asset denominated
in foreign currency in foreign currency
As at the As at the
As at the end beginning of As at the end beginning of
Item of the period the period of the period the period
USD 569,541.73 453,753.14 95,384.06 147,730.57
EUR 9,260.62 9,890.43 7,536.40 5,131.53
HKD 2,153.25 3,150.80 3,335.82 63.69
KRW
YEN 941.18
GBP 5.22 1.86
Total 580,955.59 466,794.37 106,261.50 153,868.82
The Company closely monitors the impact of exchange rate changes on the Company’s foreign exchange risk. The
Company has not taken any measures to avoid foreign exchange risks. However, the management is responsible
for monitoring exchange rate risks and will consider hedging significant exchange rate risks when necessary.
With other variables unchanged, the after-tax effect of the possible reasonable changes in the exchange rate of
foreign currency to RMB on the current profit and loss of the Group is as follows (in RMB ten thousands):
Increase (decrease) in after-tax profits Balance for the period Balance for the prior year
Increase in exchange rate of USD 5% -17,317.30 5% -15,301.13
Decrease in exchange rate of USD -5% 17,317.30 -5% 15,301.13
Increase in exchange rate of Euro 5% -107.48 5% -237.95
Decrease in exchange rate of Euro -5% 107.48 -5% 237.95
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X. Risk relating to financial instruments (Cont’d)
2. Capital management
The objective of the Group’s capital risk management is to safeguard the Group’s ability to continue as a going concern
in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital
structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the number of dividends paid to shareholders,
return capital to shareholders, issue new shares or disposes assets to reduce its liabilities.
The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net liabilities divided by total
capital. As at 30 June 2020, the Group’s gearing ratio is 73.49% (31 December 2019: 73.11%).
XI. 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 of fair value – – – –
(I) Other non-current financial assets 147,445,653.55 147,445,653.55
(II) Biological assets
1. Consumable biological assets 1,556,753,786.65 1,556,753,786.65
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 reasonable and probable changes
in risk variables to profit or loss for the period or to the shareholders’ equity. Since risk variables seldom change on a
stand-alone basis, while the correlation between variables may have significant effect on 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.
For the year For the prior year
Change in Impact on Impact on
investment yield Impact shareholders’ Impact shareholders’
Item or discount rate on profit equity on profit equity
Consumable biological assets Increases by 1% -32,178,275.96 -32,178,275.96 -33,202,809.15 -33,202,809.15
Consumable biological assets Decreases by 1% 36,713,253.94 36,713,253.94 36,397,424.88 36,397,424.88
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.
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.
116 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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XII. Related parties and related party transactions
1. Parent company of the Company
Shareholding Voting right
Registered of the parent of the parent
Place of capital company in the company in
Name of parent company incorporation Nature of business (RMB’ 0,000) Company the Company
Investment in manufacture
of paper, electricity, steam,
Chenming Holdings Company Limited Shouguang arboriculture 123,878.77 27.87% 27.87%
Note: The ultimate controller of the Company is State-owned Assets Supervision and Administration Bureau of Shouguang City.
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. 2. Interest in joint ventures or associates for details.
Balance of related party transaction between the Company and its joint ventures or associates during the period or prior
periods are as follows:
Name of joint ventures or associates Relation
Shouguang Chenming Huisen New-style Construction
Materials Co., Ltd. A joint venture of the Company
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
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
Guangdong Nanyue Bank Co., Ltd. An associate of the Company
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XII. 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. and A company invested by the Directors and senior
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. and Directors and senior management served by the
its subsidiaries Company’s Directors
Hebei Chenming Zhongjin Real Estate Development Co., Ltd. Directors and senior management served by the
and its subsidiaries Company’s Supervisors
Wuhan Chenming Zhongjin Real Estate Co., Ltd. and Directors and senior management served by the
its subsidiaries Company’s Supervisors
Wuhan Rongsheng Zhongjin Development and Investment Directors and senior management served by the
Co., Ltd. and its subsidiaries Company’s Supervisors
Shouguang Hengyuan Energy Co., Ltd. Directors and senior management served by the
Company’s Supervisors
Qingzhou Chenming Denaturation Amylum Co., Ltd. Investee of the Company
Anhui Time Source Corporation Investee of the Company
Shandong Hongqiao Venture Capital Co., Ltd. Investee of the Company
Shanghai Hengzheng Venture Investment Center Investee of the Company
(Limited Partnership)
Lide Technology Co., Ltd. Investee of the Company
Jiangxi Jiuyu Energy Co., Ltd. and its subsidiaries Directors and senior management served by the
Company’s Directors in the past twelve month
Chen Hongguo, Hu Changqing, Li Xingchun, Geng Guanglin, Key management personnel
Li Feng, Chen Gang, Dong Lianming and Yuan Xikun
118 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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XII. 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
Whether the
Transaction transaction Amount
Details of related party Amount for facility facility is for the prior
Related party transaction the period approved exceeded period
Jiangxi Jiuyu Energy Co., Ltd. Procurement of natural 68,606,145.25 600,000,000.00 No 112,367,700.00
gas and heavy oil, etc.
Weifang Xingxing United Procurement of hydrogen 0 45,877,683.03
Chemical Co., Ltd. peroxide etc.
Table on sales of goods/providing of services
Unit: RMB
Details of related Amount for Amount for
Related party party transaction the period the prior period
Shouguang Chenming Huisen New-style
Construction Materials Co., Ltd. Sales of electricity and gas 3,186,741.72 3,980,581.15
Shouguang Huixin Construction Materials
Co., Ltd. Machinery materials 2,422,678.94 34,785.90
SHANDONG CHENMING PAPER HOLDINGS LIMITED 119
INTERIM FINANCIAL REPORT 2020
X Financial Report
XII. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont’d)
(2) Guarantee
The Company as guarantor
Unit: RMB
Whether
Amount performance
under Starting date Expiry date of guarantee
Guarantor Party being guaranteed guarantee of guarantee of guarantee is completed
Shandong Chenming Paper Holdings Limited Weifang Sime Darby West Port Co., Ltd. 135,000,000.00 2017/12/20 2027/12/20 No
Shandong Chenming Paper Holdings Limited Shouguang Meilun Paper Co., Ltd. 125,705,687.82 2019/8/6 2020/8/6 No
Shandong Chenming Paper Holdings Limited Shouguang Meilun Paper Co., Ltd. 100,000,000.00 2019/9/30 2020/9/30 No
Shandong Chenming Paper Holdings Limited Shouguang Meilun Paper Co., Ltd. 168,622,526.92 2019/12/9 2020/12/3 No
Shandong Chenming Paper Holdings Limited Shouguang Meilun Paper Co., Ltd. 24,851,540.87 2020/3/25 2020/9/25 No
Shandong Chenming Paper Holdings Limited Shouguang Meilun Paper Co., Ltd. 99,476,860.75 2020/4/8 2020/10/8 No
Shandong Chenming Paper Holdings Limited Shouguang Meilun Paper Co., Ltd. 132,570,677.48 2020/6/8 2020/12/8 No
Shandong Chenming Paper Holdings Limited Shandong Chenming Paper Sales Co., Ltd. 280,000,000.00 2019/7/30 2020/7/29 No
Shandong Chenming Paper Holdings Limited Shandong Chenming Paper Sales Co., Ltd. 253,272,043.36 2020/3/9 2021/3/4 No
Shandong Chenming Paper Holdings Limited Shandong Chenming Paper Sales Co., Ltd. 60,000,000.00 2020/3/31 2021/1/22 No
Shandong Chenming Paper Holdings Limited Shandong Chenming Paper Sales Co., Ltd. 240,000,000.00 2020/3/31 2020/9/7 No
Shandong Chenming Paper Holdings Limited Shandong Chenming Paper Sales Co., Ltd. 420,456,575.63 2020/5/6 2021/5/2 No
Shandong Chenming Paper Holdings Limited Shandong Chenming Paper Sales Co., Ltd. 100,000,000.00 2020/6/10 2021/6/7 No
Shandong Chenming Paper Holdings Limited Shandong Chenming Paper Sales Co., Ltd. 270,000,000.00 2020/6/16 2021/1/22 No
Shandong Chenming Paper Holdings Limited Shanghai Chenming Pulp & Paper Sales 20,000,000.00 2019/8/30 2020/8/7 No
Co., Ltd
Shandong Chenming Paper Holdings Limited Shanghai Chenming Pulp & Paper Sales 10,000,000.00 2019/12/27 2020/12/24 No
Co., Ltd
Shandong Chenming Paper Holdings Limited Shanghai Chenming Pulp & Paper Sales 5,000,000.00 2020/5/11 2021/5/10 No
Co., Ltd
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 50,000,000.00 2019/8/16 2020/8/14 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 86,000,000.00 2019/8/21 2020/8/20 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 50,108,549.49 2019/9/6 2020/9/6 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 200,000,000.00 2019/10/9 2020/10/8 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 80,000,000.00 2019/10/14 2020/10/13 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 110,000,000.00 2019/10/16 2020/10/15 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 115,000,000.00 2019/11/5 2020/11/4 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 90,000,000.00 2019/11/8 2020/11/7 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 166,668,000.00 2019/11/13 2020/11/13 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 90,000,000.00 2019/11/5 2020/11/14 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2019/12/9 2020/12/8 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2019/12/17 2020/12/16 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 49,556,500.00 2019/11/13 2020/11/5 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 89,000,000.00 2020/3/18 2020/9/14 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 99,600,000.00 2020/3/26 2020/9/22 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2020/1/14 2021/1/13 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 125,000,000.00 2020/1/21 2021/1/21 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2020/2/11 2021/2/10 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2020/2/19 2021/2/18 No
120 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
XII. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont’d)
(2) Guarantee (Cont’d)
Whether
Amount performance
under Starting date Expiry date of guarantee
Guarantor Party being guaranteed guarantee of guarantee of guarantee is completed
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2020/2/27 2021/2/25 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 50,000,000.00 2020/2/18 2021/2/12 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 300,000,000.00 2020/2/29 2021/2/28 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 30,000,000.00 2020/3/13 2021/3/10 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 70,000,000.00 2020/3/13 2021/3/12 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2020/3/25 2021/3/25 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 50,000,000.00 2020/3/27 2021/3/22 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 38,229,300.00 2020/3/25 2021/3/24 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 53,096,250.00 2020/1/13 2020/7/10 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 353,975,000.00 2020/2/26 2021/2/25 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 30,071,580.00 2020/4/29 2020/10/26 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 90,000,000.00 2020/5/18 2020/11/17 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 31,857,750.00 2020/5/21 2021/5/18 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 33,981,600.00 2020/5/27 2020/11/26 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 51,500,000.00 2020/6/1 2020/11/24 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 90,000,000.00 2020/6/3 2020/12/1 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 90,000,000.00 2020/6/8 2020/12/5 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2020/5/19 2020/8/19 No
Shandong Chenming Paper Holdings Limited Jilin Chenming Paper Co., Ltd. 20,000,000.00 2020/3/16 2021/2/26 No
Shandong Chenming Paper Holdings Limited Jilin Chenming Paper Co., Ltd. 20,053,500.00 2020/3/6 2020/9/2 No
Shandong Chenming Paper Holdings Limited Jilin Chenming Paper Co., Ltd. 78,000,000.00 2020/5/18 2020/11/16 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co., Ltd. 150,000,000.00 2019/12/4 2020/12/4 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co., Ltd. 46,800,000.00 2020/2/14 2021/2/13 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co., Ltd. 25,000,000.00 2020/2/25 2020/8/21 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co., Ltd. 60,000,000.00 2020/2/24 2021/2/23 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co., Ltd. 99,000,000.00 2020/3/3 2021/3/2 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co., Ltd. 150,000,000.00 2020/3/20 2021/3/19 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co., Ltd. 90,000,000.00 2020/3/27 2021/3/26 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co., Ltd. 49,500,000.00 2020/3/19 2021/3/19 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co., Ltd. 100,000,000.00 2020/4/10 2021/4/9 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co., Ltd. 70,000,000.00 2020/4/15 2021/4/14 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co., Ltd. 73,000,000.00 2020/5/27 2021/5/26 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co., Ltd. 200,000,000.00 2019/9/29 2020/9/28 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2019/12/23 2020/12/22 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co., Ltd. 20,000,000.00 2020/3/30 2021/3/29 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co., Ltd. 70,000,000.00 2020/4/27 2021/3/29 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co., Ltd. 90,000,000.00 2020/6/24 2021/3/29 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2020/5/18 2020/12/22 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co., Ltd. 20,000,000.00 2020/3/23 2021/3/22 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co., Ltd. 96,942,436.11 2020/4/14 2021/4/13 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co., Ltd. 30,000,000.00 2020/6/9 2021/6/8 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co., Ltd. 38,057,563.89 2020/6/19 2021/6/18 No
SHANDONG CHENMING PAPER HOLDINGS LIMITED 121
INTERIM FINANCIAL REPORT 2020
X Financial Report
XII. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont’d)
(2) Guarantee (Cont’d)
Whether
Amount performance
under Starting date Expiry date of guarantee
Guarantor Party being guaranteed guarantee of guarantee of guarantee is completed
Jiangxi Chenming Paper Co., Ltd. Chenming (HK) Limited 154,687,075.00 2019/1/12 2020/1/10 No
Jiangxi Chenming Paper Co., Ltd. Chenming (HK) Limited 94,538,935.05 2020/3/19 2021/3/9 No
Shandong Chenming Paper Holdings Limited Chenming (HK) Limited 70,795,000.00 2019/8/5 2021/5/30 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co., Ltd. 200,000,000.00 2019/6/28 2022/6/27 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co., Ltd. 300,000,000.00 2019/7/1 2020/6/27 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co., Ltd. 85,000,000.00 2019/10/23 2022/6/27 No
Shandong Chenming Paper Holdings Limited Jiangxi Chenming Paper Co., Ltd. 114,750,000.00 2019/11/22 2022/6/27 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. Chenming (HK) Limited 106,192,500.00 2019/3/28 2022/1/7 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. Chenming (HK) Limited 208,385,082.50 2019/4/2 2022/1/6 No
Shandong Chenming Paper Holdings Limited Chenming (HK) Limited 142,297,950.00 2019/4/30 2022/4/22 No
Shandong Chenming Paper Holdings Limited Chenming (HK) Limited 138,191,840.00 2018/4/23 2021/4/7 No
Shandong Chenming Paper Holdings Limited Chenming (HK) Limited 79,290,400.00 2018/5/4 2021/4/6 No
Shandong Chenming Paper Holdings Limited Chenming (HK) Limited 49,839,680.00 2018/5/17 2021/5/5 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. Chenming (HK) Limited 262,533,732.74 2018/8/8 2021/5/25 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. Chenming (HK) Limited 262,533,732.74 2018/8/8 2021/5/25 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. Chenming (HK) Limited 267,782,087.50 2018/9/4 2021/6/21 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. Chenming (HK) Limited 267,782,087.50 2018/9/6 2021/6/21 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. Chenming (HK) Limited 168,138,125.00 2019/1/25 2021/5/21 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. Chenming (HK) Limited 106,192,500.00 2019/3/28 2021/6/16 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. Chenming (HK) Limited 208,385,082.50 2019/4/2 2021/6/10 No
Zhanjiang Chenming Pulp & Paper Co., Ltd. Chenming (HK) Limited 138,050,250.00 2019/7/19 2021/6/19 No
Shandong Chenming Paper Holdings Limited Chenming (HK) Limited 198,933,950.00 2018/11/30 2020/10/30 No
Shandong Chenming Paper Holdings Limited Shandong Chenming Financial Leasing 25,000,000.00 2017/9/21 2020/9/21 No
Co., Ltd.
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 330,000,000.00 2018/10/31 2020/10/30 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 70,000,000.00 2018/10/31 2020/10/30 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2018/12/18 2020/10/31 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 200,000,000.00 2019/7/12 2021/7/12 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 140,000,000.00 2019/12/4 2021/12/3 No
Shandong Chenming Paper Holdings Limited Zhanjiang Chenming Pulp & Paper Co., Ltd. 700,870,500.00 2019/12/27 2022/12/27 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co., Ltd. 38,240,000.00 2017/1/5 2020/9/26 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co., Ltd. 38,240,000.00 2017/1/5 2020/12/26 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co., Ltd. 43,690,000.00 2017/1/5 2021/3/26 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co., Ltd. 43,690,000.00 2017/1/5 2021/6/26 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co., Ltd. 3,900,000.00 2017/1/5 2021/9/26 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co., Ltd. 36,260,000.00 2017/2/3 2021/9/26 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co., Ltd. 40,160,000.00 2017/2/3 2021/12/26 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co., Ltd. 40,160,000.00 2017/2/3 2022/3/26 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co., Ltd. 33,420,000.00 2017/2/3 2022/6/26 No
Shandong Chenming Paper Holdings Limited Huanggang Chenming Pulp & Paper Co., Ltd. 45,017,527.85 2018/11/14 2020/9/26 No
Total 13,357,901,980.70
122 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
XII. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont’d)
(3) Related party lending and borrowing
Unit: RMB
Borrowing Starting
Related party amount date Expiry date Description
Lending
Weifang Sime Darby West Port Co., Ltd. 59,500,000.00 2018/07/09 2022/07/08
(4) Interest on related party lending and borrowing
Unit: RMB
Related party Amount for Amount for
Related party transaction the period the prior period
Weifang Sime Darby West Port Co., Ltd. Interest income 1,980,057.34 1,794,916.65
SHANDONG CHENMING PAPER HOLDINGS LIMITED 123
INTERIM FINANCIAL REPORT 2020
X Financial Report
XII. Related parties and related party transactions (Cont’d)
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 Chenming Huisen New-style Construction
Materials Co., Ltd. 1,548,830.12 82,185.06 2,008,185.60 61,132.76
Shouguang Huixin Construction Materials Co., Ltd. 24,103,255.17 2,298,275.87
Total 25,652,085.29 2,380,460.92 2,008,185.60 61,132.76
Prepayments:
Jiangxi Jiuyu Energy Co., Ltd. 12,089,761.12 15,358,225.83
Shouguang Hengyuan Energy Co., Ltd. 8,838,324.17 20,179,937.87
Total 20,928,085.29 – 35,538,163.70 –
Other receivables:
Shouguang Hengyuan Energy Co., Ltd. 10,000,000.00 757,910.97
Weifang Sime Darby West Port Co., Ltd. 66,436,602.10 5,151,661.58 64,889,583.26 5,151,661.58
Total 66,436,602.10 5,151,661.58 74,889,583.26 5,909,572.55
124 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
XII. 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 Joint Chemical Co., Ltd. 26,905,494.34 26,905,494.34
Accounts payable: Jiangxi Jiuyu Energy Co., Ltd. 4,067,576.01 3,054,956.65
Accounts payable: Jiangxi Chenming Port Co., Ltd. 910,329.34
Total 31,883,399.69 29,960,450.99
Other current liabilities Guangdong Nanyue Bank Co., Ltd. 400,000,000.00 400,000,000.00
Total 400,000,000.00 400,000,000.00
(3) Deposits with related parties
Unit: RMB
Closing book Opening book
Related party Related party transaction balance balance
Bank deposit Guangdong Nanyue Bank Co., Ltd. 83,915.75 85,668.46
Other monetary funds Guangdong Nanyue Bank Co., Ltd. 1,964,668,000.00 2,414,668,000.00
(4) Loans from related parties
Unit: RMB
Closing book Opening book
Item name Related party balance balance
Short-term borrowings Guangdong Nanyue Bank Co., Ltd. 2,598,668,000.00 2,948,970,000.00
SHANDONG CHENMING PAPER HOLDINGS LIMITED 125
INTERIM FINANCIAL REPORT 2020
X Financial Report
XIII. Share-based payment
1. General information of share-based payment
√ Applicable Not applicable
Unit: RMB
Total equity instruments of the Company granted during the period 226,860,000
On 29 May 2020, the Company disclosed the Announcement on Grant of Restricted Shares to Participants and
determined to grant 79,600,000 restricted shares to 111 participants at the grant price of RMB2.85 per share. On 9 July
2020, the Company disclosed the announcement on Completion of Registration of the Grant of the 2020 Restricted A
Shares. The restricted shares will be unlocked respectively after 24 months, 36 months and 48 months from the date of
completion of the registration of the restricted shares under the grant.
2. Equity-settled share-based payment
√ Applicable Not applicable
Unit: RMB
The method of determining the fair value of equity instrument The Company chooses to calculate the
on the grant date fair value based on the closing price of
the Company’s shares on the grant
date deducting the grant price
Basis for determining the quantity of exercisable equity instruments Based on subsequent information such
as the latest changes in the number of
participants who are entitled to exercise
and the completion status of
performance targets
Reasons for significant difference between the current estimate and None
previous estimate
Accumulated amount of equity-settled share-based payment included 146,264,104
in the capital reserve
Total amount of equity-settled share-based payment recognised 34,443,000
in the current period
126 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
XIV. Undertaking and contingency
1. Significant commitments
(1) Capital commitment
Item Closing balance Opening balance
Commitments in relation to acquisition and construction of
long-term assets 360,655,698.54 260,421,348.84
Total 360,655,698.54 260,421,348.84
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 2020, 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.
SHANDONG CHENMING PAPER HOLDINGS LIMITED 127
INTERIM FINANCIAL REPORT 2020
X Financial Report
XV. Post-balance sheet events
As of 10 August 2020 (the date of approval of the report by the Board of Directors), the Group has no events that should be
disclosed after the balance sheet date.
XVI. Other material matters
1. Segment information
(1) Basis for determination and accounting policies
According to the Group’s internal organizational structure, management requirements and internal reporting
system, the Group’s operating business is divided into 5 reporting segments. These report segments are
determined based on the financial information required by the company’s daily internal management. The
management of the Group regularly evaluates the operating results of these reporting segments to determine the
allocation of resources to them and evaluate their performance.
The Group’s reporting segments include:
(1) Machine paper segment, which is responsible for production and sales of machine paper;
(2) Financial services segment, which provides financial services;
(3) Investment real estate segment, which is responsible for real estate rental;
(4) Other segments, which is responsible for the above segments otherwise.
Segment report information is disclosed in accordance with the accounting policies and measurement standards
adopted by each segment when reporting to management. These accounting policies and measurement basis are
consistent with the accounting policies and measurement basis used in preparing the financial statements.
(2) Financial Information of Reporting Segment
Unit: RMB’ 0,000
Machine Financial Investment Inter-segment
Item paper Services real estate Others offset Total
Revenue from principal activities 1,219,124.98 80,275.71 3,567.20 45,013.05 52,343.59 1,295,637.35
Costs of principal activities 935,107.60 47,183.26 6,399.64 39,695.04 57,817.01 970,568.53
Total assets 9,494,702.87 2,674,717.40 565,998.03 509,033.89 3,341,044.22 9,903,407.97
Total liabilities 6,753,299.01 1,306,696.34 314,968.25 286,852.27 1,383,568.99 7,278,246.88
128 SHANDONG CHENMING PAPER HOLDINGS LIMITED
INTERIM FINANCIAL REPORT 2020
X Financial Report
XVI. Other material matters (Cont’d)
2. Government Subsidies
(1) Government subsidies included in deferred income will be subsequently measured using the gross method
Unit: RMB
Include in Asset-related/
Opening New grants other income Other Closing income-
Liability item balance for the period for the period changes balance related
National Science and Technology Support
Program Project Funding 1,452,525.00 82,350.00 1,370,175.00 Asset-related
Sewage treatment and water saving
reconstruction 63,274,136.71 1,588,476.44 61,685,660.27 Asset-related
Financial subsidies for technical transformation
project 168,182,448.80 28,360,000.00 6,391,903.86 190,150,544.94 Asset-related
Funding for environmental protection 700,228,305.19 24,595,985.84 675,632,319.35 Asset-related
Industrial logistics park reconstruction
compensation 51,960,000.00 51,960,000.00 Asset-related
Zhanjiang integrated forestry, pulp and
paper project 67,047,201.50 10,098,654.93 56,948,546.57 Asset-related
Huanggang pulp-forestry-paper project 681,564,072.66 11,359,401.20 670,204,671.46 Asset-related
Others 37,304,645.25 794,727.54 36,509,917.71 Asset-related
Total 1,771,013,335.11 28,360,000.00 54,911,499.81 51,960,000.00 1,692,501,835.30
(2) Government subsidies calculated into the current profit and loss using the total method
Unit: RMB
Amount Amount
credited to credited to Presentable
profit or loss for profit or loss items included Asset-related/
Subsidy Item Type the prior period for the period in profit or loss revenue-related
Interest subsidy Financial appropriation 1,087,500.00 Finance expenses Asset-related
Risk subsidy Financial appropriation 19,980,000.00 Other income Income-related
Tax rebate Tax rebate 33,984,039.89 62,377,043.64 Non-operating income Income-related
and other income
Enterprise reform and development Financial appropriation 160,161,518.76 80,837,506.25 Non-operating income Income-related
subsidies and other income
Government awards Financial appropriation 10,000.00 5,845,000.00 Non-operating income Income-related
Afforestation subsidy Financial appropriation 588,512.58 3,252,768.00 Other income Income-related
Value-added tax rebate Tax rebate 275,104.76 1,380,000.00 Other income Income-related
Employment subsidy Financial appropriation 135,853.85 3,725,651.13 Non-operating income Income-related
and other income
Final payment of relocation compensation Financial appropriation 533,390,000.00 Non-operating income Income-related
Funding for environmental protection Financial appropriation 36,428,597.00 1,000,000.00 Non-operating income Income-related
Research and development grants Financial appropriation 392,300.00 Non-operating income Income-related
Others Financial appropriation 46,886.89 513,387.38 Non-operating income Income-related
and other income
Total 232,022,813.73 713,388,856.40
SHANDONG CHENMING PAPER HOLDINGS LIMITED 129
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XVI. Other material matters (Cont’d)
3. Net Current Assets and Total Assets less Current Liabilities
(1) Net current assets
Unit: RMB’ 0,000
2020.06.30 2019.12.31
Current assets 4,714,918.30 4,495,243.39
Less: Current liabilities 5,693,367.00 5,269,876.89
Net current assets -978,448.70 -774,633.50
(2) Total assets less current liabilities
Unit: RMB’ 0,000
2020.06.30 2019.12.31
Total assets 9,903,407.97 9,795,890.99
Less: Current liabilities 5,693,367.00 5,269,876.89
Total assets less current liabilities 4,210,040.97 4,526,014.10
130 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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XVII. Notes to major financial statement items of the parent company
1. Accounts receivable
(1) Accounts receivable by category
Unit: RMB
Closing balance Opening balance
Book balance Bad debt provision Book balance Bad debt provision
Carrying Carrying
Category Amount Percentage Amount Percentage amount Amount Percentage Amount Percentage amount
Accounts receivable assessed
individually for impairment 5,000,000.00 0.52% 5,000,000.00 100.00% 778,063.57 1.73% 778,063.57 100.00%
Accounts receivable assessed
collectively for impairment 957,744,376.63 99.48% 4,723,988.82 0.92% 953,020,387.81 44,083,258.79 98.27% 4,878,588.79 11.07% 39,204,670.00
Of which:
Receivables from related
parties 446,319,284.22 46.36% 276.00 0.00% 446,319,008.22 31,427,654.36 70.06% 157,138.27 0.50% 31,270,516.09
Receivables from dealer
customers 511,425,092.41 53.12% 4,723,712.82 0.92% 506,701,379.59 12,655,604.43 28.21% 4,721,450.52 37.31% 7,934,153.91
Total 962,744,376.63 100.00% 9,723,988.82 1.88% 953,020,387.81 44,861,322.36 100.00% 5,656,652.36 12.61% 39,204,670.00
Items assessed individually for impairment:
Unit: RMB
Closing balance
Book Bad debt Provision Reasons for
Name balance provision percentage provision
Ningxia Lingwu Baota Dagu 5,000,000.00 5,000,000.00 100.00% Due to poor
Storage and Transportation management, the
Co., Ltd. financial indicators
of the company
deteriorated and its
repayment ability
substantially declined
Total 5,000,000.00 5,000,000.00 – –
SHANDONG CHENMING PAPER HOLDINGS LIMITED 131
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XVII. 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 collectively for impairment:
Accounts receivable with collective provision for bad debts based on receivables from related parties:
Unit: RMB
Closing balance
Bad debt Provision
Name Book balance provision percentage
Within 1 year 446,319,284.22 276.00 0.00%
Total 446,319,284.22 276.00 –
Accounts receivable with collective provision for bad debts based on receivables from dealer customers:
Unit: RMB
Closing balance
Bad debt Provision
Name Book balance provision percentage
Within 1 year 511,425,092.41 4,723,712.82 0.92%
Total 511,425,092.41 4,723,712.82 –
By ageing
Unit: RMB
Ageing Closing balance
Within 1 year (including 1 year) 953,020,387.81
Total 953,020,387.81
132 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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XVII. Notes to major financial statement items of the parent company (Cont’d)
1. Accounts receivable (Cont’d)
(2) Provision, recovery or reversal of bad debt provision for the period
Unit: RMB
Changes in the period
Opening Recovery Closing
Category balance Provision or reversal Write-off Others balance
bad debt provision for accounts
receivable 5,656,652.36 4,067,336.46 9,723,988.82
5,656,652.36 4,067,336.46 9,723,988.82
(3) Top five accounts receivable based on closing balance of debtors
The top five accounts receivable based on closing balance of debtors for the period amounted to
RMB509,639,869.96 in total, accounting for 98.69% of the total closing balance of accounts receivable. The
closing balance of the corresponding bad debt provision amounted to RMB9,422,600.00 in total.
2. Other receivables
Unit: RMB
Item Closing balance Opening balance
Other receivables 13,615,203,417.43 13,975,590,537.58
Total 13,615,203,417.43 13,975,590,537.58
(1) Other receivables
1) Other receivables by nature
Unit: RMB
Closing book Opening book
Nature balance balance
Open credit 13,530,563,966.51 13,888,363,610.88
Guarantee deposit 52,295,446.66 5,379,025.93
Advances 519,489.32
Insurance premium 1,692,817.38 13,786.37
Reserve and borrowings 9,505,097.32 7,978,371.88
Others 21,146,089.56 73,336,253.20
Total 13,615,203,417.43 13,975,590,537.58
SHANDONG CHENMING PAPER HOLDINGS LIMITED 133
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XVII. Notes to major financial statement items of the parent company (Cont’d)
2. Other receivables (Cont’d)
(1) Other receivables (Cont’d)
2) Particulars of bad debt provision
Unit: RMB
Phase 1 Phase 2 Phase 3
ECLs over the ECLs over the
ECLs for the entire life (not entire life (credit-
Bad debt provision next 12 months credit-impaired) impaired) Total
Balance as at 1 January 2020 192,610,311.65 2,790,901.12 195,401,212.77
Balance as at 1 January 2020 during the period – – – –
– Transferred into Phase 2
– Transferred into Phase 3 2,790,901.12 2,790,901.12
– Reversal to Phase 2
– Reversal to Phase 1 192,610,311.65 192,610,311.65
Provision for the period
Reversal for the period 14,305,237.97 14,305,237.97
Transfer for the period
Write-off for the period
Other changes
Balance as at 30 June 2020 178,305,073.68 2,790,901.12 181,095,974.80
Changes in book balances with significant changes in loss provision for the period
Applicable √ Not applicable
By ageing
Unit: RMB
Ageing Book balance
Within 1 year (including 1 year) 13,543,034,435.30
1 – 2 years 47,804,128.41
2 – 3 years 24,364,853.72
Total 13,615,203,417.43
134 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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XVII. Notes to major financial statement items of the parent company (Cont’d)
2. Other receivables (Cont’d)
(1) Other receivables (Cont’d)
3) 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 Write-off Others balance
Bad debt provision for other
receivables 195,401,212.77 14,305,237.97 181,095,974.80
Total 195,401,212.77 14,305,237.97 181,095,974.80
4) Top five other receivables according to closing balance of debtors
Unit: RMB
Percentage to
closing balance Closing balance
of other of bad debt
Name of entity Nature Closing balance Maturity receivables provision
Shanghai Chenming Financial Leasing
Co., Ltd. Open credit 3,559,000,000.00 Within 1 year 24.99% 17,795,000.00
Shandong Chenming Financial Leasing
Co., Ltd. Open credit 1,974,869,546.02 Within 1 year 13.87% 9,874,347.73
Shanghai Chenming Industrial Co., Ltd. Open credit 1,634,234,658.73 Within 1 year 11.47% 8,171,173.29
Zhanjiang Chenming Pulp & Paper
Co., Ltd. Open credit 1,397,791,325.58 Within 1 year 9.81% 6,988,956.63
Shouguang Chenming Import and
Export Trade Co., Ltd Open credit 1,154,508,529.76 Within 1 year 8.11% 5,772,542.65
Total – 9,720,404,060.09 – 68.25% 48,602,020.30
3. Long-term equity investments
Unit: RMB
Closing balance Opening balance
Book Impairment Carrying Book Impairment Carrying
Item balance provision amount balance provision amount
Investment in subsidiaries 23,343,942,649.90 23,343,942,649.90 23,275,652,649.90 23,275,652,649.90
Investment in associates and joint ventures 357,261,245.00 5,994,545.96 351,266,699.04 360,122,213.93 5,994,545.96 354,127,667.97
Total 23,701,203,894.90 5,994,545.96 23,695,209,348.94 23,635,774,863.83 5,994,545.96 23,629,780,317.87
SHANDONG CHENMING PAPER HOLDINGS LIMITED 135
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XVII. 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
Increase for Decrease for Closing provision for provision of
Investee Opening balance the year the year balance the year impairment
Chenming Paper Korea Co., Ltd. 6,143,400.00 6,143,400.00
Chenming GmbH 4,083,235.00 4,083,23
Shandong Chenming Paper Group (Fuyu) Sales
Co., Ltd. 1,000,000.00 1,0
Hailaer Chenming Paper Co., Ltd. 12,000,000.00 12,000,000.00
Huanggang Chenming Pulp & Paper Co., Ltd. 2,250,000,000.00 50,000,000.00 2,300,000,000
Huanggang Chenming Arboriculture Development
Co., Ltd. 70,000,000.00 70,00
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
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. 5,055,000,000.00 27,500,000.00 5,082,500,000.00
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. 762,641,208.20 762,641,208.20
Shouguang Chenming Import and Export Trade
Co., Ltd. 250,000,000.00 250,000,00
Shouguang Chenming Papermaking Machine
Co., Ltd. 2,000,000.00 2,00
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 Industrial 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
Weifang Chenming Growth Driver Replacement
Equity Investment Fund Partnership
(Limited Partnership) 158,000,000.00 790,000.00 158,790,000.00
Total 23,275,652,649.90 78,290,000.00 10,000,000.00 23,343,942,649.90
136 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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XVII. 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
Investment Distribution
gain or loss Adjustment Other of cash Closing
recognised of other change dividend balance of
Opening Additional Withdrawn under equity comprehensive in equity or profit Impairment Closing impairment
Investee balance contribution contribution method income interest declared provision Others balance provision
I. Joint ventures
Shouguang Chenming Huisen
New-style Construction
Materials Co., Ltd. 3,789,667.61 740,169.16 1,200,000.00 3,329,836.77
Weifang Sime Darby West
Port Co., Ltd. 89,726,671.76 -2,880,211.17 86,846,460.59
Subtotal 93,516,339.37 -2,140,042.01 1,200,000.00 90,176,297.36
II. Associates
Jiangxi Jiangbao Media
Colour Printing Co., Ltd. 0 0
Zhuhai Dechen New Third
Board Equity Investment
Fund Company (Limited
Partnership) 52,412,989.91 -30,470.86 52,382,519.05
Ningbo Kaichen Huamei
Equity Investment Fund
Partnership (Limited
Partnership) 199,528,847.52 516,198.50 200,045,046.02
Xuchang Chenming Paper
Co., Ltd. 5,994,545.96
Chenming (Qingdao) Asset
Management Co., Ltd. 8,669,491.17 -6,654.56 8,662,836.61
Subtotal 260,611,328.60 0.00 0.00 479,073.08 0.00 0.00 0.00 0.00 0.00 261,090,401.68 5,994,545.96
Total 354,127,667.97 0.00 0.00 -1,660,968.93 0.00 0.00 1,200,000.00 0.00 0.00 351,266,699.04 5,994,545.96
SHANDONG CHENMING PAPER HOLDINGS LIMITED 137
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XVII. Notes to major financial statement items of the parent company (Cont’d)
4. Other payables
Unit: RMB
Item Closing balance Opening balance
Interest payable 109,263,749.98 127,278,083.35
Dividend payable 610,109,667.16
Other payables 3,672,958,735.20 6,299,370,764.60
Total 4,392,332,152.34 6,426,648,847.95
Other payables of the top five closing balances collected by the payee
Unit: RMB
Name of company Closing balance
Jiangxi Chenming Paper Co., Ltd. 1,655,496,622.33
Shouguang Meilun Paper Co., Ltd. 950,951,379.11
Jilin Chenming Paper Co., Ltd. 233,624,654.50
Shandong Chenming Power Supply Holdings Co., Ltd. 146,387,007.68
Sutai (Hangzhou) Investment Management Co., Ltd. 100,000,000.00
Total 3,086,459,663.62
5. Revenue and operating costs
Unit: RMB
Amount for the period Amount for the prior period
Item Revenue Costs Revenue Costs
Principal activities 3,138,096,400.01 2,435,165,869.61 2,237,163,494.68 1,674,925,035.20
Other activities 709,097,257.52 593,307,602.81 458,848,921.42 428,362,116.44
Total 3,847,193,657.53 3,028,473,472.42 2,696,012,416.10 2,103,287,151.64
6. Investment income
Amount for Amount for
Item the period the prior period
Income from long-term equity investments accounted for using
the cost method 681,230,000.00 1,023,353,000.00
Income from long-term equity investments accounted for using
the equity method -1,660,968.93 -12,799,856.43
Investment gain on disposal of long-term equity investments 3,100,000.00
Total 682,669,031.07 1,010,553,143.57
138 SHANDONG CHENMING PAPER HOLDINGS LIMITED
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X Financial Report
XVIII. Supplementary information
1. Breakdown of extraordinary gains and losses for the current period
√ Applicable Not applicable
Unit: RMB
Item Amount
Profit or loss from disposal of non-current assets 13,758,306.22
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 767,184,012.96
Gain or loss from change in fair value of consumable biological assets and other non-current
financial assets by adopting fair value method for subsequent measurements -9,246,743.86
Other gain or loss items within the definition of extraordinary gain or loss -2,416,979.09
Less: Effect of income tax 179,535,882.21
Effect of minority interest 141,298,126.77
Total 448,444,587.25
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. Return on net assets and earnings per share
Earnings per share
Rate of return
on net assets
on weighted Basic Diluted
Profit for the reporting period average basis (RMB per share) (RMB per share)
Net profit attributable to ordinary shareholders of the
Company 0.84% 0.051 0.051
Net profit after extraordinary gains and losses attributable to
ordinary shareholders of the Company -1.69% -0.103 -0.103
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 RMB96,734,246.58 from 1 January 2020 to 30 June 2020 and the dividends issued and declared
by preference shares of RMB270,776,073.42 in 2020 are deducted.
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
SHANDONG CHENMING PAPER HOLDINGS LIMITED 139
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