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个股公告正文

晨 鸣B:2019年半年度报告(英文版)

日期:2019-08-16附件下载

    SHANDONG CHENMING PAPER HOLDINGS LIMITED*
    
    2019 Interim Report
    
    August 2019
    
    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, guarantee that there are no false representations, misleading
    
    statements or material omissions contained in this annual report, and are jointly and severally responsible for the liabilities of the
    
    Company.
    
    Chen Hongguo, head of the Company, Dong Lianming, head in charge of accounting and Zhang Bo, head of the accounting
    
    department (Accounting Officer), declare that they warrant the truthfulness, accuracy and completeness of the financial report in the
    
    interim report.
    
    All directors have attended the board meeting to review 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 of the Company 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
    
    Table of Contents
    
    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 13
    
    V Material Matters 24
    
    VI Changes in Share Capital and Shareholders 42
    
    VII Preference Shares 47
    
    VIII Directors, Supervisors and Senior Management 49
    
    IX Corporate Bonds 54
    
    X Financial Report 58
    
    XI Documents Available for Inspection 189
    
    2 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    Definitions
    
    Item means Definition
    
    Company, Group, Chenming Group means Shandong Chenming Paper Holdings Limited and its subsidiaries
    
    or Chenming Paper
    
    Parent Company or Shouguang means Shandong Chenming Paper Holdings Limited
    
    Headquarters
    
    Chenming Holdings means 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.
    
    Shanghai Chenming means Shanghai Chenming Industry Co., Ltd.
    
    Huanggang Chenming means Huanggang Chenming Pulp & Paper 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 Shouguang Meilun Paper Co., Ltd.
    
    Chenming Sales Company means Shandong Chenming Paper Sales Company Limited
    
    Finance Company means Shandong Chenming Group Finance Co., Ltd.
    
    Chenming Leasing means Shandong Chenming Financial Leasing Co., Ltd. and its subsidiaries
    
    Hongtai Real Estate means Shanghai Hongtai Real Estate Co., Ltd.
    
    GDR Fund means Weifang Chenming Growth Driver Replacement Equity Investment Fund Partnership
    
    (Limited Partnership)
    
    Goldtrust Futures means Goldtrust Futures Co., Ltd.
    
    the reporting period means The period from 1 January 2019 to 30 June 2019
    
    the beginning of the year or means 1 January 2019
    
    the period
    
    the end of the interim period or means 30 June 2019
    
    the period
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 3
    
    I. Company profile
    
    Stock abbreviation 晨鳴紙業 Stock code 000488
    
    晨鳴B 200488
    
    晨鳴優01 140003
    
    晨鳴優02 140004
    
    晨鳴優03 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 山東晨鳴紙業集團股份有限公司
    
    Legal short name in Chinese of the Company 晨鳴紙業
    
    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 HongguoII. Contact persons and contact methods
    
    Secretary to the Board Hong Kong Company Secretary
    
    Name Yuan Xikun Chu Hon Leung
    
    Correspondence No. 2199 East Nongsheng Road, Shouguang City, 22nd Floor, World Wide House
    
    Address Shandong Province
    
    Telephone 0536-2158008 +852-21629600
    
    Facsimile 0536-2158977 +852-25010028
    
    Email address chenmmingpaper@163.com liamchu@li-partners.comIII. 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 2018 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 2018 Annual Report for details.
    
    4 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    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
    
    The corresponding to the corresponding
    
    period of period of
    
    The reporting period the prior year the prior year
    
    Revenue (RMB) 13,348,648,113.70 15,551,334,039.89 -14.16%
    
    Net profit attributable to shareholders of the Company (RMB) 509,795,572.29 1,784,631,025.31 -71.43%
    
    Net profit after extraordinary gains or losses attributable to
    
    shareholders of the Company (RMB) 303,144,996.21 1,537,896,765.44 -80.29%
    
    Net cash flows from operating activities (RMB) 2,699,770,891.69 4,745,037,920.91 -43.10%
    
    Basic earnings per share (RMB per share) 0.013 0.36 -96.39%
    
    Diluted earnings per share (RMB per share) 0.013 0.36 -96.39%
    
    Rate of return on net assets on weighted average basis 0.21% 5.77% -5.56%
    
    Increase/decrease as
    
    at the end of the
    
    reporting period as
    
    As at the end of As at the end of compared to the
    
    the reporting period the prior year end of the prior year
    
    Total assets (RMB) 106,558,750,961.42 105,318,734,827.82 1.18%
    
    Net assets attributable to shareholders of
    
    the Company (RMB) 24,468,978,032.01 25,048,731,454.79 -2.31%
    
    Data specification for basic earnings per share, diluted earnings per share, and rate of return on weighted average net assets:
    
    Net profit attributable to shareholders of the Company does not exclude the effect of interest of perpetual bonds and the
    
    dividends of preference shares paid and declared to be paid. When calculating financial indicators such as earnings per
    
    share and the rate of return on net assets on weighted average basis, the interest for perpetual bonds from 1 January 2019
    
    to 30 June 2019 of RMB96,202,739.73 and the dividend on preference shares paid and declared to be paid in 2019 of
    
    RMB377,169,767.52 are deducted.
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 5
    
    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.3. Reasons for differences in accounting data under domestic and overseas accounting standards
    
    □ Applicable √ Not applicable
    
    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) 23,358,777.37
    
    Government grants (except for the government grants closely related to the
    
    normal operation of the Company and granted constantly at a fixed amount
    
    or quantity in accordance with a certain standard based on state policies)
    
    accounted for in profit or loss for the current period 227,698,648.23
    
    Non-operating gains and losses other than the above items 4,188,590.61
    
    Gain or loss from change in fair value of consumable biological assets adopting
    
    fair value method for subsequent measurements -1,883,064.80
    
    Less: Effect of income tax 46,750,425.02
    
    Effect of minority interest (after tax) -38,049.69
    
    Total 206,650,576.08
    
    Notes for the Company’s extraordinary gain or loss items as defined in the Explanatory Announcement on Information
    
    Disclosure for Companies Offering Their Securities to the Public No.1 – Extraordinary Gains or Losses and the extraordinary
    
    gain or loss items as illustrated in the Explanatory Announcement on Information Disclosure for Companies Offering Their
    
    Securities to the Public No.1 – Extraordinary Gains or Losses defined as its recurring gain or loss items
    
    □ Applicable √ Not applicable
    
    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
    
    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 activities of the Company during the reporting Period
    
    The Company is a large conglomerate principally engaged in pulp production and paper making with synergistic
    
    development in finance, mining, forestry, logistics and construction materials. The Company is the only listed company
    
    with A shares, B shares and H shares in China. It is among the top 100 listed companies in China and the top 10 star
    
    enterprises in China, and is rated as one of the 50 most competitive blue chip companies in China. It has been honoured
    
    over 200 titles above the provincial level including the China May 1st Labour Prize, the Top 10 Best Light Industry
    
    Enterprises in China, Outstanding Contribution Prize in Business Administration in China and the National Spiritual
    
    Civilisation Advanced Unit. Its key indicators in respect of business and economic efficiency have been in a leading
    
    position in the industry in China for over 20 consecutive years. The machine-made paper business is the principal
    
    activity and the major source of revenue and profit of the Company. During the reporting period, there was no significant
    
    change in the principal activity of the Company.
    
    Recently, the Company has committed itself to implementing the “forestry, pulp and paper integration” strategy. It
    
    currently has three major pulp mills in Zhanjiang, Huanggang and Shouguang. It has the largest wood pulp production
    
    capacity in China with annual production capacity of more than 4.2 million tonnes. It is the first integrated pulp and
    
    paper enterprise in China to be able to produce wood pulp to meet its paper making demand and its pulp production
    
    capacity and paper production capacity complement each other perfectly. Leveraging the integrated forestry, pulp and
    
    paper project, the Company is the enterprise that offers the widest product range in the paper making industry, and
    
    its products include culture paper, white paper board, coated paper, household paper, electrostatic copy paper and
    
    thermal paper, with each major product ranking among the best in China in terms of market share.
    
    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 17 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 FSC-COC
    
    certification, leading among its industry peers.
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 7
    
    I. Principal operations of the Company during the Reporting Period (Cont’d)
    
    (II) General information of the industries where the Company operated
    
    The paper making industry is an important basic raw materials industry which is closely related to the national economy
    
    and social development with the characteristic of sustainable development. In recent years, the supply and demand
    
    of the paper making industry grew at a steady pace, creating a relatively stable production and sale environment.
    
    According to the 2018 Annual Report of China’s Paper Industry, in 2018, there were approximately 2,700 companies
    
    engaged in the production and paper and paper board in China, with a nationwide paper and paper board production
    
    volume of 104,350,000 tonnes; and a consumption volume of 104,390,000 tonnes. The annual consumption per capita
    
    was 75 kilograms (1.395 billion persons). From 2009 to 2018, the average annual growth rate of paper and paper board
    
    production volume was 2.12% and the average annual growth rate of consumption was 2.22%.
    
    Since the implementation of the “Thirteenth Five Year Plan”, the paper making industry has been subject to stricter
    
    environmental requirements with elevated government focus on “clear water and green hills”. The successive
    
    implementation of environmental protection inspections, licensing system for pollutant discharge and others reflected
    
    that more stringent environmental protection measures will become a prolonged trend in the industry. Certain provinces
    
    and cities promulgated, among others, air pollution prevention programs and major pollutant emission reduction
    
    programs, signalling enhanced supervision of local governments over the pollution discharge of paper making
    
    companies. Driven by the supply-side reform and under the overlapping effect of stricter environment protection
    
    policies, more severe limit on import quota of waste paper and closer inspection, cost pressure will force certain small
    
    and medium-sized enterprises to exit the market, thereby further increasing the industry concentration ratio. On the
    
    other hand, leading enterprises, with obvious cost advantages and high cost transferability, will enjoy further increase
    
    in profitability and gradual growth in market share. In particular, the large leading enterprises having comprehensive
    
    environmental facilities with significant economies of scale will become the actual beneficiaries under these
    
    environmental protection policies.
    
    In 2018, although the economic operation of China remained within a reasonable range, paper making enterprises
    
    experienced the same challenges as most brick-and-mortar enterprises in China did in the complex and changing
    
    domestic and international economic situation. From the fourth quarter of 2018 to the first quarter of 2019, affected
    
    by the macroeconomic situation, the overall prosperity of the paper making industry had been not high and paper
    
    prices fell sharply. However, since the second quarter, the prices of major paper types of the Company had been on
    
    the rise. Moreover, guided by market demand, the Company continued to strengthen its research and development
    
    and innovation in technology and product. It developed the production of more than 20 highly profitable products
    
    including straw paper and cast coating base paper only in the first half year. The overall profitability greatly improved.
    
    Furthermore, the forestry, pulp and paper integration strategic layout of the Company has basically completed during
    
    the year. The gross profit margin of its products significantly improved, further enhancing the profitability and risk
    
    aversion ability of the Company.
    
    8 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    II. Material Changes of Major Assets
    
    1. Material Changes of Major Assets
    
    Major assets Description
    
    Equity During the reporting period, the Company acquired partial equity interest in Nanyue Bank and
    
    Goldtrust Futures.
    
    Fixed assets During the reporting period, Shouguang Headquarters newsprint paper-for-cultural paper project
    
    and the Shouguang Meilun 510,000 tonne high-end cultural paper project were transferred from
    
    construction in progress to fixed assets.
    
    Financial leasing During the reporting period, the financial leasing company changed its overall operating strategy
    
    assets by continuously reducing the scale of the financial leasing business.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 2019, the Group’s current ratio was 77.56%. The quick ratio was 70.30%. The gearing ratio was 76.25%. The
    
    accounts receivable turnover ratio was 601.68% (accounts receivable turnover ratio = turnover/weighted average accounts
    
    receivable and net bills*100%). The inventory turnover ratio was 397.02% (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, public 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 2019, the total bank borrowings, corporate bonds, short-term commercial paper and medium-term notes
    
    and wealth management direct financing instruments of the Group were RMB55,514 million, RMB2,098 million, RMB1,854
    
    million and RMB2,301 million, respectively (aAs at the end of the prior year: the total bank borrowings, corporate bonds,
    
    medium-term notes and wealth management direct financing instruments, and short-term commercial paper of the Group
    
    were RMB52,261 million, RMB2,098 million, RMB2,298 million and RMB2,817 million, respectively). As at 30 June 2019,
    
    the Group had monetary funds of RMB20,728 million (as at the end of the prior year: RMB19,293 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 2019, the Group
    
    had 14,311 employees. The total staff remuneration for the first half of 2019 amounted to RMB668.0937 million (The Group
    
    had 15,191 employees in 2018. The total staff remuneration for 2018 amounted to RMB1,129.1552 million).
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 9
    
    III. Analysis of liquidity, financial resources and capital structure disclosed in accordance with the
    
    listing rules of the Hong Kong Stock Exchange (Cont’d)
    
    There will be no major investment project of the Company during the second half of 2019.
    
    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 2019, please refer to Section X. VII. 61. Details
    
    of assets with restricted ownership or right to use in this report.
    
    For details of the contingent event required to be disclosed by the Group as at 30 June 2019, please refer to Section X. VII. 33
    
    Provisions.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 innovation and development for more than half a
    
    century, it has developed into a large conglomerate principally engaged in pulp production and paper making with synergistic
    
    development in finance, mining, forestry, logistics and construction materials. The Company is the first company in the paper
    
    making industry having a finance company, as well as the only listed company with A shares, B shares and H shares in China.
    
    Compared with other enterprises in the industry, the Company has the following advantages:
    
    1. Advantages of forestry-pulp-paper integration
    
    As the chemical wood pulp projects of Huanggang Chenming and Shouguang Meilun commence production, the
    
    Company currently has three major pulp mills in Zhanjiang, Huanggang and Shouguang. It has the largest wood pulp
    
    production capacity in China with annual production capacity of more than 4.2 million tonnes. It is the first integrated
    
    pulp and paper enterprise in China to be able to produce wood pulp to meet its paper making demand and its pulp
    
    production capacity and paper production capacity complement each other perfectly.
    
    Self-produced pulp enjoys significant cost advantage over purchased wood pulp, which enables the gross profit of the
    
    Company’s paper products to consistently rank among the top of the industry; on the other hand, the price of wood
    
    chips, the raw material for pulp making, is relatively stable. Therefore, the procurement advantage of bulk supplies and
    
    the application of ancillary logistics services have significantly reduced the logistics and transportation costs of raw
    
    material and finished products, considerably increasing the Company’s cost advantage and quality stability.2. 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 11 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.
    
    10 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    IV. Analysis of Core Competitiveness (Cont’d)
    
    3. Product advantages
    
    Leveraging the integrated forestry, pulp and paper project, the Company has introduced the top world-leading paper
    
    making technology and equipment. It is the enterprise that offers the widest product range in the paper making industry,
    
    and its products include culture paper, white paper board, coated paper, household paper, electrostatic copy paper and
    
    thermal paper, with each major product ranking among the best in China in terms of market share.4. Advantages in technical equipment
    
    Currently, the Company 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 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 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.5. Advantages in research and innovation and new product development
    
    Shouguang Headquarters, Zhanjiang Chenming, Shouguang Meilun, Jiangxi Chenming, Jilin Chenming and Haiming
    
    Mining are high and new-technology enterprises and give full play to their 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
    
    210 national patents including 18 patents for invention and 7 products selected as national new products. The Company
    
    participated in the formulation of 5 national standards and was awarded honours including “China Patent Shandong
    
    Star Enterprise”, becoming the “green engine” of the transformation and upgrading in the paper making industry and
    
    leading the direction of the latest and most advanced technology in the paper making industry in China.
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 11
    
    IV. Analysis of Core Competitiveness (Cont’d)
    
    6. 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.7. Team advantages
    
    The key management members and the core personnel of the Company remain stable. In the business development
    
    of the Company, 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.8. 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, middle water reuse system, white water recovery system and black
    
    liquor comprehensive utilisation system. The environmental indicators of the Company rank high in the country and in
    
    the world. Besides, the national policy of eliminating outdated production capacity will facilitate the development of the
    
    paper making industry while the replenishment and replacement of additional production capacity will bring new blood
    
    and momentum into the paper making industry, favouring industry concentration to establish a sound industry cycle.
    
    12 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    I. Overview
    
    During the reporting period, although the general operation of the Company is in good condition, the Company experienced
    
    huge challenges as other paper making enterprises did in the complex and changing domestic and international economic
    
    situation. Affected by various factors such as economic downturn, reduced market demand, tight supply and rising prices of
    
    raw materials, the paper making industry experienced a decline in economic efficiency, increased difficulties in production and
    
    operation, and falling paper prices. Accordingly, the Company achieved net profit of only RMB38.22 million in the first quarter,
    
    representing a decrease of 95.12% as compared to the corresponding period of prior year.
    
    Since the second quarter, the market improved significantly. The prices of the major paper types had been on the rise, and
    
    the benefits of the paper price rise were obvious. The Shouguang Meilun 510,000 tonne high-ended cultural paper project, the
    
    Shouguang Headquarters cultural paper transformation project, the Shouguang Meilun 1,000,000 tonne chemical pulp project,
    
    the Huanggang Chenming chemical pulp project and others invested and constructed by the Company were successively
    
    put into operation with smooth operation in the second quarter, and gradually began to play their role. The profitability of the
    
    Company improved significantly in the second quarter with a quarter-on-quarter increase of 1,157.95%.
    
    In the first half of 2019, the Company completed the production of machine-made paper of 2.15 million tonnes with sales of
    
    2.39 million tonnes and achieved revenue of RMB13,349 million, a year-on-year decrease of 14.16%. The Company recorded
    
    operating costs of RMB9,754 million, a year-on-year decrease of 4.93%. Total profit and net profit attributable to equity
    
    holders of the Company were RMB662 million and RMB510 million respectively, down by 70.12% and 71.43% from the prior
    
    year. The Company’s total assets amounted to RMB106,559 million.
    
    At present, the four major pulp and paper projects of the Company have been completed and commenced operation. There
    
    is no major project expenditure in the future; and the financial leasing company continued to reduce its business scale, and
    
    finance expenses will be effectively controlled. In the second half year, as the four major pulp and paper projects will operate
    
    at full capacity and fully realised their benefits, the Company will achieve a balance between the pulp production capacity and
    
    paper production capacity. The advantages of its pulp and paper integration will be obvious with significantly higher gross
    
    profit margin, thereby effectively enhancing the overall profitability and risk aversion ability of the Company.
    
    During the reporting period, the operating results and future development path of the Company were closely related to the
    
    ever improving operating and management systems, which are detailed as follows:
    
    (I) Sales management
    
    Facing the complex and ever-changing market conditions, the sales system persistently executed the decision and
    
    planning made by the management of the Company with a pioneering attitude in spite of challenges, thus opening up
    
    a new dimension for sales. Through sales restructuring with adjustment to independent operation of seven product
    
    companies engaged in, among others, culture paper and coated paper from integrated sales, the Company greatly
    
    increased its operating efficiency. With an innovative management model, the Company established daily work and
    
    corresponding measures at each level, thus charting a clear course for employees to proceed with their tasks. By
    
    implementing the weekly meeting system, the weekly appraisal measure and a performance-driven approach, the
    
    Company stimulated employees’ diligence and determination, and enabled the sales teams to improve their work with
    
    fresh mentality.
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 13
    
    I. Overview (Cont’d)
    
    (II) Product management
    
    Benefiting from the strengthened basic management and adjustment in product structure, the production system in
    
    general remained stable and under control with constant improvement. The Company gained initiatives in the market
    
    through adjustment in the product structure and development of new products; reduced inventory, turnover days and
    
    operational pressure by implementing production scheduling; and shed light on the daily work direction for all levels of
    
    staff through innovative basic management with clearer instructions to and greater control over all levels of work.(III) Finance and financial capital management
    
    During the reporting period, the Company established a more rational financial business system by strengthening capital
    
    management, deepening cooperation between banks and the Company, facilitating and implementing debt-to-equity
    
    swaps, and establishing GDR Fund with professional institutions. Through strengthened capital management, the
    
    Company held regular meetings to study and formulate financing proposals, set up a steering group on financing,
    
    and stepped up its appraisal efforts, which yielded great results. Through deepening cooperation between banks and
    
    the Company, the Company established a closer relationship with banks, entered into cooperation agreements, and
    
    enjoyed quicker facility approval, which effectively improved its corporate financing environment. Through facilitating
    
    and implementing debt-to-equity swaps, the Company further optimised its asset and liability structure.(IV) Project construction
    
    During the reporting period, the Shouguang Meilun 510,000 tonne high-ended cultural paper project, the Shouguang
    
    Headquarters cultural paper transformation project, the Shouguang Meilun 1,000,000 tonne chemical pulp project, the
    
    Huanggang Chenming chemical pulp project and others invested and constructed by the Company were successively
    
    put into operation in the second quarter. The operation of the above projects will play a very important role in enhancing
    
    the sustainable development and achieving the strategic objectives of the Company.(V) Corporate management
    
    The Company fully implemented the adjustments to its organisational structure and remuneration system as planned
    
    to further enhance its functional management and the effectiveness of remuneration as incentives. The Company also
    
    proactively proceeded with the process and information-based construction to promote management reform and
    
    system upgrade. The Company further improved its management system so that there were rules to follow for the basic
    
    management. The Company focused on strengthening level management by specifying the tasks and measures to be
    
    taken at each level on a daily, weekly, monthly and annual basis, making clear the responsibilities of each position, and
    
    setting the direction for each level of work and enhancing the execution capability of the team.
    
    14 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    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 Increase/
    
    During the corresponding period decreasereporting period of the prior year year on year Reason for the changeRevenue 13,348,648,113.70 15,551,334,039.89 -14.16% Mainly due to the year-on-year
    
    decrease in the average selling price
    
    of machine-made paper during the
    
    reporting period.
    
    Operating costs 9,754,097,799.82 10,259,884,918.86 -4.93%
    
    Selling and distribution expenses 590,584,957.47 605,463,325.71 -2.46%
    
    Administrative expenses 562,417,399.25 494,841,668.55 13.66% Mainly due to the technological
    
    transformation of Jilin Chenming during
    
    the reporting period.
    
    Research and 431,483,716.06 478,014,854.10 -9.73%
    
    development expense
    
    Finance expenses 1,516,848,723.80 1,498,828,444.69 1.20%
    
    Income tax expenses 125,877,819.62 434,202,112.50 -71.01% Mainly due to the year-on-year
    
    decrease in the profit of the Company
    
    during the reporting period.
    
    Net cash flows from 2,699,770,891.69 4,745,037,920.91 -43.10% Mainly due to the year-on-year
    
    operating activities decrease in the profit of the Company
    
    during the reporting period.
    
    Net cash flows from -2,094,526,965.30 -470,806,697.24 344.88% Mainly due to the investment in the
    
    investing activities equity interest in Nanyue Bank during
    
    the reporting period.
    
    Net cash flows from -780,976,710.03 -3,577,622,905.43 -78.17% Mainly due to the reduced financing
    
    financing activities scale during the reporting period.
    
    Net increase in cash and -372,495,011.14 726,576,915.27 -151.27%
    
    cash equivalents
    
    Significant change in structure or source of profit of the Company during the reporting period
    
    □ Applicable √ Not applicable
    
    There was no significant change in structure or source of profit of the Company during the reporting period.
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 15
    
    II. Analysis of principal operations (Cont’d)
    
    Composition of principal operations
    
    Unit: RMB
    
    Increase/ Increase/
    
    Increase/ decrease of decrease of
    
    decrease of operating gross profit
    
    revenue as costs as margin ascompared to the compared to the compared to thecorresponding corresponding correspondingGross profit period of period of period ofRevenue Operating costs margin the prior year the prior year the prior yearBy industry
    
    Machine-made paper 11,561,215,578.29 9,106,155,485.94 21.24% -12.15% -3.19% -7.29%
    
    Financial leasing 947,166,321.20 103,174,600.54 89.11% -25.52% -29.30% 0.58%
    
    By products
    
    White paper board 3,693,719,773.04 3,091,359,060.61 16.31% 5.93% 8.78% -2.20%
    
    Duplex press paper 3,213,175,197.38 2,461,988,839.69 23.38% -3.36% 6.82% -7.30%
    
    Coated paper 1,556,419,430.61 1,237,904,813.04 20.46% -39.55% -30.67% -10.18%
    
    Electrostatic paper 1,121,377,047.63 822,196,602.49 26.68% -7.30% 17.21% -15.34%
    
    Anti-sticking raw paper 619,876,429.25 438,249,538.09 29.30% -9.00% 8.70% -11.51%
    
    Financial leasing 947,166,321.20 103,174,600.54 89.11% -25.52% -29.30% 0.58%
    
    By geographical segment
    
    Mainland China 11,249,807,122.53 7,852,362,145.60 30.20% -19.75% -12.00% -6.15%
    
    Other countries and regions 2,098,840,991.17 1,901,735,654.22 9.39% 37.02% 40.50% -2.25%III. Analysis of non-principal operations
    
    □ Applicable √ Not applicable16 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIV. Assets and liabilities
    
    1. Material changes of asset items
    
    Unit: RMB
    
    As at the end of the corresponding
    
    As at the end of the reporting period period of the prior year
    
    As a As apercentage percentage Percentage Description ofAmount of total assets Amount of total assets change major changesMonetary funds 20,727,891,187.25 19.45% 18,221,475,254.64 17.02% 2.43% Mainly due to the increase in
    
    depos i ts fo r the issuance of
    
    bills and letters of credit by the
    
    Company.
    
    Long-term 5,279,451,578.15 4.95% 9,561,944,402.25 8.93% -3.98% Mainly due to the expiry of certain
    
    receivables financial leases of the Leasing
    
    Company.
    
    Fixed assets 30,774,255,749.34 28.88% 27,822,887,081.68 25.98% 2.90% Dur ing the repor t ing per iod ,
    
    Shouguang Headquarters newsprint
    
    paper-for-cultural paper project
    
    and the Shouguang Meilun 510,000
    
    tonne high-end cultural paper
    
    project were transferred from
    
    construction in progress to fixed
    
    assets.
    
    Short-term 44,665,330,086.95 41.92% 34,822,972,619.60 32.52% 9.40% Mainly due to the increase in
    
    borrowings liquidity needed for the Company’s
    
    production.
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 17
    
    IV. Assets and liabilities (Cont’d)
    
    2. Assets and liabilities measured at fair value
    
    √ Applicable □ Not applicable
    
    Unit: RMB
    
    Profit or loss
    
    from change in Cumulative fair Impairment
    
    fair value during value change provided during Purchases during Disposal during
    
    Item Opening balance the period charged to equity the period the period the period Closing balance
    
    Financial assets:
    
    Investment in other equity
    
    instruments 103,000,000.00 662,160,000.00 765,160,000.00
    
    Consumable biological
    
    assets 1,511,542,610.36 -1,883,064.80 35,994,700.68 12,743,553.04 1,532,910,693.20
    
    Total 1,614,542,610.36 -1,883,064.80 698,154,700.68 12,743,553.04 2,298,070,693.20
    
    Whether there were any material changes on the measurement attributes of major assets of the Company during the
    
    reporting period
    
    □ Yes √ No3. Restriction on asset rights as at the end of the reporting period
    
    Unit: RMB
    
    Carrying amount as at
    
    Item the end of the period Reasons for such restriction
    
    Monetary funds 18,718,827,955.87 As deposits for bank acceptance bills, letters of credit and bank
    
    borrowings, and deposit reserves
    
    Bills receivable 624,106,580.39 As collateral for short-term borrowings, letters of guarantee and
    
    letters of credit
    
    Fixed assets 9,433,004,439.14 As collateral for bank borrowings and long-term payables
    
    Intangible assets 855,039,400.00 As collateral for bank borrowings and long-term payables
    
    Investment property 4,581,606,847.89 As collateral for bank borrowings
    
    Total 34,212,585,223.29
    
    V. Analysis of Investments
    
    1. Overview
    
    √ Applicable □ Not applicable
    
    Investments during the
    
    corresponding period of
    
    Investments during the reporting period (RMB) the prior year (RMB) Change
    
    1,890,000,000.00 8,232,854,389.46 -77.04%
    
    18 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 19
    
    V. 2A.nalyTSHWN√MohuaePPD(ItasLnamaiaafrnnviaalimeppvgegnieeeshiAgogttsrrrtaeafmeRSCCidnpinCeaegohPvrnlpohe.peCa,etlneisarLshFnmatlcttfCneumiedeiencnone.lmirmdng.ssI,aegheiPLGnnniPtpbagtrdqor)uEv.tPwllnqpeueutuhle&rpistyih&stipy□tmin–pSCapusErsciPneehnonarqarovloviraedmleplunenivejsrvNeeiscsiesrpttcaecreytteisnaempnrotlpdueionsstoafnsrecvicolcfvpetnattoaoedlistutinosscsmnulimtanptatntscemnpipuvotadpdarspilefnot(trneaniipddevCipnteuuascstnltcpol,yetiotc–eNiCNeiFnsnssaoneaecvttrwpwreaambeibbsdllttayyatlloiisml’slseeufdhheeenrddt)ingInv11te,,s8107ht9009m0000e,,,,e0000n0000t0000ra,,,,0000em0000o0000pu....0000n0000ot Srhtai1ren90h05og..770ld940i%%%np–g fffeuuuSSSnnnSeeerdddlllosssfffi---uoooorwwwcfduennnneeeodddd–f –SsWCCAASFGWCCCPuiuhssahaooornhebossborpe...aio,,,teesufusninnaltLLLittpligdmaceyndtttMMulii-dddrgCiaaiao(Mna...aasrlor,Hwngyann)yHa.Wge,nnaan(oQnLdeggeaJlgdtdeeiigidnfnximmaeng.tin,omngdeegunnaetton)t –S2t272Pe960eeMr2pmrJSi6atoaeerdnpcmuhtobeaf2meryi0rnb122ve900er-15s2698t0mM–0Ie8NLan-ortc2nTh6gERI–PfPpcibicEPnniMbhoruquurvvooernsllueeppejdmiseissnt,uuacyptteicmmRcltn,crtso,oaadtseegvlEdntsnniaeycsuttnnPpcy,cceoetsOirslaleatirRoynT–CCUbPataroon2oltcmmahgo0nepprmcell1deeespttaseel9setddeahteseodeft ––––Eresttuimrnated Pro--fi22nit274vo,,,e551rst875hlto203mes,,,551eps219nef197trroi...fo824omd189–r –NNNLoinarooovwnooslvtueitdis –72222(dDif0220iaMs11atcJJe99naaaloryonnc)suufhuaar2rreyy019 –hhhDtttitttspppc:::l///o///wwwsuwwwrwwweU...icccnnnndniiiennnixfffooot(...:icccfoooaRmmmny...Mccc)nnn B
    
    V. Analysis of Investments (Cont’d)
    
    3. Material non-equity investments during the reporting period
    
    √ Applicable □ Not applicable
    
    Unit: RMB
    
    Reasons
    
    for failure
    
    Industry in Accumulated in meeting
    
    which the Accumulated actual realised return scheduledFixed assets investment Investment amount amount invested as as of the end progress andForm of investment project during the of the end of Source of Estimated of the reporting estimated Date ofProject name investment or not operates reporting period reporting period fund Progress return period return disclosure Disclosure indexShouguang Meilun Self- Yes Pulp 576,970,728.79 3,655,000,625.94 Self-owned 95% Approximately – Trial production 21 March http://www.cninfo.com.cn1 million chemical constructed production funds and RMB1,000 million phase 2014
    
    wood pulp project borrowings of cost is expected
    
    to be saved as
    
    compared to
    
    outsourcing pulp
    
    upon completion
    
    of construction
    
    and production at
    
    full capacity
    
    Huanggang Chenming Self- Yes Pulp 447,209,747.75 4,052,359,826.41 Self-owned 100% Expected gain – Trial production 2 August http://www.cninfo.com.cn
    
    chemical wood constructed production funds and of the project phase 2013
    
    pulp project borrowings will amount
    
    to RMB500
    
    million upon
    
    commencement of
    
    operation
    
    Haiming Phase II Self- Yes Mining and 342,679,398.79 1,388,057,233.53 Self-owned – Expected profit – Trial production N/A N/A
    
    project constructed smelting funds and and tax of the phase
    
    borrowings project will amount
    
    to RMB500 million
    
    upon completion
    
    of construction
    
    and production at
    
    full capacity
    
    Total – – – 1,366,859,875.33 9,095,417,685.88 – – – – – – –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.
    
    20 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    VI. Disposal of material assets and equity interest
    
    1. Disposal of material assets
    
    □ Applicable √ Not applicable
    
    The Company did not dispose of any material asset during the reporting period.2. Disposal of material equity interest
    
    □ Applicable √ Not applicable
    
    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
    
    Name of company Type of company Principal activities Registered capital Total assets Net assets Revenue Operating profit Net profit
    
    Zhanjiang Chenming Pulp & Subsidiary Production and 5,550,000,000 25,218,587,891.74 8,123,899,177.11 4,679,755,169.61 387,607,008.07 379,174,433.57
    
    Paper Co., Ltd. sale of pulp, duplex
    
    press paper,
    
    electrostatic paper
    
    Shandong Chenming Subsidiary Financial leasing 5,872,000,000.00 19,946,724,862.86 8,983,092,153.58 530,249,891.77 223,214,756.15 210,099,233.76
    
    Financial Leasing Co., Ltd.
    
    Shouguang Meilun Subsidiary Production and sale 3,000,000,000 24,317,770,569.12 4,623,572,789.47 1,648,360,918.66 -145,254,892.49 -76,000,316.17
    
    Paper Co., Ltd. of coated paper and
    
    household paper
    
    Shanghai Chenming Subsidiary Property lease 3,000,000,000.00 5,821,581,997.99 2,745,633,960.57 55,029,478.03 -104,025,822.46 -104,604,910.07
    
    Industrial Co., Ltd.
    
    Acquisition and disposal of subsidiaries during the reporting period
    
    □ Applicable √ Not applicableVIII. Structured entities controlled by the Company
    
    □ Applicable √ Not applicableIX. Estimate of the operating results from January to September 2019
    
    Warning of cumulative net profit for the period between the beginning of the year to the end of the next reporting period being
    
    projected to be at a loss or expected to have material changes as compared to the corresponding period of prior year and its
    
    explanation
    
    □ Applicable √ Not applicable
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 21
    
    X. Risk exposures of the Company and the measures to be taken
    
    1. Policy risk
    
    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 incorporation of smart technology into its
    
    industrial activities. The Company will emphasise on the development of leading businesses including pulp production
    
    and paper making, so as to construct an efficient industrial system with synergies.2. 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 on the strength and capital
    
    accumulated over the years, domestic enterprises have further expanded their size 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, the China-US trade war in recent years also had an effect on the
    
    exporting of the Company’s products.
    
    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 while 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.3. 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 macroeconomic growth, the demand
    
    in paper making industry has been weak. At the same time, China has been encouraging energy conservation and
    
    emission reduction. The outdated production capacity will be phased out, and thus the new projects will be on a large
    
    scale. By virtue of the economies of scale in the paper making industry, the production capacity of individual paper
    
    making projects which are under construction or planning for construction in China is large, which affects the demand
    
    and supply relationship in the whole paper making industry.
    
    Hence, the Company will make advancements in equipment and technological level, expand its product mix,
    
    improve the grading of products and focus on the research and development of high-end products so as to improve
    
    competitiveness.
    
    22 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    X. Risk exposures of the Company and the measures to be taken (Cont’d)
    
    4. Risk of price fluctuation of raw materials
    
    Wood pulp is a major raw material in the Company. The market price of wood pulp fluctuates 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 remain steadfast in the “forestry-pulp-paper integration” development. With the commencement of
    
    production of chemical pulp projects of Huanggang Chenming and Shouguang Meilun, the Company currently has three
    
    major pulp mills in Zhanjiang, Huanggang and Shouguang. It has the largest wood pulp production capacity in China
    
    with annual production capacity of more than 4.2 million tonnes. The Company is the first integrated pulp and paper
    
    enterprise in China to be able to produce wood pulp to meet its paper making demand and its pulp production capacity
    
    and paper production capacity complement each other perfectly. The gross profit margin of its products will significantly
    
    improve, effectively enhancing the risk aversion ability.5. Risk of change in environmental protection policies
    
    China has been raising the standards for environmental protection in recent years. More stringent environmental
    
    protection policies have been implemented in the paper making industry with successive implementation of
    
    environmental inspections and licensing system for pollutant discharge. 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 environmental protection costs in the industry 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 environmentally friendly
    
    projects and strive to achieve its waste emission target.6. Risk on financial leasing business
    
    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. Moreover, the financial leasing company has
    
    been reducing the scale of the financial leasing business in recent years, adhering to the policy of “recovery only but no
    
    financing” The Company proceeds with getting rid of the financial leasing business gradually.
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 23
    
    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
    
    2018 annual general Annual general
    
    meeting meeting 32.20% 11 June 2019 12 June 2018 http://www.cninfo.com.cn2. Extraordinary general meeting requested by holders of the preference shares with voting rights restored
    
    □ Applicable √ Not applicable
    
    II. Profit distribution and conversion of capital reserves into share capital during this reporting
    
    period
    
    □ Applicable √ Not applicable
    
    The Company does not propose distribution of cash dividends and bonus shares, and increase of share capital from reserves
    
    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.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 applicableVI. Opinions of the Board regarding the “modified auditor’s report” for the prior year
    
    □ Applicable √ Not applicableVII. Matters related to bankruptcy and reorganisation
    
    □ Applicable √ Not applicable
    
    There was no matter related to bankruptcy and reorganisation during the reporting period.24 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    VIII. 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 applicableIX. Punishment and rectification
    
    √ Applicable □ Not applicable
    
    Investigation and
    
    Name Type Reason punishment type Conclusion, if any Disclosure date Disclosure index
    
    Jiangxi Chenming Paper Subsidiary Excessive discharge of Warning issued by the Nanchang Ecological N/A N/A
    
    Co., Ltd. water pollutants environment authority Environment Bureau conducted
    
    on-site sampling at the main
    
    water drain of Jiangxi Chenming.
    
    The sample report indicated
    
    that the suspended solid
    
    concentration of discharge water
    
    at the main drain exceeded
    
    the limit under the Discharge
    
    Standard of Water Pollutants
    
    for Pulp and Paper Industry.
    
    Jiangxi Chenming conducted
    
    rectifications according to the
    
    rectification notice and achieved
    
    sound results. The event did not
    
    constitute a significant violation
    
    against laws and regulations,
    
    and the corresponding penalty
    
    of RMB800,000 will be paid
    
    before 31 August 2019.
    
    Rectification
    
    √ Applicable □ Not applicable
    
    Since January 2019, Jiangxi Chenming adjusted its water treatment technique, refined dosing operation, increased sludge
    
    press quality, and established, among others, monitoring response mechanism for water quantity and water standard at
    
    the middle water section which is designed to respond to changes in BTMP ingredient ratio and load. As a result, Jiangxi
    
    Chenming proved qualified on all indicators during two spontaneous sampling inspections conducted by Nanchang Ecological
    
    Environment Bureau and the environmental monitor station as well as a scheduled sampling inspection conducted by a third
    
    party. Based on such results, Nanchang Ecological Environment Bureau determined in June 2019 that the rectification for
    
    out-of-limit waste water (SS standard) of Jiangxi Chenming had been completed, and conducted post-inspection withdrawal
    
    for the non-compliance.
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 25
    
    X. Credibility of the Company, its controlling shareholders and beneficial controllers
    
    □ Applicable √ Not applicableXI. 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.XII. Significant related party transactions
    
    1. Related party transactions associated with day-to-day operation
    
    √ Applicable □ Not applicable
    
    Percentage
    
    as
    
    Subject Pricing basis Amount of the amount Amount of MarketTypes of the matter of the of the Price of Related party of similar transactions Whether Settlement of price ofRelated party related party related party related party related party transaction transactions approved exceeding related party available similar DisclosureRelated party relationship transactions transactions transactions transactions (RMB’0,000) (%) (RMB’0,000) approved cap transactions transaction date Disclosure indexJiangxi Pursuant to the Procurement of Procurement Market price Market price 11,236.77 1.17% 60,000 No Bank Not applicable 19 July 2019 http://www.cninfo.com.cnChenming requirement fuel and power of natural gas, acceptance
    
    Natural under Paragraph from related heavy oil and and telegraphic
    
    Gas Co., (3) of Article parties diesel etc. transfer
    
    Ltd. and its 10.1.6 of the
    
    subsidiaries Rules Governing
    
    the Listing
    
    of Stocks on
    
    Shenzhen Stock
    
    Exchange
    
    Total – – 11,236.77 – 60,000 – – – – –
    
    Particulars on refund of bulk sale Not applicable
    
    26 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    XII. Significant related party transactions (Cont’d)
    
    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
    
    Debts payable to any related party:
    
    Amount Amount
    
    increased recovered Interest
    
    during during for the
    
    Opening the current the current current Closing
    
    balance period period Interest period balance
    
    Related party Relationship with the Company Reason (RMB’0,000) (RMB’0,000) (RMB’0,000) rate (RMB’0,000) (RMB’0,000)
    
    CHENMING HOLDINGS COMPANY LIMITED The controlling shareholder of Financial 37,600 16,200 49,280 7% 672.62 4,520
    
    the Company support
    
    Effect of related debts on the operating results Financial support is provided by Chenming Holdings without requiring any pledge or guarantee, which is a testament to its support and confidence in
    
    and financial position of the Company the future development of the Company, and helps the Company promote project construction and satisfy its needs for working capital.5. Other significant related party transactions
    
    □ Applicable √ Not applicable
    
    There was no other significant related party transaction of the Company during the reporting period.
    
    XIII. 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.
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 27
    
    XIV. 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 provided guarantee to subsidiaries and the guarantee amount incurred
    
    was RMB6,126.88 million; subsidiaries provided guarantee to subsidiaries and the guarantee amount incurred was
    
    RMB120 million.
    
    As at 30 June 2019, the balance of the external guarantee provided by the Company (including the guarantee
    
    to its subsidiaries by the Company and the guarantee provided to subsidiaries by subsidiaries) amounted to
    
    RMB14,266.43 million, representing 58.30% of the equity attributable to shareholders of the Company as at the
    
    end of June 2019.
    
    The Company did not provide any guarantee to external parties (excluding the guarantee provided to its
    
    subsidiaries and the guarantee provided to subsidiaries by subsidiaries) and did not provide any guarantee against
    
    the rules and regulations.
    
    Unit: RMB’0,000
    
    External guarantees of the Company and its subsidiaries (excluding guarantees to subsidiaries)
    
    Date of
    
    the related
    
    Announcement Guarantee
    
    disclosing the Amount of Guarantee Type of Fulfilled to related
    
    Name of obligee guarantee amount guarantee Guarantee date provided guarantee Term or not parties or not
    
    Weifang Sime Darby West 24 July 2017 17,500 20 December 13,500 General 10 years No No
    
    Port Co., Ltd. 2017 guarantee
    
    Total external guarantees approved during 0 Total actual external guarantees during the reporting period (A2) 0
    
    the reporting period (A1)
    
    Total external guarantees approved at the end of 17,500 Balance of total actual guarantees at the end of the reporting period (A4) 13,500
    
    the reporting period (A3)
    
    28 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    XIV. Material contracts and implementation (Cont’d)
    
    2. Significant guarantees (Cont’d)
    
    (1) Guarantees (Cont’d)
    
    Date of Guarantees between the Company and its subsidiaries
    
    tAhnenroeulantceedment Guarantee
    
    tdhisecglousairnagntee Amount of Guarantee Type of Fulfilled to rpealarttieeds
    
    Name of obligee amount guarantee Guarantee date provided guarantee Term or not or not
    
    ZZhhaannjjiiaanngg CChheennmmiinngg PPuullpp && PPaappeerr CCoo..,, LLttdd.. 3104 MJuanrech20210819 1,200808,,000000 227AJpurilly22001198 221278,,868651 GGeenneerraall gguuaarraanntteeee 53 yyeeaarrss NNoo NNoo
    
    ShLatndd.ong Chenming Group Finance Co., 30 March 2019 500,000 General guarantee 5 years No No
    
    SShhaannddoonngg CChheennmmiinngg PFianpaenrcSiaal lLeesaCsoin.g, Ltd. 3206 MMaarrcchh 22001195 650000,,000000 22 AMparricl h20210913 26173,,424010 GGeenneerraall gguuaarraanntteeee 57 yyeeaarrss NNoo NNoo
    
    ShCanod.,oLntgd.Chenming Financial Leasing 30 March 2016 300,000 General guarantee 7 years No No
    
    ShCanod.,oLntgd.Chenming Financial Leasing 14 February 2018 150,000 General guarantee 3 years No No
    
    ShCanog.,hLatidC. henming Financial Leasing Co., 14 February 2018 400,000 General guarantee 3 years No No
    
    QinLgtdd.ao Chenming Nonghai Financial 14 February 2018 250,000 General guarantee 3 years No No
    
    GuLaenagszinhgouCCo.h,eLntmd.ing Financial Leasing 14 February 2018 200,000 13 September 18,000 General guarantee 3 years No No
    
    ShCanod.,oLntgd.Chenming Commercial Factoring 14 February 2018 200,000 2018 General guarantee 3 years No No
    
    HuCaon.g,gLatdng. Chenming Pulp & Paper Co., 26 March 2015 400,000 14 December 74,681 General guarantee 7 years No No
    
    HuLatndg. gang Chenming Pulp & Paper Co., 30 March 2016 550,000 2015 General guarantee 7 years No No
    
    JiaLntgdx. i Chenming Paper Co., Ltd. 14 June 2018 50,000 10 July 2018 17,800 General guarantee 3 years No No
    
    JSihaonuggxui CanhgenMmeiinlugnPPaappeerrCCoo.,.,LLtdtd.. 1306 MDeacrcehm2b0e1r 9 635000,,000000 119AJparinl u2a0r1y9 6672,,315099 GGeenneerraall gguuaarraanntteeee 105 yyeeaarrss NNoo NNoo
    
    Shouguang Meilun Paper Co., Ltd. 32001M0arch 2019 100,000 2018 General guarantee 5 years No No
    
    CChheennmmiinngg ((HHKK)) LLiimmiitteedd 3104 MJuanrech20210819 520500,,000000 18 AAupgriul 2st0129018 213881,,891888 GGeenneerraall gguuaarraanntteeee 35 yyeeaarrss NNoo NNoo
    
    ShToruagdueaCngo.C, Lhtedn.ming Import and Export 30 March 2019 50,000 General guarantee 5 years No No
    
    JZihliannCjiahnegnmCihnegnPmaipnegrACrboo.,rLictudl.ture 3300 MMaarrcchh 22001199 15100,,000000 5 April 2019 13,201 GGeenneerraallgguuaarraannteteee 55yyeeaarrss NNoo NNoo
    
    NaDnecvhealnogpmCehnetnmCoin.,gLAtdrb. oriculture 15 August 2017 10,000 General guarantee 3 years No No
    
    ShDanevdeolnogpmCehnetnmCoin.,gLPtda.nels Co., Ltd. 14 June 2018 3,000 General guarantee 3 years No No
    
    Shanghai Chenming Industrial Co., Ltd. 11 October 2018 400,000 General guarantee 3 years No No
    
    Shanghai Sales Co., Ltd. 30 March 2019 300,000 General guarantee 5 years No No
    
    HaLicimheitnegd Haiming Mining Company 30 March 2019 100,000 General guarantee 5 years No No
    
    Todtaulrainmgotuhnetroepf ogrutainrganpteeeriopdro(Bvi1d)ed for subsidiaries approved 3,748,000 Total amount of guarantee provided for subsidiaries during the reporting period (B2) 612,688
    
    Toatasl aatmthoeunetnodfogfutahreanretepeorptirnogvipdeerdiofdor(Bsu3b) sidiaries approved 8,211,000 pToertaioldba(Bla4n)ce of guarantee provided for subsidiaries as at the end of the reporting 1,401,143
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 29
    
    XIV. Material contracts and implementation (Cont’d)
    
    2. Significant guarantees (Cont’d)
    
    (1) Guarantees (Cont’d)
    
    Guarantees between subsidiaries
    
    Date of
    
    the related
    
    Announcement Guarantee
    
    disclosing to related
    
    the guarantee Amount of Guarantee Type of Fulfilled parties
    
    Name of obligee amount guarantee Guarantee date provided guarantee Term or not or not
    
    Chenming (HK) Limited 30 March 2019 200,000 General guarantee 5 years No No
    
    Chenming (HK) Limited 30 March 2019 100,000 General guarantee 5 years No No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 27 June 2019 12,000 27 June 2019 12,000 General guarantee 1 years No No
    
    Total amount of guarantee provided for subsidiaries approved 312,000 Total amount of guarantee provided for subsidiaries during the reporting 12,000
    
    during the reporting period (C1) period (C2)
    
    Total amount of guarantee provided for subsidiaries approved as 312,000 Total balance of guarantee provided for subsidiaries as at the end of the 12,000
    
    at the end of the reporting period (C3) reporting period (C4)
    
    Total amount of guarantee provided (i.e. sum of the above three guarantee amount)
    
    Total amount of guarantee approved during the reporting period 4,060,000 Total amount of guarantee during the reporting period (A2+B2+C2) 624,688
    
    (A1+B1+C1)
    
    Total amount of guarantee approved as at the end of the 8,540,500 Total balance of guarantee as at the end of the reporting period 1,426,643
    
    reporting period (A3+B3+C3) (A4+B4+C4)
    
    The percentage of total amount of guarantee provided (i.e. 4+B4+C4) to the net assets attributable to the Company 58.30%
    
    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) 755,606
    
    Total amount of guarantee provided in excess of 50% of net assets (F) 161,166
    
    Sum of the above three amount of guarantee (D+E+F) 916,772(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.
    
    30 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    XIV. Material contracts and implementation (Cont’d)
    
    3. Other material contracts
    
    √ Applicable □ Not applicable
    
    Involved Estimated Whether
    
    assets and value of it is Implementation
    
    Name of carrying involving Valuation Transaction a related as at the end of
    
    Name of contract Subject Date of amount assets Name of reference Pricing consideration party the reporting Disclosure
    
    contract party counterparty matter signing (RMB ’0,000) (RMB ’0,000) valuer date basis (RMB ’0,000) transaction Relationship period date Disclosure index
    
    Zhanjiang Guangdong Nanyue Part of equity 28 May 2018 254,634 Not Not Not Audited net 254,634 No Not In the course 5 May 2018 http://www.cninfo.com.cn
    
    Chenming Pulp Bank Co., Ltd., China in Guangdong applicable applicable applicable assets per applicable of performance
    
    & Paper Co., Ltd. Delixi Holding Group Nanyue Bank share
    
    Co., Ltd., Shandong Co., Ltd.
    
    Hexin Chemical
    
    Group Co., Ltd.,
    
    Chibi Chenli Paper
    
    Co., Ltd., Foshan
    
    Nanhai Quanhui Metal
    
    Materials Trading Co.,
    
    Ltd.
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 31
    
    XV. Fulfilment of Social Responsibility
    
    1. Major environmental protection matters
    
    Are the Company and its subsidiaries classified as key pollutant discharging unit as specified by environmental
    
    protection authority?
    
    Yes
    
    Name of major Number
    
    pollutants of Pollutant emission
    
    Name of company or and specific Way of emission Distribution of standards Approved Excessive
    
    subsidiary pollutants emission outlets emission outlets Emission concentration implemented Total emissions total emissions emissions
    
    Shandong Chenming COD Organised 3 Within Chenming 186mg/L 300mg/L 4,126.30t 7,666.64t No
    
    Paper Holdings Limited emission Industrial Park
    
    Ammonia nitrogen Organised 3 Within Chenming 3.9mg/L 30mg/L 96.39t 766.66t No
    
    emission Industrial Park
    
    Sulphur dioxide Organised 3 Within Chenming Power plant: 4.88mg/m3 Power plant: 35mg/m3 8.87t 247.16t No
    
    emission Industrial Park Alkali recovery: 2.62mg/m3 Alkali recovery: 200mg/m3
    
    Nitrogen oxide Organised 3 Within Chenming Power plant: 42.1mg/m3 Power plant: 100 mg/m3 172.5t 1,059.41t No
    
    emission Industrial Park Alkali recovery: 127.3mg/m3 Alkali recovery: 300mg/m3
    
    Smoke Organised 3 Within Chenming Power plant: 0.80mg/m3 Power plant: 10 mg/m3 1.45t 70.62t No
    
    emission Industrial Park Alkali recovery: 9.35mg/m3 Alkali recovery: 20mg/m3
    
    Shouguang Meilun Paper Co., Ltd. Sulphur dioxide Organised 2 Within Chenming 8.2mg/m3 35mg/m3 79.82t 383.9t No
    
    emission Industrial Park
    
    Nitrogen oxide Organised 2 Within Chenming 47.3mg/m3 100 mg/m3 455t 1,163.24t No
    
    emission Industrial Park
    
    Smoke Organised 2 Within Chenming 0.81mg/m3 5mg/m3 7.33t 122.94t No
    
    emission Industrial Park
    
    Wuhan Chenming Hanyang COD Organised 1 East of the factory 30.67mg/l 80mg/L 33.96t 184.30t No
    
    Paper Holdings Co., Ltd. emission area
    
    Ammonia nitrogen Organised 1 East of the factory 1.24mg/l 8 mg/L 1.37t 17.30t No
    
    emission area
    
    Sulphur dioxide Organised 2 Within Qianneng 130t/h furnace 24.8mg/m3 50mg/m3 32.17t 102.58t No
    
    emission Electric Power 75t/h furnace: 29.7mg/m3
    
    factory area
    
    Nitrogen oxide Organised 2 Within Qianneng 130t/h furnace: 27.8mg/m3 100 mg/m3 42.62t 205.16t No
    
    emission Electric Power 75t/h furnace: 58.1mg/m3
    
    factory area
    
    Smoke Organised 2 Within Qianneng 130t/h furnace: 12.2mg/m3 20mg/m3 14.73t 41.03t No
    
    emission Electric Power 75t/h furnace: 10.5mg/m3
    
    factory area
    
    Jiangxi Chenming Paper Co., Ltd. COD Organised 1 At the boundary of 42.75mg/L 90mg/L 279.18t 1,260t No
    
    emission factory area
    
    Ammonia nitrogen Organised 1 At the boundary of 2.25mg/L 8mg/L 9.08t 112t No
    
    emission factory area
    
    Sulphur dioxide Organised 2 Within factory area 200mg/m3 180.81t 806t No
    
    emission
    
    Nitrogen oxide Organised 2 Within factory area 102.41mg/m3 200 mg/m3 303.37t 806t No
    
    emission
    
    Smoke Organised 2 Within factory area 11.05mg/m3 30mg/m3 38.09t 135t No
    
    emission
    
    32 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    XV. Fulfilment of Social Responsibility (Cont’d)
    
    1. Major environmental protection matters (Cont’d)
    
    Name of major Number
    
    pollutants of Pollutant emission
    
    Name of company or and specific Way of emission Distribution of standards Approved Excessive
    
    subsidiary pollutants emission outlets emission outlets Emission concentration implemented Total emissions total emissions emissions
    
    Jilin Chenming Paper Co., Ltd. COD Organised 1 At the boundary of 61.9mg/L 90mg/L 275.38t 357t No
    
    emission factory area
    
    Ammonia nitrogen Organised 1 At the boundary of 1.51mg/L 8mg/L 6.72t 34t No
    
    emission factory area
    
    Sulphur dioxide Organised 1 Within factory area 5mg/m3 100mg/m3 7.39t 97t No
    
    emission
    
    Nitrogen oxide Organised 1 Within factory area 36.07mg/m3 100mg/m3 53.34t 213t No
    
    emission
    
    Smoke Organised 1 Within factory area 14.7mg/m3 30mg/m3 21.7t 51.66t No
    
    emission
    
    Zhanjiang Chenming Pulp & COD Organised 1 Within Zhanjiang 35.57mg/L 90mg/L 860.03t 1,943t No
    
    Paper Co., Ltd. emission Chenming factory
    
    area
    
    Ammonia nitrogen Organised 1 Within Zhanjiang 1.01mg/L 8mg/L 28.49t 43.90t No
    
    emission Chenming factory
    
    area
    
    Sulphur dioxide Organised 6 Within Zhanjiang Lime kiln: 0.26mg/m3 Lime kiln:400mg/m3 317.26t 620t No
    
    emission Chenming factory Alkali recovery: 26.41mg/m3 Alkali recovery: 200mg/m3
    
    area Power plant 1#: 4.66mg/m3 1#, 2#, 3# circulating
    
    Power plant 2#: 2.93mg/m3 fluidised bed boilers:
    
    Power plant 3#: 5.77mg/m3 100mg/m3 4# circulating
    
    Power plant 4#: 16.60mg/m3 fluidised bed boilers:
    
    35mg/m3
    
    Nitrogen oxide Organised 6 Within Zhanjiang Lime kiln: 231.5mg/m3 Lime kiln: 300mg/m3 1634.36t 2,169.70t No
    
    emission Chenming factory Alkali recovery: 198.6mg/m3 Alkali recovery: 200mg/m3
    
    area Power plant 1#: 21.55mg/m3 1#, 2#, 3# circulating
    
    Power plant 2#: 20.09mg/m3 fluidised bed boilers:
    
    Power plant 3#: 17.75mg/m3 100mg/m?
    
    Power plant 4#: 28.35mg/m3 4# circulating fluidised
    
    bed boilers: 50mg/m3
    
    Smoke Organised 6 Within Zhanjiang Lime kiln: Smoke 14.2mg/m3 Lime kiln:80mg/m3 190.87t 196t No
    
    emission Chenming factory Alkali recovery: 15.30mg/m3 Alkali recovery, 1#, 2#,
    
    area Power plant 1#: 14.12mg/m3 3# circulating fluidised
    
    Power plant 2#: 4.41mg/m3 bed boilers: 30mg/m3
    
    Power plant 3#: 7.52mg/m3 4# circulating fluidised
    
    Power plant 4#: 9.75mg/m3 bed boilers: 10mg/m3
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 33
    
    XV. Fulfilment of Social Responsibility (Cont’d)
    
    1. 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 adheres to the “three
    
    simultaneities” on environmental protection. In order to ensure pollutants are discharged strictly in accordance
    
    with the requirements under laws and regulations 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 Water Pollution, Law on the Prevention and Control of Air Pollution, Action Plan for Prevention and Control of
    
    Water Pollution and Law on the Prevention and Control of Environmental Pollution by Solid Waste and other laws.(2) Both the Company and its subsidiaries are equipped with comprehensive environmental protection treatment
    
    facilities. The pre-treatment-aerobic-anaerobic-in-depth treatment technology is the major technology for water
    
    treatment, which can achieve standardised discharge of wastewater. Moreover, subsidiaries are equipped with
    
    recycling system for process effluent, and reuse treated wastewater to the greatest extent in order to minimise
    
    pollution. The Company has constructed a total of 9 water treatment plants, with daily treatment capacity of
    
    350,000 m3. In addition, governmental authority will regularly visit the Company to conduct comparison of online
    
    monitoring data every quarter. All data meets the standards.(3) Each subsidiary’s organised emission outlets are equipped with an online monitoring system for real-time
    
    monitoring. All subsidiaries have their own power plants. Each self-owned plant has its own environmental
    
    protection facilities for de-dusting, desulphurisation and denitrification. Denitrification is conducted through SCR or
    
    SNCR, while desulphurisation is primarily conducted through gypsum desulphurisation (ammonia desulphurisation
    
    is adopted in the self-owned plant of Jiangxi Chenming). Substantially all of the emissions indicators are below the
    
    national and local execution standards. Other alkali recovery boilers and lime kilns are also in compliance with the
    
    emission standards.Environmental impact assessment of construction projects and other environmental protection administrativelicensing
    
    The Company has strictly complied with the environmental laws and regulations all along to carry out environmental
    
    impact assessment of construction projects. The construction projects are all subject to environmental impact
    
    assessment. During the construction process, a reasonable environmental protection project construction plan is
    
    formulated and strictly implemented. The environmental protection facilities and the main project are designed,
    
    constructed and put into operation at the same time. At present, all construction projects put into production have
    
    obtained environmental impact assessment approvals and acceptance approvals.
    
    In June 2017, the Company and its subsidiaries completed the formalities for new discharge permits in accordance with
    
    the Measures for the Administration of Pollutant Discharge Permits of the Ministry of Environmental Protection, and the
    
    discharge permits of the new projects were renewed according to the environmental protection requirements in a timely
    
    manner.
    
    34 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    XV. Fulfilment of Social Responsibility (Cont’d)
    
    1. Major environmental protection matters (Cont’d)
    
    Emergency plan for emergency environmental incidents
    
    The Company has strictly implemented emergency regulations for emergency environmental incidents, and formulated
    
    various emergency plans for emergency environmental incidents according to the technical requirements in the
    
    “Technical Guidelines for Emergency Environmental Pollution Accidents”. The plans are reviewed by and filed with the
    
    Environmental Protection Bureau, and regular emergency training and emergency drills are conducted. Emergency
    
    measures in relation to dangerous chemicals are formulated in accordance with the environmental protection
    
    requirements. At the same time, necessary emergency supplies are provided with regular inspections and updates.
    
    Environmental self-monitoring programme
    
    The Company has strictly complied with self-monitoring laws and regulations, and conducted self-monitoring in
    
    accordance with the environmental protection requirements to establish and perfect the corporate environmental
    
    management ledgers and materials. At present, self-monitoring is a combination of manual monitoring and automatic
    
    monitoring. At the same time, qualified units are engaged to conduct regular monitoring. Automatically monitored items
    
    include: total wastewater discharge (COD, ammonia nitrogen, flow rate, total phosphorus, total nitrogen and PH); power
    
    plant, alkali recovery boilers and lime kiln exhaust emissions (sulphur dioxide, nitrogen oxide and smoke). Manually
    
    monitored items include: daily monitoring of COD, ammonia nitrogen, SS, chroma, PH, total phosphorus and total
    
    nitrogen indicators. Sewage and other monitoring items, unorganised exhaust emission, solid waste, and noise at the
    
    plant boundary, are monitored on a monthly or quarterly basis by qualified units engaged in accordance with the local
    
    environmental protection requirements in relation to each subsidiary.
    
    The self-monitoring data and environmental monitoring programmes for pollutants discharge of various subsidiaries are
    
    published on the national key pollution source information disclosure website and the provincial key pollution source
    
    information disclosure websites.
    
    Other environmental information to be disclosed
    
    The relevant environmental protection information of the pollutant discharge permit information and the pollutant
    
    discharge permit requirements is announced on the national sewage discharge permit management information
    
    platform.
    
    Other environmental protection related information
    
    Other environmental protection related information is announced on the Company’s website.2. Fulfilment of social responsibility regarding targeted poverty relief
    
    The Company did not commence any work regarding targeted poverty relief in the first half of the year and had no
    
    follow-up targeted poverty relief plan.
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 35
    
    XVI. Other matters of significance
    
    √ Applicable □ Not applicable
    
    1. Issue of medium-term notes with an amount of RMB600 million
    
    The public issue of the 2018 second tranche of medium-term notes in the national inter-bank bond market was launched
    
    by the Company on 27 December 2018. The amount of the issue was RMB600 million with a nominal value of RMB100
    
    each at the interest rate of 7.50%.
    
    For details, please refer to relevant announcement (announcement no.: 2019-001) of the Company published on
    
    CNINFO on 2 January 2019.2. Distribution of fixed dividend of Chenming You 01
    
    The dividend was accrued from 17 March 2018 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.: 2019-014) of the Company published on
    
    CNINFO on 11 March 2019.3. 2018 profit distribution plan for ordinary shares
    
    On 11 June 2019, the Company convened the 2018 annual general meeting, at which, the 2018 profit distribution plan
    
    was considered and approved: based on the number of the shares as at the dividend distribution registration date of
    
    2,904,608,200 shares, a cash dividend of RMB2.40 (tax inclusive) was to be paid to all shareholders for every 10 shares
    
    held, and no capitalisation issue will be made out of the capital reserves. The total cash dividend distributed to the
    
    holders of ordinary shares amounted to RMB697,105,968 (tax inclusive) in 2018.
    
    For details, please refer to relevant announcement (announcement no.: 2019-055) of the Company published on
    
    CNINFO on 12 June 2019.4. Re-elections of the Company
    
    The 37th extraordinary meeting of eighth session of the Board and the 13th extraordinary meeting of the eighth session
    
    of the Supervisory Committee held on 20 May 2019 considered and passed the resolution in relation to the re-election
    
    of the Board and the resolution in relation to the re-election of the Supervisory Committee. The above resolutions in
    
    relation to the re-elections were considered and approved at the annual general meeting convened on 11 June 2019.
    
    The new session of the Board and the new session of the Supervisory Committee will serve for a term of three years.
    
    On 11 June 2019, the ninth session of the Board considered and passed the resolution in relation to the election of
    
    the chairman, vice chairman, general manager, secretary to the Board and the senior management of the Company.
    
    The ninth session of the Supervisory Committee considered and passed the resolution in relation to the election of the
    
    chairman of the Supervisory Committee.
    
    For details, please refer to relevant announcements (announcement no.: 2019-039, 2019-040, 2019-055, 2019-056 and
    
    2019-057) of the Company published on CNINFO on 21 May and 12 June 2019.
    
    36 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    XVI. Other matters of significance (Cont’d)
    
    5. Information disclosure index for the first half of 2018
    
    Announcement Date of
    
    no. Subject matter publication Publication website and index
    
    2019-001 Announcement on Result of the Issue of 2018 3 January 2019 http://www.cninfo.com.cn
    
    Second Tranche of Medium-term Notes
    
    2019-002 Announcement on the Receipt of the Decision on 7 January 2019 http://www.cninfo.com.cn
    
    the Administrative Supervision Measures of the
    
    Shandong Securities Regulatory Commission of
    
    the China Securities Regulatory Commission
    
    2019-003 Announcement on the Acquisition of Mining 7 January 2019 http://www.cninfo.com.cn
    
    License by Haiming Mining, a Subsidiary of the
    
    Company
    
    2019-004 Announcement on Signing Strategic Cooperation 17 January 2019 http://www.cninfo.com.cn
    
    Agreement with Great Wall Glory Securities
    
    2019-005 Announcement in respect of Resolutions of the 22 January 2019 http://www.cninfo.com.cn
    
    Thirty-fifth Extraordinary Meeting of the Eighth
    
    Session of the Board of Directors
    
    2019-006 Announcement on External Investment (I) 22 January 2019 http://www.cninfo.com.cn
    
    2019-007 Announcement on Huanggang Chenming’s 22 January 2019 http://www.cninfo.com.cn
    
    Application for Bank Loan and Provision of
    
    Guarantee and Asset Pledge
    
    2019-008 Announcement on External Investment (II) 22 January 2019 http://www.cninfo.com.cn
    
    2019-009 Announcement on Result of the Issue of 2019 22 January 2019 http://www.cninfo.com.cn
    
    First Tranche of Super & Short-term Commercial
    
    Paper
    
    2019-010 Announcement in respect of Resolutions of the 7 March 2019 http://www.cninfo.com.cn
    
    Thirty-Sixth Extraordinary Meeting of the Eighth
    
    Session of the Board of Directors
    
    2019-011 Announcement on Cooperation on the Initiation 7 March 2019 http://www.cninfo.com.cn
    
    of the Establishment of Weifang Chenming
    
    Growth Driver Replacement Equity Investment
    
    Fund
    
    2019-012 Announcement on the Progress of Initiation of 11 March 2019 http://www.cninfo.com.cn
    
    the Establishment of Weifang Chenming Growth
    
    Driver Replacement Equity Investment Fund
    
    2019-013 Announcement on the Progress of Intended 11 March 2019 http://www.cninfo.com.cn
    
    Increase in Shareholding by the Company’s
    
    Largest Shareholder
    
    2019-014 Announcement on the Distribution of Dividend of 12 March 2019 http://www.cninfo.com.cn
    
    Preference Share
    
    2019-015 Announcement on Resignation of Senior 16 March 2019 http://www.cninfo.com.cn
    
    Management
    
    2019-016 Announcement on Obtaining High-tech 19 March 2019 http://www.cninfo.com.cn
    
    Enterprise Certificates by the Company and its
    
    wholly-owned subsidiaries
    
    2019-017 Announcement on Pledge of Shares held by 19 March 2019 http://www.cninfo.com.cn
    
    Shareholders and the Release of Pledge of Part
    
    of the Shares
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 37
    
    XVI. Other matters of significance (Cont’d)
    
    5. Information disclosure index for the first half of 2018 (Cont’d)
    
    Announcement Date of
    
    no. Subject matter publication Publication website and index
    
    2019-018 Announcement on payment of 2019 interest with 26 March 2019 http://www.cninfo.com.cn
    
    respect to the first tranche of corporate bonds
    
    publicly issued to qualified investors in 2018
    
    2019-019 Announcement on Pledge of Shares held by 26 March 2019 http://www.cninfo.com.cn
    
    Shareholders and the Release of Pledge of Part
    
    of the Shares
    
    2019-020 Announcement in respect of Resolutions of the 30 March 2019 http://www.cninfo.com.cn
    
    Twelfth Meeting of the Eighth Session of the
    
    Board of Directors
    
    2019-021 2018 Annual Report Summary 30 March 2019 http://www.cninfo.com.cn
    
    2019-022 Announcement in respect of Resolutions of the 30 March 2019 http://www.cninfo.com.cn
    
    Thirteenth Meeting of the Eighth Session of the
    
    Supervisory Committee
    
    2019-023 Announcement on Provision of Guarantees for 30 March 2019 http://www.cninfo.com.cn
    
    General Facilities of Relevant Subsidiaries by the
    
    Company
    
    2019-024 Announcement on correction of previous 30 March 2019 http://www.cninfo.com.cn
    
    accounting errors and retrospective restatement
    
    2019-025 Announcement on the Appointment of the 30 March 2019 http://www.cninfo.com.cn
    
    Auditors for 2019
    
    2019-026 Announcement on the Commencement of 30 March 2019 http://www.cninfo.com.cn
    
    Financial Leasing Business
    
    2019-027 Notice of 2018 Annual General Meeting 30 March 2019 http://www.cninfo.com.cn
    
    2019-028 Announcement on Result of the Issue of 2019 30 March 2019 http://www.cninfo.com.cn
    
    Third Tranche of Super & Short-term Commercial
    
    Paper
    
    2019-029 Announcement on Receipt of Government 2 April 2019 http://www.cninfo.com.cn
    
    Subsidy by Wholly-owned Subsidiaries of the
    
    Company
    
    2019-030 Announcement on Pledge of Shares held by 11 April 2019 http://www.cninfo.com.cn
    
    Shareholders
    
    2019-031 Announcement on Estimated Results for First 15 April 2019 http://www.cninfo.com.cn
    
    Quarter of 2019
    
    2019-032 Announcement on Release of Pledge of Shares 19 April 2019 http://www.cninfo.com.cn
    
    held by Shareholders
    
    2019-033 Announcement in respect of Resolutions of the 30 April 2019 http://www.cninfo.com.cn
    
    Thirteenth Meeting of the Eighth Session of the
    
    Board of Directors
    
    2019-034 2019 First Quarterly Report 30 April 2019 http://www.cninfo.com.cn
    
    2019-035 Announcement on the Commencement of 30 April 2019 http://www.cninfo.com.cn
    
    Financial Leasing Business of Subsidiary
    
    2019-036 Announcement on Receipt of Government 6 May 2019 http://www.cninfo.com.cn
    
    Subsidy by Subsidiaries of the Company
    
    2019-037 Announcement on Result of the Issue of 6 May 2019 http://www.cninfo.com.cn
    
    2019 Fourth Tranche of Super & Short-term
    
    Commercial Paper
    
    38 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    XVI. Other matters of significance (Cont’d)
    
    5. Information disclosure index for the first half of 2018 (Cont’d)
    
    Announcement Date of
    
    no. Subject matter publication Publication website and index
    
    2019-038 Announcement on Progress of external 13 May 2019 http://www.cninfo.com.cn
    
    investment and Operation Commencement of
    
    Shouguang Meilun chemical pulp project
    
    2019-039 Announcement in Respect of Resolutions of the 21 May 2019 http://www.cninfo.com.cn
    
    Thirty-Seven Extraordinary Meeting of the Eighth
    
    Session of the Board of Directors
    
    2019-040 Announcement in respect of Resolutions of the 21 May 2019 http://www.cninfo.com.cn
    
    Thirteenth Meeting of the Eighth Session of the
    
    Supervisory Committee
    
    2019-041 Declaration by Candidate for Independent 21 May 2019 http://www.cninfo.com.cn
    
    Director (Sun Jianfei)
    
    2019-042 Declaration by Candidate for Independent 21 May 2019 http://www.cninfo.com.cn
    
    Director (Yang Biao)
    
    2019-043 Declaration by Candidate for Independent 21 May 2019 http://www.cninfo.com.cn
    
    Director (Yin Meiqun)
    
    2019-044 Declaration by Nominator of Independent 21 May 2019 http://www.cninfo.com.cn
    
    Director
    
    2019-045 Announcement on the Issue of Commercial 21 May 2019 http://www.cninfo.com.cn
    
    Mortgage Backed Securities Backed by an Office
    
    Property of a Subsidiary
    
    2019-046 Announcement on the Commencement of 21 May 2019 http://www.cninfo.com.cn
    
    Equipment Financing Business of Subsidiaries
    
    2019-047 Announcement on Additional Resolutions 21 May 2019 http://www.cninfo.com.cn
    
    Proposed at the 2018 Annual General Meeting
    
    2019-048 Supplementary Notice of 2018 Annual General 21 May 2019 http://www.cninfo.com.cn
    
    Meeting
    
    2019-049 Second Supplementary Notice of 2018 Annual 24 May 2019 http://www.cninfo.com.cn
    
    General Meeting
    
    2019-050 Announcement on Supplemental Pledge of 25 May 2019 http://www.cninfo.com.cn
    
    Shares held by Shareholders and Business
    
    Continuation
    
    2019-051 Announcement on Result of the Issue of 2019 28 May 2019 http://www.cninfo.com.cn
    
    Fifth Tranche of Super & Short-term Commercial
    
    Paper
    
    2019-052 Announcement on Intended Increase in 29 May 2019 http://www.cninfo.com.cn
    
    Shareholding by the Directors, Supervisors and
    
    Senior Management
    
    2019-053 Announcement on Release of Pledge of Shares 30 May 2019 http://www.cninfo.com.cn
    
    and Supplemental Pledge of Shares held by
    
    Shareholders
    
    2019-054 Announcement on Intended Increase in 7 June 2019 http://www.cninfo.com.cn
    
    Shareholding by the Chairman of the Company
    
    2019-055 Poll Results Announcement of the 2018 Annual 12 June 2019 http://www.cninfo.com.cn
    
    General Meeting
    
    2019-056 Announcement on Resolutions of the First 12 June 2019 http://www.cninfo.com.cn
    
    Meeting of the Ninth Session of the Board of
    
    Directors
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 39
    
    XVI. Other matters of significance (Cont’d)
    
    5. Information disclosure index for the first half of 2018 (Cont’d)
    
    Announcement Date of
    
    no. Subject matter publication Publication website and index
    
    2019-057 Announcement on Resolutions of the First 12 June 2019 http://www.cninfo.com.cn
    
    Meeting of the Ninth Session of the Supervisory
    
    Committee
    
    2019-058 Announcement on the Re-election of Employee 12 June 2019 http://www.cninfo.com.cn
    
    Representative Supervisor
    
    2019-059 Announcement on Pledge of Shares held by 21 June 2019 http://www.cninfo.com.cn
    
    Shareholders
    
    2019-060 Announcement on Progress of the acquisition of 26 June 2019 http://www.cninfo.com.cn
    
    45% of equity interest in Goldtrust Futures
    
    2019-061 Announcement in respect of Guarantee in Favour 27 June 2019 http://www.cninfo.com.cn
    
    of Subsidiaries for their Bank Loans by the
    
    Wholly-owned Subsidiaries of the Company
    
    XVII. Matters of significant of subsidiaries of the Company
    
    √ Applicable □ Not applicable
    
    1. Establishment of Shanghai Chenming Pulp & Paper Sales Co., Ltd. through External Investment
    
    In order to make full use of the advantages of Shanghai as a financial centre, expand and enhance the Shanghai
    
    platform, put great efforts in market development, and enhance the Company’s overall strength and comprehensive
    
    competitiveness, the company intended to set up Shanghai Sales Co., Ltd. in Hongkou District, Shanghai.
    
    For details, please refer to relevant announcement (announcement no.: 2019-008) of the Company published on
    
    CNINFO on 21 January 2019.2. Capital Increase in Huanggang Chenming Pulp & Paper Co., Ltd.
    
    In order to meet the needs of Huanggang Chenming’s production and operation, optimise the capital structure, and
    
    enhance the overall strength and comprehensive competitiveness of Huanggang Chenming, the Company intended to
    
    increase the capital of Huanggang Chenming with its own funds, with an increase of RMB1 billion, which can be made
    
    by instalments according to actual needs.
    
    For details, please refer to relevant announcement (announcement no.: 2019-006) of the Company published on
    
    CNINFO on 21 January 2019.
    
    40 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    XVII. Matters of significant of subsidiaries of the Company (Cont’d)
    
    3. Operation Commencement of Shouguang Meilun Chemical Pulp Project
    
    The proposal on the construction of a bleached sulfate chemical wood pulp in Shouguang of Shouguang Meilun, a
    
    wholly-owned subsidiary of the Company, was considered and approved at the 2013 annual general meeting of the
    
    Company. During the process of project construction, given the high dependence of China’s wood pulp imports and
    
    the impact of waste paper import policies, waste paper prices in the domestic market rose sharply, which led to the
    
    increase in wood pulp prices. In order to solve the problem of raw materials of the Company, make full use of the cost
    
    advantage of self-made pulp and improve economic efficiency, the Company adjusted the annual production of 400,000
    
    tonnes of bleached sulfate chemical wood pulp to annual production of 1 million tonnes of bleached sulfate chemical
    
    wood pulp and put it into production smoothly.
    
    For details, please refer to relevant announcement (announcement no.: 2019-038) of the Company published on
    
    CNINFO on 13 May 2019.
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 41
    
    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 reserves Others Subtotal Amounts Percentage
    
    I. Restricted shares 11,968,581 0.41% 1,494,400 1,494,400 13,462,981 0.46%
    
    1. Shares held by other domestic investors 11,968,581 0.41% 1,494,400 1,494,400 13,462,981 0.46%
    
    Of which: Shares held by domestic
    
    natural persons 11,968,581 0.41% 1,494,400 1,494,400 13,462,981 0.46%
    
    II. Non-restricted shares 2,892,639,619 99.59% -1,494,400 -1,494,400 2,891,145,219 99.54%
    
    1. RMB ordinary shares 1,658,018,403 57.08% -1,494,400 -1,494,400 1,656,524,003 57.03%
    
    2. Domestic listed foreign share 706,315,966 24.32% 0 0 706,315,966 24.32%
    
    3. Overseas listed foreign shares 528,305,250 18.19% 0 0 528,305,250 18.19%
    
    III. Total number of shares 2,904,608,200 100.00% 0 0 2,904,608,200 100.00%
    
    The reasons for such changes
    
    √ Applicable □ Not applicable
    
    Before and after the change, the number of restricted shares held by domestic natural persons increased by 1,494,400
    
    shares from 11,968,581 shares to 13,582,231 shares, 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, 1,494,400 RMB ordinary shares (A shares) without restriction additionally acquired by Directors and
    
    Senior Management were put under restriction.
    
    Approval of changes in shareholding
    
    □ Applicable √ Not applicable
    
    Transfer of shares arising from changes in shareholding
    
    □ Applicable √ Not applicable
    
    Progress of share repurchase
    
    □ Applicable √ Not applicable
    
    Progress of decrease in the holding of repurchased shares by way of bidding
    
    □ 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
    
    42 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    I. Changes in shares (Cont’d)
    
    2. Changes in restricted shares
    
    √ Applicable□Not applicable
    
    Unit: share
    
    Restricted Restricted
    
    Restricted shares shares Restricted
    
    shares at the released increased shares at
    
    Name of beginning during during the end
    
    shareholders of period the period the period of period Reason for restriction Date of release from restriction
    
    Chen Hongguo 7,608,333 0 701,700 8,310,033 Locked-up shares held Under relevant requirements for
    
    by senior management management of shares held by senior
    
    management
    
    Hu Changqing 1,393 0 30,750 32,143 Locked-up shares held Under relevant requirements for
    
    by senior management management of shares held by senior
    
    management
    
    Chen Gang 0 0 104,775 104,775 Locked-up shares held Under relevant requirements for
    
    by senior management management of shares held by senior
    
    management
    
    Li Weixian 3,600 0 57,300 60,900 Locked-up shares held Under relevant requirements for
    
    by senior management management of shares held by senior
    
    management
    
    Li Xueqin 483,016 0 162,975 645,991 Locked-up shares held Under relevant requirements for
    
    by senior management management of shares held by senior
    
    management
    
    Geng Guanglin 492,112 0 45,600 537,712 Locked-up shares held Under relevant requirements for
    
    by senior management management of shares held by senior
    
    management
    
    Li Feng 530,795 0 148,725 679,520 Locked-up shares held Under relevant requirements for
    
    by senior management management of shares held by senior
    
    management
    
    Li Zhenzhong 0 0 84,750 84,750 Locked-up shares held Under relevant requirements for
    
    by senior management management of shares held by senior
    
    management
    
    Li Dong 11,250 0 45,000 56,250 Locked-up shares held Under relevant requirements for
    
    by senior management management of shares held by senior
    
    management
    
    Yuan Xikun 0 0 33,525 33,525 Locked-up shares held Under relevant requirements for
    
    by senior management management of shares held by senior
    
    management
    
    Sun Yinghua 0 0 73,800 73,800 Resignation 11 December 2019
    
    Yang Hongqin 0 0 5,500 5,500 Resignation 11 December 2019
    
    Total 9,130,499 0 1,494,400 10,624,899 — —
    
    II. Issuance and listing of securities
    
    □ Applicable √ Not applicable
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 43
    
    III. Total number of shareholders and shareholdings
    
    Unit: share
    
    130,823, of which 110,298 were holders of A
    
    Total number of shareholders of ordinary shares shares, 20,157 were holders of B shares and Total number of shareholders of preference shares with restored
    
    as at the end of the reporting period 368 were holders of H shares voting right as at the end of the reporting period, if any (see Note 8) 0
    
    Shareholdings of shareholders interested in more than 5% of the shares of the Company or Top 10 shareholders
    
    Share pledged or locked-up
    
    Number of Changes
    
    ordinary shares (increase or
    
    held at the decrease) Number of Number of
    
    end of the during the restricted non-restrict
    
    Nature of Percentage of reporting Reporting ordinary ordinary Status
    
    Name of shareholders shareholders shareholding period period shares held shares held of shares Number
    
    CHENMING HOLDINGS COMPANY LIMITED State-owned legal person 15.33% 445,396,128 1250000 0 445,396,128 Pledged 333,499,836
    
    HKSCC NOMINEES LIMITED Overseas legal person 12.84% 373,067,625 -220250 0 373,067,625
    
    CHENMING HOLDINGS (HONG KONG)
    
    LIMITED Overseas legal person 12.54% 364,131,563 0 0 364,131,563
    
    CENTRAL HUIJIN ASSET MANAGEMENT LTD. State-owned legal person 2.07% 60,206,850 0 0 60,206,850
    
    AGRICULTURAL BANK OF CHINA LIMITED –
    
    CHINA CSI 500 ETF Others 0.55% 15,982,750 1,816,300 0 15,982,750
    
    VANGUARD EMERGING MARKETS STOCK
    
    INDEX FUND Overseas legal person 0.44% 12,912,357 0 0 12,912,357
    
    VANGUARD TOTAL INTERNATIONAL STOCK
    
    INDEX FUND Overseas legal person 0.39% 11,351,620 354,212 0 11,351,620
    
    Chen Hongguo Domestic nature person 0.38% 11,080,044 935,600 0 2,770,011
    
    Chen Suiqiang Domestic nature person 0.37% 10,800,200 899,050 0 10,800,200
    
    Jin Xing Domestic nature person 0.37% 10,610,329 -1,114,421 0 10,610,329
    
    Related party relationship or acting in concert A shareholder, Chenming Holdings (Hong Kong) Limited, which is an overseas legal person, is a wholly-owned subsidiary of a shareholder, Shouguang
    
    among the above shareholders Chenming Holdings Company Limited, which is a state-owned legal person. A shareholder, Chen Hongguo, is the legal representative, chairman and general
    
    manager of Chenming Holdings Company Limited. 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
    
    III. Total number of shareholders and shareholdings (Cont’d)
    
    Shareholdings of the top ten shareholders of non-restricted ordinary shares
    
    Number of Class of shares
    
    non-restricted
    
    ordinary shares
    
    held as at the
    
    end of the
    
    Name of shareholders reporting period Class of shares Number
    
    CHENMING HOLDINGS COMPANY LIMITED 445,396,128 RMB ordinary shares 445,396,128
    
    HKSCC NOMINEES LIMITED 373,067,625 Overseas listed foreign shares 373,067,625
    
    CHENMING HOLDINGS (HONG KONG) LIMITED 364,131,563 Domestic listed foreign shares 210,717,563
    
    Overseas listed foreign shares 153,414,000
    
    CENTRAL HUIJIN ASSET MANAGEMENT LTD. 60,206,850 RMB ordinary shares 60,206,850
    
    AGRICULTURAL BANK OF CHINA LIMITED –
    
    CSI500 INDEX OPEN-ENDED FUND 15,982,750 RMB ordinary shares 15,982,750
    
    VANGUARD EMERGING MARKETS STOCK
    
    INDEX FUND 12,912,357 Domestic listed foreign shares 12,912,357
    
    VANGUARD TOTAL INTERNATIONAL STOCK
    
    INDEX FUND 11,351,620 Domestic listed foreign shares 11,351,620
    
    Chen Suiqiang 10,800,200 RMB ordinary shares 10,800,200
    
    Jin Xing 10,610,329 Domestic listed foreign shares 10,610,329
    
    LSV EMERGING MARKETS EQUITY FUND, L.P. 9,154,200 Domestic listed foreign shares 9,154,200
    
    Related party relationship or acting in concert A shareholder, Chenming Holdings (Hong Kong) Limited, which is an
    
    among the top ten ordinary shareholders of non- overseas legal person, is a wholly-owned subsidiary of a shareholder,
    
    restricted ordinary shares, and between the Shouguang Chenming Holdings Company Limited, which is a state-
    
    top ten shareholders of non-restricted ordinary owned legal person. Save for the above, it is not aware that any other
    
    shares and the top ten ordinary shareholders shareholders of tradable shares are persons acting in concert. It is also
    
    not aware that any other shareholders of tradable shares are related to
    
    each other.
    
    Securities margin trading of top 10 ordinary Chenming Holdings Company Limited held 445,396,128 RMB ordinary
    
    shareholders shares, of which 402,196,128 shares were held through ordinary account
    
    and 43,200,000 shares were held through credit guarantee security
    
    account.
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 45
    
    III. Total number of shareholders and shareholdings (Cont’d)
    
    Whether an agreed repurchase transaction was entered into during the reporting period by the top 10 ordinary shareholders
    
    and top 10 shareholders of non-restricted shares of the Company
    
    □ Yes √ No
    
    The top 10 ordinary shareholders and top 10 shareholders of non-restricted ordinary shares of the Company did not enter into
    
    any agreed repurchase transaction during the reporting period.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.
    
    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
    
    √ 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
    
    preference Changes
    
    shares (increase or
    
    held at the decrease)
    
    end of the during the
    
    Preference reporting reporting
    
    Name of shareholders Nature of shareholders shareholding period period Share pledged or locked-up
    
    Status
    
    of shares Number
    
    BEIJING YIBEN ZHONGXING INVESTMENT Domestic non-state-
    
    MANAGEMENT CO., LTD. owned legal person 27.78% 12,500,000 0 Pledged 12,500,000
    
    BANK OF COMMUNICATIONS INTERNATIONAL
    
    TRUST CO., LTD. – HUILI NO.167 SINGLE
    
    CAPITAL TRUST Others 22.44% 10,100,000 0
    
    BANK OF COMMUNICATIONS MINTERNATIONAL
    
    TRUST CO., LTD. – HUILI NO.136 SINGLE
    
    CAPITAL TRUST Others 14.22% 6,400,000 0
    
    QILU BANK CO., LTD. – QILU BANK QUANXIN
    
    WEALTH MANAGEMENT PRODUCT SERIES Others 13.33% 6,000,000 0
    
    Domestic non-state-
    
    HENGFENG BANK CO., LTD. owned legal person 11.11% 5,000,000 0
    
    SHANGHAI STATE-OWNED ASSETS State-owned legal
    
    OPERATION CO., LTD. person 6.67% 3,000,000 0
    
    NCF – MINSHENG BANK – CHINA FORTUNE
    
    INTERNATIONAL TRUST – CHINA FORTUNE
    
    TRUST?MIN XIN NO. 11 SINGLE CAPITAL TRUST Others 4.44% 2,000,000 0
    
    Related party relationship or acting in concert among The aforesaid holders of preference shares, “BANK OF COMMUNICATIONS INTERNATIONAL
    
    the top ten holders of preference shares, and between TRUST CO., LTD. – UILI NO.167 SINGLE CAPITAL TRUST” and “BANK OF COMMUNICATIONS
    
    the top ten holders of preference shares and the top ten INTERNATIONAL TRUST CO., LTD. – HUILI NO.136 SINGLE CAPITAL TRUST”, are persons
    
    holders of ordinary shares acting in concert. Save for the above, it is not aware that whether the remaining holders of
    
    preference shares are persons acting in concert. It is also not aware that the top ten holders of
    
    preference shares and the top ten holders of ordinary shares are related to each other.
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 47
    
    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
    
    I. Changes in shareholding of Directors, Supervisors and Senior Management
    
    √ Applicable □ Not applicable
    
    Restricted
    
    Increase in Decrease in shares Restricted Restricted
    
    Shares held the number the number Shares granted shares shares
    
    as at the of shares of shares held as at at the granted granted at
    
    beginning of held during held during the end of beginning of during the end of
    
    the period the period the period the period the period the period the period
    
    Name Position Status (shares) (shares) (shares) (shares) (shares) (shares) (shares)
    
    Chen Hongguo Chairman In office 10,144,444 935,600 0 11,080,044 0 0 0
    
    Hu Changqing Vice Chairman In office 1,857 41,000 0 42,857 0 0 0
    
    Li Xingchun Vice Chairman In office 0 0 0 0 0 0 0
    
    Chen Gang Director and In office 0 139,700 0 139,700 0 0 0
    
    deputy general
    
    manager
    
    Han Tingde Director In office 0 0 0 0 0 0 0
    
    Li Chuanxuan Director In office 0 0 0 0 0 0 0
    
    Sun Jianfei Independent In office 0 0 0 0 0 0 0
    
    Director
    
    Yang Biao Independent In office 0 0 0 0 0 0 0
    
    Director
    
    Yin Meiqun Independent In office 0 0 0 0 0 0 0
    
    Director
    
    Li Dong Chairman of In office 15,000 60,000 0 75,000 0 0 0
    
    Supervisory
    
    Committee
    
    Pan Ailing Supervisor In office 0 0 0 0 0 0 0
    
    Zhang Hong Supervisor In office 0 0 0 0 0 0 0
    
    Li Xinggui Employee In office 0 0 0 0 0 0 0
    
    representative
    
    supervisor
    
    Qiu Lanju Employee In office 0 0 0 0 0 0 0
    
    representative
    
    supervisor
    
    Li Weixian General manager In office 4,800 235,400 0 240,200 0 0 0
    
    Geng Guanglin Deputy general In office 656,150 60,800 0 716,950 0 0 0
    
    manager
    
    Li Xueqin Deputy general In office 644,022 217,300 0 861,322 0 0 0
    
    manager
    
    Li Feng Deputy general In office 707,727 198,300 0 906,027 0 0 0
    
    manager
    
    Li Zhenzhong Deputy general In office 0 113,000 0 113,000 0 0 0
    
    manager
    
    Zhao Xuegang Deputy general In office 0 0 0 0 0 0 0
    
    manager
    
    Dong Lianming Financial In office 0 69,600 0 69,600 0 0 0
    
    controller
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 49
    
    I. Changes in shareholding of Directors, Supervisors and Senior Management (Cont’d)
    
    Restricted
    
    Increase in Decrease in shares Restricted Restricted
    
    Shares held the number the number Shares granted shares shares
    
    as at the of shares of shares held as at at the granted granted at
    
    beginning of held during held during the end of beginning of during the end of
    
    the period the period the period the period the period the period the period
    
    Name Position Status (shares) (shares) (shares) (shares) (shares) (shares) (shares)
    
    Yuan Xikun Secretary to In office 0 44,700 0 44,700 0 0 0
    
    the Board
    
    Zhu Hanliang Company In office 0 0 0 0 0 0 0
    
    secretary
    
    Sun Yinghau Employee Resigned 0 73,800 0 73,800 0 0 0
    
    representative
    
    supervisor
    
    Yang Guihua Director Resigned 0 0 0 0 0 0 0
    
    Wang Fengrong Independent Resigned 0 0 0 0 0 0 0
    
    Director
    
    Huang Lei Independent Resigned 0 0 0 0 0 0 0
    
    Director
    
    Liang Fu Independent Resigned 0 0 0 0 0 0 0
    
    Director
    
    Zhang Xiaofeng Supervisor Resigned 0 0 0 0 0 0 0
    
    Zhang Qingzhi Deputy general Resigned 0 0 0 0 0 0 0
    
    manager
    
    Yang Weiming Deputy general Resigned 0 0 0 0 0 0 0
    
    manager
    
    Poon Shiu Company Resigned 0 0 0 0 0 0 0
    
    Cheong secretary
    
    and qualified
    
    accountant
    
    Total – – 12,174,000 2,189,200 0 14,363,200 0 0 050 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    II. Changes of Directors, Supervisors and Senior Management of the Company
    
    √ Applicable □ Not applicable
    
    Name Position Type Date Reason
    
    Chen Hongguo Chairman Elected 11 June 2019 Elected as a director and the chairman of the
    
    ninth session of the Board at the 2018 annual
    
    general meeting and the first meeting of the
    
    ninth session of the Board, respectively.
    
    Hu Changqing Vice chairman Elected 11 June 2019 Elected as a director and a vice chairman of the
    
    ninth session of the Board at the 2018 annual
    
    general meeting and the first meeting of the
    
    ninth session of the Board, respectively.
    
    Li Xingchun Vice chairman Elected 11 June 2019 Elected as a director and a vice chairman of the
    
    ninth session of the Board at the 2018 annual
    
    general meeting and the first meeting of the
    
    ninth session of the Board, respectively.
    
    Chen Gang Director and Elected and 11 June 2019 Elected as a director of the ninth session of
    
    vice general appointed the Board at the 2018 annual general meeting
    
    manager and appointed as the deputy general manager
    
    at the first meeting of the ninth session of the
    
    Board.
    
    Han Tingde Director Elected 11 June 2019 Elected as a director of the ninth session of the
    
    Board at the 2018 annual general meeting.
    
    Li Chuanxuan Director Elected 11 June 2019 Elected as a director of the ninth session of the
    
    Board at the 2018 annual general meeting.
    
    Sun Jianfei Independent Elected 11 June 2019 Elected as an independent director of the ninth
    
    Director session of the Board at the 2018 annual general
    
    meeting.
    
    Yang Biao Independent Elected 11 June 2019 Elected as an independent director of the ninth
    
    Director session of the Board at the 2018 annual general
    
    meeting.
    
    Yin Meiqun Independent Elected 11 June 2019 Elected as an independent director of the ninth
    
    Director session of the Board at the 2018 annual general
    
    meeting and appointed as the chairman of
    
    Supervisory Committee of the first meeting of
    
    the ninth session of the Supervisory Committee.
    
    Li Dong Chairman of Elected 11 June 2019 Elected as a supervisor of the ninth session of
    
    Supervisory the Supervisory Committee at the 2018 annual
    
    Committee general meeting.
    
    Pan Ailing Supervisor Elected 11 June 2019 Elected as a supervisor of the ninth session of
    
    the Supervisory Committee at the 2018 annual
    
    general meeting.
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 51
    
    II. Changes of Directors, Supervisors and Senior Management of the Company (Cont’d)
    
    Name Position Type Date Reason
    
    Zhang Hong Supervisor Elected 11 June 2019 Elected as a supervisor of the ninth session of
    
    the Supervisory Committee at the 2018 annual
    
    general meeting.
    
    Li Xinggui Employee Elected 11 June 2019 Elected as an employee representative
    
    representative supervisor at the tenth meeting of the ninth
    
    supervisor session of the employee representative
    
    meeting.
    
    Qiu Lanju Employee Elected 11 June 2019 Elected as an employee representative
    
    representative supervisor at the tenth meeting of the ninth
    
    supervisor session of the employee representative
    
    meeting.
    
    Li Weixian General Appointed 11 June 2019 Elected as the general manager at the first
    
    manager meeting of the ninth session of the Board.
    
    Li Xueqin Vice general Appointed 11 June 2019 Elected as a deputy general manager at
    
    manager the first meeting of the ninth session of the
    
    Board.
    
    Geng Guanglin Vice general Appointed 11 June 2019 Elected as a deputy general manager at
    
    manager the first meeting of the ninth session of the
    
    Board.
    
    Li Feng Vice general Appointed 11 June 2019 Elected as a deputy general manager at
    
    manager the first meeting of the ninth session of the
    
    Board.
    
    Li Zhenzhong Vice general Appointed 11 June 2019 Elected as a deputy general manager at
    
    manager the first meeting of the ninth session of the
    
    Board.
    
    Zhao Xuegang Vice general Appointed 11 June 2019 Elected as a deputy general manager at
    
    manager the first meeting of the ninth session of the
    
    Board.
    
    Dong Lianming Financial Appointed 11 June 2019 Elected as the financial controller at the first
    
    controller meeting of the ninth session of the Board.
    
    Yuan Xikun Secretary to Appointed 11 June 2019 Elected as the secretary to the Board at
    
    the Board the first meeting of the ninth session of the
    
    Board.
    
    Chu Hon Leung Hong Kong Appointed 11 June 2019 Elected as the company secretary (Hong
    
    Company Kong) at the first meeting of the ninth session
    
    secretary of the Board.
    
    Geng Guanglin Director Expiry of term 11 June 2019 Vacation of office upon expiry of the term of
    
    of office the eighth session of the Board
    
    52 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    II. Changes of Directors, Supervisors and Senior Management of the Company (Cont’d)
    
    Name Position Type Date Reason
    
    Li Feng Director Expiry of term 11 June 2019 Vacation of office upon expiry of the term of
    
    of office the eighth session of the Board
    
    Zhang Hong Director Expiry of term 11 June 2019 Elected as a supervisor subsequent to the
    
    of office vacation of office upon expiry of the term of
    
    the eighth session of the Board
    
    Yang Guihua Director Expiry of term 11 June 2019 Vacation of office upon expiry of the term of
    
    of office the eighth session of the Board
    
    Wang Fengrong Independent Expiry of term 11 June 2019 Vacation of office upon expiry of the term of
    
    Director of office the eighth session of the Board
    
    Huang Lei Independent Expiry of term 11 June 2019 Vacation of office upon expiry of the term of
    
    Director of office the eighth session of the Board
    
    Liang Fu Independent Expiry of term 11 June 2019 Vacation of office upon expiry of the term of
    
    Director of office the eighth session of the Board
    
    Pan Ailing Independent Expiry of term 11 June 2019 Elected as a supervisor subsequent to the
    
    Director of office vacation of office upon expiry of the term of
    
    the eighth session of the Board
    
    Sun Yinghua Employee Expiry of term 11 June 2019 Vacation of office upon expiry of the term
    
    representative of office of the eighth session of the Supervisory
    
    supervisor Committee
    
    Zhang Xiaofeng Supervisor Expiry of term 11 June 2019 Vacation of office upon expiry of the term
    
    of office of the eighth session of the Supervisory
    
    Committee
    
    Zhang Qingzhi Vice general Expiry of term 11 June 2019 Vacation of office upon expiry of the term of
    
    manager of office the eighth session of the Board
    
    Yang Weiming Vice general Dismissal 15 March 2019 Resignation from the position due to
    
    manager personal reasons
    
    Poon Shiu Company Expiry of term 11 June 2019 Vacation of office upon expiry of the term of
    
    Cheong secretary of office the eighth session of the Board
    
    and qualified
    
    accountant
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 53
    
    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 the interim report or overdue but not fully settled?
    
    Yes
    
    I. Basic information on corporate bonds
    
    Outstanding
    
    amount of
    
    Bond the bonds Interest Payment
    
    Name of bond abbreviation Bond code Issue date Maturity date (RMB’0,000) rate method
    
    The public issuance of the corporate 17 Chenming 112570 17 August 21 August 120,000 6.50% Interest is paid
    
    bonds of Shandong Chenming Bond 01 2017 2022 annually. The
    
    Paper Holdings Limited to qualified principal amount
    
    investors in 2017 (tranche I) and the last
    
    interest payment
    
    will be paid on
    
    the maturity
    
    date.
    
    The public issuance of the corporate 18 Chenming 112641 29 March 2 April 90,000 7.28% Interest is paid
    
    bonds of Shandong Chenming Bond 01 2018 2023 annually. The
    
    Paper Holdings Limited to qualified principal amount
    
    investors in 2018 (tranche I) and the last
    
    interest payment
    
    will be paid on
    
    the maturity
    
    date.
    
    Stock exchange on which Shenzhen Stock Exchange
    
    corporate 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 There was no interest payment during the reporting period.
    
    bonds during the reporting period
    
    Performance of relevant terms Both 17 Chenming Bond 01 and 18 Chenming Bond 01 attach with options for the issuer to adjust the coupon
    
    during the reporting period, rate and for investors to resell. The issuer has the right to determine the adjustment to the coupon rate for
    
    for special terms such as the following 3 years at the end of the second year and the adjustment to the coupon rate for the following
    
    issuer or investor option and year as the end of the fourth year. After issuing the announcement on whether the coupon rate of the relevant
    
    interchangeable for corporate tranche of bonds will be adjusted and the range of adjustment, the investors have the right to register for
    
    bonds (if any) reselling during the period as announced to resell all or part of the relevant tranche of bonds held to the issuer
    
    at par value.
    
    54 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    II. Information on bond custodian and credit rating agency
    
    Bond custodian:
    
    Name GF Securities Office 38th Floor, Metro Plaza, Contact Xu Duwei Telephone 020-87555888
    
    Co., Ltd. address No.183 Tianhe North person of contact
    
    Road, Guangzhou person
    
    Credit rating agency(ies) which conducted rating on corporate bonds during the reporting period:
    
    Name China Chengxin Securities Office 21/F, Anji Building, 760 Xizang South Road, Huangpu
    
    Rating Co., Ltd. address District, Shanghai
    
    Reason of change, procedures to be performed and No change during the reporting period.
    
    impacts on interests of investors, etc. in case the bond
    
    trustee and credit rating agency engaged by the Company
    
    during the reporting period have changed (if applicable)III. Use of proceeds from corporate bonds
    
    Use of proceeds from corporate bonds and its The use of proceeds from issuance of corporate bonds has strictly
    
    implementation completed relevant application and approval procedures. As at the end
    
    of the reporting period, the proceeds from 17 Chenming Bond 01 and
    
    18 Chenming Bond 01 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?IV. Credit rating of corporate bonds
    
    The credit rating of 18 Chenming Bond 01 as granted by China Chengxin Securities Rating Co., Ltd. remained at AA+, and the
    
    credit rating for the Company remained at AA+ (stable outlook). The 2018 public issuance of the corporate bonds (tranche I)
    
    updated rating report (2019) was published on CNINFO on 29 May 2019.
    
    The credit rating of 17 Chenming Bond 01 as granted by China Chengxin Securities Rating Co., Ltd. remained at AA+, and the
    
    credit rating for the Company remained at AA+ (stable outlook). The 2017 public issuance of the corporate bonds (tranche I)
    
    updated rating report (2019) was published on CNINFO on 29 May 2019.
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 55
    
    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 applicableVII. 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)
    
    Increase/decrease as at
    
    the end of
    
    the reporting
    
    period as
    
    As at the compared
    
    end of the As at the end of to the end of
    
    Item reporting period the prior year the prior year
    
    Gearing ratio 76.25% 75.43% 0.82%
    
    Current ratio 77.56% 78.10% -0.54%
    
    Quick ratio 70.30% 69.54% 0.76%
    
    Increase/
    
    decrease of
    
    the reporting
    
    period as
    
    The compared to
    
    corresponding corresponding
    
    The reporting period of period of
    
    Item period the prior year the prior year
    
    EBITDA interest coverage ratio 1.64 2.70 -39.26%
    
    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 recorded a decrease of 39.26%, which was mainly due to the year-on-year decrease of profit
    
    during the reporting period.56 SHANDONG CHENMING PAPER HOLDINGS LIMITEDIX. 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
    
    Unit: RMB
    
    Amount of
    
    Item interest payment
    
    Corporate bonds 65,520,000.00
    
    Privately placed bonds 152,000,000.00
    
    Super & short-term commercial papers 2,954,844,931.51
    
    Total 3,172,364,931.51XI. Bank credit obtained, its use and repayment of bank loans during the reporting period
    
    During the reporting period, the Company obtained bank credit of RMB82.706 billion, of which RMB52.735 billion was utilised
    
    with RMB29.971 billion outstanding. The Company repaid bank loans of RMB18.767 billion.XII. Performance of relevant agreements or commitments under the prospectus of corporate
    
    bonds during the reporting period
    
    NilXIII. Matters of significance during the reporting period
    
    NilXIV. Is there any guarantor for corporate bonds?
    
    □? Yes? √? No
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 57
    
    I. Auditors’ Report
    
    Is the interim report audited
    
    □ Yes √ No
    
    The interim financial report is unaudited.II. Financial Statements
    
    The unit in the notes to the financial statements is: RMB
    
    1. Consolidated Balance Sheet
    
    Prepared by: Shandong Chenming Paper Holdings Limited
    
    30 June 2019
    
    Unit: RMB
    
    Item 30 June 2019 31 December 2018
    
    CURRENT ASSETS:
    
    Monetary funds 20,727,891,187.25 19,292,774,747.79
    
    Bills receivable 750,842,498.89 1,213,116,491.46
    
    Accounts receivable 3,505,805,716.79 3,404,487,004.59
    
    Prepayments 512,812,462.07 863,739,020.74
    
    Other receivables 1,610,458,353.55 2,133,089,983.39
    
    Including: Interest receivable 210,003,430.11 198,577,632.43
    
    Inventories 6,100,360,068.05 6,771,488,433.74
    
    Assets held-for-sale 50,717,915.24
    
    Non-current assets due within one year 5,565,858,326.78 4,007,503,281.86
    
    Other current assets 9,952,044,144.85 10,281,312,825.13
    
    Total current assets 48,776,790,673.47 47,967,511,788.70
    
    NON-CURRENT ASSETS:
    
    Long-term receivables 5,279,451,578.15 7,926,610,770.86
    
    Long-term equity investments 474,707,109.80 484,674,282.77
    
    Other non-current financial assets 765,160,000.00 103,000,000.00
    
    Investment property 4,731,461,433.14 4,844,993,039.62
    
    Fixed assets 30,774,255,749.34 27,913,986,152.68
    
    Construction in progress 10,152,057,869.08 11,871,350,821.55
    
    Intangible assets 2,024,361,567.03 1,939,355,274.98
    
    Goodwill 5,969,626.57 5,969,626.57
    
    Long-term prepaid expenses 129,568,658.12 134,916,241.81
    
    Deferred income tax assets 758,929,929.02 603,873,698.62
    
    Other non-current assets 2,686,036,767.70 1,522,493,129.66
    
    Total non-current assets 57,781,960,287.95 57,351,223,039.12
    
    Total assets 106,558,750,961.42 105,318,734,827.82
    
    58 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    II. Financial Statements (Cont’d)
    
    1. Consolidated Balance Sheet (Cont’d)
    
    Item 30 June 2019 31 December 2018
    
    CURRENT LIABILITIES:
    
    Short-term borrowings 44,665,330,086.95 40,227,945,361.89
    
    Bills payable 2,219,908,433.85 4,218,969,554.93
    
    Accounts payable 4,612,151,878.32 4,150,228,644.66
    
    Employee benefits payable 108,165,972.80 135,373,407.70
    
    Taxes payable 314,284,022.19 451,651,198.64
    
    Other payables 3,228,659,821.69 1,777,718,017.48
    
    Including: Interest payable 163,355,268.55 226,788,777.59
    
    Dividend payable 976,175,735.52
    
    Contract liabilities 639,444,833.26 419,540,133.74
    
    Non-current liabilities due within one year 5,243,485,176.41 7,216,305,771.01
    
    Other current liabilities 1,853,868,055.56 2,816,956,481.68
    
    Total current liabilities 62,885,298,281.03 61,414,688,571.73
    
    NON-CURRENT LIABILITIES:
    
    Long-term borrowings 8,449,738,255.44 7,798,934,484.94
    
    Bonds payable 2,097,877,500.00 2,097,562,500.00
    
    Long-term payables 3,630,523,501.35 3,900,255,693.44
    
    Provisions 329,230,107.88 325,259,082.28
    
    Deferred income 1,805,521,960.25 1,862,395,197.61
    
    Deferred income tax liabilities
    
    Other non-current liabilities 2,051,031,576.50 2,047,948,069.73
    
    Total non-current liabilities 18,363,922,901.42 18,032,355,028.00
    
    TOTAL LIABILITIES 81,249,221,182.45 79,447,043,599.73
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 59
    
    II. Financial Statements (Cont’d)
    
    1. Consolidated Balance Sheet (Cont’d)
    
    Item 30 June 2019 31 December 2018
    
    OWNERS’ EQUITY:
    
    Share capital 2,904,608,200.00 2,904,608,200.00
    
    Other equity instruments 7,465,500,000.00 7,465,500,000.00
    
    Including: Preference shares 4,477,500,000.00 4,477,500,000.00
    
    Perpetual bonds 2,988,000,000.00 2,988,000,000.00
    
    Capital reserves 5,091,449,915.14 5,091,449,915.14
    
    Less: Treasury shares
    
    Other comprehensive income -752,536,869.21 -736,520,181.01
    
    Special reserves 4,001,427.12 3,257,998.47
    
    Surplus reserves 1,148,888,912.11 1,148,888,912.11
    
    General risk provisions 64,123,919.23 64,123,919.23
    
    Retained profit 8,542,942,527.62 9,107,422,690.85
    
    Total equity attributable to owners of the Company 24,468,978,032.01 25,048,731,454.79
    
    Minority interest 840,551,746.96 822,959,773.30
    
    Total owners’ equity 25,309,529,778.97 25,871,691,228.09
    
    TOTAL LIABILITIES AND OWNERS’ EQUITY 106,558,750,961.42 105,318,734,827.82
    
    Legal Representative: Financial controller: Head of the financial department:
    
    Chen Hongguo Dong Lianming Zhang Bo
    
    60 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    II. Financial Statements (Cont’d)
    
    2. Balance sheet of the Company
    
    Unit: RMB
    
    Item 30 June 2019 31 December 2018
    
    CURRENT ASSETS:
    
    Monetary funds 8,975,954,132.48 8,160,234,434.15
    
    Bills receivable 610,733,820.49 436,662,187.80
    
    Accounts receivable 106,218,916.73 1,349,276,965.04
    
    Prepayments 1,992,149,171.76 1,584,388,551.00
    
    Other receivables 17,730,598,151.93 19,405,314,961.24
    
    Including: Interest receivable 69,171,162.65 77,257,506.25
    
    Dividends receivable 1,023,353,000.00
    
    Inventories 695,649,440.79 1,133,888,230.37
    
    Other current assets 130,445,337.51 140,126,157.18
    
    Total current assets 30,241,748,971.69 32,209,891,486.78
    
    NON-CURRENT ASSETS:
    
    Long-term receivables 516,925,607.06 516,925,607.06
    
    Long-term equity investments 23,621,617,586.81 22,487,417,443.24
    
    Investments in other equity instrument 3,000,000.00 3,000,000.00
    
    Other non-current financial assets 103,000,000.00 103,000,000.00
    
    Fixed assets 3,803,368,878.72 2,103,164,588.93
    
    Construction in progress 523,108,866.98 2,014,493,138.68
    
    Intangible assets 452,398,009.26 458,365,862.52
    
    Deferred income tax assets 400,436,726.68 303,861,021.95
    
    Other non-current assets 49,300,000.00 9,800,000.00
    
    Total non-current assets 29,473,155,675.51 28,000,027,662.38
    
    Total assets 59,714,904,647.20 60,209,919,149.16
    
    CURRENT LIABILITIES:
    
    Short-term borrowings 8,545,244,718.34 7,668,689,104.31
    
    Bills payable 11,685,733,442.58 10,595,836,030.46
    
    Accounts payable 806,871,182.64 722,999,244.33
    
    Contract liabilities 3,709,236,079.57 3,299,778,982.47
    
    Employee benefits payable 56,431,633.89 53,899,651.15
    
    Taxes payable 61,706,479.96 59,595,083.56
    
    Other payables 5,315,116,231.34 5,465,488,890.52
    
    Including: Interest payable 131,416,333.34 139,444,333.34
    
    Dividend payable 976,175,735.52
    
    Non-current liabilities due within one year 3,238,789,335.72 3,256,715,148.39
    
    Other current liabilities 2,673,868,055.56 3,527,956,481.68
    
    Total current liabilities 36,092,997,159.60 34,650,958,616.87
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 61
    
    II. Financial Statements (Cont’d)
    
    2. Balance sheet of the Company (Cont’d)
    
    Item 30 June 2019 31 December 2018
    
    NON-CURRENT LIABILITIES:
    
    Long-term borrowings 763,242,631.96 1,335,482,969.43
    
    Bonds payable 2,097,877,500.00 2,097,562,500.00
    
    Long-term payables 1,237,291,100.52 2,072,502,840.48
    
    Provisions 325,259,082.28 325,259,082.28
    
    Deferred income 44,241,427.63 46,412,014.99
    
    Deferred income tax liabilities
    
    Other non-current liabilities 1,593,766,672.00 1,592,166,670.00
    
    Total non-current liabilities 6,061,678,414.39 7,469,386,077.18
    
    TOTAL LIABILITIES 42,154,675,573.99 42,120,344,694.05
    
    OWNERS’ EQUITY:
    
    Share capital 2,904,608,200.00 2,904,608,200.00
    
    Other equity instruments 7,465,500,000.00 7,465,500,000.00
    
    Including: Preference shares 4,477,500,000.00 4,477,500,000.00
    
    Perpetual bonds 2,988,000,000.00 2,988,000,000.00
    
    Capital reserves 4,953,557,435.19 4,953,557,435.19
    
    Less: Treasury shares
    
    Surplus reserves 1,136,699,330.20 1,136,699,330.20
    
    Retained profit 1,099,864,107.82 1,629,209,489.72
    
    Total owners’ equity 17,560,229,073.21 18,089,574,455.11
    
    TOTAL LIABILITIES AND OWNERS’ EQUITY 59,714,904,647.20 60,209,919,149.16
    
    Legal Representative: Financial controller: Head of the financial department:
    
    Chen Hongguo Dong Lianming Zhang Bo
    
    62 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    II. Financial Statements (Cont’d)
    
    3. Consolidated Income Statement
    
    Unit: RMB
    
    Amount for the Amount for the
    
    Item first half of 2019 first half of 2018
    
    I. Total revenue 13,348,648,113.70 15,551,334,039.89
    
    Including: Revenue 13,348,648,113.70 15,551,334,039.89II. Total operating costs 12,968,897,317.21 13,616,998,093.86
    
    Including: Operating costs 9,754,097,799.82 10,259,884,918.86
    
    Taxes and surcharges 134,488,545.06 129,509,211.98
    
    Sales and distribution expenses 590,584,957.47 605,463,325.71
    
    General and administrative expenses 562,417,399.25 494,841,668.55
    
    Research and development expense 431,483,716.06  478,014,854.10
    
    Finance expenses 1,516,848,723.80 1,498,828,444.69
    
    Including: Interest expenses 1,650,075,404.49 1,720,741,207.21
    
    Interest income 213,994,280.22 159,096,591.34
    
    Loss on impairment of assets -83,464,107.59 150,455,669.97
    
    Credit impairment loss 62,440,283.34
    
    Plus: Other income 38,831,290.64 59,672,276.88
    
    Investment income (“-” denotes loss) -9,467,172.97 152,314,068.88
    
    Including: Investment income from
    
    associates and joint ventures -9,467,172.97 -17,153,503.00
    
    Gain on change in fair value (“-” denotes loss) -1,883,064.80 -117,973,841.55
    
    Gain on disposal of assets (“-” denotes loss) 22,823,551.43 -2,210,048.63
    
    III. Operating profit (“-” denotes loss) 430,055,400.79 2,026,138,401.61
    
    Plus: Non-operating income 237,472,592.97 191,632,557.35
    
    Less: Non-operating expenses 5,050,128.19 446,221.32IV. Total profit (“-” denotes total loss) 662,477,865.57 2,217,324,737.64
    
    Less: Income tax expenses 125,877,819.62 434,202,112.50V. Net profit (“-” denotes net loss) 536,600,045.95 1,783,122,625.14
    
    (I) Classification according to the continuity of operation
    
    1. Net profit from continuing operations
    
    (“-” denotes net loss) 536,600,045.95 1,783,122,625.14
    
    (II) Classification according to ownership
    
    1. Net profit attributable to shareholders
    
    of the Company 509,795,572.29 1,784,631,025.312. Profit or loss of minority interest 26,804,473.66 -1,508,400.17VI. Net other comprehensive income after tax -16,016,688.20 -103,234,110.38
    
    Net other comprehensive income after tax attributable
    
    to shareholders of the Company -16,016,688.20 -103,234,110.38
    
    (I) Other comprehensive income that cannot be reclassified
    
    to profit and loss in subsequent periods(II) Other comprehensive income that will be reclassified
    
    to profit and loss in subsequent periods -16,016,688.20 -103,234,110.38
    
    1. Exchange differences on translation
    
    of foreign operations -16,016,688.20 -103,234,110.382. Others
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 63
    
    II. Financial Statements (Cont’d)
    
    3. Consolidated Income Statement (Cont’d)
    
    Amount for the Amount for the
    
    Item first half of 2019 first half of 2018
    
    VII. Total comprehensive income 520,583,357.75 1,679,888,514.76
    
    Total comprehensive income attributable to shareholders
    
    of the Company 493,778,884.09 1,681,396,914.93
    
    Total comprehensive income attributable to minority interest 26,804,473.66 -1,508,400.17IIX. Earnings per share:
    
    (I) Basic earnings per share 0.013 0.36
    
    (II) Diluted earnings per share 0.013 0.36
    
    Legal Representative: Financial controller: Head of the financial department:
    
    Chen Hongguo Dong Lianming Zhang Bo
    
    64 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    II. Financial Statements (Cont’d)
    
    4. Income statement of the Company
    
    Unit: RMB
    
    Amount for the Amount for the
    
    Item first half of 2019 first half of 2018
    
    I. Revenue 2,696,012,416.10 2,816,294,485.82
    
    Less: Operating costs 2,103,287,151.64 1,974,361,613.08
    
    Taxes and surcharges 22,384,520.78 44,570,024.17
    
    Sales and distribution expenses 95,933,113.16 90,052,325.82
    
    General and administrative expenses 160,401,795.91 140,442,801.05
    
    Research and development expense 122,265,471.50 112,935,318.57
    
    Finance expenses 851,438,574.25 450,292,646.56
    
    Including: Interest expenses 1,297,180,410.46 1,213,666,209.80
    
    Interest income 524,005,473.68 838,254,501.87
    
    Loss on impairment of assets
    
    Credit impairment loss 844,738.21 -3,263,078.84Plus: Other income 2,180,872.36 2,170,587.30
    
    Investment income (“-” denotes loss) 1,010,553,143.57 151,671,872.91
    
    Including: Investment income from associates
    
    and joint ventures -12,799,856.43 -4,078,127.09
    
    Gain on change in fair value (“-” denotes loss) -94,000,000.00
    
    Gain on disposal of assets (“-” denotes loss) 22,416,169.42 -1,404,490.25
    
    II. Operating profit (“-” denotes loss) 374,607,236.00 65,340,805.37
    
    Plus: Non-operating income 77,943,339.00 159,134,238.55
    
    Less: Non-operating expenses 4,195,926.11III. Total profit (“-” denotes total loss) 448,354,648.89 224,475,043.92
    
    Less: Income tax expenses -96,575,704.73 26,570,945.21IV. Net profit (“-” denotes net loss) 544,930,353.62 197,904,098.71
    
    (1) Net profit from continuing operations
    
    (“-” denotes net loss) 544,930,353.62 197,904,098.71(2) Net profit from discontinued operations
    
    (“-” denotes net loss)
    
    V. Net other comprehensive income after tax
    
    VI. Total comprehensive income 544,930,353.62 197,904,098.71
    
    Legal Representative: Financial controller: Head of the financial department:
    
    Chen Hongguo Dong Lianming Zhang Bo
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 65
    
    II. Financial Statements (Cont’d)
    
    5. Consolidated cash flow statement
    
    Unit: RMB
    
    Amount for the Amount for the
    
    Item first half of 2019 first half of 2018
    
    I. Cash flows from operating activities:
    
    Cash received from sales of goods and rendering of services 14,748,713,123.70 14,209,807,106.29
    
    Tax rebates received 660,483.85 4,906,195.67
    
    Cash received relating to other operating activities 2,298,196,240.97 2,560,132,218.85Subtotal of cash inflows from operating activities 17,047,569,848.52 16,774,845,520.81
    
    Cash paid for goods and services 11,576,281,103.39 9,303,280,725.88
    
    Cash paid to and for employees 674,527,204.40 578,298,920.80
    
    Payments of taxes and surcharges 1,096,901,907.86 876,814,512.36
    
    Cash paid relating to other operating activities 1,000,088,741.18 1,271,413,440.86Subtotal of cash outflows from operating activities 14,347,798,956.83 12,029,807,599.90Net cash flows from operating activities 2,699,770,891.69 4,745,037,920.91II. Cash flows from investing activities:
    
    Cash received from investments 2,350,000,000.00
    
    Cash received from investment income 171,500,000.00
    
    Net cash received from disposal of fixed assets, intangible
    
    assets and other long-term assets 111,235,000.00 150,077.55
    
    Net cash received from disposal of subsidiaries and other
    
    business units 19,610,260.70
    
    Cash received relating to other investing activities 11,194,100.00Subtotal of cash inflows from investing activities 111,235,000.00 2,552,454,438.25
    
    Cash paid for purchase of fixed assets, intangible assets
    
    and other long-term assets 376,939,086.06 1,609,046,327.99
    
    Cash paid on investments 1,639,194,479.24 1,311,172,596.96
    
    Net increase in pledged loans
    
    Net cash paid for acquiring subsidiaries and
    
    other business units
    
    Cash paid relating to other investing activities 189,628,400.00 103,042,210.54Subtotal of cash outflows from investing activities 2,205,761,965.30 3,023,261,135.49Net cash flows from investing activities -2,094,526,965.30 -470,806,697.2466 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    II. Financial Statements (Cont’d)
    
    5. Consolidated cash flow statement
    
    Amount for the Amount for the
    
    Item first half of 2019 first half of 2018
    
    III. Cash flows from financing activities:
    
    Cash received from investments
    
    Including: Cash received from by subsidiaries
    
    from minority investment
    
    Cash received from borrowings 22,550,704,467.77 23,960,924,414.55
    
    Cash received from issuance of bonds
    
    Cash received relating to other financing activities 3,479,693,527.06 8,940,587,508.90Subtotal of cash inflows from financing activities 26,030,397,994.83 32,901,511,923.45
    
    Cash repayments of amounts borrowed 18,763,676,782.15 19,647,186,258.44
    
    Cash paid for dividend and profit distribution
    
    or interest payment 1,591,133,614.29 1,331,735,531.11
    
    Including: Dividend and profit paid by subsidiaries
    
    to minority shareholders
    
    Cash paid relating to other financing activities 6,456,564,308.43 15,500,213,039.33Subtotal of cash outflows from financing activities 26,811,374,704.87 36,479,134,828.88Net cash flows from financing activities -780,976,710.04 -3,577,622,905.43IV. Effect of foreign exchange rate changes on cash
    
    and cash equivalents -196,762,227.50 29,968,597.03V. Net increase in cash and cash equivalents -372,495,011.15 726,576,915.27
    
    Plus: Balance of cash and cash equivalents
    
    as at the beginning of the period 2,381,558,242.52 2,804,408,374.46
    
    VII. Balance of cash and cash equivalents as
    
    at the end of the period 2,009,063,231.37 3,530,985,289.73
    
    Legal Representative: Financial controller: Head of the financial department:
    
    Chen Hongguo Dong Lianming Zhang Bo
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 67
    
    II. Financial Statements (Cont’d)
    
    6. Cash flow statement of the Company
    
    Unit: RMB
    
    Amount for the Amount for the
    
    Item first half of 2019 first half of 2018
    
    1. Cash flows from operating activities:
    
    Cash received from sales of goods and rendering of services 4,975,401,290.02 2,262,576,453.26
    
    Tax rebates received –
    
    Cash received relating to other operating activities 974,266,183.30 997,388,740.42Subtotal of cash inflows from operating activities 5,949,667,473.32 3,259,965,193.68
    
    Cash paid for goods and services 949,039,632.39 1,005,422,983.37
    
    Cash paid to and for employees 232,441,602.15 203,769,186.38
    
    Payments of taxes and surcharges 85,040,472.23 298,790,554.29
    
    Cash paid relating to other operating activities 643,575,724.57 778,975,073.31Subtotal of cash outflows from operating activities 1,910,097,431.34 2,286,957,797.35Net cash flows from operating activities 4,039,570,041.98 973,007,396.33II. Cash flows from investing activities:
    
    Cash received from investments 2,380,000,000.00
    
    Cash received from investment income 171,500,000.00
    
    Net cash received from disposal of fixed assets,
    
    intangible assets and other long-term assets 55,735,000.00
    
    Net cash received from disposal of subsidiaries and
    
    other business units
    
    Cash received relating to other investing activitiesSubtotal of cash inflows from investing activities 55,735,000.00 2,551,500,000.00
    
    Cash paid for purchase of fixed assets, intangible assets
    
    and other long-term assets 17,933,778.78 26,375,996.36
    
    Cash paid on investments 1,147,500,000.00 1,361,714,807.50
    
    Net cash paid for acquiring subsidiaries and
    
    other business units
    
    Cash paid relating to other investing activities 39,500,000.00Subtotal of cash outflows from investing activities 1,204,933,778.78 1,388,090,803.86Net cash flows from investing activities -1,149,198,778.78 1,163,409,196.1468 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    II. Financial Statements (Cont’d)
    
    6. Cash flow statement of the Company (Cont’d)
    
    Amount for the Amount for the
    
    Item first half of 2019 first half of 2018
    
    III. Cash flows from financing activities:
    
    Cash received from investments
    
    Cash received from borrowings 6,360,366,283.77 7,562,143,316.17
    
    Cash received from issuance of bonds
    
    Cash received relating to other financing activities 1,997,263,889.00 8,204,965,097.95Subtotal of cash inflows from financing activities 8,357,630,172.77 15,767,108,414.12
    
    Cash repayments of amounts borrowed 5,237,801,785.71 6,735,658,936.22
    
    Cash paid for dividend and profit distribution
    
    or interest payment 774,396,836.69 716,590,206.19
    
    Cash paid relating to other financing activities 5,593,391,883.99 10,373,957,627.23Subtotal of cash outflows from financing activities 11,605,590,506.39 17,826,206,769.64Net cash flows from financing activities -3,247,960,333.62 -2,059,098,355.52IV. Effect of foreign exchange rate changes on cash
    
    and cash equivalents 14,127.62 6,160,731.67V. Net increase in cash and cash equivalents -357,574,942.80 83,478,968.62
    
    Plus: Balance of cash and cash equivalents as at the
    
    beginning of the period 607,805,063.02 1,020,262,069.85
    
    VI. Balance of cash and cash equivalents as
    
    at the end of the period 250,230,120.22 1,103,741,038.47
    
    Legal Representative: Financial controller: Head of the financial department:
    
    Chen Hongguo Dong Lianming Zhang Bo
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 69
    
    70 ISNHIIIIIIT.VIItA.Ie.I.mEB(B(PBC((((.NVVIIII)IIVlaaah)I)Iu(R)))“lllasaaa1S2OT21C34P21341TD-n:nnn..”.........orpratIgaoCOBCccchtedpOMnWaUeOCAOTTDOCfeeeeuohtceiiclssrrhttmrisasrttarainaaiasaaaoorscfoahhdtredeipiNeentpnnhl7FosssenonnotlmeerirdiirchgnpssdscsettuirimrraaabetacoteeRaemosffstatsrnGhttteear.isulaasgrprsfsioiitedoyrrttbtpltepwnreondhhhEioincnettuornapiisqiw(saeeeeootvsfonhtoinCaheucldceeaiPsnmoeeeobsglarraoirsdcthateinfnnurnbeeeHroonbynceaOersspddrganiyddsitonpsrosiinhrrsienve’neEhoouoenlwareoarueACps-eernonffvlRat)bwtsvnraqiNdiiitlttrloonendaeeiihhuunrunrdcmngusTcereieemioecgsstMecosrsbyurokesppedemasp(ynediforenp’rno2opordipetvrsarotIrerbfhlisieeaohoisorNqtcye0rsuyasrvhadyiusmeoirylalesie1G)stewrnaioeyheoarcnnohnS9rttrelosldePrlsideafrAtdetsoersadP)arEt222tt,,,Re999eh000S444emHdh,,,666a000rOe888p,,,sc222eLa000etp000Dn...irat000ai000IloNttesdG444,,,m444S777(777CL,,,Pe555000Ire000Monf,,,es000rh000nteIa000nTr...tc000eoEe000s’OdDtfh)e222Prc,,,e999er888qph888ue,,,i000ttayu000a000inl,,,n000sb000tor000gun...md000000seentss in oOwthersne555r,,,000s999111,,,’444444r999ee,,,C999sae111qpr555v...it111eua444sl ityTreasEuqryuistyhLaearstetsrs:ibutab---c777l--eo35311m62666to,,,,,p55500or23211ew06066hi,,,,,nn18166eecO86888nro19188stAshm.....i0202m2voeee11100rfotuhnetSCfoporemt3143chp,,,,iea7200227al4530954nfr3791673iyre,,,,,,,s4974394ste2962392hr8857688va.......6401446elf5752075sof 201111,,,1119444888,,,888888r888eS,,,999sue111rrp222v...l111ue111ss 666444G,,,111pe222nr333oe,,,vr999ai111sl999ior...i222ns333ks --98911-,,,,,1515500R0406077e7274944t,,,,,,,a4944722in242897722e20555,,d,,,,,65615779296733p0703255ro.......8682255fi5253922t Others 222--54511-,,,,,0405400464797718889344,,,,,,,,7072977722433973577739168S13855,,,,,,,,,,u4743044877b2653352833t8546242455o..........t6074077055a5590198922l M888i24212n--2027699o,,,,,,,r9595822it5559011y9191422i,,,,,,,n7779455t7477700e3633300re.......3936600s0606600tU222--n55511-,,,,,8385500oi7076288wt11912033:n,,,,,,,,7026561544e4399296888rRs3961911388’,,,,,,,,,,4732724322eM2632724533Tq8568889755ou..........t6040901755itaB5509792522yl
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 71
    
    IIIIII.IVIt.Ie.I.mBBBCP((((((.IIIIVV)IIValaah)Iu)I)))lllaasaaT1C3241243P1T2S1On:nnn...........orrpatgaoOCBCccchtepnaeOCAOTDTOCUWefeeeuohtciiclssrrhttmriaassrttariaaaasiaaorocfsoahhdertdeippieentsnnl7Fhssenonotnlmeerirdiiirchgnpsssscdetuitrmrraaabtaaoceeaoemffsstatsrnhttteer.iullaasgrprsfsioiitedoyrrtbttp(tepwnreohnohhioincnettuornapiisqiwesaeeoortsvfonhtinhaeucdleieassnmoeeoebsglaraoidhscthateinnfnunbreeroonbyncaaeersdpdrgniyddstionrprsosiinrrieenve’onheouoenlw(aroruepACs-“eenrfonfvclatb-wtsnvaqidiititlatlr”onondaeehiihuunrunrpdcmngusdcereeiemioecgsisteosrtesbyurokeapspedemnsp(ynedifolernp’r)onooordipetvrsraotrecrbtfhliseeaohoieosrqrcyersuyearsshvdyiusmeLaoirylaesidesttewrnaioeyeeheoaernndcohnSrtterlosdlegrslsadeiCsrtedaserfsa)h)laotRe211rt,,,e999999enet033666S466888hmdhp,,,,,,644222Hae000000rre855222o,,,,,,esc244777epa066333sntp077333nr......iat000000egai000000lonttgerstu444a,,,mp444o777t(777eiC,,,vPe555r000reei000onfo,,,es000:rh000nteda000nr...tc000eoe000s’Odtfh)e555Prc,,,e555er777qph000ue,,,i888ttayu000a000inl,,,n000sb000tor000gun...md000000s–eentss in oOwthersne-5616C--r,,,,110199--as24245566p29698888it,,,,,,,,’a92321122l55050000r27572222ee,,,,,,,,47375577se58289933qr54946633v........09898800eu90101100s ityTrea(FsCEuqirynuDoistayhLnaeoarnstetstnrs:ic’bdguitaa)b-----cL43131lleo55050m74343ictoa,,,,,p31212oor96363new95454hi,,,,,nnn21111emecO32121ntro87070stAshmr.....i18383mvioeoee80808nrfotuhlgnleteSCfIoporNrem:tchpiTeaalnfEriyressRtehrvaIelMfsof 20R111S1,,,u1118Er333p222Plu,,,111s111Or666e,,,111sRe000r666vT...444e000s2019Gepnroevraisliorinsks --888111,,,,,,988777R2656822e6696444t,,,,,,,aH5696666in81713556414e199e,,,,d,,,58780228434288pa2484577ro.......7434300dfi1010100t of theOZfthihenrsaann222--777111g-c,,,,,,6717677--770785522i781818844Ba,,,,,,,,,153531166626290055lo49496S2299,,,,,,,,,du109095522b076719988te648446677o.........t098998800pa208031100–l a---r122111M,,,,,,t242422im990900n-0545133o,,,,,,,r7669544ite2442011y7991833in,,,,,,,n5448444t7686088et4449099r:e.......8002100s0444777tU233-----n801011111,,,,,,,,,923262277oi670776622wt746491144:n,,,,,,,,,812185566e978781155rRs186886699’,,,,,,,,,658550022eM835318888Tq088845577ou.........t891978800itaB242468800yl
    
    72 ISNHIIIIIITV.IItA.IeI..Em.NBBBPC((((((RIIIIVV)IIVDlaaah)Iu)I()))“lllIasaaa-OMTCP123T1S21On:nnn”......orgrpCOCaccctadobNhte8FepeeeohnatefyesD(TOCWUhciiRalrsottnaaaGr.ireroaiiascfsntiarosssdeasincehrtlwEepoglntcstsnhirrepaaasredtrmieeCnhtsditheProttttaisbaaseafsorraespfittteHiultadrrOdbnhhheierorsen(tpweseeeeuoridEiwnhtovenAShctaaorRooeebienrnoNerolcsiafnnleessoecnndmcnhTttnpddgauodrMseoadacssrriirnooureipvo’aes2oernnffvealIwept))euiitNttcq0niodueiisnhhtnnauagluueeec1GgrpnliscmretooppisryeptSs9eefmtaerdeoPsritslrorr)eheleioivoArtcererdvyifnasesyPeeoseaEtatrrrReothmH222f,,,e999Oc000Se444Lphh,,,666Dane000areI888rNt,,,nic222osa000Ggp000d...iSt000ea(000ClLsIMo444inn,,,I444T777t777E’o,,,dP555D000rw)e000f,,,es000nrh000ea000enr...c000ere000ss’222,,,e999888q888,,,000u00P0000ei,,,tr000bpy000oe000nt...ud000oa000slf the CoOtmherspa444n,,,99955y5333,,,O555555thr777ee,,,C444srae333epr555qv...it111uea999istly insTtrrAuemmasoeunurtnystsfhoLarerstehsse: first choamlf porfe2hi0ne1Ocn9osthmiveeer Special reserves 111S,,,u111r333p666lu,,,666s999r999e,,,333s3e3300r0v...222e000s --11111-,,,,,0665500R9222477e9999444t,,,,,,,a8223922in6004377499e5055,,,d,,,,14433770888533p7991355ro.......8779655fi2220222t Others 111--78811U-,,,,,5005500o6882477nw0999444ni,,,,,,,2553922te2774377:rs9445055’R,,,,,,,0443377e7558533TqM3551355ou.......t2119655itaB1110222yl
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 73
    
    IIIIIIVI.It.IeI..m.BBBCP((((((IIIVVII)IVlaaahI)uI)()))“lllasaaa-PTC12ST12O13n:nnn”......orgrpCOCatcccadobhte8FepeeeohnatefyesDTCUWOchiialsrttnaaar.ireroaiiascfsntaiosssdeasin(cehrtlweopolgntcsnthirrepaaasredtrrmieentsditherottttaibsaassefsorraespfittteiulhtadrdbnhhheierorsn(tpwaeseeeeuoridiwntorvenAShctaaoreoebeeinrnoerolcshiafnneessoecnnmcnhttonpddguaodrsoadlacssrridinooureipvo’aeoeernnffevalwept)euriitttcqsniodueiisnhhtnna)LuagulueeecgrpnliscmertooeppisryeptSseefmtaerdeosgritslrorr)eheleiCoivortcearerdvyifnasesyeheloseatatRerrrenoethmp211fH,,,e999999rc033666oeSe466888phh,,,,,,sn644222anr000000eargie855222ont,,,,,,ngc244777rsa066333tugp077333ap......iot000000eta(000000eiClvsreioo444i:n,n,,d444777t777’o,,,dP555000rw)e000f,,,es000nrh000ea000enr...000cer000ess’555,,,e555777q000,,,888u000P000ei,,,tr000bpy000oe000tn...ud000oa000slf the CoOtmherspa455nF---,,,999999i7336y66n088888D,,,,,,Oa799222(566000otCnhr700222een,,,,,,Cc411777sora366e333geip588r333naqv......it111000ueLtla999000ist’liycdaion)nsntmrAutmmrionoenulgTtnlsertesIfharoLNas:reurstTehrssye:EfRirsItMchoamlfRporfEe2hiP0ne1cOnO8osthmivReeerT 2019 reSspeervceiasl 111,,,111H111999,,,e999222ar666eS,,,d555su222er444rpov...l444uef999ss th---233111e,,,,,,1661577RZ3679222-ef96476484ith,,,,,,,,an63896756ina27805505a38249539en,,,,,,,,dn35201272g32598828pc75387877ro........i14172060Bafi43110980tlodepartmOtheenrst:222---122111U,,,,,,1771577o8019222n-w39876484ni,,,,,,,,29497656te17705505:rs50445939’R,,,,,,,,46402172e98198828TqM65287877ou........t81770260itaB21919080yl
    
    III. General Information of the Company
    
    Shandong Chenming Paper Holdings Limited (hereinafter referred to as the “Company”) was incorporated in May 1993 in
    
    Shouguang City, Shandong Province, with its headquarters at No. 2199 Nongsheng Road East, Shouguang City, Shandong
    
    Province.
    
    The Company and its subsidiaries are principally engaged in, among other things, processing and sale of paper products
    
    (including machine-made paper and paper board), paper making raw materials and machinery; generation and sale of electric
    
    power and thermal power; forestry, saplings growing, processing and sale of timber; manufacturing, processing and sale of
    
    wood products; and manufacturing and sale of laminated boards and fortified wooden floorboards, hotel service, equipment
    
    financial and operating leasing, magnesite mining, processing and sales of talc.
    
    The financial statements were considered and approved by the board of directors of the Company (the “Board”) on 15 August
    
    2019.
    
    Subsidiaries of the Company included in the scope of consolidation for the reporting period totalled 67. For details, please
    
    refer to this Note IX “Equity in other entities”. The scope of consolidation of the Company during the year had one company
    
    included compared to the prior year. For details, please refer to this Note VIII “Changes in the scope of consolidation”.IV. Basis of Preparation of the Financial Statements
    
    1. Basis of preparation
    
    The Company’s financial statements are prepared on a going concern and based on actual transactions and events,
    
    in accordance with the Accounting Standards for Business Enterprises-Basic Standards promulgated by the Ministry
    
    of Finance (Order of Ministry of Finance No. 33, as amended by Order of Ministry of Finance No. 76) and 42 specific
    
    accounting standards as promulgated and amended on and after 15 February 2006, the application guidelines of the
    
    Accounting Standards for Business Enterprises, interpretations and other related rules of the Accounting Standards for
    
    Business Enterprises (hereinafter referred to as “ASBEs”), and the disclosure requirements of the “Regulation on the
    
    Preparation of Information Disclosures of Companies Issuing Public Shares, No. 15: General Requirements for Financial
    
    Reports” (revised in 2014) of China Securities Regulatory Commission.
    
    The Company’s financial statements have been prepared on an accrual basis in accordance with the ASBEs. Except
    
    for certain financial instruments, the financial statements are prepared under the historical cost convention. Held-for-
    
    sale non-current assets are measured at the lower of the difference of fair value less expected expenses or the original
    
    carrying amount when meeting the conditions of holding for sale. In the event that depreciation of assets occurs, a
    
    provision for impairment is made accordingly in accordance with the relevant regulations.2. Going concern
    
    No facts or circumstances comprise a material uncertainty about the Company’s going concern basis within 12 months
    
    since the end of the reporting period.
    
    74 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    V. Significant Accounting Policies and Accounting Estimates
    
    Specific accounting policies and accounting estimates are indicated as follows:
    
    The Company and its subsidiaries are principally engaged in machine-made paper, electricity and heat, construction materials,
    
    paper making chemical products, financial leasing, hotel management and other operations. The Company and its subsidiaries
    
    formulated certain specific accounting policies and accounting estimates for the transactions and matters such as revenue
    
    recognition, determination of performance progress and R&D expenses based on their actual production and operation
    
    characteristics pursuant to the requirements under the relevant accounting standards for business enterprises. For details,
    
    please refer “Revenue” under this Note. For the critical accounting judgments and estimates made by the management,
    
    please refer to “Change of Significant accounting policies and accounting estimates” under this Note.
    
    1. Statement of compliance with the Accounting Standards for Business Enterprises
    
    The financial statements have been prepared by the Company in conformity with the ASBEs, which truly and fully
    
    reflect the financial position of the Company as at 31 December 2018 and relevant information such as the operating
    
    results and cash flows for 2018. In addition, the financial statements of the Company also comply with, in all material
    
    respects, the disclosure requirements of the “Regulation on the Preparation of Information Disclosures of Companies
    
    Issuing Public Shares, No. 15: General Requirements for Financial Reports” revised by the China Securities Regulatory
    
    Commission in 2014 and the notes thereto.2. Accounting period
    
    The accounting periods of the Company are divided into annual periods and interim periods. Interim periods refer to
    
    reporting periods that are shorter than a full accounting year. The accounting year of the Company is from 1 January to
    
    31 December of each calendar year.3. Operating cycle
    
    Ordinary operating cycle refers to the period from acquisition of assets used for processing by the Company until
    
    their realisation in cash or cash equivalents. The operating cycle of the Company lasts for 12 months, and acts as an
    
    indicator for classification of liquidity of assets and liabilities.
    
    Our subsidiaries, including Zhanjiang Chenming Arboriculture Development Co., Ltd., Yangjiang Chenming Arboriculture
    
    Development Co., Ltd., Nanchang Chenming Arboriculture Development Co., Ltd., Huanggang Chenming Arboriculture
    
    Development Co., Ltd. and Chenming Arboriculture Co., Ltd., were engaged in arboriculture cultivating, plantation and
    
    sale. Their ordinary operating cycle lasts for over 1 year.4. Functional currency
    
    The Company and its domestic subsidiaries recognise RMB as their functional currency according to the primary
    
    economic environment in which they operate. The functional currency of the Company and its domestic subsidiaries is
    
    Renminbi (“RMB”). Overseas subsidiaries of the Company recognise U.S. dollar (“USD” or “US$”), Japanese yen (“JPY”),
    
    Euro (“EUR”) and South Korean Won (“KRW”) as their respective functional currency according to the general economic
    
    environment in which these subsidiaries operate. The Company prepares its financial statements in RMB.
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 75
    
    V. Significant Accounting Policies and Accounting Estimates (Cont’d)
    
    5. Accounting treatment of business combinations under common control and not under common control
    
    Business combinations refer to the transactions or events in which two or more separate enterprises merged as a single
    
    reporting entity. Business combinations are divided into business combinations under common control and not under
    
    common control.
    
    (1) Business combination under common control
    
    A business combination involving enterprises under common control is a business combination in which all of the
    
    combining enterprises are ultimately controlled by the same party or parties before and after the combination,
    
    and that control is not transitory. The party that, on the combination date, obtains control of another enterprise
    
    participating in the combination is the absorbing party, while that other enterprise participating in the combination
    
    is a party being absorbed. The combination date is the date on which the absorbing party effectively obtains
    
    control of the party being absorbed.
    
    Assets and liabilities obtained by the absorbing party are measured at their carrying amount at the combination
    
    date as recorded by the party being merged. The difference between the carrying amount of the net assets
    
    obtained and the carrying amount of the consideration paid for the combination (or the aggregate nominal value of
    
    shares issued as consideration) is charged to the capital reserve (share capital premium). If the capital reserve (share
    
    capital premium) is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings.
    
    Cost incurred by the absorbing party that is directly attributable to the business combination shall be charged to
    
    profit or loss in the period in which they are incurred.(2) Business combination not under common control
    
    A business combination not involving enterprises under common control is a business combination in which
    
    all of the combining enterprises are not ultimately controlled by the same party or parties before and after the
    
    combination. For a business combination not involving enterprises under common control, the party that, on the
    
    acquisition date, obtains control of another enterprise participating in the combination is the acquirer, while that
    
    other enterprise participating in the combination is the acquiree. The acquisition date is the date on which the
    
    acquirer effectively obtains control of the acquiree.
    
    For business combination involving entities not under common control, the cost of a business combination is the
    
    aggregate of the fair values, on the date of acquisition, of assets given, liabilities incurred or assumed, and equity
    
    instruments issued by the acquirer to be paid by the acquirer, in exchange for control of the acquire plus agency
    
    fee such as audit, legal service and evaluation consultation and other management fees charged to the profit or
    
    loss for the period when incurred. Transaction cost attributable to equity or debt securities issued by the acquirer
    
    as consideration is included in the initial costs. Contingent consideration involved is charged to the combination
    
    cost at its fair value on the acquisition date, in the event that adjustment on the contingent consideration is
    
    required as a result of new or additional evidence in relation to circumstances existed on the acquisition date
    
    emerges within 12 months from the acquisition date, the combination goodwill shall also be adjusted. The
    
    combination cost incurred by the acquirer and the identifiable net assets acquired from the combination are
    
    measured at their fair values on the acquisition date. Where the cost of a business combination exceeds the
    
    acquirer’s interest in the fair value of the acquiree’s identifiable net assets on the acquisition date, the difference
    
    is recognised as goodwill. Where the cost of a business combination is less than the acquirer’s interest in the
    
    fair value of the acquiree’s identifiable net assets, the acquirer shall first reassess the measurement of the fair
    
    value of the acquiree’s identifiable assets, liabilities and contingent liabilities and the measurement of the cost of
    
    combination. If after such reassessment the cost of combination is still less than the acquirer’s interest in the fair
    
    value of the acquiree’s identifiable net assets, the difference is charged to profit or loss for the period.
    
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    5. Accounting treatment of business combinations under common control and not under common control
    
    (Cont’d)
    
    (2) Business combination not under common control (Cont’d)
    
    In relation to the deductible temporary difference acquired from the acquiree, which was not recognised as
    
    deferred tax assets due to non-fulfilment of the recognition criteria at the date of the acquisition, if new or
    
    further information that is obtained within 12 months after the acquisition date indicates that related conditions
    
    at the acquisition date already existed, and that the implementation of the economic benefits brought by the
    
    deductible temporary difference of the acquiree can be expected, the relevant deferred tax assets shall be
    
    recognised and goodwill shall be deducted. When the amount of goodwill is less than the deferred tax assets that
    
    shall be recognised, the difference shall be recognised in the profit or loss of the period. Except for the above
    
    circumstances, deferred tax assets in relation to business combination are recognised in the profit or loss of the
    
    period.
    
    For combination of business not under common control achieved by several transactions, these several
    
    transactions will be judged whether they belong to “transactions in a basket” in accordance with the judgement
    
    standards on “transactions in a basket” as set out in the Notice of the Ministry of Finance on Issuing Accounting
    
    Standards for Business Enterprises Interpretation No. 5 (Cai Kuai [2012] No. 19) and Rule of 51 to “Accounting
    
    Standard for Business Enterprises No. 33 – Consolidated Financial Statements”. If they belong to “transactions in
    
    a basket”, they are accounted for with reference to the descriptions as set out in the previous paragraphs of this
    
    section and Note V. 16 “Long-term equity investments”, and if they do not belong to “transactions in a basket”,
    
    they are accounted for in separate financial statements and consolidated financial reports:
    
    In separate financial statements, the initial equity investment cost is the aggregate of the carrying amount of the
    
    equity investment in the acquiree held prior to the acquisition date and the investment cost newly added as at the
    
    acquisition date. In respect of any other comprehensive income attributable to the equity interest in the acquiree
    
    prior to the acquisition date, other comprehensive income is accounted for on the same accounting treatment
    
    as direct disposal of relevant asset or liability by the acquiree at the time of disposal (i.e. to be transferred to
    
    investment income for the period, except for the changes arising from remeasuring net assets or net liabilities of
    
    defined benefit plan using the equity method attributable to the acquiree).
    
    In consolidated financial statements, the equity interest in the acquiree held prior to the acquisition date is
    
    remeasured at fair value as at the acquisition date, and the difference between the fair value and the carrying
    
    amount is recognised as investment income for the current period. In respect of any other comprehensive income
    
    attributable to the equity interest in the acquiree held prior to the acquisition date, other comprehensive income is
    
    accounted for on the same accounting treatment as direct disposal of relevant asset or liability by the acquiree (i.e.
    
    to be transferred to investment income at the acquisition date, except for the changes arising from remeasuring
    
    net assets or net liabilities of defined benefit plan using the equity method attributable to the acquiree) is
    
    transferred to investment income in the period of the acquisition date.
    
    6. Preparation of consolidated financial statements
    
    (1) Basis for principle of determining the scope of consolidated financial statements
    
    The scope of consolidation of the consolidated financial statements is determined on the basis of control. The
    
    term “control” refers to the fact that the Company has power over the investee and is entitled to variable returns
    
    from its involvement with the investee and the ability to use its power over the investee to affect the amount of
    
    those returns. The scope of consolidation includes the Company and all of its subsidiaries. A subsidiary is an
    
    entity controlled by the Company.
    
    The Company will conduct reassessment in the event there are changes in actual condition and situation causing
    
    changes in relevant elements involved in the definition of control above.
    
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    6. Preparation of consolidated financial statements (Cont’d)
    
    (2) Basis for preparation of the consolidated financial statements
    
    Subsidiaries are consolidated from the date on which the Company obtains net assets and the effective control of
    
    decision making of production and operation and are deconsolidated from the date that such control ceases. For
    
    disposal of subsidiaries, the operating results and cash flows of such subsidiaries before the date of disposal are
    
    properly included into the consolidated income statement and consolidated cash flow statements; for disposal of
    
    subsidiaries during the reporting period, no adjustment shall be made to the opening balance of the consolidated
    
    balance sheet. For those subsidiaries acquired through business combination not under common control, the
    
    operating results and cash flows after the acquisition date have been properly included in the consolidated income
    
    statements and consolidated cash flow statements. No adjustments shall be made to the opening balance of the
    
    consolidated balance sheet and the comparative consolidated financial statements amount. For those subsidiaries
    
    acquired through business combinations under common control, the operating results and cash flows from the
    
    beginning of the consolidation period to the consolidation date are also presented in the consolidated income
    
    statement and the consolidated cash flow statements. The comparative amounts presented in the consolidated
    
    financial statements are also adjusted accordingly.
    
    The financial statements of the subsidiaries are adjusted in accordance with the accounting policies and
    
    accounting period of the Company in the preparation of the consolidated financial statements, where the
    
    accounting policies and the accounting periods are inconsistent between the Company and the subsidiaries. For
    
    acquisition of subsidiaries arising from merger of entities not under same control, the financial statements of the
    
    subsidiaries will be adjusted according to the fair value of the identifiable net assets at the acquisition date.
    
    All intra-company significant balances, transactions and unrealised profit are eliminated in the consolidated
    
    financial statements.
    
    The shareholders’ equity and the portion of the profit or loss for the period of the subsidiaries that are not
    
    attributable to the Company are presented under shareholders’ equity and net profit in the consolidated financial
    
    statements as minority interests and net profit of minority interest respectively. The portion of net profit or loss
    
    of subsidiaries for the period attributable to minority interest is presented in the consolidated income statement
    
    under the “profit or loss of minority interest”. When the amount of loss attributable to the minority shareholders of
    
    a subsidiary exceeds the minority shareholders’ portion of the opening balance of owners’ equity of the subsidiary,
    
    the excess amount shall be allocated against minority interest.
    
    For the loss of control over a subsidiary due to disposal of a portion of the equity investment or other reasons,
    
    the remaining equity is measured at fair value on the date when the control is lost. The difference arising from the
    
    sum of consideration received for disposal of equity interest and the fair value of remaining equity interest over
    
    the share of net assets of the former subsidiary calculated continuously since the purchase date based on the
    
    shareholding percentage before disposal are recognised as investment income in the period when the control is
    
    lost. Other comprehensive income related to equity investment in the subsidiary is accounted for on the same
    
    accounting treatment as direct disposal of relevant asset or liability by the acquiree at the time when the control
    
    is lost (i.e. to be transferred to investment income, except for the changes arising from remeasuring net assets
    
    or net liabilities of defined benefit plan of the subsidiary using the equity method). The remaining equity interests
    
    are measured subsequently according to “Accounting Standard for Business Enterprises No. 2 – Long-term
    
    Equity Investments” or “Accounting Standard for Business Enterprises No. 22 – Recognition and Measurement of
    
    Financial Instruments”. See Note V. 16 “Long-term equity investments” or Note V. 10 “Financial instruments” for
    
    details.
    
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    6. Preparation of consolidated financial statements (Cont’d)
    
    (2) Basis for preparation of the consolidated financial statements (Cont’d)
    
    When the Company disposes of equity investment in a subsidiary by a stage-up approach with several
    
    transactions until the control over the subsidiary is lost, it shall determine whether these several transactions
    
    related to the disposal of equity investment in a subsidiary until the control over the subsidiary is lost belong
    
    to “transactions in a basket”. Usually, these several transactions related to the disposal of equity investment in
    
    a subsidiary are accounted for as transactions in a basket when the terms, conditions and economic impacts
    
    of these several transactions meet the following one or more conditions: ① these transactions are entered
    
    into at the same time or after considering their impacts on each other; ② these transactions as a whole can
    
    reach complete business results; ③ the occurrence of a transaction depends on at least the occurrence of
    
    another transaction; ④ an individual transaction is not deemed as economic, but is deemed as economic when
    
    considered with other transactions. If they are not transactions in a basket, each of which are accounted for in
    
    accordance with applicable rules in “partial disposal of long-term equity investment of a subsidiary without losing
    
    control over a subsidiary” separately, and “the control over a subsidiary is lost due to partial disposal of equity
    
    investment or other reasons” (see the preceding paragraph). When several transactions related to the disposal
    
    of equity investment in a subsidiary until the control over the subsidiary is lost belong to transactions in a basket,
    
    each of which is accounted for as disposal of a subsidiary with a transaction until the control over a subsidiary
    
    is lost; however, the different between the amount of disposal prior to the loss of control and the net assets
    
    of a subsidiary attributable to the disposal investment shall be recognised as other comprehensive income in
    
    consolidated financial statements and transferred to profit or loss at the time when the control is lost.
    
    7. Classification of joint arrangements and accounting treatment for joint ventures
    
    A joint arrangement refers to an arrangement of two or more parties have joint control. In accordance with the
    
    Company’s rights and obligations under a joint arrangement, the Company classifies joint arrangements into: joint
    
    ventures and joint operations. Joint operations refer to a joint arrangement during which the Company is entitled
    
    to relevant assets and obligations of this arrangement. Joint ventures refer to a joint arrangement during which the
    
    Company only is entitled to net assets of this arrangement.
    
    The Company treats investments in joint ventures by using the equity method of accounting in accordance with
    
    accounting policies as set out in Note V. 16 (2)② “long-term equity investments by using equity method of accounting”.
    
    The Company shall, as a joint venture, recognise the assets held and obligations assumed solely by the Company, and
    
    recognise assets held and obligations assumed jointly by the Company in appropriation to the share of the Company;
    
    recognise revenue from disposal of the share of joint operations of the Company; recognise fees solely occurred by
    
    Company and recognise fees from joint operations in appropriation to the share of the Company.
    
    When the Company, as a joint venture, invests or sells assets (the assets does not constitute a business, the same
    
    below) to or purchase assets from joint operations, the Company shall only recognise the part of profit or lost from
    
    this transaction attributable to other parties of joint operations before these assets are sold to the third party. If
    
    the occurrence of these assets meet the impairment loss of asset as set out in “Accounting Standard for Business
    
    Enterprises No. 8 – Asset Impairment”, the Company shall recognise the full amount of this loss in relation to the
    
    Company invests in or sells assets to joint operations; the Company recognise the loss according to the Company’s
    
    share of commitment in relation to the Company purchase assets from joint operations.8. Standards for recognising cash and cash equivalents
    
    Cash and cash equivalents of the Company include cash on hand, deposits readily available for payment purpose and
    
    short-term (normally fall due within three months from the date of acquisition) and highly liquid investments held the
    
    Company which are readily convertible into known amount of cash and which are subject to insignificant risk of value
    
    change.
    
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    9. Foreign currency operations and translation of statements denominated in foreign currency
    
    (1) Basis for translation of foreign currency transactions
    
    The foreign currency transactions of the Company, when initially recognised, are translated into the functional
    
    currency at the prevailing spot exchange rate on the date of exchange, i.e. usually the middle price of RMB
    
    exchange rate published by the People’s Bank of China on that date in general and the same hereinafter, while
    
    the foreign currency exchange operations and transactions of the Company in connection with foreign currency
    
    exchange shall be translated into the functional currency at the exchange rate actually adopted.(2) Basis for translation of foreign currency monetary items and foreign currency non-monetary items
    
    On the balance sheet date, foreign currency monetary items shall be translated at the spot exchange rate on the
    
    balance sheet date. All differences are included in the profit or loss in the period, except for: ① the differences
    
    arising from foreign currency borrowings related to the acquisition or construction of fixed assets that are qualified
    
    for capitalisation will be accounted for according to the principle of capitalisation; and ② exchange difference
    
    arising from change in balance of carrying amount other than amortised cost of available for sale foreign monetary
    
    items will be included in other comprehensive income.
    
    Exchange differences arising from change in exchange rate where the preparation of consolidated financial
    
    statements relates to foreign operations and foreign currency monetary items materially constitute net investment
    
    in foreign operations shall be recorded into “other comprehensive income”; disposal of foreign operations shall be
    
    included into profits and losses on disposal in the current period.
    
    The foreign currency non-monetary items measured at historical cost shall still be measured by the functional
    
    currency translated at the spot exchange rate on the date of the transaction. Foreign currency non-monetary
    
    items measured at fair value are translated at the spot exchange rate on the date of determination of the fair value.
    
    The difference between the amounts of the functional currency before and after the translation will be treated as
    
    changes in fair value (including changes in foreign exchange rates) and recognised in profit or loss for the period
    
    or recognised as other comprehensive income.(3) Basis for translation of foreign currency financial statements
    
    Exchange differences arising from change in exchange rate where the preparation of consolidated financial
    
    statements relates to foreign operations and foreign currency monetary items materially constitute net investment
    
    in foreign operations shall be recorded into “other comprehensive income” under “translation reserve”; disposal of
    
    foreign operations shall be included into profits and losses on disposal in the current period.
    
    The financial statements denominated in foreign currency of a foreign operation are translated to RMB in
    
    compliance with the following requirements: assets and liabilities on the balance sheet are translated at the spot
    
    exchange rate prevailing at the balance sheet date; owner’s equity items except for “retained profit” are translated
    
    at the spot exchange rates at the dates on which such items arose; income and expenses items in the income
    
    statement are translated at the average exchange rate for the period in which the transaction occurred. The
    
    retained profit brought forward are reported at the prior year’s closing balance; the retained profit as at the end of
    
    the year are presented after translated the profit appropriation items; differences between the aggregate of asset
    
    and liability items and owners’ equity items are recognised as “translation differences arising on the translation
    
    of financial statements denominated in foreign currencies” in other comprehensive income. On disposal of
    
    foreign operations and loss of control, exchange differences arising from the translation of financial statements
    
    denominated in foreign currencies related to the disposed foreign operations which has been included in owners’
    
    equity in the balance sheet, shall be transferred to profit or loss in whole or in proportionate share in the period in
    
    which the disposal took place.
    
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    9. Foreign currency operations and translation of statements denominated in foreign currency (Cont’d)
    
    (3) Basis for translation of foreign currency financial statements (Cont’d)
    
    Cash flow dominated in foreign currency or from foreign subsidiaries shall be translated at the average exchange
    
    rate for the period in which the transaction occurred. Effects arising from changes of exchange rate of cash shall
    
    be presented separately in the cash flow statements.
    
    The opening balance and the prior year’s figures are presented according to the translated amounts of the prior
    
    year.
    
    On disposal of the entire owners’ equity in a foreign operation of the Company, or upon a loss of control over
    
    a foreign operation due to disposal of certain equity investment or other reasons, the Company transfers the
    
    exchange differences arising on translation of financial statements of this foreign operation attributable to owners’
    
    equity of parent company presented under owners’ equity in the balance sheet, to profit or loss in the period in
    
    which the disposal took place.
    
    In case of partial disposal of equity investment or other reason that result in reduction in shareholding in a
    
    foreign operation without losing control over it, the proportionate share of exchange differences arising from
    
    the translation of financial statements will be attributable to minority interests and will not recognised in profit
    
    or loss. For partial disposals of equity interests in foreign operations which are associates or joint ventures, the
    
    proportionate share of the exchange differences arising from the translation of financial statements of foreign
    
    operations is reclassified to profit or loss.
    
    10. Financial instruments
    
    Financial asset or financial liability will be recognised when the Company became one of the parties under a financial
    
    instrument contract.
    
    (1) Classification, recognition and measurement of financial assets
    
    The Company classifies the financial assets according to the business model for managing the financial assets
    
    and characteristics of the contractual cash flows as follows: financial assets measured at amortised cost, financial
    
    assets measured at fair value through other comprehensive income, and financial assets measured at fair value
    
    through profit or loss.
    
    Financial assets are measured at fair value upon initial recognition. For financial assets measured at fair value
    
    through profit or loss, relevant transaction costs are directly recognised in profit or loss for the period. For other
    
    categories of financial assets, relevant transaction costs are included in the amount initially recognised. Accounts
    
    receivable or bills receivable arising from sales of goods or rendering services or without significant financing
    
    component, are initially recognised based on the transaction price expected to be entitled by the Company.
    
    ① Financial assets measured at amortised cost
    
    The Company’s business model for managing the financial assets measured at amortised cost is to
    
    collect the contractual cash flows, and the contractual cash flow characteristics of such financial assets
    
    are consistent with the basic lending arrangements. That is, the cash flows generated on a specific date,
    
    represent solely payment of the principal and interest on the outstanding principal amount. The Company
    
    subsequently measures such financial assets at amortised cost using effective interest method, and the
    
    gains or losses from amortisation or impairment is recognised in profit or loss for the current period.
    
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    10. Financial instruments (Cont’d)
    
    (1) Classification, recognition and measurement of financial assets (Cont’d)
    
    ② Financial assets measured at fair value through other comprehensive income
    
    The Company’s business model for managing such financial assets is achieved both by collecting
    
    contractual cash flows and selling of these assets. The contractual cash flow characteristics of such financial
    
    assets are consistent with the basic lending arrangements. Such financial assets are measured by the
    
    Company at fair value through other comprehensive income, but the impairment losses or gains, exchange
    
    gains or losses, and interest income calculated by effective interest method are recognised in profit or loss
    
    for the current period.
    
    In addition, the Company designates certain equity instruments not held for trading as financial assets
    
    measured at fair value through other comprehensive income. The Company recognises the dividends related
    
    to such financial assets in profit or loss for the current period. Upon derecognition of such financial assets,
    
    the accumulated gains or losses previously included in other comprehensive income will be transferred from
    
    other comprehensive income to retained earnings, and will not be included in profit or loss for the current
    
    period.③ Financial assets measured at fair value through profit or loss
    
    The Company classifies the financial assets other than those measured at amortised cost and measured
    
    at fair value through other comprehensive as financial assets measured at fair value through profit or
    
    loss. In addition, upon initial recognition, the Company designates some financial assets as financial
    
    assets measured at fair value through profit or loss in order to eliminate or significantly reduce accounting
    
    mismatch. The Company subsequently measures such financial assets at fair value, and the changes in fair
    
    value are recognised in profit or loss for the current period.
    
    (2) Classification, recognition and measurement of financial liabilities
    
    Financial liabilities are classified as financial liabilities measured at fair value through profit or loss and other
    
    financial liabilities at initial recognition. For financial liabilities measured at fair value through profit or loss, relevant
    
    transaction costs are directly recognised in profit or loss for the period. For other financial liabilities, relevant
    
    transaction costs are included in the amount initially recognised.
    
    ① Financial liabilities measured at fair value through profit or loss
    
    Financial liabilities measured at fair value through profit or loss comprise held-for-trading financial liabilities
    
    (including derivatives under financial liabilities) and financial liabilities designated as measured at fair value
    
    through profit or loss upon initial recognition.
    
    Held-for-trading financial liabilities (including derivatives under financial liabilities) are subsequently
    
    measured at fair value, and the changes in fair value are recognised in profit or loss for the current period,
    
    except for those related to hedging accounting.
    
    The changes in fair value attributable to the changes in the Company’s own credit risk of the financial
    
    liabilities designated as measured at fair value through profit or loss are recognised in other comprehensive
    
    income, and the accumulated changes in fair value attributable to the changes in the Company’s own
    
    credit risk which were recognised in other comprehensive income are transferred to retained earnings upon
    
    derecognition of such liabilities. The remaining changes in fair value are recognised in profit or loss for
    
    the current period. In case that the above accounting treatment for the effect of changes in such financial
    
    liabilities’ own credit risk would create, or enlarge, an accounting mismatch, the Company will recognise
    
    all gains or losses (including the amount affected by the changes in the Company’s own credit risk) of such
    
    financial liabilities in profit or loss for the current period.
    
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    10. Financial instruments (Cont’d)
    
    (2) Classification, recognition and measurement of financial liabilities (Cont’d)
    
    ② Other financial liabilities
    
    Other financial liabilities, except for financial liabilities arising from transfer of financial assets not satisfying
    
    derecognition criteria or continue involvement of transferred financial assets and financial guarantee
    
    contracts liability, are classified as financial liabilities measured at amortised cost and are subsequently
    
    measured at amortised cost, and the gains or losses arising from derecognition or amortisation are
    
    recognised in profit or loss for the current period.
    
    (3) Recognition and measurement of transfers of financial asset
    
    Financial asset that satisfied any of the following criteria shall be derecognised: ① the contract right to receive
    
    the cash flows of the financial asset has terminated; ② the financial asset, along with substantially all the risk and
    
    return arising from the ownership of the financial asset, has been transferred to the transferee; and③ the financial
    
    asset has been transferred to the transferee, and the transferor has given up the control on such financial asset,
    
    though it does not assign maintain substantially all the risk and return arising from the ownership of the financial
    
    asset.
    
    When the entity does not either assign or maintain substantially all the risk and return arising from the ownership
    
    of the financial asset and does not give up the control on such financial asset, to the extent of its continuous
    
    involvement in the financial asset, the entity recognises such financial asset and the relevant liability accordingly.
    
    The extent of the continuous involvement is the extent to which the entity exposes to changes in the value of such
    
    financial assets.
    
    If all criteria of recognition of transfer of financial assets are satisfied, the difference between the carrying
    
    amount of the financial assets transferred and the sum of the consideration received from the transfer and the
    
    accumulated changes in fair value originally included in other comprehensive income shall be recognised in the
    
    profit or loss for the period.
    
    If a part of the financial assets is qualified for derecognition, the carrying amount of the financial asset is allocated
    
    between the part that continues to be recognised and the part that qualifies for derecognition, based on the fair
    
    values of the respective parts. The difference between the following amounts is recognised in profit or loss for the
    
    period: the sum of the consideration received and the carrying amount of the part that qualifies for derecognition
    
    and the aforementioned carrying amount.
    
    For financial assets that are sold or transferred with recourse or endorsement, the Company needs to determine
    
    whether the risk and rewards of ownership of the financial asset have been substantially transferred. If the risk
    
    and rewards of ownership of the financial asset have been substantially transferred, the financial assets shall be
    
    derecognised. If the risk and rewards of ownership of the financial asset have been retained, the financial assets
    
    shall not be derecognised. If the Company neither transfers nor retains substantially all the risks and rewards of
    
    ownership of the financial asset, the Company shall assess whether the control over the financial asset is retained,
    
    and the financial assets shall be accounting for according to the above paragraphs.
    
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    10. Financial instruments (Cont’d)
    
    (4) Derecognition of financial liabilities
    
    Financial liabilities (or a part thereof) are derecognised only when the present obligation is discharged in full or
    
    in part. An agreement is entered between the Company (debtor) and a creditor to replace the original financial
    
    liabilities with new financial liabilities with substantially different terms, derecognise the original financial
    
    liabilities as well as recognise the new financial liabilities. In case that the Company makes substantial changes
    
    to the contractual terms of the original financial liabilities (or a part thereof), the original financial liabilities are
    
    derecognised, and the new financial liabilities are recognised in accordance with the revised terms.
    
    When financial liabilities (or a part thereof) are derecognised, the difference between the carrying amount of the
    
    financial liabilities derecognised and the consideration paid (including transferred non-cash assets or assumed
    
    financial liability) is recognised in profit or loss for the current period.(5) Offset of financial assets and financial liabilities
    
    If the Company owns the legitimate rights of offsetting the recognised financial assets and financial liabilities,
    
    which are enforceable currently, and the Company plans to realise the financial assets or to clear off the financial
    
    liabilities on a net amount basis or simultaneously, the net amount of financial assets and financial liabilities shall
    
    be reported in the balance sheet upon offsetting. Otherwise, financial assets and financial liabilities are presented
    
    separately in the balance sheet without offsetting.(6) Determination of fair values for financial assets and financial liabilities
    
    The fair value refers to the price that will be received when selling an asset or the price to be paid to transfer a
    
    liability in an orderly transaction between market participants on the date of measurement. Financial instruments
    
    exist in an active market. Fair value is determined based on the quoted price in such market. An active market
    
    refers to where pricing is easily and regularly obtained from exchanges, brokers, industrial organisations and
    
    price fixing service organisations, representing the actual price of a market transaction that takes place in a fair
    
    deal. While financial instruments do not exist in an active market, the fair value is determined using valuation
    
    techniques. Valuation technologies include reference to be familiar with situation and prices reached in recent
    
    market transactions entered into by both willing parties, reference to present fair values of similar other financial
    
    instruments, cash flow discounting method and option pricing models. During the valuation process, the Company
    
    uses valuation techniques appropriate to the prevailing circumstances with the support of sufficient data and other
    
    information available, selects inputs consistent with the characteristics of the assets or liabilities considered in the
    
    transactions of relevant assets or liabilities by market participants, and gives priority to relevant observable inputs.
    
    Unobservable inputs are used only when relevant observable inputs are not accessible or the access to which is
    
    impracticable.(7) Equity instruments
    
    Equity instruments are any contract that evidences a residual interest in the assets of an entity after deducting
    
    all of its liabilities. The issuance (including refinancing), repurchase, sale or cancellation of equity instruments by
    
    the Company is accounted for movement in equity. Transaction costs related to equity transactions are deducted
    
    from equity. The Company does not recognise the movement in fair value of equity instruments.
    
    The dividends distributed by the Company for its equity instruments (including the “interest” arising from the
    
    instruments classified as equity instruments) during the existence period are accounted for as profit distribution.
    
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    11. Bills receivable
    
    Method for determining the expected credit loss of bills receivable
    
    The Company measures the loss provisions for bills receivable in accordance with the expected credit loss amount for
    
    the entire period. Based on the credit risk characteristics of bills receivable, bills receivable are divided into different
    
    groups:
    
    Item Basis for determining the groups
    
    Bank acceptance bills The acceptance party is a bank with less credit risk
    
    Commercial acceptance bills The acceptance party is a company with higher credit risk12. Accounts receivable
    
    Method for determining the expected credit loss of accounts receivable
    
    For receivables and contract assets that do not contain significant financing components, the Company measures loss
    
    provisions based on the expected credit loss amount for the entire period.
    
    For receivables, contract assets and lease receivables that contain significant financing components, the Company
    
    chooses to always measure the loss provision based on the expected credit loss amount for the entire period.
    
    In addition to accounts receivable and contract assets which are individually assessed for credit risk, they are also
    
    classified into different groups based on their credit risk characteristics:
    
    Item Basis for determining the groups
    
    Amount due from related parties This group comprises amounts due from related parties with lower risks.
    
    Factoring receivables This group comprises factoring receivables with special risks.
    
    Amount due from distributor This group comprises receivables with their ageing as credit risk characteristics.
    
    customers
    
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    13. Other receivables
    
    Determination and accounting treatment of expected credit loss of other receivables
    
    The Company measures impairment losses using the expected credit losses amount in the next 12 months or the entire
    
    duration, based on whether the credit risk of other receivables has increased significantly upon initial recognition. In
    
    addition to other receivables which are individually assessed for credit risk, they are also classified into different groups
    
    based on their credit risk characteristics:
    
    Item Basis for determining the groups
    
    Dividends receivable This group comprises dividends receivable.
    
    Interest receivable This group comprises interest due from financial institutions.
    
    Amount due from government This group comprises amount due from government agencies with less risks.
    
    agencies
    
    Amount due from related parties This group comprises amount due from related parties with less risks.
    
    Other receivables This group comprises for all types of deposits, advances and premiums receivable
    
    during daily and recurring activities.
    
    14. Inventories
    
    Whether the Company needs to comply with the disclosure requirements for specific industries
    
    No
    
    (1) Classification of inventories
    
    Inventories mainly include raw materials, work in progress and semi-finished products, turnover materials, finished
    
    products and goods etc.(2) Pricing of inventories received and dispatched
    
    Inventories are measured at their planned cost when obtained. Cost of an inventory consists of purchase costs,
    
    processing costs and other costs. The difference between the planned cost and the actual cost is calculated by
    
    cost variance account, and the cost difference assumed for the inventories will be pay by instalment, so as to
    
    adjust the planned cost to the actual cost.
    
    Consumable biological assets refer to biological assets held-for-sale which include growing timber. Consumable
    
    biological assets without a stock are stated at historical cost at initial recognition, and subsequently measured
    
    at fair value when there is a stock. Changes in fair values shall be recognised as profit or loss in the current
    
    period. The cost of self-planting, self-cultivating consumable biological assets is the necessary expenses
    
    directly attributable to such assets prior to canopy closure, including borrowing costs eligible for capitalisation.
    
    Subsequent expenses such as maintenance cost incurred after canopy closure shall be included in profit or loss
    
    for the current period.
    
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    14. Inventories (Cont’d)
    
    (3) Recognition of net realisable value of inventory and provision for inventory impairment
    
    Net realisable value refers to the amount of the estimated price of inventories less the estimated cost incurred
    
    upon completion, estimated sales expenses and taxes and levies in daily operation. The realisable value of
    
    inventories shall be determined on the basis of definite evidence, purpose of holding the inventories and effect of
    
    after-balance-sheet-date events.
    
    At the balance sheet date, inventories are calculated at the lower of cost and net realisable value. Usually,
    
    provision for inventory impairment is made when the net realisable value is lower than the cost. Provisions for
    
    impairment of inventory shall be made according to the amount by which the cost of a single item exceeds its
    
    net realisable value. For large quantity and low value items of inventories, provision may be made based on
    
    categories of inventories. For items of inventories relating to a product line that is produced and marketed in the
    
    same geographical area and with the same or similar end uses or purposes, which cannot be practicable valued
    
    separately from other items in that product line, provision for decline in value of inventories may be determined on
    
    an aggregate basis.
    
    After making the provision for inventory impairment, in case the factors causing inventory impairment no longer
    
    exists, and the net realisable value of an inventory is higher than its book-value, the original provision for inventory
    
    impairment shall be transferred back and incorporated into the profit or loss for the current period.(4) We implement permanent inventory system as our inventory stock taking system.
    
    (5) Amortisation of low-value consumables and packaging materials
    
    Low-value consumables and packaging materials are amortised when issued for use.
    
    15. Assets held-for-sale
    
    Assets held-for-sale measures non-current assets held for sale and assets within the disposal groups held for sale.
    
    When classifying such non-current assets or disposal groups as held-for-sale, assets held-for-sale shall be debited;
    
    items such as “accumulated depreciation” and “accumulated amortisation” are debited based on their respective
    
    accrued amounts; items such as “fixed assets”, “intangible assets”, “long-term equity investments” and “goodwill” are
    
    credited according their respective balances. For items for which provision for impairment is made, such provision shall
    
    be carried forward at the same time. The closing balance of debit for assets held-for-sale reflects the book balance of
    
    the Company’s non-current assets held for sale and assets within the disposal groups held for sale.16. Long-term receivables
    
    The Company measures the impairment loss of long-term receivables at an amount equal to the expected credit loss
    
    in the next 12 months or the lifetime expected credit loss ECL, depending on whether its credit risk has significantly
    
    increased upon initial recognition. Other than the long-term receivables assessed individually for credit risks, long-term
    
    receivables are classified into different groups based on their credit risk characteristics:
    
    Item Basis for determining the groups
    
    Long-term receivables This group is comprised of long-term receivables not yet past due with normal
    
    not yet past due exposures.
    
    Long-term receivables overdue This group is comprised of long-term receivables with higher past due exposures.
    
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    17. Long-term equity investments
    
    Long-term equity investments under this section refer to long-term equity investments in which the Company has
    
    control, joint control or significant influence over the investee. Long-term equity investment without control or joint
    
    control or significant influence of the Company is accounted for as financial assets measured at fair value through profit
    
    or loss. In case such equity investment is not held for sale, then the Company may choose to designate such equity
    
    investment as financial assets measured at fair value through other comprehensive income. Details on its accounting
    
    policy please refer to Note V. “Financial instruments”.
    
    Joint control is the Company’s contractually agreed sharing of control over an arrangement, which relevant activities
    
    of such arrangement must be decided by unanimously agreement from parties who share control. Significant influence
    
    is the power of the Company to participate in the financial and operating policy decisions of an investee, but to fail to
    
    control or joint control the formulation of such policies together with other parties.
    
    (1) Determination of investment cost
    
    For a long-term equity investment acquired through a business combination involving enterprises under common
    
    control, the initial investment cost of the long-term equity investment shall be the absorbing party’s share of the
    
    carrying amount of the shareholders’ equity under the consolidated financial statements of the ultimate controlling
    
    party on the date of combination. The difference between the initial cost of the long-term equity investment and
    
    the cash paid, non-cash assets transferred as well as the carrying amount of the debts borne by the absorbing
    
    party shall offset against the capital reserve. If the capital reserve is insufficient to offset, the retained earnings
    
    shall be adjusted. If the consideration of the merger is satisfied by issue of equity securities, the initial investment
    
    cost of the long-term equity investment shall be the absorbing party’s share of the carrying amount of the
    
    shareholders’ equity under the consolidated financial statements of the ultimate controlling party on the date of
    
    combination. With the total face value of the shares issued as share capital, the difference between the initial cost
    
    of the long-term equity investment and total face value of the shares issued shall be used to offset against the
    
    capital reserve. If the capital reserve is insufficient to offset, the retained earnings shall be adjusted. For business
    
    combination resulted in an enterprise under common control by acquiring equity of the absorbing party under
    
    common control through a stage-up approach with several transactions, these transactions will be judged whether
    
    they shall be treat as “transactions in a basket”. If they belong to “transactions in a basket”, these transactions will
    
    be accounted for a transaction in obtaining control. If they do not belong to “transactions in a basket”, the initial
    
    investment cost of the long-term equity investment shall be the absorbing party’s share of the carrying amount of
    
    the shareholders’ equity under the consolidated financial statements of the ultimate controlling party on the date
    
    of combination. The difference between the initial cost of the long-term equity investment and the aggregate of
    
    the carrying amount of the long-term equity investment before merging and the carrying amount the additional
    
    consideration paid for further share acquisition on the date of combination shall offset against the capital reserve.
    
    If the capital reserve is insufficient to offset, the retained earnings shall be adjusted. Other comprehensive income
    
    recognised as a result of the previously held equity investment accounted for using equity method on the date of
    
    combination or recognised for financial assets measured at fair value through other comprehensive income will
    
    not be accounted for.
    
    For a long-term equity investment acquired through a business combination involving enterprises not under
    
    common control, the initial investment cost of the long-term equity investment shall be the cost of combination
    
    on the date of acquisition. Cost of combination includes the aggregate fair value of assets paid by the acquirer,
    
    liabilities incurred or borne and equity securities issued. For business combination resulted in an enterprise not
    
    under common control by acquiring equity of the acquiree under common control through a stage-up approach
    
    with several transactions, these transactions will be judged whether they shall be treat as “transactions in a
    
    basket”. If they belong to “transactions in a basket”, these transactions will be accounted for a transaction in
    
    obtaining control. If they do not belong to “transactions in a basket”, the initial investment cost of the long term
    
    equity investment accounted for using cost method shall be the aggregate of the carrying amount of equity
    
    investment previously held by the acquiree and the additional investment cost. For previously held equity
    
    accounted for using equity method, relevant other comprehensive income will not be accounted for.
    
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    17. Long-term equity investments (Cont’d)
    
    (1) Determination of investment cost (Cont’d)
    
    Agent fees incurred by the absorbing party or acquirer for the acquisition such as audit, legal service, and
    
    valuation and consultation fees, and other related administration expenses are charged to profit or loss in the
    
    current period at the time such expenses incurred.
    
    The long-term equity investment acquired through means other than a business combination shall be initially
    
    measured at its cost. Such cost is depended upon the acquired means of long-term equity investments, which is
    
    recognised based on the purchase cost actually paid by the Company in cash, the fair value of equity securities
    
    issued by the Company, the agreed value of investment contract or agreement, the fair value or original carrying
    
    amount of the non-monetary asset exchange transaction which the asset will be transferred out of the Company,
    
    and the fair value of long-term equity investment itself. The costs, taxes and other necessary expenses that are
    
    directly attributable to the acquisition of the long-term equity investments are also included in the investment cost.
    
    For additional equity investment made in order to obtain significant influence or common control over investee
    
    without resulted in control, the relevant cost for long-term equity investment shall be the aggregate of fair value of
    
    previously held equity investment and additional investment cost determined according to “Accounting Standard
    
    for Business Enterprises No. 22 – Recognition and measurement of Financial Instruments”.(2) Subsequent measurement and method for profit or loss recognition
    
    Long-term equity investments with joint control (excluding those constitute joint ventures) or significant influence
    
    on the investee are accounted for using equity method. In addition, long-term equity investments with control on
    
    the investee are accounted for using cost method and record in the Company’s financial statements.
    
    ① Long-term equity investments accounted for using the cost method
    
    Under the cost method, a long-term equity investment is measured at its initial investment cost. The cost for
    
    long-term equity investment is adjusted in the event of additional investment or investment recovery. Except
    
    receiving the actual consideration paid for the investment or the declared but not yet distributed cash
    
    dividends or profits which is included in the consideration, investment gains for the period is recognised as
    
    the cash dividends or profits declared by the investee.
    
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    17. Long-term equity investments (Cont’d)
    
    (2) Subsequent measurement and method for profit or loss recognition (Cont’d)
    
    ② Long-term equity investments accounted for using the equity method
    
    Under the equity method, where the initial investment cost of a long-term equity investment exceeds
    
    the investor’s interest in the fair value of the investee’s identifiable net assets at the acquisition date, no
    
    adjustment shall be made to the initial investment cost. Where the initial investment cost is less than
    
    the investor’s interest in the fair value of the investee’s identifiable net assets at the acquisition date, the
    
    difference shall be charged to profit or loss for the current period, and the cost of the long-term equity
    
    investment shall be adjusted accordingly.
    
    Under the equity method, investment gain and other comprehensive income shall be recognised based
    
    on the Company’s share of the net profits or losses and other comprehensive income made by the
    
    investee, respectively. Meanwhile, the carrying amount of long-term equity investment shall be adjusted.
    
    The carrying amount of long-term equity investment shall be reduced based on the Company’s share of
    
    profit or cash dividend distributed by the investee. In respect of the other movement of net profit or loss,
    
    other comprehensive income and profit distribution of investee, the carrying amount of long-term equity
    
    investment shall be adjusted and included in the capital reserves. The Company shall recognise its share of
    
    the investee’s net profits or losses based on the fair values of the investee’s individual separately identifiable
    
    assets at the time of acquisition, after making appropriate adjustments thereto. In the event of inconformity
    
    between the accounting policies and accounting periods of the investee and the Company, the financial
    
    statements of the investee shall be adjusted in conformity with the accounting policies and accounting
    
    periods of the Company. Investment gain and other comprehensive income shall be recognised accordingly.
    
    In respect of the transactions between the Company and its associates and joint ventures in which the
    
    assets disposed of or sold are not classified as operation, the share of unrealised gain or loss arising from
    
    internal transactions shall be eliminated by the portion attributable to the Company. Investment gain shall
    
    be recognised accordingly. However, any unrealised loss arising from internal transactions between the
    
    Company and an investee is not eliminated to the extent that the loss is impairment loss of the transferred
    
    assets. In the event that the Company disposed of an asset classified as operation to its joint ventures or
    
    associates, which resulted in acquisition of long-term equity investment by the investor without obtaining
    
    control, the initial investment cost of additional long-term equity investment shall be the fair value of
    
    disposed operation. The difference between initial investment cost and the carrying amount of disposed
    
    operation will be fully included in profit or loss for the current period. In the event that the Company sold an
    
    asset classified as operation to its associates or joint ventures, the difference between the carrying amount
    
    of consideration received and operation shall be fully included in profit or loss for the current period. In the
    
    event that the Company acquired an asset which formed an operation from its associates or joint ventures,
    
    relevant transaction shall be accounted for in accordance with “Accounting Standards for Business
    
    Enterprises No. 20 – Business combination”. All profit or loss related to the transaction shall be accounted
    
    for.
    
    The Company’s share of net losses of the investee shall be recognised to the extent that the carrying
    
    amount of the long-term equity investment together with any long-term interests that in substance form
    
    part of the investor’s net investment in the investee are reduced to zero. If the Company has to assume
    
    additional obligations, the estimated obligation assumed shall be provided for and charged to the profit
    
    or loss as investment loss for the period. Where the investee is making profits in subsequent periods, the
    
    Company shall resume recognising its share of profits after setting off against the share of unrecognised
    
    losses.
    
    90 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    V. Significant Accounting Policies and Accounting Estimates (Cont’d)
    
    17. Long-term equity investments (Cont’d)
    
    (2) Subsequent measurement and method for profit or loss recognition (Cont’d)
    
    ② Long-term equity investments accounted for using the equity method (Cont’d)
    
    If there is debit variation in relation to the long-term equity investments in associates and joint venture held
    
    prior to first adoption of the Accounting Standards for Business Enterprises by the Company on 1 January
    
    2007, the amounts amortised over the original residual term using the straight-line method is included in the
    
    profit or loss for the period.③ Acquisition of minority interest
    
    Upon the preparation of the consolidated financial statements, capital reserve is adjusted based on the
    
    difference between the additional long term equity investment from acquisition of minority interest and the
    
    share of net assets of the subsidiary attributable to the additional shareholding from the date of acquisition (or
    
    date of combination). In the case of insufficient capital surplus to offset impairment, retained earnings shall
    
    be adjusted.④ Disposal of long-term equity investments
    
    In these consolidated financial statements, for disposal of a portion of the long-term equity investments
    
    in a subsidiary without loss of control, the difference between disposal cost and disposal of long-term
    
    equity investments relative to the net assets of the subsidiary is charged to the owners’ equity. If disposal
    
    of a portion of the long-term equity investments in a subsidiary by the parent company results in a loss in
    
    control, it shall be accounted for in accordance with the relevant accounting policies as described in Note V.
    
    6. (2) “Preparation Method of the Consolidated Financial Statements”.
    
    On disposal of a long-term equity investment otherwise, the difference between the carrying amount of the
    
    investment and the actual consideration paid is recognised through profit or loss in the current period.
    
    In respect of long-term equity investment accounted for using equity method with the remaining equity
    
    interest after disposal also accounted for using equity method, other comprehensive income previously
    
    under owners’ equity shall be accounted for in accordance with the same accounting treatment for direct
    
    disposal of relevant asset or liability by investee on pro rata basis at the time of disposal. The owners’ equity
    
    recognised for the movement of other owners’ equity (excluding net profit or loss, other comprehensive
    
    income and profit distribution of investee) shall be transferred to profit or loss for the current period on pro
    
    rata basis.
    
    In respect of long-term equity investment accounted for using cost method with the remaining equity
    
    interest after disposal also accounted for using cost method, other comprehensive income recognised
    
    using equity method or the recognition and measurement standard of financial instruments before obtaining
    
    control over the investee shall be accounted for in accordance with the same accounting treatment for direct
    
    disposal of relevant asset or liability by investee, and transferred to profit or loss for the current period on
    
    pro rata basis. Movement of other owners’ equity (excluding net profit or loss, other comprehensive income
    
    and profit distribution under net asset of investee accounted for and recognised using equity method) shall
    
    be transferred to profit or loss for the current period on pro rata basis.
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 91
    
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    17. Long-term equity investments (Cont’d)
    
    (2) Subsequent measurement and method for profit or loss recognition (Cont’d)
    
    ④ Disposal of long-term equity investments (Cont’d)
    
    In the event of loss of control over investee due to partial disposal of equity investment by the Company,
    
    in preparing separate financial statements, the remaining equity interest which can apply common control
    
    or impose significant influence over the investee after disposal shall be accounted for using equity method.
    
    Such remaining equity interest shall be treated as accounting for using equity method since it is obtained
    
    and adjustment was made accordingly. For the remaining equity interest which cannot apply common
    
    control or impose significant influence over the investee after disposal, it shall be accounted for using
    
    the recognition and measurement standard of financial instruments. The difference between its fair value
    
    and carrying amount as at the date of losing control shall be included in profit or loss for the current
    
    period. In respect of other comprehensive income recognised using equity method or the recognition and
    
    measurement standard of financial instruments before the Company obtained control over the investee,
    
    it shall be accounted for in accordance with the same accounting treatment for direct disposal of relevant
    
    asset or liability by investee at the time when the control over investee is lost. Movement of other owners’
    
    equity (excluding net profit or loss, other comprehensive income and profit distribution under net asset of
    
    investee accounted for and recognised using equity method) shall be transferred to profit or loss for the
    
    current period at the time when the control over investee is lost. Of which, for the remaining equity interest
    
    after disposal accounted for using equity method, other comprehensive income and other owners’ equity
    
    shall be transferred on pro rata basis. For the remaining equity interest after disposal accounted for using
    
    the recognition and measurement standard of financial instruments, other comprehensive income and other
    
    owners’ equity shall be fully transferred.
    
    In the event of loss of common control or significant influence over investee due to partial disposal of equity
    
    investment by the Company, the remaining equity interest after disposal shall be accounted for using the
    
    recognition and measurement standard of financial instruments. The difference between its fair value and
    
    carrying amount as at the date of losing common control or significant influence shall be included in profit
    
    or loss for the current period. In respect of other comprehensive income recognised under previous equity
    
    investment using equity method, it shall be accounted for in accordance with the same accounting treatment
    
    for direct disposal of relevant asset or liability by investee at the time when equity method was ceased to
    
    be used. Movement of other owners’ equity (excluding net profit or loss, other comprehensive income and
    
    profit distribution under net asset of investee accounted for and recognised using equity method) shall be
    
    transferred to profit or loss for the current period at the time when equity method was ceased to be used.
    
    The Company disposes its equity investment in subsidiary by a stage-up approach with several transactions
    
    until the control over the subsidiary is lost. If the said transactions belong to “transactions in a basket”, each
    
    transaction shall be accounted for as a single transaction of disposing equity investment of subsidiary and
    
    loss of control. The difference between the disposal consideration for each transaction and the carrying
    
    amount of the corresponding long-term equity investment of disposed equity interest before loss of control
    
    shall initially recognised as other comprehensive income, and subsequently transferred to profit or loss
    
    arising from loss of control for the current period upon loss of control.
    
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    V. Significant Accounting Policies and Accounting Estimates (Cont’d)
    
    18. Investment property
    
    Measurement of investment property
    
    Measured by using the cost method
    
    Depreciation or amortisation methods
    
    Investment property refers to real estate held to earn rentals or for capital appreciation, or both, which include leased
    
    land use rights, land use rights held for sale after appreciation, leased buildings, etc. In addition, for the vacant buildings
    
    that the Company holds for operating leases, if the Board (or similar bodies) makes a written decision that it is explicitly
    
    used for operating leases and that the holdings do not change in the short term, they are also presented as investment
    
    property.
    
    Investment property is initially measured at cost. Subsequent expenditures related to an investment property shall be
    
    included in cost of investment property only when the economic benefits associated with the asset will likely flow to the
    
    Company and its cost can be measured reliably. All other expenditures on investment property shall be included in profit
    
    or loss for the current period when incurred.
    
    The Company adopts cost method for subsequent measurement of investment property, which is depreciated or
    
    amortised using the same policy as that for buildings or land use rights.
    
    The method for impaired test of investment property and measurement of impairment provision are detailed in Note V.
    
    23 “Impairment of long-term assets”.
    
    In the event that an owner-occupied property or inventories is converted to an investment property (or vice versa), upon
    
    the conversion, the property shall be stated at the carrying amount prior to the conversion.
    
    In the event that an investment property is converted to an owner-occupied property, such property shall become fixed
    
    assets or intangible assets since the date of its conversion. In the event that an owner-occupied property is converted
    
    to real estate held to earn rentals or for capital appreciation, such fixed assets or intangible assets shall become an
    
    investment property since the date of its conversion. For investment property measured at cost during its conversion,
    
    upon the conversion, the property shall be stated at the carrying amount prior to the conversion. For investment
    
    property measured at fair value during its conversion, upon the conversion, the property shall be stated at the fair value
    
    on the date of conversion.
    
    If an investment property is disposed of or if it withdraws permanently from use and no economic benefit will be
    
    obtained from the disposal, the recognition of it as an investment property shall be terminated. When an investment
    
    property is sold, transferred, retired or damaged, the amount of proceeds on disposal of the property net of the carrying
    
    amount and related tax and surcharges is recognised in profit or loss for the current period.
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 93
    
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    19. Fixed assets
    
    (1) Conditions for recognition
    
    Fixed assets are tangible assets that are held for use in the production or supply of goods or services, for rental
    
    to others, or for administrative purposes; and have a useful life of more than one accounting year. Fixed assets
    
    are recognised only if the Company is very likely to receive economic benefits from the asset and its cost can
    
    be measured reliably. A fixed asset shall be initially measured at cost and the effect of any expected costs of
    
    abandoning the asset at the end of its use.(2) Depreciation method
    
    Useful lives of Estimated Annual
    
    depreciation residual value depreciation
    
    Category Depreciation method (Year) (%) rate (%)
    
    Housing and building structure Straight-line method 20-40 5-10 2.25-4.75
    
    Machinery and equipment Straight-line method 8-20 5-10 4.50-11.88
    
    Transportation equipment Straight-line method 5-8 5-10 11.25-19.00
    
    Electronic equipment and others Straight-line method 5 5-10 18.00-19.00(3) Recognition, accounting and depreciation method of fixed assets acquired under finance leases
    
    Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and
    
    rewards of asset ownership to the lessee and titles to the assets may or may not eventually be transferred. For
    
    fixed assets acquired under finance leases, the basis for provision of leased assets depreciation is the same as
    
    that of self-owned fixed assets. When it can be reasonably determined that the ownership of a leased asset will
    
    be transferred at the end of the lease term, it is depreciated over the period of expected use; otherwise, the lease
    
    asset is depreciated over the shorter period of the lease term and the period of expected use.
    
    20. Construction in progress
    
    Construction in progress is recognised based on the actual construction cost, including all expenditures incurred for
    
    construction projects, capitalised borrowing costs for the construction in progress before it has reached the working
    
    condition for its intended use, and other related expenses during the construction period. A construction in progress is
    
    reclassified to fixed assets when it has reached the working condition for its intended use.
    
    The method for impaired test of construction in progress and measurement of impairment provision are detailed in Note V.
    
    25 “Impairment of long-term asset”.
    
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    21. Borrowing costs
    
    Borrowing costs include interest, amortisation of discounts or premiums related to borrowings, ancillary costs incurred in
    
    connection with the arrangement of borrowings, and exchange differences arising from foreign currency borrowings. For
    
    borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset, when
    
    expenditures for the asset and borrowing costs are being incurred, activities relating to the acquisition, construction
    
    or production of the asset that are necessary to prepare the asset for its intended use or sale have commenced, such
    
    borrowing costs shall be capitalised as part of the cost of that asset; and capitalisation shall discontinue when the
    
    qualifying asset is ready for its intended use or sale. Other borrowing costs shall be recognised as expense in the period
    
    in which they are incurred.
    
    Where funds are borrowed for a specific purpose, the amount of interest to be capitalised shall be the actual interest
    
    expense incurred on that borrowing for the period less any bank interest earned from depositing the borrowed funds
    
    before being used into banks or any investment income on the temporary investment of those funds. Where funds are
    
    borrowed for general purpose, the Company shall determine the amount of interest to be capitalised on such borrowings
    
    by applying a capitalisation rate to the weighted average of the excess amounts of cumulative expenditures on the asset
    
    over and above the amounts of specific-purpose borrowings. The capitalisation rate shall be the weighted average of
    
    the interest rates applicable to the general-purpose borrowings.
    
    During the capitalisation period, exchange differences on a specific purpose borrowing denominated in foreign currency
    
    shall be capitalised. Exchange differences related to general-purpose borrowings denominated in foreign currency shall
    
    be included in profit or loss for the current period.
    
    Qualifying assets are assets (fixed assets, investment property, inventories, etc.) that necessarily take a substantial
    
    period of time for acquisition, construction or production to get ready for their intended use or sale.
    
    Capitalisation of borrowing costs shall be suspended during periods in which the acquisition, construction or production
    
    of a qualifying asset is interrupted abnormally, when the interruption is for a continuous period of more than 3 months,
    
    until the acquisition, construction or production of the qualifying asset is resumed.22. Biological assets
    
    Consumable biological assets refer to biological assets held-not-for-sale, which include forest trees being grown.
    
    Consumable biological assets are stated at cost at initial recognition. The cost of self-planting, self-cultivating, self-
    
    breeding or self-farming consumable biological assets is the necessary expenses directly attributable to such assets
    
    prior to canopy closure, including borrowing costs eligible for capitalisation. Subsequent expenses such as maintenance
    
    incurred after canopy closure shall be included in profit or loss for the current period.
    
    The cost of consumable biological assets shall, at the time of harvest or disposal, be carried forward at carrying amount
    
    using the batch averaging method.
    
    On the balance sheet date, consumable biological assets are measured at the lower of cost and net realisable value,
    
    and the impairment provision for consumable biological assets is made using the same approach as that used for the
    
    recognition of impairment provision for inventories. In case the factors causing impairment no longer exists, the reduced
    
    amount shall be recovered and reversed in the provision amount originally provided for impairment. The reversed
    
    amount shall be recognised in profit or loss for the current period.
    
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    23. Right-of-use assets
    
    (1) Conditions for recognition
    
    Right-of-use assets refer to the rights of using the assets over the lease term. Right-of-use assets are initially
    
    measured at cost, including the amount of initial measurement under
    
    (I) lease liabilities;
    
    (II) for lease payment on or before the date of commencement of the lease period, where there was lease
    
    incentive, such incentives shall be deducted;(III) initial direct expenses incurred by the lessee;(IV) costs expected to be incurred by the lessee for demolition and removal of leased assets, restoration of the
    
    premises where the leased assets are located, or restoration of the leased assets to the conditions of the
    
    lease terms.
    
    (2) Depreciation method
    
    Right-of-use assets are depreciated using the straight-line method over its useful life.
    
    The Company adopts cost method for subsequent measurement of right-of-use assets. Where ownership of the
    
    lease assets during the lease term can be reasonably determined, right-of-use assets are depreciated over the
    
    remainder of useful lives of the lease assets; where ownership of the lease assets during the lease term cannot be
    
    reasonably determined, right-of-use assets are depreciated over the lease term or the remainder of useful lives of
    
    the lease assets, whichever is shorter.
    
    24. Intangible assets
    
    (1) Measurement method, useful life and impairment testing
    
    For details of the method of impairment testing and impairment provision of intangible assets, please see Note V.
    
    25 “Impairment of long-term assets”.
    
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    24. Intangible assets (Cont’d)
    
    (2) Accounting policy of internal research and development expenditure
    
    Research and development expenditure of the Company was divided into expenses incurred during the research
    
    phase and expenses incurred during the development phase.
    
    Expenses incurred during the research phase are recognised as profit or loss in the current period.
    
    Expenses incurred during the development phase that satisfy the following conditions are recognised as intangible
    
    assets, while those that do not satisfy the following conditions are accounted for in the profit or loss for the current
    
    period:
    
    ① it is technically feasible that the intangible asset can be used or sold upon completion;
    
    ② there is intention to complete the intangible asset for use or sale;
    
    ③ the intangible asset can produce economic benefits, including there is evidence that the products produced
    
    using the intangible asset has a market or the intangible asset itself has a market; and if the intangible asset
    
    is for internal use, there is evidence that there exists usage for the intangible asset;④ there is sufficient support in terms of technology, financial resources and other resources in order to
    
    complete the development of the intangible asset, and there is capability to use or sell the intangible asset;⑤ the expenses attributable to the development phase of the intangible asset can be measured reliably.
    
    If the expenses incurred during the research phase and the development phase cannot be distinguished
    
    separately, all development expenses incurred are accounted for in the profit or loss for the current period.
    
    25. Impairment of long-term asset
    
    The Company will judge if there is any indication of impairment as at the balance sheet date in respect of noncurrent
    
    non-financial assets such as fixed assets, construction in progress, intangible assets with a finite useful life, investment
    
    properties measured at cost, and long-term equity investments in subsidiaries, joint controlled entities and associates.
    
    If there is any evidence indicating that an asset may be impaired, recoverable amount shall be estimated for impairment
    
    test. Goodwill, intangible assets with an indefinite useful life and intangible assets beyond working conditions will be
    
    tested for impairment annually, regardless of whether there is any indication of impairment.
    
    If the impairment test result shows that the recoverable amount of an asset is less than its carrying amount, the
    
    impairment provision will be made according to the difference and recognised as an impairment loss. The recoverable
    
    amount of an asset is the higher of its fair value less costs of disposal and the present value of the future cash
    
    flows expected to be derived from the asset. An asset’s fair value is the price in a sale agreement in an arm’s length
    
    transaction. If there is no sale agreement but the asset is traded in an active market, fair value shall be determined
    
    based on the bid price. If there is neither sale agreement nor active market for an asset, fair value shall be based on
    
    the best available information. Costs of disposal are expenses attributable to disposal of the asset, including legal fee,
    
    relevant tax and surcharges, transportation fee and direct expenses incurred to prepare the asset for its intended sale.
    
    The present value of the future cash flows expected to be derived from the asset over the course of continued use and
    
    final disposal is determined as the amount discounted using an appropriately selected discount rate. Provisions for
    
    assets impairment shall be made and recognised for the individual asset. If it is not possible to estimate the recoverable
    
    amount of the individual asset, the Company shall determine the recoverable amount of the asset group to which the
    
    asset belongs. The asset group is the smallest group of assets capable of generating cash flows independently.
    
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    25. Impairment of long-term asset (Cont’d)
    
    For the purpose of impairment testing, the carrying amount of goodwill presented separately in the financial statements
    
    shall be allocated to the asset groups or group of assets benefiting from synergy of business combination. If the
    
    recoverable amount is less than the carrying amount, the Company shall recognise an impairment loss. The amount
    
    of impairment loss shall first reduce the carrying amount of any goodwill allocated to the asset group or set of asset
    
    groups, and then reduce the carrying amount of other assets (other than goodwill) within the asset group or set of asset
    
    groups, pro rata on the basis of the carrying amount of each asset.
    
    An impairment loss recognised on the aforesaid assets shall not be reversed in a subsequent period in respect of the
    
    restorable value.26. Long-term prepaid expenses
    
    Long-term prepaid expenses measures the Company’s incurred expenses with amortisation period of over one year,
    
    including repair expenditure of fixed assets, improvement expenditure of fixed assets under lease and other prepaid
    
    expenses with amortisation period of over one year.27. Contract liabilities
    
    A contract liability represents the Company’s obligation to transfer goods to a customer for which the Company has
    
    received consideration (or an amount of consideration is due) from the customer. If the customer has already paid
    
    the contract consideration before the Company transfers goods to the customer or the Company has obtained the
    
    unconditional collection right, the Company will recognise such amount received or receivable as contract liabilities
    
    at earlier of the actual payment by the customer or the amount payable becoming due. Contract assets and contract
    
    liabilities under the same contract are presented on a net basis, and contract assets and contract liabilities under
    
    different contracts are not offset.28. Employee benefits
    
    (1) Accounting treatment for short-term staff remuneration
    
    Staff remuneration of the Company mainly includes short-term staff remuneration, post-employment benefits and
    
    termination benefits, in which:
    
    Short-term remuneration mainly includes salaries, bonuses, allowance and subsides, staff welfare, medical
    
    insurance premium, maternity insurance premium, work-related injury insurance premium, housing provident
    
    funds, union operation costs and employee education costs and non-monetary welfare etc. Short-term
    
    remuneration incurred during the accounting period in which the Company’s staff provided services for the
    
    Company is recognised as liability and included in profit or loss for the current period or related asset costs. Of
    
    which, non-monetary welfare is measured at fair value.(2) Accounting treatment for post-employment benefits
    
    Post-employment benefits mainly include pension insurance premium and unemployment insurance premium.
    
    Postemployment benefits include defined contribution plan. For those adopted defined contribution plan, relevant
    
    contribution amount is included in related asset costs or profit or loss for the current period during the period in
    
    which the expenses incurred.
    
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    28. Employee benefits (Cont’d)
    
    (3) Accounting treatment for termination benefits
    
    When the Company terminates the employment relationship with employees before the end of the employment
    
    contracts or provides compensation as an offer to encourage employees to accept voluntary redundancy, the
    
    Company shall recognise employee compensation liabilities arising from compensation for staff dismissal and
    
    included in profit or loss for the current period, when the Company cannot revoke unilaterally compensation
    
    for dismissal due to the cancellation of labour relationship plans and employee redundant proposals; and the
    
    Company recognise cost and expenses related to payment of compensation for dismissal and restructuring,
    
    whichever is earlier. However, if the compensation for termination of employment is not expected to be fully paid
    
    within 12 months from the reporting period, it shall be accounted for other long-term staff remuneration.
    
    The early retirement plan shall be accounted for in accordance with the accounting principles for compensation for
    
    termination of employment. The salaries or wages and the social contributions to be paid for the employees who
    
    retire before schedule from the date on which the employees stop rendering services to the scheduled retirement
    
    date, shall be recognised (as compensation for termination of employment) in the current profit or loss by the
    
    Company if the recognition principles for provisions are satisfied.(4) Accounting treatment for other long-term employee benefit
    
    For other long-term employee benefit provided by the Company for employees which meets the criteria of defined
    
    contribution plan, accounting treatment for defined contribution plan will be adopted; otherwise accounting
    
    treatment for defined benefit plan will be adopted.
    
    29. Provisions
    
    Obligations pertinent to the contingencies which satisfy the following conditions are recognised as provisions: (1) The
    
    obligation is a current obligation borne by the Company; (2) it is likely that an outflow of economic benefits will be
    
    resulted from the performance of the obligation; and (3) the amount of the obligation can be reliably measured.
    
    At the balance sheet date, provisions shall be measured at the best estimate of the necessary expenses required for the
    
    performance of existing obligations, after taking into account relevant risks, uncertainties, time value of money and other
    
    factors pertinent to the contingencies.
    
    If all or some expenses incurred for settlement of provisions are expected to be borne by the third party, the
    
    compensation amount shall, on a recoverable basis, be recognised as asset separately, and compensation amount
    
    recognised shall not be more than the carrying amount of provisions.
    
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    30. Preference shares, perpetual bonds and other financial instruments
    
    (1) Classification of perpetual bonds and preference shares
    
    Perpetual bonds, preference shares and other financial instruments issued by the Company are classified as
    
    equity instruments when all of the following conditions are satisfied:
    
    ① The financial instruments have no contractual obligation to pay in cash or other financial assets to other
    
    parties nor to exchange financial assets or financial liabilities under potential adverse condition with other
    
    parties;② If the financial instrument will or may be settled in the entity’s own equity instruments, it is a non-
    
    derivative instrument that includes no contractual obligations to deliver a variable number of its own equity
    
    instruments; or a derivative that will be settled only by the Company exchanging a fixed amount of cash or
    
    other financial asset for a fixed number of its own equity instruments.Other than financial instruments classified as equity instruments according to the above conditions, other financialinstruments issued by the Company shall be classified as financial liabilities.
    
    The financial instruments issued by the Company which are compound financial instruments are recognised as
    
    a liability based on the fair value of the liability component, and the amount net of the fair value of the liability
    
    component from the actual amount received is recognised as “other equity instruments”. Transaction costs that
    
    relate to the issue of a compound financial instrument are allocated to the liability and equity components in
    
    proportion to the allocation of gross proceeds.(2) Accounting treatment of perpetual bonds and preference shares
    
    For financial instruments classified as financial liabilities (such as perpetual bonds and preference shares), except
    
    borrowing costs qualifying for capitalisation (please refer to this Note V. 21 “Borrowing costs”), its related interest,
    
    dividends, gains or losses, and gains or losses arising from redemption or refinancing are credited to profit or loss
    
    for the current period.
    
    For financial instruments classified as equity instruments (such as perpetual bonds and preference shares), its
    
    issue (including refinancing), repurchase, sale or cancellation are treated by the Company as changes in equity,
    
    with related transaction costs deducted from equity. The Company’s distribution to holders of equity instruments
    
    are treated as a distribution of profits.
    
    Changes in the fair value of equity instruments are not recognised by the Company.
    
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    31. Revenue
    
    Accounting policies adopted for revenue recognition and measurement
    
    Revenue is recognised when the customer obtains control of the relevant goods, subject to the fulfilment of the following
    
    conditions under the contract entered into between the Company and customers: the parties has approved the contract
    
    and undertaken to fulfil their respective obligations; the contract clearly states the parties to the contract and their rights
    
    and obligations relating to the transferred goods and rendered services; the contract clearly stated the payment terms
    
    relating to the transferred goods; the contract has commercial substance that the fulfilment of the contract will result in
    
    changes in the risk, time frame or amount of the future cash flow risk of the Company; the collection of the consideration
    
    that the Company is entitled to for transferring the goods is probable.
    
    On the effective date of the contract, the Company identifies each performance obligation under such contracts and
    
    allocate the transaction price to each performance obligation based on the percentage of respective unit price of a
    
    good guaranteed by each performance obligation. The determination of the transaction price has taken into account the
    
    impact of factors such as variable consideration, the significant financing component existed in the contract, non-cash
    
    consideration, and consideration payable to the customers.
    
    For each of the performance obligations under the contract, if one of the following conditions is fulfilled, the Company
    
    shall recognise the transaction price which was allocated to each of the performance obligations as revenue based on
    
    the progress of performance within a certain period: when the customer simultaneously receives and consumes the
    
    benefits provided by the Company when the Company performs its obligations under the contract; when the customer
    
    is able to control the good in progress in the course of performance by the Company under the contract; when the
    
    product produced by the Company under the contract is irreplaceable and the Company has the right to payment for
    
    performance completed to date during the whole contract term. The progress of performance is determined based
    
    on the nature of the transferred goods with the adoption of input method or output method. When the progress of
    
    performance cannot be reasonably determined, if the costs incurred by the Company are expected to be recoverable,
    
    the revenue will be recognised to the extent of the costs incurred until the progress of performance can be reasonably
    
    determined.
    
    If one of the above conditions is not fulfilled, the Company shall recognise the transaction price which was allocated
    
    to each of the performance obligations as revenue when the customer is able to control the relevant goods. When
    
    determining whether the customer has obtained control of the goods, the Company will consider the following
    
    indications: the enterprise has the current right to receive payment for the goods, which is when the customers has the
    
    current payment obligations for the goods; the enterprise has transferred the legal title of the goods to the customer,
    
    which is when the client possesses the legal title of the goods; the enterprise has transferred the physical possession
    
    of goods to the customer, which is when the customer obtain physical possession of the goods; the enterprise has
    
    transferred all of the substantial risks and rewards of ownership of the goods to the customer, which is when the client
    
    obtain all of the substantial risks and rewards of ownership of the goods to the customer; when the customer has
    
    accepted the goods, which is when other information indicates that the customer has obtained control of the goods.
    
    The point of time of recognition of revenue for sales of goods: the date when the goods are delivered to the customers
    
    with signature confirmation for the domestic sales business, and the date when the goods are loaded onto a vessel and
    
    declared at customs for the overseas sales business.
    
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    V. Significant Accounting Policies and Accounting Estimates (Cont’d)
    
    32. Government grants
    
    Government grants are transfer of monetary assets or non-monetary assets from the government to the Company at no
    
    consideration, excluding capital considerations from the government as an investor entitling to corresponding owners’
    
    equity. Government grants are classified into government grants related to assets and government grants related to
    
    income. Government grants obtained for acquisition or construction of long-term assets or other forms of long-term
    
    asset formation are classified as related to assets. Other government grants are classified as related to revenue. If
    
    related government documents do not specify the objective of the grants, the grants are classified as related to assets
    
    or income as follows: (1) In case a project for which the grants are granted is specified in such documents, the grants
    
    are classified as related to assets and income based on the budgeted ratio of the expenditure on asset formation
    
    and the expenditure recorded as expenses, where such ratio should be reviewed and, if necessary, changed on each
    
    balance sheet date; and (2) in case of general description without specifying any project in such documents, the grants
    
    are classified as related to income. If a government grant is in the form of a transfer of monetary asset, the item shall be
    
    measured at the amount received or receivable. If a government grant is in the form of a transfer of non-monetary asset,
    
    the item shall be measured at fair value. If fair value is not reliably determinable, the item shall be measured at a nominal
    
    amount and recognised immediately in profit or loss for the current period.
    
    Government grants are generally recognised when received and measured at the amount actually received, but are
    
    measured at the amount likely to be received when there is conclusive evidence at the end of the accounting period that
    
    the Company will meet related requirements of such grants and will be able to receive the grants. The government grants
    
    so measured should also satisfy the following conditions: (1) the amount of the grants be confirmed with competent
    
    authorities in written form or reasonably deduced from related requirements under financial fund management measures
    
    officially released without material uncertainties; (2) the grants be given based on financial support projects and fund
    
    management policies officially published and voluntarily disclosed by local financial authorities in accordance with
    
    the requirements under disclosure of government information, where such policies should be open to any company
    
    satisfying conditions required and not specifically for certain companies; (3) the date of payment be specified in related
    
    documents and the payment thereof be covered by corresponding budget to ensure such grants will be paid on time as
    
    specified; and (4) other relevant conditions (if any) which should be satisfied according to the specific conditions of the
    
    Company and the matters relating to such grants.
    
    A government grant related to an asset shall be recognised as deferred income, and evenly amortised to profit or loss
    
    for the current period over the useful life of the asset in a reasonable and systematic manner. For a government grant
    
    related to income, if the grant is a compensation for related costs, expenses or losses to be incurred in subsequent
    
    periods, the grant shall be recognised as deferred income, and recognised in profit or loss over the periods in which the
    
    related costs or losses are recognised, or off set against the relevant costs or expenses; if the grant is a compensation
    
    for related costs, expenses or losses already incurred, the grant shall be recognised immediately in profit or loss for the
    
    current period.
    
    If a government grant contains both assets related and income related component at the same time, the accounting
    
    treatment will depend on the different parts of the government grant; if it is difficult to distinguish, the entire government
    
    grant is classified as a government grant related to income.
    
    A government grant related to daily activities of the Company is recognised in other gains or off set relevant costs
    
    or expenses relying on the essence of economic business; otherwise, recognised in non-operating income or non-
    
    operating expenses.
    
    For the repayment of a government grant already recognised, if there is any related deferred income, the repayment
    
    shall be off set against the carrying amount of the deferred income, and any excess shall be recognised in profit or loss
    
    for the current period; otherwise, the repayment shall be recognised immediately in profit or loss for the current period.
    
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    33. Deferred income tax assets/deferred income tax liabilities
    
    (1) Current income tax
    
    At the balance sheet date, current income tax liabilities (or assets) for the current and prior periods shall be
    
    measured at the amount expected to be paid (or recovered) according to the requirements of tax laws. Taxable
    
    profits, which are the basis for calculating the current income tax expense, are determined after adjusting the
    
    accounting profits before tax for the year in accordance with relevant requirements of tax laws.(2) Deferred income tax assets and deferred income tax liabilities
    
    Temporary differences arising from the difference between the carrying amount of an asset or liability and its tax
    
    base, and the difference between the tax base and the carrying amount of those items that are not recognised
    
    as assets or liabilities but have a tax base that can be determined according to tax laws, shall be recognised as
    
    deferred income tax assets and deferred income tax liabilities using the balance sheet liability method.
    
    Deferred income tax liabilities are not recognised for taxable temporary differences related to: the initial
    
    recognition of goodwill; and the initial recognition of an asset or liability in a transaction which is neither a business
    
    combination nor affects accounting profit or taxable profit (or deductible loss) at the time of the transaction.
    
    In addition, the Company recognises the corresponding deferred income tax liability for taxable temporary
    
    differences associated with investments in subsidiaries, associates and joint ventures, except when both of the
    
    following conditions are satisfied: the Company is able to control the timing of the reversal of the temporary
    
    difference; and it is probable that the temporary difference will not reverse in the foreseeable future.
    
    Deferred income tax assets are not recognised for deductible temporary differences related to the initial
    
    recognition of an asset or liability in a transaction which is neither a business combination nor affects accounting
    
    profit or taxable profit (or deductible loss) at the time of the transaction. In addition, the Company recognises
    
    the corresponding deferred income tax asset for deductible temporary differences associated with investments
    
    in subsidiaries, associates and joint ventures to the extent that it is probable that taxable profits will be available
    
    against which the deductible temporary differences can be utilised, except when both of the following conditions
    
    are satisfied: it is not probable that the temporary difference will reverse in the foreseeable future; and it is not
    
    probable that taxable profits will be available in the future, against which the temporary difference can be utilised.
    
    Chenming Paper recognises a deferred income tax asset for the carry forward of deductible losses and tax credits
    
    to subsequent periods, to the extent that it is probable that future taxable profits will be available against which
    
    the deductible losses and tax credits can be utilised.
    
    At the balance sheet date, deferred income tax assets and deferred income tax liabilities are measured at the tax
    
    rates that are expected to apply to the period when the asset is realised or the liability is settled, according to the
    
    requirements of tax laws.
    
    At the balance sheet date, Chenming Paper shall review the carrying amount of a deferred income tax asset. If it
    
    is probable that sufficient taxable profits will not be available in future periods to allow the benefit of the deferred
    
    income tax asset to be utilised, the carrying amount of the deferred income tax asset shall be reduced. Any such
    
    reduction in amount shall be reversed when it becomes probable that sufficient taxable profits will be available.
    
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    33. Deferred income tax assets/deferred income tax liabilities (Cont’d)
    
    (3) Income tax expenses
    
    Income tax expense comprises current income tax expense and deferred income tax expense.
    
    Current income tax expense (current income tax income) and deferred income tax expense (deferred income tax
    
    income) are included in profit or loss for the current period, except for: recognised as other comprehensive income
    
    or current income tax and deferred income tax related to transactions or events that are directly recognised in
    
    other comprehensive income or owners’ equity, which are recognised directly in owners’ equity, and deferred
    
    income tax arising from a business combination, which is adjusted against the carrying amount of goodwill.(4) Offset of income tax
    
    After granted the legal rights of net settlement and with the intention to use net settlement or obtain assets, repay
    
    debt, the Company, at the same time, records the net amount after offsetting its current income tax assets and
    
    current income tax liabilities.
    
    The Company was granted the legal rights of net settlement of current income tax assets and current income
    
    tax liabilities. Deferred income tax assets and deferred income tax liabilities are related to income tax to be paid
    
    by the same entity liable to pay tax to the same tax collection and management authority or related to different
    
    entities liable to pay tax, but the relevant entity liable to pay tax is intended to apply net settlement of current
    
    income tax assets and liabilities or, at the same time, obtain assets, repay debt whenever every deferred income
    
    tax assets and liabilities with importance would be reversed in the future, the Company records the net amount
    
    after offsetting its current income tax assets and current income tax liabilities.
    
    34. Lease
    
    (1) Accounting treatment with the Company recorded as lessor
    
    ① Operating lease business with the Company recorded as lessor
    
    Rental income is recognised in profit or loss for the current period using the straight-line method over the
    
    lease term. The initial direct cost where the amount is larger is capitalised when incurred, and accounted for
    
    as profit or loss for the current period on the same basis as recognition of rental income over the entire lease
    
    period; the initial direct cost where the amount is fewer is included in the profit or loss for the period when
    
    incurred. Contingent rental is accounted for as profit or loss for the period in which it is incurred.② Financing lease business with the Company recorded as lessor
    
    On the beginning date of the lease, the entry value of lease receivable shall be the aggregate of minimum
    
    lease receivable and initial direct costs at the beginning date of the lease. The unsecured balance shall be
    
    recorded. The aggregate of minimum lease receivable, initial direct costs and unsecured balance and the
    
    different between their present values shall be recognised as unrealised financing income. The balance of
    
    lease receivable after deducting unrecognised financing income shall be accounted for long-term debt and
    
    long-term debt due within one year.
    
    Unrecognised financing income shall be recognised as financing income for the current period using
    
    effective interest method during the leasing period. Contingent rent shall be included in profit or loss for the
    
    current period at the time it incurred.
    
    104 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    V. Significant Accounting Policies and Accounting Estimates (Cont’d)
    
    34. Lease (Cont’d)
    
    (2) Accounting treatment with the Company recorded as lessee
    
    On the beginning date of the lease, the Company recognises right-of-use assets and lease liabilities for leases,
    
    except for short-term lease and low-value asset lease with simplified treatment.
    
    The beginning date of the lease refers to the date since which the Company may use the lease assets provided
    
    by the lessor. The lease term refers to the period during which the Company has the right to use the lease assets
    
    which is irrevocable.
    
    Right-of-use assets refer to the rights of using the assets over the lease term. Right-of-use assets are initially
    
    measured at cost. For lease payment on or before the beginning date of the lease period, where there was lease
    
    incentive, such incentives shall be deducted, as well as the initial direct expenses incurred by the lessee, costs
    
    expected to be incurred by the lessee for demolition and removal of leased assets, restoration of the premises
    
    where the leased assets are located, or restoration of the leased assets to the conditions of the lease terms. Right-
    
    of-use assets are depreciated using the straight-line method over its useful life.
    
    Lease liabilities are initially measured at the present value of outstanding lease payment at the beginning date
    
    of lease period. The bank lending rate for the same period is used as discount rate when calculating the present
    
    value of the lease payment.
    
    Right-of-use assets and lease liabilities are presented separately on the balance sheet of the Company. Lease
    
    liabilities are usually presented separately as non-current liabilities and non-current liabilities due within one year.
    
    In the income statement, the interest expenses of lease liabilities and depreciation expenses of right-of-use assets
    
    are separately presented. Interest expense of lease liabilities is presented under finance expenses.
    
    35. OthersVI. Taxation
    
    1. Main tax types and tax rates
    
    Tax type Tax base Tax rate
    
    Value added tax (VAT) 16% and 13% for general, 10% and 9% for sales of water 16%, 13%, 10%, 9%, 6%
    
    and gas and 6% for the service industry. VAT is computed
    
    on the difference after deduction of input value-added tax.
    
    Urban maintenance and 7%, 5% and 1% of actual payment of turnover tax. 7%, 5%, 3%, 1%
    
    construction tax
    
    Enterprise income tax (EIT) 25% of taxable income; for the companies which are 25%, 15%, 10%
    
    subject to preferential policies, please refer to the table
    
    below; the overseas companies shall pay taxes at the tax
    
    rate pursuant to the requirements of the countries or regions
    
    where the companies are located.
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 105
    
    VI. Taxation (Cont’d)
    
    2. Tax incentives
    
    (1) Enterprise income tax
    
    On 16 August 2018, the Company received a high and new technology enterprise certificate with a certification
    
    number of GR201837000311. Pursuant to the requirements under the Law of the People’s Republic of China on
    
    Enterprise Income Tax and the relevant policies, the Company is subject to a corporate income tax rate of 15% of
    
    taxable income, and is entitled to the preferential treatment from 2018 to 2020.
    
    Haicheng Haiming Mining Company Limited, a subsidiary of the Company, received a high and new technology
    
    enterprise certificate with a certification number of GR201821000291 on 12 October 2018. Pursuant to the
    
    requirements under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies,
    
    Haicheng Haiming is subject to an enterprise income tax rate of 15% of taxable income, and is entitled to the
    
    preferential treatment from 2018 to 2020.
    
    Shouguang Meilun Paper Co., Ltd., a subsidiary of the Company, received a high and new technology enterprise
    
    certificate with a certification number of GR201837000455 on 16 August 2018. Pursuant to the requirements
    
    under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies, Shouguang
    
    Meilun is subject to an enterprise income tax rate of 15% of taxable income, and is entitled to the preferential
    
    treatment from 2018 to 2020.
    
    For Jilin Chenming Paper Co., Ltd., a subsidiary of the Company, its high and new technology enterprise
    
    certificate with a certification number of GR201622000039 obtained on 1 November 2016 has expired, and is
    
    making a renewal application.
    
    For Jiangxi Chenming Paper Co., Ltd., a subsidiary of the Company, its high and new technology enterprise
    
    certificate with a certification number of GR201636000018 obtained on 15 November 2016 has expired, and is
    
    making a renewal application.
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd., a subsidiary of the Company, received a high and new technology
    
    enterprise certificate with a certification number of GR201844005747 on 28 November 2018. Pursuant to the
    
    requirements under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies,
    
    it is subject to a corporate income tax rate of 15% of taxable income, and is entitled to the preferential treatment
    
    from 2018 to 2020.
    
    Pursuant to the requirements of Rule 27(1) of Law of the People’s Republic of China on Enterprise Income Tax
    
    and Rule 86(1) of regulations for the Implementation of Law of the People’s Republic of China on Enterprise
    
    Income Tax, Zhanjiang Chenming Arboriculture Development Co., Ltd. and Yangjiang Chenming Arboriculture
    
    Development Co., Ltd., which are the subsidiaries of the Company, have completed the filings for EIT reduction
    
    for exemption from EIT.
    
    106 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    VI. Taxation (Cont’d)
    
    2. Tax incentives (Cont’d)
    
    (2) Value-added Tax (“VAT”)
    
    Pursuant to Rule 10 of the Interim Regulation of the People’s Republic of China on Value Added Tax, Zhanjiang
    
    Chenming Arboriculture Development Co., Ltd. and Yangjiang Chenming Arboriculture Development Co., Ltd.,
    
    which are the subsidiaries of the Company, are exempt from VAT, and have completed the filings for VAT
    
    reduction for exemption from VAT.
    
    Pursuant to the Value-added Tax Preferential Catalogue on Products and Services Applying Integrated Use of
    
    Resources (Cai Shui [2015] No. 78), taxpayers who sell self-produced products and services applying integrated
    
    use of resources may enjoy the immediate VAT refund policy. Zhanjiang Chenming New-style Wall Materials Co.,
    
    Ltd., a subsidiary of the Company, produced products applying raw materials containing more than 30% of fly
    
    ash. It belongs to a company that uses pollutants for production, and is therefore subject to the immediate VAT
    
    refund policy in 2019.
    
    Pursuant to the Value-added Tax Preferential Catalogue on Products and Services Applying Integrated Use of
    
    Resources (Cai Shui [2015] No. 78), taxpayers who sell self-produced products and services applying integrated
    
    use of resources may enjoy the immediate VAT refund policy. Shandong Chenming Panels Co., Ltd., a subsidiary
    
    of the Company, produced products applying integrated use of resources, and is therefore subject to the
    
    immediate VAT refund policy in 2019.
    
    Pursuant to the Value-added Tax Preferential Catalogue on Products and Services Applying Integrated Use of
    
    Resources (Cai Shui [2015] No. 78), taxpayers who sell self-produced products and services applying integrated
    
    use of resources may enjoy the immediate VAT refund policy. Shouguang Chenming Cement Co., Limited, a
    
    subsidiary of the Company, produced products applying integrated use of resources, and is therefore subject to
    
    the immediate VAT refund policy in 2019.
    
    3. Others
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 107
    
    VII. Notes to items of the consolidated financial statements
    
    1. Monetary funds
    
    Unit: RMB
    
    Item Closing balance Opening balance
    
    Treasury cash 2,316,388.38 2,078,321.66
    
    Bank deposit 2,006,746,843.00 2,379,479,920.86
    
    Other monetary funds 18,718,827,955.87 16,911,216,505.27
    
    Total 20,727,891,187.25 19,292,774,747.79
    
    Of which: Total deposits in overseas banks 386,703,983.47 614,601,451.77
    
    Other explanation
    
    Notes: ① Other monetary funds of RMB14,388,551,572.15 (31 December 2018: RMB9,329,325,370.71) were the guarantee deposit for the
    
    application for bank acceptance with the banks by the Group;② Other monetary funds of RMB2,001,461,802.43 (31 December 2018: RMB3,703,195,695.22) were the guarantee deposit for the
    
    application for letter of credit with the banks by the Group;③ Other monetary funds of RMB1,690,568,603.51 (31 December 2018: RMB2,358,115,439.34) were the guarantee deposit for the
    
    application for guarantees with the banks by the Group;④ Other monetary funds of RMB254,045,977.78 (31 December 2018: RMB987,520,000.00) were the guarantee deposit for the
    
    application for loans with the banks by the Group;⑤ Other monetary funds of RMB384,200,000.00 (31 December 2018: RMB533,060,000.00) were the Group’s statutory reserve deposit
    
    at the banks.
    
    108 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    2. Bills receivable
    
    (1) Classification of bills receivable
    
    Unit: RMB
    
    Item Closing balance Opening balance
    
    Bank acceptance bills 750,842,498.89 1,213,116,491.46
    
    Total 750,842,498.89 1,213,116,491.46
    
    Unit: RMB
    
    Closing balance Opening balance
    
    Book balance Bad debts provision Book balance Bad debts provision
    
    Provision Provision
    
    Category Amount Percentage Amount percentage Carrying amount Amount Percentage Amount percentage Carrying amount
    
    Bills receivable assessed
    
    individually for
    
    impairment – – – – – 15,000,000.00 1.23% 1,500,000.00 10.00% 13,500,000.00
    
    Of which:
    
    Bank acceptance bills 15,000,000.00 1.23% 1,500,000.00 10.00% 13,500,000.00
    
    Bills receivable
    
    assessed collectively
    
    for impairment 750,842,498.89 100.00% 750,842,498.89 1,199,616,491.46 98.77% 1,199,616,491.46
    
    Of which:
    
    Bank acceptance bills 750,842,498.89 100.00% 750,842,498.89 1,199,616,491.46 98.77% 1,199,616,491.46
    
    Commercial
    
    acceptance bills
    
    Total 750,842,498.89 100.00% 750,842,498.89 1,214,616,491.46 100.00% 1,500,000.00 0.12% 1,213,116,491.46
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 109
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    2. Bills receivable (Cont’d)
    
    (2) Provision, recovery or reversal of bad debt provision for the period
    
    Significant recovery or reversal of bad debt provision for the period:
    
    √ Applicable □ Not applicable
    
    Unit: RMB
    
    Changes in the period
    
    Opening Recovery Closing
    
    Category balance Provision or reversal Written off balance
    
    Accounts receivable with
    
    provision for bad debt 1,500,000.00 1,500,000.00 –
    
    Total 1,500,000.00 1,500,000.00 –
    
    Note: Bills amounting to RMB15,000,000.00 represent payment received from Changjiang (Hubei) Publishing & Print Materials Co., Ltd. in
    
    advance, and the bad debt provision for which is made individually under bills receivable at the beginning of the period, which has
    
    been transferred to bad debt provision individually made under accounts receivable for the current period.
    
    (3) Bills receivable of the Company pledged at the end of the period
    
    Unit: RMBPledged amountItem at the end of the periodBank acceptance bills 624,106,580.39Total 624,106,580.39(4) Outstanding bills receivable endorsed or discounted by the Company as at the end of the period
    
    Unit: RMB
    
    Derecognised Recognised
    
    amount as at the amount as at the
    
    Item end of the period end of the period
    
    Bank acceptance bills 6,072,923,132.61
    
    Total 6,072,923,132.61
    
    110 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    2. Bills receivable (Cont’d)
    
    (5) Bills transferred to accounts receivable due to non-performance of the issuers at the end of the period
    
    Unit: RMB
    
    Amounts transferred
    
    to accounts receivable
    
    Item at the end of the period
    
    Bills receivable 37,600,000.00
    
    Total 37,600,000.00
    
    3. Accounts receivable
    
    (1) Disclosure of accounts receivable by category
    
    Unit: RMB
    
    Closing balance Opening balance
    
    Book balance Bad debts provision Carrying amount Book balance Bad debts provision Carrying amount
    
    Provision Provision
    
    Category Amount Percentage Amount percentage Amount Percentage Amount percentage
    
    Accounts receivable assessed individually
    
    for impairment 67,960,343.90 1.73% 55,040,343.90 80.99% 12,920,000.00 71,960,343.90 1.90% 55,240,343.90 76.76% 16,720,000.00
    
    Of which:
    
    Accounts receivable assessed collectively
    
    for impairment 3,854,279,812.78 98.27% 361,394,095.99 9.38% 3,492,885,716.79 3,711,403,752.23 98.10% 323,636,747.64 8.72% 3,387,767,004.59
    
    Of which:
    
    Accounts receivable from related parties 7,005,299.94 0.18% 1,716,884.04 24.51% 5,288,415.90 5,838,812.92 0.15% 947,246.64 16.22% 4,891,566.28
    
    Accounts receivable from distributor clients 3,637,109,235.06 92.73% 359,046,716.12 9.87% 3,278,062,518.94 3,043,388,184.37 80.44% 320,207,886.86 10.52% 2,723,180,297.51
    
    Factoring receivables 210,165,277.78 5.36% 630,495.83 0.30% 209,534,781.95 662,176,754.94 17.50% 2,481,614.14 0.37% 659,695,140.80
    
    Total 3,922,240,156.68 100.00% 416,434,439.89 10.62% 3,505,805,716.79 3,783,364,096.13 100.00% 378,877,091.54 10.01% 3,404,487,004.59
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 111
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    3. Accounts receivable (Cont’d)
    
    (1) Disclosure of accounts receivable by category (Cont’d)
    
    Items assessed individually for impairment:
    
    Unit: RMB
    
    Closing balanceBad debts ProvisionName Book balance provision percentage Reasons for provisionFOSHAN SHUNDE XINGCHEN PAPER CO., LTD. 26,236,528.70 26,236,528.70 100.00% Unlikely to be recoveredBEIJING HUAXIA CULTURE MEDIA CO., LTD. 8,207,950.42 8,207,950.42 100.00% Unlikely to be recoveredJIANGXI LONGMING ENTERPRISE CO., LTD. 1,763,987.74 1,763,987.74 100.00% Unlikely to be recoveredNANCHANG XINGBO PAPER CO., LTD. 1,656,205.97 1,656,205.97 100.00% Unlikely to be recoveredJIANGSU YIHONG PAPER CO., LTD. 3,490,464.47 3,490,464.47 100.00% Unlikely to be recoveredQINGDAO TENGFARUN PACKAGING CO., LTD. 3,239,582.93 3,239,582.93 100.00% Unlikely to be recoveredSIHONG GUANGFA COLOR PRINTING
    
    AND PACKAGING CO., LTD. 934,371.82 934,371.82 100.00% Unlikely to be recovered
    
    PINGYI HUIFENG PAPER CO., LTD. 636,988.62 636,988.62 100.00% Unlikely to be recovered
    
    QINGTAO BAOYUE PAPER CO., LTD. 553,898.05 553,898.05 100.00% Unlikely to be recovered
    
    BAYAN NUR TAILI PACKAGING CO., LTD. 503,562.66 503,562.66 100.00% Unlikely to be recovered
    
    WENXIAN HUARONG PACKAGING MATERIAL CO., LTD. 426,858.60 426,858.60 100.00% Unlikely to be recovered
    
    JILIN SAIWEI TRADING CO., LTD. 6,709,943.92 6,709,943.92 100.00% Unlikely to be recovered
    
    Bills matured but
    
    WUHAN TIANRUI PAPER CO., LTD. 13,600,000.00 680,000.00 5.00% not collected
    
    Total 67,960,343.90 55,040,343.90 – –
    
    Items assessed collectively for impairment:
    
    Accounts receivable with collective provision for bad debts based on receivables from related parties:
    
    Unit: RMB
    
    Closing balance
    
    Provision
    
    Name Book balance Bad debts provision percentage (%)
    
    Within 1 year 4,372,394.16 218,619.71 5%
    
    1-2 years 513,899.40 51,389.94 10%
    
    2-3 years 840,164.98 168,032.99 20%
    
    Over 3 years 1,278,841.40 1,278,841.40 100%
    
    Total 7,005,299.94 1,716,884.04 –
    
    112 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    3. Accounts receivable (Cont’d)
    
    (1) Disclosure of accounts receivable by category (Cont’d)
    
    Accounts receivable with collective provision for bad debts based on receivables from distributor clients:
    
    Unit: RMB
    
    Closing balance
    
    Provision
    
    Name Book balance Bad debts provision percentage (%)
    
    Within 1 year 3,288,959,975.08 145,760,318.07 4.43%
    
    1-2 years 103,718,997.15 10,371,899.72 10.00%
    
    2-3 years 51,894,705.62 10,378,941.12 20.00%
    
    Over 3 years 192,535,557.21 192,535,557.21 100.00%
    
    Total 3,637,109,235.06 359,046,716.12 –
    
    If the provision for bad debts of accounts receivable is made in accordance with the general model of expected
    
    credit losses, please disclose the information about provision for bad debts with reference to the way of disclosure
    
    of other receivables:
    
    □ Applicable √ Not applicable
    
    By ageing
    
    Unit: RMB
    
    Ageing Closing balance
    
    Within 1 year 3,369,808,213.41
    
    1-2 years 93,809,606.89
    
    2-3 years 42,187,896.49
    
    Total 3,505,805,716.79
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 113
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    3. Accounts receivable (Cont’d)
    
    (2) Provision, recovery or reversal of bad debt provision for the period
    
    Provision of bad debt provision for the period:
    
    Unit: RMB
    
    Changes in the period
    
    Category Opening balance Provision Recovery or reversal Written off Closing balance
    
    Accounts receivable with provision for bad debt 378,877,091.54 39,608,466.66 2,051,118.31 416,434,439.89
    
    Total 378,877,091.54 39,608,466.66 2,051,118.31 416,434,439.89(3) Top five accounts receivable based on closing balance of debtors
    
    Unit: RMB
    
    Percentage to
    
    closing balance of Closing balance of
    
    Name of entity Nature Closing amount Ageing other receivables bad debt provision
    
    BEIJING PAPER COMPANY FOR FOREIGN
    
    LANGUAGE PUBLICATIONS Loan 214,005,849.96 Within 1 year 5.46% 10,700,292.50
    
    YUNNAN PRINTING MATERIALS CO. LTD. Loan 86,300,124.14 Within 1 year 2.20% 4,315,006.21
    
    SHENZHEN CENTURY HOPE TRADE CO., LTD. Loan 69,951,518.53 Within 1 year 1.78% 3,497,575.93
    
    DONGGUAN HUAFA PAPER CO., LTD. Loan 66,534,917.30 Within 1 year 1.70% 3,326,745.87
    
    GUANGZHOU JINGUAN FANZHOU PAPER CO., LTD. Loan 61,025,415.53 Within 1 year 1.56% 3,051,270.78
    
    Total – 497,817,825.46 – 12.69% 24,890,891.29
    
    114 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    4. Prepayments
    
    (1) Presentation of prepayments stated according to ageing analysis
    
    Unit: RMB
    
    Closing balance Opening balance
    
    Ageing Amount Percentage Amount Percentage
    
    Within 1 year 486,689,905.11 94.91% 793,395,209.02 91.86%
    
    1-2 years 26,122,556.96 5.09% 70,343,811.72 8.14%
    
    Total 512,812,462.07 –- 863,739,020.74 –-(2) Top five prepayments according to closing balance of prepaid parties
    
    Percentage
    
    to closing
    
    balance of Reason for
    
    Name of entity Nature Closing amount Ageing prepayments being unsettled
    
    JIANGXI PROVINCE ZHONGLIAN ENERGY Loan 82,871,712.88 Within 1 year 16.16% Prepayments for goods according
    
    DEVELOPMENT CO., LTD. to the agreed contract
    
    SHOUGUANG CHENMING NATURAL GAS CO., LTD. Loan 51,950,255.71 Within 1 year 10.13% Prepayments for goods according
    
    to the agreed contract
    
    SHANDONG HEXIN CHEMICAL GROUP CO., LTD. Loan 36,005,510.81 Within 1 year 7.02% Prepayments for goods according
    
    to the agreed contract
    
    LINYI WANCHENG TRADE CO., LTD. Loan 17,653,234.05 Within 1 year 3.44% Prepayments for goods according
    
    to the agreed contract
    
    JINAN LONGYU PULP & PAPER CO., LTD. Loan 15,275,387.36 Within 1 year 2.98% Prepayments for goods according
    
    to the agreed contract
    
    Total 203,756,100.81 39.73%
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 115
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    5. Other receivables
    
    Unit: RMB
    
    Item Closing balance Opening balance
    
    Interest receivable 210,003,430.11 198,577,632.43
    
    Other receivables 1,400,454,923.44 1,934,512,350.96
    
    Total 1,610,458,353.55 2,133,089,983.39
    
    (1) Interest receivable
    
    1) Classification of interest receivable
    
    Unit: RMB
    
    Item Closing balance Opening balance
    
    Time deposit 0.00 1,002,811.95
    
    Bond investment 0.00 25,018,561.36
    
    Interest on deposit 210,003,430.11 172,556,259.12
    
    Total 210,003,430.11 198,577,632.43
    
    (2) Other receivables
    
    1) Other receivables by nature
    
    Unit: RMB
    
    Closing Opening
    
    Nature book balance book balance
    
    Open credit 1,406,823,003.01 1,960,044,821.28
    
    Reserve and borrowings 1,123,747.33 1,957,000.00
    
    Guarantee deposit 10,639,508.54 18,064,797.46
    
    Insurance premium 1,224,439.62 2,034,980.18
    
    Advances 4,629,242.14 4,099,146.51
    
    Others 162,375,159.64 162,793,258.20
    
    Total 1,586,815,100.28 2,148,994,003.63
    
    116 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    5. Other receivables (Cont’d)
    
    (2) Other receivables (Cont’d)
    
    2) Particulars of bad debt provision
    
    Unit: RMB
    
    Phase 1 Phase 2 Phase 3
    
    Expected Expected
    
    Expected credit credit loss over credit loss over
    
    loss for the next the entire life (not the entire life
    
    Bad debt provision 12 months credit-impaired) (credit-impaired) Total
    
    Balance as at 1 January 2019 180,706,607.98 33,775,044.69 214,481,652.67
    
    Balance as at 1 January 2019 during the period – – – –
    
    –Transferred into Phase 2 2,115,218,958.94 2,115,218,958.94
    
    –Transferred into Phase 3 33,775,044.69 33,775,044.69
    
    –Reversal to Phase 2
    
    –Reversal to Phase 1
    
    Provision for the year 27,839,538.39 27,839,538.39
    
    Reversal for the year 50,727,406.92 28,350,785.93 79,078,192.85
    
    Transfer for the year
    
    Writing-off for the year
    
    Other changes
    
    Balance as at 30 June 2019 180,935,918.08 5,424,258.76 186,360,176.84
    
    Changes in carrying book balances with significant changes in loss provision for the period
    
    □ Applicable √ Not applicable
    
    By ageing
    
    Unit: RMB
    
    Ageing Closing balance
    
    Within 1 year 1,059,136,065.35
    
    1-2 years 267,976,828.92
    
    2-3 years 67,201,314.48
    
    3-4 years 277,224.02
    
    4-5 years 2,800,490.00
    
    Over 5 years 3,063,000.67
    
    Total 1,400,454,923.44
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 117
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    5. Other receivables (Cont’d)
    
    (2) Other receivables (Cont’d)
    
    3) Provision, recovery or reversal of bad debt provision for the period
    
    Bad debt provision for the period:
    
    Unit: RMB
    
    Changes for the period
    
    Recovery
    
    Category Opening balance Provision or reversal Closing balance
    
    Bad debt provision for other receivables 237,598,831.30 27,839,538.39 79,078,192.85 186,360,176.84
    
    Total 237,598,831.30 27,839,538.39 79,078,192.85 186,360,176.844) Top five other receivables according to closing balance of debtors
    
    Unit: RMB
    
    Percentage
    
    to closing Closing
    
    balance balance of
    
    Closing of other bad debt
    
    Name of entity Nature balance Maturity receivables provision
    
    SHENZHEN QIANHAI RUILI ASSET MANAGEMENT CO., LTD. Consideration for equity transfer 805,040,747.00 Within 1 year 50.73% 40,252,037.35
    
    XIWANG GROUP FINANCE CO., LTD. Open credit 100,000,000.00 Within 1 year 6.30% 5,000,000.00
    
    WEIFANG SIME DARBY WEST PORT CO., LTD Open credit 62,631,878.08 1-2 years 3.95% 4,086,281.40
    
    HUANGGANG HIGH-TECH DEVELOPMENT ZONE
    
    MANAGEMENT COMMITTEE Land transfer 17,860,367.88 1-2 years 1.13% 1,786,036.79
    
    GUANGDONG ZHONGTUO CONSTRUCTION CO., LTD. Relocation payment 15,200,000.00 3-4 years 0.96% 15,200,000.00
    
    Total – 1,000,732,992.96 – 63.07% 66,324,355.54
    
    118 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    5. Other receivables (Cont’d)
    
    (2) Other receivables (Cont’d)
    
    5) Government grants related receivables
    
    Unit: RMBEstimated time
    
    and amount of
    
    Maturity receiving theClosing as at the end grants and theName of entity Name of project receiving government grants balance of the period basis thereofShandong Chenming Other enterprise reform and development grants 73,730,000.00 1 month Received at 5 JulyMeilun Paper Other enterprise reform and development grants 27,400,000.00 1 month Received at 5 JulyTotal 101,130,000.00
    
    6. Inventories
    
    Whether the New Standard for Revenue has been implemented
    
    √ Yes □ No
    
    (1) Categories of inventories
    
    Unit: RMB
    
    Closing balance Opening balance
    
    Impairment Impairment
    
    provision for provision for
    
    inventories or inventories or
    
    Item Book balance performance costs Carrying amount Book balance performance costs Carrying amount
    
    Raw materials 2,884,649,476.30 2,884,649,476.30 3,275,454,669.27 9,525,360.59 3,265,929,308.68
    
    Work-in-process products 121,882,974.07 121,882,974.07 102,153,808.77 102,153,808.77
    
    Goods in stock 1,246,019,599.62 1,246,019,599.62 1,690,248,067.43 34,943,475.27 1,655,304,592.16
    
    Consumable biological assets 1,532,910,693.20 1,532,910,693.20 1,511,542,610.36 1,511,542,610.36
    
    Developing products 314,897,324.86 314,897,324.86 309,823,656.64 73,265,542.87 236,558,113.77
    
    Total 6,100,360,068.05 6,100,360,068.05 6,889,222,812.47 117,734,378.73 6,771,488,433.74
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 119
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    6. Inventories (Cont’d)
    
    (2) Impairment provision for inventories or performance costs
    
    Unit: RMB
    
    Increase for the period Decrease for the period
    
    Reversal
    
    Item Opening balance Provision Others or transfer Others Closing balance
    
    Raw materials 9,525,360.59 9,525,360.59 –
    
    Goods in stock 34,943,475.27 34,943,475.27 –
    
    Developing products 73,265,542.87 73,265,542.87 –
    
    Total 117,734,378.73 117,734,378.73 –
    
    Notes: ① Since March 2019, the prices of various types of machine-made paper have been increasing. In June, we conducted an
    
    impairment test on finished products, and the net realisable value was higher than the cost, and there was no sign of
    
    impairment.② On 25 March, the Company received the “Letter on Terminating the Construction of the BT Project for the Coastal and
    
    Beach Comprehensive Treatment Project of Haidong New District of Zhanjiang City” (Zhan Dai Jian Han [2019] No. 66)
    
    issued by the Zhanjiang City Construction Project Management Bureau. The letter required that all the pre-investment
    
    projects and project costs that have been invested at the early stage should be included in the development cost of the first
    
    zone, which obtained sea area use right certificate. Since the events that caused provision impairment of the developing
    
    products at the early stage disappeared, the impairment provision for inventories was reversed.
    
    7. Assets held-for-sale
    
    Unit: RMB
    
    Closing Impairment Closing Estimated Estimated
    
    Item book balance provision carrying amount Fair value disposal fee disposal time
    
    Kraft paper production line of Fuyu Chenming 224,652,780.55 173,934,865.31 50,717,915.24 50,300,000.00 – 2020-018. Non-current assets due within one year
    
    Unit: RMB
    
    Item Closing balance Opening balance
    
    Long-term receivables due within one year 5,565,858,326.78 4,007,503,281.86
    
    Total 5,565,858,326.78 4,007,503,281.86
    
    120 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    9. Other current assets
    
    Whether the New Standard for Revenue has been implemented
    
    √ Yes □ No
    
    Unit: RMB
    
    Item Closing balance Opening balance
    
    VAT recoverable 1,391,709,444.36 1,365,819,497.97
    
    Prepaid tax 46,204,550.66 13,217,451.88
    
    Receivables under financial lease due within one year 8,345,877,080.02 8,234,007,148.70
    
    Prepaid expenses 165,347,939.51 662,919,414.09
    
    Others 2,905,130.30 5,349,312.49
    
    Total 9,952,044,144.85 10,281,312,825.1310. Long-term receivables
    
    (1) Particulars of long-term receivables
    
    Unit: RMB
    
    Closing balance Opening balance
    
    Bad debt Bad debt Discount
    
    Item Book balance provision Carrying amount Book balance provision Carrying amount rate range
    
    Finance lease payments 12,362,308,287.51 179,024,982.90 12,183,283,304.61 13,581,636,630.17 145,746,721.12 13,435,889,909.05 4-10
    
    Less: Unrealised
    
    financing income 1,183,579,855.68 1,183,579,855.68 1,501,775,856.33 1,501,775,856.33
    
    Less: Non-current assets
    
    due within one year 5,887,079,513.38 166,827,642.60 5,720,251,870.78 4,028,313,053.68 20,809,771.82 4,007,503,281.86
    
    Total 5,291,648,918.45 12,197,340.30 5,279,451,578.15 8,051,547,720.16 124,936,949.30 7,926,610,770.86
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 121
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    10. Long-term receivables (Cont’d)
    
    (1) Particulars of long-term receivables (Cont’d)
    
    Particulars of bad debt impairment provision
    
    Unit: RMB
    
    Phase 1 Phase 2 Phase 3
    
    Expected credit Expected credit
    
    Expected credit loss over the loss over the
    
    loss for the next entire life (not entire life
    
    Bad debt provision 12 months credit-impaired) (credit-impaired) Total
    
    Balance as at 1 January 2019 145,746,721.12 145,746,721.12
    
    Balance as at 1 January 2019 during the period
    
    –Transferred into Phase 2
    
    –Transferred into Phase 3
    
    –Reversal to Phase 2
    
    –Reversal to Phase 1
    
    Provision for the year 33,278,261.78 33,278,261.78
    
    Reversal for the year
    
    Transfer for the year
    
    Writing-off for the year
    
    Other changes
    
    Balance as at 30 June 2019 179,024,982.90 179,024,982.90
    
    Changes in carrying book balances with significant changes in loss provision for the year
    
    □ Applicable √ Not Applicable
    
    Other explanation
    
    122 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    11. Long-term equity investments
    
    Unit: RMB
    
    Change for the period
    
    Investment
    
    gain or loss Adjustment Distribution Closing
    
    recognised of other Other change of cash balance
    
    Additional Withdrawn under comprehensive in equity dividend or Impairment of impairment
    
    Investee Opening balance contribution contribution equity method income interest profit declared provision Others Closing balance provision
    
    I. Joint ventures
    
    Shouguang Chenming Huisen
    
    New-style Construction Materials
    
    Co., Ltd. 3,572,834.79 975,461.08 500,000.00 4,048,295.87
    
    Weifang Sime Darby West Port
    
    Co., Ltd 103,159,857.71 -7,969,846.98 95,190,010.73
    
    Weifang Xingxing United Chemical
    
    Co., Ltd. 109,253,237.12 4,099,600.98 113,352,838.10
    
    Sub-total 215,985,929.62 -2,894,784.92 500,000.00 212,591,144.70
    
    II. Associates
    
    Jiangxi Jiangbao Media Colour
    
    Printing Co. Ltd. 811,998.75 -480,747.58 331,251.17
    
    Zhuhai Dechen New Third Board
    
    Equity Investment Fund Company
    
    (Limited Partnership) 52,253,817.72 108,497.32 52,362,315.04
    
    Ningbo Kaichen Huamei Equity
    
    Investment Fund Partnership
    
    (Limited Partnership) 199,585,216.94 799,460.06 200,384,677.00
    
    Xuchang Chenming Paper Co., Ltd. 5,994,545.96 -5,994,545.96 –
    
    Jiangxi Chenming Port Co., Ltd. 2,156,252.31 -766,917.52 1,389,334.79
    
    Chenming (Qingdao)
    
    Asset Management Co., Ltd. 7,886,521.47 -238,134.37 7,648,387.10
    
    Sub-total 268,688,353.15 -6,572,388.05 262,115,965.10
    
    Total 484,674,282.77 -9,467,172.97 500,000.00 474,707,109.80
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 123
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    12. Other non-current financial assets
    
    Unit: RMB
    
    Item Closing balance Opening balance
    
    Equity instrument investment 765,160,000.00 103,000,000.00
    
    Total 765,160,000.00 103,000,000.0013. Investment properties
    
    (1) Investment properties under the cost method
    
    Housing and Construction
    
    Item building structure Land use rights in progress Total
    
    I. Original carrying amount
    
    1. Opening balance 5,021,057,510.73 5,021,057,510.73
    
    2. Increase for the year
    
    3. Decrease for the year 3,090,227.36 3,090,227.36
    
    (1) Disposal 3,090,227.36 3,090,227.36
    
    4. Closing balance 5,017,967,283.37 5,017,967,283.37II. Accumulated depreciation and
    
    accumulated amortisation
    
    1. Opening balance 176,064,471.11 176,064,471.11
    
    2. Increase for the year 111,282,341.19 111,282,341.19
    
    (1) Provision or amortisation 111,282,341.19 111,282,341.19
    
    3. Decrease for the year 840,962.07 840,962.07
    
    (1) Disposal 840,962.07 840,962.07
    
    4. Closing balance 286,505,850.23 286,505,850.23IV. Carrying amount
    
    1. Closing carrying amount 4,731,461,433.14 4,731,461,433.14
    
    2. Opening carrying amount 4,844,993,039.62 4,844,993,039.62
    
    14. Fixed assets
    
    Unit: RMB
    
    Item Closing balance Opening balance
    
    Fixed assets 30,774,255,749.34 27,913,986,152.68
    
    Total 30,774,255,749.34 27,913,986,152.68
    
    124 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    14. Fixed assets (Cont’d)
    
    (1) Particulars of fixed assets
    
    Unit: RMB
    
    Electronic
    
    Housing and Machinery and equipment
    
    Item building structure equipment Vehicles and others Total
    
    I. Original carrying amount:
    
    1. Opening balance 9,669,605,532.54 32,091,581,325.72 345,066,029.50 440,199,456.27 42,546,452,344.03
    
    2. Increase for the period 199,399,266.20 3,563,165,711.79 16,240,303.34 5,711,396.43 3,784,516,677.76
    
    (1) Acquisition 50,976,885.65 32,624,783.10 3,528,582.53 5,425,353.38 92,555,604.66
    
    (2) Transferred from construction in progress 148,422,380.55 3,530,540,928.69 12,711,720.81 286,043.05 3,691,961,073.10
    
    (3) Increase in business combinations
    
    3. Decrease for the period 171,362,577.70 264,357,625.00 3,043,833.97 6,543,249.48 445,307,286.15
    
    (1) Disposal or retirement 47,658,732.97 19,104,009.29 1,583,087.61 2,266,916.65 70,612,746.52
    
    (2) Transferal 19,261.54 19,261.54
    
    (3) Transferred to assets held-for-sale 123,684,583.19 245,253,615.71 1,460,746.36 4,276,332.83 374,675,278.09
    
    4. Closing balance 9,697,642,221.04 35,390,389,412.51 358,262,498.87 439,367,603.22 45,885,661,735.64II. Accumulated depreciation
    
    1. Opening balance 1,678,906,121.65 12,326,017,656.16 173,353,238.78 257,772,524.59 14,436,049,541.18
    
    2. Increase for the period 127,158,122.10 676,205,622.57 16,960,307.47 7,379,287.21 827,703,339.35
    
    (1) Provision 127,158,122.10 676,205,622.57 16,960,307.47 7,379,287.21 827,703,339.35
    
    3. Decrease for the period 65,606,218.05 101,491,723.48 2,040,748.21 5,689,989.35 174,828,679.09
    
    (1) Disposal or retirement 15,023,390.75 11,705,555.76 764,605.87 1,632,235.94 29,125,788.32
    
    (2) Transferal 5,184.53 5,184.53
    
    (3) Transferred to assets held-for-sale 50,577,642.77 89,786,167.72 1,276,142.34 4,057,753.41 145,697,706.24
    
    4. Closing balance 1,740,458,025.70 12,900,731,555.25 188,272,798.04 259,461,822.45 15,088,924,201.44III. Provision for impairment
    
    1. Opening balance 50,958,113.15 145,083,130.77 13,092.92 362,313.33 196,416,650.17
    
    2. Increase for the period
    
    (1) Provision
    
    3. Decrease for the period 50,958,113.15 122,601,345.91 13,092.92 362,313.33 173,934,865.31
    
    (1) Disposal or retirement
    
    (2) Transferred to assets held-for-sale 50,958,113.15 122,601,345.91 13,092.92 362,313.33 173,934,865.31
    
    4. Closing balance 22,481,784.86 22,481,784.86IV. Carrying amount
    
    1. Closing carrying amount 7,957,184,195.34 22,467,176,072.40 169,989,700.83 179,905,780.77 30,774,255,749.34
    
    2. Opening carrying amount 7,939,741,297.74 19,620,480,538.79 171,699,697.80 182,064,618.35 27,913,986,152.68
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 125
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    14. Fixed assets (Cont’d)
    
    (2) Particulars of temporarily idle fixed assets
    
    Unit: RMB
    
    Original
    
    carrying Accumulated Provision for Carrying
    
    Item amount depreciation impairment amount Remark
    
    Housing and building structure 52,541,556.53 7,204,288.74 45,337,267.79
    
    Machinery and equipment 461,842,555.02 174,634,921.54 20,501,583.51 266,706,049.97
    
    Total 514,384,111.55 181,839,210.28 20,501,583.51 312,043,317.76(3) Particulars of fixed assets without obtaining property right certificates
    
    Unit: RMB
    
    Reason for not yet
    
    obtaining property
    
    Item Carrying amount right certificates
    
    Housing and building structure (JIANGXI CHENMING) 219,633,066.69 Scheduled operation
    
    commencement
    
    not imminent
    
    Housing and building structure (SHOUGUANG MEILUN) 276,549,079.27 Scheduled operation
    
    commencement
    
    not imminent
    
    Housing and building structure (HAIMING MINING) 134,823,018.55 Scheduled operation
    
    commencement
    
    not imminent
    
    Housing and building structure (JILIN CHENMING) 422,053,751.94 Scheduled operation
    
    commencement
    
    not imminent
    
    Housing and building structure (Parent company) 73,212,959.15 Scheduled operation
    
    commencement
    
    not imminent
    
    Housing and building structure (ZHANJIANG CHENMING) 1,348,705,580.19 Scheduled operation
    
    commencement
    
    not imminent
    
    Total 2,474,977,455.79
    
    126 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    15. Construction in progress
    
    Unit: RMB
    
    Item Closing balance Opening balance
    
    Construction in progress 10,141,701,524.68 11,861,494,351.33
    
    Materials for project 10,356,344.40 9,856,470.22
    
    Total 10,152,057,869.08 11,871,350,821.55
    
    (1) Particulars of construction in progress
    
    Unit: RMB
    
    Closing balance Opening balance
    
    Provision for Provision for
    
    Item Book balance impairment Carrying amount Book balance impairment Carrying amount
    
    400T/d Mechanical pulp project (Headquarters) 190,246,507.11 190,246,507.11
    
    Newsprint machine to cultural paper machine and
    
    related pulp line transformation (Headquarters) 1,426,602,125.57 1,426,602,125.57
    
    Upgrading and renovation of back pressure unit of
    
    captive power plant (Headquarters) 212,587,040.69 212,587,040.69 177,001,786.08 177,001,786.08
    
    Membrane treatment for reclaimed
    
    water recycling (Headquarters) 236,089,709.94 236,089,709.94 145,410,753.42 145,410,753.42
    
    Chemical pulp project (Meilun) 3,602,279,799.06 3,602,279,799.06 3,016,785,495.66 3,016,785,495.66
    
    High-end cultural paper (Meilun) 117,738,632.97 117,738,632.97 1,701,781,479.30 1,701,781,479.30
    
    Haiming mining magnesite deep processing
    
    project (Haiming) 544,449,147.79 544,449,147.79 486,501,551.60 486,501,551.60
    
    200,000-ton magnesia-alumina spinel project (Haiming) 774,397,532.48 774,397,532.48 558,876,283.14 558,876,283.14
    
    Huanggang Chenming integrated forestry,
    
    pulp and paper project 4,052,359,826.41 4,052,359,826.41 3,605,150,078.66 3,605,150,078.66
    
    Membrane treatment project (Zhanjiang Chenming) 88,779,975.16 88,779,975.16 74,505,129.72 74,505,129.72
    
    Back pressure unit project (Zhanjiang Chenming) 51,243,062.13 51,243,062.13 26,452,503.41 26,452,503.41
    
    Others 485,462,893.87 23,686,095.82 461,776,798.05 479,609,593.48 27,428,935.82 452,180,657.66
    
    Total 10,165,387,620.50 23,686,095.82 10,141,701,524.68 11,888,923,287.15 27,428,935.82 11,861,494,351.33
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 127
    
    12V8II. SI1NNH5TAo.ENtRDeIOM(Cs2No)RGtnoECsPHMBBH2HHCNNM4PCTUtOi00oraiuaiheeprtee(ogoE00tHci(wrwpaPecgm(mhammHhueRj,HTeknmraeurr0Nls-loaa/bobaaiagepcae0ppndaiTddijnrrsctcagnttmne0grrmaMaeiuisnaiMdeavgdnnc-nnnndicumltsenqngttgpateeoe2ctpasgpguam(oIiimpigcnuPoaunlutt)uanNw0oshrroCln2nreiluametrelgnpeapweuetd0lhcaagpep1GnarrC0punehettlrarriiigmms,gnmscnneinrroho9l0non)geanimejepepe0taeePjenloenlnna0gPipctiaispetnvcrmfttApnntornnriartuagatoopfeeoatinolt-cn(jjprrstPiFnMees(aotrouigHio(ocfcmltppnMlorju)oeEetehentrterufmir)ecaoeloc(mdRuprZf(srtdfilajHilaelnaenyrtehua(qblooeuZ)icaaatnmapuaHjtpiathenno)ssaacene(acdgjnhppHprkiOdgantctriePe(ecnngprjo(HiwrrsraeaaegarcLsioeeomdmnaplneea)CuasDptgqegsaeedtshrrushlcsnrCnuoCqeiIaIehntrrnjhuNnhreeecrigscttneanmecceeseuenrnptGygrodtrinsmnmercaraio)io(asgrlmtnSiniisjCtntnn)eodri)soggigcfcsliLn)t)tteoi)ItdMrnuat(IRTc’MdtEtBei)D’o00dnBm1u31334ildi10548870303127lfingo..............26185560752313ien00350010270031nt) pa1r31311o,,,,,n1654704111527505801234979g64758616605076c,,,,,,,,,,,,,,r4551857761420950457088021e407i52O006115220616ba,,,,,,,,,,,s,,,p51302544147575ae20678579245080lsaln39583195533763ni..............n479616365441c00spg122640067921e88 rtoa1j,4212519te14304269230e875714770615cI,,,,,,,,,,,,n626092036045tctm203474537998hr8954695488s57ee,,,,,,,,,,,,a570389499727ps640920645285efee372641666647roi............fo976199935269ond450971062217rr tths113,,,e85266917f(o8368Cpr,,,,Tf6636itx5545rheaoe1754end,,,,r8527psn8931afiee6232sortris....o5433t’eddo2732dt ) Otheforrdtehdeupcetiroionds– 439,,,10755282772599743311664243517692,,,,,,,,,,,,154355104085605514035818825915657997bC,,,,,,,,,,,,951829433750alo220284198074la9936577799080sni.............n84747775890c76g62114957540e39– Acicntuvo11em3641931679bs4246322805308uut.............ml3002400007701da4998780301803tgee%%%%%%%%%%%%%nedtt Coinnpstrrougc10101000000r90tei.............o0808099966981sn0003085600547s 1115810686A4994122c,,,,,,,c71615502ca56561555up74112684mi,,,,,,,,in72096367tuat50071378ella80716982irste........ee95937719sdd12815564––t in1t311242feo6022427rr,,,,,,,ec52002582tsa14302525hOtp28132694efa,,,,,,,,i67021307twpma50885308ehlo13781962irsiuic........oe89274709nhdd97690504t: intCfeoarreprtsiahttate4aelip447551mso......ea930442ofrt050778utiiooh%%%%%%ndnet USSSSSSSSSSSnoeeeeeeeeeelllllllllluffffffffffi----------bbbbbbbbbbrtSSSrrrrrrrrrrcooooooooooaaaaaaaaaa:eeeerrrrrrrrrriiiiiiiiiilllssssssssssrrrrrrrrrrfffoooooooooooR---eeeeeeeeeerrrfwwwwwwwwwwddddddddddaaafiiiiiiiiiiiiiMuaaaaaaaaaasssnnnnnnnnnnnnnnnnnnnnneeeggggggggggddddddddddddddsssssssss–sB
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    15. Construction in progress (Cont’d)
    
    (3) Materials for project
    
    Unit: RMB
    
    Closing balance Opening balance
    
    Impairment Impairment
    
    Item Book balance provision Carrying amount Book balance provision Carrying amount
    
    Special materials 10,356,344.40 10,356,344.40 9,856,470.22 9,856,470.22
    
    Total 10,356,344.40 10,356,344.40 9,856,470.22 9,856,470.22
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 129
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    16. Intangible assets
    
    (1) Particulars of intangible assets
    
    Unit: RMB
    
    Unpatented
    
    Item Land use rights Patents technology Software Total
    
    I. Original carrying amount
    
    1. Opening balance 2,298,247,993.53 15,895,213.33 25,993,883.14 2,340,137,090.00
    
    2. Increase for the period 1,768,215.95 110,016,542.11 355,074.82 112,139,832.88
    
    (1) Acquisition 1,768,215.95 110,016,542.11 355,074.82 112,139,832.88
    
    3. Decrease for the period 731,218.52 731,218.52
    
    (1) Disposal 731,218.52 731,218.52
    
    4. Closing balance 2,299,284,990.96 125,911,755.44 26,348,957.96 2,451,545,704.36II. Accumulated amortisation
    
    1. Opening balance 379,242,063.35 1,705,104.30 19,834,647.37 400,781,815.02
    
    2. Increase for the period 23,817,593.04 2,650,548.42 665,399.37 27,133,540.83
    
    (1) Provision 23,817,593.04 2,650,548.42 665,399.37 27,133,540.83
    
    3. Decrease for the period 731,218.52 731,218.52
    
    (1) Provision 731,218.52 731,218.52
    
    4. Closing balance 402,328,437.87 4,355,652.72 20,500,046.74 427,184,137.33III. Impairment provision
    
    IV. Carrying amount
    
    1. Closing carrying amount 1,896,956,553.09 121,556,102.72 5,848,911.22 2,024,361,567.03
    
    2. Opening carrying amount 1,919,005,930.18 14,190,109.03 6,159,235.77 1,939,355,274.98
    
    17. Goodwill
    
    (1) Original carrying amount of goodwill
    
    Unit: RMB
    
    Increase Decrease
    
    Name of investee or item generating goodwill Opening balance for the period for the period Closing balance
    
    Shandong Chenming Panels Co., Ltd. 5,969,626.57 5,969,626.57
    
    Jilin Chenming Paper Co., Ltd. 14,314,160.60 14,314,160.60
    
    Total 20,283,787.17 20,283,787.17
    
    130 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    17. Goodwill (Cont’d)
    
    (2) Provision for impairment of goodwill
    
    Unit: RMB
    
    Increase Decrease
    
    Name of investee or item generating goodwill Opening balance for the period for the period Closing balance
    
    Machine-made paper sector – Jilin Chenming
    
    Paper Co., Ltd. 14,314,160.60 14,314,160.60
    
    Total 14,314,160.60 14,314,160.60
    
    18. Long-term prepaid expenses
    
    Unit: RMB
    
    Increase Amortisation Other
    
    Item Opening balance for the period for the period deductions Closing balance
    
    Railway expenses 6,969,901.98 352,407.30 6,617,494.68
    
    Rentals 41,096,304.35 1,005,862.08 40,090,442.27
    
    Woodland expenses 86,850,035.48 3,989,314.31 82,860,721.17
    
    Total 134,916,241.81 5,347,583.69 129,568,658.12
    
    19. Deferred income tax assets/deferred income tax liabilities
    
    (1) Deferred income tax assets before offsetting
    
    Unit: RMB
    
    Closing balance Opening balance
    
    Deductible Deferred Deductible Deferred
    
    temporary income temporary income
    
    Item difference tax assets difference tax assets
    
    Provision for impairment of assets 1,075,169,307.43 251,697,134.87 1,009,229,761.95 201,814,843.08
    
    Unrealised profit arising from intra-group transactions 86,406,080.32 21,601,520.08 53,691,645.13 13,422,911.28
    
    Deductible loss 2,474,702,128.23 393,326,264.47 1,832,638,038.33 291,277,348.30
    
    Outstanding payables 388,522,635.82 69,970,733.85 464,741,048.85 72,646,157.78
    
    Deferred income 116,027,847.20 22,334,275.75 136,079,842.63 24,712,438.18
    
    Total 4,140,827,999.00 758,929,929.02 3,496,380,336.89 603,873,698.62
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 131
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    19. Deferred income tax assets/deferred income tax liabilities (Cont’d)
    
    (2) The breakdown of unrecognised deferred income tax assets
    
    Unit: RMB
    
    Item Closing balance Opening balance
    
    Deductible temporary difference 198,361,935.86 293,812,600.65
    
    Deductible loss 746,075,536.84 618,945,325.05
    
    Total 944,437,472.70 912,757,925.70(3) Expiry of deductible loss of unrecognised deferred income tax assets falls in the periods as follows
    
    Unit: RMB
    
    Year Closing amount Opening amount Remark
    
    2019 58,075,279.70
    
    2020 62,162,599.80 68,154,676.89
    
    2021 67,536,762.75 79,493,561.61
    
    2022 80,679,499.21 91,517,702.92
    
    2023 318,817,137.26 321,704,103.93
    
    2024 216,879,537.82
    
    Total 746,075,536.84 618,945,325.05 –
    
    20. Other non-current assets
    
    Whether the New Standard for Revenue has been implemented
    
    √ Yes □ No
    
    Unit: RMB
    
    Closing balance Opening balance
    
    Impairment Impairment
    
    Item Book balance provision Carrying amount Book balance provision Carrying amount
    
    Prepayments for properties 507,301,567.82 507,301,567.82 458,224,099.89 458,224,099.89
    
    Prepayments for land 45,230,000.00 45,230,000.00
    
    Prepayments for engineering 17,790,680.05 17,790,680.05 22,445,137.18 22,445,137.18
    
    Prepayments for equipment 238,243,937.63 238,243,937.63 223,822,509.86 223,822,509.86
    
    Deposits 36,000,000.00 36,000,000.00
    
    Equity transfer or investment 1,896,662,879.24 1,896,662,879.24 694,000,000.00 694,000,000.00
    
    Pre-paid expenses 26,037,702.96 26,037,702.96 42,771,382.73 42,771,382.73
    
    Total 2,686,036,767.70 2,686,036,767.70 1,522,493,129.66 1,522,493,129.66
    
    Other explanations: Equity transfer payment of RMB1,671,034,479.24 was used for the acquisition of equity interest in Nanyue Bank, and
    
    RMB39.5 million was used for investment in Weifang Chenming Growth Driver Replacement Fund.
    
    132 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    21. Short-term borrowings
    
    (1) Classification of short-term borrowings
    
    Unit: RMB
    
    Item Closing balance Opening balance
    
    Pledged borrowings 791,650,262.66 971,604,153.41
    
    Mortgage borrowings 180,000,000.00 180,000,000.00
    
    Guaranteed borrowings 9,444,577,202.39 9,918,242,061.05
    
    Credit borrowings 10,720,238,621.90 7,531,565,147.43
    
    Discounted borrowings 23,528,864,000.00 21,626,534,000.00
    
    Total 44,665,330,086.95 40,227,945,361.89
    
    22. Bills payable
    
    Unit: RMB
    
    Classification Closing balance Opening balance
    
    Commercial acceptance bills 131,972,223.26 49,670,407.62
    
    Bank acceptance bills 2,087,936,210.59 4,169,299,147.31
    
    Total 2,219,908,433.85 4,218,969,554.93
    
    Total outstanding bills payable as at the end of the period amounted to RMB0.00.23. Accounts payable
    
    (1) Particulars of accounts payable
    
    Unit: RMB
    
    Item Closing balance Opening balance
    
    Within 1 year 4,013,299,860.41 3,566,507,866.14
    
    1-2 years 383,179,342.06 261,760,924.33
    
    2-3 years 56,927,131.28 80,120,125.97
    
    Over 3 years 158,745,544.57 241,839,728.22
    
    Total 4,612,151,878.32 4,150,228,644.66
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 133
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    23. Accounts payable (Cont’d)
    
    (2) Significant advance receipts for over 1 year
    
    Unit: RMB
    
    Item Closing balance Reasons
    
    Guangxi Construction Engineering Group No. 1 Installation Co., Ltd. 28,486,702.84 Deposit for
    
    engineering
    
    Anhui Transportation Navigation Engineering Co., Ltd. 17,854,000.00 Deposit for
    
    engineering
    
    Institute 704 of China Shipbuilding Industry Corporation 13,217,264.90 Deposit for
    
    engineering
    
    equipment
    
    China Light Industry Nanning Design Engineering Co., Ltd. 12,375,316.24 Deposit for
    
    engineering
    
    equipment
    
    Shandong Shenhua Shanda Energy & Environment Co., Ltd. 11,736,736.36 Payment not
    
    demanded by the
    
    counterparty yet
    
    Total 83,670,020.34
    
    24. Contract liabilities
    
    Unit: RMB
    
    Item Closing balance Opening balance
    
    Advance loans 639,444,833.26 419,540,133.74
    
    Total 639,444,833.26 419,540,133.7425. Staff remuneration payables
    
    (1) Particulars of staff remuneration payables
    
    Unit: RMB
    
    Increase Decrease
    
    Item Opening balance for the period for the period Closing balance
    
    I. Short-term remuneration 135,108,374.13 640,959,206.39 668,093,665.86 107,973,914.66
    
    II. Retirement benefit plan – defined contribution scheme 265,033.57 95,915,737.03 95,988,712.46 192,058.14
    
    Total 135,373,407.70 736,874,943.42 764,082,378.32 108,165,972.80
    
    134 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    25. Staff remuneration payables (Cont’d)
    
    (2) Particulars of short-term remuneration
    
    Unit: RMB
    
    Increase Decrease
    
    Item Opening balance for the period for the period Closing balance
    
    1. Salaries, bonuses, allowance and subsidies 45,776,603.50 510,410,269.53 531,270,016.44 24,916,856.59
    
    2. Staff welfare 9,087,468.82 22,724,599.85 31,485,293.12 326,775.55
    
    3. Social insurance premium 1,453,195.45 42,676,671.30 43,122,682.97 1,007,183.78
    
    Of which: Medical insurance premium 484,700.11 36,927,845.19 37,412,545.30 0.00
    
    Work-related injury insurance premium 2,559.91 2,442,599.94 2,312,567.58 132,592.27
    
    Maternity insurance premium 962,031.66 3,306,226.17 3,393,666.32 874,591.51
    
    Others 3,903.77 0.00 3,903.77 0.00
    
    4. Housing provident funds 8,814,407.42 52,870,502.29 55,334,822.02 6,350,087.69
    
    5. Union funds and workers’ education 26,540,500.67 11,494,802.53 5,907,078.30 32,128,224.90
    
    6. Other short-term remuneration 43,436,198.27 782,360.89 973,773.01 43,244,786.15
    
    Total 135,108,374.13 640,959,206.39 668,093,665.86 107,973,914.66(3) Defined contribution plan
    
    Unit: RMB
    
    Increase Decrease
    
    Item Opening balance for the period for the period Closing balance
    
    1. Basic pension insurance 13,533.34 92,381,476.43 92,395,009.77 0.00
    
    2. Unemployment insurance 251,500.23 3,534,260.60 3,593,702.69 192,058.14
    
    Total 265,033.57 95,915,737.03 95,988,712.46 192,058.14
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 135
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    26. Taxes payable
    
    Unit: RMB
    
    Item Closing balance Opening balance
    
    Value added tax 58,166,520.30 101,147,703.11
    
    Enterprise income tax 191,803,093.04 279,044,478.52
    
    Individual income tax 26,292,521.44 21,204,181.79
    
    Urban maintenance and construction tax 3,751,037.26 1,675,884.94
    
    Land use tax 8,684,907.55 16,727,507.78
    
    Property tax 16,180,243.57 26,049,416.88
    
    Educational surcharges and others 3,538,242.36 2,685,191.81
    
    Stamp duty 2,538,931.67 3,116,833.81
    
    Resource tax 1,404,501.92
    
    Environmental tax 1,924,023.08
    
    Total 314,284,022.19 451,651,198.6427. Other payables
    
    Unit: RMB
    
    Item Closing balance Opening balance
    
    Interest payable 163,355,268.55 226,788,777.59
    
    Dividend payable 976,175,735.52 0.00
    
    Other payables 2,089,128,817.62 1,550,929,239.89
    
    Total 3,228,659,821.69 1,777,718,017.48
    
    (1) Interest payable
    
    Unit: RMB
    
    Item Closing balance Opening balance
    
    Interest on corporate bonds 99,925,579.95 132,103,351.62
    
    Interest payable on short-term borrowings 17,804,688.63 34,393,759.32
    
    Interest on medium-term notes 45,624,999.97 60,291,666.65
    
    Total 163,355,268.55 226,788,777.59
    
    136 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    27. Other payables (Cont’d)
    
    (2) Dividend payable
    
    Unit: RMB
    
    Item Closing balance Opening balance
    
    A shares 400,780,244.16 0.00
    
    B shares 169,532,463.84 0.00
    
    H shares 126,793,260.00 0.00
    
    Preference shares 279,069,767.52 0.00
    
    Total 976,175,735.52 0.00(3) Other payables
    
    1) Other payables by nature
    
    Unit: RMB
    
    Item Closing balance Opening balance
    
    Open credit 627,042,165.66 164,919,560.22
    
    Deposit 663,102,948.69 969,423,011.35
    
    Accrued expenses 530,264,563.26 281,151,124.64
    
    Others 268,719,140.01 135,435,543.68
    
    Total 2,089,128,817.62 1,550,929,239.892) Significant advance receipts for over 1 year
    
    Unit: RMB
    
    Item Closing balance Reasons
    
    Liaoning Beihai Industry Group Ltd. 74,643,475.03 Debt investment by
    
    a shareholder of a
    
    subsidiary as agreed
    
    Shouguang Hengtai Enterprise Investment Co., Ltd. 45,977,444.73 Debt investment by
    
    a shareholder of a
    
    subsidiary as agreed
    
    Nine Dragons Dawei Holdings Co., Ltd. 30,000,000.00 Deposit
    
    State-Owned Shouguang Qingshuipo Farm 8,800,000.00 Deposit
    
    Institute 704 of China Shipbuilding Industry Corporation 3,924,720.00 Deposit
    
    Total 163,345,639.76 –
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 137
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    28. Non-current assets due within one year
    
    Unit: RMB
    
    Item Closing balance Opening balance
    
    Long-term receivables due within one year 2,399,108,063.18 4,234,248,448.36
    
    Long-term payables due within one year 2,594,377,113.23 2,732,057,322.65
    
    Other non-current liabilities due within one year 250,000,000.00 250,000,000.00
    
    Total 5,243,485,176.41 7,216,305,771.0129. Other current liabilities
    
    Whether the New Standard for Revenue has been implemented
    
    √ Yes □ No
    
    Unit: RMB
    
    Item Closing balance Opening balance
    
    Short-term bonds payable 1,853,868,055.56 2,816,956,481.68
    
    Total 1,853,868,055.56 2,816,956,481.68
    
    138 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    30. Long-term borrowings
    
    (1) Types of long-term borrowings
    
    Unit: RMB
    
    Item Closing balance Opening balance
    
    Pledge borrowings 345,766,543.72 362,064,033.51
    
    Secured borrowings 4,427,537,899.99 4,733,171,900.00
    
    Guarantee borrowings 4,686,849,838.97 6,097,254,963.85
    
    Credit borrowings 923,110,691.19 840,692,035.94
    
    Less: Long-term borrowings due within 1 year 1,933,526,718.43 4,234,248,448.36
    
    Total 8,449,738,255.44 7,798,934,484.94
    
    Details of types long-term borrowings:
    
    Item Closing balance Opening balance
    
    Long-term borrowings due within 1 year
    
    Long-term borrowings due within 1-2 years 2,037,389,007.22 2,032,389,007.22
    
    Long-term borrowings due within 2-5 years 3,367,349,248.22 2,716,545,477.72
    
    Long-term borrowings due over 5 years 3,045,000,000.00 3,050,000,000.00
    
    Total 8,449,738,255.44 7,798,934,484.9431. Bonds payable
    
    (1) Bonds payable
    
    Unit: RMB
    
    Item Closing balance Opening balance
    
    17 Chenming bond 01- Chenming Paper 1,198,890,000.00 1,198,710,000.00
    
    18 Chenming bond 01- Chenming Paper 898,987,500.00 898,852,500.00
    
    Total 2,097,877,500.00 2,097,562,500.00
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 139
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    31. Bonds payable (Cont’d)
    
    (2) Increase/decrease in bonds payable (excluding other financial instruments such as preference shares and
    
    perpetual bonds classified as financial liabilities)
    
    Unit: RMB
    
    Name of bond Par value Date of issue Term Amount Opening balance
    
    17 Chenming bond 01- Chenming Paper 1,200,000,000.00 2017/8/22 5年 1,198,200,000.00 1,198,710,000.00
    
    18 Chenming bond 01- Chenming Paper 900,000,000.00 2018/4/2 5年 898,650,000.00 898,852,500.00
    
    Total 2,100,000,000.00 2,096,850,000.00 2,097,562,500.00
    
    (Cont’d)
    
    Issue Interest at Amortisation of Redemption
    
    Name of bond during the year par value premium/discount during the year Closing balance
    
    17 Chenming bond 01- Chenming Paper 180,000.00 1,198,890,000.00
    
    18 Chenming bond 01- Chenming Paper 135,000.00 898,987,500.00
    
    Total 315,000.00 2,097,877,500.00
    
    32. Long-term payables
    
    Unit: RMB
    
    Item Closing balance Opening balance
    
    Long-term payables 3,630,523,501.35 3,900,255,693.44
    
    Total 3,630,523,501.35 3,900,255,693.44
    
    (1) By nature
    
    Unit: RMB
    
    Item Closing balance Opening balance
    
    Retention for the financial leasing operations 164,190,103.51 167,083,436.84
    
    China Development Bank Special funds 595,000,000.00 622,500,000.00
    
    Financial leasing 5,408,761,794.56 5,842,729,579.25
    
    Exploitation right 56,948,716.51
    
    Less: Due within 1 year 2,594,377,113.23 2,732,057,322.65
    
    Total 3,630,523,501.35 3,900,255,693.44
    
    140 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    33. Provision
    
    Unit: RMB
    
    Increase Decrease
    
    Item Closing balance for the period for the period Opening balance Reason
    
    Provision 329,230,107.88 3,971,025.60 325,259,082.28 Losses from Arjo’s
    
    lawsuit and
    
    recognisedabandon costs forHaiming MiningTotal 329,230,107.88 3,971,025.60 325,259,082.28 –Note: Haicheng Haiming Mining Co., Ltd., a controlled subsidiary of the Company, is expected to pay magnesite mine abandon costs.
    
    34. Deferred income
    
    Unit: RMB
    
    Increase for Decrease for
    
    Item Opening balance the period the period Closing balance Reason
    
    Government grants 1,862,395,197.61 – 56,873,237.36 1,805,521,960.25
    
    Total 1,862,395,197.61 – 56,873,237.36 1,805,521,960.25 –
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 141
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    34. Deferred income (Cont’d)
    
    Items in respect of government grants:
    
    Unit: RMB
    
    Include in non- Include in other Amount charged
    
    New grants operating income income for the against cost Asset-related/
    
    Liabilities item Opening balance for the period for the period period expenses Other changes Closing balance income-related
    
    Project fund for National
    
    technological support
    
    scheme 1,617,224.68 82,349.68 1,534,875.00 Asset-related
    
    Sewage treatment and
    
    water conservation
    
    reconfiguration project 64,466,819.64 596,341.49 63,870,478.15 Asset-related
    
    Financial grants
    
    for technological
    
    modification project 181,015,256.91 1,500.00 6,391,904.25 174,621,852.66 Asset-related
    
    Special subsidy funds
    
    for environmental
    
    protection 749,420,276.75 24,595,985.72 724,824,291.03 Asset-related
    
    Railway line change
    
    compensation 13,336,458.29 184,375.02 13,152,083.27 Asset-related
    
    Interest subsidy 17,050,714.30 228,475.03 16,822,239.27 Asset-related
    
    Logistics park project 51,960,000.00 – 51,960,000.00 Asset-related
    
    Zhanjiang integrated
    
    forestry, pulp and
    
    paper project 93,506,446.64 2,047,316.46 22,364,612.22 69,094,517.96 Asset-related
    
    Huanggang pulp-forestry-
    
    paper project 681,039,716.66 – 681,039,716.66 Asset-related
    
    Others 8,982,283.74 380,377.49 8,601,906.25 Asset-related
    
    Total 1,862,395,197.61 1,500.00 34,507,125.14 22,364,612.22 1,805,521,960.25
    
    142 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    35. Other non-current liabilities
    
    Whether the New Standard for Revenue has been implemented
    
    √ Yes □ No
    
    Unit: RMB
    
    Item Closing balance Opening balance
    
    Medium-term notes 2,051,031,576.50 2,047,948,069.73
    
    Wealth management direct financing instruments 250,000,000.00 250,000,000.00
    
    Less: Other non-current liabilities due within one year 250,000,000.00 250,000,000.00
    
    Total 2,051,031,576.50 2,047,948,069.7336. Share capital
    
    Unit: RMB
    
    Increase/decrease during the year(+/-)
    
    Shares converted
    
    Opening balance New issue Bonus issue from reserves Others Subtotal Closing balance
    
    Total number of shares 2,904,608,200.00 2,904,608,200.0037. Other equity instruments
    
    (1) Preference shares, perpetual bonds and other financial instruments outstanding at the end of the period
    
    Decrease for the
    
    Item Opening balance Increase for the periodperiod Closing balance
    
    Perpetual bonds 2,988,000,000.00 2,988,000,000.00
    
    Preference shares 4,477,500,000.00 4,477,500,000.00
    
    Total 7,465,500,000.00 7,465,500,000.00(2) Changes in perpetual bonds outstanding at the end of the period
    
    Unit: RMB
    
    Increase for Decrease for
    
    Outstanding financial instruments Opening balance the period the period Closing balance
    
    17 Lu Chenming MTN001 996,000,000.00 996,000,000.00
    
    17 Lu Chenming MTN002 1,992,000,000.00 1,992,000,000.00
    
    Total 2,988,000,000.00 2,988,000,000.00
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 143
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    37. Other equity instruments (Cont’d)
    
    (3) Changes in perpetual bonds outstanding at the end of the period
    
    Increase for Decrease for
    
    Outstanding financial instruments Opening balance the period the period Closing balance
    
    Chenming You 01 2,238,750,000.00 2,238,750,000.00
    
    Chenming You 02 999,000,000.00 999,000,000.00
    
    Chenming You 03 1,239,750,000.00 1,239,750,000.00
    
    Total 4,477,500,000.00 4,477,500,000.00
    
    38. Capital reserves
    
    Unit: RMB
    
    Increase for Decrease for
    
    Item Opening balance the period the period Closing balance
    
    Capital premium (share premium) 4,421,127,407.93 4,421,127,407.93
    
    Other capital reserves 670,322,507.21 670,322,507.21
    
    Total 5,091,449,915.14 5,091,449,915.1439. Other comprehensive income
    
    Unit: RMB
    
    During the period
    
    Less: Transferred Less: Transferred
    
    from other from other
    
    comprehensive comprehensive
    
    income in prior income in prior Attributable
    
    Incurred before periods to profit periods to Attributable to to minority
    
    income tax for or loss during retained earnings Less: Income parent company Shareholders
    
    Item Opening balance the period the period during the period tax expenses after tax after tax Closing balance
    
    Other comprehensive
    
    income to be reclassified
    
    to profit or loss in
    
    subsequent periods
    
    Exchange differences on
    
    translation of foreign
    
    operations -736,520,181.01 -16,016,688.20 -16,016,688.20 -752,536,869.21
    
    Total other comprehensive
    
    income -736,520,181.01 -16,016,688.20 -16,016,688.20 -752,536,869.21
    
    144 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    40. Special reserves
    
    Unit: RMB
    
    Increase for Decrease for
    
    Item Opening balance the period the period Closing balance
    
    Safety production 3,257,998.47 1,039,765.05 296,336.40 4,001,427.12
    
    Total 3,257,998.47 1,039,765.05 296,336.40 4,001,427.1241. Surplus reserves
    
    Unit: RMB
    
    Increase for Decrease for
    
    Item Opening balance the period the period Closing balance
    
    Statutory surplus reserves 1,148,888,912.11 1,148,888,912.11
    
    Total 1,148,888,912.11 1,148,888,912.1142. Retained profit
    
    Unit: RMBThe prior period(the same periodItem The period last year)Retained profit as at the end of the prior year before adjustment 9,107,422,690.85 8,866,614,844.40Accumulated adjustments to retained profit as at the beginning of the year
    
    (increase “+”, decrease “-”)
    
    Retained profit as at the beginning of the year after adjustment 9,107,422,690.85 8,866,614,844.40
    
    Plus: Net profit for year attributable to shareholders of the parent company 509,795,572.29 1,784,631,025.31
    
    Less: Transfer of statutory surplus reserves
    
    Ordinary dividend payable 697,105,968.00 1,161,843,280.20
    
    Preferred shares interest payable 377,169,767.52 562,816,006.80
    
    Retained profit as at the end of the year 8,542,942,527.62 8,926,586,582.71
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 145
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    43. Revenue and operating cost
    
    Unit: RMB
    
    Amount for the period Amount for the prior period
    
    Item Revenue Costs Revenue Costs
    
    Principal activities 13,127,389,053.48 9,644,049,075.24 15,339,402,308.23 10,223,566,613.79
    
    Other activities 221,259,060.22 110,048,724.58 211,931,731.66 36,318,305.07
    
    Total 13,348,648,113.70 9,754,097,799.82 15,551,334,039.89 10,259,884,918.86
    
    Whether the New Standard for Revenue has been implemented
    
    √ Yes □ No
    
    Information related to revenue:
    
    Unit: RMB
    
    Machine-made Magnesium
    
    Category of contract paper segment Financial segment mining segment Other segment Total
    
    Type of goods
    
    Machine-made paper 11,561,215,578.29 11,561,215,578.29
    
    Financial leasing 947,166,321.20 947,166,321.20
    
    Magnesium mining 195,773,124.76 195,773,124.76
    
    Electricity and steam 88,614,973.37 2,129,527.85 90,744,501.22
    
    Construction materials 126,059,123.60 126,059,123.60
    
    Paper chemicals 56,149,320.48 56,149,320.48
    
    Hotel services 13,771,420.58 13,771,420.58
    
    Others 203,468,152.83 24,521,500.95 724,488.32 129,054,581.47 357,768,723.57
    
    Total 11,909,448,024.97 971,687,822.15 196,497,613.08 271,014,653.50 13,348,648,113.70
    
    146 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    44. Taxes and surcharges
    
    Unit: RMB
    
    Amount for
    
    Item Amount for the period the prior period
    
    Urban maintenance and construction tax 33,491,970.50 29,431,549.79
    
    Educational surcharges 30,083,061.41 23,321,557.68
    
    Property tax 25,991,020.83 26,787,098.32
    
    Land use tax 17,485,547.38 25,666,645.17
    
    Vehicle and vessel tax 53,845.71 502,934.38
    
    Stamp duty 10,950,170.18 11,344,290.23
    
    Water engineering funds 1,634,705.86 1,937,359.03
    
    Environmental tax 4,945,936.66 4,354,733.37
    
    Water resource tax 9,852,286.53 6,163,044.01
    
    Total 134,488,545.06 129,509,211.9845. Selling and distribution expenses
    
    Unit: RMB
    
    Amount for
    
    Item Amount for the period the prior period
    
    Wages and surcharges 61,585,417.90 66,498,765.40
    
    Depreciation expenses 6,288,587.94 6,739,186.02
    
    Office expenses 1,758,975.11 2,024,990.87
    
    Transportation expenses 425,245,830.59 438,096,633.12
    
    Selling commissions 5,725,354.65 9,527,198.46
    
    Cargo handling charges 7,716,321.23 6,447,682.56
    
    Travel expenses 14,946,381.33 14,287,350.75
    
    Business hospitality expenses 28,199,788.34 27,355,797.58
    
    Warehouse expenses 1,080,149.47 1,622,562.73
    
    Rental expenses 4,019,981.96 4,783,613.45
    
    Others 34,018,168.95 28,079,544.77
    
    Total 590,584,957.47 605,463,325.71
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 147
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    46. General and administrative expenses
    
    Unit: RMB
    
    Amount for
    
    Item Amount for the period the prior period
    
    Wages and surcharges 80,866,566.50 135,226,780.34
    
    Welfare expenses 27,556,239.75 21,985,234.28
    
    Labour insurance premium 37,651,636.41 22,172,367.80
    
    Insurance premium 14,052,377.28 12,675,862.00
    
    Depreciation expenses 114,171,603.76 106,354,515.61
    
    Waste disposal expenses 5,411,881.45 5,684,105.91
    
    Hospitality expenses 38,283,517.05 29,705,889.73
    
    Amortisation of intangible assets 24,242,384.25 16,360,689.72
    
    Production interruption loss 69,899,210.78 372,715.95
    
    Repair fees 15,566,475.96 13,562,056.75
    
    Others 134,715,506.06 130,741,450.46
    
    Total 562,417,399.25 494,841,668.5547. R&D expenses
    
    Unit: RMB
    
    Amount for
    
    Item Amount for the period the prior period
    
    Installation expenses 8,229,476.80 828,905.32
    
    Depreciation expenses 18,616,150.51 19,938,607.46
    
    Consumption of raw materials 181,729,065.27 227,337,001.14
    
    Consumption of semi-finished products 61,663,204.78 58,506,944.19
    
    Consumption of auxiliary materials 41,870,386.58 55,211,735.49
    
    Travel expenses 1,574.18 143,842.00
    
    Wages and surcharges 52,643,872.99 52,089,007.68
    
    Welfare expenses 3,128,695.00 1,294,197.20
    
    Housing provident funds 3,507,430.88 2,486,485.16
    
    Insurance premium 8,344,818.02 5,502,576.84
    
    Union funds 165,815.82 199,798.57
    
    Utilities 50,274,197.98 53,656,094.31
    
    Other expenses 1,309,027.25 819,658.74
    
    Total 431,483,716.06 478,014,854.10
    
    148 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    48. Finance expenses
    
    Unit: RMB
    
    Amount for
    
    Item Amount for the period the prior period
    
    Finance expenses 1,650,075,404.49 1,720,741,207.21
    
    Less: interest income 213,994,280.22 159,096,591.34
    
    Less: capitalised interest amount 73,319,125.19 162,960,177.00
    
    Foreign exchange gains and losses -2,644,727.97 -16,373,292.86
    
    Bank charges 156,731,452.69 116,517,298.68
    
    Total 1,516,848,723.80 1,498,828,444.6949. Other income
    
    Unit: RMB
    
    Amount for
    
    Item Amount for the period the prior period
    
    Government grants – amortised deferred income included in profit or loss 34,507,125.14 43,038,926.19
    
    Government grants – directly included in profit or loss 4,324,165.50 16,633,350.69
    
    Total 38,831,290.64 59,672,276.8850. Investment income
    
    Unit: RMB
    
    Amount for
    
    Item Amount for the period the prior period
    
    Income from long-term equity investments accounted for using the equity method -9,467,172.97 -17,153,503.00
    
    Investment gain on disposal of long-term equity investments 13,717,571.88
    
    Investment gain on holding of available-for-sale financial assets 41,516,700.00
    
    Investment gain on disposal financial assets measured at fair value through profit or loss 114,233,300.00
    
    Total -9,467,172.97 152,314,068.88
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 149
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    51. Gain on change in fair value
    
    Unit: RMB
    
    Amount for
    
    Source of gain on change in fair value Amount for the period the prior period
    
    Gain on change in fair value of financial assets measured at fair value through
    
    profit or loss -94,000,000.00
    
    Consumable biological assets measured at fair value -1,883,064.80 -23,973,841.55
    
    Total -1,883,064.80 -117,973,841.5552. Credit impairment loss
    
    Unit: RMB
    
    Amount for
    
    Item Amount for the period the prior period
    
    Bad debt loss of accounts receivable 62,440,283.34
    
    Total 62,440,283.3453. Loss on impairment of assets
    
    Whether the New Standard for Revenue has been implemented
    
    √ Yes □ No
    
    Unit: RMB
    
    Amount for
    
    Item Amount for the period the prior period
    
    Loss on inventory impairment and impairment loss of performance costs of contracts -83,464,107.59 150,455,669.97
    
    Total -83,464,107.59 150,455,669.9754. Asset disposal income
    
    Unit: RMB
    
    Amount for the
    
    Source of asset disposal income Amount for the period prior period
    
    Net income from disposal of non-current assets 22,823,551.43 -2,210,048.63
    
    Total 22,823,551.43 -2,210,048.63
    
    150 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    55. Non-operating income
    
    Unit: RMB
    
    Amounts included in
    
    extraordinary gains
    
    Amount for and losses
    
    Item Amount for the period the prior period for the period
    
    Government grants 227,700,148.23 184,555,864.82 227,700,148.23
    
    Others 9,772,444.74 7,076,692.53 9,772,444.74
    
    Total 237,472,592.97 191,632,557.35 237,472,592.9756. Non-operating expenses
    
    Unit: RMB
    
    Amounts included in
    
    extraordinary gains
    
    Amount for and losses
    
    Item Amount for the period the prior period for the period
    
    Donation 3,041,000.00 5,000.00 3,041,000.00
    
    Loss on destroyed and scrapped non-current assets 1,207,252.11 1,207,252.11
    
    Others 801,876.08 441,221.32 801,876.08
    
    Total 5,050,128.19 446,221.32 5,050,128.1957. Income tax expenses
    
    (1) Particulars of income tax expenses
    
    Unit: RMB
    
    Amount for
    
    Item Amount for the period the prior period
    
    Income tax expenses for the period 264,288,265.75 443,275,831.48
    
    Deferred income tax expenses -138,410,446.13 -9,073,718.98
    
    Total 125,877,819.62 434,202,112.50
    
    58. Other comprehensive income
    
    Please refer to Note VII. 39 for details.
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 151
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    59. Items on statements of cash flow
    
    (1) Cash received relating to other operating activities
    
    Unit: RMB
    
    Amount for
    
    Item Amount for the period the prior period
    
    Finance support fund 184,083,293.99 196,283,019.84
    
    Interest income 213,994,280.22 216,272,935.89
    
    Open credit, and income from default penalty and fine 199,443,495.78 90,523,468.41
    
    Net return of principal receivables relating to finance lease business 1,700,675,170.98 2,057,052,794.71
    
    Total 2,298,196,240.97 2,560,132,218.85(2) Cash paid relating to other operating activities
    
    Unit: RMB
    
    Amount for
    
    Item Amount for the period the prior period
    
    Expense and open credit 1,000,088,741.18 1,261,413,440.86
    
    External security deposit of the Leasing Company 10,000,000.00
    
    Total 1,000,088,741.18 1,271,413,440.86(3) Cash received relating to other investing activities
    
    Unit: RMB
    
    Amount for
    
    Item Amount for the period the prior period
    
    Asset-related government grants 11,194,100.00
    
    Total 11,194,100.00
    
    152 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    59. Items on statements of cash flow (Cont’d)
    
    (4) Cash paid relating to other investing activities
    
    Unit: RMB
    
    Amount for
    
    Item Amount for the period the prior period
    
    Compensation liability 103,042,210.54
    
    Purchase of Goldtrust Futures equity interest 144,248,400.00
    
    Investment in Growth Driver Replacement 39,500,000.00
    
    Investment in Meite Environment 5,880,000.00
    
    Total 189,628,400.00 103,042,210.54(5) Cash received relating to other financing activities
    
    Unit: RMB
    
    Amount for
    
    Item Amount for the period the prior period
    
    Short-term commercial paper 1,887,185,904.00 8,204,965,097.95
    
    Equipment financing 831,099,242.78 500,000,000.00
    
    Debt financing receivable 400,071,077.96 135,622,410.95
    
    Loan from the Finance Company 200,000,000.00 100,000,000.00
    
    Shandong Financial Assets Exchange borrowings 161,337,302.32
    
    Total 3,479,693,527.06 8,940,587,508.90(6) Cash paid relating to other financing activities
    
    Unit: RMB
    
    Amount for
    
    Item Amount for the period the prior period
    
    Repayment of short-term commercial paper 2,820,000,000.00 7,911,542,642.29
    
    Repayment of matured bonds 579,511,229.15
    
    Repayment of interest on preference shares 98,100,000.00
    
    Repayment of equipment leaseback 1,400,052,857.83 1,086,203,289.95
    
    Increase in restricted bank deposits for the period 1,807,611,450.60 5,922,955,877.94
    
    Repayment of borrowings from Chenming Holdings 330,800,000.00
    
    Total 6,456,564,308.43 15,500,213,039.33
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 153
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    60. Supplementary information on cash flow statement
    
    (1) Supplementary information on cash flow statement
    
    Unit: RMB
    
    Amount for Amount for
    
    Supplementary information the period the prior period
    
    1. Reconciliation of net profit as cash flows from operating activities: – –
    
    Net profit 536,600,045.95 1,783,122,625.14
    
    Plus: Provision for impairment of assets -83,464,107.59 150,455,669.97
    
    Depreciation of fixed assets, consumption of oil and gas assets,
    
    depreciation of bearer biological assets 763,316,039.38 784,191,510.41
    
    Amortisation of intangible assets 26,402,322.31 24,059,444.29
    
    Amortisation of long-term prepaid expenses 5,347,583.69 16,218,441.95
    
    Loss on disposal of fixed assets, intangible assets and
    
    other long-term assets (“-” denotes gain) 22,823,551.43 2,210,048.63
    
    Loss on changes in fair value (“-” denotes gain) -1,883,064.80 117,973,841.55
    
    Finance expenses (“-” denotes gain) 1,516,848,723.80 1,584,988,775.97
    
    Investment loss (“-” denotes gain) -9,467,172.97 -152,438,125.48
    
    Decrease in deferred income tax assets (“-” denotes increase) -155,056,230.40 3,621,648.17
    
    Decrease in inventories (“-” denotes increase) -678,542,881.70 -385,938,273.77
    
    Decrease in operating receivables (“-” denotes increase) -282,017,217.78 -3,833,188,190.12
    
    Increase in operating payables (“-” denotes decrease) 1,038,863,300.37 4,649,760,504.20
    
    Net cash flows from operating activities 2,699,770,891.69 4,745,037,920.91
    
    2. Major investing and financing activities not involving cash
    
    settlements: – –
    
    3. Net change in cash and cash equivalents: – –
    
    Closing balance of cash 2,009,063,231.38 3,530,985,289.73
    
    Less: Opening balance of cash 2,381,558,242.53 2,804,408,374.46
    
    Plus: Closing balance of cash equivalents
    
    Less: Opening balance of cash equivalents
    
    Net increase in cash and cash equivalents -372,495,011.15 726,576,915.27
    
    154 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    60. Supplementary information on cash flow statement (Cont’d)
    
    (2) Cash and cash equivalents composition
    
    Unit: RMB
    
    Item Closing balance Opening balance
    
    I. Cash 2,009,063,231.38 2,381,558,242.52
    
    Of which: Treasury cash 2,316,388.38 2,078,321.66
    
    Bank deposit that can be used for payment at any time 2,006,747,121.50 2,379,479,920.86
    
    III. Balance of cash and cash equivalent as at end of period 2,009,063,231.38 2,381,558,242.52
    
    Other explanation:
    
    Cash and cash equivalents did not include the restricted cash and cash equivalents used by the Company or
    
    subsidiaries within the Group.
    
    61. Assets with restricted ownerships or right to use
    
    Unit: RMB
    
    Closing carrying
    
    Item amount Reason for such restrictions
    
    Monetary funds 18,718,827,955.87 As guarantee deposits for bank acceptance bills, letter
    
    of credit, and bank borrowings deposits, and deposit
    
    reserves
    
    Bills receivable collateral 624,106,580.39 As collateral for short-term borrowings, letters of guarantee
    
    and letters of credit
    
    Fixed assets 9,433,004,439.14 As collateral for bank borrowings and long-term payables
    
    Intangible assets 855,039,400.00 As collateral for bank borrowings and long-term payables
    
    Investment properties 4,581,606,847.89 As collateral for bank borrowings
    
    Total 34,212,585,223.29 –
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 155
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    62. Foreign currency items
    
    (1) Foreign currency items
    
    Unit: RMB
    
    Closing foreign Closing balance
    
    Item currency balance Exchange rate in RMB
    
    Monetary funds – –
    
    Of which: USD 53,951,809.15 6.87 370,902,496.61
    
    EUR 1,370,658.67 7.81 5,273,015.00
    
    HKD 125,418.66 0.88 110,325.78
    
    JPY 101,532.00 0.06 6,479.37
    
    Accounts receivables – –
    
    Of which: USD 57,294,935.90 6.87 404,634,355.39
    
    EUR 4,797,586.69 7.81 37,506,151.76
    
    HKD – 0.88 –
    
    JPY 146,734,998.00 0.06 9,364,040.63
    
    Accounts payable – –
    
    Of which: USD 134,390,132.53 6.87 923,891,844.10
    
    EUR 9,937,315.49 7.81 77,655,636.32
    
    Other payables – –
    
    Of which: USD 5,870,562.01 6.87 40,358,352.65
    
    EUR 407,344.91 7.81 3,184,215.16
    
    HKD 655,647.38 0.88 574,820.89
    
    JPY 31,428.00 0.06 2,005.61
    
    Short-term borrowings – –
    
    Of which: USD 237,634,727.44 6.87 1,633,667,460.73
    
    HKD 35,000,000.00 0.88 30,788,100.00
    
    Long-term borrowings – –
    
    Of which: USD 471,864,591.76 6.87 3,243,927,508.97
    
    EUR 26,820,000.00 7.81 209,651,940.00
    
    Non-current liabilities due within one year
    
    Of which: USD 166,488,425.60 6.87 1,144,557,979.47
    
    EUR 26,820,000.00 7.81 209,651,940.00
    
    156 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    VII. Notes to items of the consolidated financial statements (Cont’d)
    
    62. Foreign currency items (Cont’d)
    
    (2) Explanation on overseas operating entities (including major overseas operating entities), which shall disclose
    
    their overseas principal places of business, functional currency and basis. Reasons shall be disclosed if there
    
    is any change in the functional currency.
    
    √ Applicable □ Not applicable
    
    Principal place Place of Functional
    
    No. Name of subsidiary of business incorporation currency
    
    1 Chenming GmbH Hamburg, Germany Hamburg, Germany EUR
    
    2 Chenming Paper Korea Co., Ltd. Seoul, Korea Seoul, Korea KRW
    
    3 Chenming (HK) Limited Hong Kong, China Hong Kong, China USD
    
    4 Chenming International Co., Ltd. Los Angeles, USA Los Angeles, USA USD
    
    5 Chenming Paper Japan Co., Ltd. Tokyo, Japan Tokyo, Japan JPY
    
    6 Chenming Paper United States Co., Ltd. Los Angeles, USA Los Angeles, USA USD
    
    63. Government grants
    
    (1) General information of government grants
    
    Unit: RMB
    
    Amountaccounted forType Amount Reporting item in profit or lossGovernment incentives 10,000.00 Non-operating income 10,000.00Immediate VAT refund 275,104.76 Other income 275,104.76Forestation subsidies 588,512.58 Non-operating income, 588,512.58
    
    other income
    
    R&D subsidies 392,300.00 Non-operating income 392,300.00
    
    Tax refund 33,984,039.89 Non-operating income, 33,984,039.89
    
    other income
    
    Social security subsidies and 135,853.85 Non-operating income 135,853.85
    
    post subsidies
    
    Enterprise reform development 160,161,518.76 Non-operating income, 160,161,518.76
    
    subsidies other income
    
    Others 46,886.89 Other income 46,886.89
    
    Environmental protection 36,428,597.00 Non-operating income, 36,428,597.00
    
    special subsidies other income
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 157
    
    VIII. Change in scope of consolidation
    
    1. Change in scope of consolidation due to other reasons
    
    During the reporting period, the scope of consolidation included 1 newly established subsidiary, namely Shanghai Pulp
    
    & Paper Sales Co., Ltd.
    
    IX. Interest in other entities
    
    1. Interest in subsidiaries
    
    (1) Constitution of the Group
    
    Principle place Nature of Shareholding (%)
    
    Name of subsidiary of business Place of incorporation business Acquisition Direct Indirect
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. Zhanjiang, China Zhanjiang, China Paper making 100.00 Establishment
    
    Shouguang Meilun Paper Co., Ltd. Shouguang, China Shouguang, China Paper making 100.00 Establishment
    
    Jilin Chenming Paper Co., Ltd. Jilin, China Jilin, China Paper making 100.00 Merger and
    
    acquisition
    
    Huanggang Chenming Pulp & Paper Co., Ltd. Huanggang, China Huanggang, China Pulp production 100.00 Establishment
    
    Shandong Chenming Paper Sales Co., Ltd. Shouguang, China Shouguang, China Sales of paper 100.00 Establishment
    
    Shouguang Chenming Import and Export Trade Co., Ltd. Shouguang, China Shouguang, China Import and export trade 100.00 Establishment
    
    Jiangxi Chenming Supply Chain Management Co., Ltd Jiangxi, China Jiangxi, China Trading 70.00 Establishment
    
    Chenming GmbH Hamburg, Germany Hamburg, Germany Paper product trading 100.00 Establishment
    
    Shouguang Chenming Papermaking Machine Co., Ltd. Shouguang, China Shouguang, China Machinery manufacturing 100.00 Establishment
    
    Shouguang Hongxiang Printing and Packaging Co., Ltd. Shouguang, China Shouguang, China Printing and packaging 100.00 Merger and
    
    acquisition
    
    Shouguang Chenming Modern Logistic Co., Ltd. Shouguang, China Shouguang, China Transportation 100.00 Establishment
    
    Shouguang Chenming Industrial Logistics Co., Ltd. Shouguang, China Shouguang, China Logistics 100.00 Establishment
    
    Jinan Chenming Investment Management Co., Ltd. Jinan, China Jinan, China Investment management 100.00 Establishment
    
    Huanggang Chenming Arboriculture Development Co., Ltd. Huanggang, China Huanggang, China Arboriculture 100.00 Establishment
    
    Chenming Arboriculture Co., Ltd. Wuhan, China Wuhan, China Arboriculture 100.00 Establishment
    
    Chenming Paper Korea Co., Ltd. Seoul, Korea Seoul, Korea Sales of paper 100.00 Establishment
    
    Shandong Chenming Power Supply Holdings Co., Ltd. Shouguang, China Shouguang, China Power Supply 100.00 Establishment
    
    Shouguang Shun Da Customs Declaration Co, Ltd. Shouguang, China Shouguang, China Customs declaration 100.00 Establishment
    
    Shanghai Chenming Industrial Co., Ltd. Shanghai, China Shanghai, China Property investment and 100.00 Establishment
    
    management
    
    Wuxi Song Ling Paper Co., Ltd. Wuxi, China Wuxi, China Paper making 100.00 Merger and
    
    acquisition
    
    Shandong Chenming Paper Group (Fuyu) Sales Co., Ltd. Fuyu, China Fuyu, China Sales of paper 100.00 Establishment
    
    Shandong Chenming Group Finance Co., Ltd. Jinan, China Jinan, China Finance 80.00 20.00 Establishment
    
    Jiangxi Chenming Paper Co., Ltd. Nanchang, China Nanchang, China Paper making 42.46 40.79 Establishment
    
    Qingdao Chenming International Logistics Co., Ltd. Qingdao, China Qingdao, China Logistics 30.00 70.00 Establishment
    
    Shouguang Chenming Art Paper Co., Ltd. Shouguang, China Shouguang, China Paper making 75.00 Establishment
    
    Hailaer Chenming Paper Co., Ltd. Hailaer, China Hailaer, China Paper making 75.00 Establishment
    
    Shandong Grand View Hotel Co., Ltd. Shouguang, China Shouguang, China Catering 70.00 Establishment
    
    Haicheng Haiming Mining Co., Ltd. Haicheng, China Haicheng, China Mining 60.00 Establishment
    
    Wuhan Chenming Hanyang Paper Holdings Co., Ltd. Wuhan, China Wuhan, China Paper making 65.205 Establishment
    
    Chengdu Chenming Culture Communication Co., Ltd. Chengdu, China Chengdu, China Marketing 100.00 Establishment
    
    Shandong Chenming Financial Leasing Co., Ltd. Jinan, China Jinan, China Financial leasing 100.00 Establishment
    
    Qingdao Chenming Nonghai Financial Leasing Co., Ltd. Qingdao, China Qingdao, China Financial leasing 100.00 Establishment
    
    Chenming (HK) Limited Hong Kong, China Hong Kong, China Paper product trading 100.00 Establishment
    
    Shouguang Hongyi Decorative Packaging Co., Ltd. Shouguang, China Shouguang, China Packaging 100.00 Merger and
    
    acquisition
    
    158 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    IX. Interest in other entities (Cont’d)
    
    1. Interest in subsidiaries (Cont’d)
    
    (1) Constitution of the Group (Cont’d)
    
    Principle place Nature of Shareholding (%)
    
    Name of subsidiary of business Place of incorporation business Acquisition Direct Indirect
    
    Shouguang Xinyuan Coal Co., Ltd. Shouguang, China Shouguang, China Coal 100.00 Merger and
    
    acquisition
    
    Shouguang City Run Sheng Wasted Paper Recycle Co., Ltd. Shouguang, China Shouguang, China Purchase and sale of 100.00 Merger and
    
    waste acquisition
    
    Shouguang Wei Yuan Logistics Company Limited Shouguang, China Shouguang, China Logistics 100.00 Merger and
    
    acquisition
    
    Shandong Chenming Panels Co., Ltd. Shouguang, China Shouguang, China Panels 100.00 Merger and
    
    acquisition
    
    Shouguang Chenming Floor Board Co., Ltd. Shouguang, China Shouguang, China Floor board 100.00 Merger and
    
    acquisition
    
    Shouguang Chenming Cement Co., Limited Shouguang, China Shouguang, China Cement 100.00 Establishment
    
    Wuhan Chenming Qianneng Electric Power Co., Ltd. Wuhan, China Wuhan, China Electric power 51.00 Establishment
    
    Shandong Chenming Investment Limited Jinan, China Jinan, China Investment 100.00 Establishment
    
    Japan Chenming Paper Co., Ltd. Tokyo, Japan Tokyo, Japan Paper product trading 100.00 Establishment
    
    Chenming International Co., Ltd. Los Angeles, USA Los Angeles, USA Paper product trading 100.00 Establishment
    
    Zhanjiang Chenming Arboriculture
    
    Development Co., Ltd. Zhanjiang, China Zhanjiang, China Arboriculture 100.00 Establishment
    
    Yangjiang Chenming Arboriculture
    
    Development Co., Ltd. Yangjiang, China Yangjiang, China Arboriculture 100.00 Establishment
    
    Nanchang Chenming Arboriculture
    
    Development Co., Ltd. Nanchang, China Nanchang, China Arboriculture 100.00 Establishment
    
    Guangdong Huirui Investment Co., Ltd. Zhanjiang, China Zhanjiang, China Investment 100.00 Merger and
    
    acquisition
    
    Zhanjiang Chenming New-style Wall Materials Co., Ltd Zhanjiang, China Zhanjiang, China Wall materials 100.00 Establishment
    
    Jilin Chenming New-style Wall Materials Co., Ltd. Jilin, China Jilin, China Wall materials 100.00 Establishment
    
    Jilin Chenming Logistics Co., Ltd. Jilin, China Jilin, China Logistics 100.00 Establishment
    
    Jiangxi Chenming Logistics Co., Ltd. Nanchang, China Nanchang, China Logistics 100.00 Establishment
    
    Fuyu Chenming Paper Co., Ltd. Fuyu, China Fuyu, China Paper making 100.00 Establishment
    
    Zhanjiang Meilun Pulp & Paper Co., Ltd. Zhanjiang, China Zhanjiang, China Paper making 100.00 Establishment
    
    Shanghai Chenming Financial leasing Co., Ltd. Shanghai, China Shanghai, China Financial leasing 100.00 Establishment
    
    Guangzhou Chenming Financial leasing Co., Ltd. Guangzhou, China Guangzhou, China Financial leasing 100.00 Establishment
    
    Shanghai Hongtai Real Estate Co., Ltd. Shanghai, China Shanghai, China Real estate 100.00 Merger and
    
    acquisition
    
    Shanghai Hongtai Property Management Co., Ltd. Shanghai, China Shanghai, China Property Management 100.00 Merger and
    
    acquisition
    
    Shandong Chenming Commercial Factoring Co., Ltd. Jinan, China Jinan, China Business factoring 100.00 Establishment
    
    Guangzhou Chenming Commercial Factoring Co., Ltd. Guangzhou, China Guangzhou, China Business factoring 51.00 Establishment
    
    Qingdao Chenming Pulp & Paper Electronic Commodity Spot Qingdao, China Qingdao, China Trading 30.00 70.00 Establishment
    
    Trading Center Co., Ltd.
    
    Beijing Chenming Meilun Technology Co., Ltd. Beijing, China Beijing, China Marketing 100.00 Establishment
    
    Shandong Chenming Paper Coated Paper Sales Co., Ltd. Shouguang, China Shouguang, China Sales 100.00 Establishment
    
    Zhanjiang Chenming Port Co., Ltd. Zhanjiang, China Zhanjiang, China Loading and unloading 100.00 Establishment
    
    Beijing Chenming Financial Leasing Co., Ltd. Beijing, China Beijing, China Finance 100.00 Establishment
    
    Chenming Paper United States Co., Ltd. USA 3200 EL CAMINO REAL, Paper trading 100.00 Establishment
    
    SUITE130, IRVINE,CA
    
    Shanghai Pulp & Paper Sales Co., Ltd. Shanghai, China Shanghai, China Sales of pulp and paper 100.00 Establishment
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 159
    
    IX. Interest in other entities (Cont’d)
    
    1. Interest in subsidiaries (Cont’d)
    
    (2) Major non-wholly owned subsidiaries
    
    Unit: RMB
    
    Gain or loss Dividend to Closing
    
    attributable to minority interests balance
    
    minority interests declared during of minority
    
    Name of subsidiary Minority interests during the period the period interests
    
    Wuhan Chenming Hanyang Paper Holdings Co., Ltd. 34.80% 2,917,703.06 87,394,258.81
    
    Shouguang Chenming Art Paper Co., Ltd. 25.00% 8,114,816.70 89,392,132.13
    
    Haicheng Haiming Mining Co., Ltd. 40.00% 18,062,982.75 162,380,423.51
    
    Jiangxi Chenming Paper Co., Ltd. 16.75% 5,048,268.31 9,212,500.00 500,428,230.77
    
    160 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 161
    
    IX. 1In. ter(Ie3ns)tetrienKWNSHJishaaauCoimnehcotugohae.gxy,neuioinLCCatfngtdnfhhshHg.ueiennanbCsmimesmhaidiieuninnnirggnagmbrHPyMcineaaisgpnnieyiaAnniarrgdnCtlgCtPoiiao.Pi,nap.at,LepLtfrirdetoCde.ri.Hoer.os,mlsLdtidna(g.(CsCtiooo14nnn,,3021Ct8470tuo’7394’rd,,,,dr4488fe0111n))0997tm,,,,4827a2636s2875sae....2195tj5483sorNon123n,,,0509-o9c9994u585n,,,,r7276re2217-n1151wt,,,,3271a9776sh2248s....e1327ot9667slly1128,,,,o46318370w2880T,,,,1o6542438tna1158l,,,,e8109a1413sCd4024sloe....4523ts4040ssingubba1113Cl,,,,au0298snr0815rci1127eed,,,,n9039t2772il0274iaa,,,,2627br5133il7281iite....i3042e1091ss No1n,22-0c551u64,,,r599re942n483t,,,778li318a767b...i558li612ties 1115,,,,2291TI0861oN3192t,,,,a5038Tl1724l4258iEa,,,,9696bR9151il4259itI....i8000eM7003s R3E,3814C0777Pu4457rO,,,,r8304e0695n0675Rt,,,,5126aT1868s3710se....22208t0455s01N9o114n,,,1670-c2119u8818,,,,r8222re3247n4329t,,,,7942a7058s9447s....e7524t0234s 1117,,,,448539873265T,,,,o65373933ta5094l,,,,2079aO9916sp2158se....e9722tn0689sing b1113Ca,,,,lu1157ar1626nr6727ec,,,,ne3427t9880l4086ia,,,,6818b7311il7048it....i0093e3718s Non7-c49u35,,r05re03n45t,,68li13a86b..i57li22ties U1114,,,,1155Tn5626o9723ti,,,,a3422tl9884:l9082ia,,,,R2816b9315il5045iMt....i5091e5710sB
    
    IX. Interest in other entities (Cont’d)
    
    1. Interest in subsidiaries (Cont’d)
    
    (3) Key financial information of major non-wholly owned subsidiaries (Cont’d)
    
    Unit: RMB
    
    Amount for the reporting period Amount for the prior period
    
    Total Cash flows from Total Cash flows fromcomprehensive operating comprehensive operatingName of subsidiary Revenue Net profit income activities Revenue Net profit income activitiesWuhan Chenming Hanyang Paper Holdings 596,359,764.41 4,370,822.22 4,370,822.22 -151,581,823.28 1,364,181,429.19 35,042,380.33 35,042,380.33 316,577,834.65Co., Ltd.
    
    Shouguang Chenming Art Paper Co., Ltd. 373,470,955.30 32,459,266.81 32,459,266.81 4,414,114.47 909,260,241.77 118,652,095.44 118,652,095.44 -99,931,648.76
    
    Haicheng Haiming Mining Co., Ltd. 208,675,941.50 45,157,456.87 45,157,456.87 32,185,353.30 421,599,693.66 126,380,989.01 126,380,989.01 75,115,059.89
    
    Jiangxi Chenming Paper Co., Ltd. 1,450,118,569.52 30,148,002.08 30,148,002.08 331,918,952.83 1,611,920,231.56 69,140,492.85 69,140,492.85 659,823,787.57
    
    3. Interest in joint arrangements or associates
    
    (1) Major joint ventures and associates
    
    Principle place Place of Shareholding Accounting
    
    Name of joint ventures and associates of business incorporation Nature of business Direct Indirect method
    
    Weifang Sime Darby West Port Co., Ltd. Weifang, China Weifang, China Port construction 50.00 Equity method
    
    Ningbo Qichen Huamei Equity Investment Fund Partnership Investment
    
    (Limited Partnership) Ningbo, China Ningbo, China management 40.00 Equity method
    
    Weifang Xingxing United Chemical Co., Ltd Weifang, China Weifang, China Chemical engineering 50.00 Equity method
    
    Zhuhai Dechen New Third Board Equity Investment Fund Investment
    
    Company (Limited Partnership) Zhuhai, China Zhuhai, China management 50.00 Equity method
    
    162 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    IX. Interest in other entities (Cont’d)
    
    3. Interest in joint arrangements or associates (Cont’d)
    
    (2) Key financial information of major joint ventures
    
    Unit: RMB
    
    Closing balance/Amount for Opening balance/Amount
    
    the reporting period for the prior period
    
    Weifang Xingxing Weifang Xingxing
    
    Weifang Sime Darby United Chemical Weifang Sime Darby United Chemical
    
    Item West Port Co., Ltd. Co., Ltd West Port Co., Ltd. Co., Ltd
    
    Current assets 30,816,393.13 114,409,623.25 55,386,175.28 97,755,183.56
    
    Of which: Cash and cash equivalents 21,180,173.81 33,305,428.50 53,489,910.53 35,030,150.70
    
    Non-current assets 550,319,128.35 32,702,466.79 528,403,804.86 38,098,361.81
    
    Total assets 581,135,521.48 147,112,090.04 583,789,980.14 135,853,545.37
    
    Current liabilities 14,456,779.54 35,381,769.82 1,236,372.30 32,584,182.76
    
    Non-current liabilities 391,067,611.12 389,620,042.41
    
    Total liabilities 405,524,390.66 35,381,769.82 390,856,414.71 32,584,182.76
    
    Minority interests
    
    Equity interest attributable to shareholders of the parent company 175,611,130.82 111,730,320.22 192,933,565.43 103,269,362.61
    
    Share of net assets based on shareholding 87,805,565.41 55,865,160.11 96,466,782.72 51,634,681.31
    
    Adjustments
    
    – Goodwill
    
    – Unrealised profit arising from intra-group transactions
    
    – Others 6,693,074.99 57,618,555.81
    
    Carrying amount of investment in joint ventures 95,190,010.73 113,352,838.10 103,159,857.71 109,253,237.12
    
    Fair value of investments in joint ventures with public quoted prices
    
    Revenue 7,744,022.16 78,509,386.24 166,613,896.54
    
    Finance expenses 10,159,513.72 -261,143.08 -346,852.57 -8,403.59
    
    Income tax expenses 2,733,067.31
    
    Net profit -15,939,693.96 8,199,201.95 -3,214,369.59 26,370,424.95
    
    Net profit from discontinued operations
    
    Other comprehensive income
    
    Total comprehensive income -15,939,693.96 8,199,201.95 -3,214,369.59 26,370,424.95
    
    Dividend received from joint ventures during the period
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 163
    
    IX. Interest in other entities (Cont’d)
    
    3. Interest in joint arrangements or associates (Cont’d)
    
    (3) Key financial information of major associates
    
    Unit: RMB
    
    Closing balance/Amount for Opening balance/Amount for
    
    the reporting period the reporting periodNingbo Qichen Zhuhai Dechen Ningbo Qichen Zhuhai DechenHuamei Equity New Third Board Huamei Equity New Third BoardInvestment Fund Equity Investment Investment Fund Equity Investment
    
    Partnership Fund Company Partnership Fund Company
    
    Item (Limited Partnership) (Limited Partnership) (Limited Partnership) (Limited Partnership)
    
    Current assets 59,343,061.91 5,709,651.76 79,292,150.81 5,492,635.42
    
    Non-current assets 140,950,006.00 99,020,000.00 119,000,000.00 99,020,000.00
    
    Total assets 200,293,067.91 104,729,651.76 198,292,150.81 104,512,635.42
    
    Current liabilities 14,232.41 5,000.00 13,135.40 5,000.00
    
    Non-current liabilities
    
    Total liabilities 14,232.41 5,000.00 13,135.40 5,000.00
    
    Minority interests
    
    Equity interest attributable to shareholders of
    
    the parent company 200,278,835.50 104,724,651.76 198,279,015.41 104,507,635.42
    
    Share of net assets based on shareholding 80,111,534.20 52,362,325.89 79,311,606.16 52,253,817.72
    
    Carrying amount of investment in associates 200,384,677.01 52,362,315.04 199,585,216.93 52,253,817.72
    
    Revenue
    
    Net profit 1,998,750.11 217,016.34 1,510,109.81 670,768.61
    
    Net profit from discontinued operations
    
    Other comprehensive income
    
    Total comprehensive income 1,998,750.11 217,016.34 1,510,109.81 670,768.61(4) Summary financial information of non-major joint ventures and associates
    
    Unit: RMB
    
    Closing balance/ Opening balance/
    
    Amount for Amount for the
    
    Item the year prior year
    
    Joint ventures:
    
    Total carrying amount of investment 4,048,295.87 3,572,834.79
    
    Total amount of the following items based on shareholding 975,461.08 485,538.07
    
    – Net profit 975,461.08 485,538.07
    
    Associates:
    
    Total carrying amount of investment 9,368,973.06 18,761,580.99
    
    Total amount of the following items based on shareholding -18,325,737.46 -11,838,692.59
    
    – Net profit -18,325,737.46 -11,838,692.59
    
    164 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    IX. Interest in other entities (Cont’d)
    
    3. Interest in joint arrangements or associates (Cont’d)
    
    (5) Excess loss of joint ventures or associates
    
    Unit: RMB
    
    Accumulatedunrecognised loss Unrecognised loss Unrecognised loss
    
    incurred for (or share of net (or share of net
    
    Name of joint ventures or associates prior periods profit) for the period profit) for the period
    
    Arjo Wiggins Chenming Specialty Paper Co.,
    
    Ltd. 7,308,869.16 7,308,869.16
    
    Xuchang Chenming Paper Co., Ltd. 4,091,767.83 4,091,767.83
    
    X. Fair value
    
    1. Fair value of assets and liabilities measured at fair value as at the end of the period
    
    Unit: RMB
    
    Fair value as at the end of the period
    
    Item Level 1 Level 2 Level 3 Total
    
    I. Continuous measurement at fair value –- –- –- –-
    
    1. Other non-current financial assets –- –- 765,160,000.00 765,160,000.00
    
    2. Biological assets
    
    Consumable biological assets 1,532,910,693.20 1,532,910,693.20
    
    Total assets continuously measured at fair value 2,298,070,693.20 2,298,070,693.20
    
    Note: as the Company’s shareholding in the investee is low without significant influence, it is not practicable to adopt the income approach or
    
    the market approach for the valuation of the shareholding in the investee. Moreover, there was no recent introduction of external investor
    
    or equity transfer among the shareholders to serve as a reference for the determination of fair value, which may be classified as “limited
    
    circumstances” for the best estimate of fair value at cost. Thus, the fair value of other non-current financial assets was measured at cost at
    
    the end of the year.
    
    2. Level 3 continuous measurement, adjustment between opening and closing value and sensitivity of
    
    unobservable inputs
    
    The Company adopts sensitivity analysis techniques to analyse the possible effects of rational and probable changes
    
    in risk variables to profit or loss for the period or to the interests of shareholders. Since risk variables seldom change on
    
    a stand-alone basis, while the correlation between variables may have significant influence to the ultimate amount of
    
    change effected by the change in a single risk variable, the analysis below is based on the assumption that the changes
    
    in each variable occurred separately.
    
    Change in For the year For the prior yearinvestment yield or Impact on Impact onItem discount rate Impact on profit shareholders’ equity Impact on profit shareholders’ equityConsumable biological assets Increases by 1% -33,202,809.15 -33,202,809.15 -39,808,078.34 -39,808,078.34Consumable biological assets Decreases by 1% 36,397,424.88 36,397,424.88 43,368,412.26 43,368,412.26Note: In the prior period, the income method was used to evaluate the impact of the change in the discount rate on the fair value. In the current
    
    period, the harvest present value method is used to assess the impact of the change in investment yield on fair value.
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 165
    
    X. Fair value (Cont’d)
    
    3. Fair value of financial assets and financial liabilities not measured at fair value
    
    The Company’s financial assets and financial liabilities not measured at fair value mainly consist of: accounts receivable,
    
    short-term borrowings, accounts payable, long-term borrowings, bonds payable and long-term payables. The carrying
    
    amount of the above financial assets and financial liabilities deviates from the fair value by a small amount.
    
    XI. Related parties and related party transactions
    
    1. Parent company of the Company
    
    Shareholding Voting right of
    
    of the parent the parent
    
    Name of parent Place of Business Registered company in the company in the
    
    company incorporation nature capital Company Company
    
    Chenming Holdings Shouguang Investment in 123,878.77 27.87% 27.87%
    
    Co., Ltd. manufacture of paper,
    
    electricity, steam,
    
    arboriculture
    
    Note: The ultimate controller of the Company is Shouguang State-owned Assets Supervision and Administration Office.2. Subsidiaries of the Company
    
    Please refer to Note IX. 1. Interest in subsidiaries for details.3. Joint ventures and associates of the Company
    
    Please refer to Note IX. 3. Interest in joint ventures or associates for details.
    
    Balance of related party transaction between the Company and its joint ventures or associates during the period or prior
    
    periods are as follows:
    
    Name of joint ventures or associates Relation
    
    Shouguang Chenming Huisen New-style A joint venture of the Company
    
    Construction Materials Co., Ltd.
    
    Xuchang Chenming Paper Co., Ltd. An associate of the Company
    
    Weifang Sime Darby West Port Co., Ltd. A joint venture of the Company
    
    Jiangxi Jiangbao Media Colour Printing Co., Ltd. An associate of the Company
    
    Zhuhai Dechen New Third Board Equity Investment An associate of the Company
    
    Zhuhai Dechen New Third Board Equity Investment
    
    Ningbo Kaichen Huamei Equity Investment An associate of the Company
    
    Fund Partnership (Limited Partnership)
    
    Chenming (Qingdao) Asset Management Co., Ltd. An associate of the Company
    
    Jiangxi Chenming Port Co., Ltd. An associate of the Company
    
    Weifang Xingxing United Chemical Co., Ltd. A joint venture of the Company
    
    166 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    XI. Related parties and related party transactions (Cont’d)
    
    4. Other related parties
    
    Name of other related parties Relation
    
    Shandong Shouguang Jinxin Investment Development Shareholder of the Company’s largest shareholder
    
    Holdings Group Co., Ltd.
    
    Shouguang Henglian Enterprise Investment Limited Shareholder of the Company’s largest shareholder
    
    Shouguang Ruifeng Enterprise Investment Limited Shareholder of the Company’s largest shareholder
    
    Chenming Holdings (Hong Kong) Limited Subsidiary of the Company’s largest shareholder
    
    Zhanjiang Chenming Real Estate Co., Ltd. Subsidiary of the Company’s largest shareholder
    
    Qingdao Hongji Weiye Investment Co., Ltd. Subsidiary of the Company’s largest shareholder
    
    Shouguang Hengying Real Estate Co., Ltd. Subsidiary of the Company’s largest shareholder
    
    Shouguang Hengtai Enterprise Investment Co., Ltd. A company invested by the Directors and senior
    
    management of the Company
    
    Shouguang Huixin Construction Materials Co., Ltd. A company invested by the Directors and senior
    
    management of the Company
    
    Shouguang Chenming Guangyuan Real Property Co., Ltd. A company invested by the Directors and senior
    
    and its subsidiaries management of the Company
    
    Qingdao Chenming Nonghai Investment Co., Ltd. A company invested by the Directors and senior
    
    and its subsidiaries management of the Company
    
    Nanchang Chenjian New-style Wall Materials Co., Ltd. A company invested by the Directors and senior
    
    management of the Company
    
    Shouguang Hengde Enterprises Investment Co., Ltd. A company invested by the Directors and senior
    
    management of the Company
    
    Zhejiang Huaming Investment Management Co., Ltd. Directors and senior management served
    
    and its subsidiaries by the Company’s Directors
    
    Hebei Chenming Zhongjin Real Estate Directors and senior management served
    
    Development Co., Ltd. and its subsidiaries by the Company’s Directors
    
    Wuhan Chenming Zhongjin Real Estate Co., Ltd. Directors and senior management served
    
    and its subsidiaries by the Company’s Directors
    
    Wuhan Rongsheng Zhongjin Development Directors and senior management served
    
    and Investment Co., Ltd. and its subsidiaries by the Company’s Directors
    
    Qingzhou Chenming Denaturation Amylum Co., Ltd. Share participating company of the Company
    
    Zhejiang Guangyu Idall Print Co., Ltd. Share participating company of the Company
    
    Anhui Time Source Corporation Share participating company of the Company
    
    Shandong Hongqiao Venture Capital Co., Ltd. Share participating company of the Company
    
    Shanghai Hengzheng Venture Investment Center Share participating company of the Company
    
    (Limited Partnership)
    
    Lide Technology Co., Ltd. Share participating company of the Company
    
    Jiangxi Chenming Natural Gas Co., Ltd. Directors and senior management served
    
    and its subsidiaries by the Company’s Directors in the past twelve months
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 167
    
    XI. Related parties and related party transactions (Cont’d)
    
    5. Related party transactions
    
    (1) Purchase and sales of goods and rendering and receiving services
    
    Table on purchase of goods/receiving of services
    
    Unit: RMB
    
    Transaction Whether the
    
    Amount for the facility transaction facility Amount for
    
    Related party Details of related party transaction reporting period approved is exceeded the prior period
    
    Jiangxi Chenming Natural Procurement of natural gas
    
    Gas Co., Ltd. and heavy oil, etc. 112,367,700.00 600,000,000.00 No 170,147,411.87
    
    Weifang Xingxing United Procurement of hydrogen peroxide etc.
    
    Chemical Co., Ltd. 45,877,683.03
    
    Table on sales of goods/providing of services
    
    Unit: RMB
    
    Details of related Amount for the Amount for
    
    Related party party transaction reporting period the prior period
    
    Shouguang Chenming Huisen New-style Construction Materials Co., Ltd. Sales of electricity and gas 3,980,581.15 2,669,745.03
    
    Shouguang Huixin Construction Materials Co., Ltd. Machinery materials 34,785.90 49,464.70
    
    168 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    XI. Related parties and related party transactions (Cont’d)
    
    5. Related party transactions (Cont’d)
    
    (2) Guarantee
    
    The Company as guarantor
    
    Unit: RMBWhether performanceStarting date Expiry date of guarantee
    
    Party being guaranteed Amount under guarantee of guarantee of guarantee is completed
    
    Weifang Sime Darby West Port Co., Ltd. 135,000,000.00 2017/12/20 2027/12/20 No
    
    Shandong Chenming Paper Sales Co., Ltd. 130,000,000.00 2018/7/4 2019/7/5 No
    
    Shandong Chenming Paper Sales Co., Ltd. 420,000,000.00 2018/7/23 2019/7/24 No
    
    Shandong Chenming Paper Sales Co., Ltd. 300,000,000.00 2018/10/26 2019/10/26 No
    
    Shandong Chenming Paper Sales Co., Ltd. 450,000,000.00 2018/11/14 2019/11/14 No
    
    Shandong Chenming Paper Sales Co., Ltd. 100,000,000.00 2019/1/24 2020/1/16 No
    
    Shandong Chenming Paper Sales Co., Ltd. 254,291,455.72 2019/3/13 2019/9/10 No
    
    Shandong Chenming Paper Sales Co., Ltd. 50,000,000.00 2019/3/19 2020/3/13 No
    
    Shandong Chenming Paper Sales Co., Ltd. 200,000,000.00 2019/4/2 2019/9/30 No
    
    Shandong Chenming Paper Sales Co., Ltd. 100,000,000.00 2019/5/17 2019/11/17 No
    
    Shandong Chenming Paper Sales Co., Ltd. 420,118,552.64 2019/5/21 2019/11/18 No
    
    Shandong Chenming Paper Sales Co., Ltd. 100,000,000.00 2019/5/23 2019/11/23 No
    
    Shandong Chenming Paper Sales Co., Ltd. 150,000,000.00 2019/5/29 2020/5/28 No
    
    Shouguang Meilun Paper Co., Ltd. 23,812,304.93 2019/1/3 2019/7/2 No
    
    Shouguang Meilun Paper Co., Ltd. 96,352,478.17 2019/4/17 2019/10/15 No
    
    Shouguang Meilun Paper Co., Ltd. 106,211,387.85 2019/6/13 2019/12/10 No
    
    Shouguang Meilun Paper Co., Ltd. 27,867,187.19 2019/6/25 2019/12/23 No
    
    Shouguang Meilun Paper Co., Ltd. 170,000,000.00 2018/12/11 2019/12/6 No
    
    Shouguang Meilun Paper Co., Ltd. 249,348,278.62 2019/2/19 2019/8/19 No
    
    Chenming (HK) Limited 57,060,010.00 2018/8/8 2019/7/15 No
    
    Chenming (HK) Limited 96,933,270.00 2018/8/10 2019/7/15 No
    
    Chenming (HK) Limited 226,383,871.00 2018/11/19 2019/11/8 No
    
    Chenming (HK) Limited 65,309,650.00 2018/12/7 2019/12/6 No
    
    Chenming (HK) Limited 200,000,000.00 2018/12/5 2019/12/5 No
    
    Chenming (HK) Limited 97,139,511.00 2019/3/26 2020/3/16 No
    
    Chenming (HK) Limited 278,837,832.00 2019/6/19 2020/6/10 No
    
    Chenming (HK) Limited 30,788,100.00 2019/1/12 2020/1/10 No
    
    Chenming (HK) Limited 150,968,412.00 2018/4/23 2021/4/7 No
    
    Chenming (HK) Limited 86,621,220.00 2018/5/4 2021/4/6 No
    
    Chenming (HK) Limited 54,447,624.00 2018/5/17 2021/5/5 No
    
    Chenming (HK) Limited 254,939,000.28 2018/8/8 2021/5/25 No
    
    Chenming (HK) Limited 254,939,000.28 2018/8/8 2021/5/25 No
    
    Chenming (HK) Limited 290,627,942.50 2018/9/4 2021/6/21 No
    
    Chenming (HK) Limited 290,627,942.50 2018/9/6 2021/6/21 No
    
    Chenming (HK) Limited 193,179,070.00 2018/11/30 2020/10/30 No
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 169
    
    XI. Related parties and related party transactions (Cont’d)
    
    5. Related party transactions (Cont’d)
    
    (2) Guarantee (Cont’d)
    
    Whether performance
    
    Starting date Expiry date of guarantee
    
    Party being guaranteed Amount under guarantee of guarantee of guarantee is completed
    
    Chenming (HK) Limited 163,274,125.00 2019/1/25 2021/5/21 No
    
    Chenming (HK) Limited 103,120,500.00 2019/3/28 2022/1/7 No
    
    Chenming (HK) Limited 103,120,500.00 2019/3/28 2021/6/16 No
    
    Chenming (HK) Limited 202,356,794.50 2019/4/2 2022/1/6 No
    
    Chenming (HK) Limited 202,356,794.50 2019/4/2 2021/6/10 No
    
    Chenming (HK) Limited 138,181,470.00 2019/4/30 2022/4/22 No
    
    Chenming (HK) Limited 288,737,400.00 2016/11/2 2019/9/10 No
    
    Chenming (HK) Limited 281,862,700.00 2017/11/7 2019/9/30 No
    
    Chenming (HK) Limited 96,245,800.00 2018/5/11 2020/4/11 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 99,730,254.39 2018/7/27 2019/7/21 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 50,000,000.00 2018/8/31 2019/8/16 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2018/9/13 2019/9/12 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 110,000,000.00 2018/10/17 2019/10/17 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 200,000,000.00 2018/10/12 2019/10/11 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2018/10/17 2019/9/27 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 99,903,967.00 2018/10/17 2019/10/17 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 76,000,000.00 2018/10/19 2019/10/19 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 115,000,000.00 2018/11/6 2019/11/4 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 90,000,000.00 2018/11/12 2019/11/12 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 166,670,000.00 2018/11/9 2019/11/8 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 97,116,354.19 2018/12/3 2019/11/25 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2018/12/20 2019/12/19 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2018/12/26 2019/12/25 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 154,898,103.49 2019/1/10 2019/6/29 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 60,000,000.00 2019/1/28 2019/7/28 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 450,000,000.00 2019/1/30 2020/1/29 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 30,600,977.22 2019/2/2 2020/1/31 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2019/1/8 2019/12/31 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 87,552,473.94 2019/1/18 2019/7/16 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2019/1/14 2020/1/13 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 125,000,000.00 2019/1/22 2020/1/21 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2019/2/15 2020/2/14 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 70,000,000.00 2019/3/22 2020/3/22 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 42,400,000.00 2019/4/12 2019/10/9 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 99,600,000.00 2019/4/23 2019/10/23 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 82,000,000.00 2019/4/28 2019/10/28 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 89,000,000.00 2019/6/3 2020/6/2 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 120,000,000.00 2019/6/27 2020/6/26 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 343,735,000.00 2019/2/14 2020/2/2 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 92,324,988.00 2019/1/22 2019/12/20 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 95,180,400.00 2019/2/15 2019/8/14 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 34,877,540.01 2019/5/30 2019/11/20 No
    
    170 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    XI. Related parties and related party transactions (Cont’d)
    
    5. Related party transactions (Cont’d)
    
    (2) Guarantee (Cont’d)
    
    Whether performance
    
    Starting date Expiry date of guarantee
    
    Party being guaranteed Amount under guarantee of guarantee of guarantee is completed
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 19,439,919.66 2019/6/10 2019/8/2 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 22,500,000.00 2015/6/3 2020/5/21 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 25,436,390.00 2015/6/5 2020/5/21 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 137,494,000.00 2017/12/21 2019/12/20 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 49,000,000.00 2018/2/13 2020/2/11 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 10,000,000.00 2018/2/23 2020/2/11 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 10,000,000.00 2018/2/26 2020/2/11 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 30,000,000.00 2018/2/28 2020/2/11 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 330,000,000.00 2018/10/31 2020/10/30 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 70,000,000.00 2018/10/31 2020/10/30 No
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.00 2018/12/18 2020/10/31 No
    
    Jiangxi Chenming Paper Co., Ltd. 99,000,000.00 2018/7/10 2019/7/8 No
    
    Jiangxi Chenming Paper Co., Ltd. 51,000,000.00 2018/8/16 2019/8/14 No
    
    Jiangxi Chenming Paper Co., Ltd. 28,000,000.00 2018/8/24 2019/8/24 No
    
    Jiangxi Chenming Paper Co., Ltd. 64,285,135.36 2019/1/7 2020/1/7 No
    
    Jiangxi Chenming Paper Co., Ltd. 100,000,000.00 2019/1/18 2020/1/15 No
    
    Jiangxi Chenming Paper Co., Ltd. 46,800,000.00 2019/2/28 2020/2/28 No
    
    Jiangxi Chenming Paper Co., Ltd. 100,000,000.00 2019/3/15 2020/3/14 No
    
    Jiangxi Chenming Paper Co., Ltd. 150,000,000.00 2019/3/21 2020/3/21 No
    
    Jiangxi Chenming Paper Co., Ltd. 90,000,000.00 2019/3/29 2020/3/29 No
    
    Jiangxi Chenming Paper Co., Ltd. 70,000,000.00 2019/3/29 2020/3/29 No
    
    Shandong Chenming Financial Leasing Co., Ltd. 72,000,000.00 2018/11/7 2019/11/7 No
    
    Shandong Chenming Financial Leasing Co., Ltd. 60,000,000.00 2018/10/17 2019/10/17 No
    
    Guangzhou Chenming Financial Leasing Co., Ltd. 180,000,000.00 2018/9/13 2018/9/9 No
    
    Jilin Chenming Paper Co., Ltd. 40,000,000.00 2019/3/15 2020/1/17 No
    
    Jilin Chenming Paper Co., Ltd. 20,010,000.00 2019/2/26 2019/8/26 No
    
    Jilin Chenming Paper Co., Ltd. 23,398,200.00 2019/5/7 2020/5/8 No
    
    Jilin Chenming Paper Co., Ltd. 48,600,000.00 2019/5/7 2020/5/8 No
    
    Huanggang Chenming Pulp & Paper Co., Ltd. 32,770,000.00 2015/12/14 2019/9/26 No
    
    Huanggang Chenming Pulp & Paper Co., Ltd. 27,070,000.00 2015/12/14 2019/12/26 No
    
    Huanggang Chenming Pulp & Paper Co., Ltd. 5,700,000.00 2016/6/24 2019/12/26 No
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 171
    
    XI. Related parties and related party transactions (Cont’d)
    
    5. Related party transactions (Cont’d)
    
    (2) Guarantee (Cont’d)
    
    Whether performance
    
    Starting date Expiry date of guarantee
    
    Party being guaranteed Amount under guarantee of guarantee of guarantee is completed
    
    Huanggang Chenming Pulp & Paper Co., Ltd. 32,770,000.00 2016/6/24 2020/3/26 No
    
    Huanggang Chenming Pulp & Paper Co., Ltd. 530,000.00 2016/6/24 2020/6/26 No
    
    Huanggang Chenming Pulp & Paper Co., Ltd. 32,240,000.00 2017/1/5 2020/6/26 No
    
    Huanggang Chenming Pulp & Paper Co., Ltd. 38,240,000.00 2017/1/5 2020/9/26 No
    
    Huanggang Chenming Pulp & Paper Co., Ltd. 38,240,000.00 2017/1/5 2020/12/26 No
    
    Huanggang Chenming Pulp & Paper Co., Ltd. 43,690,000.00 2017/1/5 2021/3/26 No
    
    Huanggang Chenming Pulp & Paper Co., Ltd. 43,690,000.00 2017/1/5 2021/6/26 No
    
    Huanggang Chenming Pulp & Paper Co., Ltd. 3,900,000.00 2017/1/5 2021/9/26 No
    
    Huanggang Chenming Pulp & Paper Co., Ltd. 36,260,000.00 2017/2/3 2021/9/26 No
    
    Huanggang Chenming Pulp & Paper Co., Ltd. 40,160,000.00 2017/2/3 2021/12/26 No
    
    Huanggang Chenming Pulp & Paper Co., Ltd. 40,160,000.00 2017/2/3 2022/3/26 No
    
    Huanggang Chenming Pulp & Paper Co., Ltd. 33,420,000.00 2017/2/3 2022/6/26 No
    
    Huanggang Chenming Pulp & Paper Co., Ltd. 44,531,362.58 2018/9/19 2020/6/26 No
    
    Huanggang Chenming Pulp & Paper Co., Ltd. 43,642,107.09 2018/11/14 2020/11/14 No
    
    Huanggang Chenming Pulp & Paper Co., Ltd. 66,702,050.00 2016/12/5 2019/9/26 No
    
    Huanggang Chenming Pulp & Paper Co., Ltd. 41,747,636.00 2016/12/5 2019/12/26 No
    
    Huanggang Chenming Pulp & Paper Co., Ltd. 24,954,414.00 2017/4/12 2019/12/26 No
    
    Huanggang Chenming Pulp & Paper Co., Ltd. 66,702,050.00 2017/4/12 2020/3/26 No
    
    Huanggang Chenming Pulp & Paper Co., Ltd. 9,693,533.74 2017/4/12 2020/6/26 No
    
    Total 14,266,427,041.35
    
    172 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    XI. Related parties and related party transactions (Cont’d)
    
    5. Related party transactions (Cont’d)
    
    (3) Related party lending and borrowing (Cont’d)
    
    Unit: RMB
    
    Related party Borrowing amount Starting date Expiry date Description
    
    Borrowing
    
    Chenming Holdings Co., Ltd. 162,000,000.00 2018/8/28 2019/7/17
    
    Lending
    
    Weifang Sime Darby West Port Co., Ltd. 59,500,000.00 2018/7/9 2022/7/8
    
    6. Related party accounts receivable and accounts payable
    
    (1) Accounts receivables
    
    Unit: RMB
    
    Closing balance Opening balance
    
    Item Book balance Bad debt Book balance Bad debt
    
    Accounts receivable:
    
    Shouguang Huixin Construction Materials Co., Ltd. 18,892,073.10 944,603.66 12,960,322.42 648,016.12
    
    Shouguang Chenming Huisen New-style
    
    Construction Materials Co., Ltd. 979,382.80 48,969.14 774,832.20 38,741.61
    
    Total 19,666,905.30 1,719,435.86 13,735,154.62 1,422,848.32
    
    Prepayments:
    
    Jiangxi Chenming Natural Gas Co., Ltd. 25,391,023.96 33,567,041.92
    
    Shouguang Chenming Natural Gas Co., Ltd. 33,144,533.81 25,586,691.33
    
    Total 58,535,557.77 59,153,733.25
    
    Other receivables:
    
    Arjo Wiggins Chenming Specialty Paper Co., Ltd. 1,191,705.08 1,191,705.08 1,191,705.08 1,191,705.08
    
    Weifang Sime Darby West Port Co., Ltd. 62,631,878.08 313,159.38 60,836,961.43 304,184.80
    
    Total 63,823,583.16 1,504,864.46 62,028,666.51 1,495,889.88
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 173
    
    XI. Related parties and related party transactions (Cont’d)
    
    6. Related party accounts receivable and accounts payable (Cont’d)
    
    (2) Accounts payable
    
    Unit: RMB
    
    Closing book Opening book
    
    Item Related party balance balance
    
    Accounts payable: Weifang Xingxing United
    
    Chemical Co., Ltd. 15,861,358.40 18,544,025.96
    
    Total 15,861,358.40 18,544,025.96
    
    Other payables Chenming Holdings Co., Ltd. 45,200,000.00 376,000,000.00
    
    Other payables Shouguang Hengtai Enterprise
    
    Investment Company Limited 45,977,444.73 44,392,007.69
    
    Total 111,177,444.73 420,392,007.69
    
    XII. Undertaking and contingency
    
    1. Undertaking
    
    (1) Capital commitment
    
    Item Closing balance Opening balance
    
    Commitments in relation to acquisition and
    
    construction of long-term assets 1,930,608,190.17 1,463,816,242.90
    
    Total 1,930,608,190.17 1,463,816,242.90(2) Operating lease commitments
    
    As at the balance sheet date, the Company entered into irrevocable operating lease contracts with external
    
    companies as follows:
    
    Item Closing balance Opening balance
    
    Minimum lease payments under irrevocable operating leases:
    
    The first year after balance sheet date 4,579,873.34 5,315,217.18
    
    The second year after balance sheet date 4,543,786.76 4,929,546.64
    
    The third year after balance sheet date 4,406,104.83 4,406,104.83
    
    In the years thereafter 86,588,438.29 86,672,608.29
    
    Total 100,118,203.22 101,323,476.94
    
    174 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    XII. Undertaking and contingency (Cont’d)
    
    2. Contingency
    
    Contingent liabilities arising from pending litigation and its financial impacts
    
    In October 2005, the Company and Hong Kong ArjowigginsHKK2Limited (“HKK2”) jointly established Arjo Wiggins
    
    Chenming Specialty Paper Co., Ltd. in Shouguang, Shandong Province, which is engaged in the production of special
    
    paper, decoration paper and draft paper. However, such company experienced poor management due to financial
    
    crisis. Hence, such company was forced to dissolve in October 2008.
    
    In October 2012, HKK2 submitted for arbitration application to Hong Kong International Arbitration Centre, Hong Kong
    
    Special Administration of PRC, on the ground of default of the joint venture agreement by the Company. In November
    
    2015, Hong Kong International Arbitration Centre announced arbitration result, stating that the Company should
    
    compensate HKK2 with economic loss of RMB167 million, arbitration fee of HK$3.30 million and legal fee of USD3.54
    
    million, together with interest thereon calculated at 8% per annum. In October 2016, the Company received a statutory
    
    demand, stating that if the Company fails to perform the arbitration results within 21 days, the liquidation application
    
    on H shares of the Company will be submitted. Subsequently, HKK2 submitted H shares liquidation application to the
    
    arbitration centre.
    
    In November 2016, the Company submitted application to the Court of First Instance of the High Court of the HKSAR
    
    and received an injunction, stating that “the applicant is prohibited from applying for liquidation on the Company”.
    
    In February 2017, HKK2 submitted an appeal to the court. In June 2017, the court dismissed the injunction received by
    
    the Company. In the same month, the Company received the liquidation application submitted by the defendant to the
    
    High Court of Hong Kong, which alleged that the Company should compensate the defendant with economic loss of
    
    RMB167 million, legal fee of USD3.54 million and arbitration fee of HK$3.30 million, together with interest thereon due to
    
    failure in compliance of the arbitration results.
    
    In September 2017, the Company procured a deposit of HK$389 million to the High Court of Hong Kong, and appealed
    
    against the injunction to the court. In May 2018, the court session of the case commenced. At present, the injunction
    
    case is still in progress.
    
    In 2017, the Company made provision of RMB325,259,082.28 for the expected liability arising from this litigation.
    
    However, as at 30 June 2019, judgment of the court of Hong Kong is yet to be made, and the expected loss is uncertain.
    
    Hence, such expected liability is still stated under the balance sheet.
    
    XIII. Post-balance sheet event
    
    The 2018 profit distribution plan was approved at the 2018 annual general meeting, based on the total ordinary share capital
    
    of 2,904,608,200 shares, a cash dividend of RMB2.4 (tax inclusive) per 10 shares was distributed to ordinary shareholders and
    
    the 1,162,790,698 simulated ordinary shares converted from the preference shares using a conversion ratio of 1 share valued
    
    at RMB3.87 as at the end of 2018; a cash dividend of RMB2.4 (tax inclusive) per 10 simulated ordinary shares converted from
    
    the preference shares was distributed to holders of preference shares. No bonus shares were issued and no capitalisation
    
    issue was made out of the reserves. A cash dividend of RMB697,105,968 was distributed to ordinary shareholders and a
    
    variable cash dividend of RMB279,069,767.52 was distributed to holders of preference shares. On 9 August, the above
    
    distribution plan was implemented.
    
    On 7 August 2019, Meilun (BVI) Limited, an overseas wholly-owned subsidiary of the Company, issued a total of USD163
    
    million USD bond on Hong Kong Stock Exchange with an interest rate of 9% and a term of less than 3 years.
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 175
    
    XIV. Other material matters
    
    1. Segment information
    
    Unit: RMB0,000
    
    Machine-made Financial Magnesium Inter-segment
    
    Item paper services ore Others elimination Total
    
    Income from principal activities 1,160,238.19 125,508.31 19,577.31 44,544.25 37,129.15 1,312,738.91
    
    Cost for principal activities 913,857.99 48,814.34 9,642.65 34,516.92 42,426.99 964,404.91
    
    Total assets 10,023,910.58 3,860,864.11 238,537.54 962,885.92 4,430,323.05 10,655,875.10
    
    Total liabilities 7,773,740.88 2,171,651.27 200,544.39 475,448.24 2,496,462.66 8,124,922.12
    
    XV. Notes to major financial statement items of the parent company
    
    1. Accounts receivable
    
    (1) Accounts receivable by category
    
    Unit: RMB
    
    Closing balance Opening balance
    
    Book balance Bad debt provision Carrying Book balance Bad debt provision
    
    Category Amount Percentage Amount Percentage amount Amount Percentage Amount Percentage Carrying amount
    
    Accounts receivable
    
    assessed individually
    
    for impairment
    
    Accounts receivable 108,478,376.23 100.00% 2,259,459.50 2.08% 106,218,916.73 1,349,962,797.42 100% 685,832.38 0.05% 1,349,276,965.04
    
    assessed collectively
    
    for impairment
    
    Of which:
    
    Accounts receivable from 78,081,188.56 71.98% 78,081,188.56 1,342,192,951.98 99.42% 1,342,192,951.98
    
    related parties
    
    Accounts receivable from 30,397,187.67 28.02% 2,259,459.50 7.43% 28,137,728.17 7,769,845.44 0.58% 685,832.38 8.83% 7,084,013.06
    
    distributor clients
    
    Total 108,478,376.23 100.00% 2,259,459.50 2.08% 106,218,916.73 1,349,962,797.42 100% 685,832.38 0.05% 1,349,276,965.04
    
    176 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    XV. Notes to major financial statement items of the parent company (Cont’d)
    
    1. Accounts receivable (Cont’d)
    
    (1) Accounts receivable by category (Cont’d)
    
    Items assessed individually for impairment:
    
    Accounts receivable with collective provision for bad debts based on receivables from distributor clients:
    
    Unit: RMB
    
    Closing balance
    
    Bad debts Provision
    
    Ageing Book balance provision Percentage
    
    Within 1 year 25,894,366.50 1,294,718.33 5.00%
    
    1-2 years – –
    
    2-3 years 4,422,600.00 884,520.00 20.00%
    
    Over 3 years 80,221.17 80,221.17 100.00%
    
    Total 30,397,187.67 2,259,459.50 7.43%
    
    Disclosed by ageing:
    
    Unit: RMB
    
    Ageing Closing balance
    
    Within 1 year 101,045,250.65
    
    1-2 years –
    
    2-3 years 5,173,666.08
    
    Over 3 years –
    
    Total 106,218,916.73(2) Provision, recovery or reversal of bad debt provision for the period
    
    Provision of bad debt provision for the period:
    
    Unit: RMB
    
    Changes in the period
    
    Opening Recovery Closing
    
    Category balance Provision or reversal Written off balance
    
    Accounts receivable with provision
    
    for bad debt 685,832.38 1,573,627.12 2,259,459.50
    
    Total 685,832.38 1,573,627.12 2,259,459.50
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 177
    
    XV. Notes to major financial statement items of the parent company (Cont’d)
    
    1. Accounts receivable (Cont’d)
    
    (3) Top five accounts receivable based on closing balance of debtors
    
    The total amount of the Company’s top five accounts receivable based on closing balance of debtors for the year
    
    was RMB71,592,434.10, which accounted for 66.00% of the closing balance of the total accounts receivable. The
    
    closing balance of corresponding bad debt provision amounted to RMB1,152,813.34.
    
    2. Other receivables
    
    Unit: RMB
    
    Item Closing balance Opening balance
    
    Interest receivables 69,171,162.65 77,257,506.25
    
    Dividend receivables 1,023,353,000.00 –
    
    Other receivables 16,638,073,989.28 19,328,057,454.99
    
    Total 17,730,598,151.93 19,405,314,961.24
    
    (1) Interest receivable
    
    1) Classification of interest receivable
    
    Unit: RMB
    
    Item Closing balance Opening balance
    
    Guarantee deposit 69,171,162.65 77,257,506.25
    
    Total 69,171,162.65 77,257,506.25
    
    178 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    XV. Notes to major financial statement items of the parent company (Cont’d)
    
    2. Other receivables (Cont’d)
    
    (2) Dividend receivables
    
    1) Classification of dividend receivable
    
    Unit: RMB
    
    Item Closing balance Opening balance
    
    Dividend from subsidiaries 1,023,353,000.00 0.00
    
    Total 1,023,353,000.00 0.00
    
    (3) Other receivables
    
    1) Other receivables by nature
    
    Unit: RMB
    
    Item Closing balance Opening balance
    
    Open credit 16,661,132,245.22 19,342,458,869.77
    
    Reserve and borrowings 8,808,936.90 7,681,197.42
    
    Guarantee deposit 3,089,997.00 9,958,377.28
    
    Insurance premium 584,881.11 466,935.72
    
    Others 35,412,417.30 39,175,451.96
    
    Total 16,709,028,477.53 19,399,740,832.15
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 179
    
    XV. Notes to major financial statement items of the parent company (Cont’d)
    
    2. Other receivables (Cont’d)
    
    (3) Other receivables (Cont’d)
    
    2) Particulars of bad debt provision
    
    Unit: RMB
    
    Phase 1 Phase 2 Phase 3
    
    Expected credit
    
    Expected credit loss over the entire Expected credit
    
    loss in the next life (not credit- loss over the entire
    
    Bad debt provision 12 months impaired) life (credit-impaired) Total
    
    Balance as at 1 January
    
    2019 during the period –- –- –- –-
    
    – Transferred into Phase 2 19,368,599,145.10 19,368,599,145.10
    
    – Transferred into Phase 3 31,141,687.05 31,141,687.05
    
    – Reversal to Phase 2
    
    – Reversal to Phase 1
    
    Provision for the year 27,621,897.02 27,621,897.02
    
    Reversal for the year 28,350,785.93 28,350,785.93
    
    Transfer for the year
    
    Writing-off for the year
    
    Other changes
    
    Balance as at 30 June 2019 68,163,587.13 2,790,901.12 70,954,488.25
    
    Changes in carrying book balances with significant changes in loss provision for the year
    
    □ Applicable √ Not Applicable
    
    By ageing
    
    Unit: RMB
    
    Ageing Closing balance
    
    Items within 1 year 16,610,734,001.40
    
    1-2 years 19,685,064.18
    
    2-3 years 7,654,923.70
    
    Total 16,638,073,989.28
    
    180 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    XV. Notes to major financial statement items of the parent company (Cont’d)
    
    2. Other receivables (Cont’d)
    
    (3) Other receivables (Cont’d)
    
    3) Provision, recovery or reversal of bad debt provision for the year
    
    Bad debt provision for the year:
    
    Unit: RMB
    
    Changes for the period
    
    Recovery
    
    Category Opening balance Provision or reversal Closing balance
    
    Bad debt provision for other receivables 71,683,377.16 27,621,897.02 28,350,785.93 70,954,488.25
    
    Total 71,683,377.16 27,621,897.02 28,350,785.93 70,954,488.254) Top five other receivables according to closing balance of debtors
    
    Unit: RMB
    
    Percentage to Closing balance
    
    closing balance of of bad debt
    
    Name of entity Nature Closing balance Maturity other receivables provision
    
    Shandong Chenming Financial Leasing Co.,
    
    Ltd. Open credit 5,614,741,821.77 Within 1 year 33.60 280,737,091.09
    
    Shanghai Chenming Financial Leasing Co., Ltd. Open credit 3,284,100,000.00 Within 1 year 19.66 164,205,000.00
    
    Haicheng Haiming Mining Co., Ltd. Open credit 1,549,545,947.16 Within 1 year 9.28 77,477,297.36
    
    Huanggang Chenming Pulp & Paper Co., Ltd. Open credit 1,529,415,162.57 Within 1 year 9.15 76,470,758.13
    
    Shanghai Chenming Industrial Co., Ltd. Open credit 1,440,416,829.83 Within 1 year 8.62 72,020,841.49
    
    Total – 13,418,219,761.33 – 80.31 670,910,988.075) Receivables in respect of government grant
    
    Unit: RMBEstimated time ofreceiving the grantand the amountName of entity Name of government grant Closing balance Closing age and basis thereofShandong Chenming Paper Holdings Limited Other corporate reformation
    
    and development grant 73,730,000.00 Within 1 month Received on 5 July
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 181
    
    XV. Notes to major financial statement items of the parent company (Cont’d)
    
    3. Long-term equity investments
    
    Unit: RMB
    
    Closing balance Opening balance
    
    Item Book balance Impairment provision Carrying amount Book balance Impairment provision Carrying amount
    
    Investment in subsidiaries 23,261,652,649.90 23,261,652,649.90 22,114,152,649.90 22,114,152,649.90
    
    Investment in associates and joint ventures 359,964,936.91 359,964,936.91 373,264,793.34 373,264,793.34
    
    Total 23,621,617,586.81 23,621,617,586.81 22,487,417,443.24 22,487,417,443.24
    
    182 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    XV. Notes to major financial statement items of the parent company (Cont’d)
    
    3. Long-term equity investments (Cont’d)
    
    (1) Investment in subsidiaries
    
    Unit: RMB
    
    Impairment Closing balance
    
    Decrease for provision for provision of
    
    Investee Opening balance Increase for the year the year Closing balance the year impairment
    
    Chenming Paper Korea Co., Ltd. 6,143,400.00 6,143,400.00
    
    Chenming GmbH 4,083,235.00 4,083,235.00
    
    Shandong Chenming Paper Group
    
    (Fuyu) Sales Co., Ltd. 1,000,000.00 1,000,000.00
    
    Haicheng Haiming Mining Co., Ltd. 144,000,000.00 144,000,000.00
    
    Hailaer Chenming Paper Co., Ltd. 12,000,000.00 12,000,000.00
    
    Huanggang Chenming Pulp & Paper
    
    Co., Ltd. 1,250,000,000.00 1,000,000,000.00 2,250,000,000.00
    
    Huanggang Chenming Arboriculture
    
    Development Co., Ltd. 70,000,000.00 70,000,000.00
    
    Jilin Chenming Paper Co., Ltd. 1,501,350,000.00 1,501,350,000.00
    
    Jinan Chenming Investment
    
    Management Co., Ltd. 100,000,000.00 100,000,000.00
    
    Jiangxi Chenming Paper Co., Ltd. 822,867,646.40 822,867,646.40
    
    Shandong Chenming Power Supply
    
    Holdings Co., Ltd. 157,810,117.43 157,810,117.43
    
    Wuhan Chenming Hanyang Paper
    
    Holdings Co., Ltd. 264,493,210.21 264,493,210.21
    
    Shandong Grand View Hotel Co., Ltd. 80,500,000.00 80,500,000.00
    
    Zhanjiang Chenming Pulp & Paper
    
    Co., Ltd. 5,027,500,000.00 27,500,000.00 5,055,000,000.00
    
    Shouguang Chenming Modern Logistic
    
    Co., Ltd. 10,000,000.00 10,000,000.00
    
    Shouguang Chenming Art Paper
    
    Co., Ltd. 113,616,063.80 113,616,063.80
    
    Shouguang Meilun Paper Co., Ltd. 4,449,441,979.31 4,449,441,979.31
    
    Shouguang Shun Da Customs
    
    Declaration Co, Ltd. 1,500,000.00 1,500,000.00
    
    Shandong Chenming Paper Sales
    
    Co., Ltd. 662,641,208.20 662,641,208.20
    
    Shouguang Chenming Import
    
    and Export Trade Co., Ltd. 250,000,000.00 250,000,000.00
    
    Shouguang Chenming Papermaking
    
    Machine Co., Ltd. 2,000,000.00 2,000,000.00
    
    Shouguang Chenming Industrial
    
    Logistics Co., Ltd. 10,000,000.00 10,000,000.00
    
    Shouguang Chenming Hongxin
    
    Packaging Co., Ltd. 3,730,000.00 3,730,000.00
    
    Shandong Chenming Group Finance
    
    Co., Ltd. 4,000,000,000.00 4,000,000,000.00
    
    Chenming Arboriculture Co., Ltd. 45,000,000.00 45,000,000.00
    
    Shanghai Chenming Industry Co., Ltd. 3,000,000,000.00 3,000,000,000.00
    
    Chenming (HK) Limited 118,067,989.55 118,067,989.55
    
    Chenming Paper USA Co., Ltd. 6,407,800.00 6,407,800.00
    
    Shandong Chenming Coated Paper
    
    Sales Co. Ltd. 20,000,000.00 20,000,000.00
    
    Shanghai Pulp & Paper Sales Co., Ltd. 100,000,000.00 100,000,000.00
    
    Total 22,114,152,649.90 1,147,500,000.00 23,261,652,649.90
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 183
    
    XV. Notes to major financial statement items of the parent company (Cont’d)
    
    3. Long-term equity investments (Cont’d)
    
    (2) Investment in associates and joint ventures
    
    Unit: RMB
    
    Change for the period
    
    Adjustment Distribution Closing
    
    Investment gain or of other Other change of cash balance of
    
    Additional Withdrawn loss recogniser comprehensive in equity dividend or Impairment impairment
    
    Investee Opening balance contribution contribution under equity method income interest profit declared provision Others Closing balance provision
    
    I.Joint ventures
    
    Shouguang Chenming Huisen New-style
    
    Construction Materials Co., Ltd. 3,572,834.79 975,461.08 500,000.00 4,048,295.87
    
    Weifang Sime Darby West Port Co., Ltd. 103,159,857.71 -7,969,846.98 95,190,010.73
    
    Subtotal 106,732,692.50 -6,994,385.90 500,000.00 99,238,306.60
    
    II.Associates
    
    Jiangxi Jiangbao Media Colour
    
    Printing Co., Ltd. 811,998.75 -480,747.58 331,251.17
    
    Zhuhai Dechen New Third Board Equity
    
    Investment Fund Company (Limited
    
    Partnership) 52,253,817.72 108,497.32 52,362,315.04
    
    Ningbo Kaichen Huamei Equity
    
    Investment Fund Partnership
    
    (Limited Partnership) 199,585,216.94 799,460.06 200,384,677.00
    
    Xuchang Chenming Paper Co., Ltd. 5,994,545.96 -5,994,545.96
    
    Chenming (Qingdao) Asset
    
    Management Co., Ltd. 7,886,521.47 -238,134.37 7,648,387.10
    
    Subtotal 266,532,100.84 -5,805,470.53 260,726,630.31
    
    Total 373,264,793.34 -12,799,856.43 500,000.00 359,964,936.91
    
    184 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    XV. Notes to major financial statement items of the parent company (Cont’d)
    
    4. Other payables
    
    Unit: RMB
    
    Item Closing balance Opening balance
    
    Interest payable 131,416,333.34 139,444,333.34
    
    Dividend payable 976,175,735.52
    
    Other payables 4,207,524,162.48 5,326,044,557.18
    
    Total 5,315,116,231.34 5,465,488,890.52
    
    Other payables of the top five closing balances collected by the payee
    
    Unit: RMB
    
    Name of company Closing balance
    
    Zhanjiang Chenming Pulp & Paper Co., Ltd. 2,206,451,191.57
    
    Shandong Chenming Financial Leasing Co., Ltd. 985,621,153.02
    
    Jiangxi Chenming Paper Co., Ltd. 408,822,164.21
    
    Shouguang Chenming Import and Export Trade Co., Ltd. 258,234,638.23
    
    Shandong Chenming Power Supply Holdings Co., Ltd. 136,387,007.68
    
    Total 3,995,516,156.715. Revenue and operating costs
    
    Unit: RMB
    
    Amount for the year Amount for the prior year
    
    Category Revenue Costs Revenue Costs
    
    Principal activities 2,237,163,494.68 1,674,925,035.20 2,300,997,002.45 1,522,148,043.23
    
    Other activities 458,848,921.42 428,362,116.44 515,297,483.37 452,213,569.85
    
    Total 2,696,012,416.10 2,103,287,151.64 2,816,294,485.82 1,974,361,613.08
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 185
    
    XV. Notes to major financial statement items of the parent company (Cont’d)
    
    5. Revenue and operating costs (Cont’d)
    
    Distribution of revenue
    
    Unit: RMB
    
    Machine-made
    
    Type of contracts paper sectors Materials Utilities Other sectors Total
    
    Machine-made paper sectors 2,237,163,494.68 2,237,163,494.68
    
    Materials 367,750,475.36 367,750,475.36
    
    Utilities 53,730,932.70 53,730,932.70
    
    Other sectors 37,367,513.36 37,367,513.36
    
    Total 2,237,163,494.68 367,750,475.36 53,730,932.70 37,367,513.36 2,696,012,416.106. Investment income
    
    Unit: RMB
    
    Item Amount for the period Amount for the prior period
    
    Income from long-term equity investments accounted for using the equity method -12,799,856.43 -4,078,127.09
    
    Income from long-term equity investments accounted for using the cost method 1,023,353,000.00
    
    Investment income on holding of available-for-sale financial assets 41,516,700.00
    
    Investment gain on disposal financial assets measured at fair value through profit or loss 114,233,300.00
    
    Total 1,010,553,143.57 151,671,872.91
    
    186 SHANDONG CHENMING PAPER HOLDINGS LIMITED
    
    XVI. Supplementary information
    
    1. Breakdown of extraordinary gains and losses for the current period
    
    √ Applicable □ Not applicable
    
    Unit: RMB
    
    Item Amount Remark
    
    Profit or loss from disposal of non-current assets 23,358,777.37
    
    Government grants (except for the government grants closely related to
    
    the normal operation of the Company and granted constantly at
    
    a fixed amount or quantity in accordance with a certain standard
    
    based on state policies) accounted for in profit or loss for the current period 227,698,648.23
    
    Non-operating gains and losses other than the above items 4,188,590.61
    
    Gain or loss from change in fair value of consumable biological
    
    assets adopting fair value method for follow-up measurements -1,883,064.80
    
    Less: Effect of income tax 46,750,425.02
    
    Effect of minority interest -38,049.69
    
    Total 206,650,576.08 –
    
    Notes for the Company’s extraordinary gain or loss items as defined in the Explanatory Announcement on Information
    
    Disclosure for Companies Offering Their Securities to the Public No.1 – Extraordinary Gains or Losses and the
    
    extraordinary gain or loss items as illustrated in the Explanatory Announcement on Information Disclosure for Companies
    
    Offering Their Securities to the Public No.1 – Extraordinary Gains or Losses defined as its recurring gain or loss items.
    
    □ Applicable √ Not applicable2. Returns on net assets and earnings per share
    
    Rate on net Earnings per share
    
    assets on Basic Diluted
    
    weighted (RMB per (RMB per
    
    Profit for the reporting period average basis share) share)
    
    Net profit attributable to ordinary shareholders of the Company 0.21% 0.013 0.013
    
    Net profit after extraordinary gains and losses attributable
    
    to ordinary shareholders of the Company -0.97% -0.059 -0.059
    
    Note: The net profit attributable to shareholders of the listed company has not deducted perpetual debt incurred interest and impact of dividends
    
    issued and declared by preference shares. When calculating the financial indicators of earnings per share and weighted average return
    
    on equity, the interest on perpetual bonds of RMB96,202,739.73 from January 1, 2019 to June 30, 2019 and the dividends issued and
    
    declared by preference shares of RMB377,169,767.52 in 2019 are deducted.
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 187
    
    XVI. Supplementary information (Cont’d)
    
    3. Differences in accounting data under domestic and overseas accounting standards
    
    (1) Differences between the net profit and net assets disclosed in accordance with international accounting
    
    standards and China accounting standards in the financial report
    
    □ Applicable √ Not applicable(2) Differences between the net profit and net assets disclosed in accordance with overseas accounting
    
    standards and China accounting standards in the financial report
    
    □ Applicable √ Not applicable(3) Reasons for differences in accounting data under domestic and overseas accounting standards. If the
    
    data audited by overseas audit institutions have been adjusted for differences, the name of the foreign
    
    institution shall be indicated.
    
    4. Other188 SHANDONG CHENMING PAPER HOLDINGS LIMITED(I) The financial statements signed and sealed by the legal representative, financial representative and head of the financial
    
    department of the Company;(II) The interim report signed by the legal representative.(III) The original copies of all of the documents and announcements of the Company disclosed on the designated website as
    
    approved by China Securities Regulatory Commission during the reporting period.(VI) The interim report disclosed on The Stock Exchange of Hong Kong Limited.
    
    (V) Other relevant information.
    
    SHANDONG CHENMING PAPER HOLDINGS LIMITED 189

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