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个股公告正文

晨 鸣B:2016年半年度报告(英文版)

日期:2016-08-25附件下载

Shandong C ng Papeer Holdings Limmited

        INNTERIM REPOORT 20016




              Auugust 20016
I    Important Notice, Table of Contents and Definitions


The board of directors (the “Board”), the supervisory committee (the “Supervisory Committee”) and the directors (the “Directors”),
supervisors (the “Supervisors”) and senior management (the “Senior Management”) of the Company hereby warrant the truthfulness,
accuracy and completeness of the contents of the interim report (the “Report”), guarantee that there are no false representations,
misleading statements or material omissions contained in the Report, and are jointly and severally responsible for the liabilities
associated with the Report.

All Directors were present at the Board meeting to consider and approve this Report.

The Company does not propose distribution of cash dividends or bonus shares, and there will be no increase of share capital from
reserves.

Chen Hongguo, head of the Company, Dong Lianming, head in charge of accounting and Li Dong, head of the accounting
department (Accounting Officer), declare that they warrant the truthfulness, accuracy and completeness of the financial statements
in the interim report.

The Company is exposed to various risk factors such as macro-economic fluctuation, adjustment of state policy, intensified
competition in the industry, as well as change in exchange rate. Public investors should be aware of investment risks. For further
details, please refer to the risk factors likely to be faced and the measures to be taken as set out in the outlook on the future
development of the Company in the Directors’ Report.




                                                                                                                                           16
                                                                                                                                           INTERIM
                                                                                                                                            REPORT




                                                                                          SHANDONG CHENMING PAPER HOLDINGS LIMITED            1
          I      Important Notice, Table of Contents and Definitions


          Table of Contents

          2016 Interim Report

          I      Important Notice, Table of Contents and Definitions    3

          II     Company Profile                                        4

          III    Summary of Accounting Data and Financial Indicators    6

          IV     Directors’ Report                                     8

          V      Material Matters                                      24

          VI     Changes in Share Capital and Shareholders             43

          VII    Preference Shares                                     47

          VIII   Directors, Supervisors and Senior Management          48

          IX     Financial Report                                      50

          X      Documents Available for Inspection                    156




16
INTERIM
REPORT




 2        SHANDONG CHENMING PAPER HOLDINGS LIMITED
I      Important Notice, Table of Contents and Definitions


Definitions

Item                                       Definition

Company, Group, Chenming           means   Shandong Chenming Paper Holdings Limited and its subsidiaries
 Group or Chenming Paper

Parent Company or                  means   Shandong Chenming Paper Holdings Limited
  Shouguang Headquarters

Chenming Holdings                  means   Shouguang Chenming Holdings Company Limited

Shenzhen Stock Exchange            means   Shenzhen Stock Exchange

Stock Exchange                     means   The Stock Exchange of Hong Kong Limited

CSRC                               means   China Securities Regulatory Commission

Shandong CSRC                      means   Shandong branch of China Securities Regulatory Commission

Zhanjiang Chenming                 means   Zhanjiang Chenming Pulp & Paper Co., Ltd.

Jiangxi Chenming                   means   Jiangxi Chenming Paper Co., Ltd.

Wuhan Chenming                     means   Wuhan Chenming Hanyang Paper Holdings Co., Ltd.

Chenming (HK)                      means   Chenming (HK) Limited

Haiming Mining                     means   Haicheng Haiming Mining Company Limited                                     16
                                                                                                                       INTERIM
Jilin Chenming                     means   Jilin Chenming Paper Co., Ltd.                                               REPORT



Shouguang Meilun or Meilun Paper   means   Shouguang Meilun Paper Co., Ltd.

Chenming Sales Company             means   Shandong Chenming Paper Sales Company Limited

Chenming Power                     means   Shandong Chenming Power Supply Holdings Co., Ltd.

Finance Company                    means   Shandong Chenming Group Finance Co., Ltd.

Financial Leasing Company          means   Shandong Chenming Financial Leasing Co., Ltd.

reporting period                   means   The period from 1 January 2016 to 30 June 2016




                                                                            SHANDONG CHENMING PAPER HOLDINGS LIMITED      3
          II Company Profile


          I.    Company profile
                Stock abbreviation                                                          Stock Code           000488
                Stock abbreviation                                           B              Stock Code           200488
                Stock abbreviation                                       Chenming Paper     Stock Code           1812
                Stock exchanges on which the shares are listed           Shenzhen Stock Exchange and The Stock Exchange of Hong Kong
                                                                         Limited
                Legal name in Chinese of the Company
                Legal short name in Chinese of the Company (if any)
                Legal name in English of the Company (if any)            SHANDONG CHENMING PAPER HOLDINGS LIMITED
                Legal short name in English of the Company (if any)      SCPH
                Legal representative of the Company                      Chen Hongguo

          II.   Contact persons and contact methods
                                    Securities Affairs                Securities Affairs                Hong Kong
                                    Representative                    Representative                    Company Secretary

                Name                Xiao Peng                         Yuan Xikun                        Poon Shiu Cheong
                Correspondence      No. 2199 East Nongsheng Road,     No. 2199 East Nongsheng Road,     22nd Floor, World Wide House,
                  Address           Shouguang City,                   Shouguang City,                   Central, Hong Kong
                                    Shandong Province                 Shandong Province
                Telephone           (86)-0536-2158008                 (86)-0536-2158008                 (852)-2501 0088
                Facsimile           (86)-0536-2158977                 (86)-0536-2158977                 (852)-2501 0028

16
INTERIM
                Email address       chenmmingpaper@163.com            chenmmingpaper@163.com            kentpoon_1009@yahoo.com.hk

REPORT
          III. Other information
                1.   Contact methods of the Company
                     Whether the registered address, office address, postal code, website, email of the Company changed during the
                     reporting period

                          Applicable √ Not applicable

                     There was no change of the registered address, office address, postal code, website and email of the Company during
                     the reporting period. Please refer to 2015 Annual Report for details.

                2.   Information disclosure and places for inspection
                     Whether the information disclosure and places for inspection changed during the reporting period

                          Applicable √ Not applicable

                     There was no change of the newspapers designated by the Company for information disclosure, designated websites
                     for the publication of the Interim Report as approved by CSRC and places for inspection of the Company’s Interim
                     Report during the reporting period. Please refer to 2015 Annual Report for details.




 4        SHANDONG CHENMING PAPER HOLDINGS LIMITED
II Company Profile


III. Other information (Cont’d)
    3.   Change of registration information
         Whether the registration information changed during the reporting period

         √ Applicable           Not applicable

                                                                   Legal person            Taxation
                          Date of            Registration          business license        registration
                          registration       place                 registration number     number               Organisation code

         At the beginning 28 May 2014        Shandong Administration 370000400001170       370783613588986      61358898-6
           of the reporting                  for Industry
           period                            and Commerce
         At the end of the 21 June 2016      Shandong Administration 913700006135889860    913700006135889860   913700006135889860
           reporting                         for Industry
           period                            and Commerce




                                                                                                                                     16
                                                                                                                                     INTERIM
                                                                                                                                      REPORT




                                                                                          SHANDONG CHENMING PAPER HOLDINGS LIMITED      5
          III Summary of Accounting Data and Financial Indicators


          I.    Major accounting data and financial indicators
                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 the reporting
                                                                                                                                    period as
                                                                                                                           compared to the
                                                                                                   The corresponding          corresponding
                                                                                 The reporting              period of               period of
                                                                                        period          the prior year         the prior year

                Revenue (RMB)                                                  10,606,358,733.02      9,718,697,677.76                9.13%
                Net profit attributable to shareholders of the Company (RMB)      939,164,870.60        276,388,070.51              239.80%
                Net profit after extraordinary gains or losses attributable
                  to shareholders of the Company (RMB)                            741,811,083.82        174,462,219.94              325.20%
                Net cash flows from operating activities (RMB)                 -2,697,509,853.04     -2,222,755,634.73              -21.36%
                Basic earnings per share (RMB per share)                                    0.45                  0.14              221.43%
                Diluted earnings per share (RMB per share)                                  0.45                  0.14              221.43%
                Rate of return on net assets on weighted average basis                    5.89%                 1.97%                 3.92%

                                                                                                                          Increase/decrease

16
INTERIM
                                                                                                                               as at the end
                                                                                                                            of the reporting
REPORT
                                                                                  As at the end                        period as compared
                                                                                          of the      As at the end of            to the end
                                                                               reporting period         the prior year     of the prior year

                Total assets (RMB)                                             86,628,494,212.59     77,961,699,547.59               11.12%
                Net assets attributable to shareholders of the Company (RMB)   19,314,182,445.78     16,871,494,584.82               14.48%

                Explanation: Net profit attributable to ordinary shareholders of the Company should exclude the effect of interest payment
                deferred and accumulated to subsequent periods for perpetual bonds under other equity instruments. When calculating
                financial indicators such as earnings per share and rate of return on net assets on weighted average basis, the interests
                incurred but not declared for perpetual bonds in the first half of 2016 (amounting to RMB76,151,584.70) are deducted.


          II.   Differences in accounting data under domestic and overseas accounting standards
                1.    Differences between the net profit and net assets disclosed in accordance with international accounting standards and
                      China accounting standards in the financial report

                           Applicable √ Not applicable

                      There was no difference between the net profit and net assets disclosed in accordance with international accounting
                      standards and China accounting standards in the financial report during the reporting period.

                2.    Differences between the net profit and net assets disclosed in accordance with overseas accounting standards and
                      China accounting standards in the financial report

                           Applicable √ Not applicable

                There was no difference between the net profit and net assets disclosed in accordance with overseas accounting standards
                and China accounting standards in the financial report during the reporting period.




 6        SHANDONG CHENMING PAPER HOLDINGS LIMITED
III Summary of Accounting Data and Financial Indicators


III. Items and amounts of extraordinary gains or losses
    √   Applicable       Not applicable

                                                                                                                    Unit: RMB

    Item                                                          Amount     Explanation

    Profit or loss from disposal of non-current assets       -1,626,686.16
    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                                   214,412,568.80
    Profit or loss from debt restructuring                   1,909,002.10
    Profit or loss arising from external entrusted loans    44,212,264.15
    Gain or loss from changes in fair value of
      consumable biological assets subsequently
      measured at fair value                               -10,599,543.68
    Non-operating gains and losses other than
      the above items                                        4,597,886.08
    Less: Effect of income tax                              53,745,876.48
           Effect of minority interests                      1,805,828.03

    Total                                                  197,353,786.78
                                                                                                                                  16
                                                                                                                                  INTERIM
                                                                                                                                   REPORT



    Notes for the Company‘s extraordinary gain or loss items as defined in the Explanatory Announcement on Information
    Disclosure for Companies Offering Their Securities to the Public No.1 - Extraordinary Gains or Losses and the extraordinary
    gain or loss items as illustrated in the Explanatory Announcement on Information Disclosure for Companies Offering Their
    Securities to the Public No.1 - Extraordinary Gains or Losses defined as its recurring gain or loss items

         Applicable   √ Not applicable

    No extraordinary gain or loss items as defined or illustrated in the Explanatory Announcement on Information Disclosure for
    Companies Offering Their Securities to the Public No.1 - Extraordinary Gains or Losses were defined by the Company as its
    recurring gain or loss items during the reporting period.




                                                                                   SHANDONG CHENMING PAPER HOLDINGS LIMITED          7
          IV Directors’ Report


          I.   Overview
               During the reporting period, the situation of oversupply in the paper making industry continued on the whole, but the
               difference between supply and demand narrowed. Efforts to reduce excess capacity and inventories in the industry paid
               off. The downward trend in raw material costs had a greater positive effect on the industry in terms of profit with a turning
               point in earnings indicating a clear bottoming out. In the medium to long run, by virtue the supply-side reform, environmental
               protection standards will be higher, small and medium-sized production capacity will accelerate to phase out, industry
               concentration will be further enhanced, and the performance of the paper making industry is expected to continue to improve.

               During the reporting period, the Company adhered to the main goal of “developing into an enterprise with hundreds of billions
               in value” by adhering to the principle of “achieving growth amid stability”. The Company will stick to its diversification strategy
               and develop an industrial system that centres on pulp production, paper making and finance to achieve synergy with forestry,
               real estate and mining so as to boost the core competiveness and profitability. Meanwhile, the Company will be committed
               to “team building, management enhancement, outstanding business performance and good results” in order to upgrade
               management quality.

               During the reporting period, the Company completed the production of machine-made paper of 2.13 million tonnes with
               sales of 2.09 million tonnes and achieved revenue of RMB10.606 billion, representing a year-on-year increase of 9.13%. The
               Company recorded operating costs of RMB7,264 million, representing a year-on-year decrease of 1.44%. Total profit and net
               profit attributable to equity holders of the Company were RMB1,233 million and RMB939 million respectively, representing
               year on year increases of 188.69% and 239.80% respectively. As at 30 June 2016, the financial segment experienced rapid
               development across businesses with ever improving management systems and effective risk preventions. Financial leasing
               contracts of Chenming Leasing amounted to RMB29,454,821,300, which increased by 21.97% from the end of 2015.

               During the reporting period, the Company cooperated with a first-class domestic management consulting company, and
16             leveraged the strength of an external think tank to find out problems in its business management. As a result, practicable
INTERIM        plans for improvement were developed, business management was strengthened and overall management was improved.
REPORT

               Through the measures such as adjusting product structure, boosting overseas sales, raising selling prices and making
               investment in places with close proximity, the efficiency of the Company was higher. Through the measures such as
               supporting strategic customers, boosting barter transaction volume, securing contracts, and strengthening control of cash
               in transit, the appropriation of funds was reduced. The Company continued to accelerate the process in relation to collateral
               security to strengthen risk management and control.

               The Company fully boosted production efficiency through enhanced refining management. It aimed at a higher market share of
               high value-added products to optimise the product structure by developing products with competiveness, such as wine label,
               logistics label and liquid packaging paper. The Company also adjusted the structure of pulp materials, upgraded production
               process, and utilised new raw materials to promote technological progress.

               During the reporting period, due to enhanced project management, Zhanjiang Chenming’s 600,000-tonne liquid packaging
               paper project entered the equipment installation and calibration stage with trial operation going to take place at the end
               of August. This 600,000-tonne liquid packaging paper project has the widest width, fastest speed and largest production
               capacity for a single machine in the world. With various technical indicators reaching world-class standard, it will quickly
               become a new profit growth point of the Company. At the same time, the Company actively pushed on projects such as
               Haiming’s mining project, Huanggang Chenming’s integrated forestry, pulp and paper project, and Shouguang Meilun’s
               400,000-tonne chemical pulp project.

               During the reporting period, the Company strengthened its financing management. The Financial Leasing Company focused
               on risk control. It actively explored for quality customers and sought to increase the direct credit lines of domestic banks.
               The Company enhanced the management of the Finance Company with focus on its fundamental business in relation to
               settlement, deposit and loans as well as bills, so as to boost the recovery rate of funds. The Company actively solicited
               interbank credit extension and diversified its interbank product offerings in order to increase efficiency. At the same time,
               the Company provided liquidity support to corporate operation and lowered the operating and financing costs, thus creating
               financial value.




 8        SHANDONG CHENMING PAPER HOLDINGS LIMITED
IV Directors’ Report


II.   Analysis of principal operations
      Year on year changes in major financial information

                                                                                                                               Unit: RMB

                                                                    During the
                                                               corresponding
                                                During the          period of     Increase/
                                          reporting period      the prior year    decrease Reason for the change

      Revenue                             10,606,358,733.02    9,718,697,677.76      9.13% Sales of paper products increased and the
                                                                                           Financial Leasing Company newly established
                                                                                           external business.
      Operating costs                      7,263,967,310.23    7,370,384,661.31     -1.44%
      Selling and distribution expenses      573,734,657.05      551,073,823.71      4.11%
      Administrative expenses                694,013,827.38      654,253,969.26      6.08%
      Finance expenses                       968,343,561.61      745,472,279.11     29.90% Increase in interest expenses on higher
                                                                                           borrowings.
      Income tax expenses                   307,031,422.46       173,411,302.61     77.05% A year-on-year increase in profitability of the
                                                                                           Company.
      Investments in research               305,617,867.77       278,819,214.56      9.61% Investments in research and development
        and development                                                                    increased as Zhanjiang Chenming and
                                                                                           Meilun Paper were qualified as high and new
                                                                                           tech enterprises.
      Net cash flows from                 -2,697,509,853.04 -2,222,755,634.73      -21.36% The Financial Leasing Company’s external         16
        operating activities                                                               business growth.                                  INTERIM
                                                                                                                                              REPORT
      Net cash flows from                   -840,208,267.12 -1,201,478,950.29       30.07% No payment for external investment of the
        investing activities                                                               Company in the year.
      Net cash flows from                  5,225,021,178.25    3,152,446,052.60     65.74% Increase in borrowings of the Company in
        financing activities                                                               the year.
      Net increase in cash and             1,679,333,857.39     -250,918,819.93    769.27%
        cash equivalents

      Significant change in structure or source of profit of the Company during the reporting period

          Applicable √ Not Applicable

      There was no significant change in structure or source of profit of the Company during the reporting period.

      Disclosure of future development and continued planning during the reporting period in public documents such as IPO
      prospectus, offering documents and asset reconstruction report

          Applicable √ Not Applicable

      There was no disclosure of future development and continued planning during the reporting period in public documents such
      as IPO prospectus, offering documents and asset reconstruction report.

      Progress of operating plans disclosed in corporate review during the reporting period

      For details, please refer to “I. Overview” of this section.




                                                                                            SHANDONG CHENMING PAPER HOLDINGS LIMITED            9
          IV Directors’ Report


          III. Components of principal operations
                                                                                                                                                          Unit: RMB

                                                                                                                                                    Increase/decrease
                                                                                                       Increase/decrease     Increase/decrease           of gross profit
                                                                                                            of revenue as     of operating costs             margin as
                                                                                                         compared to the         as compared to       compared to the
                                                                                                           corresponding     the corresponding          corresponding
                                                                                               Gross         period of the          period of the         period of the
                                                        Revenue     Operating costs    profit margin            prior year             prior year             prior year

               By industry

               Machine-made paper                8,931,569,299.48   6,831,111,581.63        23.52%                0.71%                 -1.94%                  9.64%
               Financial leasing                 1,202,014,670.10     147,407,276.78        87.74%              310.03%              1,179.91%                 -8.68%
               Electricity and steam               146,006,710.07      88,821,316.36        39.17%              -19.05%                -27.83%                 23.28%
               Construction materials              101,685,213.16      76,416,729.74        24.85%              104.09%                101.90%                  3.37%
               Chemical products                    61,789,407.17      21,725,612.54        64.84%              -39.47%                -73.90%                251.62%
               Hotel                                14,060,284.77       3,491,311.42        75.17%                3.57%                  5.62%                 -0.64%
               Others                               74,088,876.93      68,995,217.98         6.88%              140.61%                135.18%                 45.48%

               By products

               Light weight coated paper           252,822,667.89     212,689,444.25        15.87%              -22.47%                -23.99%                 11.79%
               Duplex press paper                2,354,825,630.93   1,814,035,836.95        22.97%                7.97%                  9.43%                 -4.27%
               Writing paper                       144,936,982.41     122,237,625.46        15.66%               34.89%                 41.22%                -19.44%
               Coated paper                      2,070,298,934.43   1,548,760,177.34        25.19%               -1.26%                 -3.17%                  6.25%
               News press paper                    444,539,348.00     408,251,436.65         8.16%               -7.01%                  9.36%                -62.74%
16             Paperboard                           20,731,825.60      21,273,378.96        -2.61%              -84.55%                -84.06%               -592.86%
INTERIM        White paper board                 1,060,234,119.54     814,282,784.76        23.20%               21.28%                 19.73%                  4.45%
REPORT
               Electrostatic paper                 925,975,105.51     642,832,215.68        30.58%               26.74%                 28.42%                 -2.90%
               Other machine-made paper          1,657,204,685.17   1,246,748,681.58        24.77%              -14.59%                -24.68%                 68.62%
               Financial leasing                 1,202,014,670.10     147,407,276.78        87.74%              310.03%              1,179.91%                 -8.68%
               Electricity and steam               146,006,710.07      88,821,316.36        39.17%              -19.05%                -27.83%                 23.28%
               Construction materials              101,685,213.16      76,416,729.74        24.85%              104.09%                101.90%                  3.37%
               Chemical products                    61,789,407.17      21,725,612.54        64.84%              -39.47%                -73.90%                251.62%
               Hotel                                14,060,284.77       3,491,311.42        75.17%                3.57%                  5.62%                 -0.64%
               Others                               74,088,876.93      68,995,217.98         6.88%              140.61%                135.18%                 45.48%

               By geographical segment

               Mainland China                    8,974,320,983.03   5,868,057,173.90        34.61%                 9.52%                -3.49%                   8.81%
               Other countries and regions       1,556,893,478.65   1,369,911,872.55        12.01%                15.85%                16.64%                  -0.59%




10        SHANDONG CHENMING PAPER HOLDINGS LIMITED
IV Directors’ Report


IV. Analysis of liquidity, financial resources and capital structure disclosed in accordance with the
    listing rules of the Hong Kong Stock Exchange
     As at 30 June 2016, the Group’s current ratio was 72.30%. The quick ratio was 61.59%. The gearing ratio was 77.27%. The
     accounts receivable turnover ratio was 303.92% (Accounts receivable turnover ratio = turnover/weighted average accounts
     receivable and net bills*100%). The inventory turnover ratio was 262.77% (Inventory turnover ratio = cost of sales of the
     products/weighted average net inventory*100%).

     There was no significant seasonal trend for capital requirements of the Group.

     The Group’s sources of capital primarily came from cash generated from operating activities, borrowings from financial
     institutions, open issuance of corporate bonds in the capital market, as well as issuance of privately placed bonds, medium-
     term notes and short-term commercial paper in the interbank market.

     As at 30 June 2016, the total bank borrowings, corporate bonds, medium-term notes and privately placed bonds of the Group
     were RMB35,917 million, RMB5,791 million, RMB1,096 million and RMB11,653 million (As at the end of the prior year: the
     total bank borrowings, corporate bonds, and medium-term notes and privately placed bonds of the Group were RMB31,900
     million, RMB5,787 million and RMB2,593 million, respectively). As at 30 June 2016, the Group had monetary funds of
     RMB11,773 million (As at the end of the prior year: RMB8,984 million) in total (For the breakdown of monetary funds, please
     refer to “Section IX. VII. 1 Note on Monetary Funds” in this report).

     To strengthen our financial management, the Group established and optimised its strict internal control system on cash and
     capital management. The liquidity and repayment ability of the Group were in a good condition. As at 30 June 2016, the Group
     had 12,473 employees. The total staff remuneration for the first half of 2016 amounted to RMB520.3379 million (as at the end
     of the prior year, the Group had 11,893 employees. The total staff remuneration for 2015 amounted to RMB808.7321 million).

     Major investment projects of the Company during the second half of 2016 will include Huanggang Chenming’s integrated                 16
                                                                                                                                           INTERIM
     forestry, pulp and paper project, Shouguang City’s 400,000 tonne chemical pulp project, Haicheng Haiming’s magnesite                 REPORT

     mining project, Zhanjing Chemning’s 600,000 tonne liquid packaging cardboard project and other projects.

     Our existing bank deposits were primarily used for production and operation, construction projects and investment in
     technology research and developments.

     For details of the assets with restricted ownership of the Group as at 30 June 2016, please refer to “Section IX. VII. 58. Details
     of assets with restricted ownership or right of use” in this report.

     As at 30 June 2016, no contingent event was required to be disclosed by the Group.


V.   Analysis of Core Competitiveness
     The Company is a leading player in the paper making industry of China. After entrepreneurship and innovation for more
     than half a century, it has developed into a large and integrated modern conglomerate principally engaged in paper making,
     finance, forestry and real estate businesses while also involved in mining, energy, logistics, construction materials, hotel
     operation and others. It is also the only listed company with three types of listed shares (i.e. A shares, B shares and H shares)
     and the first in the paper making industry having a finance company and a financial leasing company integrated with its
     industrial activities in China. Compared with other enterprises in the industry, the Company has the following advantages:

     1.    Scale advantages
           After years of development, the Company has achieved annual pulp and paper production capacity of 8.50 million
           tonnes and is capable to compete with international paper making enterprises in scale. Large-scale centralised
           production has provided the Company with obvious economic benefits, which are reflected not only in the
           manufacturing costs of products, but also in its strong market influence in raw material procurement, product pricing
           and industry policymaking.




                                                                                         SHANDONG CHENMING PAPER HOLDINGS LIMITED            11
          IV Directors’ Report


          V.   Analysis of Core Competitiveness (Cont’d)
               2.   Product advantages
                    While the production scale of the Company is expanding rapidly, its product mix also continues to optimise. In recent
                    years, the Company has built production lines for cultural paper such as high-end coated paper, high-end light weight
                    coated paper and high-end white paper board, and achieved higher technological content of products and added
                    values as well as a higher gross profit margin. The product mix of the Company gradually diversified into five major
                    paper types, namely printing paper, packaging paper, office paper, industrial paper and household paper, as well
                    as the nine major product series which focused on high and middle end products, including high-end coated paper,
                    white paper board, coated linerboard, news press paper, light weight coated paper, duplex press paper, light weight
                    paper, electrostatic paper and household paper. Thus, the Company has become the enterprise that offers the widest
                    product range in China’s paper making industry. Diversification and gentrification of the product mix has not only greatly
                    enhanced the Company’s ability to withstand market risks, but also enabled the Company to maintain a relatively high
                    profitability

               3.   Comprehensive cost advantages
                    The Company has a relative advantage in comprehensive cost, which is mainly reflected in: firstly, the Company has
                    optimised the operation of the production lines through stringent management, which has substantially lowered the
                    waste of resources in evaporating, emitting, dripping or leaking, and the Company’s energy consumption per ton of
                    paper was also controlled at a relatively low level; secondly, the Company has established several advanced pulp
                    production lines, thus increasing the supply of major raw materials through the 700,000-tonne pulp project of Zhanjiang
                    Chenming and forestry pulp integration project of Huanggang Chenming; thirdly, the Company has reduced costs
                    through the construction of the captive power plant to ensure energy supply.

16
INTERIM
               4.   Advantages in technical equipment
REPORT              The Company’s overall technical equipment has reached the advanced international level. The main production
                    equipment have been imported from internationally renowned manufacturers, including Valmet, Ahlstrom and Metso of
                    Finland, Voith of Germany and TBC of the United States. In particular, Shouguang Meilun’s production lines for high-
                    end white coated linerboard project of production capacity of 600,000 tonnes and high-end low weight coated paper
                    project of production capacity of 800,000 tonnes, as well as Zhanjiang Chenming’s production line for high-end cultural
                    paper project of production capacity of 650,000 tonnes were leading production lines with greatest production capacity,
                    widest length of paper produced and highest equipment standard among similar production line worldwide. In addition,
                    various technical indicators of products had reached the international leading level.

               5.   Advantages in research and innovation and new product development
                    The Company is an important high and new-technology enterprise listed in national torch plan. It established various
                    technology carriers including the national enterprise technology centre and the national post-doctoral working station
                    as well as an international high-quality innovation team, injecting endless vitality to its technology research. It undertook
                    the national “863” plan, national science support plans for the “11th Five Years” and “12th Five Years”, and tens of
                    key provincial technological special projects, making outstanding contribution to the scientific progress within the
                    industry. The Company has obtained over 150 national patents, with 7 products selected as national new products and
                    29 products covering blank areas in China. It also participated in formulating 4 national standards, as well as obtained
                    the honours including “China Patent Shandong Star Enterprise”. The Company became the “green engine” to promote
                    transformation and upgrading of the paper making industry and lead China’s paper making industry into the direction of
                    the newest and most advanced technology.

               6.   Funding advantages
                    The paper making industry is a capital-intensive industry, and funding is one of the most important factors influencing
                    the development of the industry. The Company has high profitability and credit status, and has maintained long-term
                    stable cooperative relations with its bankers, which provide the Company with an unobstructed indirect financing
                    capacity. Since its listing, the Company has maintained good operating results and a sound corporate governance
                    structure. It has conducted several financing activities in domestic and foreign capital markets. As the funds obtained
                    have been applied effectively with good market image, the Company has stronger abilities in direct financing in the
                    capital market.




12        SHANDONG CHENMING PAPER HOLDINGS LIMITED
IV Directors’ Report


V.   Analysis of Core Competitiveness (Cont’d)
     7.   Advantages in environmental regulation capacity
          Over the years, the Company has firmly established “environmental protection first, scale expansion second” as
          the concept of development. The Company has ensured the enhancement of economic and environmental benefits
          simultaneously by giving equal importance to environmental protection and production. In recent years, the Company
          and its subsidiaries have constructed the pollution treatment facilities including the alkali recovery system, middle
          water treatment system, white water recovery system and black liquor comprehensive utilisation system, as well as the
          sewage treatment plants, which guarantee that the environmental protection facilities can meet the demand of the rapid
          expansion of the Company. The environmental emission indicators of the Company are in the top rank among industry
          peers.

     8.   Advantages in diversified development
          The Company has established a financial segment, which comprises of the Financial Leasing Company, the Finance
          Company, the Investment Company and the New Third Board Investment Fund. The financial segment maintained
          a good development momentum, which becomes a new profit growth point through the leaseback business of the
          Financial Leasing Company and the credit business of the Finance Company. Apart from entering into the financial
          industry, the Company has also entered into the fields of energy exploration and waterfront regulation works. It
          proactively facilitates diversified development, thereby further enhancing its competiveness and strength.


VI. Analysis of Investments
     1.   External equity investments
          (1)   External investments                                                                                                                                                                                                            16
                                                                                                                                                                                                                                                INTERIM
                                                                                                                                                                                                                                                 REPORT
                        Applicable √             Not applicable

                The Company did not have any external investment during the reporting period.

          (2)   Shareholding in financial companies

                √    Applicable                  Not applicable

                                                                                 Initial                          Shareholding as Number of shares           Shareholding     Carrying amount     Gain or loss for
                                                                           investment      Initial number of      at the beginning held as at the end      as at the end of    as at the end of   the reporting
                Name of company           Type                (RMB) shares held (share)         of the period of the period (share)        the period     the period (RMB)        period (RMB)    Accounting treatment   Source of shares

                Shandong Chenming Group   Other     1,000,000,000.00                N/A          100.00%                    N/A             100.00%       1,000,000,000.00      43,835,594.00     Long-term              Capital contribution
                  Finance Co., Ltd.                                                                                                                                                               equity investment
                Total                               1,000,000,000.00                N/A                                     N/A                           1,000,000,000.00      43,835,594.00




                                                                                                                                                        SHANDONG CHENMING PAPER HOLDINGS LIMITED                                                  13
          IV Directors’ Report


          VI. Analysis of Investments (Cont’d)
               1.   External equity investments (Cont’d)
                    (3)   Security investments

                                   Applicable √         Not applicable

                          The Company did not have any security investments during the reporting period.

                    (4)   Equity interest in other listed companies

                                   Applicable √         Not applicable

                          The Company did not have any equity interest in other listed companies during the reporting period.

               2.   Entrusted wealth management, derivative investments and entrusted loans
                    (1)   Entrusted wealth management

                                   Applicable √         Not applicable

                          The Company did not have any entrusted wealth management during the reporting period.

                    (2)   Derivatives investments

                                   Applicable √         Not applicable

16
INTERIM
                          The Company did not have any derivative investments during the reporting period.
REPORT
                    (3)   Entrusted loans

                          √      Applicable             Not applicable

                                                                                                                                                                          Unit: RMB’0,000

                                                                                                     Interest rate
                          Borrower                      Related parties        Loan amount               of loans    Guarantor or Collateral                    Use of proceeds by borrowers

                          Shouguang Jin Cai Public                   No              90,000              10.00%      Shouguang Infrastructure Fund              Construction, investment and
                            Assets Management                                                                        Management Centre shall pledge 20% of      operation of urban and rural
                            Co., Ltd.                                                                                the equity interest of Shouguang Jin Cai   infrastructure.
                                                                                                                     Public Assets Management Co., Ltd. held
                                                                                                                     by it.

                          Total                                                      90,000

                          Disclosure date of approval of entrusted loans in board meeting (if any)                   18 January 2014




14        SHANDONG CHENMING PAPER HOLDINGS LIMITED
IV Directors’ Report


VI. Analysis of Investments (Cont’d)
    3.   Utilisation of proceeds raised
         √    Applicable          Not applicable

         (1)     The general use of proceeds

                 √   Applicable        Not applicable

                                                                                                             Unit: RMB’0,000

                 Total proceeds                                                                                     225,000
                 Total investment of proceeds during the reporting period                                           223,875
                 Total cumulative investment of proceeds                                                            223,875
                 Total proceeds of changed use during the reporting period                                                0
                 Total cumulative proceeds of changed use during the reporting period                                     0
                 Ratio of total cumulative proceeds of changed use                                                   0.00%
                                               Description of the general use of proceeds
                 On 17 September 2015, the Company received the Approval of the Non-Public Issuance of Preference Shares
                 of Shandong Chenming Paper Holdings Limited (Zheng Jian Xu Ke [2015] No. 2130) from the China Securities
                 Regulatory Commission. On 17 March 2016, the gross proceeds from the issuance of preference shares amounted
                 to RMB2,250.0000 million and the proceeds from the same net of paid issuance expenses of RMB11.2500 million
                 amounted to RMB2,238.7500 million, which was deposited to the designated account for the proceeds of such
                 issuance. At the tenth extraordinary meeting of the seventh session of the Board held on 24 March 2016, the

                                                                                                                                16
                 Resolution On Replacement Of Self-raised Funds Invested In Advance To Projects Financed By Proceeds With
                 Proceeds From Issue Of Preference Shares approving the replacement of self-raised funds invested in advance    INTERIM
                 to projects financed by proceeds with RMB2,238.7500 million from the proceeds of initial non-public issue of    REPORT

                 preference shares was passed.




                                                                                  SHANDONG CHENMING PAPER HOLDINGS LIMITED        15
          IV Directors’ Report


          VI. Analysis of Investments (Cont’d)
               3.   Utilisation of proceeds raised (Cont’d)
                    (2)   The commitment of proceeds

                          √     Applicable                          Not applicable

                                                                                                                                                                                                                             Unit: RMB’0,000

                                                                                                                                                         Accumulated
                                                                                        Change                                                Invested       invested       Investment                           Return
                                                                                        in project              Total           Total          amount      amount as       progress as            Expect        realised        Expected
                                                                                        (including        committed       investment        during the     at the end        at the end            date o     during the     return being     Significant
                          Committed investment project                                  partial           investment            after        reporting          of the            of the operation of          reporting        achieved       change in
                          and excess proceeds                                           change)          of proceeds     adjustment(1)          period        period(2)    period (3)=(2)/(1) the project         period           or not        project

                          Committed investment project
                          Repayment of bank borrowings                                  No                   300,000          300,000         223,875          223,875         74.63% 24 March 2016 Not applicable                   Yes              No
                          Replenishment of liquidity                                    No                   150,000          150,000               0                0          0.00%               Not applicable                    No              No
                          Subtotal of committed investment project                                           450,000          450,000         223,875          223,875                              Not applicable
                          Excess proceeds
                          Total                                                                              450,000          450,000         223,875          223,875                                      Not applicable
                          Condition and reason for not achieving planned progress       Not applicable
                            or expected return (by special item)
                          Description of significant change in feasibility of project   Not applicable
                          Amount, use and utilisation of excess proceeds                Not applicable
                          Change in place of implementation of
                            investment project of proceeds                              Not applicable
16
INTERIM
                          Adjustment on implementation method of
                            investment project of proceeds                              Not applicable
REPORT
                          Pre-investment and swap of investment project                 Applicable
                            of proceeds                                                 At the tenth extraordinary meeting of the seventh session of the Board held on 24 March 2016, the Resolution On Replacement Of Self-raised Funds Invested In
                                                                                        Advance To Projects Financed By Proceeds With Proceeds From Issue Of Preference Shares approving the replacement of self-raised funds invested in advance to
                                                                                        projects financed by proceeds with RMB2,238.7500 million from the proceeds of initial non-public issue of preference shares was passed. Please refer to the relevant
                                                                                        announcement dated 25 March 2016 published on www.cninfo.com.cn.
                          Temporary replenishment of liquidity by idle proceeds         Not applicable
                          Balance and reason for proceeds arising from
                            project implementation                                      Not applicable
                          Use and direction of unused proceeds                          Not applicable
                          Use of proceeds and problems disclosed or other issues        Not applicable


                    (3)   Change in use of proceeds

                                   Applicable √                     Not applicable

                          The Company did not have any change in use of proceeds during the reporting period.

                    (4)   Fund-raising activities

                          Fund-raising activity                                                          Date of disclosure                                         Disclosure index

                          Non-public issue of preference shares 25 March 2016                                                                                       http://www.cninfo.com.cn




16        SHANDONG CHENMING PAPER HOLDINGS LIMITED
IV Directors’ Report


VI. Analysis of Investments (Cont’d)
    4.    Analysis of major subsidiaries and investees
          √    Applicable                   Not applicable

          Information on major subsidiaries and investees

                                                                                                                                                                                                             Unit: RMB

                                        Type of                          Principal products                 Registered                                                Revenue from
          Name of companies             companies      Industry          or services                           capital           Total assets         Net assets        operations        Operating profit          Net profit



          Zhanjiang Chenming            Subsidiary     Paper making     Pulp, duplex press and      RMB3,200.00 million     17,481,935,204.29   3,701,676,320.42    2,351,397,261.17      235,622,032.25       209,289,208.26
            Pulp & Paper Co., Ltd.                                      electrostatic paper
          Chenming (HK) Limited         Subsidiary     Trading of paper Sales of paper products,       US$29.90 million     28,305,573,747.20   4,575,798,159.44    4,120,018,686.23      579,626,001.49       520,479,192.79
                                                       products         import of raw materials
                                                                        and processing
          Shouguang Meilun Paper        Subsidiary     Paper making     Coated paper,               RMB3,000.00 million     31,180,687,246.02     985,289,450.25    2,533,171,167.07      449,812,136.12       337,917,126.66
            Co., Ltd.                                                   white coated linerboard
                                                                        and household paper


    5.    Highlights of major investments not financed by the proceeds
          √    Applicable                   Not applicable

                                                                                                                                                                                                  Unit: RMB’0,000

                                                                                                 Accumulated                                                                                                                     16
                                                                                                                                                                                                                                 INTERIM
                                                                                                        actual                                                                                                                    REPORT
                                                                             Investment            investment
                                                                           made during         made as of the
                                                     Total planned         the reporting            end of the            Progression      Revenue                  Date of
          Name of project                              investment                 period      reporting period             of projects     from projects            disclosure (if any)          Disclosure index (if any)

          Integrated forestry and paper project           348,500              28,959.15            95,007.72                 27.26%       Not put into operation   2 August 2013                http://www.cninfo.com.cn/
             of Huanggang Chenming
          600,000 tonne liquid packaging paper            380,000              51,505.93           310,461.62                 81.70%       Not put into operation   19 December 2015             http://www.cninfo.com.cn/

          Total                                           728,500              80,465.08           405,469.34



VII. Estimate of the operating results from January to September 2016
    Warning of cumulative net profit for the period between the beginning of the year to the end of the next reporting period being
    projected to be at a loss or expected to have material changes as compared to the corresponding period of prior year and its
    explanation

         Applicable √ Not applicable




                                                                                                                                                SHANDONG CHENMING PAPER HOLDINGS LIMITED                                           17
          IV Directors’ Report


          VIII. Outlook on the future development of the Company
               (I)    Competition overview and development trend of the industry
                      In recent years, 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 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. Elimination of
                      obsolete 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 obsolete 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, conducive to a higher concentration ratio to creating a favourable industry
                      lifecycle and a bright outlook for the paper making industry.

                      Furthermore, under the slowing macro-economic growth and economic transformation, the financial leasing industry
                      as a favoured supplementary corporate financing channel and an effective tool to use assets at hand embraced
                      continuously mounting market demand and was stepping into a golden age for its development. The financial leasing
                      industry in China is at the early stage and has a promising outlook. In fact, it is on a solid track of rapid growth. It is
                      expected that the market size will reach RMB1,200 billion by 2020. The financial leasing industry has bright prospects in
16
INTERIM
                      China as a result of its growth momentum under the “new normal” of the economy.

REPORT
               (II)   Development strategy
                      Looking forward, the Company will adhere to the principal of achieving growth amid stability, and emphasise on
                      environmental protection, low carbon, recycling and sustainable development. Following the “Made in China 2025 Plan”
                      and the principles of scientific development and quality and efficiency enhancement, it will comprehensively improve
                      its quality and efficiency, management level, technology application, sense of happiness and brand image through the
                      integration between its production and manufacture segment and financial services segment, incorporation of smart
                      technology into its industrial activities, reorganised methodology and restructuring so as to expand and improve itself
                      and strive to become one of the world-class companies with the highest growth rate in the “Thirteenth Five Year Plan”
                      period.

               (III) Operating plan for the second half of 2016
                      The main goal of the Company for 2016 is to “develop into an enterprise with hundreds of billions in value” by adhering
                      to the principle of “achieving growth amid stability”. The Company will stick to its diversification strategy and develop
                      an industrial system that centres on pulp production, paper making and finance to achieve synergy with forestry, real
                      estate and mining so as to boost the core competiveness and profitability. Meanwhile, the Company will be committed
                      to “team building, management enhancement, outstanding business performance and good results” in order to upgrade
                      management quality. The measures to be taken by the Company are as follows:

                      1.    Enhance management to upgrade management quality

                            The Company will work with leading management consultants in China. It will identify the problems in management
                            and formulate practical plans to address the issues with the help of external experts in order to enhance the
                            management level. It will improve fundamental management and recruit competent employees in a timely manner
                            to the management team to deal with the current problems arising from lack of sufficient management. The
                            Company will also further optimise the management system and procedures to provide strong support to the
                            strengthening of management standard.




18        SHANDONG CHENMING PAPER HOLDINGS LIMITED
IV Directors’ Report


VIII. Outlook on the future development of the Company (Cont’d)
    (III) Operating plan for the second half of 2016 (Cont’d)
         2.   Enhance operation management and take initiatives to expand market

              The Company will step up in its efforts in team building and talent recruitment to develop a talent pool and
              promotion channels while laying off unqualified employees. It will focus on efficiency in performance evaluation
              to stimulate employees’ incentives. It will enhance fundamental management and perform monthly inspection
              to groundwork so as to “cover all aspects of the system”. The Company will also optimise the system in a
              timely manner and set up standards for procedures, so that the implementation will be strict, effective and
              highly efficient. The Company will formulate plans for major and difficult tasks and closely monitor, inspect and
              evaluate such tasks to rectify problems. It will enhance efficiency management, adjust product structure, boost
              overseas sales, raise price, and make investment in places with close proximity, in the pursuit of higher efficiency.
              Meanwhile, it will support strategic customers, boost volume of trade, secure contracts and strengthen control
              of cash in transit to reduce appropriation of funds. It will enhance risk control and the marketing team will set its
              priority on the collection of receivables. The dedicated receivables collection team will carry out their work and
              strictly monitor receivables. The Company will also accelerate the process in relation to collateral security.

         3.   Enhance and refine production management

              The Company will boost production efficiency through refining management. It will cooperate with professional
              consultants to optimise management and actively recruit and nurture talents in order to enhance fundamental
              management capability. It will aim at a higher market share of high value-added products and optimise the
              product structure by developing products with competiveness, such as wine label, logistics label and liquid
              packaging paper. The Company will adjust the structure of pulp materials, upgrade production process, and utilise
              new raw materials to promote technological progress. It will step up inspection efforts to identify safety risks and
                                                                                                                                       16
                                                                                                                                       INTERIM
                                                                                                                                        REPORT
              protect the environment in accordance with the new national standards and requirements, thereby ensuring the
              fulfilment of targets on time.

         4.   Enhance project management for high quality and efficiency

              The Company will enhance implementation and management of Zhanjiang Chenming’s 600,000 tonne liquid
              packaging paper project, Haiming Mining, Huanggang Chenming’s integrated forestry, pulp and paper project
              and Shouguang Chenming’s 400,000 tonne chemical pulp project so as to ensure the timely commencement of
              operation, which will provide new sources of profit growth. The Company will adopt strict quality control on project
              construction by clarifying responsibility and enhancing control so as to ensure construction quality and safety at
              the work sites. The Company will fully prepare for the projects and optimise the organisational structure. It will set
              up a management team and recruit technicians, while developing training programmes for the staff at all levels, so
              as to lay a solid foundation for production and operation and ensure the smooth operation of the projects upon
              completion.

         5.   Enhance financing management to create extra value

              The Financial Leasing Company will focus on risk control. It will actively explore for quality customers, seek
              to increase the direct credit lines of domestic banks and obtain additional banking facilities. The Company
              will enhance the management of the Finance Company with a focus on its fundamental business in relation to
              settlement, deposit and loans as well as bills, so as to boost the recovery rate of funds. The Company will actively
              solicit interbank credit extension and diversify its interbank product offerings in order to increase efficiency. At
              the same time, Qingdao Chenming will commence financial leasing business at bonded areas to provide liquidity
              support to the Company’s operation and lower the financing cost.




                                                                                     SHANDONG CHENMING PAPER HOLDINGS LIMITED            19
          IV Directors’ Report


          VIII. Outlook on the future development of the Company (Cont’d)
               (III) Operating plan for the second half of 2016 (Cont’d)
                    6.    Enhance procurement management to raise resources efficiency

                          Leveraging the development of “cross-border e-commerce” and “Internet Plus”, the Company will seek to gain
                          market influence by establishing an online marketing platform for import and export of goods. The Company will
                          also develop complementary distributor management policy and pricing policy to boost efficiency of external
                          sales. In addition, it will set up an electronic merchandise exchange centre for pulp and paper products, and
                          develop an integrated supply chain for the storage and logistics of pulp and paper products in the country, with
                          the goal of building China’s market price index centre of pulp and paper products, and a global information centre
                          of paper products.

                    7.    Enhance service operation and business expansion

                          The Company will enhance the management of the brick plant, cement and construction materials companies.
                          In terms of internal measure, it will enhance the service quality; and in terms of external measure, it will actively
                          expand business to boost profit.

               (IV) Future capital requirements, source of funds and plan for use
                    With the extension of the Company’s industry chain and expansion of business scale, the Company has greater demand
                    for working capital. To this end, the Company has identified the following measures:

                    Firstly, the Company will raise fund through non-public offering of shares and preference shares. This will help the
16                  Company meet our financing needs together with our business development. The issue of preference shares which may
INTERIM
REPORT
                    be accounted for in equity will also help reduce the Company’s gearing ratio, thus improving the Company’s capital
                    structure and enhancing the Company’s risk aversion capability.

                    Secondly, the Company will establish diversified financing channels. Various financing methods, such as increasing
                    direct financing and issuing super and short term commercial paper and perpetual bonds, will be used to reduce the
                    Company’s finance expenses, improve the Company’s liabilities structure and ensure funding for the Company’s
                    sustainable and healthy development.

                    Thirdly, the Company will make progress in cross-border financing. Leveraging the financing platform of the Hong Kong
                    market, the Company will make effort to increase the credit line of Chenming (HK), avert exchange rate risks through
                    multi-currency financing and improve the efficiency of capital use so as to reduce finance expenses.

                    Fourthly, the Company will capitalise on the financial advantages of the Finance Company and the Financial Leasing
                    Company to expand the Group’s financing channels. They will grow amid stability, provide new impetus for the
                    Company’s earnings growth and boost profit.

                    Fifthly, the Company will further improve our international and domestic sales and marketing network, expand our
                    export sales and increase our investment in products of high profit so as to increase economic benefits. The Company
                    will take strict control measures to reduce inventories and improve contract compliance rate in order to reduce use of
                    funds, further reducing the finance expenses.




20        SHANDONG CHENMING PAPER HOLDINGS LIMITED
IV Directors’ Report


VIII. Outlook on the future development of the Company (Cont’d)
    (V)   Risk factors likely to be faced and the measures to be taken
          Industry risk

          As a basic raw materials industry of the national economy, the paper making industry’s overall efficiency has a strong
          correlation with economic cycles, and is therefore a cyclical industry fluctuating with the national macroeconomic
          performance, which will further affect the profitability of paper making enterprises. With the rapid growth of the national
          economy and economic globalisation, China’s paper making industry has been facing increasingly fierce competition,
          and overcapacity and lower demand will have impact on the operating results of the Company to a certain extent in the
          future.

          In light of the above, the Company will enhance the level of its equipment and technology, enrich its product portfolio,
          raise its product quality and put emphasis on developing high-end products to increase its competitiveness.

          Policy risk

          At present, the industry has entered into an important transitional period, and the mode which has supported the rapid
          development of the paper making industry in the past currently face the dual pressures of resources and environment.
          From the point of view of China’s policy, China will change the mode of growth through optimising the layout of the
          paper making industry and the raw material structure and product structure in order to promote a modern paper making
          industry based on recycling by integrating the forestry and paper making industry, and adjust the industry through entry
          requirements, environmental standards and energy saving. The development of the Company will be affected by the
          direction of such policies.

          Elimination of obsolete production capacity and stricter environmental protection policy have forced some small and           16
          medium-sized enterprises to exit the industry. Hence, the Company is expected to record long-term revenue.                    INTERIM
                                                                                                                                         REPORT



          Operational risk

          The major raw materials used by the Company are wood pulp and waste paper. The Company’s products are mainly
          comprised of high-end paper, and as the State encourages the increase of the proportion of wood pulp used by the
          industry, wood pulp, thus, has accounted for a higher proportion of the production cost. The market price fluctuations
          of raw material have significantly affected the production cost of the Company. In addition to intensified market
          competition resulting from surging capacity in the industry in recent years, the market price fluctuation of raw materials
          will have an impact on the performance of the Company.

          Hence, the Company will remain steadfast in the “forestry-pulp-paper integration” development path and focus on the
          construction of Zhanjiang Chenming pulp project, Huanggang Chenming pulp project and Shouguang chemical pulp
          project, thereby eliminating the limitations of upstream resources on the Company’s development and enhancing the
          Company’s sustainable development.

          Environmental protection risk

          The new Environmental Protection Law took effect on 1 January 2015. More stringent environmental protection policies
          have been implemented in the paper making industry. A multi-pronged approach has been adopted to promote
          industrial restructuring, and the paper making industry has entered into an important transitional period of development.
          The higher emission standard is bound to increase the Company’s environmental protection costs and high entry
          standards may result in the slowdown of scale expansion, thus affecting the production and operation of the Company.

          The Company always strive to achieve harmonious development with energy conservation and emission reduction.
          The Company will endeavour to develop the recycling economy through waste exchange and recycling and strive to
          maximise its resource utilisation. Meanwhile, the Company will make greater efforts to construct environment friendly
          projects and strive to achieve its waste emission target.




                                                                                       SHANDONG CHENMING PAPER HOLDINGS LIMITED           21
          IV Directors’ Report


          VIII. Outlook on the future development of the Company (Cont’d)
               (V)     Risk factors likely to be faced and the measures to be taken (Cont’d)
                       Exchange rate risk

                       The value of Renminbi is affected by the domestic and international economic and political environment and the supply
                       and demand for Renminbi. As an import and export enterprise, the exchange rate of Renminbi against other currencies
                       in future will affect the Company’s operating results. The foreign currency transactions of the Company are mainly
                       denominated in US$. The operations of raw material imports, product exports and US$ borrowings of the Company will
                       face the risk of exchange rate changes.

                       The Company lowers the proportion of imported goods procurement denominated in foreign currency. The Company
                       uses more domestic raw materials and spare parts in its production, and increases its Renminbi settlement while
                       decreasing its foreign exchange settlement. Meanwhile, the Company expands its overseas sales, increases repatriation
                       on exports and repays its domestic US dollar loans in order to mitigate its exchange rate risk exposure.


          IX. Opinions of the Board and the Supervisory Committee regarding the “modified auditor’s
              report” for the reporting period issued by the accountants
                      Applicable   √ Not applicable


          X.   Opinions of the Board regarding the “modified auditor’s report” for the prior year
                      Applicable   √ Not applicable
16
INTERIM
REPORT    XI. Particulars of profit distribution by the Company during the reporting period
               Implementation and adjustment of profit distribution proposals, especially the cash dividend proposal and proposal on
               conversion of capital reserves into share capital during the reporting period

               √    Applicable      Not applicable

               The 2015 profit distribution plan was considered and approved in the 2015 annual general meeting convened by the Company
               on 18 May 2016. Based on the number of the shares as at the dividend distribution registration date of 1,936,405,467 shares,
               a cash dividend of RMB3 (tax inclusive) was to be paid to all shareholders for every 10 shares held. The total cash dividend
               to be distributed amounted to RMB580,921,640.10 (tax inclusive). The dividend distribution was implemented and completed
               on 15 July 2016. For details, please refer to the announcement on payment of final dividend and withholding and payment
               of enterprise income tax for non-resident enterprise shareholders published on the Hong Kong Stock Exchange on 4 July
               2016, and the announcement on the implementation of the 2015 profit distribution and dividend plan for A share and B share
               published on http://www.cninfo.com.cn on 7 July 2016.

                                                             Particulars of Cash Dividend Policy

               Was it in compliance with the requirements of the Articles of
                 Association and the resolutions of the general meeting?                             Yes
               Were the dividend distribution criteria and proportion well-defined and clear?        Yes
               Were the related decision making process and mechanism in place?                      Yes
               Did independent Directors fulfil their duties and play their role?                    Yes
               Were the minority shareholders given opportunities to sufficiently voice
                 their opinion and make requests and were the legal interests of
                 the minority shareholders fully protected?                                          Yes
               Were conditions and procedures legal and transparent in respect of
                 cash dividend policy with adjustments and changes?                                  Yes




22        SHANDONG CHENMING PAPER HOLDINGS LIMITED
IV Directors’ Report


XII. Proposals on profit distribution and conversion of capital reserves into share capital during
     this reporting period
            Applicable       √ Not applicable

The Company does not intend to distribute cash dividend and bonus share, and conduct conversion of capital reserves into share
capital for the interim period.


XIII. Registration report on reception of research investigations, communications and interviews
      during the reporting period
     √ Applicable              Not applicable

                         Place of             Manner of          Class of parties                                                   Main topics of discussion
     Date of reception   reception            reception          accommodated       Parties accommodated                            and information provided

     5 May 2016          The Company’s       On-site research   Institution        96 individuals in total from Bosera Funds, E Fund, Recent production and operation of
                         conference room      investigation                         Shenwan Hongyuan, Lombarda China Fund, Tianhong the Company and development of the
                                                                                    Asset Management, Ping An Asset Management, industry
                                                                                    Guotai Junan, Minsheng Royal Fund, China
                                                                                    Merchants Fund, Harvest Fund, China Re Asset,
                                                                                    Wanjia Fund, China AMC, BOC Schroder Fund,
                                                                                    Huatai Securities, CICC Wealth Management, CSCI,
                                                                                    Industrial Securities, Galaxy Securities, New China
                                                                                    Fund, Huabao Investment, GF Asset Management,
                                                                                    GF Securities, Guosen Securities, Central China
                                                                                    Securities, Fortune SGAM, BOC International, Ping
                                                                                    An Fund, Anxin Fund, Congrong Investment, Double-
                                                                                    Safeguard,.Starrock Investment, Guofu Fund, Bohong
                                                                                                                                                                            16
                                                                                                                                                                            INTERIM
                                                                                    Capital, DH Fund, Huaxia Jiusheng, Changsheng                                            REPORT

                                                                                    Fund, Zheshang Securities, Zhonghai Fund, Infore
                                                                                    Capital, Great Abundance Year Asset Management,
                                                                                    China Life AMP, SWS MU, Manulife Teda, Sinosafe
                                                                                    Property Insurance, COAMC, Changjiang Securities,
                                                                                    Costone Value Selection, Essence Securities, Sealand
                                                                                    Securities, Shandong Jincheng Lida Fund, Zhongtai
                                                                                    Securities and Sudou Private Equity.

     19 May 2016         Leasing Company’s   On-site research   Institution        CCB Principal Asset Management, Galaxy Securities Recent production and operation of
                         conference room      investigation                         and Ping An Securities.                           the Company and development of the
                                                                                                                                      industry

     27 June 2016        The Company’s       On-site research   Institution        Haitong Securities, Haitong Asset, Harvest Fund, Recent production and operation of
                         conference room      investigation                         Caida Securities, Longrising Asset, Ping and CSCI. the Company and development of the
                                                                                                                                       industry




                                                                                                              SHANDONG CHENMING PAPER HOLDINGS LIMITED                        23
          V Material Matters


          I.   Overview of corporate governance
               1.   Corporate Governance in practice
                    The Company operated in compliance with the requirement of Companies Law, Securities Law, Code of Corporate
                    Governance for Listed Companies, Rules Governing Listing of Stocks on Shenzhen Stock Exchange, Rules Governing
                    the Listing of Securities on the Stock Exchange of Hong Kong Limited (the “Listing Rules”) and the related requirements
                    as required by the CSRC. The Company further improved and optimised its legal person governance structure in
                    practice during the reporting period. The Board considered the state of the Company’s corporate governance was
                    substantially in compliance with the requirements and requests of the regulatory documents such as Code of Corporate
                    Governance for Listed Companies.

               2.   Corporate governance activities
                    During the reporting period, the Board strived to regulate the operation of the Company by improving corporate
                    governance based on relevant special activities carried out in 2015. Pursuant to the requirements of the CSRC, the
                    Shenzhen Stock Exchange and the Shandong Securities Regulatory Bureau, it made the following efforts to continuously
                    improve the corporate governance level:

                    (1)   According to relevant provisions of the Company Law, Code of Corporate Governance for Listed Companies and
                          other laws and regulations, and based on circumstances of the Company, the Board amended the Articles of
                          Association.

                    (2)   According to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (as
                          amended and effective 1 January 2016), the Board amended the Implementing Rules of the Audit Committee.

16                  The Company strictly implemented its related system of internal control to facilitate its regulated operation and healthy
INTERIM
REPORT
                    development, thereby protecting the legal interests of investors. The corporate governance of the Company was exactly
                    the same as what was required by the CSRC. The regulated operations and the internal control standards would
                    enhance with the development of the Company.

               3.   Corporate Governance Code
                    The Company is committed to attaining good standard of corporate governance practices in order to enhance
                    shareholders’ value. Saved as disclosed below, none of the Directors is aware of any information that would reasonably
                    indicate that the Company is not, or was not for any part of the reporting period, in compliance with the Corporate
                    Governance Code and Corporate Governance Report, as set out in Appendix 14 of the Listing Rules.

                    (1)   The chairman and general manager of the Company is Mr. Chen Hongguo. Mr. Chen Hongguo performs the
                          roles of the chairman and the general manager for the overall management of the Company. This constitutes
                          a deviation from the principles and code provisions of A2 - Directors and Chief Executive Office in Corporate
                          Governance Code and Corporate Governance Report under Appendix 14 to Listing Rules. However, the Directors
                          of the Company believe that Mr. Chen Hongguo acting as the chairman and the general manager will enable the
                          Company to more effectively plan and implement the business strategies so that the Group can effectively and
                          rapidly seize business opportunities. As all major decisions will be made after consultation with other members of
                          the Board, the Company believes that the supervision of the Board and independent non-executive Directors will
                          strike a sufficient balance of power and authority.




24        SHANDONG CHENMING PAPER HOLDINGS LIMITED
V Material Matters


I.   Overview of corporate governance (Cont’d)
     3.   Corporate Governance Code (Cont’d)
          (2)   Communication with shareholders

                The Company’s annual general meeting provides a useful platform for direct communication between the Board
                and Shareholders. Various resolutions are proposed on each substantially separate issue at the general meetings.
                Save for the annual general meeting held on 18 May 2016 by the Company, two extraordinary general meetings
                and one class meeting were convened during the reporting period. Pursuant to section E1.2 of Appendix 14 to
                the Corporate Governance Code and Corporate Governance Report, the chairman of the board should attend the
                annual general meeting. He should also invite the chairmen of the audit, remuneration, nomination and any other
                committees (as appropriate) to attend. In their absence, he should invite another member of the committee or
                failing this his duly appointed delegate, to attend.

                The attendance record of Directors at each general meeting is set out below:

                Name                                            Attendance of general meetings

                Annual General Meeting for 2015                 Yin Tongyuan, Geng Guanglin and Pan Ailing
                First extraordinary general meeting for 2016    Yin Tongyuan
                Second extraordinary general meeting for 2016   Yin Tongyuan, Geng Guanglin and Wang Chunfang
                First class meeting for 2016                    Yin Tongyuan, Geng Guanglin and Wang Chunfang

                Mr. Chen Hongguo, the chairman of the Company and its strategy committee, Ms. Zhang Hong, the chairman of
                the audit committee, and Mr. Zhang Zhiyuan, the chairman of the nomination committee, were absent from the
                annual general meeting due to business commitments. The Company’s external auditor also attended the annual           16
                                                                                                                                       INTERIM
                general meeting as the scrutineer.                                                                                      REPORT




     4.   Securities transactions by Directors and Supervisors
          The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model
          Code”) as set out in Appendix 10 of the Listing Rules as the code of conduct for Directors’ securities transactions. The
          Company had made specific enquiry of all Directors and Supervisors and all Directors and Supervisors confirmed that
          they had complied with the requirements as set out in the Model Code for the six months ended 30 June 2016.

     5.   Audit Committee
          The audit committee of the Company now comprises two independent non-executive Directors and one non-executive
          Director. The members of the audit committee are Ms. Pan Ailing, Ms. Wang Fengrong and Ms. Yang Guihua. The
          audit committee reviewed the accounting standards and practices adopted by the Group with the management of the
          Company and discussed and reviewed the interim results and interim report for the six months ended 30 June 2016
          prepared in accordance with the accounting standards.




                                                                                      SHANDONG CHENMING PAPER HOLDINGS LIMITED           25
          V Material Matters


          II.   Litigation
                Material litigation and arbitration

                      Applicable √ Not applicable

                The Company was not involved in any material litigation and arbitration during the reporting period.

                Other litigations

                      Applicable √   Not applicable


          III. Questioning from the Media
                √   Applicable       Not applicable

                Media Attention                                                           Date of Disclosure     Disclosure Index

                Report about Chenming Paper currently under reprimand for                 26 April 2016          http://www.cninfo.com.cn
                  violating environmental regulations and required to take
                  remedial action

          IV. Matter related to bankruptcy and reorganisation
                      Applicable √   Not applicable

                There was no matter related to bankruptcy and reorganisation during the reporting period.
16
INTERIM
REPORT    V.    Asset transactions
                1.     Acquisition of assets
                           Applicable √ Not applicable

                       There was no acquisition of assets during the reporting period.

                2.     Disposal of assets
                           Applicable √ Not applicable

                       There was no disposal of assets during the reporting period.

                3.     Business combination
                           Applicable √ Not applicable

                       There was no business combination during the reporting period.




26        SHANDONG CHENMING PAPER HOLDINGS LIMITED
V Material Matters


VI. Implementation of the equity incentive plan of the Company and its effect

              Applicable √ Not applicable

    There was no implementation of the equity incentive plan of the Company during the reporting period.


VII. Significant related party transactions
    1.              Related party transactions associated with day-to-day operation
                    √ Applicable                                 Not applicable

                                                                                                                                                         Percentage
                                                                              Subject                                                                         as the
                                                                              matter of               Pricing basis                        Amount of         amount        Amount of
                                                            Types of the      the related             of the            Price of        related party      of similar   transactions       Whether                         Market price of
                                  Related                   related party     party                   related party     related party   transactions    transactions        approved     exceeding Settlement of related   available similar
    Related party                 party relationship        transactions      transactions            transactions      transactions      (RMB’0000)             (%)     (RMB’0000) approved cap party transactions      transaction       Disclosure date Disclosure index

    Jiangxi Chenming              Under indirect control of Procurement       Energy such as          Market price      Market price      14,321.39          1.97%           36,000            No Bank acceptance and      Not applicable   31 March 2016    http://www.cninfo.com.cn
      Natural Gas Co., Ltd.       directors, supervisors or                   natural gas and                                                                                                     telegraphic transfer
                                  senior management of                        heavy oil
                                  the Company

    Total                                                                                                                                 14,321.39                          36,000

    Particulars on refund of bulk sale                                                                 No
    Estimated total amount for day-to-day related party transactions to be conducted during the period No
      (by types of transactions) and their actual implementing during the reporting period (if any)
                                                                                                                                                                                                                                                                                        16
                                                                                                                                                                                                                                                                                        INTERIM
                                                                                                                                                                                                                                                                                         REPORT
    Reason for the difference between transaction price and market reference price (if applicable)     Not applicable


    2.              Related party transaction connected to purchase or sale of assets
                              Applicable √ Not applicable

                    There was no related party transaction of the Company connected to purchase or sale of assets during the reporting
                    period.

    3.              Related party transaction connected to joint external investment
                              Applicable √ Not applicable

                    There was no related party transaction of the Company connected to joint external investment during the reporting
                    period.

    4.              Related creditors’ rights and debts transactions
                    √    Applicable                              Not applicable

                    Was there any non-operating related creditors’ rights and debts transaction?

                              Yes √ No

                    There was no non-operating related creditors’ rights and debts transactions of the Company during the reporting period.

    5.              Other related party transactions
                              Applicable √ Not applicable

                    There was no other related party transaction of the Company during the reporting period.




                                                                                                                                                                                          SHANDONG CHENMING PAPER HOLDINGS LIMITED                                                        27
          V Material Matters


          VIII. Appropriation of funds of the Company by the controlling shareholder and its related parties
                for non-operating purposes
                    Applicable √ Not applicable

               There was no appropriation of funds of the Company by the controlling shareholder and its related parties for non-operating
               purposes during the reporting period.


          IX. Material contracts and implementation
               1.    Custody, contracting and leasing
                     (1)   Custody
                               Applicable √   Not applicable

                           There was no custody of the Company during the reporting period.

                     (2)   Contracting
                              Applicable √    Not applicable

                           There was no contracting of the Company during the reporting period.

                     (3)   Leasing
                               Applicable √   Not applicable

                           There was no leasing of the Company during the reporting period.
16
INTERIM
REPORT
               2.    Guarantees
                     √ Applicable       Not applicable




28        SHANDONG CHENMING PAPER HOLDINGS LIMITED
V Material Matters


IX. Material contracts and implementation (Cont’d)
    2.   Guarantees (Cont’d)
                                                                                                                                                    Unit: RMB’0,000

                                                                                 Guarantees between the Company and its subsidiaries
                                             Date of
                                             the related                                                                                                          Guarantee
                                             announcement                                                                                                         to related
                                             disclosing the            Amount     Guarantee date           Guarantee    Type of                    Fulfilled      parties
         Name of obligee                     guarantee amount     of guarantee    (agreement date)          provided    guarantee      Term        or not         or not

         Zhanjiang Chenming Pulp &           27 October 2014          650,000     3 June 2015             242,719.88     General       3 years     No             No
           Paper Co., Ltd.                                                                                               guarantee
         Zhanjiang Chenming Pulp &           30 March 2016            150,000                                            General       3 years     No             No
           Paper Co., Ltd.                                                                                               guarantee
         Shandong Chenming Financial         26 March 2015            500,000     22 May 2015                295,092.04 General        7 years     No             No
           Leasing Co., Ltd.                                                                                             guarantee
         Shandong Chenming Financial         30 March 2016            300,000                                            General       7 years     No             No
           Leasing Co., Ltd.                                                                                             guarantee
         Huanggang Chenming Arboriculture    27 October 2014           10,000     18 December 2014                 3,000 General       3 years     No             No
           Co., Ltd.                                                                                                     guarantee
         Huanggang Chenming Pulp &           26 March 2015            400,000     28 July 2015                44,499.28 General        7 years     No             No

                                                                                                                                                                               16
           Paper Co., Ltd.                                                                                               guarantee
         Huanggang Chenming Pulp &           30 March 2016            550,000                                            General       7 years     No             No           INTERIM
           Paper Co., Ltd.                                                                                               guarantee                                              REPORT

         Jiangxi Chenming Paper Co., Ltd.    27 October 2014          200,000     6 January 2015              75,683.54 General        3 years     No             No
                                                                                                                         guarantee
         Jiangxi Chenming Paper Co., Ltd.    30 March 2016            150,000                                            General       3 years     No             No
                                                                                                                         guarantee
         Shouguang Meilun Paper Co., Ltd.    16 December 2010         600,000     13 April 2015                  44,725 General        10 years    No             No
                                                                                                                         guarantee
         Shandong Chenming Paper             27 October 2014          400,000     9 January 2015              328,739.3 General        3 years     No             No
           Sales Co., Ltd.                                                                                               guarantee
         Shandong Chenming Paper             30 March 2016            200,000                                            General       3 years     No             No
           Sales Co., Ltd.                                                                                               guarantee
         Chenming (HK) Limited               27 October 2014          500,000     31 July 2015               403,621.68 General        3 years     No             No
                                                                                                                         guarantee
         Chenming (HK) Limited               30 March 2016            100,000                                            General       3 years     No             No
                                                                                                                         guarantee
         Shouguang Chenming Import and       27 October 2014          200,000                                            General       3 years     No             No
            Export Trade Co., Ltd.                                                                                       guarantee
         Jilin Chenming Paper Co., Ltd.      27 October 2014          150,000                                            General       3 years     No             No
                                                                                                                         guarantee
         Haicheng Haiming Mining Co., Ltd.   27 August 2014            60,000                                            General       3 years     No             No
                                                                                                                         guarantee
         Shandong Chenming Group               13 February 2015       400,000                                            General       3 years     No             No
           Finance Co., Ltd.                                                                                             guarantee
         Total amount of guarantee provided for subsidiaries        1,450,000     Total amount of guarantee provided for subsidiaries during the                851,428.65
         approved during the reporting period (B1)                                reporting period (B2)
         Total amount of guarantee provided for subsidiaries        5,520,000     Total balance of guarantee provided for subsidiaries as at the               1,438,080.72
         approved as at the end of the reporting period (B3)                      end of the reporting period (B4)




                                                                                                             SHANDONG CHENMING PAPER HOLDINGS LIMITED                            29
          V Material Matters


          IX. Material contracts and implementation (Cont’d)
               2.   Guarantees (Cont’d)


                                                                                                Guarantees provided by subsidiaries for subsidiaries
                                                         Date of
                                                         the related                                                                                                           Guarantee
                                                         announcement                                                                                                          to related
                                                         disclosing the              Amount     Guarantee date            Guarantee     Type of                   Fulfilled    parties
                    Name of obligee                      guarantee amount       of guarantee    (agreement date)           provided     guarantee      Term        or not      or not

                    Chenming (HK) Limited                30 March 2016               100,000    20 April 2016              58,326.84       General    3 years          No      No
                                                                                                                                           guarantee
                    Chenming (HK) Limited                  30 March 2016                 100,000 20 April 2016                   10,355.95 General    3 years          No      No
                                                                                                                                           guarantee
                    Chenming (HK) Limited                  30 March 2016                 100,000 20 April 2016                    48,822.5 General    3 years          No      No
                                                                                                                                           guarantee
                    Total amount of guarantee provided for subsidiaries                  300,000 Total amount of guarantee provided for subsidiaries during the               117,505.29
                    approved during the reporting period (C1)                                        reporting period (C2)
                    Total amount of guarantee provided for subsidiaries                  300,000 Total balance of guarantee provided for subsidiaries as at the               117,505.29
                    approved as at the end of the reporting period (C3)                              end of the reporting period (C4)
                                                         Total amount of guarantee provided by the Company (the sum of the above three main categories)
                    Total amount of guarantee approved during the reporting            1,750,000 Total amount of guarantee provided during the reporting period               968,933.94

16
                    period (B1+C1)                                                                   (B2+C2)
INTERIM
                    Total amount of guarantee approved as at the end of the            5,820,000 Total balance of guarantee provided as at the end of the                 1,555,586.01
REPORT              reporting period (B3+C3)                                                         reporting period (B4+C4)
                    The percentage of total amount of guarantee provided (B4+C4) to the net assets of the Company                                                                80.54%
                    Of which:
                    Amount of guarantee provided for shareholders, beneficial controllers and its related parties (D)                                                                0
                    Amount of guarantee directly or indirectly provided for obligors with gearing ratio over 70% (E)                                                        914,276.22
                    Total amount of guarantee provided in excess of 50% of net assets (F)                                                                                   589,876.88
                    Sum of the above three amount of guarantee (D+E+F)                                                                                                    1,504,153.11

                    (1)     External guarantees against the rules and regulations

                                  Applicable √         Not applicable

                            There was no external guarantee provided by the Company which was against the rules and regulations during the
                            reporting period.




30        SHANDONG CHENMING PAPER HOLDINGS LIMITED
V Material Matters


IX. Material contracts and implementation (Cont’d)
    3.   Other material contracts
         √    Applicable                    Not applicable

                                                                                                        Appraisal
                                                                                         Book value      value of
                                                                                       of the subject the subject                                                                                     Progress
                                                                                            asset of     asset of        Name of                                               Related                as at the
                                  Name of                                      Date of the contract the contract        appraisal     Appraisal                Transaction       party     Related    end of the
         Name of the company      party involved                          the contract         (if any)    (if any)      institute          date       Pricing       price transaction        party   reporting
         entering into contract   in the contract      Subject matter     entered into (RMB’0,000) (RMB ’0,000)          (if any)      (if any)       basis (RMB’0,000)      or not relationship   period

         Shandong Chenming        Jinan Hi-Tech        A7-2 plot of the   9 May 2014 Not applicable Not applicable Not applicable Not applicable Market price         36,000       No Not applicable In progress
           Paper Holdings Limited Holding Group          Han Yu Jin Gu
                                    Co., Ltd.
         Huanggang Chenming       FMW Foerderanlagen Materials and        1 July 2015 Not applicable Not applicable Not applicable Not applicable Market price          EUR        No Not applicable In progress
           Pulp & Paper Co., Ltd.   Gmbh.                equipment for                                                                                            7.80 million
                                                         chemical pulp
         Huanggang Chenming       Valmet Technologies Equipment           1 July 2015 Not applicable Not applicable Not applicable Not applicable Market price         EUR         No Not applicable In progress
           Pulp & Paper Co., Ltd.   Oy                                                                                                                         65.631 million
         Huanggang Chenming       Valmet (China) Co., Equipment and       1 July 2015 Not applicable Not applicable Not applicable Not applicable Market price     36,076.4        No Not applicable In progress
           Pulp & Paper Co., Ltd.   Ltd.                 spare parts
         Huanggang Chenming       Andritz Oy           Steam equipment    1 July 2015 Not applicable Not applicable Not applicable Not applicable Market price         EUR         No Not applicable In progress
           Pulp & Paper Co., Ltd.                        system                                                                                                7.044 million                                       16
         Huanggang Chenming       Andritz (China) Ltd. Steam equipment    1 July 2015 Not applicable Not applicable Not applicable Not applicable Market price      3,060.4        No Not applicable In progress   INTERIM
                                                                                                                                                                                                                    REPORT
           Pulp & Paper Co., Ltd.

    4.   Other material transactions
                 Applicable √ Not applicable

         There was no other material transaction of the Company during the reporting period.




                                                                                                                                          SHANDONG CHENMING PAPER HOLDINGS LIMITED                                   31
          V Material Matters


          X.   Undertakings made by the Company and shareholders interested in 5% or more of the shares
               of the Company made during the reporting period or prior periods but subsisting to the
               reporting period
               √ Applicable                      Not applicable

                                                     Party involved                                                                                                                       Particulars on
               Undertaking                           in undertaking         Details of undertaking                                                    Undertaking date Term               the performance

               Undertaking on shareholding
                 structure reformation

               Undertaking made in offering
                 documents or shareholding
                 alternation documents

               Undertaking made during asset
                 reconstruction

               Undertaking made on initial           Shouguang Chenming     (1) Shouguang Chenming Holdings Co., Ltd. (“Shouguang                        22 May 2008 During the period Strictly implemented
                 public offering or refinancing        Holdings Co., Ltd.   Chenming Holdings”) shall not engage, whether solely, jointly,                             when Chenming
                                                                            or by representing itself or any other persons or companies, and                            Holdings was the
                                                                            shall not procure its associates (as defined in The Listing Rules                           major shareholder
                                                                            of Hong Kong Stock Exchange) to engage, in any business which                               of the Company
                                                                            competes with the business of the Company and its subsidiaries

16
INTERIM
                                                                            (“Chenming Group” or “we”) directly or indirectly, in any country
                                                                            and region which our business exists (or any part of the world if in
REPORT
                                                                            any form of electronics business), or in any business that directly
                                                                            or indirectly competes with Chenming Group’s business which we
                                                                            operate from time to time (including but not limited to any business
                                                                            in the form of sole proprietorship, joint ventures or acquisitions, or
                                                                            holding interests directly or indirectly in such enterprises, or by any
                                                                            other means); (2) in the event that Shouguang Chenming Holdings
                                                                            is required by its business to, whether solely, jointly, or by
                                                                            representing itself or any other persons or companies, engage in
                                                                            business which directly or indirectly competes against the business
                                                                            of Chenming Group, or obtain any business opportunity which
                                                                            directly or indirectly competes against the business of Chenming
                                                                            Group, it shall endeavour to procure that Chenming Group shall
                                                                            have priority to obtain the right to operate such business or to
                                                                            obtain such business opportunity; (3) if Shouguang Chenming
                                                                            Holdings is in breach of the abovementioned undertakings, it
                                                                            shall indemnify the Company for any loss caused by such breach
                                                                            and the Company shall have the right to acquire all businesses
                                                                            of Shouguang Chenming Holdings, which directly or indirectly
                                                                            compete with the businesses of our Group, at market price or cost
                                                                            price (whichever price is lower); (4) Shouguang Chenming Holdings
                                                                            shall not make use of its position as the controlling shareholder (as
                                                                            defined in The Listing Rules of Hong Kong Stock Exchange) of our
                                                                            Group to jeopardise the legal interests of Chenming Group and its
                                                                            shareholders with other persons or companies or on their behalf.




32        SHANDONG CHENMING PAPER HOLDINGS LIMITED
V Material Matters


X.   Undertakings made by the Company and shareholders interested in 5% or more of the shares
     of the Company made during the reporting period or prior periods but subsisting to the
     reporting period (Cont’d)
                                  Party involved                                                                                                                 Particulars on
     Undertaking                  in undertaking         Details of undertaking                                              Undertaking date Term               the performance

                                  Shouguang Chenming     (1) According to the plan on defective properties of the Company, 16 January 2008 During the period Strictly implemented
                                    Holdings Co., Ltd.   Shouguang Chenming Holdings Co., Ltd. (“Shouguang Chenming                         when Chenming
                                                         Holdings”) has guaranteed and undertaken that: according to the                    Holdings was
                                                         application of the Company, for defective property(ies) owned                       the major
                                                         by the Company and its holding subsidiary company which                             shareholder
                                                         situated in the administrative area of Shouguang city, Shouguang                    of the Company
                                                         Chenming Holdings will purchase it(them) and have it(them) being
                                                         transferred to itself pursuant to the law in accordance with the
                                                         result of the related asset valuation if the Company decides to
                                                         transfer and dispose of it(them) and there is no other transferee;
                                                         (2) before the Company transfers and disposes of the defective
                                                         properties pursuant to the law, if the Company suffers any
                                                         economic losses due to the defects of the title (including but not
                                                         limited to damages, penalties and relocation costs), Shouguang
                                                         Chenming Holdings will bear such economic losses; (3) during the
                                                         regulatory process taken to the defective properties of buildings
                                                         and land of subsidiaries of the Company situated outside the local
                                                         areas (outside the administrative area of Shouguang city), the                                                             16
                                                                                                                                                                                    INTERIM
                                                         economic losses such as penalties or relocation costs imposed                                                               REPORT

                                                         by competent administrative authorities to be borne by the
                                                         subsidiaries arising from defects of insufficient title documents
                                                         shall be paid pursuant to the law by Shouguang Chenming
                                                         Holdings after verification.

     Other undertakings made to   Shouguang Chenming     As Chenming Holdings is confident of the prospects of the                8 July 2015 From 8 July 2015 to Completed
       minority shareholders of     Holdings Co., Ltd.   economic development in China and the future development of                            8 January 2016
       the Company                                       the Company, in order to maintain the stability of capital market
                                                         and promote the sustainable, stable and healthy development of
                                                         the Company, Chenming Holdings has undertaken that it will not
                                                         reduce its shareholding in the Company in the coming six months.

     Does the undertaking         Yes
       performed timely?




                                                                                                                     SHANDONG CHENMING PAPER HOLDINGS LIMITED                         33
          V Material Matters


          XI. Engagement or dismissal of accounting firms
               Has the interim financial report been audited?

                    Yes √   No

               The interim financial report is unaudited.

          XII. Punishment and rectification
                    Applicable √ Not applicable

               There was no punishment and rectification of the Company during the reporting period.

          XIII. Risk of delisting due to non-compliance
                    Applicable √ Not applicable

               The Company was not exposed to the risk of delisting due to non-compliance during the reporting period.

          XIV. Purchase, sale and redemption of shares

               During the reporting period, the Company did not purchase, sell or redeem any listed securities of the Company.

          XV. Other matters of significance
               √ Applicable        Not applicable


16
INTERIM
               1.    Non-public issue of A shares
REPORT               At the 13th extraordinary meeting of the seventh session of the Board, the second extraordinary general meeting
                     for 2016 and the first domestic and overseas shareholders’ class meeting for 2016, it was passed, among others,
                     resolutions relating to the non-public issue of A shares by the Company. Under such issue, no more than 686,015,831
                     shares (inclusive) were to be issued for gross proceeds of no more than RMB5,200.0000 million (inclusive), of which
                     RMB3,700 million would be used in the bleached sulfate chemical pulp project with annual production capacity of
                     400,000 tonne and RMB1,500 million for repayment of bank loans. On 20 June 2016, the Company received the Notice
                     of Acceptance of Application for Administrative Approval (No. 161455) from the China Securities Regulatory Commission
                     (the “CSRC”). On 19 July 2016, the Company received the Notice of Feedback on Administrative Approval Application
                     (No. 161455) from the CSRC, a reply to which was published on www.cninfo.com.cn and submitted to the CSRC.

                     As of the disclosure date of the Report, the Company has not received the related approval of the CSRC. The Company
                     will perform its obligation to disclose the related information on a timely basis based on the approval of the CSRC.

               2.    Obtaining high and new tech enterprise qualifications by the Company and its subsidiaries
                     The Company received a high and new technology enterprise certificate jointly issued by the Shandong Provincial Office
                     of SAT, Shandong Local Taxation Bureau, the Shandong Province Finance Bureau and the Department of Science &
                     Technology of Shandong Province certifying the Company as a high and new technology enterprise with a certification
                     number of GR201537000611 valid for three years.

                     Shouguang Meilun Paper Co., Ltd. (“Shouguang Meilun”), a wholly-owned subsidiary, received a high and new
                     technology enterprise certificate jointly issued by the Shandong Provincial Office of SAT, Shandong Local Taxation
                     Bureau, the Shandong Province Finance Bureau and the Department of Science & Technology of Shandong Province
                     certifying the Company as a high and new technology enterprise with a certification number of GR201537000228 valid
                     for three years.

                     Zhanjiang Chenming Pulp & Paper Co., Ltd. (“Zhanjiang Chenming”), a controlling subsidiary of the Company, received
                     a high and new technology enterprise certificate jointly issued by the Guangdong Provincial Office of SAT, Guangdong
                     Local Taxation Bureau, the Guangdong Province Finance Bureau and the Department of Science & Technology of
                     Guangdong Province certifying the Company as a high and new technology enterprise of Guangdong with a certification
                     number of GR201544000146 valid for three years.

                     Pursuant to relevant requirements, the Company, Shouguang Meilun and Zhanjiang Chenming are eligible for relevant
                     national preferential treatment enjoyable by high and new tech enterprises for three years and subject to a corporate
                     income tax rate of 15%.




34        SHANDONG CHENMING PAPER HOLDINGS LIMITED
V Material Matters


XV. Other matters of significance (Cont’d)
    3.   Information disclosure index for the first half of 2016
         Announcement                                                                                Publication website
         No.             Subject matter                                        Date of publication   and index

         2016-001        Announcement on Pledge of Shares by Shareholders      5 January 2016        http://www.cninfo.com.cn
         2016-002        Announcement on Progress of increase in               5 January 2016        http://www.cninfo.com.cn
                           shareholding of the Company by Controlling
                           Shareholder
         2016-003        Announcement on Progress of Undertaking by the        9 January 2016        http://www.cninfo.com.cn
                         Controlling Shareholder of the Company
         2016-004        Announcement on Pledge of Shares by Shareholders      13 January 2016       http://www.cninfo.com.cn
         2016-005        Announcement on Progress of increase in               13 January 2016       http://www.cninfo.com.cn
                           shareholding of the Company by Controlling
                           Shareholder
         2016-006        Full Report of Changes in Equity                      15 January 2016       http://www.cninfo.com.cn
         2016-007        Second Supplementary Notice of the 2016               15 January 2016       http://www.cninfo.com.cn
                           First Extraordinary General Meeting
         2016-008        Supplementary Announcement on Full Report of          19 January 2016       http://www.cninfo.com.cn
                           Changes in Equity
         2016-009        Announcement on Result of the Issue of 2016 First     20 January 2016       http://www.cninfo.com.cn
                           Tranche of Super & Short-term Commercial Paper

                                                                                                                                16
         2016-010        Announcement on Progress of Registered Capital        23 January 2016       http://www.cninfo.com.cn
                           Decrease by Controlling Shareholder                                                                  INTERIM
         2016-011        Announcement on Estimated Annual Results for 2015     26 January 2016       http://www.cninfo.com.cn    REPORT

         2016-012        Indicative Announcement of 2016 First                 29 January 2016       http://www.cninfo.com.cn
                           Extraordinary General Meeting
         2016-013        Indicative Announcement on Subsidiary                 29 January 2016       http://www.cninfo.com.cn
                           Receiving Subsidy
         2016-014        Announcement on Resolutions of the 2015 First         4 February 2016       http://www.cninfo.com.cn
                         Extraordinary General Meeting
         2016-015        Announcement on Result of the Issue of 2016 Second    12 March 2016         http://www.cninfo.com.cn
                           Tranche of Super & Short-term Commercial Paper
         2016-016        Announcement on Pledge of Shares by Shareholders      12 March 2016         http://www.cninfo.com.cn
         2016-017        Announcement on Result of the Issue of 2016 Third     15 March 2016         http://www.cninfo.com.cn
                           Tranche of Super & Short-term Commercial Paper
         2016-018        Announcement in Respect of Resolutions of the Ninth   16 March 2016         http://www.cninfo.com.cn
                           Extraordinary Meeting of the Seventh Session of
                           the Board of Directors
         2016-019        Announcement on Investment of China Development       16 March 2016         http://www.cninfo.com.cn
                           Bank Development Fund Co., Ltd. in Subsidiary
                           Zhanjiang Chenming
         2016-020        Indicative announcement on refund of value-added      19 March 2016         http://www.cninfo.com.cn
                           tax received by a subsidiary
         2016-021        Announcement on Undertakings and Performance          25 March 2016         http://www.cninfo.com.cn
                           under Non-public Issue of Preference Shares
         2016-022        Announcement on Resolution of the 10th                25 March 2016         http://www.cninfo.com.cn
                           Extraordinary Meeting of the Seventh Session of
                           the Board of Directors
         2016-023        Announcement on Replacement of Self-raised Funds      25 March 2016         http://www.cninfo.com.cn
                           Invested in Advance to Projects with Proceeds
                           from Issue of Preference Shares
         2016-024        Announcement on Resolution of the First               25 March 2016         http://www.cninfo.com.cn
                           Extraordinary Meeting of the Seventh Session of
                           the Supervisory Committee


                                                                                   SHANDONG CHENMING PAPER HOLDINGS LIMITED       35
          V Material Matters


          XV. Other matters of significance (Cont’d)
               3.   Information disclosure index for the first half of 2016 (Cont’d)
                    Announcement                                                                                 Publication website
                    No.             Subject matter                                         Date of publication   and index

                    2016-025        Announcement on Entering into Proceeds                 29 March 2016         http://www.cninfo.com.cn
                                      Supervision Agreement
                    2016-026        Announcement on Subsidiaries Obtaining High and        29 March 2016         http://www.cninfo.com.cn
                                      New Tech Enterprise Qualifications
                    2016-027        Indicative Announcement on Medium-term Notes           29 March 2016         http://www.cninfo.com.cn
                                      Issue Registered
                    2016-028        Announcement in respect of Resolutions of the 13th     31 March 2016         http://www.cninfo.com.cn
                                      Meeting of the Seventh Session of
                                      the Board of Directors
                    2016-029        Announcement on Resolution of the 13th Meeting of      31 March 2016         http://www.cninfo.com.cn
                                      the Seventh Session of the Supervisory Committee
                    2016-030        2015 Annual Report Summary                             31 March 2016         http://www.cninfo.com.cn
                    2016-031        Notice of 2015 Annual General Meeting                  31 March 2016         http://www.cninfo.com.cn
                    2016-032        Announcement on Provision of Guarantee for             31 March 2016         http://www.cninfo.com.cn
                                      Comprehensive Credit Line of
                                      Relevant Subsidiaries
                    2016-033        Announcement in relation to External Investment        31 March 2016         http://www.cninfo.com.cn

16
                    2016-034        Announcement on Expected Ordinary Connected            31 March 2016         http://www.cninfo.com.cn
INTERIM
                                      Transactions in 2016
REPORT              2016-035        Announcement on Entering into a Strategic              1 April 2016          http://www.cninfo.com.cn
                                      Cooperation Agreement with Postal Savings
                                      Bank of China (Shandong Branch)
                    2016-036        Announcement on the Company and Subsidiaries           2 April 2016          http://www.cninfo.com.cn
                                      Obtaining High and New Tech Enterprise
                                      Qualifications
                    2016-037        Transfer Announcement on Non-public Issue of           7 April 2016          http://www.cninfo.com.cn
                                      Preference Shares
                    2016-038        Announcement on Estimated Results for                  7 April 2016          http://www.cninfo.com.cn
                                      the First Quarter of 2016
                    2016-039        Announcement on Suspension of Trading                  12 April 2016         http://www.cninfo.com.cn
                                      In Relation To Major Event
                    2016-040        Announcement on Synchronised Information               12 April 2016         http://www.cninfo.com.cn
                                      Disclosure on Two Stock Exchanges
                    2016-041        Announcement in respect of Resolutions of the 11th     16 April 2016         http://www.cninfo.com.cn
                                      Extraordinary Meeting of the Seventh Session of
                                      the Board of Directors
                    2016-042        Announcement on Resolution of the Second               16 April 2016         http://www.cninfo.com.cn
                                      Extraordinary Meeting of the Seventh Session of
                                      the Supervisory Committee
                    2016-043        Announcement on Dilution of Current Returns and        16 April 2016         http://www.cninfo.com.cn
                                      Remedial Measures upon Non-public Offering
                    2016-044        Notice of 2016 Second Extraordinary General Meeting    16 April 2016         http://www.cninfo.com.cn
                    2016-045        Notice of the 2016 First Domestic Listed Share Class   16 April 2016         http://www.cninfo.com.cn
                                      Meeting and 2016 First Overseas Listed
                                      Share Class Meeting
                    2016-046        Announcement on Resumption of Trading                  16 April 2016         http://www.cninfo.com.cn
                    2016-047        Announcement on Capital Increase of                    16 April 2016         http://www.cninfo.com.cn
                                      Chenming Leasing
                    2016-048        Indicative Announcement for H Shares                   19 April 2016         http://www.cninfo.com.cn



36        SHANDONG CHENMING PAPER HOLDINGS LIMITED
V Material Matters


XV. Other matters of significance (Cont’d)
    3.   Information disclosure index for the first half of 2016 (Cont’d)
         Announcement                                                                               Publication website
         No.             Subject matter                                       Date of publication   and index

         2016-049        Supplemental Notice of 2016 Second                   20 April 2016         http://www.cninfo.com.cn
                           Extraordinary General Meeting
         2016-050        Supplementary Notice of the 2016 First Domestic      20 April 2016         http://www.cninfo.com.cn
                           Listed Share Class Meeting and 2016
                           First Overseas Listed Share
         2016-051        Announcement on Result of the Issue of 2016 Fifth    20 April 2016         http://www.cninfo.com.cn
                           Tranche of Super & Short-term Commercial Paper
         2016-052        Announcement on Result of the Issue of 2016 Sixth    23 April 2016         http://www.cninfo.com.cn
                           Tranche of Super & Short-term Commercial Paper
         2016-053        Indicative Announcement on Media Coverage            26 April 2016         http://www.cninfo.com.cn
         2016-054        2016 First Quarterly Report                          28 April 2016         http://www.cninfo.com.cn
         2016-055        Announcement on Total New Borrowings for             28 April 2016         http://www.cninfo.com.cn
                           2015 and 2016
         2016-056        Announcement in respect of Resolutions of the 12th   29 April 2016         http://www.cninfo.com.cn
                           Extraordinary Meeting of the Seventh Session of
                           the Board of Directors
         2016-057        Announcement on Revision on the Date of              29 April 2016         http://www.cninfo.com.cn

                                                                                                                               16
                           2015 Annual General Meeting
         2016-058        Notice of 2015 Annual General Meeting                29 April 2016         http://www.cninfo.com.cn   INTERIM
         2016-059        Announcement on Revision on the Date of              29 April 2016         http://www.cninfo.com.cn    REPORT

                           2016 Second Extraordinary General Meeting
         2016-060        Announcement on Revision on the Date of 2016         29 April 2016         http://www.cninfo.com.cn
                           First Domestic Listed Share Class Meeting and
                           2016 First Overseas Listed Share
         2016-061        Notice of 2016 Second Extraordinary                  29 April 2016         http://www.cninfo.com.cn
                           General Meeting
         2016-062        Notice of 2016 First Domestic Listed Share Class     29 April 2016         http://www.cninfo.com.cn
                           Meeting and 2016 First Overseas Listed Share
         2016-063        Announcement in respect of Resolutions of the 15th   30 April 2016         http://www.cninfo.com.cn
                           Meeting of the Seventh Session of
                           the Board of Directors
         2016-064        Announcement on Resolution of the 15th Meeting of    30 April 2016         http://www.cninfo.com.cn
                           the Seventh Session of the Supervisory Committee
         2016-065        Announcement on Additional Resolutions Proposed      30 April 2016         http://www.cninfo.com.cn
                           at the 2015 General Meeting
         2016-066        Supplemental Notice of 2015 General Meeting          30 April 2016         http://www.cninfo.com.cn
         2016-067        Notice of Investor Reception Day                     4 May 2016            http://www.cninfo.com.cn
         2016-068        Announcement on Result of the Issue of 2016 Seven    8 May 2016            http://www.cninfo.com.cn
                           Tranche of Super & Short-term Commercial Paper
         2016-069        Indicative Announcement on 2015 General Meeting      13 May 2016           http://www.cninfo.com.cn
         2016-070        Announcement in respect of Resolutions of the 13th   18 May 2016           http://www.cninfo.com.cn
                           Meeting of the Seventh Session of
                           the Board of Directors
         2016-071        Announcement on Resolution of the Third              18 May 2016           http://www.cninfo.com.cn
                           Extraordinary Meeting of the Seventh Session of
                           the Supervisory Committee
         2016-072        Announcement on Additional Resolutions Proposed      18 May 2016           http://www.cninfo.com.cn
                           at the 2016 Second Extraordinary General Meeting




                                                                                  SHANDONG CHENMING PAPER HOLDINGS LIMITED       37
          V Material Matters


          XV. Other matters of significance (Cont’d)
               3.   Information disclosure index for the first half of 2016 (Cont’d)
                    Announcement                                                                                Publication website
                    No.             Subject matter                                        Date of publication   and index

                    2016-073        Announcement on Additional Resolutions Proposed       18 May 2016           http://www.cninfo.com.cn
                                      at 2016 First Domestic Listed Share Class Meeting
                                      and 2016 First Overseas Listed Share
                    2016-074        Supplementary Notice of 2016 Second                   18 May 2016           http://www.cninfo.com.cn
                                      Extraordinary General Meeting
                    2016-075        Supplementary Notice of 2016 First Domestic           18 May 2016           http://www.cninfo.com.cn
                                      Listed Share Class Meeting and 2016
                                      First Overseas Listed Share
                    2016-076        Announcement on Dilution of Current Returns and       18 May 2016           http://www.cninfo.com.cn
                                      Remedial Measures upon Non-public
                                      Offering (Revision)
                    2016-077        Announcement on Entering into Conditional Share       18 May 2016           http://www.cninfo.com.cn
                                      Purchase Agreement and Connected
                                      Transactions under the Non-public Offering of
                                      A Share (Revision)
                    2016-078        Announcement on Revision of Non-public                18 May 2016           http://www.cninfo.com.cn
                                      Offering for 2016

16
                    2016-079        Announcement on Resolutions of                        19 May 2016           http://www.cninfo.com.cn
INTERIM
                                      the 2015 General Meeting
REPORT              2016-080        Announcement in respect of Resolutions of the         19 May 2016           http://www.cninfo.com.cn
                                      1st Meeting of the Eighth Session of
                                      the Board of Directors
                    2016-081        Announcement on Resolutions of the 1st Meeting of     19 May 2016           http://www.cninfo.com.cn
                                      the Eighth Session of the Supervisory Committee
                    2016-082        Indicative Announcement on 2016 Second                26 May 2016           http://www.cninfo.com.cn
                                      Extraordinary General Meeting
                    2016-083        Indicative Announcement on 2016 First Domestic        26 May 2016           http://www.cninfo.com.cn
                                      Listed Share Class Meeting and
                                      2016 First Overseas Listed Share
                    2016-084        Announcement on Resolutions of 2016 Second            3 June 2016           http://www.cninfo.com.cn
                                      Extraordinary General Meeting
                    2016-085        Poll Results Announcement of the 2016 First           3 June 2016           http://www.cninfo.com.cn
                                      Domestic A Shareholders’ and B Shareholders’
                                      Class Meeting and the 2016 First Overseas
                                      H Shareholders’ Class Meeting
                    2016-086        Announcement on Pledge of Shares                      7 June 2016           http://www.cninfo.com.cn
                                      by Shareholders
                    2016-087        Notice of Investor Reception Day                      14 June 2016          http://www.cninfo.com.cn
                    2016-088        Announcement on Resignation of                        15 June 2016          http://www.cninfo.com.cn
                                      Senior Management
                    2016-089        Announcement on receipt of CSRC Notice of             21 June 2016          http://www.cninfo.com.cn
                                      Acceptance of Application for
                                      Administrative Approval
                    2016-090        Announcement on Result of the Issue of 2016 August    25 June 2016          http://www.cninfo.com.cn
                                      Tranche of Super & Short-term Commercial Paper
                    2016-091        Announcement on Redemption, Dividend Payment          30 June 2016          http://www.cninfo.com.cn
                                      and Delisting of “11 Chenming Bond” for 2016




38        SHANDONG CHENMING PAPER HOLDINGS LIMITED
V Material Matters


XVI. Corporate bonds
    Are there any corporate bonds offered to the public and listed on stock exchanges which do not become due as at the date of
    approval of interim report or overdue but not fully settled?

    Yes

    1.    Basic information on corporate bonds
                                                                                                                  Outstanding
                                                                                                                    amount of
                                                                                                                    the bonds
          Name of bond                Bond abbreviation Bond code         Issue date           Maturity date      (RMB ’0,000) Interest rate   Payment method

          2011 corporate bonds     11 Chenming Bond 112031                6 July 2011          6 July 2016            200,000         5.95%     Interest is paid
            of Shandong Chenming                                                                                                                annually. The principal
            Paper Holdings Limited                                                                                                              amount and the last
                                                                                                                                                interest payment will
                                                                                                                                                be paid on the maturity
                                                                                                                                                date.

          2012 corporate bonds     12 Chenming Bond 112144                26 December          26 December            380,000         5.65%     Interest is paid
            of Shandong Chenming                                          2012                 2017                                             annually. The principal
            Paper Holdings Limited                                                                                                              amount and the last
                                                                                                                                                interest payment will
                                                                                                                                                be paid on the maturity
                                                                                                                                                date.
                                                                                                                                                                            16
                                                                                                                                                                            INTERIM
                                                                                                                                                                             REPORT

          Stock exchange on which Shenzhen Stock Exchange
            corporate bonds
            are listed or transferred

          Investor eligibility        Online subscription: Public investors with A share security account opened under China Securities Depository and Clearing Co., Ltd.
            arrangement
                                      Offline subscription: Institutional investors with A share security account opened under China Securities Depository and Clearing
                                      Co., Ltd.

          Interest payment of       There was no payment of interest or redemption during the reporting period. The payment of interest on and redemption of 11
             corporate bonds during Chenming Bond were completed on 6 July 2016. For details, please refer to the Announcement on Redemption, Dividend Payment
             the reporting period   and Delisting of “11 Chenming Bond” for 2016 published by the Company on 30 June 2016.

    2.    Information on bond custodian and credit rating agency
          Bond custodian:

          Name            UBS Securities     Office address        12/F and 15/F,                Contact person Chen Yang            Telephone of    010-5832 8888
                           Co., Ltd.                               Winland International                                             contact
                                                                   Finance Centre,                                                   person
                                                                   7 Financial Street,
                                                                   Xicheng District, Beijing

          Credit rating agency(ies) which conducted rating on corporate bonds during the reporting period:

          Name            China Chengxin Securities Valuation Company Limited                    Office address     8/F, Anji Building, 760 Xizang South Road,
                                                                                                                    Huangpu District, Shanghai




                                                                                                               SHANDONG CHENMING PAPER HOLDINGS LIMITED                       39
          V Material Matters


          XVI. Corporate bonds (Cont’d)
               3.   Use of proceeds from corporate bonds
                    Use of proceeds from corporate           The use of proceeds from issuance of corporate bonds has strictly complied
                      bonds and its implementation           with relevant application and approval procedures. As at the end of the
                                                             reporting period, the proceeds from 11 Chenming Bond and 12 Chenming
                                                             Bond were fully used.

                    Balance as at the end of                 0
                      the year (RMB ’0,000)

                    Operation of special account             Special account for proceeds is used for the deposit of special capital from
                     for proceeds                            bonds.

                    Is the use of proceeds consistent        Yes
                       with the use of proceeds guaranteed
                       under the prospectus, proposed use
                       of proceeds and other agreement?

               4.   Credit rating of corporate bonds
                    The credit rating of 11 Chenming Bond and 12 Chenming Bond as granted by China Chengxin Securities Valuation
                    Company Limited remained at AA+, and the rating for the Company was AA+ (stable outlook). The 2011 corporate bond
                    rating report (2016) and 2012 corporate bond rating report (2016) were published on CNINFO on 27 April 2016.


16             5.   Credit enhancement mechanism, repayment plan and other repayment guarantee measures for
INTERIM
REPORT              corporate bonds
                    There was no change in credit enhancement mechanism, repayment plan and other repayment guarantee measures,
                    which were consistent with relevant commitments as set out in the prospectuses, during the reporting period.

               6.   Convening of meeting for bondholders during the reporting period
                    Not applicable.

               7.   Performance of bond custodian during the reporting period
                    The bond custodian performed its duties in accordance with the agreement during the reporting period.




40        SHANDONG CHENMING PAPER HOLDINGS LIMITED
V Material Matters


XVI. Corporate bonds (Cont’d)
    8.   Major accounting data and financial indicators of the Company as at the end of the reporting period and
         last year (or for the reporting period and the corresponding period last year)
                                                                                                             Unit: RMB ’0,000

                                                                                                          Increase/decrease
                                                                                                                as at the end
                                                                                                      of the reporting period
                                                                                                                as compared
                                                          As at the end of         As at the end of                to the end
         Item                                         the reporting period           the prior year          of the prior year

         Current ratio                                            79.72%                   72.30%                      7.42%
         Gearing ratio                                            77.27%                   77.86%                     -0.59%
         Quick ratio                                              69.94%                   61.59%                      8.35%
                                                                                                          Increase/decrease
                                                                                                                as at the end
                                                                                                      of the reporting period
                                                                                The corresponding               as compared
                                                                                         period of                 to the end
                                                     The reporting period            the prior year          of the prior year

         EBITDA interest coverage ratio                               2.9                     3.24                  -10.49%
         Loans payment ratio                                     100.00%                  100.00%                     0.00%      16
                                                                                                                                 INTERIM
         Interest payment ratio                                  100.00%                  100.00%                     0.00%       REPORT



         Major reason for more than 30% in year-on-year change for the above accounting data and financial indicators

             Applicable √ Not applicable

    9.   Restriction on asset rights as at the end of the reporting period
         Item                                                            Amount Purpose

         Fixed assets                                           4,673,799,362.90 As pledge for bank borrowings
         Intangible assets                                        342,444,168.04 As pledge for bank borrowings


    10. Overdue liabilities
             Applicable √ Not applicable

         The Company did not have any liabilities overdue.




                                                                                  SHANDONG CHENMING PAPER HOLDINGS LIMITED         41
          V Material Matters


          XVI. Corporate bonds (Cont’d)
               11. Interest payment on other bonds, debt and financing instruments during the reporting period
                                                                                                                           Amount of
                    Item                                                                                            interest payment

                    Privately placed bonds                                                                             81,925,000.00
                    Medium-term notes                                                                                  54,010,000.00

                    Total                                                                                            135,935,000.00


               12. Bank credit obtained, its use and repayment of bank loans during the reporting period
                    During the reporting period, the Company obtained bank credit of RMB60,200 million, of which RMB38,700 million was
                    utilised with RMB21,500 million outstanding. The Company repaid bank loans of RMB26,300 million.

               13. Performance of relevant agreements or commitments under the prospectus of corporate bonds during
                   the reporting period
                    Not applicable.

               14. Matters of significance happened during the reporting period
                    Nil.

16
INTERIM        15. Is there any guarantor for corporate bonds?
REPORT

                           Yes √   No




42        SHANDONG CHENMING PAPER HOLDINGS LIMITED
VI Changes in Share Capital and Shareholders


I.   Changes in shares
                                                                                                                                                                     Unit: share

                                                             Opening balance                     Change during the reporting period (+/-)                    Closing balance
                                                                                                                   Shares
                                                                                                               Converted
                                                          Amounts     Percentage   New issue   Bonus issue from reserve            Others   Sub-total     Amounts      Percentage

     I. Restricted shares                                 8,241,219        0.43%                                                 187,981     187,981     8,429,200         0.44%
         1. Shares held by other domestic investors       8,241,219        0.43%                                                 187,981     187,981     8,429,200         0.44%
            Shares held by domestic natural persons       8,241,219        0.43%                                                 187,981     187,981     8,429,200         0.44%
     II. Non-restricted shares                        1,928,164,248       99.57%                                                -187,981    -187,981 1,927,976,267        99.56%
         1. RMB ordinary shares                       1,105,037,237       57.07%                                                -187,981    -187,981 1,104,849,256        57.05%
         2. Domestic listed foreign shares              470,923,511       24.32%                                                                       470,923,511        24.32%
         3. Overseas listed foreign shares              352,203,500       18.19%                                                                       352,203,500        18.19%
     III. Total number of shares                      1,936,405,467      100.00%                                                       0           0 1,936,405,467       100.00%

     The reasons for such changes

     √ Applicable                    Not applicable

     Before the change, the number of restricted shares held by domestic natural persons decreased by 187,981 from 8,241,219
     to 8,429,200, due to the fact that: according to the Practice Guidance for the Company’s Shares Held by the Directors,
     Supervisors and Senior Management of the Listed Companies of Shenzhen Stock Exchange, 25% of RMB shares without
     restriction held by senior management were put under restriction for half a year since the resignation thereof during the
     reporting period.

     Approval of changes in shareholding
                                                                                                                                                                                    16
                                                                                                                                                                                    INTERIM
            Applicable √ Not applicable                                                                                                                                             REPORT


     Transfer of shares arising from changes in shareholding

            Applicable √ Not applicable

     The effects of changes in shareholding on financial indicators such as basic earnings per share, diluted earnings per share and
     net assets per share attributable to shareholders of ordinary shares of the Company for the latest year and the latest period

            Applicable √ Not applicable

     Other information considered necessary by the Company or required by the securities regulatory authorities to be disclosed

            Applicable √ Not applicable

     Changes in the total number of shares and structure of shareholders and the structure of the assets and liabilities of the
     Company

            Applicable √ Not applicable




                                                                                                                       SHANDONG CHENMING PAPER HOLDINGS LIMITED                       43
          VI Changes in Share Capital and Shareholders


          II.   Total number of shareholders and shareholdings
                                                                                                                                                                                                                               Unit: share

                Total number of shareholders of ordinary shares as at the end of the reporting                119,339,        Total number of shareholders of preference shares with restored voting right as at the                          0
                period                                                                                 of which 93,187        end of the reporting period
                                                                                              were holders of A shares,
                                                                                               25,656 were holders of
                                                                                               B shares and 496 were
                                                                                                   holders of H shares

                                                     Shareholdings of shareholders of ordinary shares interested in more than 5% of the shares of the Company or top ten shareholders of ordinary shares
                                                                                                                                                                                                                    Share pledged or locked-up
                                                                                                                                           Number of            Changes
                                                                                                                                          shares held        (increase or
                                                                                                                                           at the end           decrease)        Number of          Number of
                                                                                                                                                of the         during the         restricted     non-restricted
                                                                                          Nature of                 Percentage of           reporting           reporting          ordinary           ordinary        Status of
                Name of shareholders                                                      shareholders               shareholding              period              period       shares held        shares held          shares          Number

                SHOUGUANG CHENMING HOLDINGS COMPANY LIMITED                               State-owned legal                15.13%        293,003,657                   0                   0       293,003,657         Pledged      145,189,000
                                                                                          person
                HKSCC NOMINEES LIMITED                                                    Overseas legal person            13.74%        266,013,900         -25,997,000                   0       266,013,900
                CHENMING HOLDINGS (HONG KONG) LIMITED                                     Overseas legal person             5.74%        111,217,683          39,434,503                   0       111,217,683
                CENTRAL HUIJIN ASSET MANAGEMENT LTD.                                      State-owned legal                 2.07%         40,137,900                   0                   0        40,137,900
                                                                                          person
                HUATAI SECURITIES CO., LTD.                                               Domestic non-state-               1.22%          23,671,737          5,976,969                   0        23,671,737
                                                                                          owned legal person
                AGRICULTURAL BANK OF CHINA - XINHUA SECTOR ROTATION                       Others                            0.55%          10,556,179         10,556,179                   0        10,556,179
16
INTERIM
                  FLEXIBLE-DISPOSITION MIXED-TYPE SECURITIES INVESTMENT FUND
                BOSERA FUNDS-BANK OF CHINA - PING AN LIFE INSURANCE - PING                Others                            0.52%          10,000,000         10,000,000                   0        10,000,000
REPORT
                  AN LIFE INSURANCE ENTRUSTED INVESTMENT
                  NO.1 ASSET MANAGEMENT PLAN
                BBH A/C VANGUARD EMERGING MARKETS STOCK INDEX FUND                        Overseas legal person             0.44%           8,608,238                  0                   0         8,608,238
                JIN Xing                                                                  Domestic nature person            0.41%           7,922,300            -72,700                   0         7,922,300
                CHINA MERCHANTS BANK CO.,LTD - BOSERA SHS EXCELLENT                       Others                            0.36%           7,000,000          7,000,000                   0         7,000,000
                ENTERPRISES HYBRID FUND
                Connected relationship or connected party relationship                    A shareholder, Chenming Holdings (Hong Kong) Limited, which is an overseas legal person, is a wholly-owned subsidiary of a shareholder, Shouguang
                  among the above shareholders                                            Chenming Holdings Company Limited, which is a state-owned legal person. Hence they are persons acting in concert under Administration of Disclosure
                                                                                          of Information on the Change of Shareholdings in Listed Companies Procedures. Save for the above, it is not aware that any other shareholders of tradable
                                                                                          shares are persons acting in concert and is also not aware that any other shareholders of tradable shares are connected with each other.




44        SHANDONG CHENMING PAPER HOLDINGS LIMITED
VI Changes in Share Capital and Shareholders


II.   Total number of shareholders and shareholdings (Cont’d)
                                        Shareholdings of the top ten shareholders of ordinary shares of non-restricted shares

                                                                                                Number of
                                                                                            non-restricted
                                                                                               shares held
                                                                                              as at the end
                                                                                           of the reporting
      Name of shareholders                                                                           period                    Class of shares
                                                                                                                        Class of shares               Number

      SHOUGUANG CHENMING HOLDINGS COMPANY LIMITED                                              293,003,657        RMB ordinary shares             293,003,657
      HKSCC NOMINEES LIMITED                                                                   266,013,900            Overseas listed             266,013,900
                                                                                                                       foreign shares
      CHENMING HOLDINGS (HONG KONG) LIMITED                                                    111,217,683         Domestically listed             26,238,183
                                                                                                                       foreign shares
                                                                                                                      Overseas listed              84,979,500
                                                                                                                       foreign shares
      CENTRAL HUIJIN ASSET MANAGEMENT LTD.                                                      40,137,900        RMB ordinary shares              40,137,900
      HUATAI SECURITIES CO., LTD.                                                               23,671,737        RMB ordinary shares              23,671,737
      AGRICULTURAL BANK OF CHINA - XINHUA SECTOR ROTATION                                       10,556,179        RMB ordinary shares              10,556,179
       FLEXIBLE-DISPOSITION MIXED-TYPE SECURITIES INVESTMENT FUND
      BOSERA FUNDS-BANK OF CHINA PING AN LIFE INSURANCE                                         10,000,000        RMB ordinary shares              10,000,000
       PING AN LIFE INSURANCE ENTRUSTED
       INVESTMENT NO.1 ASSET MANAGEMENT PLAN
                                                                                                                                                                    16
                                                                                                                                                                    INTERIM
      BBH A/C VANGUARD EMERGING MARKETS STOCK INDEX FUND                                         8,608,238         Domestically listed               8,608,238       REPORT

                                                                                                                       foreign shares
      JIN Xing                                                                                   7,922,300         Domestically listed               7,922,300
                                                                                                                       foreign shares
      CHINA MERCHANTS BANK CO.,LTD - BOSERA                                                      7,000,000        RMB ordinary shares                7,000,000
        SHS EXCELLENT ENTERPRISES HYBRID FUND
      Connected relationship or connected party relationship among the top ten        A shareholder, Chenming Holdings (Hong Kong) Limited, which is an
      shareholders of ordinary shares of non-restricted shares, and between the top   overseas legal person, is a wholly-owned subsidiary of a shareholder,
      ten shareholders of ordinary shares of non-restricted shares and the top ten    Shouguang Chenming Holdings Company Limited, which is a state-owned
      shareholders of ordinary shares                                                 legal person. Hence they are persons acting in concert under Administration
                                                                                      of Disclosure of Information on the Change of Shareholdings in Listed
                                                                                      Companies Procedures. Save for the above, it is not aware that any other
                                                                                      shareholders of tradable shares are persons acting in concert and is also
                                                                                      not aware that any other shareholders of tradable shares are connected
                                                                                      with each other.

      Whether an agreed repurchase transaction was entered into during the reporting period by the top 10 shareholders of ordinary
      shares and top 10 shareholders of non-restricted shares of the Company

           Yes √ No

      The top 10 shareholders of ordinary shares and top 10 shareholders of non-restricted shares of the Company did not enter
      any agreed repurchase transaction during the reporting period.




                                                                                                        SHANDONG CHENMING PAPER HOLDINGS LIMITED                      45
          VI Changes in Share Capital and Shareholders


          III. Change of controlling shareholders or beneficial controllers
               The Change of controlling shareholders during the reporting period

                    Applicable √ Not applicable

               There was no change of controlling shareholders of the Company during the reporting period.

               During the reporting period, Chenming Holdings (Hong Kong) Limited acquired additional 13,369,503 B shares and 26,065,000
               H shares of the Company. As at the end of the reporting period, Chenming Holdings (Hong Kong) Limited had 26,238,183 B
               shares and 84,979,500 H shares of the Company, which amounted to 111,217,683 shares, representing a shareholding of
               5.74%.

               As at the end of the reporting period, Shouguang Chenming Holdings Company Limited and its party acting in concert,
               namely Chenming Holdings (Hong Kong) Limited, held 293,003,657 A shares, 26,238,183 B shares and 84,979,500 H shares
               of the Company in aggregate, representing a shareholding of 20.87%.

               Change of beneficial owner during the reporting period

                    Applicable √ Not applicable

               There was no change of beneficial owner of the Company during the reporting period.


          IV. Plan on increase of shareholding proposed or implemented by shareholders of the Company
              and their persons acting in concert during the reporting period
               √ Applicable             Not applicable
16
INTERIM                                                         Number of        Resulting     Number         Resulting Announcement       End of
REPORT
                                                                 shares to     increase in    of shares     increase in        date of   purchase
               Name of shareholder/party acting in concert   be purchased    shareholding    purchased    shareholding       purchase      period

               CHENMING HOLDINGS (HONG KONG) LIMITED                  N/A             N/A    39,434,503         2.04%             N/A        N/A




46        SHANDONG CHENMING PAPER HOLDINGS LIMITED
VII Preference Shares


I.    Issue and listing of preference shares during the reporting period
      √ Applicable              Not applicable

                                                                                         With listing
                                     Issue price              Issue size                 permission                  Information of            Information of
      Method        Issue date      (RMB/share) Coupon rate       (share) Listing date        (share) Delisting date use of proceeds           changes to proceeds

      Private       16 March 2016         100        4.36%    22,500,000 8 April 2016    22,500,000                 http://www.cninfo.com.cn   http://www.cninfo.com.cn


II.   Holders of preference shares and their shareholdings
                                                                                                                                                             Unit: share

      Total number of shareholders of preference shares as at the end of the reporting period                                                                    5
                                More than 5% shareholdings of the preference shares of the Company or top ten holders of preference shares
                                                                                                     Number of
                                                                                                     preference
                                                                                                         shares
                                                                                                         held at        Changes
                                                                                                      the end of           during
                                                                                        Preference the reporting    the reporting
      Name                                      Nature                               shareholding         period           period     Share pledged or locked-up
                                                                                                                                            Status
                                                                                                                                         of shares         Number

      GUOXIN LEASING CO., LTD.                  Domestic non-state-owned                 35.56%           8,000,000                    0                                  0
                                                legal person
      QILU BANK CO., LTD. - QILU BANK
        QUANXIN WEALTH MANAGEMENT
                                                Others                                   26.67%           6,000,000                    0                                  0
                                                                                                                                                                              16
                                                                                                                                                                              INTERIM
        PRODUCT SERIES                                                                                                                                                         REPORT

      LAIWU GUANGYANG INVESTMENT                Domestic non-state-owned                 20.00%           4,500,000                    0                                  0
        CO., LTD.                               legal person
      SHANDONG DONGTAI IMPORT AND               Domestic non-state-owned                  8.89%           2,000,000                    0                                  0
        EXPORT CO., LTD.                        legal person
      SHANDONG TAISHAN STEEL GROUP              Domestic non-state-owned                  8.89%           2,000,000                    0                                  0
        COMPANY LIMITED                         legal person

      Connected relationship or connected party relationship among the top ten holders of preference shares, and between the top
      ten holders of preference shares and the top ten holders of ordinary shares     It is not aware that the above holders of
      preference shares are persons acting in concert and it is also not aware that the above shareholders of preference shares are
      connected with each other.


III. Repurchase or conversion
            Applicable √ Not applicable

      There was no repurchase or conversion during the reporting period.


IV. Resumption and exercise of voting rights
            Applicable √ Not applicable

      There was no resumption and exercise of voting rights conferred by preference shares during the reporting period.


V.    Accounting policy and reasons therefor

      √ Applicable              Not applicable

      Pursuant to requirements of Accounting Standard for Business Enterprises No. 22 – Recognition and Measurement of
      Financial Instruments, Accounting Standard for Business Enterprises No. 37 – Presentation of Financial Instruments and
      Provisions for Differentiation between Financial Instruments and Equity Instruments and Relevant Accounting Treatment, the
      preference shares were accounted for as equity instruments as their terms satisfied requirements for such treatments.




                                                                                                                SHANDONG CHENMING PAPER HOLDINGS LIMITED                        47
          VIII Directors, Supervisors and Senior Management


          I.    Changes in shareholdings of Directors, Supervisors and Senior Management
                    Applicable √ Not applicable

                There was no change in shareholdings of Directors, Supervisors and senior management of the Company during the reporting
                period. Please see the annual report for 2015 for details.


          II.   Changes of Directors, Supervisors and Senior Management of the Company
                √ Applicable      Not applicable

                Name               Position                       Type                            Date           Reason

                Chen Hongguo       Chairman and general manager   Elected                         18 May 2016    Elected upon replacement of the Board
                Yin Tongyuan       Vice-chairman                  Elected                         18 May 2016    Elected upon replacement of the Board
                Li Feng            Director                       Elected                         18 May 2016    Elected upon replacement of the Board
                Geng Guanglin      Director                       Elected                         18 May 2016    Elected upon replacement of the Board
                Hou Huancai        Director                       Retired upon expiry of office   18 May 2016    Retired upon expiry of office
                Zhou Shaohua       Director                       Retired upon expiry of office   18 May 2016    Retired upon expiry of office
                Yang Guihua        Director                       Elected                         18 May 2016    Elected upon replacement of the Board
                Wang Xiaoqun       Director                       Retired upon expiry of office   18 May 2016    Retired upon expiry of office
                Zhang Zhiyuan      Independent Director           Retired upon expiry of office   18 May 2016    Retired upon expiry of office
                Wang Aiguo         Independent Director           Retired upon expiry of office   18 May 2016    Retired upon expiry of office
                Zhang Hong         Director                       Elected                         18 May 2016    Elected upon replacement of the Board
                Pan Ailing         Independent Director           Elected                         18 May 2016    Elected upon replacement of the Board
16
INTERIM
                Gao Junjie         Chairman of Supervisory
                                   Committee
                                                                  Elected                         18 May 2016    Elected upon replacement of the Board
REPORT
                Wang Ju            Supervisor                     Retired upon expiry of office   18 May 2016    Retired upon expiry of office
                Yang Hongqin       Supervisor                     Elected                         18 May 2016    Elected upon replacement of the Board
                Yin Qixiang        Supervisor                     Retired upon expiry of office   18 May 2016    Retired upon expiry of office
                Guo Guangyao       Supervisor                     Retired upon expiry of office   18 May 2016    Retired upon expiry of office
                Chen Hongguo       General Manager                Appointed                       18 May 2016    Appointed
                Li Xueqin          Deputy general manager         Appointed                       18 May 2016    Appointed
                Wang Chunfang      Secretary to the Board and     Appointed                       18 May 2016    Appointed
                                   deputy general manager
                Hu Changqing       Deputy general manager         Appointed                       18 May 2016    Appointed
                Li Zhenzhong       Deputy general manager         Appointed                       18 May 2016    Appointed
                Poon Shiu Cheong   Company secretary and          Appointed                       18 May 2016    Appointed
                                   qualified accountant
                Wang Fengrong      Independent Director           Elected                         18 May 2016    Elected upon replacement of the Board
                Huang Lei          Independent Director           Elected                         18 May 2016    Elected upon replacement of the Board
                Liang Fu           Independent Director           Elected                         18 May 2016    Elected upon replacement of the Board
                Liu Jilu           Supervisor                     Elected                         18 May 2016    Elected upon replacement of the Board
                Zhang Xiaofeng     Supervisor                     Elected                         18 May 2016    Elected upon replacement of the Board
                Sun Yinghua        Supervisor                     Elected                         18 May 2016    Elected upon replacement of the Board
                Yang Weiming       Deputy general manager         Appointed                       18 May 2016    Appointed
                Zhang Qingzhi      Deputy general manager         Appointed                       18 May 2016    Appointed
                Wang Chunfang      Director                       Elected                         18 May 2016    Elected upon replacement of the Board
                Wang Chunfang      Director                       Resigned                        14 June 2016   Resigned due to personal reasons
                Wang Chunfang      Secretary to the Board and     Resigned                        14 June 2016   Resigned due to personal reasons
                                   deputy general manager
                Geng Guanglin      Deputy general manager         Appointed                       18 May 2016    Appointed




48        SHANDONG CHENMING PAPER HOLDINGS LIMITED
VIII Directors, Supervisors and Senior Management


III. Equity interests of Directors, Supervisors and Senior Management under SFO of Hong Kong
    As at 30 June 2016, the interests held by each of the Directors, Supervisors and Chief Executives of the Company in the
    Company and its associated corporations (within the meaning of Part XV of the SFO) as recorded in the register required to be
    kept under section 352 of the SFO, are set out as follows:

                                                                                                                        Number of shares (A shares)
                                                                                                                               held as at the end of
    Name                                       Position                                                                 the reporting period (shares)

    Directors
    Chen Hongguo (Note 1)                      Chairman and General Manager                                                               6,434,527
    Yin Tongyuan                               Executive Director and Vice Chairman                                                       2,423,640
    Li Feng                                    Executive Director                                                                           471,818
    Geng Guanglin                              Executive Director                                                                           437,433
    Supervisor
    Gao Junjie                                 Supervisor                                                                                    39,606

    Associated corporations

                                                                                      Number of shares
                                                                                         held as at the                           Number of shares
                                                                                       beginning of the      Change during        held as at the end
                                                 Name of                               reporting period       the reporting         of the reporting
    Name                     Position            associated corporation                         (shares)        period (+/-)         period (shares)

    Chen Hongguo (Note 2)    Chairman            Shouguang Chenming Holdings               231,000,000                    0             231,000,000
                                                                                                                                                        16
                                                                                                                                                        INTERIM
                                                                                                                                                         REPORT
                                                 Company Limited
    Note 1: Save as the 6,434,527 A Shares personally held, Chen Hongguo was also deemed to be interested in the 429,348 A Shares held by Li Xueqin,
            his spouse.

    Note 2: Chen Hongguo and his spouse, Li Xueqin, collectively held 43% equity interests in Shouguang Henglian Enterprise Investment Co. Ltd. As
            a result, Shouguang Henglian was deemed to be controlled by Chen Hongguo. As such, the 231,000,000 shares of Chenming Holdings
            (approximately 18.65% of the total share capital of Chenming Holdings) held by Shouguang Henglian were also deemed to be held by Chen
            Hongguo.

    Save as disclosed in the above, as at 30 June 2016, none of the Directors, Supervisors or chief executives of the Company
    had any interests or short positions in the shares, underlying shares or debentures of the Company or any of its associated
    corporations which were required to be filed in the register of the Company required to be maintained pursuant to section 352
    of the SFO or which were required to be notified to the Company and the Hong Kong Stock Exchange pursuant to the Model
    Code as contained in Appendix 10 to the Listing Rules.

    As at 30 June 2016, none of each of the Directors, Supervisors or chief executives or their respective spouses or children
    under the age of 18 held or exercised any rights to subscribe for the share capital or debentures of the Company or its
    associated corporations.




                                                                                                    SHANDONG CHENMING PAPER HOLDINGS LIMITED              49
          IX Financial Report


          I.    Auditors’ Report
                Is the interim report audited

                     Yes √ No

                The interim financial report is unaudited.


          II.   Financial Statements
                The unit in the financial statements of the financial report is: RMB

                1.    Consolidated Balance Sheet
                      Prepared by: Shandong Chenming Paper Holdings Limited

                      30 June 2016

                                                                                                                    Unit: RMB

                      Item                                                               Closing balance    Opening balance

                      CURRENT ASSETS:
                       Monetary funds                                                  11,772,868,305.13    8,984,326,016.01
                       Bills receivable                                                 3,759,908,176.21    3,998,782,845.65
                       Accounts receivable                                              3,950,271,213.66    3,951,287,979.32
                       Prepayments                                                      1,569,369,035.86    1,072,990,234.05
                       Other receivables                                                1,573,176,269.30    1,469,573,364.01
16
INTERIM
                       Inventories                                                      5,226,225,533.10    5,210,917,891.42
REPORT                 Non-current assets due within one year                           4,525,169,793.00    2,893,133,653.86
                       Other current assets                                            10,205,027,704.48    7,582,839,356.54

                      Total current assets                                             42,582,016,030.74   35,163,851,340.86

                      NON-CURRENT ASSETS:
                       Available-for-sale financial assets                                109,000,000.00      109,000,000.00
                       Long-term receivables                                           10,682,888,917.02    9,084,087,143.84
                       Long-term equity investments                                        63,288,422.01       70,492,256.38
                       Investment property                                                 15,127,803.85       15,996,931.87
                       Fixed assets                                                    24,982,941,210.61   24,169,725,529.18
                       Construction in progress                                         5,654,059,733.57    5,829,619,258.48
                       Construction materials                                              15,391,351.31       14,662,116.76
                       Intangible assets                                                1,456,335,471.06    1,462,706,060.63
                       Goodwill                                                            20,283,787.17       20,283,787.17
                       Long-term prepaid expenses                                         161,448,142.38      165,686,946.61
                       Deferred income tax assets                                         537,027,243.99      613,229,310.48
                       Other non-current assets                                           348,686,098.88    1,242,358,865.33

                      Total non-current assets                                         44,046,478,181.85   42,797,848,206.73

                      Total assets                                                     86,628,494,212.59   77,961,699,547.59




50        SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report


II.   Financial Statements (Cont’d)
      1.   Consolidated Balance Sheet (Cont’d)

                                                                                                                     Unit: RMB

           Item                                                                         Closing balance      Opening balance

           CURRENT LIABILITIES:
            Short-term borrowings                                                     28,531,704,325.25    24,755,535,672.86
            Bills payable                                                              3,843,491,440.10     3,281,599,412.31
            Accounts payable                                                           2,672,610,340.38     2,942,337,386.57
            Advance receipts                                                             212,382,889.00       180,504,227.01
            Staff remuneration payables                                                  163,713,392.98       205,840,694.03
            Taxes payable                                                                204,353,134.05       194,852,483.80
            Interest payable                                                             230,076,253.71       150,075,698.23
            Dividend payable                                                             580,921,640.10
            Other payables                                                             1,035,468,204.63     1,158,567,353.38
            Non-current liabilities due within one year                                4,286,339,021.25     5,471,286,735.91
            Other current liabilities                                                 11,652,566,715.45    10,293,543,297.00

           Total current liabilities                                                  53,413,627,356.90    48,634,142,961.10

           NON-CURRENT LIABILITIES:
            Long-term borrowings                                                       6,195,047,942.07      5,169,381,063.83
            Bonds payable                                                              3,791,215,868.81      3,788,539,249.59    16
                                                                                                                                 INTERIM
            Long-term payables                                                         1,795,435,500.86        344,000,000.00     REPORT
            Special payables                                                             281,039,716.66        176,983,516.66
            Deferred income                                                            1,463,624,001.97      1,495,104,889.26
            Other non-current liabilities                                                                    1,094,621,421.67

           Total non-current liabilities                                              13,526,363,030.37    12,068,630,141.01

           TOTAL LIABILITIES                                                          66,939,990,387.27    60,702,773,102.11

           OWNERS’ EQUITY:
            Share capital                                                              1,936,405,467.00      1,936,405,467.00
            Other equity instruments                                                   4,821,550,000.00      2,582,800,000.00
            Of which: Preference shares                                                2,238,750,000.00
                       Perpetual bonds                                                 2,582,800,000.00      2,582,800,000.00
            Capital reserves                                                           6,149,150,177.41      6,149,138,276.81
            Other comprehensive income                                                  -499,332,134.40       -345,014,864.26
            Surplus reserves                                                           1,132,116,106.40      1,132,116,106.40
            Retained profit                                                            5,774,292,829.37      5,416,049,598.87

           Total equity attributable to equity holders of the company                 19,314,182,445.78    16,871,494,584.82
             Minority interest                                                           374,321,379.54       387,431,860.66
           Total owners’ equity                                                      19,688,503,825.32    17,258,926,445.48

           TOTAL LIABILITIES AND OWNERS’ EQUITY                                      86,628,494,212.59    77,961,699,547.59


           Legal Representative: Chen Hongguo Financial controller: Dong Lianming Head of the financial department: Li Dong




                                                                                    SHANDONG CHENMING PAPER HOLDINGS LIMITED       51
          IX Financial Report


          II.   Financial Statements (Cont’d)
                2.   Balance sheet of the Company

                                                                                                Unit: RMB

                     Item                                            Closing balance     Opening balance

                     CURRENT ASSETS:
                      Monetary funds                                 7,759,995,769.70    5,700,832,345.61
                      Bills receivable                                 642,494,704.84    1,279,192,805.78
                      Accounts receivable                            3,077,142,500.14    2,054,668,707.47
                      Prepayments                                    1,010,186,691.28      354,158,061.49
                      Interest receivable                                2,350,760.36
                      Dividends receivable                             200,000,000.00      200,000,000.00
                      Other receivables                             25,815,266,155.40   23,168,599,276.40
                      Inventories                                      822,615,802.07      770,515,314.04
                      Non-current assets due within one year           900,000,000.00
                      Other current assets                                                 44,180,954.64

                     Total current assets                           40,230,052,383.79   33,572,147,465.43

                     NON-CURRENT ASSETS:
                      Available-for-sale financial assets               73,000,000.00       73,000,000.00
                      Long-term equity investments                  13,526,913,608.16   13,526,953,706.49
16
INTERIM
                      Investment property                               15,127,803.85       15,996,931.87
REPORT                Fixed assets                                   3,375,035,573.45    3,494,527,564.35
                      Construction in progress                          65,595,314.91       39,945,237.44
                      Construction materials                             1,445,766.52        1,480,399.83
                      Intangible assets                                304,774,755.95      308,890,444.95
                      Deferred income tax assets                       180,340,981.36      146,800,984.93
                      Other non-current assets                                             900,000,000.00

                     Total non-current assets                       17,542,233,804.20   18,507,595,269.86

                     Total assets                                   57,772,286,187.99   52,079,742,735.29

                     CURRENT LIABILITIES:
                      Short-term borrowings                          7,903,828,909.20    7,288,876,600.43
                      Bills payable                                  2,535,000,000.00    1,095,500,000.00
                      Accounts payable                                 925,129,538.66      952,024,758.38
                      Advance receipts                               1,685,736,617.64      735,151,335.79
                      Staff remuneration payables                       65,386,622.05       84,950,702.67
                      Taxes payable                                     37,501,207.92       37,964,445.54
                      Interest payable                                 230,076,253.71      150,075,698.23
                      Dividend payable                                 580,921,640.10
                      Other payables                                 3,753,483,078.96    4,342,643,198.14
                      Non-current liabilities due within one year    3,318,633,543.11    4,339,346,982.33
                      Other current liabilities                     11,652,566,715.45   10,293,543,297.00

                     Total current liabilities                      32,688,264,126.80   29,320,077,018.51




52        SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report


II.   Financial Statements (Cont’d)
      2.   Balance sheet of the Company (Cont’d)

                                                                                  Unit: RMB

           Item                                        Closing balance    Opening balance

           NON-CURRENT LIABILITIES:
            Long-term borrowings                      1,541,012,766.29     1,051,891,417.64
            Bonds payable                             3,791,215,868.81     3,788,539,249.59
            Long-term payables                        1,199,435,500.86
            Deferred income                              58,743,385.05        61,468,322.53
            Other non-current liabilities                                  1,094,621,421.67

           Total non-current liabilities              6,590,407,521.01     5,996,520,411.43

           TOTAL LIABILITIES                         39,278,671,647.81   35,316,597,429.94

           OWNERS’ EQUITY:
            Share capital                             1,936,405,467.00     1,936,405,467.00
            Other equity instruments                  4,821,550,000.00     2,582,800,000.00
            Of which: Preference shares               2,238,750,000.00
                      Perpetual bonds                 2,582,800,000.00     2,582,800,000.00
            Capital reserves                          5,938,852,560.70     5,938,840,660.10
            Surplus reserves                          1,119,926,524.49     1,119,926,524.49    16
            Retained profit                           4,676,879,987.99     5,185,172,653.76    INTERIM
                                                                                                REPORT


           Total owners’ equity                     18,493,614,540.18   16,763,145,305.35

           TOTAL LIABILITIES AND OWNERS’ EQUITY     57,772,286,187.99   52,079,742,735.29




                                                    SHANDONG CHENMING PAPER HOLDINGS LIMITED     53
          IX Financial Report


          II.   Financial Statements (Cont’d)
                3.   Consolidated Income Statement

                                                                                                                                   Unit: RMB

                                                                                                           Amounts for         Amounts for
                     Item                                                                           the reporting period    the prior period

                     I.     Total revenue                                                            10,606,358,733.02     9,718,697,677.76
                            Including: Revenue                                                       10,606,358,733.02     9,718,697,677.76
                     II.    Total operating costs                                                     9,622,587,179.13     9,407,786,957.20
                            Including: Operating costs                                                7,263,967,310.23     7,370,384,661.31
                                        Business taxes and surcharges                                    85,488,437.29        51,233,976.66
                                        Sales expenses                                                  573,734,657.05       551,073,823.71
                                        Administrative expenses                                         694,013,827.38       654,253,969.26
                                        Finance expenses                                                968,343,561.61       745,472,279.11
                                        Loss on impairment of assets                                     37,039,385.57        35,368,247.15
                            Plus:       Gain on change in fair value (“-” denotes loss)               -10,599,543.68        -2,177,906.88
                                        Investment income (“-” denotes loss)                           37,008,429.78        46,632,746.32
                                        Including: Investment income from associates
                                            and joint ventures                                            -7,203,834.37       -2,145,031.45
                                        Foreign exchange gains (“-” denotes loss)
                     III.   Operating profit (“-” denotes loss)                                      1,010,180,439.99     355,365,560.00

16
INTERIM
                            Plus:       Non-operating income
                                        Including: Gain on disposal of non-current assets
                                                                                                         228,908,354.31
                                                                                                           2,416,628.05
                                                                                                                             75,090,038.49
                                                                                                                              7,042,678.94
REPORT
                            Less:       Non-operating expenses                                             6,002,982.36       3,331,029.84
                                        Including: Loss on disposal of non-current assets                  4,043,314.21       2,683,749.34
                     IV.    Total profit (“-” denotes total loss)                                    1,233,085,811.94     427,124,568.65
                            Less:       Income tax expenses                                              307,031,422.46     173,411,302.61
                     V.     Net profit (“-” denotes net loss)                                          926,054,389.48     253,713,266.04
                            Net profit attributable to owners of the Company                             939,164,870.60     276,388,070.51
                            Minority interest                                                            -13,110,481.12     -22,674,804.47
                     VI.    Other comprehensive income after tax, net                                   -154,317,270.14      16,017,289.88
                            Other comprehensive income after tax attributable to
                               owners of the Company, net                                               -154,317,270.14      16,017,289.88
                              (II)  Other comprehensive income that will not be reclassified
                                       to profit and loss in subsequent periods                         -154,317,270.14      16,017,289.88
                                    5. Translation difference of financial statements denominated
                                            in foreign currency                                         -154,317,270.14      16,017,289.88
                     VII.   Total comprehensive income                                                   771,737,119.34     269,730,555.92

                     Total comprehensive income attributable to owners of the Company                   784,847,600.46      292,405,360.39

                     Total comprehensive income attributable to minority interest                        -13,110,481.12      -22,674,804.47

                     VIII. Earnings per share:
                           (I) Basic earnings per share                                                            0.45                0.14
                           (II) Diluted earnings per share                                                         0.45                0.14

                     Legal Representative: Chen Hongguo Financial controller: Dong Lianming Head of the financial department: Li Dong




54        SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report


II.   Financial Statements (Cont’d)
      4.   Income Statement of the Company

                                                                                                         Unit: RMB

                                                                                 Amounts for         Amounts for
           Item                                                           the reporting period    the prior period

           I.  Revenue                                                       3,404,907,928.96    3,168,439,943.39
               Less: Operating costs                                         2,749,395,766.42    2,599,359,718.51
                      Business taxes and surcharges                             13,030,965.17       13,228,944.39
                      Selling expenses                                         128,062,939.31      132,390,470.24
                      Administrative expenses                                  267,555,727.82      247,053,467.37
                      Finance expenses                                         490,569,574.44      655,455,057.16
                      Loss on impairment of assets                               1,356,150.48          613,708.24
               Plus: Gain on change in fair value (“-” denotes loss)
                      Investment income (“-” denotes loss)                  244,172,165.82      409,332,599.58
                      Including: Investment income from associates
                        and joint ventures                                         -40,098.33         -347,400.41
           II. Operating profit (“-” denotes loss)                              -891,028.86      -70,328,822.94
               Plus: Non-operating income                                       40,001,738.10        4,623,094.90
                      Including: Gain on disposal of non-current assets            373,450.11        2,762,502.62
               Less: Non-operating expenses                                         21,731.34        2,075,816.44
                      Including: Loss on disposal of non-current assets
           III. Total profit (“-” denotes total loss)
                                                                                    21,731.34
                                                                                39,088,977.90
                                                                                                     1,922,928.98
                                                                                                   -67,781,544.48
                                                                                                                     16
                                                                                                                     INTERIM
                                                                                                                      REPORT
                Less: Income tax expenses                                      -33,539,996.43      -73,979,233.89
           IV. Net profit (“-” denotes net loss)                              72,628,974.33        6,197,689.41
           V. Other comprehensive income after tax, net

           VI. Total comprehensive income                                       72,628,974.33        6,197,689.41

           VII. Earnings per share:
                (I) Basic earnings per share
                (II) Diluted earnings per share




                                                                          SHANDONG CHENMING PAPER HOLDINGS LIMITED     55
          IX Financial Report


          II.   Financial Statements (Cont’d)
                5.   Consolidated cash flow statement

                                                                                                                        Unit: RMB

                                                                                               Amounts for          Amounts for
                     Item                                                               the reporting period     the prior period

                     I.   Cash flows from operating activities:
                          Cash received from sales of goods and rendering of services    11,293,635,802.59      9,898,058,035.83
                          Tax rebates received                                                3,612,601.13
                          Cash received relating to other operating activities              390,470,872.96       571,126,879.30

                     Subtotal of cash inflows from operating activities                  11,687,719,276.68     10,469,184,915.13

                          Cash paid for goods and services                                 6,247,052,235.36     7,576,299,500.64
                          Cash paid to and for employees                                     486,900,606.26       440,902,131.38
                          Payments of taxes                                                  631,814,661.29       479,492,280.63
                          Cash paid relating to other operating activities                 7,019,461,626.81     4,195,246,637.21

                     Subtotal of cash outflows from operating activities                 14,385,229,129.72     12,691,940,549.86

                     Net cash flows from operating activities                             -2,697,509,853.04    -2,222,755,634.73

                     II. Cash flows from investing activities:
16
INTERIM
                         Cash received from investments                                                          100,000,000.00
REPORT                   Cash received from investment income                                 45,750,000.00
                         Net cash received from disposal of fixed assets,
                           intangible assets and other long-term assets                         213,406.40           111,852.36
                         Cash received relating to other investing activities               104,056,200.00        31,438,021.33

                     Subtotal of cash inflows from investing activities                     150,019,606.40       131,549,873.69

                          Cash paid for purchase of fixed assets, intangible assets
                            and other long-term assets                                      990,227,873.52       947,028,823.98
                          Cash paid on investments                                                               386,000,000.00

                     Subtotal of cash outflows from investing activities                    990,227,873.52      1,333,028,823.98

                     Net cash flows from investing activities                               -840,208,267.12    -1,201,478,950.29




56        SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report


II.   Financial Statements (Cont’d)
      5.   Consolidated cash flow statement (Cont’d)

                                                                                                                      Unit: RMB

                                                                                             Amounts for          Amounts for
           Item                                                                       the reporting period     the prior period

           III. Cash flows from financing activities:
                Cash received from borrowings                                          23,019,156,541.90     17,281,871,535.62
                Cash received relating to other financing activities                   12,132,838,789.75      3,585,600,000.00

           Subtotal of cash inflows from financing activities                          35,151,995,331.65     20,867,471,535.62

              Cash repayments of amounts borrowed                                      19,068,968,880.27     15,175,740,399.14
              Cash paid for dividend and profit distribution or interest payment          786,313,234.84        771,500,046.59
              Cash paid relating to other financing activities                         10,071,692,038.29      1,767,785,037.29

           Subtotal of cash outflows from financing activities                         29,926,974,153.40     17,715,025,483.02

           Net cash flows from financing activities                                      5,225,021,178.25     3,152,446,052.60

           IV. Effect of foreign exchange rate changes on cash and cash equivalents         -7,969,200.70        20,869,712.49
           V. Net increase in cash and cash equivalents                                  1,679,333,857.39      -250,918,819.93
               Plus: Balance of cash and cash equivalents
                 as at the beginning of the period                                       1,888,107,493.76      976,096,861.30     16
                                                                                                                                  INTERIM
                                                                                                                                   REPORT

           VI. Balance of cash and cash equivalents as at the end of the period          3,567,441,351.15      725,178,041.37




                                                                                      SHANDONG CHENMING PAPER HOLDINGS LIMITED      57
          IX Financial Report


          II.   Financial Statements (Cont’d)
                6.   Cash flow statement of the Company

                                                                                                                       Unit: RMB

                                                                                               Amounts for         Amounts for
                     Item                                                               the reporting period    the prior period

                     I.   Cash flows from operating activities:
                          Cash received from sales of goods and rendering of services      3,582,406,689.02    3,565,908,328.69
                          Cash received relating to other operating activities                79,542,569.75       81,122,254.98

                     Subtotal of cash inflows from operating activities                    3,661,949,258.77    3,647,030,583.67

                          Cash paid for goods and services                                 3,315,453,666.09    1,806,037,967.56
                          Cash paid to and for employees                                     202,298,099.22      190,552,619.28
                          Payments of taxes                                                   83,292,921.05       61,089,661.71
                          Cash paid relating to other operating activities                   127,733,680.37       73,119,210.01

                     Subtotal of cash outflows from operating activities                   3,728,778,366.73    2,130,799,458.56

                     Net cash flows from operating activities                                -66,829,107.96    1,516,231,125.11

                     II. Cash flows from investing activities:
                         Cash received from investments                                                         300,000,000.00
16
INTERIM
                         Cash received from return on investments                           245,750,000.00          903,625.62
REPORT                   Net cash received from disposal of fixed assets,
                           intangible assets and other long-term assets                           93,406.40             140.00
                         Cash received relating to other investing activities                                    21,611,333.23

                     Subtotal of cash inflows from investing activities                     245,843,406.40      322,515,098.85

                          Cash paid for purchase of fixed assets, intangible
                            assets and other long-term assets                                 31,377,557.00      50,797,899.17
                          Cash paid on investments                                                              459,143,400.00

                     Subtotal of cash outflows from investing activities                      31,377,557.00     509,941,299.17

                     Net cash flows from investing activities                               214,465,849.40     -187,426,200.32




58        SHANDONG CHENMING PAPER HOLDINGS LIMITED
IX Financial Report


II.   Financial Statements (Cont’d)
      6.   Cash flow statement of the Company (Cont’d)

                                                                                                                      Unit: RMB

                                                                                             Amounts for          Amounts for
           Item                                                                       the reporting period     the prior period

           III. Cash flows from financing activities:
                Cash received from borrowings                                          15,208,998,560.00      5,161,426,356.80
                Cash received relating to other financing activities                   10,733,403,288.89      3,585,600,000.00

           Subtotal of cash inflows from financing activities                          25,942,401,848.89      8,747,026,356.80

              Cash repayments of amounts borrowed                                      14,730,286,609.26      8,803,455,745.75
              Cash paid for dividend and profit distribution or interest payment          322,578,000.95        370,381,029.51
              Cash paid relating to other financing activities                         10,675,743,122.70        883,402,412.60

           Subtotal of cash outflows from financing activities                         25,728,607,732.91     10,057,239,187.86

           Net cash flows from financing activities                                       213,794,115.98     -1,310,212,831.06

           IV. Effect of foreign exchange rate changes on cash and cash equivalents       -15,526,949.47        19,785,229.09
           V. Net increase in cash and cash equivalents                                   345,903,907.95        38,377,322.82
               Plus: Balance of cash and cash equivalents
                  as at the beginning of the period                                         49,438,736.95       40,590,357.33     16
                                                                                                                                  INTERIM
                                                                                                                                   REPORT

           VI. Balance of cash and cash equivalents as at the end of the period           395,342,644.90        78,967,680.15




                                                                                      SHANDONG CHENMING PAPER HOLDINGS LIMITED      59
60
                                                                                                                                                                                                                                 16
                                                                                                                                                                                                                            REPORT
                                                                                                                                                                                                                            INTERIM
                                           II.   Financial Statements (Cont’d)
                                                 7.   Consolidated statement of changes in owners’ equity
                                                      Amounts for the period

                                                                                                                                                                                                                                                                                                                                                                      Unit: RMB

                                                      Item                                                                                                                                                                                  For the reporting period
                                                                                                                                                                                                          Equity attributable to owners of the Company
                                                                                                                                                            Other comprehensive income
                                                                                                                                                  Preference                                                                       Less:           Other equity                                                     General                                                        Total
                                                                                                                           Share capital              shares Perpetual bonds             Others   Capital reserves       treasury shares           instruments         Special reserves   Surplus reserves   risk provisions    Retained profit   Minority interest      owners’ equity
                                                                                                                                                                                                                                                                                                                                                                                           IX Financial Report




                                                      I. Balance as at the end of the prior period                        1,936,405,467.00                      2,582,800,000.00                  6,149,138,276.81                             -345,014,864.26                            1,132,116,106.40                     5,416,049,598.87    387,431,860.66     17,258,926,445.48
                                                           Add: changes in accounting policies
                                                           Corrections of previous errors




SHANDONG CHENMING PAPER HOLDINGS LIMITED
                                                           Mergers of companies under common control
                                                           Others
                                                      II. Balance as at the beginning of the period                       1,936,405,467.00                      2,582,800,000.00                  6,149,138,276.81                             -345,014,864.26                            1,132,116,106.40                     5,416,049,598.87    387,431,860.66     17,258,926,445.48
                                                      III. Changes in the period (“-” denotes decrease)                                    2,238,750,000.00                                            11,900.60                             -154,317,270.14                                                                   358,243,230.50    -13,110,481.12      2,429,577,379.84
                                                           (I) Total comprehensive income                                                                                                                                                      -154,317,270.14                                                                   939,164,870.60    -13,110,481.12        771,737,119.34
                                                           (II) Capital paid in and reduced by owners                                        2,238,750,000.00                                           11,900.60                                                                                                                                                      2,238,761,900.60
                                                                 1. Ordinary shares paid by shareholders                                                                                                11,900.60                                                                                                                                                             11,900.60
                                                                 2. Other equity investment                                                  2,238,750,000.00                                                                                                                                                                                                          2,238,750,000.00
                                                                 3. Payment for shares under owners’ equity
                                                                 4. Others
                                                           (III) Profit distribution                                                                                                                                                                                                                                           -580,921,640.10                          -580,921,640.10
                                                                 1. Transfer to surplus reserves
                                                                 2. Transfer to general risk provision
                                                                 3. Distribution to owners (or shareholders)                                                                                                                                                                                                                   -580,921,640.10                          -580,921,640.10
                                                                 4. Others
                                                           (IV) Transfer of owners’ equity
                                                                 1. Capital (or share capital) created on capital reserve
                                                                 2. Capital (or share capital) created on
                                                                       surplus reserve
                                                                 3. Surplus reserve making up losses
                                                                 4. Others
                                                           (V) Special reserve
                                                                 1. Withdrawal
                                                                 2. Used
                                                           (VI) Others

                                                      IV. Balance as at the end of the period                          1,936,405,467.00      2,238,750,000.00   2,582,800,000.00                  6,149,150,177.41                             -499,332,134.40                            1,132,116,106.40                     5,774,292,829.37    374,321,379.54     19,688,503,825.32
                                           II.   Financial Statements (Cont’d)
                                                 7.   Consolidated statement of changes in owners’ equity (Cont’d)
                                                      Amounts for the prior period

                                                                                                                                                                                                                                                                                                                                                                Unit: RMB

                                                      Item                                                                                                                                                                                For the prior period
                                                                                                                                                                                                      Equity attributable to owners of the Company
                                                                                                                                                          Other equity instruments
                                                                                                                                                                                                                                                    Other
                                                                                                                                             Preference                                                                        Less:        comprehensive                                                      Genera                                                        Total
                                                                                                                                                                                                                                                                                                                                                                                     IX Financial Report




                                                                                                                           Share capital         shares      Perpetual bonds         Others   Capital reserves       treasury shares              income         Special reserves   Surplus reserves   risk provisions    Retained profit   Minority interest      owners’ equity

                                                      I. Balance as at the end of the prior period                        1,936,405,467.00                                                    6,149,136,873.41                                33,763,168.13                         1,132,116,106.40                     4,665,921,686.21    430,724,931.85     14,348,068,233.00
                                                           Add: changes in accounting policies
                                                           Corrections of previous errors
                                                           Mergers of companies under common control
                                                           Others
                                                      II. Balance as at the beginning of the period                       1,936,405,467.00                                                    6,149,136,873.41                                33,763,168.13                         1,132,116,106.40                     4,665,921,686.21    430,724,931.85     14,348,068,233.00
                                                      III. Changes in the period (“-” denotes decrease)                                                                                             1,403.40                                16,017,289.88                                                                  5,291,305.13    -22,674,804.47         -1,364,806.06
                                                           (I) Total comprehensive income                                                                                                                                                     16,017,289.88                                                                276,388,070.51    -22,674,804.47        269,730,555.92
                                                           (II) Capital paid in and reduced by owners                                                                                                 1,403.40                                                                                                                                                           1,403.40
                                                                 1. Ordinary shares paid by shareholders                                                                                              1,403.40
                                                                 2. Other equity investment
                                                                 3. Payment for shares under owners’ equity
                                                                 4. Others
                                                           (III) Profit distribution                                                                                                                                                                                                                                     -271,096,765.38                          -271,096,765.38
                                                                 1. Transfer to surplus reserves
                                                                 2. Transfer to general risk provision
                                                                 3. Distribution to owners (or shareholders)                                                                                                                                                                                                             -271,096,765.38                          -271,096,765.38
                                                                 4. Others
                                                           (IV) Transfer of owners’ equity
                                                                 1. Capital (or share capital) created on capital reserve
                                                                 2. Capital (or share capital) created on
                                                                       surplus reserve
                                                                 3. Surplus reserve making up losses
                                                                 4. Others
                                                           (V) Special reserve
                                                                 1. Withdrawal
                                                                 2. Used
                                                           (VI) Others

                                                      IV. Balance as at the end of the period                          1,936,405,467.00                                                       6,149,138,276.81                                49,780,458.01                         1,132,116,106.40                     4,671,212,991.34    408,050,127.38     14,346,703,426.94




SHANDONG CHENMING PAPER HOLDINGS LIMITED
61
                                                                                                                                                                                                                         REPORT
                                                                                                                                                                                                                        INTERIM
                                                                                                                                                                                                                             16
62
                                                                                                                                                                                                        16
                                                                                                                                                                                                   REPORT
                                                                                                                                                                                                   INTERIM
                                           II.   Financial Statements (Cont’d)
                                                 8.   Statement of changes in owners’ equity of the Company
                                                      Amounts for the period

                                                                                                                                                                                                                                                                                                                 Unit: RMB

                                                      Item                                                                                                                                                   For the reporting period
                                                                                                                                                      Other equity instruments
                                                                                                                                                                                                                                                Other
                                                                                                                                                                                                                             Less:      comprehensive                                                                         Total
                                                                                                                  Share capital   Preference shares         Perpetual bonds      Others   Capital reserves         treasury shares            income    Special reserves   Surplus reserves    Retained profit      owners’ equity
                                                                                                                                                                                                                                                                                                                                      IX Financial Report




                                                      I. Balance as at the end of the prior period             1,936,405,467.00                            2,582,800,000.00               5,938,840,660.10                                                                 1,119,926,524.49   5,185,172,653.76   16,763,145,305.35
                                                           Add: changes in accounting policies
                                                           Corrections of previous errors




SHANDONG CHENMING PAPER HOLDINGS LIMITED
                                                           Others
                                                      II. Balance as at the beginning of the period            1,936,405,467.00                            2,582,800,000.00               5,938,840,660.10                                                                 1,119,926,524.49   5,185,172,653.76   16,763,145,305.35
                                                      III. Changes in the period (“-” denotes decrease)                          2,238,750,000.00                                              11,900.60                                                                                     -508,292,665.77    1,730,469,234.83
                                                           (I) Total comprehensive income                                                                                                                                                                                                        72,628,974.33       72,628,974.33
                                                           (II) Capital paid in and reduced by owners                              2,238,750,000.00                                             11,900.60                                                                                                         2,238,761,900.60
                                                                 1. Ordinary shares paid by shareholders                                                                                        11,900.60                                                                                                                11,900.60
                                                                 2. Other equity investment                                        2,238,750,000.00                                                                                                                                                               2,238,750,000.00
                                                                 3. Payment for shares
                                                                       under owners’ equity
                                                                 4. Others
                                                           (III) Profit distribution                                                                                                                                                                                                          -580,921,640.10      -580,921,640.10
                                                                 1. Transfer to surplus reserves
                                                                 2. Distribution to owners (or shareholders)                                                                                                                                                                                  -580,921,640.10      -580,921,640.10
                                                                 3. Others
                                                           (IV) Transfer of owners’ equity
                                                                 1. Capital (or share capital) created on
                                                                        capital reserve
                                                                 2. Capital (or share capital) created on
                                                                        surplus reserve
                                                                 3. Surplus reserve making up losses
                                                                 4. Others
                                                           (V) Special reserve
                                                                 3. Withdrawal
                                                                 4. Used
                                                           (VI) Others

                                                      IV. Balance as at the end of the period                  1,936,405,467.00    2,238,750,000.00        2,582,800,000.00               5,938,852,560.70                                                                 1,119,926,524.49   4,676,879,987.99   18,493,614,540.18
                                           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                                                                                                                                            For the reporting period
                                                                                                                                               Other equity instruments
                                                                                                                                                                                                                                         Other
                                                                                                                                  Preference                                                                                     comprehensive                                                                         Total
                                                                                                                  Share capital       shares         Perpetual bonds      Others   Capital reserves   Less: treasury shares            income    Special reserves   Surplus reserves    Retained profit      owners’ equity
                                                                                                                                                                                                                                                                                                                               IX Financial Report




                                                      I. Balance as at the end of the prior period             1,936,405,467.00                                                    5,938,839,256.70                                                                 1,119,926,524.49   5,296,499,772.11   14,291,671,020.30
                                                           Add: changes in accounting policies
                                                           Corrections of previous errors
                                                           Others
                                                      II. Balance as at the beginning of the period            1,936,405,467.00                                                    5,938,839,256.70                                                                 1,119,926,524.49   5,296,499,772.11   14,291,671,020.30
                                                      III. Changes in the period (“-” denotes decrease)                                                                                  1,403.40                                                                                     -264,899,075.97     -264,897,672.57
                                                           (I) Total comprehensive income                                                                                                                                                                                                  6,197,689.41        6,197,689.41
                                                           (II) Capital paid in and reduced by owners                                                                                      1,403.40                                                                                                                1,403.40
                                                                 1. Ordinary shares paid by shareholders                                                                                   1,403.40                                                                                                                1,403.40
                                                                 2. Other equity investment
                                                                 3. Payment for shares under owners’ equity
                                                                 4. Others
                                                           (III) Profit distribution                                                                                                                                                                                                   -271,096,765.38      -271,096,765.38
                                                                 1. Transfer to surplus reserves
                                                                 2. Distribution to owners (or shareholders)