SHANDONG CHENMING PAPER HOLDINGS LIMITED Interim Financial Report 2023
SHANDONG CHENMING PAPER HOLDINGS LIMITED
Interim Financial Report 2023
August 2023
INTERIM REPORT 2023
I Financial Report
I. Auditors’ Report
Is the interim report audited Yes √ NoThe interim financial report is unaudited.
II. Financial StatementsThe unit in the notes to the financial statements is: RMB
1. Consolidated balance sheet
Prepared by: Shandong Chenming Paper Holdings Limited
30 June 2023
Unit: RMBItem30 June 202331 December 2022CURRENT ASSETS:
Monetary funds13,755,530,864.8314,000,434,986.08 Financial assets held for trading50,433,870.5974,708,444.88 Accounts receivable2,946,153,971.113,212,260,445.96 Accounts receivable financing614,794,433.04924,960,384.16 Prepayments846,920,981.37788,191,626.82 Other receivables1,645,909,354.441,717,445,443.44 Including: Interest receivable––
Dividend receivable–– Inventories6,777,881,649.686,821,916,159.95 Non-current assets due within one year3,852,470,167.903,998,724,415.85 Other current assets1,160,886,486.811,180,807,801.62Total current assets31,650,981,779.7732,719,449,708.76NON-CURRENT ASSETS:
Long-term receivables1,372,560,959.211,486,807,783.47 Long-term equity investments4,354,672,770.244,277,013,369.56 Other non-current financial assets785,374,459.73786,750,761.62 Investment property6,154,324,519.026,256,723,113.15 Fixed assets32,975,722,557.5433,797,738,695.30 Construction in progress674,425,091.26558,866,880.36 Bearer biological assets16,780,814.3613,697,336.80 Right-of-use assets175,084,081.35181,614,699.25 Intangible assets1,837,906,882.941,831,338,830.92 Goodwill35,220,543.8026,946,905.38 Long-term prepaid expenses41,879,965.9944,462,851.45 Deferred income tax assets1,562,270,625.951,335,700,565.60 Other non-current assets1,015,655,705.42983,905,908.00Total non-current assets51,001,878,976.8151,581,567,700.86Total assets82,652,860,756.5884,301,017,409.62
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
Item30 June 202331 December 2022CURRENT LIABILITIES:
Short-term borrowings34,946,527,126.2836,385,048,295.02 Bills payable3,530,803,793.613,128,595,835.04 Accounts payable3,972,082,627.544,114,966,767.76 Receipts in advance12,959,619.3314,261,436.67 Contract liabilities1,629,061,591.451,306,029,389.80 Employee benefits payable114,802,027.95144,925,887.00 Taxes payable134,129,746.74261,011,669.09 Other payables2,059,334,576.711,870,403,909.17 Including: Interest payable–15,895,930.51
Dividend payable–– Non-current liabilities due within one year4,152,676,912.294,673,505,241.86Total current liabilities50,552,378,021.9051,898,748,431.41NON-CURRENT LIABILITIES:
Long-term borrowings4,895,546,304.363,982,236,251.08 Lease liabilities49,288,793.8453,596,047.46 Long-term payables2,840,065,362.583,160,771,126.31 Deferred income1,386,819,506.161,469,230,468.46 Deferred income tax liabilities13,647,914.798,181,264.29 Total non-current liabilities9,185,367,881.738,674,015,157.60Total liabilities59,737,745,903.6360,572,763,589.01OWNERS’ EQUITY:
Share capital2,979,742,200.002,979,742,200.00 Other equity instruments996,000,000.00996,000,000.00 Including: Preference shares––
Perpetual Bonds996,000,000.00996,000,000.00 Capital reserves5,333,733,000.375,361,200,522.29 Less: Treasury shares128,780,100.00128,780,100.00 Other comprehensive income-907,674,603.11-821,940,694.57 Special reserves19,914,734.4915,791,710.95 Surplus reserves1,212,009,109.971,212,009,109.97 General risk provisions79,900,268.7179,900,268.71 Retained profit8,702,562,313.479,390,642,477.57Total equity attributable to owners of the Company18,287,406,923.9019,084,565,494.92Minority interest4,627,707,929.054,643,688,325.69Total owners’ equity22,915,114,852.9523,728,253,820.61Total liabilities and owners’ equity82,652,860,756.5884,301,017,409.62Legal Representative:Financial controller:Head of the financial department:
Chen HongguoDong LianmingZhang Bo
II. Financial Statements (Cont’d)
1. Consolidated balance sheet (Cont
’d)
INTERIM REPORT 2023
I Financial Report
II. Financial Statements (Cont’d)
2. Balance sheet of the Company
Unit: RMBItem30 June 202331 December 2022CURRENT ASSETS:
Monetary funds4,842,652,489.675,661,807,164.72 Bills receivable2,665,209,020.763,482,822,426.80 Accounts receivable2,520,259,119.61134,755,527.73 Prepayments1,131,421,810.91375,206,833.58 Other receivables8,352,806,067.279,337,019,470.13 Inventories638,303,459.00692,338,698.67 Non-current assets due within one year3,190,542.3013,434,710.01 Other current assets76,616,158.3386,159,558.49Total current assets20,230,458,667.8519,783,544,390.13NON-CURRENT ASSETS:
Long-term receivables12,069,279.2115,914,404.25 Long-term equity investments18,885,983,088.9418,826,163,036.33 Other non-current financial assets122,374,459.73123,750,761.62 Fixed assets3,547,645,657.473,654,340,361.49 Construction in progress29,630,298.2124,865,009.58 Intangible assets483,415,378.84490,533,559.72 Deferred income tax assets559,868,680.69518,171,288.92 Other non-current assets13,217,145.67986,260.70Total non-current assets23,654,203,988.7623,654,724,682.61Total assets43,884,662,656.6143,438,269,072.74CURRENT LIABILITIES:
Short-term borrowings12,547,491,670.1512,885,183,530.81 Bills payable9,351,434,692.209,455,780,407.30 Accounts payable825,592,347.731,288,578,359.05 Contract liabilities4,188,916,529.771,503,256,921.15 Staff remuneration payables47,516,337.3465,349,838.50 Tax payables9,573,634.4811,729,028.39 Other payables875,210,000.441,856,098,294.14 Including: Interest payable–15,895,930.51
Dividend payable–– Non-current liabilities due within one year1,026,488,877.771,171,869,377.78Total current liabilities28,872,224,089.8828,237,845,757.12
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
Item30 June 202331 December 2022NON-CURRENT LIABILITIES:
Long-term borrowings1,460,844,500.001,698,253,561.10 Long-term payables293,382,733.53150,911,348.00 Deferred income32,391,082.1233,251,328.04Total non-current liabilities1,786,618,315.651,882,416,237.14Total liabilities30,658,842,405.5330,120,261,994.26OWNERS’ EQUITY Share capital2,979,742,200.002,979,742,200.00 Other equity instruments996,000,000.00996,000,000.00 Including: Preference shares––
Perpetual Bonds996,000,000.00996,000,000.00 Capital reserves5,119,757,519.195,147,225,041.11 Less: Treasury shares128,780,100.00128,780,100.00 Special reserves3,327,739.592,066,138.15 Surplus reserves1,199,819,528.061,199,819,528.06 Retained profit3,055,953,364.243,121,934,271.16Total owners’ equity13,225,820,251.0813,318,007,078.48Total liabilities and owners’ equity43,884,662,656.6143,438,269,072.74
II. Financial Statements (Cont’d)
2. Balance sheet of the Company (Cont
’d)
INTERIM REPORT 2023
I Financial Report
II. Financial Statements (Cont’d)
3. Consolidated income statement
Unit: RMBItemFirst half of 2023First half of 2022I. Total revenue12,564,962,781.3116,676,428,365.83
Including: Revenue12,564,962,781.3116,676,428,365.83II. Total operating costs13,439,844,164.1016,436,429,464.84Including: Operating costs11,496,731,662.5814,124,548,249.51
Taxes and surcharges105,817,810.49116,108,890.55Sales and distribution expenses106,666,717.54138,055,763.65General and administrative expenses328,296,224.86353,167,395.54Research and development expense552,804,828.58683,514,560.93Finance expenses849,526,920.051,021,034,604.66 Including: Interest expenses856,872,614.18991,475,816.56
Interest income94,532,686.92150,582,370.85
Plus: Other income108,155,697.19149,264,611.68Investment income (“-” denotes loss)-42,756,726.88-24,138,176.90Including: In vestment income from associates and joint
ventures23,934,269.8126,616,556.58Ga ins on derecognition of financial assetsmeasured at amortised cost(“-” denotes loss)-67,175,214.10-56,307,959.46Gain on change in fair value (“-” denotes loss)-19,815,797.83-58,813,415.49Credit impairment loss (“-” denotes loss)-43,081,750.88-25,363,341.17Lo ss on impairment of assets
(“-” denotes loss)-43,314,485.761,936,644.09Gain on disposal of assets (“-” denotes loss)11,759,266.911,605,314.49III. Operating profit (“-” denotes loss)-903,935,180.04284,490,537.69Plus: Non-operating income940,805.301,093,429.33Less: Non-operating expenses3,138,190.0610,202,739.60IV. Total profit (“-” denotes total loss)-906,132,564.80275,381,227.42Less: Income tax expenses-211,491,182.141,378,726.69V. Net profit (“-” denotes net loss)-694,641,382.66274,002,500.73(I) Classification according to the continuity of operation:––
1. Net profit from continuing operations (
“-”denotesnet loss)-694,641,382.66274,002,500.73
2. Net profit from discontinued operations (
“-”
denotes net loss)––(II) Classification according to ownership:––
1. Net profit attributable to shareholders of the
Company-688,080,164.10230,141,463.76
2. Profit or loss of minority interest-6,561,218.5643,861,036.97VI. Net other comprehensive income after tax-85,733,908.54-150,576,277.41Net other comprehensive income after tax attributable to shareholders of the Company-85,733,908.54-150,576,277.41
(1) Other comprehensive income that cannot be reclassified
to profit and loss––
(2) Other comprehensive income that will be reclassified to
profit and loss-85,733,908.54-150,576,277.41
1. Exchange differences arising from translation
of financial statements denominated in foreigncurrencies-88,339,013.66-155,319,427.95
2. Other comprehensive income that may be
reclassified to profit and loss under the equitymethod2,605,105.124,743,150.54Other comprehensive income, net of tax attributable to minority interest
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
ItemFirst half of 2023First half of 2022VII. Total comprehensive income-780,375,291.20123,426,223.32To tal comprehensive income attributable to shareholders ofthe Company-773,814,072.6479,565,186.35Total comprehensive income attributable to minority interest-6,561,218.5643,861,036.97VIII. Earnings per share:––(I) Basic earnings per share-0.2500.064(II) Diluted earnings per share-0.2500.064
Legal Representative:
Chen Hongguo
Financial controller:
Dong Lianming
Head of the financial department:
Zhang Bo
II. Financial Statements (Cont’d)
3. Consolidated income statement (Cont
’d)
INTERIM REPORT 2023
I Financial Report
II. Financial Statements (Cont’d)
4. Income statement of the Company
Unit: RMBItemFirst half of 2023First half of 2022I. Revenue3,904,584,964.103,746,662,856.50
Less: Operating costs3,746,877,337.083,381,230,045.73Taxes and surcharges19,988,361.1914,470,073.85Sales and distribution expenses4,148,207.413,847,240.05General and administrative expenses51,547,136.6889,156,653.40Research and development expense117,941,892.00165,518,080.69Finance expenses125,869,235.74210,696,803.24 Including: Interest expenses245,995,158.97333,394,473.97
Interest income212,850,374.32230,217,851.40Plus: Other income13,833,015.4624,145,213.86Investment income (“-” denotes loss)55,178,952.64237,259,432.75In cluding: Investment income from associates and jointventures-2,829,947.39-5,337,689.31Ga ins on derecognition of financial assets measured at
amortised cost (“-” denotes loss)-22,621,312.74-30,954,557.50Gain on change in fair value (“-” denotes loss)––Credit impairment loss (“-” denotes loss)-6,264,582.46-722,675.75Loss on impairment of assets (“-” denotes loss)––Gain on disposal of assets (“-” denotes loss)9,745,045.43172,652.98II. Operating profit (“-” denotes loss)-89,294,774.93142,598,583.38Plus: Non-operating income451,184.7761,000.00Less: Non-operating expenses1,912,008.533,003,746.82III. Total profit (“-” denotes total loss)-90,755,598.69139,655,836.56Less: Income tax expenses-41,697,391.77-15,843,567.25IV. Net profit (“-” denotes net loss)-49,058,206.92155,499,403.81(I) Net profit from continuing operations
(“-” denotes net loss)-49,058,206.92155,499,403.81(II) Net profit from discontinued operations
(“-” denotes net loss)––V. Total comprehensive income-49,058,206.92155,499,403.81
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
II. Financial Statements (Cont’d)
5. Consolidated cash flow statement
Unit: RMBItemFirst half of 2023First half of 2022I. Cash flows from operating activities:
Cash received from sales of goods and rendering of services12,654,981,362.6216,841,914,152.37Tax rebates received109,519,774.17697,745,590.84Cash received relating to other operating activities880,312,282.56833,956,367.80Subtotal of cash inflows from operating activities13,644,813,419.3518,373,616,111.01Cash paid for goods and services9,962,778,364.1715,019,129,399.82Cash paid to and for employees667,506,780.80721,958,063.20Payments of taxes and surcharges428,775,626.59635,688,016.57Cash paid relating to other operating activities802,664,900.20998,576,421.97Subtotal of cash outflows from operating activities11,861,725,671.7617,375,351,901.56Net cash flows from operating activities1,783,087,747.59998,264,209.45II. Cash flows from investing activities:
Cash received from investments6,376,301.89–Cash received from investment income1,730,212.774,740,000.00Ne t cash received from disposal of fixed assets, intangibleassets and other long-term assets147,784,119.603,921,115.56Subtotal of cash inflows from investing activities155,890,634.268,661,115.56
Ca sh paid for purchase of fixed assets, intangible assets and
other long-term assets104,455,019.88815,285,839.39Ne t cash paid for acquisition of subsidiaries and other
business units4,934,751.03–Subtotal of cash outflows from investing activities109,389,770.91815,285,839.39Net cash flows from investing activities46,500,863.35-806,624,723.83
INTERIM REPORT 2023
I Financial Report
ItemFirst half of 2023First half of 2022III. Cash flows from financing activities:
Cash received from investments–400,000,000.00In cluding: Cash received from subsidiaries from minorityinvestment–400,000,000.00Cash received from borrowings17,765,551,073.7717,740,613,294.18Cash received relating to other financing activities1,128,264,589.152,078,910,644.82Subtotal of cash inflows from financing activities18,893,815,662.9220,219,523,939.00
Cash repayments of amounts borrowed18,186,471,433.2016,096,915,969.19Ca sh paid for dividend and profit distribution or interestpayment853,357,265.461,053,952,956.06In cluding: Dividend and profit paid by subsidiaries to minorityshareholders9,419,178.08–Cash paid relating to other financing activities1,942,169,772.073,310,774,061.40Subtotal of cash outflows from financing activities20,981,998,470.7320,461,642,986.65Net cash flows from financing activities-2,088,182,807.81-242,119,047.65IV. Effect of foreign exchange rate changes on cash and cash
equivalents-58,096,458.3824,169,806.97V. Net increase in cash and cash equivalents-316,690,655.25-26,309,755.06Pl us: Balance of cash and cash equivalents as at the
beginning of the period2,159,460,149.513,168,915,847.02VI. Balance of cash and cash equivalents as at the end of the
period1,842,769,494.263,142,606,091.96
II. Financial Statements (Cont’d)
5. Consolidated cash flow statement (Cont
’d)
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
II. Financial Statements (Cont’d)
6. Cash flow statement of the Company
Unit: RMBItemFirst half of 2023First half of 2022I. Cash flows from operating activities:
Cash received from sales of goods and rendering of services3,929,585,126.953,937,092,906.31Tax rebates received10,186,261.559,335,732.78Cash received relating to other operating activities244,461,863.48268,488,989.46Subtotal of cash inflows from operating activities4,184,233,251.984,214,917,628.55
Cash paid for goods and services3,646,421,670.773,559,003,036.92Cash paid to and for employees159,974,284.62168,707,495.45Payments of taxes and surcharges23,767,270.65146,897,297.11Cash paid relating to other operating activities222,463,991.65255,001,227.95Subtotal of cash outflows from operating activities4,052,627,217.694,129,609,057.43Net cash flows from operating activities131,606,034.2985,308,571.12II. Cash flows from investing activities:
Cash received from investments6,376,301.89–Cash received from investment income81,730,212.77401,816,698.06Ne t cash received from disposal of fixed assets, intangibleassets and other long-term assets40,443,619.603,527,572.65Subtotal of cash inflows from investing activities128,550,134.26405,344,270.71
Ca sh paid for purchase of fixed assets, intangible assets andother long-term assets19,406,565.3412,870,064.02Subtotal of cash outflows used in investing activities19,406,565.3412,870,064.02Net cash flows from investing activities109,143,568.92392,474,206.69
INTERIM REPORT 2023
I Financial Report
ItemFirst half of 2023First half of 2022III. Cash flows from financing activities:
Cash received from borrowings10,014,688,564.2110,531,501,508.20Cash received relating to other financing activities1,362,715,891.06247,000,000.00Subtotal of cash inflows from financing activities11,377,404,455.2710,778,501,508.20
Cash repayments of amounts borrowed10,389,789,485.9710,584,544,305.53Ca sh paid for dividend and profit distribution or interestpayment242,860,355.63320,363,139.80Cash paid relating to other financing activities438,804,497.05307,022,816.27Subtotal of cash outflows from financing activities11,071,454,338.6511,211,930,261.60Net cash flows from financing activities305,950,116.62-433,428,753.40IV. Effect of foreign exchange rate changes on cash and cashequivalents-3,138,503.826,179,448.15V. Net increase in cash and cash equivalents543,561,216.0150,533,472.56Pl us: Balance of cash and cash equivalents as at the
beginning of the period233,971,948.99893,454,314.56VI. Balance of cash and cash equivalents as at the end of the
period777,533,165.00943,987,787.12
II. Financial Statements (Cont’d)
6. Cash flow statement of the Company (Cont
’d)
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
II. Financial Statements (Cont
’d)
7. Consolidated statement of changes in owners
’ equity
Amount for the period
Unit: RMB
Item
First half of 2023
Equity attributable to owners of the Company
MinorityinterestTotalowners’ equityShare capital
Other equity instruments
Capital
reservesLess:
treasury shares
Other
comprehensive
incomeSpecial
reservesSurplus
reservesGeneral risk
provisionsRetained profitOthersSubtotal
Preference
sharesPerpetual
BondsOthers
I. Balance as at the end of the prior year2,979,742,200.00–996,000,000.00–5,361,200,522.29128,780,100.00-821,940,694.5715,791,710.951,212,009,109.9779,900,268.719,390,642,477.57–19,084,565,494.924,643,688,325.6923,728,253,820.61II. Balance as at the beginning of the year2,979,742,200.00–996,000,000.00–5,361,200,522.29128,780,100.00-821,940,694.5715,791,710.951,212,009,109.9779,900,268.719,390,642,477.57–19,084,565,494.924,643,688,325.6923,728,253,820.61III. Changes in the period (“-” denotes decrease)––––-27,467,521.92–-85,733,908.544,123,023.54––-688,080,164.10–-797,158,571.02-15,980,396.64-813,138,967.66
(I) Total comprehensive income––––––-85,733,908.54–––-688,080,164.10–-773,814,072.64-6,561,218.56-780,375,291.20(II) Capital paid in and reduced by owners––––-27,467,521.92–––––––-27,467,521.92–-27,467,521.92
1. Amount of share-based payments
recognised in owners’ equity––––-27,467,521.92–––––––-27,467,521.92–-27,467,521.92
(III) Profit distribution–––––––––––––-9,419,178.08-9,419,178.08
1. Distribution to shareholders (or owners)–––––––––––––-9,419,178.08-9,419,178.08
(IV) Transfer within owners’ equity–––––––––––––––
(V) Special reserves–––––––4,123,023.54––––4,123,023.54–4,123,023.54
1. Withdrew in the period–––––––13,373,517.00––––13,373,517.00–13,373,517.00
2. Used in the period (denotes in
“-”)–––––––-9,250,493.46––––-9,250,493.46–-9,250,493.46
IV. Balance as at the end of the period2,979,742,200.00–996,000,000.00–5,333,733,000.37128,780,100.00-907,674,603.1119,914,734.491,212,009,109.9779,900,268.718,702,562,313.47–18,287,406,923.904,627,707,929.0522,915,114,852.95
INTERIM REPORT 2023
I Financial Report
Amounts for the prior year
Unit: RMB
Item
First half of 2022
Equity attributable to owners of the Company
MinorityinterestTotalowners’ equityShare capital
Other equity instruments
CapitalreservesLess:
treasury shares
Othercomprehensive
incomeSpecialreservesSurplusreservesGeneral riskprovisionsRetained
profitOthersSubtotal
Preference
sharesPerpetual
BondsOthers
I. Balance as at the end of the prior year2,984,208,200.00–996,000,000.00–5,282,805,114.62226,860,000.00-445,582,729.36–1,212,009,109.9776,825,918.609,210,372,613.81–19,089,778,227.643,457,050,907.2622,546,829,134.90
Plus: Others––––-55,547,014.21–––––83,754,093.05–28,207,078.84–28,207,078.84II. Balance as at the beginning of the year2,984,208,200.00–996,000,000.00–5,227,258,100.41226,860,000.00-445,582,729.36–1,212,009,109.9776,825,918.609,294,126,706.86–19,117,985,306.483,457,050,907.2622,575,036,213.74III. Changes in the period (“-” denotes decrease)––––22,826,801.91–-150,576,277.41–––230,141,463.76–102,391,988.26414,361,772.63516,753,760.89
(I) Total comprehensive income––––––-150,576,277.41–––230,141,463.76–79,565,186.3544,038,587.32123,603,773.67(II) Capital paid in and reduced by owners––––22,826,801.91–––––––22,826,801.91370,323,185.31393,149,987.22
1. Ordinary shares paid by owners–––––––––––––370,323,185.31370,323,185.31
2. Capital paid by holders of other equity
instruments–––––––––––––––
3. Amount of share-based payments
recognised in owners’ equity––––-6,850,012.78–––––––-6,850,012.78–-6,850,012.78
4. Others––––29,676,814.69–––––––29,676,814.69–29,676,814.69(III) Profit distribution–––––––––––––––(IV) Transfer within owners’ equity–––––––––––––––
IV. Balance as at the end of the period2,984,208,200.00–996,000,000.00–5,250,084,902.32226,860,000.00-596,159,006.77–1,212,009,109.9776,825,918.609,524,268,170.62–19,220,377,294.743,871,412,679.8923,091,789,974.63
II. Financial Statements (Cont
’d)
7. Consolidated statement of changes in owners
’ equity (Cont
’d)
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
II. Financial Statements (Cont
’d)
8. Statement of changes in owners
’ equity of the Company
Amounts for the period
Unit: RMB
Item
First half of 2023
Share capital
Other equity instruments
Capital reserves
Less:
treasury shares
OthercomprehensiveincomeSpecial
reservesSurplusreservesRetained profitOthers
Total
owners
’ equity
Preference
sharesPerpetual
BondsOthers
I. Balance as at the end of the prior year2,979,742,200.00–996,000,000.00–5,147,225,041.11128,780,100.00–2,066,138.151,199,819,528.063,121,934,271.16–13,318,007,078.48II. Balance as at the beginning of the year2,979,742,200.00–996,000,000.00–5,147,225,041.11128,780,100.00–2,066,138.151,199,819,528.063,121,934,271.16–13,318,007,078.48III. Changes in the period (
“-” denotes decrease)––––-27,467,521.92––1,261,601.44–-65,980,906.92–-92,186,827.40
(I) Total comprehensive income–––––––––-65,980,906.92–-65,980,906.92(II) Capital paid in and reduced by owners––––-27,467,521.92––––––-27,467,521.92
1. Amount of share-based payments
recognised in owners’ equity––––-27,467,521.92––––––-27,467,521.92
(III) Profit distribution––––––––––––(IV) Transfer within owners
’ equity––––––––––––
(V) Special reserves–––––––1,261,601.44–––1,261,601.44
1. Withdrew in the period–––––––1,284,902.41–––1,284,902.41
2. Used in the period–––––––-23,300.97–––-23,300.97
IV. Balance as at the end of the period2,979,742,200.00–996,000,000.00–5,119,757,519.19128,780,100.00–3,327,739.591,199,819,528.063,055,953,364.24–13,225,820,251.08
INTERIM REPORT 2023
I Financial Report
Amounts for the prior year
Unit: RMB
Item
First half of 2022
Share capital
Other equity instruments
Capital reserves
Less:
treasury shares
OthercomprehensiveincomeSpecial
reservesSurplusreservesRetained profitOthers
Total
owners
’ equity
Preference
sharesPerpetual
BondsOthers
I. Balance as at the end of the prior year2,984,208,200.00–996,000,000.00–5,154,365,336.31226,860,000.00––1,199,819,528.062,921,641,460.59–13,029,174,524.96II. Balance as at the beginning of the year2,984,208,200.00–996,000,000.00–5,154,365,336.31226,860,000.00––1,199,819,528.062,921,641,460.59–13,029,174,524.96III. Changes in the period (
“-” denotes decrease)––––-6,850,012.78––––155,499,403.81–148,649,391.03
(I) Total comprehensive income–––––––––155,499,403.81–155,499,403.81(II) Capital paid in and reduced by owners––––-6,850,012.78––––––-6,850,012.78
1. Amount of share-based payments
recognised in owners’ equity––––-6,850,012.78––––––-6,850,012.78
(III) Profit distribution––––––––––––(IV) Transfer within owners
’ equity––––––––––––
IV. Balance as at the end of the period2,984,208,200.00–996,000,000.00–5,147,515,323.53226,860,000.00––1,199,819,528.063,077,140,864.40–13,177,823,915.99II. Financial Statements (Cont
’d)
8. Statement of changes in owners
’ equity of the Company (Cont
’d)
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
III. General Information of the Company
1. Company overview
The predecessor of Shandong Chenming Paper Holdings Limited (hereinafter referred to as the“Company”) wasShandong Shouguang Paper Mill Corporation, which was changed as a joint stock company with limited liability throughoffering to specific investors in May 1993. In December 1996, with approval by Lu Gai Zi [1996] No. 270 issued by thePeople’s Government of Shandong Province and Zheng Wei [1996] No. 59 of the Securities Committee of the StateCouncil, the Company was changed as a joint stock company with limited liability established by share offer.In May 1997, with approval by Zheng Wei Fa [1997] No. 26 issued by the Securities Committee of the State Council,the Company issued 115,000,000 domestic listed foreign shares (B shares) under public offering, which were listed andtraded on Shenzhen Stock Exchange from 26 May 1997.In September 2000, with approval by Zheng Jian Gong Si Zi [2000] No. 151 issued by the China Securities RegulatoryCommission, the Company issued an additional 70,000,000 RMB ordinary shares (A shares), which were listed andtraded on Shenzhen Stock Exchange from 20 November 2000.In June 2008, with approval by the Stock Exchange of Hong Kong Limited, the Company issued 355,700,000 H shares.At the same time, 35,570,000 H shares were allocated to the National Council for Social Security Fund by our relevantstate-owned shareholder and converted into overseas listed foreign shares (H shares) for the purpose of reducing thenumber of state-owned shares. The additionally issued H shares were listed and traded on Hong Kong Stock Exchangeon 18 June 2008.As at 30 June 2023, the total share capital of the Company was 2,979,742,200 shares. For details, please refer to NoteVII. 37.The Company established a corporate governance structure comprising the general meeting, the board of directorsand the supervisory committee, and has human resources department, information technology department, corporatemanagement department, legal affairs department, financial management department, capital management department,securities investment department, procurement department, audit department, and other departments.The Company and its subsidiaries (the“Company”) are principally engaged in, among other things, processing andsale 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 hotel service, and equipment financial and operating leasing,investment properties and property service etc.The financial statements and notes thereto were approved at the sixth meeting of the tenth session of the board ofdirectors of the Company (the“Board”) on 30 August 2023.
2. Scope of consolidation
Subsidiaries of the Company included in the scope of consolidation in 2023 totalled 79. For details, please refer toNote IX“Interest in other entities”. The scope of consolidation of the Company during the year had one more companyincluded compared to the prior year. For details, please refer to Note VIII“Change in scope of consolidation”.
INTERIM REPORT 2023
I Financial Report
IV. Basis of Preparation of the Financial Statements
1. Basis of preparation
These financial statements are prepared in accordance with the accounting standards for business enterprises, theapplication guidelines thereof, interpretations and other related rules (collectively referred to as“ASBEs”) promulgatedby the Ministry of Finance. In addition, the Company also discloses relevant financial information in accordance withthe“Preparation Rules for Information Disclosure by Companies Offering Securities to the Public No. 15 – GeneralProvisions on Financial Reports” (revised in 2014) of the CSRC.The financial statements are presented on a going concern.The Company’s financial statements have been prepared on an accrual basis. Except for certain financial instruments,the financial statements are prepared under the historical cost convention. In the event that impairment of assetsoccurs, 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 monthssince the end of the reporting period.V. Significant Accounting Policies and Accounting EstimatesSpecific accounting policies and accounting estimates are indicated as follows:
The Company and its subsidiaries are principally engaged in machine-made paper, electricity and heat, constructionmaterials, paper making chemical products, processing of moulds, hotel management and other operations. The Companyand its subsidiaries formulated certain specific accounting policies and accounting estimates for the transactions and matterssuch as revenue recognition, determination of performance progress and R&D expenses based on their actual production andoperation characteristics pursuant to the requirements under the relevant ASBEs. For details, please refer to this Note V. 29“Revenue”. For the critical accounting judgments and estimates made by the management, please refer to Note V. 38“Changesin significant accounting policies and accounting estimates”.
1. Statement of compliance with the Accounting Standards for Business Enterprises
These financial statements have been prepared in conformity with the ASBEs, which truly and fully reflect the financialposition of the consolidated entity and the Company as at 30 June 2023 and relevant information such as the operatingresults and cash flows of the consolidated entity and the Company for the first half of 2023.
2. Accounting period
The accounting period of the Company is from 1 January to 31 December of each calendar year.
3. Operating cycle
The operating cycle of the Company lasts for 12 months.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
4. Functional currency
The functional currency of the Company and its domestic subsidiaries is Renminbi (“RMB”). Overseas subsidiaries of theCompany 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 subsidiariesoperate. The Company prepares the financial statements in RMB.
5. Accounting treatment of business combinations under common control and not under common control
(1) Business combination under common control
For the business combination involving entities under common control, the assets and liabilities of the party beingmerged that are obtained in the business combination by the absorbing party shall be measured at the carryingamounts as recorded by the ultimate controlling party in the consolidated financial statements at the combinationdate. The difference between the carrying amount of the consideration paid for the combination (or the aggregatenominal value of shares issued as consideration) and the carrying amount of the net assets obtained in thecombination is charged to the capital reserve (share capital premium/capital premium). If the capital reserve (sharecapital premium/capital premium) is not sufficient to absorb the difference, any excess shall be adjusted againstretained earnings.Business combinations involving entities under common control and achieved in stages
In the separate financial statements, the initial investment cost is calculated based on the shareholding portionof the assets and liabilities obtained and are measured at the carrying amounts as recorded by the party beingmerged at the combination date. The difference between the initial investment cost and the sum of the carryingamount of the original investment cost prior to the combination and the carrying amount of consideration paid forthe combination is adjusted to the capital reserve (share capital premium/capital premium), if the capital reserve isnot sufficient to absorb the difference, the excess difference shall be adjusted to retained earnings.In the consolidated financial statements, the assets and liabilities of the party being merged that are obtainedat the combination by the absorbing party shall be measured at the carrying value as recorded by the ultimatecontrolling party in the consolidated financial statements at combination date. The difference between the sumof the carrying value from original shareholding portion and the new investment cost incurred at combinationdate and the carrying value of net assets obtained at combination date shall be adjusted to capital reserve (sharecapital premium/capital premium), if the balance of capital reserve is not sufficient to absorb the differences,any excess is adjusted to retained earnings. The long-term investment prior to the absorbing party obtainingthe control of the party being merged, the recognised profit or loss, comprehensive income and other changeof owners’equity at the closer date of the acquisition date and combination date under common control shallseparately offset the opening balance of retained earnings and profit or loss during comparative statements.
(2) Business combination not under common control
For business combinations involving entities not under common control, the cost for each combination ismeasured at the aggregate fair value at acquisition date, of assets given, liabilities incurred or assumed, andequity securities issued by the acquirer in exchange for control of the acquiree. At acquisition date, the acquiredassets, liabilities or contingent liabilities of acquiree are measured at their fair value.
INTERIM REPORT 2023
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
5. Accounting treatment of business combinations under common control and not under common control
(Cont’d)
(2) Business combination not under common control (Cont
’d)Where the cost of combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable netassets, the difference is recognised as goodwill, and subsequently measured on the basis of its cost minusaccumulative impairment provision; Where the cost of combination is less than the acquirer’s interest in the fairvalue of the acquiree’s identifiable net assets, the difference is recognised in profit or loss for the current periodafter reassessment.Business combinations involving entities not under common control and achieved in stagesIn the separate financial statements, the initial investment cost of the investment is the sum of the carrying amountof the equity investment held by the entity prior to the acquisition date and the additional investment cost at theacquisition date. The disposal accounting policy of other comprehensive income related with equity investmentprior to the acquisition date recognised under equity method shall be compliance with the method when theacquiree disposes the related assets or liabilities. Owners’ equity due to the changes of other owners’equity otherthan the changes of net profit, other comprehensive income and profit distribution shall be transferred to profit orloss for current period when disposed of. If the equity investment held by the entity prior to the acquisition date ismeasured at fair value, the cumulative changes in fair value recognised in other comprehensive income shall betransferred to retained earnings for current period when accounted for using cost method.In the consolidation financial statements, the combination cost is the sum of consideration paid at acquisition dateand fair value of the acquiree’s equity investment held prior to acquisition date. The cost of equity of the acquireeheld prior to acquisition date shall be remeasured at the fair value at acquisition date, and the difference betweenthe fair value and carrying amount shall be recognised as investment income or loss for the current period.Other comprehensive income and changes of other owners’ equity related with acquiree’s equity held prior toacquisition date shall be transferred to investment profit or loss for current period at acquisition date, except forthe other comprehensive income incurred by the changes of net assets or net liabilities due to the remeasurementof defined benefit plans.
(3) Transaction fees attribution during business combination
The audit, legal, valuation advisory and other intermediary fees and other relevant administrative expenses arisingfrom business combinations are recognised in profit or loss when incurred. Transaction costs of equity or debtsecurities issued as the considerations of business combination are included in the initial recognition amounts.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
6. Preparation of consolidated financial statements
(1) Scope of consolidation
The scope of consolidation of the consolidated financial statements is determined on the basis of control. Theterm“control”refers to the fact that the Company has power over the investee and is entitled to variable returnsfrom its involvement with the investee and the ability to use its power over the investee to affect the amount ofthose returns. A subsidiary is an entity controlled by the Company (including an enterprise, a separable part of aninvestee, a structured entity, etc.).
(2) Basis for preparation of the consolidated financial statements
The consolidated financial statements are prepared by the Company based on the financial statements of theCompany and its subsidiaries and other relevant information. In preparing the consolidated financial statements,the accounting policies and accounting periods of the Company and its subsidiaries shall be consistent, and intra-company significant transactions and balances are eliminated.A subsidiary and its business acquired through a business combination involving entities under common controlduring the reporting period shall be included in the scope of the consolidation of the Company from the dateof being controlled by the ultimate controlling party, and its operating results and cash flows from the date ofbeing controlled by the ultimate controlling party are included in the consolidated income statement and theconsolidated cash flow statement, respectively.For a subsidiary and its business acquired through a business combination involving entities not under commoncontrol during the reporting period, its income, expenses and profits are included in the consolidated incomestatement, and cash flows are included in the consolidated cash flow statement from the acquisition date to theend of the reporting period.The shareholders’equity of the subsidiaries that is not attributable to the Company is presented undershareholders’equity in the consolidated balance sheet as minority interest. The portion of net profit or loss ofsubsidiaries for the period attributable to minority interest is presented in the consolidated income statementunder the“profit or loss of minority interest”. When the amount of loss attributable to the minority shareholders ofa subsidiary exceeds the minority shareholders’ portion of the opening balance of owners’equity of the subsidiary,the excess amount shall be allocated against minority interest.
(3) Acquisition of non-controlling interests in subsidiaries
The difference between the long-term equity investments costs acquired by the acquisition of non-controllinginterests and the share of the net assets from subsidiaries from the date of acquisition or the date of combinationbased on the new shareholding ratio, as well as the difference between the proceeds from the partial disposalof the equity investment without losing control over its subsidiary and the disposal of the long-term equityinvestment corresponding to the share of the net assets of the subsidiaries from the date of acquisition or the dateof combination, is adjusted to the capital reserve. If the capital reserve is not sufficient, any excess is adjusted toretained earnings.
(4) Accounting treatment for loss of control over subsidiaries
For the loss of control over a subsidiary due to disposal of a portion of the equity investment or other reasons,the remaining equity is measured at fair value on the date when the control is lost. The difference arising fromthe sum of consideration received for disposal of equity interest and the fair value of remaining equity interestover the sum of the share of the carrying amount of net assets of the former subsidiary calculated continuouslyfrom the purchase date based on the shareholding percentage before disposal and the goodwill is recognised asinvestment income in the period when the control is lost.Other comprehensive income related to equity investment in the former subsidiary shall be transferred to currentprofit or loss at the time when the control is lost, except for other comprehensive income arising from changes innet assets or net liabilities due to remeasurement of defined benefit plan by the investee.
INTERIM REPORT 2023
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
7. Classification of joint arrangements and accounting treatment for joint operations
A joint arrangement refers to an arrangement of two or more parties have joint control. The joint arrangements of theCompany comprise joint operations and joint ventures.
(1) Joint operations
Joint operations refer to a joint arrangement during which the Company is entitled to relevant assets andobligations of this arrangement.The Company recognises the following items in relation to its interest in a joint operation and accounts for them inaccordance with the relevant ASBEs:
A. the assets held solely by it and assets held jointly according to its share;B. the liabilities assumed solely by it and liabilities assumed jointly according to its share;C. the revenue from sale of output from joint operations;D. the revenue from sale of output from joint operations according to its share;E. the fees solely incurred by it and fees incurred from joint operations according to its share.
(2) Joint ventures
Joint ventures refer to a joint arrangement during which the Company only is entitled to net assets of thisarrangement.The Company accounts for its investments in joint ventures in accordance with the requirements relating toaccounting treatment using equity method for long-term equity investments.
8. Standards for recognising cash and cash equivalents
Cash refers to cash on hand and deposits readily available for payment purpose. Cash equivalents refer to short-termand highly liquid investments held by the Company which are readily convertible into known amount of cash and whichare subject to insignificant risk of value change.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
9. Foreign currency operations and translation of statements denominated in foreign currency
(1) Foreign currency operations
The foreign currency operations of the Company are translated into the functional currency at the prevailing spotexchange rate on the date of exchange.On the balance sheet date, foreign currency monetary items shall be translated at the spot exchange rate onthe balance sheet date. The exchange difference arising from the difference between the spot exchange rateon the balance sheet date and the spot exchange rate upon initial recognition or the last balance sheet date willbe recognised in profit or loss for the period. The foreign currency non-monetary items measured at historicalcost shall still be measured by the functional currency translated at the spot exchange rate on the date of thetransaction. Foreign currency non-monetary items measured at fair value are translated at the spot exchangerate on the date of determination of the fair value. The difference between the amounts of the functional currencybefore and after the translation will be recognised in profit or loss or other comprehensive income for the periodbased on the nature of the non-monetary items.
(2) Translation of financial statements denominated in foreign currency
When translating the financial statements denominated in foreign currency of overseas subsidiaries, assets andliabilities 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 whichsuch items arose.Income and expenses items in the income statement are translated at the prevailing spot exchange rate on thetransaction date.All items in the cash flow statements shall be translated at the prevailing spot exchange rate on the date thatthe cash flow transaction occurred. Effects arising from changes of exchange rate on cash shall be presentedseparately as the“effect of foreign exchange rate changes on cash and cash equivalents”item in the cash flowstatements.The differences arising from translation of financial statements shall be included in the“other comprehensiveincome” item in owners’ equity in the balance sheet.On disposal of foreign operations and loss of control, exchange differences arising from the translation of financialstatements denominated in foreign currencies related to the disposed foreign operations which has been includedin shareholders’equity in the balance sheet, shall be transferred to profit or loss in whole or in proportionate sharein the period in which the disposal took place.
INTERIM REPORT 2023
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments
A financial instrument is a contract that gives rise to a financial asset of one party and a financial liability or equityinstrument of another party.
(1) Recognition and derecognition of financial instruments
Financial asset or financial liability will be recognised when the Company became one of the parties under afinancial instrument contract.Financial asset that satisfied any of the following criteria shall be derecognised:
the contract right to receive the cash flows of the financial asset has terminated;the financial asset has been transferred and meets the derecognition criteria for the transfer of financialasset as described below.A financial liability (or a part thereof) is derecognised only when the present obligation is discharged in full or inpart. If an agreement is entered between the Company (debtor) and a creditor to replace the existing financialliabilities with new financial liabilities, and the contractual terms of the new financial liabilities are substantiallydifferent from those of the existing financial liabilities, the existing financial liabilities shall be derecognised and thenew financial liabilities shall be recognised.Conventionally traded financial assets shall be recognised and derecognised at the trading date.
(2) Classification and measurement of financial assets
The Company classifies the financial assets according to the business model for managing the financial assetsand characteristics of the contractual cash flows as follows: financial assets measured at amortised cost, financialassets measured at fair value through other comprehensive income, and financial assets measured at fair valuethrough profit or loss.
Financial assets measured at amortised cost
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designatedat fair value through profit or loss:
The Company’s business model for managing such financial assets is to collect contractual cash flows;The contractual terms of the financial asset stipulate that cash flows generated on specific dates are solelypayments of principal and interest on the principal amount outstanding.Subsequent to initial recognition, such financial assets are measured at amortised cost using the effective interestmethod. A gain or loss on a financial asset that is measured at amortised cost and is not part of a hedgingrelationship shall be recognised in profit or loss for the current period when the financial asset is derecognised,amortised using the effective interest method or with impairment recognised.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont
’d)
(2) Classification and measurement of financial assets (Cont
’d)Financial assets measured at fair value through other comprehensive income
A financial asset is classified as measured at fair value through other comprehensive income if it meets both of thefollowing conditions and is not designated at fair value through profit or loss:
The Company’s business model for managing such financial assets is achieved both by collecting collectcontractual cash flows and selling such financial assets;The contractual terms of the financial asset stipulate that cash flows generated on specific dates are solelypayments of principal and interest on the principal amount outstanding.Subsequent to initial recognition, such financial assets are subsequently measured at fair value. Interest calculatedusing the effective interest method, impairment losses or gains and foreign exchange gains and losses arerecognised in profit or loss for the current period, and other gains or losses are recognised in other comprehensiveincome. On derecognition, the cumulative gain or loss previously recognised in other comprehensive income isreclassified from other comprehensive income to profit or loss.Financial assets measured at fair value through profit or lossThe Company classifies the financial assets other than those measured at amortised cost and measured at fairvalue through other comprehensive income as financial assets measured at fair value through profit or loss. Uponinitial recognition, the Company irrevocably designates certain financial assets that are required to be measuredat amortised cost or at fair value through other comprehensive income as financial assets measured at fair valuethrough profit or loss in order to eliminate or significantly reduce accounting mismatch.Upon initial recognition, such financial assets are measured at fair value. Except for those held for hedgingpurposes, gains or losses (including interests and dividend income) arising from such financial assets arerecognised in the profit or loss for the current period.The business model for managing financial assets refers to how the Company manages its financial assets inorder to generate cash flows. That is, the Company’s business model determines whether cash flows will resultfrom collecting contractual cash flows, selling financial assets or both. The Company determines the businessmodel for managing financial assets on the basis of objective facts and specific business objectives for managingfinancial assets determined by key management personnel.The Company assesses the characteristics of the contractual cash flows of financial assets to determine whetherthe contractual cash flows generated by the relevant financial assets on a specific date are solely payments ofprincipal and interest on the principal amount outstanding. The principal refers to the fair value of the financialassets at the initial recognition. Interest includes consideration for the time value of money, for the credit riskassociated with the principal amount outstanding during a particular period of time and for other basic lendingrisks, costs and profits. In addition, the Company evaluates the contractual terms that may result in a change inthe time distribution or amount of contractual cash flows from a financial asset to determine whether it meets therequirements of the above contractual cash flow characteristics.
INTERIM REPORT 2023
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont
’d)
(2) Classification and measurement of financial assets (Cont
’d)
Financial assets measured at fair value through profit or loss(Cont’d)All affected financial assets are reclassified on the first day of the first reporting period following the change inthe business model where the Company changes its business model for managing financial assets; otherwise,financial assets shall not be reclassified after initial recognition.Financial assets are measured at fair value upon initial recognition. For financial assets measured at fair valuethrough profit or loss, relevant transaction costs are directly recognised in profit or loss for the current period.For other categories of financial assets, relevant transaction costs are included in the amount initially recognised.Accounts receivable arising from sales of goods or rendering services, without significant financing component,are initially recognised based on the transaction price expected to be entitled by the Company.
(3) Classification and measurement of financial liabilities
At initial recognition, financial liabilities of the Company are classified as financial liabilities measured at fair valuethrough profit or loss and financial liabilities measured at amortised cost. For financial liabilities not classifiedas measured at fair value through profit or loss, relevant transaction costs are included in the amount initiallyrecognised.Financial liabilities measured at fair value through profit or lossFinancial liabilities measured at fair value through profit or loss comprise held-for-trading financial liabilities andfinancial liabilities designated at fair value through profit or loss upon initial recognition. Such financial liabilitiesare subsequently measured at fair value, and the gains or losses from the change in fair value and the dividend orinterest expenses related to the financial liabilities are included in the profit or loss of the current period.Financial liabilities measured at amortised costOther financial liabilities are subsequently measured at amortised cost using the effective interest rate method,and the gains or losses arising from derecognition or amortisation are recognised in profit or loss for the currentperiod.
Classification between financial liabilities and equity instruments
A financial liability is a liability if:
it has a contractual obligation to pay in cash or other financial assets to other parties.it has a contractual obligation to exchange financial assets or financial liabilities under potential adverse
condition with other parties. it is a non-derivative instrument contract which will or may be settled with the entity’s own equityinstruments, and the entity will deliver a variable number of its own equity instruments according to suchcontract. it is a derivative instrument contract which will or may be settled with the entity’s own equity instruments,except for a derivative instrument contract that exchanges a fixed amount of cash or other financial assetwith a fixed number of its own equity instruments.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont
’d)
(3) Classification and measurement of financial liabilities (Cont
’d)Classification between financial liabilities and equity instruments(Cont’d)Equity instruments are any contract that evidences a residual interest in the assets of an entity after deducting allof its liabilities.If the Company cannot unconditionally avoid the performance of a contractual obligation by paying cash ordelivering other financial assets, the contractual obligation meets the definition of financial liabilities.Where a financial instrument must or may be settled with the Company’s own equity instruments, the Company’sown equity instruments used to settle such instrument should be considered as to whether it is as a substitutefor cash or other financial assets or for the purpose of enabling the holder of the instrument to be entitled to theremaining interest in the assets of the issuer after deducting all of its liabilities. For the former, it is a financialliability of the Company; for the latter, it is the Company’s own equity instruments.
(4) Fair value of financial instruments
The methods for determining the fair value of the financial assets or financial liabilities are set out in Note V. 11.
(5) Impairment of financial assets
The Company makes provision for impairment based on expected credit losses (ECLs) on the following items:
Financial assets measured at amortised cost;Receivables and debt investments measured at fair value through other comprehensive income;Contract assets as defined in the Accounting Standards for Business Enterprises No. 14 – Revenue;Lease receivables;Financial guarantee contracts (except those measured at fair value through profit or loss or formed by continuinginvolvement of transferred financial assets or the transfer does not qualify for derecognition).
INTERIM REPORT 2023
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont
’d)
(5) Impairment of financial assets (Cont
’d)Measurement of ECLsECLs are the weighted average of credit losses of financial instruments weighted by the risk of default. Creditlosses refer to the difference between all contractual cash flows receivable according to the contract anddiscounted according to the original effective interest rate and all cash flows expected to be received, i.e. thepresent value of all cash shortages.The Company takes into account reasonable and well-founded information such as past events, current conditionsand forecasts of future economic conditions, and calculates the probability-weighted amount of the present valueof the difference between the cash flows receivable from the contract and the cash flows expected to be receivedweighted by the risk of default.The Company measures ECLs of financial instruments at different stages. If the credit risk of the financialinstrument did not increase significantly upon initial recognition, it is at the first stage, and the Company makesprovision for impairment based on the ECLs within the next 12 months; if the credit risk of a financial instrumentincreased significantly upon initial recognition but has not yet incurred credit impairment, it is at the second stage,and the Company makes provision for impairment based on the lifetime ECLs of the instrument; if the financialinstrument incurred credit impairment upon initial recognition, it is at the third stage, and the Company makesprovision for impairment based on the lifetime ECLs of the instrument.For financial instruments with low credit risk on the balance sheet date, the Company assumes that the creditrisk did not increase significantly upon initial recognition, and makes provision for impairment based on the ECLswithin the next 12 months.Lifetime ECLs represent the ECLs resulting from all possible default events over the expected life of a financialinstrument. The 12-month ECLs are the ECLs resulting from possible default events on a financial instrumentwithin 12 months (or a shorter period if the expected life of the financial instrument is less than 12 months) afterthe balance sheet date, and is a portion of lifetime ECLs.The maximum period to be considered when estimating ECLs is the maximum contractual period over which theCompany is exposed to credit risk, including renewal options.For the financial instruments at the first and second stages and with low credit risks, the Company calculatesthe interest income based on the book balance and the effective interest rate before deducting the impairmentprovisions. For financial instruments at the third stage, interest income is calculated based on the amortised costafter deducting impairment provisions made from the book balance and the effective interest rate.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont
’d)
(5) Impairment of financial assets (Cont
’d)
Bills receivable, accounts receivable and contract assets
For bills receivable, accounts receivable and contract assets, regardless of whether there is a significant financingcomponent, the Company always makes provision for impairment at an amount equal to lifetime ECLs.When the Company is unable to assess the information of ECLs for an individual financial asset at a reasonablecost, it classifies bills receivable and accounts receivable into portfolios based on the credit risk characteristics,and calculates the ECLs on a portfolio basis. The basis for determining the portfolios is as follows:
A. Bills receivableBills receivable portfolio 1: Bank acceptance billsBills receivable portfolio 2: Commercial acceptance billsB. Accounts receivableAccounts receivable portfolio 1: Due from related party customersAccounts receivable portfolio 2: Due from non-related party customersAccounts receivable portfolio 3: Factoring receivablesFor bills receivable classified as a portfolio, the Company refers to the historical credit loss experience, combinedwith the current situation and the forecast of future economic conditions, to calculate the ECLs based on defaultrisk exposure and lifetime ECL rate.For accounts receivable classified as a portfolio, the Company refers to the historical credit loss experience,combined with the current situation and the forecast of future economic conditions, to prepare a comparison tableof the ageing/overdue days of accounts receivable and the lifetime ECL rate to calculate the ECLs.
Other receivables
The Company classifies other receivables into portfolios based on credit risk characteristics, and calculates theECLs on a portfolio basis. The basis for determining the portfolios is as follows:
Other receivables portfolio 1: Amount due from government authoritiesOther receivables portfolio 2: Amount due from related partiesOther receivables portfolio 3: Other receivablesFor other receivables classified as a portfolio, the Company calculates the ECLs based on default risk exposureand the ECL rate over the next 12 months or the entire lifetime.
INTERIM REPORT 2023
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont
’d)
(5) Impairment of financial assets (Cont
’d)Long-term receivablesThe Company’s long-term receivables include finance lease receivables and deposits receivable.The Company classifies the finance lease receivables, deposits receivable and other receivables into portfoliosbased on the credit risk characteristics, and calculates the ECLs on a portfolio basis. The basis for determiningthe portfolios is as follows:
A. Finance lease receivablesFinance lease receivables portfolio 1: Receivables not past dueFinance lease receivables portfolio 2: Overdue receivablesB. Other long-term receivablesOther long-term receivables portfolio 1: Deposits receivableOther long-term receivables portfolio 2: Other receivablesFor deposits receivable and receivables for construction projects, the Company refers to the historical credit lossexperience, combined with the current situation and the forecast of future economic conditions, and calculatesthe ECLs based on default risk exposure and lifetime ECL rate.Except for those of finance lease receivables and deposits receivable, the ECLs of other receivables and long-term receivables classified as a portfolio are measured based on default risk exposure and ECL rate over the next12 months or the entire lifetime.Debt investments and other debt investmentsFor debt investments and other debt investments, the Company measures the ECLs based on the nature of theinvestment, the types of counterparty and risk exposure, and default risk exposure and ECL rate within the next12 months or the entire lifetime.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont
’d)
(5) Impairment of financial assets (Cont
’d)Assessment of significant increase in credit risk
In assessing whether the credit risk of a financial instrument has increased significantly upon initial recognition, theCompany compares the risk of default of the financial instrument at the balance sheet date with that at the dateof initial recognition to determine the relative change in risk of default within the expected lifetime of the financialinstrument.In determining whether the credit risk has increased significantly upon initial recognition, the Company considersreasonable and well-founded information, including forward-looking information, which can be obtained withoutunnecessary extra costs or efforts. Information considered by the Company includes:
The debtor’s failure to make payments of principal and interest on their contractually due dates;An actual or expected significant deterioration in a financial instrument’s external or internal credit rating (if any);An actual or expected significant deterioration in the operating results of the debtor;Existing or expected changes in the technological, market, economic or legal environment that have a significantadverse effect on the debtor’s ability to meet its obligation to the Company.Depending on the nature of the financial instruments, the Company assesses whether there has been a significantincrease in credit risk on either an individual basis or a collective basis. When the assessment is performed on acollective basis, the financial instruments are grouped based on their common credit risk characteristics, such aspast due information and credit risk ratings.The Company determines that the credit risk on a financial asset has increased significantly if it is more than 30days past due.
Credit-impaired financial assets
At balance sheet date, the Company assesses whether financial assets measured at amortised cost and debtinvestments measured at fair value through other comprehensive income are credit-impaired. A financial asset iscredit-impaired when one or more events that have an adverse effect on the estimated future cash flows of thefinancial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observableevents:
Significant financial difficulty of the issuer or debtor;A breach of contract by the debtor, such as a default or delinquency in interest or principal payments;For economic or contractual reasons relating to the debtor’s financial difficulty, the Company having granted tothe debtor a concession that would not otherwise consider;It becoming probable that the debtor will enter bankruptcy or other financial reorganisation;The disappearance of an active market for that financial asset because of financial difficulties of the issuer ordebtor.
INTERIM REPORT 2023
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont
’d)
(5) Impairment of financial assets (Cont
’d)Presentation of provisions for ECLsECLs are remeasured at each balance sheet date to reflect changes in the financial instrument’s credit risk uponinitial recognition. Any change in the ECL amount is recognised as an impairment gain or loss in profit or loss forthe current period. For financial assets measured at amortised cost, the provisions of impairment is deductedfrom the carrying amount of the financial assets presented in the balance sheet; for debt investments at fair valuethrough other comprehensive income, the Company makes provisions of impairment in other comprehensiveincome without reducing the carrying amount of the financial asset.Write-offsThe book balance of a financial asset is directly written off to the extent that there is no realistic prospect ofrecovery of the contractual cash flows of the financial asset (either partially or in full). Such write-off constitutesderecognition of such financial asset. This is generally the case when the Company determines that the debtordoes not have assets or sources of income that could generate sufficient cash flows to repay the amounts subjectto the write-off. However, financial assets that are written off could still be subject to enforcement activities inorder to comply with the Company’s procedures for recovery of amounts due.If a write-off of financial assets is subsequently recovered, the recovery is credited to profit or loss in the period inwhich the recovery occurs.
(6) Transfer of financial assets
Transfer of financial assets refers to the transfer or delivery of financial assets to another party other than theissuer of such financial assets (the transferee).If the Company transfers substantially all the risks and rewards of ownership of the financial asset to thetransferee, the financial asset shall be derecognised. If the Company retains substantially all the risks and rewardsof ownership of a financial asset, the financial asset shall not be derecognised.If the Company neither transfers nor retains substantially all the risks and rewards of ownership of the financialasset, it accounts for the transaction as follows: if the Company does not retain control, it derecognises thefinancial asset and recognises any resulting assets or liabilities; if the control over the financial asset is not waived,the relevant financial asset is recognised according to the extent of its continuing involvement in the transferredfinancial asset and the relevant liability is recognised accordingly.
(7) 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 financialliabilities on a net amount basis or simultaneously, the net amount of financial assets and financial liabilities shallbe presented in the balance sheet upon offsetting. Otherwise, financial assets and financial liabilities are presentedseparately in the balance sheet without offsetting.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
11. Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transactionbetween market participants at the measurement date.The Company measures the relevant asset and liability at fair value, based on the presumption that the orderlytransaction to sell the asset or transfer the liability takes place either in the principal market for the relevant asset orliability, or in the absence of a principal market, in the most advantageous market for relevant the asset or liability. Theprincipal or the most advantageous market must be a trading market accessible by the Company at the measurementdate. The Company adopts the presumption that market participants would use when pricing the asset or liability in theirbest economic interest.If there exists an active market for a financial asset or financial liability, the Company uses the quotation on the activemarket as its fair value. If the market for a financial instrument is inactive, the Company uses valuation technique torecognise its fair value.Fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economicbenefits by using the asset in its best use or by selling it to another market participant that would use the asset in itsbest use.The Company adopts valuation techniques that are appropriate in the current circumstance and for which sufficient dataand other information are available, prioritises the use of relevant observable inputs and uses unobservable inputs onlyunder the circumstances where such relevant observable inputs cannot be obtained or practicably obtained.Assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within thefair value hierarchy based on the lowest level input that is significant to the fair value measurement as a whole. Level 1:
based on quoted prices (unadjusted) in active markets for identical assets or liabilities obtainable at the measurementdate. Level 2: observable inputs for the relevant asset or liability, either directly or indirectly, except for Level 1 input.Level 3: unobservable inputs for the relevant assets or liability.At each balance sheet date, the Company reassesses assets and liabilities measured at fair value that are recognisedin the financial statements on a recurring basis to determine whether transfers have occurred between fair valuemeasurement hierarchy levels.
12. Inventories
(1) Classification of inventories
Inventories of the Company mainly include raw materials, work in progress, goods in stock, development productsand consumable biological assets, etc.
(2) Pricing of inventories dispatched
Inventories of the Company are measured at their actual cost when obtained. Cost of raw materials, goods instock and others will be calculated with weighted average method when being dispatched.Consumable biological assets refer to biological assets held-for-sale which include growing timber. Consumablebiological assets without a stock are stated at historical cost at initial recognition, and subsequently measuredat fair value when there is a stock. Changes in fair values shall be recognised as profit or loss in the currentperiod. The cost of self-planting, self-cultivating consumable biological assets is the necessary expensesdirectly 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 lossfor the current period.The cost of consumable biological assets shall, at the time of harvest or disposal, be carried forward at carryingamount using the stock volume proportion method.
INTERIM REPORT 2023
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
12. Inventories (Cont
’d)
(3) Recognition of net realisable value of inventories and provision for inventory impairment
Net realisable value of inventories refers to the amount of the estimated price of inventories less the estimatedcost incurred upon completion, estimated sales expenses and taxes and levies. The realisable value of inventoriesshall be determined on the basis of definite evidence, purpose of holding the inventories and effect of after-balance-sheet-date events.At the balance sheet date, provision for inventory impairment is made when the cost is higher than the netrealisable value. The Company usually make provision for inventory impairment based on categories of inventories.At the balance sheet date, in case the factors causing inventory impairment no longer exists, the original provisionfor inventory impairment shall be reversed.
(4) Inventory stock taking system
The Company implements permanent inventory system as its inventory stock taking system.
(5) Amortisation of low-value consumables and packaging materials
The low-value consumables of the Company are amortised when issued for use.Packaging materials for turnover are amortised when issued for use.
13. Long-term equity investments
Long-term equity investments include the equity investments in subsidiaries, joint ventures and associates. Associatesof the Company are those investees that the Company imposes significant influence over.
(1) Determination of initial investment cost
Long-term equity investments acquired through business combinations: for a long-term equity investmentacquired through a business combination involving enterprises under common control, the investment cost shallbe the absorbing party’s share of the carrying amount of the owners’equity under the consolidated financialstatements of the ultimate controlling party on the date of combination. For a long-term equity investmentacquired through a business combination involving enterprises not under common control, the investment cost ofthe long-term equity investment shall be the cost of combination.Long-term equity investments acquired through other means: for a long-term equity investment acquired by cashpayment, the initial investment cost shall be the purchase cost actually paid; for a long-term equity investmentacquired by issuing equity securities, the initial investment cost shall be the fair value of equity securities issued.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
13. Long-term equity investments (Cont
’d)
(2) Subsequent measurement and method for profit or loss recognition
Investments in subsidiaries shall be accounted for using the cost method. Except for the investments which meetthe conditions of holding for sale, investments in associates and joint ventures shall be accounted for using theequity method.For a long-term equity investment accounted for using the cost method, the cash dividends or profits declared bythe investees for distribution shall be recognised as investment gains and included in profit or loss for the currentperiod, except the case of receiving the actual consideration paid for the investment or the declared but not yetdistributed cash dividends or profits which is included in the consideration.For a long-term equity investment accounted for using the equity method, where the initial investment costexceeds the investor’s interest in the fair value of the investee’s identifiable net assets at the acquisition date, noadjustment shall be made to the investment cost of the long-term equity investment. Where the initial investmentcost is less than the investor’s interest in the fair value of the investee’s identifiable net assets at the acquisitiondate, adjustment shall be made to the carrying amount of the long-term equity investment, and the difference shallbe charged to profit or loss for the current period.Under the equity method, investment gain and other comprehensive income shall be recognised based on theCompany’s share of the net profits or losses and other comprehensive income made by the investee, respectively.Meanwhile, the carrying amount of long-term equity investment shall be adjusted. The carrying amount of long-term equity investment shall be reduced based on the Group’s share of profit or cash dividend distributed bythe investee. In respect of the other movement of net profit or loss, other comprehensive income and profitdistribution of investee, the carrying amount of long-term equity investment shall be adjusted and included inthe capital reserves (other capital reserves). The Group shall recognise its share of the investee’s net profits orlosses based on the fair values of the investee’s individual separately identifiable assets at the time of acquisition,after making appropriate adjustments thereto according to the accounting policies and accounting periods of theCompany.For additional equity investment made in order to obtain significant influence or common control over investeewithout resulted in control, the initial investment cost under the equity method shall be the aggregate of fair valueof previously held equity investment and additional investment cost on the date of transfer. For investments in non-trading equity instruments that were previously classified as at fair value through other comprehensive income, thecumulative fair value changes associated with them that were previously included in other comprehensive incomeare transferred to retained earnings upon the change to the equity method of accounting.In the event of loss of common control or significant influence over investee due to partial disposal of equityinvestment, the remaining equity interest after disposal shall be accounted for according to the AccountingStandard for Business Enterprises No. 22 – Recognition and measurement of Financial Instruments. The differencebetween its fair value and carrying amount shall be included in profit or loss for the current period. In respectof other comprehensive income recognised under previous equity investment using equity method, it shall beaccounted for in accordance with the same accounting treatment for direct disposal of relevant asset or liability byinvestee at the time when equity method was ceased to be used. Movement of other owners’equity related to theprevious equity investment shall be transferred to profit or loss for the current period.In the event of loss of control over investee due to partial disposal of equity investment, the remaining equityinterest which can apply common control or impose significant influence over the investee after disposal shall beaccounted for using equity method. Such remaining equity interest shall be treated as accounting for using equitymethod since it is obtained and adjustment was made accordingly. For the remaining equity interest which cannotapply common control or impose significant influence over the investee after disposal, it shall be accounted forusing the Accounting Standard for Business Enterprises No. 22 – Recognition and measurement of FinancialInstruments. The difference between its fair value and carrying amount as at the date of losing control shall beincluded in profit or loss for the current period.
INTERIM REPORT 2023
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
13. Long-term equity investments (Cont
’d)
(2) Subsequent measurement and method for profit or loss recognition (Cont
’d)If the shareholding ratio of the Company is reduced due to the capital increase of other investors, and as a result,the Company loses the control of but still can apply common control or impose significant influence over theinvestee, the net asset increase due to the capital increase of the investee attributable to the Company shall berecognised according to the new shareholding ratio, and the difference with the original carrying amount of thelong-term equity investment corresponding to the shareholding ratio reduction part that should be carried forwardshall be recorded in the profit or loss for the current period; and then it shall be adjusted according to the newshareholding ratio as if equity method is used for accounting when acquiring the investment.In respect of the transactions between the Company and its associates and joint ventures, the share of unrealisedgain or loss arising from internal transactions shall be eliminated by the portion attributable to the Company.Investment gain or loss shall be recognised accordingly. However, any unrealised loss arising from internaltransactions between the Company and an investee is not eliminated to the extent that the loss is impairment lossof the transferred assets.
(3) Basis for determining the common control and significant influence on the investee
Common control is the contractually agreed sharing of control over an arrangement, which relevant activities ofsuch arrangement must be decided by unanimously agreement from parties who share control. When determiningif there is any common control, it should first be identified if the arrangement is controlled by all the participantsor the group consisting of the participants, and then determined if the decision on the arranged activity can bemade only with the unanimous consent of the participants sharing the control. If all the participants or a groupof participants can only decide the relevant activities of certain arrangement through concerted action, it canbe considered that all the participants or a group of participants share common control on the arrangement. Ifthere are two or more participant groups that can collectively control certain arrangement, it does not constitutecommon control. When determining if there is any common control, the relevant protection rights will not be takeninto account.Significant influence is the power of the investor to participate in the financial and operating policy decisions ofan investee, but to fail to control or joint control the formulation of such policies together with other parties. Whendetermining if there is any significant influence on the investee, the influence of the voting shares of the investeeheld by the investor directly and indirectly and the potential voting rights held by the investor and other partieswhich are exercisable in the current period and converted to the equity of the investee, including the warrants,stock options and convertible bonds that are issued by the investee and can be converted in the current period,shall be taken into account.When the Company holds directly or indirectly through the subsidiary 20% (inclusive) to 50% of the voting sharesof the investee, it is generally considered to have significant influence on the investee, unless there is concreteevidence to prove that it cannot participate in the production and operation decision-making of the investee andcannot pose significant influence in this situation. When the Company owns less than 20% of the voting sharesof the investee, it is generally considered that it has not significantly influenced on the investee, unless there isconcrete evidence to prove that it can participate in the production and operation decision-making of the investeeand can impose significant influence in this situation.
(4) Impairment test method and impairment provision
For the method for making impairment provision for the investment in subsidiaries, associates and joint ventures,please refer to Note V. 22.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
14. Investment property
Investment property refers to real estate held to earn rentals or for capital appreciation, or both. The investment propertyof the Company includes leased land use rights, land use rights held for sale after appreciation, and leased buildings.The investment property of the Company is measured initially at cost upon acquisition, and subject to depreciation oramortisation in the relevant periods according to the relevant provisions on fixed assets or intangible assets.For the method for making impairment provision for the investment property adopted cost method for subsequentmeasurement, please refer to Note V. 22.When an investment property is sold, transferred, retired or damaged, the amount of proceeds on disposal of theproperty net of the carrying amount and related tax and surcharges is recognised in profit or loss for the current period.
15. Fixed assets
(1) Conditions for recognition of fixed assets
Fixed assets represent the tangible assets held by the Company using in the production of goods, rendering ofservices and for operation and administrative purposes with useful life over one year.Fixed assets are recognised when it is probable that the related economic benefits will flow to the Company andthe costs can be reliably measured.The Company’s fixed assets are initially measured at the actual cost at the time of acquisition.Subsequent expenditures incurred for a fixed asset are included in the cost of the fixed asset when it is probablethat the associated economic benefits will flow to the Company and the related cost can be reliably measured.The cost of routine repairs of fixed assets that do not qualify as capitalised subsequent expenditure is charged tocurrent profit or loss or included in the cost of the related assets in accordance with the beneficiary object whenincurred. The carrying amount of the replaced part is derecognised.
(2) Depreciation method by category of fixed assets
The Company adopts the straight-line method for depreciation. Provision for depreciation will be started when thefixed asset reaches its expected usable state, and stopped when the fixed asset is derecognised or classified as anon-current asset held for sale. Without regard to the depreciation provision, the Company determines the annualdepreciation rate by category, estimated useful lives and estimated residual value of the fixed assets as below:
Category
Useful lives ofdepreciation (Year)
Estimated residual
value (%)
Annual depreciation
rate (%)Housing and building structure20-405-102.25-4.75Machinery and equipment8-205-104.50-11.88Transportation equipment5-85-1011.25-19.00Electronic equipment and others55-1018.00-19.00Where, for the fixed assets for which impairment provision is made, to determine the depreciation rate, theaccumulated amount of the fixed asset impairment provision that has been made shall be deducted.
INTERIM REPORT 2023
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
15. Fixed assets (Cont
’d)
(3) The impairment test method and impairment provision method of the fixed assets are set out in Note V. 22.
(4) The Company will review the useful lives, estimated net residual value and depreciation method of the fixed assets
at the end of each year.When there is any difference between the useful lives estimate and the originally estimated value, the usefullives of the fixed asset shall be adjusted. When there is any difference between the estimated net residual valueestimate and the originally estimated value, the estimated net residual value shall be adjusted.
(5) Disposal of fixed assets
A fixed asset is derecognised on disposal or when it is expected that there shall be no economic benefit arisingfrom using or after disposal. Where the fixed assets are sold, transferred, retired or damaged, the income receivedafter disposal after deducting the carrying amount and related taxes are recognised in profit or loss for the currentperiod.
16. Construction in progress
Construction in progress of the Company is recognised based on the actual construction cost, including all necessaryexpenditures incurred for construction projects, capitalised borrowing costs for the construction in progress before ithas reached the working condition for its intended use, and other related expenses during the construction period.A construction in progress is reclassified to fixed assets when it has reached the working condition for its intended use.The method for impairment provision of construction in progress is set out in Note V. 22.
17. Materials for project
The materials for project of the Group refer to various materials prepared for construction in progress, includingconstruction materials, equipment not yet installed and tools for production.The purchased materials for project are measured at cost, and the planning materials for project are transferred toconstruction in progress. After the completion of the project, the remaining materials for project are transferred toinventory.The method for impairment provision of materials for project is set out in Note V. 22.The closing balance of materials for project is presented as“construction in progress” item in the balance sheet.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
18. Borrowing costs
(1) Recognition principle for the capitalisation of the borrowing costs
The borrowing costs incurred by the Company directly attributable to the acquisition, construction or productionof a qualifying asset will be capitalised and included in the cost of relevant asset. Other borrowing costs will berecognised as expenses when incurred according to the incurred amount, and included in the profit or loss for thecurrent period. When the borrowing costs meet all the following conditions, capitalisation shall be started:
The capital expenditure has been incurred, which includes the expenditure incurred by paying cash,
transferring non-cash assets or undertaking interest-bearing liabilities for acquiring, constructing orproducing the qualifying assets; The borrowing costs have been incurred;The acquisition, construction or production activity necessary for the asset to be ready for its intended useor sale has been started.
(2) Capitalisation period of borrowing costs
When a qualifying asset acquired, constructed or produced by the Company is ready for its intended use or sale,the capitalisation of the borrowing costs shall discontinue. The borrowing costs incurred after a qualifying assetis ready for its intended use or sale shall be recognised as expenses when incurred according to the incurredamount, and included in the profit or loss for the current period.Capitalisation of borrowing costs shall be suspended during periods in which the acquisition, construction orproduction of a qualifying asset is interrupted abnormally, when the interruption is for a continuous period of morethan 3 months. The capitalisation of the borrowing costs shall be continued in the normal interruption period.
(3) Calculation methods for capitalisation rate and capitalised amount of the borrowing costs
Where funds are borrowed for a specific purpose, the amount of interest to be capitalised shall be the actualinterest expense incurred on that borrowing for the period less any bank interest earned from depositing theborrowed funds before being used into banks or any investment income on the temporary investment of thosefunds. Where funds are borrowed for general purpose, the Company shall determine the amount of interestto be capitalised on such borrowings by applying a capitalisation rate to the weighted average of the excessamounts 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-purposeborrowings.During the capitalisation period, exchange differences on a specific purpose borrowing denominated in foreigncurrency shall be capitalised. Exchange differences related to general-purpose borrowings denominated in foreigncurrency shall be included in profit or loss for the current period.
INTERIM REPORT 2023
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
19. Biological assets
Bearer biological assets refer to biological assets held for the purpose of producing agricultural products, providinglabour services or renting, including economic forests, firewood forests, productive livestock and draught animals. TheCompany’s bearer biological assets are mainly tea trees. The cost of a planted or propagated bearer biological assetincludes the expenses directly attributable to the asset and necessarily incurred before the asset is ready for its intendedproduction and operation, including the borrowing costs that are eligible for capitalisation.The management, protection and feeding costs of a biological asset subsequent to crown closure or after the asset isready for its intended production and operation are expensed and recognised in profit or loss as incurred.Depreciation of bearer biological assets is calculated using the straight-line method over the estimated useful life ofeach biological asset less its residual value as follows:
Type of bearer biological assetsUseful life (year)
Estimated residual
value
Annual depreciation
rateTea tree105%9.50%The Company reviews the useful life and estimated net residual value of a bearer biological asset and the depreciationmethod applied at least at each financial year-end. A change in the useful life or estimated net residual value of a fixedasset or the depreciation method used shall be accounted for as a change in accounting estimate.The difference between the disposal income of the sale, loss, death or damage of a bearer biological asset, net of itscarrying amount and related taxes, is recognised in profit or loss for the current period.The method for impairment provision of bearer biological assets is set out in Note V. 22.
20. Right-of-use assets
(1) Conditions for recognition of right-of-use assets
Right-of-use assets are defined as the right of underlying assets in the lease term for the Company as a lessee.Right-of-use assets are initially measured at cost at the commencement date of the lease. The cost includes theamount of the initial measurement of lease liability; lease payments made at or before the inception of the leaseless any lease incentives enjoyed; initial direct costs incurred by the Company as lessee; costs to be incurred indismantling and removing the underlying assets, restoring the site on which it is located or restoring the underlyingasset to the condition required by the terms and conditions of the lease incurred by the Company as lessee. Asa lessee, the Company recognises and measures the costs of dismantling and restoration in accordance with theAccounting Standard for Business Enterprises No. 13 – Contingencies. Subsequently, the lease liability is adjustedfor any remeasurement of the lease liability.
(2) Depreciation method of right-of-use assets
The Company uses the straight-line method for depreciation. Where the Company, as a lessee, is reasonablycertain to obtain ownership of the leased asset at the end of the lease term, such asset is depreciated over theremaining useful life of the leased asset. Where ownership of the lease assets during the lease term cannot bereasonably determined, right-of-use assets are depreciated over the lease term or the remainder of useful lives ofthe lease assets, whichever is shorter.
(3) For the methods of impairment test and impairment provision of right-of-use assets, please refer to Note V. 22.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
21. Intangible assets
The intangible assets of the Company include land use rights, software, patents and certificates of third party right.The intangible asset is initially measured at cost, and its useful life is determined upon acquisition. If the useful life isfinite, the intangible asset will be amortised over the estimated useful life using the amortisation method that can reflectthe estimated realisation of the economic benefits related to the asset, starting from the time when it is available for use.If it is unable to reliably determine the estimated realisation, straight-line method shall be adopted for amortisation. Theintangible assets with uncertain useful life will not be amortised.The amortisation methods for the intangible assets with finite useful life are as follows:
TypeUseful lifeMethod of amortisationRemarkLand use rights50-70Straight-line methodSoftware5-10Straight-line methodPatents5-20Straight-line methodCertificates of third party right3Straight-line methodThe Company reviews the useful life and amortisation method of the intangible assets with finite useful life at the end ofeach year. If it is different from the previous estimates, the original estimates will be adjusted, and will be treated as achange in accounting estimate.If it is estimated on the balance sheet date that certain intangible asset can no longer bring future economic benefit tothe company, the carrying amount of the intangible asset will be entirely transferred into the profit or loss for the currentperiod.The impairment method for the intangible assets is set out in Note V. 22.
22. Long-term asset impairment
Impairment of long-term equity investments in subsidiaries, associates and joint ventures, asset impairment oninvestment property, fixed assets, construction in progress, bearer biological assets measured at cost, right-of-useassets, intangible assets, goodwill and others (excluding inventories, investment property measured at fair value,deferred tax assets and financial assets) subsequently measured at cost is determined as follows:
The Company determines if there is any indication of asset impairment as at the balance sheet date. If there is anyevidence indicating that an asset may be impaired, recoverable amount shall be estimated for impairment test. Goodwillarising from business combinations, intangible assets with an indefinite useful life and intangible assets not ready foruse will be tested for impairment annually, regardless of whether there is any indication of impairment.The recoverable amount of an asset is the higher of its fair value less costs of disposal and the present value of thefuture cash flows expected to be derived from the asset. The Company estimates the recoverable amount of anindividual asset. If it is not possible to estimate the recoverable amount of the individual asset, the Company shalldetermine the recoverable amount of the asset group to which the asset belongs. The determination of an asset groupis based on whether major cash inflows generated by the asset group are independent of the cash inflows from otherassets or asset groups.
INTERIM REPORT 2023
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
22. Long-term asset impairment (Cont
’d)When the recoverable amount of an asset or an asset group is less than its carrying amount, the carrying amount isreduced to its recoverable amount. The reduction amount is charged to profit or loss and an impairment provision ismade accordingly.For the purpose of impairment test of goodwill, the carrying amount of goodwill acquired in a business combination isallocated to the relevant asset groups on a reasonable basis from the acquisition date; where it is difficult to allocateto the related asset groups, it is allocated to the combination of related asset groups. The related asset groups orcombination of asset groups are those which can benefit from the synergies of the business combination and are notlarger than the reportable segments identified by the Company.In the impairment test, if there is any indication that an asset group or a combination of asset groups related to goodwillmay be impaired, the Company first tests the asset group or set of asset groups excluding goodwill for impairment,calculates the recoverable amount and recognises the corresponding impairment loss. An impairment test is then carriedout on the asset group or combination of asset groups containing goodwill by comparing its carrying amount with itsrecoverable amount. If the recoverable amount is lower than the carrying amount, an impairment loss is recognised forgoodwill.An impairment loss recognised shall not be reversed in a subsequent period.
23. Long-term prepaid expenses
The long-term prepaid expenses incurred by the Company shall be recognised based on the actual cost, and evenlyamortised over the estimated benefit period. For the long-term prepaid expense that cannot benefit the subsequentaccounting periods, its value after amortisation shall be entirely included in the profit or loss for the current period.
24. Contract liabilities
A contract liability represents the Company’s obligation to transfer goods to a customer for which the Company hasreceived consideration (or an amount of consideration is due) from the customer. If the customer has already paidthe contract consideration before the Company transfers goods to the customer or the Company has obtained theunconditional collection right, the Company will recognise such amount received or receivable as contract liabilitiesat earlier of the actual payment by the customer or the amount payable becoming due. Contract assets and contractliabilities under the same contract are presented on a net basis, and contract assets and contract liabilities underdifferent contracts are not offset.
25. Employee benefits
(1) Scope of employee benefits
Employee benefits are all forms of considerations or compensation given by an entity in exchange for servicesrendered by employees or for the termination of employment. Employee benefits include short-term staffremuneration, post-employment benefits, termination benefits and other long-term employee benefits. Employeebenefits include benefits provided to employees’spouses, children, other dependants, family members ofdeceased employees and other beneficiaries.Employee benefits are presented as“employee benefits payable”and“long-term employee benefits payable”inthe balance sheet, respectively, according to liquidity.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
25. Employee benefits (Cont
’d)
(2) Short-term staff remuneration
Employee wages or salaries actually incurred, bonuses, and social insurance contributions such as medicalinsurance, work injury insurance, maternity insurance, and housing fund, contributed at the applicable benchmarksand rates, are recognised as a liability as the employees provide services, with a corresponding charge to profit orloss or included in the cost of assets where appropriate.
(3) Post-employment benefits
Post-employment benefit plans include defined contribution plans and defined benefit plans. A definedcontribution plan is a post-employment benefit plan under which the Company pays fixed contributions intoa separate fund and the Company has no further obligations for payment. A defined benefit plan is a post-employment benefit plan other than a defined contribution plan.Defined contribution plans
Defined contribution plans include basic pension insurance and unemployment insurance.During the accounting period in which an employee provides service, the amount payable calculated according tothe defined contribution plan is recognised as a liability and included in the profit or loss for the current period orthe cost of relevant assets.Defined benefit plans
For defined benefit plans, the actuarial valuation is carried out by an independent actuary on the annual balancesheet date, and the cost of providing benefits is determined by the expected cumulative benefit unit method. Thecost of staff remuneration arising from the Company’s defined benefit plans includes the following components:
Service cost, including current service cost, past service cost, and settlement gain or loss. In particular,the current service cost refers to the increase in the present value of obligations of defined benefit plansarising from the service provided by staff in the current period; the past service cost refers to the increase ordecrease in the present value of obligations of defined benefit plans related to the service of the staff in theprevious period arising from the revision of defined benefit plans.Net interest on net liabilities or net assets of defined benefit plans, including interest income from the assetsunder the plans, interest expense arising from the obligations of defined benefit plans, and interest affectedby asset caps. Changes arising from the remeasurement of net liabilities or net assets of defined benefit plans.Unless other accounting standards require or allow costs of staff welfare to be included in costs of assets,the Company will include the above items and in the current profit and loss; and include item in othercomprehensive income which will not be transferred back to profit or loss in subsequent accounting periods.When the original defined benefit plan is terminated, all the part originally included in other comprehensive incomeshall be transferred to retained profit within the scope of equity.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
25. Employee benefits (Cont
’d)
(4) Termination benefits
When the Company provides termination benefits to employees, employee benefits liabilities arising fromtermination benefits are recognised in profit or loss for the current period at the earlier of the following dates: whenthe Company cannot revoke unilaterally compensation for dismissal due to the cancellation of labour relationshipplans and employee redundant proposals; the Company recognises cost and expenses related to payment ofcompensation for dismissal and restructuring.For the early retirement plans, economic compensations before the actual retirement date were classified astermination benefits. During the period from the date of cease of render of services to the actual retirementdate, relevant wages and contribution to social insurance for the employees proposed to be paid are recognisedin profit or loss on a one-off basis. Economic compensation after the official retirement date, such as normalpension, is accounted for as post-employment benefits.
(5) Other long-term benefits
Other long-term employee benefits provided by the Group to employees that meet the conditions for definedcontribution plans are accounted for in accordance with the relevant provisions relating to defined contributionplans as stated above. If the conditions for defined benefit plans are met, the benefits shall accounted for inaccordance with the relevant provisions relating to defined benefit plans, but the“changes arising from theremeasurement of net liabilities or net assets of defined benefit plans”in the relevant employee benefits shall beincluded in the current profit and loss or the relevant costs of assets.
26. Provisions
Obligations pertinent to the contingencies which satisfy the following conditions are recognised by the Company asprovisions:
(1) the obligation is a current obligation borne by the Company;
(2) it is likely that an outflow of economic benefits from the Company will be resulted from the performance of the
obligation;
(3) the amount of the obligation can be reliably measured.
The provisions shall be initially measured based on the best estimate for the expenditure required for the performanceof the current obligation, after taking into account relevant risks, uncertainties, time value of money and otherfactors pertinent to the contingencies. If the time value of money has significant influence, the best estimates shallbe determined after discounting the relevant future cash outflow. The Company reviews the carrying amount of theprovisions on the balance sheet date and adjust the carrying amount to reflect the current best estimates.If all or some expenses incurred for settlement of recognised provisions are expected to be borne by the third party,the compensation amount shall, on a recoverable basis, be recognised as asset separately, and compensation amountrecognised shall not be more than the carrying amount of provisions.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
27. Share-based payments and equity instruments
(1) Category of share-based payment
The Company’s share-based payment is either equity-settled or cash-settled.
(2) Determination of fair value of equity instruments
For the existence of an active market for options and other equity instruments granted by the Company, the fairvalue is determined at the quoted price in the active market. For options and other equity instruments with noactive market, option pricing model shall be used to estimate the fair value of the equity instruments. The followingfactors shall be taken into account using option pricing models: A. the exercise price of the option; B. the validityperiod of the option; C. the current market price of the share; D. the expected volatility of the share price; E.predicted dividend of the share; and F. risk-free rate of the option within the validity period.
(3) Recognition of vesting of equity instruments based on the best estimate
On each balance sheet date within the vesting period, the estimated number of equity instruments expected tovest is revised based on the best estimate made by the Company according to the latest available subsequentinformation as to changes in the number of employees with exercisable rights. On the vesting date, the finalestimated number of equity instruments expected to vest should equal the actual number of equity instrumentsexpected to vest.
(4) Accounting treatment of implementation, modification and termination of share-based payment
Equity-settled share-based payment shall be measured at the fair value of the equity instruments granted toemployees. For those may immediately vest after the grant, the fair value of equity instrument at the grant dateshall be included in the relevant costs or expenses, and the capital reserve shall be increased accordingly.If the right may not be exercised until the vesting period comes to an end or until the specified performanceconditions are met, on each balance sheet date within the vesting period, the services obtained in the currentperiod shall, based on the best estimate of the number of vested equity instruments, be included in the relevantcosts or expenses and the capital reserve at the fair value of the equity instrument at the grant date. After thevesting period, relevant costs or expenses and total shareholders’equity which have been recognised will not beadjusted.Cash-settled share-based payment shall be measured in accordance with the fair value of liability calculatedand recognised based on the shares or other equity instruments undertaken by the Company. For those mayimmediately vest after the grant, the fair value of the liability undertaken by the Company shall, on the date of thegrant, be included in the relevant costs or expenses, and the liabilities shall be increased accordingly. If the rightmay not be exercised until the vesting period comes to an end or until the specified performance conditions aremet, on each balance sheet date within the vesting period, the services obtained in the current period shall, basedon the best estimate of the information about the exercisable right, be included in the relevant costs or expensesand the corresponding liabilities at the fair value of the liability undertaken by the Company. For each of thebalance sheet date and settlement date before the settlement of the relevant liabilities, fair value of the liabilitiesshall be remeasured and the changes will be included in the profit or loss for the current period.When there are changes in the Company’s share-based payment plans, if the modification increases the fair valueof the equity instruments granted, corresponding recognition of service increase in accordance with the increasein the fair value of the equity instruments; if the modification increases the number of equity instruments granted,the increase in fair value of the equity instruments is recognised as a corresponding increase in service achieved.An increase in the fair value of equity instruments refers to the difference between the fair values of the modifieddate. If the modification reduces the total fair value of shares paid or not conductive to the use of other employeesshare-based payment plans to modify the terms and conditions of service, it will continue to be accounted for inthe accounting treatment, as if the change had not occurred, unless the Company cancelled some or all of theequity instruments granted.During the vesting period, if the cancelled equity instruments (except for failure to meet the conditions of the non-market vesting conditions) granted by the Company to cancel the equity instruments granted amount treated asaccelerated vesting of the remaining period should be recognised immediately in profit or loss, while recognisingcapital reserves. If employees or other parties can choose to meet non-vesting conditions but they are not met inthe vesting period, the Company will treat them as cancelled equity instruments granted.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
28. Perpetual Bonds
(1) Classification of financial liabilities and equity instruments
Financial instruments issued by the Company are classified into financial assets, financial liabilities or equityinstruments on the basis of the substance of the contractual arrangements and the economic nature not onlyits legal form, together with the definition of financial asset, financial liability and equity instruments on initialrecognition.
(2) Accounting treatment of Perpetual Bonds
Financial instruments issued by the Company are initially recognised and measured in accordance with thefinancial instrument standards; thereafter, interest or dividends are accrued on each balance sheet date andaccounted for in accordance with relevant specific ASBEs, i.e. to determine the accounting treatment for interestexpenditure or dividend distribution of the instrument based on the classification of the financial instrument issued.For financial instruments classified as equity instruments, their interest expenses or dividend distributions aretreated as profit distribution of the Company, and their repurchases and cancellations are treated as changes inequity; for financial instruments classified as financial liabilities, their interest expenses or dividend distribution arein principle accounted for with reference to borrowing costs, and the gains or losses arising from their repurchasesor redemption are included in the profit or loss for the current period.For the transaction costs such as fees and commissions incurred by the Company for issuing financialinstruments, if such financial instruments are classified as debt instruments and measured at amortised cost, theyare included in the initial measured amount of the instruments issued; if such financial instruments are classifiedas equity instruments, they are deducted from equity.
29. Revenue
(1) General principles
The Company recognises revenue when it satisfies a performance obligation in the contract, i.e. when thecustomer obtains control of the relevant goods or services.Where a contract has two or more performance obligations, the Company allocates the transaction price to eachperformance obligation based on the percentage of respective unit price of goods or services guaranteed byeach performance obligation, and recognises as revenue based on the transaction price that is allocated to eachperformance obligation.If one of the following conditions is fulfilled, the Company performs its performance obligation within a certainperiod; otherwise, it performs its performance obligation at a point of time:
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 goods in progress in the course of performance by the Company
under the contract;when the goods produced by the Company under the contract are irreplaceable and the Company has the
right to payment for performance completed to date during the whole contract term.For performance obligations performed within a certain period, the Company recognises revenue by measuringthe progress towards complete of that performance obligation within that certain period. When the progressof performance cannot be reasonably determined, if the costs incurred by the Company are expected to becompensated, the revenue shall be recognised at the amount of costs incurred until the progress of performancecan be reasonably determined.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
29. Revenue (Cont
’d)
(1) General principles (Cont
’d)
For performance obligation performed at a point of time, the Company recognises revenue at the point of time atwhich the customer obtains control of relevant goods or services. To determine whether a customer has obtainedcontrol of goods or services, the Company considers the following indications:
The Company has the current right to receive payment for the goods, which is when the customer has thecurrent payment obligations for the goods.The Company has transferred the legal title of the goods to the customer, which is when the clientpossesses the legal title of the goods.The Company has transferred the physical possession of goods to the customer, which is when thecustomer obtains physical possession of the goods.The Company has transferred all of the substantial risks and rewards of ownership of the goods to thecustomer, which is when the customer obtain all of the substantial risks and rewards of ownership of thegoods to the customer. The customer has accepted the goods or services. Other information indicates that the customer has obtained control of the goods.The Company’s right to consideration in exchange for goods or services that the Company has transferred tocustomers (and such right depends on factors other than passage of time) is accounted for as contract assets,and contract assets are subject to impairment based on ECLs (Note V. 10(5)). The Company’s unconditionalright to receive consideration from customers (only depends on passage of time) is accounted for as accountsreceivable. The Company’s obligation to transfer goods or services to customers for which the Company hasreceived or should receive consideration from customers is accounted for as contract liabilities.Contract assets and contract liabilities under the same contract are presented on a net basis. Where the netamount has a debit balance, it is presented in“contract assets”or“other non-current assets”according to itsliquidity. Where the net amount has a credit balance, it is presented in“contract liabilities”or“other non-currentliabilities” according to its liquidity.
(2) Specific methods
Specific method for revenue recognition of machine-made paper business of the Company: in terms of domesticsales of machine-made paper, revenue is recognised when goods are delivered to the customers and suchdeliveries are confirmed; while in terms of overseas sales of machine-made paper, revenue is recognised on theday when goods are loaded on board and declared.Specific method for recognition of finance lease income of the Company: according to the repayment schedule,the income is recognised by instalments according to the effective interest rate.Specific method for recognition of revenue from real estate of the Company: revenue is recognised by amortisingthe property rental income on a straight-line basis over the lease term.The specific method for the Company to recognise revenue from electricity and steam: the sales of steam andelectricity by the Company are performance obligations performed at a point of time. For sales of electricity, theCompany recognises revenue from sales of electricity based on the quantity of electricity delivered to customersevery month at a price agreed in the contract. For sales of steam, the Company recognises revenue from sales ofsteam based on the amount of steam delivered to customers every month at a price agreed in the contract.The specific method for the Company to recognise revenue from construction materials, moulds and paperchemicals: revenue is recognised when goods are delivered to the customers and such deliveries are confirmed.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
30. Contract costs
Contract costs are either the incremental costs of obtaining a contract with a customer or the costs to fulfil a contractwith a customer.Incremental costs of obtaining a contract are those costs that the Company incurs to obtain a contract with a customerthat it would not have incurred if the contract had not been obtained e.g. sales commission. The Company recognisesthe incremental costs of obtaining a contract with a customer as an asset if it expects to recover those costs. Othercosts of obtaining a contract are expensed when incurred.If the costs to fulfil a contract with a customer are not within the scope of inventories or other ASBEs, the Companyrecognises an asset from the costs incurred to fulfil a contract only if those costs meet all of the following criteria:
the costs relate directly to an existing contract or to a specifically identifiable anticipated contract, including directlabour, direct materials, allocations of overheads (or similar costs), costs that are explicitly chargeable to thecustomer and other costs that are incurred only because the Company entered into the contract;the costs generate or enhance resources of the Company that will be used in satisfying (or in continuing to satisfy)
performance obligations in the future; the costs are expected to be recovered.Assets recognised for the incremental costs of obtaining a contract and assets recognised for the costs to fulfil acontract (the“assets related to contract costs”) are amortised on a systematic basis that is consistent with the transferto the customer of the goods or services to which the assets relate and recognised in profit or loss for the currentperiod.The Company recognises an impairment loss in profit or loss to the extent that the carrying amount of an asset relatedto contract costs exceeds:
remaining amount of consideration that the Company expects to receive in exchange for the goods or services to
which the asset relates; the cost estimated to be happened for the transfer of related goods or services.The costs of contract performance recognised as assets, if the amortisation period is less than one year or a normaloperating cycle upon the initial recognition, are presented as“Inventories”item, and if the amortisation period is morethan one year or a normal operating cycle upon the initial recognition, are presented as“other non-current assets” item.The contract obtaining costs recognised as assets, if the amortisation period is less than one year or a normal operatingcycle upon the initial recognition, are presented as“other current assets”item, and if the amortisation period is morethan one year or a normal operating cycle upon the initial recognition, are presented as“other non-current assets” item.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
31. Government grants
A government grant is recognised when the grant will be received and that the Company will comply with the conditionsattaching to the grant.If a government grant is in the form of a monetary asset, it is measured at the amount received or receivable. If agovernment grant is in the form of non-monetary asset, it is measured at fair value; if the fair value cannot be obtained ina reliable way, it is measured at the nominal amount of RMB1.Government grants obtained for acquisition or construction of long-term assets or other forms of long-term assetformation are classified as government grants related to assets, while the remaining government grants are classified asgovernment grants related to revenue.Regarding the government grant not clearly defined in the official documents and can form long-term assets, the partof government grant which can be referred to the value of the assets is classified as government grant related to assetsand the remaining part is government grant related to revenue. For the government grant that is difficult to distinguish,the entire government grant is classified as government grant related to revenue.A government grant related to an asset shall be recognised as deferred income, and evenly amortised to profit or lossover the useful life of the asset in a reasonable and systematic manner. For a government grant related to revenue, ifthe grant is a compensation for related costs, expenses or losses incurred, the grant shall be recognised in profit orloss for the current period or used to offset related costs; if the grant is a compensation for related costs, expenses orlosses to be incurred in subsequent periods, the grant shall be recognised as deferred income, and recognised in profitor loss over the periods in which the related costs, expenses or losses are recognised. A government grant measured atnominal amount is directly included in profit or loss for the current period. The Company adopts a consistent approachto the same or similar government grants.A government grant related to daily activities is recognised in other gains or used to offset related costs relying on theessence of economic business; otherwise, recognised in non-operating income.For the repayment of a government grant already recognised, if the carrying amount of relevant assets was written offat initial recognition, the carrying amount of the assets shall be adjusted; if there is any related deferred income, therepayment shall be offset against the carrying amount of the deferred income, and any excess shall be recognised inprofit or loss for the current period; otherwise, the repayment shall be recognised immediately in profit or loss for thecurrent period.
32. Deferred income tax assets/deferred income tax liabilities
Income tax comprises current income tax expense and deferred income tax expense, which are included in profit orloss for the current period as income tax expenses, except for deferred tax related to transactions or events that aredirectly recognised in owners’ equity which are recognised in owners’equity, and deferred tax arising from a businesscombination, which is adjusted against the carrying amount of goodwill.Temporary differences arising from the difference between the carrying amount of an asset or liability and its tax baseat the balance sheet date of the Company shall be recognised as deferred income tax using the balance sheet liabilitymethod.All the taxable temporary differences are recognised as deferred income tax liabilities except for those incurred in thefollowing transactions:
(1) The initial recognition of goodwill, and the initial recognition of an asset or liability in a transaction which is neither
a business combination nor affects accounting profit or taxable profit (or deductible loss) when the transactionoccurs;
(2) The taxable temporary differences associated with investments in subsidiaries, associates and joint ventures, and
the Company is able to control the timing of the reversal of the temporary difference and it is probable that thetemporary difference will not reverse in the foreseeable future.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
32. Deferred income tax assets/deferred income tax liabilities (Cont
’d)The Company recognises a deferred income tax asset for the carry forward of deductible temporary differences,deductible losses and tax credits to subsequent periods, to the extent that it is probable that future taxable profitswill be available against which the deductible temporary differences, deductible losses and tax credits can be utilised,except for those incurred in the following transactions:
(1) The transaction is neither a business combination nor affects accounting profit or taxable profit (or deductible loss)
when the transaction occurs;
(2) The deductible temporary differences associated with investments in subsidiaries, associates and joint ventures,
the corresponding deferred income tax asset is recognised when both of the following conditions are satisfied: it isprobable that the temporary difference will reverse in the foreseeable future, and it is probable that taxable profitswill be available in the future, against which the temporary difference can be utilised.At the balance sheet date, deferred income tax assets and deferred income tax liabilities are measured at the taxrates that are expected to apply to the period when the asset is realised or the liability is settled, and their tax effect isreflected accordingly.At the balance sheet date, the Company reviews the carrying amount of a deferred income tax asset. If it is probablethat sufficient taxable profits will not be available in future periods to allow the benefit of the deferred tax asset to beutilised, the carrying amount of the deferred tax asset is reduced. Any such reduction in amount is reversed when itbecomes probable that sufficient taxable profits will be available.
33. Lease
(1) Identification of leases
On the beginning date of the contract, the Company (as a lessee or lessor) assesses whether the customer inthe contract has the right to obtain substantially all of the economic benefits from use of the identified assetthroughout the period of use and has the right to direct the use of the identified asset throughout the period ofuse. If a contract conveys the right to control the use of an identified asset and multiple identified assets for aperiod of time in exchange for consideration, the Company identifies such contract is, or contains, a lease.
(2) The Company as lessee
On the beginning date of the lease, the Company recognises right-of-use assets and lease liabilities for all leases,except for short-term lease and low-value asset lease with simplified approach.The accounting policy for right-of-use assets is set out in Note V. 20.The lease liability is initially measured at the present value of the lease payments that are not paid at the beginningdate of the lease using the interest rate implicit in the lease. Where the interest rate implicit in the lease cannot bedetermined, the incremental borrowing rate is used as the discount rate. Lease payments include fixed paymentsand in-substance fixed payments, less any lease incentives receivable; variable lease payments that are basedon an index or a rate; the exercise price of a purchase option if the lessee is reasonably certain to exercisethat option; payments for terminating the lease, if the lease term reflects the lessee exercising that option ofterminating; and amounts expected to be payable by the lessee under residual value guarantees. Subsequently,the interest expense on the lease liability for each period during the lease term is calculated using a constantperiodic rate of interest and is recognised in profit or loss for the current period. Variable lease payments notincluded in the measurement of lease liabilities are recognised in profit or loss for the period in which they actuallyarise.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
33. Lease (Continued)
(2) The Company as lessee (Continued)
Short-term leaseShort-term leases refer to leases with a lease term of less than 12 months from the commencement date, exceptfor those with a purchase option.Lease payments on short-term leases are recognised in the cost of related assets or current profit or loss on astraight-line basis over the lease term.For short-term leases, the Company chooses to adopt the above simplified approach for the following types ofassets that meet the conditions of short-term lease according to the classification of leased assets.Low-value equipmentTransportation vehiclesLow-value asset leaseA low-value asset lease is a lease that the value of a single leased asset is below RMB40,000 when it is a newasset.Lease payments on low-value asset leases are recognised on a straight-line basis over the lease term, and eitherincluded in the cost of the related asset or charged to profit or loss for the current period.For a low-value asset lease, the Company chooses the above simplified approach based on the specificcircumstances of each lease.Lease modificationThe Company accounts for a lease modification as a separate lease when the modification occurs and thefollowing conditions are met: the lease modification expands the scope of lease by adding the right to useone or more of the leased assets; and the increase in consideration is equivalent to the separate price for theexpanded scope of lease adjusted for that contractual situation.Where a lease modification is not accounted for as a separate lease, at the effective date of the lease modification,the Company reallocates the consideration of the modified contract, reassesses the lease term and remeasuresthe lease liability based on the present value of the lease payments after the modification and the revised discountrate.If a lease modification results in a reduction in the scope of the lease or a shortening of the lease term, theCompany reduces the carrying amount of the right-of-use asset accordingly and includes in the profit or loss forthe period the gain or loss associated with the partial or complete termination of the lease.Where other lease modifications result in a remeasurement of the lease liability, the Company adjusts the carryingamount of the right-of-use asset accordingly.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
33. Lease (Continued)
(3) The Company as lessor
When the Company is a lessor, a lease is classified as a finance lease whenever the terms of the lease transfersubstantially all the risks and rewards of asset ownership to the lessee. All leases other than financial leases areclassified as operating leases.Finance leases
Under finance leases, the Company accounts for finance lease receivables at the beginning of the lease term atthe net lease investment, which is the sum of the unsecured residual value and the present value of the leasereceipts outstanding at the commencement date of the lease, discounted at the interest rate implicit in the lease.The Company as lessor calculates and recognises interest income for each period of the lease term based ona fixed periodic interest rate. Variable lease payments acquired by the Company as lessor that are not includedin the net measurement of lease investments are included in profit or loss for the period when they are actuallyincurred.Derecognition and impairment of finance lease receivables are accounted for in accordance with the requirementsunder the Accounting Standard for Business Enterprises No. 22 – Recognition and Measurement of FinancialInstruments and the Accounting Standards for Business Enterprises No. 23 – Transfer of Financial Assets.Operating leaseLease payments under operating leases are recognised in profit or loss on a straight-line basis over the lease term.Initial direct costs incurred in relation to operating leases are capitalised and amortised over the lease term on thesame basis as rental income and recognised in profit or loss for the current period. The variable lease paymentsobtained in relation to operating leases that are not included in the lease payments are recognised in profit or lossin the period in which they actually incurred.Lease modificationThe Company accounts for a modification in an operating lease as a new lease from the effective date of themodification and the amount of lease receipts received in advance or receivable in respect of the lease prior to themodification is treated as a receipt under the new lease.The Company accounts for a modification in a finance lease as a separate lease when the change occurs andthe following conditions are met: the modification expands the scope of lease by adding the right to use oneor more of the leased assets; and the increase in consideration is equivalent to the separate price for theexpanded scope of lease adjusted for that contractual situation.Where a finance lease is modified and not accounted for as a separate lease, the Company accounts for themodified lease in the following circumstances: If the modification takes effect on the lease commencementdate, the lease will be classified as an operating lease, the Company will account for it as a new lease from theeffective date of the lease modification, and use the net lease investment before the effective date of the leasemodification; If the modification takes effect on the lease commencement date, the lease will be classified as afinance lease, and the Company will conduct accounting treatment in accordance with the Accounting Standardsfor Business Enterprises No. 22 – Recognition and Measurement of Financial Instruments on modifying orrenegotiating contracts.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
33. Lease (Continued)
(4) Sublease
When the Company is an intermediate lessor, the sublease is classified with reference to the right-of-use assetsarising from the head lease. If the head lease is a short-term lease for which the Company adopts a simplifiedapproach, then the Company classifies the sublease as an operating lease.
(5) Sale and leaseback
The lessee and the lessor shall assess and determine whether the transfer of assets in a sale and leasebacktransaction is a sale in accordance with the requirements of the Accounting Standard for Business Enterprises No.14 – Revenue.Where asset transfer under the sale and leaseback transactions is a sale, the lessee shall measure the right-of-use assets created by the sale and leaseback based on the portion of carrying amount of the original assetsrelated to right of use obtained upon leaseback, and only recognise relevant profit or loss for the right transferredto the lessor. The lessor shall account for the purchase of assets in accordance with other applicable ASBEs andaccount for the lease of assets in accordance with this standard.Where asset transfer under the sale and leaseback transactions is not a sale, the lessee shall continue torecognise the transferred assets while recognising a financial liability equal to the transfer income and accountfor such liability according to the Accounting Standard for Business Enterprises No. 22 – Recognition andMeasurement of Financial Instruments; or not to recognise the transferred assets but recognise a financial assetequal to the transfer income and account for such asset according to the Accounting Standard for BusinessEnterprises No. 22 – Recognition and Measurement of Financial Instruments.
34. Production safety expenses
According to relevant provisions, the Company makes provisions for production safety expenses based on the revenueof the power plant in the previous year and the prescribed percentages. The specific provisions are as follows: ifthe revenue of the previous year did not exceed RMB10 million, provisions would be made at 3%; if the revenue ofthe previous year exceeded RMB10 million but did not exceed RMB100 million, provisions would be made at 1.5%;if the revenue of the previous year exceeded RMB100 million but did not exceed RMB1,000 million, provisions wouldbe made at 1%; if the revenue of the previous year exceeded RMB1,000 million but did not exceed RMB5,000million, provisions would be made at 0.8%; if the revenue of the previous year exceeded RMB5,000 million but didnot exceed RMB10,000 million, provisions would be made at 0.6%; if the revenue of the previous year exceededRMB10,000 million, provisions would be made at 0.2%.Provisions for production safety expenses are included in the cost of related products or profit or loss of the currentperiod and included in“special reserves” correspondingly.When the provisions for production safety expenses and maintenance costs are utilised within the prescribed scope,if such production safety expenses are applied and related to revenue expenditures, specific reserve is directly offset.When fixed assets are incurred, they are included in the“construction in progress”item and transferred to fixed assetswhen the status of the assets is ready for intended use. They are then offset against specific reserve based on theamount included in fixed assets while corresponding amount is recognised in accumulated depreciation. Such fixedassets are no longer depreciated in subsequent periods.
INTERIM REPORT 2023
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
35. Repurchase of shares
Prior to cancellation or transfer of shares repurchased, the Company recognises all expenditures arising from sharerepurchase as cost of treasury shares in the treasury share account. Considerations and transaction fee incurred fromthe repurchase of shares shall lead to the elimination of owners’equity and does not recognise profit or loss whenshares of the Company are repurchased, transferred or cancelled.The difference between the actual amount received and the carrying amount of the treasury shares are recognised ascapital reserve when the treasury shares are transferred, if the capital reserve is not sufficient to be offset, the excessamount shall be recognised to offset surplus reserve and retained profit. When the treasury shares are cancelled,the capital shall be eliminated according to the number of shares and par value of cancelled shares, the differencebetween the actual amount received and the carrying amount of the treasury shares are recognised as capital reserve,if the capital reserve is not sufficient to be offset, the excess amount shall be recognised to offset surplus reserve andretained profit.
36. Restricted shares
If the Company grants the restricted shares to incentive participants under an equity incentive plan, the incentiveparticipants shall subscribe for the shares first. If the unlocking conditions stipulated in the equity incentive plan cannotbe fulfilled subsequently, the Company repurchase the shares at the predetermined price. If the registration and othercapital increase procedures for the restricted shares issued to employees are completed in accordance with relevantregulations, the Company recognises share capital and capital reserve (or capital premium) based on the subscriptionmoney received from the employees on the grant date; and recognises treasury shares and other payables forrepurchase obligation.
37. Critical accounting judgments and estimates
The Company gives continuous assessment on, among other things, the reasonable expectations of future events andthe critical accounting estimates and key assumptions adopted according to its historical experience and other factors.The critical accounting estimates and key assumptions that are likely to lead to significant adjustment risks of thecarrying amount of assets and liabilities for the next financial year are listed as follows:
Classification of financial assetsSignificant judgements involved in determining the classification of financial assets include the analysis of businessmodels and contractual cash flow characteristics.Factors considered by the Company in determining the business model for a group of financial assets include how theasset’s performance is evaluated and reported to key management personnel, how risks are assessed and managedand how the relevant management personnel are compensated.When the Company assesses whether the contractual cash flows of the financial assets are consistent with basiclending arrangements, the main judgements are described as below: whether the principal amount may change overthe life of the financial asset (for example, if there are repayments of principal); whether the interest includes onlyconsideration for the time value of money, credit risk, other basic lending risks and a profit margin and cost. Forexample, whether the amount repaid in advance reflects only the outstanding principal and interest thereon, as well asreasonable compensation paid for early termination of the contract.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
37. Critical accounting judgments and estimates (Continued)
Measurement of the ECLs of accounts receivableThe Company calculates the ECLs of accounts receivable using the exposure to default risk and ECL rate of accountsreceivable, and determines the ECL rate based on default probability and default loss rate. When determining the ECLrate, the Company adjusts its historical data by referring to information such as historical credit loss experience as wellas current situation and forward-looking information. When considering the forward-looking information, indicators usedby the Company include the risk of economic downturn, external market environment, technology environment andchanges in customers. The assumptions relating to the ECL calculation are monitored and reviewed by the Company ona regularly basis.Impairment of goodwillThe Company assesses the impairment of goodwill at least annually, which requires estimates on the use value of assetgroups allocated with goodwill. When estimating use value, the Company is required to estimate the future cash flowfrom such asset groups while selecting the appropriate discount rate to calculate the present value of future cash flow.Deferred income tax assetsDeferred income tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profitwill be available against which the losses can be utilised. Significant management judgement is required to determinethe amount of deferred income tax assets that can be recognised, based upon the likely timing and level of futuretaxable profits together with future tax planning strategies.Share-based paymentsWhen calculating the liabilities and expenses related to the equity incentive plan, the management of the Company isrequired to make judgments and estimates on issues such as the turnover rate and vesting conditions. Differences inthe judgments and estimates will have a material effect on the financial statements.
38. Changes in significant accounting policies and accounting estimates
(1) Changes in significant accounting policies
The Company did not have any change in significant accounting policies during the year.
(2) Changes in significant accounting estimates
The Company did not have any change in significant accounting estimates during the year.
INTERIM REPORT 2023
I Financial Report
VI. Taxation
1. Main tax types and tax rates
Tax typeTax BaseTax rateValue added tax (VAT)VAT payable (VAT payable is calculated
by multiplying taxable sales amountby the applicable tax rate less current deductible input VAT)
13/9/6Property taxRental income and property price1.2/12Urban maintenance and construction taxTurnover tax payable7Enterprise income tax (EIT)Taxable income25Disclosure of taxable entities subject to different EIT tax ratesName of taxable entityEIT tax rateShandong Chenming Paper Holdings Limited15Shouguang Meilun Paper Co., Ltd.15Jilin Chenming Paper Co., Ltd.15Jiangxi Chenming Paper Co., Ltd.15Zhanjiang Chenming Pulp & Paper Co., Ltd.15Huanggang Chenming Pulp & Paper Co., Ltd.15Kunshan Tuoan Plastic Products Co., Ltd.15Shouguang Xinyuan Coal Co., Ltd.20Shouguang Chenming Papermaking Machine Co., Ltd.20Shouguang Wei Yuan Logistics Company Limited20Shouguang Shun Da Customs Declaration Co., Ltd.20Zhanjiang Chenming Arboriculture Development Co., Ltd.Exempt from EITNanchang Chenming Arboriculture Development Co., Ltd.Exempt from EITChenming Arboriculture Co., Ltd.Exempt from EITYangjiang Chenming Arboriculture Development Co., Ltd.Exempt from EIT
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
VI. Taxation (Continued)
2. Tax incentives
(1) Enterprise income tax
On 15 December 2021, the Company received a high and new technology enterprise certificate with a certificationnumber of GR202137005666. Pursuant to the requirements under the Law of the People’s Republic of China onEnterprise Income Tax and the relevant policies, the Company is subject to a corporate income tax rate of 15% oftaxable income, and is entitled to the preferential treatment from 2021 to 2023.Shouguang Meilun Paper Co., Ltd., a subsidiary of the Company, received a high and new technology enterprisecertificate with a certification number of GR202137005468 on 15 December 2021. Pursuant to the requirementsunder the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies, ShouguangMeilun is subject to an enterprise income tax rate of 15% of taxable income, and is entitled to the preferentialtreatment from 2021 to 2023.Jilin Chenming Paper Co., Ltd., a subsidiary of the Company, received a high and new technology enterprisecertificate with a certification number of GR202222000414 on 29 November 2022. Pursuant to the requirementsunder the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies, JilinChenming is subject to an enterprise income tax rate of 15% of taxable income, and is entitled to the preferentialtreatment from 2022 to 2024.Jiangxi Chenming Paper Co., Ltd., a subsidiary of the Company, received a high and new technology enterprisecertificate with a certification number of GR202236000018 on 4 November 2022. Pursuant to the requirementsunder the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies, JiangxiChenming is subject to an enterprise income tax rate of 15% of taxable income, and is entitled to the preferentialtreatment from 2022 to 2024.Zhanjiang Chenming Pulp & Paper Co., Ltd., a subsidiary of the Company, received a high and new technologyenterprise certificate with a certification number of GR202144001212 on 20 December 2021. Pursuant to therequirements under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies,Zhanjiang Chenming is subject to an enterprise income tax rate of 15% of taxable income, and is entitled to thepreferential treatment from 2021 to 2023.Huanggang Chenming Pulp & Paper Co., Ltd., a subsidiary of the Company, received a high and new technologyenterprise certificate with a certification number of GR202042001471 on 1 December 2020. Pursuant to therequirements under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies,Huanggang Chenming is subject to an enterprise income tax rate of 15% of taxable income, and is entitled to thepreferential treatment from 2020 to 2022.Kunshan Tuoan Plastic Products Co., Ltd., a subsidiary of the Company, received a high and new technologyenterprise certificate with a certification number of GR202032004526 on 2 December 2020. Pursuant to therequirements under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies,Kunshan Tuoan is subject to an enterprise income tax rate of 15% of taxable income, and is entitled to thepreferential treatment from 2020 to 2022.Pursuant to the requirements of Rule 27(1) of Law of the People’s Republic of China on Enterprise Income Tax andRule 86(1) of regulations for the Implementation of Law of the People’s Republic of China on Enterprise IncomeTax, Zhanjiang Chenming Arboriculture Development Co., Ltd., Yangjiang Chenming Arboriculture DevelopmentCo., Ltd., Nanchang Chenming Arboriculture Development Co., Ltd. and Chenming Arboriculture Co., Ltd., whichare the subsidiaries of the Company, have completed the filings for EIT reduction for exemption from EIT.
INTERIM REPORT 2023
I Financial Report
VI. Taxation (Continued)
2. Tax incentives (Continued)
(1) Enterprise income tax (Continued)
Shouguang Xinyuan Coal Co., Ltd., Shouguang Chenming Papermaking Machine Co., Ltd., Shouguang Wei YuanLogistics Company Limited and Shouguang Shun Da Customs Declaration Co, Ltd., which are subsidiaries ofthe Company, are small and micro enterprises. Pursuant to the Announcement of the Ministry of Finance and theState Administration of Taxation on the Implementation of Preferential Income Tax Policies for Small and MicroEnterprises and Individual Industrial and Commercial Business (Cai Shui [2021] No. 12) and the Announcement ofthe Ministry of Finance and the State Administration of Taxation on Further Implementation of Preferential IncomeTax Policies for Small and Micro Enterprises (Cai Shui [2022] No. 13), the annual taxable income of a small low-profit enterprise that is less than RMB1 million shall be included in its taxable income at a reduced rate of 12.5%,with the applicable enterprise income tax rate of 20%. The annual taxable income of a small low-profit enterprisethat is more than RMB1 million but not exceeding RMB3 million shall be included in its taxable income at areduced rate of 25%, with the applicable enterprise income tax rate of 20%.Guangdong Chenming Panels Co., Ltd., a subsidiary of the Company, meets the requirements of Rule 99 of theRegulations for the Implementation of Law of the People’s Republic of China on Enterprise Income Tax (DecreeNo. 512 of the State Council of the People’s Republic of China) and the Announcement of the Ministry of Financeand the State Administration of Taxation on Improvement of the Value-added Tax Policy for the ComprehensiveUtilisation of Resources (Cai Shui [2021] No. 40): For enterprises that derive income from the products listed inthe Catalogue which are in line with related national or industry standards by making use of the resources listed inthe Catalogue as the main raw materials, taxable income will be calculated at a reduced rate of 90% of the totalrevenue. To be entitled to the above tax benefits, the ratio of the resources listed in the Catalogue and the rawmaterials used for the product shall be consistent with the required technical standards stated in the Catalogue.
(2) Value-added Tax (
“VAT”)Pursuant to Rule 10 of the Interim Regulation of the People’s Republic of China on Value Added Tax, ZhanjiangChenming Arboriculture Development Co., Ltd., Yangjiang Chenming Arboriculture Development Co., Ltd.,Nanchang Chenming Arboriculture Development Co., Ltd. and Chenming Arboriculture Co., Ltd., which aresubsidiaries of the Company, are exempt from VAT, and have completed the filings for VAT reduction forexemption from VAT.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements
1. Monetary funds
Unit: RMBItemClosing balanceOpening balanceTreasury cash3,577,158.843,491,219.08Bank deposit1,839,192,335.422,155,968,930.43Other monetary funds11,912,761,370.5711,840,974,836.57Total13,755,530,864.8314,000,434,986.08 Of which: Total deposits in overseas banks334,092,239.78593,378,097.70
Total restricted amount due to mortgages, pledges or freezes11,853,449,355.4011,756,140,645.56Other explanations:
Other monetary funds of RMB8,797,013,971.15 were the guarantee deposit for the application for bank
acceptance with the banks by the Company;Other monetary funds of RMB2,657,225,384.25 were the guarantee deposit for the application for letter of credit
with the banks by the Company;Other monetary funds of RMB322,500,000.00 were the guarantee deposit for the application for guarantees with
the banks by the Company; Other monetary funds of RMB76,710,000.00 were the Company’s statutory reserve deposits at the People’s Bank
of China; Other monetary funds included accrued interest of RMB59,312,015.17.
2. Financial assets held for trading
Unit: RMBItemClosing balanceOpening balanceFinancial assets measured at fair value through profit or loss50,433,870.5974,708,444.88Of which:
Investment in equity instruments50,433,870.5974,708,444.88Total50,433,870.5974,708,444.88Explanation: Financial assets held for trading were shares of China Bohai Bank subscribed by the Company.
INTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
3. Accounts receivable
(1) Disclosure of accounts receivable by category
Unit: RMB
Category
Closing balanceOpening balanceBook balanceBad debt provision
Carrying amount
Book balanceBad debt provision
Carrying amountAmountPercentage
(%)Amount
Percentage(%)Amount
Percentage(%)Amount
Percentage(%)Accounts receivable assessed individually for bad debt provision221,531,626.666.49221,531,626.66100.00226,667,597.476.13226,667,597.47100.00Accounts receivable assessed collectively for bad debt provision3,193,714,088.4293.51247,560,117.317.752,946,153,971.113,473,893,247.3293.87261,632,801.367.533,212,260,445.96Of which:
Due from related party customers6,494,662.960.196,756.490.106,487,906.478,639,295.980.231,775,510.0120.556,863,785.97Due from non-related party customers1,852,451,198.8554.2449,073,801.392.651,803,377,397.462,081,296,530.2856.2452,357,160.252.522,028,939,370.03 Factoring receivables1,334,768,226.6139.08198,479,559.4314.871,136,288,667.181,383,957,421.0637.40207,500,131.1014.991,176,457,289.96Total3,415,245,715.08100.00469,091,743.9713.742,946,153,971.113,700,560,844.79100.00488,300,398.8313.203,212,260,445.96
Items assessed individually for bad debt provision:
Unit: RMB
Name
Closing balanceBook balance
Bad debts
provision
Provisionpercentage
(%)Provision reasonHengfeng Hongyuan Real Estate Holdings Co., Ltd.45,493,811.4045,493,811.40100.00Long outstandingNingxia Lingwu Baota Dagu Storage and Transportation Co., Ltd.27,600,000.0027,600,000.00100.00Long outstandingFoshan Shunde Xingchen Paper Co., Ltd.26,236,528.7026,236,528.70100.00Long outstandingZhengzhou Hongyang Paper Products Co., Ltd.14,933,432.9314,933,432.93100.00Long outstandingShandong Bisheng Printing Materials Co., Ltd.14,813,369.2714,813,369.27100.00Long outstandingHenan Yibang Technology Trading Co., Ltd.13,396,601.2213,396,601.22100.00Long outstanding90 companies including Shandong Yiming New Material Technology Corp Co., Ltd.79,057,883.1479,057,883.14100.00Long outstandingTotal221,531,626.66221,531,626.66100.00
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
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 collectively for bad debt provision: Due from related party customers
Unit: RMBName
Closing balanceBook balance
Bad debtsprovision
Provisionpercentage (%)Within 1 year6,494,662.966,756.490.10Total6,494,662.966,756.490.10Items assessed collectively for bad debt provision: Receivables from non-related party customer
Unit: RMBName
Closing balanceBook balance
Bad debtsprovision
Provisionpercentage (%)Within 1 year1,742,600,457.648,196,561.590.471 to 2 years49,846,903.418,433,176.6816.922 to 3 years2,788,682.141,217,451.7243.66Over 3 years57,215,155.6631,226,611.4054.58Total1,852,451,198.8549,073,801.392.65Items assessed collectively for bad debt provision: Factoring receivables
Unit: RMBName
Closing balanceBook balance
Bad debts
provision
Provisionpercentage (%)Within 1 year279,980,044.4615,564,778.335.561 to 2 years904,649,222.15130,814,781.1014.462 to 3 yearsOver 3 years150,138,960.0052,100,000.0034.70Total1,334,768,226.61198,479,559.4314.87
INTERIM REPORT 2023
I Financial Report
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)If the bad debt provision of accounts receivable is made in accordance with the general model of ECLs, pleasedisclose the information about bad debt provision with reference to the way of disclosure of other receivables:
√ Applicable Not applicable
Disclosure by ageing
Unit: RMBAgeingClosing balanceWithin 1 year (including 1 year)2,029,075,165.061 to 2 years1,024,496,125.562 to 3 years2,788,682.14Over 3 years358,885,742.32Subtotal3,415,245,715.08Bad debts provision469,091,743.97Total2,946,153,971.11The basis used by the ageing analysis of the accounts receivable of the Company: the ageing of accountsreceivable is the length of time of the Company’s outstanding accounts receivable based on invoice date. Theclosing balance is recognised one by one from the end of the period onwards until the amounts add up to thebalance. It is also broken up by intervals of within 1 year, 1-2 years, 2-3 years, 3-4 years, 4-5 years and over 5years.
(2) Provision, recovery or reversal of bad debt provision for the period
Bad debt provision for the period:
Unit: RMBCategoryOpening balance
Changes in the period
Closing balanceProvisionRecoveryor reversalWritten-offOthersBad debts provision488,300,398.8321,928,911.7113,618,485.4727,600,041.6880,960.58469,091,743.97Total488,300,398.8321,928,911.7113,618,485.4727,600,041.6880,960.58469,091,743.97Explanation: Others represent the accounts receivable with provision for bad debts transferred from the merger ofJiangxi Chenming Port Co., Ltd.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
3. Accounts receivable (Cont
’d)
(3) Top five accounts receivable based on closing balance of debtors
The total amount of top five accounts receivable based on closing balance of debtors for the period amountedto RMB1,128,033,226.63 in total, accounting for 33.03% of the total closing balance of accounts receivable. Theclosing balance of the corresponding bad debt provision amounted to RMB116,908,685.72 in total.
Unit: RMB
Name of entity
Closing balance
of accountsreceivable
As a percentageof the closingbalance of thetotal accountsreceivable (%)
Closing balanceof bad debtprovisionCustomer I481,810,233.3314.1140,333,075.30Customer II222,656,666.646.5224,596,930.88Customer III198,805,660.005.8227,024,669.68Customer IV121,908,333.333.5714,629,000.00Customer V102,852,333.333.0110,325,009.86Total1,128,033,226.6333.03116,908,685.72
4. Accounts receivable financing
Unit: RMBItemClosing balanceOpening balanceBills receivable614,794,433.04924,960,384.16Total614,794,433.04924,960,384.16Changes (increase or decrease) during the period and change in fair value of accounts receivable financing Applicable √ Not applicableIf the provision for impairment of accounts receivable financing is made in accordance with the general model ofECLs, please disclose the information about provision for impairment with reference to the way of disclosure of otherreceivables:
Applicable √ Not applicable
INTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
5. Prepayments
(1) Presentation of prepayments according to ageing analysis
Unit: RMBAgeing
Closing balanceOpening balanceAmountPercentageAmountPercentageWithin 1 year805,903,097.6495.16%749,904,460.4595.14%1 to 2 years41,017,883.734.84%38,287,166.374.86%Total846,920,981.37100.00%788,191,626.82100.00%
(2) Top five prepayments based on closing balance of prepaid parties
The total amount of top five prepayments based on closing balance of prepaid parties for the period amounted toRMB379,724,428.05, accounting for 44.84% of the closing balance of the total prepayments.
Unit: RMB
Name of entity
Closing balanceof prepayments
As a percentageof the closingbalance of thetotal prepaymentsCustomer I131,294,630.1315.50%Customer II71,725,703.128.47%Customer III63,062,594.807.45%Customer IV60,929,500.007.19%Customer V52,712,000.006.22%Total379,724,428.0544.84%
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
6. Other receivables
Unit: RMBItemClosing balanceOpening balanceOther receivables1,645,909,354.441,717,445,443.44Total1,645,909,354.441,717,445,443.44
(1) Other receivables by nature
Unit: RMBNature
Closing book
balance
Opening book
balanceOpen credit2,022,161,667.402,108,991,172.35Reserve and borrowings32,813,868.9726,270,269.00Guarantee deposit and deposit12,109,761.4112,230,367.80Others46,303,026.7052,332,819.95Total2,113,388,324.482,199,824,629.10
(2) Particulars of bad debt provision
Unit: RMB
Bad debts provision
Stage 1Stage 2Stage 3
TotalECLs for thenext 12 months
Lifetime ECLs
(not credit-impaired)
Lifetime ECLs
(credit-impaired)Balance as at 1 January 202373,559,281.09408,819,904.57482,379,185.66Balance as at 1 January 2023 for the period– Transferred to stage 2– Transferred to stage 3– Reversed to stage 2– Reversed to stage 1Provision for the period13,193,201.53421,349.7113,614,551.24Reversal for the period1,298,753.9427,264,570.6828,563,324.62Transfer for the periodWrite-off for the periodOther changes48,557.7648,557.76Balance as at 30 June 202385,502,286.44381,976,683.60467,478,970.04
INTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
6. Other receivables (Cont
’d)
(2) Particulars of bad debt provision (Cont
’d)
Changes in carrying book balances with significant changes in loss provision for the period Applicable √ Not applicableExplanation: In 2023, the Company obtained control over Jiangxi Chenming Port Co., Ltd. Other changes in baddebt provision as described in the table above represent the balance of bad debt provision of such company atthe acquisition date.Disclosure by ageing
Unit: RMBAgeingClosing balanceWithin 1 year (including 1 year)496,853,852.101 to 2 years310,379,496.322 to 3 years643,164,143.67Over 3 years662,990,832.39Total2,113,388,324.48
(3) Provision, recovery or reversal of bad debt provision for the period
Bad debt provision for the period:
Unit: RMBCategory
Openingbalance
Changes in the period
Closing balanceProvisionRecoveryor reversalWrite-offOthersBad debts provision482,379,185.6613,614,551.2428,563,324.6248,557.76467,478,970.04Total482,379,185.6613,614,551.2428,563,324.6248,557.76467,478,970.04
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
6. Other receivables (Cont
’d)
(4) Top five accounts receivable based on closing balance of debtors
The total amount of top five accounts receivable based on closing balance of debtors for the period amountedto RMB1,258,260,155.89 in total, accounting for 59.52% of the total closing balance of accounts receivable. Theclosing balance of the corresponding bad debt provision amounted to RMB266,924,822.62 in total.
Unit: RMB
Name of entityNatureClosing balanceAgeing
Percentageto total closingbalance of other
receivables
Closing balance
of bad debtprovisionCustomer IConsideration for equity
transfer
472,854,783.562 to 3 years,
3 to 4 years
22.37%48,950,000.00
Customer IIConsideration for equity
transfer
453,002,316.853 to 4 years21.43%140,010,695.06Customer IIIConsideration for equity
transfer
143,940,305.631 to 2 years,
2 to 3 years
6.81%64,773,137.54
Customer IVConsideration for equity
transfer
114,840,000.00Within 1 year5.43%5,742,000.00Customer VFinancial support and
interest
73,622,749.85Within 1 year,
1 to 2 years
3.48%7,448,990.02
Total1,258,260,155.8959.52%266,924,822.62
7. Inventories
Whether the Company needs to comply with the disclosure requirements for real estate industriesNo
(1) Categories of inventories
Unit: RMB
Item
Closing balanceOpening balance
Book balance
Impairmentprovision forinventories orperformance
costsCarrying amountBook balance
Impairmentprovision forinventories orperformance
costsCarrying amountRaw materials1,894,223,179.8218,068,973.641,876,154,206.182,488,652,200.1518,096,641.642,470,555,558.51Work-in-process products133,398,598.07133,398,598.07111,248,779.69111,248,779.69Goods in stock2,163,112,731.6443,314,485.762,119,798,245.881,622,062,893.5516,737,849.961,605,325,043.59Developing costs1,156,377,072.091,156,377,072.091,138,178,959.321,138,178,959.32Consumable biological assets1,492,153,527.461,492,153,527.461,496,607,818.841,496,607,818.84Total6,839,265,109.0861,383,459.406,777,881,649.686,856,750,651.5534,834,491.606,821,916,159.95Note: Consumable biological assets are forestry assets.
INTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
7. Inventories (Cont
’d)
(2) Impairment provision for inventories or performance costs
Unit: RMBItem
Openingbalance
Increase during the periodDecrease during the period
ClosingbalanceProvisionOthersReversal or
transferOthersRaw materials18,096,641.6427,668.0018,068,973.64Goods in stock16,737,849.9643,314,485.7616,737,849.9643,314,485.76Total34,834,491.6043,314,485.7616,765,517.9661,383,459.40Basis for recognition of net realisable value: Net realisable value of goods in stock is recognised on the basis ofthe estimated selling price, net of related taxes and selling expenses. Basis for recognition of net realisable value:
the estimated selling price of the target product, net of related taxes, selling expenses and costs to be incurreduntil completion.Reversal or transfer of impairment provision for inventories during the period was due to: Impairment provision forinventories during the period due to the purchase of raw materials for which impairment provision had been made,and the sale of inventories for which impairment provision had been made.
8. Non-current assets due within one year
Unit: RMBItemClosing balanceOpening balanceLong-term receivables due within one year3,852,470,167.903,998,724,415.85Total3,852,470,167.903,998,724,415.85
Explanations:
Long-term receivables due within one year amounting to RMB3,736,417,788.05 (amount for the prior year: RMB3,920,915,510.01) were
financial lease receivables;Long-term receivables due within one year amounting to RMB116,052,379.85 (amount for the prior year: RMB77,808,905.84) weredeposits receivable.
9. Other current assets
Unit: RMBItemClosing balanceOpening balancePrepaid expenses332,730,125.13241,313,507.50Receivables under financial lease due within one year328,065,332.45340,546,803.50Factoring receivables due within one year274,708,276.63298,446,276.63Input tax amount to be deducted90,137,290.97141,038,575.79Prepaid tax70,252,896.5392,806,690.76Other payments64,992,565.1066,655,947.44Total1,160,886,486.811,180,807,801.62
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
10. Long-term receivables
Unit: RMBItem
Closing balanceOpening balanceDiscount
rate rangeBook balanceBad debts provisionCarrying amountBook balanceBad debts provisionCarrying amountFinance lease payments6,349,305,959.961,305,082,476.715,044,223,483.256,739,718,184.271,302,116,713.905,437,601,470.374%-12%Less: Unrealised financing income173,784,123.48173,784,123.48271,455,622.37271,455,622.37Equipment lease financing382,214,607.49382,214,607.49351,446,696.64351,446,696.64Less: Unrealised financing income27,622,840.1527,622,840.1532,060,345.3232,060,345.32Subtotal6,530,113,603.821,305,082,476.715,225,031,127.116,787,648,913.221,302,116,713.905,485,532,199.32Less: Long-term receivables due within one year4,910,948,881.991,058,478,714.093,852,470,167.905,075,152,713.361,076,428,297.513,998,724,415.85Total1,619,164,721.83246,603,762.621,372,560,959.211,712,496,199.86225,688,416.391,486,807,783.47Particulars of bad debt provision impairment
Unit: RMB
Bad debts provision
Stage 1Stage 2Stage 3
TotalECLs for thenext 12 months
Lifetime ECLs(not credit-impaired)
Lifetime ECLs(credit-impaired)Balance as at 1 January 20233,237,410.85222,451,005.54225,688,416.39Balance as at 1 January 2023 for the period3,237,410.85222,451,005.54225,688,416.39– Transferred to stage 2– Transferred to stage 3– Reversed to stage 2– Reversed to stage 1Provision for the period21,450,269.7221,450,269.72Reversal for the period98,613.9998,613.99Transfer for the periodWrite-off for the periodOther changes-436,309.50-436,309.50Balance as at 30 June 20232,702,487.36243,901,275.26246,603,762.62
Note: Other changes represented the transfer of the bad debt provision for long-term financing lease payments due within one year from long-
term receivables to non-current assets due within one year during the period.Changes in carrying book balances with significant changes in loss provision for the period
Applicable √ Not applicable
INTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
11. Long-term equity investments
Unit: RMB
Investee
Openingbalance(carryingamount)
Change for the period
Closingbalance(carryingamount)
Closingbalance ofimpairmentprovisionAdditionalcontribution
Withdrawncontribution
Investmentgain or lossrecognisedunder equitymethod
Adjustment
of othercomprehensiveincomeOther changein equityinterest
Distributionof cashdividend orprofit declared
Impairment
provisionOthersI. Joint venturesShouguang Chenming Huisen
New-style ConstructionMaterials Co., Ltd.7,892,659.421,025,474.671,100,000.007,818,134.09Weifang Port Wood ChipTerminal Co., Ltd.74,848,570.73-3,915,613.0670,932,957.67Shouguang Meite
Environmental TechnologyCo., Ltd.8,921,843.889,656,629.5818,578,473.46Shouguang Jintou Industrial
Investment Partnership(Limited Partnership)2,359,998,661.67-803,127.312,359,195,534.36Weifang Xingxing United
Chemical Co., Ltd.91,874,385.1291,874,385.12Subtotal2,543,536,120.825,963,363.881,100,000.002,548,399,484.70II. AssociatesZhuhai Dechen New Third
Board Equity Investment
Fund Company (Limited
Partnership)36,776,710.915,000,000.0035,769.9331,812,480.84Ningbo Kaichen Huamei Equity
Investment Fund Partnership
(Limited Partnership)197,218,318.77-3,089.85197,215,228.92Nanchang Tianchen Port Co.,
Ltd.59,345,429.053,760,608.162,125,403.3060,980,633.91Goldtrust Futures Co., Ltd.178,389,182.83-177,137.24178,212,045.59Chenming (Qingdao) Asset
Management Co., Ltd.6,482,035.6927,510.926,509,546.61Guangdong Nanyue Bank
Co., Ltd.1,314,611,000.5414,327,244.012,605,105.121,331,543,349.67Subtotal1,733,477,248.7459,345,429.055,000,000.0017,970,905.932,605,105.122,125,403.301,806,273,285.54Total4,277,013,369.5659,345,429.055,000,000.0023,934,269.812,605,105.123,225,403.304,354,672,770.24
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
12. Other non-current financial assets
Unit: RMBItemClosing balanceOpening balanceInvestment in debt instruments663,000,000.00663,000,000.00Investment in equity instruments122,374,459.73123,750,761.62Total785,374,459.73786,750,761.62
13. Investment property
(1) Investment property under the cost method
√ Applicable Not applicable
Unit: RMBItem
Housing andbuilding structureTotalI. Original carrying amount
1. Opening balance7,160,214,568.837,160,214,568.83
2. Increase during the period
(1) Acquisition
3. Decrease during the period3,155,127.043,155,127.04
(1) Disposal3,155,127.043,155,127.04
4. Closing balance7,157,059,441.797,157,059,441.79II. Accumulated depreciation and accumulated amortisation
1. Opening balance903,491,455.68903,491,455.68
2. Increase during the period99,749,771.4399,749,771.43
(1) Provision or amortisation99,749,771.4399,749,771.43
3. Decrease during the period506,304.34506,304.34
(1) Disposal506,304.34506,304.34
4. Closing balance1,002,734,922.771,002,734,922.77III. Impairment provision
1. Opening balance
2. Increase during the period
(1) Provision
3. Decrease during the period
(1) Disposal
(2) Transferred due to debt restructuring
4. Closing balance
IV. Carrying amount
1. Closing carrying amount6,154,324,519.026,154,324,519.02
2. Opening carrying amount6,256,723,113.156,256,723,113.15
INTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
13. Investment property (Cont
’d)
(1) Investment property under the cost method (Cont
’d)Note: Investment properties under the Company primarily include:
Pujiang International Finance Plaza, located at No. 1098, Dongdaming Road, Hongkou District, Shanghai, is a long-term held officeproperty of Shanghai Hongtai Real Estate Co., Ltd., a subsidiary of the Company, mainly used for external rental or office purposes;Jinan Chenming Finance Building (), located in No. 7 Zone, Hanyu Financial Business Center, No. 7000, JingshiRoad, Jinan Innovation Zone, is a long-term held office property of Shandong Chenming Investment Limited, a subsidiary of theCompany, mainly used for external rental or office purposes; Fatum Apartment (), located at No. 463, Anbo Road, No. 22, Lane 467, Anbo Road, Yangpu District, Shanghai, is a long-term held apartment property of Shanghai Herui Investment Co., Ltd., a subsidiary of the Company, mainly used for external rentalpurposes;Guangzhou Zhengjia Plaza (), located at Room 3901-3926, No. 372, Huanshi East Road, Yuexiu District, Guangzhou,is a long-term held office property of Guangzhou Chenming Property Management Co., Ltd., a subsidiary of the Company, mainlyused for external rental purposes;Shenzhen Zhuoyue Baozhong Times Square (), located at Room 3201-3210, Building C, Zhuoyue BaozhongTimes Square (Phase 2), Xin’an Sub-district, Bao’an District, Shenzhen, is a long-term held office property of Guangzhou ChenmingProperty Management Co., Ltd., a subsidiary of the Company, mainly used for external rental purposes.Shanghai Xizang South Road shop, located at No. 518-528 Xizang South Road, Shanghai, is a long-term store held by Wuhan
Junheng Property Management Co. Ltd., a subsidiary, mainly for external rental purposes.
(2) Investment property under the fair value method
Applicable √ Not applicable
14. Fixed assets
Unit: RMBItemClosing balanceOpening balanceFixed assets32,705,962,616.9733,527,978,754.73Disposal of fixed assets269,759,940.57269,759,940.57Total32,975,722,557.5433,797,738,695.30
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
14. Fixed assets (Cont
’d)
(1) Particulars of fixed assets
Unit: RMBItem
Housing andbuilding structure
Machinery and
equipmentVehicles
Electronicequipmentand othersTotalI. Original carrying amount:
1. Opening balance10,286,809,124.8943,106,182,009.60288,801,665.32400,465,471.7554,082,258,271.56
2. Increase during the period157,781,537.57100,275,378.243,858,108.564,379,990.07266,295,014.44
(1) Acquisition6,680,702.7867,294,320.851,865,070.943,954,275.1479,794,369.71
(2) Transferred from construction in
progress2,816,881.4030,148,765.8732,965,647.27
(3) Increase due to business
combination148,283,953.392,832,291.521,993,037.62425,714.93153,534,997.46
3. Decrease during the period14,572,261.4014,975,053.02496,759.272,507,761.5632,551,835.25
(1) Disposal or retirement14,572,261.4014,975,053.02496,759.272,507,761.5632,551,835.25
4. Closing balance10,430,018,401.0643,191,482,334.82292,163,014.61402,337,700.2654,316,001,450.75II. Accumulated depreciation
1. Opening balance2,329,752,339.5717,561,160,193.98200,474,107.77258,849,412.2020,350,236,053.52
2. Increase during the period173,982,240.84880,608,831.8911,092,467.735,955,495.731,071,639,036.19
(1) Provision133,108,443.58879,938,525.2110,383,519.515,750,532.091,029,181,020.39
(2) Increase due to business
combination40,873,797.26670,306.68708,948.22204,963.6442,458,015.80
3. Decrease during the period5,639,596.737,890,452.65256,285.182,093,384.6815,879,719.24
(1) Disposal or retirement5,639,596.737,890,452.65256,285.182,093,384.6815,879,719.24
4. Closing balance2,498,094,983.6818,433,878,573.22211,310,290.32262,711,523.2521,405,995,370.47III. Provision for impairment
1. Opening balance27,808,852.79168,785,487.4713,889.137,435,233.92204,043,463.31
2. Increase during the period
(1) Provision
3. Decrease during the period
(1) Disposal or retirement
4. Closing balance27,808,852.79168,785,487.4713,889.137,435,233.92204,043,463.31IV. Carrying amount
1. Closing carrying amount7,904,114,564.5924,588,818,274.1380,838,835.16132,190,943.0932,705,962,616.97
2. Opening carrying amount7,929,247,932.5325,376,236,328.1588,313,668.42134,180,825.6333,527,978,754.73
INTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
14. Fixed assets (Cont
’d)
(2) Particulars of temporarily idle fixed assets
Unit: RMBItem
Original carrying
amount
Accumulateddepreciation
Provision forimpairmentCarrying amountRemarkHousing and building structure72,585,434.3724,639,785.753,093,008.6444,852,639.98Machinery and equipment893,374,015.71563,977,620.65147,863,071.36181,533,323.70Electronic equipment and others478,399.18430,411.067,187.2740,800.85Total966,437,849.26589,047,817.46150,963,267.27226,426,764.53
(3) Particulars of fixed assets without obtaining property right certificates
Unit: RMBItemCarrying amount
Reason for not yetobtaining propertyright certificatesHousing and building structure (Zhanjiang Chenming Pulp & Paper Co., Ltd.)998,765,824.60Under applicationHousing and building structure (Huanggang Chenming Pulp & Paper Co., Ltd.)584,615,688.59Under applicationHousing and building structure (Shouguang Meilun Paper Co., Ltd.)521,012,901.37Under applicationHousing and building structure (Jilin Chenming Paper Co., Ltd.)369,108,268.46Under applicationHousing and building structure (Jiangxi Chenming Paper Co., Ltd.)197,048,976.25Under applicationHousing and building structure (Shandong Chenming Paper Holdings Limited)93,423,000.91Under application
(4) Disposal of fixed assets
Unit: RMBItemClosing balanceOpening balanceMachinery equipment, electronic and other equipment in production workshop of Wuhan Chenming3,457,743.883,457,743.88Housing and office equipment of Wuhan Chenming management integrated office168,170,645.13168,170,645.13Generator machinery equipment of Qianneng Electric Power factory area59,225,154.9959,225,154.99Boiler room and other structures of Qianneng Electric Power factory area38,801,269.0538,801,269.05Transportation and others of Qianneng Electric Power factory area105,127.52105,127.52Total269,759,940.57269,759,940.57
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
15. Construction in progress
Unit: RMBItemClosing balanceOpening balanceConstruction in progress666,573,576.71551,020,785.44Materials for project7,851,514.557,846,094.92Total674,425,091.26558,866,880.36
(1) Particulars of construction in progress
Unit: RMBItem
Closing balanceOpening balanceBook balance
ImpairmentprovisionCarrying amountBook balance
ImpairmentprovisionCarrying amountRelocation of Wuhan 4800 papermaking machine project (Zhanjiang)359,821,563.97359,821,563.97303,942,703.51303,942,703.51Technological transformation project179,165,773.85179,165,773.85121,193,391.56121,193,391.56Integrated forestry, pulp and paper project (Huanggang Pulp & Paper)45,524,448.9045,524,448.9045,538,442.7845,538,442.78Others103,200,461.7521,138,671.7682,061,789.99101,484,919.3521,138,671.7680,346,247.59Total687,712,248.4721,138,671.76666,573,576.71572,159,457.2021,138,671.76551,020,785.44
(2) Changes in material construction in progress projects for the period
Unit: RMB
Project nameBudget
Openingbalance
Increaseduring the
period
Transferto fixed asset
during the
period
Otherdeductionsduring the
period
Closingbalance
Accumulated
investmentto budget
Construction
progress
Accumulated
capitalised
interest
Of which:
Capitalised
interestamountduring the
period
Capitalisation
rate of the
interestamount forthe period
Sourceof fundRelocation of Wuhan 4800papermaking machine project (Zhanjiang)800,000,000.00303,942,703.5155,878,860.46359,821,563.9744.98%44.98%Self-owned fundsIntegrated forestry, pulp andpaper project (Huanggang Pulp & Paper)320,000,000.0045,538,442.788,363,873.168,377,867.0445,524,448.9030.72%30.72%Self-owned fundsTotal1,120,000,000.00349,481,146.2964,242,733.628,377,867.04405,346,012.87
INTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
15. Construction in progress (Cont
’d)
(3) Materials for project
Unit: RMBItem
Closing balanceOpening balanceBook balance
Impairment
provisionCarrying amountBook balance
ImpairmentprovisionCarrying amountSpecial materials7,851,514.557,851,514.557,846,094.927,846,094.92Total7,851,514.557,851,514.557,846,094.927,846,094.92
16. Bearer biological assets
(1) Bearer biological assets under the cost method
√ Applicable Not applicable
Unit: RMBItemTea treesTotalI. Original carrying amount
1. Opening balance13,697,336.8013,697,336.80
2. Increase during the period3,083,477.563,083,477.56
(1) Purchase
(2) Self-cultivation3,083,477.563,083,477.56
3. Decrease during the period
4. Closing balance16,780,814.3616,780,814.36II. Accumulated depreciation
1. Opening balance
2. Increase during the period
3. Decrease during the period
4. Closing balance
III. Impairment provision
1. Opening balance
2. Increase during the period
3. Decrease during the period
4. Closing balance
IV. Carrying amount
1. Closing carrying amount16,780,814.3616,780,814.36
2. Opening carrying amount13,697,336.8013,697,336.80
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
17. Right-of-use assets
Unit: RMBItemLand use rights
Housing andbuilding structureTotalI. Original carrying amount
1. Opening balance205,820,222.415,546,607.90211,366,830.31
2. Increase during the period
3. Decrease during the period3,213,041.3112,385.323,225,426.63
(1) Transfer or held for sale3,089,188.113,089,188.11
(2) Other decreases123,853.2012,385.32136,238.52
4. Closing balance202,607,181.105,534,222.58208,141,403.68II. Accumulated depreciation
1. Opening balance28,702,609.311,049,521.7529,752,131.06
2. Increase during the period3,434,275.84137,854.173,572,130.01
(1) Provision3,434,275.84137,854.173,572,130.01
3. Decrease during the period266,938.74266,938.74
(1) Transfer or held for sale266,938.74266,938.74
4. Closing balance31,869,946.411,187,375.9233,057,322.33III. Impairment provision
1. Opening balance
2. Increase during the period
(1) Provision
3. Decrease during the period
(1) Disposal
4. Closing balance
IV. Carrying amount
1. Closing carrying amount170,737,234.694,346,846.66175,084,081.35
2. Opening carrying amount177,117,613.104,497,086.15181,614,699.25Explanation: The reason for other decreases is that the original recognised amount of right-of-use assets was tax-included, and as the invoices for leasing have been received, the input tax amount offset the original carrying amount ofthe right-of-use assets.
INTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
18. Intangible assets
(1) Particulars of intangible assets
Unit: RMBItemLand use rightsPatents
Unpatentedtechnology
Certificates ofthird party rightTotalI. Original carrying amount
1. Opening balance2,317,286,177.5722,054,431.7327,493,613.0515,908,674.872,382,742,897.22
2. Increase during the period35,251,750.6735,251,750.67
(1) Acquisition24,205,100.0024,205,100.00
(2) Increase due to business
combination11,046,650.6711,046,650.67
3. Decrease during the period
4. Closing balance2,352,537,928.2422,054,431.7327,493,613.0515,908,674.872,417,994,647.89II. Accumulated amortisation
1. Opening balance512,384,814.2622,054,431.731,056,145.4415,908,674.87551,404,066.30
2. Increase during the period28,625,702.8557,995.8328,683,698.65
(1) Provision26,543,505.5057,995.8326,601,501.33
(2) Increase due to business
combination2,082,197.322,082,197.32
3. Decrease during the period
4. Closing balance541,010,517.0822,054,431.731,114,141.2715,908,674.87580,087,764.95III. Impairment provision
1. Opening balance
2. Increase during the period
3. Decrease during the period
4. Closing balance
IV. Carrying amount
1. Closing carrying amount1,811,527,411.1626,379,471.781,837,906,882.94
2. Opening carrying amount1,804,901,363.3126,437,467.611,831,338,830.92Explanation: For details of restricted ownership, please refer to note VII. 63;
Certificates of third party right refer to enterprise emission rights.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
19. Goodwill
(1) Original carrying amount of goodwill
Unit: RMB
Name of investee or event generating goodwillOpening balance
Increase during
the period
Decrease duringthe period
Closing balanceArising from
businesscombinationsDisposalJilin Chenming Paper Co., Ltd.14,314,160.6014,314,160.60Kunshan Tuoan Plastic Products Co., Ltd.26,946,905.3826,946,905.38Jiangxi Chenming Port Co., Ltd.8,273,638.428,273,638.42Total41,261,065.988,273,638.4249,534,704.40
(2) Provision for impairment of goodwill
Unit: RMBName of investee or event generating goodwillOpening balance
Increase duringthe period
Decrease duringthe period
Closing balanceProvisionDisposalJilin Chenming Paper Co., Ltd.14,314,160.6014,314,160.60Total14,314,160.6014,314,160.60The Company assessed the recoverable amount of goodwill and determined that the goodwill related to theCompany’s plastic business was not impaired. With the category of the principal activities as the basis fordetermining the reporting segments, the Company regarded Kunshan Tuoan Plastic Products Co., Ltd. andJiangxi Chenming Port Co., Ltd. as an asset group. The recoverable amount was determined based on the presentvalue of the estimated future cash flows.Future cash flows were determined based on the financial budget for 2023 to 2027 as approved by themanagement, and adopted 7.28% as the discount rate which was the interest rate of the 5-year bonds issued bythe Company in 2018. The cash flows for more than 5 years are calculated based on the growth rate of 5%. Otherkey assumptions used in estimating future cash flows included the estimated sales and gross profit based on theperformance of such asset group in the past and the expectation to market development by the management. Themanagement believed that any reasonable change in the above assumptions will not result in the total book valueof the asset group Kunshan Tuoan Plastic Products Co., Ltd. exceeding its recoverable amount.
20. Long-term prepaid expenses
Unit: RMBItem
Openingbalance
Increase during
the period
Amortisationduring the period
OtherdeductionsClosing balanceWoodland expenses7,233,827.75347,610.661,244,638.456,336,799.96Others37,229,023.7040,130.011,725,987.6835,543,166.03Total44,462,851.45387,740.672,970,626.1341,879,965.99
INTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
21. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets before offsetting
Unit: RMBItem
Closing balanceOpening balanceDeductible temporary
difference
Deferred income
tax assets
Deductible temporary
difference
Deferred incometax assetsProvision for impairment of assets2,689,226,543.47572,930,085.692,344,419,524.10549,431,097.40Unrealised profit arising from intra-group transactions1,399,629.90349,907.4847,231,691.3211,807,922.83Outstanding payables122,792,373.6118,768,839.94169,723,942.8826,380,462.69Deferred income160,218,077.6924,632,987.76193,822,821.6529,673,699.36Deductible loss5,965,548,854.64942,938,248.294,578,592,243.20716,030,918.97Debt restructuring30,831.057,707.76Special reserves19,914,734.492,650,556.7915,791,710.952,368,756.59Total8,959,100,213.801,562,270,625.957,349,612,765.151,335,700,565.60
(2) Deferred income tax liabilities before offsetting
Unit: RMBItem
Closing balanceOpening balanceTaxable temporary
differences
Deferred incometax liabilities
Taxable temporary
differences
Deferred incometax liabilitiesAsset valuation increment from businesscombinations involving entities not under common control56,746,069.8410,242,663.2619,104,051.044,776,012.76Debt restructuring13,621,006.123,405,251.5313,621,006.123,405,251.53Total70,367,075.9613,647,914.7932,725,057.168,181,264.29
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
21. Deferred income tax assets/deferred income tax liabilities (Cont
’d)
(3) The breakdown of unrecognised deferred income tax assets
Unit: RMBItemClosing balanceOpening balanceDeductible temporary difference61,132,211.7010,365,962.12Deductible loss680,496,027.54808,569,643.83Total741,628,239.24818,935,605.95
(4) Expiry of deductible loss of unrecognised deferred income tax assets falls in the years as follows
Unit: RMBYearClosing balanceOpening balanceRemark2023189,187,446.572024178,453,414.73178,453,991.842025237,824,072.25251,671,920.262026117,354,955.05119,959,990.04202769,296,295.1269,296,295.12202877,567,290.39Total680,496,027.54808,569,643.83
22. Other non-current assets
Unit: RMBItem
Closing balanceOpening balanceBookbalance
Impairment
provisionCarrying amountBook balance
Impairment
provisionCarrying amountPrepayments for certificates of third party right2,612,250.682,612,250.682,612,250.682,612,250.68Payments for engineering and equipment1,013,043,454.741,013,043,454.74981,293,657.32981,293,657.32Total1,015,655,705.421,015,655,705.42983,905,908.00983,905,908.00
INTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
23. Short-term borrowings
(1) Classification of short-term borrowings
Unit: RMBItemClosing balanceOpening balanceDiscounted borrowings14,310,500,000.0016,207,640,000.00Credit borrowings9,770,481,878.499,613,884,197.48Guaranteed borrowings9,411,256,447.639,757,184,167.65Pledged borrowings1,389,288,800.16741,339,929.89Mortgage borrowings65,000,000.0065,000,000.00Total34,946,527,126.2836,385,048,295.02Explanation of the classification of short-term borrowings:
For classification and amount of pledged borrowings and mortgage assets, please see 1. Monetary fundsand 63. Assets with restricted ownerships or right to use in Note VII.For classification and amount of mortgage borrowings and mortgage assets, please see 1. Monetary fundsand 63. Assets with restricted ownerships or right to use in Note VII.Overdue outstanding short-term borrowings: total outstanding short-term borrowings overdue as at the end
of the period amounted to RMB0.00. Short-term borrowings included accrued interest of RMB18,290,191.17.
24. Bills payable
Unit: RMBCategoryClosing balanceOpening balanceCommercial acceptance bills2,326,739,583.281,922,361,633.83Bank acceptance bills1,204,064,210.331,206,234,201.21Total3,530,803,793.613,128,595,835.04Total outstanding bills payable due as at the end of the period amounted to RMB0.00.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
25. Accounts payable
(1) Particulars of accounts payable
Unit: RMBItemClosing balanceOpening balancePayment for goods3,451,530,854.533,619,549,023.04Payment for engineering183,561,582.14146,144,102.25Payment for equipment105,349,826.86100,493,461.51Others231,640,364.01248,780,180.96Total3,972,082,627.544,114,966,767.76
(2) Disclosure by ageing
Unit: RMBAgeingClosing balanceOpening balanceWithin 1 year (including 1 year)3,640,462,482.193,746,315,716.201 to 2 years91,931,628.4698,287,651.122 to 3 years32,304,508.5952,080,919.33Over 3 years207,384,008.30218,282,481.11Total3,972,082,627.544,114,966,767.76The basis used by the ageing analysis of the accounts payable of the Company: the ageing of accounts payableis the length of time of the Company’s outstanding accounts payable based on invoice date. The closing balanceis recognised one by one from the end of the period onwards until the amounts add up to the balance. It is alsobroken up by intervals of within 1 year, 1-2 years, 2-3 years, 3-4 years, 4-5 years and over 5 years.
(3) Significant accounts payable aged over 1 year
Unit: RMBItemClosing balance
Reason for outstanding
or not transferWeifang Xingxing United Chemical Co., Ltd.26,905,494.34Not due for paymentOmya Haiming (Nanchang) Chemical Co., Ltd.16,000,000.00Not due for paymentMILLTEXS.P.A13,788,818.45Not due for paymentZhejiang Jndia Pipeline Industry Co., Ltd.11,477,155.91Not due for paymentVoith Germany5,410,815.85Not due for paymentTotal73,582,284.55
INTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
26. Receipts in advance
(1) Particulars of receipts in advance
Unit: RMBItemClosing balanceOpening balancePrepaid rents and property fees12,959,619.3314,261,436.67Total12,959,619.3314,261,436.67
27. Contract liabilities
Unit: RMBItemClosing balanceOpening balancePayment for goods in advance1,629,061,591.451,306,029,389.80Total1,629,061,591.451,306,029,389.80
28. Staff remuneration payables
(1) Particulars of staff remuneration payables
Unit: RMBItem
Openingbalance
Increaseduringthe period
Decrease
duringthe period
ClosingbalanceI. Short-term remuneration99,353,543.41535,303,722.87545,954,477.6988,702,788.59II. Retirement benefit plan-defined
contribution scheme45,572,343.59101,013,727.12120,486,831.3526,099,239.36III. Termination benefits1,065,471.761,065,471.76IV. Other benefits due within one yearTotal144,925,887.00637,382,921.75667,506,780.80114,802,027.95
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
28. Staff remuneration payables (Cont
’d)
(2) Particulars of short-term remuneration
Unit: RMBItemOpening balance
Increase duringthe period
Decreaseduringthe periodClosing balance
1. Salaries, bonuses, allowance and subsidies84,374,864.77409,233,898.71422,708,539.5870,900,223.90
2. Staff welfare24,252,540.0724,252,540.07331,036.18
3. Social insurance premium4,072,690.5053,322,211.3050,963,905.106,430,996.70Of which: Medical insurance premium669,598.5548,618,545.6547,989,841.921,298,302.28
Work-related injury insurance premium2,514,203.463,825,280.092,082,524.614,256,958.94Maternity insurance premium888,888.49878,385.56891,538.57875,735.48
4. Housing provident funds7,500,937.8034,025,150.8535,678,548.445,847,540.21
5. Union funds and workers
’ education463,017.479,311,206.986,993,594.832,780,629.62
6. Other short-term remuneration2,942,032.875,158,714.965,357,349.672,743,398.16Total99,353,543.41535,303,722.87545,954,477.6988,702,788.59
(3) Defined contribution plan
Unit: RMBItem
Openingbalance
Increase
duringthe period
Decrease
duringthe period
Closingbalance
1. Basic pension insurance premiums43,615,129.4297,229,819.35117,696,173.0223,148,775.75
2. Unemployment insurance premiums1,957,214.173,783,907.772,790,658.332,950,463.61
3. Enterprise annuity payment
Total45,572,343.59101,013,727.12120,486,831.3526,099,239.36
INTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
29. Tax payables
Unit: RMBItemClosing balanceOpening balanceValue added tax51,105,204.81128,305,607.36Property tax25,501,429.8734,531,806.76Enterprise income tax21,447,951.9551,538,384.55Stamp duty11,048,346.4012,987,679.08Land use tax8,976,877.2010,659,878.19Environmental protection tax3,898,266.333,674,817.23Resource tax3,000,000.003,500,000.00Urban maintenance and construction tax2,798,467.115,069,014.46Educational surcharges and others2,337,703.883,955,412.99Land appreciation tax2,024,028.202,024,028.20Individual income tax1,991,470.994,765,040.27Total134,129,746.74261,011,669.09
30. Other payables
Unit: RMBItemClosing balanceOpening balanceOther payables2,059,334,576.711,854,507,978.66Interest payable15,895,930.51Total2,059,334,576.711,870,403,909.17
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
30. Other payables (Cont
’d)
(1) Other payables
1) Other payables by nature
Unit: RMBItemClosing balanceOpening balanceDeposit791,373,992.08788,792,126.26Open credit703,492,005.81490,279,690.52Accrued expenses355,747,871.50355,492,234.45The obligation to repurchase shares under the share incentive scheme129,112,395.74129,112,395.74Others79,608,311.5890,831,531.69Total2,059,334,576.711,854,507,978.66
2) Significant other payables aged over 1 year
Unit: RMBItemClosing balance
Reason for outstanding
or not transferZhanjiang Runbao Trading Co., Ltd.160,000,000.00Not due for paymentShanghai Shuilan Property Management Co., Ltd.
136,000,000.00Not due for paymentNine Dragons Dawei Holdings Co., Ltd.30,000,000.00Not due for paymentWeifang Xingxing United Chemical Co., Ltd.16,860,000.00Not due for paymentWuhan Tianrui Paper Co., Ltd.7,941,708.00Not due for paymentTotal350,801,708.00
(2) Interest payable
Unit: RMBItemClosing balanceOpening balanceInterest on corporate bonds15,895,930.51Total15,895,930.51
INTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
31. Non-current liabilities due within one year
Unit: RMBItemClosing balanceOpening balanceLong-term payables due within one year2,507,044,660.932,398,150,298.72Long-term borrowings due within one year1,641,025,533.781,920,748,225.56Bonds payable due within one year350,000,000.00Lease liabilities due within one year4,606,717.584,606,717.58Total4,152,676,912.294,673,505,241.86
32. Long-term borrowings
(1) Types of long-term borrowings
Unit: RMBItemClosing balanceOpening balanceMortgage borrowings4,262,402,572.553,118,508,092.17Credit borrowings1,362,804,500.001,405,855,117.94Guaranteed borrowings911,364,765.591,378,621,266.53Less: Long-term borrowings due within one year1,641,025,533.781,920,748,225.56Total4,895,546,304.363,982,236,251.08Explanation of the types of long-term borrowings:
For classification and amount of mortgage assets of mortgage borrowings, please see 63. Assets with
restricted ownerships or right to use in Note VII; Long-term borrowings included accrued interest of RMB14,309,265.59.
33. Bonds payable
(1) Bonds payable
Unit: RMBItemClosing balanceOpening balance18 Chenming Bond 01 – Chenming GroupTotal
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
33. 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: RMBBond namePar value
Date ofissueTermAmountOpening balance
Issueduring theperiod
Interest atpar valueAmortisationof premium/
discount
Redemptionduring theperiod
Closingbalance18 Chenming Bond 01 – Chenming Group350,000,000.002018-4-25 years350,000,000.00350,000,000.0015,895,930.51365,895,930.51Subtotal350,000,000.00350,000,000.0015,895,930.51365,895,930.51Less: Bonds payable due within
one year350,000,000.00Total350,000,000.0015,895,930.51365,895,930.51
34. Lease liabilities
Unit: RMBItemClosing balanceOpening balanceLease payments payable72,538,903.1176,929,509.38Less: Unrecognised financing expenses18,643,391.6918,726,744.34Subtotal53,895,511.4258,202,765.04Less: Lease liabilities due within one year4,606,717.584,606,717.58Total49,288,793.8453,596,047.46
INTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
35. Long-term payables
Unit: RMBItemClosing balanceOpening balanceLong-term payables2,840,065,362.583,160,771,126.31Total2,840,065,362.583,160,771,126.31
(1) By nature
Unit: RMBItemClosing balanceOpening balanceFinancial leasing4,785,829,789.294,928,891,190.81China Development Bank Special Fund343,750,000.00412,500,000.00Contributions by other partners211,530,234.22211,530,234.22Retention for the financial leasing operations6,000,000.006,000,000.00Subtotal5,347,110,023.515,558,921,425.03Less: Long-term payables due within one year2,507,044,660.932,398,150,298.72Total2,840,065,362.583,160,771,126.31
36. Deferred income
Unit: RMBItemOpening balance
Increase duringthe period
Decrease duringthe periodClosing balanceReasonGovernment grants1,469,230,468.4682,410,962.301,386,819,506.16Financial provisionTotal1,469,230,468.4682,410,962.301,386,819,506.16
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
36. Deferred income (Cont
’d)
Items in respect of government grants:
Unit: RMBLiability item
Openingbalance
New grantsduring the
period
Include inother incomefor the period
Otherchanges
Closingbalance
Asset-related/income-relatedFunding for environmental protection576,455,283.8026,522,207.20549,933,076.60Asset-related government
grantsHuanggang forestry-pulp-paper project470,994,523.0512,513,108.90458,481,414.15Asset-related government
grantsInfrastructure and environmental protection engineering
208,320,966.695,758,794.72202,562,171.97Asset-related government
grantsFinancial subsidies for technological transformation project
132,614,525.6434,821,957.4897,792,568.16Asset-related government
grantsZhanjiang forestry-pulp-paper project46,711,964.272,047,316.4644,664,647.81Asset-related government
grantsProject fund for National Key Technology Research and Development Program
958,425.0082,350.00876,075.00Asset-related government
grantsOthers33,174,780.01665,227.5432,509,552.47Asset-related government
grantsTotal1,469,230,468.4682,410,962.301,386,819,506.16
37. Share capital
Unit: RMB
Opening balance
Increase/decrease during the year (+/-)
Closing balanceNew issueBonus issueSharesconverted from
reservesOthersSubtotalTotal number of shares2,979,742,200.002,979,742,200.00
38. Other equity instruments
(1) Perpetual Bonds outstanding at the end of the period
Unit: RMBOutstanding financialinstruments
Year ofissuance
Accountingclassification
Dividend orinterest rateIssue priceIssue sizeAmount
Maturity dateor renewalstatus
Condition forconversionConversion17 Lu Chenming MTN0012017Equity
instrument
8.97%100.0010,000,000.001,000,000,000.00No defined
maturity date
NilNon-convertibleTotal10,000,000.001,000,000,000.00
INTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
38. Other equity instruments (Continued)
(2) Changes in Perpetual Bonds outstanding at the end of the period
Unit: RMBOutstanding financialinstruments
Beginning of the periodIncrease during the periodDecrease during the periodEnd of the periodNumber
CarryingamountNumber
Carrying amountNumber
CarryingamountNumber
Carryingamount17 Lu Chenming MTN00110,000,000.00996,000,000.0010,000,000.00996,000,000.00Total10,000,000.00996,000,000.0010,000,000.00996,000,000.00Changes (increase or decrease) in other equity instruments during the period, the reasons for such changes, andthe basis for relevant accounting treatment:
The Company issued medium-term notes amounting to RMB1,000 million on 12 July 2017 at a coupon rate of
6.80%. The proceeds net of issue costs amounted to RMB996.00 million.
The notes are debts without a defined maturity date and will continue indefinitely until the exercise of the rightof redemption by the Company. The interest rate of the bills is determined by the basic interest rate + the initialinterest rate + 300BP. It has the feature of capped interest rates and the capped interest rate does not exceed theaverage interest rate level of the same type of instruments in the same industry in the same period; The Companyhas the right to defer any payment of interest. The right of redemption of the notes is vested in the Company sothat it is up to the Company to decide whether to redeem or not; the priority of repayment of the principal andinterest of medium-term notes for the period is the same as other outstanding debt financing instruments of theissuers in the event of winding up, because there is low probability of bankruptcy that the Company will not beliable for contractual obligations to deliver cash or other financial assets expected.Based on the above, the notes do not contain any term giving rise to any contractual obligation to deliver cashor other financial assets to any other entity, or to exchange any financial asset or financial liability with any otherentity under potential adverse circumstances. Consequently, they are eligible to be recognised and accounted foras equity instruments and included under other equity – Perpetual Bonds.
39. Capital reserves
Unit: RMBItemOpening balance
Increase during
the period
Decrease during
the periodClosing balanceCapital premium (share premium)4,604,712,413.164,604,712,413.16Other capital reserves756,488,109.1327,467,521.92729,020,587.21Total5,361,200,522.2927,467,521.925,333,733,000.37Other explanations, including changes (increase or decrease) during the period and reasons for such changes:
Based on the performance in the first half of 2023, the management of the Company estimated that the performanceindicators for 2023 cannot be fulfilled, and the corresponding third batch of the 30% Restricted Shares cannot beunlocked. Accordingly, the capital reserve of RMB27,467,521.92 recognised in previous years was written off accordingto the cancellation treatment.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
40. Treasury shares
Unit: RMBItemOpening balance
Increase duringthe period
Decrease during
the periodClosing balanceShare incentive128,780,100.00128,780,100.00Total128,780,100.00128,780,100.00
41. Other comprehensive income
Unit: RMB
ItemOpening balance
During the period
Closing balanceIncurredbefore incometax forthe period
Less:
Transferredfrom othercomprehensiveincome in priorperiods toprofit or loss
duringthe period
Less:
Transferredfrom othercomprehensiveincome in priorperiods toretainedearnings during
the period
Less: Incometax expenses
Attributable to
parentcompanyafter tax
Attributableto minorityshareholders
after taxI. Other comprehensive income that cannot be
reclassified to profit or loss in subsequent periodsII. Other comprehensive income that will be reclassified
to profit and loss in subsequent periods-821,940,694.57-85,733,908.54-907,674,603.11Of which: Other comprehensive income that may be
reclassified to profit or loss under the equity method-9,916,102.692,605,105.12-7,310,997.57Translation differences of financial statements
denominated in foreign currency-812,024,591.88-88,339,013.66-900,363,605.54Total other comprehensive income-821,940,694.57-85,733,908.54-907,674,603.11
42. General risk reserves
Unit: RMBItemOpening balance
Increase during
the period
Decrease during
the periodClosing balanceGeneral risk reserves79,900,268.7179,900,268.71Total79,900,268.7179,900,268.71
43. Special reserves
Unit: RMBItemOpening balance
Increase during
the period
Decrease during
the periodClosing balanceProduction safety expenses15,791,710.9513,373,517.009,250,493.4619,914,734.49Total15,791,710.9513,373,517.009,250,493.4619,914,734.49
INTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
44. Surplus reserves
Unit: RMBItemOpening balance
Increase during
the period
Decrease duringthe periodClosing balanceStatutory surplus reserves1,212,009,109.971,212,009,109.97Total1,212,009,109.971,212,009,109.97
45. Retained profit
Unit: RMBItemThe periodThe prior periodRetained profit as at the end of the prior year before adjustment9,390,642,477.579,294,126,706.86Adjustment to opening balance of retained earnings (increase +, decrease -)Opening balance of retained profit after adjustment9,390,642,477.579,294,126,706.86Plus: Net profit for the period attributable to shareholders of the parentcompany-688,080,164.10189,290,120.82Less: Transfer of statutory surplus reserves Transfer of discretionary surplus reserves Transfer of general risk reserves3,074,350.11 Perpetual Bonds interest payable89,700,000.00Retained profit as at the end of the period8,702,562,313.479,390,642,477.57
46. Revenue and operating costs
Unit: RMBItem
Amount for the periodAmount for the prior periodRevenueCostsRevenueCostsPrincipal activities12,420,935,712.7811,377,205,194.8916,170,535,559.2413,692,044,445.11Other activities144,027,068.53119,526,467.69505,892,806.59432,503,804.40Total12,564,962,781.3111,496,731,662.5816,676,428,365.8314,124,548,249.51
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
46. Revenue and operating costs (Cont
’d)
Information related to revenue:
Unit: RMBCategory of contract
Machine-made
paperFinancial services
Hotel andproperty rentalsOthersTotalType of goods12,065,096,786.1490,836,358.97118,740,344.32290,289,291.8812,564,962,781.31
Including:
Machine-made paper11,300,765,054.8611,300,765,054.86 Chemical pulp240,438,232.65240,438,232.65 Processing of moulds100,217,749.88100,217,749.88 Electricity and steam120,561,393.77120,561,393.77 Construction materials106,371,211.95106,371,211.95 Paper chemicals60,607,594.9860,607,594.98 Hotel and property rentals109,744,705.55109,744,705.55 Others342,724,509.8890,836,358.978,995,638.7783,700,330.05526,256,837.67By geographical area12,065,096,786.1490,836,358.97118,740,344.32290,289,291.8812,564,962,781.31 Including:
Mainland China8,691,224,985.3590,836,358.97118,740,344.32290,289,291.889,191,090,980.52 Other countries and regions3,373,871,800.793,373,871,800.79By the timing of delivery12,065,096,786.1490,836,358.97118,740,344.32290,289,291.8812,564,962,781.31 Including:
Goods (at a point in time)11,932,557,803.646,317,579.78290,105,088.6212,228,980,472.04 Services (within a certain period)120,561,393.7790,836,358.97107,856,141.55319,253,894.29 Leasing income11,977,588.734,566,622.99184,203.2616,728,414.98
Information related to the transaction price allocated to residual performance obligations:
At the end of the reporting period, the amount of revenue with signed contracts but unfulfilled or uncompletedperformance obligation was RMB2, 675,475,342.05, which was expected to be recognised in 2023.
INTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
47. Taxes and surcharges
Unit: RMBItem
Amount forthe period
Amount forthe prior periodProperty tax43,867,342.4841,715,466.80Stamp duty20,624,364.1924,637,949.80Land use tax17,689,934.664,547,575.80Water resource tax7,866,553.805,678,351.10Environmental protection tax6,474,664.236,793,722.79Urban maintenance and construction tax5,065,031.7217,218,814.49Educational surcharges and local education surcharge3,832,275.9511,612,306.79Water conservation funds375,223.40350,123.53Vehicle and vessel tax22,420.061,998,845.57Cultural undertaking development tax1,528,301.88Land appreciation tax27,432.00Total105,817,810.49116,108,890.55
48. Selling and distribution expenses
Unit: RMBItem
Amount forthe period
Amount forthe prior periodWages and surcharges50,366,970.2672,692,606.41Business hospitality expenses23,235,804.1122,786,567.81Travel expenses12,003,217.198,535,839.64Selling commissions3,387,483.926,883,405.06Rental expenses3,238,179.102,478,458.25Depreciation expenses2,820,127.765,541,590.42Office expenses1,137,272.191,108,123.52Warehouse expenses429,220.85503,789.82Others10,048,442.1617,525,382.72Total106,666,717.54138,055,763.65
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
49. General and administrative expenses
Unit: RMBItem
Amount forthe period
Amount forthe prior periodWages and surcharges118,217,373.00113,861,878.26Depreciation expenses44,973,785.8247,710,740.44Hospitality expenses44,140,876.0138,886,989.85Welfare expenses31,454,087.1735,507,840.57Amortisation of intangible assets23,286,773.7325,828,580.24Insurance premium9,440,871.939,449,472.17Repair fees9,337,357.649,615,210.77Others47,445,099.5672,306,683.24Total328,296,224.86353,167,395.54
50. R&D expenses
Unit: RMBItem
Amount for
the period
Amount forthe prior periodConsumption of raw materials366,319,485.67453,243,553.84Utilities75,235,547.39105,357,973.18Wages and surcharges66,209,728.3176,633,329.10Depreciation expenses23,682,873.4023,781,607.53Insurance premium13,868,772.4815,220,882.81Welfare expenses3,443,387.624,712,671.38Housing provident funds2,384,161.812,698,047.92Other expenses1,660,871.901,866,495.17Total552,804,828.58683,514,560.93
51. Finance expenses
Unit: RMBItem
Amount for
the period
Amount forthe prior periodInterest expenses856,872,614.18991,475,816.56Less: capitalised interest amountInterest income94,532,686.92150,582,370.85Foreign exchange gains and losses-34,863,785.35-21,746,160.65Less: Capitalisation of foreign exchange gains and lossesBank charges and others122,050,778.14201,887,319.60Total849,526,920.051,021,034,604.66
INTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
52. Other income
Unit: RMBSource of other income
Amount forthe period
Amount forthe prior periodGovernment grants – amortised deferred income included in profit or loss82,410,962.3052,355,943.37Government grants – directly included in profit or loss25,744,734.8996,908,668.31Total108,155,697.19149,264,611.68
53. Investment income
Unit: RMBItem
Amount forthe period
Amount forthe prior periodIncome from long-term equity investments accounted for using the equity method23,934,269.8126,616,556.58Investment gain on disposal of long-term equity investments6,812.52Investment income on holding financial assets held for trading and other non-current financial assets630,212.776,301,220.33Investment gain on derecognition of financial assets-67,175,214.10-56,307,959.46Gain on debt restructuring-145,995.36-754,806.87Total-42,756,726.88-24,138,176.90
54. Gain on change in fair value
Unit: RMBSource of gain on change in fair value
Amount for
the period
Amount forthe prior periodFinancial assets held for trading-25,565,577.25-62,122,863.58Gain on change in fair value of consumable biological assets measured at fair value5,749,779.423,309,448.09Total-19,815,797.83-58,813,415.49
55. Credit impairment loss
Unit: RMBItem
Amount for
the period
Amount forthe prior periodBad debt loss of accounts receivable-43,081,750.88-25,363,341.17Total-43,081,750.88-25,363,341.17
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
56. Loss on impairment of assets
Unit: RMBItem
Amount for
the period
Amount forthe prior periodLoss on inventory impairment and loss on impairment of costs of contract performance-43,314,485.761,936,644.09Total-43,314,485.761,936,644.09
57. Asset disposal income
Unit: RMBSource of asset disposal income
Amount for
the period
Amount forthe prior periodGain on disposal of fixed assets (“-” denotes loss)11,759,266.911,605,314.49Total11,759,266.911,605,314.49
58. Non-operating income
Unit: RMB
Item
Amount for
the period
Amount forthe prior period
Amount included inextraordinary gains
or losses for
the periodGain on damage and retirement of non-current assets433,184.7723,874.29433,184.77Fine income323,305.00215,595.32318,305.00Exempted debts12,888.0011,345.8012,888.00Others171,427.53842,613.92176,427.53Total940,805.301,093,429.33940,805.30
59. Non-operating expenses
Unit: RMB
Item
Amount for
the period
Amount forthe prior period
Amount included inextraordinary gains
or losses for
the periodLoss on damage and retirement of non-current assets3,074,424.635,557,464.333,074,424.63Default penalty4,626,610.27Donation5,000.00Others63,765.4313,665.0063,765.43Total3,138,190.0610,202,739.603,138,190.06
INTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
60. Income tax expenses
(1) Particulars of income tax expenses
Unit: RMBItem
Amount forthe period
Amount forthe prior periodIncome tax expenses for the period22,508,021.8251,225,155.03Deferred income tax expenses-233,999,203.96-49,846,428.34Total-211,491,182.141,378,726.69
(2) Reconciliation between accounting profit and income tax expenses
Unit: RMBItem
Amount forthe periodTotal profit-906,132,564.80Income tax expenses calculated at statutory/applicable tax rates-135,919,884.72Effect of different tax rates applicable to subsidiaries27,248,703.09Effect of adjustments for income tax for prior periods9,207,371.67Profit and loss of joint ventures and associates accounted for using the equity method-3,590,140.47Effect of income not subject to tax-4,055,086.68Non-deductible costs, expenses and losses7,486,299.55Effect of utilisation of previously unrecognised deductible loss on deferred income tax assets-44,216,260.65Effect of current unrecognised deductible temporary difference or deductible loss arising from deferred tax income assets23,986,101.00Tax effect of R&D fee deduction (listed with“-”)-79,940,345.85Tax incentives such as equipment credits-11,697,939.08Income tax expense-211,491,182.14
61. Items on statements of cash flow
(1) Cash received relating to other operating activities
Unit: RMBItem
Amount for
the period
Amount forthe prior periodNet proceedings from the financial leasing business638,037,439.53125,816,344.91Interest income96,517,182.23147,503,480.13Government support fund16,978,364.2794,023,387.98Open credit and other income128,779,296.53466,613,154.78Total880,312,282.56833,956,367.80
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
61. Items on statements of cash flow (Cont
’d)
(2) Cash paid relating to other operating activities
Unit: RMBItem
Amount for
the period
Amount forthe prior periodExpenses and open credit802,664,900.20998,576,421.97Total802,664,900.20998,576,421.97
(3) Cash received relating to other financing activities
Unit: RMBItem
Amount forthe period
Amount forthe prior periodEquipment sale and leaseback1,122,264,589.152,068,410,644.82Recovery of deposit for financial leasing6,000,000.0010,500,000.00Total1,128,264,589.152,078,910,644.82
(4) Cash paid relating to other financing activities
Unit: RMBItem
Amount forthe period
Amount forthe prior periodRepayment of equipment sale and leaseback1,376,861,062.23961,427,794.77Repayment of bonds350,000,000.001,078,685,100.00Increase of restricted bank deposits97,308,709.84992,161,166.63Payment for equity in China Development Bank funds68,750,000.0027,500,000.00Payment for finance lease deposits49,250,000.0051,000,000.00Purchase or repayment of short-term commercial paper and MTNs200,000,000.00Total1,942,169,772.073,310,774,061.40
INTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
62. Supplementary information on cash flow statement
(1) Supplementary information on cash flow statement
Unit: RMBSupplementary information
Amount for
the period
Amount forthe prior period
1.Reconciliation of net profit as cash flows from operating activities:
Net profit-694,641,382.66274,002,500.73Plus: Provision for impairment of assets86,396,236.6423,426,697.08Depreciation of fixed assets, depletion of oil and gasassets, and depreciation of bearer biological assets andinvestment property1,128,930,791.821,138,180,403.64Depreciation of right-of-use assets3,572,130.013,916,179.79Amortisation of intangible assets26,601,501.3328,127,606.73Amortisation of long-term prepaid expenses2,970,626.132,055,896.23Loss on disposal of fixed assets, intangible assets and
other long-term assets (“-” denotes gain)-11,759,266.91-1,605,314.49Loss on retirement of fixed assets (“-” denotes gain)2,641,239.865,533,590.04Loss on changes in fair value (“-” denotes gain)19,815,797.8358,813,415.49Finance expenses (“-” denotes gain)856,872,614.18991,475,816.56Investment loss (“-” denotes gain)42,756,726.8824,138,176.90Decrease in deferred income tax assets
(“-” denotes increase)-226,570,060.35-49,397,297.55Increase in deferred income tax liabilities
(“-” denotes decrease)5,466,650.50-449,130.79Decrease in inventories (“-” denotes increase)35,683,655.24-105,936,523.16Decrease in operating receivables (“-” denotes increase)643,109,345.71-1,497,590,484.79Increase in operating payables (“-” denotes decrease)-138,758,858.62103,572,677.04OthersNet cash flows from operating activities1,783,087,747.59998,264,209.45
2.Major investing and financing activities not involving cash
settlements:
Capital converted from debtsConvertible corporate bonds due within one yearFinance leases of fixed assets
3.Net change in cash and cash equivalents:
Closing balance of cash1,842,769,494.263,142,606,091.96Less: Opening balance of cash2,159,460,149.513,168,915,847.02Plus: Closing balance of cash equivalentsLess: Opening balance of cash equivalentsNet increase in cash and cash equivalents-316,690,655.25-26,309,755.06
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
62. Supplementary information on cash flow statement (Cont
’d)
(2) Net cash of acquisition subsidiaries paid in current period
Unit: RMBAmountCash or cash equivalents paid in the current period for business combinations that occurred during the period5,400,000.00Of which:
Less: Cash and cash equivalents held by the subsidiary on the acquisition date465,248.97Of which:
Plus: Cash or cash equivalents paid in the current period for business combinations that
occurred during previous periodsOf which:
Net cash paid for acquisition of subsidiaries4,934,751.03
(3) Cash and cash equivalents composition
Unit: RMBItemClosing balanceOpening balanceI. Cash1,842,769,494.262,159,460,149.51 Of which: Treasury cash3,577,158.843,491,219.08 Bank deposit that can be used for payment at any time1,839,192,335.422,155,968,930.43II. Cash equivalents Of which: Bond investment with maturity within 3 monthsIII. Balance of cash and cash equivalent at end of period1,842,769,494.262,159,460,149.51
63. Assets with restricted ownerships or right to use
Unit: RMBItem
Closingcarrying amountReasons for such restrictionMonetary funds11,912,761,370.57As deposits for bank acceptance bills and letters of credit,
security deposits for loans, deposit reserves, interestreceivable, etc. (Note VII. 1)Fixed assets5,380,577,035.38As collateral for bank borrowings and long-term payables
(Note VII. 14)Investment property4,754,893,839.15As collateral for bank borrowings (Note VII. 13)Intangible assets550,003,479.41As collateral for bank borrowings and long-term payables
(Note VII. 18)Accounts receivable188,497,651.34As collateral for borrowings (Note VII. 3)Total22,786,733,375.85
INTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
64. Foreign currency items
(1) Foreign currency items
Unit: RMBItem
Closing foreigncurrency balanceExchange rate
Closing balance
in RMBMonetary fundsOf which: USD50,971,917.747.2258368,312,883.21
EUR2,777,106.447.877121,875,545.14HKD1,026,323.520.9220946,270.29GBP1,648.029.143215,068.18JPY1,197.000.050159.97Accounts receivablesOf which: USD18,584,628.347.2258134,288,807.46
EUR8,855,976.607.877169,759,413.28JPY146,734,998.000.05017,351,423.40Accounts payableOf which: USD95,242,773.807.2258688,205,234.92
EUR1,196,397.657.87719,424,143.93JPY187,909.000.05019,414.24Other receivablesOf which: USD8,727.397.225863,062.37
EUR69,241.347.8771545,420.96Other payablesOf which: USD1,377,668.717.22589,954,758.56
EUR1,488,642.257.877111,726,183.87
JPY8,800.000.0501440.88Short-term borrowingsOf which: USD12,697,585.997.225891,750,216.85
EUR382,900.007.87713,016,141.59
(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 thereis any change in the functional currency.
√ Applicable Not applicable
No.Name of subsidiary
Principal place ofbusiness
Place ofincorporation
Functionalcurrency1Chenming GmbHHamburg, GermanyHamburg, GermanyEUR2Chenming Paper Korea Co., Ltd.Seoul, KoreaSeoul, KoreaKRW3Chenming International Co., Ltd.Los Angeles, USALos Angeles, USAUSD4Chenming Paper Japan Co., Ltd.Tokyo, JapanTokyo, JapanJPY5Chenming Paper United States Co., Ltd.Los Angeles, USALos Angeles, USAUSD6Chenming (Overseas) LimitedHong Kong, ChinaHong Kong, ChinaUSD7Chenming (Singapore) LimitedSingaporeSingaporeUSD8Chenming (HK) LimitedHong Kong, ChinaHong Kong, ChinaUSD
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
VII. Notes to Items of the Consolidated Financial Statements (Cont’d)
65. Government grants
(1) General information of government grants
Unit: RMBTypeAmountReporting item
Amount included inthe current profit
and lossFunding for environmental protection549,933,076.60Deferred income26,522,207.20Huanggang forestry-pulp-paper project458,481,414.15Deferred income12,513,108.90Infrastructure and environmental protectionengineering202,562,171.97Deferred income5,758,794.72Financial subsidies for technological transformation project97,792,568.16Deferred income34,821,957.48Zhanjiang forestry-pulp-paper project44,664,647.81Deferred income2,047,316.46Project Funding for National Key Technology Research and Development Program876,075.00Deferred income82,350.00Others32,509,552.47Deferred income665,227.54Subsidies for foreign trade projects10,833,800.00Other income10,833,800.00Government rewards7,220,880.00Other income7,220,880.00Immediate VAT refund3,186,241.18Other income3,186,241.18Refund of tax2,877,613.59Other income2,877,613.59Enterprise reform and development subsidies612,000.00Other income612,000.00Afforestation subsidy459,000.12Other income459,000.12Financial subsidies for technological transformation project370,000.00Other income370,000.00Funding for environmental protection72,000.00Other income72,000.00Employment expansion subsidies52,000.00Other income52,000.00Employment stabilisation subsidies9,500.00Other income9,500.00Others51,700.00Other income51,700.00Total1,412,564,241.05108,155,697.19
INTERIM REPORT 2023
I Financial Report
VIII. Change in Scope of Consolidation
1. Business combination not under common control
(1) Business combination not under common control during the current period
Unit: RMB
Acquiree
Date ofacquiring the shareholding
Considerationfor acquiringthe shareholding
Shareholding ratio acquired
The way ofacquiring theshareholding
Acquisition
date
The basis fordeterminingthe date ofacquisition
The income ofacquiree fromthe date ofacquisition tothe end of theperiod
The net profit
of acquireefrom the dateof acquisitionto the end ofthe periodJiangxi Chenming Port Co., Ltd.2023.3.315,400,000.00100.00%Acquisition2023.3.31Control2,501,184.09899,011.43
(2) Cost of combination and goodwill
Unit: RMBCost of combination
Jiangxi Chenming
Port Co., Ltd.– Cash5,400,000.00– Fair value of non-cash assets– Fair value of debt issued or assumed– Fair value of equity securities issued– Fair value of contingent consideration– Fair value of the equity held before the acquisition date on the acquisition date– OthersTotal cost of combination5,400,000.00Less: the interest in the fair value of the identifiable net assets acquired-2,873,638.42Amount of goodwill/cost of combination being less than the interest in the fair value of the identifiable net assets acquired8,273,638.42
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
VIII. Change in Scope of Consolidation (Cont’d)
1. Business combination not under common control (Cont
’d)
(3) Acquiree
’s identifiable assets or liabilities as at the acquisition date
Unit: RMBJiangxi Chenming Port Co., Ltd.Fair value as atthe acquisition date
Carrying amount as at
the acquisition dateAssets:183,176,943.5185,831,727.82 Monetary funds465,248.97465,248.97 Accounts receivable3,537,419.243,537,419.24 Long-term equity investment59,345,429.052,450,000.00 Fixed assets111,076,981.6674,175,345.69 Intangible assets8,486,760.004,938,609.33Liabilities:186,050,581.93186,050,581.93 Borrowings Accounts payable179,009,234.83179,009,234.83 Deferred income tax liabilities6,067,468.006,067,468.00 Net assets-2,873,638.42-100,218,854.11Less: minority interest Net assets acquired-2,873,638.42-100,218,854.11IX. Interest in Other Entities
1. Interest in subsidiaries
(1) Constitution of the Group
Name of subsidiary
Principle placeof business
Place ofincorporation
Nature ofbusiness
Type of legalperson
Shareholding
Acquisition
Issued debt
securities
Issued share
capitalDirectIndirectShouguang Meilun Paper Co., Ltd.ShouguangShouguangPaper makingFor-profit corporation62.49%Establishment00Shouguang Meichen Energy
Technology Co., Ltd.
ShouguangShouguangElectricityFor-profit corporation100%Establishment00Shouguang Chenming Art Paper
Co., Ltd.
ShouguangShouguangPaper makingFor-profit corporation75%Establishment00Shandong Chenming Paper Sales
Co., Ltd.
ShouguangShouguangSales of paper
product
For-profit corporation100%Establishment00Shanghai Chenming Pulp & Paper
Sales Co., Ltd.
ShanghaiShanghaiPaper product
trading
For-profit corporation100%Establishment00Shouguang Chenming Import and
Export Trade Co., Ltd.
ShouguangShouguangTradingFor-profit corporation100%Establishment00Jiangxi Chenming Supply Chain
Management Co., Ltd.
JiangxiJiangxiTradingFor-profit corporation70%Establishment00Zhanjiang Chenming Pulp & Paper
Co., Ltd.
ZhanjiangZhanjiangPaper makingFor-profit corporation82.67%Establishment00Zhanjiang Chenming ArboricultureDevelopment Co., Ltd.
ZhanjiangZhanjiangArboricultureFor-profit corporation100%Establishment00
INTERIM REPORT 2023
I Financial Report
Name of subsidiary
Principle placeof business
Place ofincorporation
Nature ofbusiness
Type of legalperson
Shareholding
Acquisition
Issued debt
securities
Issued share
capitalDirectIndirectYangjiang Chenming Arboriculture
Development Co., Ltd.
YangjiangYangjiangArboricultureFor-profit corporation100%Establishment00Guangdong Huirui Investment Co.,Ltd.
ZhanjiangZhanjiangInvestmentFor-profit corporation100%Establishment00Hubei Changjiang ChenmingHuanggang Equity InvestmentFund Partnership (LimitedPartnership)
HuanggangHuanggangFundFor-profit corporation59.97%Establishment00Hainan Chenming Technology Co.,Ltd.
HaikouHaikouWholesale and retailFor-profit corporation100%Establishment00Foshan Chenming Import and
Export Trade Co., Ltd.
FoshanFoshanTradingFor-profit corporation100%Establishment00Shanghai Herui Investment Co., Ltd.ShanghaiShanghaiBusiness servicesFor-profit corporation100%Merger and
acquisition
Zhanjiang Chenming Port Co., Ltd.ZhanjiangZhanjiangPort servicesFor-profit corporation100%Establishment00Zhanjiang Meilun Pulp & Paper Co.,
Ltd.
ZhanjiangZhanjiangPaper makingFor-profit corporation100%Establishment00Guangdong Chenming Panels Co.,
Ltd.
GuangdongGuangdongPanelsFor-profit corporation100%Establishment00Jiangxi Chenming Tea Co., Ltd.JiangxiJiangxiTea businessFor-profit corporation100%Establishment00Jiangxi Chenming Paper Co., Ltd.NanchangNanchangPaper makingFor-profit corporation100%Establishment00Jiangxi Chenming Logistics Co., Ltd.NanchangNanchangLogisticsFor-profit corporation100%Establishment00Nanchang Shengheng Trading Co.,Ltd.
NanchangNanchangTradingFor-profit corporation100%Establishment00Nanchang Kunheng Trading Co.,
Ltd.
NanchangNanchangTradingFor-profit corporation100%Establishment00Nanchang Chenming Arboriculture
Development Co., Ltd.
NanchangNanchangArboricultureFor-profit corporation100%Establishment00Jiangxi Chenming Port Co., Ltd.JiangxiJiangxiCargo transportationFor-profit corporation100%Acquisition00Wuhan Chenming Hanyang Paper
Holdings Co., Ltd.
WuhanWuhanPaper makingFor-profit corporation65.21%34.64%Establishment00Wuhan Chenming Qianneng Electric
Power Co., Ltd.
WuhanWuhanThermal powerFor-profit corporation51%Establishment00Shandong Dingkun Asset
Management Partnership (LimitedPartnership)
ShouguangShouguangBusiness servicesFor-profit corporation100%Establishment00Jilin Chenming Paper Co., Ltd.JilinJilinPaper makingFor-profit corporation100%Acquisition00Fuyu Chenming Paper Co., Ltd.FuyuFuyuPaper makingFor-profit corporation100%Establishment00Jilin Chenming New-style Wall
Materials Co., Ltd
JilinJilinWall materialsFor-profit corporation100%Establishment00Jilin Chenming Logistics Co., Ltd.JilinJilinLogisticsFor-profit corporation100%Establishment00Huanggang Chenming Pulp & Paper
Co., Ltd.
HuanggangHuanggangPulp productionFor-profit corporation70.15%29.85%Establishment00Huanggang Chenming PaperTechnology Co., Ltd.
HuanggangHuanggangPaper makingFor-profit corporation100%Establishment00Huanggang Chenming Port ServiceCo., Ltd.
HuanggangHuanggangPort servicesFor-profit corporation100%Establishment00
IX. Interest in other entities (Cont’d)
1. Interest in subsidiaries (Cont
’d)
(1) Constitution of the Group (Cont
’d)
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
Name of subsidiary
Principle placeof business
Place ofincorporation
Nature ofbusiness
Type of legalperson
Shareholding
Acquisition
Issued debtsecurities
Issued sharecapitalDirectIndirectHuanggang Chenming Pulp & Fiber
Trading Co., Ltd.
HuanggangHuanggangTradingFor-profit corporation100%Establishment00Hubei Huanggang Chenming EquityInvestment Fund ManagementCo., Ltd.
HuanggangHuanggangCapital market
services
For-profit corporation60%Establishment00Shandong Chenming Group FinanceCo., Ltd.
JinanJinanFinanceFor-profit corporation80%20%Establishment00Chenming (HK) LimitedHong KongHong KongPaper product
trading
For-profit corporation100%Establishment00Shandong Chenming FinancialLeasing Co., Ltd.
JinanJinanFinancial leasingFor-profit corporation100%Establishment00Qingdao Chenming Nonghai
Financial Leasing Co., Ltd
QingdaoQingdaoFinancial leasingFor-profit corporation100%Establishment00Shanghai Chenming FinancialLeasing Co., Ltd.
ShanghaiShanghaiFinancial leasingFor-profit corporation100%Establishment00Wuhan Junheng PropertyManagement Co. Ltd.
WuhanWuhanPropertyFor-profit corporation100%Merger and
acquisition
Guangzhou Chenming PropertyManagement Co., Ltd.
GuangzhouGuangzhouPropertyFor-profit corporation100%Establishment00Shandong Chenming InvestmentLimited
JinanJinanInvestmentFor-profit corporation100%Establishment00Beijing Chenming Financial LeasingCo., Ltd.
BeijingBeijingFinancial leasingFor-profit corporation100%Establishment00Shanxi Fuyin Industrial Trading Co.,
Ltd.
TaiyuanTaiyuanWholesale and retailFor-profit corporation100%Acquisition00Chongmin Culture Development
(Shanghai) Co., Ltd.
ShanghaiShanghaiLeasing and business
services
For-profit corporation100%Acquisition00Jinan Chenming Paper Sales Co.,
Ltd.
JinanJinanInvestment
management/Paper producttrading
For-profit corporation100%Establishment00Shandong Chenming Commercial
Factoring Co., Ltd.
JinanJinanBusiness factoringFor-profit corporation100%Establishment00Guangzhou Chenming Commercial
Factoring Co., Ltd.
GuangzhouGuangzhouBusiness factoringFor-profit corporation51%Establishment00Chenming GmbHGermanyGermanyPaper product
trading
For-profit corporation100%Establishment00Chenming Paper Japan Co., Ltd.JapanJapanPaper product
trading
For-profit corporation100%Establishment00Chenming International Co., Ltd.the United Statesthe United StatesPaper product
trading
For-profit corporation100%Establishment00Chenming Paper United States Co.,
Ltd.
the United Statesthe United StatesPaper product
trading
For-profit corporation100%Establishment00Chenming Paper Korea Co., Ltd.KoreaKoreaPaper product
trading
For-profit corporation100%Establishment00Chenming (Overseas) LimitedHong KongHong KongPaper product
trading
For-profit corporation100%Establishment00Chenming (Singapore) LimitedSingaporeSingaporePaper product
trading
For-profit corporation100%Establishment00Meilun (BVI) LimitedCaymanCaymanCommerceFor-profit corporation100%Establishment00Shanghai Chenming Industry Co.,Ltd.
ShanghaiShanghaiProperty investment
and management
For-profit corporation100%Establishment00Shanghai Chenyin Trading Co., Ltd.ShanghaiShanghaiTradingFor-profit corporation51%Establishment00
IX. Interest in other entities (Cont’d)
1. Interest in subsidiaries (Cont
’d)
(1) Constitution of the Group (Cont
’d)
INTERIM REPORT 2023
I Financial Report
Name of subsidiary
Principle placeof business
Place ofincorporation
Nature ofbusiness
Type of legalperson
Shareholding
Acquisition
Issued debt
securitiesIssued sharecapitalDirectIndirectShanghai Hongtai Real Estate Co.,
Ltd.
ShanghaiShanghaiReal estateFor-profit corporation100%Merger and
acquisition
Shanghai Hongtai PropertyManagement Co., Ltd.
ShanghaiShanghaiPropertyFor-profit corporation100%Merger and
acquisition
Shandong Grand View Hotel Co.,Ltd.
ShouguangShouguangCateringFor-profit corporation70%Establishment00Shouguang Chenming PapermakingMachine Co., Ltd.
ShouguangShouguangMachinery
manufacturing
For-profit corporation100%Establishment00Shouguang Hongxiang Printing andPackaging Co., Ltd.
ShouguangShouguangPrinting and
packaging
For-profit corporation100%Acquisition00Shouguang Chenming Modern
Logistic Co., Ltd.
ShouguangShouguangTransportationFor-profit corporation100%Establishment00Shouguang Hongyi DecorativePackaging Co., Ltd.
ShouguangShouguangPackagingFor-profit corporation100%Merger and
acquisition
Kunshan Tuoan Plastic ProductsCo., Ltd.
KunshanKunshanRubber and plasticFor-profit corporation100%Merger and
acquisition
Shouguang Xinyuan Coal Co., Ltd.ShouguangShouguangCoalFor-profit corporation100%Merger and
acquisition
Shouguang Wei Yuan LogisticsCompany Limited
ShouguangShouguangLogisticsFor-profit corporation100%Merger and
acquisition
Shouguang City Run Sheng Wasted
Paper Recycle Co., Ltd.
ShouguangShouguangPurchase and sale of
waste
For-profit corporation100%Merger and
acquisition
Shouguang Shun Da Customs
Declaration Co, Ltd.
ShouguangShouguangCustoms declarationFor-profit corporation100%Establishment00Huanggang Chenming Arboriculture
Development Co., Ltd.
HuanggangHuanggangArboricultureFor-profit corporation100%Establishment00Chenming Arboriculture Co., Ltd.WuhanWuhanArboricultureFor-profit corporation100%Establishment00Hailaer Chenming Paper Co., Ltd.HailaerHailaerPaper makingFor-profit corporation75%Establishment00Weifang Chenming Growth Driver
Replacement Equity InvestmentFund Partnership (LimitedPartnership)
WeifangWeifangFundFor-profit corporation79%Establishment00Weifang Chendu Equity Investment
Partnership (Limited Partnership)
ShouguangShouguangCapital market
services
For-profit corporation79.75%Establishment00Nanjing Chenming Culture
Communication Co., Ltd.
NanjingNanjingMarketingFor-profit corporation100%Establishment00
(2) Major non-wholly owned subsidiaries
Unit: RMB
Name of subsidiary
Minorityinterest
Gain or lossattributable tominority interestduring the period
Dividend tominority interestdeclared during
the period
Closingbalance ofminority interest
Shouguang Chenming Art Paper Co., Ltd.25.00%396,368.1698,249,523.36Shouguang Meilun Paper Co., Ltd.37.51%12,619,413.249,419,178.082,499,723,544.78Zhanjiang Chenming Pulp & Paper Co., Ltd.17.33%-17,281,674.121,496,781,680.24
IX. Interest in other entities (Cont’d)
1. Interest in subsidiaries (Cont
’d)
(1) Constitution of the Group (Cont
’d)
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
IX. Interest in Other Entities (Cont
’d)
1. Interest in subsidiaries (Cont
’d)
(3) Key financial information of major non-wholly owned subsidiaries
Unit: RMB
Name of subsidiary
Closing balanceOpening balance
Current assets
Non-current
assetsTotal assetsCurrent liabilities
Non-currentliabilitiesTotal liabilitiesCurrent assets
Non-currentassetsTotal assetsCurrent liabilities
Non-currentliabilitiesTotal liabilities
Shouguang Chenming Art Paper Co., Ltd.758,835,938.53439,827,453.861,198,663,392.39800,665,298.985,000,000.00805,665,298.98592,821,595.68455,020,296.411,047,841,892.09656,429,271.34656,429,271.34Shouguang Meilun Paper Co., Ltd.7,406,998,021.3110,248,738,927.8917,655,736,949.207,928,361,439.111,210,968,284.369,139,329,723.475,271,560,197.7410,517,781,981.2215,789,342,178.965,706,873,517.181,592,276,073.167,299,149,590.34Zhanjiang ChenmingPulp & Paper Co., Ltd.13,311,726,510.5813,133,443,755.9326,445,170,266.5115,538,216,860.301,736,060,722.9517,274,277,583.2512,177,003,083.1513,209,726,474.8125,386,729,557.9614,522,121,479.881,696,026,289.0916,218,147,768.97
Unit: RMB
Name of subsidiary
Amount for the periodAmount for the prior period
RevenueNet profit
TotalcomprehensiveincomeCash flowsfrom operatingactivitiesRevenueNet profit
TotalcomprehensiveincomeCash flows
from operating
activities
Shouguang Chenming Art Paper Co., Ltd.307,683,134.581,585,472.661,585,472.6698,313,422.22322,720,534.36-1,342,438.95-1,342,438.95133,667,925.23Shouguang Meilun Paper Co., Ltd.4,453,614,876.1833,639,568.6933,639,568.69883,836,062.483,956,822,454.56114,261,960.45114,261,960.451,167,059,642.56Zhanjiang Chenming Pulp & Paper Co., Ltd.5,372,507,782.65-40,134,946.90-37,529,841.78813,258,132.165,841,511,419.81181,827,121.84181,827,121.841,308,835,701.84
INTERIM REPORT 2023
I Financial Report
IX. Interest in Other Entities (Cont’d)
2. Interest in joint arrangements or associates
(1) Major joint ventures and associates
Name of joint venture and associate
Principle placeof business
Place ofincorporationNature of business
Shareholding
Accountingmethod forinvestment injoint venturesor associatesDirectIndirectWeifang Port Wood Chip Terminal Co., Ltd.WeifangWeifangPort construction50.00%Equity methodShouguang Jintou Industrial Investment Partnership (Limited Partnership)ShouguangShouguangInvestment49.57%Equity methodNingbo Kaichen Huamei Equity Investment Fund Partnership (Limited Partnership)NingboNingboInvestment management40.00%Equity methodZhuhai Dechen New Third Board EquityInvestment Fund Company (Limited Partnership)ZhuhaiZhuhaiInvestment management50.00%Equity methodGoldtrust Futures Co., Ltd.ChangshaChangshaFutures35.43%Equity methodGuangdong Nanyue Bank Co., Ltd.GuangdongGuangdongBanking6.76%Equity method
(2) Key financial information of major joint ventures
Unit: RMBWeifang Port Wood Chip Terminal Co., Ltd.
Closing balance/
amount forthe period
Opening balance/
‘amount for the
prior periodCurrent assets13,917,909.5027,197,876.06Of which: Cash and cash equivalents5,343,639.644,280,737.42Non-current assets480,210,142.19489,392,605.54Total assets494,128,051.69516,590,481.60Current liabilities29,483,896.6724,865,100.48Non-current liabilities338,050,969.91357,300,969.89Total liabilities367,534,866.58382,166,070.37Minority interestEquity interest attributable to shareholders of the parent company126,593,185.11134,424,411.23Share of net assets based on shareholding63,296,592.5667,212,205.62Adjustments– Goodwill– Unrealised profit arising from intra-group transactions– Others7,636,365.127,636,365.12Carrying amount of equity investment in joint ventures70,932,957.6774,848,570.73Fair value of equity investment in joint ventures where publicly quoted prices existRevenue26,129,240.4331,433,562.91Finance expenses9,778,624.5410,778,949.56Income tax expensesNet profit-8,041,206.50-6,013,863.17Net profit from discontinued operationsOther comprehensive incomeTotal comprehensive income-8,041,206.50-6,013,863.17Dividends received from joint ventures during the year
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
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IX. Interest in Other Entities (Cont’d)
2. Interest in joint arrangements or associates (Cont
’d)
(2) Key financial information of major joint ventures (Cont
’d)Shouguang Jintou Industrial Investment Partnership(Limited Partnership)
Closing balance/amount forthe period
Opening balance/
amount forthe prior periodCurrent assets1,366,378,092.221,373,114,822.27Of which: Cash and cash equivalents98,092.2298,300.08Non-current assets992,000,000.00992,000,000.00Total assets2,358,378,092.222,365,114,822.27Current liabilities1,000.001,000.00Non-current liabilitiesTotal liabilities1,000.001,000.00Minority interestEquity interest attributable to shareholders of the parent company2,358,377,092.222,365,113,822.27Share of net assets based on shareholding1,169,033,374.351,172,372,731.02Adjustments– Goodwill– Unrealised profit arising from intra-group transactions– Others1,190,162,160.011,187,625,930.65Carrying amount of equity investment in joint ventures2,359,195,534.362,359,998,661.67Fair value of equity investment in joint ventures where publicly quoted prices existRevenueFinance expenses1,620,207.86Income tax expensesNet profit-1,620,207.86Net profit from discontinued operationsOther comprehensive incomeTotal comprehensive incomeDividends received from joint ventures during the year
INTERIM REPORT 2023
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IX. Interest in Other Entities (Cont’d)
2. Interest in joint arrangements or associates (Cont
’d)
(3) Key financial information of major associates
Unit: RMBNingbo Kaichen Huamei Equity Investment Fund Partnership(Limited Partnership)
Closing balance/amount forthe period
Opening balance/amount forthe prior periodCurrent assets4,322,919.994,330,644.90Non-current assets189,276,814.94189,276,814.94Total assets193,599,734.93193,607,459.84Current liabilities149,740.00149,740.00Non-current liabilitiesTotal liabilities149,740.00149,740.00Minority interestEquity interest attributable to shareholders of the parent company193,449,994.93193,457,719.84Share of net assets based on shareholding77,376,902.7777,379,992.61Adjustments– Goodwill– Unrealised profit arising from intra-group transactions– Others119,838,326.15119,838,326.16Carrying amount of equity investment in associates197,215,228.92197,218,318.77Fair value of equity investment in associates where publicly quoted prices existRevenueNet profit-7,724.91-8,044.64Net profit from discontinued operationsOther comprehensive incomeTotal comprehensive income-7,724.91-8,044.64Dividends received from associates during the year
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
IX. Interest in Other Entities (Cont’d)
2. Interest in joint arrangements or associates (Cont
’d)
(3) Key financial information of major associates (Cont
’d)
Zhuhai Dechen New Third Board Equity Investment Fund Company(Limited Partnership)
Closing balance/amount forthe period
Opening balance/amount forthe prior periodCurrent assets32,423,116.8242,352,069.89Non-current assets31,213,708.0031,213,708.00Total assets63,636,824.8273,565,777.89Current liabilities5,500.005,000.00Non-current liabilitiesTotal liabilities5,500.005,000.00Minority interestEquity interest attributable to shareholders of the parent company63,631,324.8273,560,777.89Share of net assets based on shareholding31,812,480.8436,776,710.91Adjustments– Goodwill– Unrealised profit arising from intra-group transactions– OthersCarrying amount of equity investment in associates31,812,480.8436,776,710.91Fair value of equity investment in associates where publicly quoted prices existRevenueNet profit71,546.93-4,006,504.95Net profit from discontinued operationsOther comprehensive incomeTotal comprehensive income71,546.93-4,006,504.95Dividends received from associates during the year
INTERIM REPORT 2023
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IX. Interest in Other Entities (Cont’d)
2. Interest in joint arrangements or associates (Cont
’d)
(3) Key financial information of major associates (Cont
’d)Goldtrust Futures Co., Ltd.
Closing balance/amount forthe period
Opening balance/amount forthe prior periodCurrent assets821,662,429.67577,035,187.04Non-current assets480,166,319.83297,668,426.77Total assets1,301,828,749.50874,703,613.81Current liabilities1,082,672,661.98665,847,237.87Non-current liabilities42,878,877.7933,761,891.27Total liabilities1,125,551,539.77699,609,129.14Minority interestEquity interest attributable to shareholders of the parent company176,277,209.73175,094,484.67Share of net assets based on shareholding62,455,015.4162,035,975.92Adjustments– Goodwill104,073,292.25104,073,292.25– Unrealised profit arising from intra-group transactions– Others11,683,737.9312,279,914.66Carrying amount of equity investment in associates178,212,045.59178,389,182.83Fair value of equity investment in associates where publicly quoted prices existRevenue29,661,817.3827,108,619.25Net profit-2,222,578.59-7,109,291.31Net profit from discontinued operationsOther comprehensive incomeTotal comprehensive income-2,222,578.59-7,109,291.31Dividends received from associates during the year
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
IX. Interest in Other Entities (Cont’d)
2. Interest in joint arrangements or associates (Cont
’d)
(3) Key financial information of major associates (Cont
’d)Guangdong Nanyue Bank Co., Ltd.
Closing balance/amount forthe period
Opening balance/amount forthe prior periodCurrent assets170,787,680,642.25153,109,778,598.66Non-current assets82,849,851,268.1374,753,438,649.12Total assets253,637,531,910.38227,863,217,247.78Current liabilities207,280,787,023.03181,929,537,932.08Non-current liabilities26,578,782,100.0926,407,317,751.35Total liabilities233,859,569,123.12208,336,855,683.43Minority interest65,996,100.7565,058,817.68Equity interest attributable to shareholders of the parent company19,711,966,686.5119,461,302,746.67Share of net assets based on shareholding1,331,543,349.671,314,611,000.54Adjustments– Goodwill– Unrealised profit arising from intra-group transactions– OthersCarrying amount of equity investment in associates1,331,543,349.671,314,611,000.54Fair value of equity investment in associates where publicly quoted prices existRevenue1,048,426,151.951,372,177,865.46Net profit222,221,106.76365,449,485.74Net profit from discontinued operationsOther comprehensive income38,565,582.8870,787,018.40Total comprehensive income260,786,689.64436,236,504.14Dividends received from associates during the year
(4) Summary financial information of non-major joint ventures and associates
Unit: RMBClosing balance/
amount forthe period
Opening balance/
amount forthe prior periodJoint ventures:
Total carrying amount of investment118,270,992.67108,688,888.42Total amount of the following items based on shareholding– Net profit10,682,104.25-3,056,784.45– Other comprehensive income– Total comprehensive income10,682,104.25-3,056,784.45Associates:
Total carrying amount of investment67,490,180.526,482,035.69Total amount of the following items based on shareholding– Net profit3,788,119.08-168,899.05– Other comprehensive income– Total comprehensive income3,788,119.08-168,899.05
INTERIM REPORT 2023
I Financial Report
X. Risk Relating to Financial Instruments
Main financial instruments of the Group include monetary funds, accounts receivable, accounts receivable financing, otherreceivables, non-current assets due within one year, other current assets, long-term receivables, bills payable, accountspayable, other payables, short-term borrowings, non-current liabilities due within one year, long-term borrowings, bondspayable, lease liabilities and long-term payables. Details of financial instruments refer to related notes. The risks associatedwith these financial instruments and the risk management policies adopted by the Company to mitigate these risks aredescribed below. The management of the Company manages and monitors these exposures to ensure that the above risksare controlled in a limited extent.
1. Risk management goals and policies
The Company aims to seek the appropriate balance between the risks and benefits in order to mitigate the adverseeffects on the Company’s financial performance from financial risk. Based on such objectives, the Company’s riskmanagement policies are established to identify and analyse the risks faced by the Company, to set appropriate risklimits and devise corresponding internal control procedures, and to monitor risks faced by the Company. Such riskmanagement policies and internal control systems are reviewed regularly to adapt to changes in market conditions andthe Company’s activities. The internal audit department of the Company undertakes both regular and ad-hoc reviews ofrisk management controls and procedures.Risks associated with the financial instrument of the Company mainly include credit risk, liquidity risk, market risk(including exchange rate risk, interest rate risk and commodity price risk).The board of directors is responsible to plan and establish the Company’s risk management structure, make riskmanagement policies and related guidelines, and supervise the implementation of risk management. The Company hasalready made risk management risks to identify and analyse risks that the Company face. These policies mentionedspecific risks, covering market, credit risk and liquidity risk etc. The Company regularly assesses market environmentand the operation of the Company changes to determine if to make alteration to risk management policy and systems.The Company’s risk management is implemented by Risk Management Committee according to the approval of theboard of directors. The Risk Management Committee works closely with other business department of the Company toidentify, evaluating and avoiding certain risks. The Company’s internal audit department will audit the risk managementcontrol and procedures regularly and report the result to audit committee of the Company.The Company spreads risks through diverse investment and business lines, and through making risk managementpolicy to reduce risks of single industry, specific area and counterpart.
(1) Credit risk
Credit risk refers to risk associated with the default of contract obligation of a transaction counterparty resulting infinancial losses to the Company.The Company manages credit risk based category. Credit risks mainly arose from bank deposit, bills receivable,accounts receivable, other receivables and long-term receivables etc.The Company’s bank deposit mainly deposits in state-owned banks and other large and medium-sized listedbanks. The Company anticipated that the bank deposit does not have significant credit risk.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
X. Risk Relating to Financial Instruments (Cont’d)
1. Risk management goals and policies (Cont
’d)
(1) Credit risk (Cont
’d)
For accounts receivables, other receivables and long-term receivables, the Company set related policies to controlexposure of credit risks. The Company evaluates client’s credit quality and set related credit period based on theclient’s financial status, credit records and other factors such as current market situation etc. The Company keepsmonitor the client’s credit record and for client with deteriorate credit records, the Company will ensure the creditrisk is under control in whole by means of written notice of payment collection, shorten or cancel credit period.The Company’s debtor spread over different industry and area. The Company continued to assess the creditevaluation to receivables and purchase credit guarantee insurance if necessary.The biggest credit risk exposure of the Company is the carrying amount of each financial asset in the balancesheet. The Company did not provide financial guarantee which resulted in credit risks.The amount of top 5 accounts receivable of the Company accounted for 33.03% (2022: 30.43%) of theCompany’s total accounts receivables. The amount of top 5 other receivable of the Company accounted for
59.52% (2022: 64.05%) of the Company
’s total other receivables.
(2) Liquidity risk
Liquidity risk refers to the risks that the Company will not be able to meet its obligations associated with itsfinancial liabilities that are settled by delivering cash or other financial assets.To manage the liquidity risk, the Company monitors and maintains a level of cash and cash equivalents to financethe Company’s operations and mitigate the effects of fluctuations in cash flows. The management of the Companymonitors the usage of bank borrowings and ensures compliance with the borrowing agreements. In the meantime,we obtain commitments from major financial institutions to provide sufficient standby funds to meet short-termand long-term funding needs.Operating cash of the Company was generated from capital and bank and other borrowings. As at 30 June 2023,the Company’s unused bank loan credit was RMB43,059.3568 million (31 December 2022: RMB42,790.5456million).
INTERIM REPORT 2023
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X. Risk Relating to Financial Instruments (Cont’d)
1. Risk management goals and policies (Cont
’d)
(2) Liquidity risk (Cont
’d)As at the end of the period, the financial assets, financial liabilities and off balance sheet guarantee held by theCompany are analysed by their maturity date as below at their remaining undiscounted contractual cash flows (inRMB’0,000):
Item
Closing balanceWithin 1year
1 to 2years
2 to 5years
over 5yearsTotalFinancial assets:
Monetary funds1,375,553.091,375,553.09Accounts receivable341,524.57341,524.57Accounts receivable financing61,479.4461,479.44Other receivables211,338.83211,338.83Long-term receivables30,774.14134,798.60165,572.74Other current assets116,088.65116,088.65Non-current assets due within one year395,340.31395,340.31Total financial assets2,501,324.8930,774.14134,798.602,666,897.63Financial liabilities:
Short-term borrowings3,494,652.713,494,652.71Bills payable353,080.38353,080.38Accounts payable397,208.26397,208.26Other payables205,933.46205,933.46Non-current liabilities due within one year435,000.57435,000.57Long-term borrowings95,041.95258,081.07136,431.61489,554.63Lease liabilities446.641,418.274,928.316,793.22Long-term payables157,089.7094,238.3548,653.02299,981.07Total financial liabilities and contingent liabilities4,885,875.38252,578.29353,737.69190,012.945,682,204.30
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
X. Risk Relating to Financial Instruments (Cont’d)
1. Risk management goals and policies (Cont
’d)
(2) Liquidity risk (Cont
’d)As at the end of the prior year, the financial assets, financial liabilities and off-balance sheet guarantee held by theCompany are analysed by their maturity date as below at their remaining undiscounted contractual cash flows (inRMB’0,000):
Item
Closing balance of the prior yearWithin 1 year1 to 2 years2 to 5 yearsOver 5 yearsTotalFinancial assets:
Monetary funds1,400,043.501,400,043.50Accounts receivable370,056.08370,056.08Accounts receivable financing92,496.0492,496.04Other receivables219,982.47219,982.47Long-term receivables139,749.8534,634.23174,384.08Other current assets79,590.3979,590.39Non-current assets due within one year492,071.00492,071.00Total financial assets2,654,239.48139,749.8534,634.232,828,623.56Financial liabilities:
Short-term borrowings3,638,504.833,638,504.83Bills payable312,859.58312,859.58Accounts payable411,496.68411,496.68Other payables185,450.80185,450.80Non-current liabilities due within one year487,609.74487,609.74Long-term borrowings102,329.00181,247.82114,646.81398,223.63Lease liabilities408.731,338.555,485.007,232.28Long-term payables169,345.00105,959.8759,653.02334,957.89Total financial liabilities and contingent liabilities5,035,921.63272,082.73288,546.24179,784.835,776,335.43The financial liabilities disclosed above are based on cash flows that are not discounted and may differ from thecarrying amount of the line items of the balance sheet.Maximum guarantee amount for signed guarantee contracts does not represent the amount to be paid.
INTERIM REPORT 2023
I Financial Report
X. Risk Relating to Financial Instruments (Cont’d)
1. Risk management goals and policies (Cont
’d)
(3) Market risk
Market risk includes interest rate risk and currency risk, refers to the risk that the fair value or future cash flow of afinancial instrument will be fluctuated due to the changes in market price.Interest rate riskInterest rate risk refers to the risk that the fair value or future cash flow of a financial instrument will be fluctuateddue to the floating rate. Interest rate risk arises from recognised interest-bearing financial instrument andunrecognised financial instrument (e.g. loan commitments).The Company’s interest rate risk arises from long-term interest-bearing liabilities including long-term borrowingand bonds payable. Financial liabilities issued at floating rate expose the Company to cash flow interest raterisk. Financial liabilities issued at fixed rate expose the Company to fair value interest rate risk. The Companydetermines the relative proportions of its fixed rate and floating rate contracts depending on the prevailing marketconditions and to maintain an appropriate combination of financial instruments at fixed rate and floating ratethrough regular reviews and monitors.The Company continuously monitors the interest rate position of the Company. The Company did not enterinto any interest rate hedging arrangements. But the management is responsible to monitor the risks of interestrate and consider to hedge significant interest risk if necessary. Increase in interest rates will increase the costof new borrowing and the interest expenses with respect to the Company’s outstanding floating rate interest-bearing borrowings, and therefore could have a material adverse effect on the Company’s financial result. Themanagement will make adjustments with reference to the latest market conditions. These adjustments mayinclude enter into interest swap agreement to mitigate its exposure to the interest rate risk.Interest bearing financial instrument held by the Company are as follows (in RMB’0,000):
Item
Balance for
the period
Balance forthe prior periodFinancial instrument with fixed interest rateFinancial liabilitiesOf which: Short-term borrowings3,494,652.713,638,504.83
Long-term borrowings489,554.63398,223.63Long-term borrowings due within one year164,102.55192,074.82Bonds payable due within one year35,000.00Total4,148,309.894,263,803.28Financial instrument with floating interest rateFinancial assetsOf which: Monetary funds183,919.23215,596.89Total183,919.23215,596.89
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
X. Risk Relating to Financial Instruments (Cont’d)
1. Risk management goals and policies (Cont
’d)
(3) Market risk (Cont
’d)Interest rate risk(Cont’d)As at 30 June 2023, if the interest rates of borrowings at floating interest rates increase or decrease by 25 basispoints with all other factors remain unchanged, the Company’s net profit and shareholders’equity will increase ordecrease by RMB103,707,700 (31 December 2022: RMB105,720,100).The financial instruments held by the Company at the reporting date expose the Company to fair value interestrate risk. This sensitivity analysis as above has been determined assuming that the change in interest rates hadoccurred at the reporting date and arisen from the recalculation of the above financial instrument issued at newinterest rates. The non-derivative tools issued at floating interest rate held by the Company at the reporting dateexpose the Company to cash flow interest rate risk. The effect to the net profit and shareholder’s equity illustratedin the sensitivity analysis as above is arisen from the effect to the annual estimate amount of interest expenses orrevenue at the floating interest rate. The analysis is performed on the same basis for prior year.Exchange rate riskExchange risk refers to the risk that the fair value or future cash flows of a financial instrument will be fluctuateddue to the changes in foreign currency rates. Foreign currency risk arises on financial instruments that aredenominated in a currency other than the functional currency in which they are measured.The principal business of the Company is situated within the PRC and is denominated in RMB. However, foreignexchange risks still exist for the assets and liabilities in foreign currencies and future foreign currency transactionsas recognised by the Company (assets and liabilities in foreign currencies and foreign currency transactions aremainly denominated in US dollar, Japanese yen, South Korean Won, Euro, Hong Kong dollar and British pound).The following table details the financial assets and liabilities held by the Company which denominated in foreigncurrencies and amounted to RMB as at 30 June 2023 are as follows (in RMB’0,000):
Item
Liabilities denominated in foreign currencyAsset denominated in foreign currency
Closingbalance
Closing balanceof the prior yearClosing balance
Closing balanceof the prior yearUSD78,991.02130,604.7050,266.4888,289.61EUR2,416.6520,033.379,218.0414,744.91HKD94.63100.71JPY735.15768.90GBP1.511.37Total81,407.67150,638.0760,315.81103,905.5The Group continuously monitors the size of the Group’s foreign currency transactions and foreign currencyassets and liabilities to minimise the foreign exchange risks it faces, and for this reason the Group may aim toavoid foreign exchange risk by signing forward foreign exchange contracts or currency swap contracts.
INTERIM REPORT 2023
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X. Risk Relating to Financial Instruments (Cont’d)
1. Risk management goals and policies (Cont
’d)
(3) Market risk (Cont
’d)
Exchange rate risk(Cont’d)
With other variables unchanged, the after-tax effect of the possible reasonable changes in the exchange rate offoreign currency to RMB on the current profit and loss of the Company is as follows (in RMB’0,000):
Increase (decrease) in after-tax profitsBalance for the periodBalance for the prior periodIncrease in exchange rate of USD5%-1,436.235%-2,115.75Decrease in exchange rate of USD-5%1,436.23-5%2,115.75Increase in exchange rate of EUR5%-340.075%-264.42Decrease in exchange rate of EUR-5%340.07-5%264.42Other price risks
Other price risks refer to the risk of fluctuations caused by changes in market prices other than exchange raterisks and interest rate risks, whether arising from factors related to a single financial instrument or its issuer, orfrom factors related to all similar financial instruments traded on the market. Other price risks can stem fromchanges in commodity prices, stock market indexes, equity instrument prices, and other risk variables.Listed equity instrument investments held by the Company classified as financial assets held for trading, othernon-current financial assets and other equity instrument investments are measured at fair value on the balancesheet date. Therefore, the Company is subject to the risk of changes in the securities market.The Company monitors closely the impact of price changes on the price risk of the Company’s investment inequity securities. The Company has not taken any measures to avoid other price risks. However, the managementis responsible for monitoring other price risks, and will consider holding multiple equity securities portfolios toreduce the price risk of equity securities investment when necessary.With other variables unchanged, the after-tax effect of the change of -32.49% (last year: -32.63%) in equitysecurities investment prices on the Company’s current profit and loss and other comprehensive income is asfollows (unit: RMB’0,000):
Item
Increase (decrease) inafter-tax profits
Increase (decrease) in othercomprehensive incomeBalance for
the period
Balance forthe prior period
Balance for
the period
Balance forthe prior periodDue to the rise in the price of equity securities
investmentDue to the decline in the price of equity securities
investment-2,427.46-3,617.77
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
X. Risk Relating to Financial Instruments (Cont’d)
2. Capital management
The objective of the Company’s capital risk management is to safeguard the Company’s ability to continue as a goingconcern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimalcapital structure to reduce the cost of capital.In order to maintain or adjust the capital structure, the Company may adjust its financing methods, adjust the numberof dividends paid to shareholders, return capital to shareholders, issue new shares or disposes assets to reduce itsliabilities.The Company monitors capital on the basis of the gearing ratio. This ratio is calculated as net liabilities divided by totalcapital. As at 30 June 2023, the Company’s gearing ratio is 72.28% (31 December 2022: 71.85%).
XI. Fair Value DisclosureBased on the inputs of the lowest level that are of great significance to the measurement as a whole in the fair valuemeasurement, the fair value can be categorised as:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.Level 2: Observable inputs other than the quoted market price of assets or liabilities in Level 1, either directly (the prices) orindirectly (derived from prices).Level 3: Any input that is not based on observable market data (unobservable inputs) is used for assets or liabilities.
1. Fair value of assets and liabilities measured at fair value as at the end of the period
Unit: RMBItem
Fair value as at the end of the periodLevel 1 fair value
measurement
Level 2 fair value
measurement
Level 3 fair value
measurementTotalI.Continuous measurement of fair value
(I) Financial assets held for trading50,433,870.5950,433,870.59
(1) Equity instrument investments50,433,870.5950,433,870.59(II) Accounts receivable financing614,794,433.04614,794,433.04(III) Other non-current financial assets785,374,459.73785,374,459.73(IV) Biological assets1,492,153,527.461,492,153,527.46
1. Consumable biological assets1,492,153,527.461,492,153,527.46Total assets continuously measured at fair value50,433,870.592,892,322,420.232,942,756,290.82In the current year, there were no transfers between Level 1 and Level 2 or transfers into or out of Level 3 for the fairvalue measurements of the Company’s financial assets and financial liabilities.
INTERIM REPORT 2023
I Financial Report
XI. Fair Value Disclosure (Cont’d)
2. Quantitative information about significant unobservable inputs used in the level 3 fair value
measurement that are significant
Unit: RMBItem
Fair value as at
the end ofthe period
ValuationtechniquesUnobservable inputsRangeEquity instrument investments:
Shandong Hongqiao Venture
Capital Co., Ltd.
77,860,000.00Cost methodConsumable biological assets:
Forestry1,492,153,527.46Replacement cost
method
Cost per mu for the first year of EucalyptusCost per mu for the first year of Pines
854.36
(RMB/tonne)
627.52
(RMB/tonne)Roll back method of market price
Unit price per tonne of Eucalyptus woodUnit price per tonne of wet pineUnit price per tonne of Chinese fir
575.00
(RMB/tonne)
572.00
(RMB/tonne)
695.00
(RMB/tonne)
XII. Related Parties and Related Party Transactions
1. Parent company of the Company
Name of parent company
Place ofincorporationBusiness nature
Registered
capital(RMB’0,000)
Shareholdingof the parent
company inthe Company
Voting rightof the parent
company inthe CompanyChenming Holdings Co., Ltd.ShouguangInvestment in manufacture of
paper, electricity, steam, andarboriculture
123,878.7727.57%27.57%
The ultimate controller of the Company is Shouguang State-owned Assets Supervision and Administration Office.
2. Subsidiaries of the Company
For details of the Company’s subsidiaries, please refer to Note IX. 1.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
XII. Related Parties and Related Party Transactions (Cont’d)
3. Joint ventures and associates of the Company
For details of material joint ventures and associates of the Company, please refer to Note IX. 2.Balance of related party transaction between the Company and its joint ventures or associates during the period or priorperiods are as follows:
Name of joint ventures or associatesRelationShouguang Chenming Huisen New-style Construction Materials Co., Ltd.A joint venture of the CompanyWeifang Port Wood Chip Terminal Co., Ltd.A joint venture of the CompanyShouguang Meite Environmental Technology Co., Ltd.A joint venture of the CompanyWeifang Xingxing United Chemical Co., Ltd.A joint venture of the CompanyChenming (Qingdao) Asset Management Co., Ltd.An associate of the CompanyGuangdong Nanyue Bank Co., Ltd.An associate of the CompanyLide Technology Co., Ltd.An associate of the CompanyOther explanation: The former name of Weifang Port Wood Chip Terminal Co., Ltd. was Weifang Sime Darby West PortCo., Ltd.
4. Other related parties
Name of other related partiesRelationShouguang Huixin Construction Materials Co., Ltd.A subsidiary of a company invested by the Directors
and Senior Management of the CompanyChen Hongguo, Hu Changqing, Li Xingchun, Li Feng, LiChuanxuan, Yuan Xikun, Li Xueqin, Li Zhenzhong, Li Weixian, Dong Lianming, etc.
Key management personnel of the Company
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
Related party
Details of relatedparty transaction
Amount for
the period
Transaction
facilityapproved
Whether the
transaction
facility isexceeded
Amount for the
prior periodWeifang Port WoodChip Terminal Co., Ltd.Port miscellaneous expenses20,317,747.45N/AN/A32,355,133.76
INTERIM REPORT 2023
I Financial Report
XII. Related Parties and Related Party Transactions (Cont’d)
5. Related party transactions (Cont
’d)
(1) Purchase and sales of goods and rendering and receiving services (Cont
’d)Table on sales of goods/providing of services
Unit: RMBRelated party
Details of relatedparty transaction
Amount forthe period
Amount forthe prior periodShouguang Chenming Huisen New-style Construction Materials Co., Ltd.Sales of electricity and steam7,876,218.228,581,891.97Shouguang Huixin Construction Materials Co., Ltd.Sales of cement, coal, oil, etc.55,815.9726,377.86
(2) Related party leasing
The Company as lessor:
Unit: RMBName of lesseeType of leased asset
Lease incomerecognised forthe current period
Lease incomerecognised forthe previous periodShouguang Meite Environmental Technology Co., Ltd.Investment property733,944.95733,944.95Chenming (Qingdao) Asset Management Co., Ltd.Housing and building structure431,707.46337,346.26Lide Technology Co., Ltd.Housing and building structure949,010.43872,208.34
(3) Related party guarantee
The Company as guarantor
Unit: RMB
Party being guaranteed
Amountunder guarantee
Commencement
date ofguarantee
Expiry dateof guarantee
Whetherperformanceof guaranteeis completedHainan Chenming Technology Co., Ltd.30,000,000.002022-9-202023-9-20NoHainan Chenming Technology Co., Ltd.50,000,000.002023-3-302024-3-30NoHainan Chenming Technology Co., Ltd.30,000,000.002022-9-202023-9-19NoHainan Chenming Technology Co., Ltd.50,000,000.002023-3-302024-3-29NoHainan Chenming Technology Co., Ltd.20,100,000.002022-9-202023-9-20NoHainan Chenming Technology Co., Ltd.100,000,000.002023-3-302023-9-28NoHainan Chenming Technology Co., Ltd.186,000,000.002023-3-292023-9-28NoHainan Chenming Technology Co., Ltd.39,600,000.002023-4-62023-10-6NoHainan Chenming Technology Co., Ltd.100,000,000.002023-5-312023-11-30NoHainan Chenming Technology Co., Ltd.56,400,000.002023-6-292023-12-29No
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
Party being guaranteed
Amountunder guarantee
Commencement
date ofguarantee
Expiry dateof guarantee
Whetherperformanceof guaranteeis completedHainan Chenming Technology Co., Ltd.30,000,000.002023-2-102023-8-10NoHainan Chenming Technology Co., Ltd.20,000,000.002023-3-162023-8-16NoHainan Chenming Technology Co., Ltd.50,050,000.002023-5-252023-11-25NoHainan Chenming Technology Co., Ltd.19,950,000.002023-5-302023-11-30NoHuanggang Chenming Pulp & Paper Co., Ltd.90,000,000.002023-4-272024/4/26NoHuanggang Chenming Pulp & Paper Co., Ltd.20,000,000.002023-5-232024/5/22NoHuanggang Chenming Pulp & Paper Co., Ltd.30,000,000.002022-7-272023/7/26NoHuanggang Chenming Pulp & Paper Co., Ltd.45,000,000.002022-8-192023/8/18NoHuanggang Chenming Pulp & Paper Co., Ltd.200,000,000.002022-8-242023/8/23NoHuanggang Chenming Pulp & Paper Co., Ltd.200,000,000.002022-12-232023/12/22NoHuanggang Chenming Pulp & Paper Co., Ltd.100,000,000.002023-1-32023/12/22NoHuanggang Chenming Pulp & Paper Co., Ltd.20,000,000.002022-8-172023/8/17NoHuanggang Chenming Pulp & Paper Co., Ltd.50,000,000.002022-9-272023/9/26NoHuanggang Chenming Pulp & Paper Co., Ltd.50,000,000.002022-10-132023/10/13NoJilin Chenming Paper Co., Ltd.8,000,000.002023-5-312023-11-27NoJilin Chenming Paper Co., Ltd.18,000,000.002023-6-272024-5-10NoJiangxi Chenming Paper Co., Ltd.10,000,000.002022-8-102023-8-7NoJiangxi Chenming Paper Co., Ltd.10,000,000.002022-8-302023-8-28NoJiangxi Chenming Paper Co., Ltd.10,000,000.002023-1-192024-1-18NoJiangxi Chenming Paper Co., Ltd.10,000,000.002022-9-92023-9-4NoJiangxi Chenming Paper Co., Ltd.30,000,000.002023-1-122023-7-9NoJiangxi Chenming Paper Co., Ltd.20,000,000.002023-1-122023-7-9NoJiangxi Chenming Paper Co., Ltd.94,000,000.002023-3-182023-9-13NoJiangxi Chenming Paper Co., Ltd.99,450,000.002023-3-182023-9-13NoJiangxi Chenming Paper Co., Ltd.800,000.002023-3-152023-9-15NoJiangxi Chenming Paper Co., Ltd.12,100,000.002023-3-222023-9-18NoJiangxi Chenming Paper Co., Ltd.13,867,900.002023-2-162023-8-16NoJiangxi Chenming Paper Co., Ltd.3,016,141.592023-3-102023-9-4NoJiangxi Chenming Paper Co., Ltd.31,000,000.002023-3-312024-9-30NoJiangxi Chenming Paper Co., Ltd.2,000,000.002023-4-122023-10-12NoJiangxi Chenming Paper Co., Ltd.70,000,000.002023-4-202024-4-19NoJiangxi Chenming Paper Co., Ltd.1,000,000.002023-5-42023-11-4NoJiangxi Chenming Paper Co., Ltd.33,000,000.002023-5-92024-9-30NoJiangxi Chenming Paper Co., Ltd.160,000,000.002023-5-242024-5-22NoJiangxi Chenming Paper Co., Ltd.60,000,000.002023-5-252024-5-22NoJiangxi Chenming Paper Co., Ltd.1,400,000.002023-6-82023-12-8NoJiangxi Chenming Paper Co., Ltd.1,650,000.002023-6-92023-9-9NoJiangxi Chenming Paper Co., Ltd.10,000,000.002023-6-122024-6-7NoJiangxi Chenming Paper Co., Ltd.30,000,000.002023-6-132024-6-11NoJiangxi Chenming Paper Co., Ltd.80,000,000.002023-6-162024-6-15No
XII. Related Parties and Related Party Transactions (Cont’d)
5. Related party transactions (Cont
’d)
(3) Related party guarantee (Cont
’d)
INTERIM REPORT 2023
I Financial Report
Party being guaranteed
Amountunder guarantee
Commencement
date ofguarantee
Expiry dateof guarantee
Whetherperformanceof guaranteeis completedJiangxi Chenming Paper Co., Ltd.50,000,000.002023-6-192024-5-22NoJiangxi Chenming Paper Co., Ltd.250,000,000.002023-6-192024-6-13NoJiangxi Chenming Paper Co., Ltd.14,002,000.002023-6-192023-12-15NoJiangxi Chenming Paper Co., Ltd.20,000,000.002023-6-202024-6-17NoJiangxi Chenming Paper Co., Ltd.20,000,000.002023-6-212024-6-17NoJiangxi Chenming Paper Co., Ltd.17,924,293.142023-6-252024-6-20NoJiangxi Chenming Paper Co., Ltd.2,550,000.002023-6-272024-9-30NoJiangxi Chenming Paper Co., Ltd.10,000,000.002023-6-292024-6-24NoJiangxi Chenming Paper Co., Ltd.250,000,000.002023-6-302024-6-28NoJiangxi Chenming Paper Co., Ltd.80,000,000.002022-7-12024-7-1NoShouguang Chenming Import and Export Trade Co., Ltd.149,995,461.942023-6-272023-12-25NoShandong Chenming Paper Sales Co., Ltd.150,000,000.002022-8-192023-8-22NoShandong Chenming Paper Sales Co., Ltd.100,000,000.002022-9-162023-9-19NoShandong Chenming Paper Sales Co., Ltd.80,000,000.002022-9-162023-9-19NoShandong Chenming Paper Sales Co., Ltd.165,854,444.582022-10-92023-10-8NoShandong Chenming Paper Sales Co., Ltd.379,780,113.162022-10-92023-10-8NoShandong Chenming Paper Sales Co., Ltd.160,000,000.002022-12-232023-12-18NoShandong Chenming Paper Sales Co., Ltd.260,000,000.002022-12-232023-12-18NoShandong Chenming Paper Sales Co., Ltd.50,000,000.002023-1-52024-1-2NoShandong Chenming Paper Sales Co., Ltd.50,000,000.002023-1-122024-1-8NoShandong Chenming Paper Sales Co., Ltd.290,525,401.172023-2-132023-8-11NoShandong Chenming Paper Sales Co., Ltd.330,033,668.832023-4-62024-4-8NoShandong Chenming Paper Sales Co., Ltd.129,933,410.352023-4-62024-4-8NoShanghai Chenming Pulp & Paper Sales Co., Ltd.5,000,000.002022-10-262023-10-25NoShanghai Chenming Pulp & Paper Sales Co., Ltd.50,000,000.002023-2-232023-8-23NoShanghai Chenming Pulp & Paper Sales Co., Ltd.10,000,000.002023-5-292024-5-25NoShanghai Chenming Pulp & Paper Sales Co., Ltd.10,000,000.002023-2-132026-2-12NoKunshan Tuoan Plastic Products Co., Ltd.10,000,000.002023/2/272023/8/26NoKunshan Tuoan Plastic Products Co., Ltd.20,000,000.002023/2/272024/2/26NoChenming (HK) Limited77,298,616.852023-5-182023-11-14NoShouguang Meilun Paper Co., Ltd.364,394,014.752023-6-192024-6-19NoShouguang Meilun Paper Co., Ltd.88,180,874.402023-6-272024-6-27NoShouguang Meilun Paper Co., Ltd.44,000,000.002022-7-312023-7-30NoShouguang Meilun Paper Co., Ltd.205,308,929.422023-1-112023-7-10NoShouguang Meilun Paper Co., Ltd.38,551,963.362023-2-82023-8-7NoShouguang Meilun Paper Co., Ltd.10,000,000.002023-2-282024-2-27NoShouguang Meilun Paper Co., Ltd.190,200,798.222023-6-192023-12-15NoShouguang Meilun Paper Co., Ltd.34,000,000.002023-4-282023-7-27No
XII. Related Parties and Related Party Transactions (Cont’d)
5. Related party transactions (Cont
’d)
(3) Related party guarantee (Cont
’d)
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
Party being guaranteed
Amountunder guarantee
Commencement
date ofguarantee
Expiry dateof guarantee
Whetherperformanceof guaranteeis completedShouguang Meilun Paper Co., Ltd.285,000,000.002023-6-292023/12/26NoShouguang Meilun Paper Co., Ltd.125,573,440.232023-1-292023-7-31NoShouguang Meilun Paper Co., Ltd.100,164,057.082022-7-292023-7-24NoShouguang Meilun Paper Co., Ltd.20,000,000.002022-8-312023-8-31NoShouguang Meilun Paper Co., Ltd.200,000,000.002023-4-252024-4-24NoZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002022-8-92023-8-8NoZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002022-8-122023-8-11NoZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002022-8-172023-8-16NoZhanjiang Chenming Pulp & Paper Co., Ltd.67,000,000.002022-8-182023-8-17NoZhanjiang Chenming Pulp & Paper Co., Ltd.59,000,000.002022-8-192023-8-18NoZhanjiang Chenming Pulp & Paper Co., Ltd.50,000,000.002022-9-142023-9-13NoZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002022-10-92023-10-8NoZhanjiang Chenming Pulp & Paper Co., Ltd.57,500,000.002022-10-182023-10-17NoZhanjiang Chenming Pulp & Paper Co., Ltd.50,000,000.002022-11-162023-11-15NoZhanjiang Chenming Pulp & Paper Co., Ltd.50,000,000.002022-11-292023-11-28NoZhanjiang Chenming Pulp & Paper Co., Ltd.47,382,000.002022-12-212023-12-8NoZhanjiang Chenming Pulp & Paper Co., Ltd.200,000,000.002023-1-122023-8-8NoZhanjiang Chenming Pulp & Paper Co., Ltd.65,000,000.002023-1-182023-7-17NoZhanjiang Chenming Pulp & Paper Co., Ltd.21,000,000.002023-1-162024-1-15NoZhanjiang Chenming Pulp & Paper Co., Ltd.50,000,000.002023-1-182023-7-17NoZhanjiang Chenming Pulp & Paper Co., Ltd.15,000,000.002023-1-202024-1-19NoZhanjiang Chenming Pulp & Paper Co., Ltd.14,000,000.002023-1-302024-1-29NoZhanjiang Chenming Pulp & Paper Co., Ltd.200,000,000.002023-2-152023-8-14NoZhanjiang Chenming Pulp & Paper Co., Ltd.125,000,000.002023-2-232024-3-20NoZhanjiang Chenming Pulp & Paper Co., Ltd.80,000,000.002023-2-232024-3-20NoZhanjiang Chenming Pulp & Paper Co., Ltd.50,000,000.002023-3-232024-3-21NoZhanjiang Chenming Pulp & Paper Co., Ltd.45,000,000.002023-3-282023-9-22NoZhanjiang Chenming Pulp & Paper Co., Ltd.50,000,000.002023-3-292023-9-29NoZhanjiang Chenming Pulp & Paper Co., Ltd.4,000,000.002023-4-32024-4-2NoZhanjiang Chenming Pulp & Paper Co., Ltd.200,000,000.002023-4-252023-10-20NoZhanjiang Chenming Pulp & Paper Co., Ltd.68,000,000.002023-4-242024-4-20NoZhanjiang Chenming Pulp & Paper Co., Ltd.120,000,000.002023-4-212024-4-19NoZhanjiang Chenming Pulp & Paper Co., Ltd.50,000,000.002023-5-62023-10-25NoZhanjiang Chenming Pulp & Paper Co., Ltd.74,500,000.002023-5-252024-5-24NoZhanjiang Chenming Pulp & Paper Co., Ltd.99,600,000.002023-5-302023-11-27NoZhanjiang Chenming Pulp & Paper Co., Ltd.50,000,000.002023-5-92023-11-9NoZhanjiang Chenming Pulp & Paper Co., Ltd.40,000,000.002023-6-92023-12-8NoZhanjiang Chenming Pulp & Paper Co., Ltd.220,000,000.002023-6-82024-5-26NoZhanjiang Chenming Pulp & Paper Co., Ltd.65,000,000.002023-6-212023-12-18No
XII. Related Parties and Related Party Transactions (Cont’d)
5. Related party transactions (Cont
’d)
(3) Related party guarantee (Cont
’d)
INTERIM REPORT 2023
I Financial Report
Party being guaranteed
Amountunder guarantee
Commencement
date ofguarantee
Expiry dateof guarantee
Whetherperformanceof guaranteeis completedZhanjiang Chenming Pulp & Paper Co., Ltd.50,000,000.002023-6-252024-6-24NoZhanjiang Chenming Pulp & Paper Co., Ltd.81,200,000.002023-6-192024-6-19NoZhanjiang Chenming Pulp & Paper Co., Ltd.70,000,000.002023-6-212024-6-20NoZhanjiang Chenming Pulp & Paper Co., Ltd.77,450,000.002020-10-162023-10-15NoZhanjiang Chenming Pulp & Paper Co., Ltd.112,450,000.002020-11-112023-11-10NoZhanjiang Chenming Pulp & Paper Co., Ltd.98,000,000.002020-12-102023-12-9NoZhanjiang Chenming Pulp & Paper Co., Ltd.98,000,000.002021-1-52024-1-4NoZhanjiang Chenming Pulp & Paper Co., Ltd.140,000,000.002021-12-232023-12-23NoZhanjiang Chenming Pulp & Paper Co., Ltd.90,000,000.002022-6-172025-6-16NoZhanjiang Chenming Pulp & Paper Co., Ltd.90,000,000.002022-6-172025-6-16NoZhanjiang Chenming Pulp & Paper Co., Ltd.90,000,000.002022-5-312024-5-30NoZhanjiang Chenming Pulp & Paper Co., Ltd.50,000,000.002022-1-262023-12-22NoZhanjiang Chenming Pulp & Paper Co., Ltd.47,000,000.002022-10-252024-10-19NoZhanjiang Chenming Pulp & Paper Co., Ltd.137,133,300.002022-6-292025-6-29NoZhanjiang Chenming Pulp & Paper Co., Ltd.93,000,000.002023-3-312026-3-29NoZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002023-6-202026-6-20NoZhanjiang Chenming Pulp & Paper Co., Ltd.180,000,000.002023-6-22026-6-20NoWeifang Port Wood Chip Terminal Co., Ltd.105,200,000.002017-12-202027-12-20NoTotal11,701,070,829.07
(4) Related party lending and borrowing
Unit: RMBRelated party
Borrowingamount
Commencement
dateExpiry dateDescriptionBorrowingChenming Holdings Co., Ltd.40,000,000.002023-1-12023-6-30Controlling
shareholder Guangdong Nanyue Bank Co., Ltd.842,600,000.002023-1-12023-6-30Associate
XII. Related Parties and Related Party Transactions (Cont’d)
5. Related party transactions (Cont
’d)
(3) Related party guarantee (Cont
’d)
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
XII. Related Parties and Related Party Transactions (Cont’d)
6. Related party accounts receivable and accounts payable
(1) Receivables
Unit: RMBItemRelated party
Closing balanceOpening balanceBook balanceBad debts provisionBook balanceBad debts provisionAccounts receivableShouguang Chenming Huisen
New-style Construction Materials Co., Ltd.
6,467,589.176,692.831,856,833.501,392.06Accounts receivableShouguang Huixin Construction
Materials Co., Ltd.
27,073.7963.66Other receivablesWeifang Port Wood Chip Terminal
Co., Ltd.
73,622,749.857,448,990.0271,722,249.853,755,227.15Accounts receivableShouguang Meite Environmental
Technology Co., Ltd.
6,782,462.481,774,117.95Payments in advanceShouguang Meite Environmental
Technology Co., Ltd.
6,370,726.99Other receivablesShouguang Meite Environmental
Technology Co., Ltd.
16,799,133.873,286,036.6918,291,242.681,779,523.20Other receivablesXuchang Chenming Paper Co., Ltd.327,400.006,791.28327,400.006,791.28
(2) Payable
Unit: RMBItemRelated party
Closing book
balance
Opening book
balanceAccounts payableWeifang Port Wood Chip Terminal Co., Ltd.7,367,747.4519,479,518.82Accounts payableShouguang Meite Environmental Technology Co., Ltd.8,382,468.95Accounts payableWeifang Xingxing United Chemical Co., Ltd.26,905,494.3426,905,494.34Other payablesWeifang Xingxing United Chemical Co., Ltd.16,860,000.0016,860,000.00Other payablesLide Technology Co., Ltd.559,897.05508,619.46Other payablesChenming (Qingdao) Asset Management Co., Ltd.115,583.42116,656.55Receipts in advanceChenming (Qingdao) Asset Management Co., Ltd.2,000.00Contract liabilitiesShouguang Huixin Construction Materials Co., Ltd.20,000.00
(3) Deposits with related parties
Unit: RMBItemRelated party
Closing book
balance
Opening book
balanceBank depositGuangdong Nanyue Bank Co., Ltd.50,022,794.1510,069,515.51Other monetary fundsGuangdong Nanyue Bank Co., Ltd.1,027,400,000.00927,400,000.00
(4) Loans from related parties
Unit: RMBItemRelated party
Closing book
balance
Opening book
balanceShort-term borrowingsGuangdong Nanyue Bank Co., Ltd.2,059,100,000.001,909,100,000.00
INTERIM REPORT 2023
I Financial Report
XIII. Share-based Payment
1. General information of share-based payment
√ Applicable Not applicable
Unit: RMBTotal equity instruments of the Company granted during the period0Total exercised equity instruments of the Company during the period0Total lapsed equity instruments of the Company during the period22,645,800.00Range of exercise prices and contractual remaining period for share options issued by the Company at the end of the period
See explanationfor detailsOther explanation: On 29 May 2020, the Resolution on the Matters Relating to Adjustments to the 2020 RestrictedA Share Incentive Scheme of the Company and the Resolution in Relation to the Grant of Restricted Shares to theParticipants were considered and approved at the tenth extraordinary meeting of ninth session of the Board and thefifth extraordinary meeting of the ninth session of the Supervisory Committee of the Company, by which 79.60 millionrestricted shares were granted. The grant date was 29 May 2020, and the fair value of the restricted shares was theex-rights price of the shares on the grant date. The Restricted Shares to be granted under the Incentive Scheme were“granted once and unlocked in batches”. For the period commencing from the first trading day after expiry of the24-month period from the date on which the registration of the grant of the Restricted Shares is completed and endingon the last trading day of the 36-month period from the date on which the registration of the grant of the RestrictedShares is completed, 40% of the Restricted Shares will be unlocked; for the period commencing from the first tradingday after expiry of the 36-month period from the date on which the registration of the grant of the Restricted Sharesis completed and ending on the last trading day of the 48-month period from the date on which the registration of thegrant of the Restricted Shares is completed, 30% of the Restricted Shares will be unlocked; for the period commencingfrom the first trading day after expiry of the 48-month period from the date on which the registration of the grant ofthe Restricted Shares is completed and ending on the last trading day of the 60-month period from the date on whichthe registration of the grant of the Restricted Shares is completed, 30% of the Restricted Shares will be unlocked.Meanwhile, during the three accounting years from 2021 to 2023, the Restricted Shares granted under the IncentiveScheme shall be subject to annual performance appraisal for unlocking (for details of specific performance evaluationconditions, please refer to the announcement of the Company). The Company estimated that the performance indicatorsfor 2023 cannot be fulfilled, and the corresponding third batch of the 30% Restricted Shares cannot be unlocked. Inaddition, 49,652,000 shares lapsed due to the resignation of some Senior Management members.
2. Equity-settled share-based payment
√ Applicable Not applicable
Unit: RMBThe method of determining the fair value of equity instrument on the grant date
Ex-right price of
grant of shareBasis for determining the quantity of exercisable equity instruments
See explanation
for detailsReasons for significant difference between the current estimate and previous estimateNilAccumulated amount of equity-settled share-based payment included in the capital reserve58,698,080.00Total amount of equity-settled share-based payment recognised in the current period-27,467,521.92Other explanation: At each balance sheet date during the vesting period, the Company, based on the latest informationsuch as the latest update on the change in the number of entitled employees, will make best estimates to adjust theexpected number of equity instruments that can be vested. As at the exercise date, the final estimated number ofexercisable equity instruments should equal the actual number of exercisable equity instruments.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
XIV. Undertaking and Contingency
1. Significant commitments
Significant commitments as at the balance sheet date
Unit: RMBCapital commitments contracted for but not yetnecessary to be recognised on the balance sheetClosing balanceOpening balanceCommitments in relation to acquisition and construction of long-term assets394,868,914.72184,833,000.27
2. Contingency
As at 30 June 2023, the Company had no contingent items such as outstanding litigation and external guarantees thatshould be disclosed.XV. Post-balance Sheet Event
1. On 11 May 2023, Shandong Chenming Paper Holdings Limited published the Announcement on the Exercise of the
Redemption Option of the 2017 First Tranche of Medium-term Notes and the Announcement on the Redemption of the2017 First Tranche of Medium-term Notes on Shanghai Clearing House (www.shclearing.com) and Chinamoney (www.chinamoney.com.cn). The Company intended to redeem“17 Lu Chenming MTN001”in full. The date of principal andinterest payment was 12 July 2023, and the amount of principal and interest payment was RMB1,089.7 million. On 12July 2023, the Company completed the payment of the principal and interest of“17 Lu Chenming MTN001”(bond code:
101779001), with a total of RMB1,089.7 million in principal and interest paid.
2. On 17 July 2023, Shandong Chenming Paper Holdings Limited convened the ninth extraordinary meeting of the tenth
session of the Board and the fifth extraordinary meeting of the tenth session of the Supervisory Committee, at which,the Resolution on Failing to Fulfil the Unlocking Conditions for the Second Unlocking Period under the 2020 Restricted AShare Incentive Scheme and Repurchase and Cancellation of Certain Restricted Shares was considered and approved.The resolution allowed the repurchase and cancellation of 22,929,000 restricted A shares of the participants that havebeen granted but not yet unlocked, including 22,593,000 restricted shares granted to 98 participants for the secondunlocking period, and 336,000 restricted shares granted to five departed staff for the third unlocking period. All therelated Directors and related Supervisors have abstained from voting. The changes in the share capital structure of theCompany after the repurchase and cancellation are as follows:
Nature of shares
Before the changeChangeAfter the changeNumber (shares)PercentageNumber (shares)Number (shares)PercentageRestricted shares59,507,5872.00%-22,929,00036,578,5871.24%Non-restricted shares2,920,234,61398.00%2,920,234,61398.76%Total number of shares2,979,742,200100.00%-22,929,0002,956,813,200100.00%XVI. Other Material Matters
1. Segment information
(1) Basis for determination and accounting policies
According to the Company’s internal organisational structure, management requirements and internal reportingsystem, the Company’s operating business is divided into 4 reporting segments. These report segments aredetermined based on the financial information required by the company’s daily internal management. Themanagement of the Group regularly evaluates the operating results of these reporting segments to determine theallocation of resources to them and evaluate their performance.
INTERIM REPORT 2023
I Financial Report
XVI. Other Material Matters (Cont’d)
1. Segment information (Cont
’d)
(1) Basis for determination and accounting policies (Cont
’d)
The Company’s reporting segments include:
(1) Machine-made paper and pulp segment, which is responsible for production and sales of machine-made
paper and pulp;
(2) Financial services segment, which provides financial services;
(3) Hotels and property rentals segment, which engages in property leasing;
(4) Other segments, which is responsible for the above segments otherwise.
Segment report information is disclosed in accordance with the accounting policies and measurement standardsadopted by each segment when reporting to management. These accounting policies and measurement basis areconsistent with the accounting policies and measurement basis used in preparing the financial statements.
(2) Financial information of reporting segment
Unit: RMBItem
Machine-madepaper and pulpFinancial services
Hotels andproperty rentalsOthersEliminationTotalRevenue39,476,912,657.97177,268,060.87131,290,586.44572,304,835.4327,792,813,359.4012,564,962,781.31Of which: revenue from external transactions12,065,096,786.1490,836,358.97118,740,344.32290,289,291.88–12,564,962,781.31Revenue from inter-segment transactions27,411,815,871.8386,431,701.9012,550,242.12282,015,543.5527,792,813,359.40–Of which: Revenue from principal activities31,384,239,458.66177,173,721.2560,933,019.69413,380,818.9319,614,791,305.7512,420,935,712.78Operating costs38,520,939,069.72126,482,676.2668,582,448.16542,328,134.8327,761,600,666.3911,496,731,662.58Of which: Costs of principal activities30,859,129,272.33126,482,676.2637,016,668.91393,758,731.5520,039,182,154.1611,377,205,194.89Operating expenses91,452,287.47145,808.0611,116,898.903,953,215.771,492.66106,666,717.54Of which: Salaries45,098,380.6772,901.733,574,025.741,621,662.12–50,366,970.26Depreciation expenses924,400.19–1,889,865.395,862.18–2,820,127.76Office expenses1,128,584.76–6,629.232,058.20–1,137,272.19Travel expenses11,756,448.3712,886.331,223.13232,659.36–12,003,217.19Selling commissions790,986.61–2,425,469.11171,028.20–3,387,483.92Rental expenses3,195,914.93––42,264.17–3,238,179.10Hospitality expenses22,702,904.4960,020.008,206.24466,166.041,492.6623,235,804.11Warehouse expenses93,953.41––335,267.44–429,220.85Others5,760,714.04–3,211,480.061,076,248.06–10,048,442.16Operating profit/(loss)-623,546,726.5539,091,841.23-61,163,817.1556,633,428.35314,949,905.92-903,935,180.04Total cost of construction inprogress incurred during the period146,009,004.57––2,509,433.97–148,518,438.54Fixed assets acquired in the current period79,181,364.03–157,609.55455,396.13–79,794,369.71Intangible assets acquired during the period24,205,100.00––––24,205,100.00Total assets152,006,775,904.4522,919,601,699.028,438,207,685.8810,515,826,833.53111,227,551,366.3082,652,860,756.58Total liabilities107,344,765,983.535,073,124,221.753,855,939,230.823,905,173,097.8460,441,256,630.3159,737,745,903.63Basis of accounting: The transfer prices between the Company’s segments are based on market prices.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements
1. Accounts receivable
(1) Disclosure of accounts receivable by category
Unit: RMB
Category
Closing balanceOpening balanceBook balanceBad debts provision
Carrying amount
Book balanceBad debts provision
Carrying amountAmountPercentage(%)Amount
Provisionpercentage(%)Amount
Percentage
(%)Amount
Provisionpercentage(%)Accounts receivable assessed individually for bad debt provisionAccounts receivable assessed collectively for bad debt provision2,524,824,903.83100.004,565,784.220.182,520,259,119.61139,392,924.13100.004,637,396.403.33134,755,527.73Of which:
Due from related party customers2,512,278,523.2699.506,658.130.002,512,271,865.13101,246,295.7472.63101,246,295.74Due from non-related party customers12,546,380.570.504,559,126.0936.347,987,254.4838,146,628.3927.374,637,396.4012.1633,509,231.99Total2,524,824,903.83100.004,565,784.220.182,520,259,119.61139,392,924.13100.004,637,396.403.33134,755,527.73
INTERIM REPORT 2023
I Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
1. Accounts receivable (Cont
’d)
(1) Disclosure of accounts receivable by category (Cont
’d)Items assessed collectively for bad debt provision: Due from related party customers
Unit: RMBName
Closing balanceBook balance
Bad debtsprovision
Provisionpercentage (%)Within 1 year2,512,278,523.266,658.130.00Total2,512,278,523.266,658.130.00
Items assessed collectively for bad debt provision: Receivables from non-related party customer
Unit: RMBName
Closing balanceBook balance
Bad debtsprovision
Provisionpercentage (%)Within 1 year8,043,559.4056,304.920.701 to 2 years2 to 3 yearsOver 3 years4,502,821.174,502,821.17100.00Total12,546,380.574,559,126.0936.34
Disclosure by ageing
Unit: RMBAgeingClosing balanceWithin 1 year (including 1 year)2,520,322,082.661 to 2 years2 to 3 yearsOver 3 years4,502,821.17Subtotal2,524,824,903.83Less: Bad debt provision4,565,784.22Total2,520,259,119.61
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
1. Accounts receivable (Cont
’d)
(2) Provision, recovery or reversal of bad debt provision for the period
Bad debt provision for the period:
Unit: RMBCategory
Openingbalance
Changes in the period
Closing
balanceProvisionRecoveryor reversalWrite-offOthersBad debt provision4,637,396.4071,612.184,565,784.22Total4,637,396.4071,612.184,565,784.22
(3) Top five accounts receivable based on closing balance of debtors
The total amount of top five accounts receivable based on closing balance of debtors for the period amountedto RMB2,511,327,361.34 in total, accounting for 99.47% of the total closing balance of accounts receivable. Theclosing balance of the corresponding bad debt provision amounted to RMB0.00 in total.
Unit: RMB
Name of entity
Closing balance
of accounts
receivable
Percentage to
total closing
balance of
accountsreceivable
Closing balance
of bad debt
provisionCustomer I1,417,896,807.6256.16Customer II1,000,000,000.0039.61Customer III72,800,000.002.88Customer IV10,630,553.720.42Customer V10,000,000.000.40Total2,511,327,361.3499.47
INTERIM REPORT 2023
I Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
2. Other receivables
Unit: RMBItemClosing balanceOpening balanceOther receivables8,352,806,067.279,337,019,470.13Total8,352,806,067.279,337,019,470.13
(1) Other receivables by nature
Unit: RMBNature
Closing bookbalance
Opening book
balanceOpen credit8,415,914,078.759,391,199,670.38Reserve and borrowings20,758,876.6015,112,113.60Guarantee deposit and deposit730,500.00850,000.00Others4,908,983.5713,027,863.16Total8,442,312,438.929,420,189,647.14
(2) Particulars of bad debt provision
Unit: RMB
Bad debts provision
Stage 1Stage 2Stage 3
TotalECLs for thenext 12 months
Lifetime ECLs
(not credit-
impaired)
Lifetime ECLs
(credit-impaired)Balance as at 1 January 202334,208,745.7348,961,431.2883,170,177.01Balance as at 1 January 2023 for the period– Transferred to stage 2– Transferred to stage 3– Reversed to stage 2– Reversed to stage 1Provision for the period5,914,844.93421,349.716,336,194.64Reversal for the periodTransfer for the periodWrite-off for the periodOther changesBalance as at 30 June 202340,123,590.6649,382,780.9989,506,371.65
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
2. Other receivables (Cont
’d)
(2) Particulars of bad debt provision (Cont
’d)
Changes in carrying book balances with significant changes in loss provision for the period Applicable √ Not applicableDisclosure by ageing
Unit: RMBAgeingClosing balanceWithin 1 year (including 1 year)8,290,851,749.531 to 2 years68,570,416.652 to 3 years3,547,424.94Over 3 years79,342,847.80Total8,442,312,438.92
(3) Provision, recovery or reversal of bad debt provision for the period
Bad debt provision for the period:
Unit: RMBCategory
Openingbalance
Changes in the period
Closing balanceProvisionRecoveryor reversalWrite-offOthersOther receivables83,170,177.016,336,194.6489,506,371.65Total83,170,177.016,336,194.6489,506,371.65
INTERIM REPORT 2023
I Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
2. Other receivables (Cont
’d)
(4) Top five accounts receivable based on closing balance of debtors
The total amount of top five other receivables based on closing balance of debtors for the period amountedto RMB4,443,181,018.88 in total, accounting for 52.64% of the total closing balance of other receivables. Theclosing balance of the corresponding bad debt provision amounted to RMB0.00 in total.
Unit: RMB
Name of entityNatureClosing balanceAgeing
Percentageto total closingbalance of otherreceivables
Closing balanceof bad debtprovisionCustomer IOpen credit1,277,000,000.00Within 1 year15.13%Customer IIOpen credit1,047,280,075.00Within 1 year12.41%Customer IIIOpen credit921,800,000.00Within 1 year10.92%Customer IVOpen credit709,692,418.87Within 1 year8.41%Customer VOpen credit487,408,525.01Within 1 year5.77%Total4,443,181,018.8852.64%
3. Long-term equity investments
Unit: RMBItem
Closing balanceOpening balanceBook balance
ImpairmentprovisionBook valueBook balance
ImpairmentprovisionBook valueInvestment in subsidiaries18,571,694,740.8118,571,694,740.8118,502,944,740.8118,502,944,740.81Investment in associates and joint ventures320,282,894.095,994,545.96314,288,348.13329,212,841.485,994,545.96323,218,295.52Total18,891,977,634.905,994,545.9618,885,983,088.9418,832,157,582.295,994,545.9618,826,163,036.33
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
3. Long-term equity investments (Cont
’d)
(1) Investment in subsidiaries
Unit: RMB
Investee
Openingbalance(Book value)
Change for the periodClosing
balance(book value)
Closingbalance ofimpairment
provisionAdditionalcontribution
Withdrawncontribution
Impairment
provisionOthersChenming Paper Korea Co., Ltd.6,143,400.006,143,400.00Chenming GmbH4,083,235.004,083,235.00Hailaer Chenming Paper Co., Ltd.12,000,000.0012,000,000.00Huanggang Chenming Pulp & Paper Co., Ltd.2,350,000,000.002,350,000,000.00Huanggang Chenming Arboriculture Development Co., Ltd.70,000,000.0070,000,000.00Jinan Chenming Investment and Management Co., Ltd.100,000,000.00100,000,000.00Wuhan Chenming Hanyang Paper Holdings Co., Ltd.264,493,210.21264,493,210.21Shandong Grand View Hotel Co., Ltd.80,500,000.0080,500,000.00Zhanjiang Chenming Pulp & Paper Co., Ltd.5,137,500,000.0068,750,000.005,206,250,000.00Shouguang Chenming Modern Logistic Co., Ltd.10,000,000.0010,000,000.00Shouguang Chenming Art Paper Co., Ltd.113,616,063.80113,616,063.80Shouguang Meilun Paper Co., Ltd.4,449,441,979.314,449,441,979.31Shouguang Shun Da Customs Declaration Co, Ltd.1,500,000.001,500,000.00Shandong Chenming Paper Sales Co., Ltd.762,641,208.20762,641,208.20Shouguang Chenming Import and Export Trade Co., Ltd.250,000,000.00250,000,000.00Shouguang Chenming Papermaking Machine Co., Ltd.2,000,000.002,000,000.00Shouguang Hongxiang Printing and Packaging Co., Ltd.3,730,000.003,730,000.00Shandong Chenming Group Finance Co., Ltd.4,000,000,000.004,000,000,000.00Chenming Arboriculture Co., Ltd.45,000,000.0045,000,000.00Chenming Paper United States Co., Ltd.6,407,800.006,407,800.00Weifang Chenming Growth DriverReplacement Equity Investment Fund Partnership (Limited Partnership)592,500,340.53592,500,340.53Weifang Chendu Equity Investment Partnership (Limited Partnership)241,387,503.76241,387,503.76Total18,502,944,740.8168,750,000.0018,571,694,740.81
INTERIM REPORT 2023
I Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
3. Long-term equity investments (Cont
’d)
(2) Investment in associates and joint ventures
Unit: RMB
Investee
Openingbalance(book value)
Change for the period
Closingbalance(book value)
Closingbalance ofimpairmentprovisionAdditionalcontribution
Withdrawncontribution
Investmentgain or lossrecognisedunder equitymethodAdjustmentof othercomprehensive
income
Other change
in equityinterest
Distribution
of cashdividend or
profit
declared
Impairment
provisionOthersI. AssociatesZhuhai Dechen New Third Board EquityInvestment Fund Company (Limited Partnership)36,776,710.915,000,000.0035,769.9331,812,480.84Ningbo Kaichen Huamei Equity Investment Fund Partnership (Limited Partnership)197,218,318.77-3,089.85197,215,228.92Chenming (Qingdao) Asset Management Co., Ltd.6,482,035.6927,510.926,509,546.61Xuchang Chenming Paper Co., Ltd.0.005,994,545.96Subtotal240,477,065.375,000,000.0060,191.00235,537,256.375,994,545.96II. Joint venturesShouguang Chenming Huisen New-style Construction Materials Co., Ltd.7,892,659.421,025,474.671,100,000.007,818,134.09Weifang Port Wood Chip Terminal Co., Ltd.74,848,570.73-3,915,613.0670,932,957.67Subtotal82,741,230.15-2,890,138.391,100,000.0078,751,091.76Total323,218,295.525,000,000.00-2,829,947.391,100,000.00314,288,348.135,994,545.96
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
4. Revenue and operating costs
Unit: RMBItem
Amount for the periodAmount for the prior periodRevenueCostsRevenueCostsPrincipal activities2,588,800,023.672,692,576,337.913,140,980,202.712,884,740,920.89Other activities1,315,784,940.431,054,300,999.17605,682,653.79496,489,124.84Total3,904,584,964.103,746,877,337.083,746,662,856.503,381,230,045.73Information related to revenue:
Unit: RMBCategory of contractMachine-made paperOthersTotalType of goods2,588,800,023.671,315,784,940.433,904,584,964.10Including:
Machine-made paper2,228,816,873.672,228,816,873.67 Material sales1,038,125,689.111,038,125,689.11 Leasing8,728,934.628,728,934.62 Others359,983,150.00268,930,316.70628,913,466.70 By geographical area2,588,800,023.671,315,784,940.433,904,584,964.10Including:
Mainland China2,588,800,023.671,315,784,940.433,904,584,964.10 Other countries and regions By the timing of delivery2,588,800,023.671,315,784,940.433,904,584,964.10Including:
Goods (at a point in time)2,588,800,023.671,307,056,005.813,895,856,029.48 Services (within a certain period) Leasing income8,728,934.628,728,934.62Information related to the transaction price allocated to the remaining performance obligations:
As at the end of the reporting period, the amount of income corresponding to the agreements that have been enteredinto but have not yet fulfilled or not fully fulfilled their performance obligations amounted to RMB4,188,916,529.77,which is expected to be recognised in 2023.
INTERIM REPORT 2023
I Financial Report
XVII. Major Item Notes of the Parent Company’s Financial Statements (Cont’d)
5. Investment income
Unit: RMBItem
Amount forthe period
Amount forthe prior periodIncome from long-term equity investments accounted for using the cost method80,000,000.00270,000,000.00Income from long-term equity investments accounted for using the equity method-2,829,947.39-5,337,689.31Investment gain on disposal of long-term equity investments630,212.77751,679.56Investment gain on holding other non-current financial assets2,800,000.00Investment gain on derecognition of financial assets-22,621,312.74-30,954,557.50Total55,178,952.64237,259,432.75
XVIII. Supplementary information
1. Breakdown of extraordinary gains or losses for the current period
√ Applicable Not applicable
Unit: RMBItemAmountRemarkProfit or loss from disposal of non-current assets (including write-off of provision for assets impairment)9,118,027.05Government grants (except for the government grants closely related tothe normal operation of the Company and granted constantly at a fixedamount or quantity in accordance with a certain standard based on state policies) accounted for in profit or loss for the current period108,155,697.19Profit or loss from debt restructuring-145,995.36Except for effective hedging business conducted in the ordinary courseof business of the Company, gain or loss arising from the change infair value of financial assets held for trading and financial liabilities heldfor trading, as well as investment gains from disposal of financial assetsheld for trading, financial liabilities held for trading and financial assets available for sale-25,565,577.25Reversal of provision for impairment of receivables individually tested for impairment68,586,443.66Gain or loss arising from fair value change of consumable biological assets subsequently measured at fair value5,749,779.42Other gain or loss items within the definition of extraordinary gain or loss443,855.10Less: Effect of income tax39,664,063.42Effect of minority interest (after tax)2,919,113.00Total123,759,053.39
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2023
I Financial Report
XVIII. Supplementary information (Cont’d)
1. Breakdown of extraordinary gains or losses for the current period (Cont
’d)Other profit or loss items consistent with the definition of extraordinary items:
Applicable √ Not applicableThe Company does not have other profit or loss items consistent with the definition of extraordinary items.Explanation on classification of non-recurring profit and loss listed in Explanatory Announcement No. 1 on InformationDisclosure of Companies Offering Their Securities to the Public – Non-recurring Profit and Loss as non-recurring profitand loss Applicable √ Not applicable
2. Return on net assets and earnings per share
Profit for the reporting period
Rate of returnon net assetson weightedaverage basis
Earnings per share
Basic(RMB per share)
Diluted(RMB per share)Net profit attributable to ordinary shareholders of the Company-4.15%-0.250-0.250Net profit after extraordinary gains or lossesattributable to ordinary shareholders of the Company-4.85%-0.292-0.292Data specification: The net profit attributable to shareholders of the Company does not exclude the effect of the interestpayment deferred and accumulated to subsequent periods for Perpetual Bonds. When calculating financial indicatorssuch as earnings per share and rate of return on weighted average net assets, the interest on Perpetual Bonds ofRMB44,481,369.86 during the reporting period is deducted.
3. Accounting data difference under accounting standard at home and abroad
(1) Differences of net profit and net assets disclosed in financial reports prepared under IAS and Chinese
accounting standards Applicable √ Not applicable
(2) Differences of net profit and net assets disclosed in financial reports prepared under oversea and Chinese
accounting standards Applicable √ Not applicable
The Board of Shandong Chenming Paper Holdings Limited
30 August 2023