SHANDONG CHENMING PAPER HOLDINGS LIMITED 2019 Financial Report
SHANDONG CHENMING PAPER HOLDINGS LIMITED*
2019 Financial Report
August 2019
INTERIM REPORT 2019
X Financial Report
I. Auditors’ ReportIs the interim report audited Yes √ NoThe interim financial report is unaudited.
II. Financial StatementsThe unit in the notes to the financial statements is: RMB
1. Consolidated Balance Sheet
Prepared by: Shandong Chenming Paper Holdings Limited30 June 2019
Unit: RMBItem30 June 201931 December 2018CURRENT ASSETS:
Monetary funds20,727,891,187.2519,292,774,747.79 Bills receivable750,842,498.891,213,116,491.46 Accounts receivable3,505,805,716.793,404,487,004.59 Prepayments512,812,462.07863,739,020.74 Other receivables1,610,458,353.552,133,089,983.39 Including: Interest receivable210,003,430.11198,577,632.43 Inventories6,100,360,068.056,771,488,433.74 Assets held-for-sale50,717,915.24 Non-current assets due within one year5,565,858,326.784,007,503,281.86 Other current assets9,952,044,144.8510,281,312,825.13Total current assets48,776,790,673.4747,967,511,788.70NON-CURRENT ASSETS:
Long-term receivables5,279,451,578.157,926,610,770.86 Long-term equity investments474,707,109.80484,674,282.77 Other non-current financial assets765,160,000.00103,000,000.00 Investment property4,731,461,433.144,844,993,039.62 Fixed assets30,774,255,749.3427,913,986,152.68 Construction in progress10,152,057,869.0811,871,350,821.55 Intangible assets2,024,361,567.031,939,355,274.98 Goodwill5,969,626.575,969,626.57 Long-term prepaid expenses129,568,658.12134,916,241.81 Deferred income tax assets758,929,929.02603,873,698.62 Other non-current assets2,686,036,767.701,522,493,129.66Total non-current assets57,781,960,287.9557,351,223,039.12Total assets106,558,750,961.42105,318,734,827.82
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
Item30 June 201931 December 2018CURRENT LIABILITIES:
Short-term borrowings44,665,330,086.9540,227,945,361.89 Bills payable2,219,908,433.854,218,969,554.93 Accounts payable4,612,151,878.324,150,228,644.66 Employee benefits payable108,165,972.80135,373,407.70 Taxes payable314,284,022.19451,651,198.64 Other payables3,228,659,821.691,777,718,017.48 Including: Interest payable163,355,268.55226,788,777.59 Dividend payable976,175,735.52 Contract liabilities639,444,833.26419,540,133.74 Non-current liabilities due within one year5,243,485,176.417,216,305,771.01 Other current liabilities1,853,868,055.562,816,956,481.68Total current liabilities62,885,298,281.0361,414,688,571.73NON-CURRENT LIABILITIES:
Long-term borrowings8,449,738,255.447,798,934,484.94 Bonds payable2,097,877,500.002,097,562,500.00 Long-term payables3,630,523,501.353,900,255,693.44 Provisions329,230,107.88325,259,082.28 Deferred income1,805,521,960.251,862,395,197.61 Deferred income tax liabilities Other non-current liabilities2,051,031,576.502,047,948,069.73Total non-current liabilities18,363,922,901.4218,032,355,028.00TOTAL LIABILITIES81,249,221,182.4579,447,043,599.73
II. Financial Statements (Cont’d)
1. Consolidated Balance Sheet (Cont
’d)
INTERIM REPORT 2019
X Financial Report
Item30 June 201931 December 2018OWNERS’ EQUITY:
Share capital2,904,608,200.002,904,608,200.00 Other equity instruments7,465,500,000.007,465,500,000.00 Including: Preference shares4,477,500,000.004,477,500,000.00 Perpetual bonds2,988,000,000.002,988,000,000.00 Capital reserves5,091,449,915.145,091,449,915.14 Less: Treasury shares Other comprehensive income-752,536,869.21-736,520,181.01 Special reserves4,001,427.123,257,998.47 Surplus reserves1,148,888,912.111,148,888,912.11 General risk provisions64,123,919.2364,123,919.23 Retained profit8,542,942,527.629,107,422,690.85Total equity attributable to owners of the Company24,468,978,032.0125,048,731,454.79 Minority interest840,551,746.96822,959,773.30Total owners’ equity25,309,529,778.9725,871,691,228.09TOTAL LIABILITIES AND OWNERS’ EQUITY106,558,750,961.42105,318,734,827.82Legal Representative:Financial controller:Head of the financial department:
Chen HongguoDong LianmingZhang Bo
II. Financial Statements (Cont’d)
1. Consolidated Balance Sheet (Cont
’d)
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
II. Financial Statements (Cont’d)
2. Balance sheet of the Company
Unit: RMBItem30 June 201931 December 2018CURRENT ASSETS:
Monetary funds8,975,954,132.488,160,234,434.15 Bills receivable610,733,820.49436,662,187.80 Accounts receivable106,218,916.731,349,276,965.04 Prepayments1,992,149,171.761,584,388,551.00 Other receivables17,730,598,151.9319,405,314,961.24 Including: Interest receivable69,171,162.6577,257,506.25 Dividends receivable1,023,353,000.00 Inventories695,649,440.791,133,888,230.37 Other current assets130,445,337.51140,126,157.18Total current assets30,241,748,971.6932,209,891,486.78NON-CURRENT ASSETS:
Long-term receivables516,925,607.06516,925,607.06 Long-term equity investments23,621,617,586.8122,487,417,443.24 Investments in other equity instrument 3,000,000.003,000,000.00 Other non-current financial assets103,000,000.00103,000,000.00 Fixed assets3,803,368,878.722,103,164,588.93 Construction in progress523,108,866.982,014,493,138.68 Intangible assets452,398,009.26458,365,862.52 Deferred income tax assets400,436,726.68303,861,021.95 Other non-current assets49,300,000.009,800,000.00Total non-current assets29,473,155,675.5128,000,027,662.38Total assets59,714,904,647.2060,209,919,149.16CURRENT LIABILITIES:
Short-term borrowings8,545,244,718.347,668,689,104.31 Bills payable11,685,733,442.5810,595,836,030.46 Accounts payable806,871,182.64722,999,244.33 Contract liabilities3,709,236,079.573,299,778,982.47 Employee benefits payable56,431,633.8953,899,651.15 Taxes payable61,706,479.9659,595,083.56 Other payables5,315,116,231.345,465,488,890.52 Including: Interest payable131,416,333.34139,444,333.34 Dividend payable976,175,735.52 Non-current liabilities due within one year3,238,789,335.723,256,715,148.39 Other current liabilities2,673,868,055.563,527,956,481.68Total current liabilities36,092,997,159.6034,650,958,616.87
INTERIM REPORT 2019
X Financial Report
Item30 June 201931 December 2018NON-CURRENT LIABILITIES:
Long-term borrowings763,242,631.961,335,482,969.43 Bonds payable2,097,877,500.002,097,562,500.00 Long-term payables1,237,291,100.522,072,502,840.48 Provisions325,259,082.28325,259,082.28 Deferred income44,241,427.6346,412,014.99 Deferred income tax liabilities Other non-current liabilities1,593,766,672.001,592,166,670.00Total non-current liabilities6,061,678,414.397,469,386,077.18TOTAL LIABILITIES42,154,675,573.9942,120,344,694.05OWNERS’ EQUITY:
Share capital2,904,608,200.002,904,608,200.00 Other equity instruments7,465,500,000.007,465,500,000.00 Including: Preference shares4,477,500,000.004,477,500,000.00 Perpetual bonds2,988,000,000.002,988,000,000.00 Capital reserves4,953,557,435.194,953,557,435.19 Less: Treasury shares Surplus reserves1,136,699,330.201,136,699,330.20 Retained profit1,099,864,107.821,629,209,489.72Total owners’ equity17,560,229,073.2118,089,574,455.11TOTAL LIABILITIES AND OWNERS’ EQUITY59,714,904,647.2060,209,919,149.16Legal Representative:Financial controller:Head of the financial department:
Chen HongguoDong LianmingZhang Bo
II. Financial Statements (Cont’d)
2. Balance sheet of the Company (Cont
’d)
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
II. Financial Statements (Cont’d)
3. Consolidated Income Statement
Unit: RMBItem
Amount for thefirst half of 2019
Amount for thefirst half of 2018I. Total revenue13,348,648,113.7015,551,334,039.89 Including: Revenue13,348,648,113.7015,551,334,039.89II. Total operating costs12,968,897,317.2113,616,998,093.86
Including: Operating costs9,754,097,799.8210,259,884,918.86 Taxes and surcharges134,488,545.06129,509,211.98 Sales and distribution expenses590,584,957.47605,463,325.71 General and administrative expenses562,417,399.25494,841,668.55 Research and development expense431,483,716.06478,014,854.10 Finance expenses1,516,848,723.801,498,828,444.69
Including: Interest expenses1,650,075,404.491,720,741,207.21 Interest income213,994,280.22159,096,591.34 Loss on impairment of assets-83,464,107.59150,455,669.97 Credit impairment loss62,440,283.34Plus: Other income38,831,290.6459,672,276.88 Investment income (“-” denotes loss)-9,467,172.97152,314,068.88Including: Investment income from associates and joint ventures-9,467,172.97-17,153,503.00 Gain on change in fair value (“-” denotes loss)-1,883,064.80-117,973,841.55 Gain on disposal of assets (“-” denotes loss)22,823,551.43-2,210,048.63III. Operating profit (“-” denotes loss)430,055,400.792,026,138,401.61Plus: Non-operating income237,472,592.97191,632,557.35Less: Non-operating expenses5,050,128.19446,221.32IV. Total profit (“-” denotes total loss)662,477,865.572,217,324,737.64Less: Income tax expenses125,877,819.62434,202,112.50V. Net profit (“-” denotes net loss)536,600,045.951,783,122,625.14(I) Classification according to the continuity of operation
1. Net profit from continuing operations
(“-” denotes net loss)536,600,045.951,783,122,625.14(II) Classification according to ownership
1. Net profit attributable to shareholders
of the Company509,795,572.291,784,631,025.31
2. Profit or loss of minority interest26,804,473.66-1,508,400.17VI. Net other comprehensive income after tax-16,016,688.20-103,234,110.38
Net other comprehensive income after tax attributable to shareholders of the Company-16,016,688.20-103,234,110.38(I) Other comprehensive income that cannot be reclassified to profit and loss in subsequent periods(II) Other comprehensive income that will be reclassified to profit and loss in subsequent periods-16,016,688.20-103,234,110.38
1. Exchange differences on translation
of foreign operations-16,016,688.20-103,234,110.38
2. Others
INTERIM REPORT 2019
X Financial Report
Item
Amount for thefirst half of 2019
Amount for thefirst half of 2018VII. Total comprehensive income520,583,357.751,679,888,514.76 Total comprehensive income attributable to shareholders of the Company493,778,884.091,681,396,914.93 Total comprehensive income attributable to minority interest26,804,473.66-1,508,400.17IIX. Earnings per share:
(I) Basic earnings per share0.0130.36(II) Diluted earnings per share0.0130.36Legal Representative:Financial controller:Head of the financial department:
Chen HongguoDong LianmingZhang Bo
II. Financial Statements (Cont’d)
3. Consolidated Income Statement (Cont
’d)
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
II. Financial Statements (Cont’d)
4. Income statement of the Company
Unit: RMBItem
Amount for thefirst half of 2019
Amount for thefirst half of 2018I. Revenue2,696,012,416.102,816,294,485.82
Less: Operating costs2,103,287,151.641,974,361,613.08 Taxes and surcharges22,384,520.7844,570,024.17 Sales and distribution expenses95,933,113.1690,052,325.82 General and administrative expenses160,401,795.91140,442,801.05 Research and development expense122,265,471.50112,935,318.57 Finance expenses851,438,574.25450,292,646.56 Including: Interest expenses1,297,180,410.461,213,666,209.80
Interest income524,005,473.68838,254,501.87 Loss on impairment of assets Credit impairment loss844,738.21-3,263,078.84Plus: Other income2,180,872.362,170,587.30 Investment income (“-” denotes loss)1,010,553,143.57151,671,872.91 Including: Investment income from associates and joint ventures-12,799,856.43-4,078,127.09 Gain on change in fair value (“-” denotes loss)-94,000,000.00 Gain on disposal of assets (“-” denotes loss)22,416,169.42-1,404,490.25II. Operating profit (“-” denotes loss)374,607,236.0065,340,805.37Plus: Non-operating income77,943,339.00159,134,238.55Less: Non-operating expenses4,195,926.11III. Total profit (“-” denotes total loss)448,354,648.89224,475,043.92Less: Income tax expenses-96,575,704.7326,570,945.21IV. Net profit (“-” denotes net loss)544,930,353.62197,904,098.71
(1) Net profit from continuing operations
(“-” denotes net loss)544,930,353.62197,904,098.71
(2) Net profit from discontinued operations
(“-” denotes net loss)V. Net other comprehensive income after taxVI. Total comprehensive income544,930,353.62197,904,098.71
Legal Representative:Financial controller:Head of the financial department:
Chen HongguoDong LianmingZhang Bo
INTERIM REPORT 2019
X Financial Report
II. Financial Statements (Cont’d)
5. Consolidated cash flow statement
Unit: RMBItem
Amount for thefirst half of 2019
Amount for thefirst half of 2018I. Cash flows from operating activities:
Cash received from sales of goods and rendering of services14,748,713,123.7014,209,807,106.29 Tax rebates received660,483.854,906,195.67 Cash received relating to other operating activities2,298,196,240.972,560,132,218.85Subtotal of cash inflows from operating activities17,047,569,848.5216,774,845,520.81 Cash paid for goods and services11,576,281,103.399,303,280,725.88 Cash paid to and for employees674,527,204.40578,298,920.80 Payments of taxes and surcharges1,096,901,907.86876,814,512.36 Cash paid relating to other operating activities1,000,088,741.181,271,413,440.86Subtotal of cash outflows from operating activities14,347,798,956.8312,029,807,599.90Net cash flows from operating activities2,699,770,891.694,745,037,920.91II. Cash flows from investing activities:
Cash received from investments2,350,000,000.00 Cash received from investment income171,500,000.00Net cash received from disposal of fixed assets, intangible assets and other long-term assets111,235,000.00150,077.55Net cash received from disposal of subsidiaries and other business units19,610,260.70 Cash received relating to other investing activities11,194,100.00Subtotal of cash inflows from investing activities111,235,000.002,552,454,438.25 Cash paid for purchase of fixed assets, intangible assets and other long-term assets376,939,086.061,609,046,327.99 Cash paid on investments1,639,194,479.241,311,172,596.96 Net increase in pledged loans Net cash paid for acquiring subsidiaries and other business units Cash paid relating to other investing activities189,628,400.00103,042,210.54Subtotal of cash outflows from investing activities2,205,761,965.303,023,261,135.49Net cash flows from investing activities-2,094,526,965.30-470,806,697.24
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
Item
Amount for thefirst half of 2019
Amount for thefirst half of 2018III. Cash flows from financing activities:
Cash received from investments Including: Cash received from by subsidiaries from minority investment Cash received from borrowings22,550,704,467.7723,960,924,414.55 Cash received from issuance of bonds Cash received relating to other financing activities3,479,693,527.068,940,587,508.90Subtotal of cash inflows from financing activities26,030,397,994.8332,901,511,923.45 Cash repayments of amounts borrowed18,763,676,782.1519,647,186,258.44 Cash paid for dividend and profit distribution or interest payment1,591,133,614.291,331,735,531.11 Including: Dividend and profit paid by subsidiaries to minority shareholders Cash paid relating to other financing activities6,456,564,308.4315,500,213,039.33Subtotal of cash outflows from financing activities26,811,374,704.8736,479,134,828.88Net cash flows from financing activities-780,976,710.04-3,577,622,905.43IV. Effect of foreign exchange rate changes on cash and cash equivalents-196,762,227.5029,968,597.03V. Net increase in cash and cash equivalents-372,495,011.15726,576,915.27
Plus: Balance of cash and cash equivalents as at the beginning of the period2,381,558,242.522,804,408,374.46VII. Balance of cash and cash equivalents as at the end of the period2,009,063,231.373,530,985,289.73
Legal Representative:Financial controller:Head of the financial department:
Chen HongguoDong LianmingZhang Bo
II. Financial Statements (Cont’d)
5. Consolidated cash flow statement (Cont
’d)
INTERIM REPORT 2019
X Financial Report
II. Financial Statements (Cont’d)
6. Cash flow statement of the Company
Unit: RMBItem
Amount for thefirst half of 2019
Amount for thefirst half of 2018
1. Cash flows from operating activities:
Cash received from sales of goods and rendering of services4,975,401,290.022,262,576,453.26 Tax rebates received– Cash received relating to other operating activities974,266,183.30997,388,740.42Subtotal of cash inflows from operating activities5,949,667,473.323,259,965,193.68 Cash paid for goods and services949,039,632.391,005,422,983.37 Cash paid to and for employees232,441,602.15203,769,186.38 Payments of taxes and surcharges85,040,472.23298,790,554.29 Cash paid relating to other operating activities643,575,724.57778,975,073.31Subtotal of cash outflows from operating activities1,910,097,431.342,286,957,797.35Net cash flows from operating activities4,039,570,041.98973,007,396.33II. Cash flows from investing activities:
Cash received from investments2,380,000,000.00 Cash received from investment income171,500,000.00 Net cash received from disposal of fixed assets, intangible assets and other long-term assets55,735,000.00 Net cash received from disposal of subsidiaries and other business units Cash received relating to other investing activitiesSubtotal of cash inflows from investing activities55,735,000.002,551,500,000.00 Cash paid for purchase of fixed assets, intangible assets and other long-term assets17,933,778.7826,375,996.36 Cash paid on investments1,147,500,000.001,361,714,807.50 Net cash paid for acquiring subsidiaries and other business units Cash paid relating to other investing activities39,500,000.00Subtotal of cash outflows from investing activities1,204,933,778.781,388,090,803.86Net cash flows from investing activities-1,149,198,778.781,163,409,196.14
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
Item
Amount for thefirst half of 2019
Amount for thefirst half of 2018III. Cash flows from financing activities:
Cash received from investments Cash received from borrowings6,360,366,283.777,562,143,316.17 Cash received from issuance of bonds Cash received relating to other financing activities1,997,263,889.008,204,965,097.95Subtotal of cash inflows from financing activities8,357,630,172.7715,767,108,414.12 Cash repayments of amounts borrowed5,237,801,785.716,735,658,936.22 Cash paid for dividend and profit distribution or interest payment774,396,836.69716,590,206.19 Cash paid relating to other financing activities5,593,391,883.9910,373,957,627.23Subtotal of cash outflows from financing activities11,605,590,506.3917,826,206,769.64Net cash flows from financing activities-3,247,960,333.62-2,059,098,355.52IV. Effect of foreign exchange rate changes on cash and cash equivalents14,127.626,160,731.67V. Net increase in cash and cash equivalents-357,574,942.8083,478,968.62
Plus: Balance of cash and cash equivalents as at the beginning of the period607,805,063.021,020,262,069.85VI. Balance of cash and cash equivalents as at the end of the period250,230,120.221,103,741,038.47
Legal Representative:Financial controller:Head of the financial department:
Chen HongguoDong LianmingZhang Bo
II. Financial Statements (Cont’d)
6. Cash flow statement of the Company (Cont
’d)
INTERIM REPORT 2019
X Financial Report
II. Financial Statements (Cont
’d)
7. Consolidated statement of changes in owners
’ equity
Amount for the period
Unit: RMB
ItemAmount for the first half of 2019
Equity attributable to owners of the Company
Other equity instruments
Share capitalPreference
sharesPerpetual bondsOthers
Capital
reservesLess:
Treasury shares
Othercomprehensive
incomeSpecial reserves
Surplus
reservesGeneral risk
provisionsRetained profitOthersSubtotalMinority interest
Total
owners
’
equity
I. Balance as at the end of the prior year2,904,608,200.004,477,500,000.002,988,000,000.005,091,449,915.14-736,520,181.013,257,998.471,148,888,912.1164,123,919.239,107,422,690.8525,048,731,454.79822,959,773.3025,871,691,228.09 Plus: Changes in accounting policies
Corrections of previous errorsBusiness combination under common controlOthers
II. Balance as at the beginning of the year2,904,608,200.004,477,500,000.002,988,000,000.005,091,449,915.14-736,520,181.013,257,998.471,148,888,912.1164,123,919.239,107,422,690.8525,048,731,454.79822,959,773.3025,871,691,228.09III. Changes in the period (“-” denotes decrease)-16,016,688.20743,428.65-564,480,163.23-579,753,422.7817,591,973.66-562,161,449.12
(I) Total comprehensive income-16,016,688.20509,795,572.29493,778,884.0926,804,473.66520,583,357.75(II) Capital paid in and reduced by owners
1. Ordinary shares paid by shareholders
2. Capital paid by holders of
other equity instruments
3. Amount of share-based payments
recognised in owners’ equity
4. Others
(III) Profit distribution-1,074,275,735.52-1,074,275,735.52-9,212,500.00-1,083,488,235.52
1. Transfer to surplus reserves
2. Transfer to general risk provision
3. Distribution to owners (or shareholders)-1,074,275,735.52-1,074,275,735.52-9,212,500.00-1,083,488,235.52
4. Others
(IV) Transfer of owners’ equity
1. Capital (or share capital) created
on capital reserve
(V) Special reserves743,428.65743,428.65743,428.65
1. Withdrawal1,039,765.051,039,765.051,039,765.05
2. Used296,336.40296,336.40296,336.40
(VI) Others
IV. Balance as at the end of the period2,904,608,200.004,477,500,000.002,988,000,000.005,091,449,915.14-752,536,869.214,001,427.121,148,888,912.1164,123,919.238,542,942,527.6224,468,978,032.01840,551,746.9625,309,529,778.97
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
II. Financial Statements (Cont
’d)
7. Consolidated statement of changes in owners
’ equity (Cont
’d)
Amounts for the prior period
Unit: RMB
ItemAmount for the first half of 2018
Equity attributable to owners of the Company
Other equity instruments
Share capitalPreference
sharesPerpetual bondsOthersCapital reserves
Less:
Treasury shares
Othercomprehensive
incomeSpecial reservesSurplus reserves
General risk
provisionsRetained profitOthersSubtotalMinority interest
Total
owners
’
equity
I. Balance as at the end of the prior year1,936,405,467.004,477,500,000.005,570,800,000.006,149,257,784.90-354,165,127.801,132,116,106.408,866,614,844.4027,778,529,074.902,495,649,464.0430,274,178,538.94 Plus: Changes in accounting policiesCorrections of previous errorsBusiness combination under
common controlOthers
II. Balance as at the beginning of the year1,936,405,467.004,477,500,000.005,570,800,000.006,149,257,784.90-354,165,127.801,132,116,106.408,866,614,844.4027,778,529,074.902,495,649,464.0430,274,178,538.94III. Changes in the period (“-” denotes decrease)968,202,733.00-1,026,305,329.81-103,234,110.3859,971,738.31-101,364,968.88-1,204,921,889.24-1,306,286,858.12
(I) Total comprehensive income-103,234,110.381,784,631,025.311,681,396,914.93-1,508,400.171,679,888,514.76(II) Capital paid in and reduced by owners-58,102,596.81-58,102,596.81-1,203,413,489.07-1,261,516,085.88
1. Ordinary shares paid by shareholders-58,102,596.81-58,102,596.81-1,203,413,489.07-1,261,516,085.88
2. Capital paid by holders of
other equity instruments
3. Amount of share-based payments
recognised in owners’ equity
4. Others
(III) Profit distribution-1,724,659,287.00-1,724,659,287.00-1,724,659,287.00
1. Transfer to surplus reserves
2. Transfer to general risk provision
3. Distribution to owners (or shareholders)
4. Others-1,724,659,287.00-1,724,659,287.00-1,724,659,287.00
(IV) Transfer of owners’ equity968,202,733.00-968,202,733.00
1. Capital (or share capital) created
on capital reserve968,202,733.00–-968,202,733.00–
(V) Special reserves
1. Withdrawal
2. Used
(VI) Others
IV. Balance as at the end of the period2,904,608,200.004,477,500,000.005,570,800,000.005,122,952,455.09-457,399,238.181,132,116,106.408,926,586,582.7127,677,164,106.021,290,727,574.8028,967,891,680.82
Legal Representative:Financial controller:Head of the financial department:
Chen HongguoDong LianmingZhang Bo
INTERIM REPORT 2019
X Financial Report
II. Financial Statements (Cont
’d)
8. Statement of changes in owners
’ equity of the Company
Amounts for the period
Unit: RMB
ItemAmount for the first half of 2019
Other equity instruments
Share capitalPreference
sharesPerpetual
bondsOthers
Capital
reserves
Less:
Treasury shares
Other
comprehensive
incomeSpecial reservesSurplus reservesRetained profitOthers
Total
owners
’
equity
I. Balance as at the end of the prior year2,904,608,200.004,477,500,000.002,988,000,000.004,953,557,435.191,136,699,330.201,629,209,489.7218,089,574,455.11 Plus: Changes in accounting policiesCorrections of previous errorsOthers
II. Balance as at the beginning of the year2,904,608,200.004,477,500,000.002,988,000,000.004,953,557,435.191,136,699,330.201,629,209,489.7218,089,574,455.11III. Changes in the period (“-” denotes decrease)-529,345,381.90-529,345,381.90
(I) Total comprehensive income544,930,353.62544,930,353.62(II) Capital paid in and reduced by owners(III) Profit distribution-1,074,275,735.52-1,074,275,735.52
1. Transfer to surplus reserves
2. Distribution to owners
(or shareholders)-1,074,275,735.52-1,074,275,735.52
3. Others
(IV) Transfer of owners’ equity
1. Capital (or share capital)
created on capital reserve
(V) Special reserves
1. Withdrawal
2. Used
(VI) Others
IV. Balance as at the end of the period2,904,608,200.004,477,500,000.002,988,000,000.004,953,557,435.191,136,699,330.201,099,864,107.8217,560,229,073.21
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
II. Financial Statements (Cont
’d)
8. Statement of changes in owners
’ equity of the Company (Cont
’d)
Amounts for the prior period
Unit: RMB
ItemAmount for the first half of 2018
Other equity instruments
Share capitalPreferencesharesPerpetual
bondsOthers
Capital
reserves
Less:
Treasury
sharesOthercomprehensive
incomeSpecial
reservesSurplus
reservesRetained profitOthers
Total
owners
’
equity
I. Balance as at the end of the prior year1,936,405,467.004,477,500,000.005,570,800,000.005,938,960,168.191,119,926,524.493,674,882,253.1122,718,474,412.79 Plus: Changes in accounting policies
Corrections of previous errorsOthers-8,503,727.68-8,503,727.68
II. Balance as at the beginning of the year1,936,405,467.004,477,500,000.005,570,800,000.005,938,960,168.191,119,926,524.493,666,378,525.4322,709,970,685.11III. Changes in the period (“-” denotes decrease)968,202,733.00-968,202,733.00-1,526,755,188.29-1,526,755,188.29
(I) Total comprehensive income197,904,098.71197,904,098.71(II) Capital paid in and reduced by owners(III) Profit distribution-1,724,659,287.00-1,724,659,287.00
1. Transfer to surplus reserves
2. Distribution to owners
(or shareholders)-1,724,659,287.00-1,724,659,287.00
3. Others
(IV) Transfer of owners’ equity968,202,733.00-968,202,733.00
1. Capital (or share capital)
created on capital reserve968,202,733.00-968,202,733.00
(V) Special reserves
1. Withdrawal
2. Used
(VI) Others
IV. Balance as at the end of the period2,904,608,200.004,477,500,000.005,570,800,000.004,970,757,435.191,119,926,524.492,139,623,337.1421,183,215,496.82
Legal Representative:Financial controller:Head of the financial department:
Chen HongguoDong LianmingZhang Bo
INTERIM REPORT 2019
X Financial Report
III. General Information of the CompanyShandong 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, ShandongProvince.The Company and its subsidiaries are principally engaged in, among other things, processing and sale of paper products(including machine-made paper and paper board), paper making raw materials and machinery; generation and sale of electricpower and thermal power; forestry, saplings growing, processing and sale of timber; manufacturing, processing and sale ofwood products; and manufacturing and sale of laminated boards and fortified wooden floorboards, hotel service, equipmentfinancial and operating leasing, magnesite mining, processing and sales of talc.The financial statements were considered and approved by the board of directors of the Company (the“Board”) on 15 August2019.Subsidiaries of the Company included in the scope of consolidation for the reporting period totalled 67. For details, pleaserefer to this Note IX“Equity in other entities”. The scope of consolidation of the Company during the year had one companyincluded compared to the prior year. For details, please refer to this Note VIII“Changes in the scope of consolidation”.
IV. Basis of Preparation of the Financial Statements
1. Basis of preparation
The Company’s financial statements are prepared on a going concern and based on actual transactions and events,in accordance with the Accounting Standards for Business Enterprises-Basic Standards promulgated by the Ministryof Finance (Order of Ministry of Finance No. 33, as amended by Order of Ministry of Finance No. 76) and 42 specificaccounting standards as promulgated and amended on and after 15 February 2006, the application guidelines of theAccounting Standards for Business Enterprises, interpretations and other related rules of the Accounting Standards forBusiness Enterprises (hereinafter referred to as“ASBEs”), and the disclosure requirements of the“Regulation on thePreparation of Information Disclosures of Companies Issuing Public Shares, No. 15: General Requirements for FinancialReports” (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. Exceptfor certain financial instruments, the financial statements are prepared under the historical cost convention. Held-for-sale non-current assets are measured at the lower of the difference of fair value less expected expenses or the originalcarrying amount when meeting the conditions of holding for sale. In the event that depreciation of assets occurs, aprovision for impairment is made accordingly in accordance with the relevant regulations.
2. Going concern
No facts or circumstances comprise a material uncertainty about the Company’s going concern basis within 12 monthssince the end of the reporting period.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates
Specific accounting policies and accounting estimates are indicated as follows:
The Company and its subsidiaries are principally engaged in machine-made paper, electricity and heat, construction materials,paper making chemical products, financial leasing, hotel management and other operations. The Company and its subsidiariesformulated certain specific accounting policies and accounting estimates for the transactions and matters such as revenuerecognition, determination of performance progress and R&D expenses based on their actual production and operationcharacteristics pursuant to the requirements under the relevant accounting standards for business enterprises. For details,please refer“Revenue”under this Note. For the critical accounting judgments and estimates made by the management,please refer to“Change of Significant accounting policies and accounting estimates” under this Note.
1. Statement of compliance with the Accounting Standards for Business Enterprises
The financial statements have been prepared by the Company in conformity with the ASBEs, which truly and fullyreflect the financial position of the Company as at 31 December 2018 and relevant information such as the operatingresults and cash flows for 2018. In addition, the financial statements of the Company also comply with, in all materialrespects, the disclosure requirements of the“Regulation on the Preparation of Information Disclosures of CompaniesIssuing Public Shares, No. 15: General Requirements for Financial Reports”revised by the China Securities RegulatoryCommission 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 toreporting periods that are shorter than a full accounting year. The accounting year of the Company is from 1 January to31 December of each calendar year.
3. Operating cycle
Ordinary operating cycle refers to the period from acquisition of assets used for processing by the Company untiltheir realisation in cash or cash equivalents. The operating cycle of the Company lasts for 12 months, and acts as anindicator for classification of liquidity of assets and liabilities.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 andsale. Their ordinary operating cycle lasts for over 1 year.
4. Functional currency
The Company and its domestic subsidiaries recognise RMB as their functional currency according to the primaryeconomic environment in which they operate. The functional currency of the Company and its domestic subsidiaries isRenminbi (“RMB”). Overseas subsidiaries of the Company recognise U.S. dollar (“USD”or“US$”), Japanese yen (“JPY”),Euro (“EUR”) and South Korean Won (“KRW”) as their respective functional currency according to the general economicenvironment in which these subsidiaries operate. The Company prepares its financial statements in RMB.
INTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
5. Accounting treatment of business combinations under common control and not under common control
Business combinations refer to the transactions or events in which two or more separate enterprises merged as a singlereporting entity. Business combinations are divided into business combinations under common control and not undercommon control.
(1) Business combination under common control
A business combination involving enterprises under common control is a business combination in which all of thecombining enterprises are ultimately controlled by the same party or parties before and after the combination,and that control is not transitory. The party that, on the combination date, obtains control of another enterpriseparticipating in the combination is the absorbing party, while that other enterprise participating in the combinationis a party being absorbed. The combination date is the date on which the absorbing party effectively obtainscontrol of the party being absorbed.Assets and liabilities obtained by the absorbing party are measured at their carrying amount at the combinationdate as recorded by the party being merged. The difference between the carrying amount of the net assetsobtained and the carrying amount of the consideration paid for the combination (or the aggregate nominal value ofshares issued as consideration) is charged to the capital reserve (share capital premium). If the capital reserve (sharecapital premium) is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings.Cost incurred by the absorbing party that is directly attributable to the business combination shall be charged toprofit or loss in the period in which they are incurred.
(2) Business combination not under common control
A business combination not involving enterprises under common control is a business combination in whichall of the combining enterprises are not ultimately controlled by the same party or parties before and after thecombination. For a business combination not involving enterprises under common control, the party that, on theacquisition date, obtains control of another enterprise participating in the combination is the acquirer, while thatother enterprise participating in the combination is the acquiree. The acquisition date is the date on which theacquirer effectively obtains control of the acquiree.For business combination involving entities not under common control, the cost of a business combination is theaggregate of the fair values, on the date of acquisition, of assets given, liabilities incurred or assumed, and equityinstruments issued by the acquirer to be paid by the acquirer, in exchange for control of the acquire plus agencyfee such as audit, legal service and evaluation consultation and other management fees charged to the profit orloss for the period when incurred. Transaction cost attributable to equity or debt securities issued by the acquireras consideration is included in the initial costs. Contingent consideration involved is charged to the combinationcost at its fair value on the acquisition date, in the event that adjustment on the contingent consideration isrequired as a result of new or additional evidence in relation to circumstances existed on the acquisition dateemerges within 12 months from the acquisition date, the combination goodwill shall also be adjusted. Thecombination cost incurred by the acquirer and the identifiable net assets acquired from the combination aremeasured at their fair values on the acquisition date. Where the cost of a business combination exceeds theacquirer’s interest in the fair value of the acquiree’s identifiable net assets on the acquisition date, the differenceis recognised as goodwill. Where the cost of a business combination is less than the acquirer’s interest in thefair value of the acquiree’s identifiable net assets, the acquirer shall first reassess the measurement of the fairvalue of the acquiree’s identifiable assets, liabilities and contingent liabilities and the measurement of the cost ofcombination. If after such reassessment the cost of combination is still less than the acquirer’s interest in the fairvalue of the acquiree’s identifiable net assets, the difference is charged to profit or loss for the period.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
5. Accounting treatment of business combinations under common control and not under common control
(Cont’d)
(2) Business combination not under common control (Cont
’d)
In relation to the deductible temporary difference acquired from the acquiree, which was not recognised asdeferred tax assets due to non-fulfilment of the recognition criteria at the date of the acquisition, if new orfurther information that is obtained within 12 months after the acquisition date indicates that related conditionsat the acquisition date already existed, and that the implementation of the economic benefits brought by thedeductible temporary difference of the acquiree can be expected, the relevant deferred tax assets shall berecognised and goodwill shall be deducted. When the amount of goodwill is less than the deferred tax assets thatshall be recognised, the difference shall be recognised in the profit or loss of the period. Except for the abovecircumstances, deferred tax assets in relation to business combination are recognised in the profit or loss of theperiod.For combination of business not under common control achieved by several transactions, these severaltransactions will be judged whether they belong to“transactions in a basket”in accordance with the judgementstandards on“transactions in a basket”as set out in the Notice of the Ministry of Finance on Issuing AccountingStandards for Business Enterprises Interpretation No. 5 (Cai Kuai [2012] No. 19) and Rule of 51 to“AccountingStandard for Business Enterprises No. 33 – Consolidated Financial Statements”. If they belong to“transactions ina basket”, they are accounted for with reference to the descriptions as set out in the previous paragraphs of thissection and Note V. 16“Long-term equity investments”, and if they do not belong to“transactions in a basket”,they are accounted for in separate financial statements and consolidated financial reports:
In separate financial statements, the initial equity investment cost is the aggregate of the carrying amount of theequity investment in the acquiree held prior to the acquisition date and the investment cost newly added as at theacquisition date. In respect of any other comprehensive income attributable to the equity interest in the acquireeprior to the acquisition date, other comprehensive income is accounted for on the same accounting treatmentas direct disposal of relevant asset or liability by the acquiree at the time of disposal (i.e. to be transferred toinvestment income for the period, except for the changes arising from remeasuring net assets or net liabilities ofdefined 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 isremeasured at fair value as at the acquisition date, and the difference between the fair value and the carryingamount is recognised as investment income for the current period. In respect of any other comprehensive incomeattributable to the equity interest in the acquiree held prior to the acquisition date, other comprehensive income isaccounted for on the same accounting treatment as direct disposal of relevant asset or liability by the acquiree (i.e.to be transferred to investment income at the acquisition date, except for the changes arising from remeasuringnet 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 statements
The scope of consolidation of the consolidated financial statements is determined on the basis of control. Theterm“control”refers to the fact that the Company has power over the investee and is entitled to variable returnsfrom its involvement with the investee and the ability to use its power over the investee to affect the amount ofthose returns. The scope of consolidation includes the Company and all of its subsidiaries. A subsidiary is anentity controlled by the Company.The Company will conduct reassessment in the event there are changes in actual condition and situation causingchanges in relevant elements involved in the definition of control above.
INTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
6. Preparation of consolidated financial statements (Cont
’d)
(2) Basis for preparation of the consolidated financial statements
Subsidiaries are consolidated from the date on which the Company obtains net assets and the effective control ofdecision making of production and operation and are deconsolidated from the date that such control ceases. Fordisposal of subsidiaries, the operating results and cash flows of such subsidiaries before the date of disposal areproperly included into the consolidated income statement and consolidated cash flow statements; for disposal ofsubsidiaries during the reporting period, no adjustment shall be made to the opening balance of the consolidatedbalance sheet. For those subsidiaries acquired through business combination not under common control, theoperating results and cash flows after the acquisition date have been properly included in the consolidated incomestatements and consolidated cash flow statements. No adjustments shall be made to the opening balance of theconsolidated balance sheet and the comparative consolidated financial statements amount. For those subsidiariesacquired through business combinations under common control, the operating results and cash flows from thebeginning of the consolidation period to the consolidation date are also presented in the consolidated incomestatement and the consolidated cash flow statements. The comparative amounts presented in the consolidatedfinancial statements are also adjusted accordingly.The financial statements of the subsidiaries are adjusted in accordance with the accounting policies andaccounting period of the Company in the preparation of the consolidated financial statements, where theaccounting policies and the accounting periods are inconsistent between the Company and the subsidiaries. Foracquisition of subsidiaries arising from merger of entities not under same control, the financial statements of thesubsidiaries will be adjusted according to the fair value of the identifiable net assets at the acquisition date.All intra-company significant balances, transactions and unrealised profit are eliminated in the consolidatedfinancial statements.The shareholders’equity and the portion of the profit or loss for the period of the subsidiaries that are notattributable to the Company are presented under shareholders’equity and net profit in the consolidated financialstatements as minority interests and net profit of minority interest respectively. The portion of net profit or lossof subsidiaries for the period attributable to minority interest is presented in the consolidated income statementunder the“profit or loss of minority interest”. When the amount of loss attributable to the minority shareholders ofa subsidiary exceeds the minority shareholders’ portion of the opening balance of owners’equity of the subsidiary,the excess amount shall be allocated against minority interest.For the loss of control over a subsidiary due to disposal of a portion of the equity investment or other reasons,the remaining equity is measured at fair value on the date when the control is lost. The difference arising from thesum of consideration received for disposal of equity interest and the fair value of remaining equity interest overthe share of net assets of the former subsidiary calculated continuously since the purchase date based on theshareholding percentage before disposal are recognised as investment income in the period when the control islost. Other comprehensive income related to equity investment in the subsidiary is accounted for on the sameaccounting treatment as direct disposal of relevant asset or liability by the acquiree at the time when the controlis lost (i.e. to be transferred to investment income, except for the changes arising from remeasuring net assetsor net liabilities of defined benefit plan of the subsidiary using the equity method). The remaining equity interestsare measured subsequently according to“Accounting Standard for Business Enterprises No. 2 – Long-termEquity Investments”or“Accounting Standard for Business Enterprises No. 22 – Recognition and Measurement ofFinancial Instruments”. See Note V. 16“Long-term equity investments”or Note V. 10“Financial instruments”fordetails.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
6. Preparation of consolidated financial statements (Cont
’d)
(2) Basis for preparation of the consolidated financial statements (Cont
’d)
When the Company disposes of equity investment in a subsidiary by a stage-up approach with severaltransactions until the control over the subsidiary is lost, it shall determine whether these several transactionsrelated to the disposal of equity investment in a subsidiary until the control over the subsidiary is lost belongto“transactions in a basket”. Usually, these several transactions related to the disposal of equity investment ina subsidiary are accounted for as transactions in a basket when the terms, conditions and economic impactsof these several transactions meet the following one or more conditions: these transactions are enteredinto at the same time or after considering their impacts on each other; these transactions as a whole canreach complete business results; the occurrence of a transaction depends on at least the occurrence ofanother transaction; an individual transaction is not deemed as economic, but is deemed as economic whenconsidered with other transactions. If they are not transactions in a basket, each of which are accounted for inaccordance with applicable rules in“partial disposal of long-term equity investment of a subsidiary without losingcontrol over a subsidiary”separately, and“the control over a subsidiary is lost due to partial disposal of equityinvestment or other reasons”(see the preceding paragraph). When several transactions related to the disposalof equity investment in a subsidiary until the control over the subsidiary is lost belong to transactions in a basket,each of which is accounted for as disposal of a subsidiary with a transaction until the control over a subsidiaryis lost; however, the different between the amount of disposal prior to the loss of control and the net assetsof a subsidiary attributable to the disposal investment shall be recognised as other comprehensive income inconsolidated financial statements and transferred to profit or loss at the time when the control is lost.
7. Classification of joint arrangements and accounting treatment for joint ventures
A joint arrangement refers to an arrangement of two or more parties have joint control. In accordance with theCompany’s rights and obligations under a joint arrangement, the Company classifies joint arrangements into: jointventures and joint operations. Joint operations refer to a joint arrangement during which the Company is entitledto relevant assets and obligations of this arrangement. Joint ventures refer to a joint arrangement during which theCompany 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 withaccounting policies as set out in Note V. 16 (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, andrecognise assets held and obligations assumed jointly by the Company in appropriation to the share of the Company;recognise revenue from disposal of the share of joint operations of the Company; recognise fees solely occurred byCompany and recognise fees from joint operations in appropriation to the share of the Company.When the Company, as a joint venture, invests or sells assets (the assets does not constitute a business, the samebelow) to or purchase assets from joint operations, the Company shall only recognise the part of profit or lost fromthis transaction attributable to other parties of joint operations before these assets are sold to the third party. Ifthe occurrence of these assets meet the impairment loss of asset as set out in“Accounting Standard for BusinessEnterprises No. 8 – Asset Impairment”, the Company shall recognise the full amount of this loss in relation to theCompany invests in or sells assets to joint operations; the Company recognise the loss according to the Company’sshare 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 andshort-term (normally fall due within three months from the date of acquisition) and highly liquid investments held theCompany which are readily convertible into known amount of cash and which are subject to insignificant risk of valuechange.
INTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
9. Foreign currency operations and translation of statements denominated in foreign currency
(1) Basis for translation of foreign currency transactions
The foreign currency transactions of the Company, when initially recognised, are translated into the functionalcurrency at the prevailing spot exchange rate on the date of exchange, i.e. usually the middle price of RMBexchange rate published by the People’s Bank of China on that date in general and the same hereinafter, whilethe foreign currency exchange operations and transactions of the Company in connection with foreign currencyexchange shall be translated into the functional currency at the exchange rate actually adopted.
(2) Basis for translation of foreign currency monetary items and foreign currency non-monetary items
On the balance sheet date, foreign currency monetary items shall be translated at the spot exchange rate on thebalance sheet date. All differences are included in the profit or loss in the period, except for: the differencesarising from foreign currency borrowings related to the acquisition or construction of fixed assets that are qualifiedfor capitalisation will be accounted for according to the principle of capitalisation; and exchange differencearising from change in balance of carrying amount other than amortised cost of available for sale foreign monetaryitems will be included in other comprehensive income.Exchange differences arising from change in exchange rate where the preparation of consolidated financialstatements relates to foreign operations and foreign currency monetary items materially constitute net investmentin foreign operations shall be recorded into“other comprehensive income”; disposal of foreign operations shall beincluded into profits and losses on disposal in the current period.The foreign currency non-monetary items measured at historical cost shall still be measured by the functionalcurrency translated at the spot exchange rate on the date of the transaction. Foreign currency non-monetaryitems measured at fair value are translated at the spot exchange rate on the date of determination of the fair value.The difference between the amounts of the functional currency before and after the translation will be treated aschanges in fair value (including changes in foreign exchange rates) and recognised in profit or loss for the periodor recognised as other comprehensive income.
(3) Basis for translation of foreign currency financial statements
Exchange differences arising from change in exchange rate where the preparation of consolidated financialstatements relates to foreign operations and foreign currency monetary items materially constitute net investmentin foreign operations shall be recorded into“other comprehensive income”under“translation reserve”; disposal offoreign operations shall be included into profits and losses on disposal in the current period.The financial statements denominated in foreign currency of a foreign operation are translated to RMB incompliance with the following requirements: assets and liabilities on the balance sheet are translated at the spotexchange rate prevailing at the balance sheet date; owner’s equity items except for“retained profit”are translatedat the spot exchange rates at the dates on which such items arose; income and expenses items in the incomestatement are translated at the average exchange rate for the period in which the transaction occurred. Theretained profit brought forward are reported at the prior year’s closing balance; the retained profit as at the end ofthe year are presented after translated the profit appropriation items; differences between the aggregate of assetand liability items and owners’equity items are recognised as“translation differences arising on the translationof financial statements denominated in foreign currencies”in other comprehensive income. On disposal offoreign operations and loss of control, exchange differences arising from the translation of financial statementsdenominated in foreign currencies related to the disposed foreign operations which has been included in owners’
equity in the balance sheet, shall be transferred to profit or loss in whole or in proportionate share in the period inwhich the disposal took place.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
9. Foreign currency operations and translation of statements denominated in foreign currency (Cont
’d)
(3) Basis for translation of foreign currency financial statements (Cont
’d)Cash flow dominated in foreign currency or from foreign subsidiaries shall be translated at the average exchangerate for the period in which the transaction occurred. Effects arising from changes of exchange rate of cash shallbe 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 prioryear.On disposal of the entire owners’equity in a foreign operation of the Company, or upon a loss of control overa foreign operation due to disposal of certain equity investment or other reasons, the Company transfers theexchange differences arising on translation of financial statements of this foreign operation attributable to owners’
equity of parent company presented under owners’equity in the balance sheet, to profit or loss in the period inwhich the disposal took place.In case of partial disposal of equity investment or other reason that result in reduction in shareholding in aforeign operation without losing control over it, the proportionate share of exchange differences arising fromthe translation of financial statements will be attributable to minority interests and will not recognised in profitor loss. For partial disposals of equity interests in foreign operations which are associates or joint ventures, theproportionate share of the exchange differences arising from the translation of financial statements of foreignoperations 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.
(1) Classification, recognition and measurement of financial assets
The Company classifies the financial assets according to the business model for managing the financial assetsand characteristics of the contractual cash flows as follows: financial assets measured at amortised cost, financialassets measured at fair value through other comprehensive income, and financial assets measured at fair valuethrough profit or loss.Financial assets are measured at fair value upon initial recognition. For financial assets measured at fair valuethrough profit or loss, relevant transaction costs are directly recognised in profit or loss for the period. For othercategories of financial assets, relevant transaction costs are included in the amount initially recognised. Accountsreceivable or bills receivable arising from sales of goods or rendering services or without significant financingcomponent, are initially recognised based on the transaction price expected to be entitled by the Company. Financial assets measured at amortised cost
The Company’s business model for managing the financial assets measured at amortised cost is tocollect the contractual cash flows, and the contractual cash flow characteristics of such financial assetsare consistent with the basic lending arrangements. That is, the cash flows generated on a specific date,represent solely payment of the principal and interest on the outstanding principal amount. The Companysubsequently measures such financial assets at amortised cost using effective interest method, and thegains or losses from amortisation or impairment is recognised in profit or loss for the current period.
INTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont
’d)
(1) Classification, recognition and measurement of financial assets (Cont
’d) Financial assets measured at fair value through other comprehensive income
The Company’s business model for managing such financial assets is achieved both by collectingcontractual cash flows and selling of these assets. The contractual cash flow characteristics of such financialassets are consistent with the basic lending arrangements. Such financial assets are measured by theCompany at fair value through other comprehensive income, but the impairment losses or gains, exchangegains or losses, and interest income calculated by effective interest method are recognised in profit or lossfor the current period.In addition, the Company designates certain equity instruments not held for trading as financial assetsmeasured at fair value through other comprehensive income. The Company recognises the dividends relatedto such financial assets in profit or loss for the current period. Upon derecognition of such financial assets,the accumulated gains or losses previously included in other comprehensive income will be transferred fromother comprehensive income to retained earnings, and will not be included in profit or loss for the currentperiod. Financial assets measured at fair value through profit or lossThe Company classifies the financial assets other than those measured at amortised cost and measuredat fair value through other comprehensive as financial assets measured at fair value through profit orloss. In addition, upon initial recognition, the Company designates some financial assets as financialassets measured at fair value through profit or loss in order to eliminate or significantly reduce accountingmismatch. The Company subsequently measures such financial assets at fair value, and the changes in fairvalue are recognised in profit or loss for the current period.
(2) Classification, recognition and measurement of financial liabilities
Financial liabilities are classified as financial liabilities measured at fair value through profit or loss and otherfinancial liabilities at initial recognition. For financial liabilities measured at fair value through profit or loss, relevanttransaction costs are directly recognised in profit or loss for the period. For other financial liabilities, relevanttransaction costs are included in the amount initially recognised. Financial liabilities measured at fair value through profit or loss
Financial liabilities measured at fair value through profit or loss comprise held-for-trading financial liabilities(including derivatives under financial liabilities) and financial liabilities designated as measured at fair valuethrough profit or loss upon initial recognition.Held-for-trading financial liabilities (including derivatives under financial liabilities) are subsequentlymeasured at fair value, and the changes in fair value are recognised in profit or loss for the current period,except for those related to hedging accounting.The changes in fair value attributable to the changes in the Company’s own credit risk of the financialliabilities designated as measured at fair value through profit or loss are recognised in other comprehensiveincome, and the accumulated changes in fair value attributable to the changes in the Company’s owncredit risk which were recognised in other comprehensive income are transferred to retained earnings uponderecognition of such liabilities. The remaining changes in fair value are recognised in profit or loss forthe current period. In case that the above accounting treatment for the effect of changes in such financialliabilities’own credit risk would create, or enlarge, an accounting mismatch, the Company will recogniseall gains or losses (including the amount affected by the changes in the Company’s own credit risk) of suchfinancial liabilities in profit or loss for the current period.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont
’d)
(2) Classification, recognition and measurement of financial liabilities (Cont
’d) Other financial liabilitiesOther financial liabilities, except for financial liabilities arising from transfer of financial assets not satisfyingderecognition criteria or continue involvement of transferred financial assets and financial guaranteecontracts liability, are classified as financial liabilities measured at amortised cost and are subsequentlymeasured at amortised cost, and the gains or losses arising from derecognition or amortisation arerecognised in profit or loss for the current period.
(3) Recognition and measurement of transfers of financial asset
Financial asset that satisfied any of the following criteria shall be derecognised: the contract right to receivethe cash flows of the financial asset has terminated; the financial asset, along with substantially all the risk andreturn arising from the ownership of the financial asset, has been transferred to the transferee; and the financialasset has been transferred to the transferee, and the transferor has given up the control on such financial asset,though it does not assign maintain substantially all the risk and return arising from the ownership of the financialasset.When the entity does not either assign or maintain substantially all the risk and return arising from the ownershipof the financial asset and does not give up the control on such financial asset, to the extent of its continuousinvolvement in the financial asset, the entity recognises such financial asset and the relevant liability accordingly.The extent of the continuous involvement is the extent to which the entity exposes to changes in the value of suchfinancial assets.If all criteria of recognition of transfer of financial assets are satisfied, the difference between the carryingamount of the financial assets transferred and the sum of the consideration received from the transfer and theaccumulated changes in fair value originally included in other comprehensive income shall be recognised in theprofit or loss for the period.If a part of the financial assets is qualified for derecognition, the carrying amount of the financial asset is allocatedbetween the part that continues to be recognised and the part that qualifies for derecognition, based on the fairvalues of the respective parts. The difference between the following amounts is recognised in profit or loss for theperiod: the sum of the consideration received and the carrying amount of the part that qualifies for derecognitionand the aforementioned carrying amount.For financial assets that are sold or transferred with recourse or endorsement, the Company needs to determinewhether the risk and rewards of ownership of the financial asset have been substantially transferred. If the riskand rewards of ownership of the financial asset have been substantially transferred, the financial assets shall bederecognised. If the risk and rewards of ownership of the financial asset have been retained, the financial assetsshall not be derecognised. If the Company neither transfers nor retains substantially all the risks and rewards ofownership of the financial asset, the Company shall assess whether the control over the financial asset is retained,and the financial assets shall be accounting for according to the above paragraphs.
INTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
10. Financial instruments (Cont
’d)
(4) Derecognition of financial liabilities
Financial liabilities (or a part thereof) are derecognised only when the present obligation is discharged in full orin part. An agreement is entered between the Company (debtor) and a creditor to replace the original financialliabilities with new financial liabilities with substantially different terms, derecognise the original financialliabilities as well as recognise the new financial liabilities. In case that the Company makes substantial changesto the contractual terms of the original financial liabilities (or a part thereof), the original financial liabilities arederecognised, and the new financial liabilities are recognised in accordance with the revised terms.When financial liabilities (or a part thereof) are derecognised, the difference between the carrying amount of thefinancial liabilities derecognised and the consideration paid (including transferred non-cash assets or assumedfinancial liability) is recognised in profit or loss for the current period.
(5) Offset of financial assets and financial liabilities
If the Company owns the legitimate rights of offsetting the recognised financial assets and financial liabilities,which are enforceable currently, and the Company plans to realise the financial assets or to clear off the financialliabilities on a net amount basis or simultaneously, the net amount of financial assets and financial liabilities shallbe reported in the balance sheet upon offsetting. Otherwise, financial assets and financial liabilities are presentedseparately in the balance sheet without offsetting.
(6) Determination of fair values for financial assets and financial liabilities
The fair value refers to the price that will be received when selling an asset or the price to be paid to transfer aliability in an orderly transaction between market participants on the date of measurement. Financial instrumentsexist in an active market. Fair value is determined based on the quoted price in such market. An active marketrefers to where pricing is easily and regularly obtained from exchanges, brokers, industrial organisations andprice fixing service organisations, representing the actual price of a market transaction that takes place in a fairdeal. While financial instruments do not exist in an active market, the fair value is determined using valuationtechniques. Valuation technologies include reference to be familiar with situation and prices reached in recentmarket transactions entered into by both willing parties, reference to present fair values of similar other financialinstruments, cash flow discounting method and option pricing models. During the valuation process, the Companyuses valuation techniques appropriate to the prevailing circumstances with the support of sufficient data and otherinformation available, selects inputs consistent with the characteristics of the assets or liabilities considered in thetransactions of relevant assets or liabilities by market participants, and gives priority to relevant observable inputs.Unobservable inputs are used only when relevant observable inputs are not accessible or the access to which isimpracticable.
(7) Equity instruments
Equity instruments are any contract that evidences a residual interest in the assets of an entity after deductingall of its liabilities. The issuance (including refinancing), repurchase, sale or cancellation of equity instruments bythe Company is accounted for movement in equity. Transaction costs related to equity transactions are deductedfrom equity. The Company does not recognise the movement in fair value of equity instruments.The dividends distributed by the Company for its equity instruments (including the“interest”arising from theinstruments classified as equity instruments) during the existence period are accounted for as profit distribution.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
11. Bills receivable
Method for determining the expected credit loss of bills receivableThe Company measures the loss provisions for bills receivable in accordance with the expected credit loss amount forthe entire period. Based on the credit risk characteristics of bills receivable, bills receivable are divided into differentgroups:
ItemBasis for determining the groupsBank acceptance billsThe acceptance party is a bank with less credit riskCommercial acceptance billsThe acceptance party is a company with higher credit risk
12. Accounts receivable
Method for determining the expected credit loss of accounts receivableFor receivables and contract assets that do not contain significant financing components, the Company measures lossprovisions based on the expected credit loss amount for the entire period.For receivables, contract assets and lease receivables that contain significant financing components, the Companychooses to always measure the loss provision based on the expected credit loss amount for the entire period.In addition to accounts receivable and contract assets which are individually assessed for credit risk, they are alsoclassified into different groups based on their credit risk characteristics:
ItemBasis for determining the groupsAmount due from related partiesThis group comprises amounts due from related parties with lower risks.Factoring receivablesThis group comprises factoring receivables with special risks.Amount due from distributorcustomers
This group comprises receivables with their ageing as credit risk characteristics.
INTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
13. Other receivables
Determination and accounting treatment of expected credit loss of other receivablesThe Company measures impairment losses using the expected credit losses amount in the next 12 months or the entireduration, based on whether the credit risk of other receivables has increased significantly upon initial recognition. Inaddition to other receivables which are individually assessed for credit risk, they are also classified into different groupsbased on their credit risk characteristics:
ItemBasis for determining the groupsDividends receivableThis group comprises dividends receivable.Interest receivableThis group comprises interest due from financial institutions.Amount due from governmentagencies
This group comprises amount due from government agencies with less risks.Amount due from related partiesThis group comprises amount due from related parties with less risks.Other receivablesThis group comprises for all types of deposits, advances and premiums receivable
during daily and recurring activities.
14. Inventories
Whether the Company needs to comply with the disclosure requirements for specific industriesNo
(1) Classification of inventories
Inventories mainly include raw materials, work in progress and semi-finished products, turnover materials, finishedproducts and goods etc.
(2) Pricing of inventories received and dispatched
Inventories are measured at their planned cost when obtained. Cost of an inventory consists of purchase costs,processing costs and other costs. The difference between the planned cost and the actual cost is calculated bycost variance account, and the cost difference assumed for the inventories will be pay by instalment, so as toadjust the planned cost to the actual cost.Consumable biological assets refer to biological assets held-for-sale which include growing timber. Consumablebiological assets without a stock are stated at historical cost at initial recognition, and subsequently measuredat fair value when there is a stock. Changes in fair values shall be recognised as profit or loss in the currentperiod. The cost of self-planting, self-cultivating consumable biological assets is the necessary expensesdirectly attributable to such assets prior to canopy closure, including borrowing costs eligible for capitalisation.Subsequent expenses such as maintenance cost incurred after canopy closure shall be included in profit or lossfor the current period.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
14. Inventories (Cont
’d)
(3) Recognition of net realisable value of inventory and provision for inventory impairment
Net realisable value refers to the amount of the estimated price of inventories less the estimated cost incurredupon completion, estimated sales expenses and taxes and levies in daily operation. The realisable value ofinventories shall be determined on the basis of definite evidence, purpose of holding the inventories and effect ofafter-balance-sheet-date events.At the balance sheet date, inventories are calculated at the lower of cost and net realisable value. Usually,provision for inventory impairment is made when the net realisable value is lower than the cost. Provisions forimpairment of inventory shall be made according to the amount by which the cost of a single item exceeds itsnet realisable value. For large quantity and low value items of inventories, provision may be made based oncategories of inventories. For items of inventories relating to a product line that is produced and marketed in thesame geographical area and with the same or similar end uses or purposes, which cannot be practicable valuedseparately from other items in that product line, provision for decline in value of inventories may be determined onan aggregate basis.After making the provision for inventory impairment, in case the factors causing inventory impairment no longerexists, and the net realisable value of an inventory is higher than its book-value, the original provision for inventoryimpairment shall be transferred back and incorporated into the profit or loss for the current period.
(4) We implement permanent inventory system as our inventory stock taking system.
(5) Amortisation of low-value consumables and packaging materials
Low-value consumables and packaging materials are amortised when issued for use.
15. Assets held-for-sale
Assets held-for-sale measures non-current assets held for sale and assets within the disposal groups held for sale.When classifying such non-current assets or disposal groups as held-for-sale, assets held-for-sale shall be debited;items such as“accumulated depreciation”and“accumulated amortisation”are debited based on their respectiveaccrued amounts; items such as“fixed assets”,“intangible assets”,“long-term equity investments”and“goodwill”arecredited according their respective balances. For items for which provision for impairment is made, such provision shallbe carried forward at the same time. The closing balance of debit for assets held-for-sale reflects the book balance ofthe Company’s non-current assets held for sale and assets within the disposal groups held for sale.
16. Long-term receivables
The Company measures the impairment loss of long-term receivables at an amount equal to the expected credit lossin the next 12 months or the lifetime expected credit loss ECL, depending on whether its credit risk has significantlyincreased upon initial recognition. Other than the long-term receivables assessed individually for credit risks, long-termreceivables are classified into different groups based on their credit risk characteristics:
ItemBasis for determining the groupsLong-term receivables not yet past due
This group is comprised of long-term receivables not yet past due with normalexposures.Long-term receivables overdueThis group is comprised of long-term receivables with higher past due exposures.
INTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
17. Long-term equity investments
Long-term equity investments under this section refer to long-term equity investments in which the Company hascontrol, joint control or significant influence over the investee. Long-term equity investment without control or jointcontrol or significant influence of the Company is accounted for as financial assets measured at fair value through profitor loss. In case such equity investment is not held for sale, then the Company may choose to designate such equityinvestment as financial assets measured at fair value through other comprehensive income. Details on its accountingpolicy please refer to Note V.“Financial instruments”.Joint control is the Company’s contractually agreed sharing of control over an arrangement, which relevant activitiesof such arrangement must be decided by unanimously agreement from parties who share control. Significant influenceis the power of the Company to participate in the financial and operating policy decisions of an investee, but to fail tocontrol or joint control the formulation of such policies together with other parties.
(1) Determination of investment cost
For a long-term equity investment acquired through a business combination involving enterprises under commoncontrol, the initial investment cost of the long-term equity investment shall be the absorbing party’s share of thecarrying amount of the shareholders’equity under the consolidated financial statements of the ultimate controllingparty on the date of combination. The difference between the initial cost of the long-term equity investment andthe cash paid, non-cash assets transferred as well as the carrying amount of the debts borne by the absorbingparty shall offset against the capital reserve. If the capital reserve is insufficient to offset, the retained earningsshall be adjusted. If the consideration of the merger is satisfied by issue of equity securities, the initial investmentcost of the long-term equity investment shall be the absorbing party’s share of the carrying amount of theshareholders’equity under the consolidated financial statements of the ultimate controlling party on the date ofcombination. With the total face value of the shares issued as share capital, the difference between the initial costof the long-term equity investment and total face value of the shares issued shall be used to offset against thecapital reserve. If the capital reserve is insufficient to offset, the retained earnings shall be adjusted. For businesscombination resulted in an enterprise under common control by acquiring equity of the absorbing party undercommon control through a stage-up approach with several transactions, these transactions will be judged whetherthey shall be treat as“transactions in a basket”. If they belong to“transactions in a basket”, these transactions willbe accounted for a transaction in obtaining control. If they do not belong to“transactions in a basket”, the initialinvestment cost of the long-term equity investment shall be the absorbing party’s share of the carrying amount ofthe shareholders’equity under the consolidated financial statements of the ultimate controlling party on the dateof combination. The difference between the initial cost of the long-term equity investment and the aggregate ofthe carrying amount of the long-term equity investment before merging and the carrying amount the additionalconsideration paid for further share acquisition on the date of combination shall offset against the capital reserve.If the capital reserve is insufficient to offset, the retained earnings shall be adjusted. Other comprehensive incomerecognised as a result of the previously held equity investment accounted for using equity method on the date ofcombination or recognised for financial assets measured at fair value through other comprehensive income willnot be accounted for.For a long-term equity investment acquired through a business combination involving enterprises not undercommon control, the initial investment cost of the long-term equity investment shall be the cost of combinationon the date of acquisition. Cost of combination includes the aggregate fair value of assets paid by the acquirer,liabilities incurred or borne and equity securities issued. For business combination resulted in an enterprise notunder common control by acquiring equity of the acquiree under common control through a stage-up approachwith several transactions, these transactions will be judged whether they shall be treat as“transactions in abasket”. 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 termequity investment accounted for using cost method shall be the aggregate of the carrying amount of equityinvestment previously held by the acquiree and the additional investment cost. For previously held equityaccounted for using equity method, relevant other comprehensive income will not be accounted for.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
17. Long-term equity investments (Cont
’d)
(1) Determination of investment cost (Cont
’d)Agent fees incurred by the absorbing party or acquirer for the acquisition such as audit, legal service, andvaluation and consultation fees, and other related administration expenses are charged to profit or loss in thecurrent period at the time such expenses incurred.The long-term equity investment acquired through means other than a business combination shall be initiallymeasured at its cost. Such cost is depended upon the acquired means of long-term equity investments, which isrecognised based on the purchase cost actually paid by the Company in cash, the fair value of equity securitiesissued by the Company, the agreed value of investment contract or agreement, the fair value or original carryingamount of the non-monetary asset exchange transaction which the asset will be transferred out of the Company,and the fair value of long-term equity investment itself. The costs, taxes and other necessary expenses that aredirectly 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 investeewithout resulted in control, the relevant cost for long-term equity investment shall be the aggregate of fair value ofpreviously held equity investment and additional investment cost determined according to“Accounting Standardfor Business Enterprises No. 22 – Recognition and measurement of Financial Instruments”.
(2) Subsequent measurement and method for profit or loss recognition
Long-term equity investments with joint control (excluding those constitute joint ventures) or significant influenceon the investee are accounted for using equity method. In addition, long-term equity investments with control onthe investee are accounted for using cost method and record in the Company’s financial statements. 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 forlong-term equity investment is adjusted in the event of additional investment or investment recovery. Exceptreceiving the actual consideration paid for the investment or the declared but not yet distributed cashdividends or profits which is included in the consideration, investment gains for the period is recognised asthe cash dividends or profits declared by the investee.
INTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
17. Long-term equity investments (Cont
’d)
(2) Subsequent measurement and method for profit or loss recognition (Cont
’d) Long-term equity investments accounted for using the equity methodUnder the equity method, where the initial investment cost of a long-term equity investment exceedsthe investor’s interest in the fair value of the investee’s identifiable net assets at the acquisition date, noadjustment shall be made to the initial investment cost. Where the initial investment cost is less thanthe investor’s interest in the fair value of the investee’s identifiable net assets at the acquisition date, thedifference 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 basedon the Company’s share of the net profits or losses and other comprehensive income made by theinvestee, respectively. Meanwhile, the carrying amount of long-term equity investment shall be adjusted.The carrying amount of long-term equity investment shall be reduced based on the Company’s share ofprofit or cash dividend distributed by the investee. In respect of the other movement of net profit or loss,other comprehensive income and profit distribution of investee, the carrying amount of long-term equityinvestment shall be adjusted and included in the capital reserves. The Company shall recognise its share ofthe investee’s net profits or losses based on the fair values of the investee’s individual separately identifiableassets at the time of acquisition, after making appropriate adjustments thereto. In the event of inconformitybetween 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 accountingperiods of the Company. Investment gain and other comprehensive income shall be recognised accordingly.In respect of the transactions between the Company and its associates and joint ventures in which theassets disposed of or sold are not classified as operation, the share of unrealised gain or loss arising frominternal transactions shall be eliminated by the portion attributable to the Company. Investment gain shallbe recognised accordingly. However, any unrealised loss arising from internal transactions between theCompany and an investee is not eliminated to the extent that the loss is impairment loss of the transferredassets. In the event that the Company disposed of an asset classified as operation to its joint ventures orassociates, which resulted in acquisition of long-term equity investment by the investor without obtainingcontrol, the initial investment cost of additional long-term equity investment shall be the fair value ofdisposed operation. The difference between initial investment cost and the carrying amount of disposedoperation will be fully included in profit or loss for the current period. In the event that the Company sold anasset classified as operation to its associates or joint ventures, the difference between the carrying amountof consideration received and operation shall be fully included in profit or loss for the current period. In theevent that the Company acquired an asset which formed an operation from its associates or joint ventures,relevant transaction shall be accounted for in accordance with“Accounting Standards for BusinessEnterprises No. 20 – Business combination”. All profit or loss related to the transaction shall be accountedfor.The Company’s share of net losses of the investee shall be recognised to the extent that the carryingamount of the long-term equity investment together with any long-term interests that in substance formpart of the investor’s net investment in the investee are reduced to zero. If the Company has to assumeadditional obligations, the estimated obligation assumed shall be provided for and charged to the profitor 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 unrecognisedlosses.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
17. Long-term equity investments (Cont
’d)
(2) Subsequent measurement and method for profit or loss recognition (Cont
’d)Long-term equity investments accounted for using the equity method(Cont’d)If there is debit variation in relation to the long-term equity investments in associates and joint venture heldprior to first adoption of the Accounting Standards for Business Enterprises by the Company on 1 January2007, the amounts amortised over the original residual term using the straight-line method is included in theprofit or loss for the period. Acquisition of minority interestUpon the preparation of the consolidated financial statements, capital reserve is adjusted based on thedifference between the additional long term equity investment from acquisition of minority interest and theshare of net assets of the subsidiary attributable to the additional shareholding from the date of acquisition (ordate of combination). In the case of insufficient capital surplus to offset impairment, retained earnings shallbe adjusted. Disposal of long-term equity investments
In these consolidated financial statements, for disposal of a portion of the long-term equity investmentsin a subsidiary without loss of control, the difference between disposal cost and disposal of long-termequity investments relative to the net assets of the subsidiary is charged to the owners’equity. If disposalof a portion of the long-term equity investments in a subsidiary by the parent company results in a loss incontrol, it shall be accounted for in accordance with the relevant accounting policies as described in Note V.
6. (2)
“Preparation Method of the Consolidated Financial Statements”.On disposal of a long-term equity investment otherwise, the difference between the carrying amount of theinvestment and the actual consideration paid is recognised through profit or loss in the current period.In respect of long-term equity investment accounted for using equity method with the remaining equityinterest after disposal also accounted for using equity method, other comprehensive income previouslyunder owners’equity shall be accounted for in accordance with the same accounting treatment for directdisposal of relevant asset or liability by investee on pro rata basis at the time of disposal. The owners’equityrecognised for the movement of other owners’equity (excluding net profit or loss, other comprehensiveincome and profit distribution of investee) shall be transferred to profit or loss for the current period on prorata basis.In respect of long-term equity investment accounted for using cost method with the remaining equityinterest after disposal also accounted for using cost method, other comprehensive income recognisedusing equity method or the recognition and measurement standard of financial instruments before obtainingcontrol over the investee shall be accounted for in accordance with the same accounting treatment for directdisposal of relevant asset or liability by investee, and transferred to profit or loss for the current period onpro rata basis. Movement of other owners’equity (excluding net profit or loss, other comprehensive incomeand profit distribution under net asset of investee accounted for and recognised using equity method) shallbe transferred to profit or loss for the current period on pro rata basis.
INTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
17. Long-term equity investments (Cont
’d)
(2) Subsequent measurement and method for profit or loss recognition (Cont
’d)Disposal of long-term equity investments(Cont’d)In the event of loss of control over investee due to partial disposal of equity investment by the Company,in preparing separate financial statements, the remaining equity interest which can apply common controlor impose significant influence over the investee after disposal shall be accounted for using equity method.Such remaining equity interest shall be treated as accounting for using equity method since it is obtainedand adjustment was made accordingly. For the remaining equity interest which cannot apply commoncontrol or impose significant influence over the investee after disposal, it shall be accounted for usingthe recognition and measurement standard of financial instruments. The difference between its fair valueand carrying amount as at the date of losing control shall be included in profit or loss for the currentperiod. In respect of other comprehensive income recognised using equity method or the recognition andmeasurement 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 relevantasset or liability by investee at the time when the control over investee is lost. Movement of other owners’
equity (excluding net profit or loss, other comprehensive income and profit distribution under net asset ofinvestee accounted for and recognised using equity method) shall be transferred to profit or loss for thecurrent period at the time when the control over investee is lost. Of which, for the remaining equity interestafter disposal accounted for using equity method, other comprehensive income and other owners’equityshall be transferred on pro rata basis. For the remaining equity interest after disposal accounted for usingthe recognition and measurement standard of financial instruments, other comprehensive income and otherowners’ equity shall be fully transferred.In the event of loss of common control or significant influence over investee due to partial disposal of equityinvestment by the Company, the remaining equity interest after disposal shall be accounted for using therecognition and measurement standard of financial instruments. The difference between its fair value andcarrying amount as at the date of losing common control or significant influence shall be included in profitor loss for the current period. In respect of other comprehensive income recognised under previous equityinvestment using equity method, it shall be accounted for in accordance with the same accounting treatmentfor direct disposal of relevant asset or liability by investee at the time when equity method was ceased tobe used. Movement of other owners’equity (excluding net profit or loss, other comprehensive income andprofit 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 equity method was ceased to be used.The Company disposes its equity investment in subsidiary by a stage-up approach with several transactionsuntil the control over the subsidiary is lost. If the said transactions belong to“transactions in a basket”, eachtransaction shall be accounted for as a single transaction of disposing equity investment of subsidiary andloss of control. The difference between the disposal consideration for each transaction and the carryingamount of the corresponding long-term equity investment of disposed equity interest before loss of controlshall initially recognised as other comprehensive income, and subsequently transferred to profit or lossarising from loss of control for the current period upon loss of control.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
18. Investment property
Measurement of investment property
Measured by using the cost methodDepreciation or amortisation methodsInvestment property refers to real estate held to earn rentals or for capital appreciation, or both, which include leasedland use rights, land use rights held for sale after appreciation, leased buildings, etc. In addition, for the vacant buildingsthat the Company holds for operating leases, if the Board (or similar bodies) makes a written decision that it is explicitlyused for operating leases and that the holdings do not change in the short term, they are also presented as investmentproperty.Investment property is initially measured at cost. Subsequent expenditures related to an investment property shall beincluded in cost of investment property only when the economic benefits associated with the asset will likely flow to theCompany and its cost can be measured reliably. All other expenditures on investment property shall be included in profitor loss for the current period when incurred.The Company adopts cost method for subsequent measurement of investment property, which is depreciated oramortised using the same policy as that for buildings or land use rights.The method for impaired test of investment property and measurement of impairment provision are detailed in Note V.
“Impairment of long-term assets”.In the event that an owner-occupied property or inventories is converted to an investment property (or vice versa), uponthe conversion, the property shall be stated at the carrying amount prior to the conversion.In the event that an investment property is converted to an owner-occupied property, such property shall become fixedassets or intangible assets since the date of its conversion. In the event that an owner-occupied property is convertedto real estate held to earn rentals or for capital appreciation, such fixed assets or intangible assets shall become aninvestment property since the date of its conversion. For investment property measured at cost during its conversion,upon the conversion, the property shall be stated at the carrying amount prior to the conversion. For investmentproperty measured at fair value during its conversion, upon the conversion, the property shall be stated at the fair valueon the date of conversion.If an investment property is disposed of or if it withdraws permanently from use and no economic benefit will beobtained from the disposal, the recognition of it as an investment property shall be terminated. When an investmentproperty is sold, transferred, retired or damaged, the amount of proceeds on disposal of the property net of the carryingamount and related tax and surcharges is recognised in profit or loss for the current period.
INTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
19. Fixed assets
(1) Conditions for recognition
Fixed assets are tangible assets that are held for use in the production or supply of goods or services, for rentalto others, or for administrative purposes; and have a useful life of more than one accounting year. Fixed assetsare recognised only if the Company is very likely to receive economic benefits from the asset and its cost canbe measured reliably. A fixed asset shall be initially measured at cost and the effect of any expected costs ofabandoning the asset at the end of its use.
(2) Depreciation method
CategoryDepreciation method
Useful lives ofdepreciation(Year)
Estimated residual value
(%)
Annual depreciation rate (%)Housing and building structureStraight-line method20-405-102.25-4.75Machinery and equipmentStraight-line method8-205-104.50-11.88Transportation equipmentStraight-line method5-85-1011.25-19.00Electronic equipment and othersStraight-line method55-1018.00-19.00
(3) Recognition, accounting and depreciation method of fixed assets acquired under finance leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks andrewards of asset ownership to the lessee and titles to the assets may or may not eventually be transferred. Forfixed assets acquired under finance leases, the basis for provision of leased assets depreciation is the same asthat of self-owned fixed assets. When it can be reasonably determined that the ownership of a leased asset willbe transferred at the end of the lease term, it is depreciated over the period of expected use; otherwise, the leaseasset is depreciated over the shorter period of the lease term and the period of expected use.
20. Construction in progress
Construction in progress is recognised based on the actual construction cost, including all expenditures incurred forconstruction projects, capitalised borrowing costs for the construction in progress before it has reached the workingcondition for its intended use, and other related expenses during the construction period. A construction in progress isreclassified to fixed assets when it has reached the working condition for its intended use.The method for impaired test of construction in progress and measurement of impairment provision are detailed in Note V.
“Impairment of long-term asset”.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
V. Significant Accounting Policies and Accounting Estimates (Cont’d)
21. 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. Forborrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset, whenexpenditures for the asset and borrowing costs are being incurred, activities relating to the acquisition, constructionor production of the asset that are necessary to prepare the asset for its intended use or sale have commenced, suchborrowing costs shall be capitalised as part of the cost of that asset; and capitalisation shall discontinue when thequalifying asset is ready for its intended use or sale. Other borrowing costs shall be recognised as expense in the periodin which they are incurred.Where funds are borrowed for a specific purpose, the amount of interest to be capitalised shall be the actual interestexpense incurred on that borrowing for the period less any bank interest earned from depositing the borrowed fundsbefore being used into banks or any investment income on the temporary investment of those funds. Where funds areborrowed for general purpose, the Company shall determine the amount of interest to be capitalised on such borrowingsby applying a capitalisation rate to the weighted average of the excess amounts of cumulative expenditures on the assetover and above the amounts of specific-purpose borrowings. The capitalisation rate shall be the weighted average ofthe interest rates applicable to the general-purpose borrowings.During the capitalisation period, exchange differences on a specific purpose borrowing denominated in foreign currencyshall be capitalised. Exchange differences related to general-purpose borrowings denominated in foreign currency shallbe included in profit or loss for the current period.Qualifying assets are assets (fixed assets, investment property, inventories, etc.) that necessarily take a substantialperiod of time for acquisition, construction or production to get ready for their intended use or sale.Capitalisation of borrowing costs shall be suspended during periods in which the acquisition, construction or productionof a qualifying asset is interrupted abnormally, when the interruption is for a continuous period of more than 3 months,until the acquisition, construction or production of the qualifying asset is resumed.
22. Biological assets
Consumable biological assets refer to biological assets held-not-for-sale, which include forest trees being grown.Consumable biological assets are stated at cost at initial recognition. The cost of self-planting, self-cultivating, self-breeding or self-farming consumable biological assets is the necessary expenses directly attributable to such assetsprior to canopy closure, including borrowing costs eligible for capitalisation. Subsequent expenses such as maintenanceincurred after canopy closure shall be included in profit or loss for the current period.The cost of consumable biological assets shall, at the time of harvest or disposal, be carried forward at carrying amountusing the batch averaging method.On the balance sheet date, consumable biological assets are measured at the lower of cost and net realisable value,and the impairment provision for consumable biological assets is made using the same approach as that used for therecognition of impairment provision for inventories. In case the factors causing impairment no longer exists, the reducedamount shall be recovered and reversed in the provision amount originally provided for impairment. The reversedamount shall be recognised in profit or loss for the current period.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
23. Right-of-use assets
(1) Conditions for recognition
Right-of-use assets refer to the rights of using the assets over the lease term. Right-of-use assets are initiallymeasured at cost, including the amount of initial measurement under(I) lease liabilities;(II) for lease payment on or before the date of commencement of the lease period, where there was lease
incentive, such incentives shall be deducted;(III) initial direct expenses incurred by the lessee;(IV) costs expected to be incurred by the lessee for demolition and removal of leased assets, restoration of thepremises where the leased assets are located, or restoration of the leased assets to the conditions of thelease terms.
(2) Depreciation method
Right-of-use assets are depreciated using the straight-line method over its useful life.The Company adopts cost method for subsequent measurement of right-of-use assets. Where ownership of thelease assets during the lease term can be reasonably determined, right-of-use assets are depreciated over theremainder of useful lives of the lease assets; where ownership of the lease assets during the lease term cannot bereasonably determined, right-of-use assets are depreciated over the lease term or the remainder of useful lives ofthe lease assets, whichever is shorter.
24. Intangible assets
(1) Measurement method, useful life and impairment testing
For details of the method of impairment testing and impairment provision of intangible assets, please see Note V.
“Impairment of long-term assets”.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
24. Intangible assets (Cont
’d)
(2) Accounting policy of internal research and development expenditure
Research and development expenditure of the Company was divided into expenses incurred during the researchphase and expenses incurred during the development phase.Expenses incurred during the research phase are recognised as profit or loss in the current period.Expenses incurred during the development phase that satisfy the following conditions are recognised as intangibleassets, while those that do not satisfy the following conditions are accounted for in the profit or loss for the currentperiod:
it is technically feasible that the intangible asset can be used or sold upon completion; there is intention to complete the intangible asset for use or sale;the intangible asset can produce economic benefits, including there is evidence that the products produced
using the intangible asset has a market or the intangible asset itself has a market; and if the intangible assetis for internal use, there is evidence that there exists usage for the intangible asset;there is sufficient support in terms of technology, financial resources and other resources in order to
complete the development of the intangible asset, and there is capability to use or sell the intangible asset; 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 distinguishedseparately, all development expenses incurred are accounted for in the profit or loss for the current period.
25. Impairment of long-term asset
The Company will judge if there is any indication of impairment as at the balance sheet date in respect of noncurrentnon-financial assets such as fixed assets, construction in progress, intangible assets with a finite useful life, investmentproperties measured at cost, and long-term equity investments in subsidiaries, joint controlled entities and associates.If there is any evidence indicating that an asset may be impaired, recoverable amount shall be estimated for impairmenttest. Goodwill, intangible assets with an indefinite useful life and intangible assets beyond working conditions will betested for impairment annually, regardless of whether there is any indication of impairment.If the impairment test result shows that the recoverable amount of an asset is less than its carrying amount, theimpairment provision will be made according to the difference and recognised as an impairment loss. The recoverableamount of an asset is the higher of its fair value less costs of disposal and the present value of the future cashflows expected to be derived from the asset. An asset’s fair value is the price in a sale agreement in an arm’s lengthtransaction. If there is no sale agreement but the asset is traded in an active market, fair value shall be determinedbased on the bid price. If there is neither sale agreement nor active market for an asset, fair value shall be based onthe best available information. Costs of disposal are expenses attributable to disposal of the asset, including legal fee,relevant tax and surcharges, transportation fee and direct expenses incurred to prepare the asset for its intended sale.The present value of the future cash flows expected to be derived from the asset over the course of continued use andfinal disposal is determined as the amount discounted using an appropriately selected discount rate. Provisions forassets impairment shall be made and recognised for the individual asset. If it is not possible to estimate the recoverableamount of the individual asset, the Company shall determine the recoverable amount of the asset group to which theasset belongs. The asset group is the smallest group of assets capable of generating cash flows independently.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
25. Impairment of long-term asset (Cont
’d)
For the purpose of impairment testing, the carrying amount of goodwill presented separately in the financial statementsshall be allocated to the asset groups or group of assets benefiting from synergy of business combination. If therecoverable amount is less than the carrying amount, the Company shall recognise an impairment loss. The amountof impairment loss shall first reduce the carrying amount of any goodwill allocated to the asset group or set of assetgroups, and then reduce the carrying amount of other assets (other than goodwill) within the asset group or set of assetgroups, 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 therestorable value.
26. Long-term prepaid expenses
Long-term prepaid expenses measures the Company’s incurred expenses with amortisation period of over one year,including repair expenditure of fixed assets, improvement expenditure of fixed assets under lease and other prepaidexpenses with amortisation period of over one year.
27. Contract liabilities
A contract liability represents the Company’s obligation to transfer goods to a customer for which the Company hasreceived consideration (or an amount of consideration is due) from the customer. If the customer has already paidthe contract consideration before the Company transfers goods to the customer or the Company has obtained theunconditional collection right, the Company will recognise such amount received or receivable as contract liabilitiesat earlier of the actual payment by the customer or the amount payable becoming due. Contract assets and contractliabilities under the same contract are presented on a net basis, and contract assets and contract liabilities underdifferent contracts are not offset.
28. Employee benefits
(1) Accounting treatment for short-term staff remuneration
Staff remuneration of the Company mainly includes short-term staff remuneration, post-employment benefits andtermination benefits, in which:
Short-term remuneration mainly includes salaries, bonuses, allowance and subsides, staff welfare, medicalinsurance premium, maternity insurance premium, work-related injury insurance premium, housing providentfunds, union operation costs and employee education costs and non-monetary welfare etc. Short-termremuneration incurred during the accounting period in which the Company’s staff provided services for theCompany is recognised as liability and included in profit or loss for the current period or related asset costs. Ofwhich, non-monetary welfare is measured at fair value.
(2) Accounting treatment for post-employment benefits
Post-employment benefits mainly include pension insurance premium and unemployment insurance premium.Postemployment benefits include defined contribution plan. For those adopted defined contribution plan, relevantcontribution amount is included in related asset costs or profit or loss for the current period during the period inwhich the expenses incurred.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
28. Employee benefits (Cont
’d)
(3) Accounting treatment for termination benefits
When the Company terminates the employment relationship with employees before the end of the employmentcontracts or provides compensation as an offer to encourage employees to accept voluntary redundancy, theCompany shall recognise employee compensation liabilities arising from compensation for staff dismissal andincluded in profit or loss for the current period, when the Company cannot revoke unilaterally compensationfor dismissal due to the cancellation of labour relationship plans and employee redundant proposals; and theCompany recognise cost and expenses related to payment of compensation for dismissal and restructuring,whichever is earlier. However, if the compensation for termination of employment is not expected to be fully paidwithin 12 months from the reporting period, it shall be accounted for other long-term staff remuneration.The early retirement plan shall be accounted for in accordance with the accounting principles for compensation fortermination of employment. The salaries or wages and the social contributions to be paid for the employees whoretire before schedule from the date on which the employees stop rendering services to the scheduled retirementdate, shall be recognised (as compensation for termination of employment) in the current profit or loss by theCompany if the recognition principles for provisions are satisfied.
(4) Accounting treatment for other long-term employee benefit
For other long-term employee benefit provided by the Company for employees which meets the criteria of definedcontribution plan, accounting treatment for defined contribution plan will be adopted; otherwise accountingtreatment for defined benefit plan will be adopted.
29. 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 beresulted from the performance of the obligation; and (3) the amount of the obligation can be reliably measured.At the balance sheet date, provisions shall be measured at the best estimate of the necessary expenses required for theperformance of existing obligations, after taking into account relevant risks, uncertainties, time value of money and otherfactors pertinent to the contingencies.If all or some expenses incurred for settlement of provisions are expected to be borne by the third party, thecompensation amount shall, on a recoverable basis, be recognised as asset separately, and compensation amountrecognised shall not be more than the carrying amount of provisions.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
30. Preference shares, perpetual bonds and other financial instruments
(1) Classification of perpetual bonds and preference shares
Perpetual bonds, preference shares and other financial instruments issued by the Company are classified asequity instruments when all of the following conditions are satisfied:
The financial instruments have no contractual obligation to pay in cash or other financial assets to otherparties nor to exchange financial assets or financial liabilities under potential adverse condition with otherparties; If the financial instrument will or may be settled in the entity’s own equity instruments, it is a non-derivative instrument that includes no contractual obligations to deliver a variable number of its own equityinstruments; or a derivative that will be settled only by the Company exchanging a fixed amount of cash orother financial asset for a fixed number of its own equity instruments.Other than financial instruments classified as equity instruments according to the above conditions, other financialinstruments issued by the Company shall be classified as financial liabilities.The financial instruments issued by the Company which are compound financial instruments are recognised asa liability based on the fair value of the liability component, and the amount net of the fair value of the liabilitycomponent from the actual amount received is recognised as“other equity instruments”. Transaction costs thatrelate to the issue of a compound financial instrument are allocated to the liability and equity components inproportion to the allocation of gross proceeds.
(2) Accounting treatment of perpetual bonds and preference shares
For financial instruments classified as financial liabilities (such as perpetual bonds and preference shares), exceptborrowing costs qualifying for capitalisation (please refer to this Note V. 21“Borrowing costs”), its related interest,dividends, gains or losses, and gains or losses arising from redemption or refinancing are credited to profit or lossfor the current period.For financial instruments classified as equity instruments (such as perpetual bonds and preference shares), itsissue (including refinancing), repurchase, sale or cancellation are treated by the Company as changes in equity,with related transaction costs deducted from equity. The Company’s distribution to holders of equity instrumentsare treated as a distribution of profits.Changes in the fair value of equity instruments are not recognised by the Company.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
31. Revenue
Accounting policies adopted for revenue recognition and measurementRevenue is recognised when the customer obtains control of the relevant goods, subject to the fulfilment of the followingconditions under the contract entered into between the Company and customers: the parties has approved the contractand undertaken to fulfil their respective obligations; the contract clearly states the parties to the contract and their rightsand obligations relating to the transferred goods and rendered services; the contract clearly stated the payment termsrelating to the transferred goods; the contract has commercial substance that the fulfilment of the contract will result inchanges in the risk, time frame or amount of the future cash flow risk of the Company; the collection of the considerationthat the Company is entitled to for transferring the goods is probable.On the effective date of the contract, the Company identifies each performance obligation under such contracts andallocate the transaction price to each performance obligation based on the percentage of respective unit price of agood guaranteed by each performance obligation. The determination of the transaction price has taken into account theimpact of factors such as variable consideration, the significant financing component existed in the contract, non-cashconsideration, and consideration payable to the customers.For each of the performance obligations under the contract, if one of the following conditions is fulfilled, the Companyshall recognise the transaction price which was allocated to each of the performance obligations as revenue based onthe progress of performance within a certain period: when the customer simultaneously receives and consumes thebenefits provided by the Company when the Company performs its obligations under the contract; when the customeris able to control the good in progress in the course of performance by the Company under the contract; when theproduct produced by the Company under the contract is irreplaceable and the Company has the right to payment forperformance completed to date during the whole contract term. The progress of performance is determined basedon the nature of the transferred goods with the adoption of input method or output method. When the progress ofperformance cannot be reasonably determined, if the costs incurred by the Company are expected to be recoverable,the revenue will be recognised to the extent of the costs incurred until the progress of performance can be reasonablydetermined.If one of the above conditions is not fulfilled, the Company shall recognise the transaction price which was allocatedto each of the performance obligations as revenue when the customer is able to control the relevant goods. Whendetermining whether the customer has obtained control of the goods, the Company will consider the followingindications: the enterprise has the current right to receive payment for the goods, which is when the customers has thecurrent payment obligations for the goods; the enterprise has transferred the legal title of the goods to the customer,which is when the client possesses the legal title of the goods; the enterprise has transferred the physical possessionof goods to the customer, which is when the customer obtain physical possession of the goods; the enterprise hastransferred all of the substantial risks and rewards of ownership of the goods to the customer, which is when the clientobtain all of the substantial risks and rewards of ownership of the goods to the customer; when the customer hasaccepted the goods, which is when other information indicates that the customer has obtained control of the goods.The point of time of recognition of revenue for sales of goods: the date when the goods are delivered to the customerswith signature confirmation for the domestic sales business, and the date when the goods are loaded onto a vessel anddeclared at customs for the overseas sales business.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
32. Government grants
Government grants are transfer of monetary assets or non-monetary assets from the government to the Company at noconsideration, excluding capital considerations from the government as an investor entitling to corresponding owners’
equity. Government grants are classified into government grants related to assets and government grants related toincome. Government grants obtained for acquisition or construction of long-term assets or other forms of long-termasset formation are classified as related to assets. Other government grants are classified as related to revenue. Ifrelated government documents do not specify the objective of the grants, the grants are classified as related to assetsor income as follows: (1) In case a project for which the grants are granted is specified in such documents, the grantsare classified as related to assets and income based on the budgeted ratio of the expenditure on asset formationand the expenditure recorded as expenses, where such ratio should be reviewed and, if necessary, changed on eachbalance sheet date; and (2) in case of general description without specifying any project in such documents, the grantsare classified as related to income. If a government grant is in the form of a transfer of monetary asset, the item shall bemeasured at the amount received or receivable. If a government grant is in the form of a transfer of non-monetary asset,the item shall be measured at fair value. If fair value is not reliably determinable, the item shall be measured at a nominalamount and recognised immediately in profit or loss for the current period.Government grants are generally recognised when received and measured at the amount actually received, but aremeasured at the amount likely to be received when there is conclusive evidence at the end of the accounting period thatthe Company will meet related requirements of such grants and will be able to receive the grants. The government grantsso measured should also satisfy the following conditions: (1) the amount of the grants be confirmed with competentauthorities in written form or reasonably deduced from related requirements under financial fund management measuresofficially released without material uncertainties; (2) the grants be given based on financial support projects and fundmanagement policies officially published and voluntarily disclosed by local financial authorities in accordance withthe requirements under disclosure of government information, where such policies should be open to any companysatisfying conditions required and not specifically for certain companies; (3) the date of payment be specified in relateddocuments and the payment thereof be covered by corresponding budget to ensure such grants will be paid on time asspecified; and (4) other relevant conditions (if any) which should be satisfied according to the specific conditions of theCompany and the matters relating to such grants.A government grant related to an asset shall be recognised as deferred income, and evenly amortised to profit or lossfor the current period over the useful life of the asset in a reasonable and systematic manner. For a government grantrelated to income, if the grant is a compensation for related costs, expenses or losses to be incurred in subsequentperiods, the grant shall be recognised as deferred income, and recognised in profit or loss over the periods in which therelated costs or losses are recognised, or off set against the relevant costs or expenses; if the grant is a compensationfor related costs, expenses or losses already incurred, the grant shall be recognised immediately in profit or loss for thecurrent period.If a government grant contains both assets related and income related component at the same time, the accountingtreatment will depend on the different parts of the government grant; if it is difficult to distinguish, the entire governmentgrant is classified as a government grant related to income.A government grant related to daily activities of the Company is recognised in other gains or off set relevant costsor expenses relying on the essence of economic business; otherwise, recognised in non-operating income or non-operating expenses.For the repayment of a government grant already recognised, if there is any related deferred income, the repaymentshall be off set against the carrying amount of the deferred income, and any excess shall be recognised in profit or lossfor the current period; otherwise, the repayment shall be recognised immediately in profit or loss for the current period.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
33. Deferred income tax assets/deferred income tax liabilities
(1) Current income tax
At the balance sheet date, current income tax liabilities (or assets) for the current and prior periods shall bemeasured at the amount expected to be paid (or recovered) according to the requirements of tax laws. Taxableprofits, which are the basis for calculating the current income tax expense, are determined after adjusting theaccounting profits before tax for the year in accordance with relevant requirements of tax laws.
(2) Deferred income tax assets and deferred income tax liabilities
Temporary differences arising from the difference between the carrying amount of an asset or liability and its taxbase, and the difference between the tax base and the carrying amount of those items that are not recognisedas assets or liabilities but have a tax base that can be determined according to tax laws, shall be recognised asdeferred income tax assets and deferred income tax liabilities using the balance sheet liability method.Deferred income tax liabilities are not recognised for taxable temporary differences related to: the initialrecognition of goodwill; and the initial recognition of an asset or liability in a transaction which is neither a businesscombination nor affects accounting profit or taxable profit (or deductible loss) at the time of the transaction.In addition, the Company recognises the corresponding deferred income tax liability for taxable temporarydifferences associated with investments in subsidiaries, associates and joint ventures, except when both of thefollowing 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 initialrecognition of an asset or liability in a transaction which is neither a business combination nor affects accountingprofit or taxable profit (or deductible loss) at the time of the transaction. In addition, the Company recognisesthe corresponding deferred income tax asset for deductible temporary differences associated with investmentsin subsidiaries, associates and joint ventures to the extent that it is probable that taxable profits will be availableagainst which the deductible temporary differences can be utilised, except when both of the following conditionsare 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 creditsto subsequent periods, to the extent that it is probable that future taxable profits will be available against whichthe deductible losses and tax credits can be utilised.At the balance sheet date, deferred income tax assets and deferred income tax liabilities are measured at the taxrates that are expected to apply to the period when the asset is realised or the liability is settled, according to therequirements of tax laws.At the balance sheet date, Chenming Paper shall review the carrying amount of a deferred income tax asset. If itis probable that sufficient taxable profits will not be available in future periods to allow the benefit of the deferredincome tax asset to be utilised, the carrying amount of the deferred income tax asset shall be reduced. Any suchreduction in amount shall be reversed when it becomes probable that sufficient taxable profits will be available.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
33. Deferred income tax assets/deferred income tax liabilities (Cont
’d)
(3) Income tax expenses
Income tax expense comprises current income tax expense and deferred income tax expense.Current income tax expense (current income tax income) and deferred income tax expense (deferred income taxincome) are included in profit or loss for the current period, except for: recognised as other comprehensive incomeor current income tax and deferred income tax related to transactions or events that are directly recognised inother comprehensive income or owners’ equity, which are recognised directly in owners’equity, and deferredincome tax arising from a business combination, which is adjusted against the carrying amount of goodwill.
(4) Offset of income tax
After granted the legal rights of net settlement and with the intention to use net settlement or obtain assets, repaydebt, the Company, at the same time, records the net amount after offsetting its current income tax assets andcurrent income tax liabilities.The Company was granted the legal rights of net settlement of current income tax assets and current incometax liabilities. Deferred income tax assets and deferred income tax liabilities are related to income tax to be paidby the same entity liable to pay tax to the same tax collection and management authority or related to differententities liable to pay tax, but the relevant entity liable to pay tax is intended to apply net settlement of currentincome tax assets and liabilities or, at the same time, obtain assets, repay debt whenever every deferred incometax assets and liabilities with importance would be reversed in the future, the Company records the net amountafter offsetting its current income tax assets and current income tax liabilities.
34. Lease
(1) Accounting treatment with the Company recorded as lessor
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 thelease term. The initial direct cost where the amount is larger is capitalised when incurred, and accounted foras profit or loss for the current period on the same basis as recognition of rental income over the entire leaseperiod; the initial direct cost where the amount is fewer is included in the profit or loss for the period whenincurred. Contingent rental is accounted for as profit or loss for the period in which it is incurred.
Financing lease business with the Company recorded as lessor
On the beginning date of the lease, the entry value of lease receivable shall be the aggregate of minimumlease receivable and initial direct costs at the beginning date of the lease. The unsecured balance shall berecorded. The aggregate of minimum lease receivable, initial direct costs and unsecured balance and thedifferent between their present values shall be recognised as unrealised financing income. The balance oflease receivable after deducting unrecognised financing income shall be accounted for long-term debt andlong-term debt due within one year.Unrecognised financing income shall be recognised as financing income for the current period usingeffective interest method during the leasing period. Contingent rent shall be included in profit or loss for thecurrent period at the time it incurred.
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V. Significant Accounting Policies and Accounting Estimates (Cont’d)
34. Lease (Cont
’d)
(2) Accounting treatment with the Company recorded as lessee
On the beginning date of the lease, the Company recognises right-of-use assets and lease liabilities for leases,except for short-term lease and low-value asset lease with simplified treatment.The beginning date of the lease refers to the date since which the Company may use the lease assets providedby the lessor. The lease term refers to the period during which the Company has the right to use the lease assetswhich is irrevocable.Right-of-use assets refer to the rights of using the assets over the lease term. Right-of-use assets are initiallymeasured at cost. For lease payment on or before the beginning date of the lease period, where there was leaseincentive, such incentives shall be deducted, as well as the initial direct expenses incurred by the lessee, costsexpected to be incurred by the lessee for demolition and removal of leased assets, restoration of the premiseswhere the leased assets are located, or restoration of the leased assets to the conditions of the lease terms. Right-of-use assets are depreciated using the straight-line method over its useful life.Lease liabilities are initially measured at the present value of outstanding lease payment at the beginning dateof lease period. The bank lending rate for the same period is used as discount rate when calculating the presentvalue of the lease payment.Right-of-use assets and lease liabilities are presented separately on the balance sheet of the Company. Leaseliabilities are usually presented separately as non-current liabilities and non-current liabilities due within one year.In the income statement, the interest expenses of lease liabilities and depreciation expenses of right-of-use assetsare separately presented. Interest expense of lease liabilities is presented under finance expenses.
35. Others
VI. Taxation
1. Main tax types and tax rates
Tax typeTax baseTax rateValue added tax (VAT)16% and 13% for general, 10% and 9% for sales of water
and gas and 6% for the service industry. VAT is computedon the difference after deduction of input value-added tax.
16%, 13%, 10%, 9%, 6%Urban maintenance and construction tax
7%, 5% and 1% of actual payment of turnover tax.7%, 5%, 3%, 1%Enterprise income tax (EIT)25% of taxable income; for the companies which are
subject to preferential policies, please refer to the table
below; the overseas companies shall pay taxes at the tax
rate pursuant to the requirements of the countries or regions
where the companies are located.
25%, 15%, 10%
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VI. Taxation (Cont’d)
2. Tax incentives
(1) Enterprise income tax
On 16 August 2018, the Company received a high and new technology enterprise certificate with a certificationnumber of GR201837000311. Pursuant to the requirements under the Law of the People’s Republic of China onEnterprise Income Tax and the relevant policies, the Company is subject to a corporate income tax rate of 15% oftaxable income, and is entitled to the preferential treatment from 2018 to 2020.Haicheng Haiming Mining Company Limited, a subsidiary of the Company, received a high and new technologyenterprise certificate with a certification number of GR201821000291 on 12 October 2018. Pursuant to therequirements under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies,Haicheng Haiming is subject to an enterprise income tax rate of 15% of taxable income, and is entitled to thepreferential treatment from 2018 to 2020.Shouguang Meilun Paper Co., Ltd., a subsidiary of the Company, received a high and new technology enterprisecertificate with a certification number of GR201837000455 on 16 August 2018. Pursuant to the requirementsunder the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies, ShouguangMeilun is subject to an enterprise income tax rate of 15% of taxable income, and is entitled to the preferentialtreatment from 2018 to 2020.For Jilin Chenming Paper Co., Ltd., a subsidiary of the Company, its high and new technology enterprisecertificate with a certification number of GR201622000039 obtained on 1 November 2016 has expired, and ismaking a renewal application.For Jiangxi Chenming Paper Co., Ltd., a subsidiary of the Company, its high and new technology enterprisecertificate with a certification number of GR201636000018 obtained on 15 November 2016 has expired, and ismaking a renewal application.Zhanjiang Chenming Pulp & Paper Co., Ltd., a subsidiary of the Company, received a high and new technologyenterprise certificate with a certification number of GR201844005747 on 28 November 2018. Pursuant to therequirements under the Law of the People’s Republic of China on Enterprise Income Tax and the relevant policies,it is subject to a corporate income tax rate of 15% of taxable income, and is entitled to the preferential treatmentfrom 2018 to 2020.Pursuant to the requirements of Rule 27(1) of Law of the People’s Republic of China on Enterprise Income Taxand Rule 86(1) of regulations for the Implementation of Law of the People’s Republic of China on EnterpriseIncome Tax, Zhanjiang Chenming Arboriculture Development Co., Ltd. and Yangjiang Chenming ArboricultureDevelopment Co., Ltd., which are the subsidiaries of the Company, have completed the filings for EIT reductionfor exemption from EIT.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
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VI. Taxation (Cont’d)
2. Tax incentives (Cont
’d)
(2) Value-added Tax (
“VAT”)Pursuant to Rule 10 of the Interim Regulation of the People’s Republic of China on Value Added Tax, ZhanjiangChenming Arboriculture Development Co., Ltd. and Yangjiang Chenming Arboriculture Development Co., Ltd.,which are the subsidiaries of the Company, are exempt from VAT, and have completed the filings for VATreduction for exemption from VAT.Pursuant to the Value-added Tax Preferential Catalogue on Products and Services Applying Integrated Use ofResources (Cai Shui [2015] No. 78), taxpayers who sell self-produced products and services applying integrateduse of resources may enjoy the immediate VAT refund policy. Zhanjiang Chenming New-style Wall Materials Co.,Ltd., a subsidiary of the Company, produced products applying raw materials containing more than 30% of flyash. It belongs to a company that uses pollutants for production, and is therefore subject to the immediate VATrefund policy in 2019.Pursuant to the Value-added Tax Preferential Catalogue on Products and Services Applying Integrated Use ofResources (Cai Shui [2015] No. 78), taxpayers who sell self-produced products and services applying integrateduse of resources may enjoy the immediate VAT refund policy. Shandong Chenming Panels Co., Ltd., a subsidiaryof the Company, produced products applying integrated use of resources, and is therefore subject to theimmediate VAT refund policy in 2019.Pursuant to the Value-added Tax Preferential Catalogue on Products and Services Applying Integrated Use ofResources (Cai Shui [2015] No. 78), taxpayers who sell self-produced products and services applying integrateduse of resources may enjoy the immediate VAT refund policy. Shouguang Chenming Cement Co., Limited, asubsidiary of the Company, produced products applying integrated use of resources, and is therefore subject tothe immediate VAT refund policy in 2019.
3. Others
INTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements
1. Monetary funds
Unit: RMBItemClosing balanceOpening balanceTreasury cash2,316,388.382,078,321.66Bank deposit2,006,746,843.002,379,479,920.86Other monetary funds18,718,827,955.8716,911,216,505.27Total20,727,891,187.2519,292,774,747.79Of which: Total deposits in overseas banks386,703,983.47614,601,451.77
Other explanationNotes: Other monetary funds of RMB14,388,551,572.15 (31 December 2018: RMB9,329,325,370.71) were the guarantee deposit for the
application for bank acceptance with the banks by the Group;Other monetary funds of RMB2,001,461,802.43 (31 December 2018: RMB3,703,195,695.22) were the guarantee deposit for theapplication for letter of credit with the banks by the Group;Other monetary funds of RMB1,690,568,603.51 (31 December 2018: RMB2,358,115,439.34) were the guarantee deposit for theapplication for guarantees with the banks by the Group;Other monetary funds of RMB254,045,977.78 (31 December 2018: RMB987,520,000.00) were the guarantee deposit for theapplication for loans with the banks by the Group; Other monetary funds of RMB384,200,000.00 (31 December 2018: RMB533,060,000.00) were the Group’s statutory reserve depositat the banks.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
2. Bills receivable
(1) Classification of bills receivable
Unit: RMBItemClosing balanceOpening balanceBank acceptance bills750,842,498.891,213,116,491.46Total750,842,498.891,213,116,491.46
Unit: RMBClosing balanceOpening balanceBook balanceBad debts provisionBook balanceBad debts provisionCategoryAmountPercentageAmount
ProvisionpercentageCarrying amountAmountPercentageAmount
ProvisionpercentageCarrying amountBills receivable assessed individually for impairment–––––15,000,000.001.23%1,500,000.0010.00%13,500,000.00Of which:
Bank acceptance bills15,000,000.001.23%1,500,000.0010.00%13,500,000.00 Bills receivable assessed collectively for impairment750,842,498.89100.00%750,842,498.891,199,616,491.4698.77%1,199,616,491.46Of which:
Bank acceptance bills750,842,498.89100.00%750,842,498.891,199,616,491.4698.77%1,199,616,491.46 Commercial acceptance billsTotal750,842,498.89100.00%750,842,498.891,214,616,491.46100.00%1,500,000.000.12%1,213,116,491.46
INTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
2. Bills receivable (Cont
’d)
(2) Provision, recovery or reversal of bad debt provision for the period
Significant recovery or reversal of bad debt provision for the period:
√ Applicable Not applicable
Unit: RMBChanges in the periodCategory
OpeningbalanceProvision
Recoveryor reversalWritten off
ClosingbalanceAccounts receivable with provision for bad debt1,500,000.001,500,000.00–Total1,500,000.001,500,000.00–
Note: Bills amounting to RMB15,000,000.00 represent payment received from Changjiang (Hubei) Publishing & Print Materials Co., Ltd. in
advance, and the bad debt provision for which is made individually under bills receivable at the beginning of the period, which hasbeen transferred to bad debt provision individually made under accounts receivable for the current period.
(3) Bills receivable of the Company pledged at the end of the period
Unit: RMBItem
Pledged amountat the end of the periodBank acceptance bills624,106,580.39Total624,106,580.39
(4) Outstanding bills receivable endorsed or discounted by the Company as at the end of the period
Unit: RMBItem
Derecognisedamount as at theend of the period
Recognisedamount as at theend of the periodBank acceptance bills6,072,923,132.61Total6,072,923,132.61
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
2. Bills receivable (Cont
’d)
(5) Bills transferred to accounts receivable due to non-performance of the issuers at the end of the period
Unit: RMBItem
Amounts transferredto accounts receivableat the end of the periodBills receivable37,600,000.00Total37,600,000.00
3. Accounts receivable
(1) Disclosure of accounts receivable by category
Unit: RMBClosing balanceOpening balanceBook balanceBad debts provisionCarrying amountBook balanceBad debts provisionCarrying amountCategoryAmountPercentageAmount
ProvisionpercentageAmountPercentageAmount
ProvisionpercentageAccounts receivable assessed individually for impairment67,960,343.901.73%55,040,343.9080.99%12,920,000.0071,960,343.901.90%55,240,343.9076.76%16,720,000.00Of which:
Accounts receivable assessed collectively for impairment3,854,279,812.7898.27%361,394,095.999.38%3,492,885,716.793,711,403,752.2398.10%323,636,747.648.72%3,387,767,004.59Of which:
Accounts receivable from related parties7,005,299.940.18%1,716,884.0424.51%5,288,415.905,838,812.920.15%947,246.6416.22%4,891,566.28 Accounts receivable from distributor clients3,637,109,235.0692.73%359,046,716.129.87%3,278,062,518.943,043,388,184.3780.44%320,207,886.8610.52%2,723,180,297.51 Factoring receivables210,165,277.785.36%630,495.830.30%209,534,781.95662,176,754.9417.50%2,481,614.140.37%659,695,140.80Total3,922,240,156.68100.00%416,434,439.8910.62%3,505,805,716.793,783,364,096.13100.00%378,877,091.5410.01%3,404,487,004.59
INTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
3. Accounts receivable (Cont
’d)
(1) Disclosure of accounts receivable by category (Cont
’d)Items assessed individually for impairment:
Unit: RMBClosing balanceNameBook balance
Bad debts
provision
ProvisionpercentageReasons for provisionFOSHAN SHUNDE XINGCHEN PAPER CO., LTD.26,236,528.7026,236,528.70100.00%Unlikely to be recoveredBEIJING HUAXIA CULTURE MEDIA CO., LTD.8,207,950.428,207,950.42100.00%Unlikely to be recoveredJIANGXI LONGMING ENTERPRISE CO., LTD.1,763,987.741,763,987.74100.00%Unlikely to be recoveredNANCHANG XINGBO PAPER CO., LTD.1,656,205.971,656,205.97100.00%Unlikely to be recoveredJIANGSU YIHONG PAPER CO., LTD.3,490,464.473,490,464.47100.00%Unlikely to be recoveredQINGDAO TENGFARUN PACKAGING CO., LTD.3,239,582.933,239,582.93100.00%Unlikely to be recoveredSIHONG GUANGFA COLOR PRINTING AND PACKAGING CO., LTD.934,371.82934,371.82100.00%Unlikely to be recoveredPINGYI HUIFENG PAPER CO., LTD.636,988.62636,988.62100.00%Unlikely to be recoveredQINGTAO BAOYUE PAPER CO., LTD.553,898.05553,898.05100.00%Unlikely to be recoveredBAYAN NUR TAILI PACKAGING CO., LTD.503,562.66503,562.66100.00%Unlikely to be recoveredWENXIAN HUARONG PACKAGING MATERIAL CO., LTD.426,858.60426,858.60100.00%Unlikely to be recoveredJILIN SAIWEI TRADING CO., LTD.6,709,943.926,709,943.92100.00%Unlikely to be recoveredWUHAN TIANRUI PAPER CO., LTD.13,600,000.00680,000.005.00%
Bills matured butnot collectedTotal67,960,343.9055,040,343.90––Items assessed collectively for impairment:
Accounts receivable with collective provision for bad debts based on receivables from related parties:
Unit: RMBClosing balanceNameBook balanceBad debts provision
Provisionpercentage (%)Within 1 year4,372,394.16218,619.715%1-2 years513,899.4051,389.9410%2-3 years840,164.98168,032.9920%Over 3 years1,278,841.401,278,841.40100%Total7,005,299.941,716,884.04–
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
3. Accounts receivable (Cont
’d)
(1) Disclosure of accounts receivable by category
(Cont’d)Accounts receivable with collective provision for bad debts based on receivables from distributor clients:
Unit: RMBClosing balanceNameBook balanceBad debts provision
Provisionpercentage (%)Within 1 year3,288,959,975.08145,760,318.074.43%1-2 years103,718,997.1510,371,899.7210.00%2-3 years51,894,705.6210,378,941.1220.00%Over 3 years192,535,557.21192,535,557.21100.00%Total3,637,109,235.06359,046,716.12–If the provision for bad debts of accounts receivable is made in accordance with the general model of expectedcredit losses, please disclose the information about provision for bad debts with reference to the way of disclosureof other receivables:
Applicable √ Not applicableBy ageing
Unit: RMBAgeingClosing balanceWithin 1 year3,369,808,213.411-2 years93,809,606.892-3 years42,187,896.49Total3,505,805,716.79
INTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
3. Accounts receivable (Cont
’d)
(2) Provision, recovery or reversal of bad debt provision for the period
Provision of bad debt provision for the period:
Unit: RMBChanges in the periodCategoryOpening balanceProvisionRecovery or reversalWritten offClosing balanceAccounts receivable with provision for bad debt378,877,091.5439,608,466.662,051,118.31416,434,439.89Total378,877,091.5439,608,466.662,051,118.31416,434,439.89
(3) Top five accounts receivable based on closing balance of debtors
Unit: RMBName of entityNatureClosing amountAgeing
Percentage toclosing balance ofother receivables
Closing balance ofbad debt provisionBEIJING PAPER COMPANY FOR FOREIGN LANGUAGE PUBLICATIONSLoan214,005,849.96Within 1 year5.46%10,700,292.50YUNNAN PRINTING MATERIALS CO. LTD.Loan86,300,124.14Within 1 year2.20%4,315,006.21SHENZHEN CENTURY HOPE TRADE CO., LTD.Loan69,951,518.53Within 1 year1.78%3,497,575.93DONGGUAN HUAFA PAPER CO., LTD.Loan66,534,917.30Within 1 year1.70%3,326,745.87GUANGZHOU JINGUAN FANZHOU PAPER CO., LTD.Loan61,025,415.53Within 1 year1.56%3,051,270.78Total–497,817,825.46–12.69%24,890,891.29
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
4. Prepayments
(1) Presentation of prepayments stated according to ageing analysis
Unit: RMBClosing balanceOpening balanceAgeingAmountPercentageAmountPercentageWithin 1 year486,689,905.1194.91%793,395,209.0291.86%1-2 years26,122,556.965.09%70,343,811.728.14%Total512,812,462.07–-863,739,020.74–-
(2) Top five prepayments according to closing balance of prepaid parties
Name of entityNatureClosing amountAgeing
Percentageto closingbalance ofprepayments
Reason forbeing unsettledJIANGXI PROVINCE ZHONGLIAN ENERGY DEVELOPMENT CO., LTD.
Loan82,871,712.88Within 1 year16.16%Prepayments for goods according
to the agreed contractSHOUGUANG CHENMING NATURAL GAS CO., LTD.Loan51,950,255.71Within 1 year10.13%Prepayments for goods according
to the agreed contractSHANDONG HEXIN CHEMICAL GROUP CO., LTD.Loan36,005,510.81Within 1 year7.02%Prepayments for goods according
to the agreed contractLINYI WANCHENG TRADE CO., LTD.Loan17,653,234.05Within 1 year3.44%Prepayments for goods according
to the agreed contractJINAN LONGYU PULP & PAPER CO., LTD.Loan15,275,387.36Within 1 year2.98%Prepayments for goods according
to the agreed contractTotal203,756,100.8139.73%
INTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
5. Other receivables
Unit: RMBItemClosing balanceOpening balanceInterest receivable210,003,430.11198,577,632.43Other receivables1,400,454,923.441,934,512,350.96Total1,610,458,353.552,133,089,983.39
(1) Interest receivable
1) Classification of interest receivable
Unit: RMBItemClosing balanceOpening balanceTime deposit0.001,002,811.95Bond investment0.0025,018,561.36Interest on deposit210,003,430.11172,556,259.12Total210,003,430.11198,577,632.43
(2) Other receivables
1 Other receivables by nature
Unit: RMBNature
Closingbook balance
Openingbook balanceOpen credit1,406,823,003.011,960,044,821.28Reserve and borrowings1,123,747.331,957,000.00Guarantee deposit10,639,508.5418,064,797.46Insurance premium1,224,439.622,034,980.18Advances4,629,242.144,099,146.51Others162,375,159.64162,793,258.20Total1,586,815,100.282,148,994,003.63
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
5. Other receivables (Cont
’d)
(2) Other receivables (Cont
’d)
2) Particulars of bad debt provision
Unit: RMBPhase 1Phase 2Phase 3Bad debt provision
Expected creditloss for the next12 months
Expectedcredit loss overthe entire life (notcredit-impaired)
Expectedcredit loss overthe entire life(credit-impaired)TotalBalance as at 1 January 2019180,706,607.9833,775,044.69214,481,652.67Balance as at 1 January 2019 during the period–––––Transferred into Phase 22,115,218,958.942,115,218,958.94–Transferred into Phase 333,775,044.6933,775,044.69–Reversal to Phase 2–Reversal to Phase 1Provision for the year27,839,538.3927,839,538.39Reversal for the year50,727,406.9228,350,785.9379,078,192.85Transfer for the yearWriting-off for the yearOther changesBalance as at 30 June 2019180,935,918.085,424,258.76186,360,176.84Changes in carrying book balances with significant changes in loss provision for the period Applicable √ Not applicableBy ageing
Unit: RMBAgeingClosing balanceWithin 1 year1,059,136,065.351-2 years267,976,828.922-3 years67,201,314.483-4 years277,224.024-5 years2,800,490.00Over 5 years3,063,000.67Total1,400,454,923.44
INTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
5. Other receivables (Cont
’d)
(2) Other receivables (Cont
’d)
3) Provision, recovery or reversal of bad debt provision for the period
Bad debt provision for the period:
Unit: RMBChanges for the periodCategoryOpening balanceProvision
Recoveryor reversalClosing balanceBad debt provision for other receivables237,598,831.3027,839,538.3979,078,192.85186,360,176.84Total237,598,831.3027,839,538.3979,078,192.85186,360,176.84
4) Top five other receivables according to closing balance of debtors
Unit: RMB
Name of entityNature
ClosingbalanceMaturity
Percentageto closingbalanceof otherreceivables
Closingbalance ofbad debtprovisionSHENZHEN QIANHAI RUILI ASSET MANAGEMENT CO., LTD.Consideration for equity transfer805,040,747.00Within 1 year50.73%40,252,037.35XIWANG GROUP FINANCE CO., LTD.Open credit100,000,000.00Within 1 year6.30%5,000,000.00WEIFANG SIME DARBY WEST PORT CO., LTDOpen credit62,631,878.081-2 years3.95%4,086,281.40HUANGGANG HIGH-TECH DEVELOPMENT ZONEMANAGEMENT COMMITTEELand transfer17,860,367.881-2 years1.13%1,786,036.79GUANGDONG ZHONGTUO CONSTRUCTION CO., LTD.Relocation payment15,200,000.003-4 years0.96%15,200,000.00Total–1,000,732,992.96–63.07%66,324,355.54
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
5. Other receivables (Cont
’d)
(2) Other receivables (Cont
’d)
5) Government grants related receivables
Unit: RMB
Name of entityName of project receiving government grants
Closingbalance
Maturityas at the endof the period
Estimated timeand amount ofreceiving thegrants and thebasis thereofShandong ChenmingOther enterprise reform and development grants73,730,000.001 monthReceived at 5 JulyMeilun PaperOther enterprise reform and development grants27,400,000.001 monthReceived at 5 JulyTotal101,130,000.00
6. Inventories
Whether the New Standard for Revenue has been implemented
√ Yes No
(1) Categories of inventories
Unit: RMBClosing balanceOpening balanceItemBook balance
Impairmentprovision forinventories orperformance costsCarrying amountBook balance
Impairmentprovision forinventories orperformance costsCarrying amountRaw materials2,884,649,476.302,884,649,476.303,275,454,669.279,525,360.593,265,929,308.68Work-in-process products121,882,974.07121,882,974.07102,153,808.77102,153,808.77Goods in stock1,246,019,599.621,246,019,599.621,690,248,067.4334,943,475.271,655,304,592.16Consumable biological assets1,532,910,693.201,532,910,693.201,511,542,610.361,511,542,610.36Developing products314,897,324.86314,897,324.86309,823,656.6473,265,542.87236,558,113.77Total6,100,360,068.056,100,360,068.056,889,222,812.47117,734,378.736,771,488,433.74
INTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
6. Inventories (Cont
’d)
(2) Impairment provision for inventories or performance costs
Unit: RMBIncrease for the periodDecrease for the periodItemOpening balanceProvisionOthers
Reversalor transferOthersClosing balanceRaw materials9,525,360.599,525,360.59–Goods in stock34,943,475.2734,943,475.27–Developing products73,265,542.8773,265,542.87–Total117,734,378.73117,734,378.73–
Notes: Since March 2019, the prices of various types of machine-made paper have been increasing. In June, we conducted an
impairment test on finished products, and the net realisable value was higher than the cost, and there was no sign ofimpairment.On 25 March, the Company received the“Letter on Terminating the Construction of the BT Project for the Coastal andBeach Comprehensive Treatment Project of Haidong New District of Zhanjiang City”(Zhan Dai Jian Han [2019] No. 66)issued by the Zhanjiang City Construction Project Management Bureau. The letter required that all the pre-investmentprojects and project costs that have been invested at the early stage should be included in the development cost of the firstzone, which obtained sea area use right certificate. Since the events that caused provision impairment of the developingproducts at the early stage disappeared, the impairment provision for inventories was reversed.
7. Assets held-for-sale
Unit: RMBItem
Closingbook balance
Impairmentprovision
Closingcarrying amountFair value
Estimateddisposal fee
Estimateddisposal timeKraft paper production line of Fuyu Chenming224,652,780.55173,934,865.3150,717,915.2450,300,000.00–2020-01
8. Non-current assets due within one year
Unit: RMBItemClosing balanceOpening balanceLong-term receivables due within one year5,565,858,326.784,007,503,281.86Total5,565,858,326.784,007,503,281.86
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
9. Other current assets
Whether the New Standard for Revenue has been implemented
√ Yes No
Unit: RMBItemClosing balanceOpening balanceVAT recoverable1,391,709,444.361,365,819,497.97
Prepaid tax46,204,550.6613,217,451.88
Receivables under financial lease due within one year8,345,877,080.028,234,007,148.70
Prepaid expenses165,347,939.51662,919,414.09Others2,905,130.305,349,312.49Total9,952,044,144.8510,281,312,825.13
10. Long-term receivables
(1) Particulars of long-term receivables
Unit: RMBItem
Closing balanceOpening balance
Discountrate rangeBook balanceBad debt provisionCarrying amountBook balance
Bad debtprovisionCarrying amountFinance lease payments12,362,308,287.51179,024,982.9012,183,283,304.6113,581,636,630.17145,746,721.1213,435,889,909.054-10Less: Unrealised financing income1,183,579,855.681,183,579,855.681,501,775,856.331,501,775,856.33Less: Non-current assets due within one year5,887,079,513.38166,827,642.605,720,251,870.784,028,313,053.6820,809,771.824,007,503,281.86Total5,291,648,918.4512,197,340.305,279,451,578.158,051,547,720.16124,936,949.307,926,610,770.86
INTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
10. Long-term receivables (Cont
’d)
(1) Particulars of long-term receivables (Cont
’d)Particulars of bad debt impairment provision
Unit: RMB
Bad debt provision
Phase 1Phase 2Phase 3
TotalExpected creditloss for the next12 months
Expected creditloss over theentire life (notcredit-impaired)
Expected creditloss over theentire life(credit-impaired)Balance as at 1 January 2019145,746,721.12145,746,721.12Balance as at 1 January 2019 during the period –Transferred into Phase 2 –Transferred into Phase 3 –Reversal to Phase 2 –Reversal to Phase 1Provision for the year33,278,261.7833,278,261.78Reversal for the yearTransfer for the yearWriting-off for the yearOther changesBalance as at 30 June 2019179,024,982.90179,024,982.90
Changes in carrying book balances with significant changes in loss provision for the year
Applicable √ Not ApplicableOther explanation
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
11. Long-term equity investments
Unit: RMB
InvesteeOpening balance
Change for the periodAdditionalcontribution
Withdrawncontribution
Investmentgain or lossrecognisedunderequity method
Adjustment
of othercomprehensive
incomeOther changein equityinterest
Distributionof cashdividend orprofit declared
ImpairmentprovisionOthersClosing balance
Closingbalanceof impairmentprovisionI. Joint venturesShouguang Chenming HuisenNew-style Construction Materials Co., Ltd.3,572,834.79975,461.08500,000.004,048,295.87Weifang Sime Darby West Port Co., Ltd103,159,857.71-7,969,846.9895,190,010.73Weifang Xingxing United Chemical Co., Ltd.109,253,237.124,099,600.98113,352,838.10Sub-total215,985,929.62-2,894,784.92500,000.00212,591,144.70II. AssociatesJiangxi Jiangbao Media Colour Printing Co. Ltd.811,998.75-480,747.58331,251.17Zhuhai Dechen New Third BoardEquity Investment Fund Company (Limited Partnership)52,253,817.72108,497.3252,362,315.04Ningbo Kaichen Huamei EquityInvestment Fund Partnership (Limited Partnership)199,585,216.94799,460.06200,384,677.00Xuchang Chenming Paper Co., Ltd.5,994,545.96-5,994,545.96–Jiangxi Chenming Port Co., Ltd.2,156,252.31-766,917.521,389,334.79Chenming (Qingdao) Asset Management Co., Ltd.7,886,521.47-238,134.377,648,387.10Sub-total268,688,353.15-6,572,388.05262,115,965.10Total484,674,282.77-9,467,172.97500,000.00474,707,109.80
INTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
12. Other non-current financial assets
Unit: RMBItemClosing balanceOpening balanceEquity instrument investment765,160,000.00103,000,000.00Total765,160,000.00103,000,000.00
13. Investment properties
(1) Investment properties under the cost method
Item
Housing andbuilding structureLand use rights
Constructionin progressTotalI.Original carrying amount
1. Opening balance5,021,057,510.735,021,057,510.73
2. Increase for the year
3. Decrease for the year3,090,227.363,090,227.36
(1) Disposal3,090,227.363,090,227.36
4. Closing balance5,017,967,283.375,017,967,283.37II.Accumulated depreciation and
accumulated amortisation
1. Opening balance176,064,471.11176,064,471.11
2. Increase for the year111,282,341.19111,282,341.19
(1) Provision or amortisation111,282,341.19111,282,341.19
3. Decrease for the year840,962.07840,962.07
(1) Disposal840,962.07840,962.07
4. Closing balance286,505,850.23286,505,850.23IV.Carrying amount
1. Closing carrying amount4,731,461,433.144,731,461,433.14
2. Opening carrying amount4,844,993,039.624,844,993,039.62
14. Fixed assets
Unit: RMBItemClosing balanceOpening balanceFixed assets30,774,255,749.3427,913,986,152.68
Total30,774,255,749.3427,913,986,152.68
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
14. Fixed assets (Cont
’d)
(1) Particulars of fixed assets
Unit: RMBItem
Housing andbuilding structure
Machinery andequipmentVehicles
Electronicequipmentand othersTotalI.Original carrying amount:
1. Opening balance9,669,605,532.5432,091,581,325.72345,066,029.50440,199,456.2742,546,452,344.03
2. Increase for the period199,399,266.203,563,165,711.7916,240,303.345,711,396.433,784,516,677.76
(1) Acquisition50,976,885.6532,624,783.103,528,582.535,425,353.3892,555,604.66
(2) Transferred from construction in progress148,422,380.553,530,540,928.6912,711,720.81286,043.053,691,961,073.10
(3) Increase in business combinations
3. Decrease for the period171,362,577.70264,357,625.003,043,833.976,543,249.48445,307,286.15
(1) Disposal or retirement47,658,732.9719,104,009.291,583,087.612,266,916.6570,612,746.52
(2) Transferal19,261.5419,261.54
(3) Transferred to assets held-for-sale123,684,583.19245,253,615.711,460,746.364,276,332.83374,675,278.09
4. Closing balance9,697,642,221.0435,390,389,412.51358,262,498.87439,367,603.2245,885,661,735.64II.Accumulated depreciation
1. Opening balance1,678,906,121.6512,326,017,656.16173,353,238.78257,772,524.5914,436,049,541.18
2. Increase for the period127,158,122.10676,205,622.5716,960,307.477,379,287.21827,703,339.35
(1) Provision127,158,122.10676,205,622.5716,960,307.477,379,287.21827,703,339.35
3. Decrease for the period65,606,218.05101,491,723.482,040,748.215,689,989.35174,828,679.09
(1) Disposal or retirement15,023,390.7511,705,555.76764,605.871,632,235.9429,125,788.32
(2) Transferal5,184.535,184.53
(3) Transferred to assets held-for-sale50,577,642.7789,786,167.721,276,142.344,057,753.41145,697,706.24
4. Closing balance1,740,458,025.7012,900,731,555.25188,272,798.04259,461,822.4515,088,924,201.44III.Provision for impairment
1. Opening balance50,958,113.15145,083,130.7713,092.92362,313.33196,416,650.17
2. Increase for the period
(1) Provision
3. Decrease for the period50,958,113.15122,601,345.9113,092.92362,313.33173,934,865.31
(1) Disposal or retirement
(2) Transferred to assets held-for-sale50,958,113.15122,601,345.9113,092.92362,313.33173,934,865.31
4. Closing balance22,481,784.8622,481,784.86IV.Carrying amount
1. Closing carrying amount7,957,184,195.3422,467,176,072.40169,989,700.83179,905,780.7730,774,255,749.34
2. Opening carrying amount7,939,741,297.7419,620,480,538.79171,699,697.80182,064,618.3527,913,986,152.68
INTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
14. Fixed assets (Cont
’d)
(2) Particulars of temporarily idle fixed assets
Unit: RMBItem
Originalcarryingamount
Accumulateddepreciation
Provision forimpairment
CarryingamountRemarkHousing and building structure52,541,556.537,204,288.7445,337,267.79Machinery and equipment461,842,555.02174,634,921.5420,501,583.51266,706,049.97Total514,384,111.55181,839,210.2820,501,583.51312,043,317.76
(3) Particulars of fixed assets without obtaining property right certificates
Unit: RMBItemCarrying amount
Reason for not yetobtaining propertyright certificatesHousing and building structure (JIANGXI CHENMING)219,633,066.69Scheduled operation
commencementnot imminentHousing and building structure (SHOUGUANG MEILUN)276,549,079.27Scheduled operation
commencementnot imminentHousing and building structure (HAIMING MINING)134,823,018.55Scheduled operation
commencementnot imminentHousing and building structure (JILIN CHENMING)422,053,751.94Scheduled operation
commencementnot imminentHousing and building structure (Parent company)73,212,959.15Scheduled operation
commencementnot imminentHousing and building structure (ZHANJIANG CHENMING)1,348,705,580.19Scheduled operation
commencementnot imminentTotal2,474,977,455.79
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
15. Construction in progress
Unit: RMBItemClosing balanceOpening balanceConstruction in progress10,141,701,524.6811,861,494,351.33
Materials for project10,356,344.409,856,470.22Total10,152,057,869.0811,871,350,821.55
(1) Particulars of construction in progress
Unit: RMB
Item
Closing balanceOpening balance
Book balance
Provision for
impairmentCarrying amountBook balance
Provision forimpairmentCarrying amount400T/d Mechanical pulp project (Headquarters)190,246,507.11190,246,507.11Newsprint machine to cultural paper machine and related pulp line transformation (Headquarters)1,426,602,125.571,426,602,125.57Upgrading and renovation of back pressure unit of captive power plant (Headquarters)212,587,040.69212,587,040.69177,001,786.08177,001,786.08Membrane treatment for reclaimed water recycling (Headquarters)236,089,709.94236,089,709.94145,410,753.42145,410,753.42Chemical pulp project (Meilun)3,602,279,799.063,602,279,799.063,016,785,495.663,016,785,495.66High-end cultural paper (Meilun)117,738,632.97117,738,632.971,701,781,479.301,701,781,479.30Haiming mining magnesite deep processing project (Haiming)544,449,147.79544,449,147.79486,501,551.60486,501,551.60200,000-ton magnesia-alumina spinel project (Haiming)774,397,532.48774,397,532.48558,876,283.14558,876,283.14Huanggang Chenming integrated forestry, pulp and paper project4,052,359,826.414,052,359,826.413,605,150,078.663,605,150,078.66Membrane treatment project (Zhanjiang Chenming)88,779,975.1688,779,975.1674,505,129.7274,505,129.72Back pressure unit project (Zhanjiang Chenming)51,243,062.1351,243,062.1326,452,503.4126,452,503.41Others485,462,893.8723,686,095.82461,776,798.05479,609,593.4827,428,935.82452,180,657.66
Total10,165,387,620.5023,686,095.8210,141,701,524.6811,888,923,287.1527,428,935.8211,861,494,351.33
INTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont
’d)
15. Construction in progress (Cont
’d)
(2) Changes in material construction in progress projects for the period
Unit: RMB
Project name
Budget(RMB’00 million)OpeningbalanceIncrease forthe periodTransfer tofixed assetfor the periodOther deductionsfor the period
ClosingbalanceAccumulatedinvestment
to budgetConstruction
in progressAccumulated
capitalised
interestOf which:
capitalised
interest amount
for the periodCapitalisation
rate of the
interest amount
for the periodSource of fund
Up grading and renovation of back pressure unit ofcaptive power plant (Headquarters)
2.13177,001,786.0835,585,254.61212,587,040.6998.13%0.17254,782.94254,782.94Self-raised and
borrowings
400T/d Mechanical pulp project (Headquarters)1.30190,246,507.1126,098,726.22216,345,233.330.000.00%0.95–Self-raised and
borrowings
Me mbrane treatment for reclaimed water recycling
(Headquarters)
3.20145,410,753.4290,678,956.52236,089,709.9473.78%0.602,556,339.752,556,339.75Self-raised and
borrowings
Ne w annual 200,000 ton of fly ash cement ceramsite
production project
0.5730,122,443.497,334,946.3637,457,389.8565.71%0.60–Self-raised and
borrowings
Ne wsprint machine to cultural paper machine and
related pulp line transformation (Headquarters)
3.721,426,602,125.57167,055,466.901,593,657,592.47–0.00%0.96Self-raised and
borrowings
Chemical pulp project (Meilun)30.003,016,785,495.66524,249,901.913,541,035,397.57118.03%0.95181,512,616.7544,222,151.405.47%Self-raised and
borrowings
High-end cultural paper (Meilun)37.611,701,781,479.30241,976,824.971,868,651,886.5275,106,417.752.00%0.9864,161,971.3122,003,288.795.47%Self-raised and
borrowings
Ha iming mining magnesite deep processing project
(Haiming)
18.50486,501,551.60107,044,396.19593,545,947.7932.08%1.00109,651,007.9812,031,087.267.00%Self-raised and
borrowings
200,000-ton magnesia-alumina spinel project8.50558,876,283.14235,635,002.60794,511,285.7493.47%0.8319,164,200.5210,248,703.974.35%Self-raised and
borrowings
Hu anggang Chenming Forest and Paper Integration
Project (Pulping Project) (Huanggang Chenming)
34.853,605,150,078.66447,209,747.754,052,359,826.41116.28%1.00184,757,758.9136,512,651.894.90%Self-raised and
borrowings
Bi omass power generation project (southern district)(Huanggang Chenming)
5.13157,540,365.9218,628,563.94176,168,929.8634.34%1.00Self-raised
Me mbrane treatment project (Zhanjiang Chenming)1.2074,505,129.7274,505,129.7262.09%0.80Self-raisedBa ck pressure unit project (Zhanjiang Chenming)0.6026,452,503.4126,452,503.4144.09%Self-raisedTotal147.3111,596,976,503.081,901,497,787.973,678,654,712.32–9,819,819,578.739.84562,058,678.16127,829,006.0041.28%–
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
15. Construction in progress (Cont
’d)
(3) Materials for project
Unit: RMBItem
Closing balanceOpening balance
Book balance
Impairment
provisionCarrying amountBook balance
ImpairmentprovisionCarrying amountSpecial materials10,356,344.4010,356,344.409,856,470.229,856,470.22Total10,356,344.4010,356,344.409,856,470.229,856,470.22
INTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
16. Intangible assets
(1) Particulars of intangible assets
Unit: RMBItemLand use rightsPatents
UnpatentedtechnologySoftwareTotalI.Original carrying amount
1. Opening balance2,298,247,993.5315,895,213.3325,993,883.142,340,137,090.00
2. Increase for the period1,768,215.95110,016,542.11355,074.82112,139,832.88
(1) Acquisition1,768,215.95110,016,542.11355,074.82112,139,832.88
3. Decrease for the period731,218.52731,218.52
(1) Disposal731,218.52731,218.52
4. Closing balance2,299,284,990.96125,911,755.4426,348,957.962,451,545,704.36II.Accumulated amortisation
1. Opening balance379,242,063.351,705,104.3019,834,647.37400,781,815.02
2. Increase for the period23,817,593.042,650,548.42665,399.3727,133,540.83
(1) Provision
23,817,593.042,650,548.42665,399.3727,133,540.83
3. Decrease for the period731,218.52731,218.52
(1) Provision
731,218.52731,218.52
4. Closing balance402,328,437.874,355,652.7220,500,046.74427,184,137.33III.Impairment provisionIV.Carrying amount
1. Closing carrying amount1,896,956,553.09121,556,102.725,848,911.222,024,361,567.03
2. Opening carrying amount1,919,005,930.1814,190,109.036,159,235.771,939,355,274.98
17. Goodwill
(1) Original carrying amount of goodwill
Unit: RMBName of investee or item generating goodwillOpening balance
Increasefor the period
Decreasefor the periodClosing balanceShandong Chenming Panels Co., Ltd.5,969,626.575,969,626.57Jilin Chenming Paper Co., Ltd.14,314,160.6014,314,160.60Total20,283,787.1720,283,787.17
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
17. Goodwill (Cont
’d)
(2) Provision for impairment of goodwill
Unit: RMBName of investee or item generating goodwillOpening balance
Increasefor the period
Decreasefor the periodClosing balanceMachine-made paper sector – Jilin Chenming Paper Co., Ltd.14,314,160.6014,314,160.60Total14,314,160.6014,314,160.60
18. Long-term prepaid expenses
Unit: RMBItemOpening balance
Increasefor the period
Amortisationfor the period
OtherdeductionsClosing balanceRailway expenses6,969,901.98352,407.306,617,494.68Rentals41,096,304.351,005,862.0840,090,442.27Woodland expenses86,850,035.483,989,314.3182,860,721.17Total134,916,241.815,347,583.69129,568,658.12
19. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets before offsetting
Unit: RMBClosing balanceOpening balanceItem
Deductibletemporarydifference
Deferred
incometax assets
Deductibletemporarydifference
Deferred
incometax assetsProvision for impairment of assets1,075,169,307.43251,697,134.871,009,229,761.95201,814,843.08Unrealised profit arising from intra-group transactions86,406,080.3221,601,520.0853,691,645.1313,422,911.28Deductible loss2,474,702,128.23393,326,264.471,832,638,038.33291,277,348.30Outstanding payables388,522,635.8269,970,733.85464,741,048.8572,646,157.78Deferred income116,027,847.2022,334,275.75136,079,842.6324,712,438.18Total4,140,827,999.00758,929,929.023,496,380,336.89603,873,698.62
INTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
19. Deferred income tax assets/deferred income tax liabilities (Cont
’d)
(2) The breakdown of unrecognised deferred income tax assets
Unit: RMBItemClosing balanceOpening balanceDeductible temporary difference198,361,935.86293,812,600.65Deductible loss746,075,536.84618,945,325.05Total944,437,472.70912,757,925.70
(3) Expiry of deductible loss of unrecognised deferred income tax assets falls in the periods as follows
Unit: RMBYearClosing amountOpening amountRemark201958,075,279.70202062,162,599.8068,154,676.89202167,536,762.7579,493,561.61202280,679,499.2191,517,702.922023318,817,137.26321,704,103.932024216,879,537.82Total746,075,536.84618,945,325.05–
20. Other non-current assets
Whether the New Standard for Revenue has been implemented
√ Yes No
Unit: RMBItem
Closing balanceOpening balance
Book balance
Impairment
provisionCarrying amountBook balance
Impairment
provisionCarrying amountPrepayments for properties507,301,567.82507,301,567.82458,224,099.89458,224,099.89Prepayments for land45,230,000.0045,230,000.00Prepayments for engineering17,790,680.0517,790,680.0522,445,137.1822,445,137.18Prepayments for equipment238,243,937.63238,243,937.63223,822,509.86223,822,509.86Deposits36,000,000.0036,000,000.00Equity transfer or investment1,896,662,879.241,896,662,879.24694,000,000.00694,000,000.00Pre-paid expenses26,037,702.9626,037,702.9642,771,382.7342,771,382.73Total2,686,036,767.702,686,036,767.701,522,493,129.661,522,493,129.66Other explanations: Equity transfer payment of RMB1,671,034,479.24 was used for the acquisition of equity interest in Nanyue Bank, andRMB39.5 million was used for investment in Weifang Chenming Growth Driver Replacement Fund.
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
21. Short-term borrowings
(1) Classification of short-term borrowings
Unit: RMBItemClosing balanceOpening balancePledged borrowings791,650,262.66971,604,153.41Mortgage borrowings180,000,000.00180,000,000.00
Guaranteed borrowings9,444,577,202.399,918,242,061.05Credit borrowings10,720,238,621.907,531,565,147.43Discounted borrowings23,528,864,000.0021,626,534,000.00Total44,665,330,086.9540,227,945,361.89
22. Bills payable
Unit: RMBClassificationClosing balanceOpening balanceCommercial acceptance bills131,972,223.2649,670,407.62Bank acceptance bills2,087,936,210.594,169,299,147.31Total2,219,908,433.854,218,969,554.93Total outstanding bills payable as at the end of the period amounted to RMB0.00.
23. Accounts payable
(1) Particulars of accounts payable
Unit: RMBItemClosing balanceOpening balanceWithin 1 year4,013,299,860.413,566,507,866.14
1-2 years383,179,342.06261,760,924.332-3 years56,927,131.2880,120,125.97Over 3 years158,745,544.57241,839,728.22Total4,612,151,878.324,150,228,644.66
INTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
23. Accounts payable (Cont
’d)
(2) Significant advance receipts for over 1 year
Unit: RMBItemClosing balanceReasonsGuangxi Construction Engineering Group No. 1 Installation Co., Ltd.28,486,702.84Deposit for
engineeringAnhui Transportation Navigation Engineering Co., Ltd.17,854,000.00Deposit for
engineeringInstitute 704 of China Shipbuilding Industry Corporation13,217,264.90Deposit for
engineeringequipmentChina Light Industry Nanning Design Engineering Co., Ltd.12,375,316.24Deposit for
engineeringequipmentShandong Shenhua Shanda Energy & Environment Co., Ltd.11,736,736.36Payment not
demanded by thecounterparty yetTotal83,670,020.34
24. Contract liabilities
Unit: RMBItemClosing balanceOpening balanceAdvance loans639,444,833.26419,540,133.74
Total639,444,833.26419,540,133.74
25. Staff remuneration payables
(1) Particulars of staff remuneration payables
Unit: RMBItemOpening balance
Increasefor the period
Decreasefor the periodClosing balanceI. Short-term remuneration135,108,374.13640,959,206.39668,093,665.86107,973,914.66II. Retirement benefit plan – defined contribution scheme265,033.5795,915,737.0395,988,712.46192,058.14Total135,373,407.70736,874,943.42764,082,378.32108,165,972.80
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
25. Staff remuneration payables (Cont
’d)
(2) Particulars of short-term remuneration
Unit: RMBItemOpening balance
Increasefor the period
Decreasefor the periodClosing balance
1. Salaries, bonuses, allowance and subsidies45,776,603.50510,410,269.53531,270,016.4424,916,856.59
2. Staff welfare9,087,468.8222,724,599.8531,485,293.12326,775.55
3. Social insurance premium1,453,195.4542,676,671.3043,122,682.971,007,183.78Of which: Medical insurance premium484,700.1136,927,845.1937,412,545.300.00 Work-related injury insurance premium2,559.912,442,599.942,312,567.58132,592.27 Maternity insurance premium962,031.663,306,226.173,393,666.32874,591.51 Others3,903.770.003,903.770.00
4. Housing provident funds8,814,407.4252,870,502.2955,334,822.026,350,087.69
5. Union funds and workers
’ education26,540,500.6711,494,802.535,907,078.3032,128,224.90
6. Other short-term remuneration43,436,198.27782,360.89973,773.0143,244,786.15Total135,108,374.13640,959,206.39668,093,665.86107,973,914.66
(3) Defined contribution plan
Unit: RMB
ItemOpening balance
Increasefor the period
Decreasefor the periodClosing balance
1. Basic pension insurance13,533.3492,381,476.4392,395,009.770.00
2. Unemployment insurance251,500.233,534,260.603,593,702.69192,058.14Total265,033.5795,915,737.0395,988,712.46192,058.14
INTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
26. Taxes payable
Unit: RMBItemClosing balanceOpening balanceValue added tax58,166,520.30101,147,703.11Enterprise income tax191,803,093.04279,044,478.52
Individual income tax26,292,521.4421,204,181.79
Urban maintenance and construction tax3,751,037.261,675,884.94Land use tax8,684,907.5516,727,507.78Property tax16,180,243.5726,049,416.88Educational surcharges and others3,538,242.362,685,191.81Stamp duty2,538,931.673,116,833.81Resource tax1,404,501.92Environmental tax1,924,023.08Total314,284,022.19451,651,198.64
27. Other payables
Unit: RMBItemClosing balanceOpening balanceInterest payable163,355,268.55226,788,777.59
Dividend payable976,175,735.520.00Other payables2,089,128,817.621,550,929,239.89
Total3,228,659,821.691,777,718,017.48
(1) Interest payable
Unit: RMBItemClosing balanceOpening balanceInterest on corporate bonds99,925,579.95132,103,351.62
Interest payable on short-term borrowings17,804,688.6334,393,759.32
Interest on medium-term notes45,624,999.9760,291,666.65
Total163,355,268.55226,788,777.59
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
27. Other payables (Cont
’d)
(2) Dividend payable
Unit: RMBItemClosing balanceOpening balanceA shares400,780,244.160.00B shares169,532,463.840.00H shares126,793,260.000.00Preference shares279,069,767.520.00
Total976,175,735.520.00
(3) Other payables
1) Other payables by nature
Unit: RMBItemClosing balanceOpening balanceOpen credit627,042,165.66164,919,560.22Deposit663,102,948.69969,423,011.35Accrued expenses530,264,563.26281,151,124.64
Others268,719,140.01135,435,543.68
Total2,089,128,817.621,550,929,239.89
2) Significant advance receipts for over 1 year
Unit: RMBItemClosing balanceReasonsLiaoning Beihai Industry Group Ltd.74,643,475.03Debt investment by
a shareholder of asubsidiary as agreedShouguang Hengtai Enterprise Investment Co., Ltd.45,977,444.73Debt investment by
a shareholder of asubsidiary as agreedNine Dragons Dawei Holdings Co., Ltd.30,000,000.00DepositState-Owned Shouguang Qingshuipo Farm8,800,000.00DepositInstitute 704 of China Shipbuilding Industry Corporation3,924,720.00DepositTotal163,345,639.76–
INTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
28. Non-current assets due within one year
Unit: RMBItemClosing balanceOpening balanceLong-term receivables due within one year2,399,108,063.184,234,248,448.36Long-term payables due within one year2,594,377,113.232,732,057,322.65Other non-current liabilities due within one year250,000,000.00250,000,000.00Total5,243,485,176.417,216,305,771.01
29. Other current liabilities
Whether the New Standard for Revenue has been implemented
√ Yes No
Unit: RMBItemClosing balanceOpening balanceShort-term bonds payable1,853,868,055.562,816,956,481.68
Total1,853,868,055.562,816,956,481.68
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
30. Long-term borrowings
(1) Types of long-term borrowings
Unit: RMBItemClosing balanceOpening balancePledge borrowings345,766,543.72362,064,033.51Secured borrowings4,427,537,899.994,733,171,900.00Guarantee borrowings4,686,849,838.976,097,254,963.85Credit borrowings923,110,691.19840,692,035.94
Less: Long-term borrowings due within 1 year1,933,526,718.434,234,248,448.36Total8,449,738,255.447,798,934,484.94
Details of types long-term borrowings:
ItemClosing balanceOpening balanceLong-term borrowings due within 1 yearLong-term borrowings due within 1-2 years2,037,389,007.222,032,389,007.22
Long-term borrowings due within 2-5 years3,367,349,248.222,716,545,477.72Long-term borrowings due over 5 years3,045,000,000.003,050,000,000.00
Total8,449,738,255.447,798,934,484.94
31. Bonds payable
(1) Bonds payable
Unit: RMBItemClosing balanceOpening balance17 Chenming bond 01- Chenming Paper1,198,890,000.001,198,710,000.0018 Chenming bond 01- Chenming Paper898,987,500.00898,852,500.00
Total2,097,877,500.002,097,562,500.00
INTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
31. Bonds payable (Cont
’d)
(2) Increase/decrease in bonds payable (excluding other financial instruments such as preference shares and
perpetual bonds classified as financial liabilities)
Unit: RMBName of bondPar valueDate of issueTermAmountOpening balance17 Chenming bond 01- Chenming Paper1,200,000,000.002017/8/2251,198,200,000.001,198,710,000.0018 Chenming bond 01- Chenming Paper900,000,000.002018/4/25898,650,000.00898,852,500.00Total2,100,000,000.002,096,850,000.002,097,562,500.00(Cont’d)Name of bond
Issueduring the year
Interest atpar value
Amortisation ofpremium/discount
Redemptionduring the yearClosing balance17 Chenming bond 01- Chenming Paper180,000.001,198,890,000.0018 Chenming bond 01- Chenming Paper135,000.00898,987,500.00Total315,000.002,097,877,500.00
32. Long-term payables
Unit: RMBItemClosing balanceOpening balanceLong-term payables3,630,523,501.353,900,255,693.44
Total3,630,523,501.353,900,255,693.44
(1) By nature
Unit: RMBItemClosing balanceOpening balanceRetention for the financial leasing operations164,190,103.51167,083,436.84
China Development Bank Special funds595,000,000.00622,500,000.00
Financial leasing5,408,761,794.565,842,729,579.25
Exploitation right56,948,716.51
Less: Due within 1 year2,594,377,113.232,732,057,322.65
Total3,630,523,501.353,900,255,693.44
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
33. Provision
Unit: RMBItemClosing balance
Increasefor the period
Decreasefor the periodOpening balanceReasonProvision329,230,107.883,971,025.60325,259,082.28Losses from Arjo’slawsuit andrecognisedabandon costs for
Haiming MiningTotal329,230,107.883,971,025.60325,259,082.28–
Note: Haicheng Haiming Mining Co., Ltd., a controlled subsidiary of the Company, is expected to pay magnesite mine abandon costs.
34. Deferred income
Unit: RMBItemOpening balance
Increase forthe period
Decrease for
the periodClosing balanceReasonGovernment grants1,862,395,197.61–56,873,237.361,805,521,960.25Total1,862,395,197.61–56,873,237.361,805,521,960.25–
INTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
34. Deferred income (Cont
’d)
Items in respect of government grants:
Unit: RMBLiabilities itemOpening balance
New grantsfor the period
Include in non-operating income
for the period
Include in otherincome for theperiodAmount chargedagainst costexpensesOther changesClosing balance
Asset-related/income-relatedPr oject fund for National
technological supportscheme1,617,224.6882,349.681,534,875.00Asset-relatedSe wage treatment andwater conservationreconfiguration project64,466,819.64596,341.4963,870,478.15Asset-relatedFi nancial grantsfor technologicalmodification project181,015,256.911,500.006,391,904.25174,621,852.66Asset-relatedSp ecial subsidy funds
for environmentalprotection749,420,276.7524,595,985.72724,824,291.03Asset-relatedRa ilway line change
compensation13,336,458.29184,375.0213,152,083.27Asset-relatedInterest subsidy17,050,714.30228,475.0316,822,239.27Asset-relatedLogistics park project51,960,000.00–51,960,000.00Asset-relatedZh anjiang integrated
forestry, pulp and
paper project93,506,446.642,047,316.4622,364,612.2269,094,517.96Asset-relatedHu anggang pulp-forestry-
paper project681,039,716.66–681,039,716.66Asset-relatedOthers8,982,283.74380,377.498,601,906.25Asset-relatedTotal1,862,395,197.611,500.0034,507,125.1422,364,612.221,805,521,960.25
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
35. Other non-current liabilities
Whether the New Standard for Revenue has been implemented
√ Yes No
Unit: RMBItemClosing balanceOpening balanceMedium-term notes2,051,031,576.502,047,948,069.73
Wealth management direct financing instruments250,000,000.00250,000,000.00Less: Other non-current liabilities due within one year250,000,000.00250,000,000.00Total2,051,031,576.502,047,948,069.73
36. Share capital
Unit: RMBOpening balance
Increase/decrease during the year(+/-)
Closing balanceNew issueBonus issueShares convertedfrom reservesOthersSubtotalTotal number of shares2,904,608,200.002,904,608,200.00
37. Other equity instruments
(1) Preference shares, perpetual bonds and other financial instruments outstanding at the end of the period
ItemOpening balanceIncrease for the period
Decrease for theperiodClosing balancePerpetual bonds2,988,000,000.002,988,000,000.00Preference shares4,477,500,000.004,477,500,000.00Total7,465,500,000.007,465,500,000.00
(2) Changes in perpetual bonds outstanding at the end of the period
Unit: RMBOutstanding financial instrumentsOpening balance
Increase for
the period
Decrease for
the periodClosing balance17 Lu Chenming MTN001996,000,000.00996,000,000.0017 Lu Chenming MTN0021,992,000,000.001,992,000,000.00Total2,988,000,000.002,988,000,000.00
INTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
37. Other equity instruments (Cont
’d)
(3) Changes in perpetual bonds outstanding at the end of the period
Outstanding financial instrumentsOpening balance
Increase forthe period
Decrease forthe periodClosing balanceChenming You 012,238,750,000.002,238,750,000.00Chenming You 02999,000,000.00999,000,000.00Chenming You 031,239,750,000.001,239,750,000.00Total4,477,500,000.004,477,500,000.00
38. Capital reserves
Unit: RMBItemOpening balance
Increase forthe period
Decrease forthe periodClosing balanceCapital premium (share premium)4,421,127,407.934,421,127,407.93Other capital reserves670,322,507.21670,322,507.21Total5,091,449,915.145,091,449,915.14
39. Other comprehensive income
Unit: RMB
ItemOpening balance
During the period
Closing balanceIncurred beforeincome tax forthe period
Less: Transferred
from othercomprehensiveincome in priorperiods to profit
or loss during
the period
Less: Transferred
from othercomprehensiveincome in prior
periods toretained earningsduring the period
Less: Incometax expenses
Attributable toparent company
after tax
Attributableto minorityShareholders
after taxOt her comprehensiveincome to be reclassifiedto profit or loss insubsequent periodsEx change differences on
translation of foreignoperations-736,520,181.01-16,016,688.20-16,016,688.20-752,536,869.21To tal other comprehensive
income-736,520,181.01-16,016,688.20-16,016,688.20-752,536,869.21
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
40. Special reserves
Unit: RMBItemOpening balance
Increase forthe period
Decrease forthe periodClosing balanceSafety production3,257,998.471,039,765.05296,336.404,001,427.12Total3,257,998.471,039,765.05296,336.404,001,427.12
41. Surplus reserves
Unit: RMBItemOpening balance
Increase forthe period
Decrease forthe periodClosing balanceStatutory surplus reserves1,148,888,912.111,148,888,912.11Total1,148,888,912.111,148,888,912.11
42. Retained profit
Unit: RMBItemThe period
The prior period(the same period
last year)Retained profit as at the end of the prior year before adjustment9,107,422,690.858,866,614,844.40Ac cumulated adjustments to retained profit as at the beginning of the year
(increase“+”, decrease“-”)Retained profit as at the beginning of the year after adjustment9,107,422,690.858,866,614,844.40Plus: Net profit for year attributable to shareholders of the parent company509,795,572.291,784,631,025.31Less: Transfer of statutory surplus reservesOrdinary dividend payable697,105,968.001,161,843,280.20Preferred shares interest payable377,169,767.52562,816,006.80Retained profit as at the end of the year8,542,942,527.628,926,586,582.71
INTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
43. Revenue and operating cost
Unit: RMBItem
Amount for the periodAmount for the prior periodRevenueCostsRevenueCostsPrincipal activities13,127,389,053.489,644,049,075.2415,339,402,308.2310,223,566,613.79Other activities221,259,060.22110,048,724.58211,931,731.6636,318,305.07Total13,348,648,113.709,754,097,799.8215,551,334,039.8910,259,884,918.86Whether the New Standard for Revenue has been implemented
√ Yes No
Information related to revenue:
Unit: RMBCategory of contract
Machine-madepaper segmentFinancial segment
Magnesiummining segmentOther segmentTotalType of goodsMachine-made paper11,561,215,578.2911,561,215,578.29
Financial leasing947,166,321.20947,166,321.20
Magnesium mining195,773,124.76195,773,124.76
Electricity and steam88,614,973.372,129,527.8590,744,501.22Construction materials126,059,123.60126,059,123.60Paper chemicals56,149,320.4856,149,320.48
Hotel services13,771,420.5813,771,420.58Others203,468,152.8324,521,500.95724,488.32129,054,581.47357,768,723.57Total11,909,448,024.97971,687,822.15196,497,613.08271,014,653.5013,348,648,113.70
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
44. Taxes and surcharges
Unit: RMBItemAmount for the period
Amount forthe prior periodUrban maintenance and construction tax33,491,970.5029,431,549.79Educational surcharges30,083,061.4123,321,557.68Property tax25,991,020.8326,787,098.32Land use tax17,485,547.3825,666,645.17Vehicle and vessel tax53,845.71502,934.38Stamp duty10,950,170.1811,344,290.23Water engineering funds1,634,705.861,937,359.03Environmental tax4,945,936.664,354,733.37Water resource tax9,852,286.536,163,044.01Total134,488,545.06129,509,211.98
45. Selling and distribution expenses
Unit: RMBItemAmount for the period
Amount forthe prior period
Wages and surcharges61,585,417.9066,498,765.40Depreciation expenses6,288,587.946,739,186.02Office expenses1,758,975.112,024,990.87Transportation expenses425,245,830.59438,096,633.12Selling commissions5,725,354.659,527,198.46Cargo handling charges7,716,321.236,447,682.56Travel expenses14,946,381.3314,287,350.75Business hospitality expenses28,199,788.3427,355,797.58Warehouse expenses1,080,149.471,622,562.73Rental expenses4,019,981.964,783,613.45Others34,018,168.9528,079,544.77Total590,584,957.47605,463,325.71
INTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
46. General and administrative expenses
Unit: RMBItemAmount for the period
Amount forthe prior period
Wages and surcharges80,866,566.50135,226,780.34Welfare expenses27,556,239.7521,985,234.28Labour insurance premium37,651,636.4122,172,367.80Insurance premium14,052,377.2812,675,862.00Depreciation expenses114,171,603.76106,354,515.61Waste disposal expenses5,411,881.455,684,105.91Hospitality expenses38,283,517.0529,705,889.73Amortisation of intangible assets24,242,384.2516,360,689.72Production interruption loss69,899,210.78372,715.95Repair fees15,566,475.9613,562,056.75Others134,715,506.06130,741,450.46Total562,417,399.25494,841,668.55
47. R&D expenses
Unit: RMBItemAmount for the period
Amount forthe prior periodInstallation expenses8,229,476.80828,905.32Depreciation expenses18,616,150.5119,938,607.46Consumption of raw materials181,729,065.27227,337,001.14Consumption of semi-finished products61,663,204.7858,506,944.19Consumption of auxiliary materials41,870,386.5855,211,735.49Travel expenses1,574.18143,842.00Wages and surcharges52,643,872.9952,089,007.68Welfare expenses3,128,695.001,294,197.20Housing provident funds3,507,430.882,486,485.16Insurance premium8,344,818.025,502,576.84Union funds165,815.82199,798.57Utilities50,274,197.9853,656,094.31Other expenses1,309,027.25819,658.74Total431,483,716.06478,014,854.10
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
48. Finance expenses
Unit: RMBItemAmount for the period
Amount forthe prior periodFinance expenses1,650,075,404.491,720,741,207.21Less: interest income213,994,280.22159,096,591.34Less: capitalised interest amount73,319,125.19162,960,177.00Foreign exchange gains and losses-2,644,727.97-16,373,292.86Bank charges156,731,452.69116,517,298.68Total1,516,848,723.801,498,828,444.69
49. Other income
Unit: RMBItemAmount for the period
Amount forthe prior periodGovernment grants – amortised deferred income included in profit or loss34,507,125.1443,038,926.19Government grants – directly included in profit or loss4,324,165.5016,633,350.69Total38,831,290.6459,672,276.88
50. Investment income
Unit: RMBItemAmount for the period
Amount forthe prior periodIncome from long-term equity investments accounted for using the equity method-9,467,172.97-17,153,503.00Investment gain on disposal of long-term equity investments13,717,571.88Investment gain on holding of available-for-sale financial assets41,516,700.00Investment gain on disposal financial assets measured at fair value through profit or loss114,233,300.00Total-9,467,172.97152,314,068.88
INTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
51. Gain on change in fair value
Unit: RMBSource of gain on change in fair valueAmount for the period
Amount forthe prior periodGain on change in fair value of financial assets measured at fair value through profit or loss-94,000,000.00Consumable biological assets measured at fair value-1,883,064.80-23,973,841.55Total-1,883,064.80-117,973,841.55
52. Credit impairment loss
Unit: RMBItemAmount for the period
Amount forthe prior periodBad debt loss of accounts receivable62,440,283.34Total62,440,283.34
53. Loss on impairment of assets
Whether the New Standard for Revenue has been implemented
√ Yes No
Unit: RMBItemAmount for the period
Amount forthe prior period
Loss on inventory impairment and impairment loss of performance costs of contracts-83,464,107.59150,455,669.97Total-83,464,107.59150,455,669.97
54. Asset disposal income
Unit: RMBSource of asset disposal incomeAmount for the period
Amount for the
prior periodNet income from disposal of non-current assets22,823,551.43-2,210,048.63Total22,823,551.43-2,210,048.63
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
55. Non-operating income
Unit: RMB
ItemAmount for the period
Amount forthe prior period
Amounts included inextraordinary gains
and lossesfor the periodGovernment grants227,700,148.23184,555,864.82227,700,148.23Others9,772,444.747,076,692.539,772,444.74Total237,472,592.97191,632,557.35237,472,592.97
56. Non-operating expenses
Unit: RMB
ItemAmount for the period
Amount forthe prior period
Amounts included inextraordinary gains
and lossesfor the periodDonation3,041,000.005,000.003,041,000.00Loss on destroyed and scrapped non-current assets1,207,252.111,207,252.11Others801,876.08441,221.32801,876.08Total5,050,128.19446,221.325,050,128.19
57. Income tax expenses
(1) Particulars of income tax expenses
Unit: RMBItemAmount for the period
Amount forthe prior periodIncome tax expenses for the period264,288,265.75443,275,831.48Deferred income tax expenses-138,410,446.13-9,073,718.98Total125,877,819.62434,202,112.50
58. Other comprehensive income
Please refer to Note VII. 39 for details.
INTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
59. Items on statements of cash flow
(1) Cash received relating to other operating activities
Unit: RMBItemAmount for the period
Amount forthe prior period
Finance support fund184,083,293.99196,283,019.84Interest income213,994,280.22216,272,935.89Open credit, and income from default penalty and fine199,443,495.7890,523,468.41Net return of principal receivables relating to finance lease business1,700,675,170.982,057,052,794.71Total2,298,196,240.972,560,132,218.85
(2) Cash paid relating to other operating activities
Unit: RMBItemAmount for the period
Amount forthe prior periodExpense and open credit1,000,088,741.181,261,413,440.86External security deposit of the Leasing Company10,000,000.00Total1,000,088,741.181,271,413,440.86
(3) Cash received relating to other investing activities
Unit: RMBItemAmount for the period
Amount forthe prior period
Asset-related government grants11,194,100.00Total11,194,100.00
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
59. Items on statements of cash flow (Cont
’d)
(4) Cash paid relating to other investing activities
Unit: RMBItemAmount for the period
Amount forthe prior periodCompensation liability103,042,210.54Purchase of Goldtrust Futures equity interest144,248,400.00Investment in Growth Driver Replacement39,500,000.00Investment in Meite Environment5,880,000.00Total189,628,400.00103,042,210.54
(5) Cash received relating to other financing activities
Unit: RMBItemAmount for the period
Amount forthe prior periodShort-term commercial paper1,887,185,904.008,204,965,097.95Equipment financing831,099,242.78500,000,000.00Debt financing receivable400,071,077.96135,622,410.95Loan from the Finance Company200,000,000.00100,000,000.00Shandong Financial Assets Exchange borrowings161,337,302.32Total3,479,693,527.068,940,587,508.90
(6) Cash paid relating to other financing activities
Unit: RMBItemAmount for the period
Amount forthe prior period
Repayment of short-term commercial paper2,820,000,000.007,911,542,642.29Repayment of matured bonds579,511,229.15Repayment of interest on preference shares98,100,000.00Repayment of equipment leaseback1,400,052,857.831,086,203,289.95Increase in restricted bank deposits for the period1,807,611,450.605,922,955,877.94Repayment of borrowings from Chenming Holdings330,800,000.00Total6,456,564,308.4315,500,213,039.33
INTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
60. Supplementary information on cash flow statement
(1) Supplementary information on cash flow statement
Unit: RMBSupplementary information
Amount for
the period
Amount forthe prior period
1. Reconciliation of net profit as cash flows from operating activities:––Net profit536,600,045.951,783,122,625.14Plus: Provision for impairment of assets-83,464,107.59150,455,669.97Depreciation of fixed assets, consumption of oil and gas assets, depreciation of bearer biological assets763,316,039.38784,191,510.41Amortisation of intangible assets26,402,322.3124,059,444.29Amortisation of long-term prepaid expenses5,347,583.6916,218,441.95Loss on disposal of fixed assets, intangible assets and other long-term assets (“-” denotes gain)22,823,551.432,210,048.63Loss on changes in fair value (“-” denotes gain)-1,883,064.80117,973,841.55Finance expenses (“-” denotes gain)1,516,848,723.801,584,988,775.97Investment loss (“-” denotes gain)-9,467,172.97-152,438,125.48Decrease in deferred income tax assets (“-” denotes increase)-155,056,230.403,621,648.17Decrease in inventories (“-” denotes increase)-678,542,881.70-385,938,273.77Decrease in operating receivables (“-” denotes increase)-282,017,217.78-3,833,188,190.12Increase in operating payables (“-” denotes decrease)1,038,863,300.374,649,760,504.20Net cash flows from operating activities2,699,770,891.694,745,037,920.91
2. Major investing and financing activities not involving cash
settlements:––
3. Net change in cash and cash equivalents:––
Closing balance of cash2,009,063,231.383,530,985,289.73Less: Opening balance of cash2,381,558,242.532,804,408,374.46Plus: Closing balance of cash equivalentsLess: Opening balance of cash equivalentsNet increase in cash and cash equivalents-372,495,011.15726,576,915.27
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
60. Supplementary information on cash flow statement (Cont
’d)
(2) Cash and cash equivalents composition
Unit: RMBItemClosing balanceOpening balanceI. Cash2,009,063,231.382,381,558,242.52Of which: Treasury cash2,316,388.382,078,321.66Bank deposit that can be used for payment at any time2,006,747,121.502,379,479,920.86III. Balance of cash and cash equivalent as at end of period2,009,063,231.382,381,558,242.52
Other explanation:
Cash and cash equivalents did not include the restricted cash and cash equivalents used by the Company orsubsidiaries within the Group.
61. Assets with restricted ownerships or right to use
Unit: RMBItem
Closing carrying
amountReason for such restrictions
Monetary funds18,718,827,955.87As guarantee deposits for bank acceptance bills, letter
of credit, and bank borrowings deposits, and depositreserves
Bills receivable collateral624,106,580.39As collateral for short-term borrowings, letters of guarantee
and letters of credit
Fixed assets9,433,004,439.14As collateral for bank borrowings and long-term payablesIntangible assets855,039,400.00As collateral for bank borrowings and long-term payables
Investment properties4,581,606,847.89As collateral for bank borrowings
Total34,212,585,223.29–
INTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
62. Foreign currency items
(1) Foreign currency items
Unit: RMBItem
Closing foreigncurrency balanceExchange rate
Closing balance
in RMBMonetary funds––Of which: USD53,951,809.156.87370,902,496.61 EUR1,370,658.677.815,273,015.00 HKD125,418.660.88110,325.78 JPY101,532.000.066,479.37 Accounts receivables––Of which: USD57,294,935.906.87404,634,355.39 EUR4,797,586.697.8137,506,151.76 HKD–0.88– JPY146,734,998.000.069,364,040.63 Accounts payable––Of which: USD134,390,132.536.87923,891,844.10 EUR9,937,315.497.8177,655,636.32 Other payables––Of which: USD5,870,562.016.8740,358,352.65 EUR407,344.917.813,184,215.16 HKD655,647.380.88574,820.89 JPY31,428.000.062,005.61 Short-term borrowings––Of which: USD237,634,727.446.871,633,667,460.73 HKD35,000,000.000.8830,788,100.00 Long-term borrowings––Of which: USD471,864,591.766.873,243,927,508.97 EUR26,820,000.007.81209,651,940.00Non-current liabilities due within one yearOf which: USD166,488,425.606.871,144,557,979.47 EUR26,820,000.007.81209,651,940.00
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
VII. Notes to items of the consolidated financial statements (Cont’d)
62. Foreign currency items (Cont
’d)
(2) Explanation on overseas operating entities (including major overseas operating entities), which shall disclose
their overseas principal places of business, functional currency and basis. Reasons shall be disclosed if thereis any change in the functional currency.
√ Applicable Not applicable
No.Name of subsidiary
Principal placeof business
Place ofincorporation
Functionalcurrency1Chenming GmbHHamburg, GermanyHamburg, GermanyEUR2Chenming Paper Korea Co., Ltd.Seoul, KoreaSeoul, KoreaKRW3Chenming (HK) LimitedHong Kong, ChinaHong Kong, ChinaUSD4Chenming International Co., Ltd.Los Angeles, USALos Angeles, USAUSD5Chenming Paper Japan Co., Ltd.Tokyo, JapanTokyo, JapanJPY6Chenming Paper United States Co., Ltd.Los Angeles, USALos Angeles, USAUSD
63. Government grants
(1) General information of government grants
Unit: RMBTypeAmountReporting item
Amountaccounted forin profit or lossGovernment incentives10,000.00Non-operating income10,000.00Immediate VAT refund275,104.76Other income275,104.76Forestation subsidies588,512.58Non-operating income,
other income
588,512.58R&D subsidies392,300.00Non-operating income392,300.00Tax refund33,984,039.89Non-operating income,
other income
33,984,039.89Social security subsidies and post subsidies
135,853.85Non-operating income135,853.85Enterprise reform development subsidies
160,161,518.76Non-operating income,
other income
160,161,518.76Others46,886.89Other income46,886.89Environmental protection special subsidies
36,428,597.00Non-operating income,
other income
36,428,597.00
INTERIM REPORT 2019
X Financial Report
VIII. Change in scope of consolidation
1. Change in scope of consolidation due to other reasons
During the reporting period, the scope of consolidation included 1 newly established subsidiary, namely Shanghai Pulp& Paper Sales Co., Ltd.IX. Interest in other entities
1. Interest in subsidiaries
(1) Constitution of the Group
Name of subsidiary
Principle placeof businessPlace of incorporation
Nature ofbusiness
Shareholding (%)
IndirectAcquisitionDirectZhanjiang Chenming Pulp & Paper Co., Ltd.Zhanjiang, ChinaZhanjiang, ChinaPaper making100.00EstablishmentShouguang Meilun Paper Co., Ltd.Shouguang, ChinaShouguang, ChinaPaper making100.00EstablishmentJilin Chenming Paper Co., Ltd.Jilin, ChinaJilin, ChinaPaper making100.00Merger and
acquisitionHuanggang Chenming Pulp & Paper Co., Ltd.Huanggang, ChinaHuanggang, ChinaPulp production100.00EstablishmentShandong Chenming Paper Sales Co., Ltd.Shouguang, ChinaShouguang, ChinaSales of paper100.00EstablishmentShouguang Chenming Import and Export Trade Co., Ltd.Shouguang, ChinaShouguang, ChinaImport and export trade100.00EstablishmentJiangxi Chenming Supply Chain Management Co., LtdJiangxi, ChinaJiangxi, ChinaTrading70.00EstablishmentChenming GmbHHamburg, GermanyHamburg, GermanyPaper product trading100.00EstablishmentShouguang Chenming Papermaking Machine Co., Ltd.Shouguang, ChinaShouguang, ChinaMachinery manufacturing100.00EstablishmentShouguang Hongxiang Printing and Packaging Co., Ltd.Shouguang, ChinaShouguang, ChinaPrinting and packaging100.00Merger and
acquisitionShouguang Chenming Modern Logistic Co., Ltd.Shouguang, ChinaShouguang, ChinaTransportation100.00EstablishmentShouguang Chenming Industrial Logistics Co., Ltd.Shouguang, ChinaShouguang, ChinaLogistics100.00EstablishmentJinan Chenming Investment Management Co., Ltd.Jinan, ChinaJinan, ChinaInvestment management100.00EstablishmentHuanggang Chenming Arboriculture Development Co., Ltd.Huanggang, ChinaHuanggang, ChinaArboriculture100.00EstablishmentChenming Arboriculture Co., Ltd.Wuhan, ChinaWuhan, ChinaArboriculture100.00EstablishmentChenming Paper Korea Co., Ltd.Seoul, KoreaSeoul, KoreaSales of paper100.00EstablishmentShandong Chenming Power Supply Holdings Co., Ltd.Shouguang, ChinaShouguang, ChinaPower Supply100.00EstablishmentShouguang Shun Da Customs Declaration Co, Ltd.Shouguang, ChinaShouguang, ChinaCustoms declaration100.00EstablishmentShanghai Chenming Industrial Co., Ltd.Shanghai, ChinaShanghai, ChinaProperty investment and
management
100.00Establishment
Wuxi Song Ling Paper Co., Ltd.Wuxi, ChinaWuxi, ChinaPaper making100.00Merger and
acquisitionShandong Chenming Paper Group (Fuyu) Sales Co., Ltd.Fuyu, ChinaFuyu, ChinaSales of paper100.00EstablishmentShandong Chenming Group Finance Co., Ltd.Jinan, ChinaJinan, ChinaFinance80.0020.00EstablishmentJiangxi Chenming Paper Co., Ltd.Nanchang, ChinaNanchang, ChinaPaper making42.4640.79EstablishmentQingdao Chenming International Logistics Co., Ltd.Qingdao, ChinaQingdao, ChinaLogistics30.0070.00EstablishmentShouguang Chenming Art Paper Co., Ltd.Shouguang, ChinaShouguang, ChinaPaper making75.00EstablishmentHailaer Chenming Paper Co., Ltd.Hailaer, ChinaHailaer, ChinaPaper making75.00EstablishmentShandong Grand View Hotel Co., Ltd.Shouguang, ChinaShouguang, ChinaCatering70.00EstablishmentHaicheng Haiming Mining Co., Ltd.Haicheng, ChinaHaicheng, ChinaMining60.00EstablishmentWuhan Chenming Hanyang Paper Holdings Co., Ltd.Wuhan, ChinaWuhan, ChinaPaper making65.205EstablishmentChengdu Chenming Culture Communication Co., Ltd.Chengdu, ChinaChengdu, ChinaMarketing100.00EstablishmentShandong Chenming Financial Leasing Co., Ltd.Jinan, ChinaJinan, ChinaFinancial leasing100.00EstablishmentQingdao Chenming Nonghai Financial Leasing Co., Ltd.Qingdao, ChinaQingdao, ChinaFinancial leasing100.00EstablishmentChenming (HK) LimitedHong Kong, ChinaHong Kong, ChinaPaper product trading100.00EstablishmentShouguang Hongyi Decorative Packaging Co., Ltd.Shouguang, ChinaShouguang, ChinaPackaging100.00Merger and
acquisition
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
Name of subsidiary
Principle placeof businessPlace of incorporation
Nature ofbusiness
Shareholding (%)
IndirectAcquisitionDirectShouguang Xinyuan Coal Co., Ltd.Shouguang, ChinaShouguang, ChinaCoal100.00Merger and
acquisitionShouguang City Run Sheng Wasted Paper Recycle Co., Ltd.Shouguang, ChinaShouguang, ChinaPurchase and sale of
waste
100.00Merger and
acquisitionShouguang Wei Yuan Logistics Company LimitedShouguang, ChinaShouguang, ChinaLogistics100.00Merger and
acquisitionShandong Chenming Panels Co., Ltd.Shouguang, ChinaShouguang, ChinaPanels100.00Merger and
acquisitionShouguang Chenming Floor Board Co., Ltd.Shouguang, ChinaShouguang, ChinaFloor board100.00Merger and
acquisitionShouguang Chenming Cement Co., LimitedShouguang, ChinaShouguang, ChinaCement100.00EstablishmentWuhan Chenming Qianneng Electric Power Co., Ltd.Wuhan, ChinaWuhan, ChinaElectric power51.00EstablishmentShandong Chenming Investment LimitedJinan, ChinaJinan, ChinaInvestment100.00EstablishmentJapan Chenming Paper Co., Ltd.Tokyo, JapanTokyo, JapanPaper product trading100.00EstablishmentChenming International Co., Ltd.Los Angeles, USALos Angeles, USAPaper product trading100.00EstablishmentZhanjiang Chenming ArboricultureDevelopment Co., Ltd.Zhanjiang, ChinaZhanjiang, ChinaArboriculture100.00EstablishmentYangjiang Chenming ArboricultureDevelopment Co., Ltd.Yangjiang, ChinaYangjiang, ChinaArboriculture100.00EstablishmentNanchang Chenming ArboricultureDevelopment Co., Ltd.Nanchang, ChinaNanchang, ChinaArboriculture100.00EstablishmentGuangdong Huirui Investment Co., Ltd.Zhanjiang, ChinaZhanjiang, ChinaInvestment100.00Merger and
acquisitionZhanjiang Chenming New-style Wall Materials Co., LtdZhanjiang, ChinaZhanjiang, ChinaWall materials100.00EstablishmentJilin Chenming New-style Wall Materials Co., Ltd.Jilin, ChinaJilin, ChinaWall materials100.00EstablishmentJilin Chenming Logistics Co., Ltd.Jilin, ChinaJilin, ChinaLogistics100.00EstablishmentJiangxi Chenming Logistics Co., Ltd.Nanchang, ChinaNanchang, ChinaLogistics100.00EstablishmentFuyu Chenming Paper Co., Ltd.Fuyu, ChinaFuyu, ChinaPaper making100.00EstablishmentZhanjiang Meilun Pulp & Paper Co., Ltd.Zhanjiang, ChinaZhanjiang, ChinaPaper making100.00EstablishmentShanghai Chenming Financial leasing Co., Ltd.Shanghai, ChinaShanghai, ChinaFinancial leasing100.00EstablishmentGuangzhou Chenming Financial leasing Co., Ltd.Guangzhou, ChinaGuangzhou, ChinaFinancial leasing100.00EstablishmentShanghai Hongtai Real Estate Co., Ltd.Shanghai, ChinaShanghai, ChinaReal estate100.00Merger and
acquisitionShanghai Hongtai Property Management Co., Ltd.Shanghai, ChinaShanghai, ChinaProperty Management100.00Merger and
acquisitionShandong Chenming Commercial Factoring Co., Ltd.Jinan, ChinaJinan, ChinaBusiness factoring100.00EstablishmentGuangzhou Chenming Commercial Factoring Co., Ltd.Guangzhou, ChinaGuangzhou, ChinaBusiness factoring51.00EstablishmentQingdao Chenming Pulp & Paper Electronic Commodity SpotTrading Center Co., Ltd.
Qingdao, ChinaQingdao, ChinaTrading30.0070.00EstablishmentBeijing Chenming Meilun Technology Co., Ltd.Beijing, ChinaBeijing, ChinaMarketing100.00EstablishmentShandong Chenming Paper Coated Paper Sales Co., Ltd.Shouguang, ChinaShouguang, ChinaSales100.00EstablishmentZhanjiang Chenming Port Co., Ltd.Zhanjiang, ChinaZhanjiang, ChinaLoading and unloading100.00EstablishmentBeijing Chenming Financial Leasing Co., Ltd.Beijing, ChinaBeijing, ChinaFinance100.00EstablishmentChenming Paper United States Co., Ltd.USA3200 EL CAMINO REAL,
SUITE130, IRVINE,CA
Paper trading100.00EstablishmentShanghai Pulp & Paper Sales Co., Ltd.Shanghai, ChinaShanghai, ChinaSales of pulp and paper100.00Establishment
IX. Interest in other entities (Cont’d)
1. Interest in subsidiaries (Cont
’d)
(1) Constitution of the Group (Cont
’d)
INTERIM REPORT 2019
X Financial Report
IX. Interest in other entities (Cont’d)
1. Interest in subsidiaries (Cont
’d)
(2) Major non-wholly owned subsidiaries
Unit: RMB
Name of subsidiaryMinority interests
Gain or lossattributable tominority interestsduring the period
Dividend tominority interestsdeclared duringthe period
Closingbalanceof minorityinterestsWuhan Chenming Hanyang Paper Holdings Co., Ltd.34.80%2,917,703.0687,394,258.81Shouguang Chenming Art Paper Co., Ltd.25.00%8,114,816.7089,392,132.13Haicheng Haiming Mining Co., Ltd.40.00%18,062,982.75162,380,423.51Jiangxi Chenming Paper Co., Ltd.16.75%5,048,268.319,212,500.00500,428,230.77
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
IX. Interest in other entities (Cont
’d)
1. Interest in subsidiaries (Cont
’d)
(3) Key financial information of major non-wholly owned subsidiaries
Unit: RMB
Name of subsidiary
Closing balance
Opening balance
Current assetsNon-current assetsTotal assetsCurrent liabilitiesNon-current liabilitiesTotal liabilitiesCurrent assetsNon-current assetsTotal assetsCurrent liabilitiesNon-current liabilitiesTotal liabilities
Wuhan Chenming Hanyang Paper Holdings Co., Ltd.387,400,422.251,094,721,392.191,482,121,814.441,001,920,257.31201,594,737.561,203,514,994.87304,800,513.201,128,834,779.701,433,635,292.901,116,394,677.0343,004,618.521,159,399,295.55Shouguang Chenming Art Paper Co., Ltd.1,043,419,868.14595,221,272.361,638,641,140.501,281,072,612.001,281,072,612.00874,366,187.24618,223,904.521,492,590,091.761,167,480,830.071,167,480,830.07Haicheng Haiming Mining Co., Ltd.279,819,237.982,098,715,774.262,378,535,012.241,912,377,238.4956,948,716.511,969,325,955.00175,097,261.051,711,242,454.231,886,339,715.281,522,288,114.911,522,288,114.91Jiangxi Chenming Paper Co., Ltd.4,104,817,765.533,995,671,168.778,100,488,934.303,857,924,731.211,254,923,887.825,112,848,619.033,477,455,680.854,098,279,287.447,575,734,968.293,767,706,818.38795,535,836.724,563,242,655.10
INTERIM REPORT 2019
X Financial Report
IX. Interest in other entities (Cont’d)
1. Interest in subsidiaries (Cont
’d)
(3) Key financial information of major non-wholly owned subsidiaries (Cont
’d)
Unit: RMB
Name of subsidiary
Amount for the reporting periodAmount for the prior periodRevenueNet profit
TotalcomprehensiveincomeCash flows fromoperatingactivitiesRevenueNet profit
Totalcomprehensive
income
Cash flows from
operatingactivitiesWuhan Chenming Hanyang Paper Holdings Co., Ltd.
596,359,764.414,370,822.224,370,822.22-151,581,823.281,364,181,429.1935,042,380.3335,042,380.33316,577,834.65Shouguang Chenming Art Paper Co., Ltd.373,470,955.3032,459,266.8132,459,266.814,414,114.47909,260,241.77118,652,095.44118,652,095.44-99,931,648.76Haicheng Haiming Mining Co., Ltd.208,675,941.5045,157,456.8745,157,456.8732,185,353.30421,599,693.66126,380,989.01126,380,989.0175,115,059.89Jiangxi Chenming Paper Co., Ltd.1,450,118,569.5230,148,002.0830,148,002.08331,918,952.831,611,920,231.5669,140,492.8569,140,492.85659,823,787.57
3. Interest in joint arrangements or associates
(1) Major joint ventures and associates
Name of joint ventures and associates
Principle place
of business
Place ofincorporationNature of business
ShareholdingAccountingmethodDirectIndirect
Weifang Sime Darby West Port Co., Ltd.Weifang, ChinaWeifang, ChinaPort construction50.00Equity methodNingbo Qichen Huamei Equity Investment Fund Partnership (Limited Partnership)Ningbo, ChinaNingbo, China
Investmentmanagement40.00Equity methodWeifang Xingxing United Chemical Co., LtdWeifang, ChinaWeifang, ChinaChemical engineering50.00Equity methodZhuhai Dechen New Third Board Equity Investment Fund Company (Limited Partnership)Zhuhai, ChinaZhuhai, China
Investmentmanagement50.00Equity method
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
IX. Interest in other entities (Cont’d)
3. Interest in joint arrangements or associates (Cont
’d)
(2) Key financial information of major joint ventures
Unit: RMB
Item
Closing balance/Amount forthe reporting period
Opening balance/Amount
for the prior periodWeifang Sime Darby
West Port Co., Ltd.
Weifang XingxingUnited Chemical
Co., Ltd
Weifang Sime DarbyWest Port Co., Ltd.
Weifang XingxingUnited Chemical
Co., LtdCurrent assets30,816,393.13114,409,623.2555,386,175.2897,755,183.56Of which: Cash and cash equivalents21,180,173.8133,305,428.5053,489,910.5335,030,150.70Non-current assets550,319,128.3532,702,466.79528,403,804.8638,098,361.81Total assets581,135,521.48147,112,090.04583,789,980.14135,853,545.37Current liabilities14,456,779.5435,381,769.821,236,372.3032,584,182.76Non-current liabilities391,067,611.12389,620,042.41Total liabilities405,524,390.6635,381,769.82390,856,414.7132,584,182.76Minority interestsEquity interest attributable to shareholders of the parent company175,611,130.82111,730,320.22192,933,565.43103,269,362.61Share of net assets based on shareholding87,805,565.4155,865,160.1196,466,782.7251,634,681.31Adjustments– Goodwill– Unrealised profit arising from intra-group transactions– Others6,693,074.9957,618,555.81Carrying amount of investment in joint ventures95,190,010.73113,352,838.10103,159,857.71109,253,237.12Fair value of investments in joint ventures with public quoted pricesRevenue7,744,022.1678,509,386.24166,613,896.54Finance expenses10,159,513.72-261,143.08-346,852.57-8,403.59Income tax expenses2,733,067.31Net profit-15,939,693.968,199,201.95-3,214,369.5926,370,424.95Net profit from discontinued operationsOther comprehensive incomeTotal comprehensive income-15,939,693.968,199,201.95-3,214,369.5926,370,424.95Dividend received from joint ventures during the period
INTERIM REPORT 2019
X Financial Report
IX. Interest in other entities (Cont’d)
3. Interest in joint arrangements or associates (Cont
’d)
(3) Key financial information of major associates
Unit: RMB
Item
Closing balance/Amount forthe reporting period
Opening balance/Amount for
the reporting periodNingbo QichenHuamei EquityInvestment FundPartnership(Limited Partnership)
Zhuhai DechenNew Third BoardEquity InvestmentFund Company(Limited Partnership)
Ningbo QichenHuamei EquityInvestment FundPartnership(Limited Partnership)
Zhuhai DechenNew Third BoardEquity InvestmentFund Company(Limited Partnership)Current assets59,343,061.915,709,651.7679,292,150.815,492,635.42
Non-current assets140,950,006.0099,020,000.00119,000,000.0099,020,000.00Total assets200,293,067.91104,729,651.76198,292,150.81104,512,635.42Current liabilities14,232.415,000.0013,135.405,000.00Non-current liabilitiesTotal liabilities14,232.415,000.0013,135.405,000.00Minority interestsEquity interest attributable to shareholders ofthe parent company200,278,835.50104,724,651.76198,279,015.41104,507,635.42Share of net assets based on shareholding80,111,534.2052,362,325.8979,311,606.1652,253,817.72Carrying amount of investment in associates200,384,677.0152,362,315.04199,585,216.9352,253,817.72RevenueNet profit1,998,750.11217,016.341,510,109.81670,768.61Net profit from discontinued operationsOther comprehensive incomeTotal comprehensive income1,998,750.11217,016.341,510,109.81670,768.61
(4) Summary financial information of non-major joint ventures and associates
Unit: RMBItem
Closing balance/
Amount for
the year
Opening balance/
Amount for the
prior yearJoint ventures:
Total carrying amount of investment4,048,295.873,572,834.79 Total amount of the following items based on shareholding975,461.08485,538.07 – Net profit975,461.08485,538.07Associates:
Total carrying amount of investment9,368,973.0618,761,580.99 Total amount of the following items based on shareholding-18,325,737.46-11,838,692.59 – Net profit-18,325,737.46-11,838,692.59
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
IX. Interest in other entities (Cont’d)
3. Interest in joint arrangements or associates (Cont
’d)
(5) Excess loss of joint ventures or associates
Unit: RMB
Name of joint ventures or associates
Accumulatedunrecognised lossincurred forprior periods
Unrecognised loss
(or share of netprofit) for the period
Unrecognised loss(or share of netprofit) for the periodArjo Wiggins Chenming Specialty Paper Co.,Ltd.7,308,869.167,308,869.16Xuchang Chenming Paper Co., Ltd.4,091,767.834,091,767.83
X. Fair value
1. Fair value of assets and liabilities measured at fair value as at the end of the period
Unit: RMBItem
Fair value as at the end of the periodLevel 1Level 2Level 3TotalI. Continuous measurement at fair value––––
1. Other non-current financial assets––765,160,000.00765,160,000.00
2. Biological assets
Consumable biological assets1,532,910,693.201,532,910,693.20Total assets continuously measured at fair value2,298,070,693.202,298,070,693.20
Note: as the Company’s shareholding in the investee is low without significant influence, it is not practicable to adopt the income approach orthe market approach for the valuation of the shareholding in the investee. Moreover, there was no recent introduction of external investoror equity transfer among the shareholders to serve as a reference for the determination of fair value, which may be classified as“limitedcircumstances”for the best estimate of fair value at cost. Thus, the fair value of other non-current financial assets was measured at cost atthe end of the year.
2. Level 3 continuous measurement, adjustment between opening and closing value and sensitivity of
unobservable inputsThe Company adopts sensitivity analysis techniques to analyse the possible effects of rational and probable changesin risk variables to profit or loss for the period or to the interests of shareholders. Since risk variables seldom change ona stand-alone basis, while the correlation between variables may have significant influence to the ultimate amount ofchange effected by the change in a single risk variable, the analysis below is based on the assumption that the changesin each variable occurred separately.Item
Change ininvestment yield or
discount rate
For the yearFor the prior yearImpact on profit
Impact onshareholders’ equityImpact on profit
Impact onshareholders’ equityConsumable biological assetsIncreases by 1%-33,202,809.15-33,202,809.15-39,808,078.34-39,808,078.34Consumable biological assetsDecreases by 1%36,397,424.8836,397,424.8843,368,412.2643,368,412.26
Note: In the prior period, the income method was used to evaluate the impact of the change in the discount rate on the fair value. In the currentperiod, the harvest present value method is used to assess the impact of the change in investment yield on fair value.
INTERIM REPORT 2019
X Financial Report
X. Fair value (Cont’d)
3. Fair value of financial assets and financial liabilities not measured at fair value
The Company’s financial assets and financial liabilities not measured at fair value mainly consist of: accounts receivable,short-term borrowings, accounts payable, long-term borrowings, bonds payable and long-term payables. The carryingamount of the above financial assets and financial liabilities deviates from the fair value by a small amount.XI. Related parties and related party transactions
1. Parent company of the Company
Name of parentcompany
Place ofincorporation
Businessnature
Registered
capital
Shareholdingof the parentcompany in theCompany
Voting right ofthe parentcompany in theCompanyChenming Holdings Co., Ltd.
ShouguangInvestment in
manufacture of paper,electricity, steam,arboriculture
123,878.7727.87%27.87%
Note: The ultimate controller of the Company is Shouguang State-owned Assets Supervision and Administration Office.
2. Subsidiaries of the Company
Please refer to Note IX. 1. Interest in subsidiaries for details.
3. Joint ventures and associates of the Company
Please refer to Note IX. 3. Interest in joint ventures or associates for details.Balance of related party transaction between the Company and its joint ventures or associates during the period or priorperiods are as follows:
Name of joint ventures or associatesRelationShouguang Chenming Huisen New-style Construction Materials Co., Ltd.
A joint venture of the CompanyXuchang Chenming Paper Co., Ltd.An associate of the CompanyWeifang Sime Darby West Port Co., Ltd.A joint venture of the CompanyJiangxi Jiangbao Media Colour Printing Co., Ltd.An associate of the CompanyZhuhai Dechen New Third Board Equity Investment Zhuhai Dechen New Third Board Equity Investment
An associate of the CompanyNingbo Kaichen Huamei Equity Investment Fund Partnership (Limited Partnership)
An associate of the CompanyChenming (Qingdao) Asset Management Co., Ltd.An associate of the CompanyJiangxi Chenming Port Co., Ltd.An associate of the CompanyWeifang Xingxing United Chemical Co., Ltd.A joint venture of the Company
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
XI. Related parties and related party transactions (Cont’d)
4. Other related parties
Name of other related partiesRelationShandong Shouguang Jinxin Investment Development Holdings Group Co., Ltd.
Shareholder of the Company’s largest shareholderShouguang Henglian Enterprise Investment LimitedShareholder of the Company’s largest shareholderShouguang Ruifeng Enterprise Investment LimitedShareholder of the Company’s largest shareholderChenming Holdings (Hong Kong) LimitedSubsidiary 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 of the CompanyShouguang Huixin Construction Materials Co., Ltd.A company invested by the Directors and senior
management of the CompanyShouguang Chenming Guangyuan Real Property Co., Ltd.and its subsidiaries
A company invested by the Directors and senior
management of the CompanyQingdao Chenming Nonghai Investment Co., Ltd. and its subsidiaries
A company invested by the Directors and senior
management of the CompanyNanchang Chenjian New-style Wall Materials Co., Ltd.A company invested by the Directors and senior
management of the CompanyShouguang Hengde Enterprises Investment Co., Ltd.A company invested by the Directors and senior
management of the CompanyZhejiang Huaming Investment Management Co., Ltd. and its subsidiaries
Directors and senior management served
by the Company’s DirectorsHebei Chenming Zhongjin Real Estate Development Co., Ltd. and its subsidiaries
Directors and senior management served
by the Company’s DirectorsWuhan Chenming Zhongjin Real Estate Co., Ltd. and its subsidiaries
Directors and senior management served
by the Company’s DirectorsWuhan Rongsheng Zhongjin Development and Investment Co., Ltd. and its subsidiaries
Directors and senior management served
by the Company’s DirectorsQingzhou Chenming Denaturation Amylum Co., Ltd.Share participating company of the CompanyZhejiang Guangyu Idall Print Co., Ltd.Share participating company of the CompanyAnhui Time Source CorporationShare participating company of the CompanyShandong Hongqiao Venture Capital Co., Ltd.Share participating company of the CompanyShanghai Hengzheng Venture Investment Center (Limited Partnership)
Share participating company of the CompanyLide Technology Co., Ltd.Share participating company of the CompanyJiangxi Chenming Natural Gas Co., Ltd. and its subsidiaries
Directors and senior management served
by the Company’s Directors in the past twelve months
INTERIM REPORT 2019
X Financial Report
XI. Related parties and related party transactions (Cont’d) 5. Related party transactions
(1) Purchase and sales of goods and rendering and receiving services
Table on purchase of goods/receiving of services
Unit: RMBRelated partyDetails of related party transaction
Amount for thereporting period
Transaction
facilityapproved
Whether thetransaction facilityis exceeded
Amount forthe prior periodJiangxi Chenming Natural Gas Co., Ltd.
Procurement of natural gasand heavy oil, etc.112,367,700.00600,000,000.00No170,147,411.87Weifang Xingxing United Chemical Co., Ltd.
Procurement of hydrogen peroxide etc.
45,877,683.03Table on sales of goods/providing of services
Unit: RMBRelated party
Details of relatedparty transaction
Amount for thereporting period
Amount forthe prior periodShouguang Chenming Huisen New-style Construction Materials Co., Ltd.Sales of electricity and gas3,980,581.152,669,745.03Shouguang Huixin Construction Materials Co., Ltd.Machinery materials34,785.9049,464.70
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
XI. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont’d)
(2) Guarantee
The Company as guarantor
Unit: RMBParty being guaranteedAmount under guarantee
Starting dateof guarantee
Expiry dateof guarantee
Whether performanceof guaranteeis completedWeifang Sime Darby West Port Co., Ltd.135,000,000.002017/12/202027/12/20NoShandong Chenming Paper Sales Co., Ltd.130,000,000.002018/7/42019/7/5NoShandong Chenming Paper Sales Co., Ltd.420,000,000.002018/7/232019/7/24NoShandong Chenming Paper Sales Co., Ltd.300,000,000.002018/10/262019/10/26NoShandong Chenming Paper Sales Co., Ltd.450,000,000.002018/11/142019/11/14NoShandong Chenming Paper Sales Co., Ltd.100,000,000.002019/1/242020/1/16NoShandong Chenming Paper Sales Co., Ltd.254,291,455.722019/3/132019/9/10NoShandong Chenming Paper Sales Co., Ltd.50,000,000.002019/3/192020/3/13NoShandong Chenming Paper Sales Co., Ltd.200,000,000.002019/4/22019/9/30NoShandong Chenming Paper Sales Co., Ltd.100,000,000.002019/5/172019/11/17NoShandong Chenming Paper Sales Co., Ltd.420,118,552.642019/5/212019/11/18NoShandong Chenming Paper Sales Co., Ltd.100,000,000.002019/5/232019/11/23NoShandong Chenming Paper Sales Co., Ltd.150,000,000.002019/5/292020/5/28NoShouguang Meilun Paper Co., Ltd.23,812,304.932019/1/32019/7/2NoShouguang Meilun Paper Co., Ltd.96,352,478.172019/4/172019/10/15NoShouguang Meilun Paper Co., Ltd.106,211,387.852019/6/132019/12/10NoShouguang Meilun Paper Co., Ltd.27,867,187.192019/6/252019/12/23NoShouguang Meilun Paper Co., Ltd.170,000,000.002018/12/112019/12/6NoShouguang Meilun Paper Co., Ltd.249,348,278.622019/2/192019/8/19NoChenming (HK) Limited57,060,010.002018/8/82019/7/15NoChenming (HK) Limited96,933,270.002018/8/102019/7/15NoChenming (HK) Limited226,383,871.002018/11/192019/11/8NoChenming (HK) Limited65,309,650.002018/12/72019/12/6NoChenming (HK) Limited200,000,000.002018/12/52019/12/5NoChenming (HK) Limited97,139,511.002019/3/262020/3/16NoChenming (HK) Limited278,837,832.002019/6/192020/6/10NoChenming (HK) Limited30,788,100.002019/1/122020/1/10NoChenming (HK) Limited150,968,412.002018/4/232021/4/7NoChenming (HK) Limited86,621,220.002018/5/42021/4/6NoChenming (HK) Limited54,447,624.002018/5/172021/5/5NoChenming (HK) Limited254,939,000.282018/8/82021/5/25NoChenming (HK) Limited254,939,000.282018/8/82021/5/25NoChenming (HK) Limited290,627,942.502018/9/42021/6/21NoChenming (HK) Limited290,627,942.502018/9/62021/6/21NoChenming (HK) Limited193,179,070.002018/11/302020/10/30No
INTERIM REPORT 2019
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Party being guaranteedAmount under guarantee
Starting dateof guarantee
Expiry dateof guarantee
Whether performanceof guaranteeis completedChenming (HK) Limited163,274,125.002019/1/252021/5/21NoChenming (HK) Limited103,120,500.002019/3/282022/1/7NoChenming (HK) Limited103,120,500.002019/3/282021/6/16NoChenming (HK) Limited202,356,794.502019/4/22022/1/6NoChenming (HK) Limited202,356,794.502019/4/22021/6/10NoChenming (HK) Limited138,181,470.002019/4/302022/4/22NoChenming (HK) Limited288,737,400.002016/11/22019/9/10NoChenming (HK) Limited281,862,700.002017/11/72019/9/30NoChenming (HK) Limited96,245,800.002018/5/112020/4/11NoZhanjiang Chenming Pulp & Paper Co., Ltd.99,730,254.392018/7/272019/7/21NoZhanjiang Chenming Pulp & Paper Co., Ltd.50,000,000.002018/8/312019/8/16NoZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002018/9/132019/9/12NoZhanjiang Chenming Pulp & Paper Co., Ltd.110,000,000.002018/10/172019/10/17NoZhanjiang Chenming Pulp & Paper Co., Ltd.200,000,000.002018/10/122019/10/11NoZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002018/10/172019/9/27NoZhanjiang Chenming Pulp & Paper Co., Ltd.99,903,967.002018/10/172019/10/17NoZhanjiang Chenming Pulp & Paper Co., Ltd.76,000,000.002018/10/192019/10/19NoZhanjiang Chenming Pulp & Paper Co., Ltd.115,000,000.002018/11/62019/11/4NoZhanjiang Chenming Pulp & Paper Co., Ltd.90,000,000.002018/11/122019/11/12NoZhanjiang Chenming Pulp & Paper Co., Ltd.166,670,000.002018/11/92019/11/8NoZhanjiang Chenming Pulp & Paper Co., Ltd.97,116,354.192018/12/32019/11/25NoZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002018/12/202019/12/19NoZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002018/12/262019/12/25NoZhanjiang Chenming Pulp & Paper Co., Ltd.154,898,103.492019/1/102019/6/29NoZhanjiang Chenming Pulp & Paper Co., Ltd.60,000,000.002019/1/282019/7/28NoZhanjiang Chenming Pulp & Paper Co., Ltd.450,000,000.002019/1/302020/1/29NoZhanjiang Chenming Pulp & Paper Co., Ltd.30,600,977.222019/2/22020/1/31NoZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002019/1/82019/12/31NoZhanjiang Chenming Pulp & Paper Co., Ltd.87,552,473.942019/1/182019/7/16NoZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002019/1/142020/1/13NoZhanjiang Chenming Pulp & Paper Co., Ltd.125,000,000.002019/1/222020/1/21NoZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002019/2/152020/2/14NoZhanjiang Chenming Pulp & Paper Co., Ltd.70,000,000.002019/3/222020/3/22NoZhanjiang Chenming Pulp & Paper Co., Ltd.42,400,000.002019/4/122019/10/9NoZhanjiang Chenming Pulp & Paper Co., Ltd.99,600,000.002019/4/232019/10/23NoZhanjiang Chenming Pulp & Paper Co., Ltd.82,000,000.002019/4/282019/10/28NoZhanjiang Chenming Pulp & Paper Co., Ltd.89,000,000.002019/6/32020/6/2NoZhanjiang Chenming Pulp & Paper Co., Ltd.120,000,000.002019/6/272020/6/26NoZhanjiang Chenming Pulp & Paper Co., Ltd.343,735,000.002019/2/142020/2/2NoZhanjiang Chenming Pulp & Paper Co., Ltd.92,324,988.002019/1/222019/12/20NoZhanjiang Chenming Pulp & Paper Co., Ltd.95,180,400.002019/2/152019/8/14NoZhanjiang Chenming Pulp & Paper Co., Ltd.34,877,540.012019/5/302019/11/20No
XI. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont’d)
(2) Guarantee (Cont
’d)
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
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Party being guaranteedAmount under guarantee
Starting dateof guarantee
Expiry dateof guarantee
Whether performanceof guaranteeis completedZhanjiang Chenming Pulp & Paper Co., Ltd.19,439,919.662019/6/102019/8/2NoZhanjiang Chenming Pulp & Paper Co., Ltd.22,500,000.002015/6/32020/5/21NoZhanjiang Chenming Pulp & Paper Co., Ltd.25,436,390.002015/6/52020/5/21NoZhanjiang Chenming Pulp & Paper Co., Ltd.137,494,000.002017/12/212019/12/20NoZhanjiang Chenming Pulp & Paper Co., Ltd.49,000,000.002018/2/132020/2/11NoZhanjiang Chenming Pulp & Paper Co., Ltd.10,000,000.002018/2/232020/2/11NoZhanjiang Chenming Pulp & Paper Co., Ltd.10,000,000.002018/2/262020/2/11NoZhanjiang Chenming Pulp & Paper Co., Ltd.30,000,000.002018/2/282020/2/11NoZhanjiang Chenming Pulp & Paper Co., Ltd.330,000,000.002018/10/312020/10/30NoZhanjiang Chenming Pulp & Paper Co., Ltd.70,000,000.002018/10/312020/10/30NoZhanjiang Chenming Pulp & Paper Co., Ltd.100,000,000.002018/12/182020/10/31NoJiangxi Chenming Paper Co., Ltd.99,000,000.002018/7/102019/7/8NoJiangxi Chenming Paper Co., Ltd.51,000,000.002018/8/162019/8/14NoJiangxi Chenming Paper Co., Ltd.28,000,000.002018/8/242019/8/24NoJiangxi Chenming Paper Co., Ltd.64,285,135.362019/1/72020/1/7NoJiangxi Chenming Paper Co., Ltd.100,000,000.002019/1/182020/1/15NoJiangxi Chenming Paper Co., Ltd.46,800,000.002019/2/282020/2/28NoJiangxi Chenming Paper Co., Ltd.100,000,000.002019/3/152020/3/14NoJiangxi Chenming Paper Co., Ltd.150,000,000.002019/3/212020/3/21NoJiangxi Chenming Paper Co., Ltd.90,000,000.002019/3/292020/3/29NoJiangxi Chenming Paper Co., Ltd.70,000,000.002019/3/292020/3/29NoShandong Chenming Financial Leasing Co., Ltd.72,000,000.002018/11/72019/11/7NoShandong Chenming Financial Leasing Co., Ltd.60,000,000.002018/10/172019/10/17NoGuangzhou Chenming Financial Leasing Co., Ltd.180,000,000.002018/9/132018/9/9NoJilin Chenming Paper Co., Ltd.40,000,000.002019/3/152020/1/17NoJilin Chenming Paper Co., Ltd.20,010,000.002019/2/262019/8/26NoJilin Chenming Paper Co., Ltd.23,398,200.002019/5/72020/5/8NoJilin Chenming Paper Co., Ltd.48,600,000.002019/5/72020/5/8NoHuanggang Chenming Pulp & Paper Co., Ltd.32,770,000.002015/12/142019/9/26NoHuanggang Chenming Pulp & Paper Co., Ltd.27,070,000.002015/12/142019/12/26NoHuanggang Chenming Pulp & Paper Co., Ltd.5,700,000.002016/6/242019/12/26No
XI. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont’d)
(2) Guarantee (Cont
’d)
INTERIM REPORT 2019
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Party being guaranteedAmount under guarantee
Starting dateof guarantee
Expiry dateof guarantee
Whether performanceof guaranteeis completedHuanggang Chenming Pulp & Paper Co., Ltd.32,770,000.002016/6/242020/3/26NoHuanggang Chenming Pulp & Paper Co., Ltd.530,000.002016/6/242020/6/26NoHuanggang Chenming Pulp & Paper Co., Ltd.32,240,000.002017/1/52020/6/26NoHuanggang Chenming Pulp & Paper Co., Ltd.38,240,000.002017/1/52020/9/26NoHuanggang Chenming Pulp & Paper Co., Ltd.38,240,000.002017/1/52020/12/26NoHuanggang Chenming Pulp & Paper Co., Ltd.43,690,000.002017/1/52021/3/26NoHuanggang Chenming Pulp & Paper Co., Ltd.43,690,000.002017/1/52021/6/26NoHuanggang Chenming Pulp & Paper Co., Ltd.3,900,000.002017/1/52021/9/26NoHuanggang Chenming Pulp & Paper Co., Ltd.36,260,000.002017/2/32021/9/26NoHuanggang Chenming Pulp & Paper Co., Ltd.40,160,000.002017/2/32021/12/26NoHuanggang Chenming Pulp & Paper Co., Ltd.40,160,000.002017/2/32022/3/26NoHuanggang Chenming Pulp & Paper Co., Ltd.33,420,000.002017/2/32022/6/26NoHuanggang Chenming Pulp & Paper Co., Ltd.44,531,362.582018/9/192020/6/26NoHuanggang Chenming Pulp & Paper Co., Ltd.43,642,107.092018/11/142020/11/14NoHuanggang Chenming Pulp & Paper Co., Ltd.66,702,050.002016/12/52019/9/26NoHuanggang Chenming Pulp & Paper Co., Ltd.41,747,636.002016/12/52019/12/26NoHuanggang Chenming Pulp & Paper Co., Ltd.24,954,414.002017/4/122019/12/26NoHuanggang Chenming Pulp & Paper Co., Ltd.66,702,050.002017/4/122020/3/26NoHuanggang Chenming Pulp & Paper Co., Ltd.9,693,533.742017/4/122020/6/26NoTotal14,266,427,041.35
XI. Related parties and related party transactions (Cont’d)
5. Related party transactions (Cont’d)
(2) Guarantee (Cont
’d)
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
XI. Related parties and related party transactions (Cont’d) 5. Related party transactions (Cont’d)
(3) Related party lending and borrowing (Cont
’d)
Unit: RMBRelated partyBorrowing amountStarting dateExpiry dateDescriptionBorrowingChenming Holdings Co., Ltd.162,000,000.002018/8/282019/7/17LendingWeifang Sime Darby West Port Co., Ltd.59,500,000.002018/7/92022/7/8
6. Related party accounts receivable and accounts payable
(1) Accounts receivables
Unit: RMBItem
Closing balanceOpening balanceBook balanceBad debtBook balanceBad debtAccounts receivable:
Shouguang Huixin Construction Materials Co., Ltd.18,892,073.10944,603.6612,960,322.42648,016.12Shouguang Chenming Huisen New-style Construction Materials Co., Ltd.979,382.8048,969.14774,832.2038,741.61Total19,666,905.301,719,435.8613,735,154.621,422,848.32Prepayments:
Jiangxi Chenming Natural Gas Co., Ltd.25,391,023.9633,567,041.92Shouguang Chenming Natural Gas Co., Ltd.33,144,533.8125,586,691.33Total58,535,557.7759,153,733.25Other receivables:
Arjo Wiggins Chenming Specialty Paper Co., Ltd.1,191,705.081,191,705.081,191,705.081,191,705.08Weifang Sime Darby West Port Co., Ltd.62,631,878.08313,159.3860,836,961.43304,184.80Total63,823,583.161,504,864.4662,028,666.511,495,889.88
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XI. Related parties and related party transactions (Cont’d)
6. Related party accounts receivable and accounts payable (Cont
’d)
(2) Accounts payable
Unit: RMBItemRelated party
Closing bookbalance
Opening book
balanceAccounts payable:Weifang Xingxing United
Chemical Co., Ltd.15,861,358.4018,544,025.96Total15,861,358.4018,544,025.96Other payablesChenming Holdings Co., Ltd.45,200,000.00376,000,000.00Other payablesShouguang Hengtai Enterprise
Investment Company Limited45,977,444.7344,392,007.69Total111,177,444.73420,392,007.69
XII. Undertaking and contingency
1. Undertaking
(1) Capital commitment
ItemClosing balanceOpening balanceCommitments in relation to acquisition and construction of long-term assets1,930,608,190.171,463,816,242.90Total1,930,608,190.171,463,816,242.90
(2) Operating lease commitments
As at the balance sheet date, the Company entered into irrevocable operating lease contracts with externalcompanies as follows:
ItemClosing balanceOpening balanceMinimum lease payments under irrevocable operating leases:
The first year after balance sheet date4,579,873.345,315,217.18The second year after balance sheet date4,543,786.764,929,546.64The third year after balance sheet date4,406,104.834,406,104.83In the years thereafter86,588,438.2986,672,608.29Total100,118,203.22101,323,476.94
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
XII. Undertaking and contingency (Cont’d)
2. Contingency
Contingent liabilities arising from pending litigation and its financial impactsIn October 2005, the Company and Hong Kong ArjowigginsHKK2Limited (“HKK2”) jointly established Arjo WigginsChenming Specialty Paper Co., Ltd. in Shouguang, Shandong Province, which is engaged in the production of specialpaper, decoration paper and draft paper. However, such company experienced poor management due to financialcrisis. Hence, such company was forced to dissolve in October 2008.In October 2012, HKK2 submitted for arbitration application to Hong Kong International Arbitration Centre, Hong KongSpecial Administration of PRC, on the ground of default of the joint venture agreement by the Company. In November2015, Hong Kong International Arbitration Centre announced arbitration result, stating that the Company shouldcompensate HKK2 with economic loss of RMB167 million, arbitration fee of HK$3.30 million and legal fee of USD3.54million, together with interest thereon calculated at 8% per annum. In October 2016, the Company received a statutorydemand, stating that if the Company fails to perform the arbitration results within 21 days, the liquidation applicationon H shares of the Company will be submitted. Subsequently, HKK2 submitted H shares liquidation application to thearbitration centre.In November 2016, the Company submitted application to the Court of First Instance of the High Court of the HKSARand received an injunction, stating that“the applicant is prohibited from applying for liquidation on the Company”.In February 2017, HKK2 submitted an appeal to the court. In June 2017, the court dismissed the injunction received bythe Company. In the same month, the Company received the liquidation application submitted by the defendant to theHigh Court of Hong Kong, which alleged that the Company should compensate the defendant with economic loss ofRMB167 million, legal fee of USD3.54 million and arbitration fee of HK$3.30 million, together with interest thereon due tofailure in compliance of the arbitration results.In September 2017, the Company procured a deposit of HK$389 million to the High Court of Hong Kong, and appealedagainst the injunction to the court. In May 2018, the court session of the case commenced. At present, the injunctioncase is still in progress.In 2017, the Company made provision of RMB325,259,082.28 for the expected liability arising from this litigation.However, as at 30 June 2019, judgment of the court of Hong Kong is yet to be made, and the expected loss is uncertain.Hence, such expected liability is still stated under the balance sheet.XIII. Post-balance sheet eventThe 2018 profit distribution plan was approved at the 2018 annual general meeting, based on the total ordinary share capitalof 2,904,608,200 shares, a cash dividend of RMB2.4 (tax inclusive) per 10 shares was distributed to ordinary shareholders andthe 1,162,790,698 simulated ordinary shares converted from the preference shares using a conversion ratio of 1 share valuedat RMB3.87 as at the end of 2018; a cash dividend of RMB2.4 (tax inclusive) per 10 simulated ordinary shares converted fromthe preference shares was distributed to holders of preference shares. No bonus shares were issued and no capitalisationissue was made out of the reserves. A cash dividend of RMB697,105,968 was distributed to ordinary shareholders and avariable cash dividend of RMB279,069,767.52 was distributed to holders of preference shares. On 9 August, the abovedistribution plan was implemented.On 7 August 2019, Meilun (BVI) Limited, an overseas wholly-owned subsidiary of the Company, issued a total of USD163million USD bond on Hong Kong Stock Exchange with an interest rate of 9% and a term of less than 3 years.
INTERIM REPORT 2019
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XIV. Other material matters
1. Segment information
Unit: RMB0,000Item
Machine-made
paper
Financialservices
MagnesiumoreOthers
Inter-segmenteliminationTotalIncome from principal activities1,160,238.19125,508.3119,577.3144,544.2537,129.151,312,738.91Cost for principal activities913,857.9948,814.349,642.6534,516.9242,426.99964,404.91Total assets10,023,910.583,860,864.11238,537.54962,885.924,430,323.0510,655,875.10Total liabilities7,773,740.882,171,651.27200,544.39475,448.242,496,462.668,124,922.12
XV. Notes to major financial statement items of the parent company
1. Accounts receivable
(1) Accounts receivable by category
Unit: RMBCategory
Closing balanceOpening balanceBook balanceBad debt provisionCarrying
amount
Book balanceBad debt provision
Carrying amountAmountPercentageAmountPercentageAmountPercentageAmountPercentageAccounts receivableassessed individually for impairmentAccounts receivableassessed collectively for impairment
108,478,376.23100.00%2,259,459.502.08%106,218,916.731,349,962,797.42100%685,832.380.05%1,349,276,965.04Of which:
Accounts receivable from related parties
78,081,188.5671.98%78,081,188.561,342,192,951.9899.42%1,342,192,951.98Accounts receivable from distributor clients
30,397,187.6728.02%2,259,459.507.43%28,137,728.177,769,845.440.58%685,832.388.83%7,084,013.06Total108,478,376.23100.00%2,259,459.502.08%106,218,916.731,349,962,797.42100%685,832.380.05%1,349,276,965.04
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
XV. Notes to major financial statement items of the parent company (Cont’d)
1. Accounts receivable (Cont
’d)
(1) Accounts receivable by category (Cont
’d)Items assessed individually for impairment:
Accounts receivable with collective provision for bad debts based on receivables from distributor clients:
Unit: RMBAgeing
Closing balanceBook balance
Bad debtsprovision
ProvisionPercentageWithin 1 year25,894,366.501,294,718.335.00%1-2 years––2-3 years4,422,600.00884,520.0020.00%Over 3 years80,221.1780,221.17100.00%Total30,397,187.672,259,459.507.43%
Disclosed by ageing:
Unit: RMBAgeingClosing balanceWithin 1 year101,045,250.651-2 years–2-3 years5,173,666.08Over 3 years–Total106,218,916.73
(2) Provision, recovery or reversal of bad debt provision for the period
Provision of bad debt provision for the period:
Unit: RMBCategory
Openingbalance
Changes in the period
Closing
balanceProvisionRecoveryor reversalWritten offAccounts receivable with provision for bad debt685,832.381,573,627.122,259,459.50Total685,832.381,573,627.122,259,459.50
INTERIM REPORT 2019
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XV. Notes to major financial statement items of the parent company (Cont’d)
1. Accounts receivable (Cont
’d)
(3) Top five accounts receivable based on closing balance of debtors
The total amount of the Company’s top five accounts receivable based on closing balance of debtors for the yearwas RMB71,592,434.10, which accounted for 66.00% of the closing balance of the total accounts receivable. Theclosing balance of corresponding bad debt provision amounted to RMB1,152,813.34.
2. Other receivables
Unit: RMBItemClosing balanceOpening balanceInterest receivables69,171,162.6577,257,506.25
Dividend receivables1,023,353,000.00–Other receivables16,638,073,989.2819,328,057,454.99Total17,730,598,151.9319,405,314,961.24
(1) Interest receivable
1) Classification of interest receivable
Unit: RMBItemClosing balanceOpening balanceGuarantee deposit69,171,162.6577,257,506.25
Total69,171,162.6577,257,506.25
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
XV. Notes to major financial statement items of the parent company (Cont’d)
2. Other receivables (Cont
’d)
(2) Dividend receivables
1) Classification of dividend receivable
Unit: RMBItemClosing balanceOpening balanceDividend from subsidiaries1,023,353,000.000.00Total1,023,353,000.000.00
(3) Other receivables
1) Other receivables by nature
Unit: RMBItemClosing balanceOpening balanceOpen credit16,661,132,245.2219,342,458,869.77Reserve and borrowings8,808,936.907,681,197.42Guarantee deposit3,089,997.009,958,377.28Insurance premium584,881.11466,935.72Others35,412,417.3039,175,451.96Total16,709,028,477.5319,399,740,832.15
INTERIM REPORT 2019
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XV. Notes to major financial statement items of the parent company (Cont’d)
2. Other receivables (Cont
’d)
(3) Other receivables (Cont
’d)
2) Particulars of bad debt provision
Unit: RMB
Bad debt provision
Phase 1Phase 2Phase 3
TotalExpected creditloss in the next
12 months
Expected creditloss over the entire life(not credit-impaired)
Expected creditloss over the entirelife (credit-impaired)Balance as at 1 January2019 during the period––––– Transferred into Phase 219,368,599,145.1019,368,599,145.10– Transferred into Phase 331,141,687.0531,141,687.05– Reversal to Phase 2– Reversal to Phase 1Provision for the year27,621,897.0227,621,897.02Reversal for the year28,350,785.9328,350,785.93Transfer for the yearWriting-off for the yearOther changesBalance as at 30 June 201968,163,587.132,790,901.1270,954,488.25Changes in carrying book balances with significant changes in loss provision for the year Applicable √ Not ApplicableBy ageing
Unit: RMBAgeingClosing balanceItems within 1 year16,610,734,001.401-2 years19,685,064.182-3 years7,654,923.70Total16,638,073,989.28
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
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XV. Notes to major financial statement items of the parent company (Cont’d)
2. Other receivables (Cont
’d)
(3) Other receivables (Cont
’d)
3) Provision, recovery or reversal of bad debt provision for the year
Bad debt provision for the year:
Unit: RMBCategoryOpening balance
Changes for the period
Closing balanceProvisionRecoveryor reversalBad debt provision for other receivables71,683,377.1627,621,897.0228,350,785.9370,954,488.25Total71,683,377.1627,621,897.0228,350,785.9370,954,488.25
4) Top five other receivables according to closing balance of debtors
Unit: RMBName of entityNatureClosing balanceMaturity
Percentage toclosing balance ofother receivables
Closing balance
of bad debt
provisionShandong Chenming Financial Leasing Co.,Ltd.Open credit5,614,741,821.77Within 1 year33.60280,737,091.09Shanghai Chenming Financial Leasing Co., Ltd.Open credit3,284,100,000.00Within 1 year19.66164,205,000.00Haicheng Haiming Mining Co., Ltd.Open credit1,549,545,947.16Within 1 year9.2877,477,297.36Huanggang Chenming Pulp & Paper Co., Ltd.Open credit1,529,415,162.57Within 1 year9.1576,470,758.13Shanghai Chenming Industrial Co., Ltd.Open credit1,440,416,829.83Within 1 year8.6272,020,841.49Total–13,418,219,761.33–80.31670,910,988.07
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XV. Notes to major financial statement items of the parent company (Cont’d)
2. Other receivables (Cont
’d)
(3) Other receivables (Cont
’d)
5) Receivables in respect of government grant
Unit: RMB
Name of entityName of government grantClosing balanceClosing age
Estimated time ofreceiving the grantand the amountand basis thereofShandong Chenming Paper Holdings LimitedOther corporate reformation
and development grant73,730,000.00Within 1 monthReceived on 5 July
3. Long-term equity investments
Unit: RMBItem
Closing balanceOpening balanceBook balanceImpairment provisionCarrying amountBook balanceImpairment provisionCarrying amountInvestment in subsidiaries23,261,652,649.9023,261,652,649.9022,114,152,649.9022,114,152,649.90Investment in associates and joint ventures359,964,936.91359,964,936.91373,264,793.34373,264,793.34Total23,621,617,586.8123,621,617,586.8122,487,417,443.2422,487,417,443.24
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
XV. Notes to major financial statement items of the parent company (Cont’d)
3. Long-term equity investments (Cont
’d)
(1) Investment in subsidiaries
Unit: RMBInvesteeOpening balanceIncrease for the year
Decrease forthe yearClosing balance
Impairmentprovision forthe yearClosing balance
provision ofimpairmentChenming Paper Korea Co., Ltd.6,143,400.006,143,400.00Chenming GmbH4,083,235.004,083,235.00Shandong Chenming Paper Group (Fuyu) Sales Co., Ltd.1,000,000.001,000,000.00Haicheng Haiming Mining Co., Ltd.144,000,000.00144,000,000.00Hailaer Chenming Paper Co., Ltd.12,000,000.0012,000,000.00Huanggang Chenming Pulp & Paper Co., Ltd.1,250,000,000.001,000,000,000.002,250,000,000.00Huanggang Chenming Arboriculture Development Co., Ltd.70,000,000.0070,000,000.00Jilin Chenming Paper Co., Ltd.1,501,350,000.001,501,350,000.00Jinan Chenming Investment Management Co., Ltd.100,000,000.00100,000,000.00Jiangxi Chenming Paper Co., Ltd.822,867,646.40822,867,646.40Shandong Chenming Power Supply Holdings Co., Ltd.157,810,117.43157,810,117.43Wuhan Chenming Hanyang Paper Holdings Co., Ltd.264,493,210.21264,493,210.21Shandong Grand View Hotel Co., Ltd.80,500,000.0080,500,000.00Zhanjiang Chenming Pulp & Paper Co., Ltd.5,027,500,000.0027,500,000.005,055,000,000.00Shouguang Chenming Modern Logistic Co., Ltd.10,000,000.0010,000,000.00Shouguang Chenming Art Paper Co., Ltd.113,616,063.80113,616,063.80Shouguang Meilun Paper Co., Ltd.4,449,441,979.314,449,441,979.31Shouguang Shun Da Customs Declaration Co, Ltd.1,500,000.001,500,000.00Shandong Chenming Paper Sales Co., Ltd.662,641,208.20662,641,208.20Shouguang Chenming Import and Export Trade Co., Ltd.250,000,000.00250,000,000.00Shouguang Chenming Papermaking Machine Co., Ltd.2,000,000.002,000,000.00Shouguang Chenming Industrial Logistics Co., Ltd.10,000,000.0010,000,000.00Shouguang Chenming Hongxin Packaging Co., Ltd.3,730,000.003,730,000.00Shandong Chenming Group Finance Co., Ltd.4,000,000,000.004,000,000,000.00Chenming Arboriculture Co., Ltd.45,000,000.0045,000,000.00Shanghai Chenming Industry Co., Ltd.3,000,000,000.003,000,000,000.00Chenming (HK) Limited118,067,989.55118,067,989.55Chenming Paper USA Co., Ltd.6,407,800.006,407,800.00Shandong Chenming Coated Paper Sales Co. Ltd.20,000,000.0020,000,000.00Shanghai Pulp & Paper Sales Co., Ltd.100,000,000.00100,000,000.00Total22,114,152,649.901,147,500,000.0023,261,652,649.90
INTERIM REPORT 2019
X Financial Report
XV. Notes to major financial statement items of the parent company (Cont’d)
3. Long-term equity investments (Cont
’d)
(2) Investment in associates and joint ventures
Unit: RMB
InvesteeOpening balance
Change for the period
Closing balance
Closingbalance ofimpairmentprovisionAdditionalcontribution
Withdrawncontribution
Investment gain orloss recogniserunder equity method
Adjustmentof othercomprehensiveincomeOther changein equityinterest
Distributionof cashdividend orprofit declared
Impairment
provisionOthersI.Joint venturesShouguang Chenming Huisen New-style Construction Materials Co., Ltd.3,572,834.79975,461.08500,000.004,048,295.87Weifang Sime Darby West Port Co., Ltd.103,159,857.71-7,969,846.9895,190,010.73Subtotal106,732,692.50-6,994,385.90500,000.0099,238,306.60II.AssociatesJiangxi Jiangbao Media Colour Printing Co., Ltd.811,998.75-480,747.58331,251.17Zhuhai Dechen New Third Board EquityInvestment Fund Company (Limited Partnership)52,253,817.72108,497.3252,362,315.04Ningbo Kaichen Huamei EquityInvestment Fund Partnership (Limited Partnership)199,585,216.94799,460.06200,384,677.00Xuchang Chenming Paper Co., Ltd.5,994,545.96-5,994,545.96Chenming (Qingdao) Asset Management Co., Ltd.7,886,521.47-238,134.377,648,387.10Subtotal266,532,100.84-5,805,470.53260,726,630.31Total373,264,793.34-12,799,856.43500,000.00359,964,936.91
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
XV. Notes to major financial statement items of the parent company (Cont’d)
4. Other payables
Unit: RMBItemClosing balanceOpening balanceInterest payable131,416,333.34139,444,333.34Dividend payable976,175,735.52Other payables4,207,524,162.485,326,044,557.18
Total5,315,116,231.345,465,488,890.52
Other payables of the top five closing balances collected by the payee
Unit: RMBName of companyClosing balanceZhanjiang Chenming Pulp & Paper Co., Ltd.2,206,451,191.57Shandong Chenming Financial Leasing Co., Ltd.985,621,153.02Jiangxi Chenming Paper Co., Ltd.408,822,164.21Shouguang Chenming Import and Export Trade Co., Ltd.258,234,638.23Shandong Chenming Power Supply Holdings Co., Ltd.136,387,007.68Total3,995,516,156.71
5. Revenue and operating costs
Unit: RMBCategory
Amount for the yearAmount for the prior yearRevenueCostsRevenueCostsPrincipal activities2,237,163,494.681,674,925,035.202,300,997,002.451,522,148,043.23Other activities458,848,921.42428,362,116.44515,297,483.37452,213,569.85Total2,696,012,416.102,103,287,151.642,816,294,485.821,974,361,613.08
INTERIM REPORT 2019
X Financial Report
XV. Notes to major financial statement items of the parent company (Cont’d)
5. Revenue and operating costs (Cont
’d)
Distribution of revenue
Unit: RMBType of contracts
Machine-madepaper sectorsMaterialsUtilitiesOther sectorsTotalMachine-made paper sectors2,237,163,494.682,237,163,494.68Materials367,750,475.36367,750,475.36Utilities53,730,932.7053,730,932.70Other sectors37,367,513.3637,367,513.36Total2,237,163,494.68367,750,475.3653,730,932.7037,367,513.362,696,012,416.10
6. Investment income
Unit: RMBItemAmount for the periodAmount for the prior periodIncome from long-term equity investments accounted for using the equity method-12,799,856.43-4,078,127.09Income from long-term equity investments accounted for using the cost method1,023,353,000.00Investment income on holding of available-for-sale financial assets41,516,700.00Investment gain on disposal financial assets measured at fair value through profit or loss114,233,300.00Total1,010,553,143.57151,671,872.91
SHANDONG CHENMING PAPER HOLDINGS LIMITEDINTERIM REPORT 2019
X Financial Report
XVI. Supplementary information
1. Breakdown of extraordinary gains and losses for the current period
√ Applicable Not applicable
Unit: RMBItemAmountRemarkProfit or loss from disposal of non-current assets23,358,777.37Government grants (except for the government grants closely related tothe normal operation of the Company and granted constantly ata fixed amount or quantity in accordance with a certain standard based on state policies) accounted for in profit or loss for the current period227,698,648.23Non-operating gains and losses other than the above items4,188,590.61Gain or loss from change in fair value of consumable biological assets adopting fair value method for follow-up measurements-1,883,064.80Less: Effect of income tax46,750,425.02 Effect of minority interest-38,049.69Total206,650,576.08–Notes for the Company’s extraordinary gain or loss items as defined in the Explanatory Announcement on InformationDisclosure for Companies Offering Their Securities to the Public No.1 – Extraordinary Gains or Losses and theextraordinary gain or loss items as illustrated in the Explanatory Announcement on Information Disclosure for CompaniesOffering 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 on netassets onweightedaverage basis
Earnings per shareBasic(RMB per
share)
Diluted(RMB per
share)Net profit attributable to ordinary shareholders of the Company0.21%0.0130.013Net profit after extraordinary gains and losses attributable to ordinary shareholders of the Company-0.97%-0.059-0.059
Note: The net profit attributable to shareholders of the listed company has not deducted perpetual debt incurred interest and impact of dividends
issued and declared by preference shares. When calculating the financial indicators of earnings per share and weighted average returnon equity, the interest on perpetual bonds of RMB96,202,739.73 from January 1, 2019 to June 30, 2019 and the dividends issued anddeclared by preference shares of RMB377,169,767.52 in 2019 are deducted.
INTERIM REPORT 2019
X Financial Report
XVI. Supplementary information (Cont’d)
3. Differences in accounting data under domestic and overseas accounting standards
(1) Differences between the net profit and net assets disclosed in accordance with international accounting
standards and China accounting standards in the financial report Applicable √ Not applicable
(2) Differences between the net profit and net assets disclosed in accordance with overseas accounting
standards and China accounting standards in the financial report Applicable √ Not applicable
(3) Reasons for differences in accounting data under domestic and overseas accounting standards. If the
data audited by overseas audit institutions have been adjusted for differences, the name of the foreigninstitution shall be indicated.
4. Other