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个股公告正文

晨 鸣B:2014年年度报告摘要(英文版)

日期:2015-03-27附件下载

                                                             Shandong Chenming Paper Holdings Limited 2014 Annual Report Summary




Stock code: 000488, 200488                   Stock abbreviation: Chenming Paper, Chenming B             Announcement No.: 2015-008




                   Shandong Chenming Paper Holdings Limited


                                   2014 Annual Report Summary

1. IMPORTANT NOTICE
This annual report summary is extracted from the text of the annual report. For details, investors should carefully read the text of the
annual report published, at the same time, on the designated websites such as the website of Shenzhen Stock Exchange as approved
by China Securities Regulatory Commission or the website of the Stock Exchange of Hong Kong Limited.
Company profile
Stock abbreviation           晨鳴紙業                                  Stock Code                        000488
Stock abbreviation           晨鳴 B                                    Stock Code                        200488
Stock abbreviation           Chenming Pape                             Stock Code                        01812
Stock exchanges on which
                         Shenzhen Stock Exchange and The Stock Exchange of Hong Kong
the shares are listed
                                    Secretary to the Board             Securities Affairs Representative Hong Kong Company Secretary
Name                         Wang Chunfang                             Xiao Peng                         Poon Shiu Cheong
                             No. 2199 East Nongsheng Road,                                               22nd Floor, World Wide House,
                                                                       22nd Floor, World Wide House,
Correspondence Address       Shouguang City, Shandong                                                    Central, Hong Kong
                                                                       Central, Hong Kong
                             Province
Telephone                    (86)-0536-2158008                         (86)-0536-2158008                 (852)-2501 0088
Facsimile                    (86)-0536-2158977                         (86)-0536-2158977                 (852)-2501 0028
Email address                chenmmingpaper@163.com                    chenmmingpaper@163.com            kentpoon_1009@yahoo.com.hk


2. MAJOR FINANCIAL DATA AND CHANGE OF SHAREHOLDERS

(1) Major financial data

Retrospective adjustment to or restatement of the accounting data for prior years by the Company due to change of accounting
policies and correction of accounting errors
□ Yes √ No
                                                                                              Increase/decrease for
                                                      2014                     2013           the year as compared           2012
                                                                                                 to the prior year
Revenue (RMB)                                    19,101,677,077.69        20,388,890,067.41                 -6.31%    19,761,679,230.05
Net profit attributable to shareholders of
                                                    505,204,384.73           710,655,331.72                -28.91%         221,034,822.54
the Company (RMB)
Net profit after extraordinary gains or
losses attributable to shareholders of the          130,445,644.83           406,170,148.25                -67.88%      -159,777,900.37
Company (RMB)
Net cash flows from operating activities
                                                    985,399,735.85         1,122,616,800.91                -12.22%     1,956,866,477.99
(RMB)
Basic earnings per share (RMB per share)                        0.26                   0.35                -25.71%                   0.11
Diluted earnings per share (RMB per
                                                                0.26                   0.35                -25.71%                   0.11
share)



                                                                                                                                           1
                                                          Shandong Chenming Paper Holdings Limited 2014 Annual Report Summary



Rate of return on net assets on weighted
                                                           3.62%                   5.11%                  -1.49%                  1.63%
average basis
                                                                                         Increase/decrease as at
                                                                                           the end of the year        As at the end of
                                             As at the end of 2014 As at the end of 2013
                                                                                         compared to the end of            2012
                                                                                            the prior year (%)
Total assets (RMB)                             56,822,026,545.21      47,521,883,569.18                   19.57%      47,725,421,927.39
Net assets attributable to shareholders of
                                               13,917,343,301.15      14,039,888,226.11                   -0.87%      13,759,496,179.85
the Company (RMB)


(2) Table setting out shareholding of top ten shareholders of ordinary shares

                                                                 Total number of shareholders
                             128,595, of which 101,044 were                                           122,870, of which 96,097 were
Total number of shareholders                                     of ordinary shares as at the end
                             holders of A shares, 27,008 holders                                      holders of A shares, 26,232
of ordinary shares as at the                                     of the fifth trading day before
                             of B shares and 543 holders of H                                         holders of B shares and 541
end of the reporting period                                      the publication date of this
                             shares                                                                   holders of H shares
                                                                 annual report
                                        Shareholdings of top ten shareholders of ordinary shares
                                                                                                                Share pledged or
                                                                             Percentag                              locked-up
                                                                                                   Number of
                                                             Nature of          e of   Number of
                 Name of shareholders                                                               Restricted Status
                                                            shareholders     sharehold shares held
                                                                                                   shares held   of      Number
                                                                                ing
                                                                                                               shares
                                                         Overseas legal
HKSCC NOMINEES LIMITED                                                         18.11% 350,634,500                0
                                                         person
SHOUGUANG CHENMING HOLDINGS                              State-owned legal                                           Pledge
                                                                               15.13% 293,003,657                0          146,500,000
COMPANY LIMITED                                          person                                                      d
                                                         Overseas legal
PLATINUM       ASIA FUND                                                        1.67%      32,341,052            0
                                                         person
BBH A/C VANGUARD EMERGING MARKETS                        Overseas legal
                                                                                0.62%      11,946,985            0
STOCK INDEX FUND                                         person
                                                         Overseas legal
BILL & MELINDA GATES FOUNDATION TRUST                                           0.52%      10,033,077            0
                                                         person
                                                         Domestic nature
JIN Xing                                                                        0.46%       8,856,400            0
                                                         person
RONGTONG NEW BLUE CHIP SECURITIES
                                                         Others                 0.41%       8,000,012            0
INVESTMENT FUND
CHINA CONSTRUCTION BANK-NANFANG
                                                         Others                 0.41%       7,999,830            0
SHENGYUAN DIVIDEND FUND
                                                         Domestic nature
ZHONG Honglei                                                                   0.35%       6,845,568            0
                                                         person
                                                         Domestic nature
CHEN Hongguo                                                                    0.33%       6,434,527            0
                                                         person
                               Shouguang Chenming Holdings Company Limited, a state-owned legal person shareholder, is not
Connected relationship or      connected with any of the shareholders above. They are not persons acting in concert under
connected party relationship   Administration of Disclosure of Information on the Change of Shareholdings in Listed Companies
among the above                Procedures. Save for the above, it is not aware that any other shareholders of tradable shares are persons
shareholders                   acting in concert and is also not aware that any other shareholders of tradable shares are connected with
                               each others.


(3) Table setting out shareholding of top ten shareholders of preference shares

□ Applicable √ Not applicable
There was no shareholding of shareholder of preference share during the reporting period.




                                                                                                                                         2
                                                         Shandong Chenming Paper Holdings Limited 2014 Annual Report Summary



(4) Chart disclosing the relationship between the Company and the beneficial owner




3. MANAGEMENT DISCUSSION AND ANALYSIS

(1) Operating review for 2014
      During the reporting period, on the one hand, with the impact of macroeconomic slowdown, demand was continuously weak in
the paper making industry. On the other hand, new production capacity of the paper making industry had been released over the past
few years, resulting in the current transitional capacity saturation and excess capacity. Due to fierce competition, product prices
continued to decline, profit margins were narrowed, and profitability of the paper making industry stood at a low level.
      During the reporting period, the Company achieved revenue of RMB19,101.6771 million with a year-on-year decrease of 6.13%
and incurred operating costs of RMB15,323.1028 million with a year-on-year decrease of 7.98%. Total profit and net profit
attributable to equity holders of the Company were respectively RMB561.0083 million and RMB505.2044 million, down by 35.24%
and 28.91% from the prior year.
      Currently, with basically stable production capacity, excess capacity has become the primary problem to be resolved in the
industry. 2015 is a key year for reform and innovation for China’s paper making industry as the industry was entering a new stage of
transformation and upgrade. Elimination of outdated production capacity and increasingly stringent environmental policies are
forcing some small and medium-sized enterprises out of the market. To some extent, this eases the pressure of new capacity on the
supply of the industry. For major paper making enterprises, fully utilising advantages of capital, technology and scale to achieve a
change in the growth pattern may help the Company gain new market share. Meanwhile, with the impact of a weak demand, raw
material prices have been hovering at a low level, easing the pressure of operating costs on paper making enterprises. Eliminating
outdated production capacity will remove obstacles for the industry’s development, while replenishment of and substitution of
advanced production capacity will bring fresh blood and drive to the industry, conductive to a higher concentration ratio to creating a
favourable industry lifecycle. China’s paper making industry is embarking on the road of rebirth.

(2) Material changes of asset items
                                                                                                                            Unit: RMB
                     As at the end of 2014          As at the end of 2013
                                        As a                           As a   Change
                                      percenta                       percenta   in
                                                                                                 Description of major changes
                       Amounts         ge of         Amounts          ge of percenta
                                        total                          total    ge
                                       assets                         assets
                                                                                       Mainly due to the increase in bankers’
Monetary funds     5,475,658,186.10      9.64% 2,547,729,794.24        5.36%     4.28% acceptances issued by the Company, letters
                                                                                       of guarantee and the deposits for loans.
Accounts                                                                                 Mainly due to increase in sales as at the year
                   3,489,409,369.20      6.14% 3,102,643,083.54        6.53%    -0.39%
receivable                                                                               end.
                                                                                       Mainly due to new equity investments in
Long-term                                                                              Shouguang Chenming Huisen New-style
equity                36,087,848.12      0.06%       32,216,789.33     0.07%    -0.01% Construction Materials Co., Ltd. and Jiangxi
investments
                                                                                       Chenming Port Co., Ltd.




                                                                                                                                          3
                                                         Shandong Chenming Paper Holdings Limited 2014 Annual Report Summary



                                                                                        Mainly due to the increase in assets
                                                                                        reclassified upon completion of the
                                                                                        environmental protection relocation project of
 Fixed assets       24,744,731,705.04 43.55% 21,181,647,488.39 44.57%            -1.02% Jilin Chenming, the household paper and
                                                                                        specialty paper projects of Wuhan Chenming,
                                                                                        the 180,000 tonne paper cup raw paper project
                                                                                        of Zhanjiang Chenming and the paper
                                                                                        additives projects of Meilun.
                                                                                        Mainly due to the decrease in assets
                                                                                        reclassified upon completion of the
                                                                                        environmental protection relocation project of
 Construction in
                     3,709,270,828.53    6.53% 5,266,031,817.60 11.08%           -4.55% Jilin Chenming, the household paper and
 progress                                                                               specialty paper projects of Wuhan Chenming,
                                                                                        the 180,000 tonne paper cup raw paper project
                                                                                        of Zhanjiang Chenming and the paper
                                                                                        additives projects of Meilun.
                                                                                        Mainly due to the increase in amounts
 Bills receivable    3,047,541,556.15    5.36% 2,870,443,681.49        6.04%     -0.68% receivable settled through bills as at the end of
                                                                                        the year.
                                                                                          Mainly due to the increase in prepayments for
 Prepayments         1,838,017,454.90    3.23% 1,589,021,331.24        3.34%     -0.11%
                                                                                          raw materials as at the year end.
                                                                                       Mainly due to the increase in borrowings from
                                                                                       Wuhan Chenming to Wuhan Chenming Wan
 Other                                                                                 Xing Real Estate Co., Ltd., an unconsolidated
                     1,776,467,886.07    3.13% 1,331,900,749.84        2.80%     0.33%
 receivables                                                                           related party, and the leaseback payment due
                                                                                       within a year from Financial Leasing
                                                                                       Company.
                                                                                        Mainly due to realisation of the equity
 Available-for-sa
                                                                                        investments in Weifang Xinye Capital
 le financial          73,000,000.00     0.13%       83,260,425.53     0.18%     -0.05%
                                                                                        Investment Co., Ltd. and Shanghai Forest &
 assets
                                                                                        Paper E-Commerce Co., Ltd.
                                                                                       Mainly due to the new financial leasing
                                                                                       business of Shandong Chenming Financial
 Long-term
                     1,420,598,667.99    2.50%                                   2.50% Leasing Co., Ltd., a company newly
 receivables
                                                                                       established by Chenming (HK), a subsidiary
                                                                                       of the Company.
                                                                                        Mainly due to the asset reclassification of the
 Construction
                       22,955,982.38     0.04%       63,968,067.62     0.13%     -0.09% environmental protection relocation project of
 materials
                                                                                        Jilin Chenming.
                                                                                       Mainly due to the provision made for deferred
 Deferred
                                                                                       income tax assets as a result of temporary
 income tax           620,267,636.44     1.09%      507,653,388.38     1.07%     0.02%
                                                                                       losses of some companies under the current
 assets
                                                                                       market conditions.
 Other
 non-current         1,094,124,242.00    1.93%                                   1.93% Mainly due to new external entrusted loans.
 assets


 (3) Material changes of liability items
                                                                                                                            Unit: RMB
                              2014                           2013
                                          As a                                   Change in
                                                                         As a
                                        percenta
                                                                      percentag percentag           Description of major changes
                        Amounts          ge of       Amounts                        e
                                                                      e of total
                                          total
                                                                        assets
                                         assets
                                                                                          Mainly due to higher liquidity needs
Short-term                                                                                resulting from increased investment in
                    20,470,296,592.92 36.03%       9,818,885,237.85     20.66%     15.37%
borrowings                                                                                construction in progress, production
                                                                                          capacity and operation scale.




                                                                                                                                       4
                                                            Shandong Chenming Paper Holdings Limited 2014 Annual Report Summary



Long-term
                     4,378,290,245.19       7.71%     3,723,865,807.90   7.84%     -0.13% Mainly due to new long-term financing.
borrowings
                                                                                         Mainly due to the increase in bank
Bills payable        1,598,110,792.85       2.81%      290,403,790.59    0.61%     2.20% acceptance bills issued by the Company for
                                                                                         payment of goods.
                                                                                            Mainly due to increased raw material
Accounts payable     3,408,366,113.93       6.00%     2,695,169,927.14   5.67%     0.33%
                                                                                            purchase.
                                                                                          Mainly due to the decrease in advance
Advance receipts       270,056,726.88       0.48%      442,432,261.58    0.93%     -0.45% receipts resulting from intensified market
                                                                                          competition.
Staff                                                                                       Mainly due to the increase in outstanding
                       153,926,042.30       0.27%      130,271,812.18    0.27%     0.00%
remuneration                                                                                remuneration payable to chief executives.
                                                                                            Mainly due to the increase in outstanding
Tax payable            161,100,088.94       0.28%      130,192,936.87    0.27%     0.01%
                                                                                            value-added tax payable.
                                                                                            Mainly due to the borrowings from
Other payables         783,790,884.61       1.38%      486,836,595.89    1.02%     0.36%
                                                                                            Shouguang Chenming Holdings Co., Ltd.
Non-current
                                                                                            Mainly due to the payment of RMB bonds
liabilities due      1,099,968,900.00       1.94%     1,287,804,452.66   2.71%     -0.77%
                                                                                            of RMB500 million due for repayment.
within one year
                                                                                          Mainly due to the short-term commercial
Other current
                                                      3,853,488,888.90   8.11%     -8.11% paper of RMB3.8 billion of the Company
liabilities
                                                                                          due for repayment.
                                                                                          Mainly due to the surplus funds upon
                                                                                          completion of environmental protection
Special payables       161,983,516.66       0.29%      971,805,561.39    2.04%     -1.75% relocation projects of Jilin Chenming and
                                                                                          Wuhan Chenming reclassified to deferred
                                                                                          income.

 (4) Cash flows
                                                                                                                           Unit: RMB
                         Item                                     2014                      2013                Increase/decrease
 Subtotal of cash inflows from operating activities            17,924,508,169.86        20,363,176,118.78                     -11.98%
 Subtotal of cash outflows from operating activities           16,939,108,434.01        19,240,559,317.87                     -11.96%
 Net cash flows from operating activities                         985,399,735.85         1,122,616,800.91                     -12.22%
 Subtotal of cash inflows from investing activities             1,022,916,113.63         1,926,791,350.79                     -46.91%
 Subtotal of cash outflows from investing activities            4,096,185,535.33         3,837,739,389.14                       6.73%
 Net cash flows from investing activities                      -3,073,269,421.70        -1,910,948,038.35                     -60.82%
 Subtotal of cash inflows from financing activities            25,487,820,197.15        23,126,276,064.56                     10.21%
 Subtotal of cash outflows from financing activities           23,159,468,612.66        23,958,313,170.73                      -3.33%
 Net cash flows from financing activities                       2,328,351,584.49            -832,037,106.17                  379.84%
 Net cash flows from financing activities                         249,563,932.34        -1,617,017,256.49                    115.43%
 (1) Net cash flows from operating activities decreased by 12.22% as compared to the corresponding period of the prior year mainly
 due to the decrease in cash inflow of operating activities as a result of the decrease in prices of machine-made paper.
 (2) Net cash flows from investing activities decreased by 60.82% as compared to the corresponding period of the prior year mainly
 due to the decrease in relocation compensation and the consideration of equity transfer received.
 (3) Net cash flows from financing activities increased by 379.84% as compared to the corresponding period of the prior year mainly
 due to increase in loans for project investment and other purposes.

 (5) Outlook on the future development of the Company

      1. Competition overview and development trend of the industry
      (1) Competition overview and development trend of the industry
      The Company is engaged in the paper making industry, which is a light industry. The business sentiments of the industry are
 highly related to the macroeconomic growth. In recent years, on the one hand, with the impact of macroeconomic slowdown, demand



                                                                                                                                        5
                                                        Shandong Chenming Paper Holdings Limited 2014 Annual Report Summary


was continuously weak in the paper making industry. On the other hand, new production capacity of the paper making industry had
been released together over the past few years, resulting in the transitional overcapacity of some paper types. Due to fierce
competition, product prices continued to decline, narrowing profit margins of papermaking enterprises.
     In the long run, the development conditions of the paper making industry are gradually improving. Currently, with basically
stable production capacity, excess capacity has become the primary problem to be resolved in the industry. 2014 was a key year for
reform and innovation for China’s paper making industry as the industry was entering a new stage of transformation and upgrading.
As 2015 is the last year of the “Twelfth Five-Year” Plan, elimination of outdated production capacity and increasingly stringent
environmental policies are forcing some small and medium-sized enterprises out of the market. To some extent, this eases the
pressure of new capacity on the supply of the industry, which is conducive for enterprises to initiate a price rise. For major paper
making enterprises, fully utilising advantages of capital, technology and scale to achieve a change in the growth pattern may help
them gain new market share. Meanwhile, with the impact of a weak demand, raw material prices have been hovering at a low level,
easing the pressure of operating costs on paper making enterprises. Eliminating outdated production capacity will remove obstacles
for the industry’s development, while replenishment of and substitution of advanced production capacity will bring fresh blood and
drive to the industry, conductive to a higher concentration ratio to creating a favourable industry lifecycle.
     Faced with increasingly fierce competition in the industry, the Company gains competitive edge by leveraging on our strong
corporate strength to improve equipment and technologies, enrich product mix, upgrade product quality, and focus on research and
development of high-end products. The adjustment of product mix has injected new driving force for our corporate restructuring and
development, while continuous management refinement has opened up our growth bottleneck, releasing vigour to the Company. Our
diversified development brought new sources of profit growth for the Company, accelerating the process of the Company to
becoming a world-class paper making enterprise. As the economic situation improves and the industry is gradually recovering, the
Company’s performance will have steady growth.

     2. Development strategy of the Company
     Adhering to our development philosophy of “creating innovative ideas, maintaining our leading position and becoming an
international enterprise”, the Company strives to become a leading international paper maker which focuses on environmental
protection and sustainable development. The Company accelerates our transformation and upgrade process, and implements our new
round of strategic planning. Hence, a development trend focusing on principal operations as well as diversification, and
environmental protection and standardised management takes shape. We also promote detailed management. Being market-oriented,
the Company has been optimising our product mix with an increasing proportion of high value-added and high-end products. The
Company strives to become a world-class paper making enterprise with rapid growth based on the philosophy of “High-end
Positioning, Production of First-class Products”.

     3. Operating plan for 2015
     In 2015, the Company will proactively adapt to the “new normal” of economic development, accelerate transformation and
upgrade process, as well as enhance operation efficiency. The Company will consistently implement our working direction of “Team
Building, Strict Management, Outstanding Business Performance, Achieving Good Results”. To achieve our operating goals, the
Company will pay special attention to the following aspects:
     (1) Team building. The Company will optimise our human resources allocation mechanism through various means such as
management work reporting, management assessment, and training and examination, thus making our team building move on to a
new stage.
     (2) Basic management. The Company will ensure comprehensive optimisation and implementation on the system establishment
and improvement. We will put greater efforts into system inspection and appraisal in order to strengthen policy implementation.
     (3) Operating focus. The Company will focus on solving major issues on, among other things, efficiency management, risk
control, capital utilisation, slow-moving product and foreign operations management, aiming to achieve great improvement.
     (4) Production management. The Company will strengthen our system optimisation and execution: In respect of trial operation
of new systems, the Company will conduct verification and make conclusion. We will identify areas for further improvement under
the system and make rectification as soon as possible, and strictly implement such rectification. The Company will also standardise
equipment operating parameters: With reference to the operation of similar advanced equipment in local and overseas markets, the
Company will conduct comparison and adjustment in order to ensure the best operation of the equipment. The Company will
accelerate adjustment on product portfolio: In order to complete the development of new products such as high-bulk white paper
board, food paper and liquid packaging paper, the Company will introduce high quality technical talents. In accordance with the
human resources allocation standard in leading local enterprises, the Company will continue to work on position establishment and
appointment through position consolidation, automation and other measures. The Company will highly focus on our environmental
protection, safety and fire prevention works. We will learn from the past experience of overseas leading enterprises or our peers,
aiming to reach the highest standard in the industry.
     (5) Procurement efficiency. Leveraging the commencement of operation of the railroad of Shouguang Chenming, the Company
will enhance the procurement at source of materials in bulk in order to lower procurement costs. With sufficient capital reserved, the
Company aims to lower procurement price through advance payment and other means, thereby maximising our return. We will
increase trade volume through import and export companies, and establish strategic partnerships with quality customers, thus
securing quality supplies. In addition, the Company will enhance logistics management and optimise operating mode, thereby
optimising logistics efficiency.
     (6) Project progress. For projects under construction such as Jiangxi Chenming’s 350,000 tonne high-end packaging paper and
Zhanjiang Chenming’s 190,000 tonne culture paper projects, the Company will have control and assessment at key points to ensure
timely commencement of operation. For Huanggang Chenming’s integrated forestry, pulp and paper project, the Company will



                                                                                                                                    6
                                                         Shandong Chenming Paper Holdings Limited 2014 Annual Report Summary


improve its preparation works and it is going to commence construction during the year. The Company will also proactively facilitate
Shouguang Chenming’s 400,000 tonne chemical pulp project, aiming to achieve substantive progress in a short period of time.
     (7) Financial benefits. The Financial Leasing Company will strictly control its risk exposures, aiming to achieve growth amid
stability. The Finance Company will strengthen its management to provide impetus for our results growth. The Company will expand
our financing channels through various means including issue of preference shares, thus lowering the finance expenses and improve
our liabilities structure.
     (8) Service operation. The Company nurtures new sources of profit growth through the measures such as improving
procurement at source to reduce the raw material procurement price, and proactive external business expansion to further optimise
our industry chain.

4. EVENTS RELATING TO THE FINANCIAL REPORT

(1) Reason for changes in accounting policies, accounting estimates and accounting methods as compared to
the financial report for the prior year

√ Applicable □ Not applicable
      In early 2014, the Ministry of Finance issued “Accounting Standard for Business Enterprises No. 39 – Fair Value Measurement”,
“Accounting Standard for Business Enterprises No. 30 – Presentation of Financial Statements”, “Accounting Standard for Business
Enterprises No. 9 – Employee Benefits”, “Accounting Standard for Business Enterprises No. 33 – Consolidated Financial
Statements”, “Accounting Standard for Business Enterprises No. 40 – Joint Arrangements”, “Accounting Standard for Business
Enterprises No. 2 – Long-term Equity Investments (as amended in 2014)” and “Accounting Standard for Business Enterprises No. 41
– Disclosure of Interest in Other Entities” in Cai Kuai [2014] No. 6, No. 7, No. 8, No. 10, No. 11, No. 14 and No. 16, requiring the
above to be adopted among companies applying the Standards from 1 July 2014, and encouraging entities listed overseas to early
adopt the above. Furthermore, the Ministry issued “Accounting Standard for Business Enterprises No. 37 – Presentation of Financial
Instruments (as amended in 2014)” (the “Financial Instrument Presentation Standard”) in Cai Kuai [2014] No. 23, requiring the
adoption of the above standard for accounting periods starting in or after 2014.
      As resolved at the fourth meeting of the Board of the seventh session held on 19 March 2014, the Company has adopted since
the accounting period starting from 1 January 2013 the above five new or revised standards save for those on long-term equity
investments and disclosure of interest in other entities and the Financial Instrument Presentation Standard, the first two of which has
been adopted from 1 July 2014 and the last one will be first adopted in the annual report for 2014. During the year, adjustment made
to current and previous items and amounts in financial statements according to application guides and transitional arrangements
subsequently issued by the Ministry were as follows:
                                                                                            Impact on amounts in financial statements
   Standard                                  Changes and impact                                   as at 1 January 2014/for 2013
                                                                                                    Item             Increase/decrease
Accounting
                    Prior to adoption of the standard as amended in 2014, the equity Available-for-sale
Standard for                                                                                                             83,260,425.53
               investment in an investee that is not under common control or significant financial assets
Business
               influence of the Company and not quoted in an active market, and whose
Enterprises
               fair value is unable to be reliably measured was accounted for as an
No.    2    –
               long-term equity investment at cost. After the adoption, such investee is Long-term          equity
Long-term                                                                                                                -83,260,425.53
               accounted for as available-for-sale financial assets. Retrospectively investments
Equity
               adjustment is made based on the above accounting policy change.
Investments
                                                                                           Other comprehensive
                                                                                                                         16,934,073.59
                                                                                           income
Accounting          The standard as amended divides other comprehensive income into
Standard for two categories: (1) items not to be reclassified into profit or loss in Foreign             currency
Business       subsequent accounting periods; and (2) items to be reclassified into profit translation                   -16,934,073.59
Enterprises or loss in subsequent accounting periods when certain criteria have been differences
No. 30 – satisfied, and provides for presentation of held-for-sales items, current Other                  current
                                                                                                                         -25,246,647.62
Presentation items and non-current items. The financial statements are presented in liabilities
of Financial accordance with such standard and corresponding adjustments have been Deferred income                      493,600,712.15
Statements made to the presentation of the financial statements for comparable years.
                                                                                           Other       non-current
                                                                                                                       -468,354,064.53
                                                                                           liabilities


(2) Reason for retrospective restatement to correct major accounting errors during the reporting period

□ Applicable √ Not applicable
No retrospective restatement was made to correct major accounting errors during the reporting period.




                                                                                                                                         7
                                                         Shandong Chenming Paper Holdings Limited 2014 Annual Report Summary



(3) Reason for changes in scope of the consolidated financial statements as compared to the financial report
for the prior year

√ Applicable □ Not applicable
     1. During the year, six more companies were consolidated as compared to the prior year and the details are as follows:
      During the reporting period, the Company established six companies through investments, namely Shandong Chenming
Financial Leasing Co., Ltd., Shandong Chenming Investment Limited, Shandong Chenming Group Finance Co., Ltd., Chenming
Arboriculture Co., Ltd., Qingdao Chenming International Logistics Co., Ltd. and Jilin Chenming New-style Wall Materials Co., Ltd.
      In order to promote diversified development of the Company, further expand its business scope, enhance its overall strength and
comprehensive competitiveness, and develop new sources of profit growth, the Company convened the fourth extraordinary meeting
of the seventh session of the Board, at which it resolved to establish in the PRC Shandong Chenming Financial Leasing Co., Ltd.
(“Financial Leasing Company”) through Chenming (HK), a wholly-owned subsidiary of the Company, with paid-up registered
capital of RMB300.00 million, which was subsequently increased to RMB2,700.00 million due to business needs. It has been
consolidated into the financial statements of the Company since March 2014.
      In order to promote diversified development of the Company, further expand its business scope, enhance its overall strength and
comprehensive competitiveness, and develop new sources of profit growth, the Company convened the fourth meeting of the seventh
session of the Board, at which it resolved on the establishment of Shandong Chenming Investment Limited (“Investment Company”)
by Chenming (HK) Limited (“Chenming (HK)”), a wholly-owned subsidiary of the Company, with paid-up registered capital of
RMB200.00 million. It has been consolidated into the financial statements of the Company since June 2014. In addition, the
Company, together with its wholly-owned subsidiary Chenming (HK), established in PRC Qingdao Chenming International
Logistics Co., Ltd. (“Qingdao Chenming”), with a shareholding of 30% and 70% respectively and paid-up registered capital of
RMB300.00 million. It has been consolidated into the financial statements of the Company since November 2014.
      In order to cope with current difficult market environment and diversify its development, the Company decided to start financial
business. It received the Approval from Shandong CBRC of the Operation of Shandong Chenming Group Finance Co., Ltd. (Lu Yin
Jian Zhun [2014] No. 233) issued by China Banking Regulatory Commission Shandong office on 30 June 2014 approving the
establishment of Shandong Chenming Group Finance Co., Ltd. (“Finance Company”), which had paid-up registered capital of
RMB1,000 million and has been consolidated into the financial statements of the Company since July 2014.
      In order to exercise the strategic integrated development of forestry, pulp and paper to improve the organisation and
professionalism of the Company’s forestry segment and further extend the industry chain and increase technology application in
forestry, the Company convened the sixth meeting of the seventh session of the Board, at which it resolved to establish Chenming
Arboriculture Co., Ltd. (“Chenming Arboriculture”) with paid-up registered capital of RMB45.00 million. It has been consolidated
into the financial statements of the Company since August 2014.
      In order to strengthen comprehensive utilisation of resources and actively respond to state policy for resource utilisation, the
Company decided to, based on local needs, set up Jilin Chenming New-style Wall Materials Co., Ltd. (“Jilin Wall Materials”), which
was invested by Zhanjiang Chenming, a wholly-owned subsidiary of the Company, with its paid-up registered capital amounting to
RMB10.00 million. The company has been consolidated into the financial statements of the Company since July 2014.

    2. During the year (period), three companies were deconsolidated as compared to the prior year due to the reasons as
follows:
     During the reporting period, the Company lost its control over Shandong Chenming Xinli Power Co., Ltd. due to disposal of
equity interest during the period. Therefore, the above company ceased to be included in the scope of consolidation. The registration
of Shouguang Chenming Tianyuan Arboriculture Co., Ltd. and Shouguang Hengfeng Storage Co., Ltd. were cancelled according to
actual needs of operations during the period. Therefore, the above two companies ceased to be included in the scope of consolidation.
     On 15 November 2013, the Company convened the third extraordinary meeting of the seventh session of the Board and
approved the Resolution on Disposal of Equity Interest in Xinli Power”. On 4 March 2014, Chenming Power entered into an equity
interest contract with Guangdong Dejun Investment Co., Ltd. to transfer its 51% equity interest in Shandong Chenming Xinli Power
Co., Ltd. at a consideration of RMB76.1940 million. After such transfer, the Company lost its control over Xinli Power, which
ceased to be included in the scope of consolidation with effect from 4 March 2014.
     To consolidate resources and enhance overall economic efficiency, the Company cancelled the registration of Shouguang
Chenming Tianyuan Arboriculture Co., Ltd. and Shouguang Hengfeng Storage Co., Ltd. According to actual production and
operational needs. The above two companies ceased to be included in the scope of consolidation with effect from the date of such
cancellation.

(4) Opinions of the Board of Directors and the Supervisory Committee regarding the “modified auditor’s
report” for the reporting period issued by the accountants

     Ruihua Certified Public Accountants had audited the 2014 financial report of the Company and issued a standard unqualified
auditors’ report.



                                                                                Shandong Chenming Paper Holdings Limited

                                                                                                   26 March 2015



                                                                                                                                     8

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