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晨鸣B:2018年半年度报告(英文版) 下载公告
公告日期:2018-08-28

Shandong Chenming Paper Holdings Limited

2018 Interim Report

August 2018

I Important Notice, Table of Contents and Definitions

The board of directors (the “Board”), the supervisory committee (the“Supervisory Committee”) and the directors (the “Directors”), the supervisors

(the “Supervisors”) and the senior management (the “Senior Management”) of

the Company hereby warrant the truthfulness, accuracy and completeness of thecontents of the interim report (the “Report”), guarantee that there are no falserepresentations, misleading statements or material omissions contained in theReport, and are jointly and severally responsible for the liabilities associatedwith the Report.

Chen Hongguo, head of the Company, Hu Jinbao, head in charge ofaccounting, and Zhang Bo, head of the accounting department (AccountingOfficer), declare that they warrant the truthfulness, accuracy and completenessof the financial statements in the interim report.

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

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

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

Table of Contents

2018 Interim Report............................................................................................ 错误!未定义书签。I Important Notice, Table of Contents and Definitions ................................... 错误!未定义书签。II Company Profile and Key Financial Indicators .......................................... 错误!未定义书签。III Business Overview ......................................................................................... 错误!未定义书签。IV Discussion and Analysis of Operations ........................................................ 错误!未定义书签。

V Material Matters ...... 41

VI Changes in Share Capital and Shareholders .............................................. 错误!未定义书签。VII Preference Shares ......................................................................................... 错误!未定义书签。VIII Directors, Supervisors and Senior Management ..................................... 错误!未定义书签。IX Corporate Bonds ............................................................................................ 错误!未定义书签。X Financial Report .............................................................................................. 错误!未定义书签。XI Documents Available for Inspection ............................................................. 错误!未定义书签。

Definitions

Item meansDefinitionCompany, Group, Chenming Group orChenming Paper

meansShandong Chenming Paper Holdings Limited and its subsidiariesParent Company or Shouguang Headquarters meansShandong Chenming Paper Holdings Limited

Chenming Holdings meansChenming Holdings Company LimitedShenzhen Stock Exchange meansShenzhen Stock ExchangeStock Exchange meansThe Stock Exchange of Hong KongCSRC meansChina Securities Regulatory CommissionShandong CSRC meansShandong branch of China Securities Regulatory CommissionZhanjiang Chenming meansZhanjiang Chenming Pulp & Paper Co., Ltd.Jiangxi Chenming meansJiangxi Chenming Paper Co., Ltd.Huanggang Chenming meansHuanggang Chenming Pulp & Paper Co., Ltd.Wuhan Chenming meansWuhan Chenming Hanyang Paper Holdings Co., Ltd.Chenming (HK) meansChenming (HK) LimitedHaiming Mining meansHaicheng Haiming Mining Company LimitedJilin Chenming meansJilin Chenming Paper Co., Ltd.Shouguang Meilun meansShouguang Meilun Paper Co., Ltd.Chenming Sales Company meansShandong Chenming Paper Sales Company LimitedFinance Company meansShandong Chenming Group Finance Co., Ltd.Financial Leasing Company meansShandong Chenming Financial Leasing Co., Ltd.Shanghai Chenming meansShanghai Chenming Industry Co., Ltd.the reporting period meansThe period from 1 January 2018 to 30 June 2018the beginning of the year or the period means1 January 2018the end of the interim period or the period means30 June 2018

II Company Profile and Key Financial Indicators

I. Company profile

Stock abbreviation晨鳴紙業, 晨鳴BStock code000488、200488

Stock abbreviation晨鳴優01, 晨鳴優02 and 晨鳴優03Stock code140003、140004、140005

Stock exchanges on which theshares are listed

Shenzhen Stock ExchangeStock abbreviation Chenming Paper Stock code 01812Stock exchanges on which the

shares are listed

The Stock Exchange of Hong Kong LimitedLegal name in Chinese of the

Company

山東晨鳴紙業集團股份有限公司Legal short name in Chinese

of the Company (if any)

晨鳴紙業Legal name in English of the

Company (if any)

SHANDONG CHENMING PAPER HOLDINGS LIMITEDLegal short name in English of

the Company (if any)

SCPHLegal representative of the

Company

Chen Hongguo

II. Contact persons and contact methods

Secretary to the Board Securities Affairs RepresentativeHong Kong Company Secretary

Name Yuan Xikun Zhao XiaotongPoon Shiu Cheong

CorrespondenceAddress

No. 2199 East Nongsheng Road,Shouguang City, Shandong Province

No. 2199 East Nongsheng Road,Shouguang City, Shandong Province

22nd Floor, World Wide House,Central, Hong KongTelephone (86)-0536-2158008 (86)-0536-2158008(852) 2501 0088

Facsimile (86)-0536-2158977 (86)-0536-2158977(852) 2501 0028

Email address chenmmingpaper@163.com chenmmingpaper@163.comKentpoon_1009@yahoo.com.hk

III. Other information

1. Contact methods of the Company

Whether the registered address, office address, postal code, website, email of the Company changed during the reporting period□ Applicable √ Not applicableThere was no change of the registered address, office address, postal code, website and email of the Company during the reportingperiod. Please refer to 2017 Annual Report for details.

2. Information disclosure and places for inspection

Whether the information disclosure and places for inspection changed during the reporting period□ Applicable √ Not applicableThere was no change of the newspapers designated by the Company for information disclosure, designate d websites for thepublication of the Interim Report as approved by CSRC and places for inspection of the Company’s Interim Report during the

reporting period. Please refer to 2017 Annual Report for details.

IV. Major accounting data and financial indicators

Retrospective adjustment to or restatement of the accounting data for prior years by the Company□ Yes √ No

The reporting period

The correspondingperiod of the prior year

Increase/decrease for the reporting

period as compared to thecorresponding period of the pr ior

yearRevenue (RMB) 15,551,334,039.8913,749,235,007.2413.11%Net profit attributable to shareholders of the Company(RMB)

1,784,631,025.311,745,514,838.232.24%

Net profit after extraordinary gains or losses attributableto shareholders of the Company (RMB)

1,537,896,765.441,623,294,558.21-5.26%Net cash flows from operating activities (RMB) 4,745,037,920.91-4,112,941,768.39215.37%Basic earnings per share (RMB per share) 0.360.50-28.00%Diluted earnings per share (RMB per share) 0.360.50-28.00%Rate of return on net assets on weighted average basis 5.77%7.24%-1.47%

As at the end of the

reporting period

As at the end of the prior

year

Increase/decrease as at the end ofthe reporting period as compared to

the end of the prior yearTotal assets (RMB) 107,076,479,252.92105,625,096,076.921.37%Net assets attributable to shareholders of the Company(RMB)

27,677,164,106.0227,778,529,074.90-0.36%

Explanation:

Net profit attributable to shareholders of the Company does not exclude the effect of interest of perpetual bonds and the ①dividends of preference shares paid and declared to be paid. When calculating financial indicators such as earnings per share and therate of return on net assets on weighted average basis, the interest for perpetual bonds from 1 January 2018 to 30 June 2018 ofRMB172,143,397.26 and the dividend on preference shares paid and declared to be paid in 2018 of RMB562,816,006.80 arededucted.② Pursuant to the profit distribution plan of the Company for 2017 approved at the 2017 annual general meeting, based on thetotal ordinary share capital of 1,936,405,467 shares as at the end of 2017, a cash dividend of RMB6 (tax inclusive) per 10 shares wasdistributed to ordinary shareholders and a capitalisation issue to ordinary shareholders was made out of the capital reserves of 5shares for every 10 shares held. The share capital of the Company increased by 968,202,733 shares. Corresponding adjustments werealso made to the earnings per share for the same period last year.

V. Differences in accounting data under domestic and overseas accounting standards

1. Differences between the net profit and net assets disclosed in accordance with international accountingstandards and China accounting standards in the financial report

□ Applicable √ Not applicableThere was no difference between the net profit and net assets disclosed in accordance with international accounting standards andChina accounting standards in the financial report during the reporting period.

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

□ Applicable √ Not applicableThere was no difference between the net profit and net assets disclosed in accordance with overseas accounting standards and Chinaaccounting standards in the financial report during the reporting period.

VI. Items and amounts of extraordinary gains or losses

√ Applicable □ Not applicable

Unit: RMBItem Amount ExplanationProfit or loss from disposal of non-current assets (including write-off of assetimpairment provision)

11,507,523.25Government grants (except for the government grants closely related to the normal

operation of the company and granted constantly at a fixed amount or quantity inaccordance with a certain standard based on state policies) accounted for in profit orloss for the current period

239,364,403.83Except for effective hedging business conducted in the ordinary course of business of

the Company, gain or loss arising from the change in fair value of financial assetsheld for trading and financial liabilities held for trading, as well as investment gainsfrom disposal of financial assets held for trading and financial liabilities held fortrading and available-for-sale financial assets

61,750,000.00

Non-operating gains and losses other than the above items 6,630,471.21Gain or loss from changes in fair value of consumable biological assets subsequentlymeasured at fair value

-23,973,841.55Less: Effect of income tax 48,149,545.22

Effect of minority interests (after tax) 394,751.65Total 246,734,259.87 --Notes for the Company‘s extraordinary gain or loss items as defined in the Explanatory Announcement on Information Disclosure forCompanies Offering Their Securities to the Public No.1 - Extraordinary Gains or Losses and the extraordinary gain or loss items asillustrated in the Explanatory Announcement on Information Disclosure for Companies Offering Their Securities to the Public No.1 -Extraordinary Gains or Losses defined as its recurring gain or loss items□ Applicable √ Not applicableNo extraordinary gain or loss items as defined or illustrated in the Explanatory Announcement on Information Disclosure forCompanies Offering Their Securities to the Public No.1 - Extraordinary Gains or Losses were defined by the Company as itsrecurring gain or loss items during the reporting period.

III Business Overview

I. Principal operations of the Company during the Reporting Period

Whether the Company needs to comply with the disclosure requirements of specific industriesNo(I) Principal operations of the Company during the reporting PeriodThe Company is a large conglomerate principally engaged in pulp production, paper making, finance and fibre while also developingforestry, mining and logistics. The Company is the only listed company with A shares, B shares, H shares and preference shares in issue inthe PRC, the first industrial and financing company in the industry having a finance company and a financial leasing company and among thetop 100 listed companies of the PRC, having maintained a leading position among its industry peers for over 20 consecutive years in terms ofits main indicators of corporate economic efficiency. The machine-made paper business is the principal business of the Company while themachine-made paper business and financial leasing business are the main sources of revenue and profit of the Company. During the reportingperiod, there was no significant change in the principal operations of the Company.The Company is a leading player in the paper making industry in China. Since its establishment, the Company has abided by thecorporate mission of “revitalizing the national paper-making industry” and the corporate vision of building "a RMB100 billion companywith a history of 100 years". Deepening in its principal business of paper making, the Company has established production bases inShandong, Guangdong, Hubei, Jiangxi and Jilin with annual pulp and paper production capacity of over 10 million tonnes. It has the largestintegrated forestry, pulp and paper project with the most advanced technology in the world and dozens of pulp and paper production lines ofinternational advanced standards. The product mix of the Company has gradually diversified into eight major product series which focus onhigh and middle end products, including high-end offset paper, coated paper, white paper board, light weight coated paper, household paper,electrostatic copy paper, thermal paper and glassine paper, with each major product ranking among the best in terms of market share. TheCompany has the most diversified and complete set of product offering among the paper-making companies of the PRC, with considerablemarket competitiveness, bargaining power and risk resistance capacity.The Company has scientific research institutions including the national enterprise technology centre, the postdoctoral working station aswell as state certified CNAS pulp and paper testing centre and has obtained over 150 national patents including 12 patents for invention, with7 products selected as national new products and 35 products filling the gap in China. The Company has obtained 21 Science andTechnology Progress Awards above the provincial level and undertaken five national science and technology projects and 26 provincialtechnological innovation projects. The Company has obtained the ISO9001 quality certification, ISO14001 environmental protectioncertification and FSC-COC certification, leading among its industry peers.Relying on strong capital strength of the Company and leveraging its excellent business project design ability, strong ability in creditintegration and outstanding risk control capability while giving full play to the advantages of internationalisation and market-orientedoperations, Chenming Leasing has been seeking the organic combination between industrial capital and financial capital and, on the basis ofserving the upper- and lower-stream of the paper making industry, actively provides financing and value-added service solutions to largestate-owned enterprises, listed companies, government financing platforms, quality private enterprises, new and high-tech enterprises,schools and hospitals, thus greatly promoting the healthy and rapid development of the real economy.(II) General information of the industries where the Company operated in during the reporting periodThe paper making industry is an important basic raw materials industry which is closely related to the national economy and socialdevelopment. In recent years, the supply and demand of the paper making industry grew at a steady pace, creating a relatively stableproduction and marketing environment. According to the 2017 Annual Report of the Paper Making Industry of China (《中國造紙業2017年年度報告》), in 2017, there were approximately 2,800 companies engaged in the production and paper and paper board in the PRC, with anationwide paper and paper board production volume of 111,300,000 tonnes, representing a year-on-year increase of 2.53%; and aconsumption volume of 108,970,000 tonnes, representing a year-on-year increase of 4.59%.Since the implementation of the “Thirteenth Five Year Plan”, the paper making industry has been subject to stricter environmentalrequirements with elevated government focus on “clear water and green hills”. The successive implementation of environmentalprotection inspections, licensing system for pollutant discharge and others reflected that more stringent environmental protection measureswill become a prolonged trend in the industry. Certain provinces and cities promulgated, among others, air pollution prevention programsand major pollutant emission reduction programs, signalling enhanced supervision of local governments over the pollution discharge ofpaper making companies. Driven by the supply-side reform and under the overlapping effect of stricter environment protection policies,more severe limit on import quota of waste paper and closer inspection, cost pressure will force certain small and medium-sized enterprisesto exit the market, thereby further increasing the industry concentration ratio. On the other hand, leading enterprises, with obvious costadvantages and high cost transferability, will enjoy further increase in profitability and gradual growth in market share. In particular, thelarge leading enterprises having comprehensive environmental facilities with significant economies of scale will become the actualbeneficiaries under these environmental protection policies.Since initiating the forestry, pulp and paper integration strategic layout since 2001, the Company has enjoyed relatively high wood pulpself-sufficiency rate in the domestic paper making industry. On one hand, self-produced pulp enjoys significant cost advantage overpurchased wood pulp, which enables the gross profit of the Company’s paper products to consistently rank among the top of the industry;on the other hand, the price of wood chips, the raw material for pulp making, is relatively stable, therefore, the procurement advantage ofbulk supplies and the application of ancillary logistics services have significantly reduced the logistics and transportation costs of rawmaterial and finished products, considerably increasing the Company’s cost advantage and quality stability.

II. Material Changes of Major Assets

1. Material Changes of Major Assets

Major assets DescriptionEquity

During the reporting period, the Company acquired 14.2742% equity interest in Wuhan Chenming and 30% equity interest inShanghai Hongtai from minority shareholders, and disposed of equity investment of 50% in Guangdong Dejun and 30% inXuchang Chenming.

Fixed assets

During the reporting period, the phase I of Haiming mining project of a subsidiary was reclassified as assets so fixed assetsincreased by RMB582 million. As the shareholding in Xuchang Chenming decreased from 60% to 30%, Xuchang Chenmingwas excluded from scope of consolidation, and fixed assets decreased accordingly.

Intangible assets

During the reporting period, as the shareholding in Xuchang Chenming decreased from 60% to 30%, Xuchang Chenming wasexcluded from scope of consolidation, and intangible assets decreased accordingly.

Construction inprogress

During the reporting period, the phase I of Haiming mining project of a subsidiary was re classified as assets so construction inprogress decreased by RMB582 million. Continued investment was made in the Huanggang integrated forestry, pulp andpaper project, the Meilun new cultural paper project and the newsprint machinery-to-cultural paper machinery transformationproject.

2. Major Assets Overseas

□ Applicable √ Not applicable

III. Analysis of liquidity, financial resources and capital structure disclosed in accordancewith the listing rules of the Hong Kong Stock Exchange

As at 30 June 2018, the Group’s current ratio was 86.70%. The quick ratio was 75.88%. The gearing ratio was 72.95%. Theaccounts receivable turnover ratio was 461.44% (Accounts receivable turnover ratio = turnover/weighted average accounts receivableand net bills*100%). The inventory turnover ratio was 413.94% (Inventory turnover ratio = cost of sales of the products/weightedaverage net inventory*100%).

There was no significant seasonal trend for capital requirements of the Group.The Group’s sources of capital primarily came from cash generated from operating activities, borrowings from financialinstitutions, open issuance of corporate bonds in the capital market, as well as issuance of privately placed bonds, medium-term notesand short-term commercial paper in the interbank market.

As at 30 June 2018, the total bank borrowings, corporate bonds, short-term commercial paper and medium-term notes andfinancial management of the Group were RMB46,351 million, RMB2,097 million, RMB10,161 million and RMB1,920 million,respectively (As at the end of the prior year: the total bank borrowings, corporate bonds, financial management and short-termcommercial paper of the Group were RMB46,368 million, RMB2,196 million, RMB250 million and RMB10,797 million,respectively). As at 30 June 2018, the Group had monetary funds of RMB18,221 million (As at the end of the prior year:

RMB14,443 million) in total (For the breakdown of monetary funds, please refer to “Section X. VII. 1 Note on Monetary Funds” inthis report).

To strengthen our financial management, the Group established and optimised its strict internal control system on cash andcapital management. The liquidity and repayment ability of the Group were in a good condition. As at 30 June 2018, the Group had15,009 employees. The total staff remuneration for the first half of 2018 amounted to RMB636.7962 million (The Group had 13,579employees in 2017. The total staff remuneration for 2017 amounted to RMB1,129.1552 million).

Major investment projects of the Company during the second half of 2018 will include Huanggang Chenming’s integratedforestry, pulp and paper project, Shouguang City’s 400,000 tonne chemical pulp project, Haicheng Haiming’s magnesite miningproject, Shouguang’s 510,000 tonne high-end culture paper project and other projects.

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

For details of the assets with restricted ownership of the Group as at 30 June 2018, please refer to “Section X. VII. 62. Details ofassets with restricted ownership or right of use” in this report.

As at 30 June 2018, no contingent event was required to be disclosed by the Group.

IV. Analysis of Core Competitiveness

Whether the Company needs to comply with the disclosure requirements of specific industriesNoThe Company is a leading player in the paper making industry of China. After innovation and development for more than half a

century, it has developed into a large conglomerate principally engaged in paper making, finance, pulp and fibre and miningbusinesses while also involved in forestry, logistics, construction materials, and others. It is also the only listed company with Ashares, B shares and H shares and preference shares in issue in China and the first company in the paper making industry having afinance company and a financial leasing company integrated with its industrial activities in China. Compared with other enterprisesin the industry, the Company has the following advantages:

1. Scale adva ntagesAfter years of development, the Company, being a leading player in the paper making industry in China, has achieved annual pulpand paper production capacity of over 10 million tonnes and is capable to compete with international paper making enterprises inscale. The large-scale centralised production and operation model has provided the Company with obvious economic benefits. TheCompany also has strong market influence over raw material procurement, product pricing and industry policymaking.2. Product advantagesWhile the production scale of the Company is expanding rapidly, its product mix also continues to optimise. In recent years, theCompany has built production lines for cultural paper such as high-end coated paper, high-end food packaging paper and high-endwhite paper board. The product mix of the Company has gradually diversified into eight major product series which focus on highand middle end products, including high-end offset paper, coated paper, white paper board, light weight coated paper, householdpaper, electrostatic copy paper, thermal paper and glassine paper. Thus, the Company has become the enterprise that offers the widestproduct range in China’s paper making industry. Diversification and gentrification of the product mix has not only greatly enhancedthe Company’s ability to withstand market risks, but also enabled the Company to maintain a relatively high profitability.3. Advantages in technical equipmentCurrently, the Company has the largest integrated forestry, pulp and paper project with the most advanced technology in the worldand dozens of pulp and paper production lines of international advanced standards. The Company’s overall technical equipment hasreached the advanced international level. The major production equipment has been imported from internationally renownedmanufacturers, including Valmet and Metso of Finland, Voith of Germany and TBC of the United States.The technical equipment used by the Company generally reflects the characteristics of being technology-intensive and the integrationof mechanical and electrical in the paper making industry nowadays. The degassing technology, wet end chemical technology,intelligent sheet lateral control technology, coating preparation technology, free-jet coating technology, multi-nip pressure balancedcalender technology and the technical processes independently developed by the Company of the pulp systems have all reached theinternational advanced l evel.4. Advantages in research and innovation and new product developmentThe Company is a high and new-technology enterprise and gives full play to its strong research capability. Supported by the nationalenterprise technology centre and the post-doctoral working station, the Company has established a comprehensive intellectualproperty system and put more and more efforts in technical innovation and scientific research and development to develop newproducts with high technology contents and high added value as well as proprietary technologies. Meanwhile, the technology centreof the Company has actively engaged in technical cooperation with schools, research institutions and international advancedenterprises. The Company has obtained over 150 national patents including 12 patents for invention, with 7 products selected asnational new products and 35 products filling the gap in China. The Company participated in the formulation of 4 national standardsand was awarded honours including “China Patent Shandong Star Enterprise”, becoming the “green engine” of the transformationand upgrading in the paper making industry and leading the direction of the latest and most advanced technology in the paper makingindustry in China.5. Funding advantagesThe paper making industry is a capital-intensive industry, and funding is one of the most important factors in the development of theindustry. The Company has high profitability and credit status, and has maintained long-term stable cooperative relations with itsbankers, which provide the Company with an unobstructed indirect financing capacity. Since its listing, the Company has maintainedgood operating results and a sound corporate governance structure. It has conducted several financing activities in domestic andforeign capital markets. As the funds obtained have been applied effectively with good market image, the Company has strongerabilities in direct financing in the capital market.6. Team advantagesThe key management members and the core personnel of the Company remain stable. In the process of innovation and developmentof the Company, an internal corporate culture developed by the stable core staff team favourable to the growth of the Companyconsolidates the management experience specific to the industry, thus resulting in a team advantage blended with management andculture. Meanwhile, the Company has attracted experienced professionals with financial, legal and financial managementbackgrounds through its advanced management philosophy and ample room for development. The high quality and professional teamsecures the sustainable development of the Company with a solid supply of talents.7. Advantages in environmental governance capacityIn recent years, the Company and its subsidiaries have constructed the pollution treatment facilities including the alkali recoverysystem, middle water treatment system, reclaimed water recovery system and black liquor comprehensive utilisation system. Relyingon scientific and technological progress and innovation, the Company comprehensively promoted clean production and resourcerecycling. At the same time, the tightening of national environmental protection policies and supply-side structural reforms, as wellas new and old kinetic energy conversion and upgrading policies will clear the obstacles for the development of the paper makingindustry while the replenishment and replacement of advanced production capacity will bring new blood and momentum into thepaper making industry, favouring industry concentration to establish a sound industry cycle.

IV Discussion and Analysis of Operations

I. Overview

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

In the first half of 2018, the Company completed the production of machine-made paper of 2.4051 million tonnes with sales of 2.2738million tonnes and achieved revenue of RMB15,551 million, a year-on-year increase of 13.11%. The Company recorded operating costs ofRMB10,260 million, a year-on-year increase of 11.87%. Total profit and net profit attributable to equity holders of the Company wereRMB2,217 million and RMB1,785 million respectively, up by 6.65% and 2.24% from the prior year. The Company’s total assets amounted toRMB107,076 million. The Company experienced stable development across businesses with ever improving management systems, whichwere shown in the following aspects:

(I) Sales managementFacing the complex and ever-changing market conditions, the sales system persistently executed the decision and planning made by themanagement of the Company, abided by the working theme of “solid foundation, new talents, guaranteed implementation and strictevaluation” and broke new grounds in terms of price elevation, market construction and new product development. Through increasedbusiness knowledge training and outward bound training, optimization and adjustment to the appraisal and incentive schemes andmarket-based personnel integration, the Company enhanced team building and elevated team cohesiveness and strength. By way ofdeveloping direct-sale customers, perfecting the channel building and holding annual customer signing conferences, the Company steadilyenhanced market construction. The Company enhanced management over accounts receivable, heightened prepayment operations,standardised its customer credit management and improved its prevention against market risks.

(II) Product managementThe Company plugged up management loopholes by improving the safety management system, enhancing safety education training,identifying potential hazards and elevating process safety control; and ensured up-to-standard emission by optimizing operation technique,enhancing the identification of potential environmental hazards, real-time supervision of pollutant emission and clarifying on the controltargets and standards. The machines were under stable and efficient operation during the year through strengthened management, control andappraisal. The Company also conducted production capacity enhancement in its own pulp production, adjusted product structure, focused onthe development of products with high efficiency, optimised techniques and promoted the application of new technologies and raw materialsto improve efficiency.

(III) Finance and capital managementThe Company constructed a financial business system with a more reasonable structure through active business expansion and strictrisk control. The Company ensured efficient liquidity of the Company’s capital through enhancing the planned management of revenue andexpenditure as well as dispatching and compiled analysis on the capital; increased the application of new types of direct financinginstruments, which boosted bank financing and lowered interest cost; maintained normal operation of the Company by way of, among others,offshore financing against domestic guarantee and bill of exchange to conduct foreign exchange financing under low interest rate; promotedthe implementation of preferential policies; and stepped up efforts in cooperation with banks by entering into development financialcooperation agreement with the China Development Bank and a bank-enterprise strategic cooperation framework agreement withGuangdong Nanyue Bank, obtaining additional credit facilities of over RMB40.0 billion.

(IV) Project constructionThe phase I of the magnesite mining project of Haiming Mining commenced operation in January 2018, principally engaged in theproduction of high-purity magnesia. Weifang Sime Darby West Port and the newly constructed port in Huanggang have officiallycommenced operation, which consistently lowers the logistics and transportation costs of raw materials and finished products. The400,000-tonne chemical pulp project and 510,000 tonne high-end culture paper project of Shouguang Meilun and the 300,000 tonne woodpulp project of Huanggang Chenming progressed smoothly according to the schedule, which is scheduled to commence operation before theend of 2018. Viscose fibre and ancillary production facilities project of Huanggang Chenming and the cogeneration project are still innascent stages. The commencement of operation and implementation of the above projects will play a very important role in thetransformation and upgrading during the structural adjustment of the Company in elevating the vertical extension capacity of the Company,promoting sustainable development and achieving the strategic objectives of the Company.

(V) Corporate managementThe Company actively carried out process and information construction, enhanced working efficiency and promoted managementreform and system upgrade. The Company consistently strengthened its supervision and inspection as well as system improvement, enhancedthe management system and hierarchical management and further standardized internal management. Multiple sessions of special trainingwere organized to learn new concepts and new methods, elevating the management quality and business skills of the staff. The Companymade active efforts to improve its performance appraisal, remuneration incentive and the promotion systems, introduced outstanding talentsand inspired the enthusiasm and creativeness of the staff.

II. Analysis of principal operations

Please see “I. Overview” under “Discussion and Analysis of Operations” for relevant information.Year-on-year changes in major financial information

Unit: RMB

During the reporting

period

During the corresponding

period of the prior year

Increase/decrease

Reason for the changeRevenue 15,551,334,039.8913,749,235,007.2413.11%

Mainly due to the year-on-yearincrease in the prices ofmachine-made paper of theCompany.Operating costs 10,259,884,918.869,171,066,988.4911.87%Selling and distribution expenses605,463,325.71641,498,275.35-5.62%Administrative expenses 972,856,522.65856,354,999.1713.60%

Finance expenses 1,498,828,444.691,055,396,506.3642.02%

Mainly due to the year-on-yearincrease in the financing costs ofthe Company.

Income tax expenses 434,202,112.50331,253,327.0831.08%

Mainly due to the year-on-yearincrease in the provision forincome tax expenses as somecompanies turned around fromlosses to profits.Investments in research anddevelopment

478,014,854.10446,835,957.446.98%Net cash flows from operating

activities

4,745,037,920.91-4,112,941,768.39215.37%

Mainly due to the net returns of thefinancial leasing business of theCompany.Net cash flows from investingactivities

-470,806,697.24-363,428,930.29-29.55%

Mainly due to the year-on-yearincrease in investment inconstruction in progress.Net cash flows from financingactivities

-3,577,622,905.435,025,392,453.07

-171.19

%

Mainly due to the increase inrestricted bank deposits.Net increase in cash and cashequivalents

726,576,915.27441,630,376.9164.52%

Significant change in structure or source of profit of the Company during the reporting period□ Applicable √ Not applicableThere was no significant change in structure or source of profit of the Company during the reporting period.Components of principal operations

Unit: RMBRevenue Operating costs

Gross profit

margin

Increase/decrease

of revenue ascompared to the

correspondingperiod of the

prior year

Increase/decreaseof operating costs

as compared tothe corresponding

period of the

prior year

Increase/decrease

of gross profit

margin ascompared to the

correspondingperiod of the

prior yearBy industryMachine-madepaper

13,160,393,022.74 9,406,171,649.4228.53%9.27%9.00% 0.19%Financial leasing 1,271,712,904.26 145,937,245.4688.52%12.73%-28.09% 6.51%By productsDuplex presspaper

3,324,864,006.83 2,304,888,627.6430.68%23.48%16.55% 4.12%Coated paper 2,574,542,786.42 1,785,563,297.0830.65%-0.53%-2.91% 1.70%White paperboard

3,486,996,727.76 2,841,735,861.4218.50%18.94%42.93% -13.68%Electrostatic

paper

1,209,736,132.82 701,453,812.0742.02%13.78%-1.99% 9.32%Anti-sticking rawpaper

681,182,446.30 403,184,572.0640.81%16.10%2.92% 7.58%Financial leasing 1,271,712,904.26 145,937,245.4688.52%12.73%-28.09% 6.51%By geographical segmentMainland China 14,019,216,475.40 8,922,766,389.4836.35%16.95%14.43% 1.40%Other countriesand regions

1,531,781,930.08 1,353,506,642.3511.64%-2.77%-1.45% -1.18%

III. Analysis of non-principal operations

□ Applicable √ Not applicable

IV. Assets and liabilities

1. Material changes of asset items

Unit: RMB

As at the end of the reporting

period

As at the end of thecorresponding period of the

prior year

Percentage

change

Description of major changesAmount

As a

ercentageof totalassets

Amount

As a

pp

ercentageof totalassets

Monetary funds 18,221,475,254.64 17.02% 12,541,497,475.4813.67%3.35%

Mainly due to the increase in depositsfor the issuance of bills and letters ofcredit, and borrowings.Accountsreceivable

3,771,972,562.503.52% 3,767,714,992.674.11%-0.58%

Inventories 6,429,315,741.47 6.00% 6,057,467,324.086.60%-0.60%Investment

properties

4,750,494,168.51 4.44% 0.00%4.44%

Mainly due to the acquisition of 75%equity interest in Shanghai Hongtai bythe Company.Long-termequityinvestments

401,425,440.970.37% 169,207,699.570.18%0.19%

Mainly due to the investment in theequity interest in Ningbo Kaichen bythe Company.

Fixed assets 27,822,887,081.68 25.98% 28,536,783,322.0131.10%-5.12%

Mainly due to the reclassification as aresult of the newsprint plant upgrade.

Construction inprogress

9,622,048,648.758.99% 5,054,138,263.165.51%3.48%

Mainly due to the continuedinvestment made in the Meilunchemical pulp project, the 510,000tonne cultural paper project and theHuanggang integrated forestry, pulpand paper project.Short-termborrowings

34,822,972,619.6032.52% 31,686,575,360.3934.53%-2.01%

Mainly due to the increase in workingcapital required for the production ofthe Company.Long-termborrowings

7,206,918,851.776.73% 7,786,639,310.568.49%-1.76%

Long-termreceivables

9,561,944,402.25 8.93% 9,573,697,226.6510.43%-1.50%

2. Assets and liabilities measured at fair value

√ Applicable □ Not applicable

Unit: RMBItem Opening balance

Profit or lossfrom change in

fair valueduring the

period

Cumulative fair

value changecharged to equity

Impairment

providedduring the

period

Purchasesduring the

period

Disposalduring the

period

Closing balance

Financialassets

Consumablebiologicalassets

1,756,375,954.07-23,973,841.55 75,500,956.7676,793,558.03293,219,430.75 1,515,976,239.80Total 1,756,375,954.07-23,973,841.55 75,500,956.7676,793,558.03293,219,430.75 1,515,976,239.80

Financialliabilities

0.00 0.00Whether there were any material changes on the measurement attributes of major assets of the Company during the reporting period□ Yes √ No

3. Restriction on asset rights as at the end of the reporting period

Unit: RMBItem Carrying amount as at the end

of the period

Reasons for such restrictionMonetary funds 14,690,489,964.91

As deposits for bank acceptance bills, letters of credit and bankborrowings, and deposit reserves

Bills receivable 1,902,685,841.26

As collateral for short-term borrowings, letters of guarantee and lettersof creditFixed assets 7,882,378,100.81As collateral for bank borrowingsIntangible assets 631,997,196.06As collateral for bank borrowings and long-term payablesInvestment property 4,750,494,168.51As collateral for bank borrowings and long-term payablesTotal 29,858,045,271.55

V. Analysis of Investments

1. Overview

√ Applicable □ Not applicable

Investments during the reporting

period (RMB)

Investments during thecorresponding period of prior

year (RMB)

Change8,232,854,389.466,933,152,584.6018.75%

2. Material equity investments during the reporting period

√ Applicable □ Not applicable

Unit: RMB

Name ofinvestees

Principalactivities

Form ofinvestment

Investment

amount

Shareholding

Source of

fund

Partner(s)

Period ofinvestment

Product

type

Progress asat the dateof balance

sheet

Estimated

return

Profit or loss

frominvestment for

the period

Lawsuit isinvolved or

not

Date ofdisclosure

(if any)

Disclosureindex (if

any)Beijing

ChenmingFinancialLeasingCo., Ltd.

Financialleasing andoperationleasing

Newlyestablished

1,000,000,000.00 100.00%

Self-ownedfunds

Awholly-owned subsidiary

17 May2018 to 16May 2048

Financialleasing

Notcompleted

No

30 January2018

http://www.cninfo.com.cn

ShanghaiHongtaiReal EstateCo., Ltd.

Real estatedevelopmentandoperationand propertymanagement

Acquisition 1,171,957,789.46 75.00%

Self-ownedfunds

ShanghaiXinhuangpuReal EstateCo., Ltd.

31 January1994 to 30January2044

Real estateCompleted

-82,830,427.25

No

30 January2018

http://www.cninfo.com.cn

ShanghaiChenmingIndustryCo., Ltd.

Industrialinvestment,commercialconsultation

Capitalincrease

4,000,000,000.00 100.00%

Self-ownedfunds

Awholly-owned subsidiary

September2017 to 14September

Enterpriseinvestmentetc.

Notcompleted

-16,195,308.47

No

17 April2018

http://www.cninfo.com.cn

and propertymanagement

2037Shandong

ChenmingGroupFinanceCo., Ltd.

Business aspermitted bythe ChinaBankingRegulatoryCommissionpursuant torelevantlaws,administrativeregulationsand otherregulations

Capitalincrease

2,000,000,000.00 100.00%

Self-ownedfunds

Awholly-owned subsidiary

Long-term

Corporatefinancialbusiness

Notcompleted

102,249,269.8

No

27 April2018

http://www.cninfo.com.cn

WuhanChenmingHanyangPaperHoldingsCo., Ltd.

Productionand sales ofmachine-made paper,paper boardand papermakingmachinery

Acquisition 60,896,600.00 65.21%

Self-ownedfunds

AberdeenIndustrialLimited,Hong KongDongfangHuixinHoldingsLimited,HubeiXinhuaPrintingIndustry ParkCo., Ltd.,HubeiChangjiangPublishing &Media GroupCo., Ltd. andHubei ZhiyinPrinting Co.,Ltd.

29 June2004 to 18November2048

Machine-made paperand papermakingmachinery

Completed

12,815,547.34

No

24 May2018

http://www.cninfo.com.cn

Total - - 8,232,854,389.46 - - - - - - - 16,039,081.49 - - -

3. Material non-equity investments during the reporting period

√ Applicable □ Not applicable

Unit: RMB

Project name

Form ofinvestme

nt

Fixedassetsinvestment or not

Industryin which

theinvestme

ntprojectoperates

Investme

ntamountduring

thereporting

period

Accumul

atedactualamountinvestedas of the

end ofreporting

period

Sourceof fund

Progres

s

Estimat

edreturn

Accumulatedrealised

returnas ofthe endof thereporting period

Reasons

forfailure

inmeetingschedul

edprogres

s andestimated return

Date ofdisclosu

re (ifany)

Disclos

ureindex(if any)

Forestry paperintegrationproject ofHuanggangChenming

Self-constructed

Yes

Pulpproduction

751,820,35

6.99

3,234,802,612.44

Self-raised andborrowings

92%

Theexpecte

daverage

total

rofit

pp

erannum

of the

pp

roject

Not yetcompleted

August2013

http://www.cninfo.com.cn

willamount

toRMB35

million.

510,000 tonnehigh-endcultural paperproject ofShouguangMeilun

Self-constructed

Yes

Papermaking

700,746,

887.09

1,397,957,131.33

Self-raised andborrowings

37.17%

Upon

thecomplet

ion ofconstru

ction

andcommencemen

t ofproducti

on of

the

roject,

theexpected profit

willamount

toRMB30

million.

Not yetcompleted

February 2017

http://www.cninfo.com.cn

400,000 tonnechemical pulpproject ofShouguangMeilun

Self-constructed

Yes

Pulpproduction

533,044,387.0

2,335,015,663.33

Self-raised andborrowings

53.35%

Upon

thecomplet

ion ofconstru

ction

andcommencemen

t ofproducti

on of

the

pp

roject,

the

Not yetcompleted

March2014

http://www.cninfo.com.cn

expecte

d total

rofitwillamount

toRMB41

million.Newsprintpapermachinery-to-cultural papermachinerytransformationand ancillarypulpproduction linetransformation

Self-constructed

Yes

Papermakingand pulpproduction

1,131,232,128.35

1,131,232,128.35

Self-raised andborrowings

99%

Not yetcompleted

Notapplicable

Total -- -- --

3,116,843,759.44

8,099,007,535.45

-- -- -- -- --

4. Financial asset investment(1) Security investments

□ Applicable √ Not applicableThe Company did not have any security investments during the reporting period.

(2) Derivatives investments

□ Applicable √ Not applicableThe Company did not have any derivative investments during the reporting period.

VI. Disposal of material assets and equity interest

1. Disposal of material assets

□ Applicable √ Not applicableThe Company did not dispose of any material asset during the reporting period.

2. Disposal of material equity interest

√ Applicable □ Not applicable

Counterpart

y(ies)

Equitydisposed of

Disposal

date

Transactionconsideration(RMB’0,000)

Net profitcontribution

to theCompanyfrom thebeginning ofthe period up

to thedisposal date(RMB’0,000

)

Effect ofdisposal on

theCompany

Ratio of net

profitcontribution

to theCompany ofdisposal ofequity over

total netprofit (%)

Pricing basisof disposalof equity

Relatedpartytransaction

or not

Relationship

withcounterparty(ies) (in case

of related

partytransaction)

Relevantequity title

fullytransferred

or not

Carried outon schedule

or not, ifnot, thereasons andmeasurestaken by theCompany

Disclosure

date

Disclosure

index

ShanghaiZhongnengEnterpriseDevelopment (Group)Co., Ltd.

GuangdongDejunInvestmentCo., Ltd.

16 April2018

263,404.14 6,175

The disposalcaneffectivelyincrease theCompany'scash flow,whichenables theCompany toconcentrateon capitaladvantages,bettersupport thedevelopmentofcompetitivebusinessesand furtherenhancebusinessperformance.

2.94%Fair value No

Not relatedparty

Yes

Disposalcompleted

17 April2018

http://www.cninfo.com.cn

VII. Analysis of major subsidiaries and investees

√ Applicable □ Not applicableMajor subsidiary and investees accounting for over 10% of the net profit of the Company

Unit: RMBName ofcompany

Type ofcompany

Principalactivities

Registered

capital

Total assetsNet assetsRevenue

Operating

profit

Net profitZhanjiang

ChenmingPulp & PaperCo., Ltd.

Subsidiary

Productionand sale ofpulp, duplexpress paper,electrostaticpaper

5,550,000,00

22,116,965,5

12.62

8,509,589,25

0.94

4,916,442,92

7.85

967,797,04

3.54

835,494,862.20

ShouguangMeilun PaperCo., Ltd.

Subsidiary

Productionand sale ofcoated paperandhouseholdpaper

3,000,000,00

13,434,044,2

46.36

4,648,850,05

5.13

2,419,640,79

1.26

56,923,629

.15

52,638,122.17

ShandongChenmingFinancialLeasing Co.,Ltd.

Subsidiary

Financialleasing

7,700,000,00

34,737,883,6

85.37

9,786,973,96

8.68

1,372,947,13

6.35

599,082,56

9.68

467,623,153.33

JiangxiChenming

Subsidiary

Productionand sale of

2,038,116,00

6,200,304,56

6.80

2,450,235,15

6.02

1,612,275,82

2.43

69,833,747

.64

59,566,481.48

Paper Co.,Ltd.

light weightpaper andwhite paperboardAcquisition and disposal of subsidiaries during the reporting period√ Applicable □ Not applicable

Name of companies

Methods to acquire and dispose ofsubsidiaries during the reporting period

Impact on overall production and

operation and resultsBeijing Chenming Financial Leasing Co., Ltd. Newly established No effect

Shanghai Hongtai Real Estate Co., Ltd.

Acquisition of equity interest held byminority shareholders

No effectXuchang Chenming Paper Co. Ltd. Equity transfer

Net profit increased by RMB11.66million.Wuhan Chenming Hanyang Paper HoldingsCo., Ltd.

Acquisition of equity interest held byminority shareholders

No effect

VIII. Structured entities controlled by the Company

□ Applicable √ Not applicable

IX. Estimate of the operating results from January to September 2018

Warning of cumulative net profit for the period between the beginning of the year to the end of the next reporting period beingprojected to be at a loss or expected to have material changes as compared to the corresponding period of prior year and itsexplanation□ Applicable √ Not applicable

X. Risk exposures of the Company and the measures to be taken

1. Risk on paper making industry

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

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

Market fluctuation riskWith the rapid growth of the national economy, economic globalisation and China’s accession to the WTO, China’s paper

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

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

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

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

Risk of price fluctuation of raw materialsThe major raw materials used by the Company are wood pulp and waste paper. The market prices of wood pulp and waste paperfluctuate significantly. The market price fluctuation of raw material has significantly affected the production costs of the Company.In addition to intensified market competition resulting from surging capacity in the industry in recent years, the increases in prices ofa number of paper products were not in line with the increases in prices of raw materials. The market price fluctuation of rawmaterials will have an impact on the performance of the Company.

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

Risk of change in environmental protection policiesChina has been raising the standards for environmental protection in recent years. The new Environmental Protection Law tookeffect on 1 January 2015. More stringent environmental protection policies have been implemented in the paper making industry. Amulti-pronged approach has been adopted to promote industrial restructuring, and the paper making industry has entered into animportant transitional period of development. A higher emission standard is bound to increase the Company’s environmentalprotection costs and a high entry standard may result in the slowdown of scale expansion.

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

2. Risk on financial leasing business

Policy riskRecently, the financial leasing business is regulated by the commerce departments at different levels instead of being directlyregulated by the People‘s Bank of China or China Banking Regulatory Commission. The financial leasing industry in China is still at

the exploration stage with incomplete laws and regulations. If there is any material adjustment or change in national or local policiesfor the financial leasing industry, the Company’s financial leasing business may be adversely affected, in turn harming theCompany’s profitability.

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

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

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

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

The stringent risk management measures of Chenming Leasing provide comprehensive risk prevention and management for theCompany’s projects. Besides, the Company usually cooperates with state-owned enterprises and local governments, so it has strongrisk resistance and low risk of default. Chenming Leasing will strengthen risk management so as to enhance risk resistance andmaintain high quality services.

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

Learning from the risk management experience of outstanding financial leasing companies at home and abroad, the leasingcompany has formulated and optimised the internal management system of the leasing business and established an effective system

for risk assessment, risk control and risk tracking. The Company has also exercised proper control on business risk by regulating thekey business procedures including quotation, guarantee review, contract signing, leased assets management and archivesmanagement.

V Material Matters

I. Annual general meeting and extraordinary general meeting convened during the reportingPeriod

1. General meetings during the reporting period

Meeting Type of meeting

Attendanc

e rate ofinvestors

Convening dateDisclosure date Disclosure index2018 first extraordinary general

meeting

Extraordinarygeneral meeting

33.09%13 February 201814 February 2018 http://www.cninfo.com.cn2018 second extraordinary general

meeting

Extraordinarygeneral meeting

33.18%1 June 2018 2 June 2018 http://www.cninfo.com.cn2018 first domestic listed share

class meeting

Extraordinarygeneral meeting

27.93%1 June 2018 2 June 2018 http://www.cninfo.com.cn2018 first overseas listed share class

meeting

Extraordinarygeneral meeting

7.43%1 June 2018 2 June 2018 http://www.cninfo.com.cn2017 annual general meeting

Annual generalmeeting

33.10%13 June 2018 14 June 2018 http://www.cninfo.com.cn2018 second domestic listed share

class meeting

Extraordinarygeneral meeting

25.65%13 June 2018 14 June 2018 http://www.cninfo.com.cn2018 second overseas listed share

class meeting

Extraordinarygeneral meeting

7.46%13 June 2018 14 June 2018 http://www.cninfo.com.cn

2. Extraordinary general meeting requested by holders of the preference shares with voting rights restored

□ Applicable √ Not applicable

II. Proposals on profit distribution and conversion of capital reserves into share capitalduring this reporting period

□ Applicable √ Not applicableThe Company does not intend to distribute cash dividend and bonus share, and conduct conversion of capital reserves into sharecapital for the interim period.

III. Undertakings made by parties involved in undertakings including the Company’sbeneficial controllers, shareholders, related parties, bidders and the Company during thereporting period or prior periods but subsisting to the end of the reporting period

□ Applicable √ Not applicableDuring the reporting period, there was no undertaking made by parties involved in undertakings including the Company’s beneficialcontrollers, shareholders, related parties, bidders and the Company during the reporting period or prior periods but subsisting to theend of the reporting period.

IV. Engagement or dismissal of accounting firms

Has the interim financial report been audited?□ Yes √ NoThe interim financial report is unaudited.

V. Opinions of the Board and the Supervisory Committee regarding the “modified auditor’sreport” for the reporting period issued by the accountants

□ Applicable √ Not applicable

VI. Opinions of the Board regarding the “modified auditor’s report” for the prior year

□ Applicable √ Not applicable

VII. Matters related to bankruptcy and reorganisation

□ Applicable √ Not applicableThere was no matter related to bankruptcy and reorganisation during the reporting period.

VIII. Litigation

Material litigation and arbitrat ion□ Applicable √ Not applicableThe Company was not involved in any material litigation and arbitration during the reporting period.Other litigations√ Applicable □ Not applicable

Basic information

about litigation

(arbitration)

Amount(RMB’0,000

)

Willliability

beincurred

Progress of litigation

(arbitration)

Judgment result of

the litigation(arbitration) and its

effect

Judgmentexecution ofthe litigation(arbitration)

Disclosure

date

Disclosur

e indexStatutory demand

and W inding-upPetition

RMB167.86million andthe interest

Yes

The Company has appealedagainst the order of JusticeHarris dated 14 June 2017

At the conclusion ofthe hearing, thecourt indicated that

Not applicable

15 May2018

http://www.cninfo.com.cn

thereon,USB3.5489million andthe interestthereon,HK$3.3039million andthe interestthereon

on 12 July 2017. Thehearing was completed atthe Court of Appeal of theHigh Court of the HKSARon 11 May 2018. At theconclusion of the hearing,the court indicated that adate will be set to handdown the judgment.

a date will be set tohand down thejudgment.

IX. Punishment and rectification

√ Applicable □ Not applicable

Name Type Reason

Investigation andpunishment type

Conclusion, if

any

Disclosure date Disclosure index

JiangxiChenming PaperCo., Ltd.

Others

On 8 June 2018,the lawenforcementofficers ofNanchangEnvironmentalProtection Bureauconducted on-sitesampling of theoverflow of thedosing device ofthe deodorisationsystem of JiangxiChenming, whereexcessive ph wasidentified at theoverflow of theodor treatmentfacilities.

Others

On 7 August2018, JiangxiChenmingreceived the“Hong Huan FaGao Zi [2018]No. 24 Advance(Hearing) Noticeof AdministrativePenalty” fromNanchangEnvironmentalProtection Bureauin relation to aproposedadministrativepenalty onJiangxiChenming. As thetreatmentfacilities were notpolluted byimproper use ofwater as a resultof improperoperation due tohuman error, orequipment beingout of order andthere was arectification onJiangxiChenming’s owninitiative, alenient penalty ofRMB300,000 wasimposed.

Not applicable Not applicable

Rectification√ Applicable □ Not applicable

When the issue was identified, Jiangxi Chenming replaced the automatic valve immediate ly, inspected the equipment and facilitiesmore frequently and enhanced the regular maintenance and repair of the key equipment. The blowdown pipes were repaired to ensurethe alkaline cleaning water in the alkaline cleaning tanks still had access to the wastewater treatment system for effective treatmentthrough the pipes when the automatic valve did not function. The wastewater was treated and discharged up to standard through thecentral wastewater outfall in the plant area. The wastewater outfall was monitor online in real time throughout 24 hours to completelyremove the problem of leakage possibly caused by the alkaline cleaning sy stem. The rectification was completed on 12 June.

X. Credibility of the Company, its controlling shareholders and beneficial controllers

□ Applicable √ Not applicable

XI. Implementation of the equity incentive plan, employee shareholding plan or otheremployee incentive measure of the Company

□ Applicable √ Not applicableThere was no implementation of the equity incentive plan, employee shareholding plan or other employee incentive measure of theCompany during the reporting period.

XII. Significant related party transactions

1. Related party transactions associated with day-to-day operation

√ Applicable □ Not applicable

Related

party

Related

partyrelationshi

p

Typesof therelate

dpartytransactions

Subjectmatterof therelatedpartytransacti

ons

Pricingbasis of

therelatedpartytransacti

ons

Price ofrelatedpartytransacti

ons

Amount

ofrelatedpartytransacti

ons(RMB’0

,000)

Percentage as theamount

ofsimilartransactions (%)

Amount

oftransacti

onsapprove

d(RMB’0

,000)

Whetherexceedi

ngapprove

d cap

Settleme

nt ofrelatedpartytransacti

ons

Marketprice ofavailable similartransacti

on

Disclosu

re date

Disclo

sureindex

JiangxiChenmingNaturalGas Co.,Ltd. anditssubsidiaries

Pursuantto therequirement underParagraph(2) ofArticle10.1.6 ofthe RulesGoverningthe Listingof Stockson

Procurement

Naturalgas andheavyoil etc.

Marketprice

Marketprice

17,014.7

1.66%35,000No

Bankacceptance andtelegraphictransfer

Notapplicable

23 June2018

http://www.cninfo.com.cn

ShenzhenStockExchangeParticulars on refund of bulk sale Not applicable

2. Related party transaction in connection with purchase or sale of assets or equity interest

√ Applicable □ Not applicable

Related

party

Related

partyrelationship

Types ofthe relate d

partytransactions

Subjectmatter ofthe relate d

partytransactions

Pricingbasis of the

relatedpartytransactions

Carryingamount of

thetransferred

asset(RMB’0,00

0)

Assessedvalue of thetransferred

asset(RMB’0,000)

(if any)

T rans fer pric e(RMB’0,000)

Settlement ofrelated partytransactions

Transactionprofit and loss(RMB’0,000)

Disclosure

date

Disclosure

index

GuangdongDejunInvestmentCo., Ltd.

Pursuant totherequirementunderParagraph(3) ofArticle10.1.3 of theRulesGoverningthe Listingof Stocks onShenzhenStockExchange

Equityacquisition

Receipt of30% equi tyinterest inHongtaiReal Estateheld byGuangdongDejun andGuangdongDejun’sdebt toHongtaiReal Estate

Valuationreport

21,085.86123,977.96127,500Wire transfer -

30 January2018

http://www .cninfo.com.cn

3. Related party transaction connected to joint external investment

□ Applicable √ Not applicableThere was no related party transaction of the Company connected to joint external investment during the reporting period.

4. Related creditors’ rights and debts transactions

√ Applicable □ Not applicableWas there any non-operating related creditors’ rights and debts transaction?□ Yes √ NoThere were no non-operating related creditors’ rights and debts transactions of the Company during the reporting period.

5. Other significant related party transactions

□ Applicable √ Not applicableThere was no other significant related party transaction of the Company during the reporting period.

XIII. Appropriation of funds of the Company by the controlling shareholder and its relatedparties for non-operating purposes

□ Applicable √ Not applicableThere was no appropriation of funds of the Company by the controlling shareholder and its related parties for non-operating purposes

during the reporting period.

XIV. Material contracts and implementation

1. Custody, contracting and leasing(1) Custody

□ Applicable √ Not applicableThere was no custody of the Company during the reporting period.

(2) Contracting

□ Applicable √ Not applicableThere was no contracting of the Company during the reporting period.

(3) Leasing

□ Applicable √ Not applicableThere was no leasing of the Company during the reporting period.

2. Significant guarantees

√ Applicable □ Not applicable

(1) Guarantees

Unit: RMB’0,000External guarantees of the Company (excluding guarantees to subsidiaries)

Name of obligee

Date of the

relatedannouncem

entdisclosing

theguarantee

amount

Amount ofguarantee

Guarantee date(agreement date)

Guaranteeprovided

Type ofguarantee

Term

Fulfilled

or not

Guarante

e torelatedparties or

notWeifang Sime

Darby West PortCo., Ltd.

24 July2017

17,500

20 December

2017

13,500

Generalguarantee

10 years No NoTotal external guarantees

approved during the reportingperiod (A1)

Total actual externalguarantees during thereporting period (A2)

8,500

Total external guaranteesapproved at the end of thereporting period (A3)

17,500

Balance of total actualguarantees at the end of thereporting period (A4)

13,500Guarantees between the Company and its subsidiaries

Name of obligee

Date of the

relatedannouncem

entdisclosing

theguarantee

amount

Amount ofguarantee

Guarantee date(agreement date)

Guaranteeprovided

Type ofguarantee

Term

Fulfilled

or not

Guarante

e torelatedparties or

notZhanjiang

Chenming Pulp &Paper Co., Ltd.

30 March2016

150,000

Generalguarantee

3 years No NoZhanjiang

Chenming Pulp &Paper Co., Ltd.

February2017

650,000 18 October 2017498,883.84

Generalguarantee

3 years No NoZhanjiang

Chenming Pulp &Paper Co., Ltd.

14 June2018

200,000

Generalguarantee

3 years No NoShandong

ChenmingFinancial LeasingCo., Ltd.

26 March2015

500,000

17 December

2015

202,354.67

Generalguarantee

7 years No NoShandong

ChenmingFinancial LeasingCo., Ltd.

30 March2016

300,000

Generalguarantee

7 years No NoShandong

ChenmingFinancial LeasingCo., Ltd.

February2018

150,000

Generalguarantee

3 years No NoShanghai

ChenmingFinancial LeasingCo., Ltd.

February2018

400,000

Generalguarantee

3 years No NoQingdao

ChenmingNonghai FinancialLeasing Co., Ltd.

February2018

250,000

Generalguarantee

3 years No No

GuangzhouChenmingFinancial LeasingCo., Ltd.

February2018

200,000

Generalguarantee

3 years No NoShandong

ChenmingCommercialFactoring Co., Ltd.

February2018

200,000

Generalguarantee

3 years No NoHuanggang

ChenmingArboricultureDevelopment Co.,Ltd.

February2017

5,000

Generalguarantee

3 years No No

HuanggangChenming Pulp &Paper Co., Ltd.

26 March2015

400,000

23 September

2016

104,563.46

Generalguarantee

7 years No NoHuanggang

Chenming Pulp &Paper Co., Ltd.

30 March2016

550,000

Generalguarantee

7 years No NoJiangxi Chenming

Paper Co., Ltd.

30 March2016

150,000 12 June 201785,842.20

Generalguarantee

3 years No NoJiangxi Chenming

Paper Co., Ltd.

February2017

200,000

Generalguarantee

3 years No NoJiangxi Chenming

Paper Co., Ltd.

14 June2018

50,000

Generalguarantee

3 years No NoShouguang Meilun

Paper Co., Ltd.

December2010

600,000 17 January 201895,875.68

Generalguarantee

10 years No NoShouguang Meilun

Paper Co., Ltd.

February2017

100,000

Generalguarantee

3 years No NoShandong

Chenming PaperSales CompanyLimited

30 March2016

200,000

Generalguarantee

3 years No NoShandong

Chenming PaperSales CompanyLimited

February2017

400,000 19 July 2017368,056.98

Generalguarantee

3 years No No

Chenming (HK)Limited

30 March2016

100,000

Generalguarantee

3 years No NoChenming (HK)

Limited

February2017

500,000 14 July 2017444,434.94

Generalguarantee

3 years No NoChenming (HK)

Limited

14 June2018

250,000

Generalguarantee

3 years No NoShouguang

Chenming Importand Export TradeCo., Ltd.

February2017

50,000

30 September

2017

18,000.00

Generalguarantee

3 years No No

Jilin ChenmingPaper Co., Ltd.

February2017

150,000

16 February

2018

4,000.00

Generalguarantee

3 years No NoShandong

Chenming GroupFinance Co., Ltd.

February2017

500,000

Generalguarantee

3 years No NoZhanjiang

ChenmingArboricultureDevelopment Co.,Ltd.

February2017

5,000

Generalguarantee

3 years No No

NanchangChenmingArboricultureDevelopment Co.,Ltd.

15 August2017

10,000

Generalguarantee

3 years No No

ShandongChenming PanelsCo., Ltd.

14 June2018

3,000

Generalguarantee

3 years No NoTotal amount of guarantee provided for subsidiaries

approved during the reporting period (B1)

1,703,000

Total amount of guarantee provided for subsidiariesduring the reporting period (B2)

953,478.84Total amount of guarantee provided for subsidiaries

approved as at the end of the reporting period (B3)

7,223,000

Total balance of guarantee provided for subsidiariesas at the end of the reporting period (B4)

1,822,011.78Guarantees between subsidiaries

Name of obligee

Date of the related

announcementdisclosing theguarantee amount

Amount ofguarantee

Guarantee

date(agreement

date)

Guaranteeprovided

Type of guarantee Term

Fulfilled or

not

Guarante

e torelatedparties or

not

Chenming (HK) Limited 30 March 2016 100,00036,627.51General guarantee 3 years No NoChenming (HK) Limited 30 March 2016 100,000General guarantee 3 years No NoChenming (HK) Limited 30 March 2016 100,000General guarantee 3 years No No

Total amount of guarantee provided for subsidiaries approvedduring the reporting period (C1)

Total amount of guaranteeprovided for subsidiaries duringthe reporting period (C2)

19,876.27Total amount of guarantee provided for subsidiaries approved

as at the end of the reporting period (C3)

300,000

Total balance of guaranteeprovided for subsidiaries s at theend of the reporting period (C4)

36,627.51Total amount of guarantee provided (i.e. sum of the above three guarantee amount)

Total amount of guarantee approved during thereporting period (A1+B1+C1)

1,703,000

Total amount of guarantee during thereporting period (A2+B2+C2)

981,855.11Total amount of guarantee approved as at the

end of the reporting period (A3+B3+C3)

7,540,500

Total balance of guarantee as at the end ofthe reporting period (A4+B4+C4)

1,872,139.29The percentage of total amount of guarantee provided (i.e.

A4+B4+C4) to the net assets of the Company

67.64%Of which:

Balance of guarantee provided for shareholders, beneficial controllers and its related parties (D) 0Balance of guarantee directly or indirectly provided for obligors with gearing ratio over 70% (E) 1,137,410.05Total amount of guarantee provided in excess of 50% of net assets (F) 488,281.08Sum of the above three amount of guarantee (D+E+F) 1,625,691.13

(2) External guarantees against the rules and regulations

□ Applicable √ Not applicableThere was no external guarantee provided by the Company which was against the rules and regulations during the reporting period.

3. Other material contracts

□ Applicable √ Not applicableThe Company did not have any other material contract during the reporting period.

XV. Fulfilment of social responsibility

1. Major environmental protection matters

Name ofcompany orsubsidiary

Name of

majorpollutantsand specific

Way ofemission

Number

ofemission

outlets

Distributionof emission

outlets

Emissionconcentration

Pollutantemissionstandardsimplemented

Totalemissions

Approved

totalemissions

Excessiveemissions

pollutants

ShandongChenmingPaperHoldingsLimited

COD

Organisedemission

WithinChenmingIndustrialPark

200mg/L 300mg/L 1851.10t 7666.64t NoAmmonia

nitrogen

Organisedemission

WithinChenmingIndustrialPark

2mg/L 30mg/L 35.15t 766.66t NoSulphur

dioxide

Organisedemission

WithinChenmingIndustrialPark

Power plant4.50mg/m?;Alkalirecovered2.13mg/m?

Power plant35mg/m?;Alkalirecovered200mg/m?

3.15t 247.16t No

Nitrogenoxide

Organisedemission

WithinChenmingIndustrialPark

Power plant37mg/m?;Alkalirecovered142mg/m?

Power plant100 mg/m?;Alkalirecovered300mg/m?

77.39t 1059.41t No

Smoke

Organisedemission

WithinChenmingIndustrialPark

Power plant0.77mg/m?;Alkalirecovered10.40mg/m?

Power plant10 mg/m?;Alkalirecovered20mg/m?

0.50t 70.62t No

ShouguangMeilunPaper Co.,Ltd.

Sulphurdioxide

Organisedemission

WithinChenmingIndustrialPark

6.88mg/m? 35mg/m? 34.50t 348.10t NoNitrogen

oxide

Organisedemission

WithinChenmingIndustrialPark

49mg/m? 100 mg/m? 240.60t 709.32t NoSmoke

Organisedemission

WithinChenmingIndustrialPark

0.63mg/m? 5mg/m? 2.9070t 73.62t NoWuhan

ChenmingHanyangPaperHoldingsCo., Ltd.

COD

Organisedemission

East of thefactory area

26mg/l 80mg/L 14.4t 184.30t NoAmmonia

nitrogen

Organisedemission

East of thefactory area

1.4mg/l 8 mg/L 0.7t 17.30t No

WuhanChenmingQiannengElectricPower Co.,Ltd.

Sulphurdioxide

Organisedemission

WithinQiannengElectricPower factoryarea

130T furnace8.64mg/m

;75T furnace1.27mg/m

50mg/m? 4.236t 102.58t No

Nitrogenoxide

Organisedemission

WithinQiannengElectricPower factoryarea

130T furnace38.76mg/m

;3 75T furnace56.9mg/m

100 mg/m? 21.68t 205.16t No

Smoke

Organisedemission

WithinQiannengElectricPower factoryarea

130T furnace5.18mg/m

;75T furnace4.6mg/m

20mg/m? 2.755t 41.03t NoJiangxi

ChenmingPaper Co.,Ltd.

COD

Organisedemission

At theboundary offactory area

34.97mg/L 90mg/L 148.61t 1260t NoAmmonia Organised

At the2.04mg/L 8mg/L 9.77t 112t No

nitrogen emissionboundary of

factory areaSulphurdioxide

Organisedemission

Withinfactory area

48.78mg/m?200mg/m? 104.57t 806t NoNitrogen

oxide

Organisedemission

Withinfactory area

113.53mg/m?200 mg/m? 254.53t 806t NoSmoke

Organisedemission

Withinfactory area

11.63mg/m?30mg/m? 25.2t 135t No

JilinChenmingPaper Co.,Ltd.

COD

Organisedemission

At theboundary offactory area

62.5mg/L 90mg/ L 144.1t 357t NoAmmonia

nitrogen

Organisedemission

At theboundary offactory area

1.61mg/L 8mg/ L 3.72t 34t NoSulphur

dioxide

Organisedemission

Withinfactory area

3.64mg/m? 100mg/m? 3.06t 97t NoNitrogen

oxide

Organisedemission

Withinfactory area

38.24mg/m?100mg/m? 32.15t 213t NoSmoke

Organisedemission

Withinfactory area

14.05mg/m?30mg/m? 11.81t 51.66t No

ZhanjiangChenmingPulp &Paper Co.,Ltd.

COD

Organisedemission

WithinZhanjiangChenmingfactory area

35.57mg/L 90mg/L 425.09t 1943t NoAmmonia

nitrogen

Organisedemission

WithinZhanjiangChenmingfactory area

1.01mg/L 8mg/L 12.42t 43.90t No

Sulphurdioxide

Organisedemission

WithinZhanjiangChenmingfactory area

Lime kiln:

0.26mg/m?Alkalirecovered:

26.41mg/m?Power plant1#:

4.66mg/m?Power plant2#:

2.93mg/m?Power plant3#:

5.77mg/m?Power plant4#:

16.60mg/m?

Lime kiln:

400mg/m?Alkalirecovered:

200mg/m?1#、2#、3#circulatingfluidised bedboiler:

100mg/m?4# circulatingfluidised bedboiler:

35mg/m?

201.85t 620t No

Nitrogenoxide

Organisedemission

WithinZhanjiangChenmingfactory area

Lime kiln:

231.46mg/m?Alkalirecovered:

198.65mg/m?Power plant1#:

21.55mg/m?Power plant2#:

20.09mg/m?Power plant3#”17.75mg/m?Power plant4#”

Lime kiln:

300mg/m?Alkalirecovered:

200mg/m?1#、2#、3#circulatingfluidised bedboiler:

100mg/m?4# circulatingfluidised bedboiler:

50mg/m?

909.17t 2169.70t No

28.35mg/m?

Smoke

Organisedemission

WithinZhanjiangChenmingfactory area

Lime kiln:

Smoke14.21mg/m?Alkalirecovered:

15.30mg/m?Power plant1#:

14.12mg/m?Power plant2#:

4.41mg/m?Power plant3#:

7.52mg/m?Power plant4#:

9.75mg/m?

Lime kiln:

80mg/m?Alkali recovered,1#、2#、3#circulatingfluidised bedboiler:

30mg/m? 4#circulatingfluidised bedboiler:

10mg/m?

90.56t 196t No

Construction and operation of facilities for pollution prevention and control

(1) The Company and its subsidiaries strictly comply with laws, regulations and relevant rules regarding environmental protection ofthe central and local government. The construction of projects strictly adheres to the “three simultaneities” on environmentalprotection. In order to ensure pollutants are discharged strictly in accordance with the requirements under laws and regulations anddisposed properly, production and operation strictly comply with the national Law on the Prevention and Control of EnvironmentalPollution, Law on the Prevention and Control of Water Pollution, Law on the Prevention and Control of Air Pollution, Action Planfor Prevention and Control of Water Pollution and Law on the Prevention and Control of Environmental Pollution by Solid Wasteand other laws.(2) Both the Company and its subsidiaries are equipped with comprehensive environmental protection treatment facilities. Thepre-treatment-aerobic-anaerobic-in-depth treatment technology is the major technology for water treatment, which can achievestandardised discharge of waste water. Moreover, subsidiaries are equipped with recycling system for process effluent, and reusetreated waste water to the greatest extent in order to minimise pollution. The Company has constructed a total of 8 water treatmentplants, with daily treatment capacity of 350,000 m

. A total of ten online water monitoring facilities were installed in subsidiaries,which are all operated by entrusted enterprises qualified for running such facilities. In addition, governmental authority will regularlyvisit the Company to conduct comparison of online monitoring data every quarter. All data meets the standards.(3) Each subsidiary’s organized emission outlets are equipped with an online monitoring system for real-time monitoring. Allsubsidiaries have their own power plants. Each self-owned plant has its own environmental protection facilities for de-dusting,desulphurisation and denitrification. Denitrification is conducted through SNCR, while desulphurisation is primarily conductedthrough gypsum desulphurisation (ammonia desulphurisation is adopted in the self-owned plant of Jiangxi Chenming). Substantiallyall of the emissions indicators are below 50% of the execution standards. Other supporting facilities such as alkali recovery boilersand lime kilns are also in compliance with the emission standards.

Environmental impact assessment of construction projects and other environmental protection administrative licensing

The Company has strictly complied with the environmental laws and regulations all along to carry out environmental impactassessment of construction projects. The construction projects are all subject to environmental impact assessment. During theconstruction process, a reasonable environmental protection project construction plan is formulated and strictly implemented. Theenvironmental protection facilities and the main project are designed, constructed and put into operation at the same time. At present,all construction projects put into production have obtained environmental impact assessment approvals and acceptance approvals.In June 2017, the Company and its subsidiaries completed the formalities for new discharge permits in accordance with the Measuresfor the Administration of Pollutant Discharge Permits of the Ministry of Environmental Protection, and the discharge permits of thenew projects were renewed according to the environmental protection requirements in a timely manner.

Emergency plan for emergency environmental incidents

The Company has strictly implemented emergency regulations for emergency environmental incidents, and formulated variousemergency plans for emergency environmental incidents according to the technical requirements in the “Technical Guidelines forEmergency Environmental Pollution Accidents”. The plans are reviewed by and filed with the Environmental Protection Bureau, andregular emergency training and emergency drills are conducted. Emergency measures in relation to dangerous chemicals areformulated in accordance with the environmental protection requirements. At the same time, necessary emergency supplies areprovided with regular inspections and updates.

Environmental self-monitoring programme

The Company has strictly complied with self-monitoring laws and regulations, and conducted self-monitoring in accordance with theenvironmental protection requirements to establish and perfect the corporate environmental management ledgers and materials. Atpresent, self-monitoring is a combination of manual monitoring and automatic monitoring. At the same time, qualified units areengaged to conduct regular monitoring. Automatic monitored items include: total wastewater discharge (COD, ammonia nitrogen,flow rate, total phosphorus, total nitrogen and PH); power plant, alkali recovery boilers and lime kiln exhaust emissions (sulphurdioxide, nitrogen oxide and smoke). Manually monitored items include: daily monitoring of COD, ammonia nitrogen, SS, chroma,PH, total phosphorus and total nitrogen indicators. Sewage and other monitoring items, unorganised exhaust emission, solid waste,and noise at the plant boundary, are monitored on a monthly or quarterly basis by qualified units engaged in accordance with thelocal environmental protection requirements in relation to each subsidiary.The self-monitoring data and environmental monitoring programmes for pollutants discharge of various subsidiaries are published onthe national key pollution source information disclosure website and the provincial key pollution source information disclosurewebsites.

Other environmental information to be disclosed

The relevant environmental protection information of the pollutant discharge permit information and the pollutant discharge permitrequirements is announced on the national sewage discharge permit management information platform.

Other environmental protection related information

Other environmental protection related information is announced on the Company’s website.

XVI. Other matters of significance

√ Applicable □ Not applicable

1. Distribution of fixed dividend of Chenming You 01The dividend was accrued from 17 March 2017 on the basis of the 22.5 million preference shares issued with a nominal value ofRMB100 per share. As calculated according to the dividend rate of 4.36%, a dividend of RMB4.36 (tax inclusive) per preferenceshare was distributed. The Company distributed dividend amounting to RMB98.10 million in total (tax inclusive).

For details, please refer to relevant announcement (announcement no.: 2018-016) of the Company published on CNINFO on 10March 2018.

2. Issue of medium-term notes with an amount of RMB1,000 millionThe public issue of the 2018 first tranche of medium-term notes in the national inter-bank bond market was launched by theCompany on 16 March 2018. The amount of the issue was RMB1,000 million with a nominal value of RMB100 each at the interestrate of 7.50%.

For details, please refer to relevant announcement (announcement no.: 2018-017) of the Company published on CNINFO on 22March 2018.

3. Public issuance of “18 Chenming Bond 01”On 13 March 2017, the Company was approved by the CSRC for the public issuance of corporate bonds with a nominal value ofnot more than RMB4 billion according to the Zheng Jian Xu Ke [2017] No. 342. The bonds were issued in tranches. From 29 March2018 to 2 April 2018, the Company issued corporate bonds (first tranche) to institutional investors. The original basic offline

issuance size of the bonds was RMB500 million, subject to over-allotment of not more than RMB2.3 billion. The actual offlineissuance size was RMB900 million with a nominal value of RMB100. The bonds were issued at par value with a coupon rate of7.28%.

For details, please refer to relevant announcements (announcement no.: 2018-019, 2018-026, 2018-030 and 2018-068) of theCompany published on CNINFO on 27 March 2018, 28 March 2018, 2 April 2018 and 31 May 2018 respectively.

4. Entering into the Developmental Financial Cooperation Agreement with China Development BankOn 29 March 2018, the Company and China Development Bank entered into the Developmental Financial CooperationAgreement to establish a new strategic partnership for the all-rounded and in-depth cooperation between an industrial group and afinancial group. Adhering to the principle of “planning first”, both parties will make full use of their respective advantages to carryout in-depth cooperation in areas such as medium and long-term project cooperation, loans for working capital, intermediary businessand cross-border financing through project cooperation at the early stage and cooperation on financial products.

For details, please refer to relevant announcement (announcement no.: 2018-028) of the Company published on CNINFO on 1April 2018.

5. 2017 profit distribution plan for ordinary sharesOn 13 June 2018, the Company convened the 2017 annual general meeting, at which, the 2017 profit distribution plan wasconsidered and approved: based o n the num ber of the shar es as at the divid end distribution r egistration date of 1,936,405,467 shares, acash dividend of RMB6.00 (tax inclusive) was to be paid to all shareholders for every 10 shares held, and a capitalisation issue madeout of the capital reserves of 5 shares for every 10 shares held will be distributed to ordinary shareholders. The total cash dividenddistributed to the holders of ordinary shares amounted to RMB1,161,843,280.20 (tax inclusive) in 2017.

For details, please refer to relevant announcement (announcement no.: 2018-079) of the Company published on CNINFO on 14June 2018.

6. Information disclosure index for the first half of 2018Announcement No.

Subject matter Date of

publication

Publication website and

index2018-001 Announcement on Result of the Issue of 2018 First Tranche of Super &

Short-term Commercial Paper

9 January 2018http://www.cninfo.com.cn2018-002 Announcement on Resignation of Secretary to the Board 19 January 2018 http://www.cninfo.com.cn

2018-003 Announcement on Estimated Annual Results for 2017 19 January 2018 http://www.cninfo.com.cn2018-004 Announcement on Result of the Issue of 2018 Second Tranche of Super

& Short-term Commercial Paper

19 January 2018 http://www.cninfo.com.cn2018-005 Second Supplementary Notice of the 2018 First Extraordinary General

Meeting

26 January 2018 http://www.cninfo.com.cn2018-006 Announcement in respect of Resolutions of the Twentieth Extraordinary

Meeting of the Eighth Session of the Board of Directors

30 January 2018 http://www.cninfo.com.cn2018-007 Announcement on the Receipt of 30% equity interest in Hongtai Real

Estate held by Guangdong Dejun and Guangdong Dejun’s Debt toHongtai Real Estate and Related Party Transaction

30 January 2018 http://www.cninfo.com.cn2018-008 Announcement on External Investment 30 January 2018 http://www.cninfo.com.cn

2018-009 Announcement in respect of Guarantee in Favour of Related

Subsidiaries for their Credit Facilities Applications

30 January 2018 http://www.cninfo.com.cn2018-010 Announcement on Additional Resolutions Proposed at the 2018 First

Extraordinary General Meeting

30 January 2018 http://www.cninfo.com.cn2018-011 Supplementary Notice of 2018 First Extraordinary General Meeting 30 January 2018 http://www.cninfo.com.cn

2018-012 Announcement on Result of the Issue of 2018 Third Tranche of Super &

Short-term Commercial Paper

8 February 2018 http://www.cninfo.com.cn2018-013 Poll Results Announcement of the 2018 First Extraordinary General

Meeting

14 February2018

http://www.cninfo.com.cn2018-014 Indicative Announcement 1 March 2018 http://www.cninfo.com.cn

2018-015 Announcement in respect of Resolutions of the Twenty-first

Extraordinary Meeting of the Eighth Session of the Board of Directors

10 March 2018http://www.cninfo.com.cn2018-016 Announcement on the Distribution of Dividend for Preference Share 14 March 2018http://www.cninfo.com.cn

2018-017 Announcement on Result of the Issue of 2018 First Tranche o

Medium-term Notes

22 March 2018http://www.cninfo.com.cn2018-018 Announcement on Pledge of Shares held by Shareholders 22 March 2018http://www.cninfo.com.cn

2018-019 Announcement on 2018 Public Issue of Corporate Bonds to Qualified

Investors (First Tranche)

27 March 2018http://www.cninfo.com.cn2018-020 Announcement in respect of Resolutions of the Eighth Meeting of the

Eighth Session of the Board of Directors

28 March 2018http://www.cninfo.com.cn2018-021 2017 Annual Report Summary 28 March 2018http://www.cninfo.com.cn

2018-022 Announcement on Provision of Guarantee for General Credit Lines o

ff

Relevant Subsidiaries

28 March 2018http://www.cninfo.com.cn2018-023 Announcement in respect of Resolutions of the Ninth Meeting of the

Eighth Session of the Supervisory Committee

28 March 2018http://www.cninfo.com.cn2018-024 Notice of 2017 Annual General Meeting 28 March 2018http://www.cninfo.com.cn

2018-025 Announcement on the Appointment of the auditors for 2018 28 March 2018http://www.cninfo.com.cn2018-026 Announcement on the Coupon Rate of 2018 Public Issue of Corporate

Bonds to Qualified Investors (First Tranche)

28 March 2018http://www.cninfo.com.cn2018-027 Announcement on Result of the Issue of 2018 Fourth Tranche of Super

& Short-term Commercial Paper

30 March 2018http://www.cninfo.com.cn2018-028 Announcement on Entering into the Developmental Financial

Cooperation agreement with China Development Bank

2 April 2018 http://www.cninfo.com.cn2018-029 Announcement on the Receipt of an Arbitral Award by a Subsidiary 2 April 2018 http://www.cninfo.com.cn

2018-030 Announcement on the Result of 2018 Public Issue of Corporate Bonds to

Qualified Investors (First Tranche)

2 April 2018 http://www.cninfo.com.cn2018-031 Announcement on Pledge of Shares held by Shareholders 12 April 2018 http://www.cninfo.com.cn

2018-032 Announcement in Respect of Resolutions of the Twenty-Second

Extraordinary Meeting of the Eighth Session of the Board of Directors

17 April 2018 http://www.cninfo.com.cn2018-033 Announcement on the Extension of the Validity Period of the

resolutions in Respect of the Non-

fp

ublic Issue of Shares of theCompany at the General Meeting and the Validity Period of theAuthorisation Granted to the Board to Deal with Related Matters

17 April 2018 http://www.cninfo.com.cn

2018-034 Notice of 2018 Second Extraordinary General Meeting 17 April 2018 http://www.cninfo.com.cn2018-035 Notice of the 2018 First Domestic Listed Share Class Meeting and 2018

First Overseas Listed Share Class Meeting

17 April 2018 http://www.cninfo.com.cn

2018-036 Announcement in respect of Resolutions of the Ninth Extraordinary

Meeting of the Eighth Session of the Supervisory Committee

17 April 2018 http://www.cninfo.com.cn2018-037 Announcement on External Investment 17 April 2018 http://www.cninfo.com.cn

2018-038 Announcement on the Sale of Available-for-sale Financial Assets 17 April 2018 http://www.cninfo.com.cn2018-039 Announcement in respect of Resolutions of the Ninth Meeting of the

Eighth Session of the Board of Directors

27 April 2018 http://www.cninfo.com.cn2018-040 2017 First Quarterly Report 27 April 2018 http://www.cninfo.com.cn

2018-041 Announcement on External Investment (I) 27 April 2018 http://www.cninfo.com.cn2018-042 Announcement on External Investment (II) 27 April 2018 http://www.cninfo.com.cn2018-043 Announcement on Result of the Issue of 2018 Fifth Tranche of Super &

Short-term Commercial Paper

27 April 2018 http://www.cninfo.com.cn2018-044 Announcement on the Cancellation of the General Meeting and

Postponement of the 2017 Annual General Meeting

27 April 2018 http://www.cninfo.com.cn2018-045 Notice on the Cancellation of the General Meeting and Postponement o

the 2017 Annual General Meeting

27 April 2018 http://www.cninfo.com.cn2018-046 Notice of the 2018 Second Domestic Listed Share Class Meeting and

2018 Second Overseas Listed Share Class Meeting

27 April 2018 http://www.cninfo.com.cn2018-047 Announcement in respect of Resolutions of the Tenth Meeting of the

Eighth Session of the Supervisory Committee

27 April 2018 http://www.cninfo.com.cn2018-048 Announcement on the Change of the Name of the Controlling

Shareholder

3 May 2018 http://www.cninfo.com.cn2018-049 Announcement in Respect of Resolutions of the Twenty-Third

Extraordinary Meeting of the Eighth Session of the Board of Directors

5 May 2018 http://www.cninfo.com.cn2018-050 Announcement on External Investment 5 May 2018 http://www.cninfo.com.cn

2018-051 Announcement on Resignation of the Vice Chairman 9 May 2018 http://www.cninfo.com.cn2018-052 Announcement on Result of the Issue of 2018 Sixth Tranche of Super &

Short-term Commercial Paper

11 May 2018 http://www.cninfo.com.cn2018-053 Announcement on Entering into the Framework Agreement for Strategic

Cooperation between Banks and Enterprises with Guangdong NanyueBank

15 May 2018 http://www.cninfo.com.cn2018-054 Indicative Announcement 15 May 2018 http://www.cninfo.com.cn

2018-055 Announcement in respect of Resolutions of the Twenty-fourth

Extraordinary Meeting of the Eighth Session of the Board of Directors

16 May 2018 http://www.cninfo.com.cn2018-056 Announcement on Appointment of the Secretary of the Board and

Securities Affairs Representative

16 May 2018 http://www.cninfo.com.cn2018-057 Second Supplementary Notice of the 2018 Second Extraordinary

General Meeting

16 May 2018 http://www.cninfo.com.cn2018-058 Second Supplementary Notice of the 2018 First Domestic Listed Share

Class Meeting and 2018 First Overseas Listed Share Class Meeting

16 May 2018 http://www.cninfo.com.cn2018-059 Announcement on Receipt of Government Subsidy 18 May 2018 http://www.cninfo.com.cn

2018-060 Announcement on Acquisition of Minority Interest in Subsidiaries 24 May 2018 http://www.cninfo.com.cn

2018-061 Announcement on Pledge of Shares held by Shareholders and the

Release of Pledge of Part of the Shares

29 May 2018 http://www.cninfo.com.cn2018-062 Announcement on the Progress of External Investment 29 May 2018 http://www.cninfo.com.cn

2018-063 Announcement on Additional Resolutions Proposed at the 2017 Annual

General Meeting

30 May 2018 http://www.cninfo.com.cn2018-064 Supplementary Notice of 2017 Annual General Meeting 30 May 2018 http://www.cninfo.com.cn

2018-065 Second Supplementary Notice of the 2018 Second Domestic Listed

Share Class Meeting and 2018 Second Overseas Listed Share ClassMeeting

30 May 2018 http://www.cninfo.com.cn2018-066 Announcement on Result of the Issue of 2018 Seventh Tranche of Super

& Short-term Commercial Paper

30 May 2018 http://www.cninfo.com.cn2018-067 Announcement on Pledge of Shares held by Shareholders 31 May 2018 http://www.cninfo.com.cn

2018-068 Announcement on the Listing of 2018 Public Issue of Corporate Bonds to

Qualified Investors (First Tranche)

31 May 2018 http://www.cninfo.com.cn2018-069 Announcement in Respect of Resolutions of 2018 Second Extraordinary

General Meeting, 2018 First Class Meeting For Domestic Shareholdersand 2018 First Class Meeting For Overseas Shareholders

2 June 2018 http://www.cninfo.com.cn2018-070 Shandong Chenming Paper Holdings Limited Announcement in respect

of Resolutions of the 25th Extraordinary Meeting of the Eighth Sessionof the Board of Directors

5 June 2018 http://www.cninfo.com.cn2018-071 Announcement in respect of Resolutions of the Tenth Extraordinary

Meeting of the Eighth Session of the Supervisory Committee

5 June 2018 http://www.cninfo.com.cn2018-072 Announcement on Dilution of Current Returns and Remedial Measures

upon Non-public Offering (Fifth Revision)

5 June 2018 http://www.cninfo.com.cn2018-073 Announcement on Adjustment to the Price Determination Date for the

Non-public Issue of A Shares

5 June 2018 http://www.cninfo.com.cn2018-074 Announcement on Entering into Conditional Share Purchase Agreement

and Connected Transactions under the Non-public Offering of A Share(Third Revision)

5 June 2018 http://www.cninfo.com.cn2018-075 Notice of 2018 Third Extraordinary General Meeting 5 June 2018 http://www.cninfo.com.cn

2018-076 Notice of the 2018 Third Domestic Listed Share Class Meeting and

2018 Third Overseas Listed Share Class Meeting

5 June 2018 http://www.cninfo.com.cn2018-077 Announcement on Release of Pledge of Shares held by Shareholders 5 June 2018 http://www.cninfo.com.cn

2018-078 Announcement on Fifth Revision of Non-public Offering for 2016 5 June 2018 http://www.cninfo.com.cn2018-079 Announcement in Respect of Resolutions of 2017 Annual General

Meeting, 2018 Second Class Meeting For Domestic Shareholders and2018 Second Class Meeting For Overseas Shareholders

14 June 2018 http://www.cninfo.com.cn2018-080 Shandong Chenming Paper Holdings Limited Announcement in respect

of Resolutions of the 26th Extraordinary Meeting of the Eighth Sessionof the Board of Directors

23 June 2018 http://www.cninfo.com.cn2018-081 Announcement on New Ordinary Connected Transactions in 2018 23 June 2018 http://www.cninfo.com.cn

2018-082 Announcement on the Disposal of the 40% Equity Interest in Wan Xing 23 June 2018 http://www.cninfo.com.cn

Real Estate by Wuhan Chenming2018-083 Announcement on Supplemental Pledge of Shares held by Shareholders26 June 2018 http://www.cninfo.com.cn

XVII. Matters of significant of subsidiaries of the Company

√ Applicable □ Not applicable1. Disposal of 30% equity interest in Xuchang ChenmingAt the eighteenth extraordinary meeting of the eighth session of the Board of the Company held on 27 November 2017, theResolution on the disposal of 30% equity interest in Xuchang Chenming was considered and approved, pursuant to which theCompany proposed to dispose of 30% equity interest in its controlling subsidiary Xuchang Chenming Paper Co., Ltd. (“XuchangChenming”) through public tender. For details, please refer to the Announcement on the Disposal of Equity Interest in XuchangChenming published by the Company on 28 November 2017 (announcement no.: 2017-147).Based on the appraised value, the Company held public tender though the Shandong Weifang Property Right Exchange Center on 8December 2017, and entered into an equity exchange agreement with Xuchang Chenzhuo Trading Co., Ltd. (許昌市晨卓貿易有限公司) (“Chenzhuo Trading”), pursuant to which the Company conditionally transferred the 30% equity interest in XuchangChenming at the consideration of RMB30 million. On 19 January 2018, the Company received the Equity Transaction Certificateissued by the Shandong Weifang Property Right Exchange Center.

2. Receipt of Shanghai Chenming of 30% equity interest in Shanghai Hongtai Real Estate held by Guangdong DejunShanghai Chenming Industry Co., Ltd. and Guangdong Dejun Investment Co., Ltd. entered into the Equity Acquisition Agreement.Based on the appraised value of the total shareholders’ equity of Shanghai Hongtai Real Estate Co., Ltd. of RMB3,908.397 million,Shanghai Chenming proposed to acquire 30% equity interest in and the loan due from Hongtai Real Estate held by Guangdong Dejunat a consideration of RMB1,275,000,000, in which the equity interest amounted to RMB1,171,960,000 and loan amounted toRMB103,040,000.For details, please refer to the relevant announcement (announcement no.: 2018-007) of the Company published on CNINFO on 30January 2018.

3. Transfer of the entire company woodland of Huanggang ArboricultureIn January 2008, the Company established the Huanggang Chenming Arboriculture Development Co., Ltd. (“HuanggangArboriculture”) for investment and construction for the raw material forest projects. In aggregate, it constructed woodland of 854,100mu and incurred expense of RMB368,456,600, including principal and interest. In December 2015, The Notice about StrictProtection of Natural Forest was issued by the State Forestry Bureau; in October 2016, the Notice about Accelerating in Ceasing theCommercial Logging of Natural Forest (《關於加快推進停止天然林商業性採伐工作的通知》) was issued by the Department ofForestry of Hubei; and in January 2017, the Decision on the Vigorous Promotion of Ecological Protection and Green Development inthe Yangtze River Economic Zone (《關於大力推進長江經濟帶生態保護和綠色發展的決定》 was issued by the Hubei ProvincialPeople’s Congress, under which the majority of woodland of Huanggang Arboriculture was classified as within the National NaturalForest Reserve. After arm’s length negotiation with the Huanggang government, Huanggang Arboriculture will return all purchasedproprietary woodland and woodland warrants and will go through all legal processes according to the law. In the future, theHuanggang pulp and paper project will actively explore overseas resource markets and meet production needs through importedwood chips. As at 31 March 2018, the accumulated woodland investment costs of Huanggang Arboriculture was RMB371,367,500.After returning all woodland of Huanggang Arboriculture, the loss is expected to amount to RMB1,710,200 and the loss on changesin fair value is RMB16,723,700, specific financial data being subject to auditing. Investors should be aware of the investment risks.

For details, please refer to the relevant announcement (announcement no.: 2018-029) of the Company published on CNINFO on 2April 2018.

4. Disposal of 50% equity interest in Guangdong DejunPursuant to the decision approved at the twenty-second extraordinary meeting of the eighth session of the Board of the Company heldon 16 April 2018, the Company andShangh ai Zhongneng Enterprise Development (Group) Co., Ltd. (“Shanghai Zhongneng”)

entered into the Equity Repurchase Agreement, under which the 50% equity interest in Guangdong Dejun, being theavailable-for-sale financial asset, to Shanghai Zhongneng, with the aggregate of premium repurchase and investment incomeamounting to RMB2,634,041,400. The Company received the sum on 28 April 2018. Subsequent to the transfer, the Company nolonger held any equity interests in Guangdong Dejun.For details, please refer to the relevant announcement (announcement no.: 2018-038) of the Company published on CNINFO on 17April 2018.

5. Acquisition of 14.2742% equity interest held by a minority shareholder of Wuhan ChenmingTo better advance the strategic development positioning of the Company, optimize the management structure, streamline businesslayout and further elevate the Company’s profitability, the Company intends to acquire 14.2742% equity interest in WuhanChenming, a controlling subsidiary of the Company, held by Hubei Hanyang Paper Mill (“Hanyang Paper Mill”), a minorityshareholder of Wuhan Chenming, by way of transfer through agreement. In accordance with the result of public tender, the Companyreceived the abovementioned equity interest held by Hanyang Paper Mill at the consideration of RMB60,896,600. Subsequent to thecompletion of the equity transfer, the Company will hold 65.205% of the equity interest in Wuhan Chenming.For details, please refer to the relevant announcement (announcement no.: 2018-060) of the Company published on CNINFO on 24May 2018.

6. Disposal of 40% equity interest in Wan Xing Real Estate by Wuhan ChenmingTo further integrate the Company’s resources, focus its advantages on the principal business and enhance quality and efficiency,Wuhan Chenming Hanyang Paper Holdings Co., Ltd. intends to dispose of 40% equity interest in Wuhan Chenming Wan Xing RealEstate Co., Ltd., an investee, through public tender. The transferee will be determined by way of bidding, and the final price will bedetermined comprehensively according to the tender and auctioning with reference to the appraisal value.For details, please refer to the relevant announcement (announcement no.: 2018-082) of the Company published on CNINFO on 23June 2018.

VI Changes in Share Capital and Shareholders

I. Changes in shares

1. Changes in shares

Unit: share

Opening balance Change during the reporting period (+/-) Closing balanceAmounts

Percenta

ge

New issue

Bonusissue

Sharesconvertedfrom reserve

OthersSubtotal Amounts

Percenta

geI. Restricted shares 7,935,101 0.41% 634,738634,738 8,569,8390.44%

1. Shares held by otherdomestic investors

7,935,101 0.41% 634,738634,738 8,569,8390.44%Of which: Shares held by

domestic natural persons

7,935,101 0.41% 634,738634,738 8,569,8390.44%II. Non-restricted shares 1,928,470,366 99.59% -634,738-634,738 1,927,835,62899.56%

1. RMB ordinary shares 1,105,389,555 57.08% -619,338-619,338 1,104,770,21757.05%2. Domestic listed foreignshare

470,877,311 24.32% -15,400-15,400 470,861,91124.32%3. Overseas listed foreign

shares

352,203,500 18.19% 352,203,50018.19%III. Total number of

shares

1,936,405,467 100.00% 1,936,405,467100.00%The reasons for such changes

√ Applicable □ Not applicableBefore and after the change, the number of restricted shares held by domestic natural persons increased by 634,738 from 7,935,101 to8,569,839, due to the fact that: according to the Practice Guidance for the Company’s Shares Held by the Directors, Supervisors andSenior Management of the Listed Companies of Shenzhen Stock Exchange, 25% (634,738 shares) of the non-restricted RMBordinary shares (A shares) held by directors who have been resigned for less than half a year, senior management and new directorswere converted into restricted shares.Approval of changes in shareholding□ Applicable √ Not applicableTransfer of shares arising from changes in shareholding□ Applicable √ Not applicableThe effects of changes in shareholding on financial indicators such as basic earnings per share, diluted earnings per share and netassets per share attributable to shareholders of ordinary shares of the Company for the latest year and the latest period□ Applicable √ Not applicableOther information considered necessary by the Company or required by the securities regulatory authorities to be disclosed

□ Applicable √ Not applicable

2. Changes in restricted shares

□ Applicable √ Not applicable

II. Issuance and listing of securities

□ Applicable √ Not applicable

III. Total number of shareholders and shareholdings

Unit: shareTotal number of shareholdersof ordinary shares as at theend of the reporting period

111,039, of which 91,323 were holdersof A shares, 19,346 were holders of Bshares and 370 were holders of H shares

Total number of shareholders of preference shareswith restored voting right as at the end of thereporting period (if any) (please refer to note 8)

Shareholdings of shareholders of ordinary shares interested in more than 5% of the shares of the Company or top ten shareholders

of ordinary shares

Name of shareholders

Nature ofshareholders

Percenta

ge ofsharehol

ding

Number of

ordinaryshares heldat the end ofthe reporting

period

Changes(increase

ordecrease)during thereporting

period

Number

ofrestricte

dordinary

shares

held

Number ofnon-restricte

d ordinaryshares held

Share pledged or

locked-upStatus of

shares

NumberCHENMING HOLDINGS

COMPANY LIMITED

State-owned

legal person

15.13%293,003,65700293,003,657Pledged 225,717,161

HKSCC NOMINEES LIMITED

Overseas legalperson

12.84%248,678,750-188,500 0248,678,750CHENMING HOLDINGS

(HONG KONG) LIMITED

Overseas legalperson

12.54%242,754,37500242,754,375

CENTRAL HUIJIN ASSETMANAGEMENT LTD.

State-owned

legal person

2.07%40,137,9000040,137,900

CHINA UNIVERSAL FUND -CHINA CONSTRUCTIONBANK - CHINA LIFEINSURANCE - CHINA LIFEINSURANCE’S EQUITYPORTFOLIO ENTRUSTED TOCHINA UNIVERSAL FUND

Others 0.47%9,134,2407,985,840 09,134,240

VANGUARD EMERGINGMARKETS STOCK INDEX

Overseas legalperson

0.44%8,608,238008,608,238

FUNDJIN Xing

Domesticnature person

0.44%8,510,1172,720,917 08,510,117AGRICULTURAL BANK OF

CHINA LIMITED – ESSENCECOMPARATIVE ADVANTAGEFLEXIBLE ALLOCATION OFHYBRID SECURITIESINVESTMENT FUND

Others 0.39%7,646,4077,646,407 08,280,589

INDUSTRIAL ANDCOMMERCIAL BANK OFCHINA - CHINA UNIVERSALFOCUSED GROWTH FUND

Others 0.39%7,500,0097,500,009 07,500,009

CHINA CONSTRUCTIONBANK CORPORATION -CHINA UNIVERSALENVIRONMENT PROTECTIONINDUSTRY FUND

Others 0.36%7,000,0261,499,929 07,000,026

Connected relationship or connected partyrelationship among the above shareholders

A shareholder, Chenming Holdings (Hong Kong) Limited, which is an overseas legalperson, is a wholly-owned subsidiary of a shareholder, Shouguang Chenming HoldingsCompany Limited, which is a state-owned legal person. Hence, they are persons actingin concert under Administration of Disclosure of Information on the Change ofShareholdings in Listed Companies Procedures. Save for the above, it is not aware thatany other shareholders of tradable shares are persons acting in concert and is also notaware that any other shareholders of tradable shares are connected with each other.Shareholdings of the top ten shareholders of ordinary shares of non-restricted shares

Name of shareholders

Number ofnon-restrictedordinary shares

held as at the

end of thereporting period

Class of shares

Class of shares Number

CHENMING HOLDINGS COMPANY LIMITED 293,003,657RMB ordinary shares 293,003,657HKSCC NOMINEES LIMITED 248,678,750Overseas listed foreign shares 248,678,750CHENMING HOLDINGS (HONG KONG)

LIMITED

242,754,375

Domestically l i sted foreign shares 140,478,375Domestically l i sted foreign shares 102,276,000CENTRAL HUIJIN ASSET MANAGEMENT LTD.40,137,900RMB ordinary shares 40,137,900CHINA UNIVERSAL FUND - CHINACONSTRUCTION BANK - CHINA LIFEINSURANCE - CHINA LIFE INSURANCE’S

9,134,240RMB ordinary shares 9,134,240

EQUITY PORTFOLIO ENTRUSTED TO CHINAUNIVERSAL FUNDVANGUARD EMERGING MARKETS STOCKINDEX FUND

8,608,238Domestically l i sted foreign shares 8,608,238

JIN Xing 8,510,117Domestically listed foreign shares 8,510,117AGRICULTURAL BANK OF CHINA LIMITED –ESSENCE COMPARATIVE ADVANTAGEFLEXIBLE ALLOCATION OF HYBRIDSECURITIES INVESTMENT FUND

7,646,407RMB ordinary shares 7,646,407

INDUSTRIAL AND COMMERCIAL BANK OFCHINA - CHINA UNIVERSAL FOCUSEDGROWTH FUND

7,500,009RMB ordinary shares 7,500,009

CHINA CONSTRUCTION BANK CORPORATION- CHINA UNIVERSAL ENVIRONMENTPROTECTION INDUSTRY FUND

7,000,026RMB ordinary shares 7,000,026

Connected relationship or connected partyrelationship among the top ten shareholdersof ordinary shares of non-restricted shares,and between the top ten shareholders ofordinary shares of non-restricted shares andthe top ten shareholders of ordinary shares

A shareholder, Chenming Holdings (Hong Kong) Limited, which is an overseas legalperson, is a wholly-owned subsidiary of a shareholder, Shouguang Chenming HoldingsCompany Limited, which is a state-owned legal person. Hence they are persons actingin concert under Administration of Disclosure of Information on the Change ofShareholdings in Listed Companies Procedures. Save for the above, it is not aware thatany other shareholders of tradable shares are persons acting in concert and is also notaware that any other shareholders of tradable shares are connected with each other.Whether an agreed repurchase transaction was entered into during the reporting period by the top 10 shareholders of ordinary sharesand top 10 shareholders of non-restricted shares of the Company□ Yes √ NoThe top 10 shareholders of ordinary shares and top 10 shareholders of non-restricted shares of the Company did not enter any agreedrepurchase transaction during the reporting period.

IV. Change of controlling shareholders or beneficial controllers

The change of controlling shareholders during the reporting period□ Applicable √ Not applicableThere was no change of controlling shareholders of the Company during the reporting period.Change of beneficial owner during the reporting period□ Applicable √ Not applicableThere was no change of beneficial owner of the Company during the reporting period.

VII Preference Shares

√ Applicable □ Not applicable

I. Issue and listing of preference shares during the reporting period

□ Applicable √ Not applicableThere was no issue and listing of preference shares during the reporting period.

II. Holders of preference shares and their shareholdings

Unit: shareTotal number of shareholders of preference shares as at the end of the reporting period 7

Holders holdings more than 5% of the preference shares of the Company or top ten holders of preference shares

Name of shareholders

Nature ofshareholders

Preferen

cesharehol

ding

Number ofpreferenceshares held atthe end of the

reporting

period

Changes(increase or

decrease)during thereporting

period

Share pledged or

locked-upStatus of

shares

NumberBEIJING YIBEN ZHONGXING

INVESTMENT MANAGEMENT CO., LTD.

Domesticnon-state-owned

legal person

27.78%12,500,0000Pledged 12,500,000

BANK OF COMMUNICATIONSINTERNATIONAL TRUST CO., LTD. -HUILI NO.167 SINGLE CAPITAL TRUST

Others 22.44%10,100,0000

BANK OF COMMUNICATIONSINTERNATIONAL TRUST CO., LTD. -HUILI NO.136 SINGLE CAPITAL TRUST

Others 14.22%6,400,0000

QILU BANK CO., LTD. - QILU BANKQUANXIN WEALTH MANAGEMENTPRODUCT SERIES

Others 13.33%6,000,0000

HENGFENG BANK CO., LTD.

Domesticnon-state-owned

legal person

11.11%5,000,0000SHANGHAI STATE-OWNED ASSETS

OPERATION CO., LTD.

State-owned legal

person

6.67%3,000,0000

NCF - MINSHENG BANK - CHINAFORTUNE INTERNATIONAL TRUST –

Others 4.44%2,000,0000

CHINA FORTUNE TRUST?MIN XIN NO.11 SINGLE CAPITAL TRUST

Connected relationship or connected partyrelationship among the top ten holders ofpreference shares, and between the top tenholders of preference shares and the top tenholders of ordinary shares

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

III. Repurchase or conversion

□ Applicable √ Not applicableThere was no repurchase or conversion during the reporting period.

IV. Resumption and exercise of voting rights

□ Applicable √ Not applicableThere was no resumption and exercise of voting rights conferred by preference shares during the reporting period.

V. Accounting policy and reasons thereof

√ Applicable □ Not applicable

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

VIII Directors, Supervisors and Senior Management

I. Changes in shareholdings of Directors, Supervisors and Senior Management

□ Applicable √ Not applicableThere was no change in shareholdings of Directors, Supervisors and senior management of the Company during the reporting period.Please see the annual report for 2017 for details.

II. Changes of Directors, Supervisors and Senior Management of the Company

√ Applicable □ Not applicable

Name Position Type Date ReasonHu Changqing

Vice Chairman anddeputy general manager

Elected 13 June 2018

Elected as the Vice Chairman of the eighth session of theBoard.

Chen Gang Director Elected 13 June 2018 Elected as a director of the eighth session of the Board.Xiao Peng Secretary to the Board Dismissed 19 January 2018

Dismissed as the secretary to the Board due to personalwork change.Yuan Xikun Secretary to the Board Appointment16 May 2018 Appointed by the Board as the Secretary to the Board.

IX Corporate Bonds

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

I. Basic information on corporate bonds

Name of bond

Bondabbreviation

Bondcode

Issue date

Maturity

date

Outstandingamount of the bonds

(RMB’0,000)

Interest

rate

Paymentmethod

The public issuanceof the corporatebonds of ShandongChenming PaperHoldings Limited toqualified investorsin 2017 (tranche I)

17 ChenmingBond 01

112570 21 August 2017

21 August2022

120,0006.50%

Interest is paidannually. Theprincipal amountand the last interestpayment will bepaid on the maturitydate.The public issuanceof the corporatebonds of ShandongChenming PaperHoldings Limited toqualified investorsin 2018 (tranche I)

18 ChenmingBond 01

112641 29 March 2018

29 March2023

90,0007.28%

Interest is paidannually. Theprincipal amountand the last interestpayment will bepaid on the maturitydate.Stock exchange on which corporate bonds are listed or transferredShenzhen Stock Exchange

Investor eligibility arrangement

Offline subscription: Institutional investors with A share security account openedunder China Securities Depository and Clearing Co., Ltd.Interest payment of corporate bonds during thereporting period

There was no interest payment during the reporting period.Performance of relevant terms

during the reporting period, forspecial terms such a s issuer orinvestor option andinterchangeable for corporatebonds (if any)

Both 17 Chenming Bond 01 and 18 Chenming Bond 01 attach with options for the issuer toadjust the coupon rate and for investors to resell. The issuer has the right to determine theadjustment to the coupon rate for the following 3 years at the end of the second year and theadjustment to the coupon rate for the following year as the end of the fourth year. After issuingthe announcement on whether the coupon rate of the relevant tranche of bonds will be adjustedand the range of adjustment, the investors have the right to register for reselling during the

eriod as announced to resell all or part of the relevant tranche of bonds held to the issuer at parvalue.

II. Information on bond custodian and credit rating agency

Bond custodian:

Name

GF Securities Co.,Ltd.

Officeaddress

38th Floor, Metro Plaza, No.183Tianhe North Road, Guangzhou

Contact person

XuDuwei

Telephone ofcontact person

020-87555888Credit rating agency(ies) which conducted rating on corporate bonds during the reporting period:

Name

China Chengxin Securities ValuationCompany Limited

Office address

21/F, Anji Building, 760 Xizang South Road,Huangpu District, ShanghaiReason of change, procedures to be performed and impacts on interests ofinvestors, etc. in case the bond trustee and credit rating agency engaged by theCompany during the reporting period have changed (if applicable)

No change during the reporting period.

III. Use of proceeds from corporate bonds

Use of proceeds from corporate bonds andits implementation

The use of proceeds from issuance of corporate bonds has strictly completed relevantapplication and approval procedures. As at the end of the reporting period, the proceedsfrom 17 Chenming Bond 01 and 18 Chenming Bond 01 were fully used.Balance as at the end of the period(RMB’0,000)

Operation of special account for proceeds Special account for proceeds is used for the deposit of special capital from bonds.Is the use of proceeds consistent with theuse of proceeds guaranteed under theprospectus, proposed use of proceeds andother agreement?

Yes

IV. Credit rating of corporate bonds

The credit rating of 18 Chenming Bond 01 as granted by China Chengxin Securities Valuation Company Limited remained at AA+,and the credit rating for the Company was AA+ (stable outlook). The 2018 public issuance of the corporate bonds (tranche I) updatedrating report (2018) was published on CNINFO on 14 June 2018.The credit rating of 17 Chenming Bond 01 as granted by China Chengxin Securities Valuation Company Limited remained at AA+,and the credit rating for the Company was AA+ (stable outlook). The 2017 public issuance of the corporate bonds (tranche I) updatedrating report (2018) was published on CNINFO on 14 June 2018.

V. Credit enhancement mechanism, repayment plan and other repayment guaranteemeasures for corporate bonds

There was no change in credit enhancement mechanism, repayment plan and other repayment guarantee measures, which wereconsistent with relevant commitments as set out in the prospectuses, during the reporting period.

VI. Convening of meeting for bondholders during the reporting period

Not applicable.

VII. Performance of bond custodian during the reporting period

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

VIII. Major accounting data and financial indicators of the Company as at the end of thereporting period and last year (or for the reporting period and the corresponding period lastyear)

Item

As at the end of the reporting

period

As at the end of the prior year

Increase/decrease as at the end

of the reporting period ascompared to the end of the prior

yearCurrent ratio 86.70%86.32%0.38%Gearing ratio 72.95%71.34%1.61%Quick ratio 75.88%75.80%0.08%

The reporting period

The corresponding period of the

prior year

Increase/decrease of thereporting period as compared to

corresponding period of the

prior yearEBITDA interest coverage ratio 2.984.04-26.24%Loans payment ratio 100.00%100.00%0.00%Interest payment ratio 100.00%100.00%0.00%Major reason for more than 30% in year-on-year change for the above accounting data and financial indicators□ Applicable √ Not applicable

IX. Overdue liabilities

□ Applicable √ Not applicableThe Company did not have any liabilities overdue.

X. Interest payment on other bonds, debt and financing instruments during the reportingperiod

Unit: RMBItem Amount of interest paymentCorporate bonds 1,064,800,000.00

Super & short-term commercial papers 7,786,624,109.43

Total 8,851,424,109.43

XI. Bank credit obtained, its use and repayment of bank loans during the reporting period

During the reporting period, the Company obtained bank credit of RMB79,659 million, of which RMB47,806 million was utilisedwith RMB31,853 million outstanding. The Company repaid bank loans of RMB26,303 million.

XII. Performance of relevant agreements or commitments under the prospectus of corporatebonds during the reporting period

Nil

XIII. Matters of significance during the reporting period

Nil

XIV. Is there any guarantor for corporate bonds?

□ Yes √ No

X Financial Report

I. Auditors’ Report

Is the interim report audited□ Yes √ NoThe interim financial report is unaudited.

II. Financial Statements

The unit in the financial statements of the financial report is: RMB

1. Consolidated Balance Sheet

Prepared by: Shandong Chenming Paper Holdings Limited

30 June 2018

Unit: RMBItem Closing balance Opening balanceCURRENT ASSETS:

Monetary funds 18,221,475,254.6414,443,492,461.43Financial assets measured at fairvalue through profit or loss

0.0094,000,000.00Bills receivable 3,414,858,233.254,220,231,853.56Accounts receivable 3,771,972,562.503,665,865,577.03Prepayments 2,052,209,098.341,962,151,473.35Other receivables 594,045,363.59538,734,656.55Inventories 6,429,315,741.476,022,805,491.17Non-current assets due within oneyear

5,648,853,164.636,901,695,875.94Other current assets 11,391,587,771.9311,568,757,330.26Total current assets 51,524,317,190.3549,417,734,719.29NON-CURRENT ASSETS:

Available-for-sale financial assets 103,000,000.002,453,000,000.00Long-term receivables 9,561,944,402.259,400,862,089.18Long-term equity investments 401,425,440.97391,868,827.45Investment properties 4,750,494,168.514,809,535,109.82Fixed assets 27,822,887,081.6828,227,509,503.05Construction in progress 9,622,048,648.757,668,669,413.87Construction materials 10,036,240.5115,275,630.45Intangible assets 1,927,411,734.382,059,221,379.09Goodwill 20,283,787.1720,283,787.17Long-term prepaid expenses 134,407,595.23139,122,569.45Deferred income tax assets 518,667,202.23522,288,850.40Other non-current assets 679,555,760.89499,724,197.70Total non-current assets 55,552,162,062.5756,207,361,357.63Total assets 107,076,479,252.92105,625,096,076.92CURRENT LIABILITIES:

Short-term borrowings 34,822,972,619.6035,096,574,873.03

Bills payable 1,577,635,335.581,278,395,090.71Accounts payable 3,781,065,811.134,013,936,527.74Advance receipts 359,821,898.06243,182,891.22Staff remuneration payables 144,080,274.09185,130,892.10Taxes payable 392,925,658.39496,626,014.68Interest payable 119,390,579.9185,480,380.32Dividend payable 1,626,559,287.00Other payables 2,124,709,050.721,426,629,545.41Non-current liabilities due withinone year

4,321,258,031.953,625,430,347.40Other current liabilities 10,160,767,686.3510,797,248,631.76Total current liabilities 59,431,186,232.7857,248,635,194.37NON-CURRENT LIABILITIES:

Long-term borrowings 7,206,918,851.777,646,122,995.91Bonds payable 2,097,247,500.002,196,261,279.57Long-term payables 5,001,525,052.495,550,881,435.64Special payables 706,039,716.66681,039,716.66Provisions 325,259,082.28325,259,082.28Deferred income 1,420,873,007.361,452,717,833.55Other non-current liabilities 1,919,538,128.76250,000,000.00Total non-current liabilities 18,677,401,339.3218,102,282,343.61TOTAL LIABILITIES 78,108,587,572.1075,350,917,537.98OWNERS’ EQUITY:

Share capita l 2,904,608,200.001,936,405,467.00Other equity instruments 10,048,300,000.0010,048,300,000.00Including: Preference shares 4,477,500,000.004,477,500,000.00Perpetual bonds 5,570,800,000.005,570,800,000.00Capital reserves 5,122,952,455.096,149,257,784.90Other comprehensive income -457,399,238.18-354,165,127.80Surplus reserves 1,132,116,106.401,132,116,106.40Retained profit 8,926,586,582.718,866,614,844.40Total equity attributable to equityholders of the company

27,677,164,106.0227,778,529,074.90Minority interest 1,290,727,574.802,495,649,464.04Total owners’ equity 28,967,891,680.8230,274,178,538.94TOTAL LIABILITIES AND

OWNERS’ EQUITY

107,076,479,252.92105,625,096,076.92

Legal Representative:

Chen Hongguo

Financial controller:

Hu Jinbao

Head of the financial department:

Zhang Bo

2. Balance sheet of the Company

Unit: RMBItem Closing balance Opening balanceCURRENT ASSETS:

Monetary funds 10,332,176,520.639,580,548,200.88Financial assets measured at fairvalue through profit or loss

94,000,000.00

Bills receivable 1,169,806,535.40787,095,075.51Accounts receivable 2,203,752,838.458,188,750.45Prepayments 1,645,981,455.73742,107,273.09Other receivables 23,381,030,317.1722,351,203,484.83Inventories 893,831,632.06751,426,520.51Other current assets 2,898,684.562,488,977.72Total current assets 39,629,477,984.0034,317,058,282.99NON-CURRENT ASSETS:

Available-for-sale financial assets 103,000,000.002,453,000,000.00Long-term receivables 456,925,607.06456,925,607.06Long-term equity investments 20,069,848,988.7218,674,034,243.49Fixed assets 2,152,865,137.612,364,990,246.94Construction in progress 1,457,558,768.95973,375,557.42Intangible assets 464,333,715.78470,379,203.58Deferred income tax assets 160,364,942.47186,935,887.68Other non-current assets 54,800,000.0054,800,000.00Total non-current assets 24,919,697,160.5925,634,440,746.17TOTAL ASSETS 64,549,175,144.5959,951,499,029.16CURRENT LIABILITIES:

Short-term borrowings 7,747,708,213.637,522,637,247.14Bills payable 9,393,590,000.006,375,070,000.00Accounts payable 471,669,534.55570,706,495.21Advance receipts 1,561,190,481.36956,040,917.07Staff remuneration payables 45,432,514.5747,546,116.66Taxes payable 55,603,091.43116,173,781.96Interest payable 105,256,333.3428,428,028.58Dividend payable 1,626,559,287.00Other payables 2,446,918,910.842,162,553,106.46Non-current liabilities due withinone year

1,224,548,708.441,318,429,260.12Other current liabilities 10,160,767,686.3510,797,248,631.76Total current liabilities 34,839,244,761.5129,894,833,584.96NON-CURRENT LIABILITIES:

Long-term borrowings 667,124,084.70908,182,122.65Bonds payable 2,097,247,500.001,198,305,304.75Long-term payables 4,143,834,948.984,605,691,332.13Provisions 325,259,082.28325,259,082.28Deferred income 48,582,602.3050,753,189.60Other non-current liabilities 1,244,666,668.00250,000,000.00Total non-current liabilities 8,526,714,886.267,338,191,031.41Total liabilities 43,365,959,647.7737,233,024,616.37OWNERS’ EQUITY:

Share capita l 2,904,608,200.001,936,405,467.00Other equity instruments 10,048,300,000.0010,048,300,000.00Including: Preference shares 4,477,500,000.004,477,500,000.00Perpetual bonds 5,570,800,000.005,570,800,000.00Capital reserves 4,970,757,435.195,938,960,168.19

Surplus reserves 1,119,926,524.491,119,926,524.49Retained profit 2,139,623,337.143,674,882,253.11TOTAL OWNERS’ EQUITY 21,183,215,496.8222,718,474,412.79TOTAL LIABILITIES ANDOWNERS’ EQUITY

64,549,175,144.5959,951,499,029.16

3. Consolidated Income Statement

Unit: RMBItem Amount for the reporting period Amount for the prior periodI. Total r evenue 15,551,334,039.8913,749,235,007.24Including: Revenue 15,551,334,039.8913,749,235,007.24II. Total operating costs 13,616,998,093.8611,880,087,434.81Including: Operating costs 10,259,884,918.869,171,066,988.49Taxes and surcharges 129,509,211.98105,960,012.36Sales and distributionexpenses

605,463,325.71641,498,275.35General and administrative

expenses

972,856,522.65856,354,999.17Finance expenses 1,498,828,444.691,055,396,506.36Loss on impairment of assets 150,455,669.9749,810,653.08Plus: Gain on change in fair value (“-”

denotes loss)

-117,973,841.55-11,009,851.10Investment income (“-” denotes

loss)

152,314,068.8865,864,672.36Including: Investment income

from associates and joint ventures

-17,153,503.00-4,154,293.30

Gain on disposal of assets (“-”denotes loss)

-2,210,048.63344,802.99

Other income 59,672,276.88III. Operating profit (“-” denotes loss) 2,026,138,401.611,924,347,196.68Plus: Non-operating income 191,632,557.35156,696,370.73Less: Non-operating expenses 446,221.322,072,581.46IV. Total profit (“-” denotes total loss) 2,217,324,737.642,078,970,985.95Less: Income tax expenses 434,202,112.50331,253,327.08V. Net profit (“-” denotes net loss) 1,783,122,625.141,747,717,658.87(I) Net profit from continuingoperations (“-” denotes net loss)

1,783,122,625.141,747,717,658.87(II) Net profit from discontinued

operations (“-” denotes net loss)Net profit attributable toshareholders of the Company

1,784,631,025.311,745,514,838.23Profit or loss of minority interest -1,508,400.172,202,820.64VI. Net other comprehensive income

after tax

-103,234,110.38170,697,419.90Net other comprehensive income after

tax attributable to shareholders of theCompany

-103,234,110.38170,697,419.90(I) Other comprehensive income that

will not be reclassified to profit and lossin subsequent periods

(II) Other comprehensive incomethat will be reclassified to profit and lossin subsequent periods

-103,234,110.38170,697,419.905. Exchange differences on

translation of foreign operations

-103,234,110.38170,697,419.90Other comprehensive income

attributable to minorit y inte rest, net of ta xVII. Total comprehensive income 1,679,888,514.761,918,415,078.77Total comprehensive incomeattributable to shareholders of theCompany

1,681,396,914.931,916,212,258.13Total comprehensive income

attributable to minorit y inte rest

-1,508,400.172,202,820.64VIII. Earnings per share:

(I) Basic earnings per share 0.360.50(II) Diluted earnings per share 0.360.50

Legal Representative:

Chen Hongguo

Financial controller:

Hu Jinbao

Head of the financial department:

Zhang Bo

4. Income statement of the Company

Unit: RMBItem Amount for the reporting period Amount for the prior periodI. Revenue 2,816,294,485.823,682,570,308.92Less: Operating costs 1,974,361,613.082,560,699,253.09Taxes and surcharges 44,570,024.1738,197,149.42Selling and distributionexpenses

90,052,325.82131,699,019.76General and administrative

expenses

253,378,119.62306,624,272.42Finance expenses 450,292,646.56302,220,430.04Loss on impairment of assets -3,263,078.8413,038,951.61Plus: Gain on change in fair value

(“-” denotes loss)

-94,000,000.00Investment income (“-”

denotes loss)

151,671,872.9169,489,948.67Including: Investment income

from associates and joint ventures

-4,078,127.09-30,620.30Gain on disposal of assets

(“-” denotes loss)

-1,404,490.25285,572.22Other income 2,170,587.30

II. Operating profit (“-” denotes loss) 65,340,805.37399,866,753.47Plus: Non-operating income 159,134,238.5512,782,322.74Less: Non-operating expensesIII. Total profit (“-” denotes total loss) 224,475,043.92412,649,076.21Less: Income tax expenses 26,570,945.2120,154,500.40IV. Net profit (“-” denotes net loss) 197,904,098.71392,494,575.81(I) Net profit from continuingoperations (“-” denotes net loss)

197,904,098.71392,494,575.81(II) Net profit from discontinued

operations (“-” denotes net loss)

V. Net other comprehensive incomeafter taxVI. Total comprehensive income 197,904,098.71392,494,575.81

5. Consolidated cash flow statement

Unit: RMBItem Amount for the reporting period Amount for the prior periodI. Cash flows from operating activities:

Cash received from sales of goodsand rendering of services

14,209,807,106.2912,367,242,687.49Tax rebates received 4,906,195.672,575,753.81Cash received relating to other

operating activities

2,560,132,218.85230,498,726.61Subtotal of cash inflows from operating

activities

16,774,845,520.8112,600,317,167.91Cash paid for goods and services 9,303,280,725.888,387,824,464.47Cash paid to and for employees 578,298,920.80544,347,530.25Payments of taxes and surcharges 876,814,512.36793,983,398.34Cash paid relating to other

operating activities

1,271,413,440.866,987,103,543.24Subtotal of cash outflows from

operating activities

12,029,807,599.9016,713,258,936.30Net cash flows from operating activities 4,745,037,920.91-4,112,941,768.39II. Cash flows from investing activities:

Cash received from investme nts 2,350,000,000.00Cash received from investmentincome

171,500,000.0016,861,112.27Net cash received from disposal of

fixed assets, intangible assets and otherlong-term assets

150,077.55395,843.67Net cash received from disposal of

subsidiaries and other business units

19,610,260.70Cash received relating to other

investing activities

11,194,100.00972,391,073.00Subtotal of cash inflows from investing

activities

2,552,454,438.25989,648,028.94Cash paid for purchase of fixed

assets, intangible assets and otherlong-term assets

1,609,046,327.99746,966,959.23Cash paid on investments 1,311,172,596.96606,110,000.00

Cash paid relating to otherinvesting activities

103,042,210.54Subtotal of cash outflows from

investing activities

3,023,261,135.491,353,076,959.23Net cash flows from investing activities -470,806,697.24-363,428,930.29III. Cash flows from financing

activities:

Cash received from investme nts 40,000,000.00Including: Cash received from bysubsidiaries from minority investment

40,000,000.00Cash received from borrowings 23,960,924,414.5523,101,617,576.90

Cash received from issuance ofbondsCash received relating to otherfinancing activities

8,940,587,508.907,720,000,594.49Subtotal of cash inflows from financing

activities

32,901,511,923.4530,861,618,171.39Cash repayments of amounts

borrowed

19,647,186,258.4413,156,774,323.31Cash paid for dividend and profit

distribution or interest payment

1,331,735,531.112,483,897,208.01Including: Dividend and profit

paid by subsidiaries to minorityshareholdersCash paid relating to otherfinancing activities

15,500,213,039.3310,195,554,187.00Subtotal of cash outflows from

financing activities

36,479,134,828.8825,836,225,718.32Net cash flows from financing activities -3,577,622,905.435,025,392,453.07IV. Effect of foreign exchange rate

changes on cash and cash equivalents

29,968,597.03-107,391,377.48V. Net increase in cash and cash

equivalents

726,576,915.27441,630,376.91Plus: Balance of cash and cash

equivalents as at the beginning of theperiod

2,804,408,374.461,979,861,045.62VI. Balance of cash and cash

equivalents as at the end of the period

3,530,985,289.732,421,491,422.53

6. Cash flow statement of the Company

Unit: RMBItem Amount for the reporting period Amount for the prior periodI. Cash flows from operating activities:

Cash received from sales of goodsand rendering of services

2,262,576,453.262,947,603,434.58Tax rebates receivedCash received relating to other

operating activities

997,388,740.42697,159,595.97Subtotal of cash inflows from operating

activities

3,259,965,193.683,644,763,030.55Cash paid for goods and services 1,005,422,983.371,907,092,137.24Cash paid to and for employees 203,769,186.38227,658,831.17Payments of taxes and surcharges 298,790,554.29226,985,971.66Cash paid relating to other

operating activities

778,975,073.31610,188,242.33Subtotal of cash outflows from

operating activities

2,286,957,797.352,971,925,182.40Net cash flows from operating activities 973,007,396.33672,837,848.15II. Cash flows from investing activities:

Cash received from investme nts 2,380,000,000.00Cash received from investmentincome

171,500,000.0016,861,111.11Net cash received from disposal of17,628.00

fixed assets, intangible assets and otherlong-term assetsNet cash received from disposal ofsubsidiaries and other business unitsCash received relating to otherinvesting activities

900,000,000.00Subtotal of cash inflows from investing

activities

2,551,500,000.00916,878,739.11Cash paid for purchase of fixed

assets, intangible assets and otherlong-term assets

26,375,996.3654,575,321.80Cash paid on investments 1,361,714,807.502,665,511,220.00

Subtotal of cash outflows frominvesting activities

1,388,090,803.862,720,086,541.80Net cash flows from investing activities 1,163,409,196.14-1,803,207,802.69

III. Cash flows from financingactivities:

Cash received from investme ntsCash received from borrowings 7,562,143,316.1714,360,451,015.03Cash received from issuance ofbondsCash received relating to otherfinancing activities

8,204,965,097.957,190,741,096.00Subtotal of cash inflows from financing

activities

15,767,108,414.1221,551,192,111.03Cash repayments of amounts

borrowed

6,735,658,936.2210,665,502,742.60Cash paid for dividend and profit

distribution or interest payment

716,590,206.192,240,461,564.72Cash paid relating to other

financing activities

10,373,957,627.237,751,076,273.64Subtotal of cash outflows from

financing activities

17,826,206,769.6420,657,040,580.96Net cash flows from financing activities -2,059,098,355.52894,151,530.07IV. Effect of foreign exchange rate

changes on cash and cash equivalents

6,160,731.67-5,297,986.97V. Net increase in cash and cash

equivalents

83,478,968.62-241,516,411.44Plus: Balance of cash and cash

equivalents as at the beginning of theperiod

1,020,262,069.85582,578,426.62VI. Balance of cash and cash

equivalents as at the end of the period

1,103,741,038.47341,062,015.18

7. Consolidated statement of changes in owners’ equity

Amount for the reporting period

Unit: RMB

Item

For the reporting pe riodEquity attributable to owners of the Company

Minority interest

Total owner’s

equityShare capital

Other equity instruments

Capital reserves

Less: treasury

shares

Othercomprehensive

income

Special reservesSurplus reserves

General riskprovisions

Retained pro f itPreference sharesPerpetual bonds OthersI. Balan ce as at the end of theprior year

1,936,405,467.00 4,477,500,000.005,570,800,000.00 6,149,257,784.90-354,165,127.801,132,116,106.40 8,866,614,844.40 2,495,649,464.0430,274,178,538.94Add: changes in accounting

policies

Corrections of previouserrors

Mergers of companiesunder common control

OthersII. Balan ce as at the beginning ofthe year

1,936,405,467.00 4,477,500,000.005,570,800,000.00 6,149,257,784.90-354,165,127.801,132,116,106.40 8,866,614,844.40 2,495,649,464.0430,274,178,538.94III. Changes in the period (“ -”

denotes decrease)

968,202,733.00 -1,026,305,329.81-103,234,110.38 59,971,738.31 -1,204,921,889.24-1,306,286,858.12(I) Total comprehensive income -103,234,110.38 1,784,631,025.31 -1,508,400.171,679,888,514.76(II) Capital paid in and reducedby owners

-58,102,596.81 -1,203,413,489.07-1,261,516,085.881. Ordinary shares paid by

shareholders

-58,102,596.81 -1,203,413,489.07-1,261,516,085.882. Capital paid by holders of

other equit y ins truments

3. Amount of share-basedpayments recognised in owners’equity

4. Others(III) Profit distri bution -1,724,659,287.00 -1,724,659,287.001. Transfer to surplus reserves2. Transfer to general riskprovision

3. Distribution to owners (orshareholders)

-1,724,659,287.00 -1,724,659,287.004. Others(IV) Transfer of owners’ equity 968,202,733.00 -968,202,733.001. Capital (or share capital)created on capital reserve

968,202,733.00 -968,202,733.002. Capital (or share capital)

created on surplus reserve

3. Surplus reserve making uplosses

4. Others(V) Special reserve1. Withdrawal2. Used(VI) OthersIV. Balance as at the end of theperiod

2,904,608,200.00 4,477,500,000.005,570,800,000.00 5,122,952,455.09-457,399,238.181,132,116,106.40 8,926,586,582.71 1,290,727,574.8028,967,891,680.82

Amounts for the prior period

Unit: RMB

Item

For the prior periodEquity attributable to owners of the Company

Minority interest

Total owner’s

equityShare capital

Other equity instruments

Capital reserves

Less: treasury

shares

Othercomprehensive

income

Special reservesSurplus reserves

General riskprovisions

Retained pro f itPreference sharesPerpetual bonds OthersI. Balan ce as at the end of theprior year

1,936,405,467.00 4,477,500,000.002,582,800,000.00 6,149,257,784.90-805,245,771.891,132,116,106.40 6,745,974,781.02 346,050,847.7622,564,859,215.19Add: changes in accounting

policies

Corrections of previouserrors

Mergers of companiesunder common control

OthersII. Balan ce as at the beginning ofthe year

1,936,405,467.00 4,477,500,000.002,582,800,000.00 6,149,257,784.90-805,245,771.891,132,116,106.40 6,745,974,781.02 346,050,847.7622,564,859,215.19III. Changes in the period (“ -”

denotes decrease)

170,697,419.90 366,294,450.68 42,202,820.64579,194,691.22(I) Total comprehensive income 170,697,419.90 1,745,514,838.23 2,202,820.641,918,415,078.77(II) Capital paid in and reduced

by owners

40,000,000.0040,000,000.001. Ordinary shares paid by

shareholders

40,000,000.0040,000,000.002. Capital paid by holders of

other equit y ins truments

3. Amount of share-basedpayments recognised in owners’equity

4. Others(III) Profit distri bution -1,379,220,387.55 -1,379,220,387.551. Transfer to surplus reserves2. Transfer to general riskprovision

3. Distribution to owners (orshareholders)

-1,379,220,387.55 -1,379,220,387.554. Others(IV) Transfer of owners’ equity1. Capital (or share capital)created on capital reserve

2. Capital (or share capital)created on surplus reserve

3. Surplus reserve making uplosses

4. Others(V) Special reserve1. Withdrawal2. Used(VI) OthersIV. Balance as at the end of theperiod

1,936,405,467.00 4,477,500,000.002,582,800,000.00 6,149,257,784.90-634,548,351.991,132,116,106.40 7,112,269,231.70 388,253,668.4023,144,053,906.41

8. Statement of changes in owners’ equity of the Company

Amounts for the period

Unit: RMB

Item

For the reporting pe riodShare capital

Other equity instruments

Capital reserves Less: treasury shares

Othercomprehensive income

Special reserves Surplus reserves Retained profit

Totalowners’ equityPreference shares Perpetual bonds OthersI. Balan ce as at the end of the prior year 1,936,405,467.00 4,477,500,000.00 5,570,800,000.00 5,938,960,168.19 1,119,926,524.49 3,674,882,253.1122,718,474,412.79Add: changes in accounting policies -8,503,727.68-8,503,727.68Corrections of previous errorsOthersII. Balance as at the beginning of the year 1,936,405,467.00 4,477,500,000.00 5,570,800,000.00 5,938,960,168.19 1,119,926,524.49 3,666,378,525.4322,709,970,685.11III. Changes in the period (“-” den ote sdecrease)

968,202,733.00 -968,202,733.00 -1,526,755,188.29-1,526,755,188.29(I) Total comprehensive income 197,904,098.71197,904,098.71(II) Capita l paid in and reduced by owners1. Ordinary shares paid by shareholders2. Capital paid by holders of other equityinstruments

3. Amount of share-based paymentsrecognised in ow ners’ equity

4. Others(III) Profit distri bution -1,724,659,287.00-1,724,659,287.001. Transfer to surplus reserves2. Distribution to owners (or shareholders) -1,724,659,287.00-1,724,659,287.003. Others(IV) Transfer of owners’ equity 968,202,733.00 -968,202,733.001. Capital (or share capital) created oncapital reserve

968,202,733.00 -968,202,733.002. Capital (or share capital) created on

surplus reserve

3. Surplus reserve making up losses4. Others(V) Special reserve1. Withdrawal2. Used(VI) OthersIV. Balance as at the end of the period 2,904,608,200.00 4,477,500,000.00 5,570,800,000.00 4,970,757,435.19 1,119,926,524.49 2,139,623,337.1421,183,215,496.82

Amounts for the prior period

Unit: RMB

Item

For the prior periodShare capital

Other equity instruments

Capital reserves Less: treasury shares

Othercomprehensive income

Special reserves Surplus reserves Retained profit

Totalowners’ equityPreference shares Perpetual bonds OthersI. Balan ce as at the end of the prior year 1,936,405,467.00 4,477,500,000.00 2,582,800,000.00 5,938,960,168.19 1,119,926,524.49 4,791,486,988.3820,847,079,148.06Add: changes in accounting policiesCorrections of previous errorsOthersII. Balance as at the beginning of the year 1,936,405,467.00 4,477,500,000.00 2,582,800,000.00 5,938,960,168.19 1,119,926,524.49 4,791,486,988.3820,847,079,148.06III. Changes in the period (“-” den ote sdecrease)

-986,725,811.74-986,725,811.74(I) Total comprehensive income 392,494,575.81392,494,575.81(II) Capita l paid in and reduced by owners1. Ordinary shares paid by shareholders2. Capital paid by holders of other equityinstruments

3. Amount of share-based paymentsrecognised in ow ners’ equity

4. Others(III) Profit distri bution -1,379,220,387.55-1,379,220,387.551. Transfer to surplus reserves2. Distribution to owners (or shareholders) -1,379,220,387.55-1,379,220,387.553. Others(IV) Transfer of owners’ equity1. Capital (or share capital) created oncapital reserve

2. Capital (or share capital) created onsurplus reserve

3. Surplus reserve making up losses4. Others(V) Special reserve1. Withdrawal2. Used(VI) OthersIV. Balance as at the end of the period 1,936,405,467.00 4,477,500,000.00 2,582,800,000.00 5,938,960,168.19 1,119,926,524.49 3,804,761,176.6419,860,353,336.32

III. General Information of the Company

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

The Company and its subsidiaries are principally engaged in processing and sale of paper products (including machine-madepaper 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 manufacturingand sale of laminated boards and fortified wooden floorboards, marine engineering project investment, hotel service, equipmentfinancial and operating leasing, etc.

The financial statements were considered and approved by the Board of the Company on 27 August 2018.Subsidiaries of the Company included in the scope of consolidation for the first half of 2018 totalled 62. For details, please referto this Note IX “Equity in other entities”. The scope of consolidation of the Company during the year had one company included andone company excluded compared to the prior year. For details, please refer to this Note VIII “Changes in the scope of consolidation”.

IV. Basis of Preparation of the Financial Statements

1. Basis of preparation

The Company’s financial statements are prepared on a going concern and based on actual transactions and events, in accordancewith the Accounting Standards for Business Enterprises-Basic Standards promulgated by the Ministry of Finance (Order of Ministryof Finance No. 33, as amended by Order of Ministry of Finance No. 76) and 42 specific accounting standards as promulgated andamended on and after 15 February 2006, the application guidelines of the Accounting Standards for Business Enterprises,interpretations and other related rules of the Accounting Standards for Business Enterprises (hereinafter referred to as “ASBEs”), andthe disclosure requirements of the “Regulation on the Preparation of Information Disclosures of Companies Issuing Public Shares,No. 15: General Requirements for Financial Reports” (revised in 2014) of China Securities Regulatory Commission.

The Company’s financial statements have been prepared on an accrual basis in accordance with the ASBEs. Except for certainfinancial instruments and consumable biological assets, the financial statements are prepared under the historical cost convention. Inthe event that depreciation of assets occurs, a provision for impairment is made accordingly in accordance with the relevantregulations.

The Company has been implementing the ASBEs since 1 January 2007.In addition to preparing and issuing financial statements in accordance with the new accounting standards, the Company, as anH-share listed company, also has to provide financial statements for the public in accordance with the Hong Kong FinancialReporting Standards. Pursuant to the relevant requirements under Rule 1 of “Accounting Standards for Business EnterprisesInterpretation No. 1”, with respect to the transactions or matters which do not have any difference in terms of standards between thenew accounting standards and the Hong Kong Financial Reporting Standards, the Company shall make retrospective adjustments inaccordance with Rules 5 to 19 of “Accounting Standards for Business Enterprises No. 38 – First-time Implementation of AccountingStandards for Business Enterprises” (“Standard No. 38”) and other relevant requirements. The Company shall also makeretrospective adjustments to the financial statements for the comparable years in respect of the changes in accounting policies due tothe implementation of new accounting standards for the transactions and matters other than those attributable to Rules 5 to 19 ofStandard No. 38 with reference to the relevant available information based on the financial statements prepared by the Companyaccording to the Hong Kong Financial Reporting Standards.

2. Going concern

No facts or circumstances comprise a material uncertainty about the Company’s going concern basis within 12 months since theend of the reporting period.

V. Significant Accounting Policies and Accounting Estimates

Specific accounting policies and accounting estimates are indicated as follows:

The Company and its subsidiaries are principally engaged in processing and sale of paper products (including machine madepaper and paper board), paper making raw materials and machinery. The Company and its subsidiaries formulated certain specificaccounting policies and accounting estimates for the transactions and matters such as revenue recognition based on their actualproduction and operation characteristics pursuant to the requirements under the relevant accounting standards for business enterprises.For details, please refer to this Note V. 25 “Revenue”. For the critical accounting judgments and estimates made by the management,please refer to Note V. 30 “Critical accounting judgments and estimates”.

1. Statement of compliance with the Accounting Standards for Business Enterprises

The financial statements have been prepared by the Company in conformity with the ASBEs, which truly and fully reflect thefinancial position of the Company as at 31 December 2017 and relevant information such as the operating results and cash flows for

2017. In addition, the financial statements of the Company also comply with, in all material respects, the disclosure requirements ofthe “Regulation on the Preparation of Information Disclosures of Companies Issuing Public Shares, No. 15: General Requirementsfor Financial Reports” revised by the China Securities Regulatory Commission in 2014 and the notes thereto.

2. Accounting period

The accounting periods of the Company are divided into annual periods and interim periods. Interim periods refer to reportingperiods that are shorter than a full accounting year. The accounting year of the Company is from 1 January to 31 December of eachcalendar year.

3. Operating cycle

Ordinary operating cycle refers to the period from acquisition of assets used for processing by the Company until theirrealisation in cash or cash equivalents. The operating cycle of the Company lasts for 12 months, and acts as an indicator forclassification of liquidity of assets and liabili ti e s.

Our subsidiaries, including Zhanjiang Chenming Arboriculture Development Co., Ltd., Yangjiang Chenming ArboricultureDevelopment Co., Ltd., Nanchang Chenming Arboriculture Development Co., Ltd., Huanggang Chenming ArboricultureDevelopment Co., Ltd. and Chenming Arboriculture Co., Ltd., were engaged in arboriculture cultivating, plantation and sale. Theirordinary operating cycle lasts for over 1 year.

4. Functional currency

The Company and its domestic subsidiaries recognise RMB as their functional currency according to the primary economicenvironment in which they operate. The functional currency of the Company and its domestic subsidiaries is Renminbi (“RMB”).Overseas subsidiaries of the Company recognise U.S. dollar (“USD” or “US$”), Japanese yen (“JPY”), Euro (“EUR”) and SouthKorean Won (“KRW”) as their respective functional currency according to the general economic environment in which thesesubsidiaries operate. The Company prepares its financial statements in RMB.

5. Accounting treatment of business combinations under common control and not under common control

Business combinations refer to the transactions or events in which two or more separate enterprises merged as a single reportingentity. Business combinations are divided into business combinations under common control and not under common control.

(1) Business combinations under common controlA business combination involving enterprises under common control is a business combination in which all of the combiningenterprises are ultimately controlled by the same party or parties before and after the combination, and that control is not transitory.The party that, on the combination date, obtains control of another enterprise participating in the combination is the absorbing party,while that other enterprise participating in the combination is a party being absorbed. The combination date is the date on which theabsorbing party effectively obtains control of the party being absorbed.

Assets and liabilities obtained by the absorbing party are measured at their carrying amount at the combination date as recordedby the party being merged. The difference between the carrying amount of the net assets obtained and the carrying amount of theconsideration paid for the combination (or the aggregate nominal value of shares issued as consideration) is charged to the capitalreserve (share capital premium). If the capital reserve (share capital premium) is not sufficient to absorb the difference, any excessshall be adjusted against retained earnings.

Cost incurred by the absorbing party that is directly attributable to the business combination shall be charged to profit or loss inthe period in which they are incurred.

(2) Business combination not under common controlA business combination not involving enterprises under common control is a business combination in which all of thecombining enterprises are not ultimately controlled by the same party or parties before and after the combination. For a businesscombination not involving enterprises under common control, the party that, on the acquisition date, obtains control of anotherenterprise participating in the combination is the acquirer, while that other enterprise participating in the combination is the acquiree.The acquisition date is the date on which the acquirer effe ctively obtains control of the acquiree.

For business combination involving entities not under common control, the cost of a business combination is the aggregate ofthe fair values, on the date of acquisition, of assets given, liabilities incurred or assumed, and equity instruments issued by theacquirer to be paid by the acquirer, in exchange for control of the acquire plus agency fee such as audit, legal service and evaluationconsultation and other management fees charged to the profit or loss for the period when incurred. Transaction cost attributable toequity or debt securities issued by the acquirer as consideration is included in the initial costs. Contingent consideration involved ischarged to the combination cost at its fair value on the acquisition date, in the event that adjustment on the contingent considerationis required as a result of new or additional evidence in relation to circumstances existed on the acquisition date emerges within 12months from the acquisition date, the combination goodwill shall also be adjusted. The combination cost incurred by the acquirer andthe identifiable net assets acquired from the combination are measured at their fair values on the acquisition date. Where the cost of abusiness combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable net assets on the acquisition date,the difference is recognised as goodwill. Where the cost of a business combination is less than the acquirer’s interest in the fair valueof the acquiree’s identifiable net assets, the acquirer shall first reassess the measurement of the fair value of the acquiree’s

identifiable assets, liabilities and contingent liabilities and the measurement of the cost of combination. If after such reassessment thecost of combination is still less than the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the difference ischarged to profit or loss for the period.

In relation to the deductible temporary difference acquired from the acquiree, which was not recognised as deferred tax assetsdue to non-fulfilment of the recognition criteria at the date of the acquisition, if new or further information that is obtained within 12months after the acquisition date indicates that related conditions at the acquisition date already existed, and that the implementationof the economic benefits brought by the deductible temporary difference of the acquiree can be expected, the relevant deferred taxassets shall be recognised and goodwill shall be deducted. When the amount of goodwill is less than the deferred tax assets that shallbe recognised, the difference shall be recognised in the profit or loss of the period. Except for the above circumstances, deferred taxassets in relation to business combination are recognised in the profit or loss of the period.

For combination of business not under common control achieved by several transactions, these several transactions will bejudged whether they belong to “transactions in a basket” in accordance with the judgement standards on “transactions in a basket” asset out in the Notice of the Ministry of Finance on Issuing Accounting Standards for Business Enterprises Interpretation No. 5 (CaiKuai [2012] No. 19) and Rule of 51 to “Accounting Standard for Business Enterprises No. 33 – Consolidated FinancialStatements”(see Note V. 5 (2)). If they belong to “transactions in a basket”, they are accounted for with reference to the descriptionsas set out in the previous paragraphs of this section and Note V. 14 “Long-term equity investments”, and if they do not belong to“transactions in a basket”, they are accounted for in separate financial statements and consolidated financial reports:

In separate financial statements, the initial equity investment cost is the aggregate of the carrying amount of the equityinvestment in the acquiree held prior to the acquisition date and the investment cost newly added as at the acquisition date. In respectof any other comprehensive income attributable to the equity interest in the acquiree prior to the acquisition date, othercomprehensive income is accounted for on the same accounting treatment as direct disposal of relevant asset or liability by theacquiree at the time of disposal (i.e. to be transferred to investment income for the period, except for the changes arising fromre-measuring net assets or net liabilities of defined benefit plan using the equity method attributable to the acquiree).

In consolidated financial statements, the equity interest in the acquiree held prior to the acquisition date is remeasured at fairvalue as at the acquisition date, and the difference between the fair value and the carrying amount is recognised as investment incomefor the current period. In respect of any other comprehensive income attributable to the equity interest in the acquiree held prior tothe acquisition date, other comprehensive income is accounted for on the same accounting treatment as direct disposal of relevantasset or liability by the acquiree (i.e. to be transferred to investment income at the acquisition date, except for the changes arisingfrom re-measuring net assets or net liabilities of defined benefit plan using the equity method attributable to the acquiree) istransferred to investment income in the period of the acquisition date.

6. Preparation of consolidated financial statements

(1) Basis for principle of determining the scope of consolidated financial statementsThe scope of consolidation of the consolidated financial statements is determined on the basis of control. The term “control”refers to the fact that the Company has power over the investee and is entitled to variable returns from its involvement with theinvestee and the ability to use its power over the investee to affect the amount of those returns. The scope of consolidation includesthe Company and all of its subsidiaries. A subsidiary is an entity controlled by the Company.

The Company will conduct reassessment in the event there are changes in actual condition and situation causing changes inrelevant elements involved in the definition of control above.

(2) Basis for preparation of the consolidated financial statementsSubsidiaries are consolidated from the date on which the Company obtains net assets and the effective control of decisionmaking of production and operation and are deconsolidated from the date that such control ceases. For disposal of subsidiaries, theoperating results and cash flows of such subsidiaries before the date of disposal are properly included into the consolidated incomestatement and consolidated cash flow statements; for disposal of subsidiaries during the reporting period, no adjustment shall bemade to the opening balance of the consolidated balance sheet. For those subsidiaries acquired through business combination notunder common control, the operating results and cash flows after the acquisition date have been properly included in the consolidatedincome statements and consolidated cash flow statements. No adjustments shall be made to the opening balance of the consolidatedbalance sheet and the comparative consolidated financial statements amount. For those subsidiaries acquired through businesscombinations under common control, the operating results and cash flows from the beginning of the consolidation period to theconsolidation date are also presented in the consolidated income statement and the consolidated cash flow statements. Thecomparative amounts presented in the consolidated financial statements are also adjusted accordingly.

The financial statements of the subsidiaries are adjusted in accordance with the accounting policies and accounting period of theCompany in the preparation of the consolidated financial statements, where the accounting policies and the accounting periods areinconsistent between the Company and the subsidiaries. For acquisition of subsidiaries arising from merger of entities not under samecontrol, the financial statements of the subsidiaries will be adjusted according to the fair value of the identifiable net assets at theacquisition date.

All intra-co mpany significant balances, transactions and unrealised profit are eliminated in the consolidated financial statements.The shareholders’ equity and the portion of the profit or loss for the period of the subsidiaries that are not attributable to theCompany are presented under shareholders’ equity and net profit in the consolidated financial statements as minority interests and netprofit of minority interest respectively. The portion of net profit or loss of subsidiaries for the period attributable to minority interestis presented in the consolidated income statement under the “profit or loss of minority interest”. When the amount of loss attributableto the minority shareholders of a subsidiary exceeds the minority shareholders’ portion of the opening balance of owners’ equity ofthe subsidiary, the excess amount shall be allocated against minority interest.

For the loss of control over a subsidiary due to disposal of a portion of the equity investment or other reasons, the remainingequity is measured at fair value on the date when the control is lost. The difference arising from the sum of consideration received for

disposal of equity interest and the fair value of remaining equity interest over the share of net assets of the former subsidiarycalculated continuously since the purchase date based on the shareholding percentage before disposal are recognised as investmentincome in the period when the control is lost. Other comprehensive income related to equity investment in the subsidiary isaccounted for on the same accounting treatment as direct disposal of relevant asset or liability by the acquiree at the time when thecontrol is lost (i.e. to be transferred to investment income, except for the changes arising from re-measuring net assets or netliabilities of defined benefit plan of the subsidiary using the equity method). The remaining equity interests are measuredsubsequently according to “Accounting Standard for Business Enterprises No. 2 – Long-term Equity Investments” or “AccountingStandard for Business Enterprises No. 22 – Recognition and Measurement of Financial Instruments”. See Note V. 14 “Long-termequity investments” or Note V. 10 “Financial instruments” for details.

When the Company disposes of equity investment in a subsidiary by a stage-up approach with several transactions until thecontrol over the subsidiary is lost, it shall determine whether these several transactions related to the disposal of equity investment ina subsidiary until the control over the subsidiary is lost belong to “transactions in a basket”. Usually, these several transactionsrelated to the disposal of equity investment in a subsidiary are accounted for as transactions in a basket when the terms, conditionsand economic impacts of these several transactions meet the following one or more conditions: ① these transactions are enter edinto at the same time or after considering their impacts on each other; ② these transactions as a whole can reach complete businessresults; ③ the occurrence of a transaction depends on at least the occurrence of another transaction; ④ an individual transaction isnot deemed as economic, but is deemed as economic when considered with other transactions. If they are not transactions in a basket,each of which are accounted for in accordance with applicable rules in “partial disposal of long-term equity investment of asubsidiary without losing control over a subsidiary” (see Note V. 14 (2) ④) separately, and “the control over a subsidiary is lost dueto partial disposal of equity investment or other reasons” (see the preceding paragraph). When several transactions related to thedisposal of equity investment in a subsidiary until the control over the subsidiary is lost belong to transactions in a basket, each ofwhich is accounted for as disposal of a subsidiary with a transaction until the control over a subsidiary is lost; however, the differentbetween the amount of disposal prior to the loss of control and the net assets of a subsidiary attributable to the disposal investmentshall be recognised as other comprehensive income in consolidated financial statements and transferred to profit or loss at the timewhen the control is lost.

7. Classification of joint arrangements and accounting treatment for joint ventures

A joint arrangement refers to an arrangement of two or more parties have joint control. In accordance with the Company’s rightsand obligations under a joint arrangement, the Company classifies joint arrangements into: joint ventures and joint operations. Jointoperations refer to a joint arrangement during which the Company is entitled to relevant assets and obligations of this arrangement.Joint ventures refer to a joint arrangement during which the Company only is entitled to net assets of this arrangement.

The Company treats investments in joint ventures by using the equity method of accounting in accordance with accountingpolicies as set out in Note V. 14 (2) ②“long-term equity investments by using equity method of accounting”.

The Company shall, as a joint venture, recognise the assets held and obligations assumed solely by the Company, and recogniseassets held and obligations assumed jointly by the Company in appropriation to the share of the Company; recognise revenue fromdisposal of the share of joint operations of the Company; recognise fees solely occurred by Company and recognise fees from jointoperations in appropriation to the share of the Company.

When the Company, as a joint venture, invests or sells assets (the assets does not constitute a business, the same below) to orpurchase assets from joint operations, the Company shall only recognise the part of profit or lost from this transaction attributable toother parties of joint operations before these assets are sold to the third party. If the occurrence of these assets meet the impairmentloss of asset as set out in “Accounting Standard for Business Enterprises No. 8 – Asset Impairment”, the Company shall recognisethe full amount of this loss in relation to the Company invests in or sells assets to joint operations; the Company recognise the lossaccording to the Company’s share of commitment in relation to the Company purchase assets from joint operations.

8. Standards for recognising cash and cash equivalents

Cash and cash equivalents of the Company include cash on hand, deposits readily available for payment purpose and short-term(normally fall due within three months from the date of acquisition) and highly liquid investments held the Company which arereadily convertible into known amount of cash and which are subject to insignificant risk of value change.

9. Foreign currency operations and translation of statements denominated in foreign currency

(1) Basis for translation of foreign currency transactionsThe foreign currency transactions of the Company, when initially recognised, are translated into the functional currency at theprevailing spot exchange rate on the date of exchange, i.e. the middle price of RMB exchange rate published by the People’s Bank ofChina on that date in general and the same hereinafter, while the foreign currency exchange operations and transactions in connectionwith foreign currency exchange shall be translated into the functional currency at the exchange rate actually adopted.

(2) Basis for translation of foreign currency monetary items and foreign currency non-monetary itemsOn the balance sheet date, foreign currency monetary items shall be translated at the spot exchange rate on the balance sheetdate. All differences are included in the profit or loss in the period, except for: ① the differences arising from foreign currencyborrowings related to the acquisition or construction of fixed assets that are qualified for capitalisation will be accounted foraccording to the principle of capitalisation; and ② exchange difference arising from change in balance of carrying amount other

than amortised cost of available for sale foreign monetary items will be included in other comprehensive income.

Exchange differences arising from change in exchange rate where the preparation of consolidated financial statements relates toforeign operations and foreign currency monetary items materially constitute net investment in foreign operations shall be recordedinto “other comprehensive income”; disposal of foreign operations shall be included into profits and losses on disposal in the currentperiod.

The foreign currency non-monetary items measured at historical cost shall still be measured by the functional currencytranslated at the spot exchange rate on the date of the transaction. Foreign currency non-monetary items measured at fair value aretranslated at the spot exchange rate on the date of determination of the fair value. The difference between the amounts of thefunctional currency before and after the translation will be treated as changes in fair value (including changes in foreign exchangerates) and recognised in profit or loss for the period or recognised as other comprehensive income.

(3) Basis for translation of foreign currency financial statementsExchange differences arising from change in exchange rate where the preparation of consolidated financial statements relates toforeign operations and foreign currency monetary items materially constitute net investment in foreign operations shall be recordedinto “other comprehensive income” under “translation reserve”; disposal of foreign operations shall be included into profits andlosses on disposal in the current period.

The financial statements denominated in foreign currency of a foreign operation are translated to RMB in compliance with thefollowing requirements: assets and liabilities on the balance sheet are translated at the spot exchange rate prevailing at the balancesheet date; owner’s equity items except for “retained profit” are translated at the spot exchange rates at the dates on which such itemsarose; income and expenses items in the income statement are translated at the spot exchange rate at the date of transaction. Theretained profit brought forward are reported at the prior year’s closing balance; the retained profit as at the end of the year arepresented after translated the profit appropriation items; differences between the aggregate of asset and liability items and owners’equity items are recognised as “translation differences arising on the translation of financial statements denominated in foreigncurrencies” in other comprehensive income. On disposal of foreign operations and loss of control, exchange differences arising fromthe translation of financial statements denominated in foreign currencies related to the disposed foreign operations which has beenincluded in owners’ equity in the balance sheet, shall be transferred to profit or loss in whole or in proportionate share in the period inwhich the disposal took place.

Cash flow dominated in foreign currency or from foreign subsidiaries shall be translated at the spot exchange rate when it incurs.Effects arising from changes of exchange rate of cash shall be presented separately in the cash flow statements.

The opening balance and the prior year’s figures are presented according to the translated amounts of the prior year.On disposal of the entire owners’ equity in a foreign operation of the Company, or upon a loss of control over a foreignoperation due to disposal of certain equity investment or other reasons, the Company transfers the exchange differences arising ontranslation of financial statements of this foreign operation attributable to owners’ equity of parent company presented under owners’equity in the balance sheet, to profit or loss in the period in which the disposal took place.

In case of partial disposal of equity investment or other reason that result in reduction in shareholding in a foreign operationwithout losing control over it, the proportionate share of exchange differences arising from the translation of financial statements willbe attributable to minority interests and will not recognised in profit or loss. For partial disposals of equity interests in foreignoperations which are associates or joint ventures, the proportionate share of the exchange differences arising from the translation offinancial statements of foreign operations is reclassified to profit or loss.

10. Financial instruments

Financial asset or financial liability will be recognised when the Company became one of the parties under a financialinstrument contract. Financial assets and financial liabilities are initially recognised at fair value, except for equity instruments thatare not quoted in an active market, the fair value of which cannot be reliably measured and over relevant investees of which theCompany does not have control, joint control or significant influence, and debt financing instruments subsequently measured atamortised cost using the effective interest method. For financial assets and financial liabilities measured at fair value and whosechanges are carried through profit or loss, relevant transaction costs are directly recognised in profit or loss for the period. Forfinancial assets and financial liabilities classified as other categories, relevant transaction costs are included in the amount initiallyrecognised.

(1) Determination of fair values for financial assets and financial liabilitiesThe fair value refers to the price that will be received when selling an asset or the price to be paid to transfer a liability in anorderly transaction between market participants on the date of measurement. Financial instruments exist in an active market. Fairvalue is determined based on the quoted price in such market. An active market refers to where pricing is easily and regularlyobtained from exchanges, brokers, industrial organisations and price fixing service organisations, representing the actual price of amarket transaction that takes place in a fair deal. While financial instruments do not exist in an active market, the fair value isdetermined using valuation techniques. Valuation technologies include reference to be familiar with situation and prices reached inrecent market transactions entered into by both willing parties, reference to present fair values of similar other financial instruments,cash flow discounting method and option pricing models.

(2) Classification, recognition and measurement of finan cial assetsConventionally traded financial assets shall be recognised and derecognised at the trading date. Financial assets shall beclassified into loans and accounts receivable, available-for-sale financial assets and others for initial recognition.

① Loans and receivablesThey are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Financialassets, including bills receivable, accounts receivable, interest receivable, dividends receivable and other receivables are classified asloans and receivables by the Company.

Loans and receivables are measured subsequently at the amortised cost by using the effective interest rate method. Gains or

losses incurred at the time of derecognition, impairment or amortisation are charged to profit or loss in the current period.

② Available-for-sale financial assetsAvailable-for-sale financial assets represent equity instruments over relevant investees of which the Company does not havecontrol, joint control or significant influence.

Available-for-sale financial assets are subsequently measured at fair value. The gain or loss on change in fair value arerecognised as other comprehensive income, except for impairment loss and exchange differences arising from foreign monetaryfinancial assets and amortised cost which are accounted for through profit or loss for the current period. The financial assets will betransferred out of the financial assets on derecognition and accounted for through profit or loss for the current period. However, forequity investment of which the Company d oes not ha ve contr ol, joint c ontrol or significant influence, not quoted in an active marketand the fair value of which cannot be measured reliably, their fair values are subsequently measured at cost.

Interests received from available-for-sale financial assets held and the cash dividends declared by the investee are recognised asinvestment income.

(3) Impairment of financial assetsThe Company reviews the carrying amount of financial assets on each balance sheet date and provides for impairment wherethere is objective evidence that financial assets are impaired.

For a financial asset that is individually significant, the Company assesses the asset individually for impairment. For a financialasset that is not individually significant, the Company assess the asset individually for impairment or include the asset in a group offinancial assets with similar credit risk characteristics and collectively assess them for impairment. If it is determined that noobjective evidence of impairment exists for an individually assessed financial asset, whether the financial asset is individuallysignificant or not, the financial asset is included in a group of financial assets with similar credit risk characteristics and collectivelyassessed for impairment. Financial assets for which an impairment loss is individually recognised are not included in the collectiveassessment for impairment.

① Impairment of loans and receivablesThe carrying amount of financial assets measured as costs or amortised costs are subsequently reduced to the present valuediscounted from its projected future cash flow. The reduced amount is recognised as impairment loss and recorded as profit or lossfor the period. After recognition of the impairment loss from financial assets, if there is objective evidence showing recovery in valueof such financial assets impaired and which is related to any event occurring after such recognition, the impairment loss originallyrecognised shall be reversed to the extent that the carrying amount of the financial assets upon reversal will not exceed the amortisedcost as at the reversal date assuming there is no provision for impairment.

② Impairment of available-for-sale financial assetsIn the event that decline in fair value of the available-for-sale equity instrument or fair value of the interest in the investee’sidentifiable net assets is regarded as “severe decline” or “non-temporary decline” on the basis of comprehensive related factors, itindicates that there is impairment loss of the available-for-sale equity instrument. In particular, “severe decline” refers to decline ofover 20% in such fair value. “Non-temporary decline” refers to such fair value decreased continuously for more than 12 months. Thecontinuous decreasing period is determined on the basis of the drop of such fair value accumulated over 10%.

When the available-for-sale financial assets impair, the accumulated loss originally included in the other comprehensive incomearising from the decrease in fair value was transferred out and included in the profit or loss for the period. The accumulatedloss that

transferred out is the balance of the initial acquisition cost of asset, after deduction of the principal recovered, amortised amounts,current fair value and the impairment loss originally included in the profit or loss.

After recognition of the impairment loss, if there is objective evidence showing recovery in value of such financial assetsimpaired and which is related to any event occurring after such recognition in subsequent periods, the impairment loss originallyrecognised shall be reversed. The impairment loss reversal of the available-for-sale equity instrument will be recognised as othercomprehensive income, and the impairment loss reversal of the available-for-sale debt instrument will be included in the profit orloss for the period.

When an equity investment that is not quoted in an active market and the fair value of which cannot be measured reliably, or theimpairment loss of a derivative financial asset linked to the equity instrument that shall be settled by delivery of that equityinstrument, then it will not be reversed.

(4) Recognition and measurement of transfers of financial assetFinancial asset that satisfied any of the following criteria shall be derecognised: ① the contract right to receive the cash flowsof the financial asset has terminated; ② the financial asset, along with substantially all the risk and return arising from theownership of the financial asset, has been transferred to the transferee; and ③ the financial asset has been transferred to thetransferee, and the transferor has given up the control on such financial asset, though it does not assign maintain substantially all therisk and return arising from the ownership of the financial asset.

When the entity does not either assign or maintain substantially all the risk and return arising from the ownership of thefinancial asset and does not give up the control on such financial asset, to the extent of its continuous involvement in the financialasset, the entity recognises such financial asset and the relevant liability accordingly. The extent of the continuous involvement is theextent to which the entity exposes to changes in the value of such financial assets.

If all criteria of recognition of transfer of financial assets are satisfied, the difference between the carrying amount of thefinancial assets transferred and the sum of the consideration received from the transfer and the accumulated changes in fair valueoriginally included in other comprehensive income shall be recognised in the profit or loss for the period.

If a part of the financial assets is qualified for derecognition, the carrying amount of the financial asset is allocated between thepart that continues to be recognised and the part that qualifies for derecognition, based on the fair values of the respective parts. Thedifference between the following amounts is recognised in profit or loss for the period: the sum of the consideration received and thecarrying amount of the part that qualifies for derecognition and the aforementioned carrying amount.

For financial assets that are sold or transferred with recourse or endorsement, the Company needs to determine whether the riskand rewards of ownership of the financial asset have been substantially transferred. If the risk and rewards of ownership of the

financial asset have been substantially transferred, the financial assets shall be derecognised. If the risk and rewards of ownership ofthe financial asset have been retained, the financial assets shall not be derecognised. If the Company neither transfers nor retainssubstantially all the risks and rewards of ownership of the financial asset, the Company shall assess whether the control over thefinancial asset is retained, and the financial assets shall be accounting for according to the above paragraphs.

(5) Classification and measurement of financial liabilitiesFinancial liabilities are classified at initial recognition: financial liabilities recognised at fair value with changes carried throughprofit or loss and other financial liabilities. For financial liabilities measured at fair value with changes recognised in profit or loss ofthe current period, relevant transaction costs are directly recognised in profit or loss for the period. The amount is recognised initiallyat fair value and the subsequent changes in fair value will be recognised in profit or loss for the period. For other financial liabilities,relevant transaction costs are included in the amount initially recognised and subsequently measured at amortised cost using theeffective interest method, and relevant gain or loss arising from derecognition or amortisation are included in current profit or loss.

(6) Derecognition of financial liabilitiesFinancial liabilities are derecognised in full or in part only when the present obligation is discharged in full or in part. Anagreement is entered between the Company (debtor) and a creditor to replace the original financial liabilities with new financialliabilities with substantially different terms, derecognise the original financial liabilities as well as recognise the new financialliabilities.

When financial liabilities are derecognised in full or in part, the difference between the carrying amount of the financialliabilities derecognised and the consideration paid (including transferred non-cash assets or new financial liability) is recognised inprofit or loss for the current period.

(7) Offset of Financial Assets and Financial LiabilitiesIf the Company owns the legitimate rights of offsetting the recognised financial assets and financial liabilities, which areenforceable currently, and the Company plans to realise the financial assets or to clear off the financial liabilities on a net amountbasis or simultaneously, the financial assets and financial liabilities shall be reported in the balance sheet upon offsetting. Otherwise,financial assets and financial liabilities are presented separately in the balance sheet without offsetting.

(8) Equity instrumentsEquity instruments are any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.The issuance (including refinancing), repurchase, sale or cancellation of equity instruments by the Company is accounted formovement in equity. The Company does not recognise the movement in fair value of equity instruments. Transaction costs related toequity transactions are deducted from equity.

Various distributions (excluding dividends) made by the Company to holders of equity instruments reduces owners’ equity. TheCompany does not recognise the movement in fair value of equity instruments.

11. Accounts receivable(1) Making bad debt provision individually for individually significant accounts receivable

Judgment basis or amount standard for individually significantamount

Accounts receivable of more than RMB1 million is recognised asindividually significant accounts receivable by the Company.

Method for making bad debt provision individually forindividually significant accounts receivable

For accounts receivable that is individually significant, theCompany assesses such accounts receivable individually forimpairment. If it is determined that no objective evidence ofimpairment e xists for an in dividually assessed fi nancial a sset, thefinancial asset is included in a group of financial assets withsimilar credit risk characteristics and collectively assessed forimpairment. Accounts receivable for which an impairment loss isindividually recognised are not included in a group of accountsreceivable with similar credit risk characteristics and collectivelyassessed for impairment.

(2) Making bad debt provision for accounts receivable collectively assessed for impairment based on creditrisk characteristics

Name of groups Method for making bad debt provisionSpecific fund groups Other methodsAgeing groups Ageing analysisUse of ageing analysis for making bad debt provision in the portfolio:

√ Applicable □ Not applicable

Ageing Ratio of accounts receivable provision

Ratio of other accounts receivable

provisionWithin 1 year (including 1 year) 5.00%5.00%

1-2 years 10.00%10.00%2-3 years 20.00%20.00%Over 3 years 100.00%100.00%Using percentage of balance for making bad debt provision in the portfolio:

□ Applicable √ Not applicableUsing other methods for making bad debt provision in the portfolio:

□ Applicable √ Not applicable

(3) Accounts receivable individually insignificant but assessed individually for impairment12. Inventories

Whether the Company needs to comply with the disclosure requirements for specific industriesNo

(1) Classification of inventoriesInventories mainly include raw materials, work in progress, goods in stock, developing products and consumable biologicalassets etc.

(2) Pricing of inventories received and dispatchedInventories are measured at their actual cost when obtained. Cost of an inventory consists of purchase costs, processing costsand other costs. When used and dispatched, inventories will be calculated with weighted average method.

The developing products of land development companies under the Company are initially measured at cost. The costs ofdeveloping products include preconstruction costs, expenditures for auxiliary facilities, expenses on construction and installation,borrowing costs incurred before the completion of the subject project and other related expenses during the course of thedevelopment. Once the inventories are delivered, the actual costs will be determined using specific measurement methods.

Consumable biological assets refer to biological assets held-for-sale which include growing timber. Consuma ble biologicalassets without a stock are stated at cost at initial recognition, and subsequently measured at fair value when there is a stock. Changesin fair values shall be recognised as profit or loss in the current period. The cost of self-planting, self-cultivating consumablebiological assets is the necessary expenses directly attributable to such assets prior to canopy closure, including borrowing costseligible for capitalisation. Subsequent expenses such as maintenance cost incurred after canopy closure shall be included in profit orloss for the current period.

The cost of consumable biological assets shall, at the time of harvest or disposal, be carried forward at carrying amount usingthe batch averaging method.

(3) Recognition of net realisable value of inventory and provision for inventory impairmentNet realisable value refers to the amount of the estimated price of inventories less the estimated cost incurred upon completion,estimated sales expenses and taxes and levies in daily operation. The realisable value of inventories shall be determined on the basisof definite evidence, purpose of holding the inventories and effect of after-balance-sheet-date events.

At the balance sheet date, inventories are calculated at the lower of cost and net realisable value. Usually, provision forinventory impairment is made when the net realisable value is lower than the cost. Provisions for impairment of inventory shall bemade according to the amount by which the cost of a single item exceeds its net realisable value. For large quantity and low valueitems of inventories, provision may be made based on categories of inventories. For items of inventories relating to a product linethat is produced and marketed in the same geographical area and with the same or similar end uses or purposes, which cannot bepracticable valued separately from other items in that product line, provision for decline in value of inventories may be determinedon an aggregate basis.

After making the provision for inventory impairment, in case the factors causing inventory impairment no longer exists, and thenet realisable value of an inventory is higher than its book-value, the original provision for inventory impairment shall be transferredback and incorporated into the profit or loss for the current period.

(4) We implement permanent inventory system as our inventory stock taking system.(5) Low-value consumables and packaging materials are amortised when issued for use.

13. Assets held-for-sale

The Company shall classify a non-current asset or disposal group as held for sale if its carrying amount will be recoveredprincipally through a sale transaction (including a non-monetary asset exchange of commercial substance, the same below) ratherthan through continuous use, and when all of the following conditions are met: according to the practice of disposing of this type ofassets or disposal groups in a similar transaction, a non-current asset or disposal group is available for immediate sale in its presentcondition; the Company has made a resolution in respect of a disposal plan and obtained a firm purchase commitment from a buyer;and the sale is probable to be completed within one year. A disposal group is a group of assets to be disposed of, by sale or otherwise,together as a group in a single transaction, and liabilities directly associated with those assets that will be transferred in thetransaction. Where goodwill acquired in a business combination has been allocated to the asset group or groups to which a disposalgroup belongs in accordance with the Accounting Standard for Business Enterprises No. 8 - Impairment of Assets, the disposal groupshall include the goodwill allocated to it.

When the Company measures initially or remeasures the non-current assets and disposal group classified as held for sale on thebalance sheet date, its carrying amount is written down to its fair value less selling costs if its carrying amount is higher than its fairvalue less costs to sell. The reduced amount is recognised as asset impairment loss and charged to current profit or loss, withprovision made for the impairment of the held-for-sale assets. With regard to the disposal group, the asset impairment loss recognisedis offset by the carrying amount of the goodwill in the disposal group first, and then by the carrying amount of each of thenon-current assets in the disposal group which are applicable to the measure requirements under the Accounting Standard forBusiness Enterprises No. 42 - Noncurrent Assets Held For Sale, Disposal Groups and Discontinued Operations (hereinafter referredto as “Held-For-Sale Standard”) pro rata. If on a subsequent balance sheet date, the net amount of the fair value of a held-for-saledisposal group less its costs to sell increases, the amount reduced previously shall be recovered, and reversed in the asset impairmentloss recognised on the non-current asset which is applicable to the measurement requirements of the Held-For-Sale Standard after thenon-current asset is classified as held for sale. The reversed amount is credited to current profit or loss, and the carrying amount ofeach non-current asset (other than goodwill) which is applicable to the measurement requirements of the Held-For-Sale Standard isincreased pro rata according to the percentage of each non-current asset’s carrying amount. Neither the carrying amount of goodwillwhich has been offset nor the asset impairment loss recognised before the non-current asset to which the measurement requirementsof the Held-For-Sale Standard is applicable is classified as held for sale can be reversed.

No depreciation or amortisation is provided for a non-current asset in the non-current assets or disposal groups held for sale.Interest and other expenses attributable to the liabilities of a disposal group held for sale shall continue to be recognised.

When a non-current asset or a disposal group does not meet the condition to be classified as held for sale, the Company ceasesto classify it as held for sale or removes the non-current asset from the disposal group held for sale, and measures it at the lower of:

(1) the carrying amount before it was classified as held for sale, adjusted for any depreciation (or amortisation) or impairment thatwould have been recognised had it not been classified as held for sale, and (2) its recoverable amount.

14. Long-term equity investments

Long-term equity investments under this section refer to long-term equity investments in which the Company has control, jointcontrol or significant influence over the investee. Long-term equity investment without control or joint control or significantinfluence of the Company is accounted for as available-for-sale financial assets or financial assets measured at fair value with anychange in fair value charged to profit or loss. Details on its accounting policy please refer to Note IV. 9 “Financial instruments”.

Joint control is the Company’s contractually agreed sharing of control over an arrangement, which relevant activities of sucharrangement must be decided by unanimously agreement from parties who share control. Significant influence is the power of theCompany to participate in the financial and operating policy decisions of an investee, but to fail to control or joint control theformulation of such policies together with other parties.

(1) Determination of investment costFor a long-term equity investment acquired through a business combination involving enterprises under common control, theinitial investment cost of the long-term equity investment shall be the absorbing party’s share of the carrying amount of the owner’sequity under the consolidated financial statements of the ultimate controlling party on the date of combination. The differencebetween the initial cost of the long-term equity investment and the cash paid, non-cash assets transferred as well as the carryingamount of the debts borne by the absorbing party shall offset against the capital reserve. If the capital reserve is insufficient to offset,the retained earnings shall be adjusted. If the consideration of the merger is satisfied by issue of equity securities, the initialinvestment cost of the long-term equity investment shall be the absorbing party’s share of the carrying amount of the owner’s equityunder the consolidated financial statements of the ultimate controlling party on the date of combination. With the total face value ofthe shares issued as share capital, the difference between the initial cost of the long-term equity investment and total face value of theshares issued shall be used to offset against the capital reserve. If the capital reserve is insufficient to offset, the retained earningsshall be adjusted. For business combination resulted in an enterprise under common control by acquiring equity of the absorbingparty under common control through a stage-up approach with several transactions, these transactions will be judged whether theyshall be treat as “transactions in a basket”. If they belong to “transactions in a basket”, these transactions will be accounted for atransaction in obtaining control. If they do not belong to “transactions in a basket”, the initial investment cost of the long-term equityinvestment shall be the absorbing party’s share of the carrying amount of the owner’s equity under the consolidated financialstatements of the ultimate controlling party on the date of combination. The difference between the initial cost of the long-termequity investment and the aggregate of the carrying amount of the long-term equity investment before merging and the carryingamount the additional consideration paid for further share acquisition on the date of combination shall offset against the capitalreserve. If the capital reserve is insufficient to offset, the retained earnings shall be adjusted. Other comprehensive income recognisedas a result of the previously held equity investment accounted for using equity method on the date of combination or recognised foravailable-for-sale financial assets will not be accounted for.

For a long-term equity investment acquired through a business combination involving enterprises not under common control,the initial investment cost of the long-term equity investment shall be the cost of combination on the date of acquisition. Cost ofcombination includes the aggregate fair value of assets paid by the acquirer, liabilities incurred or borne and equity securities issued.For business combination resulted in an enterprise not under common control by acquiring equity of the acquiree under commoncontrol through a stage-up approach with several transactions, these transactions will be judged whether they shall be treat as“transactions in a basket”. If they belong to “transactions in a basket”, these transactions will be accounted for a transaction inobtaining control. If they do not belong to “transactions in a basket”, the initial investment cost of the long-term equity investmentaccounted for using cost method shall be the aggregate of the carrying amount of equity investment previously held by the acquireeand the additional investment cost. For previously held equity accounted for using equity method, relevant other comprehensiveincome will not be accounted for. For previously held equity investment classified as available-for-sale financial asset, the differencebetween its fair value and carrying amount, as well as the accumulated movement in fair value previously included in the othercomprehensive inc ome shall be transferred to profit or loss for the current period.

Agent fees incurred by the absorbing party or acquirer for the acquisition such as audit, legal service, and valuation andconsultation fees, and other related administration expenses are charged to profit or loss in the current period at the time suchexpenses incurred.

The long-term equity investment acquired through means other than a business combination shall be initially measured at itscost. Such cost is depended upon the acquired means of long-term equity investments, which is recognised based on the purchasecost actually paid by the Company, the fair value of equity securities issued by the Company, the agreed value of investment contractor agreement, the fair value or original carrying amount of the non-monetary asset exchange transaction which the asset will betransferred out of the Company, and the fair value of long-term equity investment itself. The costs, taxes and other necessaryexpenses that are directly attributable to the acquisition of the long-term equity investments are also included in the investment cost.For additional equity investment made in order to obtain significant influence or common control over investee without resulted incontrol, the relevant cost for long-term equity investment shall be the aggregate of fair value of previously held equity investmentand additional investment cost determined according to “Accounting Standard for Business Enterprises No. 22 – Recognition andmeasurement of Financial Instruments”.

(2) Subsequent measurement and method for profit or loss recognitionLong-term equity investments with joint control (excluding those constitute joint ventures) or significant influence on theinvestee are accounted for using equity method. In addition, long-term equity investments with control on the investee are accountedfor using cost method and record in the Company’s financial statements.

① Long-term equity investments accounted for using the cost methodUnder the cost method, a long-term equity investment is measured at its initial investment cost. The cost for long-term equityinvestment is adjusted in the event of additional investment or investment recovery. Except receiving the actual consideration paidfor the investment or the declared but not yet distributed cash dividends or profits which is included in the consideration, investmentgains for the period is recognised as the cash dividends or profits declared by the investee.

② Long-term equity investments accounted for using the equity methodUnder the equity method, where the initial investment cost of a long-term equity investment exceeds the investor’s interest inthe fair value of the investee’s identifiable net assets at the acquisition date, no adjustment shall be made to the initial investment cost.Where the initial investment cost is less than the investor’s interest in the fair value of the investee’s identifiable net assets at theacquisition date, the difference shall be charged to profit or loss for the current period, and the cost of the long-term equityinvestment shall be adjusted accordingly.

Under the equity method, investment gain and other comprehensive income shall be recognised based on the Company’s shareof the net profits or losses and other comprehensive income made by the investee, respectively. Meanwhile, the carrying amount oflong-term equity investment shall be adjusted. The carrying amount of long-term equity investment shall be reduced based on theCompany’s share of profit or cash dividend distributed by the investee. In respect of the other movement of net profit or loss, othercomprehensive income and profit distribution of investee, the carrying amount of long-term equity investment shall be adjusted andincluded in the capital reserves. The Company shall recognise its share of the investee’s net profits or losses based on the fair valuesof the investee’s individual separately identifiable assets at the time of acquisition, after making appropriate adjustments thereto. Inthe event of inconformity between the accounting policies and accounting periods of the investee and the Company, the financialstatements of the investee shall be adjusted in conformity with the accounting policies and accounting periods of the Company.Investment gain and other comprehensive income shall be recognised accordingly. In respect of the transactions between theCompany and its associates and joint ventures in which the assets disposed of or sold are not classified as operation, the share ofunrealised gain or loss arising from internal transactions shall be eliminated by the portion attributable to the Company. Investmentgain shall be recognised accordingly. However, any unrealised loss arising from internal transactions between the Company and aninvestee is not eliminated to the extent that the loss is impairment loss of the transferred assets. In the event that the Companydisposed of an asset classified as operation to its joint ventures or associates, which resulted in acquisition of long-term equityinvestment by the investor without obtaining control, the initial investment cost of additional long-term equity investment shall be thefair value of disposed operation. The difference between initial investment cost and the carrying amount of disposed operation will befully included in profit or loss for the current period. In the event that the Company sold an asset classified as operation to itsassociates or joint ventures, the difference between the carrying amount of consideration received and operation shall be fullyincluded in profit or loss for the current period. In the event that the Company acquired an asset which formed an operation from itsassociates or joint ventures, relevant transaction shall be accounted for in accordance with “Accounting Standards for BusinessEnterprises No. 20 - Business combination”. All profit or loss related to the transaction shall be accounted for.

The Company’s share of net losses of the investee shall be recognised to the extent that the carrying amount of the long-termequity investment together with any long-term interests that in substance form part of the investor’s net investment in the investee arereduced to zero. If the Company has to assume additional obligations, the estimated obligation assumed shall be provided for andcharged to the profit or loss as investment loss for the period. Where the investee is making profits in subsequent periods, theCompany shall resume recognising its share of profits after setting off against the share of unrecognised losses.

If there is debit variation in relation to the long-term equity investments in associates and joint venture held prior to firstadoption of the Accounting Standards for Business Enterprises by the Company on 1 January 2007, the amounts amortised over theoriginal residual term using the straight-line method is included in the profit or loss for the period.

③ Acquisition of minority interestUpon the preparation of the consolidated financial statements, capital reserve is adjusted based on the difference between theadditional long term equity investment from acquisition of minority interest and the share of net assets of the subsidiary attributableto the additional shareholding from the date of acquisition (or date of combination). In the case of insufficient capital surplus to offsetimpairment, retained earnings shall be adjusted.

④ Disposal of long-term equity investmentsIn these consolidated financial statements, for disposal of a portion of the long-term equity investments in a subsidiary withoutloss of control, the difference between disposal cost and disposal of long-term equity investments relative to the net assets of thesubsidiary is charged to the owners’ equity. If disposal of a portion of the long-term equity investments in a subsidiary by the parent

company results in a loss in control, it shall be accounted for in accordance with the relevant accounting policies as described in NoteV. 6. (2) “Preparation Method of the Consolidated Financial Statements”.

On disposal of a long-term equity investment otherwise, the difference between the carrying amount of the investment and theactual consideration paid is recognised through profit or loss in the current period.

In respect of long-term equity investment accounted for using equity method with the remaining equity interest after disposalalso accounted for using equity method, other comprehensive income previously under owners’ equity shall be accounted for inaccordance with the same accounting treatment for direct disposal of relevant asset or liability by investee on pro rata basis at thetime of disposal. The owners’ equity recognised for the movement of other owners’ equity (excluding net profit or loss, othercomprehensive income and profit distribution of investee) shall be transferred to profit or loss for the current period on pro rata basis.

In respect of long-term equity investment accounted for using cost method with the remaining equity interest after disposal alsoaccounted for using cost method, other comprehensive income recognised using equity method or the recognition and measurementstandard of financial instruments before obtaining control over the investee shall be accounted for in accordance with the sameaccounting treatment for direct disposal of relevant asset or liability by investee, and transferred to profit or loss for the current periodon pro rata basis. Movement of other owners’ equity (excluding net profit or loss, other comprehensive income and profit distributionunder net asset of investee accounted for and recognised using equity method) shall be transferred to profit or loss for the currentperiod on pro rata basis.

In the event of loss of control over investee due to partial disposal of equity investment by the Company, in preparing separatefinancial statements, the remaining equity interest which can apply common control or impose significant influence over the investeeafter disposal shall be accounted for using equity method. Such remaining equity interest shall be treated as accounting for usingequity method since it is obtained and adjustment was made accordingly. For the remaining equity interest which cannot applycommon control or impose significant influence over the investee after disposal, it shall be accounted for using the recognition andmeasurement standard of financial instruments. The difference between its fair value and carrying amount as at the date of losingcontrol shall be included in profit or loss for the current period. In respect of other comprehensive income recognised using equitymethod or the recognition and measurement standard of financial instruments before the Company obtained control over the investee,it shall be accounted for in accordance with the same accounting treatment for direct disposal of relevant asset or liability by investeeat the time when the control over investee is lost. Movement of other owners’ equity (excluding net profit or loss, othercomprehensive income and profit distribution under net asset of investee accounted for and recognised using equity method) shall betransferred to profit or loss for the current period at the time when the control over investee is lost. Of which, for the remaining equityinterest after disposal accounted for using equity method, other comprehensive income and other owners’ equity shall be transferredon pro rata basis. For the remaining equity interest after disposal accounted for using the recognition and measurement standard offinancial instruments, other comprehensive income and other owners’ equity shall be fully transferred.

In the event of loss of common control or significant influence over investee due to partial disposal of equity investment by theCompany, the remaining equity interest after disposal shall be accounted for using the recognition and measurement standard offinancial instruments. The difference between its fair value and carrying amount as at the date of losing common control orsignificant influence shall be included in profit or loss for the current period. In respect of other comprehensive income recognisedunder previous equity investment using equity method, it shall be accounted for in accordance with the same accounting treatment fordirect disposal of relevant asset or liability by investee at the time when equity method was ceased to be used. Movement of otherowners’ equity (excluding net profit or loss, other comprehensive income and profit distribution under net asset of investee accountedfor and recognised using equity method) shall be transferred to profit or loss for the current period at the time when equity methodwas ceased to be used.

The Company disposes its equity investment in subsidiary by a stage-up approach with several transactions until the controlover the subsidiary is lost. If the said transactions belong to “transactions in a basket”, each transaction shall be accounted for as asingle transaction of disposing equity investment of subsidiary and loss of control. The difference between the disposal considerationfor each transaction and the carrying amount of the corresponding long-term equity investment of disposed equity interest before lossof control shall initially recognised as other comprehensive income, and subsequently transferred to profit or loss arising from loss ofcontrol for the current period upon loss of control.

15. Investment property

Measurement of investment propertyMeasured by using the cost methodDepreciation or amortisation methodsInvestment property refers to real estate held to earn rentals or for capital appreciation, or both.Investment property is initially measured at cost. Subsequent expenditures related to an investment property shall be included incost of investment property only when the economic benefits associated with the asset will likely flow to the Company and its costcan be measured reliably. All other expenditures on investment property shall be included in profit or loss for the current period whenincurred.

The Company adopts cost method for subsequent measurement of investment property, which is depreciated using the samepolicy as that for buildings.

The method for impaired test of investment property and measurement of impairment provision are detailed in Note V. 20“Impairment of long-term assets”.

In the event that an owner-occupied property or inventories is converted to an investment property (or vice versa), upon theconversion, the property shall be stated at the carrying amount prior to the conversion.

In the event that an investment property is converted to an owner-occupied property, such property shall become fixed assets orintangible assets since the date of its conversion. In the event that an owner-occupied property is converted to real estate held to earn

rentals or for capital appreciation, such fixed assets or intangible assets shall become an investment property since the date of itsconversion. Investment property is measured at cost during its conversion. Upon the conversion, the property shall be stated at thecarrying amount prior to the conversion.

If an investment property is disposed of or if it withdraws permanently from use and no economic benefit will be obtained fromthe disposal, the recognition of it as an investment property shall be terminated. When an investment property is sold, transferred,retired or damaged, the amount of proceeds on disposal of the property net of the carrying amount and related tax and surcharges isrecognised in profit or loss for the current period.

16. Fixed assets(1) Conditions for recognition

Fixed assets are tangible assets that are held for use in the production or supply of goods or services, for rental to others, or foradministrative purposes; and have a useful life of more than one accounting year. Fixed assets are recognised only if the Company isvery likely to receive economic benefits from the asset and its cost can be measured reliably. A fixed asset shall be initially measuredat cost and the ef fect of any expected costs of abandoning the asset at the end of its use.

(2) Depreciation method

Category Depreciation method

Useful lives ofdepreciation (Year)

Estimated residual value

(%)

Annual depreciation rate

(%)Housing and building structure Straight-line method20-40 5-10 2.25-4.75Machinery and equipment Straight-line method8-20 5-10 4.50-11.88Transportation equipment Straight-line method5-8 5-10 11.25-19.00Electronic equipment and othersStraight-line method5 5-10 18.00-19.00

Estimated net residual value of a fixed asset is the estimated amount that the Company would currently obtain from disposal ofthe asset, after deducting the estimated costs of disposal, if the asset were already of the stage and in the condition expected at the endof its useful life.

(3) Recognition, accounting and depreciation method of fixed assets acquired under finance leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of assetownership to the lessee and titles to the assets may or may not eventually be transferred. For fixed assets acquired under financeleases, the basis for provision of leased assets depreciation is the same as that of self-owned fixed assets. When it can be reasonablydetermined that the ownership of a leased asset will be transferred at the end of the lease term, it is depreciated over the period ofexpected use; otherwise, the lease asset is depreciated over the shorter period of the lease term and the period of expected use.

17. Construction in progress

Construction in progress is recognised based on the actual construction cost, including all expenditures incurred for constructionprojects, capitalised borrowing costs for the construction in progress before it has reached the working condition for its intended use,and other related expenses during the construction period. A construction in progress is reclassified to fixed assets when it hasreached the working condition for its intended use.

The method for impaired test of construction in progress and measurement of impairment provision are detailed in Note IV. 20“Impairment of long-term asset”.

18. Borrowing costs

Borrowing costs include interest, amortisation of discounts or premiums related to borrowings, ancillary costs incurred inconnection with the arrangement of borrowings, and exchange differences arising from foreign currency borrowings. For borrowingcosts that are directly attributable to the acquisition, construction or production of a qualifying asset, when expenditures for the assetand borrowing costs are being incurred, activities relating to the acquisition, construction or production of the asset that are necessaryto prepare the asset for its intended use or sale have commenced, such borrowing costs shall be capitalised as part of the cost of thatasset; and capitalisation shall discontinue when the qualifying asset is ready for its intended use or sale. Other borrowing costs shallbe recognised as expense in the period in which they are incurred.

Where funds are borrowed for a specific purpose, the amount of interest to be capitalised shall be the actual interest expenseincurred on that borrowing for the period less any bank interest earned from depositing the borrowed funds before being used intobanks or any investment income on the temporary investment of those funds. Where funds are borrowed for general purpose, theCompany shall determine the amount of interest to be capitalised on such borrowings by applying a capitalisation rate to the

weighted average of the excess amounts of cumulative expenditures on the asset over and above the amounts of specific-purposeborrowings. The capitalisation rate shall be the weighted average of the interest rates applicable to the general-purpose borrowings.

During the capitalisation period, exchange differences on a specific purpose borrowing denominated in foreign currency shall becapitalised. Exchange differences related to general-purpose borrowings denominated in foreign currency shall be included in profitor loss for the current period.

Qualifying assets are assets (fixed assets, investment property, inventories, etc.) that necessarily take a substantial period of timefor acquisition, construction or production to get ready for their intended use or sale.

Capitalisation of borrowing costs shall be suspended during periods in which the acquisition, construction or production of aqualifying asset is interrupted abnormally, when the interruption is for a continuous period of more than 3 months, until theacquisition, construction or production of the qualifying asset is resumed.

19. Intangible assets(1) Accounting method, useful life and impairment test

An intangible asset is an identifiable non-monetary asset without physical substance owned or controlled by the Company.An intangible asset shall be initially measured at cost. The expenditures incurred on an intangible asset shall be recognised ascost of the intangible asset only if it is probable that economic benefits associated with the asset will flow to the Company and thecost of the asset can be measured reliably. Other expenditures on an item asset shall be charged to profit or loss when incurred.

Land use right acquired shall normally be recognised as an intangible asset. Self-constructed buildings (e.g. plants), related landuse right and the buildings shall be separately accounted for as an intangible asset and fixed asset. For buildings and structurespurchased, the purchase consideration shall be allocated among the land use right and the buildings on a reasonable basis. In casethere is difficulty in making a reasonable allocation, the consideration shall be recognised in full as fixed assets.

An intangible asset with a finite useful life shall be stated at cost less estimated net residual value and any accumulatedimpairment loss provision and amortised using the straight-line method over its useful life when the asset is available for use.Intangible assets with indefinite life are not amortised.

The Company shall review the useful life of intangible asset with a finite useful life and the amortisation method applied at leastat each financial year-end. A change in the useful life or amortisation method used shall be accounted for as a change in accountingestimate. For an intangible asset with an indefinite useful life, the Company shall review the useful life of the asset in eachaccounting period. If there is evidence indicating that the useful life of that intangible asset is finite, an entity shall estimate the usefullife of that asset and apply the accounting policies accordingly.

(2) Accounting policy for internal research and development expenditure

Research and development expenditure of the Company was divided into expenses incurred during the research phase andexpenses incurred during the development phase.

Expenses incurred during the research phase are recognised as profit or loss in the current period.Expenses incurred during the development phase that satisfy the following conditions are recognised as intangible assets, whilethose that do not satisfy the following conditions are accounted for in the profit or loss for the current period:

① it is technically feasible that the intangible asset can be used or sold upon completion;② there is intention to complete the intangible asset for use or sale;③ the intangible asset can produce economic benefits, including there is evidence that the products produced using the intangibleasset has a market or the intangible asset itself has a market; and if the intangible asset is for internal use, there is evidence that thereexists usage for the intangible asset;④ there is sufficient support in terms of technology, financial resources and other resources in order to complete the development ofthe intangible asset, and there is capability to use or sell the intangible asset;⑤ the expenses attributable to the development phase of the intangible asset can be measured reliably.

If the expenses incurred during the research phase and the development phase cannot be distinguished separately, alldevelopment expenses incurred are accounted for in the profit or loss for the current period.

20. Impairment of long-term asset

The Company will judge if there is any indication of impairment as at the balance sheet date in respect of non-currentnon-financial assets such as fixed assets, construction in progress, intangible assets with a finite useful life, investment propertiesmeasured at cost, and long-term equity investments in subsidiaries, joint controlled entities and associates. If there is any evidenceindicating that an asset may be impaired, recoverable amount shall be estimated for impairment test. Goodwill, intangible assets withan indefinite useful life and intangible assets beyond working conditions will be tested for impairment annually, regardless ofwhether there is any indication of impairment.

If the impairment test result shows that the recoverable amount of an asset is less than its carrying amount, the impairmentprovision will be made according to the difference and recognised as an impairment loss. The recoverable amount of an asset is thehigher of its fair value less costs of disposal and the present value of the future cash flows expected to be derived from the asset. Anasset’s fair value is the price in a sale agreement in an arm’s length transaction. If there is no sale agreement but the asset is traded in

an active market, fair value shall be determined based on the bid price. If there is neither sale agreement nor active market for anasset, fair value shall be based on the best available information. Costs of disposal are expenses attributable to disposal of the asset,including legal fee, relevant tax and surcharges, transportation fee and direct expenses incurred to prepare the asset for its intendedsale. The present value of the future cash flows expected to be derived from the asset over the course of continued use and finaldisposal is determined as the amount discounted using an appropriately selected discount rate. Provisions for assets impairment shallbe made and recognised for the individual asset. If it is not possible to estimate the recoverable amount of the individual asset, theCompany shall determine the recoverable amount of the asset group to which the asset belongs. The asset group is the smallest groupof assets capable of generating cash flows independently.

For the purpose of impairment testing, the carrying amount of goodwill presented separately in the financial statements shall beallocated to the asset groups or group of assets benefiting from synergy of business combination. If the recoverable amount is le ssthan the carrying amount, the Company shall recognise an impairment loss. The amount of impairment loss shall first reduce thecarrying amount of any goodwill allocated to the asset group or set of asset groups, and then reduce the carrying amount of otherassets (other than goodwill) within the asset group or set of asset groups, pro rata on the basis of the carrying amount of each asset.

An impairment loss recognised on the aforesaid assets shall not be reversed in a subsequent period in respect of the restorablevalue.

21. Long-term prepaid expenses

Long-term prepaid expenses are expenditures and other expenses which have incurred but that shall be amortised over thecurrent period and subsequent periods of more than one year. Long-term prepaid expenses of the Company mainly include expenseson improvement of fixed assets and woodland rent. Long-term prepaid expenses are amortised over the estimated benefit periodusing the straight-line method.

22. Employee benefits(1) Accounting treatment for short-term staff remuneration

Short-term remuneration mainly includes salaries, bonuses, allowance and subsides, staff welfare, medical insurance premium,maternity insurance premium, work-related injury insurance premium, housing provident funds, union operation costs and employeeeducation costs and non-monetary welfare etc. Short-term remuneration incurred during the accounting period in which theCompany’s staff provided services for the Company is recognised as liability and included in profit or loss for the current period orrelated asset costs. Of which, non-monetary welfare is measured at fair value.

(2) Accounting treatment for post-employment benefits

Post-employment benefits mainly include pension insurance premium and unemployment insurance premium. Post-employmentbenefits mainly adopt defined contribution plan. Relevant contribution amount is included in related asset costs or profit or loss forthe current period during the period in which the expenses incurred.

(3) Accounting treatment for termination benefits

When the Company terminates the employment relationship with employees before the end of the employment contracts orprovides compensation as an offer to encourage employees to accept voluntary redundancy, the Company shall recognise employeecompensation liabilities arising from compensation for staff dismissal and included in profit or loss for the current period, when theCompany cannot revoke unilaterally compensation for dismissal due to the cancellation of labour relationship plans and employeeredundant proposals; and the Company recognise cost and expenses related to payment of compensation for dismissal andrestructuring, whichever is earlier. However, if the compensation for termination of employment is not expected to be fully paidwithin 12 months from the reporting period, it shall be accounted for other long-term staff remuneration.

(4) Accounting treatment for other long-term employee benefit

The Company does not provide any other long-term employee benefit for its staff.

23. Provisions

Obligations pertinent to the contingencies which satisfy the following conditions are recognised as provisions: (1) Theobligation is a current obligation borne by the Company; (2) it is likely that an outflow of economic benefits will be resulted from theperformance of the obligation; and (3) the amount of the obligation can be reliably measured.

At the balance sheet date, provisions shall be measured at the best estimate of the necessary expenses required for theperformance of existing obligations, after taking into account relevant risks, uncertainties, time value of money and other factors

pertinent to the contingencies.

If all or some expenses incurred for settlement of provisions are expected to be borne by the third party, the compensationamount shall, on a recoverable basis, be recognised as asset separately, and compensation amount recognised shall not be more thanthe carrying amount of provisions.

24. Preference shares, perpetual bonds and other financial instruments

(1) Classification of perpetual bonds and preference sharesPerpetual bonds, preference shares and other financial instruments issued by the Company are classified as equity instrumentswhen all of the following conditions are satisfied:

① The financial instruments have no contractual obligation to pay in cash or other financial assets to other parties nor toexchange financial assets or financial liabilities under potential adverse condition with other parties;

②If the financial instrument will or may be se ttled in the entity’s own equity instruments, it is a non-derivative instrument thatincludes no contractual obligations to deliver a variable number of its own equity instruments; or a derivative that will be settled onlyby the Company exchanging a fixed amount of cash or other financial asset for a fixed number of its own equity instruments.

Other than financial instruments classified as equity instruments according to the above conditions, other financial instrumentsissued by the Company shall be classified as financial liabilities.

The financial instruments issued by the Company which are compound financial instruments are recognised as a liability basedon the fair value of the liability component, and the amount net of the fair value of the liability component from the actual amountreceived is recognised as “other equity instruments”. Transaction costs that relate to the issue of a compound financial instrument areallocated to the liability and equity components in proportion to the allocation of gross proceeds.

(2) Accounting treatment of perpetual bonds and preference sharesFor financial instruments classified as financial liabilities (such as perpetual bonds and preference shares), except borrowingcosts qualifying for capitalisation (please refer to this Note V. 18 “Borrowing costs”), its related interest, dividends, gains or losses,and gains or losses arising from redemption or refinancing are credited to profit or loss for the current period.

For financial instruments classified as equity instruments (such as perpetual bonds and preference shares), its issue (includingrefinancing), repurchase, sale or cancellation are treated by the Company as changes in equity, with related transaction costsdeducted from equity. The Company’s distribution to holders of equity instruments are treated as a distribution of profits.

Changes in the fair value of equity instruments are not recognised by the Company.

25. Revenue

Whether the Company needs to comply with the disclosure requirements for specific industriesNo

(1) Revenue from sales of goodsRevenue is recognised when the Company has transferred to the buyer the significant risks and rewards of ownership of thegoods, retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control overthe goods sold, will receive the economic benefits associated with the transaction, and can reliably measure the relevant amount ofrevenue and costs. Confirmation time for sales revenue: In terms of domestic sales, confirmation will be made on the day whengoods are delivered to the clients. While in terms of overseas sales, confirmation will be made on the day when goods are loaded onboard and declared.

(2) Revenue from the rendering of servicesWhen the outcome of a transaction involving the rendering of services can be reliably estimated, it shall, on the balance sheetdate, recognise the revenue from the rendering of services employing the percentage of completion method. The completion scheduleof transaction concerning the rendering of services shall be ascertained according to the proportion of service costs incurred to theestimated total costs.

The outcome of a transaction concerning the rendering of services can be reliably estimated, which shall concurrently satisfy:

① The relevant amount of revenue can be reliably measured; ② it is probable that the economic benefits will flow into theCompany; ③ the completion schedule of the transaction can be reliably ascertained; and ④ transaction costs incurred and to beincurred can be reliably measured.

When the outcome of a transaction involving the rendering of services cannot be reliably estimated, it shall recognise therevenue from the rendering of services based on the cost of rendering services already incurred and expected to be compensated, andthe cost of rendering services incurred shall be recognised as an expense for the current period. If the cost of rendering services isexpected not to be compensated, it shall be recognised as an expense.

When a contract or agreement signed by the Company includes sales of goods and rendering of services, if sales of goods andrendering of services can be differentiated and separately measured, they will be recognised respectively. If sales of goods andrendering of services cannot be differentiated or cannot be separately measured, they will be recognised as sales of goods in full.

(3) Revenue from rendering of servicesRevenue from rendering of services is recognised as income on the accrual basis in accordance with the underlying contracts oragreements.

(4) Interest incomeInterest income is calculated based on the time during which the Company’s monetary fund, and the effective interest rates.

26. Government grants(1) Judgment basis and accounting treatment of government grants related to assets

Government grants obtained for acquisition or construction of long-term assets or other forms of long-term asset formation areclassified as related to assets. A government grant related to an asset shall be recognised as deferred income, and evenly amortised toprofit or loss over the useful life of the asset.

(2) Judgment basis and accounting treatment of government grants related to income

Other government grants are classified as related to revenue. For a government grant related to income, if the grant is acompensation for related expenses or losses to be incurred in subsequent periods, the grant shall be recognised as deferred income,and recognised in profit or loss over the periods in which the related costs are recognised; if the grant is a compensation for relatedexpenses or losses already incurred, the grant shall be recognised immediately in profit or loss for the current period.

27. Deferred income tax assets/deferred income tax liabilities

(1) Current income taxAt the balance sheet date, current income tax liabilities (or assets) for the current and prior periods shall be measured at theamount expected to be paid (or recovered) according to the requirements of tax laws. Taxable profits, which are the basis forcalculating the current income tax expense, are determined after adjusting the accounting profits before tax for the year in accordancewith relevant requirements of tax laws.

(2) Deferred income tax assets and deferred income tax liabilitiesTemporary differences arising from the difference between the carrying amount of an asset or liability and its tax base, and thedifference between the tax base and the carrying amount of those items that are not recognised as assets or liabilities but have a taxbase that can be determined according to tax laws, shall be recognised as deferred income tax assets and deferred income taxliabilities using the balance sheet liability method.

Deferred income tax liabilities are not recognised for taxable temporary differences related to: the initial recognition of goodwill;and the initial recognition of an asset or liability in a transaction which is neither a business combination nor affects accounting profitor taxable profit (or deductible loss) at the time of the transaction. In addition, the Company recognises the corresponding deferredincome tax liability for taxable temporary differences associated with investments in subsidiaries, associates and joint ventures,except when both of the following conditions are satisfied: the Company is able to control the timing of the reversal of the temporarydifference; and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets are not recognised for deductible temporary differences related to the initial recognition of an asset orliability in a transaction which is neither a business combination nor affects accounting profit or taxable profit (or deductible loss) atthe time of the transaction. In addition, the Company recognises the corresponding deferred income tax asset for deductibletemporary differences associated with investments in subsidiaries, associates and joint ventures to the extent that it is probable thattaxable profits will be available against which the deductible temporary differences can be utilised, except when both of thefollowing conditions are satisfied: it is not probable that the temporary difference will reverse in the foreseeable future; and it is notprobable that taxable profits will be available in the future, against which the temporary difference can be utilised.

Chenming Paper recognises a deferred income tax asset for the carry forward of deductible losses and tax credits to subsequentperiods, to the extent that it is probable that future taxable profits will be available against which the deductible losses and tax creditscan be utilised.

At the balance sheet date, deferred income tax assets and deferred income tax liabilities are measured at the tax rates that areexpected to apply to the period when the asset is realised or the liability is settled, according to the requirements of tax laws.

At the balance sheet date, Chenming Paper shall review the carrying amount of a deferred income tax asset. If it is probable thatsufficient taxable profits will not be available in future periods to allow the benefit of the deferred income tax asset to be utilised, thecarrying amount of the deferred income tax asset shall be reduced. Any such reduction in amount shall be reversed when it becomesprobable that sufficient taxable profits will be available.

(3) Income tax expenseIncome tax expense comprises current income tax expense and deferred income tax expense.Current income tax expense (current income tax income) and deferred income tax expense (deferred income tax income) areincluded in profit or loss for the current period, except for: recognised as other comprehensive income or current income tax anddeferred income tax related to transactions or events that are directly recognised in other comprehensive income or owners’ equity,which are recognised directly in owners’ equity, and deferred income tax arising from a business combination, which is adjustedagainst the carrying amount of goodwill.

(4) Offset of income taxAfter granted the legal rights of net settlement and with the intention to use net settlement or obtain assets, repay debt, the

Company, at the same time, records the net amount after offsetting its current income tax assets and current income tax liabilities.

The Company was granted the legal rights of net settlement of current income tax assets and current income tax liabilities.Deferred inc ome t ax asset s and de ferre d income tax liabi liti es are relate d to inc ome tax t o be paid by t he same e ntity liab le to pay taxto the same tax collection and management authority or related to different entities liable to pay tax, but the relevant entity liable topay tax is intended to apply net settlement of current income tax assets and liabilities or, at the same time, obtain assets, repay debtwhenever every deferred income tax assets and liabilities with importance would be reversed in the future, the Company records the

net amount after offsetting its current incom e tax assets and current income tax liabilities.

28. Lease(1) Accounting treatment for operating leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of assetownership to the lessee and titles to the assets may or may not eventually be transferred. All other leases are classified as operatingleases.

(1) Operating lease business with the Company recorded as lesseeLease payment for operating lease is recognised as related asset cost or profits and losses for the current period using thestraight-line method over the lease term. The initial direct cost is directly accounted in profit or loss for the current period.Contingent rent is recognised as profit or loss for the current period upon occurrence.

(2) Operating lease business with the Company recorded as lessorRental income is recognised in profit or loss for the current period using the straight-line method over the lease term. The initialdirect cost where the amount is larger is capitalised when incurred, and accounted for as profit or loss for the current period on thesame basis as recognition of rental income over the entire lease period; the initial direct cost where the amount is fewer is included inthe profit or loss for the period when incurred. Contingent rental is accounted for as profit or loss for the period in which it isincurred.

(2) Accounting treatment for finance leases

(1) Financing lease business with the Company recorded as lesseeOn the beginning date of the lease, the entry value of leased asset shall be at the lower of the fair value of the leased asset andthe present value of minimum lease payment at the beginning date of the lease. Minimum lease payment shall be the entry value oflong-term accounts payable, with difference recognised as unrecognised financing expenses. In addition, initial direct costsattributable to leased items incurred during the process of lease negotiation and signing of lease agreement shall be included in thevalue of leased assets. The balance of minimum lease payment after deducting unrecognised financing expenses shall be accountedfor long-term liability and long-term liability due within one year.

Unrecognised financing expenses shall be recognised as financing expenses for the current period using effective interestmethod during the leasing period. Contingent rent shall be included in profit or loss for the current period at the time it incurred.

(2) Financing lease business with the Company recorded as lessorOn the beginning date of the lease, the entry value of lease receivable shall be the aggregate of minimum lease receivable andinitial direct costs at the beginning date of the lease. The unsecured balance shall be recorded. The aggregate of minimum leasereceivable, initial direct costs and unsecured balance and the different between their present values shall be recognised as unrealisedfinancing income. The balance of lease receivable after deducting unrecognised financing income shall be accounted for long-termdebt and long-term debt due within one year.

Unrecognised financing income shall be recognised as financing income for the current period using effective interest methodduring the leasing period. Contingent rent shall be included in profit or loss for the current period at the time it incurred.

(3) The debts arising from the financing lease business was provided for in the following manners:

① Individual assessment of impairmentWhen assessing the probability of recovery of lease receivables from a customer, the ability and willingness to pay leasepayments, and the payment record of the customer, profitability of the lease projects, and guarantees for leased assets will beanalysed. If there are evidences indicating that the customer is unable to repay and its willingness to repay is not strong, and theprincipal and interest are still not recoverable, or only a very small portion can be recovered, after taking all possible measures or allnecessary legal procedures, the receivables are subject to individual impairment assessment, and the difference between the presentvalue of the future cash flows expected to be derived from the receivables and the carrying amount shall be accounted for asprovision for bad debts and recognised in profit or loss.

② Collective assessment of impairment based on credit risk characteristicsAt the end of the period, each individual leasing contract is classified based on the amount past due and recovery, and the majorbasis for classification and provision for impairment are as follows:

Category Basis for classification Proportion of provision (%)Normal Not yet past due 0.30

Past due

90 days past due 5.0090 days - 1 year past due (inclusive) 10.001-2 years past due (inclusive) 30.002- 3 years past due (inclusive) 50.00Over 3 years past due 100.00③ No bad debt provision will be made for lease receivables fr om related parties unless there is objective evidence that the

Company is unable to recover the lease receivables from related parties.If there is objective evidence that the lease receivables from related parties are recovered and can be linked objectively to anevent occurring after the write-down, the impairment losses recognised will be reversed and accounted for in profit or loss. Thecarrying amount reversed shall not exceed the assumed amortised costs on the date of reversal of the lease receivables had noimpairment provision been made.

29. Other significant accounting policies and accounting estimates

(1) Discontinued operationsA discontinued operation is a separately identified component of the Group that either has been disposed of or is classified asheld for sale, and meets one of the following conditions: ① represents a separate major line of business or geographical area ofoperations; ② is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations;and ③ is a subsidiary acquired exclusively with a view to resale.

For the accounting treatment of discontinued operations, please refer to the relevant descriptions in Note IV. 12 “Assets anddisposal groups held for sale”.

(2) Repurchase of sharesShare repurchase consideration paid and transaction costs to reduce the owner’s equity, repurchase, transfer or cancellation ofChenming Paper’s shares, the gains or losses are not recognised.

In respect of transfer of treasury shares, the difference between the actual amount received and the carrying amount of treasuryshares shall be included in capital reserve. When insufficient to dilute, capital reserve will be offset against the surplus reserve andretained profits. Treasury shares are cancelled at par value and by the number of shares cancelled to reduce the share capital. Thedifference between the book balance and the nominal value of the treasury shares shall be offset against the capital reserve. Wheninsufficient to dilute, capital reserve will be offset against the surplus reserve and retained profits.

30. Changes in significant accounting policies and estimates(1) Changes in accounting policies

□ Applicable √ Not applicable

(2) Changes in significant accounting estimates

□ Applicable √ Not applicable

31. Others

The Company needs to make judgments, estimates and assumptions as to the carrying amount of statement items which cannotbe accurately calculated during the application of the Company’s accounting policies. Such judgments, estimates and assumptions aremade based on the historical experiences of the Company’s management and taking into account other relevant factors, which mayaffect the reported amount of revenue, expenses, assets and liabilities and disclosure of contingent liabilities at the balance sheet date.However, the outcome from such estimate uncertainties may different from the current estimation of the Company’s management,which may cause critical adjustment to the carrying amount of assets or liabilities which may be affected in the future.

The Company regularly reviews the aforesaid judgments, estimates and assumptions on the basis of continued operation. Arevision to accounting estimates is recognised in the period in which the estimate is revised if it only affects that period. A revision isrecognised in the period of the revision and future periods if it affects both current and future periods.

At the balance sheet date, the critical areas where Company needs to make judgments, estimates and assumptions as to the itemsamount of financial statements are set out below:

(1) Classification of leasesThe Company classifies its leases as operating lease and financing lease in accordance with “Accounting Standard for BusinessEnterprises No. 21 - Leases”. When classifying leases, the management needs to analyse and judge whether all risks and returnsrelating to the ownership of leased out assets have transferred to the leasee, or whether the Company has obliged to all risks andreturns relating to the ownership of leased assets.

(2) Provision for bad debtsThe Company adopts the allowance method to account for bad debt loss under the accounting policies of accounts receivable.Impairment of accounts receivable is based on the recoverability of assessed accounts receivable. Given the management’s judgmentand estimate required for impairment of accounts receivable, the difference between the actual outcome and original estimate willaffect the carrying amount of accounts receivable and provision and reversal of bad debts of accounts receivable during the estimaterevision period.

(3) Allowance for inventoriesUnder the accounting policies of inventories and by measuring at the lower of cost and net realisable value, the Company makesallowance for inventories which have costs higher than net realisable value or become obsolete and slow-moving. Write-down of

inventories to their net realisable values is based on the sale ability of the evaluated inventory and their net realisable values. Giventhe management’s judgments and estimates required for inventory impairment on the basis of definite evidence, purpose of holdingthe inventories and other factors, the difference between the actual outcome and original estimate will affect the carrying amount ofinventories and provision and reversal of bad debts of inventories allowance during the estimate revision period.

(4) Fair value of consumable biological assetsA consumable biological asset is measured at fair value when there is a stock. A stock is judged to be formed when theconsumable biological asset - timber survives well after a growth period and the merchantable timber exceeds 0.8 cubic metres.

The fair value of a consumable biological asset is discounted using expected cash flow and estimated and measured usingincome approach.

(5) Impairment of available-for-sale financial assetsIn respect of impairment of available-for-sale financial assets, whether impairment loss shall be recognised in income statementsignificantly depends on the judgments and assumptions of the management. While making judgments and assumptions, theCompany shall assess the excess of cost of the investee’ s identifiable net assets attributable to the investment over fair value and theduration.

(6) Provision for impairment of non-financial non-current assetsAt the balance sheet date, the Company makes its judgment as to whether there is any evidence indicating potential impairmentof non-current assets other than financial assets. Intangible assets with indefinite useful life shall be tested for impairment when thereis any indication of impairment in addition to the annual impairment testing. Other non-current assets other than financial assets shallbe tested for impairment if there is any evidence indicating that their carrying amount cannot be recovered.

When the carrying amount of an asset or asset groups is higher than the recoverable amount, being the higher of its fair valueless costs of disposal and the present value of the future cash flows expected to be derived from the asset, it indicates impairment.Where the fair value of an asset or an asset group does not have involved a sale agreement and an active market, the Company shallengage an expert to determine its fair value in a valuation.

The net amount of the fair value less costs of disposal is determined by making reference to the price in a sale agreement in anarm’s length transaction or the observable market price less the incremental costs directly attributable to such assets disposal.

In projecting the present value of the future cash flows, critical judgments shall be made to the output, selling price and relevantoperating costs of such assets (or asset groups) and the discount rate applied in calculating the discount. In estimating the recoverableamount, the Company may adopt all relevant materials including the projections as to the output, selling price and relevant operatingcosts based on reasonable and supportive assumptions.

The test shall be performed at least once a year as to whether there is any impairment. This requires an estimate for the presentvalue of the future cash flows of the asset groups or sets of asset groups to which goodwill is allocated. In estimating the presentvalue of the future cash flows, the Company needs to estimate the cash flows generated from the future asset groups or sets of assetgroups. Meanwhile, the present value of future cash flows is determined using an appropriately selected discount rate.

(7) Depreciation and amortisationThe Company shall provide depreciation and amortisation for investment properties, fixed assets and intangible assets over theiruseful lives and after taking into account of their residual value, using straight-line method. The Company shall regularly review theuseful lives to determine the amount depreciated and amortised to be accounted for in each reporting period. The useful life isdetermined by the Company according to its previous experience on the similar assets and estimated technical innovation. If there isany material change in the previously made estimate, the depreciation and amortisation will be adjusted over the future period.

(8) Deferred income tax assetsIt is probable that all unused tax loss will be recognised as the deferred income tax assets to the extent there will be sufficienttaxable profits against which the deducible loss is available. This requires the Company’s management to apply numerous judgmentsto estimate the time and amount generated from the future taxable profits so as to determine the amount of deferred income tax assetswith reference to the tax planning strategy.

(9) Income taxThere are some uncertainties in tax treatment and calculation for some transactions of the Company during its ordinary course ofbusiness. The approval from the tax authority is required for pre-tax expe nding of some items. Any difference between the finalrecognition outcome of such tax matters and the initially estimated amount will exert an effect on the current income tax and deferredincome tax during their final recognition period.

VI. Taxation

1. Main tax types and tax rates

Tax type Tax base Tax rateValue added tax

17% for general, 11% for sales of gas and water and 6% for the service industry.Value-added tax is computed on the difference after deduction of input value-addedtax.

16%、11%、6%Urban maintenance

and construction tax

7% of actual payment of turnover tax. 7%Enterprise income

tax

25% of taxable income; for the companies which are subject to preferential policies,please refer to Note VI. 2(1); the overseas companies shall pay taxes at the tax ratepursuant to the requirements of the countries or regions where the companies are

25%

located.Educationalsurcharges

3% of actual payment of turnover tax. 3%Local educational

surcharges

2% of actual payment of turnover tax. 2%

2. Tax incentives

(1) Enterprise Income TaxOn 10 December 2015, the Company received a high and new technology enterprise certificate with a certification number ofGR201537000611. Pursuant to the requirements under the Law of the People’s Republic of China on Enterprise Income Tax and therelevant policies, the Company is subject to a corporate income tax rate of 15% of taxable income, and is entitled to the preferentialtreatment from 2015 to 2017.

Shouguang Meilun Paper Co., Ltd., a subsidiary of the Company, received a high and new technology enterprise certificate witha certification number of GR201537000228 on 10 December 2015. Pursuant to the requirements under the Law of the People’sRepublic of China on Enterprise Income Tax and the relevant policies, Shouguang Meilun is subject to a corporate income tax rate of15% of taxable income, and is entitled to the preferential treatment from 2015 to 2017.

Zhanjiang Chenming Pulp & Paper Co., Ltd., a subsidiary of the Company, received a high and new technology enterprisecertificate with a certification number of GR201544000146 on 30 September 2015. Pursuant to the requirements under the Law ofthe People’s Republic of China on Enterprise Income Tax and the relevant policies, Zhanjiang Chenming is subject to a corporateincome tax rate of 15% of taxable income, and is entitled to the preferential treatment from 2015 to 2017.

Jilin Chenming Paper Co., Ltd., a subsidiary of the Company, received a high and new technology enterprise certificate with acertification number of GR201622000039 on 1 November 2016. Pursuant to the requirements under the Law of the People’sRepublic of China on Enterprise Income Tax and the relevant policies, Jilin Chenming is subject to a corporate income tax rate of 15%of taxable income, and is entitled to the preferential treatment from 2015 to 2017.

Jiangxi Chenming Paper Co., Ltd., a subsidiary of the Company, received a high and new technology enterprise certificate witha certification number of GR201636000018 on 15 November 2016. Pursuant to the requirements under the Law of the People’sRepublic of China on Enterprise Income Tax and the relevant policies, Jiangxi Chenming is subject to a corporate income tax rate of15% of taxable income, and is entitled to the preferential treatment from 2016 to 2018.

Pursuant to the requirements of Rule 27 of Law of the People’s Republic of China on Enterprise Income Tax (《中華人民共和國企業所得稅法》) and Rule 86 of Regulations for the Implementation of Law of the People’s Republic of China on EnterpriseIncome Tax (《中華人民共和國企業所得稅法實施條例》), subsidiaries of Chenming Paper, namely, Zhanjiang ChenmingArboriculture Development Co., Ltd., Yangjiang Chenming Arboriculture Development Co., Ltd., Nanchang ChenmingArboriculture Development Co., Ltd., Huanggang Chenming Arboriculture Development Co., Ltd. and Chenming Arboriculture Co.,Ltd. are engaged in arboriculture cultiv ating and thus exempt from corporate income tax.

Pursuant to the “Revenue Bill 2008” passed by The Legislative Council of the Hong Kong Special Administrative Region on 26June 2008, Chenming (HK) Limited, a subsidiary of Chenming Paper, has been subject to a corporate income tax rate of 16.5%commencing 2008, and the applicable tax rate for 2016 was 16.5%.

Except for the above preferential policies, other subsidiaries of the Company are subject to enterprise income tax rate of 25%.(2) Value-added Tax (“VAT”) incentives

Pursuant to the Notice on Issuing the Value-added Tax Preferential Catalogue on Products and Services Applying IntegratedUse of Resources by the Ministry of Finance and the State Administration of Taxation (Cai Shui [2015] No. 78), ZhanjiangChenming New-style Wall Materials Co., Ltd., a subsidiary of the Company, produces bricks and blocks using waste residues and istherefore subject to a preferential policy of an immediate VAT refund of 70% in 2017.

Pursuant to the Notice on Issuing the Value-added Tax Preferential Catalogue on Products and Services Applying IntegratedUse of Resources by the Ministry of Finance and the State Administration of Taxation (Cai Shui [2015] No. 78), ShandongChenming Panels Co., Ltd., a subsidiary of the Company, produces products that apply integrated use of resources and is thereforesubject to a preferential policy of an immediate VAT refund of 70%.

VII. Notes to items of the consolidated financial statements

1. Monetary funds

Unit: RMBItem Closing balance Opening balanceTreasury cash 2,104,950.302,344,438.45Bank deposit 3,528,880,339.432,802,063,936.01Other monetary funds 14,690,489,964.9111,639,084,086.97

Total 18,221,475,254.6414,443,492,461.43Of which: Total deposits in overseas639,719,297.65508,707,081.55

banksNote: ① Other monetary funds of RMB6,690,434,770.82 (31 December 2017: RMB4,822,551,296.94) were the guarantee depositfor the application for bank acceptance with the banks by the Group.② Other monetary funds of RMB2,510,468,323.21 (31 December 2017: RMB1,333,152,563.36) were the guaran tee depositfor the application for letter of credit with the banks by the Group.③ Other monetary funds of RMB3,826,377,119.45 (31 December 2017: RMB4,939,992,248.75) were the guaran tee depositfor the application for guarantees with the banks by the Group.④ Other monetary funds of RMB1,266,999,751.43 (31 December 2017: RMB90,037,977.92) were the gu arantee deposit fortheapplication for loans with the banks by the Group.⑤ Other monetary funds of RMB396,210,000.00 (31 December 2017: RMB453,350,000.00) were the Group’s statutoryreserve deposit at the banks.

2. Financial assets measured at fair value through profit or loss

Unit: RMBItem Closing balance Opening balanceFinancial assets designated at fair value through profit or loss 0.00 94,000,000.00

Total 0.0094,000,000.00Other explanation: On 16 April, the Company and Shanghai Zhongneng Enterprise Development (Group) Co., Ltd. (anothershareholder of Guangdong Dejun Investment Co., Ltd.) entered into the Guangdong Dejun Investment Co., Ltd. Equity RepurchaseAgreement, pursuant to which, the Company is entitled to the fixed investment income from the equity investment and received anamount for premium repurchase at 4% per year.

3. Bills receivable(1) Classification of bills receivable

Unit: RMBItem Closing balance Opening balanceBank acceptance bills 3,414,858,233.254,120,231,853.56Commercial acceptance bills 0.00100,000,000.00

Total 3,414,858,233.254,220,231,853.56

(2) Bills receivable of the Company pledged at the end of the period

Unit: RMBItem Pledged amount at the end of the periodBank acceptance bills 1,901,430,321.76Commercial acceptance bills 0.00

Total 1,901,430,321.76

(3) Outstanding bills receivable endorsed or discounted by the Company as at the end of the period

Unit: RMBItem

Derecognised amount as at the end of the

period

Recognised amount as at the end of the

periodBank acceptance bills 5,330,734,383.890.00Commercial acceptance bills 0.00

Total 5,330,734,383.890.00

(4) Other explanation

As at 30 June 2018, bills with the carrying amount of RMB1,612,389,759.13 (31 December 2017: RMB972,379,999.17) werepledged in exchange for short-term borrowings of RMB1,569,382,500.00. As at 30 June 2018, bills with the carrying amount ofRMB257,540,562.63 (31 December 2017: RMB443,772,390.78) were pledged and a letter of guarantee amounting toRMB295,000,000.00 was issued therefor. As at 30 June 2018, bills with the carrying amount of RMB31,500,000.00 (31 December2017: RMB692,007,430.76) were pledged and a letter of credit amounting to RMB22,629,484.00 was issued therefor.

As at 30 June 2018, the accumulated bank acceptance bills issued by the Group to banks amounted to RMB2,991,700,361.67(2017: RMB3,742,679,994.55), with discount expenses incurred of RMB70,915,830.95 (2017: RMB72,693,293.53). As at 30 June2018, outstanding discounted bills receivable amounted to RMB2,554,764,872.75 (2017: RMB2,169,102,479.25).

4. Accounts receivable(1) Disclosure of accounts receivable by category

Unit: RMB

Category

Closing balance Opening balanceBook balance Bad debts provision

Carrying amount

Book balance Bad debts provision

Carrying amountAmount Percentage Amount

Provisionpercentage

Amount Percentage Amount Provision percentageAccounts receivable that are

individually significant but assessedindividually for impairment

40,852,895.550.99% 40,852,895.55100.00%37,864,672.830.94%37,864,672.83 100.00% 0.00Accounts receivable that are

collectively assessed for impairmentbased on credit risk characteristics

4,096,627,882.6099.01% 324,655,320.107.92%3,771,972,562.50

3,988,541,011.

99.01%322,675,434.25 8.61% 3,665,865,577.03Receivables that are individually

insignificant but assessed individuallyfor impa irment

0.000.00% 0.000.00%1,994,466.600.05%1,994,466.60 100.00% 0.00Total 4,137,480,778.15100.00% 365,508,215.658.83%3,771,972,562.50

4,028,400,150

.71

100.00%362,534,573.68 9.00% 3,665,865,577.03

Accounts receivable that are individually significant but assessed individually for impairment as at the end of the period:

√ Applicable □ Not applicable

Unit: RMBReceivable (by entity)

Closing balanceAccountsreceivable

Bad debtprovision

Provisionpercentage

Reason for provisionFOSHAN SHUNDE XINGCHE N PAPER CO., LTD.26,236,528.7026,236,528.70100.00%

Overdue for a prolonged period

and unlikely to be recoveredBEIJING HUAXIA CULTURE MEDIA CO., LTD. 8,207,950.428,207,950.42100.00%

Overdue for a prolonged period

and unlikely to be recoveredNO.1 MIDDLE SCHOOL OF WUHAN ECONOMICAND TECHNOLOGICAL DEVELOPMENT ZONE

1,916,773.201,916,773.20100.00%

Overdue for a prolonged period

and unlikely to be recoveredJIANGXI LONGMING ENTERPRISE CO., LTD. 1,763,987.741,763,987.74100.00%

Overdue for a prolonged period

and unlikely to be recoveredNANCHANG XINGBO PAPER CO., LTD. 1,656,205.971,656,205.97100.00%

Overdue for a prolonged period

and unlikely to be recoveredSHANGHAI KANGNUO FLOORINGMANUFACTURING CO., LTD.

1,071,449.521,071,449.52100.00%

Overdue for a prolonged period

and unlikely to be recoveredTotal 40,852,895.5540,852,895.55-- --Use of ageing analysis for making bad debt provision in groups:

√ Applicable □ Not applicable

Unit: RMBAgeing

Closing balanceAccounts receivable Bad debt provision Provision percentageWithin 1 yearOf which: within 3 months2,524,113,758.35118,868,916.304.71%

4-6 months 549,224,133.4527,461,206.695.00%7-12 months 57,217,805.642,860,890.265.00%

Sub-total for within 1 year 3,130,555,697.44149,191,013.254.77%1-2 years 68,951,648.776,895,164.8810.00%2-3 years 86,974,725.7317,394,945.1520.00%Over 3 years 151,174,196.83151,174,196.83100.00%

Total 3,437,656,268.77324,655,320.10

(2) Provision, recovery or reversal of bad debt provision for the period

Bad debt provision for the current period amounted to RMB4,563,478.96. The amount for bad debt provision recovered or reversedduring the current period was RMB1,589,836.99.

(3) Particulars of accounts receivable actually written off during the reporting period

Unit: RMBItem Amount written offAccounts receivable actually written-off 1,907,616.23Significant accounts receivable written-off:

Unit: RMBName of entity

Nature of accounts

receivable

Amountwritten off

Reason for written off

Written offprocedureperformed

Arising fromrelated partytransaction or notHEBEI PRINTINGFACTORY OF PEOPLE'SDAILY

Payment for goods 534,612.10

Overdue for a prolonged period

and unlikely to be recovered

Approved by thegeneral manager

NoJILIN CHANGCHUN

CARD FACTORY

Payment for goods 1,099,418.13

Overdue for a prolonged period

and unlikely to be recovered

Approved by thegeneral manager

NoJINAN HANZHANG

PRINTING CO., LTD.

Payment for goods 273,586.00

Overdue for a prolonged period

and unlikely to be recovered

Approved by thegeneral manager

NoTotal -- 1,907,616.23-- -- --

(4) Top five accounts receivable based on closing balance of debtors

Name of entity Nature Closing

balance

Ageing Percentage

of closingbalance of

totalaccountsreceivable

Closing

alance o

f

bad debtprovision

BEIJING PAPER COMPANY FOR FOREIGNLANGUAGE PUBLICATIONS

Payment for

goods

133,549,17

0.95

Within 1 year

3.23%

6,677,458

.55

YUNNAN PRINTING MATERI ALS CORPORATION

Payment for

goods

83,711,747

.25

Within 1 year

2.02%

4,185,587

.36

GUIZHOU PRINTING MATERIALS CORPORATION

Payment for

goods

81,525,220

.72

Within 1 year

1.97%

4,076,261

.04

SICHAUN PRINTING MATERIALS CORPORATION.

Payment for

goods

69,428,539

.67

Within 1 year

1.68%

3,471,426

.98

SHANXI PRINTING MATERIALS CORPORATION

Payment for

goods

63,292,602

.60

Within 1 yearor 1 to 2 years1.53%

7,461,197

.66

Total --431,507,28

1.19

-- 12.38%28,207,93

3.65

5. Prepayments(1) Presentation of prepayments stated according to age ing anal ysis

Unit: RMBAgeing

Closing balance Opening balanceAmount Percentage Amount PercentageWithin 1 year 1,939,522,004.8494.51%1,766,616,133.82 90.03%1-2 year 112,687,093.505.49%195,535,339.53 9.97%

Total 2,052,209,098.34-- 1,962,151,473.35 --

(2) Top five prepayments according to closing balance of prepaid parties

Name of entity Amount Percentage (%)Term Reason for being unsettledJIANGXI PROVINCE ZHONGLIAN ENERGYDEVELOPMENT CO., LTD.

191,215,583.6

9.32%Within 1 year Prepayments for goods

according to the agreed

contractZHANJIANG MINGLI TRADING CO., LTD. 91,584,634.704.46%Within 1 year Prepayments for goods

according to the agreed

contractGUANGDONG LEPENG TRADING CO., LTD. 68,352,514.043.33%Within 1 year Prepayments for goods

according to the agreed

contractHENAN XINYU INTERNATIONAL PULP ANDPAPER CO., LTD.

59,841,051.052.92%Within 1 year Prepayments for goods

according to the agreed

contractSHANGHAI MUHAO INTERNATIONAL TRADE CO.,LTD.

51,865,502.432.53%Within 1 yearPrepayments for goods

according to the agreed

contractTotal 462,859,285.8

22.55%

6. Other receivables(1) Other receivables by category

Unit: RMB

Category

Closing balance Opening balanceBook balance Bad debt provision

Carrying amount

Book balance Bad debt provision

Carrying amountAmount Percentage Amount

Provisionpercentage

Amount Percentage Amount Provision percentageOther receivables that are individually

significant but assessed individuallyfor impa irment

28,935,015.664.17% 28,935,015.66100.00%28,935,015.664.52%28,935,015.66 100.00% 0.00Other receivables that are collectively

assessed for impairment based oncredit risk characteristics

658,189,914.5694.76% 64,144,550.979.75%594,045,363.59

604,070,216.3

94.32%65,335,559.83 10.82% 538,734,656.55Other receivables that are individually

insignificant but assessed individuallyfor impa irment

7,456,768.121.07% 7,456,768.12100.00%7,456,768.121.16%7,456,768.12 100.00% 0.00Total 694,581,698.34100.00% 100,536,334.7514.47%594,045,363.59

640,462,000.1

100.00%101,727,343.61 15.88% 538,734,656.55

Other receivables that are individually significant but assessed individually for impairment as at the end of the period:

√ Applicable □ Not applicable

Unit: RMB

Other receivables (by entity)

Closing balanceOtherreceivables

Bad debtprovision

Provisionpercentage

Reasons for

provisionANDRITZ AG 3,143,660.153,143,660.15 100.00%

Unlikely to be

recoveredVOITH GERMANY 2,615,790.982,615,790.98 100.00%

Unlikely to be

recoveredMETSO PAPER (CHINA) CO., LTD. 4,725,039.894,725,039.89 100.00%

Unlikely to be

recoveredYIZHIJIA PAPERMAKING DEHYDRATION EQUIPMENTTRADING (SHANGHAI) CO., LTD.

1,345,757.831,345,757.83 100.00%

Unlikely to be

recoveredHONG KONG DANBELL COMPANY 1,699,390.161,699,390.16 100.00%

Unlikely to be

recoveredAHLSTROM FINLAND 2,820,742.722,820,742.72 100.00%

Unlikely to be

recoveredGUANGDONG PETRO-TRADE DEVELOPMENT CORPORATION1,396,048.801,396,048.80 100.00%

Unlikely to be

recoveredQINGDAO SECOND AUTOMOTIVE AND TRANSPORT ATIONLOGISTICS BRANCH COMPANY

1,137,295.161,137,295.16 100.00%

Unlikely to be

recoveredCHUAN HUA PRECISION CORPORATION OF TAIWAN 2,253,993.042,253,993.04 100.00%

Unlikely to be

recoveredZIBO KAIHONG ENERGY CO., LTD. 1,130,000.001,130,000.00 100.00%

Unlikely to be

recoveredJIEERGU COMPANY 1,685,806.121,685,806.12 100.00%

Unlikely to be

recoveredZHENGZHOU SHUNFA COAL SALES CO., LTD. 2,871,239.322,871,239.32 100.00%

Unlikely to be

recoveredSPECTRIS 2,110,251.492,110,251.49 100.00%

Unlikely to be

recoveredTotal 28,935,015.6628,935,015.66 -- --In the groups, other receivables with provision for bad debts based on ageing analysis:

√ Applicable □ Not applicable

Unit: RMBAgeing

Closing balanceOther receivables Bad debt provision Provision percentageWithin 1 yearSub-total for within 1 year 203,790,887.2210,189,544.365.00%1 to 2 years 15,064,521.901,506,452.1910.00%2 to 3 years 34,287,134.256,857,426.8520.00%Over 3 years 45,591,127.5745,591,127.57100.00%

Total 298,733,670.9464,144,550.97

(2) Provision, recovery or reversal of bad debt provision for the period

Bad debt provision for the period amounted to RMB13,560,742.56. The amount for bad debt provision recovered or reversed duringthe period was RMB14,751,751.43.

(3) Top five other receivables according to closing balance of debtors

Unit: RMBName of entity Nature Closing balanceAgeing

Percentage of closingbalance of total other

Closingbalance of bad

receivables debt provisionSHANDONG STEEL GROUP FINANCECO., LTD.

Loans 200,000,000.00Within 1 year28.79%SINOTRUK FINANCE CO., LTD. Loans 100,000,000.00Within 1 year14.40%WEIFANG SIME DARBY WEST PORT

CO., LTD.

Open credit 19,093,750.00Within 1 year2.75% 954,687.50GUANGDONG ZHONGTUO

CONSTRUCTION CO., LTD

Open credit 15,200,000.002-3 years 2.19% 3,040,000.00VALMET CORPORATION FINLAND Open credit 5,533,180.792-3 years 0.80% 1,106,636.16

Total -- 339,826,930.79-- 48.93% 5,101,323.66

7. Inventories(1) Categories of inventories

Unit: RMBItem

Closing balance Opening balanceBook balance

Impairment

provision

Carrying amountBook balance

Impairment

provision

Carrying amountRaw materials 2,468,203,325.14 8,138,005.872,460,065,319.272,431,905,097.568,138,005.87 2,423,767,091.69Work-in-process

products

32,553,546.43 1,835,271.0930,718,275.34115,619,584.501,835,271.09 113,784,313.41Goods in stock 2,112,668,532.20 2,112,668,532.201,419,054,457.14 1,419,054,457.14Consumable

biological assets

1,515,976,239.80 1,515,976,239.801,756,375,954.07 1,756,375,954.07Developing

products

309,887,374.86 309,887,374.86309,823,674.86 309,823,674.86Total 6,439,289,018.43 9,973,276.966,429,315,741.476,032,778,768.139,973,276.96 6,022,805,491.17

(2) Impairment provision for inventories

Unit: RMBItem Opening balance

Increase for the period Decrease for the period

Closing balanceProvision Others

Reversal or

transfer

OthersRaw materials 8,138,005.87 8,138,005.87Work in progress 1,835,271.09 1,835,271.09

Total 9,973,276.96 9,973,276.96

8. Non-current assets due within one year

Unit: RMBItem Closing balance Opening balanceLong-term receivables due within one year 5,648,853,164.636,901,695,875.94

Total 5,648,853,164.636,901,695,875.94

9. Other current assets

Unit: RMBItem Closing balance Opening balance

VAT recoverable 1,143,634,175.09946,555,831.51Prepaid tax 45,801,512.783,703,141.50Receivables under financial lease duewithin one year

10,202,152,084.0610,618,498,357.25Total 11,391,587,771.9311,568,757,330.26

10. Available-for-sale financial assets(1) Particulars of available-for-sale financial assets

Unit: RMBItem

Closing balance Opening balanceBook balance

Provision forimpairment

Carryingamount

Book balance

Provision forimpairment

Carrying amountAvailable-for-sale equity

instruments:

104,450,000.00 1,450,000.00103,000,000.002,454,450,000.001,450,000.00 2,453,000,000.00At cost 104,450,000.00 1,450,000.00103,000,000.002,454,450,000.001,450,000.00 2,453,000,000.00

Total 104,450,000.00 1,450,000.00103,000,000.002,454,450,000.001,450,000.00 2,453,000,000.00

(2) Available-for-sale financial assets measured at cost as at the end of the period

Unit: RMB

Investee

Book balance Provision for impairment

Equity interest inthe investee held by

the Company

Cash dividends for

the periodOpening balance

Increase for the

period

Decrease for the

period

Closing balance Opening balance

Increase for the

period

Decrease for the

period

Closing balanceQINGZHOU

CHENMINGDENATURATIONAMYLUM CO., LTD.

900,000.00 900,000.00900,000.00900,000.00 30.00%SHANDONG PAPER

MAKING &PRINTINGENTERPRISESCORPORATION

200,000.00 200,000.00200,000.00200,000.00 2.00%JINAN SHANGYOU

COMMERCIALCOMPANY LIMITED

350,000.00 350,000.00350,000.00350,000.00 5.00%ZHEJIANG

GUANGYU IDALLPRINT CO., LTD.

2,000,000.00 2,000,000.00 9.96%ANHUI TIME

SOURCECORPORATION

1,000,000.00 1,000,000.00 10.00%SHANDONG

HONGQIAOVENTURE CAPITALCO., LTD.

50,000,000.00 50,000,000.00 16.67%LIDE TECHNOLOGY

CO., LTD.

36,000,000.00 36,000,000.00 3.00%SHANGHAI

HENGZHENGVENTUREINVESTMENTCENTER (LIMITEDPARTNERSHIP)

6,000,000.00 8,000,000.00 14,000,000.00 11.43%GUANGDONG

DEJUNINVESTMENT CO.,LTD.

2,350,000,000.00 2,350,000,000.00 0.00 50.00%Total 2,446,450,000.00 8,000,000.00 2,350,000,000.00 104,450,000.001,450,000.001,450,000.00 --

(3) Changes in impairment of available-for-sale assets during the reporting period

Unit: RMBType of available-for-sale assets Available-for-sale equity instruments

Available-for-sale debt

instruments

TotalOpening balance of provision for impairment 1,450,000.00 1,450,000.00

Provision made during the current period 0.00 0.00Decrease for the current period 0.00 0.00Closing balance of provision for impairment 1,450,000.00 1,450,000.00

11. Long-term receivables(1) Particulars of long-term receivables

Unit: RMBItem

Closing balance Opening balanceBook balance

Provision for

bad debts

Carrying amountBook balance

Provision for

bad debts

Carrying amountFinance leasing

payments

17,191,992,230.55176,370,744.6017,015,621,485.9517,824,233,394.52109,695,662.35 17,714,537,732.17

Including:

unrealised financingincome

1,804,823,919.07 -1,804,823,919.071,411,979,767.05 1,411,979,767.05Less: non-current

assets due within oneyear

5,667,568,816.47 18,715,651.845,648,853,164.636,921,710,823.3220,014,947.38 6,901,695,875.94Total 9,719,599,495.01 157,655,092.769,561,944,402.259,490,542,804.1589,680,714.97 9,400,862,089.18

12. Long-term equity investments

Unit: RMB

Investee Opening balance

Increase/decrease for the period

Closing balance

Closing balance

of provisionInvestmentaddition

Investmentreduction

Profit/loss ofinvestmentrecognised underequity method

Adjustment of

othercomprehensive

income

Changes in other

equity

Distribution ofcash dividends orprofit declared

Provision forimpairment

OthersI. Joi nt ventures

SHOUGUANGCHENMINGHUISEN NEWBUILDINGMATERIALSCO., LTD.

3,087,296.72 -152,076.08 2,935,220.64WEIFANG SIME

DARBY WESTPORT CO., LTD.

104,784,922.41 -1,007,659.69 103,777,262.72Subtotal 107,872,219.13 -1,159,735.77 106,712,483.36II. AssociatesJIANGXI

JIANGBAOMEDIACOLOURPRINTING CO.,LTD.

1,754,051.46 -480,140.20 1,273,911.26ZHUHAI

DECHEN NEWTHIRD BOARDEQUITYINVESTMENTFUNDCOMPANY(LIMITEDPARTNERSHIP)

51,918,433.41 115,077.17 52,033,510.58NINGBO

KAICHENHUAMEIEQUITYINVESTMENTFUNDPARTNERSHIP(LIMITEDPARTNERSHIP)

198,981,173.01 1,282,985.50 200,264,158.51WUHAN

CHENMINGWAN XINGREAL ESTATECO., LTD.

26,415,056.62 -11,958,315.95 14,456,740.67JIANGXI

CHENMING

4,927,893.82 -1,117,059.96 3,810,833.86

PORT CO., LTD.XUCHANGCHENMINGPAPER CO. LTD.

26,710,116.52 -3,836,313.79 22,873,802.73Subtotal 283,996,608.32 26,710,116.52 -15,993,767.23 294,712,957.61

Total 391,868,827.45 26,710,116.52 -17,153,503.00 401,425,440.97

13. Investment properties(1) Investment properties under the cost method

√ Applicable □ Not applicable

Unit: RMBItem Housing and building structureLand use right

Construction in

progress

TotalI. Original carrying amount

1. Opening balance 4,847,572,022.07 4,847,572,022.072. Increase for the period3. Decrease for the period4. Closing balance 4,847,572,022.07 4,847,572,022.07II. Accumulated depreciation andaccumulated amortisation

1. Opening balance 38,036,912.25 38,036,912.252. Increase for the period 59,040,941.31 59,040,941.31(1) Provision or amortisation 59,040,941.31 59,040,941.313. Decrease for the period4. Closing balance 97,077,853.56 97,077,853.56III. Provision for impairment1.Opening balance2. Increase for the period3. Decrease for the period4. Closing balanceIV. Carrying amount1. Closing carrying amount 4,750,494,168.51 4,750,494,168.512. Opening carrying amount 4,809,535,109.82 4,809,535,109.82

14. Fixed assets(1) Particulars of fixed assets

Unit: RMBItem

Housing and building

structure

Machinery and

equipment

Vehicles

Electronicequipment and

others

TotalI. Original carrying amount:

1. Opening balance 8,550,130,664.6132,357,264,151.18355,292,830.51439,890,095.33 41,702,577,741.632. Increase for the period 209,041,937.75431,582,063.337,052,516.037,923,816.06 655,600,333.17(1) Acquisition 17,007,522.8935,982,160.045,283,650.185,543,114.39 63,816,447.50(2) T ransferred fromconstruction in progress

192,034,414.86395,599,903.291,768,865.852,380,701.67 591,783,885.673. Decrease for the period 97,565,930.19565,657,833.491,987,980.4310,139,232.48 675,350,976.59(1) Disposal or97,565,930.1937,625,101.701,987,980.4310,139,232.48 147,318,244.80

retirement(2) Transferred intoconstruction in progress

528,032,731.794. Closing balance 8,661,606,672.1732,223,188,381.02360,357,366.11437,674,678.91 41,682,827,098.21II. Accumulated depreciation1. Opening balance 1,437,843,056.3311,437,397,169.74143,458,304.23264,188,740.27 13,282,887,270.572. Increase for the period 116,767,347.28643,219,732.2716,793,032.497,580,024.77 784,360,136.81(1) Provision 116,598,720.88643,219,732.2716,793,032.497,580,024.77 784,191,510.41(2) Others 168,626.40 168,626.403. Decrease for the period 1,199,415.72390,851,613.581,359,587.625,135,703.97 398,546,320.89(1) Disposal orretirement

1,199,415.7216,521,798.391,359,587.625,135,703.97 24,216,505.70(2) Transferred into

construction in progress

374,329,815.194. Closing balance 1,553,410,987.8811,689,765,288.43158,891,749.10266,633,061.07 13,668,701,086.48

III. Provision for impairment1. Opening balance 51,900,151.11139,905,410.6513,092.92362,313.33 192,180,968.012. Increase for the period(1) Provision3. Decrease for the period 942,037.96 942,037.96(1) Disposal orretirement

942,037.96 942,037.964. Closing balance 51,900,151.11138,963,372.6913,092.92362,313.33 191,238,930.05IV. Carrying amount1. Closing carrying amount 7,056,295,533.1820,394,459,719.90201,452,524.09170,679,304.51 27,822,887,081.682. Opening carrying amount 7,060,387,457.1720,779,961,570.79211,821,433.36175,339,041.73 28,227,509,503.05

(2) Particulars of temporarily idle fixed assets

Unit: RMBItem Original carrying amount

Accumulateddepreciation

Provision forimpairment

Carrying amount RemarkHousing and building structure 198,634,423.3462,308,475.9751,900,151.1184,425,796.26Machinery and equipment 480,998,965.75150,545,416.85139,160,790.69191,292,758.21Vehicles 1,460,746.361,236,706.2128,576.91195,463.24Electronic equipment and others 4,233,072.563,845,349.03120,784.43266,939.10

Total 685,327,208.01217,935,948.06191,210,303.14276,180,956.81

(3) Particulars of fixed assets without obtaining property right certificates

Unit: RMBItem Carrying amount

Reason for not yet obtaining property

right certificatesZHANJIANG CHENMING PULP & PAPER CO., LTD. 1,228,040,417.40

Processing with scheduled operationcommencement not imminent

JILIN CHENMING PAPER CO., LTD. 469,183,035.93

Processing with scheduled operationcommencement not imminent

SHOUGUANG MEILUN PAPER CO., LTD. 292,308,998.28

Processing with scheduled operationcommencement not imminentHAICHENG HAIMING MINING CO., LTD. 249,880,577.86Processing with scheduled operation

commencement not imminentJIANGXI CHENMING PAPER CO., LTD. 196,955,746.88

Processing with scheduled operationcommencement not imminent

SHANDONG CHENMING PAPER HOLDINGS LIMITED 88,030,254.36

Processing with scheduled operationcommencement not imminent

WUHAN CHENMING HANYANG PAPER HOLDINGS CO., LTD.76,400,732.81

Processing with scheduled operationcommencement not imminent

SHANDONG GRAND VIEW HOTEL CO., LTD. 41,046,490.33

Processing with scheduled operationcommencement not imminentTotal 2,641,846,253.85

15. Construction in progress(1) Particulars of construction in progress

Unit: RMBItem

Closing balance Opening balanceBook balance

Provision forimpairment

Carrying amountBook balance

Provision forimpairment

Carrying amount400T/d Mechanical

pulp project(Headquarters)

109,726,341.02 109,726,341.0223,575,818.57 23,575,818.57Newsprint machine to

cultural papermachine and relatedpulp linetransformation(Headquarters)

1,131,232,128.35 1,131,232,128.35902,644,220.48 902,644,220.48Chemical pulp project

(Meilun)

2,335,015,663.33 2,335,015,663.331,801,971,276.32 1,801,971,276.32High-end cultural

paper (Meilun)

1,397,957,131.33 1,397,957,131.33697,210,244.24 697,210,244.24Haiming mining

magnesite deepprocessing project(Haiming)

572,496,001.86 572,496,001.861,047,440,597.94 1,047,440,597.94Huanggang Chenming

Forest and PaperIntegration Project(Pulping Project)(HuanggangChenming)

3,282,772,975.06 3,282,772,975.062,482,982,255.45 2,482,982,255.45Integrated terminal

project (HuanggangChenming)

247,339,310.45 247,339,310.45191,050,346.34 191,050,346.34100,000-ton paper

machine changingproject (XuchangChenming)

170,475,982.49 170,475,982.49Others 560,273,323.58 14,764,226.23545,509,097.35366,082,898.2714,764,226.23 351,318,672.04

Total 9,636,812,874.98 14,764,226.239,622,048,648.757,683,433,640.1014,764,226.23 7,668,669,413.87

(2) Changes in material construction in progress projects for the period

Unit: RMB

Proje ct name

Budget(RMB’00

Opening balanceIncrease for the

Transfer to fixed

asset for the

Otherdeductions for

Closing balance

AccumulatedInvestment to

Construction in

Accumulatedcapitalised

Of which:

capitalised

Capitalisation

rate of the

Source of fund

million) period period the period budget progress interest interest amount

for the period

interest amountfor the period

400T/dMechanical pulpproject (ParentCompany)

1.30 23,575,818.57 86,083,169.49 109,658,988.0684.35% 2,966,101.58 2,637,207.67 6.16%

Self-raised orborrowings

Newsprintmachine tocultural papermachine andrelated pulp linetransformation(ParentCompany)

3.72 902,644,220.48 225,858,394.09

1,131,232,128.3

99.00% 15,006,123.28 12,782,733.72 6.16%

Self-raised orborrowings

Chemical pulpproject (Meilun)

43.77

1,801,971,276.3

533,044,387.01

2,335,015,663.3

53.35% 116,436,399.16 45,659,790.67 6.27%

Self-raised orborrowings

High-endcultural paper(Meilun)

37.61 697,210,244.24 700,746,887.09

1,397,957,131.3

37.17% 27,938,917.35 18,964,826.00 6.27%

Self-raised orborrowings

Haiming miningmagnesite deepprocessingproject(Haiming)

8.50

1,047,440,597.9

85,001,155.23 581,512,641.07 550,929,112.1034.11% 119,255,543.03 21,635,622.31 4.35%

Self-raised orborrowings

HuanggangChenmingForest and PaperIntegrationProje ct (PulpingProject)(HuanggangChenming)

34.85

2,482,982,255.4

751,820,356.99

3,234,802,612.4

92.00% 98,977,034.21 26,707,455.51 5.08%

Self-raised orborrowings

Integratedterminal project(HuanggangChenming)

3.51 191,050,346.34 56,288,964.11 247,339,310.4598.00% Self-raised100,000-tonne

paper machinechanging project(XuchangChenming)

1.80 170,475,982.49 170,475,982.49

Self-raised orborrowings

Total 133.27

7,317,350,741.8

2,438,843,314.0

581,512,641.07 170,475,982.49

9,006,934,946.0

-- -- 380,580,118.61 128,387,635.88 --

16. Materials for project

Unit: RMBItem Closing balance Opening balanceSpecial materials 10,036,240.5111,285,247.52Special equipment 3,990,382.93

Total 10,036,240.5115,275,630.45

17. Intangible assets(1) Particulars of intangible assets

Unit: RMBItem Land use rightsPatents Unpatented technologySoftware TotalI. Original carrying amount1. Opening balance 2,385,510,515.6724,305,385.83 2,409,815,901.502. Increase for the period 13,747,888.1567,378.42 13,815,266.57(1) Acquisition 67,378.42 67,378.42(2) Project under constructiontransfer-in

13,747,888.15 13,747,888.153. Decrease for the period 122,239,326.66 122,239,326.66(1) Disposal 122,239,326.66 122,239,326.664. Closing balance 2,277,019,077.1624,372,764.25 2,301,391,841.41II. Accumulated amortisation1. Opening balance 330,449,712.1020,144,810.31 350,594,522.412. Increase for the period 23,347,159.60712,284.69 24,059,444.29(1) Provision 23,347,159.60712,284.69 24,059,444.29

3. Decrease for the period 673,859.67 673,859.67(1) Disposal 673,859.67 673,859.674. Closing balance 353,123,012.0320,857,095.00 373,980,107.03III. Impairment provisionIV. Carrying amount1. Closing carrying amount 1,923,896,065.133,515,669.25 1,927,411,734.382. Opening carrying amount 2,055,060,803.574,160,575.52 2,059,221,379.09

18. Goodwill(1) Original carrying amount of goodwill

Unit: RMBName of investee or item generating goodwill Opening balanceIncrease for the period

Decrease for

the period

Closing balanceJILIN CHENMING PAPER CO., LTD. 14,314,160.60 14,314,160.60SHANDONG CHENMING PANELS CO., LTD. 5,969,626.57 5,969,626.57

Total 20,283,787.17 20,283,787.17

(2) Provision for impairment of goodwill

Description of the test process and parameters for goodwill impairment as well as the recognition method for goodwillimpairment loss:

On the balance sheet date, the management of the Group assessed the recoverable amount of cash generating unit which resultsin goodwill, in order to determine whether to make provision for impairment loss accordingly. The recoverable amount ofcash-generating unit was determined based on the estimated cash flow in the financial budget for the next five years by themanagement, relying on the expected annual growth rate in GNP and the expected and steady annual growth rate in the industry bymarket players to calculate. Management of the Group expects no provision for impairment loss is necessary to be made for goodwillduring the reporting period.

19. Long-term prepaid expenses

Unit: RMBItem Opening balance

Increase for the

period

Amortisation for the

period

Other deductions Closing balanceWoodland expenses 131,260,068.14 416,539.453,230,815.551,548,290.82 126,897,501.22Others 7,862,501.31 352,407.30 7,510,094.01

Total 139,122,569.45 416,539.453,583,222.851,548,290.82 134,407,595.23

20. Deferred income tax assets/deferred income tax liabilities(1) Deferred income tax assets before offsetting

Unit: RMBItem

Closing balance Opening balanceDeductible temporary

difference

Deferred income

tax assets

Deductible temporary

difference

Deferred income

tax assetsProvision for impairment of assets 871,372,135.12208,869,026.37691,231,679.05 173,959,565.59Unrealised profit arising from intra-grouptransactions

244,925,616.4461,231,404.11273,585,917.96 68,396,479.49Deductible loss 821,869,359.29142,173,437.801,006,688,665.35 173,250,557.91

Outstanding payables 438,539,008.9367,560,516.66512,378,679.91 77,803,599.22Deferred income 224,517,483.9638,832,817.29157,069,341.95 28,878,648.19

Total 2,601,223,603.74518,667,202.232,640,954,284.22 522,288,850.40

(2) The breakdown of unrecognised deferred income tax assets

Unit: RMBItem Closing balance Opening balanceDeductible temporary difference 145,364,286.32136,902,031.73Deductible loss 548,452,368.75521,429,433.24

Total 693,816,655.07658,331,464.97

(3) Expiry of deductible loss of unrecognised deferred income tax assets falls in the periods as follows

Unit: RMBYear Closing amount Opening amount Remark2018 89,165,185.032019 88,145,632.6558,161,318.092020 56,452,164.4369,723,168.312021 68,465,205.68161,307,173.382022 161,486,351.42143,072,588.432023 173,903,014.57

Total 548,452,368.75521,429,433.24--

21. Other non-current assets

Unit: RMBItem Closing balance Opening balancePrepayments for properties 678,454,601.24451,277,549.54Prepayments for equipment 1,101,159.6548,446,648.16

Total 679,555,760.89499,724,197.70

22. Short-term borrowings(1) Classification of short-term borrowings

Unit: RMBItem Closing balance Opening balancePledged borrowings 1,470,063,029.292,956,876,168.82Secured borrowings 50,000,000.00Guaranteed borrowings 11,103,380,038.1512,100,224,483.51Credit borrowings 6,892,659,552.165,823,854,220.70Discounted borrowings 15,356,870,000.0014,165,620,000.00

Total 34,822,972,619.6035,096,574,873.03

23. Bills payable

Unit: RMB

Category Closing balance Opening balanceCommercial acceptance bills 102,000,000.00283,744,411.80Bank acceptance bills 1,475,635,335.58994,650,678.91

Total 1,577,635,335.581,278,395,090.71

24. Accounts payable(1) Particulars of accounts payable

Unit: RMBItem Closing balance Opening balanceWithin 1 year 3,283,404,831.683,398,781,721.681-2 years 250,774,705.89415,562,463.452-3 years 51,463,080.4472,014,432.53Over 3 years 195,423,193.12127,577,910.08

Total 3,781,065,811.134,013,936,527.74

(2) Significant accounts payable for over 1 year

Unit: RMBItem Closing balance

Reason for outstanding or not carried

forwardANDRITZ AG 26,340,727.95Not to be collected yetLIAONING HUAYE GROUP DEVELOPMENT CO.,LTD. 9,048,000.00Not to be collected yetSHANGHAI CLEAR SCIENCE&TECHNOLOGY CO., LTD.8,642,724.19Not to be collected yetSHANDONG SHENHUA SHANDA ENERGY &ENVIRONMENT CO., LTD.

6,652,712.36Not to be collected yetFUJIAN WEIDONG INDUSTRIAL CO., LTD. 5,363,200.00Not to be collected yet

Total 56,047,364.50--

25. Advance receipts(1) Particulars of advance receipts

Unit: RMBItem Closing balance Opening balanceWithin 1 year 348,733,733.59233,656,725.361-2 years 11,088,164.479,526,165.86

Total 359,821,898.06243,182,891.22

(2) Significant advance receipts for over 1 year

Unit: RMBItem Closing balance Reason for outstanding or not carried forwardHUAI’AN FENGHUANG PAPER CO., LTD. 1,737,276.00No delivery requirement from the counterparty yetYONG YI ADHESIVE(ZHONG SHAN) CO., LTD.1,384,668.41No delivery requirement from the counterparty yetJINHUA JIAYI PACKING CO., LTD. 561,684.00No delivery requirement from the counterparty yet

Total 3,683,628.41--

26. Staff remuneration payables(1) Particulars of staff remuneration payables

Unit: RMBItem Opening balance Increase for the periodDecrease for the period Closing balanceI. Short-term remuneration 184,868,925.11636,796,162.27677,686,673.09 143,978,414.29II. Retirement benefit plan –defined contribution scheme

261,966.9982,491,392.9982,651,500.18 101,859.80III. Lay off welfare 370,371.12370,371.12

Total 185,130,892.10719,657,926.38760,708,544.39 144,080,274.09

(2) Particulars of short-term remuneration

Unit: RMBItem Opening balanceIncrease for the periodDecrease for the period Closing balance1. Salaries, bonuses, allowance andsubsidies

133,765,532.39529,897,988.19576,352,752.65 87,310,767.932. Staff welfare 14,396,362.9614,396,362.963. Social insurance premium 1,471,027.8536,687,928.4636,867,227.92 1,291,728.39Of which: Medical insurance

premium

508,362.5730,282,697.1530,468,984.55 322,075.17Work-related injury insurance

premium

146.673,619,472.143,612,382.95 7,235.86Maternity insurance premium 962,518.612,785,759.172,785,860.42 962,417.364. Housing provident funds 7,126,858.9743,389,178.8342,716,654.72 7,799,383.085. Union funds and workers’

education

23,566,423.6512,067,800.376,818,523.26 28,815,700.766. Other short-term remuneration 18,939,082.25356,903.46535,151.58 18,760,834.13

Total 184,868,925.11636,796,162.27677,686,673.09 143,978,414.29

(3) Defined contribution plan

Unit: RMBItem Opening balance Increase for the periodDecrease for the period Closing balance1. Basic pension insurance 176,970.8179,538,165.8979,715,136.702. Unemployment insurance 84,996.182,953,227.102,936,363.48 101,859.80

Total 261,966.9982,491,392.9982,651,500.18 101,859.80

27. Taxes payable

Unit: RMBItem Closing balance Opening balanceValue added tax 83,606,695.96128,785,997.13Enterprise income tax 260,063,782.98304,239,481.46Individual income tax 5,682,477.795,296,935.04Urban maintenance and construction tax 3,827,212.437,324,998.53Land use tax 14,103,299.1015,556,098.12Property tax 17,136,201.0625,352,235.76

Educational surcharges and others 6,611,693.235,702,856.39Stamp duty 1,894,295.844,367,412.25

Total 392,925,658.39496,626,014.68

28. Interest payable

Unit: RMBItem Closing balance Opening balanceInterest on corporate bonds 83,798,000.0185,480,380.32Interest on medium-term notes 35,592,579.90

Total 119,390,579.9185,480,380.32

29. Dividend payable

Unit: RMBItem Closing balance Opening balanceOrdinary dividend 1,161,843,280.20Dividends of preference shares\perpetualbonds classified as equity instruments

464,716,006.80Total 1,626,559,287.00

30. Other payables(1) Other payables by nature

Unit: RMBItem Closing balance Opening balanceWithin 1 year 1,707,405,020.371,146,432,000.751-2 years 331,107,831.91222,321,364.692-3 years 49,287,570.6133,093,992.06Over 3 years 36,908,627.8324,782,187.91

Total 2,124,709,050.721,426,629,545.41

(2) Significant other payables for over 1 year

Unit: RMBItem Closing balance

Reason for outstanding or not

carried forwardLIAONING BEIHAI INDUSTRY GROUP LTD. 42,905,085.89

Debt in vestment by a shareholderof a subsidiary as agreed

SHOUGUANG HENGTAI ENTERPRISE INVESTMENT CO., LTD. 42,189,702.27

Debt in vestment by a shareholderof a subsidiary as agreedSTATE-OWNED SHOUGUANG QINGSHUIPO FARM 8,800,000.00DepositSHANDONG YINGLI INDUSTRIAL CO., LTD. (DEPOSIT) 6,000,000.00DepositWENZHOU DONGDA MINE CONSTRUCTION ENGINEERING CO., LTD.5,450,000.00Deposit

Total 105,344,788.16--

31. Non-current liabilities due within 1 year

Unit: RMB

Item Closing balance Opening balanceLong-term borrowings due within 1 year 4,321,258,031.953,625,430,347.40

Total 4,321,258,031.953,625,430,347.40

32. Other current liabilities

Unit: RMBItem Closing balance Opening balanceShort-term bonds payable 10,160,767,686.3510,797,248,631.76

Total 10,160,767,686.3510,797,248,631.76

33. Long-term borrowings(1) Types of long-term borrowings

Unit: RMBItem Closing balance Opening balancePledged borrowings 275,000,000.00Secured borrowings 3,393,472,000.003,592,342,000.00Guaranteed borrowings 7,711,012,847.786,530,519,307.37Credit borrowings 423,692,035.94873,692,035.94Less: long-term borrowings due within 1year

4,321,258,031.953,625,430,347.40Total 7,206,918,851.777,646,122,995.91

Including:

Item Closing balance Opening balanceLong-term borrowings due within 1 ye ar 4,321,258,031.953,625,430,347.40Long-term borrowings due within 1-2 years 2,086,132,311.501,833,951,514.00Long-term borrowings due within 2-5 years 2,260,094,504.332,577,564,445.97Long-term borrowings due over 5 years 2,860,692,035.943,234,607,035.94

Total 11,528,176,883.7211,271,553,343.31

34. Bonds payable(1) Bonds payable

Unit: RMBItem Closing balance Opening balance17 Chenming Bond 01- Chenming Paper 1,198,530,000.001,198,305,304.7517 Chenming Bond 01- Financial LeasingCompany

997,955,974.8218 Chenming Bond 01 898,717,500.00

Total 2,097,247,500.002,196,261,279.57

(2) Increase/decrease in bonds payable (excluding other financial instruments such as preference sharesand perpetual bonds classified as financial liabilities)

Unit: RMB

Name of bond Par value Date of issue Term Amount Opening balance

Issue during the

period

Interest at par

value

Amortisation ofpremium/discount

Redemptionduring the period

Amortisation ofissuance fees

Closing balance17 Chenming

Bond 01-

1,200,000,000.00 2017/8/22 5 years 1,198,200,000.001,198,305,304.7539,000,000.00 224,695.251,198,530,000.00

Chenming Paper17 ChenmingBond 01-Financial Le asingCompany

1,000,000,000.00 2017/3/21 3 years 997,000,000.00997,955,974.821,000,000,000.00 2,044,025.1818 Chenming

Bond 01

900,000,000.00 2018/3/29 5 years 898,650,000.00898,650,000.0016,414,666.68 67,500.00898,717,500.00Total -- -- -- 3,093,850,000.002,196,261,279.57898,650,000.0055,414,666.681,000,000,000.00 2,336,220.432,097,247,500.00

35. Long-term payables(1) Long-term payables by nature

Unit: RMBItem Closing balance Opening balanceRetention for the financial leasingoperations

235,190,103.51245,190,103.51Specific capital for China Development 622,500,000.00700,000,000.00Equipment leaseback 4,143,834,948.984,605,691,332.13

Total 5,001,525,052.495,550,881,435.64

36. Special accounts payable

Unit: RMBItem Opening balance

Increase for the

period

Decrease for the

period

Closing balance ReasonHuanggang

Chenming integratedforestry, pulp andpaper project

681,039,716.66 25,000,000.00706,039,716.66Total 681,039,716.66 25,000,000.00706,039,716.66 --

37. Provision

Unit: RMBItem Closing balance Opening balance ReasonPending litigation 325,259,082.28325,259,082.28Losses from Arjo’s lawsuit

Total 325,259,082.28325,259,082.28--

38. Deferred income

Unit: RMBItem Opening balance

Increase for the

period

Decrease for the

period

Closing balance ReasonGovernment grants 1,452,717,833.55 11,194,100.0043,038,926.191,420,873,007.36

Total 1,452,717,833.55 11,194,100.0043,038,926.191,420,873,007.36 --Items in respect of government grants:

Unit: RMB

Liabilitie s item Opening balance

New grants for

the period

Include innon-operatingincome for the

period

Include in otherincome for the

period

Amount charged

against cost

expenses

Other changes Closing balance

Asset-related/inc

ome-relatedSpecial subsidy

funds forenvironmentalprotection

816,090,223.99 24,800,367.35 791,289,856.64 Asset-relatedProject fund for1,781,924.68 82,350.00 1,699,574.68 Asset-related

Nationaltechnologicalsupport schemeSewage treatm entand waterconservationreconfigurationproject

6,131,402.52 596,341.43 5,535,061.09 Asset-relatedFinancial grants

for technologicalmodificationproject

192,900,814.51 7,199,237.13 185,701,577.38 Asset-relatedZhanjiang

integratedforestry, pulp andpaper projec t

271,889,991.56 8,615,100.00 7,281,506.19 273,223,585.37 Asset-relatedInterest subsidy 95,580,066.97 2,729,749.09 92,850,317.88 Asset-related

Railway linechangecompensation

13,705,208.33 184,375.00 13,520,833.33 Asset-relatedLogistics park

project

53,626,701.00 2,579,000.00 56,205,701.00 Asset-relatedOthers 1,011,499.99 165,000.00 846,499.99 Asset-related

Total 1,452,717,833.55 11,194,100.00 43,038,926.19 1,420,873,007.36 --

39. Other non-current liabilities

Unit: RMBItem Closing balance Opening balanceThe first phase of financial management 250,000,000.00250,000,000.00Medium-term notes 1,680,000,000.00Unamortised issue expenses -10,461,871.24

Total 1,919,538,128.76250,000,000.00

40. Share capital

Unit: RMB

Opening balance

Increase/decrease during the period (+/-)

Closing balanceNew issue Bonus issue

Shares converted

from reserves

Others SubtotalTotal number of

shares

1,936,405,467.00968,202,733.00968,202,733.00 2,904,608,200.00

Other explanation:

Pursuant to the profit distribution plan of the Company for 2017 approved at the 2017 annual general meeting convened on 13June 2018, based on the total ordinary share capital of 1,936,405,467 shares as at the end of 2017, a cash dividend of RMB6 (taxinclusive) per 10 shares was distributed to ordinary shareholders and a capitalisation issue to ordinary shareholders was made out ofthe capital reserves of 5 shares for every 10 shares held.

41. Other equity instruments(1) Preference shares, perpetual bonds and other financial instruments outstanding at the end of the period

Item Opening balance Increase during the

year

Decrease during the

year

Closing balancePerpetual bonds 5,570,800,000.00 5,570,800,000.00

Preference shares 4,477,500,000.00 4,477,500,000.00

Total 10,048,300,000.00 10,048,300,000.00

2) Changes in perpetual bonds outstanding at the end of the period

Unit: RMBOutstanding financial instrumentsOpening balance Increase during the

year

Decrease during the

year

Closing balance15 Lu Chenming MMTN001 1,291,900,000.00 1,291,900,000.00

15 Lu Chenming MMTN001 1,290,900,000.00 1,290,900,000.0017 Lu Chenming MTN001 996,000,000.00 996,000,000.0017 Lu Chenming MTN002 1,992,000,000.00 1,992,000,000.00

Total 5,570,800,000.00 5,570,800,000.00Note: ① Par ticulars of issue: The Company issued medium-term notes amounting to RMB2.6 billion on 6 July and 8September 2015 at a coupon rate of 6.00% and 5.78%. The proceeds net of issue costs amounted to RMB2,582.80 million.

② Particulars of the notes as perpetual bondsThe notes are debts without a defined maturity date and will continue indefinitely until the exercise of the right of redemption bythe Company.

The Company has the right to defer any payment of interest.The right of redemption of the notes is vested with the Company so that it is up to the Company to decide whether to redeem ornot.

Based on the above, the notes do not contain any term giving rise to any contractual obligation to deliver cash or other financialassets to any other entity, or to exchange any financial asset or financial liability with any other entity under potential adversecircumstances. Consequently, they were eligible to be recognised and accounted for as equity instruments and included under otherequity instruments.

(3) Changes in preference shares outstanding at the end of the period

Outstanding financial instruments Opening balance Increase during

the year

Decrease during

the year

Closing balanceChenming You 01 2,238,750,000.00 2,238,750,000.00

Chenming You 02 995,000,000.00 995,000,000.00Chenming You 03 1,243,750,000.00 1,243,750,000.00

Total 4,477,500,000.00 4,477,500,000.00Notes ① Particulars of issue: The Company non-publicly issued preference shares amounting to RMB4.5 billion on 17 March,17 August and 22 September 2016. The proceeds net of issue costs amounted to RMB4,477.50 million.

② Particulars of the preference shares as equity instrumentsShareholders of preference shares participate in profit distribution in two portions, namely the fixed dividend distributed basedon a fixed dividend rate and the distribution of retained earnings realised for the year.

A. Distribution of fixed dividendAccording to the Articles of Association, the Company shall distribute fixed dividends to holders of the preference shares atfixed dividend rate if there are distributable profits after making good losses and the contribution to reserve fund according to law.The Board is authorised by the general meeting to declare and pay all dividends on the preference shares in accordance with theissuance plan under the framework and principles considered and approved in the general meeting in respect of the preference shares.The general meeting of the Company has the right to cancel part of or all of the current dividends on the preference shares. However,when the general meeting of the Company considers the cancellation of part of or all of the current dividends on the preferenceshares, the Company shall inform the shareholders of preference shares at least 10 working days before the date of dividend paymentin accordance with the requirements of the related authorities.

B. Participation in the distribution of retained earnings realised for the yearHolders of preference shares participate in the distribution of the retained earnings through receipt of cash which isnon-cumulative and non-deferrable. In the event of making good losses and the contribution to reserve fund according to law, afterreceiving fixed dividends at fixed dividend rate as agreed, holders of preference shares can also participate in the distribution of theretained earnings for the year in proportion. Specific terms are as follows: the retained earnings for the year arises from net profitattributable to owners of the parent company on a consolidated basis upon distribution of relevant fixed income to holders offinancial instruments such as the preference shares which may be classified under equity. 50% of the retained earnings shall bedistributed to holders of preference shares and ordinary shareholders. Holders of preference shares shall participate in the distributionof the retained earnings by receiving cash dividends, and the ordinary shareholders shall participate in the distribution of the retainedearnings by receiving cash dividends or dividends on ordinary shares.

Based on the above, the preference shares do not contain any term giving rise to any contractual obligation to deliver cash orother financial assets to any other entity, or to exchange any financial asset or financial liability with any other entity under potentialadverse circumstances. Consequently, they were eligible to be recognised and accounted for as equity instruments and included underother equity instruments - preference shares.

42. Capital reserves

Unit: RMBItem Opening balance Increase for the periodDecrease for the period Closing balanceCapital premium (sharepremium)

5,478,935,277.691,026,305,329.81 4,452,629,947.88Other capital reserves 670,322,507.21 670,322,507.21

Total 6,149,257,784.901,026,305,329.81 5,122,952,455.09Other particulars, including changes (increase or decrease) during the period and reasons for such changes:

① On 30 January 2018, the Company issued the Announcement on the Receipt of 30% equity interest in Hongtai Real Estateheld by Guangdong Dejun and Guangdong Dejun’s Debt to Hongtai Real Estate and Related Party Transaction in relation to theacquisition of 30% equity interest in Shanghai Hongtai Real Estate Co., Ltd., a subsidiary held by Guangdong Dejun Investment Co.,Ltd., at a consideration of RMB1,171,960,000.

③ On 23 May 2018, the Company issued the Announcement on Acquisition of Minority Interest in Subsidiaries in relation

to the acquisition of 14.2742% equity interest in Wuhan Chenming, a subsidiary of the Company, held by Hubei HanyangPaper Mill, a minority shareholder of Wuhan Chenming, at a consideration of RMB60,896,600.③ Pursuant to the profit distribution plan of the Company for 2017 approved at the 2017 annual general meeting convened on13 June 2018, based on the total ordinary share capital of 1,936,405,467 shares as at the end of 2017, a cash dividend of RMB6 (taxinclusive) per 10 shares was distributed to ordinary shareholders and a capitalisation issue to ordinary shareholders was made out ofthe capital reserves of 5 shares for every 10 shares held.

43. Other comprehensive income

Unit: RMB

Item Opening balance

During the period

Closing balanceIncurred before

income tax for the

period

Less:

Transferredfrom othercomprehensiveincome in priorperiods to profit

or loss during

the period

Less: incometax expenses

Attributable toparent company

after tax

Attributa

ble tominorityshareholders after

taxII. Other comprehens iv e

income to be reclassified toprofit or loss in subsequentperiods

-354,165,127.80 -103,234,110.38-103,234,110.38 -457,399,238.18Exchange

differences on translationof foreign operations

-354,165,127.80 -103,234,110.38-103,234,110.38 -457,399,238.18Total other comprehensive

income

-354,165,127.80-103,234,110.38-103,234,110.38 -457,399,238.18

44. Surplus reserve

Unit: RMBItem Opening balance Increase for the periodDecrease for the period Closing balanceStatutory surplus reserve 1,132,116,106.40 1,132,116,106.40

Total 1,132,116,106.40 1,132,116,106.40

45. Retained profit

Unit: RMBItem The period The prior periodRetained profit as at the end of the prior periodbefore adjustment

8,866,614,844.406,745,974,781.02Retained profit as at the beginning of the period8,866,614,844.406,745,974,781.02

after adjustmentPlus: Net profit for period attributable toshareholders of the parent company

1,784,631,025.311,745,514,838.23Ordinary dividend payable 1,161,843,280.201,161,843,280.20Preferred shares dividend payable 562,816,006.80217,377,107.35Retained profit as at the end of the period 8,926,586,582.717,112,269,231.70

46. Revenue and operating costs

Unit: RMBItem

Amount for the reporting period Amount for the prior periodRevenue Operating costs Revenue Operating costsPrincipal activities 15,339,402,308.2310,223,566,613.7913,563,143,834.69 9,109,268,921.26Other activities 211,931,731.6636,318,305.07186,091,172.55 61,798,067.23

Total 15,551,334,039.8910,259,884,918.8613,749,235,007.24 9,171,066,988.49

47. Taxes and surcharges

Unit: RMBItem Amount for the reporting period Amount for the prior periodUrban maintenance and construction tax 29,431,549.7922,398,860.35Education surcharges 21,947,084.9714,388,582.42Property tax 26,787,098.3226,916,701.19Land use tax 25,666,645.1724,234,332.85Vehicle and vessel tax 502,934.3834,306.91Stamp duty 11,344,290.2313,148,327.87Water engineering funds 1,937,359.033,177,917.53Environmental tax 4,354,733.37Water resource tax 6,163,044.01Others 1,374,472.711,660,983.24

Total 129,509,211.98105,960,012.36

48. Selling and distribution expenses

Unit: RMBItem Amount for the reporting period Amount for the prior periodWages and surcharges 66,498,765.4065,953,852.36Depreciation expenses 6,739,186.026,409,390.78Office expenses 2,024,990.871,835,605.09Transportation expenses 438,096,633.12453,538,636.06Selling commissions 9,527,198.466,775,566.23Cargo handling charges 6,447,682.569,619,073.45Travel expenses 14,287,350.7510,999,160.71Business hospitality expenses 27,355,797.5836,623,061.92Warehouse expenses 1,622,562.73714,169.93Rental expenses 4,783,613.454,580,600.56Others 28,079,544.7744,449,158.26

Total 605,463,325.71641,498,275.35

49. General and administrative expenses

Unit: RMBItem Amount for the reporting period Amount for the prior periodWages and surcharges 135,226,780.3491,040,324.67Welfare expenses 21,985,234.2820,103,576.01Labour insurance premium 22,172,367.806,102,709.36Insurance premium 12,675,862.009,518,602.13Depreciation expenses 106,354,515.6133,612,163.11Waste disposal expenses 5,684,105.919,214,959.75Hospitality expenses 29,705,889.7323,024,208.87Amortisation of intangible assets 16,360,689.7216,315,486.42Technological development expenses 478,014,854.10446,835,957.44Production interruption loss 372,715.9532,610,068.28Repair fees 13,562,056.7525,429,045.13Others 130,741,450.46142,547,898.00

Total 972,856,522.65856,354,999.17

50. Finance expenses

Unit: RMBItem Amount for the reporting period Amount for the prior periodInterest expenses 1,720,741,207.211,072,958,458.60Less: Interest income 159,096,591.34117,395,792.54Capitalised interest amount 162,960,177.0090,133,011.27Foreign exchange gains and losses -16,373,292.86107,381,433.91Bank charges 116,517,298.6882,585,417.66

Total 1,498,828,444.691,055,396,506.36

51. Loss on impairment of assets

Unit: RMBItem Amount for the reporting period Amount for the prior periodI. Loss on bad debts 150,455,669.9750,382,322.12II. Loss on inventory impairment -571,669.04

Total 150,455,669.9749,810,653.08

52. Gain on change in fair value

Unit: RMBSource of gain on change in fair value Amount for the reporting period Amount for the prior periodGain on change in fair value of financialassets measured at fair value through profitor loss

-94,000,000.00Consumable biological assets measured at

fair value

-23,973,841.55-11,009,851.10Total -117,973,841.55-11,009,851.10

53. Investment income

Unit: RMBItem Amount for the reporting period Amount for the prior periodIncome from long-te rm equity investmentsaccounted for using the equity method

-17,153,503.00-4,154,293.30Investment gain on disposal of long-term

equity investments

13,717,571.88480,189.88Investment gain on disposal financial assets

measured at fair value through profit or loss

114,233,300.00Investment gain on holding of

available-for-sale fi na ncial assets

41,516,700.0056,226,406.81Income on external entrusted loans 13,312,368.97

Total 152,314,068.8865,864,672.36

54. Asset disposal income

Unit: RMBSource of asset disposal income Amount for the reporting period Amount for the prior periodNet income from disposal of non-currentassets

-2,210,048.63344,802.99Total -2,210,048.63344,802.99

55. Other income

Unit: RMBSource of other income Amount for the reporting period Amount for the prior periodGovernment grants - amortised deferredincome included in profit or loss

43,038,926.19Government grants - directly included in

profit or loss

16,633,350.69Total 59,672,276.88

56. Non-operating income

Unit: RMBItem Amount for the reporting periodAmount for the prior period

Amounts included inextraordinary gains and losses

for the periodGovernment grants 184,555,864.82140,637,717.90184,555,864.82Others 7,076,692.5316,058,652.837,076,692.53

Total 191,632,557.35156,696,370.73191,632,557.35

57. Non-operating expenses

Unit: RMBItem Amount for the reporting periodAmount for the prior period

Amounts included inextraordinary gains and losses

for the periodDonation 5,000.00450,000.005,000.00Others 441,221.321,622,581.46441,221.32

Total 446,221.323,550,702.42446,221.32

58. Income tax expenses(1) Particulars of income tax expenses

Unit: RMBItem Amount for the reporting period Amount for the prior periodIncome tax expenses for the period 443,275,831.48351,541,417.73Deferred income tax expenses -9,073,718.98-20,288,090.65

Total 434,202,112.50331,253,327.08

59. Other comprehensive income

For details, please see Notes.

60. Items on statements of cash flow(1) Cash received relating to other operating activities

Unit: RMBItem Amount for the reporting period Amount for the prior periodFinance support fund 196,283,019.8493,044,281.20Interest income 216,272,935.89117,395,792.54External security deposit of the FinancialLeasing Company

90,523,468.414,000,000.00Open credit, and income from default

penalty and fine

16,058,652.87Net return of principal receivables relating

to finance lease business

2,057,052,794.71Total 2,560,132,218.85230,498,726.61

(2) Cash paid relating to other operating activities

Unit: RMBItem Amount for the reporting period Amount for the prior periodExpense and open credit 1,261,413,440.861,541,645,097.56Net increase in principal receivablesrelating to finance lease business

5,445,458,445.68External security deposit of the Leasing

Company

10,000,000.00Total 1,271,413,440.866,987,103,543.24

(3) Cash received relating to other investing activities

Unit: RMBItem Amount for the reporting period Amount for the prior periodAsset-related government grants 11,194,100.0072,391,073.00Entrusted loans 900,000,000.00

Total 11,194,100.00972,391,073.00

(4) Cash paid relating to other financing activities

Unit: RMBItem Amount for the reporting period Amount for the prior periodInvestment compensation liability 103,042,210.54

Total 103,042,210.54

(5) Cash received relating to other financing activities

Unit: RMBItem Amount for the reporting period Amount for the prior periodMTX and short-term commercial paper,etc.

8,204,965,097.956,990,741,096.00Equipment financing 500,000,000.00729,259,498.49Debt financing receivable 135,622,410.95Loan from the Finance Company 100,000,000.00

Total 8,940,587,508.907,720,000,594.49

(6) Cash paid relating to other financing activities

Unit: RMBItem Amount for the reporting period Amount for the prior periodRepayment of short-term commercialpaper and MTN, etc.

7, 911,542,642.297,159,436,554.95Repayment of matured bonds 579,511,229.15Repayment of equipment leaseback 1,086,203,289.95Increase in restricted bank deposits for theperiod

5,922,955,877.943,036,117,632.05Total 15,500,213,039.3310,195,554,187.00

61. Supplementary information on cash flow statement(1) Supplementary information on cash flow statement

Unit: RMBSupplementary information Amount for the period Amount for the prior period1. Reconciliation of net profit as cash flowsfrom operating activities:

-- --Net profit 1,783,122,625.141,747,717,658.87Plus: Provision for impairment of assets 150,455,669.97199,810,653.08Depreciation of fixed assets, consumption of

oil and gas assets, depreciation of bearerbiological assets

784,191,510.41816,376,614.37Amortisation of intangible assets 24,059,444.2925,214,975.98

Amortisation of long-term prepaid expenses 16,218,441.9510,052,618.57Loss on disposal of fixed assets, intangibleassets and other long-term assets (“-”denotes gain)

2,210,048.63-344,802.99Loss on changes in fair value (“-” denotes

gain)

117,973,841.5511,087,873.76Finance expenses (“-” denotes gain) 1,584,988,775.971,072,958,458.60

Investment loss (“-” denotes gain) -152,438,125.48-65,864,672.36Decrease in deferred income tax assets (“-”denotes increase)

3,621,648.17-20,288,090.65Decrease in inventories (“-” denotes

increase)

-385,938,273.77-1,194,720,554.52Decrease in operating receivables (“-”

denotes increase)

-3,833,188,190.12-3,414,834,472.92Increase in operating payables (“-” denotes

decrease)

4,649,760,504.20-3,300,108,028.18Net cash flows from operating activities 4,745,037,920.91-4,112,941,768.392. Major investing and financing activities

not involving cash settlements:

-- --3. Net change in cash and cash equivalents: -- --Closing balance of cash 3,530,985,289.732,421,491,422.53Less: Opening balance of cash 2,804,408,374.461,979,861,045.62Net increase in cash and cash equivalents 726,576,915.27441,630,376.91

(2) Cash and cash equivalents composition

Unit: RMBItem Closing balance Opening balanceI. Cash 3,530,985,289.732,804,408,374.46Of which: Cash on hand 2,104,950.302,344,438.45Bank deposits readily available forpayment

3,528,880,339.432,802,063,936.01III. Balance of cash and cash equivalent as at

end of period

3,530,985,289.732,804,408,374.46

62. Assets with restricted ownerships or right to use

Unit: RMBItem Closing carrying amount Reason for such restrictions

Monetary funds 14,690,489,964.91

As guarantee deposits for bank acceptancebills, letter of credit, and bank borrowingsdeposits, and deposit reserves.

Bills receivable 1,902,685,841.26

As collateral for short-term borrowings,bills payable, letters of guarantee andletters of credit.

Fixed assets 7,882,378,100.81

As collateral for bank borrowings andlong-term payables.

Intangible assets 631,997,196.06

As collateral for bank borrowings andlong-term payables.Investment properties 4,750,494,168.51As collateral for bank borrowings.

Total 29,858,045,271.55--

63. Foreign currency items(1) Foreign currency items

Unit: RMBItem

Closing foreign currency

balance

Exchange rate Closing balance in RMB

Monetary fundsOf which: USD 56,889,559.236.6166376,415,457.62EUR 1,309,235.947.651510,017,618.78HKD 100,012.700.843184,320.71GBP 7,121.628.655161,638.34KRW 480,926,937.110.0059032,839,001.99JPY 1,922,880.960.059914115,207.49Accounts receivableOf which: USD 49,762,699.966.6166329,259,880.55EUR 4,823,704.067.651536,908,571.62JPY 146,931,581.930.0599148,803,258.80Accounts payableOf which: USD 86,705,165.986.6166573,693,401.25EUR 22,322,987.387.6515170,804,337.97Short-term borrowingsOf which: USD 699,374,376.266.61664,627,480,497.94EUR 151,982,691.537.65151,162,895,564.23Long-term borrowingsOf which: USD 297,425,200.006.61661,967,943,578.32EUR 57,799,998.627.6515442,256,689.46Non-current liabilities due withinone yearOf which: USD 161,500,000.006.61661,068,580,900.00

(2) Explanation on overseas operating entities (including major overseas operating entities), which shalldisclose their overseas principal places of business, functional currency and basis. Reasons shall bedisclosed if there is any change in the functional currency.

√ Applicable □ Not applicable

No. Name of subsidiary Principal place

of business

Place ofincorporation

Functional

currency1 Chenming GmbH Hamburg, GermanyHamburg, Germany EUR2 Chenming Paper Korea Co., Ltd. Seoul, Korea Seoul, Korea KRW3 Chenming (HK) Limited Hong Kong, China Hong Kong, China USD4 Chenming International Co., Ltd. Los Angeles, USA Los Angeles, USA USD5 Chenming Paper Japan Co., Ltd. Tokyo, Japan Tokyo, Japan JPYThe companies numbered 3 - 5 are companies of the fourth level. Overseas subsidiaries of the Company recognise U.S. dollar(“USD” or “US$”), Japanese yen (“JPY”) Euro (“EUR”) and Korean Won (“KRW”) as their respective functional currencyaccording to the general economic environment in which these subsidiaries operate.

VIII. Change in scope of consolidation

1. Others

During the year, the scope of consolidation included a newly established subsidiary, namely Beijing Chenming FinancialLeasing Co., L td.. For details, please see Note VIII. 1 “Interest in subsidiaries”.

During the year, the scope of consolidation excluded 1 company: as the shareholding of Shandong Chenming Paper HoldingsLimited in Xuchang Chenming Paper Co. Ltd. decreased from 60% to 30%, Xuchang Chenming Paper Co. Ltd. was changed to anassociate of Shandong Chenming Paper Holdings Limited. For details, please see Note VIII. 2 “Interest in joint ventures orassociates”.

IX. Interest in other entities

1. Interest in subsidiaries(1) Constitution of the Group

Name of subs idiary

Principle place of

business

Place ofincorporation

Nature of business

Shareholding

AcquisitionDirect Indirect

Zhanjiang Chenming Pulp & Paper Co., Ltd. Zhanjiang, ChinaZhanjiang, China Paper making 100.00% EstablishmentShouguang Meilun Paper Co., Ltd. Shouguang, ChinaShouguang, ChinaPaper making 100.00% EstablishmentJilin Che nming Paper Co., Ltd. Jilin, China Jilin, China Paper making 100.00%

Merger andacquisitionHuanggang Chenming Pulp & Paper Co., Ltd. Huanggang, ChinaHuanggang, ChinaPulp production 100.00% EstablishmentShandong C henming Paper Sales Co., Ltd. Shouguang, ChinaShouguang, ChinaSales of paper 100.00% EstablishmentShouguang Chenming Import and Export TradeCo., Ltd.

Shouguang, ChinaShouguang, ChinaImport and export trade100.00% EstablishmentChenming GmbH

Hamburg,Germany

Hamburg, GermanyPaper product trading 100.00% EstablishmentShouguang Chenming Papermaking Machine Co.,

Ltd.

Shouguang, ChinaShouguang, ChinaMachinery manufacturing100.00% EstablishmentShouguang Hongxiang Printing and Packaging Co.,

Ltd.

Shouguang, ChinaShouguang, ChinaPrinting and packaging100.00%

Merger andacquisitionShouguang Chenming Modern Logistic Co., Ltd. Shouguang, ChinaShouguang, ChinaTransportation 100.00% EstablishmentShouguang Chenming Industrial Logistics Co., Ltd. Shouguang, ChinaShouguang, ChinaLogistics 100.00% EstablishmentJinan Chenming Investment Management Co., Ltd. Jinan, China Jinan, China Investment management100.00% EstablishmentHuanggang Chenming Arboriculture DevelopmentCo., Ltd.

Huanggang, ChinaHuanggang, ChinaArboriculture 100.00% EstablishmentChenming Arboriculture Co., Ltd. Wuhan, China Wuhan, China Arboriculture 100.00% EstablishmentChenming Paper Korea Co., Ltd. Seoul, Korea Seoul, Korea Sales of paper 100.00% EstablishmentShandong Chenming Power Supply Holdings Co.,

Ltd.

Shouguang, ChinaShouguang, ChinaPower 100.00% EstablishmentShouguang Shun Da Customs Declaration Co, Ltd. Shouguang, ChinaShouguang, ChinaCustoms declaration 100.00% EstablishmentShanghai Chenming Industrial Co., Ltd. Shanghai, ChinaShanghai, China

Property investment and

management

100.00% EstablishmentWuxi Song Ling Paper Co., Ltd. Wuxi, China Wuxi, China Paper making 100.00%

Merger andacquisitionShandong Chenming Paper Group (Fuyu) SalesCo., Ltd.

Fuyu, China Fuyu, China Sales of paper 100.00% EstablishmentShandong C henming Group Finance Co., Ltd. Jinan, China Jinan, China Finance 80.00% 20.00% EstablishmentJiangxi C henming Paper Co., Ltd. Nanchang, ChinaNanchang, China Paper making 51.00% 49.00% EstablishmentQingdao C henming International Logistics Co.,

Ltd.

Qingdao, ChinaQingdao, China Logistics 30.00% 70.00% EstablishmentShouguang Chenming Art Paper Co., Ltd. Shouguang, ChinaShouguang, ChinaPaper making 75.00% EstablishmentHailaer Chenming Paper Co., Ltd. Hailaer, China Hailaer, China Paper making 75.00% EstablishmentShandong Grand View Hotel Co., Ltd. Shouguang, ChinaShouguang, ChinaCatering 70.00% EstablishmentHaicheng Haiming Mining Co., Ltd. Haicheng, ChinaHaicheng, China Mining 60.00% EstablishmentWuha n Chenming Hanyang Paper Holdings Co.,Ltd.

Wuhan, China Wuhan, China Paper making 62.50% EstablishmentChengdu Chenming Culture Communication Co.,

Ltd.

Chengdu, ChinaChengdu, China Marketing 100.00% EstablishmentShandong Ch enming Financial Leasing Co., Ltd. Jinan, China Jinan, China Financial leasing 100.00% EstablishmentQingdao Chenming Nonghai Financial Leasing Co.,

Ltd.

Qingdao, ChinaQingdao, China Financial leasing 100.00% EstablishmentChenming (HK) Limited Hong Kong, ChinaHong Kong, ChinaPaper product trading 100.00% EstablishmentShouguang Hongyi Decorative Packaging Co., Ltd. Shouguang, ChinaShouguang, ChinaPackaging 100.00%

Merger andacquisition

Shouguang X inyuan Coal Co., Ltd. Shouguang, ChinaShouguang, ChinaCoal 100.00%

Merger andacquisitionShouguang City Run Sheng Wasted Paper RecycleCo., Ltd.

Shouguang, ChinaShouguang, ChinaPurchase and sale of waste 100.00%

Merger andacquisitionShouguang Wei Yuan Logistics Company Limited Shouguang, ChinaShouguang, ChinaLogistics 100.00%Merger and

acquisitionShandong Ch enming Panels Co., Ltd. Shouguang, ChinaShouguang, ChinaPanels 100.00%

Merger andacquisition

Shouguang Chenming Floor Board Co., Ltd. Shouguang, ChinaShouguang, ChinaFloor board 100.00%

Merger andacquisitionShouguang Chenming Cement Co., Limited Shouguang, ChinaShouguang, ChinaCement 100.00% EstablishmentWuhan Chenming Qianneng Electric Power Co.,Ltd.

Wuhan, China Wuhan, China Electric power 51.00% EstablishmentShandong Ch enming Investment Limited Jinan, China Jinan, China Investment 100.00% EstablishmentJapan Chenming Paper Co., Ltd. Tokyo, Japan Tokyo, Japan Paper product trading 100.00% EstablishmentChenming International Co., Ltd.

Los Angele s, the

United States

Los Angele s, the

United States

Paper product trad ing 100.00% EstablishmentZhanjiang Chenming Arboriculture Development

Co., Ltd.

Zhanjiang, ChinaZhanjiang, China Arboriculture 100.00% EstablishmentYangjiang Chenming Arboriculture Development

Co., Ltd.

Yangjiang, ChinaYangjiang, China Arboriculture 100.00% EstablishmentNanchang Chenming Arboriculture Development

Co., Ltd.

Nanchang, ChinaNanchang, China Arboriculture 100.00% EstablishmentGuangdong Huirui Investment Co., Ltd. Zhanjiang, ChinaZhanjiang, China Investment 51.00%

Merger andacquisitionZhanjiang Chenming New-style Wall MaterialsCo., Ltd

Zhanjiang, ChinaZhanjiang, China Wall materials 100.00% EstablishmentJilin Chenming New-style Wall Materials Co., Ltd. Jilin, China Jilin, China Wall materials 100.00% EstablishmentJilin Chenming Logistics Co., Ltd. Jilin, China Jilin, China Logistics 100.00% EstablishmentJiangxi Chenming Logistics Co., Ltd. Nanchang, ChinaNanchang, China Logistics 100.00% EstablishmentFuyu Chenming Paper Co., Ltd. Fuyu, China Fuyu, China Paper making 100.00% EstablishmentZhanjiang Meilun Pulp & Paper Co., Ltd. Zhanjiang, ChinaZhanjiang, China Paper making 100.00% EstablishmentShanghai Chenming Financial leasing Co., Ltd. Shanghai, ChinaShanghai, China Financial leasing 100.00% EstablishmentGuangzhou Chenming Financial leasing Co., Ltd. Guangzhou, ChinaGuangzhou, ChinaFinancial leasing 100.00% EstablishmentShanghai Hongtai Real Estate Co., Ltd. Shanghai, ChinaShanghai, China Real estate 75.00%

Merger andacquisition

Shanghai Hongtai Property Management Co., Ltd. Shanghai, ChinaShanghai, China Property Management 75.00%

Merger andacquisitionShandong Chenming Commercial Factoring Co.,Ltd.

Jinan, China Jinan, China Business factoring 100.00% EstablishmentGuangzhou Chenming Commercial Factoring Co.,

Ltd.

Guangzhou, ChinaGuangzhou, ChinaBusiness factoring 51.00% EstablishmentQingdao Chenming Pulp & Paper Electronic

Commodity Spot Trading Center Co., Ltd.

Qingdao, ChinaQingdao, China Trading 100.00% EstablishmentBeijing Chenming Culture Communication Co.,

Ltd.

Beijing, China Beijing, China Marketing 100.00% EstablishmentBeijing Chenming Financial Leasing Co., Ltd. Beijing, China Beijing, China Financial leasing 100.00% Establishment

(2) Major non-wholly owned subsidiaries

Unit: RMBName of subsidiary Minority interests

Gain or loss attributable

to minority interests

during the period

Dividend to minorityinterests declared during

the period

Closing balance ofminority interests

Wuhan ChenmingHanyang Paper HoldingsCo., Ltd.

34.80%4,201,695.95 72,308,687.04Wuhan Chenming

Qianneng Electric PowerCo., Ltd.

49.00%-3,701,067.99 36,647,300.58Shouguang Chenming

Art Paper Co., Ltd.

25.00%14,350,961.48 65,965,253.05Shandong Grand View

Hotel Co., Ltd

30.00%-3,154,708.98 -40,635,798.66Haicheng Haiming

Mining Co., Ltd.

40.00%24,819,683.23 118,584,728.38

Guangdong HuiruiInvestment Co., Ltd.

49.00%-1,463,010.47 110,879,094.98Shanghai Hongtai Real

Estate Co., Ltd.

25.00%-36,223,139.89 918,181,377.04Shandong Chenming

Commercial FactoringCo., Ltd.

49.00%-338,813.50 -338,425.02Hailaer Chenming Paper

Co., Ltd.

25.00% 9,135,357.41Total -1,508,400.17 1,290,727,574.80

(3) Key financial information of major non-wholly owned subsidiaries

Unit: RMB

Name of subsidiary

Closing balance Opening balanceCurrent assets Non-current assets Total assets Current liabilities

Non-currentliabilities

Total liabilities Current assets Non-current assetsTotal assets Current liabilities

Non-currentliabilities

Total liabilitiesW uhan Chenming

Hanyang PaperHoldings Co., Ltd.

653,704,473.75 1,091,751,428.47 1,745,455,902.22 1,479,238,400.31 51,551,946.891,530,790,347.20489,799,209.301,241,278,595.221,731,077,804.52 1,438,701,718.23 53,182,469.271,491,884,187.50Shouguang

Chenming Art PaperCo., Ltd.

645,529,959.77 638,664,460.17 1,284,194,419.94 1,020,333,407.76 0.001,020,333,407.76371,585,385.81662,367,808.011,033,953,193.82 827,496,027.57 827,496,027.57Shandong Grand

View Hotel Co., Ltd

18,507,208.71 211,791,792.46 230,299,001.17 365,751,663.38 0.00365,751,663.3816,747,494.79214,555,206.74231,302,701.53 356,239,667.14 356,239,667.14Haicheng Haiming

Mining Co., Ltd.

173,535,098.17 1,250,462,354.86 1,423,997,453.03 1,127,535,632.07 0.001,127,535,632.0775,944,768.921,181,346,911.131,257,291,680.05 1,022,879,067.16 1,022,879,067.16Guangdong Huirui

Investment Co., Ltd.

309,979,131.51 305,452.41 310,284,583.92 6,020,716.64 77,980,000.0084,000,716.64310,035,149.57356,083.09310,391,232.66 3,141,629.72 77,980,000.0081,121,629.72Shanghai Hongtai

Real Estate Co., Ltd.

71,353,496.24 2,589,307,292.35 2,660,660,788.59 735,624,861.84 1,620,000,000.002,355,624,861.8413,682,144.582,621,645,742.812,635,327,887.39 595,911,653.75 1,670,000,000.002,265,911,653.75

Unit: RMB

Name ofsubsidiary

Amount for the reporting period Amount for the prior periodRevenue Net profit

Totalcomprehensive

income

Cash flowsfrom operating

activities

Revenue Net profit

Totalcomprehensive

income

Cash flowsfrom operating

activitiesWuhanChenmingHanyang PaperHoldings Co.,Ltd.

748,479,359.87 12,815,547.34 12,815,547.34-1,234,776.51600,890,033.836,940,887.35 6,940,887.35 -6,556,195.80Shouguang

Chenming ArtPaper Co., Ltd.

469,197,828.15 57,403,845.93 57,403,845.9316,911,656.33315,445,237.8220,062,006.83 20,062,006.84 857,026.40Shandong

Grand ViewHotel Co., Ltd

17,218,894.98 -10,515,696.60 -10,515,696.60-5,150,398.0816,349,994.57-9,880,170.88 -9,880,170.88 -1,592,519.03Haicheng

HaimingMining Co.,Ltd.

194,803,343.16 62,049,208.07 62,049,208.07-47,931,813.80-4,206,980.88 20,062,006.84 -19,856,846.14Guangdong

HuiruiInvestmentCo., Ltd.

0.00 -2,985,735.66 -2,985,735.66-56,018.06-811,026.55 -811,026.55 181,814.34Shanghai

Hongtai RealEstate Co., Ltd.

437,721.38 -82,830,427.25 -82,830,427.25205,540,229.39

2. Interest in joint arrangements or associates(1) Major joint ventures and associates

Name of jointventures and

associates

Principle place of

business

Place ofincorporation

Nature ofbusiness

Shareholding

Accounting

methodDirect Indirect

ShouguangChenming HuisenNew-styleConstructionMaterials Co.,Ltd.

Shouguang,China

Shouguang,China

Constructionmaterials

50.00% Equity methodArjo W iggins

ChenmingSpecialty Pa perCo., Ltd.

Shouguang,China

Shouguang,China

Paper making 30.00% Equity methodJiangxi Jiangbao

Media ColourPrinting Co. Ltd.

Nanchang, China Nanchang, ChinaPrinting 21.15% Equity methodZhuhai Dechen

New Third BoardEquityInvestment FundCompany(LimitedPartnership)

Zhuhai, China Zhuhai, China

Investmentmanagement

50.00% Equity methodWuhan Chenming

Wan Xing RealEstate Co., Ltd.

Wuhan, China Wuhan, China

Real estatedevelopment

40.00% Equity methodJiangxi Chenming

Port Co., Ltd.

Nanchang, China Nanchang, China

Handling andtransportation ofgoods and storage

40.00% Equity methodNingbo Kaichen

Huamei EquityInvestment FundPartnership(LimitedPartnership)

Ningbo, China Ningbo, China

Investmentmanagement

40.00% Equity method

(2) Key financial information of major joint ventures

Unit: RMBClosing balance/Amount for the reporting periodOpening balance/Amount for the prior period

Shouguang Chenming

Huisen New-styleConstruction Materials

Co., Ltd.

Weifang Senda Meixi

Port Co., Ltd.

Shouguang Chenming

Huisen New-styleConstruction Materials

Co., Ltd.

Weifang Senda Meixi

Port Co., Ltd.Current assets 48,110,251.5376,446,763.09873,137.05 104,769,683.99

Of which: Cash and cashequivalents

154,968.7671,926,049.62357,810.87 20,253,054.23Non-current assets 12,918,942.03475,915,953.1612,234,041.68 325,782,379.60

Total assets 61,029,193.56552,362,716.2513,107,178.73 430,552,063.59Current liabilities 58,648,287.6914,610,058.206,932,585.26 32,781,806.73Non-current liabilities 343,620,042.41 201,622,321.84Total liabilities 58,648,287.69358,230,100.616,932,585.26 234,404,128.57Equity interestattributable toshareholders of theparent company

2,380,905.87194,132,615.646,174,593.47 196,147,935.02Share of net assets based

on shareholding

1,190,452.9497,066,307.823,087,296.74 98,073,967.51Carrying amount of

investment in joint

2,935,220.64103,777,262.723,087,296.74 104,784,922.41

venturesRevenue 22,351,679.0110,319,610.53Finance expenses -4,791.68-26,820.5599,894.57 -308,457.69Income tax expenses 226,431.31138,833.84Income tax expenses -304,152.16-2,015,319.38-502,366.61 -2,578,637.02Total comprehensi veincome

-304,152.16-2,015,319.38-502,366.61 -2,578,637.02

(3) Key financial information of major associates

Unit: RMB

Closing balance/Amount for the reporting period Opening balance/Amount for the prior period

Ningbo QichenHuamei EquityInvestment Fund

Partnership

(LimitedPartnership)

Zhuhai DechenNew Third Board

EquityInvestment Fund

Company(LimitedPartnership)

WuhanChenming WanXing Real Estate

Co., Ltd.

JiangxiChenming Port

Co., Ltd.

Ningbo QichenHuamei EquityInvestment Fund

Partnership

(LimitedPartnership)

Zhuhai DechenNew Third Board

EquityInvestment Fund

Company(LimitedPartnership)

WuhanChenming WanXing Real Estate

Co., Ltd.

JiangxiChenming Port

Co., Ltd.Current assets 107,992,539.19 12,322,021.15 1,716,557,593.4513,026,292.85146,452,805.1614,081,866.81 1,672,497,092.07 13,757,478.48

Non-currentassets

92,000,000.00 91,750,000.00 33,844,444.17105,389,783.7951,000,000.0089,760,000.00 33,671,226.11 107,795,608.88Total assets 199,992,539.19 104,072,021.15 1,750,402,037.62118,416,076.64197,452,805.16103,841,866.81 1,706,168,318.18 121,553,087.36Current liabilities 16,169.83 5,000.00 1,662,041,605.80108,888,991.995,000.00 1,588,523,379.45 109,241,036.37Total liabilities 16,169.83 5,000.00 1,662,041,605.80108,888,991.995,000.00 1,588,523,379.45 109,241,036.37Equity in terestattributable toshareholders ofthe parentcompany

199,976,369.36 104,067,021.15 88,360,431.829,527,084.65197,452,805.16103,836,866.81 117,644,938.73 12,312,050.99Share of net

assets based onshareholding

79,990,547.74 52,028,307.22 35,344,172.733,810,833.8678,977,173.0151,918,433.41 47,057,975.49 4,924,820.40Carrying amount

of investment inassociates

200,264,158.51 52,033,510.58 14,456,740.673,810,833.86198,981,173.0151,918,433.41 47,057,975.49 4,927,893.82Revenue 3,714,369.427,072,800.51

Net prof it 3,207,463.76 230,154.34 -29,895,789.87-2,784,966.34-2,547,194.841,266,311.79 56,434,545.15 -2,614,181.59Totalcomprehensiveincome

3,207,463.76 230,154.34 -29,895,789.87-2,784,966.34-2,547,194.841,266,311.79 56,434,545.15 -2,614,181.59

(4) Excess loss of joint ventures or associates

Unit: RMBName

Accumulated unrecognised loss

incurred for prior periods

Unrecognised loss (or share of

net profit) for the period

Unrecognised loss (or share of

net profit) for the periodArjo W iggins ChenmingSpecialty Paper Co., Ltd.

7,308,869.167,308,869.16

X. Fair value

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 Level 2 Level 3 TotalI. Continuousmeasurement at fair value

-- -- -- --

1. Consumable biologicalassets

1,067,432,724.07 1,067,432,724.07Total assets continuously

measured at fair value

1,067,432,724.07 1,067,432,724.07II. Non-continuous

measurement at fair value

-- -- -- --

2. Level 3 continuous and non-continuous measurement, valuation techniques and qualification andquantification of key inputs

Biological assetsThe Company adopts the income method in determining the fair value of its consumable biological assets. Under the incomemethod, the valuation is arrived at based on the aggregate expected future profit estimates from forest resources discounted to theirpresent values at an applicable rate which is usually equivalent to yield prevailing in the forestry industry. Key input of the methodincludes expected annual income and discount rate.

Expected annual profit = expected annual income - expected total inputExpected annual income = expected output x expected sales priceExpected output = based on normal output of the Company’s loggingExpected sales price = normal sales price of the Company in 2018Expected total input is based on total historic input of saplings growing of the Company up to logging.Discount rate is 10.21%, based on the yi eld prevailing in the indus tr y.

3. Level 3 continuous measurement, adjustment between opening and closing value and sensitivity ofunobservable inputs

Consumable biological assetsOpening carrying amount 1,212,770,435.34Sapling increase during the yearSales decrease during the year

121,363,869.72Change in fair value through profit or loss for the year

-23,973,841.55Closing carrying amount

1,067,432,724.07

4. Fair value of financial assets and financial liabilities not measured at fair value

(1) Financial instruments not measured at fair valueThe financial assets and financial liabilities not measured at fair value mainly consist of: accounts receivable, short-termborrowings, accounts payable, long-term borrowings, bonds payable and long-term payables.

The carrying amount of the above financial assets and financial liabilities deviates from the fair value by a small amount.(2) As at 30 June 2018, the Company had no financial instruments measured at fair value (30 June 2017: Nil).

XI. Related parties and related party transactions

1. Parent company of the Company

Name of parent

company

Place ofincorporation

Business nature

Registered

capital

Shareholdingof the parentcompany inthe Company

Voting rightof the parentcompany inthe CompanyChenmingHoldings Co., Ltd.

Shouguang City

Investment in manufacture of paper,electricity, steam, arboriculture

1,238,787,700.0027.67% 27.67%Explanation on the parent company of the Company

The ultimate controller of the Company is Shouguang State-owned Assets Supervision and Administration Office.

2. Subsidiaries of the Company

Please refer to Note IX. 1. Interest in subsidiaries for details.

3. Joint ventures and associates of the Company

Please refer to Note VIII. 2. Interest in joint ventures or associates for details.Balance of related party transaction between the Company and its joint ventures or associates during the period or prior periods are asfollows:

Name of joint ventures or associates RelationWuhan Chenming Wan Xing Real Estate Co., Ltd. An associate of the CompanyJiangxi Jiangbao Media Colour Printing Co. Ltd. An associate of the CompanyArjo Wiggins Chenming Specialty Paper Co., Ltd. An associate of the CompanyShouguang Chenming Huisen New-styleConstruction Materials Co., Ltd.

A joint venture of the Company

4. Other related parties

Name of other related parties RelationShandong Shouguang Jinxin Investment Development HoldingsGroup

Shareholder of the Company’s largest shareholderShouguang Henglian Enterprise Investment Limited Shareholder of the Company’s largest shareholderShouguang Ruifeng Enterprise Investment Limited Shareholder of the Company’s largest shareholderChenming Holdings (Hong Kong) Limited Subsidiary of the Company’s largest shareholderZhanjiang Chenming Real Estate Co., Ltd. Subsidiary of the Company’s largest shareholderQingdao Hongji Weiye Investment Co., Ltd. Subsidiary of the Company’s largest shareholderShouguang Hengying Real Estate Co., Ltd. Subsidiary of the Company’s largest shareholderShouguang Hengtai Enterprise Investment Co., Ltd.

A company invested by the Directors and senior management ofthe Company

Shouguang Huixin Construction Materials Co., Ltd.

A company invested by the Directors and senior management ofthe CompanyShouguang Chenming Guangyuan Real Property Co., Ltd. and itssubsidiaries

A company invested by the Directors and senior management ofthe CompanyQingdao Chenming Nonghai Investment Co., Ltd. and itssubsidiaries

A company invested by the Directors and senior management ofthe Company

Nanchang Chenjian New-style Wall Materials Co., Ltd.

A company invested by the Directors and senior management ofthe Company

Shouguang Hengde Enterprises Investment Co., Ltd.

A company invested by the Directors and senior management ofthe CompanyZhejiang Huaming Investment Management Co., Ltd. and itssubsidiaries

Directors and senior management serve d by the Company’sDirectorsHebei Chenming Zhongjin Real Estate Development Co., Ltd.and its subsidiaries

Directors and senior management serve d by the Company’sSupervisorsWuhan Chenming Zhongjin Real Estate Co., Ltd. and itssubsidiaries

Directors and senior management served byWuhan Rongsheng Zhongjin Development and Investment Co.,

Ltd. and its subsidiaries

Directors and senior management served byQingzhou Chenming Denaturation Amylum Co., Ltd. Share participating company of the Company

Zhejiang Guangyu Idall Print Co., Ltd Share participating company of the CompanyAnhui Time Source Corporation Share participating company of the CompanyShandong Hongqiao Venture Capital Co., Ltd. Share participating company of the Company

Shanghai Hengzheng Venture Investment Center (LimitedPartnership)

Share participating company of the CompanyGuangdong Dejun Investment Co., Ltd. Share participating company of the CompanyJiangxi Chenming Natural Gas Co., Ltd. and its subsidiaries

Directors and senior management serve d by the Company’sDirector in the past twelve months

5. Related party transactions(1) Purchase and sales of goods and rendering and receiving services

Table on purchase of goods/receiving of services

Unit: RMBRelated party

Details of relatedparty transaction

Amount for thereporting period

Transactionfacility approved

Whether thetransaction facility is

exceeded

Amount for the

prior periodJiangxi Chenming Natural

Gas Co., Ltd.

Procurement ofnatural gas and heavyoil, etc.

170,147,411.87350,000,000.00No 84,339,429.95Table on sales of goods/providing of services

Unit: RMBRelated party

Details of related party

transaction

Amount for the reporting

period

Amount for the prior periodAnhui Time Source Corporation Sales of paper 0.00122,403,067.72

(2) Guarantee

The Company as guarantor

Unit: RMBParty being guaranteed

Amount under

guarantee

Starting date of

guarantee

Expiry date of

guarantee

Whetherperformance of

guarantee iscompletedWeifang Sendamei West Port Co., Ltd. 135,000,000.0020 December 201720 December 2027 NoShandong Chenming Paper Sales Co., Ltd. 420,000,000.0019 July 201720 July 2018 NoShandong Chenming Paper Sales Co., Ltd. 450,000,000.0013 November 201713 November 2018 NoShandong Chenming Paper Sales Co., Ltd. 160,721,218.994 January 20184 July 2018 NoShandong Chenming Paper Sales Co., Ltd. 350,000,000.0024 February 201821 February 2019 NoShandong Chenming Paper Sales Co., Ltd. 254,085,821.3415 March 201812 September 2018 NoShandong Chenming Paper Sales Co., Ltd. 250,000,000.0010 April 201810 April 2019 NoShandong Chenming Paper Sales Co., Ltd. 420,045,058.1010 May 20187 November 2018 NoShandong Chenming Paper Sales Co., Ltd. 575,717,671.6010 May 20187 November 2018 NoShandong Chenming Paper Sales Co., Ltd. 300,000,000.0010 May 20186 November 2018 NoShandong Chenming Paper Sales Co., Ltd. 500,000,000.0029 June 201829 June 2019 NoJiangxi Chenming Paper Co., Ltd. 100,000,000.0017 October 201716 October 2018 NoJiangxi Chenming Paper Co., Ltd. 45,000,000.0027 March 201823 September 2018 NoJiangxi Chenming Paper Co., Ltd. 76,500,000.0029 May 201824 May 2019 NoJiangxi Chenming Paper Co., Ltd. 22,500,000.0020 June 201820 June 2019 NoJiangxi Chenming Paper Co., Ltd. 16,563,394.5729 March 201825 September 2018 NoJiangxi Chenming Paper Co., Ltd. 6,539,190.6520 April 201817 October 2018 NoJiangxi Chenming Paper Co., Ltd. 18,319,448.1410 May 20186 November 2018 NoJiangxi Chenming Paper Co., Ltd. 200,000,000.0030 September 201629 September 2018 No

Jiangxi Chenming Paper Co., Ltd. 50,000,000.0016 March 201716 March 2019 NoJiangxi Chenming Paper Co., Ltd. 100,000,000.001 April 201716 March 2019 NoJiangxi Chenming Paper Co., Ltd. 73,000,000.0012 June 201712 June 2019 NoJiangxi Chenming Paper Co., Ltd. 150,000,000.0029 November 201729 November 2019 NoShouguang Meilun Paper Co., Ltd. 57,450,000.0019 January 201818 January 2019 NoShouguang Meilun Paper Co., Ltd. 100,000,000.0017 January 201816 July 2018 NoShouguang Meilun Paper Co., Ltd. 100,000,000.001 February 201825 July 2018 NoShouguang Meilun Paper Co., Ltd. 100,000,000.0023 April 201817 October 2018 NoShouguang Meilun Paper Co., Ltd. 101,306,798.4922 June 201818 December 2018 NoShouguang Meilun Paper Co., Ltd. 500,000,000.0030 March 201816 July 2018 NoJilin Chenming Paper Co., Ltd. 40,000,000.001 February 201825 December 2018 NoChenming (HK) Limited 91,573,744.001 March 201718 March 2019 NoChenming (HK) Limited 218,347,800.0014 July 201726 July 2018 NoChenming (HK) Limited 158,798,400.0026 July 201710 August 2018 NoChenming (HK) Limited 83,435,326.008 September 20172 August 2018 NoChenming (HK) Limited 86,644,372.1025 October 201724 September 2018 NoChenming (HK) Limited 234,161,474.0027 October 201711 October 2018 NoChenming (HK) Limited 96,271,530.0031 October 20178 October 2018 NoChenming (HK) Limited 99,249,000.0022 December 201710 December 2018 NoChenming (HK) Limited 70,135,960.0022 December 201710 December 2018 NoChenming (HK) Limited 281,205,500.003 January 201813 December 2018 NoChenming (HK) Limited 238,197,600.0023 March 201820 March 2019 NoChenming (HK) Limited 178,648,200.009 April 20188 October 2018 NoChenming (HK) Limited 310,980,200.0028 May 201815 May 2019 NoChenming (HK) Limited 165,415,000.006 June 20186 December 2018 NoChenming (HK) Limited 33,083,000.006 June 20186 December 2018 NoChenming (HK) Limited 30,000,000.0022 December 201722 December 2018 NoChenming (HK) Limited 72,000,000.0029 November 201729 November 2018 NoChenming (HK) Limited 130,000,000.0011 June 201811 June 2019 NoChenming (HK) Limited 37,700,000.0022 June 201820 December 2018 NoChenming (HK) Limited 188,573,100.006 October 201630 August 2018 NoChenming (HK) Limited 277,897,200.002 November 201610 September 2019 NoChenming (HK) Limited 350,679,800.0018 January 20178 April 2019 NoChenming (HK) Limited 271,280,600.007 November 201730 September 2019 NoChenming (HK) Limited 197,408,689.4612 January 201714 December 2019 NoChenming (HK) Limited 137,727,000.0024 May 201727 April 2019 NoChenming (HK) Limited 161,445,040.0023 April 20187 April 2021 NoChenming (HK) Limited 92,632,400.004 May 20186 April 2021 NoChenming (HK) Limited 92,632,400.0011 May 201811 April 2020 NoChenming (HK) Limited 58,226,080.0017 May 20185 May 2021 NoZhanjiang Chenming Pulp & Paper Co., Ltd. 110,000,000.0018 October 201717 October 2018 NoZhanjiang Chenming Pulp & Paper Co., Ltd. 90,000,000.0017 November 201716 November 2018 NoZhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.006 September 20175 September 2018 NoZhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.0020 December 201719 December 2018 NoZhanjiang Chenming Pulp & Paper Co., Ltd. 50,000,000.0021 December 201720 December 2018 NoZhanjiang Chenming Pulp & Paper Co., Ltd. 80,000,000.0016 October 201715 October 2018 No

Zhanjiang Chenming Pulp & Paper Co., Ltd. 115,000,000.006 November 20175 November 2018 NoZhanjiang Chenming Pulp & Paper Co., Ltd. 450,000,000.0030 March 201729 March 2018 NoZhanjiang Chenming Pulp & Paper Co., Ltd. 75,000,000.0029 March 201828 December 2018 NoZhanjiang Chenming Pulp & Paper Co., Ltd. 80,000,000.0015 January 201814 July 2018 NoZhanjiang Chenming Pulp & Paper Co., Ltd. 50,000,000.001 January 201831 December 2018 NoZhanjiang Chenming Pulp & Paper Co., Ltd. 300,000,000.002 January 20181 January 2019 NoZhanjiang Chenming Pulp & Paper Co., Ltd. 100,000,000.0018 January 201817 January 2019 NoZhanjiang Chenming Pulp & Paper Co., Ltd. 125,000,000.009 February 20188 February 2019 NoZhanjiang Chenming Pulp & Paper Co., Ltd. 200,000,000.001 January 201824 October 2018 NoZhanjiang Chenming Pulp & Paper Co., Ltd. 110,000,000.0014 March 201827 July 2018 NoZhanjiang Chenming Pulp & Paper Co., Ltd. 99,969,000.009 April 20188 July 2018 NoZhanjiang Chenming Pulp & Paper Co., Ltd. 32,000,000.0025 June 201818 June 2019 NoZhanjiang Chenming Pulp & Paper Co., Ltd. 43,000,000.002 April 201825 September 2018 NoZhanjiang Chenming Pulp & Paper Co., Ltd. 327,031,740.777 January 20188 January 2019 NoZhanjiang Chenming Pulp & Paper Co., Ltd. 160,397,500.0030 August 201730 August 2018 NoZhanjiang Chenming Pulp & Paper Co., Ltd. 32,500,000.023 April 20182 July 2018 NoZhanjiang Chenming Pulp & Paper Co., Ltd. 48,999,600.0027 April 201826 April 2019 NoZhanjiang Chenming Pulp & Paper Co., Ltd. 60,872,720.0028 April 201827 October 2018 NoZhanjiang Chenming Pulp & Paper Co., Ltd. 36,738,643.182 May 20182 August 2018 NoZhanjiang Chenming Pulp & Paper Co., Ltd. 190,000,000.0026 October 201626 October 2018 NoZhanjiang Chenming Pulp & Paper Co., Ltd. 39,500,000.003 June 201521 May 2020 NoZhanjiang Chenming Pulp & Paper Co., Ltd. 200,000,000.0020 June 201720 June 2019 NoZhanjiang Chenming Pulp & Paper Co., Ltd. 44,331,220.005 June 201521 May 2020 NoZhanjiang Chenming Pulp & Paper Co., Ltd. 66,166,000.0026 October 201626 October 2018 NoZhanjiang Chenming Pulp & Paper Co., Ltd. 132,332,000.0021 December 201720 December 2019 NoZhanjiang Chenming Pulp & Paper Co., Ltd.

1,240,000,000.0

26 March 201825 March 2029 NoZhanjiang Chenming Pulp & Paper Co., Ltd. 50,000,000.0013 February 201811 February 2020 No

Zhanjiang Chenming Pulp & Paper Co., Ltd. 10,000,000.0023 February 201811 February 2020 NoZhanjiang Chenming Pulp & Paper Co., Ltd. 10,000,000.0026 February 201811 February 2020 NoZhanjiang Chenming Pulp & Paper Co., Ltd. 30,000,000.0028 February 201811 February 2020 NoShouguang Chenming Import and Export Trade Co.,Ltd.

150,000,000.0030 September 201729 September 2018 NoShouguang Chenming Import and Export Trade Co.,

Ltd.

30,000,000.0017 October 201716 October 2018 NoShandong Chenming Financial Leasing Co., Ltd. 535,605,000.0017 December 201516 December 2018 NoShandong Chenming Financial Leasing Co., Ltd. 303,764,550.002 March 201617 February 2019 NoShandong Chenming Financial Leasing Co., Ltd. 303,764,550.0018 March 20162 February 2019 NoShandong Chenming Financial Leasing Co., Ltd. 155,412,580.0028 July 201612 July 2018 NoShandong Chenming Financial Leasing Co., Ltd. 225,000,000.0021 September 201721 September 2020 NoShandong Chenming Financial Leasing Co., Ltd. 500,000,000.0031 May 201829 February 2020 NoHuanggang Chenming Pulp & Paper Co., Ltd. 11,280,000.0017 August 201526 September 2018 NoHuanggang Chenming Pulp & Paper Co., Ltd. 5,100,000.0014 December 201526 September 2018 NoHuanggang Chenming Pulp & Paper Co., Ltd. 16,380,000.0014 December 201526 December 2018 NoHuanggang Chenming Pulp & Paper Co., Ltd. 21,840,000.0014 December 201526 March 2019 NoHuanggang Chenming Pulp & Paper Co., Ltd. 21,840,000.0014 December 201526 June 2019 NoHuanggang Chenming Pulp & Paper Co., Ltd. 32,770,000.0014 December 201526 September 2019 No

Huanggang Chenming Pulp & Paper Co., Ltd. 27,070,000.0014 December 201526 December 2019 NoHuanggang Chenming Pulp & Paper Co., Ltd. 5,700,000.0024 June 201626 December 2019 NoHuanggang Chenming Pulp & Paper Co., Ltd. 32,770,000.0024 June 201626 March 2020 NoHuanggang Chenming Pulp & Paper Co., Ltd. 530,000.0024 June 201626 June 2020 NoHuanggang Chenming Pulp & Paper Co., Ltd. 32,240,000.005 January 201726 June 2020 NoHuanggang Chenming Pulp & Paper Co., Ltd. 38,240,000.005 January 201726 September 2020 NoHuanggang Chenming Pulp & Paper Co., Ltd. 38,240,000.005 January 201726 December 2020 NoHuanggang Chenming Pulp & Paper Co., Ltd. 43,690,000.005 January 201726 March 2021 NoHuanggang Chenming Pulp & Paper Co., Ltd. 43,690,000.005 January 201726 June 2021 NoHuanggang Chenming Pulp & Paper Co., Ltd. 3,900,000.005 January 201726 September 2021 NoHuanggang Chenming Pulp & Paper Co., Ltd. 36,260,000.003 February 201726 September 2021 NoHuanggang Chenming Pulp & Paper Co., Ltd. 40,160,000.003 February 201726 December 2021 NoHuanggang Chenming Pulp & Paper Co., Ltd. 40,160,000.003 February 201726 March 2022 NoHuanggang Chenming Pulp & Paper Co., Ltd. 33,420,000.003 February 201726 June 2022 NoHuanggang Chenming Pulp & Paper Co., Ltd. 100,000,000.0030 December 201529 December 2018 NoHuanggang Chenming Pulp & Paper Co., Ltd. 52,932,800.0023 September 201626 September 2018 NoHuanggang Chenming Pulp & Paper Co., Ltd. 52,932,800.0023 September 201626 December 2018 NoHuanggang Chenming Pulp & Paper Co., Ltd. 52,932,800.0023 September 201626 March 2019 NoHuanggang Chenming Pulp & Paper Co., Ltd. 16,708,238.3223 September 201626 June 2019 NoHuanggang Chenming Pulp & Paper Co., Ltd. 39,634,770.005 December 201626 June 2019 NoHuanggang Chenming Pulp & Paper Co., Ltd. 65,037,750.005 December 201626 September 2019 NoHuanggang Chenming Pulp & Paper Co., Ltd. 40,705,980.005 December 201626 December 2019 NoHuanggang Chenming Pulp & Paper Co., Ltd. 24,331,770.0012 April 201726 December 2019 NoHuanggang Chenming Pulp & Paper Co., Ltd. 65,037,750.0012 April 201726 March 2020 NoHuanggang Chenming Pulp & Paper Co., Ltd. 10,099,980.0012 April 201726 June 2020 No

6. Related party accounts receivable and accounts payable(1) Accounts receivables

Unit: RMBItem Related party

Closing balance Opening balanceBook balance

Bad debtprovision

Book balance

Bad debtprovision

Accountsreceivable

Shouguang Chenming Huisen New-styleConstruction Materials Co., Ltd.

1,196,178.3460,641.832,995,456.40 149,772.82Total 1,196,178.3460,641.832,995,456.40 149,772.82Prepayments

Jiangxi Chenming Natural Gas Co., Ltd. 32,810,399.1518,519,096.64Total 32,810,399.1518,519,096.64

Otherreceivables

Arjo Wiggins Chenming Specialty Paper Co., Ltd.1,191,705.081,191,705.081,191,705.08 1,191,705.08Guangdong Dejun Investment Co., Ltd. 128,291,400.00 6,414,570.00Weifang Sime Darby West Port Co., Ltd. 19,093,750.00954,687.50

Total 20,285,455.082,146,392.58129,483,105.08 7,606,275.08

(2) Accounts payable

Unit: RMBItem Related party Closing book balance Opening book balance

Other payables

Shouguang Hengtai Enterprise Investment Company Limited43,120,873.70 42,189,702.27Wuhan Chenming Wan Xing Real Estate Co., Ltd. 29,968,574.22Total 73,089,447.92 42,189,702.27

XII. Undertaking and contingency

1. Significant commitments

(1) Capital commitment

Item Closing balance Opening balanceContracted but not yet recognised in the financial statementsCommitments in relation to acquisition and construction o

long-term assets

3,440,480,605.28

3,826,992,695.73Huirui BT Project

2,500,000,000.002,500,000,000.00Total

5,940,480,605.286,326,992,695.73(2) Operating lease commitments

As at the balance sheet date, the Company entered into irrevocable operating lease contracts with external companies as follows:

Item Closing balance Opening balanceMinimum lease payments under irrevocable operating leases:

The first year after balance sheet date 10,107,309.664,382,201.43The second year after balance sheet date

10,384,627.74

4,777,714.37The third year after balance sheet date

10,138,378.13

5,133,887.63In the years thereafter

201,656,182.21

179,556,362.24Total

232,286,497.74

193,850,165.67

2. Contingency(1) Significant contingency as at the balance sheet date

The Company received a statutory demand in respect of alleged claims for the total amount of contractual compensation ofRMB167,860,000 and the interest thereon, legal costs of USD3,548,900 and the interest thereon and arbitration fees ofHKD3,303,900 and the interest thereon made by an alleged creditor pursuant to Companies (Winding up and MiscellaneousProvisions) Ordinance delivered to the Company on 18 October 2016.

On 5 July 2017, the Company initiated legal proceedings for a civil complaint against Arjowiggins HKK2 Limited (“HKK2”)and related parties at the Intermediate People’s Court of Weifang City in Shandong Province of the People’s Republic of China(“Weifang Court”). The Civil Complaint was admitted to be heard by Weifang Court on 8 July 2017. The Company and HKK2entered into a joint venture agreement to establish a joint venture in 2005. As one of the shareholders of the Joint Venture, theCompany, on behalf of the Joint Venture filed the Civil Complaint against HKK2 and related parties for loss suffered by the JointVenture. HKK2 filed a summons (Case Number: HCCT53/2015) at the Court of First Instance of the High Court of the HKSAR on10 October 2017 to restrain the Company from further proceeding with the Civil Complaint that it had filed on 5 July 2017 againstHKK2 and the related parties before Weifang Court.

Justice Mimmie Chan of the Court of First Instance of the High Court of the HKSAR on 19 January 2018 in chambers (open topublic) ordered that the Company be restrained from further proceeding with the Civil Complaint that it has filed on 5 July 2017against HKK2 and the related parties before Weifang Court. The Company has withdrawn the Civil Complaint from Weifang Courton 22 February 2018.

As set out in the announcement of the Company dated 17 July 2017, the Company has appealed against the order of JusticeHarris dated 14 June 2017 on 12 July 2017. The hearing is expected to be for one day, and scheduled to be conducted at the Court ofAppeal of the High Court of the HKSAR at 10:00am on 11 May 2018.

Pursuant to an order made by Judge Harris on 28 August 2017, the Company has procured payment by a third party into theHigh Court of the HKSAR in the sum of HK$389,112,432.44 (this being the Hong Kong dollar equivalent of the amount set out inthe Statutory Demand and interest thereon from 19 October 2016 to 27 August 2018).

As of 31 December 2017, the Company made provision of RMB325,259,082.28 for this litigation. As judgment of the Court ofthe HKSAR is yet to be made, the provision is uncertain.

The Company issued the Indicative Announcement on 14 August 2018. A hearing for the Garnishee Order is scheduled to beheard before a Master in Chambers at the High Court of HKSAR at 10:30a.m. on 31 August 2018, among Arjowiggins HKK2 Ltd. asthe Judgment Creditor, the Company as the Judgment Debtor and Bank of Communications Trustee Limited as the Garnishee.

XIII. Post-balance sheet date event

1. Profit distribution

Unit: RMBProposed profit or dividend for distribution 0.00Profit or dividend approved for distribution 1,626,559,287.00

2. Other post-balance sheet date event

On 11 July 2018, the resolution on the debt transfer of portion of the financial leasing business in Financial Leasing Companieswas considered and approved at the 27th extraordinary meeting of the eighth session of the Board of the Company. In order tofacilitate the capital collection in financial leasing business and enhance capital utilisation rate, the Company proposed to transfer thedebt of not more than RMB2,000 million in aggregate in financial leasing business held to Shenzhen Qianhai Ruili AssetManagement Co., Ltd. or other qualified transferee. The specific sale of debt and the transfer expenses will be executed inaccordance with the agreement of both parties.

XIV. Other material matters

1. Segment information(1) Basis for determination and accounting policies

According to the internal organisation structure, the requirement of management and the internal reporting system of theCompany, the operating businesses of the Company are categorised into 4 reporting segments, such classification is based on thecategories of primary products. The management of the Group evaluates the financial results of such reporting segments on a regularbasis, in order to allocate the resources and evaluate their results. The primary products or services provided by each reportingsegment of the Company include machine-made paper, construction materials, financial services and others.

The information from the reporting segments is disclosed in accordance with the accounting policies and measurement standardsadopted by each of the reporting segment when reporting to the management, which are consistent with the accounting policies andmeasurement standards adopted in the preparation of the financial statements.

(2) Financial information of reporting segment

Unit: RMBItem

Machine-made

paper

Construction

materials

Financial servicesOthers

Inter-segment

elimination

TotalRevenue 13,160,393,022.74 137,513,641.61 1,329,045,532.121,086,258,948.17161,877,104.75 15,551,334,039.89Costs 9,406,171,649.42 110,291,082.62 126,471,923.24798,109,948.57181,159,684.99 10,259,884,918.86Total

assets

127,127,670,045.32 404,371,534.26 44,700,868,452.6821,811,619,848.6286,968,050,627.96 107,076,479,252.92Total

liabilities

95,706,290,453.86 163,306,056.31 31,248,668,911.2915,115,194,407.8164,124,872,257.17 78,108,587,572.10

XV. Notes to major financial statement items of the parent company

1. Accounts receivable(1) Accounts receivable by category

Unit: RMB

Category

Closing balance Opening balanceBook balance Bad debt provision

Carrying amount

Book balance Bad debt provision

Carrying amountAmount Percentage Amount PercentageAmount PercentageAmount Percentage

Accounts receivable thatare collectively assessed forimpairment based on creditrisk characteristics

2,204,627,636.92100.00% 874,798.470.04%2,203,752,838.458,860,393.90100.00%671,643.45 7.58% 8,188,750.45Total 2,204,627,636.92100.00% 874,798.470.04%2,203,752,838.458,860,393.90100.00%671,643.45 7.58% 8,188,750.45

Accounts receivable that are individually significant but assessed individually for impairment as at the end of the period:

□Applicable √ Not applicableAccounts receivable using ageing analysis for making bad debt provision in groups:

√ Applicable □ Not applicable

Unit: RMBAge

Closing balanceAccounts receivable Bad debt provision PercentageWithin 1 year1-90 days 7,046,346.04352,317.305.00%Subtotal within 1 year 7,046,346.04352,317.305.00%1 to 2 years 4,422,600.00442,260.0010.00%Over 3 years 80,221.1780,221.17100.00%

Total 11,549,167.21874,798.47

(2) Provision, recovery or reversal of bad debt provision for the period

Bad debt provision for the current period amounted to RMB567,705.25. The amount for bad debt provision recovered orreversed for during the current period was RMB0.00.

(3) Top five accounts receivable based on closing balance of debtors

The total amount of the Company’s top five accounts receivable based on closing balance of debtors for the year wasRMB2,204,627,302.37, which accounted for 99.99% of the closing balance of the total accounts receivable. The closing balance ofcorresponding bad debt provision amounted to RMB767,567.42.

2. Other receivables(1) Other receivables by category

Unit: RMB

Category

Closing balance Opening balanceBook balance Bad debt provision

Carrying amount

Book balance Bad debt provision

Carrying amountAmount Percentage Amount Percentage Amount Percentage Amount PercentageOther receivables that areindividually significant butassessed individually forimpairment

26,824,764.170.12%26,824,764.17 100.00% 0.00Other receivables that are

collectively assessed forimpairment based on credit riskcharacteristics

23,446,291,278.90 100.00% 65,260,961.73 0.28%23,381,030,317.1722,388,938,155.6599.86%37,734,670.82 0.17% 22,351,203,484.83Other receivables that are

individ ually insignificant butassessed individually forimpairment

4,316,922.880.02%4,316,922.88 100.00% 0.00Total 23,446,291,278.90 100.00% 65,260,961.73 0.28%23,381,030,317.1722,420,079,842.70100.00%68,876,357.87 0.31% 22,351,203,484.83

Other receivables that are individually significant but assessed individually for impairment as at the end of the period:

□ Applicable √ Not applicableOther receivables using ageing analysis for making bad debt provision in groups:

√ Applicable □ Not applicable

Unit: RMBAge

Closing balanceOther receivables Bad debt provision PercentageWithin 1 yearSubtotal within 1 year 83,786,457.204,189,322.865.00%

1 to 2 years 13,115,224.131,311,522.4110.00%2 to 3 years 8,829,671.911,765,934.3820.00%Over 3 years 57,994,182.0857,994,182.08100.00%

Total 163,725,535.3265,260,961.73

(2) Provision, recovery or reversal of bad debt provision for the period

The amount for bad debt provision provided for during the period was RMB631,054.18. The amount for bad debt provisionrecovered or reversed during the period was RMB4,246,450.32.

(3) Top five other receivables according to closing balance of debtors

Unit: RMBName of entity Nature Closing balance Maturity

Percentage to closing

balance of other

receivables

Closing balance ofbad debt provision

Shandong ChenmingFinancial LeasingCo., Ltd.

Open credit 12,329,587,568.32

Within 1 year, 1-2years

52.59%Shanghai Chenming

Industry Co., Ltd.

Open credit 2,524,590,908.99Within 1 year 10.77%Guangzhou Chenming

Financial LeasingCo., Ltd.

Open credit 1,412,691,908.92Within 1 year 6.03%Wuhan Chenming

Hanyang PaperHoldings Co., Ltd.

Open credit 1,192,174,755.48Within 1 year 5.09%Shouguang Meilun

Paper Co., Ltd.

Open credit 1,029,765,932.66Within 1 year 4.39%Total -- 18,488,811,074.37-- 78.86%

3. Long-term equity investments

Unit: RMBItem

Closing balance Opening balanceBook balance

Impairment

provision

Carrying amountBook balance

Impairment

provision

Carrying amountInterest in

subsidiaries

19,691,904,966.48 19,691,904,966.4818,313,508,366.48 18,313,508,366.48Interest in

associates andjoint ventures

377,944,022.24 377,944,022.24360,525,877.01 360,525,877.01Total 20,069,848,988.72 20,069,848,988.7218,674,034,243.49 18,674,034,243.49

(1) Interest in subsidiaries

Unit: RMBInvestee Opening balance

Increase for the

period

Decrease for

the period

Closing balance

Impairment

rovision forthe period

Closingbalance ofimpairment

provisionChenming Paper Korea Co.,Ltd.

6,143,400.00 6,143,400.00Chenming GmbH 4,083,235.00 4,083,235.00

Shandong Chenming PaperGroup (Fuyu) Sales Co., Ltd.

1,000,000.00 1,000,000.00Haicheng Haiming Mining

Co., Ltd.

144,000,000.00 144,000,000.00Hailaer Chenming Paper Co.,

Ltd.

12,000,000.00 12,000,000.00Huanggang Chenming Pulp &

Paper Co., Ltd.

1,200,000,000.00 50,000,000.001,250,000,000.00Huanggang Chenming

Arboriculture DevelopmentCo., Ltd.

70,000,000.00 70,000,000.00Jilin Chenming Paper Co.,

Ltd.

1,501,350,000.00 1,501,350,000.00Jinan Chenming Investment

Management Co., Ltd.

100,000,000.00 100,000,000.00Jiangxi Chenming Paper Co.,

Ltd.

822,867,646.40 822,867,646.40Shandong Chenming Power

Supply Holdings Co., Ltd.

157,810,117.43 157,810,117.43Wuhan Chenming Hanyang

Paper Holdings Co., Ltd.

202,824,716.34 60,896,600.00263,721,316.34Shandong Grand View Hotel

Co., Ltd.

80,500,000.00 80,500,000.00Zhanjiang Chenming Pulp &

Paper Co., Ltd.

5,000,000,000.00 27,500,000.005,027,500,000.00Shouguang Chenming

Modern Logistic Co., Ltd.

10,000,000.00 10,000,000.00Shouguang Chenming Art

Paper Co., Ltd.

113,616,063.80 113,616,063.80Shouguang Meilun Paper Co.,

Ltd.

4,449,441,979.31 4,449,441,979.31Shouguang Shun Da Customs

Declaration Co, Ltd.

1,500,000.00 1,500,000.00Shandong Chenming Paper

Sales Co., Ltd.

662,641,208.20 662,641,208.20Shouguang Chenming Import

and Export Trade Co., Ltd.

250,000,000.00 250,000,000.00Shouguang Chenming

Papermaking Machine Co.,Ltd.

2,000,000.00 2,000,000.00Shouguang Chenming

Industrial Logistics Co., Ltd.

10,000,000.00 10,000,000.00Shouguang Chenming

Hongxin Packaging Co., Ltd.

3,730,000.00 3,730,000.00Shandong Chenming Group

Finance Co., Ltd.

2,400,000,000.00 2,400,000,000.00Chenming Arboriculture Co.,

Ltd.

45,000,000.00 45,000,000.00Qingdao Chenming

International Logistics Co.,Ltd.

3,000,000.00 3,000,000.00Shanghai Chenming Industry

Co., Ltd.

1,000,000,000.00

1,300,000,000.0

2,300,000,000.00Xuchang Chenming Paper

Co., Ltd.

60,000,000.00 60,000,000.00

Total 18,313,508,366.48

1,438,396,600.0

60,000,000.0019,691,904,966.48

(2) Interest in associates and joint ventures

Unit: RMB

Investee Opening balance

Change for the period

Closing balance

Closing balanceof impairment

provisionAdditional

contribution

Withdrawncontribution

Investme nt ga i nor loss reco gnised

under equity

method

Adjustment of

othercomprehensive

income

Other change inequity interest

Distribution ofcash dividend orprofit declared

Impairmentprovision

OthersI. Joi nt ventures

ShouguangChenming HuisenNew-styleConstructionMaterials Co.,Ltd.

3,087,296.72 -152,076.08 2,935,220.64Weifang Sime

Darby West P ortCo., Ltd

104,784,922.41 -1,007,659.69 103,777,262.72Subtotal 107,872,219.13 -1,159,735.77 106,712,483.36II. AssociatesJiangxi Jiangbao

Media ColourPrinting Co. Ltd.

1,754,051.46 -480,140.21 1,273,911.25Zhuhai Dechen

New Third BoardEquity InvestmentFund Company(LimitedPartnership)

51,918,433.41 115,077.17 52,033,510.58Ningbo Kaichen

Huamei EquityInvestment FundPartnership(LimitedPartnership)

198,981,173.01 1,282,985.50 200,264,158.51Xuchang

Chenming PaperCo., Ltd.

0.00 21,496,272.32 -3,836,313.78 17,659,958.54Subtotal 252,653,657.88 21,496,272.32 -2,918,391.32 271,231,538.88

Total 360,525,877.01 21,496,272.32 -4,078,127.09 377,944,022.24

4. Revenue and operating costs

Unit: RMBItem

Amount for the reporting period Amount for the prior periodRevenue Costs Revenue CostsPrincipal activities 2,300,997,002.451,522,148,043.233,098,374,716.53 2,056,980,676.10Other activities 515,297,483.37452,213,569.85584,195,592.39 503,718,576.99

Total 2,816,294,485.821,974,361,613.083,682,570,308.92 2,560,699,253.09

5. Investment income

Unit: RMBItem Amount for the reporting period Amount for the prior periodIncome from long-te rm equity investmentsaccounted for using the equity method

-4,078,127.09-30,620.30Investment gain on disposal of financial

assets measured at fair value through profitor loss

114,233,300.00Investment return on available-for-sale

financial assets held

41,516,700.0056,208,200.00Gain from entrusted loans 13,312,368.97

Total 151,671,872.9169,489,948.67

XVI. Supplementary information

1. Breakdown of extraordinary gains and losses for the current period

√ Applicable □ Not applicable

Unit: RMBItem Amount RemarkProfit or loss from disposal of non-current assets 11,507,523.25Government grants (except for the government grants closely related to the normaloperation of the Company and granted constantly at a fixed amount or quantity inaccordance with a certain standard based on state policies) accounted for in profit or lossfor the current period

239,364,403.83Except for effective hedging business conducted over the course of ordinary operation of

the Company, gain or loss arising from fair value change in held-for-trading financialassets and held-for-trading financial liabilities, as well as investment gain on disposal ofheld-for-trading financial assets and held-for-trading financial liabilities andavailable-for-sale fi na ncial assets

61,750,000.00Non-operating gains and losses other than the above items 6,630,471.21

Gain or loss from change in fair value of consumable biological assets adopting fairvalue method for follow-up measurements

-23,973,841.55Less: Effect of income tax 48,149,545.22Effect of minority interest 394,751.65

Total 246,734,259.87 --Notes for the Company’s extraordinary gain or loss items as defined in the Explanatory Announcement on Information Disclosure forCompanies Offering Their Securities to the Public No.1 - Extraordinary Gains or Losses and the extraordinary gain or loss items asillustrated in the Explanatory Announcement on Information Disclosure for Companies Offering Their Securities to the Public No.1 -Extraordinary Gains or Losses defined as its recurring gain or loss items.□ Applicable √ Not applicable

2. Returns on net assets and earnings per share

Profit for the reporting period

Rate of return on net assets on weighted

average basis

Earnings per shareBasic (RMB per share) Diluted (RMB per share)Net profit attributable to ordinaryshareholders of the Company

5.77%0.36 0.36Net profit after extraordinary gains

and losses attributable to ordinaryshareholders of the Company

4.41%0.28 0.28

3. Differences in accounting data under domestic and overseas accounting standards(1) Differences between the net profit and net assets disclosed in accordance with international accounting

standards and China accounting standards in the financial report

√ Applicable □ Not applicable

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

√ Applicable □ Not applicable

XI Documents Available for Inspection

(I) The financial statements signed and sealed by the legal representative, financial representative and head of the financialdepartment of the Company.(II)The interim report signed by the legal representative.(III) The original copies of all of the documents and announcements of the Company disclosed on the designated website as approvedby China Securities Regulatory Commission during the reporting period.(IV) The interim report disclosed on The Stock Exchange of Hong Kong Limited.(V) Other relevant information.


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