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个股公告正文

晨 鸣B:2017年半年度报告(英文版)

日期:2017-08-16附件下载

SHANNGDONG CHEENMINNG PAPPER HOOLDINGGS LIMITED



             INNTERIM REPOORT 20017




                   Auugust 20017
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.

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

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

The Company is exposed to various risk factors such as macro-economic fluctuation, adjustment of state policy and competition in
the industry. Investor should be aware of investment risks. For further details, please refer to the risk exposures and the measures to
be taken to address them as set out in Discussion and Analysis of Operations.

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




                                                                               SHANDONG CHENMING PAPER HOLDINGS LIMITED               1
                                                                                                  INTERIM REPORT 2017
I      Important Notice, Table of Contents and Definitions


Table of Contents

2017 Interim Report

I      Important Notice, Table of Contents and Definitions     1

II     Company Profile and Key Financial Indicators            4

III    Business Overview                                       7

IV     Discussion and Analysis of Operations                  12

V      Material Matters                                       29

VI     Changes in Share Capital and Shareholders              43

VII    Preference Shares                                      47

VIII   Directors, Supervisors and Senior Management           49

IX     Corporate Bonds                                        51

X      Financial Report                                       54

XI     Documents Available for Inspection                    168




2          SHANDONG CHENMING PAPER HOLDINGS LIMITED
           INTERIM REPORT 2017
I      Important Notice, Table of Contents and Definitions


Definitions

Item                                      means   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

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

Jilin Chenming                            means   Jilin Chenming Paper Co., Ltd.

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

Chenming Sales Company                    means   Shandong Chenming Paper Sales Company Limited

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

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

the reporting period                      means   The period from 1 January 2017 to 30 June 2017

the beginning of the year or the period   means   1 January 2017

the end of the interim period or          means   30 June 2017
  the period




                                                                      SHANDONG CHENMING PAPER HOLDINGS LIMITED    3
                                                                                         INTERIM REPORT 2017
II    Company Profile and Key Financial Indicators


I.    Company profile
      Stock abbreviation                                            ,     B          Stock code           000488 and 200488
      Stock abbreviation                                          01,         02     Stock code           140003, 140004
                                                            and       03                                  and 140005
      Stock exchanges on which the shares are listed        Shenzhen Stock Exchange
      Stock abbreviation                                    Chenming Paper          Stock code            01812
      Stock exchanges on which the shares are listed        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               Hong Kong
                            Secretary to the Board             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
      Email address         chenmmingpaper@163.com             chenmmingpaper@163.com           kentpoon_1009@yahoo.com.hk

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 2016 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 2016 Annual Report for details.




4          SHANDONG CHENMING PAPER HOLDINGS LIMITED
           INTERIM REPORT 2017
II   Company Profile and Key Financial Indicators


IV. Major accounting data and financial indicators
     Retrospective adjustment to or restatement of the accounting data for prior years by the Company

          Yes √ No

                                                                                                                Increase/decrease
                                                                                                                            for the
                                                                                                                  reporting period
                                                                                                                   as compared to
                                                                                          The corresponding     the corresponding
                                                                         The reporting             period of             period of
                                                                                period         the prior year        the prior year

     Revenue (RMB)                                                  13,749,235,007.24     10,606,358,733.02                29.63%
     Net profit attributable to shareholders of
       the Company (RMB)                                              1,745,514,838.23       939,164,870.60                85.86%
     Net profit after extraordinary gains or losses attributable
       to shareholders of the Company (RMB)                           1,623,294,558.21        741,811,083.82              118.83%
     Net cash flows from operating activities (RMB)                  -4,471,728,995.24     -2,697,509,853.04              -65.77%
     Basic earnings per share (RMB per share)                                     0.75                  0.45               66.67%
     Diluted earnings per share (RMB per share)                                   0.75                  0.45               66.67%
     Rate of return on net assets on weighted average basis                     7.24%                 5.89%                 1.35%



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

     Total assets (RMB)                                             91,768,113,395.50     82,285,354,532.14                11.52%
     Net assets attributable to shareholders
       of the Company (RMB)                                         22,755,800,238.01     22,218,808,367.43                 2.42%

     Explanation: Net profit attributable to shareholders of the Company does not 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 interest for perpetual
     bonds from 1 January 2017 to 30 June 2017 of RMB76,570,000.00 and the dividend of preference shares paid in March and
     June 2017 of RMB217,377,107.35 are deducted.


V.   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.




                                                                              SHANDONG CHENMING PAPER HOLDINGS LIMITED                5
                                                                                                 INTERIM REPORT 2017
II   Company Profile and Key Financial Indicators


VI. 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 (including write-off
       of asset impairment provision)                                                        344,802.99
     Government grants (except for the government grants closely related to
       the normal operation of the company and granted constantly
       at a fixed amountor quantity in accordance with a certain standard based
       on state policies) accounted for in profit or loss for the current period         139,985,255.40
     Profit or loss arising from external entrusted loans                                 13,312,368.97
     Non-operating gains and losses other than the above items                            12,062,780.06
     Gain or loss from changes in fair value of consumable biological
       assets subsequently measured at fair value                                        -11,009,851.10
     Less: Effect of income tax                                                           31,709,677.73
     Effect of minority interests (after tax)                                                765,398.57

     Total                                                                               122,220,280.02

     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.




6         SHANDONG CHENMING PAPER HOLDINGS LIMITED
          INTERIM REPORT 2017
III Business Overview


I.   Principal operations of the Company during the Reporting Period
     Whether the Company needs to comply with the disclosure requirements of specific industries

     No

     (I)   Principal operations of the Company during the Reporting Period
           The Company is a large and integrated modern conglomerate principally engaged in pulp production, paper making,
           finance and forestry businesses while also involved in mining, energy, logistics, construction materials, hotel operation
           and others. It is also the only listed company with A shares, B shares, H shares and preference shares in issue and the
           first company in the paper making industry having a finance company and a financial leasing company integrated with
           its industrial activities in China. The machine-made paper business and the financial leasing business are main sources
           of revenue and profit of the Company. In the first half of 2017, the Company completed the production of machine-
           made paper of 2.56 million tonnes with sales of 2.44 million tonnes. During the reporting period, there was no significant
           change in the principal operations of the Company.

           1.    Machine-made paper business
                 The Company is a leading player in the paper making industry in China. It has established production bases
                 in Shandong, Guangdong, Hubei, Jiangxi and Jilin with annual pulp and paper production capacity of over
                 10,000,000 tonnes. Currently, it has the largest integrated forestry, pulp and paper project with the most advanced
                 technology in the world and dozens of pulp and paper production lines of international advanced standards.
                 The product mix of the Company has gradually diversified into eight major product series which focus on high
                 and middle end products, including high-end offset paper, coated paper, white paper board, light weight coated
                 paper, household paper, electrostatic copy paper, thermal paper and glassine paper.

                 The Company has scientific research institutions including the national enterprise technology centre, the
                 postdoctoral working station as well as state certified CNAS pulp and paper testing centre and has obtained over
                 150 national patents including 12 patents for invention, with 7 products selected as national new products and 35
                 products filling the gap in China. The Company has obtained 21 Science and Technology Progress Awards above
                 the provincial level and undertaken five national science and technology projects and 26 provincial technological
                 innovation projects. The Company has obtained the ISO9001 quality certification, ISO14001 environmental
                 protection certification and -COC certification (License Code:FSC-C020261), leading among its industry peers.

           2.    Financial leasing business
                 Since its establishment, the Financial Leasing Company, relying on strong capital strength of the Group and
                 leveraging its excellent business project design ability, strong ability in credit integration and outstanding risk
                 control capability while giving full play to the advantages of internationalisation and market-oriented operations,
                 has been seeking the organic combination between industrial capital and financial capital. On the basis of serving
                 the upper- and lower-stream of the paper making industry, it actively provides financing service solutions to large
                 state-owned enterprises, listed companies, government financing platforms, quality private enterprises, new and
                 high-tech enterprises, schools and hospitals, thus greatly promoting the healthy and rapid development of the
                 real economy. The leasing business of the Financial Leasing Company is mainly conducted on a leaseback basis.
                 Recently, the Financial Leasing Company has become a new source of profit growth of the Company with sound
                 momentum for future growth.




                                                                             SHANDONG CHENMING PAPER HOLDINGS LIMITED              7
                                                                                                INTERIM REPORT 2017
III Business Overview


I.   Principal operations of the Company during the Reporting Period (Cont’d)
     (II)    General information of the industries where the Company operated in during the reporting period
             1.   Paper making industry
                  Since 2017, China’s economy extended its development trend at stable pace, and gradually showed steady
                  growth with favourable momentum. The growth in production and consumption in the paper making industry was
                  closely related to the domestic economic development. Benefiting from the continuous stable macroeconomic
                  growth, the development of the paper making industry was going to maintain stable growth in the long run. In
                  recent years, the central government had been introducing various industry policies such as production capacity
                  reduction, the supply-side reform, ten rules regarding water pollution and ten rules regarding air pollution. Different
                  measures such as setting higher emission standards and strictly restricting corporate scale and structure, put
                  stricter restrictions on the enterprises in the paper making industry and forced those enterprises with backward
                  production capacity to actively exit the paper making market.

                  On 5 January 2017, the Ministry of Environmental Protection issued the Interim Provisions for the Administration
                  of Pollutant Discharge License, which mainly focuses on granting permits for pollution treatment facilities, and
                  emission concentration, emission volume and management of pollutants. Pursuant to the Interim Provisions,
                  all enterprises in the thermal power industry and the paper making industry must possess permits for pollutant
                  discharge from 1 July 2017 onwards. More small enterprises may be eliminated due to stricter environmental
                  protection policy. The implementation of the licensing system for pollutant discharge will be favourable for leading
                  enterprises.

                  With the continuous introduction of production capacity reduction, the supply-side reform and other policies,
                  the environmental protection policy had become stricter. The elimination of backward production capacity in the
                  paper making industry progressed smoothly. New production capacity mainly came from large enterprises. It
                  was expected that the industry concentration ratio was going to further increase. Since the second half of 2016,
                  there was a general increase in prices in the paper making industry in China due to the increased costs of, among
                  other things, wood pulp, waste paper, logistics and coal. Product prices rose with a boom in the industry to be
                  prolonged.

                  The improvement in the supply in the industry effectively boosted the dual growth in revenue and profitability of
                  the enterprises in the paper making industry. The downstream demand in the paper making industry continued
                  to grow along with the domestic economic growth. The turning point in the supply and demand structure in the
                  industry gradually developed with a boom in the industry to be prolonged.

             2.   Financial leasing industry
                  The Guiding Opinions on Accelerating the Development of Financial Leasing Industry and the Guiding Opinions on
                  Promoting the Sound Development of Financial Leasing Industry were issued by the State Council in 2015. As the
                  first national policy on promoting the financial leasing industry in China, the above opinions had paved the way for
                  the development of the financial leasing industry in the future.

                  Under the new normal of the economic development, the financial leasing industry in China entered its golden
                  years. According to the Report on the Development of Financial Leasing Industry in China for the First Quarter of
                  2017 jointly issued by the China Leasing Alliance and Tianjin Binhai Financial Leasing Research Institute, there
                  were approximately 7,626 enterprises engaging in financial leasing in China as at the end of March 2017. The
                  outstanding financial leasing contracts amounted to approximately RMB5.54 trillion, representing an increase of
                  3.9% as compared to the end of last year. According to the Research Report on Business Prospects Survey of
                  and Investment Strategies in the China Financial Leasing Industry 2016-2021 issued by ASKCI Consulting Co.,
                  Ltd., the financial leasing industry will grow at a compound annual growth rate of over 20% in the future and it is
                  expected that the output of the industry will amount to RMB20.79 trillion by 2021. The business prospects of the
                  financial leasing industry in China are promising.




8           SHANDONG CHENMING PAPER HOLDINGS LIMITED
            INTERIM REPORT 2017
III Business Overview


II.   Material Changes of Major Assets
      1.    Material Changes of Major Assets
            Major assets      Description

            Equity            The Company made equity investment in Weifang Sime Darby West Port Co., Ltd. and completed the
                              capital increase to Guangdong Dejun Investment Co., Ltd. during the reporting period.
            Fixed assets      There was no major change in fixed assets and the Company reclassified a portion of a few projects
                              during the reporting period.
            Intangible assets The Company transferred the land use rights of the Huanggang pulp and paper project and Haiming
                              Mining from construction in progress to intangible assets for accounting during the reporting period.
            Construction inThe Meilun chemical pulp project, the Huanggang integrated forestry, pulp and paper project and the
            progress          Haiming magnesite mining project were reclassified as planned during the reporting period.

      2.    Major Assets Overseas
                Applicable √ Not applicable


III. 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 2017, the Group’s current ratio was 79.80%. The quick ratio was 68.48%. The gearing ratio was 74.78%. The
      accounts receivable turnover ratio was 511.78% (Accounts receivable turnover ratio = turnover/weighted average accounts
      receivable and net bills*100%). The inventory turnover ratio was 490.71% (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 2017, the total bank borrowings, corporate bonds and short-term commercial paper of the Group were
      RMB41,077 million, RMB3,798 million and RMB10,156 million (As at the end of the prior year: the total bank borrowings,
      corporate bonds, medium-term notes and privately placed bonds and short-term commercial paper of the Group were
      RMB36,155 million, RMB3,795 million, RMB1,098 million and RMB6,603 million, respectively). As at 30 June 2017, the Group
      had monetary funds of RMB12,542 million (As at the end of the prior year: RMB10,110 million) in total (For the breakdown of
      monetary funds, please refer to “Section X. 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 2017, the Group
      had 13,573 employees. The total staff remuneration for the first half of 2017 amounted to RMB520.3379 million (as at the end
      of the prior year, the Group had 12,986 employees. The total staff remuneration for 2016 amounted to RMB808.7321 million).

      Major investment projects of the Company during the second half of 2017 will include Huanggang Chenming’s integrated
      forestry, pulp and paper project, Shouguang City’s 400,000 tonne chemical pulp project, Haicheng Haiming’s magnesite
      mining project, Shouguang’s 510,000 tonne high-end culture paper 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 2017, please refer to “Section X. VII. 57. Details
      of assets with restricted ownership or right of use” in this report.

      As at 30 June 2017, no contingent event was required to be disclosed by the Group.




                                                                               SHANDONG CHENMING PAPER HOLDINGS LIMITED               9
                                                                                                  INTERIM REPORT 2017
III Business Overview


IV. Analysis of Core Competitiveness
     Whether the Company needs to comply with the disclosure requirements of specific industries

     No

     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 pulp production,
     paper making, finance and forestry businesses while also involved in forestry, logistics, construction materials, hotel operation
     and others. It is also the only listed company with A shares, B shares, H shares and preference shares in issue in China and
     the first company 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, being a leading player in the paper making industry in China, has achieved
           annual pulp and paper production capacity of over 10 million tonnes and is capable to compete with international paper
           making enterprises in scale. The large-scale centralised production and operation model has provided the Company
           with obvious economic benefits. The Company also has strong market influence over raw material procurement, product
           pricing and industry policymaking.

     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 food
           packaging paper and high-end white paper board. The product mix of the Company has gradually diversified into five
           major paper types, namely printing paper, packaging paper, office paper, industrial paper and household paper, and
           formed the eight major product series which focus on high and middle end products, including high-end offset paper,
           coated paper, white paper board, light weight coated paper, household paper, electrostatic copy paper, thermal paper
           and glassine 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.    Advantages in technical equipment
           The Company’s overall technical equipment has reached the advanced international level. The major production
           equipment has been imported from internationally renowned manufacturers, including Valmet, Ahlstrom and Metso of
           Finland, Voith of Germany and TBC of the United States. The equipment such as advanced dilution headboxes, top
           wire formers, unirun dryers, on-machine film coaters, non-contact hot air drying and two-sided soft and dense calender
           machines in the world is equipped with advanced technologies including online paper disease monitoring system,
           caliper control system and intelligent quality control system.

           The technical equipment used by the Company generally reflects the characteristics of being technology-intensive and
           the integration of mechanical and electrical in the paper making industry nowadays. The degassing technology, wet
           end chemical technology, intelligent sheet lateral control technology, coating preparation technology, free-jet coating
           technology, multi-nip pressure balanced calender technology and the technical processes independently developed by
           the Company of the pulp systems have all reached the international advanced level.




10        SHANDONG CHENMING PAPER HOLDINGS LIMITED
          INTERIM REPORT 2017
III Business Overview


IV. Analysis of Core Competitiveness (Cont’d)
    4.   Advantages in research and innovation and new product development
         The Company is a high and new-technology enterprise and gives full play to its strong research capability. Supported
         by the national enterprise technology centre and the post-doctoral working station, the Company has established a
         comprehensive intellectual property system and put more and more efforts in technical innovation and scientific research
         and development to develop new products with high technology contents and high added value as well as proprietary
         technologies. Meanwhile, the technology centre of the Company has actively engaged in technical cooperation with
         schools, research institutions and international advanced enterprises. The Company has obtained over 150 national
         patents including 12 patents for invention, with 7 products selected as national new products and 35 products filling the
         gap in China. The Company has obtained 21 Science and Technology Progress Awards above the provincial level and
         undertaken five national science and technology projects and 26 provincial technological innovation projects. The brand
         “Chenming” is recognised as a well-known brand name in China.

    5.   Funding advantages
         The paper making industry is a capital-intensive industry, and funding is one of the most important factors in 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.

    6.   Team advantages
         The key management members and the core personnel of the Company remain stable. In the business development of
         Chenming Paper, an internal corporate culture developed by the stable core staff team favourable to the growth of the
         Company consolidates the management experience specific to the industry, thus resulting in a team advantage blended
         with management and culture. Meanwhile, the Company has attracted experienced professionals with financial, legal,
         financial management backgrounds through its advanced management philosophy and ample room for development.
         The high quality and professional team secures the sustainable development of the Company with a solid supply of
         talents.

    7.   Advantages in environmental governance capacity
         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. The environmental emission indicators of the Company rank high among industry peers. Besides, the
         national policy of eliminating backward production capacity will facilitate the development of the paper making industry
         while the replenishment and replacement of advanced production capacity will bring new blood and momentum into the
         paper making industry, favouring industry concentration to establish a sound industry cycle.




                                                                          SHANDONG CHENMING PAPER HOLDINGS LIMITED             11
                                                                                             INTERIM REPORT 2017
IV Discussion and Analysis of Operations


I.   Overview
     During the reporting period, the Company established and implemented new management concept by adhering to the main
     theme of “achieving growth amid stability” and committed itself to “team building, management enhancement, outstanding
     business performance and good results”. It has completed various works on maintaining stable operation, promoting growth,
     adjusting structure, preventing risk exposures and formulating favourable policies for employees.

     In the first half of 2017, the Company completed the production of machine-made paper of 2.56 million tonnes with sales of
     2.44 million tonnes and achieved revenue of RMB13,749 million, a year-on-year increase of 29.63%. The Company recorded
     operating costs of RMB9,530 million, a year-on-year increase of 25.78%. Total profit and net profit attributable to equity
     holders of the Company were RMB2,079 million and RMB1,746 million respectively, up by 68.60% and 85.86% from the prior
     year. The Company’s total assets amounted to RMB91,768 million. The financial segment experienced stable development
     across businesses with ever improving management systems and effective risk preventions.

     1.    Upgraded corporate management
           The Company performed its tasks on schedule in strict compliance with the plans as formulated by the management
           consulting companies and the information technology companies. Through learning their advanced philosophies and
           methods, together with the help of external experts, corporate management standard has significantly enhanced. The
           Company has enhanced its management at hierarchy level and skill training, thus building a talented employee team
           and improved its comprehensive management capability.

     2.    Operation management
           The Company regulated its market-oriented operations. It has increased the selling prices in a timely manner based
           on the market conditions, and improved efficiency through the measures such adjustment to the product structure,
           investment in products of higher returns, investment in markets of close proximity and turning inefficient entities around.
           The Company controlled the appropriation of funds through the measures such as increase in prepayments, sales on
           contract with customers, and bartering, thus enhancing the quality of operations. The Company made every effort to
           recover overdue amount. It has improved the quality of collateral security to prevent risks.

     3.    Production management
           The Company focused on the improvement of management level for production and operation while ensuring
           stable operation and put greater efforts into efficiency utilisation, research and development innovation as well as
           environmental protection and safety. During the first half of 2017, over 30 types of high value-added products were
           produced, focusing on the development and production of high value-added products including lightweight white paper
           board, coated paper, business card paper, high-end white paper board and food card paper etc. Through optimising
           pulp composition, the Company has lowered the proportion of chemical materials and introduced new raw materials.
           It has promoted and applied new technology, such as strengthening of paper surface, thus enhancing efficiency.
           The Company implemented safety standardisation management and pay attention to environmental protection in
           accordance with national standards and requirements. The Company has set up and closely monitored the safety
           factors for internal control indicators so as to ensure standardised emission.

     4.    Project management
           Phase I of Haiming mining project has commenced the key stage. Huanggang Chenming’s integrated forestry, pulp and
           paper project, 400,000 tonne chemical pulp project and other projects under construction has proceeded strictly on
           schedule.




12        SHANDONG CHENMING PAPER HOLDINGS LIMITED
          INTERIM REPORT 2017
IV Discussion and Analysis of Operations


I.   Overview (Cont’d)
     5.   Financial capital management
          Leveraging professional teams, the Company optimised its business risk management system and set up a customer
          classification evaluation system. Financing and project investments were under centralised management of the Group
          so as to prevent business risk. The Company enhanced the incentive and appraisal mechanism for middle and senior
          management for the financial segment. The Company strengthened the ideological education and comprehensive
          capabilities training for cadres to enhance team cohesion. By virtue of additional investment through the leasing
          company and expansion in the scale of cooperation with the industry peers through the Finance Company, the
          Company engaged in new businesses including industry chain finance to increase benefits.

     6.   Supply chain management
          The establishment of information platform and international tender network had processed on schedule, which fully
          enhance the level of information management for procurement. The Company strengthened the bulk procurement of raw
          materials, established strategic cooperation relationship with quality customers, and reduced procurement costs. The
          Company gave full play to the electronic merchandise exchange centre for pulp and paper products, and established a
          supply chain system integrating warehousing and logistics for pulp and paper products in China. The Company closely
          followed the coordination and payment process and further utilised acceptance payment to facilitate the cooperation
          with electronic commercial draft business.

     7.   Logistics management
          The construction of phase I of the Shouguang Chenming international logistics centre project and the main building of
          the Qingdao innovative industry park project has proceeded on schedule. The Company facilitated the establishment
          of logistics information platform so as to accomplish the integration between business flow, material flow and
          information flow. The information platform integrated logistics resources to build an intelligent logistics system. The
          Company utilised the function of supervision stations, bonded warehouses and other existing facilities to customise
          comprehensive logistics service programs for different corporate customers.




                                                                          SHANDONG CHENMING PAPER HOLDINGS LIMITED            13
                                                                                             INTERIM REPORT 2017
IV Discussion and Analysis of Operations


II.   Analysis of principal operations
      Please see “I. Overview” under “Discussion and Analysis of Operations” for relevant information.

      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                             13,749,235,007.24       10,606,358,733.02      29.63%    Mainly due to the increased sales and
                                                                                                   prices of machine-made paper of the
                                                                                                   Company
      Operating costs                       9,529,854,215.34       7,576,566,708.17      25.78%    Mainly due to the increased sales of
                                                                                                   machine-made paper of the Company.
      Selling and distribution expenses      641,498,275.35          573,734,657.05      11.81%    Mainly due to the increased sales of
                                                                                                   machine-made paper of the Company.
      Administrative expenses                856,354,999.17          694,013,827.38      23.39%    Mainly due to the increased investment
                                                                                                   in research and development of the
                                                                                                   Company.
      Finance expenses                       696,609,279.51          655,744,163.67       6.23%    Mainly due to the increased interest
                                                                                                   expenses.
      Income tax expenses                    331,253,327.08          307,031,422.46       7.89%    Mainly due to the improved profitability
                                                                                                   of the Company.
      Investments in research and            446,835,957.44          305,617,867.77      46.21%    Mainly due to the increased investment
        development                                                                                in research and development of the
                                                                                                   Company for market expansion.
      Net cash flows from                  -4,471,728,995.24      -2,697,509,853.04     -65.77%    Mainly due to the increased use of bills
        operating activities                                                                       and the reduced discounting of bills
                                                                                                   receivable by the Company.
      Net cash flows from                   -363,428,930.29         -840,208,267.12      56.75%    Mainly due to the capital increase to
        investing activities                                                                       Guangdong Dejun and the increased
                                                                                                   investment in Sime Darby West Port by
                                                                                                   the Company during this year.
      Net cash flows from                   5,384,179,679.92       5,225,021,178.25       3.05%
        financing activities
      Net increase in cash and               441,630,376.91        1,679,333,857.39     -73.70%
        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.




14         SHANDONG CHENMING PAPER HOLDINGS LIMITED
           INTERIM REPORT 2017
IV Discussion and Analysis of Operations


II.   Analysis of principal operations (Cont’d)
      Components of principal operations

                                                                                                                                                    Unit: RMB

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

      By industry

      Machine-made paper            12,043,543,738.63   8,629,879,304.81              28.34%                34.84%                 26.33%                  4.83%
      Financial leasing              1,128,076,033.86     561,718,365.09              50.21%                -6.15%                 22.11%                -11.52%

      By products

      Duplex press paper             2,692,685,324.56   1,977,548,541.00              26.56%                14.35%                 9.01%                   3.59%
      Coated paper                   2,588,288,964.39   1,839,035,493.67              28.95%                25.02%                18.74%                   3.76%
      White paper board              2,931,623,712.21   1,988,207,004.18              32.18%               176.51%               144.17%                   8.98%
      Financial leasing              1,128,076,033.86     561,718,365.09              50.21%                -6.15%                22.11%                 -11.52%

      By geographical segment

      Mainland China                11,987,670,442.70   8,094,619,730.35              32.48%                33.58%                 30.97%                  1.35%
      Other countries and regions    1,575,473,391.99   1,373,436,417.75              12.82%                 1.19%                  0.26%                  0.81%



III. Analysis of non-principal operations
            Applicable √ Not applicable




                                                                                       SHANDONG CHENMING PAPER HOLDINGS LIMITED                                 15
                                                                                                          INTERIM REPORT 2017
IV Discussion and Analysis of Operations


IV. Assets and liabilities
     1.    Material changes of asset items
                                                                                                                                            Unit: RMB

                                                                                   As at the end of the
                                   As at the end of the reporting period   corresponding period of the prior year
                                                                    As a                                    As a
                                                          percentage of                          percentage of Percentage   Description of
                                              Amount        total assets             Amount         total assets   change   major changes

           Monetary funds          12,541,497,475.48            13.67%      11,772,868,305.13        13.59%        0.08%    Mainly due to increased
                                                                                                                            sales revenue.
           Accounts receivable      3,767,714,992.67             4.11%       3,950,271,213.66          4.56%      -0.45%
           Inventories              6,057,467,324.08             6.60%       5,226,225,533.10          6.03%       0.57%
           Long-term equity           169,207,699.57             0.18%          63,288,422.01          0.07%       0.11%    M a i nl y th e n e w e qu i ty
             investments                                                                                                    investment in Sime Darby
                                                                                                                            West Port.
           Fixed assets            28,536,783,322.01            31.10%      24,982,941,210.61        28.84%        2.26%    Mainly the reclassification
                                                                                                                            of the 600,000-tonne liquid
                                                                                                                            packaging paper project in
                                                                                                                            Zhanjiang.
           Construction             5,054,138,263.16             5.51%       5,654,059,733.57          6.53%      -1.02%
             in progress
           Short-term              31,686,575,360.39            34.53%      28,531,704,325.25        32.94%        1.59%    Mainly due to the greater
             borrowings                                                                                                     demand for short-term
                                                                                                                            working capital as a result
                                                                                                                            of the increase of the
                                                                                                                            production scale of the
                                                                                                                            Company.
           Long-term borrowings     7,786,639,310.56             8.49%       6,195,047,942.07         7.15%        1.34%
           Long-term receivables    9,573,697,226.65            10.43%      10,682,888,917.02        12.33%       -1.90%    Mainly due to the increased
                                                                                                                            investment in the leasing
                                                                                                                            business.




16        SHANDONG CHENMING PAPER HOLDINGS LIMITED
          INTERIM REPORT 2017
IV Discussion and Analysis of Operations


IV. Assets and liabilities (Cont’d)
     2.   Assets and liabilities measured at fair value
          √     Applicable              Not applicable

                                                                                                                                                                     Unit: RMB

                                                                 Profit or loss
                                                                  from change              Cumulative         Impairment
                                                                    in fair value   fair value change           provided          Purchases     Disposal during
          Item                            Opening balance    during the period      charged to equity   during the period   during the period        the period   Closing balance

          Financial assets
          Consumable biological assets    1,633,513,994.28     -11,009,851.10         109,464,989.54                           77,048,263.25      6,911,761.20    1,692,640,645.23
          Total                           1,633,513,994.28     -11,009,851.10         109,464,989.54                           77,048,263.25      6,911,761.20    1,692,640,645.23

          Financial liabilities                       0.00                                                                                                                    0.00

          Whether there were any material changes on the measurement attributes of major assets of the Company during the
          reporting period

                 Yes √           No

     3.   Restriction on asset rights as at the end of the reporting period
                                                                Carrying amount as at
          Item                                                   the end of the period                  Reasons for such restriction

          Monetary funds                                                10,120,006,052.96               As deposits for bank acceptance bills, letters of credit
                                                                                                        and bank borrowings, and deposit reserves
          Bills receivable                                                1,259,355,685.71              As collateral for short-term borrowings, bills payable,
                                                                                                        letters of guarantee and letters of credit
          Fixed assets                                                    4,458,390,058.49              As collateral for bank borrowings and long-term
                                                                                                        payables
          Intangible assets                                                  427,899,004.31             As collateral for bank borrowings and long-term
                                                                                                        payables

          Total                                                         16,265,650,801.47


V.   Analysis of Investments
     1.   Overview
          √ Applicable                  Not applicable

                   Investments
                     during the                                              Investments during
                      reporting                                               the corresponding
                   period (RMB)                                        period of prior year (RMB)                                                                     Change

               6,933,152,584.60                                                      1,352,627,240.09                                                                412.57%




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                                                                                                                           INTERIM REPORT 2017
                 18
                                           V.   Analysis of Investments (Cont’d)
                                                2.   Material equity investments during the reporting period
                                                     √      Applicable                       Not applicable

                                                                                                                                                                                                                                                                                                                                              Unit: RMB

                                                                                                                                                                                                                                                                                                  Profit or loss
                                                                                                                                                                                                                                                               Progress as                                 from    Lawsuit is Date of
                                                                                                                                         Form of                   Investment                                                    Period of                     at the date of                       investment     involved disclosure        Disclosure
                                                     Name of investees                 Principal activities                              investment                   amount Shareholding   Source of fund     Partner(s)        investment   Product type     balance sheet    Estimated return for the period    or not     (if any)        index (if any)




INTERIM REPORT 2017
                                                     Weifang Sime Darby West Port      Engaging in port construction, management and Acquisition               106,110,000.00     50.00%    Self-owned funds   Sime Darby        Long-term    Port             Completed        Not applicable      -686,692.41    No        Not applicable   Not applicable
                                                      Co., Ltd.                        operation                                                                                                               Overseas
                                                                                                                                                                                                               (HK) Limited
                                                     Shandong Chenming Commercial      Relevant consultation services for domestic Newly established 200,000,000.00              100.00%    Self-owned funds   Wholly-owned      Long-term    Commercial       Completed        Not applicable                0    No        Not applicable   Not applicable
                                                       Factoring Co., Ltd.             factoring, export factoring and commercial factoring,                                                                   subsidiary                     factoring
                                                                                       corporate management consultation, and asset
                                                                                       valuation services.
                                                     Zhanjiang Chenming Pulp & Paper   Production and sale of electrostatic paper, duplex Capital increase 2,000,000,000.00      100.00%    Self-owned funds   Wholly-owned      Long-term    Electrostatic   Completed         Not applicable   781,964,875.73    No        17 November      http://www.cninfo.




SHANDONG CHENMING PAPER HOLDINGS LIMITED
                                                       Co., Ltd.                       press paper and white paper board; and production                                                                       subsidiary                     paper, duplex                                                                  2016             com.cn/
                                                                                       and sale of pulp                                                                                                                                       press paper
                                                                                                                                                                                                                                              and white paper
                                                                                                                                                                                                                                              board, etc.
                                                     Qingdao Chenming Pulp and         Conducting spot transactions, trading of and Newly established            30,000,000.00   100.00%    Self-owned funds   Wholly-owned      Long-term    Paper product Not completed       Not applicable       -17,827.50    No        Not applicable   Not applicable
                                                                                                                                                                                                                                                                                                                                                                   IV Discussion and Analysis of Operations




                                                       Paper Electronic Commodity      electronic commerce of pulp, finished paper                                                                             subsidiary                     trading
                                                       Exchange Co., Ltd.              products, paper-making auxiliary materials, etc., and
                                                                                       online sale of pulp, paper, paper product, etc.
                                                     Qingdao Chenming Nonghai          Financial leasing business                            Capital increase 3,097,855,218.76   100.00%    Self-owned funds   Wholly-owned      Long-term    Financial leasing Completed       Not applicable    83,448,558.86    No        31 March         http://www.cninfo.
                                                       Financial Leasing Co., Ltd.                                                                                                                             subsidiary                                                                                                    2016             com.cn/
                                                     Guangdong Dejun Investment Property leasing, sale of chemical materials, etc.       Capital increase      500,000,000.00     50.00%    Self-owned funds   Shanghai          Long-term    Project          Completed        Not applicable             0.00    No        Not applicable   Not applicable
                                                     Management Co., Ltd.                                                                                                                                      Zhongneng                      investment
                                                                                                                                                                                                               Enterprise
                                                                                                                                                                                                               Development
                                                                                                                                                                                                               (Group) Co.,Ltd

                                                     Xuchang Chenming Paper Co., Ltd. Packaging and production of pulp, finished paper Newly established        60,000,000.00     60.00%    Self-owned funds   Jiulong Dawei Long-term        Machine-made     Completed        Not applicable             0.00    No        Not applicable   Not applicable
                                                                                      product, paper product; production and supply of                                                                         Holdings Limited               paper
                                                                                      thermoelectricity; sewage treatment and re-use;
                                                                                      recycling of renewable materials, etc.

                                                     Total                                                                                                    5,993,965,218.76                                                                                                                   864,708,914.68
IV Discussion and Analysis of Operations


V.   Analysis of Investments (Cont’d)
     3.   Material non-equity investments during the reporting period
          √ Applicable                            Not applicable

                                                                                                                                                                                                                 Unit: RMB

                                                                                                                                                              Accumulated     Reasons
                                                                Industry in                          Accumulated                                                   realised   for failure
                                                   Fixed        which the           Investment      actual amount                                              return as of   in meeting
                                                   assets       investment              amount             invested                                             the end of    scheduled        Date of
                                     Form of       investment   project              during the    as of the end of                                Estimated the reporting    progress and disclosure            Disclosure index
          Project name               investment    or not       operates       reporting period   reporting period    Source of fund    Progress       return        period   estimated return (if any)          (if any)

          Forestry paper integration Self-         Yes          Pulp            392,867,848.19    2,067,200,502.66    Self-raised and    50.95%                       0.00    Not yet         2 August 2013      http://www.cninfo.
             project of Huanggang constructed                   production                                            borrowings                                              completed                          com.cn/
             Chenming
          Magnesite mining           Self-         Yes          Mining          238,729,641.31     881,174,407.27     Self-raised and    73.43%                       0.00    Not yet         25 October 2012    http://www.cninfo.
                                     constructed                                                                      borrowings                                              completed                          com.cn/
          Integrated terminal        Self-         Yes          Terminal         48,662,686.07     111,571,288.60     Self-raised and    31.79%                       0.00    Not yet         19 December 2015   http://www.cninfo.
             project of Huanggang constructed                                                                         borrowings                                              completed                          com.cn/
             Chenming
          510,000 tonne high-end Self-             Yes          Paper making    172,927,190.27     292,160,129.83     Self-raised and     7.77%                       0.00    Not yet         18 February 2017   http://www.cninfo.
             cultural paper project constructed                                                                       borrowings                                              completed                          com.cn/

          Total                                                                 853,187,365.84    3,352,106,328.36                                                    0.00



     4.   Financial asset investment
          (1)         Security investments

                               Applicable √ Not applicable

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

          (2)         Derivatives investments

                               Applicable √ Not applicable

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




                                                                                                                                    SHANDONG CHENMING PAPER HOLDINGS LIMITED                                                        19
                                                                                                                                                       INTERIM REPORT 2017
IV Discussion and Analysis of Operations


VI. Disposal of material assets and equity interest
     1.    Disposal of material assets
           √ Applicable                               Not applicable

                                                                                         Net profit
                                                                                    contribution to                                Ratio of
                                                                                     the Company                                  net profit
                                                                                          from the                          contribution to                               Relationship                                   Carried out on
                                                                                      beginning of                           the Company                                  with               Relevant                    schedule or
                                                                                        the period    Effect of                 of disposal                 Related       counterparty       asset title   Relevant      not, if not,
                                                                       Transaction        up to the   disposal on             of asset over Pricing basis   party         (ies) (in case     fully         debt fully    the reasons and
                                         Asset           Disposa      consideration disposal date     the Company           total net profit of disposal    transaction   of related party   transferred   transferred   measures taken                 Disclosure
           Counterparty(ies)             disposed of     date           (RMB’0,000) (RMB’0,000)     (note 3)                          (%) of asset        or not        transaction)       or not        or not        by the Company Disclosure date index

           Jinrun Fangzhou Science and   Property 2601- 24 February          8,200           5,832 The disposal of                 3.34% Determined by No                 Not applicable Yes               Yes           Not applicable   1 March 2017 http://www.
             Technology Co., Ltd.        2617, Block A, 2017                                       asset is beneficial                   parties involved                                                                                              cninfo.com.cn
                                         Cyber Tower, No.                                          for the revitalisation                through negotiation
                                         2 Zhongguancun                                            of the Company’s                     after considering
                                         South Street,                                             assets, optimisation                  various factors,
                                         Haidian District,                                         of resources                          including the basic
                                         Beijing                                                   allocation and                        condition of subject
                                                                                                   enhancement of                        project, transaction
                                                                                                   fund utilisation                      price of nearby
                                                                                                   efficiency. Relevant                  property and other
                                                                                                   income has been                       factors.
                                                                                                   accounted for profit
                                                                                                   for the period,
                                                                                                   which can boost
                                                                                                   the profitability for
                                                                                                   2017.


     2.    Disposal of material equity interest
                     Applicable √ Not applicable




20        SHANDONG CHENMING PAPER HOLDINGS LIMITED
          INTERIM REPORT 2017
IV Discussion and Analysis of Operations


VII. Analysis of major subsidiaries and investees
    √ Applicable                         Not applicable

    Major subsidiary and investees accounting for over 10% of the net profit of the Company

                                                                                                                                                                                                      Unit: RMB

                                     Type of
    Name of company                  company      Principal activities        Industry              Registered capital        Total assets        Net assets           Revenue     Operating profit        Net profit

    Zhanjiang Chenming Pulp          Subsidiary   Production and sale of      Pulp production and    5,550,000,000.00    20,859,299,793.31   6,771,316,688.25   4,288,215,056.14   901,993,556.87     781,964,875.73
      & Paper Co., Ltd.                           pulp, duplex press paper,   paper making
                                                  Electrostatic paper
    Shandong Chenming Financial      Subsidiary   Paper product trading       Financial leasing      5,872,000,000.00    33,708,262,933.41   7,741,203,932.02   1,165,321,471.93   281,784,333.08     247,908,995.76
      Leasing Co., Ltd.                           and financial leasing
    Shouguang Meilun Paper Co., Ltd. Subsidiary   Production and              Pulp production and    3,000,000,000.00    12,305,369,523.97   4,510,466,563.76   2,348,108,370.62   116,194,087.58     116,303,935.47
                                                  sale of coated paper        paper making
                                                  and household paper


    Acquisition and disposal of subsidiaries during the reporting period

    √ Applicable                         Not applicable

                                                                                     Methods to acquire and
                                                                                     dispose of subsidiaries during                            Impact on overall production
    Name of companies                                                                the reporting period                                      and operation and results

    Jilin Chenming Machinery Manufacturing                                           Equity transfer                                           Impact of RMB408,200 on net profit.
       Co., Limited
    Qingdao Chenming Pulp and Paper                                                  Newly established                                         Net profit for January to
       Electronic Commodity Exchange                                                                                                             June 2017 was RMB-17,800.
       Co., Ltd.
    Xuchang Chenming Paper Co., Ltd.                                                 Newly established                                         Did not commence operation from
                                                                                                                                                 January to June 2017.
    Shandong Chenming Commercial                                                     Newly established                                         Did not commence operation from
      Factoring Co., Ltd.                                                                                                                        January to June 2017.

    Particulars of major subsidiaries and investees

    (1)        Zhanjiang Chenming’s major products, including high-end duplex press paper and electrostatic paper, had higher
               average selling prices, higher gross profit margin and better returns.

    (2)        Financial Leasing Company made steady progress and delivered better profit.

    (3)        With the higher prices of machine-made paper and the gains from sale of electricity, Shouguang Meilun recorded better
               profit.




                                                                                                                               SHANDONG CHENMING PAPER HOLDINGS LIMITED                                           21
                                                                                                                                                  INTERIM REPORT 2017
IV Discussion and Analysis of Operations


VIII. Structured entities controlled by the Company
           Applicable √ Not applicable


IX. Estimate of the operating results from January to September 2017
     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


X.   Outlook on the future development of the Company
     (I)    Competition overview and development trend of the industry
            Paper making industry

            The growth in production and consumption in the paper making industry is closely related to the domestic economic
            development. Benefiting from the continuous stable macroeconomic growth, the development of the paper making
            industry will maintain stable growth in the long run. In recently years, the central government has been introducing
            various industry policies such as production capacity reduction, the supply-side reform, ten rules regarding water
            pollution and ten rules regarding air pollution. Different measures such as setting higher emission standards and
            strictly restricting corporate scale and structure put stricter restrictions on the enterprises in the paper making industry
            and force those enterprises with backward production capacity to actively exit the paper making market. With the
            continuous introduction of production capacity reduction, the supply-side reform and other policies, the environmental
            protection policy has becoming stricter. The elimination of backward production capacity in the paper making industry
            has been progressing smoothly. New production capacity mainly comes from large enterprises. It is expected that the
            industry concentration ratio will further increase. The improvement in the supply in the industry has effectively boosted
            the dual growth in revenue and profitability of the enterprises in the paper making industry. The downstream demand
            in the paper making industry will continue to grow along with the domestic economic growth. The turning point in the
            supply and demand structure in the industry has gradually developed with a boom in the industry to be prolonged.

            Financial leasing industry

            As the financial reforms advance further, the integration of industrial capital and financial capital gradually accelerate
            in China. The financial leasing industry as a favoured supplementary corporate financing channel and an effective tool
            to use assets at hand embraces continuously mounting market demand. Since the implementation of the “Thirteenth
            Five Year Plan”, the accelerated urbanisation and industrialisation in China, the change in driver of economic growth,
            upgrade of traditional industries, development of emerging industries, and continuous infrastructure construction require
            substantial investment in fixed assets. China will become the largest leasing market in the world. According to the
            Research Report on Business Prospects Survey of and Investment Strategies in the China Financial Leasing Industry
            2016-2021 issued by ASKCI Consulting Co. LTD, the financial leasing industry will grow at a compound annual growth
            rate of over 20% in the future and it is expected that the outstanding leasing contracts of the financial leasing industry in
            China will amount to RMB20.79 trillion by 2021.

            In view of the establishment and optimisation of trading rules, accounting standards, industry regulation and tax policies
            for the financial leasing industry, the financial leasing in China has been evolving into modern leasing at high speed.
            In the future, the size of the financial leasing business in China will expand significantly. Financial leasing will become
            an important alternative of financing for enterprises, especially small and medium-sized enterprises. The business
            prospects of the financial leasing industry in China are promising.




22         SHANDONG CHENMING PAPER HOLDINGS LIMITED
           INTERIM REPORT 2017
IV Discussion and Analysis of Operations


X.   Outlook on the future development of the Company (Cont’d)
     (II)   Development strategy
            Looking forward, the Company will adhere to the principal of emphasising 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 achieve
            taxable profit over RMB10 billion and strive to become one of the world-class companies with the highest growth rate
            and hundreds of billions in value during the “Thirteenth Five Year Plan” period.

     (III) Operation plans for the second half of 2017
            In the second half of 2017, the main goal of the Company is still adherence to the main theme of achieving growth
            amid stability and the guiding principal of work of “team building, management enhancement, outstanding business
            performance and good results”. A new management philosophy will be firmly established and consistently practised.
            The Company will commit itself to, among other things, operating steadily, boosting growth, adjusting the structure,
            preventing risks and benefiting the employees. The major measures are as follows:

            1.    Determined to upgrade corporate management

                  The Company will enhance its corporate management level with the help of external experts. The Company
                  commits itself to performing its tasks up to standard and on schedule in strict compliance with the plans as
                  formulated by the management consulting companies and the information technology companies. The Company
                  will work together with external experts to learn their advanced philosophies and methods.

                  The Company will focus on team building to enhance its comprehensive management capability. The hierarchical
                  management will improve to make the management at each hierarchy level function and to establish cadres with
                  designated duties and full of energy. Staff teams will excel themselves during skill training. Hierarchical training
                  will be given in terms of, among other things, ideology, morals, business skills, theory and knowledge.

            2.    Determined to strengthen market-oriented operations in terms of operations management

                  The Company will strengthen its market-oriented operations. It will increase the selling prices in a timely manner
                  based on the actual market conditions, and increase its revenue through the measures such adjustment to
                  the product structure, investment in products of higher returns, investment in markets of close proximity and
                  turning inefficient entities around. The Company will control the appropriation of funds through the measures
                  such as increase in prepayments, sales on contract with customers, and bartering, thus enhancing the quality of
                  operations.

                  The Company will commit itself to working together with the management consulting companies and the
                  information technology companies. The Company will enhance its sales management level by well defining job
                  duties based on the sales structure, formulating standard procedures, and paying attention to key points through
                  full mechanical operation.

                  The Company will make every effort to recover the amount past due with a view to the collection of all past due
                  accounts. The Company will improve the quality of collateral security to prevent risks.




                                                                              SHANDONG CHENMING PAPER HOLDINGS LIMITED             23
                                                                                                 INTERIM REPORT 2017
IV Discussion and Analysis of Operations


X.   Outlook on the future development of the Company (Cont’d)
     (III) Operation plans for the second half of 2017 (Cont’d)
          3.   Determined to promote innovation with higher efficiency in terms of production management

               The Company will focus on the improvement of management level for production and operation while ensuring
               stable operation and put more efforts into efficiency utilisation, research and development innovation as well
               as environmental protection and safety. The Company will motivate the employees through appraisals at levels
               and attach great importance to training programmes for staff at entry level. The Company will cooperate with
               information technology companies to facilitate early warning and examination through mechanical operation
               during production. The Company will introduce high-end technicians to improve the research and development
               capabilities of the teams. The Company will encourage technology innovation and apply for 20 national patents.
               The Company will adjust the product mix and focus on the research and development as well as marketing
               of unbleached household paper, anti-counterfeiting white paper board, cigarette card board and other high
               value-added products. The Company will introduce new types of raw materials and promote the application of
               technologies including paper surface enhancement. The Company will be strict with product quality and work on
               increases in prices and benefits in sales. The Company will implement safety standardisation management and
               pay attention to environmental protection in accordance with national standards and requirements. The Company
               will set up and closely monitor the safety factors for internal control indicators so as to ensure standardised
               emission.

          4.   Determined to maintain quality and be on track in terms of project management

               The Company will make sure the phase I of Haiming mining project to commence production on schedule. The
               Company will also pay close attention to Huanggang Chenming’s integrated forestry and pulp project, Shouguang
               Chenming’s chemical pulp project and other projects under construction to ensure such projects will proceed on
               schedule.

          5.   Determined to achieve stable growth in terms of financial capital management

               The Company will regard risk management as the most important task for financial capital management.
               Leveraging professional teams, the Company will optimise its business risk management system and set up a
               customer classification evaluation system. Financing and project investment will be under centralised management
               of the Group so as to prevent business risk.

               The Company will proceed with capital financing to reduce its gearing ratio and optimise the structure of assets
               and liabilities. The Company will also proceed with direct financing for the medium to long term so as to prevent
               liquidity risk.

               The Company will enhance the incentive and appraisal mechanism for middle and senior management for the
               financial segment. The Company will strengthen the ideological education and comprehensive capabilities training
               for cadres to enhance team cohesion. By virtue of additional investment through the leasing company and
               expansion in the scale of cooperation with the industry peers through the Finance Company, the Company will
               engage in new businesses including industry chain finance to increase benefits.

          6.   Determined to grow revenue from trading in terms of supply chain management

               Cooperating with management consulting companies and professional information technology companies,
               the Company will strive to the establishment of information platform and international tender network so as to
               enhance the level of information management for procurement. The Company will place great emphasis on bulk
               procurement of raw materials and establish strategic cooperation relationship with quality customers while putting
               more efforts into market analysis and improving analysis and judgement capabilities for market conditions so as
               to reduce procurement costs. The Company will give full play to the electronic merchandise exchange centre for
               pulp and paper products and establish a supply chain system integrating warehousing and logistics for pulp and
               paper products in China. The Company will expand sales channels in the market to improve trading volume. The
               Company will closely follow the coordination and payment process and further utilise acceptance payment to
               facilitate the cooperation with electronic commercial draft business.



24       SHANDONG CHENMING PAPER HOLDINGS LIMITED
         INTERIM REPORT 2017
IV Discussion and Analysis of Operations


X.   Outlook on the future development of the Company (Cont’d)
     (III) Operation plans for the second half of 2017 (Cont’d)
          7.    Determined to consolidate resources in terms of logistics management

                The Company will rationalise its organisation structure and introduce logistics professionals to facilitate the greater
                reforms of the logistics of the Group. The Company will ensure the timely completion of phase I of the Shouguang
                Chenming international logistics centre project and the main building of the Qingdao innovative industry park
                project. The Company will facilitate the establishment of logistics information platform so as to accomplish the
                integration between business flow, material flow and information flow. The information platform will integrate
                logistics resources to build an intelligent logistics system. The Company will utilise the function of supervision
                stations, bonded warehouses and other existing facilities to customise comprehensive logistics service programs
                for different corporate customers.

          8.    Caring for employees with more and more employee benefits

                The Company will rationalise the salary increment mechanism to improve staff’s income in real terms so as to
                make sure the salary level of its staff is relatively higher than those of its local counterparts and industry peers.
                Making reference to renowned enterprises, the Company will improve the living standards of staff quarters through
                further improvement in basic facilities and amenities. The Company will commence physical training and testing
                for staff to improve their physical quality. Focusing on green landscaping, the Company will build more garden-like
                factory areas so as to create a more pleasant working environment for employees.

     (IV) Future capital requirements, source of funds and plan for use
          The Company has established business segments for its core business, namely, pulp production, paper making,
          finance and forestry. With the further development of the existing principal businesses of the Company, the future
          capital requirements of the Company will be: (1) investment in the existing projects under construction and proposed
          new projects; (2) consistent investment in the existing production facilities because of technological transformation or
          production expansion; and (3) business expansion and general working capital requirements. As the demand for capital
          has been growing for the Company’s production and operation, there is a strong need to replenish the working capital
          to enhance the Company’s capability for sustainable operations.

          In order to meet the business development requirements of the Company and further extend and expand the industry
          chain, the Company will establish diversified financing channels and increase the proportion of direct financing through
          diversified financing channels such as private placement, corporate bonds, perpetual bonds, short-term financing
          papers and cross-border financing so as to improve the debt structure of the Company and provide stable financial
          support for the operation and development of the Company.

          The Company will use RMB3.7 billion from private placement to reduce the cost of paper making. The investment in the
          400,000-tonne chemical pulp project through private placement will improve the self-sufficiency of pulp of the Company
          and the raw materials structure of the paper making segment, in the expectation of reducing the production costs of
          paper making and enhancing profitability of paper making business. At the same time, non-public issuance of shares will
          optimise the debt structure and reduce financial costs as well as the gearing ratio. Diversified financing channels to meet
          the Company’s capital requirements: (1) The Company will reduce the financing costs and optimise the capital structure
          by issuing corporate bonds, medium-term notes, short-term financing, super short-term financing, perpetual bonds
          and other means for financing so as to provide financial support for the Company’s long-term healthy development. (2)
          The Company will facilitate cross-border financing by making full use of the financing platform in Hong Kong market
          to increase its credit line. Besides, the Company will also mitigate exchange rate risk through multi-currency financing
          and improve the efficiency of use of capital to reduce financial costs. As at the end of June 2017, the credit lines utilised
          by the Company amounted to RMB42.0 billion and the credit lines obtained by the Company amounted to RMB72.3
          billion with an utilisation rate of 58.09%. (3) The Company will make use of the advantages of the Finance Company
          and the Financial Leasing Company in the financial industry to expand the financing channels for the Group, bring new
          momentum for business development.




                                                                             SHANDONG CHENMING PAPER HOLDINGS LIMITED               25
                                                                                                INTERIM REPORT 2017
IV Discussion and Analysis of Operations


XI. Risk exposures of the Company and the measures to be taken
     1.    Risk on paper making industry
           Policy risk

           The paper making industry is a basic raw materials industry and its growth has been faster than the average growth
           of the national economy in recent years. However, the paper making industry’s profitability is closely correlated to
           the economic cycle, and the industry is therefore a cyclical industry fluctuating with the national macroeconomic
           performance, which will further affect the profitability of the Company.

           Hence, following the principles of scientific development and quality and efficiency enhancement, the Company will
           comprehensively improve its industrial structure and regional layout through the integration between its production and
           manufacture segment and financial services segment, and incorporation of smart technology into its industrial activities.
           The Company will emphasise on the development of leading businesses including paper making, finance and forestry so
           as to construct an efficient industrial system with synergies.

           Market fluctuation risk

           With the rapid growth of the national economy, economic globalisation and China’s accession to the WTO, China’s
           paper making industry has been facing increasingly fierce competition. Leveraging the strength and capital accumulated
           over the years, domestic enterprises have further expanded their sizes and improved their technological levels and
           product quality. Well-known paper making enterprises overseas have also directly set up production bases in China
           through sole proprietorship or joint ventures so as to participate in the domestic market competition by virtue of their
           advantages in size and technology. Besides, tariff reduction on China after accession to the WTO has also further
           intensified the impact on the international market.

           Hence, the Company will strive to enhance the quality of paper products and achieve the target of establishing a layout
           for high-end paper industry so as to increase the proportion of high-end paper. In recent years, the Company has been
           expanding its business size and optimising its product mix and has set up a few production lines for high-end paper.
           A diversified and high-end product mix enables the Company to spread market risk and strengthen the resistance
           towards market volatility. Besides, as high-end products have better profit margins, the Company can increase the
           proportion of high-end products through consistent improvement in product mix, thereby enhancing its profitability and
           comprehensive competitiveness.

           Risk of overcapacity and slowdown in demand

           Overcapacity is a prominent problem in the paper making and paper product industry in China such that there has
           been fierce competition among enterprises. Since 2013, affected by slowdown in the macroeconomic growth, the
           demand in paper making industry has been weak. At the same time, as China has encouraged energy conservation
           and emission reduction, the backward production capacity will be phased out, and the new projects will significantly
           realise economies of scale. By virtue of the economies of scale in the paper making industry, the production capacity
           of individual paper making projects under construction and planning for construction in China is large, which affects the
           demand and supply relationship in the whole paper making industry.

           Hence, the Company will upgrade its equipment and its technological level, expand its product mix, improve its product
           quality and focus on the research and development of high-end products so as to improve its competitiveness.




26        SHANDONG CHENMING PAPER HOLDINGS LIMITED
          INTERIM REPORT 2017
IV Discussion and Analysis of Operations


XI. Risk exposures of the Company and the measures to be taken (Cont’d)
    1.   Risk on paper making industry (Cont’d)
         Risk of price fluctuation of raw materials

         The major raw materials used by the Company are wood pulp and waste paper. The market prices of wood pulp and
         waste paper fluctuate significantly. The market price fluctuation of raw material has significantly affected the production
         costs of the Company. In addition to intensified market competition resulting from surging capacity in the industry in
         recent years, the increases in prices of a number of paper products were not in line with the increases in prices of raw
         materials. 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 the Zhanjiang Chenming pulp project, the Huanggang Chenming pulp project and the Shouguang
         chemical pulp project, thereby eliminating the limitations of upstream resources on the Company’s development and
         enhancing the Company’s sustainable development.

         Risk of change in environmental protection policies

         China has been raising the standards for environmental protection in recent years. 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. A higher emission standard is bound
         to increase the Company’s environmental protection costs and a high entry standard may result in the slowdown of
         scale expansion.

         The Company always strives 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.

    2.   Risk on financial leasing business
         Policy risk

         Recently, the financial leasing business is regulated by the commerce departments at different levels instead of being
         directly regulated by the People ‘s Bank of China or China Banking Regulatory Commission. The financial leasing
         industry in China is still at the exploration stage with incomplete laws and regulations. If there is any material adjustment
         or change in national or local policies for the financial leasing industry, the Company’s financial leasing business may be
         adversely affected, in turn harming the Company’s profitability.

         In September 2015, the General Office of the State Council promulgated the Guiding Opinions on Accelerating the
         Development of Financial Leasing Industry, which formulated comprehensive systematic planning on accelerating
         the development of the financial leasing industry. The financial leasing industry embraced a rare opportunity for leap-
         forward development. In February 2016, the General Office of People’s Government of Shandong Province promulgated
         the Opinions of the General Office of People’s Government of Shandong Province on Accelerating the Development
         of Financial Leasing Industry by Implementing Document Guo Ban Fa [2015] No. 68, formulating specific measures to
         refine policy measures and ensure the measures being carries out properly, which provided actual policy support for the
         development of the financial leasing industry in Shandong Province.




                                                                            SHANDONG CHENMING PAPER HOLDINGS LIMITED               27
                                                                                               INTERIM REPORT 2017
IV Discussion and Analysis of Operations


XI. Risk exposures of the Company and the measures to be taken (Cont’d)
     2.    Risk on financial leasing business (Cont’d)
           Liquidity risk

           In a market economy, the macroeconomic operation tends to be in cycles and the Company is inevitably affected by
           those cycles. At the same time, there is fierce competition in the financial industry and the interest margin is a main
           source of income for the financial leasing business. The market interest rate is affected by the benchmark interest rate
           of the People’s Bank of China, the macroeconomic environment, market demand and supply and other factors, bringing
           uncertainties to the fluctuation of the market interest rate, which in turn causes uncertainties in revenue from the
           financial leasing business.

           Hence, following the principles of scientific development and quality and efficiency enhancement, the Company will
           comprehensively improve its industrial structure and regional layout through the integration between its production and
           manufacture segment and financial services segment, and incorporation of smart technology into its industrial activities.
           The Company will emphasise on the development of leading businesses including paper making, finance and forestry so
           as to construct an efficient industrial system with synergies.

           Credit risk

           The Company may suffer from loss if the lessees of its financial leasing business cannot make full rental payment on
           time due to any reason and there are abuses on equipment or any other short-term behaviour. Although the risk of such
           rental being unrecoverable is minimal, the Company will also make bad debt provision as required under its accounting
           policy. If such amounts cannot be recovered on time, the Company may be exposed to risk of bad debts.

           The stringent risk management measures of Chenming Leasing provide comprehensive risk prevention and
           management for the Company’s projects. Besides, the Company usually cooperates with state-owned enterprises
           and local governments, so it has strong risk resistance and low risk of default. The Company does not have any non-
           performing or overdue loans so far. Chenming Leasing will develop quality customers and strengthen risk management
           so as to enhance risk resistance and maintain high quality services.

           Operation risk

           Recently, there is still a gap between the practitioners working in the financial leasing industry and those working in
           traditional financial institutions such as banks in terms of their expertise and experience in financial profession in China.
           There is also a large gap in terms of investment in infrastructure. If internal control procedures are not implemented
           properly and involve operation risk as a result of operation errors, violations or non-standard execution, the Company
           may suffer from loss.

           Learning from the risk management experience of outstanding financial leasing companies at home and abroad, the
           leasing company has formulated and optimised the internal management system of the leasing business and established
           an effective system for risk assessment, risk control and risk tracking. The Company has also exercised proper control
           on business risk by regulating the key business procedures including quotation, guarantee review, contract signing,
           leased assets management and archives management.




28        SHANDONG CHENMING PAPER HOLDINGS LIMITED
          INTERIM REPORT 2017
V Material Matters


I.    Annual general meeting and extraordinary general meeting convened during the reporting
      period
      1.    General meetings during the reporting period
                                                            Attendance
                                                                 rate of
            Meeting                       Type of meeting     investors    Convening date    Disclosure date   Disclosure index

            2016 annual general meeting   Annual general        20.36%     21 April 2017     22 April 2017     http://www.cninfo.com.cn
                                          meeting
            2017 first extraordinary      Extraordinary         32.04%     2 June 2017       3 June 2017       http://www.cninfo.com.cn
              general meeting             general meeting
            2017 first domestic listed    Extraordinary         28.91%     2 June 2017       3 June 2017       http://www.cninfo.com.cn
              share class meeting         general meeting
            2017 first overseas listed    Extraordinary         39.08%     2 June 2017       3 June 2017       http://www.cninfo.com.cn
              share class meeting         general meeting

      2.    Extraordinary general meeting requested by holders of the preference shares with voting rights restored
                 Applicable √ Not applicable


II.   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.


III. Undertakings made by parties involved in undertakings including the Company’s beneficial
     controllers, shareholders, related parties, bidders and the Company during the reporting
     period or prior periods but subsisting to the end of the reporting period
           Applicable √ Not applicable

      During the reporting period, there was no undertaking made by parties involved in undertakings including the Company’s
      beneficial controllers, shareholders, related parties, bidders and the Company during the reporting period or prior periods but
      subsisting to the end of the reporting period.




                                                                                   SHANDONG CHENMING PAPER HOLDINGS LIMITED               29
                                                                                                      INTERIM REPORT 2017
V Material Matters


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

           Yes √   No

     The interim financial report is unaudited.


V.   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


VI. Opinions of the Board regarding the “modified auditor’s report” for the prior year
           Applicable √   Not applicable


VII. 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 2017.


VIII. Matters related to bankruptcy and reorganisation
           Applicable √   Not applicable

     There was no matter related to bankruptcy and reorganisation during the reporting period.


IX. 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




30         SHANDONG CHENMING PAPER HOLDINGS LIMITED
           INTERIM REPORT 2017
V Material Matters


IX. Litigation (Cont’d)
                         Amount
     Basic information   (RMB’0,000)/
     about litigation    Subject                                                                           Judgment result of the litigation
     (arbitration)       matter            Progress of litigation (arbitration)                            (arbitration) and its effect                                   Disclosure date     Disclosure index

     Statutory demand    30,200            1.   The Court of First Instance in the High Court of the 1.         The office address of the Company in Hong Kong            25 February 2017,   http://www.cninfo.com.cn,
       and Winding-up                           HKSAR completed the hearing held from 21 February               received the notice in relation to the injunction order   17 June 2017,       announcement
       Petition                                 2017 to 23 February 2017;                                       with a case number of HCMP3060/2016 to the legal          23 June 2017,       number:
                                                                                                                representative of the Company from the Court of First     30 June 2017 and    2017-015,
                                           2.   The office address of the Company in Hong Kong                  Instance in the High Court of the HKSAR on 15 June        3 July 2017         2017-067,
                                                received the notice in relation to the injunction order         2017: (1) the amended originating summonses for the                           2017-069,
                                                with a case number of HCMP3060/2016 to the legal                injunction order be dismissed; and (2) an order nisi                          2017-070 and
                                                representative of the Company from the Court of First           be made on the costs of the legal proceedings. The                            2017-071
                                                Instance in the High Court of the HKSAR on 15 June              Company pays the costs to the defendant (including
                                                2017;                                                           the fees payable to two counsels). The costs shall be
                                                                                                                taxed if not agreed. The High Court of the HKSAR
                                           3.   On 26 June 2017, there was an ex-parte hearing in
                                                                                                                anticipated the reasons for decision of the case would
                                                chambers in the High Court of the HKSAR in which
                                                                                                                be handed down on 7 July 2017.
                                                the petitioner applied for an interim injunction order
                                                to prohibit the Company from distribution of the 2016 2.        On 15 June 2017, the office address of the Company
                                                final dividend to the holders of H shares.                      in Hong Kong received a winding-up petition dated 15
                                                                                                                June 2017 filed by the defendant to the High Court of
                                           4.   On 30 June 2017, the Hon Mr. Justice Harris of the
                                                                                                                the HKSAR.
                                                High Court of the HKSAR discharged the interim
                                                injunction order on the same date after the hearing. 3.         The decision was handed down by the Hon Mr.
                                                                                                                Justice Harris of the High Court of the HKSAR on 7
                                           5.   The decision was handed down by the Hon Mr.
                                                                                                                July 2017.
                                                Justice Harris of the High Court of the HKSAR on 7
                                                July 2017.                                         4.           Having considered the reasons for decision and the
                                                                                                                consequences to the Company once the winding-up
                                           6.   The winding-up petition is scheduled to be heard
                                                                                                                petition is given, the Company applied for an appeal
                                                before the High Court of the HKSAR at 9:30 a.m. on
                                                                                                                against the decision to the High Court of HKSAR on
                                                23 August 2017.
                                                                                                                12 July 2017. Further details of the appeal will be
                                                                                                                disclosed by the Company in due course.

     Validation order    The validation    The Company through its legal adviser applied to the Court                                                                     17 July 2017 and    http://www.cninfo.com.cn,
                         order relating    of HKSAR for the validation order relating to the transfer of                                                                  31 July 2017        announcement number:
                         to the transfer   fully paid-up shares of the Company on 19 July 2017(case                                                                                           2017-076 and 2017-084
                         of fully          no. HCCW175/2017). The hearing of the application of the
                         paid-up           validation order is scheduled to be heard at 9:30 a.m. on 19
                         shares of the     October 2017.
                         Company


X.   Punishment and rectification
            Applicable √ Not applicable

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




                                                                                                                              SHANDONG CHENMING PAPER HOLDINGS LIMITED                                             31
                                                                                                                                                 INTERIM REPORT 2017
V Material Matters


XI. Credibility of the Company, its controlling shareholders and beneficial controllers
                Applicable √ Not applicable


XII. Implementation of the equity incentive plan, employee shareholding plan or other employee
     incentive measure of the Company
                Applicable √ Not applicable

     There was no implementation of the equity incentive plan, employee shareholding plan or other employee incentive measure
     of the Company during the reporting period.


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

                                                                                                Pricing                             Amount of Percentage            Amount of
                                                            Types of the    Subject matter of   basis of the     Price of        related party as the amount      transactions       Whether                         Market price of
                                    Related party           related party   the related party   related party    related party   transactions        of similar      approved      exceeding Settlement of related   available similar
     Related party                  relationship            transactions    transactions        transactions     transactions     (RMB’0,000) transactions(%)     (RMB’0,000) approved cap party transactions      transaction       Disclosure date Disclosure index

     Jiangxi Chenming Natural       Pursuant to the          Procurement    Natural gas and     Market price     Market price        8,433.94           0.89%          35,000            No Bank acceptance and      Not applicable   18 February 2017 http://www.cninfo.com.cn
       Gas Co., Ltd. and its        requirement under                       heavy oil etc.                                                                                                  telegraphic transfer
       subsidiaries                 Paragraph (2) of Article
                                    10.1.6 of the Rules
                                    Governing the Listing
                                    of Stocks on Shenzhen
                                    Stock Exchange
     Total                                                                                                                           8,433.94                          35,000
     Particulars on refund of bulk sale                                                         Not applicable


     2.              Related party transaction in connection with purchase or sale of assets or equity interest
                               Applicable √ Not applicable

                     There was no related party transaction of the Company in connection with purchase or sale of assets or equity interest
                     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 were no non-operating related creditors’ rights and debts transactions of the Company during the reporting
                     period.

     5.              Other significant related party transactions
                               Applicable √ Not applicable

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




32              SHANDONG CHENMING PAPER HOLDINGS LIMITED
                INTERIM REPORT 2017
V Material Matters


XIV. 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.


XV. 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.

    2.    Significant guarantees
          √    Applicable       Not applicable

          (1)     Guarantees

                  During the reporting period, the Company did not provide any guarantee to external parties (excluding those
                  provided to its subsidiaries) and did not provide any guarantees against the rules and regulations.

                  During the reporting period, the Company provided guarantee to its subsidiaries and its subsidiaries also
                  provided guarantee to its subsidiaries with respect to application of bank loans. The guarantee amount incurred
                  was RMB11,292.7365 million. As at 30 June 2017, the balance of the guarantee provided by the Company
                  for its subsidiaries and provided by its subsidiaries for its subsidiaries amounted to RMB18,886.5548 million,
                  representing 83% of the equity attributable to equity holders of the Company as at 30 June 2017.

                                                                                                                   Unit: RMB’0,000

                                      External guarantees of the Company (excluding guarantees to subsidiaries)
                  Total external guarantees approved                        Total actual external guarantees
                    during the reporting period (A1)                    0     during the reporting period (A2)                  0
                  Total external guarantees approved                        Balance of total actual guarantees
                    at the end of the reporting period (A3)             0     at the end of the reporting period (A4)           0




                                                                            SHANDONG CHENMING PAPER HOLDINGS LIMITED            33
                                                                                               INTERIM REPORT 2017
V Material Matters


XV. Material contracts and implementation (Cont’d)
     2.    Significant guarantees (Cont’d)
           (1)   Guarantees (Cont’d)

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

                 Zhanjiang Chenming              30 March 2016              150,000   5 December 2016          433,411.51    General        3 years      No             No
                   Pulp & Paper Co., Ltd.                                                                                    guarantee
                 Zhanjiang Chenming              17 February 2017           650,000                                          General        2 years      No             No
                   Pulp & Paper Co., Ltd.                                                                                    guarantee
                 Shandong Chenming               26 March 2015              500,000   1 December 2016          265,805.28    General        7 years      No             No
                   Financial Leasing Co., Ltd.                                                                               guarantee
                 Shandong Chenming               30 March 2016              300,000                                          General        7 years      No             No
                   Financial Leasing Co., Ltd.                                                                               guarantee
                 Huanggang Chenming              17 February 2017             5,000                                          General        2 years      No             No
                   Arboriculture Co., Ltd.                                                                                   guarantee
                 Huanggang Chenming              26 March 2015              400,000   17 August 2015           122,801.19    General        7 years      No             No
                   Pulp & Paper Co., Ltd.                                                                                    guarantee
                 Huanggang Chenming              30 March 2016              550,000                                          General        7 years      No             No
                   Pulp & Paper Co., Ltd.                                                                                    guarantee
                 Jiangxi Chenming                30 March 2016              150,000   30 September 2016         74,278.06    General        3 years      No             No
                   Paper Co., Ltd.                                                                                           guarantee
                 Jiangxi Chenming                17 February 2017           200,000                                          General        2 years      No             No
                   Paper Co., Ltd.                                                                                           guarantee
                 Shouguang Meilun                16 December 2010           600,000   12 January 2017              28,500    General        10 years     No             No
                   Paper Co., Ltd.                                                                                           guarantee
                 Shouguang Meilun                17 February 2017           100,000                                          General        2 years      No             No
                   Paper Co., Ltd.                                                                                           guarantee
                 Shandong Chenming Paper         30 March 2016              200,000   14 October 2016          255,218.54    General        3 years      No             No
                   Sales Company Limited                                                                                     guarantee
                 Shandong Chenming Paper         17 February 2017           400,000                                          General        2 years      No             No
                   Sales Company Limited                                                                                     guarantee
                 Chenming (HK) Limited           30 March 2016              100,000   23 August 2016           556,662.96    General        3 years      No             No
                                                                                                                             guarantee
                 Chenming (HK) Limited           17 February 2017           500,000                                          General        2 years      No             No
                                                                                                                             guarantee
                 Shouguang Chenming           17 February 2017               50,000                                          General        2 years      No             No
                    Import and Export                                                                                        guarantee
                    Trade Co., Ltd.
                 Jilin Chenming Paper         17 February 2017              150,000   20 July 2016                   4,000   General        2 years      No             No
                    Co., Ltd                                                                                                 guarantee
                 Shandong Chenming Group 17 February 2017                   500,000                                          General        2 years      No             No
                    Finance Co., Ltd.                                                                                        guarantee
                 Zhanjiang Chenming           17 February 2017                5,000                                          General        3 years      No             No
                    Arboriculture Co., Ltd.                                                                                  guarantee
                 Total amount of guarantee provided for                   2,560,000   0 Total amount of guarantee provided for subsidiaries during the               1,044,948.52
                 subsidiaries approved during the reporting period                    reporting period (B2)
                 (B1)
                 Total amount of guarantee provided for                   5,510,000   Total balance of guarantee provided for subsidiaries as at the                 1,740,677.54
                 subsidiaries approved as at the end of the                           end of the reporting period (B4)
                 reporting period (B3)


34        SHANDONG CHENMING PAPER HOLDINGS LIMITED
          INTERIM REPORT 2017
V Material Matters


XV. Material contracts and implementation (Cont’d)
    2.   Significant guarantees (Cont’d)
         (1)    Guarantees (Cont’d)

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

                Zhanjiang Chenming Pulp & 30 March 2016                      100,000 20 December 2016                 99,988.09 General      3 years   No            No
                  Paper Co., Ltd.                                                                                               guarantee
                Jiangxi Chenming              30 March 2016                  100,000 29 July 2016                     47,989.85 General      3 years   No            No
                  Paper Co., Ltd.                                                                                               guarantee
                Shandong Chenming Group 30 March 2016                        100,000                                            General      3 years   No            No
                  Finance Co., Ltd.                                                                                             guarantee
                Total amount of guarantee provided for                              0 Total amount of guarantee provided for subsidiaries during the                84,325.13
                subsidiaries approved during the reporting period                        reporting period (C2)
                (C1)
                Total amount of guarantee provided for                       300,000 Total balance of guarantee provided for subsidiaries s at the end             147,977.94
                subsidiaries approved as at the end of the                               of the reporting period (C4)
                reporting period (C3)
                Total amount of guarantee provided (i.e. sum of the above three guarantee amount)
                Total amount of guarantee approved during the              2,560,000 Total amount of guarantee during the reporting period                        1,129,273.65
                reporting period (A1+B1+C1)                                              (A2+B2+C2)
                Total amount of guarantee approved as at the end           5,810,000 Total balance of guarantee as at the end of the reporting period             1,888,655.48
                of the reporting period (A3+B3+C3)                                       (A4+B4+C4)
                The percentage of total amount of guarantee provided (i.e. A4+B4+C4) to the net assets of the Company                                                 83.00%
                Of which:
                Balance of guarantee provided for shareholders, beneficial controllers and its related parties (D)                                                           0
                Balance of guarantee directly or indirectly provided for obligors with gearing ratio over 70% (E)                                                 1,077,686.78
                Total amount of guarantee provided in excess of 50% of net assets (F)                                                                               777,715.06
                Sum of the above three amount of guarantee (D+E+F)                                                                                                1,855,401.84

         (2)    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.

    3.   Other material contracts
               Applicable √ Not applicable

         The Company did not have any other material contract during the reporting period.


XVI. Fulfilment of social responsibility
    1.   Fulfilment of social responsibility regarding specialised poverty relief
               Applicable √ Not applicable

    2.   Major environmental protection matters
         Are the Company and its subsidiaries classified as key pollutant discharging unit as specified by environmental
         protection authority?

         Yes

                                                                                                 SHANDONG CHENMING PAPER HOLDINGS LIMITED                                   35
                                                                                                                    INTERIM REPORT 2017
V Material Matters


XVI. Fulfilment of social responsibility (Cont’d)
     2.    Major environmental protection matters (Cont’d)
                                                                                                                                                                          Pollutant
                                            Name of major                                               Number of                                                         emission                  Approved
           Name of company                  pollutants and                                               emission Distribution                          Emission        standards           Total        total   Excessive
           or subsidiary                    specific pollutants      Way of emission                      outlets of emission outlets               concentration     implemented       emissions   emissions    emissions

           Shandong Chenming                COD                      Organised emission                         3 Within Chenming Industrial Park        200mg/L           300mg/L          2717t     7666.6t          No
             Paper Holdings Limited
                                            Ammonia nitrogen         Organised emission                         3 Within Chenming Industrial Park        1.9mg/L           35mg/L          22.94t      766.6t          No
                                            Sulphur dioxide          Organised emission                         2 Within Chenming Industrial Park     10.2mg/m            35mg/m           10.63t     247.16t          No
                                            Nitrogen oxide           Organised emission                         2 Within Chenming Industrial Park     44.6mg/m           100mg/m            85.9t      941.8 t         No
                                            Smoke                    Organised emission                         2 Within Chenming Industrial Park     6.49mg/m            10mg/m           11.98t      70.62t          No
           Shouguang Meilun Paper Co., Ltd. Sulphur dioxide          Organised emission                         2 Within Chenming Industrial Park     6.62mg/m            35mg/m            33.5t     348.10t          No
                                            Nitrogen oxide           Organised emission                         2 Within Chenming Industrial Park    48.25mg/m           100mg/m           231.3t     709.32t          No
                                            Smoke                    Organised emission                         2 Within Chenming Industrial Park     6.37mg/m            10mg/m           28.45t      73.62t          No
           Zhanjiang Chenming Pulp &        COD                      Organised emission                         5 Within Zhanjiang Chenming               63mg/L           90mg/L        790.213t       1943t          No
             Paper Co., Ltd.                                                                                      factory area
                                            Ammonia nitrogen         Organised emission                         5 Within Zhanjiang Chenming             1.53mg/L              8mg/L       29.313t        43.9t         No
                                                                                                                  factory area
                                            Smoke                    Organised emission                         5 Within Zhanjiang Chenming           Power plant       Power plant           28t        196t          No
                                                                                                                  factory area                        1# 6mg/m,        1# 30mg/m,
                                                                                                                                                      Power plant       Power plant
                                                                                                                                                      2# 7mg/m,        2# 30mg/m,
                                                                                                                                                         Lime kiln         Lime kiln
                                                                                                                                                        27mg/m,          200mg/m,
                                                                                                                                                      Alkali boiler     Alkali boiler
                                                                                                                                                        23mg/m             30mg/m
                                            Sulphur dioxide          Organised emission                         5 Within Zhanjiang Chenming           Power plant       Power plant      119.701t        620t          No
                                                                                                                  factory area                        1# 6mg/m,       1# 100mg/m,
                                                                                                                                                      Power plant       Power plant
                                                                                                                                                      2# 7mg/m,        2# 35mg/m,
                                                                                                                                                         Lime kiln         Lime kiln
                                                                                                                                                         2mg/m,          850mg/m,
                                                                                                                                                      Alkali boiler     Alkali boiler
                                                                                                                                                        24mg/m            100mg/m
                                            Nitrogen oxide           Organised emission                         5 Within Zhanjiang Chenming           Power plant       Power plant      992.817t     2169.7t          No
                                                                                                                  factory area                        1# 7mg/m,       1# 100mg/m,
                                                                                                                                                      Power plant       Power plant
                                                                                                                                                      2# 4mg/m,        2# 50mg/m,
                                                                                                                                                      Alkali boiler     Alkali boiler
                                                                                                                                                       192mg/m            250mg/m
           Wuhan Chenming Hanyang           COD                      Directly discharged into the               1 East of the factory area             38.14mg/L            80mg/L          41.9t      184.3t          No
            Paper Holdings Co., Ltd.                                 Yangtze River after treating
                                                                     the sewage up to the standard
                                            Ammonia nitrogen         Directly discharged into the               1 East of the factory area             0.529mg/L              8mg/L          0.3t        17.3t         No
                                                                     Yangtze River after treating the
                                                                     sewage up to the standard
           Wuhan Chenming Qianneng          Smoke                    Organised emission                         2 Within Qianneng Electric             9.18mg/m            20mg/m           6.29t     41.032t          No
            Electric Power Co., Ltd.                                                                              Power factory area
                                            Sulphur dioxide          Organised emission                         2 Within Qianneng Electric                9mg/m            50mg/m          15.82t    102.581t          No
                                                                                                                  Power factory area
                                            Nitrogen oxide           Organised emission                         2 Within Qianneng Electric               56mg/m          100mg/m            31.1t    205.163t          No
                                                                                                                  Power factory area
           Jilin Chenming Paper Co., Ltd.   COD                      Organised emission                         1 Downstream of the Shaokou               60mg/L            90mg/L           153t        357t          No
                                                                                                                  section of Songhua River
                                            Ammonia nitrogen         Organised emission                         1 Downstream of the Shaokou            0.875mg/L              8mg/L         2.31t         34t          No
                                                                                                                  section of Songhua River
           Jiangxi Chenming Paper Co., Ltd. Chemical oxygen demand   Organised emission                         1 At the boundary of factory area         53mg/L           90mg/L            230t       1260t          No
                                            Ammonia nitrogen         Organised emission                         1 At the boundary of factory area       3.52mg/L            8mg/L          16.42t        112t          No
                                            Suspended matter         Organised emission                         1 At the boundary of factory area         12mg/L           30mg/L           52.1t        420t          No
                                            Sulphur dioxide          Organised emission                         2 Within factory area                 44.7mg/m           200mg/m           171.4t        806t          No
                                            Nitrogen oxide           Organised emission                         2 Within factory area                  105mg/m           200mg/m             403t        806t          No
                                            Smoke                    Organised emission                         2 Within factory area                12.75mg/m            30mg/m           28.26t        135t          No




36        SHANDONG CHENMING PAPER HOLDINGS LIMITED
          INTERIM REPORT 2017
V Material Matters


XVI. Fulfilment of social responsibility (Cont’d)
     2.   Major environmental protection matters (Cont’d)
          Construction and operation of facilities for pollution prevention and control

          (1)   The Company and its subsidiaries strictly comply with laws, regulations and relevant rules regarding environmental
                protection of the central and local government. The construction of projects strictly executed the evaluation
                system on impacts of project construction on environment. In order to ensure pollutants are discharged strictly in
                accordance to requirements under laws and regulation and disposed properly, production and operation strictly
                comply with the national Law on the Prevention and Control of Environmental Pollution, Law on the Prevention
                and Control of Air Pollution, Ten Rules Regarding Water Pollution and Law on the Prevention and Control of
                Environmental Pollution by Solid Waste.

          (2)   Both the Company and its subsidiaries are equipped with comprehensive environmental protection treatment
                facilities. The aerobic-anaerobic-in-depth treatment technology is the major technology for water treatment,
                which can achieve standardised discharge of waste water. Moreover, subsidiaries are equipped with recycling
                system for process effluent, and reuse treated waste water to the greatest extent in order to minimise pollution.
                Chenming Paper has constructed a total of 8 water treatment plants, with daily treatment capacity of 350,000 m3.
                A total of ten online water monitor facilities were installed in subsidiaries. Three online water monitor facilities are
                directly managed by the environmental protection bureau, while the remaining seven online water monitor facilities
                are operated by entrusted enterprises qualified for running such facilities. In addition, governmental authority
                will regularly visit the Company to conduct comparison of online monitor data every quarter. All data meets the
                standards.

          (3)   Subsidiaries of Chenming Paper have its own power plants. Each self-owned plant has its own environmental
                protection facilities for de-dusting, desulphurisation and denitrification. Denitrification is conducted through SNCR,
                while desulphurisation is primarily conducted through gypsum desulphurisation (ammonia desulphurisation is
                adopted in self-owned plant of Jiangxi Chenming).


XVII. Other matters of significance
     √ Applicable       Not applicable

     1.   Distribution of fixed dividend of Chenming You 01
          The dividend was accrued from 17 March 2016 on the basis of the 22.5 million preference shares issued with a nominal
          value of RMB100 per share. As calculated according to the dividend rate of 4.36%, a dividend of RMB4.36 (tax
          inclusive) per preference share was distributed. The Company distributed dividend amounting to RMB98.10 million in
          total (tax inclusive).

          For details, please refer to relevant announcement (announcement no.: 2017-022) of the Company published on
          CNINFO on 10 March 2017.

     2.   Public issuance of corporate bonds was approved by the China Securities Regulatory Commission
          The Company received the Approval of the Public Issuance of Corporate Bonds to Qualified Investors of Shandong
          Chenming Paper Holdings Limited (Zheng Jian Xu Ke [2017] No. 342) from the China Securities Regulatory Commission
          on 23 March 2017, which approved the Company to issue corporate bonds in a total nominal amount of not more than
          RMB4 billion to qualified investors.

          For details, please refer to relevant announcement (announcement no.: 2017-027) of the Company published on
          CNINFO on 24 March 2017.




                                                                              SHANDONG CHENMING PAPER HOLDINGS LIMITED               37
                                                                                                 INTERIM REPORT 2017
V Material Matters


XVII. Other matters of significance (Cont’d)
     3.    Provision of financial support to an investee
           In order to ensure the normal operation of the projects of its investee, Weifang Sime Darby West Port Co., Ltd. (“Sime
           Darby West Port”), and maximise the benefits of the Company, the Company intended to provide financial support in an
           amount of not more than RMB130 million to such company according to its own operation and capital utilisation. The
           financial assistance shall be effective for five years. The Company will receive interest on the financial support at a rate
           of 6% per annum.

           For details, please refer to relevant announcement (announcement no.: 2017-046) of the Company published on
           CNINFO on 28 April 2017.

     4.    Adjustment to the price determination date for non-public offering of A shares
           The price determination date was adjusted to the announcement date of board resolutions at the tenth extraordinary
           meeting of the eighth session of the Board (i.e. 8 June 2017). The issue price for the non-public issue shall be not
           less than the higher of 90% of the average trading price of A shares of the Company for the 20 trading days prior to
           the price determination date (average trading price of A shares of the Company for the 20 trading days prior to the
           price determination date = total transaction amount of A shares of the Company for the 20 trading days prior to the
           price determination date/total trading volume of A shares of the Company for the 20 trading days prior to the price
           determination date) (i.e. RMB10.29 per share) and the latest audited net asset per share attributable to ordinary
           shareholders of the Company prior to the issue.

           For details, please refer to relevant announcement (announcement no.: 2017-063) of the Company published on
           CNINFO on 8 June 2017.

     5.    2016 profit distribution plan for ordinary shares
           On 21 April 2017, the Company convened the 2016 annual general meeting, at which, the 2016 profit distribution plan
           was considered and approved: based on the number of the shares as at the dividend distribution registration date of
           1,936,405,467 shares, a cash dividend of RMB6.00 (tax inclusive) was to be paid to all shareholders for every 10 shares
           held. The total cash dividend distributed to the holders of ordinary shares amounted to RMB1,161,843,280.20 (tax
           inclusive) in 2016.




38        SHANDONG CHENMING PAPER HOLDINGS LIMITED
          INTERIM REPORT 2017
V Material Matters


XVII. Other matters of significance (Cont’d)
    6.   Information disclosure index for the first half of 2017
         Announcement                                                                                 Publication website
         No.             Subject matter                                         Date of publication   and index

         2017-001        Announcement on Estimated Annual Results for 2016      10 January 2017       http://www.cninfo.com.cn
         2017-002        Announcement on Result of the Issue of 2017 First      10 January 2017       http://www.cninfo.com.cn
                         Tranche of Short-term Commercial Paper
         2017-003        Announcement on Result of the Issue of 2017 First      12 January 2017       http://www.cninfo.com.cn
                         Tranche of Super & Short-term Commercial Paper
         2017-004        Indicative Announcement on Subsidiary                  19 January 2017       http://www.cninfo.com.cn
                         Receiving Subsidy
         2017-005        Supplementary Announcement Subsidiary                  20 January 2017       http://www.cninfo.com.cn
                         Receiving Subsidy
         2017-006        Announcement in respect of Resolutions of              18 February 2017      http://www.cninfo.com.cn
                         the Fourth Meeting of the Eighth Session of
                         the Board of Directors
         2017-007        Notice of 2016 Annual General Meeting                  18 February 2017      http://www.cninfo.com.cn
         2017-008        2016 Annual Report Summary                             18 February 2017      http://www.cninfo.com.cn
         2017-009        Announcement in respect of Resolutions of the          18 February 2017      http://www.cninfo.com.cn
                         Fifth Meeting of the Eighth Session of the
                         Supervisory Committee
         2017-010        Announcement on Provision of Guarantee for General     18 February 2017      http://www.cninfo.com.cn
                         Credit Lines of Relevant Subsidiaries
         2017-011        Announcement on External Investment (I)                18 February 2017      http://www.cninfo.com.cn
         2017-012        Announcement on Provision of Financial Support to      18 February 2017      http://www.cninfo.com.cn
                         Haiming Mining and Related Party Transaction
         2017-013        Announcement on External Investment (II)               18 February 2017      http://www.cninfo.com.cn
         2017-014        Announcement on Expected Ordinary Connected            18 February 2017      http://www.cninfo.com.cn
                         Transactions in 2017
         2017-015        Indicative Announcement                                25 February 2017      http://www.cninfo.com.cn
         2017-016        Announcement on Asset Disposal                         1 March 2017          http://www.cninfo.com.cn
         2017-017        Announcement in respect of Resolutions of the          7 March 2017          http://www.cninfo.com.cn
                         Seventh Extraordinary Meeting of the Eighth Session
                         of the Board of Directors
         2017-018        Notice of 2016 Annual General Meeting                  7 March 2017          http://www.cninfo.com.cn
         2017-019        Announcement in respect of Resolutions of the Fourth   7 March 2017          http://www.cninfo.com.cn
                         Extraordinary Meeting of the Eighth Session of the
                         Supervisory Committee
         2017-020        Announcement on the Cancellation of Proposal for       8 March 2017          http://www.cninfo.com.cn
                         the 2016 Annual General Meeting
         2017-021        Supplemental Notice of 2016 Annual General Meeting     8 March 2017          http://www.cninfo.com.cn




                                                                        SHANDONG CHENMING PAPER HOLDINGS LIMITED             39
                                                                                           INTERIM REPORT 2017
V Material Matters


XVII. Other matters of significance (Cont’d)
     6.    Information disclosure index for the first half of 2017
           Announcement                                                                                 Publication website
           No.             Subject matter                                         Date of publication   and index

           2017-022        Announcement on the Distribution of Dividend for       10 March 2017         http://www.cninfo.com.cn
                           Preference Share
           2017-023        Announcement on Result of the Issue of 2017 Second     10 March 2017         http://www.cninfo.com.cn
                           Tranche of Super & Short-term Commercial Paper
           2017-024        Full Report of Changes in Equity                       15 March 2017         http://www.cninfo.com.cn
           2017-025        Announcement on Result of the Issue of 2017 Third      17 March 2017         http://www.cninfo.com.cn
                           Tranche of Super & Short-term Commercial Paper
           2017-026        Announcement on Entering into a Strategic              21 March 2017         http://www.cninfo.com.cn
                           Cooperation Agreement with the People’s Government
                           of Weidu District, Xuchang City
           2017-027        Announcement on Approval of Public Issuance of         24 March 2017         http://www.cninfo.com.cn
                           Corporate Bonds by the China Securities Regulatory
                            Commission
           2017-028        Indicative Announcement on Subsidiary                  31 March 2017         http://www.cninfo.com.cn
                           Receiving Subsidy
           2017-029        Second Supplementary Notice of the 2016 Annual         6 April 2017          http://www.cninfo.com.cn
                           General Meeting
           2017-030        Announcement on Estimated Results for the              11 April 2017         http://www.cninfo.com.cn
                           First Quarter of 2017
           2017-031        Announcement on Entering into a Strategic              11 April 2017         http://www.cninfo.com.cn
                           Cooperation Agreement with Qilu Bank
           2017-032        Announcement in respect of Resolutions of the Eighth   13 April 2017         http://www.cninfo.com.cn
                           Extraordinary Meeting of the Eighth Session of the
                           Board of Directors
           2017-033        Announcement in respect of Resolutions of the Fifth    13 April 2017         http://www.cninfo.com.cn
                           Extraordinary Meeting of the Eighth Session of the
                           Supervisory Committee
           2017-034        Announcement in Relation to the Extension of the       13 April 2017         http://www.cninfo.com.cn
                           Validity of the Resolutions in Respect of the
                           Non-Public Issue of Shares of the Company and
                           the Authorisation Granted to the Board to Deal
                           with the Relevant Matters
           2017-035        Notice of 2017 First Extraordinary General Meeting     13 April 2017         http://www.cninfo.com.cn
           2017-036        Notice of the 2017 First Domestic Listed Share Class   13 April 2017         http://www.cninfo.com.cn
                           Meeting and 2017 First Overseas Listed Share Class
                           Meeting
           2017-037        Announcement on Result of the Issue of 2017 Second     18 April 2017         http://www.cninfo.com.cn
                           Tranche of Short-term Commercial Paper
           2017-038        Indicative Announcement on 2016 Annual                 19 April 2017         http://www.cninfo.com.cn
                           General Meeting
           2017-039        Announcement in respect of Resolutions of the Ninth    19 April 2017         http://www.cninfo.com.cn
                           Extraordinary Meeting of the Eighth Session of the
                           Board of Directors




40        SHANDONG CHENMING PAPER HOLDINGS LIMITED
          INTERIM REPORT 2017
V Material Matters


XVII. Other matters of significance (Cont’d)
    6.   Information disclosure index for the first half of 2017
         Announcement                                                                                 Publication website
         No.             Subject matter                                         Date of publication   and index

         2017-040        Announcement in respect of Resolutions of the Sixth    19 April 2017         http://www.cninfo.com.cn
                         Extraordinary Meeting of the Eighth Session of the
                         Supervisory Committee
         2017-041        Announcement on Third Revision of Non-public           19 April 2017         http://www.cninfo.com.cn
                         Offering for 2016
         2017-042        Announcement on Dilution of Current Returns and        19 April 2017         http://www.cninfo.com.cn
                         Remedial Measures upon Non-public Offering
                         (Third Revision)
         2017-043        Announcement on Resolutions of the 2016 Annual         22 April 2017         http://www.cninfo.com.cn
                         General Meeting
         2017-044        Announcement on Result of the Issue of 2017 Fourth     26 April 2017         http://www.cninfo.com.cn
                         Tranche of Super & Short-term Commercial Paper
         2017-045        Announcement in respect of Resolutions of the          28 April 2017         http://www.cninfo.com.cn
                         Fifth Meeting of the Eighth Session of the Board
                         of Directors
         2017-046        Announcement on Provision of Financial Support         28 April 2017         http://www.cninfo.com.cn
                         to Investee
         2017-047        Announcement in respect of Resolutions of the Sixth    28 April 2017         http://www.cninfo.com.cn
                         Meeting of the Eighth Session of the Supervisory
                         Committee
         2017-048        2017 First Quarterly Report                            28 April 2017         http://www.cninfo.com.cn
         2017-049        Indicative Announcement on Receipt of Subsidy          28 April 2017         http://www.cninfo.com.cn
         2017-050        Announcement on the Total New Borrowings for the       9 May 2017            http://www.cninfo.com.cn
                         Year Exceeding 20% of the Net Assets as at the End
                         of the Previous Year
         2017-051        Announcement on Additional Resolutions Proposed        16 May 2017           http://www.cninfo.com.cn
                         at the 2017 First Extraordinary General Meeting
         2017-052        Supplementary Notice of 2017 First Extraordinary       16 May 2017           http://www.cninfo.com.cn
                         General Meeting
         2017-053        Second Supplementary Notice of the 2017 First          16 May 2017           http://www.cninfo.com.cn
                         Domestic Listed Share Class Meeting and 2017 First
                         Overseas Listed Share Class Meeting
         2017-054        Announcement on Pledge of Shares by Shareholders       1 June 2017           http://www.cninfo.com.cn
         2017-055        Announcement on Resolution of the 2017 First           3 June 2017           http://www.cninfo.com.cn
                         Extraordinary General Meeting
         2017-056        Poll Results Announcement of the 2017 First Domestic   3 June 2017           http://www.cninfo.com.cn
                         A Shareholders’ and B Shareholders’ Class Meeting
                         and the 2017 First Overseas H Shareholders’ Class
                         Meeting




                                                                        SHANDONG CHENMING PAPER HOLDINGS LIMITED             41
                                                                                           INTERIM REPORT 2017
V Material Matters


XVII. Other matters of significance (Cont’d)
     6.    Information disclosure index for the first half of 2017
           Announcement                                                                                  Publication website
           No.               Subject matter                                        Date of publication   and index

           2017-057          Announcement on Release of Stock Pledge by            3 June 2017           http://www.cninfo.com.cn
                             Shareholders
           2017-058          Announcement on Pledge of Shares by Shareholders      8 June 2017           http://www.cninfo.com.cn
           2017-059          Announcement in respect of Resolutions of the Tenth   8 June 2017           http://www.cninfo.com.cn
                             Extraordinary Meeting of the Eighth Session of the
                             Board of Directors
           2017-060          Announcement in respect of Resolutions of the         8 June 2017           http://www.cninfo.com.cn
                             Seventh Extraordinary Meeting of the Eighth
                             Session of the Supervisory Committee
           2017-061          Announcement on Entering into Conditional Share       8 June 2017           http://www.cninfo.com.cn
                             Purchase Agreement and Connected Transactions
                             under the Non-public Offering of A Share (Second
                             Revision)
           2017-062          Announcement on Dilution of Current Returns and       8 June 2017           http://www.cninfo.com.cn
                             Remedial Measures upon Non-public Offering
                             (Fourth Revision)
           2017-063          Announcement on Adjustment to the Price               8 June 2017           http://www.cninfo.com.cn
                             Determination Date for the Non-public Issue
                             of A Shares
           2017-064          Notice of 2017 Second Extraordinary General Meeting   8 June 2017           http://www.cninfo.com.cn
           2017-065          Notice of the 2017 Second Domestic Listed Share       8 June 2017           http://www.cninfo.com.cn
                             Class Meeting and 2017 Second Overseas
                             Listed Share Class Meeting
           2017-066          Announcement on the Implementation of Dividend        9 June 2017           http://www.cninfo.com.cn
                             Distribution to Holders of A Shares and B Shares
                             for 2016
           2017-067          Indicative Announcement                               17 June 2017          http://www.cninfo.com.cn
           2017-068          Announcement on Resumption of Trading                 17 June 2017          http://www.cninfo.com.cn
           2017-069          Indicative Announcement                               23 June 2017          http://www.cninfo.com.cn
           2017-070          Indicative Announcement                               30 June 2017          http://www.cninfo.com.cn

XVIII. Matters of significant of subsidiaries of the Company
          Applicable √   Not applicable




42        SHANDONG CHENMING PAPER HOLDINGS LIMITED
          INTERIM REPORT 2017
VI Changes in Share Capital and Shareholders


I.   Changes in shares
     1.   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   Subtotal       Amounts       Percentage

          I. Restricted shares                              7,787,180            0.40%          0              0                0         -94,606    -94,606       7,692,574             0.40%
              1.Shares held by the State                            0            0.00%          0              0                0               0          0               0             0.00%
              2.Shares held by state-owned
                legal persons                                       0            0.00%          0              0                0               0          0               0             0.00%
              3.Shares held by other domestic investors     7,787,180            0.40%          0              0                0         -94,606    -94,606       7,692,574             0.40%
          Of which: Shares held by domestic
              legal persons                                         0            0.00%          0              0                0               0          0               0             0.00%
          Shares held by domestic natural persons           7,787,180            0.40%          0              0                0         -94,606    -94,606       7,692,574             0.40%
              4.Shares held by overseas investors                   0            0.00%          0              0                0               0          0               0             0.00%
                Of which: Shares held by overseas
                legal persons                                       0         0.00%             0              0                0               0          0                0         0.00%
          Shares held by overseas natural persons                   0         0.00%             0              0                0               0          0                0         0.00%
          II. Non-restricted shares                     1,928,618,287        99.58%             0              0                0          94,606     94,606    1,928,712,893        99.60%
              1.RMB ordinary shares                     1,105,591,276        57.07%             0              0                0          -5,394     -5,394    1,105,585,882        57.09%
              2.Domestic listed foreign share             470,823,511        24.32%             0              0                0         100,000    100,000      470,923,511        24.32%
              3.Overseas listed foreign shares            352,203,500        18.19%             0              0                0               0          0      352,203,500        18.19%
              4.Others                                              0         0.00%             0              0                0               0          0                0         0.00%
          III. Total number of shares                   1,936,405,467       100.00%             0              0                0               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 94,606 from
          7,787,180 to 7,692,574, 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, some of the
          Directors, Supervisors and Senior Management of the Company increased their holdings in shares during the reporting
          period, causing an increase of 45,000 restricted RMB ordinary shares (A shares); 100,000 restricted domestic-listed
          foreign shares (B shares) and 39,606 restricted RMB ordinary shares (A shares) held by senior management who have
          been resigned for more than half a year were released.

          Approval of changes in shareholding

                 Applicable √ Not applicable

          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

     2.   Changes in restricted shares
                 Applicable √ Not applicable




                                                                                                              SHANDONG CHENMING PAPER HOLDINGS LIMITED                                      43
                                                                                                                                 INTERIM REPORT 2017
VI Changes in Share Capital and Shareholders


II.    Issuance and listing of securities
               Applicable √ Not applicable


III.   Total number of shareholders and shareholdings
                                                                                                                                                                                                                       Unit: share

       Total number of shareholders of ordinary shares as at the end of                                 94,435,       Total number of shareholders of preference shares with restored voting right as at the                          0
       the reporting period                                                                     of which 74,291       end of the reporting period (if any) (please refer to note 8)
                                                                                       were holders of A shares,
                                                                                        19,731 were holders of
                                                                                        B shares and 413 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
                                                                                                                           ordinary shares      (increase or                      Number of
                                                                                                                                held at the decrease) during       Number of non-restricted
                                                                                  Nature of                 Percentage of       end of the     the reporting restricted ordinary    ordinary                  Status of
       Name of shareholders                                                       shareholders               shareholding reporting period            period      shares held    shares held                    shares          Number

       SHOUGUANG CHENMING HOLDINGS COMPANY LIMITED                                State-owned                      15.13%        293,003,657                   0                   0       293,003,657          Pledged      209,643,000
                                                                                  legal person
       HKSCC NOMINEES LIMITED                                                     Overseas legal person            12.87%        249,125,250          -2,030,100                   0       249,125,250
       CHENMING HOLDINGS (HONG KONG) LIMITED                                      Overseas legal person            11.64%        225,333,881          52,240,481                   0       225,333,881
       CENTRAL HUIJIN ASSET MANAGEMENT LTD.                                       State-owned                       2.07%         40,137,900                   0                   0        40,137,900
                                                                                  legal person
       CHINA MERCHANTS BANK CO., LTD. - EVERBRIGHT                                Others                            1.20%          23,300,839         23,300,839                           293,003,658
         PRAMERICA ADVANTAGE ALLOCATION STOCK FUND
       ANBANG ASSET MANAGEMENT - CHINA MERCHANTS                                  Others                            0.95%          18,417,737        -10,985,823                   0        18,417,737
         BANK - ANBANG ASSET MANAGEMENT - WIN-WIN
         NO. 3 COLLECTIVE ASSET MANAGEMENT PRODUCT
       NATIONAL SOCIAL SECURITY FUND 403                                          Others                            0.56%          10,853,596          6,917,996                            10,853,596
       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            0.38%           7,410,100           -351,663                  0          7,410,100
       CHEN Hongguo                                                               Domestic nature person            0.33%           6,434,527                  0          4,825,895          1,608,632

       Connected relationship or connected party relationship among               A shareholder, Chenming Holdings (Hong Kong) Limited, which is an overseas legal person, is a wholly-owned subsidiary of a shareholder, Shouguang
        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
               INTERIM REPORT 2017
VI Changes in Share Capital and Shareholders


III.   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
                                                                                             ordinary shares
                                                                                               held as at the
                                                                                                  end of the
       Name of shareholders                                                                 reporting 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                                                                   249,125,250            Overseas listed             249,125,250
                                                                                                                        foreign shares
       CHENMING HOLDINGS (HONG KONG) LIMITED                                                    225,333,881         Domestically listed            123,413,881
                                                                                                                        foreign shares
                                                                                                                       Overseas listed             101,920,000
                                                                                                                        foreign shares
       CENTRAL HUIJIN ASSET MANAGEMENT LTD.                                                      40,137,900        RMB ordinary shares              40,137,900
       CHINA MERCHANTS BANK CO., LTD. - EVERBRIGHT PRAMERICA ADVANTAGE                           23,300,839        RMB ordinary shares              23,300,839
       ALLOCATION STOCK FUND
       ANBANG ASSET MANAGEMENT - CHINA MERCHANTS                                                 18,417,737        RMB ordinary shares              18,417,737
         BANK - ANBANG ASSET MANAGEMENT - WIN-WIN
         NO. 3 COLLECTIVE ASSET MANAGEMENT PRODUCT
       NATIONAL SOCIAL SECURITY FUND 403                                                         10,853,596      RMB ordinary shares                10,853,596
       BBH A/C VANGUARD EMERGING MARKETS STOCK INDEX FUND                                         8,608,238      RMB ordinary shares                 8,608,238
       JIN Xing                                                                                   7,410,100 Domestically listed foreign              7,410,100
                                                                                                            shares
       CHEN Hongguo                                                                               6,434,527      RMB ordinary shares                  6,434,527

       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
                                                                                                                INTERIM REPORT 2017
VI Changes in Share Capital and Shareholders


IV. 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.

     As at the end of the reporting period, Shouguang Chenming Holdings Company Limited, the controlling shareholder of the
     Company, and its party acting in concert, namely Chenming Holdings (Hong Kong) Limited, held 293,003,657 A shares,
     123,413,881 B shares and 101,920,000 H shares of the Company in aggregate, representing a shareholding of 26.77%.

     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.




46       SHANDONG CHENMING PAPER HOLDINGS LIMITED
         INTERIM REPORT 2017
VII Preference Shares


√ Applicable           Not applicable


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

      There was no issue and listing of preference shares during the reporting period.


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                  7
                               Holders holdings more than 5% of the preference shares of the Company or top ten holders of preference shares
                                                                                                     Number of          Changes
                                                                                                     preference      (increase or
                                                                                                    shares held         decrease)
                                                                                                   at the end of       during the
                                                                                        Preference the reporting        reporting
      Name of shareholders                        Nature of shareholders             shareholding         period           period      Share pledged or locked-up
                                                                                                                                   Status of shares         Number

      BEIJING YIBEN ZHONGXING                   Domestic non-state-owned               27.78%        12,500,000                0         Pledged       12,500,000
        INVESTMENT MANAGEMENT CO., LTD.         legal person
      BANK OF COMMUNICATIONS                    Others                                 22.44%        10,100,000                0
        INTERNATIONAL TRUST CO., LTD.
        - HUILI NO.167 SINGLE CAPITAL TRUST
      BANK OF COMMUNICATIONS                    Others                                 14.22%         6,400,000                0
        INTERNATIONAL TRUST CO., LTD.
        - HUILI NO.136 SINGLE CAPITAL TRUST
      QILU BANK CO., LTD. - QILU BANK           Others                                 13.33%         6,000,000                0
        QUANXIN WEALTH MANAGEMENT
        PRODUCT SERIES
      HENGFENG BANK CO., LTD.                   Domestic non-state-owned               11.11%         5,000,000                0
                                                legal person
      SHANGHAI STATE-OWNED ASSETS               State-owned legal person                6.67%         3,000,000                0
       OPERATION CO., LTD.
      NCF - MINSHENG BANK - CHINA               Others                                  4.44%         2,000,000                0
       FORTUNE INTERNATIONAL TRUST
       – CHINA FORTUNE TRUST MIN XIN
       NO. 11 SINGLE CAPITAL TRUST

      Connected relationship or connected party relationship among             The aforesaid holders of preference shares, “BANK OF COMMUNICATIONS
      the top ten holders of preference shares, and between the top ten        INTERNATIONAL TRUST CO., LTD. - HUILI NO.167 SINGLE CAPITAL TRUST”
      holders of preference shares and the top ten holders of ordinary         and “BANK OF COMMUNICATIONS INTERNATIONAL TRUST CO., LTD. -
      shares                                                                   HUILI NO.136 SINGLE CAPITAL TRUST”, are persons acting in concert. Save
                                                                               for the above, it is not aware that whether there is any connected relationship
                                                                               or connected party relationship among the remaining holders of preference
                                                                               shares, and between the top ten holders of preference shares and the top ten
                                                                               holders of ordinary shares.




                                                                                                SHANDONG CHENMING PAPER HOLDINGS LIMITED                        47
                                                                                                                   INTERIM REPORT 2017
VII Preference Shares


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 thereof
     √ 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.




48       SHANDONG CHENMING PAPER HOLDINGS LIMITED
         INTERIM REPORT 2017
VIII Directors, Supervisors and Senior Management


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

                                                                                                                         Restricted
                                                                           Increase in the    Decrease                       shares    Restricted    Restricted
                                                           Shares held        number of in the number                       granted       shares         shares
                                                               as at the     shares held of shares held Shares held        as at the     granted        granted
                                                             beginning        during the     during the as at the end    beginning     during the as at the end
                                                          of the period           period         period of the period of the period        period of the period
      Name        Position                    Status            (shares)         (shares)       (shares)      (shares)      (shares)     (shares)       (shares)

      Li Dong     Chairman of Supervisory     In office               0          10,000              0        10,000              0            0              0
                  Committee

      Xiao Peng   Secretary to the Board      In office               0          50,000              0        50,000              0            0              0

      Total                                                           0          60,000              0        60,000              0            0              0


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

      There was no change of Directors, Supervisors and senior management of the Company during the reporting period. Please
      see the annual report for 2016 for details.




                                                                                          SHANDONG CHENMING PAPER HOLDINGS LIMITED                            49
                                                                                                             INTERIM REPORT 2017
VIII Directors, Supervisors and Senior Management


III. Equity interests of Directors, Supervisors and Senior Management under SFO of Hong Kong
     As at 30 June 2017, 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 the
     Name                                          Position                                                              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
     Li Dong                                       Supervisor                                                                                   10,000

     Associated corporations

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

     Chen Hongguo (Note 2)       Chairman           Shouguang Chenming Holdings              231,000,000                       0            231,000,000
                                                    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 2017, 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 2017, 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.




50        SHANDONG CHENMING PAPER HOLDINGS LIMITED
          INTERIM REPORT 2017
IX 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


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

      2012 corporate bonds of                12 Chenming           112144     26 December      26 December          380,000            5.65%         Interest is
        Shandong Chenming Paper                    Bond                              2012             2017                                       paid annually.
        Holdings Limited                                                                                                                          The principal
                                                                                                                                                   amount and
                                                                                                                                                        the last
                                                                                                                                                        interest
                                                                                                                                                  payment will
                                                                                                                                                    be paid on
                                                                                                                                                   the maturity
                                                                                                                                                           date.
      Stock exchange on which corporate      Shenzhen Stock Exchange
        bonds are listed or transferred
      Investor eligibility arrangement       Online subscription: Public investors with A share security account opened under China Securities Depository and
                                             Clearing Co., Ltd. Offline subscription: Institutional investors with A share security account opened under China
                                             Securities Depository and Clearing Co., Ltd.
      Interest payment of corporate bonds    There was no payment of interest or redemption during the reporting period.
         during the reporting period

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

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

III. Use of proceeds from corporate bonds
      Use of proceeds from corporate bonds                            The use of proceeds from issuance of corporate bonds has strictly
        and its implementation                                        completed relevant application and approval procedures. As at the
                                                                      end of the reporting period, the proceeds from 12 Chenming
                                                                      Bond were fully used.
      Balance as at the end of the period (RMB’0,000)                0
      Operation of special account for proceeds                       Special account for proceeds is used for the deposit of
                                                                      special capital from bonds.
      Is the use of proceeds consistent with the use                  Yes
         of proceeds guaranteed under the prospectus,
         proposed use of proceeds and other agreement?




                                                                                             SHANDONG CHENMING PAPER HOLDINGS LIMITED                         51
                                                                                                                INTERIM REPORT 2017
IX Corporate bonds


IV. Credit rating of corporate bonds
     The credit rating of 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 2012 corporate bond rating report (2017) were published
     on CNINFO on 19 April 2017.


V.   Credit enhancement mechanism, repayment plan and other repayment guarantee measures
     for 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.


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


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


VIII. 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 to
                                                                    As at the end of       As at the end of            the end of
     Item                                                       the reporting period          the prior yea        the prior year

     Current ratio                                                           79.80%                 76.57%                  3.23%
     Gearing ratio                                                           74.78%                 72.58%                  2.20%
     Quick ratio                                                             68.48%                 66.16%                  2.32%
                                                                                                               Increase/decrease
                                                                                                                  of the reporting
                                                                                                                         period as
                                                                                                                     compared to
                                                                                        The corresponding          corresponding
                                                                       The reporting             period of               period of
                                                                              period         the prior year         the prior year

     EBITDA interest coverage ratio                                             5.87                  4.26                37.79%
     Loans payment ratio                                                    100.00%               100.00%                  0.00%
     Interest payment ratio                                                 100.00%               100.00%                  0.00%

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

     √ Applicable       Not applicable

     EBITDA interest coverage ratio increased by 37.79% as compared to the corresponding period of the prior year mainly due
     to the year-on-year improvement in profitability as a result of the increased sales, prices and gross profit margin of machine-
     made paper of the Company.




52       SHANDONG CHENMING PAPER HOLDINGS LIMITED
         INTERIM REPORT 2017
IX Corporate bonds


IX. Overdue liabilities
           Applicable √   Not applicable

     The Company did not have any liabilities overdue.


X.   Interest payment on other bonds, debt and financing instruments during the reporting period
                                                                                                             Amount of
     Item                                                                                             interest payment

     Medium-term notes                                                                                  49,959,249.83
     Super & short-term commercial papers                                                              108,591,780.82

     Total                                                                                             158,551,030.65


XI. Bank credit obtained, its use and repayment of bank loans during the reporting period
     During the reporting period, the Company obtained bank credit of RMB72,300 million, of which RMB42,000 million was
     utilised with RMB30,300 million outstanding. The Company repaid bank loans of RMB20,386 million.


XII. Performance of relevant agreements or commitments under the prospectus of corporate
     bonds during the reporting period
     Nil


XIII. Matters of significance happened during the reporting period

     Nil


XIV. Is there any guarantor for corporate bonds?
           Yes √ No




                                                                     SHANDONG CHENMING PAPER HOLDINGS LIMITED        53
                                                                                        INTERIM REPORT 2017
X Financial Report


I.    Auditors’ Report
      Is the interim report audited

           Yes √ No

      The interim financial report is unaudited.


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

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

            30 June 2017

                                                                                                         Unit: RMB

            Item                                                              Closing balance     Opening balance

            CURRENT ASSETS:
             Monetary funds                                                  12,541,497,475.48   10,109,930,319.49
             Bills receivable                                                 2,245,126,472.85    1,590,460,875.23
             Accounts receivable                                              3,767,714,992.67    3,974,065,104.15
             Prepayments                                                      1,618,194,292.51    1,511,362,674.64
             Other receivables                                                1,819,966,043.11    1,614,214,645.48
             Inventories                                                      6,057,467,324.08    4,862,668,746.90
             Non-current assets due within one year                           4,313,561,787.97    5,487,376,588.22
             Other current assets                                            10,341,054,498.85    6,616,744,831.28

            Total current assets                                             42,704,582,887.52   35,766,823,785.39

            NON-CURRENT ASSETS:
             Available-for-sale financial assets                              2,445,000,000.00    1,945,000,000.00
             Long-term receivables                                            9,573,697,226.65    8,844,262,173.65
             Long-term equity investments                                       169,207,699.57       67,251,992.88
             Investment property                                                                     14,258,675.83
             Fixed assets                                                    28,536,783,322.01   28,811,555,365.39
             Construction in progress                                         5,054,138,263.16    4,115,194,870.23
             Construction materials                                              12,057,242.74       18,847,584.79
             Intangible assets                                                1,980,339,282.53    1,540,959,330.74
             Goodwill                                                            20,283,787.17       20,283,787.17
             Long-term prepaid expenses                                         142,759,273.13      157,772,100.69
             Deferred income tax assets                                         517,745,917.35      497,457,826.70
             Other non-current assets                                           611,518,493.67      485,687,038.68

            Total non-current assets                                         49,063,530,507.98   46,518,530,746.75

            Total assets                                                     91,768,113,395.50   82,285,354,532.14




54         SHANDONG CHENMING PAPER HOLDINGS LIMITED
           INTERIM REPORT 2017
X 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                                                    31,686,575,360.39    27,875,506,988.53
            Bills payable                                                               883,353,441.56       515,301,703.08
            Accounts payable                                                          3,530,375,213.22     3,724,266,382.06
            Advance receipts                                                            302,305,850.69       377,135,566.33
            Staff remuneration payables                                                 162,599,897.73       159,968,262.82
            Taxes payable                                                               233,992,028.84       236,927,459.78
            Interest payable                                                            131,056,170.58        30,731,253.71
            Other payables                                                            1,026,057,983.92       948,919,195.80
            Non-current liabilities due within one year                               5,401,943,371.59     6,237,021,557.17
            Other current liabilities                                                10,156,266,146.23     6,602,863,069.45

           Total current liabilities                                                 53,514,525,464.75    46,708,641,438.73

           NON-CURRENT LIABILITIES:
            Long-term borrowings                                                      7,786,639,310.56      6,935,598,781.23
            Bonds payable                                                             1,000,000,000.00
            Long-term payables                                                        4,171,099,838.19      3,951,368,854.00
            Special payables                                                            681,039,716.66        681,039,716.66
            Deferred income                                                           1,470,755,158.93      1,443,846,526.33

           Total non-current liabilities                                             15,109,534,024.34    13,011,853,878.22

           TOTAL LIABILITIES                                                         68,624,059,489.09    59,720,495,316.95

           OWNERS’ EQUITY:
            Share capital                                                             1,936,405,467.00      1,936,405,467.00
            Other equity instruments                                                  7,060,300,000.00      7,060,300,000.00
            Of which: Preference shares                                               4,477,500,000.00      4,477,500,000.00
                      Perpetual bonds                                                 2,582,800,000.00      2,582,800,000.00
            Capital reserves                                                          6,149,257,784.90      6,149,257,784.90
            Other comprehensive income                                                 -634,548,351.99       -805,245,771.89
            Surplus reserves                                                          1,132,116,106.40      1,132,116,106.40
            Retained profit                                                           7,112,269,231.70      6,745,974,781.02

           Total equity attributable to equity holders of the company                22,755,800,238.01    22,218,808,367.43
             Minority interest                                                          388,253,668.40       346,050,847.76

           Total owners’ equity                                                     23,144,053,906.41    22,564,859,215.19

           TOTAL LIABILITIES AND OWNERS’ EQUITY                                     91,768,113,395.50    82,285,354,532.14


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




                                                                         SHANDONG CHENMING PAPER HOLDINGS LIMITED          55
                                                                                            INTERIM REPORT 2017
X Financial Report


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

                                                                                       Unit: RMB

            Item                                            Closing balance     Opening balance

            CURRENT ASSETS:
             Monetary funds                                10,271,461,000.35    7,934,163,265.76
             Bills receivable                                 471,596,818.52      112,943,069.85
             Accounts receivable                               54,823,865.39       84,089,911.81
             Prepayments                                    2,256,017,645.32    1,003,699,885.05
             Interest receivable                               14,373,283.56
             Other receivables                             27,570,416,090.05   22,848,685,985.74
             Inventories                                      778,395,625.91      663,006,714.42
             Non-current assets due within one year                               900,000,000.00

            Total current assets                           41,417,084,329.10   33,546,588,832.63

            NON-CURRENT ASSETS:
             Available-for-sale financial assets            2,445,000,000.00    1,909,000,000.00
             Long-term equity investments                  16,527,269,447.22   14,558,097,658.49
             Investment property                                                   14,258,675.83
             Fixed assets                                   3,254,771,603.27    3,343,366,320.45
             Construction in progress                         107,018,276.20       52,757,799.47
             Construction materials                                42,121.99           71,973.35
             Intangible assets                                476,440,219.26      300,218,996.05
             Deferred income tax assets                       143,984,689.87      164,139,190.27
             Other non-current assets                          67,400,000.00       67,400,000.00

            Total non-current assets                       23,021,926,357.81   20,409,310,613.91

            Total assets                                   64,439,010,686.91   53,955,899,446.54

            CURRENT LIABILITIES:
             Short-term borrowings                          8,029,060,574.36    8,203,392,554.58
             Bills payable                                  7,174,250,000.00    3,057,000,000.00
             Accounts payable                                 697,359,927.59      654,411,787.56
             Advance receipts                               2,614,683,825.23      537,139,483.60
             Staff remuneration payables                       59,757,890.43       58,599,576.37
             Taxes payable                                     38,730,979.85       43,087,056.70
             Interest payable                                 110,626,170.55       30,731,253.71
             Other payables                                 6,184,320,558.44    3,689,371,275.46
             Non-current liabilities due within one year    5,067,194,973.19    5,648,861,310.04
             Other current liabilities                     10,156,266,146.23    6,602,863,069.45

            Total current liabilities                      40,132,251,045.87   28,525,457,367.47




56         SHANDONG CHENMING PAPER HOLDINGS LIMITED
           INTERIM REPORT 2017
X 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                                1,171,672,793.14    1,521,611,382.77
            Long-term payables                                  3,220,909,734.68    3,005,178,750.49
            Deferred income                                        53,823,776.90       56,572,797.75

           Total non-current liabilities                        4,446,406,304.72    4,583,362,931.01

           TOTAL LIABILITIES                                   44,578,657,350.59   33,108,820,298.48

           OWNERS’ EQUITY:
            Share capital                                       1,936,405,467.00    1,936,405,467.00
            Other equity instruments                            7,060,300,000.00    7,060,300,000.00
            Of which: Preference shares                         4,477,500,000.00    4,477,500,000.00
                      Perpetual bonds                           2,582,800,000.00    2,582,800,000.00
            Capital reserves                                    5,938,960,168.19    5,938,960,168.19
            Surplus reserves                                    1,119,926,524.49    1,119,926,524.49
            Retained profit                                     3,804,761,176.64    4,791,486,988.38

           Total owners’ equity                               19,860,353,336.32   20,847,079,148.06

           TOTAL LIABILITIES AND OWNERS’ EQUITY               64,439,010,686.91   53,955,899,446.54




                                                    SHANDONG CHENMING PAPER HOLDINGS LIMITED         57
                                                                       INTERIM REPORT 2017
X 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                                                      13,749,235,007.24     10,606,358,733.02
                   Including: Revenue                                                 13,749,235,007.24     10,606,358,733.02
            II.    Total operating costs                                              11,880,087,434.81      9,622,587,179.13
                   Including: Operating costs                                          9,529,854,215.34      7,576,566,708.17
                                Taxes and surcharges                                     105,960,012.36         85,488,437.29
                                Sales expenses                                           641,498,275.35        573,734,657.05
                                Administrative expenses                                  856,354,999.17        694,013,827.38
                                Finance expenses                                         696,609,279.51        655,744,163.67
                                Loss on impairment of assets                              49,810,653.08         37,039,385.57
                   Plus:        Gain on change in fair value (“-” denotes loss)        -11,009,851.10        -10,599,543.68
                                Investment income (“-” denotes loss)                    65,864,672.36         37,008,429.78
                                Including: Investment income from associates
                                   and joint ventures                                      -4,154,293.31        -7,203,834.37
            III.   Operating profit (“-” denotes loss)                                1,924,002,393.69     1,010,180,439.99
                   Plus:        Non-operating income                                      158,519,294.68       228,908,354.31
                   Including: Gain on disposal of non-current assets                        1,822,923.95         2,416,628.05
                   Less:        Non-operating expenses                                      3,550,702.42         6,002,982.36
                   Including: Loss on disposal of non-current assets                        1,478,120.96         4,043,314.21
            IV.    Total profit (“-” denotes total loss)                              2,078,970,985.95     1,233,085,811.94
                   Less:        Income tax expenses                                       331,253,327.08       307,031,422.46
            V.     Net profit (“-” denotes net loss)                                  1,747,717,658.87       926,054,389.48
                   Net profit attributable to owners of the Company                     1,745,514,838.23       939,164,870.60
                   Minority interest                                                        2,202,820.64       -13,110,481.12
            VI.    Other comprehensive income after tax, net                              170,697,419.90      -154,317,270.14
                   Other comprehensive income after tax attributable to
                       owners of the Company, net                                        170,697,419.90       -154,317,270.14
                   (I) Other comprehensive income that cannot be reclassified
                          to profit and loss in subsequent periods
                   (II) Other comprehensive income that will be reclassified
                          to profit and loss in subsequent periods                       170,697,419.90       -154,317,270.14
                        Translation difference of financial statements denominated
                          in foreign currency                                             170,697,419.90      -154,317,270.14
            VII.   Total comprehensive income                                           1,918,415,078.77       771,737,119.34

            Total comprehensive income attributable to owners of the Company            1,916,212,258.13      784,847,600.46

            Total comprehensive income attributable to minority interest                    2,202,820.64       -13,110,481.12

            VIII. Earnings per share:
                  (I) Basic earnings per share                                                      0.75                 0.45
                  (II) Diluted earnings per share                                                   0.75                 0.45

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




58         SHANDONG CHENMING PAPER HOLDINGS LIMITED
           INTERIM REPORT 2017
X 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                                                                3,682,570,308.92    3,404,907,928.96
                Less:       Operating costs                                            2,560,699,253.09    2,749,395,766.42
                            Taxes and surcharges                                          38,197,149.42       13,030,965.17
                            Selling expenses                                             131,699,019.76      128,062,939.31
                            Administrative expenses                                      306,624,272.42      267,555,727.82
                            Finance expenses                                             302,220,430.04      490,569,574.44
                            Loss on impairment of assets                                  13,038,951.61        1,356,150.48
                Plus:       Gain on change in fair value (“-” denotes loss)
                            Investment income (“-” denotes loss)                        69,489,948.67      244,172,165.82
                Including: Investment income from associates and joint ventures              -30,620.30          -40,098.33
           II. Operating profit (“-” denotes loss)                                     399,581,181.25         -891,028.86
                Plus:       Non-operating income                                          13,151,629.14       40,001,738.10
                Including: Gain on disposal of non-current assets                            369,306.40          373,450.11
                Less:       Non-operating expenses                                            83,734.18           21,731.34
                Including: Loss on disposal of non-current assets                             83,734.18           21,731.34
           III. Total profit (“-” denotes total loss)                                  412,649,076.21       39,088,977.90
                Less:       Income tax expenses                                           20,154,500.40      -33,539,996.43
           IV. Net profit (“-” denotes net loss)                                       392,494,575.81       72,628,974.33
           V. Other comprehensive income after tax, net
                (I) Other comprehensive income that cannot be reclassified
                       to profit and loss in subsequent periods
                (II) Other comprehensive income that will be reclassified
                       to profit and loss in subsequent periods

           VI. Total comprehensive income                                                392,494,575.81       72,628,974.33




                                                                           SHANDONG CHENMING PAPER HOLDINGS LIMITED         59
                                                                                              INTERIM REPORT 2017
X 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          12,367,242,687.49     11,293,635,802.59
                 Tax rebates received                                                      2,575,753.81          3,612,601.13
                 Cash received relating to other operating activities                    230,498,726.61        390,470,872.96

            Subtotal of cash inflows from operating activities                        12,600,317,167.91     11,687,719,276.68

                 Cash paid for goods and services                                      8,746,611,691.32      6,247,052,235.36
                 Cash paid to and for employees                                          544,347,530.25        486,900,606.26
                 Payments of taxes                                                       793,983,398.34        631,814,661.29
                 Cash paid relating to other operating activities                      6,987,103,543.24      7,019,461,626.81

            Subtotal of cash outflows from operating activities                       17,072,046,163.15     14,385,229,129.72

            Net cash flows from operating activities                                  -4,471,728,995.24     -2,697,509,853.04
            II. Cash flows from investing activities:
                Cash received from investments                                            16,861,112.27        45,750,000.00
                Net cash received from disposal of fixed assets, intangible assets
                  and other long-term assets                                                 395,843.67           213,406.40
                Cash received relating to other investing activities                     972,391,073.00       104,056,200.00

            Subtotal of cash inflows from investing activities                           989,648,028.94       150,019,606.40

                 Cash paid for purchase of fixed assets, intangible assets and
                   other long-term assets                                                746,966,959.23       990,227,873.52
                 Cash paid on investments                                                606,110,000.00

            Subtotal of cash outflows from investing activities                        1,353,076,959.23       990,227,873.52

            Net cash flows from investing activities                                    -363,428,930.29       -840,208,267.12




60         SHANDONG CHENMING PAPER HOLDINGS LIMITED
           INTERIM REPORT 2017
X 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 investments                                             40,000,000.00
                Including: cash received by subsidiaries from minority investments         40,000,000.00
                Cash received from borrowings                                          23,101,617,576.90     23,019,156,541.90
                Cash received from bond issuance
                Cash received relating to other financing activities                    7,720,000,594.49     12,132,838,789.75

           Subtotal of cash inflows from financing activities                          30,861,618,171.39     35,151,995,331.65

              Cash repayments of amounts borrowed                                      13,156,774,323.31     19,068,968,880.27
              Cash paid for dividend and profit distribution or interest payment        2,125,109,981.16        786,313,234.84
              Cash paid relating to other financing activities                         10,195,554,187.00     10,071,692,038.29

           Subtotal of cash outflows from financing activities                         25,477,438,491.47     29,926,974,153.40

           Net cash flows from financing activities                                     5,384,179,679.92      5,225,021,178.25

           IV. Effect of foreign exchange rate changes on cash and cash equivalents      -107,391,377.48         -7,969,200.70
           V. Net increase in cash and cash equivalents                                   441,630,376.91      1,679,333,857.39
               Plus: Balance of cash and cash equivalents as at
                 the beginning of the period                                            1,979,861,045.62      1,888,107,493.76

           VI. Balance of cash and cash equivalents as at the end of the period         2,421,491,422.53      3,567,441,351.15




                                                                            SHANDONG CHENMING PAPER HOLDINGS LIMITED         61
                                                                                               INTERIM REPORT 2017
X 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            2,947,603,434.58    3,582,406,689.02
                 Cash received relating to other operating activities                     697,159,595.97       79,542,569.75

            Subtotal of cash inflows from operating activities                          3,644,763,030.55    3,661,949,258.77

                 Cash paid for goods and services                                       1,907,092,137.24    3,315,453,666.09
                 Cash paid to and for employees                                           227,658,831.17      202,298,099.22
                 Payments of taxes                                                        226,985,971.66       83,292,921.05
                 Cash paid relating to other operating activities                         610,188,242.33      127,733,680.37

            Subtotal of cash outflows from operating activities                         2,971,925,182.40    3,728,778,366.73

            Net cash flows from operating activities                                     672,837,848.15       -66,829,107.96

            II. Cash flows from investing activities:
                Cash received from investments                                             16,861,111.11     245,750,000.00
                Net cash received from disposal of fixed assets, intangible assets
                  and other long-term assets                                                  17,628.00            93,406.40
                Cash received relating to other investing activities                     900,000,000.00

            Subtotal of cash inflows from investing activities                           916,878,739.11      245,843,406.40

                 Cash paid for purchase of fixed assets, intangible assets and
                   other long-term assets                                                  54,575,321.80      31,377,557.00
                 Cash paid on investments                                               2,665,511,220.00

            Subtotal of cash outflows from investing activities                         2,720,086,541.80      31,377,557.00

            Net cash flows from investing activities                                   -1,803,207,802.69     214,465,849.40




62         SHANDONG CHENMING PAPER HOLDINGS LIMITED
           INTERIM REPORT 2017
X 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                                          14,360,451,015.03     15,208,998,560.00
                Cash received relating to other financing activities                    7,190,741,096.00     10,733,403,288.89

           Subtotal of cash inflows from financing activities                          21,551,192,111.03     25,942,401,848.89

              Cash repayments of amounts borrowed                                      10,665,502,742.60     14,730,286,609.26
              Cash paid for dividend and profit distribution or interest payment        2,240,461,564.72        322,578,000.95
              Cash paid relating to other financing activities                          7,751,076,273.64     10,675,743,122.70

           Subtotal of cash outflows from financing activities                         20,657,040,580.96     25,728,607,732.91

           Net cash flows from financing activities                                       894,151,530.07       213,794,115.98

           IV. Effect of foreign exchange rate changes on cash and cash equivalents         -5,297,986.97      -15,526,949.47
           V. Net increase in cash and cash equivalents                                   -241,516,411.44      345,903,907.95
               Plus: Balance of cash and cash equivalents as at
                 the beginning of the period                                              582,578,426.62        49,438,736.95

           VI. Balance of cash and cash equivalents as at the end of the period           341,062,015.18       395,342,644.90




                                                                            SHANDONG CHENMING PAPER HOLDINGS LIMITED         63
                                                                                               INTERIM REPORT 2017
                 64
                                           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 equity instruments
                                                                                                                                                                                                                                                             Other




INTERIM REPORT 2017
                                                                                                                                                                                                                                        Less:        comprehensive                                                     General                                                         Total
                                                                                                                                                                                                                                                                                                                                                                                               X Financial Report




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                                                      I. Balance as at the end of the prior period                          1,936,405,467.00    4,477,500,000.00       2,582,800,000.00                6,149,257,784.90                             -805,245,771.89                          1,132,116,106.40                     6,745,974,781.02     346,050,847.76     22,564,859,215.19
                                                           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    4,477,500,000.00       2,582,800,000.00                6,149,257,784.90                             -805,245,771.89                          1,132,116,106.40                     6,745,974,781.02     346,050,847.76     22,564,859,215.19




SHANDONG CHENMING PAPER HOLDINGS LIMITED
                                                      III. Changes in the period (“-” denotes decrease)                                                                                                                                            170,697,419.90                                                                 366,294,450.68      42,202,820.64        579,194,691.22
                                                           (I) Total comprehensive income                                                                                                                                                            170,697,419.90                                                               1,745,514,838.23       2,202,820.64      1,918,415,078.77
                                                           (II) Capital paid in and reduced by owners                                                                                                                                                                                                                                                   40,000,000.00         40,000,000.00
                                                                 1. Ordinary shares paid by shareholders                                                                                                                                                                                                                                                40,000,000.00         40,000,000.00
                                                                 2. Capital paid by holders of other equity instruments
                                                                 3. Amount of share-based payments
                                                                       recognised in owners’ equity
                                                                 4. Others
                                                           (III) Profit distribution                                                                                                                                                                                                                                              -1,379,220,387.55                        -1,379,220,387.55
                                                                 1. Transfer to surplus reserves
                                                                 2. Transfer to general risk provision
                                                                 3. Distribution to owners (or shareholders)                                                                                                                                                                                                                      -1,379,220,387.55                        -1,379,220,387.55
                                                                 4.vOthers
                                                           (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    4,477,500,000.00       2,582,800,000.00                6,149,257,784.90                             -634,548,351.99                          1,132,116,106.40                     7,112,269,231.70     388,253,668.40     23,144,053,906.41
                                           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
                                                                                                                                                                                                                                        Less:        comprehensive                                                   General
                                                                                                                                                                                                                                                                                                                                                                                             X Financial Report




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

                                                      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
                                                           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. Capital paid by holders of other equity instruments                         2,238,750,000.00                                                                                                                                                                                                        2,238,750,000.00
                                                                 3. Amount of share-based payments recognised
                                                                       in 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




                   INTERIM REPORT 2017
SHANDONG CHENMING PAPER HOLDINGS LIMITED
                 65
                 66
                                           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                                                                          Total
                                                                                                                  Share capital   Preference shares          Perpetual bonds     Others   Capital reserves     Less: treasury shares comprehensive income    Special reserves   Surplus reserves     Retained profit      owners’ equity




INTERIM REPORT 2017
                                                                                                                                                                                                                                                                                                                                            X Financial Report




                                                      I. Balance as at the end of the prior period             1,936,405,467.00    4,477,500,000.00          2,582,800,000.00             5,938,960,168.19                                                                      1,119,926,524.49   4,791,486,988.38    20,847,079,148.06
                                                           Add: changes in accounting policies
                                                           Corrections of previous errors
                                                           Others
                                                      II. Balance as at the beginning of the period            1,936,405,467.00    4,477,500,000.00          2,582,800,000.00             5,938,960,168.19                                                                      1,119,926,524.49   4,791,486,988.38    20,847,079,148.06
                                                      III. Changes in the period (“-” denotes decrease)                                                                                                                                                                                           -986,725,811.74      -986,725,811.74
                                                           (I) Total comprehensive income                                                                                                                                                                                                            392,494,575.81       392,494,575.81
                                                           (II) Capital paid in and reduced by owners




SHANDONG CHENMING PAPER HOLDINGS LIMITED
                                                                 1. Ordinary shares paid by shareholders
                                                                 2. Capital paid by holders of other
                                                                       equity instruments
                                                                 3. Amount of share-based payments
                                                                       recognised in owners’ equity
                                                                 4. Others
                                                           (III) Profit distribution                                                                                                                                                                                                               -1,379,220,387.55    -1,379,220,387.55
                                                                 1. Transfer to surplus reserves
                                                                 2. Distribution to owners (or shareholders)                                                                                                                                                                                       -1,379,220,387.55    -1,379,220,387.55
                                                                 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
                                                                 1. Withdrawal
                                                                 2. Used
                                                           (VI) Others

                                                      IV. Balance as at the end of the period                  1,936,405,467.00    4,477,500,000.00          2,582,800,000.00             5,938,960,168.19                                                                      1,119,926,524.49   3,804,761,176.64    19,860,353,336.32
                                           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 prior period
                                                                                                                                                      Other equity instruments
                                                                                                                                                                                                                                                   Other
                                                                                                                  Share capital   Preference shares          Perpetual bonds     Others   Capital reserves   Less: treasury shares comprehensive income    Special reserves   Surplus reserves    Retained profit   Total owners’ equity
                                                                                                                                                                                                                                                                                                                                            X 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
                                                           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. Capital paid by holders of other
                                                                       equity instruments                                          2,238,750,000.00                                                                                                                                                                    2,238,750,000.00
                                                                 3. Amount of share-based payments
                                                                       recognised in 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
                                                                 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             5,938,852,560.70                                                                    1,119,926,524.49   4,676,879,987.99     18,493,614,540.18




                   INTERIM REPORT 2017
SHANDONG CHENMING PAPER HOLDINGS LIMITED
                 67
IX Financial Report


III. General Information of the Company
     Shandong Chenming Paper Holdings Limited (hereinafter referred to as the “Company”) was incorporated in May 1993 in
     Shouguang City, Shandong Province, with its headquarters at No. 2199 Nongsheng Road East, Shouguang City, Shandong
     Province.

     The Company and its subsidiaries are principally engaged in processing and sale of paper products (including machine
     made paper and paper board), paper making raw materials and machinery; generation and sale of electric power and thermal
     power; forestry, saplings growing, processing and sale of timber; manufacturing, processing and sale of wood products;
     and manufacturing and sale of laminated boards and fortified wooden floorboards, hotel service, marine engineering project
     investment, equipment financial and operating leasing, etc.

     The financial statements were e considered, approved and issued by the Board of the Company on 15 August 2017.

     Subsidiaries of the Company included in the scope of consolidation for the first half of 2017 totalled 54. For details, please
     refer to this Note IX “Equity in other entities”. The scope of consolidation of the Company during the year had 3 companies
     included and two companies excluded compared to the prior year. For details, please refer to this Note VIII “Changes in the
     scope of consolidation”.


IV. Basis of Preparation of the Financial Statements
     1.    Basis of preparation
           The Company’s financial statements are prepared on a going concern basis and based on actual transactions and
           events, in accordance with the Accounting Standards for Business Enterprises-Basic Standards promulgated by
           the Ministry of Finance (Order of Ministry of Finance No. 33, as amended by Order of Ministry of Finance No. 76)
           and 41 specific accounting standards as promulgated and amended on and after 15 February 2006, the application
           guidelines of the Accounting Standards for Business Enterprises, interpretations and other related rules of the
           Accounting Standards for Business Enterprises (hereinafter referred to as “ASBEs”), and the disclosure requirements
           of the “Regulation on the Preparation of Information Disclosures of Companies Issuing Public Shares, No. 15: General
           Requirements for Financial Reports” (re